Document:

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                                                                    EXHIBIT 10.8

                               ASSIGNMENT OF LEASE

Upon receipt of $1343.00 from Red Envelope, Inc., I, the undersigned Mission
Valley Christian Fellowship of San Diego, a California Non-profit Religious
Corporation, do hereby assign, transfer and ?ILLEGIBLE? over unto Red Envelope
Inc., all my rights, title and interest in and to the entirety of that certain
lease reference dated November 17,1995 by and between the Four Amigos, a
California Ltd. as Lessor, and Mission Valley Christian Fellowship of San Diego,
a California Non-profit Religious Corporation as Lessee, covering that certain
property and premise situated in the City of San Diego, County of San Diego,
State of California and particularly described as: approximately 2,098 square
feet of office space at 4562-M Alvarado Canyon Road, and said lease is attached
hereto as Exhibit "A", Together with all my right, title and interest in and to
prepaid rent and/or security deposit on said lease, if any. Nothing contained
herein shall relieve Mission Valley Christian Fellowship of San Diego, a
California Non-profit Religious Corporation, as Assignor or Personal
Guarantor(s) of said lease from their liability for said lease. Mission Valley
Christian Fellowship of San Diego, a California Non-profit Religious Corporation
as Assignor and Personal Guarantor(s) shall be fully liable for the rental
obligation, notwithstanding this Assignment of Lease through the ending date of
said lease which is December 31,2003.

Dated this 18 day of APRIL, 2000.

Agreed, Assignor-Lessee: Mission Valley Christian Fellowship of San Diego, a
California Non-profit Religious Corporation

/s/ Leo Giovinetti                                President
--------------------------              --------------------------
Signature                               Title

Print Name Leo Giovinetti               Date 4-18-2000

Agreed, Personal Guarantor of Lease: Jack Forness,

/s/ [ILLEGIBLE]
--------------------------              Date 4/17/00
Signature

Agreed, Personal Guarantor of Lease: Leo Giovenitti,

/s/ Leo Giovinetti
--------------------------              Date 4-18-2000
Signature

<PAGE>

ACCEPTANCE OF ASSIGNMENT OF LEASE

I, Red Envelope, Inc., (Assignee-Lessee) do hereby accept the attached
Assignment of Lease for the Premises more commonly known as 4562-M Alvarado
Canyon Road, San Diego, California which is described as approximately 2,098
?ILLEGIBLE?are feet of industrial space and agree to be additionally liable for
said lease and agree to be bound by all of the conditions and covenants
contained in that certain lease referenced dated November 17, 1995 by and
between Four Amigos, a California Ltd., as Lessor, and Mission Valley Christian
Fellowship of San Diego, a California Non-profit Religious Corporation as
Lessee, referred to on the attached Assignment of Lease, a true copy of said
lease is attached hereto as Exhibit "A" and shall become part of this assignment
agreement. By signing below I acknowledge receipt of lease and that I have read
and agree to be bound by all the terms and conditions of said lease. I, Red
Envelope, Inc. (Assignee-Lessee) promise to pay and be fully liable to Lessor
for the rent payments and operating expenses of said lease due for the Premises
from July 1, 2000 (Assignee-Rent Commencement Date of Assignment) to the Lease
ending date defined as December 31, 2003 to be paid in the manner and at the
times therein specified in said lease. On date of execution of the said
assignment agreement by Lessor, Assignor and Assignee (Execution date) and
occupancy of the Premises I, Assignee will be bound by all other terms,
conditions, provisions and covenants of said lease, including carry insurance
per said lease upon taking occupancy of the premises for tenant improvements and
said terms, conditions, provisions and covenants shall continue to be in full
force and effect until the lease ending date.

Dated this 1 day of MAY, 2000.

Agreed Assignee-Lessee: Red Envelope, Inc.

/s/ [ILLEGIBLE]                                President & COO
------------------------                ------------------------
      Signature                                   Title

                        CONSENT TO ASSIGNMENT OF LEASE

I, Four Amigos, a California Ltd., Lessor, named in the aforementioned lease for
the Premises more commonly known as 4562-M Alvarado Canyon Road, San Diego,
California which is described as approximately 2,098 square feet of industrial
?ILLEGIBLE? which is attached hereto as Exhibit "A ", do hereby consent to the
assignment of said lease to Red Envelope, Inc., ?ILLEGIBLE? the understanding
Assignee-Lessee shall be additionally liable for the rent payment due to Lessor
for the Premises of said lease from Assignee's Rent Commencement date of July 1,
2000 to the lease ending date December 31, 2003. Assignee also shall have the
right to occupy the premises on the date of execution of the said assignment
agreement by Lessor, Assignor and Assignee (Execution date) with proof of
insurance and without rent payment or Operating expense payment until
Assignee-Rent Commencement date of July 1, 2000 and Assignee will be bound by
all other terms, conditions, provisions and covenants of said lease from said
Execution date, and said terms, conditions, provisions and covenants shall
continue to be in full force and effect until the lease ending date. Nothing
contained herein shall relieve Mission Valley Christian Fellowship of San Diego,
a California Non-profit Religious Corporation, as Assignor-Lessee or Personal
Guarantor(s) of said lease from their liability for said lease and the rent and
operating expense payments due for the premises per said lease.

I, Lessor, notwithstanding anything to the contrary in Paragraph #6 of the Lease
hereby consent to the use of the Premises for the general office purposes
including but not limited to use as a 24 hour call center for Internet commerce
business.

I, also, hereby certify that I hold the sum of $1343.00, as a security deposit
under said lease.

All payments of rent currently due under said lease have been paid to May 1,
2000.

The amount of the base monthly rent for the premises is $1463.18 per month plus
Lessee's estimated pro-rata share of the operating expense of the park, with the
with Assignee-Lessee next payment due on July 1, 2000 plus $15 per month HVAC
maintenance contract charge (covers filter changing and belt tightening only).
It shall be Assignor-Lessee's sole responsibility to pay rent and operating
expense for the Premise of said lease for May, 2000 and June, 2000

The monthly rent is payable to: Four Amigos, a California Ltd.
Address: 4607 Mission Gorge Place, San Diego, California 92120

Lessor: Four Amigos, a California Ltd.,     Dated this 5 day of 2, 2000.

/s/ [ILLEGIBLE]
------------------------                           __________________________
Signature                                                    Title

ADDRESS: 4607 Mission Gorge Place, San Diego, California 92120 TELEPHONE: (619)
287-8873

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                                   EXHIBIT "A"

Assignor: /s/ [ILLEGIBLE]                            Assignee: /s/ [ILLEGIBLE]
          ------------------                                   -----------------

                            SECOND AMENDMENT TO LEASE

         SECOND AMENDMENT TO LEASE, dated August 19, 1997, for that certain
lease made by and between FOUR AMIGOS, A CALIFORNIA LIMITED PARTNERSHIP, as
Lessor, and MISSION VALLEY CHRISTIAN FELLOWSHIP OF SAN DIEGO, A CALIFORNIA
NON-PROFIT RELIGIOUS CORPORATION, Lessee, for that certain lease which is
reference dated November 17, 1995, for the premises more commonly known as 4562
Alvarado Canyon Road, Suite M, and described as approximately 2,098 of office
space.

         Lessee and Lessor hereby agrees to extend the lease ending date, as
defined in Paragraph 3.1 of said lease, to December 31, 2003 and agree the Base
monthly rent for the premises shall increase by 3% on January 1, 2002 and
January 1, 2003.

         All other terms and conditions of said lease will remain in full force
and effect.

FOUR AMIGOS                                MISSION VALLEY CHRISTIAN FELLOWSHIP
A CALIFORNIA LTD.                          OF SAN DIEGO, A CALIFORNIA NON-PROFIT
                                           RELIGIOUS CORPORATION

By /s/ [ILLEGIBLE]                         By /s/ [ILLEGIBLE]
   -----------------------                    ---------------------------
           Lessor                                      Lessee

Date      9/16/97                          Date    AUG 20 1997

<PAGE>

                            FIRST AMENDMENT TO LEASE

         FIRST AMENDMENT TO LEASE, dated July 23, 1996, for that certain lease
made by and between FOUR AMIGOS, A CALIFORNIA LIMITED PARTNERSHIP, as Lessor,
and MISSION VALLEY CHRISTIAN FELLOWSHIP OF SAN DIEGO, A CALIFORNIA NON-PROFIT
RELIGIOUS CORPORATION, Lessee, for that certain lease which is reference dated
November 17, 1995, for the premises more commonly known as 4562 Alvarado Canyon
Road, Suite M, and described as approximately 2,098 of office space.

         Lessee and Lessor hereby agree to extend the lease ending date, as
defined in Paragraph 3.1 of said lease one (1) additional year and one (1) month
with the new agreed upon lease ending date being December 31, 2001.

         Lessee agrees to pay base monthly rent for the premises commencing
December 1, 2000 of $1,449.11 per month plus Lessee's pro-rata share of
operating expenses.

         All other terms and conditions of said lease will remain in full force
and effect.

FOUR AMIGOS                                MISSION VALLEY CHRISTIAN FELLOWSHIP
A CALIFORNIA LTD.                          OF SANDIEGO, A CALIFORNIA NON-PROFIT
                                           RELIGIOUS CORPORATION

By /s/ [ILLEGIBLE]                         By /s/ [ILLEGIBLE]
   -----------------------                    ---------------------------
       Lessor                                   Lessee

Date    9/24/96                            Date    8-29-96

<PAGE>
                                   EXHIBIT "A"

Assignor: /s/ [ILLEGIBLE]                    Assignee: /s/ [ILLEGIBLE]
          ----------------                             -------------------

                         STANDARD LEASE -- MULTI-TENANT

1.       PARTIES. This Lease, dated, for reference purposes only, NOVEMBER 17,
1995, is made by and between FOUR AMIGOS, A CA, LTD. (herein called "Lessor")
and MISSION VALLEY CHRISTIAN FELLOWSHIP OF SAN DIEGO, A CALIFORNIA NON-PROFIT
RELIGIOUS CORPORATION (herein called "Lessee").

2.       PREMISES, PARKING AND COMMON AREAS.

         2.1      PREMISES. Lessor hereby leases to Lessee and Lessee leases
from Lessor for the term, at the rental, and upon all of the conditions set
forth herein, real property situated in the County of SAN DIEGO, State of
CALIFORNIA commonly known as 4562-M ALVARADO CANYON ROAD and described as
approximately 2.098 square feet of INDUSTRIAL space, herein referred to as the
"Premises", as may be outlined on an Exhibit attached hereto, including rights
to the Common Areas as hereinafter specified but not including any rights to the
roof of the Premises or to any Building in the Center. The Premises are a
portion of a building, herein referred to as the "Building." The Premises, the
Building, the Common Areas, and the land upon which the same are located, along
with all other buildings and improvements thereon, are herein collectively
referred to as the "Center."

         2.2      VEHICLE PARKING. Lessee shall be entitled to THREE (3) vehicle
parking spaces, unreserved and unassigned, on those portions of the Common Areas
designated by Lessor for parking. Lessee shall not use more parking spaces than
said number. Said parking spaces shall be used only for parking by vehicles no
larger than full size passenger automobiles or pick-up trucks, herein called
"Permitted Size Vehicles." Vehicles other than Permitted Size Vehicles are
herein referred to as "Oversized Vehicles."

                  2.2.1 Lessee shall not permit or allow any vehicles that
belong to or are controlled by Lessee or Lessee's employees, suppliers,
shippers, customers, or invitees to be loaded, unloaded, or parked in areas
other than those designated by Lessor for such activities.

                  2.2.2 If Lessee permits or allows any of the prohibited
activities described in paragraph 2.2 of this Lease, then Lessor shall have the
right, without notice, in addition to such other rights and remedies that it may
have, to remove or tow away the vehicle involved and charge the cost to Lessee,
which cost shall be immediately payable upon demand by Lessor.

         2.3      COMMON AREAS-DEFINITION. The term "Common Areas" is defined as
all areas and facilities outside the Premises and within the exterior boundary
line of the Center that are provided and designated by the Lessor from time to
time for the general non-exclusive use of Lessor, Lessee and of other lessees of
the Center and their respective employees, suppliers, shippers, customers and
invitees, including parking areas, loading and unloading areas, trash areas,
roadways, sidewalks, walkways, parkways, driveways and landscaped areas.

         2.4      COMMON AREAS--LESSEE'S RIGHTS. Lessor hereby grants to Lessee,
for the benefit of Lessee and its employees, suppliers, shippers, customers and
invitees, during the term of this Lease, the non-exclusive right to use, in
common with others entitled to such use, the Common Areas as they exist from
time to time, subject to any rights, powers, and privileges reserved by Lessor
under the terms hereof or under the terms of any rules and regulations or
restrictions governing the use of the Center. Under no circumstances shall the
right herein granted to use the Common Areas be deemed to include the right to
store any property, temporarily or permanently, in the Common Areas. Any such
storage shall be permitted only by the prior written consent of Lessor
?ILLEGIBLE? designated agent, which consent may be revoked at any time. In the
event that any unauthorized storage shall occur then Lessor shall have the
?ILLEGIBLE? without notice, in addition to such other rights and remedies that
it may have, to remove the property and charge the cost to Lessee, which cost
shall be immediately payable upon demand by Lessor.

         2.5      COMMON AREAS-RULES AND REGULATIONS. Lessor or such other
person(s) as Lessor may appoint shall have the exclusive control and management
of the Common Areas and shall have the right, from time to time, to establish,
modify, amend and enforce reasonable rules and regulations with respect thereto.
Lessee agrees to abide by and conform to all such rules and regulations, and to
cause its employees, suppliers, shippers, customers, and invitees to so abide
and conform. Lessor shall not be responsible to Lessee for the non-compliance
with said rules and regulations by other lessees of the Center.

         2.6      COMMON AREAS-CHANGES. Lessor shall have the right, in Lessor's
sole discretion, from time to time:

                  (a) To make changes to the Common Areas, including, without
limitation, changes in the location, size, shape and number of driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, landscaped areas and walkways; (b) To close
temporarily any of the Common Areas for maintenance purposes so long as
reasonable access to the Premises remains available; (c) To designate other land
outside the boundaries of the Center to be a part of the Common Areas; (d) To
add additional buildings and improvements to the Common Areas; (e) To use the
Common Areas while engaged in making additional improvements, repairs or
alterations to the Center, or any portion thereof; (f) To do and perform such
other acts and make such other changes in, to or with respect to the Common
Areas and Center as Lessor may, in the exercise of sound business judgment, deem
to be appropriate.

                  2.6.1 Lessor shall at all times provide the parking facilities
required by applicable law and in no event shall the number of parking spaces
that Lessee is entitled to under paragraph 2.2 be reduced.

3.       TERM.

         3.1      TERM. The term of this Lease shall be for FIVE (5) YEARS
commencing on DECEMBER 1, 1995 and ending on NOVEMBER 30, 2000 unless sooner
terminated pursuant to any provision hereof.

         3.2      DELAY IN POSSESSION. Notwithstanding said commencement date,
if for any reason Lessor cannot deliver possession of the Premises to Lessee on
said date, Lessor shall be not be subject to any liability therefor, nor shall
such failure affect the validity of this Lease or the obligations of Lessee
hereunder or extend the term hereof, but in such case, Lessee shall not be
obligated to pay rent or perform any other obligation of Lessee under the terms
of this Lease, except as may be otherwise provided in this Lease, until
possession of the Premises is tendered to Lessee; provided, however, that if
Lessor shall not have delivered possession of the Premises within sixty (60)
days from said commencement date, Lessee may, at Lessee's option, by notice in
writing to Lessor within ten (10) days thereafter, cancel this Lease, in which
event the parties shall be discharged from all obligations hereunder; provided
further, however, that if such written notice of Lessee is not received by
Lessor within said ten (10) day period, Lessee's right to cancel this Lease
hereunder shall terminate and be of no further force or effect.

         3.3      EARLY POSSESSION. If Lessee occupies the Premises prior to
said commencement date, such occupancy shall be subject to all provisions of
this lease, such occupancy shall not advance the termination date, and Lessee
shall pay rent for such period at the initial monthly rates set forth below.

4.       RENT.

         4.1      BASE RENT. Lessee shall pay to Lessor, as Base Rent for the
Premises, without any offset or deduction, except as may be otherwise expressly
?ILLEGIBLE? provided in this Lease, on the 1st day of each month of the term
hereof, monthly payments in advance of $1,069,98 (SEE ADDENDUM 51) plus
operating expenses of $273,12 for a total of $1,343,00. Lessee shall pay
Lessor upon execution hereof $1,343,00 as Base Rent including operating
expenses for DECEMBER, 1995. Rent for any period during the term hereof which is
for less than one month shall be a pro rata portion of the Base Rent. Rent shall
be payable in lawful money of the United States to Lessor at the address stated
herein or to such other persons or at such other places as Lessor may designate
in writing.

         4.2      OPERATING EXPENSES. Lessee shall pay to Lessor during the term
hereof, in addition to the Base Rent, Lessee's Share, as hereinafter defined, of
all Operating Expenses, as hereinafter defined, during each calendar year of the
term of this Lease, in accordance with the following provisions:

                  (a)      "Lessee's Share" is defined, for purposes of this
Lease, as approximately 3,39 percent based on the total square footage of the
project.

                  (b)      "Operating Expenses" is defined, for purposes of this
Lease, as all costs incurred by Lessor, if any, for:

                           (i)      The operation, repair and maintenance, in
neat, clean, good order and condition, of the following:

                                    (aa)     The Common Areas, including parking
areas, loading and unloading areas, trash areas, roadways, sidewalks, walkways,
parkways, driveways, landscaped areas, striping, bumpers, irrigation systems,
Common Area lighting facilities, fences and gates, and roofs and walls;

                                    (bb)     Trash disposal services;

                                    (cc)     Tenant directories;

                                    (dd)     Fire detection systems including
sprinkler system maintenance and repair;

                                    (ee)     Security services;

                                    (ff)     Any other service to be provided by
Lessor that is elsewhere in this Lease stated to be an "Operating Expense;"

                           (ii)     Any deductible portion of an insured loss
concerning any of the items or matters described in this paragraph 4.2;

                           (iii)    The cost of the premiums for the liability
and property insurance policies to be maintained by Lessor under paragraph 8
hereof;

                           (iv)     The amount of the real property tax to be
paid by Lessor under paragraph 10.1 hereof;

                           (v)      The cost of water, gas and electricity to
service the Common Areas;

                           (vi)     Annual account audit plus 10% supervision
fee, based on total annual expenses.

                           (vii)    All other costs of any kind paid or incurred
by Landlord in connection with the operation, the cost of capital improvements
designed to protect the health and safety of the tenants, maintenance, and
management of the Building and the Project including, by way of examples and not
as a limitation upon the generality of the foregoing, costs of repairs and
replacements to improvements within the Project as appropriate to maintain the
Project in first class condition including cost of funding such reasonable
reserves as Landlord deems consistent with good business practice and may
establish to provide for future repairs and replacements, association dues or
any other fees due pursuant to any documents governing the real property on
which the
<PAGE>

building is located, costs of utilities furnished to the Common Areas, sewer
fees, windows, heating, ventilation, air conditioning, maintenance of landscape
?ILLEGIBLE? grounds, maintenance of drives and parking areas, security services
and devices, building supplies, maintenance and replacement to equipment
utilized for operation and maintenance of the Project, insurance premiums,
portions of loss by reason of insurance policy terms, service contracts, costs
of services of independent contractors retained to do work of nature before
referenced, and costs of compensation (including employment taxes and fringe
benefits) of all persons who perform regular and recurring duties connected with
the day-to-day operation and maintenance of the Project, its equipment, the
adjacent walks, landscaped areas, drives, and parking areas, including without
limitation, janitors, floor waxers, window-washers, watchmen, gardeners,
sweepers, and handymen and reasonable costs of management services.

                  (c)      The inclusion of the improvements, facilities and
services set forth in paragraph 4.2(b)(i) of the definition of Operating
Expenses shall not be deemed to impose an obligation upon Lessor to either have
said improvements or facilities or to provide those services unless the Center
already has the same, Lessor already provides the services, or Lessor has agreed
elsewhere in this Lease to provide the same of some of them.

                  (d)      Lessee's Share of Operating Expenses shall be payable
by Lessee within ten (10) days after a reasonably detailed statement of actual
expenses is presented to Lessee by Lessor. At Lessor's option, however, an
amount may be estimated by Lessor from time to time of Lessee's Share of annual
Operating Expenses and the same shall be payable monthly or quarterly, as Lessor
shall designate, during each twelve-month period of the Lease term, on the same
day as the Base Rent is due hereunder. In the event that Lessee pays Lessor's
estimate of Lessee's Share of Operating Expenses as aforesaid, Lessor shall
deliver to Lessee within sixty (60) days after the expiration of each calendar
year a reasonably detailed statement showing Lessee's Share of the actual
Operating Expenses incurred during the preceding year. If Lessee's payments
under this paragraph 4.2(d) during said preceding year exceed Lessee's Share as
indicated on said statement, Lessee shall be entitled to credit the amount of
such overpayment against Lessee's Share of Operating Expenses next falling due.
If Lessee's payments under this paragraph during said preceding year were less
than Lessee's Share as indicated on said statement, Lessee shall pay to Lessor
the amount of the deficiency within ten (10) days after delivery by Lessor to
Lessee of said statement.

5.       SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution
hereof $1,343,00 as security for Lessee's faithful performance of Lessee's
obligations hereunder. If Lessee fails to pay rent or other charges due
hereunder, or otherwise defaults with respect to any provision of this Lease,
Lessor may use, apply or retain all or any portion of said deposit for the
payment of any rent or other charge in default or for the payment of any other
sum to which Lessor may become obligated by reason of Lessee's default, or to
compensate Lessor for any loss or damage which Lessor may suffer thereby. If
Lessor so uses or applies all or any portion of said deposit, Lessee shall
within ten (10) days after written demand therefor deposit cash with Lessor in
an amount sufficient to restore said deposit to the full amount then required of
Lessee. If the monthly rent shall, from time to time, increase during the term
of this Lease, Lessee shall, at the time of such increase, deposit with Lessor
additional money as a security deposit so that the total amount of the security
deposit held by Lessor shall at all times bear the same proportion to the then
current Base Rent as the initial security deposit bears to the initial Base Rent
set forth in paragraph 4. Lessor shall not be required to keep said security
deposit separate from its general accounts. If Lessee performs all of Lessee's
obligations hereunder, said deposit, or so much thereof as has not theretofore
been applied by Lessor, shall be returned, without payment of interest or other
increment for its use, to Lessee (or, at Lessor's option, to the last assignee,
if any, of Lessee's interest hereunder) at the expiration of the term hereof,
and after Lessee has vacated the Premises. No trust relationship is created
herein between Lessor and Lessee with respect to said Security Deposit.

6.       USE.

         6.1      USE. The Premises shall be used and occupied only for MEETING
AND STORAGE AREA or any other use which is reasonably comparable and for no
other purpose.

         6.2      COMPLIANCE WITH LAW.

                  (a)      Lessor warrants to Lessee that the Premises, in the
state existing on the date that the Lease term commences, but without regard to
the use for which Lessee will occupy the Premises, does not violate any
covenants or restrictions of record, or any applicable building code, regulation
or ordinance in effect on such Lease term commencement date. In the event it is
determined that this warranty has been violated, then it shall be the obligation
of the Lessor, after written notice from Lessee, to promptly, at Lessor's sole
cost and expense, rectify any such violation. In the event Lessee does not give
to Lessor written notice of the violation of this warranty within six months
from the date that the Lease term commences, the correction of same shall be the
obligation of the Lessee at Lessee's sole cost. The warranty contained in this
paragraph 6.2(a) shall be of no force or effect if, prior to the date of this
Lease, Lessee was an owner or occupant of the Premises and, in such event,
Lessee shall correct any such violation at Lessee's sole cost.

                  (b)      Except as provided in paragraph 6.2(a) Lessee shall,
at Lessee's expense, promptly comply with all applicable statutes, ordinances,
rules, regulations, orders, covenants and restrictions of record, and
requirements of any fire insurance underwriters or rating bureaus, now in effect
or which may hereafter come into effect, whether or not they reflect a change in
policy from that now existing, during the term or any part of the term hereof,
relating in any manner to the Premises and the occupation and use by Lessee of
the Premises and of the Common Areas. Lessee shall not use nor permit the use of
the Premises or the Common Areas in any manner that will tend to create waste or
a nuisance or shall tend to disturb other occupants of the Center.

         6.3      CONDITION OF PREMISES.

                  (a)      Lessor shall deliver the Premises to Lessee clean and
free of debris on the Lease commencement date (unless Lessee is already in
possession) and Lessor warrants to Lessee that the plumbing, lighting, and
loading doors in the Premises shall be in good operating condition on the Lease
commencement date. In the event that it is determined that this warranty has
been violated, then it shall be the obligation of Lessor, after receipt of
written notice from Lessee setting forth with specificity the nature of the
violation, to promptly, at Lessor's sole cost, rectify such violation. Lessee's
failure to give such written notice to Lessor within thirty (30) days after the
Lease commencement date shall cause the conclusive presumption that Lessor has
complied with all of Lessor's obligations hereunder. The warranty contained in
this paragraph 6.3(a) shall be of no force or effect if prior to the date of
this Lease, Lessee was an owner or occupant of the Premises.

                  (b)      Except as otherwise provided in this Lease, Lessee
hereby accepts the Premises in their condition existing as of the Lease
commencement date or the date that Lessee takes possession of the Premises,
whichever is earlier, subject to all applicable zoning, municipal, county and
state laws, ordinances and regulations governing and regulating the use of the
Premises, and any covenants or restrictions of record, and accepts this Lease
subject thereto and to all matters disclosed thereby and by any exhibits
attached hereto. Lessee acknowledges that neither Lessor nor Lessor's agent has
made any representation or warranty as to the present or future suitability of
the Premises for the conduct of Lessee's business.

7.       MAINTENANCE, REPAIRS, ALTERATIONS AND COMMON AREA SERVICES.

         7.1      LESSOR'S OBLIGATIONS. Subject to the provisions of paragraphs
4.2 (Operating Expenses), 6 (Use), 7.2 (Lessee's Obligations) and 9 (Damage or
Destruction) and except for damage caused by any negligent or intentional act or
omission of Lessee, Lessee's employees, suppliers, shippers, customers, or
invitees, in which event Lessee shall repair the damage, Lessor, at Lessor's
expense, subject to reimbursement pursuant to paragraph 4.2, shall keep in good
condition and repair the foundations, exterior walls, structural condition of
interior bearing walls, and roof of the Premises, as well as the parking lots,
walkways, driveways, landscaping, fences, signs and utility installations of the
Common Areas and all parts thereof, as well as providing the services for which
there is an Operating Expense pursuant to paragraph 4.2. Lessor shall not,
however, be obligated to paint the exterior or interior surface of exterior
walls, ?ILLEGIBLE? or shall Lessor be required to maintain, repair or replace
windows, doors or plate glass of the Premises. Lessor shall have no obligation
to make repairs under ?ILLEGIBLE? this paragraph 7.1 until reasonable time after
receipt of written notice from Lessee of the need for such repairs. Lessee
expressly waives the benefits of any statute now or hereafter in effect which
would otherwise afford Lessee the right to make repairs at Lessor's expense or
to terminate this Lease because of Lessor's failure to keep the Premises in good
order, condition and repair. Lessor shall not be liable for damages or loss of
any kind or nature by reason of Lessor's failure to furnish any Common Area
Services when such failure is caused by accident, breakage, repairs, strikes,
lockout, or other labor disturbances or disputes of any character, or by any
other cause beyond the reasonable control of Lessor.

         7.2      LESSEE'S OBLIGATIONS.

                  (a)      Subject to the provisions of paragraphs 6 (Use), 7.1
(Lessor's Obligations), and 9 (Damage or Destruction), Lessee, at Lessee's
expense, shall keep in good order, condition and repair the Premises and every
part thereof (whether or not the damaged portion of the Premises or the means of
repairing the same are reasonably or readily accessible to Lessee) including,
without limiting the generality of the foregoing, all plumbing, including the
replacement of the heating, ventilating and air conditioning systems, electrical
and lighting facilities and equipment within the Premises, fixtures, interior
walls and interior surfaces of exterior walls, ceilings, windows, doors, plate
glass, and skylights located within the Premises. Lessor reserves the right to
procure and maintain the ventilating and air conditioning system maintenance
contract and if Lessor so elects, Lessee shall reimburse Lessor, upon demand,
for the costs thereof.

                  (b)      If Lessee fails to perform Lessee's obligations under
this paragraph 7.2 or under any other paragraph of this Lease, Lessor may enter
upon the Premises after ten (10) days' prior written notice to Lessee (except in
the case of emergency, in which no notice shall be required), perform such
obligations on Lessee's behalf and put the Premises in good order condition and
repair, and the cost thereof together with interest thereon at the maximum rate
then allowable by law shall be due and payable as additional rent to Lessor
together with Lessee's next Base Rent installment.

                  (c)      On the last day of the term hereof, or on any sooner
termination, Lessee shall surrender the Premises to Lessor in the same condition
as received, ordinary wear and tear excepted, clean and free of debris. Any
damage or deterioration of the Premises shall not be deemed ordinary wear and
tear if the same could have been prevented by good maintenance practices. Lessee
shall repair any damage to the Premises occasioned by the installation or
removal of Lessee's trade fixtures, alterations, furnishings and equipment.
Notwithstanding anything to the contrary otherwise stated in this Lease, Lessee
shall leave the air lines, power panels, electrical distribution systems,
lighting fixtures, space heaters, air conditioning, plumbing and fencing on the
Premises in good operating condition.

                                      -2-

<PAGE>

         7.3      ALTERATIONS AND ADDITIONS.

                  (a)      Lessee shall not, without Lessor's prior written
consent make any alterations, improvements, additions, or Utility Installations
in, on or about the Premises, or the Center, except for nonstructural
alterations to the Premises not exceeding $2,500 in cumulative costs, during
the term of this Lease. In any event, whether or not in excess of $2,500 in
cumulative cost, Lessee shall make no change or alteration to the exterior of
the Premises nor the exterior of the Building nor the Center without Lessor's
prior written consent. As used in this paragraph 7.3 the term "Utility
Installation" shall mean carpeting, window coverings, air lines, power panels,
electrical distribution systems, lighting fixtures, space heaters, air
conditioning, plumbing, and fencing. Lessor may require that Lessee remove any
or all of said alterations, improvements, additions or Utility Installations at
the expiration of the term, and restore the Premises and the Center to their
prior condition. Lessor may require Lessee to provide Lessor, at Lessee's sole
cost and expense, a lien and completion bond in an amount equal to one and
one-half times the estimated cost of such improvements, to insure Lessor
against any liability for mechanic's and materialmen's liens and to insure
completion of the work, Should Lessee make any alterations, improvements,
additions or Utility Installations without the prior approval of Lessor, Lessor
may, at any time during the term of this Lease, require that Lessee remove any
or all of the same.

                  (b)      Any alterations, improvements, additions or Utility
Installations in or about the Premises or the Center that Lessee shall desire to
make and which requires the consent of the Lessor shall be presented to Lessor
in written form, with proposed detailed plans. If Lessor shall give its consent,
the consent shall be deemed conditioned upon Lessee acquiring a permit to do so
from appropriate governmental agencies, the furnishing of a copy thereof to
Lessor prior to the commencement of the work and the compliance by Lessee of all
conditions of said permit in a prompt and expeditions manner.

                  (c)      Lessee shall pay, when due, all claims for labor or
materials furnished or alleged to have been furnished to or for Lessee at or for
use in the Premises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises, or the Center, or any interest therein.
Lessee shall give Lessor not less than ten (10) days' notice prior to the
commencement of any work in the Premises, and Lessor shall have the right to
post notices of non-responsibility in or on the Premises or the Building as
provided by law. If Lessee shall, in good faith, contest the validity of any
such lien, claim or demand, then Lessee shall, at its sole expense defend itself
and Lessor against the same and shall pay and satisfy any such adverse judgment
that may be rendered thereon before the enforcement thereof against the Lessor
or the Premises or the Center, upon the condition that if Lessor shall require,
Lessee shall furnish to Lessor a surety bond satisfactory to Lessor in an amount
equal to such contested lien claim or demand indemnifying Lessor against
liability for the same and holding the Premises and the Center free from the
effect of such lien or claim. In addition, Lessor may require Lessee to pay
Lessor's attorneys fees and costs in participating in such action if Lessor
shall decide it is to Lessor's best interest to do so.

                  (d)      All alterations, improvements, additions and Utility
Installations (whether or not such Utility Installations constitute trade
fixtures of Lessee), which may be made on the Premises, shall be the property of
Lessor and shall remain upon and be surrendered with the Premises at the
expiration of the Lease term, unless Lessor requires their removal pursuant to
paragraph 7.3(a). Notwithstanding the provisions of this paragraph 7.3(d),
Lessee's machinery and equipment, other than that which is affixed to the
Premises so that it cannot be removed without material damage to the Premises,
and other than Utility Installations, shall remain the property of Lessee and
may be removed by Lessee subject to the provisions of paragraph 7.2.

         7.4      UTILITY ADDITIONS. Lessor reserves the right to install new or
additional utility facilities throughout the Building and the Common Areas for
the benefit of Lessor or Lessee, or any other lessee of the Center, including,
but not by way of limitation, such utilities as plumbing, electrical systems,
security systems, communication systems, and fire protection and detection
systems, so long as such installations do not unreasonably interfere with
Lessee's use of the Premises.

         INSURANCE; INDEMNITY.

         8.1      LIABILITY INSURANCE - LESSEE. Lessee shall, at Lessee's
expense, obtain and keep in force during the term of this Lease a policy of
Combined Single Limit Bodily Injury and Property Damage insurance insuring
Lessee and Lessor against any liability arising out of the use, occupancy or
maintenance of the Premises and the Center. Such insurance shall be in an amount
not less than $1,000,000.00 per occurrence. The policy shall insure performance
by Lessee of the indemnity provisions of this paragraph 8. The limits of said
insurance shall not, however, limit the liability of Lessee hereunder. The
liability coverage will also include coverage for fire legal liability, with
limits of at least $50,000 and are subject to increase at the discretion of the
Lessor.

         8.2      LIABILITY INSURANCE - LESSOR. Lessor shall obtain and keep in
force during the term of this Lease a policy of Combined Single Limit Bodily
Injury and Property Damage Insurance, insuring Lessor, but not Lessee, against
any liability arising out of the ownership, use, occupancy or maintenance of the
Center in an amount not less than $1,000,000.00 per occurrence.

         8.3      PROPERTY INSURANCE. (a) Lessor shall obtain and keep in force
during the term of this Lease a policy or policies of insurance covering loss or
damage to the Center improvements, but not Lessee's personal property, fixtures,
equipment or tenant improvements, in an amount not to exceed the full
replacement value thereof, as the same may exist from time to time, providing
protection against all perils included within the classification of fire,
extended coverage, vandalism, malicious mischief, flood (in the event same is
required by a lender having a lien on the Premises) special extended perils (
"all risk ", as such term is used in the insurance industry), plate glass
insurance and such other insurance as Lessor deems advisable. In addition,
Lessor shall obtain and keep in force, during the term of this Lease, a policy
of rental value insurance covering a period of one year, with loss payable to
Lessor, which insurance shall also cover all Operating Expenses for said period.
In the event that the Premises shall suffer an insured loss as defined in
paragraph 9.1 (g) hereof, the deductible amounts under the casualty insurance
policies relating to the Premises shall be paid by Lessee.

                  (b)      Lessee shall obtain and keep in force during the term
of this Lease a policy of insurance covering the Lessee's personal property,
fixtures, equipment, and tenant improvements, for full replacement cost, for the
"all risk" perils.

         8.4      PAYMENT OF PREMIUM INCREASE.

                  (a)      After the term of this Lease has commenced, Lessee
shall not be responsible for paying Lessee's Share of any increase in the
property insurance premium for the Center specified by Lessor's insurance
carrier as being caused by the use, acts or omissions of any other lessee of the
Center, or by the nature of such other lessee's occupancy which create an
extraordinary or unusual risk.

                  (b)      Lessee, however, shall pay the entirety of any
increase in the property insurance premium for the Center over what it was
immediately prior to the commencement of the term of this Lease if the increase
is specified by Lessor's insurance carrier as being caused by the nature of
Lessee's occupancy or any act or omission of Lessee.

         8.5      INSURANCE POLICIES. Insurance required hereunder shall be in
companies holding a "General Policyholders Rating" of at least B plus, or such
other rating as may be required by a lender having a lien on the Premises, as
set forth in the most current issue of "Best's Insurance Guide." Lessee shall
not do or permit to be done anything which shall invalidate the insurance
policies carried by Lessor. Lessee shall deliver to Lessor copies of liability
insurance policies required under paragraph 8.1 or certificates evidencing the
existence and amounts of such insurance within seven (7) days after the
commencement date of this Lease. No such policy shall be cancelable or subject
to reduction of coverage or other modification except after thirty (30) days
prior written notice to Lessor. Lessee shall, at least thirty (30) days prior to
the expiration of such policies, furnish Lessor with renewals or "binders"
thereof.

         8.6      WAIVER OF SUBROGATION. Lessee and Lessor each hereby release
and relieve the other, and waive their entire right of recovery against the
other for loss or damage arising out of or incident to the perils insured
against which perils occur in, on or about the Premises, whether due to the
negligence of Lessor or Lessee or their agents, employees, contractors and/or
invitees. Lessee and Lessor shall, upon obtaining the policies of insurance
required, give notice to the insurance carrier or carriers that the foregoing
mutual waiver of subrogation is contained in this Lease.

         8.7      INDEMNITY. Lessee shall indemnify and hold harmless Lessor
from and against any and all claims arising from Lessee's use of the Center, or
from the conduct of Lessee's business or from any activity, work or things done,
permitted or suffered by Lessee in or about the Premises or elsewhere and shall
further indemnify and hold harmless Lessor from and against any and all claims
arising from any breach or default in the performance of any obligation on
Lessee's part to be performed under the terms of this Lease, or arising from any
act or omission of Lessee, or any of Lessee's agents, contractors, or employees,
and from and against all costs, attorney's fees, expenses and liabilities
incurred in the defense of any such claim or any action or proceeding brought
thereon; and in case any action or proceeding be brought against Lessor by
reason of any such claim, Lessee upon notice from Lessor shall defend the same
at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor
shall cooperate with Lessee in such defense. Lessee, as a material part of the
consideration to Lessor, hereby assumes all risk of damage to property of Lessee
or injury to persons, in, upon or about the Center arising from any cause and
Lessee hereby waives all claims in respect thereof against Lessor.

         8.8      EXEMPTION OF LESSOR FROM LIABILITY. Lessee hereby agrees that
Lessor shall not be liable for injury to Lessee's business or any loss of income
therefrom or for damage to the goods, wares, merchandise or other property of
Lessee, Lessee's employees, invitees, customers, or any other person in or about
the Premises or the Center, nor shall Lessor be liable for injury to the person
of Lessee, Lessee's employees, agents or contractors, whether such damage or
injury is caused by or results from fire, steam, electricity, gas, water or
rain, or from the breakage, leakage, obstruction or other defects of pipes,
sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures,
or from any other cause, whether said damage or injury results from conditions
arising upon the Premises or upon other portions of the Center, or from other
sources or places and regardless of whether the cause of such damage or injury
or the means of repairing the same is inaccessible to Lessee. Lessor shall not
be liable for any damages arising from any act or neglect of any other lessee,
occupant or user of the Center, nor from the failure of Lessor to enforce the
provisions of any other lease of the Center.

                                      -3-

<PAGE>

9. DAMAGE OR DESTRUCTION.

         9.1      DEFINITION.

                  (a)      "Premises Partial Damage" shall mean if the Premises
are damaged or destroyed to the extent that the cost of repairs is less than
fifty percent of the then replacement cost of the Premises.

                  (b)      "Premises Total Destruction" shall mean if the
Premises are damaged or destroyed to the extent that the cost of repair is fifty
percent or more of the then replacement cost of the Premises.

                  (c)      "Premises Building Partial Damage" shall mean if the
Building of which the Premises are a part is damaged or destroyed to the extent
that the cost to repair is less than fifty percent of the then replacement cost
of the Building.

                  (d)      "Premises Building Total Destruction" shall mean if
the Building of which the Premises are a part is damaged or destroyed to the
extent that the cost to repair is fifty percent or more of the then replacement
cost of the Building.

                  (e)      "Center Buildings" shall mean all of the buildings on
the Center site.

                  (f)      "Center Buildings Total Destruction" shall mean if
the Center Buildings are damaged or destroyed to the extent that the cost of
repair is fifty percent or more of the then replacement cost of the Center
Buildings.

                  (g)      "Insured Loss" shall mean damage or destruction which
was covered by an event required to be covered by the insurance described in
paragraph 8. The fact that an Insured Loss has a deductible amount shall not
make the loss an uninsured loss.

                  (h)      "Replacement Cost" shall mean the amount of money
necessary to be spent in order to repair or rebuild the damaged area to the
condition that existed immediately prior to the damage occurring excluding all
improvements made by lessees.

         9.2      PREMISES PARTIAL DAMAGE; PREMISES BUILDING PARTIAL DAMAGE.

                  (a)      Insured Loss: Subject to the provisions of paragraph
9.4 and 9.5, if at any time during the term of this Lease there is damage which
is an Insured Loss and which falls into the classification of either Premises
Partial Damage or Premises Building Partial Damage, then Lessor shall, at the
Lessor's expense, repair such damage to the Premises, but not Lessee's fixtures,
equipment or tenant improvements, as soon as reasonably possible and this Lease
shall continue in full force and effect.

                  (b)      Uninsured Loss: Subject to the provisions of
paragraph 9.4 and 9.5, if at any time during the term of this Lease there is
damage which is not an Insured Loss and which falls within the classification of
Premises Partial Damage or Premises Building Partial Damage, unless caused by a
negligent or willful act of Lessee (in which event Lessee shall make the repairs
at Lessee's expense), which damage prevents Lessee from using the Premises,
Lessor may at Lessor's option either (i) repair such damage as soon as
reasonably possible at Lessor's expense, in which event this Lease shall
continue in full force and effect, or (ii) give written notice to Lessee within
thirty (30) days after the date of the occurrence of such damage of Lessor's
intention to cancel and terminate this Lease as of the date of the occurrence of
such damage. In the event Lessor elects to give such notice of Lessor's
intention to cancel and terminate this Lease, Lessee shall have the right within
ten (10) days after the receipt of such notice to give written notice to Lessor
of Lessee's intention to repair such damage at Lessee's expense, without
reimbursement from Lessor, in which event this Lease shall continue in full
force and effect, and Lessee shall proceed to make such repairs as soon as
reasonably possible. If Lessee does not give such notice within such 10-day
period this Lease shall be canceled and terminated as of the date of the
occurrence of such damage.

         9.3      PREMISES TOTAL DESTRUCTION; PREMISES BUILDING TOTAL
DESTRUCTION; CENTER BUILDINGS TOTAL DESTRUCTION.

                  (a)      Subject to the provisions of paragraphs 9.4 and 9.5,
if at any time during the term of this Lease there is damage, whether or not it
is an Insured Loss, and which falls into the classifications of either (i)
Premises Total Destruction, or (ii) Premises Building Total Destruction, or
(iii) Center Buildings Total Destruction, then Lessor may at Lessor's option
either (i) repair such damage or destruction, but not Lessee's fixtures,
equipment or tenant improvements, as soon as reasonably possible at Lessor's
expense, and this Lease shall continue in full force and effect, or (ii) give
written notice to Lessee within thirty (30) days after the date of occurrence of
such damage of Lessor's intention to cancel and terminate this Lease, in which
case this Lease shall be canceled and terminated as of the date of the
occurrence of such damage.

         9.4      DAMAGE NEAR END OF TERM.

                  (a)      Subject to paragraph 9.4(b), if at any time during
the last six months of the term of this Lease there is substantial damage,
whether or not an Insured Loss, which falls within the classification of
Premises Partial Damage, Lessor may at Lessor's option cancel and terminate this
Lease as of the date of occurrence of such damage by giving written notice to
Lessee of Lessor's election to do so within 30 days after the date of occurrence
of such damage.

                  (b)      Notwithstanding paragraph 9.4(a), in the event that
Lessee has an option to extend or renew this Lease, and the time within which
said option may be exercised has not yet expired, Lessee shall exercise such
option, if it is to be exercised at all, no later than twenty (20) days after
the occurrence of an Insured Loss falling within the classification of Premises
Partial Damage during the last six months of the term of this Lease. If Lessee
duly exercises such option during said twenty (20) day period, Lessor shall, at
Lessor's expense, repair such damage, but not Lessee's fixtures, equipment or
tenant improvements, as soon as reasonably possible and this Lease shall
continue in full force and effect. If Lessee falls to exercise such option
during said twenty (20) day period, then Lessor may at Lessor's option terminate
and cancel this Lease as of the expiration of said twenty (20) day period by
giving written notice to Lessee of Lessor's election to do so within ten (10)
days after the expiration of said twenty (20) day period, notwithstanding any
term or provision in the grant of option to the contrary.

         9.5      ABATEMENT OF RENT; LESSEE'S REMEDIES.

                  (a)      In the event Lessor repairs or restores the Premises
pursuant to the provisions of this paragraph 9, the rent payable hereunder for
the period during which such damage, repair or restoration continues shall be
abated in proportion to the degree to which Lessee's use of the Premises is
impaired. Except for abatement of rent, if any, Lessee shall have no claim
against Lessor for any damage suffered by reason of any such damage,
destruction, repair or restoration.

                  (b)      If Lessor shall be obligated to repair or restore the
Premises under the provisions of this paragraph 9 and shall not commence such
repair or restoration within ninety (90) days after such obligation shall
accrue, Lessee may at Lessee's option cancel and terminate this Lease by giving
Lessor written notice of Lessee's election to do so at any time prior to the
commencement of such repair or restoration. In such event this Lease shall
terminate as of the date of such notice.

         9.6      TERMINATION-ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to this paragraph 9, an equitable adjustment shall be made concerning
advance rent and any advance payments made by Lessee to Lessor. Lessor shall, in
addition, return to Lessee so much of Lessee's security deposit as has not
theretofore been applied by Lessor.

         9.7      WAIVER. Lessor and Lessee waive the provisions of any statute
which relate to termination of leases when leased property is destroyed and
agree ?ILLEGIBLE? such event shall be governed by the terms of this Lease.

10.      REAL PROPERTY TAXES.

         10.1     PAYMENT OF TAXES. Lessor shall pay the real property tax, as
defined in paragraph 10.3, applicable to the Center subject to reimbursement by
Lessee of Lessee's Share of such taxes in accordance with the provisions of
paragraph 4.2, except as otherwise provided in paragraph 10.2.

         10.2     ADDITIONAL IMPROVEMENTS. Lessee shall not be responsible for
paying Lessee's Share of any increase in real property tax specified in the tax
assessor's records and work sheets as being caused by additional improvements
placed upon the Center by other lessees or by Lessor for the exclusive enjoyment
of such other lessees. Lessee shall, however, pay to Lessor at the time that
Operating Expenses are payable under paragraph 4.2(c) the entirety of any
increase in real property tax if assessed solely by reason of additional
improvements placed upon the Premises by Lessee or at Lessee's request.

         10.3     DEFINITION OF "REAL PROPERTY TAX." As used herein, the term
"real property tax" shall include any form of real estate tax or assessment,
general, special, ordinary or extraordinary, and any license fee, commercial
rental tax, improvement bond or bonds, levy or tax (other than inheritance,
personal income or estate taxes) imposed on the Center or any portion thereof
by any authority having the direct or indirect power to tax, including any
city, county, state or federal government, or any school, agricultural,
sanitary, fire, street, drainage or other improvement district thereof, as
against any legal or equitable interest of Lessor in the Center or in any
portion thereof, as against Lessors right to rent or other income therefrom,
and as against Lessor's business of leasing the Center. The term "real property
tax" shall also include any tax, fee, levy, assessment or charge (i) in
substitution of, partially or totally, any tax, fee, levy, assessment or charge
hereinabove included within the definition of "real property tax," or (ii) the
nature of which was hereinbefore included within the definition of "real
property tax," or (iii) which is imposed for a service or right not charged
prior to June 1, 1978, or, if previously charged, has been increased since June
1, 1978, or (iv) which is imposed as a result of a transfer, either partial or
total, of Lessor's interest in the Center or which is added to a tax or charge
hereinbefore included within the definition of real property tax by reason of
such transfer, or (v) which is imposed by reason of this transaction, any
modifications or changes hereto, or any transfers hereof.

         10.4     JOINT ASSESSMENT. If the Center is not separately assessed,
Lessee's Share of the real property tax 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
Lessor from the respective valuations assigned in the assessor's work sheets or
such other information as may be reasonably available. Lessor's reasonable
determination thereof, in good faith, shall be conclusive.

                                      -4-

<PAGE>
         10.5     PERSONAL PROPERTY TAXES.

                  (a)      Lessee shall pay prior to delinquency all taxes
assessed against and levied upon trade fixtures, furnishings, equipment and all
other personal property of Lessee contained in the Premises or elsewhere. When
possible, Lessee shall cause said trade fixtures, furnishings, equipment and all
other personal property to be assessed and billed separately from the real
property of Lessor.

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

11.      UTILITIES. Lessee shall pay for all water, gas, heat, light, power,
telephone and other utilities and services supplied to the Premises, together
with any taxes thereon. If any such services are not separately metered to the
Premises, Lessee shall pay at Lessor's option, either Lessee's Share or a
reasonable proportion to be determined by Lessor of all charges jointly metered
with other premises in the Building.

12.      ASSIGNMENT AND SUBLETTING.

         12.1     LESSOR'S CONSENT REQUIRED. Lessee shall not voluntarily or by
operation of law assign, transfer, mortgage, sublet, or otherwise transfer or
encumber all or any part of Lessee's interest in the Lease or in the Premises,
without Lessor's prior written consent, which Lessor shall not unreasonably
withhold. Lessor shall respond to Lessee's request for consent hereunder in a
timely manner and any attempted assignment, transfer, mortgage, encumbrance or
subletting without such consent shall be void, and shall constitute a breach of
this Lease without the need for notice to Lessee under paragraph 13.1. If Lessee
shall assign or sublet the Leased Premises or request the consent of Lessor to
any assignment or subletting, or if Lessee should request the consent of Lessor
for any act Lessee proposes to do, then Lessee shall pay to Lessor, within
thirty (30) days of receipt of a bill, all reasonable fees and costs incurred by
Lessor for attorneys, accountants, service of notice or any other services in
connection with said assignment or subletting or other act.

         12.2     LESSEE AFFILIATE. Notwithstanding the provisions of paragraph
12.1 hereof, Lessee may assign or sublet the Premises, or any portion thereof,
without Lessor's consent, to any corporation which controls, is controlled by or
is under common control with Lessee, or to any corporation resulting from the
merger or consolidation with Lessee, or to any person or entity which acquires
all the assets of Lessee as a going concern of the business that is being
conducted on the Premises, all of which are referred to as "Lessee Affiliate,"
provided that before such assignment shall be effective said assignee shall
assume, in full, the obligations of Lessee under this Lease. Any such assignment
shall not, in any way, affect or limit the liability of Lessee under the terms
of this Lease even if after such assignment or subletting the terms of this
Lease are materially changed or altered without the consent of Lessee, the
consent of whom shall not be necessary.

         12.3     TERMS AND CONDITIONS OF ASSIGNMENT. Regardless of Lessor's
consent, no assignment shall release Lessee of Lessee's obligations hereunder or
alter the primary liability of Lessee to pay the Base Rent and Lessee's Share of
Operating Expenses, and to perform all other obligations to be performed by
Lessee hereunder. Lessor may accept rent from any person other than Lessee
pending approval or disapproval of such assignment. Neither a delay in the
approval or disapproval of such assignment nor the acceptance of rent shall
constitute a waiver or estoppel of Lessor's right to exercise its remedies for
the breach of any of the terms or conditions of this paragraph 12 or this Lease.
Consent to one assignment shall not be deemed consent to any subsequent
assignment. In the event of default by any assignee of Lessee or any successor
of Lessee, in the performance of any of the terms hereof, Lessor may proceed
directly against Lessee without the necessity of exhausting remedies against
said assignee. Lessor may consent to subsequent assignments of this Lease or
amendments or modifications to this Lease with assignees of Lessee, without
notifying Lessee, or any successor of Lessee, and without obtaining its or
their consent thereto and such action shall not relieve Lessee of
liability under this Lease.

         12.4     TERMS AND CONDITIONS APPLICABLE TO SUBLETTING. Regardless of
Lessor's consent, the following terms and conditions shall apply to any
subletting by Lessee of all or any part of the Premises and shall be included in
subleases:

                  (a)      Lessee hereby assigns and transfers to Lessor all of
Lessee's interest in all rentals and income arising from any sublease heretofore
or hereafter made by Lessee, and Lessor may collect such rent and income and
apply same toward Lessee's obligations under this Lease, provided, however, that
until a default shall occur in the performance of Lessee's obligations under
this Lease, Lessee may receive, collect and enjoy the rents accruing under such
sublease. Lessor shall not, by reason of this or any other assignment of such
sublease to Lessor nor by reason of the collection of the rents from a
sublessee, be deemed liable to the sublessee for any failure of Lessee to
perform and comply with any of Lessee's obligations to such sublessee under such
sublease. Lessee hereby irrevocably authorizes and directs any such sublessee,
upon receipt of a written notice from Lessor stating that a default exists in
the performance of Lessee's obligations under this Lease, to pay to Lessor the
rents due and to become due under the sublease. Lessee agrees that such
sublessee shall have the right to rely upon any such statement and request from
Lessor, and that such sublessee shall pay such rents to Lessor without any
obligation or right to inquire as to whether such default exists and
notwithstanding any notice from or claim from Lessee to the contrary. Lessee
shall have no right or claim against such sublessee or Lessor for any such rents
so paid by said sublessee to Lessor.

                  (b)      No sublease entered into by Lessee shall be effective
unless and until it has been approved in writing by Lessor. In entering into any
sublease, Lessee shall use only such form of sublease as is satisfactory to
Lessor, and once approved by Lessor, such sublease shall not be changed or
modified without Lessor's prior written consent. Any sublessee shall, by reason
of entering into a sublease under this Lease, be deemed, for the benefit of
Lessor, to have assumed and agreed to conform and comply with each and every
obligation herein to be performed by Lessee other than such obligations as are
contrary to or inconsistent with provisions contained in a sublease to which
Lessor has expressly consented in writing.

                  (c)      If Lessee's obligations under this Lease have been
guaranteed by third parties, then a sublease, and Lessor's consent thereto,
shall not be effective unless said guarantors give their written consent to such
sublease and the terms thereof.

                  (d)      The consent by Lessor to any subletting shall not
release Lessee from its obligations or alter the primary liability of Lessee to
pay the rent and perform and comply with all of the obligations of Lessee to be
performed under this Lease.

                  (e)      The consent by Lessor to any subletting shall not
constitute a consent to any subsequent subletting by Lessee or to any assignment
or subletting by the sublessee. However, Lessor may consent to subsequent
sublettings and assignments of the sublease or any amendments or modifications
thereto without notifying Lessee or anyone else liable on the Lease or sublease
and without obtaining their consent and such action shall not relieve such
persons from liability.

                  (f)      In the event of any default under this Lease, Lessor
may proceed directly against Lessee, any guarantors or any one else responsible
for the performance of this Lease, including the sublessee, without first
exhausting Lessor's remedies against any other person or entity responsible
therefor to Lessor, or any security held by Lessor or Lessee.

                  (g)      In the event Lessee shall default in the performance
of its obligations under this Lease, Lessor, at its option and without any
obligation to do so, may require any sublessee to attorn to Lessor, in which
event Lessor shall undertake the obligations of Lessee under such sublease from
the time of the exercise of said option to the termination of such sublease;
provided, however, Lessor shall not be liable for any prepaid rents or security
deposit paid by such sublessee to Lessee or for any other prior defaults of
Lessee under such sublease.

                  (h)      Each and every consent required of Lessee under a
sublease shall also require the consent of Lessor.

                  (i)      No sublessee shall further assign or sublet all or
any part of the Premises without Lessor's prior written consent.

                  (j)      Lessor's written consent to any subletting of the
Premises by Lessee shall not constitute an acknowledgement that no default then
exists under this Lease of the obligations to be performed by Lessee nor shall
such consent be deemed a waiver of any then existing default, except as may be
otherwise stated by Lessor at the time.

                  (k)      With respect to any subletting to which Lessor has
consented, Lessor agrees to deliver a copy of any notice of default by Lessee to
the sublessee. Such sublessee shall have the right to cure a default of Lessee
within ten (10) days after service of said notice of default upon such
sublessee, and the sublessee shall have a right of reimbursement and offset from
and against Lessee for any such defaults cured by the sublessee.

         12.5     ATTORNEY'S FEES. In the event Lessee shall assign or sublet
the Premises or request the consent of Lessor to any assignment or subletting or
if Lessee shall request the consent of Lessor for any act Lessee proposes to do
then Lessee shall pay Lessor's reasonable attorneys fees incurred in connection
therewith, such attorneys fees not to exceed $350.00 for each such request.

13.      DEFAULT; REMEDIES.

         13.1     DEFAULT. The occurrence of any one or more of the following
events shall constitute a material default of this Lease by Lessee:

                  (a)      The vacating or abandonment of the Premises by
Lessee.

                  (b)      The failure by Lessee to make any payment of rent or
any other payment required to be made by Lessee hereunder, as and when due,
where such failure shall continue for a period of three (3) days after written
notice thereof from Lessor to Lessee. In the event that Lessor serves Lessee
with a Notice to Pay Rent or Quit pursuant to applicable Unlawful Detainer
statutes such Notice to Pay Rent or Quit shall also constitute the notice
required by this subparagraph.

                  (c)      Except as otherwise provided in this Lease, the
failure by Lessee to observe or perform any of the covenants, conditions or
provisions of this Lease to be observed or performed by Lessee, other than
described in paragraph (b) above, where such failure shall continue for a period
of thirty (30) days after written notice thereof from Lessor to Lessee;
provided, however, that if the nature of Lessee's noncompliance is such that
more than thirty (30) days are reasonably required for its cure, then Lessee
shall not be deemed to be in default if Lessee commenced such cure within said
thirty (30) day period

                                      -5-
<PAGE>
and thereafter diligently prosecutes such cure to completion. To the extent
permitted by law, such thirty (30) day notice shall constitute the sole and
exclusive notice required to be given to Lessee under applicable Unlawful
Detainer statutes.

                  (d)      (i) The making by Lessee of any general arrangement
or general assignment for the benefit of creditors; (ii) Lessee becomes a
"debtor" as defined in 11 U.S.C. Section 101 or any successor statute thereto
(unless, in the case of a petition filed against Lessee, the same is dismissed
within sixty (60) days); (iii) the appointment of a trustee or receiver to take
possession of substantially all of Lessee's assets located at the Promises or of
Lessee's interest in this Lease, where possession is not restored to Lessee
within thirty (30) days; or (iv) the attachment, execution or other judicial
seizure of substantially all of Lessee's assets located at the Premises or of
Lessee's interest in this Lease, where such seizure is not discharged within
thirty (30) days. In the event that any provision of this paragraph 13.1(d) is
contrary to any applicable law, such provision shall be of no force or effect.

                  (e)      The discovery by Lessor that any financial statement
given to Lessor by Lessee, any assignee of Lessee, any subtenant of Lessee, any
successor in interest of Lessee or any guarantor of Lessee's obligation
hereunder, was materially false.

         13.2     REMEDIES. In the event of any such material default by Lessee,
Lessor may at any time thereafter, with or without notice or demand and without
limiting Lessor in the exercise of any right or remedy which Lessor may have by
reason of such default:

                  (a)      Terminate Lessee's right to possession of the
Premises by any lawful means, in which case this Lease and the term hereof shall
terminate and Lessee shall immediately surrender possession of the Premises to
Lessor. In such event Lessor shall be entitled to recover from Lessee all
damages incurred by Lessor by reason of Lessee's default including, but not
limited to, the cost of recovering possession of the Premises; expenses of
reletting, including necessary renovation and alteration of the Premises,
reasonable attorney's fees, and any real estate commission actually paid; the
worth at the time of award by the court having jurisdiction thereof of the
amount by which the unpaid rent for the balance of the term after the time of
such award exceeds the amount of such rental loss for the same period that
Lessee proves could be reasonably avoided; that portion of the leasing
commission paid by Lessor pursuant to paragraph 15 applicable to the unexpired
term of this Lease.

                  (b)      Maintain Lessee's right to possession in which case
this Lease shall continue in effect whether or not Lessee shall have vacated or
abandoned the Premises. In such event Lessor shall be entitled to enforce all of
Lessor's rights and remedies under this Lease, including the right to recover
the rent as it becomes due hereunder.

                  (c)      Pursue any other remedy now or hereafter available to
Lessor under the laws or judicial decisions of the state wherein the Premises
are located. Unpaid installments of rent and other unpaid monetary obligations
of Lessee under the terms of this Lease shall bear interest from the date due at
the maximum rate then allowable by law.

         13.3     DEFAULT BY LESSOR. Lessor shall not be in default unless
Lessor falls to perform obligations required of Lessor within a reasonable time,
but in no event later than thirty (30) days after written notice by Lessee to
Lessor and to the holder of any first mortgage or deed of trust covering the
Premises whose name and address shall have theretofore been furnished to Lessee
in writing, specifying wherein Lessor has failed to perform such obligation,
provided, however, that if the nature of Lessor's obligation is such that more
than thirty (30) days are required for performance then Lessor shall not be in
default if Lessor commences performance within such thirty (30) day period and
thereafter diligently prosecutes the same to completion.

         13.4     LATE CHARGES. Should Lessee fail to pay, when due and payable,
the minimum monthly rental or any additional rental, such unpaid amounts shall
bear interest at the maximum legal rate from the date the debt was incurred to
the date of ultimate payment. Said interest amount shall be in addition to, and
not in lieu of, any late charge assessed for the debt incurred. Late charges
shall not be included in calculating interest due. In addition to such interest,
?ILLEGIBLE? stipulates that the late payment by Lessee of any monthly
rental/additional rental will cause Lessor to incur certain costs and expenses
not ?ILLEGIBLE? by the parties/lease hereto, the exact amount of which costs
are extremely difficult to ascertain. As such, if any such installment is not
received by Lessor from Lessee within five (5) days of its due date, Lessee
shall forthwith pay as additional rent, a late charge of ten percent (10%) of
that amount due. Lessor and Lessee agree that such late charge represents a
reasonable estimate of such costs and expenses and is fair compensation to
Lessor for the loss caused by Lessee's nonpayment. Payment(s) made by Lessee
shall be applied by Lessor, subject to Lessor's sole discretion, first to late
charges incurred, then to common area maintenance/operating expense as
additional rent, and lastly to base rent. Lessor's acceptance of this late
charge shall not constitute a waiver of Lessee's default with respect to
nonpayment of the subject debt, nor prevent Lessor from exercising all other
rights, claims, or remedies, known or unknown, available to Lessor pursuant to
this lease or under California or federal law.

14.      CONDEMNATION. If the Premises or any portion thereof or the Center are
taken under the power of eminent domain, or sold under the threat of the
exercise of said power (all of which are herein called "condemnation "), this
Lease shall terminate as to the part so taken as of the date the condemning
authority takes title or possession, whichever first occurs. If more than ten
percent of the floor area of the Premises, or more than twenty-five percent of
that portion of the Common Areas designated as parking for the Center is taken
by condemnation, Lessee may, at Lessee's option, to be exercised in writing only
within ten (10) days after Lessor shall have given Lessee written notice of such
taking (or in the absence of such notice, within ten (10) days after the
condemning authority shall have taken possession) terminate this Lease as of the
date the condemning authority takes such possession. If Lessee does not
terminate this Lease in accordance with the foregoing, this Lease shall remain
in full force and effect as to the portion of the premises remaining, except
that the rent shall be reduced in the proportion that the floor area of the
Premises taken bears to the total floor area of the Premises. No reduction of
rent shall occur if the only area taken is that which does not have the Premises
located thereon. Any award for the taking of all or any part of the Premises
under the power of eminent domain or any payment made under threat of the
exercise of such power shall be the property of Lessor, whether such award shall
be made as compensation for diminution in value of the leasehold or for the
taking of the fee, or as severance damages; provided, however, that Lessee shall
be entitled to any award for loss of or damage to Lessee's trade fixtures and
removable personal property. In the event that this Lease is not terminated by
reason of such condemnation, Lessor shall to the extent of severance damages
received by Lessor in connection with such condemnation, repair any damage to
the Premises caused by such condemnation except to the extent that Lessee has
been reimbursed therefor by the condemning authority. Lessee shall pay any
amount in excess of such severance damages required to complete such repair.

15.      BROKER'S FEE.

         (a)      Upon execution of this Lease by both parties, upon occupancy
of the premises by Lessee, and receipt of any deposits and/or initial rental
payment, Lessor shall pay to N/A Licensed real estate broker(s) a fee as set
forth in a separate agreement between Lessor and said broker(s), or in the event
there is no separate agreement between Lessor and said broker(s), the sum of
$-0-, for brokerage services rendered by said broker(s) to Lessor in this
transaction.

16.      ESTOPPEL CERTIFICATE.

         (a)      Each party (as "responding party ") shall at any time upon not
less than ten (10) days' prior written notice from the other party ( "requesting
party ") execute, acknowledge and deliver to the requesting party a statement in
writing (i) certifying that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification and certifying
that this Lease, as so modified, is in full force and effect) and the date to
which the rent and other charges are paid in advance, if any, and (ii)
acknowledging that there are not, to the responding party's knowledge, any
uncured defaults on the part of the requesting party, or specifying such
defaults if any are claimed. Any such statement may be conclusively relied upon
by any prospective purchaser or encumbrancer of the Premises or of the
business of the requesting party.

         (b)      At the requesting party's option, the failure to deliver such
statement within such time shall be a material default of this Lease by the
party who is to respond, without any further notice to such party, or it shall
be conclusive upon such party that (i) this Lease is in full force and effect,
without modification except as may be represented by the requesting party, (ii)
there are no uncured defaults in the requesting party's performance, and (iii)
if Lessor is the requesting party, not more than one month's rent has been paid
in advance.

         (c)      If Lessor desires to finance, refinance, or sell the Property,
or any part thereof, Lessee and all Guarantors of Lessee's performance hereunder
hereby agrees to deliver to any lender or purchaser designated by Lessor such
financial statements of Lessee and such Guarantors as may be reasonably required
by such lender or purchaser. Such statements shall include the past three (3)
years' financial statements of Lessee. All such financial statements shall be
received by Lessor and such lender or purchaser in confidence and shall be used
only for the purposes herein set forth.

17.      LESSOR'S LIABILITY. The term "Lessor" as used herein shall mean only
the owner or owners, at the time in question, of the fee title or a lessee's
interest in a ground lease of the Center, and except as expressly provided in
paragraph 15, in the event of any transfer of such title or interest, Lessor
herein named (and in case of any subsequent transfers then the grantor) shall be
relieved from and after the date of such transfer of all liability as respects
Lessor's obligations thereafter to be performed, provided that any funds in the
hands of Lessor or the then grantor at the time of such transfer, in which
Lessee has an interest, shall be delivered to the grantee. The obligations
contained in this Lease to be performed by Lessor shall, subject as aforesaid,
be binding on Lessors successors and assigns, only during their respective
periods of ownership.

18.      SEVERABILITY. The invalidity of any provision of this Lease as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.

19.      INTEREST ON PAST-DUE OBLIGATIONS. Except as expressly herein provided,
any amount due to Lessor not paid when due shall bear interest at the maximum
rate then allowable by law from the date due. Payment of such interest shall not
excuse or cure any default by Lessee under this Lease; provided, however, that
interest shall not be payable on late charges incurred by Lessee nor on any
amounts upon which late charges are paid by Lessee.

20.      TIME OF ESSENCE. Time is of the essence with respect to the obligations
to be performed under this Lease.

21.      ADDITIONAL RENT. All monetary obligations of Lessee to Lessor under the
terms of this Lease, including but not limited to Lessee's Share of Operating
Expenses and insurance and tax expenses payable shall be deemed to be rent.

                                      -6-

<PAGE>
22.      INCORPORATION OF PRIOR AGREEMENTS; AMENDMENTS. This Lease contains all
agreements of the parties with respect to any matter mentioned herein. No
?ILLEGIBLE? contemporaneous agreement or understanding pertaining to any such
matter shall be effective. This lease may be modified in writing only, signed by
the parties in interest at the time of the modification. Except as otherwise
stated in this Lease, Lessee hereby acknowledges that neither the real estate
broker listed in paragraph 15 hereof nor any cooperating broker on this
transaction nor the Lessor or any employee or agents of any of said persons has
made any oral or written warranties or representations to Lessee relative to the
condition or use by Lessee of the Premises or the Property and Lessee
acknowledges that Lessee assumes all responsibility regarding the Occupational
Safety Health Act, the legal use and adaptability of the Premises and the
compliance thereof with all applicable laws and regulations in effect during the
term of this Lease except as otherwise specifically stated in this Lease.

23.      NOTICES. Any notice required or permitted to be given hereunder shall
be in writing and may be given by personal delivery or by certified mail, and if
given personally or by mail, shall be deemed sufficiently given if addressed to
Lessee or to Lessor at the address noted below the signature of the respective
parties, as the case may be. Either party may by notice to the other specify a
different address for notice purposes except that upon Lessee's taking
possession of the Premises, the Premises shall constitute Lessee's address for
notice purposes. A copy of all notices required or permitted to be given to
Lessor hereunder shall be concurrently transmitted to such party or parties at
such addresses as Lessor may from time to time hereafter designate by notice to
Lessee.

24.      WAIVERS. No waiver by Lessor or any provision hereof shall be deemed a
waiver of any other provision hereof or of any subsequent breach by Lessee of
the same or any other provision. Lessor's consent to, or approval of, any act
shall not be deemed to render unnecessary the obtaining of Lessor's consent to
or approval of any subsequent act by Lessee. The acceptance of rent hereunder by
Lessor shall not be a waiver of any preceding breach by Lessee of any provision
hereof other than the failure of Lessee to pay the particular rent so accepted,
regardless of Lessor's knowledge of such preceding breach at the time of
acceptance of such rent.

25.      RECORDING. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a "short form" memorandum of this
Lease for recording purposes.

26.      HOLDING OVER. If Lessee, with Lessor's consent, remains in possession
of the Premises or any part thereof after the expiration of the term hereof,
such occupancy shall be a tenancy from month to month upon all the provisions of
this Lease pertaining to the obligations of Lessee, but all Options, if any,
granted under the terms of this Lease shall be deemed terminated and be of no
further effect during said month to month tenancy.

27.      CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.

28.      COVENANTS AND CONDITIONS. Each provision of this Lease performable by
Lessee shall be deemed both a covenant and a condition.

29.      BINDING EFFECT; CHOICE OF LAW. Subject to any provisions hereof
restricting assignment or subletting by Lessee and subject to the provisions of
paragraph 17, this Lease shall bind the parties, their personal representatives,
successors and assigns. This Lease shall be governed by the laws of the State
where the Center is located and any litigation concerning this Lease between the
parties hereto shall be initiated in the county in which the Center is located.

30.      SUBORDINATION.

         (a)      This Lease, and any Option granted hereby, at Lessor's option,
shall be subordinate to any ground lease, mortgage, deed of trust, or any other
hypothecation or security now or hereafter placed upon the Center and to any and
all advances made on the security thereof and to all renewals, modifications,
consolidations, replacements and extensions thereof. Notwithstanding such
subordination, Lessee's right to quiet possession of the Premises shall not be
?ILLEGIBLE? if Lessee is not in default and so long as Lessee shall pay the rent
and observe and perform all of the provisions of this Lease, unless this Lease
is ?ILLEGIBLE? terminated pursuant to its terms. If any mortgagee, trustee or
ground lessor shall elect to have this Lease and any Options granted hereby
prior to the lien of its mortgage, deed of trust or ground lease, and shall give
written notice thereof to Lessee, this Lease and such Options shall be deemed
prior to such mortgage, deed of trust or ground lease, whether this Lease or
such Options are dated prior or subsequent to the date of said mortgage, deed of
trust or ground lease or the date of recording thereof.

         (b)      Lessee agrees to execute any documents required to effectuate
an attornment, a subordination or to make this Lease or any Option granted
herein prior to the lien of any mortgage, deed of trust or ground lease, as the
case may be. Lessee's failure to execute such documents within ten (10) days
after written demand shall constitute a material default by Lessee hereunder
without further notice to Lessee or, at Lessor's option, Lessor shall execute
such documents on behalf of Lessee as Lessee's attorney-in-fact. Lessee does
hereby make, constitute and irrevocably appoint Lessor as Lessee's
attorney-in-fact and in Lessee's name, place and stead, to execute such
documents in accordance with is paragraph 30(b).

31.      ATTORNEY'S FEES. If either party or the broker(s) named herein bring an
action to enforce the terms hereof or declare rights hereunder, the prevailing
party in any such action, on trial or appeal, shall be entitled to his
reasonable attorney's fees to be paid by the losing party as fixed by the court.
The provisions of this paragraph shall inure to the benefit of the broker named
herein who seeks to enforce a right hereunder.

32.      LESSOR'S ACCESS. Lessor and Lessor's agents shall have the right to
enter the Premises at reasonable times for the purposes of inspecting the same,
showing the same to prospective purchasers, lenders, or lessees, and making such
alterations, repairs, improvements or additions to the Premises or to the
building of which they are part as Lessor may deem necessary or desirable.
Lessor may at any time place on or about the Premises or the Building any
ordinary "For Sale" signs and Lessor may at any time during the last 120 days of
the term hereof place on or about the Premises any ordinary "For Lease" signs.
All activities of Lessor pursuant to this paragraph shall be without abatement
of rent, nor shall Lessor have any liability to Lessee for the same.

33.      AUCTIONS. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises or the Common Areas
without first having obtained Lessor's prior written consent. Notwithstanding
anything to the contrary in this Lease, Lessor shall not be obligated to
exercise any standard of reasonableness in determining whether to grant such
consent.

34.      SIGNS. Lessee shall not place any sign upon the Premises of the Center
without Lessor's prior written consent. Under no circumstances shall Lessee
place a sign on any roof of the Center.

35.      MERGER. The voluntary or other surrender of this Lease by Lessee, or a
mutual cancellation thereof, or a termination by Lessor, shall not work a
merger, and shall, at the option of Lessor, terminate all or any existing
subtenancies or may, at the option of Lessor, operate as an assignment to Lessor
of any or all of such subtenancies.

36.      CONSENTS. Except for paragraph 33 hereof, wherever in this Lease the
consent of one party is required to an act of the other party such consent shall
not be unreasonably withheld or delayed.

37.      GUARENTOR. In the event that there is a guarantor of this Lease, said
guarantor shall have the same obligations as Lessee under this Lease.

38.      QUIET POSSESSION. Upon Lessee paying the rent for the Premises and
observing and performing all of the covenants, conditions and provisions on
Lessee's part to be observed and performed hereunder, Lessee shall have quiet
possession of the Premises for the entire term hereof subject to all of the
provisions of this Lease. The individuals executing this Lease on behalf of
Lessor represent and warrant to Lessee that they are fully authorized and
legally ?ILLEGIBLE? of executing this Lease on behalf of Lessor and that such
execution is binding upon all parties holding an ownership interest in the
Property. Landlord ?ILLEGIBLE? not be liable for any damage arising from acts or
neglects of co-tenants, or other occupants of the same building, or of any
owners or occupants of adjacent or contiguous property.

39.      OPTIONS.

         39.1     DEFINITION. As used in this paragraph the word "Option" has
the following meaning: (1) the right or option to extend the term of this Lease
or to renew this Lease or to extend or renew any lease that Lessee has on other
property of Lessor; (2) the option or right of first refusal to lease the
Premises or the right of first offer to lease the Premises or the right of first
refusal to lease other space within the Center or other property of Lessor or
the right of first offer to lease other space within the Center or other
property of Lessor; (3) the right or option to purchase the Premises or the
Center, or the right of first refusal to purchase the Premises or the Center, or
the right of first offer to purchase the Premises or the Center, or the right or
option to purchase other property of Lessor, or the right of first refusal to
purchase other property of Lessor or the right of first offer to purchase other
property of Lessor.

         39.2     OPTIONS PERSONAL. Each Option granted to Lessee in this Lease
is personal to the original Lessee and may be exercised only by the original
Lessee while occupying the Premises who does so without the intent of thereafter
assigning this Lease or subletting the Premises or any portion thereof, and may
not be exercised or be assigned, voluntarily or involuntarily, by or to any
person or entity other than Lessee, provided, however, that an Option may be
exercised by or assigned to any Lessee Affiliate as defined in paragraph 12.2 of
this Lease. The Options, if any, herein granted to Lessee are not assignable
separate and apart from this Lease, nor may any Option be separated from this
Lease in any manner, either by reservation or otherwise.

         39.3     MULTIPLE OPTIONS. In the event that Lessee has any multiple
options to extend or renew this Lease a later option cannot be exercised unless
the prior option to extend or renew this Lease has been so exercised.

         39.4     EFFECT OF DEFAULT ON OPTIONS.

                  (a)      Lessee shall have no right to exercise an Option,
notwithstanding any provision in the grant of Option to the contrary, (i) during
the time commencing from the date Lessor gives to Lessee a notice of default
pursuant to paragraph 13.1 (b) or 13.1 (c) and continuing until the
noncompliance alleged in said notice of default is cured, or (ii) during the
period of time commencing on the date after a monetary obligation to Lessor is
due from Lessee and unpaid (without necessity for notice thereof to Lessee) and
continuing until the obligation is paid, or (iii) at any time after an event of
default described in paragraphs 13.1(a), 13.1(d), or 13.1(e) (without any
necessity of Lessor to give notice of such default to Lessee), nor (iv) in the
event that Lessor has given to Lessee three or more notices of default under
paragraph 13.1(b), or paragraph 13.1(c), whether or not the defaults are cured,
during the 12 month period of time immediately prior to the time that Lessee
attempts to exercise the subject Option.

                                      -7-

<PAGE>

                  (b)      The period of time within which an Option may be
exercised shall not be extended or enlarged by reason of Lessee's inability to
exercise ?ILLEGIBLE? because of the provisions of paragraph 39.4(a).

                  (c)      All rights of Lessee under the provisions of an
Option shall terminate and be of no further force or effect, notwithstanding
Lessee's due and timely exercise of the Option, if, after such exercise and
during the term of this Lease, (i) Lessee fails to pay to Lessor a monetary
obligation of Lessee for a period of thirty (30) days after such obligation
becomes due (without any necessity of Lessor to give notice thereof to Lessee),
or (ii) Lessee fails to commence to cure a default specified in paragraph
13.1(c) within thirty (30) days after the date that Lessor gives notice to
Lessee of such default and/or Lessee fails thereafter to diligently prosecute
said cure to completion, or (iii) Lessee commits a default described in
paragraph 13.1(a), 13.1(d) or 13.1(e) (without any necessity of Lessor to give
notice of such default to Lessee), or (iv) Lessor gives to Lessee three or more
notices of default under paragraph 13.1(b), or paragraph 13.1(c), whether or not
the defaults are cured.

40.      SECURITY MEASURES. Lessee hereby acknowledges that Lessor shall have no
obligation whatsoever to provide guard service or other security measures for
the benefit of the Premises or the Center. Lessee assumes all responsibility for
the protection of Lessee, its agents, and invitees and the property of Lessee
and of Lessee's agents and invitees from acts of third parties. Nothing herein
contained shall prevent Lessor, at Lessor's sole option, from providing security
protection for the Industrial Center or any part thereof, in which event the
cost thereof shall be included within the definition of Operating Expenses, as
set forth in paragraph 4.2(b).

41.      EASEMENTS. Lessor reserves to itself the right, from time to time to
grant such easements, rights and dedications that Lessor deems necessary or
desirable, and to cause the recordation of Parcel Maps and restrictions, so long
as such easements, rights, dedications, Maps and restrictions do not
unreasonably interfere with the use of the Premises by Lessee. Lessee shall sign
any of the aforementioned documents upon request of Lessor and failure to do so
shall constitute a material default of this Lease by Lessee without the need for
further notice to Lessee.

42.      PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to
any amount or sum of money to be paid by one party to the other under the
provisions hereof, the party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such payment
shall not be regarded as a voluntary payment, and there shall survive the right
on the part of said party to institute suit for recovery of such sum. If it
shall be adjudged that there was no legal obligation on the part of said party
to pay such sum or any part thereof, said party shall be entitled to recover
such sum or so much thereof as it was not legally required to pay under the
provisions of this Lease.

43.      AUTHORITY. If Lessee is a corporation, trust, or general or limited
partnership, each individual executing this Lease on behalf of such entity
represents and warrants that he or she is duly authorized to execute and deliver
this Lease on behalf of said entity. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after execution of this
Lease, deliver to Lessor evidence of such authority satisfactory to Lessor.

44.      CONFLICT. Any conflict between the printed provisions of this Lease and
the typewritten or handwritten provisions, if any, shall be controlled by the
typewritten or handwritten provisions.

45.      OFFER. Preparation of this Lease by Lessor or Lessor's agent and
submission of same to Lessee shall not be deemed an offer to lease. This Lease
shall become binding upon Lessor and Lessee only when fully executed by Lessor
and Lessee.

46.      ADDENDUM. Attached hereto is an addendum or addenda containing
paragraphs 47 through 51 which constitute a part of this Lease.

47.      PARKING. Lessee is allowed 2.5 cars per 1,000 square feet Lessee has
leased. Your 2.5 cars per 1,000 square feet should be used for executive
?ILLEGIBLE? and customers only. All employees must park on City streets. Please
note below license numbers of management. Please notify landlord of any change
in management parking.

A.___________  B.____________  C.____________  D._____________  E.___________

The following Exhibits are hereby attached and made part of this lease
agreement:

     Exhibit "A" Estimated Budget
     Exhibit "B" Guarantee of Lease
     Exhibit "C" Rules and Regulations
     Exhibit "D" Site Plan
     Exhibit "E" Floor Plan

LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR INFORMED
AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS
LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND
EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.

        LESSOR                                            LESSEE

FOUR AMIGOS, A CA. LTD.                      MISSION VALLEY CHRISTIAN FELLOWSHIP
                                               OF SAN DIEGO, A CALIFORNIA NON-
                                                PROFIT RELIGIOUS CORPORATION

By  [ILLEGIBLE]                              By  [ILLEGIBLE]
   ----------------------------                 --------------------------------
By ____________________________              By ________________________________

Executed on 1-19-96                          Executed on 12-5-95
               (Corporate Seal)                                 (Corporate Seal)

  ADDRESS FOR NOTICES AND RENT                             ADDRESS

   4607 MISSION GORGE PLACE                      4562-M ALVARADO CANYON ROAD
 SAN DIEGO, CALIFORNIA 92120                     SAN DIEGO, CALIFORNIA 92120

MULTI TENANT--MODIFIED NET                                  INITIALS [ILLEGIBLE]
                                                                     -----------

LAST REVISED 4/12/94                                                 [ILLEGIBLE]
                                                                     -----------

                                      -8-

<PAGE>

                               A D D E N D U M
                        TO STANDARD INDUSTRIAL LEASE
                          DATED NOVEMBER 17, 1995

                   BY AND BETWEEN FOUR AMIGOS, A CA. LTD.
                                    AND
             MISSION VALLEY CHRISTIAN FELLOWSHIP OF SAN DIEGO,
               A CALIFORNIA NON-PROFIT RELIGIOUS CORPORATION

  48       E N V I R O N M E N T A L  M A T T E R S

48.1 NO USE OF HAZARDOUS MATERIALS. Lessee agrees that Lessee shall not keep,
use, generate, store, release, threaten release or dispose of any Hazardous
Materials (as defined below) on or about the Premises without the prior express
written consent of Lessor, which consent may be withheld by Lessor in its sole
and absolute discretion. Lessee represents that the presence of Hazardous
Materials on the Premises is not necessary to the conduct of its business or its
use of the Premises and Lessee acknowledges that it is probable that Lessor will
withhold its consent to any requested use of Hazardous Materials on the
Premises. For purposes of this provision, "Hazardous Materials" shall include
all oil, flammable explosives, asbestos, urea formaldehyde, radioactive
materials or waste, or other hazardous, toxic, contaminated, or polluting
materials, substances or wastes, including, without limitation, substances
defined as "hazardous substances', 'hazardous materials', 'hazardous wastes', or
'toxic substances' under any laws ordinances or regulations heretofore or
hereafter enacted or adopted.

48.2 COMPLIANCE WITH ENVIRONMENTAL LAWS. If Lessor consents in writing to the
presence, use, generation, storage, release or disposition of Hazardous
Materials (collectively, "Use of Hazardous Materials:) on or about the Premises,
then Lessee shall conduct such Use of Hazardous Materials subject to, and in
full compliance with, all local, state, federal and other laws and regulations
governing the Use of Hazardous Materials. Lessee shall, at its own expense,
procure, maintain in effect and comply with, all conditions of any and all
permits, licenses and other governmental and regulatory approvals required for
Lessee's use of the Premises, including without limitation, discharge of
appropriately treated materials or wastes. Lessee shall cause any known
Hazardous Materials located on or about the Premises to be removed and
transported from the Premises solely by duly licensed haulers to duly licensed
facilities for final disposal of such materials and wastes. Lessee shall in all
respects handle, treat, deal with and manage any and all Hazardous Materials in,
on, under or about the Premises in total conformity with all applicable laws and
regulations governing the Use of Hazardous Materials and prudent industrial
practices regarding management of such Hazardous Materials. Upon regarding
management of such Hazardous Materials. Upon expiration or earlier termination
of the term of this Lease, Lessee shall cause all Hazardous Materials to be
removed from the Premises and transported for use, storage or disposal in
accordance and compliance with all applicable laws and regulations governing the
Use of Hazardous Materials.

48.3 NOTICES. Lessee shall immediately notify Lessor in writing of: (i) any
enforcement, clean-up, removal or other governmental or regulatory actions
instituted, completed or threatened pursuant to any laws or regulations
governing the use of Hazardous Materials; (ii) any claim made or threatened
against Lessee or the Premises relating to damage, contribution, cost recovery,
compensation, loss or injury resulting from or claimed to result from any
hazardous materials; and (iii) any reports made to any environmental agency
arising out of or in connection with any Hazardous Materials in or removed from
the Premises, including any complaints, notices, warnings or asserted violations
in connection therewith. Lessee shall also supply to Lessor as promptly as
possible, and in any event within five (5) business days after Lessee first
receives or sends the same, with copies of all claims, reports, complaints,
notices, warnings or asserted violations relating in any way to the Premises or
Lessee's use thereof. Lessee shall promptly deliver to Lessor copies of
hazardous waste manifests reflecting the legal and proper disposal of all
Hazardous Materials removed from the Premises.

                                                           Initials: [ILLEGIBLE]
                                                                     -----------

<PAGE>

48.4 INDEMNIFICATION. Lessee hereby agrees to indemnify, defend and hold
harmless Lessor, its trustees, officers, employees and agents, and the
beneficiary or mortgagee under any deed of trust or mortgage now or hereafter
encumbering all or any portion of the Premise, from and against any and all
suits, actions, legal or administrative proceedings, claims, demands, damages,
fines, punitive damages, losses, costs, liabilities, interest, attorneys' fees
(including any such fees and expenses incurred in enforcing this indemnity),
resulting from or relating to, directly or indirectly, the Use of Hazardous
Materials on or about the Premises. The indemnity set forth herein shall
include, without limitation, the cost of any required or necessary repair,
clean-up or detoxification of the Premises and the surrounding property and
shall survive the expiration or earlier termination of the term of this Lease.

48.5 ADDITIONAL INSURANCE OR FINANCIAL CAPACITY. If at any time it reasonably
appears to Lessor that Lessee is not maintaining sufficient insurance or other
means of financial capacity to enable Lessee to fulfill its obligation to Lessor
hereunder, whether or not then accrued, liquidated, conditional or contingent,
Lessee shall procure and thereafter maintain in full force and effect such
insurance or other form of financial assurance, with or from companies or
persons and in forms reasonably acceptable to Lessor as Lessor may from time to
time reasonably request.

                                         BY: MISSION VALLEY CHRISTIAN FELLOWSHIP
                                             OF SAN DIEGO, A CALIFORNIA
                                             NON-PROFIT RELIGIOUS CORPORATION

                                         /s/ [ILLEGIBLE]
                                         --------------------------
                                         Lessee

                                                  12-5-95
                                         --------------------------
                                         Date

<PAGE>

                                A D D E N D U M
                          TO STANDARD INDUSTRIAL LEASE
                            DATED NOVEMBER 17, 1995

                     BY AND BETWEEN FOUR AMIGOS, A CA. LTD.
                                      AND
               MISSION VALLEY CHRISTIAN FELLOWSHIP OF SAN DIEGO,
                  A CALIFORNIA NON-PROFIT RELIGIOUS CORPORATION

  49       P R O P E R T Y  T A X E S

The estimated budget for Property Taxes is attached hereto and made a part
hereof. Lessee agrees Property Taxes are to be paid concurrently with rental
payment due and payable on the first day of each month.

  50       M A I N T E N A N C E  F E E S

The established budget for maintenance cost is attached hereto and made a part
hereof. Lessee agrees maintenance fees are to be paid concurrently with rental
payment due and payable on the first day of each month.

  51       B A S E  M O N T H L Y  R E N T  S C H E D U L E

Lessor and Lessee agree to the following base monthly rent schedule for the
premises:

                        December 1995 - February 1996: $1,069.98 plus
                        Lessee's pro rata share of the operating expenses
                        (estimated to be $273.12)

                        March 1996 - February 1997: $1,123.60 plus Lessee's
                        pro rat share of operating expenses

                        March 1997 - December 2000: $1,300.76 with fixed four
                        percent (4%) annual increases plus Lessee's pro rata
                        share of operating expenses (currently running at
                        $273.12 per month).

BY: FOUR AMIGOS, A CA. LTD.                 BY: MISSION VALLEY CHRISTIAN
                                                FELLOWSHIP OF SAN DIEGO, A
                                                CALIFORNIA NON-PROFIT RELIGIOUS
                                                CORPORATION

/s/ [ILLEGIBLE]                                   /s/ [ILLEGIBLE]
--------------------------                        ------------------------------
Lessor                                            Lessee

     1-19-96                                            12-5-95
--------------------------                        ------------------------------
Date                                              Date

<PAGE>

                                   EXHIBIT A
                                  FOUR AMIGOS
                         MISSION VALLEY BUSINESS CENTER

                             1995 ESTIMATED BUDGET

<TABLE>
<CAPTION>
                                     MONTHLY        YEARLY
<S>                                 <C>           <C>
1.   Property Management Fee        $  732.42     $ 8,789.00

2.   Maintenance                     1,377.08      16,525.00

3.   Landscaping                       548.33       6,580.00

4.   Security                          228.00       2,736.00

5.   Insurance                         500.17       6,002.00

6.   Gas & Electric                    211.50       2,538.00

7.   Water                             531.08       6,373.00

8.   Sweeping                           -0-           -0-

9.   Window Washing                    116.67       1,400.00

10.  Trash                             545.00       6,540.00

11.  Alarm Telephone                    -0-           -0-

12.  Reserve                           400.00       4,800.00

13.  Legal                              -0-           -0-

14.  Audit                              -0-           -0-

15.  Property Taxes                  2,866.33      34,396.00

16.  Association Dues                   -0-           -0-

17.  Franchise Tax                       0.00           0.00

                                    ---------     ----------
         TOTAL:                     $8,056.58     $96,679.00
                                    =========     ==========
</TABLE>

Tenant Building Area - 2,098 Square Feet = 3.39%
Total Building Area - 61,940

$8,056.58 x 3.39% = $ Monthly Maintenance & Tax Costs

BY: FOUR AMIGOS                              BY: MISSION VALLEY CHRISTIAN
                                             FELLOWSHIP OF SAN DIEGO, A
                                             CALIFORNIA NON-PROFIT RELIGIOUS
                                             CORPORATION

/s/ [ILLEGIBLE]                                   /s/ [ILLEGIBLE]
---------------------                             ------------------------------
Lessor                                            Lessee

    1/19/96                                            12-5-95
---------------------                             ------------------------------
Date                                              Date

<PAGE>

                                   EXHIBIT B

                               GUARANTEE OF LEASE

WHEREAS as a certain Lease of even date herewith has been, or will be, executed
by and between CASTER FAMILY TRUST, therein referred to as "Lessor", and MISSION
VALLEY CHRISTIAN FELLOWSHIP OF SAN DIEGO, A CALIFORNIA NON-PROFIT RELIGIOUS
CORPORATION, therein and herein referred to as "Tenant", covering certain
premises in the City of SAN DIEGO, County of SAN DIEGO, State of CALIFORNIA.

WHEREAS, the Lessor under said Lease requires as a condition to its execution of
said Lease that the undersigned Guarantor guarantee the full performance of the
obligations of Tenant under said Lease; and

WHEREAS, Guarantor is desirous that Lessor enter into said Lease with Tenant.

NOW, THEREFORE, in consideration of the execution of said Lease by Lessor,
Guarantor hereby unconditionally guarantees the full performance of each and all
of the terms, covenants, and conditions of said Lease to be kept and performed
by Tenant, including the payment of all rentals and other charges to accrue
thereunder. Guarantor further agrees as follows:

1.0      PERFORMANCE OF OBLIGATIONS UNDER THE LEASE:

         (a)      PERFORMANCE: In the case Tenant shall fail to perform any
                  agreement or comply with any condition contained in the Lease
                  and required to be performed or complied with by it,
                  Guarantor, whether or not such failure constitutes a default
                  under the Lease, will perform or comply with the same before
                  any grace period for remedying the same has expired. Guarantor
                  will pay all costs and expenses (including without limitation,
                  attorneys' fees and expenses) in connection with the
                  enforcement of the obligations of Tenant and in connection
                  with the enforcement of Guarantor's obligations under this
                  Agreement.

         (b)      RENT: Without limiting the generality of subsection (a), and
                  without being limited thereby, Guarantor unconditionally
                  guarantees that Tenant will duly and punctually pay all fixed
                  Rent (as defined in the Lease), and additional rent (Fixed
                  Rent and additional rent being hereinafter collectively called
                  "Rent"), damages (whether provided for in the Lease or
                  otherwise allowed by law) and all other sums payable by Tenant
                  under the Lease. Such guarantee is an absolute, unconditional,
                  continuing guarantee of payment and not of collectibility, and
                  is in no way conditioned upon any attempt to collect from
                  Tenant or upon any other event or contingency. If Tenant shall
                  fail duly and punctually to pay any such sum, Guarantor will
                  forthwith pay the same, together with interest thereon at the
                  rates and under the conditions contained in the Lease.

2.0      PAYMENTS IN LIEU OF RENT: In the event of any bankruptcy, insolvency,
         reorganization, arrangement, readjustment, composition, liquidation or
         similar proceeding with respect to tenancy in which the Lease shall be
         terminated or rejected or the obligations of Tenant shall be modified,
         Guarantor will pay an amount equal to the Rent which would have been
         payable by it pursuant to the Lease, accrued to the date of such
         termination, rejection or modification and shall thereafter pay an
         amount equal to the Rent which would have been payable by it pursuant
         to the Lease on the days when the same would have been due except for
         such termination, rejection or modification.

3.0      OBLIGATIONS OF GUARANTOR: The obligations of Guarantor hereunder shall
         be absolute and unconditional, shall not be subject to any
         counterclaim, setoff, deduction or defense based upon any claim
         Guarantor may have against Tenant or Lessor, and shall remain in full
         force and effect without regard to, and shall not be released,
         discharged, or in any way affected by any circumstance or condition
         (whether or not Guarantor shall have any knowledge or notice thereof),
         including without limitation: (a) any amendment or modification of or
         supplement to the Lease; (b) any waiver, consent, extension, indulgence
         or other action or inaction under or in respect of the Lease, or any
         exercise or non-exercise of any right, remedy, power or privilege under
         or in respect of the Lease; (c) any bankruptcy, insolvency,
         reorganization, arrangement, readjustment, composition, liquidation or
         similar proceeding with respect to Tenant; or (d) any limitation on the
         liability of Tenant under the Lease or any invalidly or
         unenforceability, in whole or in part of the Lease or any term thereof.

<PAGE>

4.0      WAIVERS: Guarantor unconditionally waives (a) notice of any of the
matters referred to in Section 3.0(b) all notices which may be required by
statute, rule of law or otherwise to preserve or assert any rights against
Guarantor hereunder, including, without limitation, any demand, proof or notice
of nonpayment of any Rent, damages or other sums payable under this Lease, and
notice of any failure on the part of Tenant to perform or comply with any term
or condition of the Lease, (c) any right to the enforcement, assertion or
exercise of any right, remedy, power or privilege under or in respect of the
Lease, (d) any requirement of diligence, (e) any requirement to mitigate, by
eviction of Tenant and the reletting of the Premises or otherwise, the damages
resulting from a default by Tenant under the Lease, and (f) any right to a
trial by jury in any action or proceeding hereunder or under the Lease.

5.0      WAIVER OF RIGHT TO REQUIRE LESSOR TO PROCEED AGAINST TENANT FIRST:
         Guarantor waives any right to require Lessor to (a) proceed against
         Tenant, its successor, assignee or subtenant; (b) proceed against or
         exhaust any security held from Tenant, its successor, assignee or
         subtenant; or (c) pursue any other remedy in Lessor's power whatsoever.
         Guarantor waives any defense arising by reason of any disability or
         other defense of Tenant or by reason of the cessation from any cause
         whatsoever of the liability of the Tenant. Until all indebtedness or
         other obligations of Tenant to Lessor shall have been paid in full,
         Guarantor shall ave no right to subrogation, and waives any right to
         enforce any remedy which Lessor now has or may hereafter have against
         Tenant, and waives any benefit or, and any right to participate in any
         security now or hereafter held by Lessor. Guarantor waives all
         presentments, demands for performance, notices of non-performance,
         protests, notices of protest, notices dishonor, notice of sales, and
         notices of acceptance of this Guarantee and of the existence, creation,
         or incurring of new or additional indebtedness.

6.0      SUBORDINATION OF TENANT'S DEBTS TO GUARANTOR. Guarantor agrees that the
         indebtedness of Tenant to Lessor, whether now existing or hereafter
         created, shall be prior to any claim that Guarantor may now have or
         hereafter acquire against Tenant, whether or not Tenant becomes
         insolvent. Guarantor hereby expressly subordinates any claim Guarantor
         may have against Tenant, upon any account whatsoever, to any claim that
         Lessor may now or hereafter have against Tenant. In the event of
         insolvency and consequent liquidation of the assets of Tenant, through
         bankruptcy, by an assignment for the benefit of creditors, by voluntary
         liquidation, or otherwise, the assets of Tenant applicable to the
         payment of the claims of both Lessor and Guarantor shall be paid to
         Lessor and shall be first applied by Lessor to the indebtedness of
         Tenant to Lessor. Guarantor does hereby assign to Lessor all claims
         which it may have or acquire against Tenant or any assignee or trustee
         in bankruptcy of Tenant; provided, that such assignment shall be
         effective only for the purpose of assuring to Lessor full payment of
         all indebtedness of Tenant to Lessor.

7.0      GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS: Guarantor warrants
         and agrees that each of the waivers set forth above is made with
         Guarantor's full knowledge of its significance and consequences, and
         that under the circumstances, the waivers are reasonable and not
         contrary to public policy or law. If any of such waivers is determined
         to be contrary to any applicable law or public policy, such waiver
         shall be effective only to the extent permitted by law.

8.0      WAIVER OF AUTHENTICATION OF VALIDITY OF ACTS OF CORPORATION OR
         PARTNERSHIP: If Tenant or Guarantor are corporations or partnerships,
         it is not necessary for Lessor to inquire into the powers of borrower
         or Guarantor or the officers, directors, partners, or agents acting or
         purporting to act on their behalf, and any indebtedness made or created
         in reliance upon the professed exercise of such powers shall be
         guaranteed hereunder.

9.0      OBLIGATIONS OF MARRIED PERSONS: Any married person who signs this
         Guaranty as the Guarantor hereby expressly agrees that recourse may be
         had against his or her separate property for all his or her obligations
         under this Guaranty.

10.0     JOINT AND SEVERAL LIABILITY OF GUARANTORS: This Agreement shall be
         binding upon Guarantor, and if more than one Guarantor, each of them
         jointly and severally, its successors and assignees, and shall inure to
         the benefit of and be enforceable by Lessor, and any holder of a
         mortgage on such Premises or any assignee under an assignment of
         Lessor's interest in the Lease given as security for any such mortgage,
         and their respective successors and assignees.

11.0     APPLICATION OF SINGULAR AND PLURAL IN CONTEXT AND CONSTRUCTION. In all
         cases where there are more than Guarantor, then all words used herein
         in the singular shall be deemed to have been used in the plural where
         the context and construction so require; and where Guaranty is executed
         by more than one Guarantor, the word "Guarantor" shall mean all and any
         one or more of them.

12.0     CALIFORNIA LAWS APPLICABLE: This Guaranty is governed by and construed
         in accordance with the laws of the state of California.

<PAGE>

13.0     AMENDMENTS MUST BE IN WRITING: Neither this Agreement nor any term
         hereof may be amended, waived, discharged or terminated orally, but
         only by an instrument in writing signed by the party against which such
         amendment, waiver, discharge or termination is sought to be charged.

14.0     INTEGRATED DOCUMENT: This writing is intended by the parties to be an
         integrated and final expression of the guarantee agreement and also is
         intended to be a complete and exclusive statement of the terms of that
         agreement. No course of prior dealing between the parties, no usage of
         trade, and no parol or extrinsic evidence of any nature shall be used
         to supplement, modify or vary any of the terms hereof. There are no
         conditions to the full effectiveness of this guarantee agreement. This
         Agreement may be executed in several counterparts, each of which shall
         be an original, but all of which together shall constitute one
         instrument.

IN WITNESS WHEREOF, the undersigned Guarantor has caused this Guarantee to be
executed as of the date of said Lease which is dated NOVEMBER 17, 1995.

                                             /s/ Jack Forness
                                             -----------------------------------
                                             Guarantor

                                                           12-5-95
                                             -----------------------------------
                                             Date

                                             Jack Forness
                                             -----------------------------------
                                             Please Print Name

<PAGE>

                                    EXHIBIT C

                         MISSION VALLEY BUSINESS CENTER
                               RULES & REGULATIONS

A.       TENANT AGREES AS FOLLOWS:

         1.       All loading and unloading of goods shall be done only at such
                  times, in the areas and through the entrances designated for
                  such purposes by Landlord.

         2.       The delivery or shipping of merchandise, supplies and fixtures
                  to and from leased premises shall be subject to such rules and
                  regulations as in the judgment of Landlord are necessary for
                  the proper operation of the leased premises or shopping
                  center.

         3.       All garbage and refuse shall be kept in the kind of container
                  specified by Landlord and shall be placed outside of the
                  premises, prepared for collection in the manner and at the
                  times and places specified by Landlord. If Landlord shall
                  provide or designate a service for picking up refuse and
                  garbage, Tenant shall use same at Tenant's cost. Tenant shall
                  pay the cost of removal of any of Tenant's refuse or rubbish.

         4.       No radio or television or other similar device shall be
                  installed without first obtaining in each instance Landlord's
                  consent in writing. No aerial shall be erected on the roof or
                  exterior walls of the premises, or on the grounds, without in
                  each instance the written consent of the Landlord. Any aerial
                  so installed without such written consent shall be subject to
                  removal without notice at any time.

         5.       No loud speakers, televisions, phonographs, radios or other
                  devices shall be used in a manner so as to be heard or seen
                  outside of the premises without the prior written consent of
                  Landlord.

         6.       The outside areas immediately adjoining the premises shall be
                  kept clean and free from dirt and rubbish by Tenant to the
                  satisfaction of Landlord, and Tenant shall not place or permit
                  any obstructions or merchandise in such areas.

         7.       Tenant and Tenant's employees shall park their cars only in
                  those portions of the parking area designated for that purpose
                  by Landlord. Tenant shall furnish Landlord with State
                  automobile license numbers assigned to Tenant's car or cars
                  and cars of Tenant's employee, within five days after taking
                  possession of the premises and shall thereafter notify
                  Landlord of any changes within five days after such changes
                  occur. In the event Tenant or its employees fail to park their
                  cars in designated parking areas as aforesaid, then Landlord
                  at its option shall charge Tenant $50.00 per day per car
                  parked in any area other than those designated, as and for
                  liquidated damages.

         8.       The plumbing facilities shall not be used for any other
                  purpose than that for which they are constructed, and no
                  foreign substance of any kind shall be thrown therein, and the
                  expense of any breakage, stoppage, or damage resulting from a
                  violation of this provision shall be borne by Tenant, who
                  shall, or whose employees, agents or invitees shall have
                  caused it.

         9.       Tenant shall use at Tenant's cost such pest extermination
                  contractor as Landlord may direct and at such intervals as
                  Landlord may require.

         10.      Tenant shall not burn any trash or garbage of any kind in or
                  about the leased premises, the shopping center, or within one
                  mile of the outside property line of the shopping center.

<PAGE>

         MISSION VALLEY BUSINESS CENTER RULES & REGULATIONS (continued)

         11.      All public entrances and exits to the leased premises shall be
                  kept unobstructed and open to the public at all times during
                  normal business hours.

         12.      Tenant shall not cause or permit any obnoxious or foul odors
                  that disturb the public or other tenants. Should such odors be
                  evident, Tenant shall be required to take immediate steps to
                  remedy same upon written notice from Landlord.

         13.      All signs will be uniform in material, shape, design, color
                  and lettering.

         14.      All employees except the Manager will park in off-site parking
                  areas. Parking lot will be for customers only. Vehicles may
                  not be left in parking lot area for longer than a 24 hour
                  period.

         15.      The outside areas immediately adjoining the premises shall be
                  kept clean and free from dirt and rubbish by Tenant to the
                  satisfaction of the Owner, and Tenant shall not place or
                  permit any obstruction or merchandise in such areas.

         16.      Lessee shall not fasten or cause to be fastened, any machinery
                  to any party wall or ceiling that will be a nuisance or shall
                  tend to disturb neighbors.

B.       Tenant agrees to comply with all such rules and regulations.

C.       Owner reserves the right from time to time to amend or supplement the
         foregoing rules and regulations, and to adopt and promulgate additional
         rules and regulations applicable to the leased premises. Reasonable
         notice of such rules and regulations and amendments and supplements
         thereto, if any, shall be given to the Tenant.

                                  BY: MISSION VALLEY CHRISTIAN FELLOWSHIP OF SAN
                                      DIEGO, A CALIFORNIA NON-PROFIT RELIGIOUS
                                      CORPORATION

                                  [ILLEGIBLE]
                                  ----------------------------------------------
                                  Lessee

                                      12-5-95
                                  ----------------------------------------------
                                  Date

<PAGE>

                                    EXHIBIT D

                               [MAP OF BUILDING 3]

                               [MAP OF BUILDING 2]

                               [MAP OF BUILDING 1]

<PAGE>

                         ADDENDUM TO ASSIGNMENT OF LEASE

              (4562-M Alvarado Canyon Road, San Diego, California)

                  THIS ADDENDUM TO ASSIGNMENT OF LEASE (this "Addendum") is
dated as of April___, 2000 (the "Effective Date"), and is made by MISSION VALLEY
CHRISTIAN FELLOWSHIP OF SAN DIEGO, a California non-profit religious
organization ("Assignor") for the benefit of RED ENVELOPE, INC. ("Assignee").

                  A.       WHEREAS, pursuant to that certain Assignment of
Lease, dated April 18, 2000, and that certain Acceptance of Assignment of Lease
of unknown date, Assignor is assigning and Assignee is assuming all of
Assignor's interest in that certain Lease (the "Lease"), dated November 17,
1995, by and between Assignor, as tenant, and Four Amigos, a Ca. Ltd., as
landlord ("Landlord"), for certain premises located in the County of San Diego,
State of California, as more particularly described in the Lease (the
"Premises").

                  NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the undersigned hereby
agrees as follows:

                  1.       Assignor's Representations.

                           a. Assignor is the Tenant under the Lease, a true and
complete copy of which is attached hereto as Exhibit "A" and made a part hereof.

                           b. The Lease embodies the entire agreement and
understanding between the parties thereto with respect to the Premises and the
Lease is in full force and effect and has not been amended, modified,
supplemented or superseded, except as shown in Exhibit "A", nor has Assignor's
interest in the Lease and/or the Premises previously been assigned, sublet or
otherwise transferred, nor has Assignor entered into any agreement to expand the
Premises, extend the term of the Lease or terminate the Lease, except as shown
in Exhibit "A".

                           c. The termination date of the present term of the
Lease is December 31, 2003.

                           d. All rent, taxes and other charges recited in the
Lease have been paid to the extent the same were payable prior to the Effective
Date and no such rent or other charges have been prepaid.

                           e. As of the Effective Date, there is no defense,
offset, claim or counterclaim by or in favor of Assignor against the obligations
of Assignor under the Lease or otherwise.

                           f. To the best of Assignor's knowledge, as of the
Effective Date there is no defense, offset, claim or counterclaim by or in favor
of Landlord against the obligations of Landlord under the Lease or otherwise.

<PAGE>

                           g. As of the Effective Date, there is no default of
Assignor under the Lease and no event has occurred and is continuing which with
the giving of notice or passage of time or both would constitute a default or
violation of the Lease by Assignor.

                           h. Assignor has not received notice of any lien,
sale, transfer, assignment, hypothecation or pledge of the Lease or the
Premises.

                           i. There is no suit, action, proceeding or audit
pending at law or in equity or before or by any court, administrative agency or
other governmental authority, or, to the knowledge of Assignor, threatened
against or affecting the undersigned or the Premises which brings into question
the validity of the Lease or which if determined adversely against Assignor
might impair the interest of Assignee under the Lease.

                           j. To the best of Assignor's knowledge, there is no
fact which materially or adversely affects or in the future may materially or
adversely affect the condition or operation of Assignee's business in the
Premises under the Lease.

                           k. Assignor has not used and is not aware of any
individual or entity who has used the Premises for any activities which,
directly or indirectly, involve the use, generation, treatment, storage,
transportation or disposal of any petroleum product or any toxic or hazardous
chemical, material, substance, pollutant or waste, except as follows:
____________________________________________________________________

                           1. The undersigned is authorized to execute this
Addendum on behalf of Assignor.

                           m. Assignor hereby acknowledges that Assignee will
rely upon the representations of Assignor in this Section 1 in connection with
the assumption by Assignee of Assignor's interest in the Lease.

                  IN WITNESS WHEREOF, Assignor has executed this Addendum the
day and year first above written.

                  "ASSIGNOR":

                  MISSION VALLEY CHRISTIAN FELLOWSHIP
                  OF SAN DIEGO, a California non-profit religious organization

                  By: [ILLEGIBLE]                     Its: President
                      -------------------------

                 "ASSIGNEE ":
                  RED ENVELOPE, INC.

                  By: [ILLEGIBLE]                     Its: President and COO
                      -------------------------            ---------------------

<PAGE>

                                  EXHIBIT "A"

                                    (Lease)

         A copy of the Lease is attached hereto.

                                   EXHIBIT "A"<PAGE>
                                                                   EXHIBIT 10.20

                                REDENVELOPE, INC.

                                 1999 STOCK PLAN

                     (As amended and restated effective upon
                     the Company's Initial Public Offering)

      1. PURPOSES OF THE PLAN. The purposes of this 1999 Stock Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants of
the Company and its Subsidiaries and to promote the success of the Company's
business. This Plan permits the granting of Options, Stock Purchase Rights and
Stock Awards to eligible persons. Options granted under the Plan may be
Incentive Stock Options (as defined under Section 422 of the Code) or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant of an Option and subject to the applicable provisions of Section 422 of
the Code, as amended, and the regulations promulgated thereunder.

      2. DEFINITIONS. As used herein, the following definitions shall apply:

            (a) "ADMINISTRATOR" means the Board or its Committee appointed
pursuant to Section 4 of the Plan.

            (b) "AFFILIATE" means an entity other than a Subsidiary in which the
Company owns an equity interest or which, together with the Company, is under
common control of a third person or entity.

            (c) "APPLICABLE LAWS" means the legal requirements relating to the
administration of stock option, purchase and award plans under applicable U.S.
state corporate laws, rules and regulations; U.S. federal and applicable state
securities laws, rules and regulations; other U.S. federal and applicable state
laws, rules and regulations; the Code; any Stock Exchange rules or regulations
to which the Company may be subject; and the applicable laws, rules and
regulations of any other country or jurisdiction where Plan Awards are or may be
granted, as such laws, rule, regulations and requirements shall be in place from
time to time.

            (d) "AWARD" means an Option, Stock Purchase Right or Stock Award
issued under the Plan, as reflected in a written document (including in
electronic form), the form(s) of which shall be approved from time to time by
the Administrator, reflecting the terms of the Award granted under the Plan and
shall include any documents attached to or incorporated into such written
document, including a notice of grant, a form of exercise notice or similar
documents.

            (e) "BOARD" means the Board of Directors of the Company.

            (f) "CAUSE" for termination of a Participant's Continuous Service
Status will exist if the Participant is terminated by the Company for any of the
following reasons: (i) Participant's willful failure substantially to perform
his or her legal duties and responsibilities to the Company after a specific
request has been made of the Participant to so perform; (ii)
<PAGE>
Participant's deliberate violation of a Company policy; (iii) Participant's
commission of any act of fraud, embezzlement, dishonesty or any other willful
misconduct that has caused or is reasonably expected to result in material
injury to the Company; (iv) any act or omission that constitutes a knowing
misrepresentation involving or related to the Company's financial statements;
(v) unauthorized use or disclosure by Participant of any proprietary information
or trade secrets of the Company or any other party to whom the Participant owes
an obligation of nondisclosure as a result of his or her relationship with the
Company; or (vi) Participant's willful breach of any of his or her obligations
under any written agreement or covenant with the Company. The determination as
to whether a Participant is being terminated for Cause shall be made in good
faith by the Company and shall be final and binding on the Participant. The
foregoing definition does not in any way limit the Company's ability to
terminate a Participant's employment or consulting relationship at any time as
provided in Section 5(d) below, and the term "Company" will be interpreted to
include any Subsidiary, Parent or Affiliate, as appropriate.

            (g) "CHANGE OF CONTROL" means

                  (1) a sale of all or substantially all of the Company's
assets; or

                  (2) any merger, consolidation or other business combination
transaction of the Company with or into another corporation, entity or person,
other than a transaction in which the holders of at least a majority of the
shares of voting capital stock of the Company outstanding immediately prior to
such transaction continue to hold (either by such shares remaining outstanding
or by their being converted into shares of voting capital stock of the surviving
entity) a majority of the total voting power represented by the shares of voting
capital stock of the Company (or the surviving entity) outstanding immediately
after such transaction; or

                  (3) the direct or indirect acquisition (including by way of a
tender or exchange offer) by any person, or persons acting as a group, of
beneficial ownership or a right to acquire beneficial ownership of shares
representing a majority of the voting power of the then outstanding shares of
capital stock of the Company; or

                  (4) the individuals who, as of the effective date of the
Company's initial public offering of its securities, are members of the Board
(the "Incumbent Board"), cease for any reason to constitute at least fifty
percent (50%) of the Board; provided however that if the election, or nomination
for election by the Company's stockholders, of any new director was approved by
a vote of at least fifty percent (50%) of the Incumbent Board, such new Director
shall be considered as a member of the Incumbent Board.

            (h) "CODE" means the Internal Revenue Code of 1986, as amended.

            (i) "COMMITTEE" means one or more committees or subcommittees of the
Board appointed by the Board to administer the Plan in accordance with Section 4
below.

            (j) "COMMON STOCK" means the Common Stock of the Company.

                                      -2-
<PAGE>
            (k) "COMPANY" means RedEnvelope, Inc., a Delaware corporation.

            (l) "CONSULTANT" means any person, including an advisor, who renders
services to the Company, or any Parent or Subsidiary, and is compensated for
such services, and any director of the Company whether compensated for such
services or not, and who qualifies as a "consultant or advisor" under the rules
applicable to Form S-8 (promulgated under the Securities Act of 1933, as
amended) as such Form may be amended from time to time (or pursuant to any
successor form thereto).

            (m) "CONTINUOUS SERVICE STATUS" means the absence of any
interruption or termination of service as an Employee or Consultant to the
Company or a Parent, Subsidiary or Affiliate. Continuous Service Status shall
not be considered interrupted in the case of: (i) sick leave; (ii) military
leave; (iii) any other leave of absence approved by the Administrator, provided
that such leave is for a period of not more than 90 days, unless reemployment
upon the expiration of such leave is guaranteed by contract or statute, or
unless provided otherwise pursuant to Company policy adopted from time to time;
or (iv) in the case of transfers between locations of the Company or between the
Company, its Parent(s), Subsidiaries, Affiliates or their respective successors.
Unless otherwise determined by the Administrator, a change in status from an
Employee to a Consultant or from a Consultant to an Employee will not constitute
an interruption of Continuous Status as an Employee or Consultant.

            (n) "CORPORATE TRANSACTION" means a sale of all or substantially all
of the Company's assets, or a merger, consolidation or other capital
reorganization or business combination transaction of the Company with or into
another corporation, entity or person, or the direct or indirect acquisition
(including by way of a tender or exchange offer) by any person, or persons
acting as a group, of beneficial ownership or a right to acquire beneficial
ownership of shares representing a majority of the voting power of the then
outstanding shares of capital stock of the Company.

            (o) "DIRECTOR" means a member of the Board.

            (p) "EMPLOYEE" means any person, including officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. The payment
by the Company of a director's fee to a Director shall not be sufficient to
constitute "employment" of such Director by the Company.

            (q) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

            (r) "FAIR MARKET VALUE" means, as of any date, the fair market value
of Common Stock determined as follows:

                  (i) If the Common Stock is listed on any established stock
exchange or a national market system including without limitation the National
Market of the National Association of Securities Dealers, Inc. Automated
Quotation ("Nasdaq") System, its Fair Market Value shall be the closing sales
price for such stock (or the closing bid, if no sales were reported), as quoted
on such system or exchange on the date of determination, as quoted on such

                                      -3-
<PAGE>
system or exchange on the date of determination, or if no trading occurred on
the date of determination, on the last market trading day prior to the time of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;

                  (ii) If the Common Stock is quoted on the Nasdaq System (but
not on the National Market thereof) or regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for the Common Stock
for the last market trading day prior to the time of determination, as reported
in The Wall Street Journal or such other source as the Administrator deems
reliable; or

                  (iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Administrator.

            (s) "INCENTIVE STOCK OPTION" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code, as
designated in the applicable Option agreement.

            (t) "INVOLUNTARY TERMINATION" means termination of a Participant's
Continuous Service Status under the following circumstances: (i) termination
without Cause by the Company or a Subsidiary, Parent or Affiliate, as
appropriate; or (ii) voluntary termination by the Participant within 30 days
following (A) a material reduction in the Participant's job responsibilities,
provided that neither a mere change in title alone nor reassignment following a
Change of Control to a position that is substantially similar to the position
held prior to the Change of Control shall constitute a material reduction in job
responsibilities; (B) relocation by the Company or a Subsidiary, Parent or
Affiliate, as appropriate, of the Participant's work site to a facility or
location more than 50 miles from the Participant's principal work site for the
Company at the time of the Change of Control; or (C) a reduction in
Participant's then-current base salary by at least 10%, provided that an
across-the-board reduction in the salary level of all other employees or
consultants in positions similar to the Participant's by the same percentage
amount as part of a general salary level reduction shall not constitute such a
salary reduction.

            (u) "LISTED SECURITY" means any security of the Company that is
listed or approved for listing on a national securities exchange or designated
or approved for designation as a national market system security on an
interdealer quotation system by the National Association of Securities Dealers,
Inc.

            (v) "NAMED EXECUTIVE" means any individual who, on the last day of
the Company's fiscal year, is the chief executive officer of the Company (or is
acting in such capacity) or among the four most highly compensated officers of
the Company (other than the chief executive officer). Such officer status shall
be determined pursuant to the executive compensation disclosure rules
promulgated under the Exchange Act, in conjunction with Code Section 162(m) and
regulations and interpretations promulgated thereunder.

            (w) "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option, as designated in the applicable Option
agreement.

                                      -4-
<PAGE>
            (x) "OPTION" means a stock option granted pursuant to the Plan.

            (y) "OPTION EXCHANGE PROGRAM" means any program approved by the
Administrator whereby outstanding Options are exchanged for Options with a lower
exercise price, including a program in which the only change made to Options is
to lower the exercise price.

            (z) "OPTIONED STOCK" means the Common Stock subject to an Option,
Stock Purchase Right or Stock Award.

            (aa) "OPTIONEE" means an Employee or Consultant who receives an
Option.

            (bb) "PARENT" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code, or any successor provision.

            (cc) "PARTICIPANT" shall mean any holder of one or more Options,
Stock Purchase Rights or Stock Awards, or the Shares issuable or issued upon
exercise of such Awards, under the Plan.

            (dd) "PLAN" means this 1999 Stock Plan.

            (ee) "REPORTING PERSON" means an officer, Director, or greater than
10% stockholder of the Company within the meaning of Rule 16a-2 under the
Exchange Act, who is required to file reports pursuant to Rule 16a-3 under the
Exchange Act.

            (ff) "RESTRICTED STOCK" means shares of Common Stock acquired
pursuant to a grant of a Stock Purchase Right under Section 10 below.

            (gg) "RULE 16B-3" means Rule 16b-3 promulgated under the Exchange
Act, as the same may be amended from time to time, or any successor provision.

            (hh) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 15 of the Plan.

            (ii) "STOCK EXCHANGE" means any stock exchange or consolidated stock
price reporting system on which prices for the Common Stock are quoted at any
given time.

            (jj) "STOCK PURCHASE RIGHT" means the right to purchase Common Stock
pursuant to Section 10 below.

            (kk) "STOCK AWARDS" means awards specified under Section 12 of the
Plan.

            (ll) "SUBSIDIARY" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code, or any successor
provision.

                                      -5-
<PAGE>
            (mm) "TEN PERCENT HOLDER" means a person who owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary.

      3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 15 of
the Plan, the maximum aggregate number of Shares that may be sold under the Plan
is 26,100,000 Shares of Common Stock (before giving effect to the stock split to
be effected in connection with the Company's initial public offering), plus an
annual increase on the first day of each of the Company's fiscal years beginning
in each of 2005 through 2009 equal to the lesser of (a) 5,000,000 Shares (before
giving effect to the stock split to be effected in connection with the Company's
initial public offering), (b) 4% of the Shares outstanding on the last day of
the immediately preceding fiscal year, or (c) such lesser number of Shares as
the Board shall determine; provided however that the maximum number of Shares
that may be added in any year pursuant to this sentence shall not result in the
Plan's having available for issuance an aggregate number of Shares that exceeds
4% of the "fully diluted" (as defined below) Shares of outstanding Common Stock
as of the last day of the immediately preceding fiscal year. For purposes of
illustrating how this formula is intended to work, if the number of Shares
remaining available as of the last day of the immediately preceding fiscal year
equaled 4.5% of the fully diluted Shares, then no additional Shares would be
added for the year, and if the number of Shares remaining available as of the
last day of the immediately preceding fiscal year equaled 2.5% of the fully
diluted Shares, then the number of Shares that would be added for the year would
equal 1.5% of the fully diluted Shares (but in any event not more than 5,000,000
Shares (before giving effect to the stock split to be effected in connection
with the Company's initial public offering)). For purposes of this Section 3,
outstanding Shares on a "fully diluted" basis shall be the number of Shares that
is equal to (i) the number of Shares of Common Stock issued and then
outstanding, plus (ii) all Shares subject to or available for Awards under this
Plan, the Company's Employee Stock Purchase Plan and its Directors' Stock Option
Plan.

      The Shares may be authorized, but unissued, or reacquired Common Stock. If
an Option expires or becomes unexercisable for any reason without having been
exercised in full, or is surrendered pursuant to an Option Exchange Program, the
unpurchased Shares that were subject thereto shall, unless the Plan shall have
been terminated, become available for future grant under the Plan. In addition,
any Shares of Common Stock that are retained by the Company upon exercise of an
Option or Stock Purchase Right in order to satisfy the exercise or purchase
price for such Option or Stock Purchase Right or any withholding taxes due with
respect to such exercise shall be treated as not issued and shall continue to be
available under the Plan. Shares issued under the Plan and later repurchased by
the Company pursuant to any repurchase right that the Company may have or
forfeited to the Company under any forfeiture restrictions that may apply to
such Shares shall become available for future grant under the Plan.

      4. ADMINISTRATION OF THE PLAN.

            (a) GENERAL. The Plan shall be administered by the Board or a
Committee, or a combination thereof, as determined by the Board. The Plan may be
administered by different administrative bodies with respect to different
classes of Participants and, if permitted by the

                                      -6-
<PAGE>
Applicable Laws, the Board may authorize one or more officers to grant Awards
under the Plan. The Plan shall be administered in a manner designed to comply
with the Applicable Laws.

            (b) COMMITTEE COMPOSITION. If a Committee has been appointed
pursuant to this Section 4, such Committee shall continue to serve in its
designated capacity until otherwise directed by the Board. From time to time the
Board may increase the size of any Committee and appoint additional members
thereof, remove members (with or without cause) and appoint new members in
substitution therefor, fill vacancies (however caused) and remove all members of
a Committee and thereafter directly administer the Plan, all to the extent
permitted by the Applicable Laws and, in the case of a Committee administering
the Plan pursuant to Rule 16b-3 or Code Section 162(m), then to the extent
permitted or required by such rules. The Committee shall conform to the
Applicable Laws.

            (c) POWERS OF THE ADMINISTRATOR. Subject to the provisions of the
Plan and in the case of a Committee, the specific duties delegated by the Board
to such Committee, and subject to the approval of any relevant authorities,
including the approval, if required, of any Stock Exchange, the Administrator
shall have the authority, in its discretion:

                  (i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(r) of the Plan;

                  (ii) to select the Consultants and Employees to whom Awards
may from time to time be granted;

                  (iii) to determine whether and to what extent Awards are
granted;

                  (iv) to determine the number of Shares of Common Stock to be
covered by each Award granted hereunder;

                  (v) to approve forms of Award agreements for use under the
Plan, which forms may differ from Participant to Participant as to the terms and
conditions imposed thereby;

                  (vi) except to the extent specifically prohibited by the terms
of the Plan, to determine the terms and conditions of any Award granted
hereunder, which terms and conditions include but are not limited to the
exercise or purchase price, the time or times when Awards may be exercised
(which may be based on performance criteria), the basis on which participants
shall vest in Optioned Stock, any vesting and/or exercisability acceleration or
waiver of forfeiture restrictions, and any restriction or limitation regarding
any Option, Optioned Stock, Stock Purchase Right, Restricted Stock or Stock
Award, based in each case on such factors as the Administrator, in its sole
discretion, shall determine;

                  (vii) subject to the requirements of Section 17(b) below and
except to the extent specifically prohibited by the terms of the Plan, to amend
the terms of any outstanding Award;

                                      -7-
<PAGE>
                  (viii) to adjust the vesting or exercisability of an Award,
Optioned Stock or Restricted Stock held by a Participant as a result of a change
in the terms or conditions under which such person is providing services to the
Company (e.g., to proportionately slow down vesting in the event a Participant
goes from a full- to part-time service provider);

                  (ix) subject to Section 17(b) below, to initiate an Option
Exchange Program, including to reduce the exercise price of any Option to the
then current Fair Market Value if the Fair Market Value of the Common Stock
covered by such Option shall have declined since the date the Option was
granted, and to make any other amendments or adjustments in connection therewith
to any Option that the Administrator determines, in its discretion and under the
authority granted to it hereunder, to be necessary or advisable;

                  (x) to construe and interpret the terms of the Plan and Awards
granted under the Plan; and

                  (xi) in order to fulfill the purposes of the Plan and without
amending the Plan in any material way that would require stockholder approval,
to take the following actions that would permit the granting of Awards to
Participants who are foreign nationals or employed outside of the United States
in order to recognize differences in local law, tax policies or customs: modify
the Plan; create a subplan that utilizes Shares reserved under the Plan; grant
Awards to such Participants with terms that differ from Awards granted to
U.S.-based Participants; or modify such Awards.

            (c) EFFECT OF ADMINISTRATOR'S DECISION. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Participants and on all other parties.

      5. ELIGIBILITY.

            (a) RECIPIENTS OF GRANTS. Nonstatutory Stock Options, Stock Purchase
Rights and Stock Awards may be granted to Employees and Consultants. Incentive
Stock Options may be granted only to Employees.

            (b) TYPE OF OPTION. Each Option shall be designated in the
applicable Option agreement as either an Incentive Stock Option or a
Nonstatutory Stock Option. However, notwithstanding such designations, to the
extent that the aggregate Fair Market Value of Shares with respect to which
Options designated as Incentive Stock Options are exercisable for the first time
by any Optionee during any calendar year (under all plans of the Company or any
Parent or Subsidiary) exceeds $100,000, such excess Options shall be treated as
Nonstatutory Stock Options. For purposes of this Section 5(b), Incentive Stock
Options shall be taken into account in the order in which they were granted, and
the Fair Market Value of the Shares subject to an Incentive Stock Option shall
be determined as of the date of grant of such Option.

            (c) AT-WILL RELATIONSHIP. Neither the Plan nor the receipt of any
Award hereunder shall confer upon a Participant any right with respect to
continuation of employment or consulting relationship with the Company, nor
shall it interfere in any way with such

                                      -8-
<PAGE>
Participant's right or the Company's right to terminate his or her employment or
consulting relationship at any time, with or without cause.

      6. TERM OF PLAN. The Plan shall become effective upon its adoption by the
Board. Upon the amendment and restatement of the Plan which becomes effective
upon the effective date of the Company's registration statement on Form S-1 in
connection with the Company's initial public offering, the Plan term shall be
extended so that the plan shall expire on the tenth anniversary of such closing
date, unless sooner terminated under Section 15 of the Plan or subsequently
extended with the approval of the Company's stockholders; provided, however that
no Incentive Stock Options may be granted under the Plan after March 1, 2009.

      7. TERM OF OPTIONS. The term of each Option shall be the term stated in
the applicable Option agreement; provided however that the term shall be no more
than ten years from the date of grant thereof or such shorter term as may be
provided in the Option agreement. However, in the case of an Incentive Stock
Option granted to an Optionee who, at the time the Option is granted is a Ten
Percent Holder, the term of such Option shall be five years from the date of
grant thereof or such shorter term as may be provided in the Option agreement.

      8. LIMITATION ON GRANTS TO EMPLOYEES. Subject to adjustment as provided in
Section 15 below, the maximum number of Shares that may be subject to Options
granted to any one Employee under this Plan for any fiscal year of the Company
shall be 4,000,000 Shares (before giving effect to the stock split to be
effected in connection with the Company's initial public offering).

      9. OPTION EXERCISE PRICE AND CONSIDERATION.

            (a) The per Share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined by the
Administrator and set forth in the Option agreement, but shall be subject to the
following:

                  (i) In the case of an Incentive Stock Option that is:

                        (A) granted to an Employee who, at the time of grant is
a Ten Percent Holder, the per Share exercise price shall be no less than 110% of
the Fair Market Value per Share on the date of grant.

                        (B) granted to any other Employee, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.

                  (ii) In the case of a Nonstatutory Stock Option that is:

                        (A) granted on any date on which the Common Stock is not
a Listed Security to a person who at the time of grant is a Ten Percent Holder,
the per Share exercise price shall be no less than 110% of the Fair Market Value
per Share on the date of the grant if required by the Applicable Laws and, if
not so required, shall be such price as is determined by the Administrator.

                                       -9-
<PAGE>

                        (B) granted on any date on which the Common Stock is not
a Listed Security to any other eligible person, the per Share exercise price
shall be no less than 85% of the Fair Market Value per Share on the date of
grant if required by the Applicable Laws and, if not so required, shall be such
price as is determined by the Administrator.

                        (C) granted on any date on which the Common Stock is a
Listed Security to any eligible person, the per Share Exercise Price shall be
such price as determined by the Administrator (subject to any requirements
imposed by applicable state law that the Participant pay at least the per Share
par value for the Shares being exercised), provided that if such eligible person
is, at the time of the grant of such Option, a Named Executive of the Company,
the per Share Exercise Price shall be no less than 100% of the Fair Market Value
on the date of grant if such Option is intended to qualify as performance-based
compensation under Section 162(m) of the Code.

                  (iii) Notwithstanding the foregoing, Options may be granted
with a per Share exercise price other than as required above pursuant to a
merger or other corporate transaction.

            (b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (1) cash, check or
wire transfer; (2) delivery of Optionee's promissory note with such recourse,
interest, security and redemption provisions as the Administrator determines to
be appropriate; (subject to the provisions of Section 153 of the Delaware
General Corporation Law, Section 402 of the Sarbanes-Oxley Act of 2002 and any
other Applicable Law), (3) cancellation of indebtedness of the Company to the
Optionee; (4) other Shares that (x) in the case of Shares acquired upon exercise
of an Option, either have been owned by the Optionee for more than six months on
the date of surrender or such other period as may be required to avoid a charge
to the Company's earnings or were not acquired, directly or indirectly, from the
Company, and (y) have a Fair Market Value on the date of surrender equal to the
aggregate exercise price of the Shares as to which such Option shall be
exercised; (5) authorization for the Company to retain from the total number of
Shares as to which the Option is exercised that number of Shares having a Fair
Market Value on the date of exercise equal to the exercise price for the total
number of Shares as to which the Option is exercised; (6) if, as of the date of
exercise of an Option the Company then is permitting Participants to engage in a
"same-day sale" cashless brokered exercise program involving one or more
brokers, through such a program that complies with the Applicable Laws
(including without limitation the requirements of Regulation T and other
applicable regulations promulgated by the Federal Reserve Board) and that
ensures prompt delivery to the Company of the amount required to pay the
exercise price and any applicable withholding taxes; (7) any combination of the
foregoing methods of payment; or (8) such other consideration and method of
payment for the issuance of Shares to the extent permitted under the Applicable
Laws. In making its determination as to the type of consideration to accept, the
Administrator shall consider if acceptance of such consideration may be
reasonably expected to benefit the Company, and the Administrator may refuse to
accept a particular form of consideration at the time of any Option

                                      -10-
<PAGE>
exercise if, in its sole discretion, acceptance of such form of consideration is
not in the bests interests of the Company at such time.

      10. EXERCISE OF OPTION.

            (a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option
granted hereunder shall be exercisable at such times and under such conditions
(including no conditions) as determined by the Administrator, consistent with
the term of the Plan and reflected in the Option agreement, including vesting
requirements and/or performance criteria with respect to the Company and/or the
Optionee; provided however that, if required under the Applicable Laws, the
Option (or Shares issued upon exercise of the Option) shall comply with the
requirements of Section 260.140.41(f) and (k) of the Rules of the California
Corporations Commissioner. The Administrator may permit Optionees to exercise
Options as to unvested Optioned Stock and the Administrator may accelerate the
vesting and exercisability of outstanding Options or waive other restrictions
that apply to such Options.

      The Administrator shall have the discretion to determine whether and to
what extent the vesting of Options shall be tolled during any unpaid leave of
absence; provided, however, that in the absence of such determination, vesting
of Options shall be tolled during any such unpaid leave (unless otherwise
required by the Applicable Laws). In the event of military leave, vesting shall
toll during any unpaid portion of such leave, provided that, upon a
Participant's returning from military leave (under conditions that would entitle
him or her to protection upon such return under the Uniform Services Employment
and Reemployment Rights Act), he or she shall be given vesting credit with
respect to Options to the same extent as would have applied had the Participant
continued to provide services to the Company throughout the leave on the same
terms as he or she was providing services immediately prior to such leave.

      An Option may not be exercised for a fraction of a Share.

      An Option shall be deemed exercised when written notice of such exercise
has been given to the Company in accordance with the terms of the Option by the
person entitled to exercise the Option and the Company has received full payment
for the Shares with respect to which the Option is exercised. Full payment may,
as authorized by the Administrator, consist of any consideration and method of
payment allowable under Section 9(b) of the Plan. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Optioned Stock, not withstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such
stock certificate promptly upon exercise of the Option. No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 15 of the
Plan.

      Exercise of an Option in any manner shall result in a decrease in the
number of Shares that thereafter may be available, both for purposes of the Plan
and for sale under the Option, by the number of Shares as to which the Option is
exercised.

                                      -11-
<PAGE>
            (b) TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP. In the
event of termination of an Optionee's Continuous Service Status with the Company
for any reason other than pursuant to Section 10(c) or 10(d) below, such
Optionee may, but only within three months (or such other period of time, not
less than 30 days, as is determined by the Administrator) after the date of such
termination (but in no event later than the expiration date of the term of such
Option as set forth in the Option agreement), exercise his or her Option to the
extent that the Optionee was vested in the Optioned Stock at the date of such
termination. To the extent that the Optionee was not vested in the Optioned
Stock at the date of such termination, or if the Optionee does not exercise the
Option to the extent so vested within the time specified above, the Option shall
terminate and the Optioned Stock underlying the unexercised portion of the
Option shall revert to the Plan. No termination shall be deemed to occur and
this Section 10(b) shall not apply if (i) the Optionee is a Consultant who
becomes an Employee, or (ii) the Optionee is an Employee who becomes a
Consultant.

            (c)   DISABILITY OF OPTIONEE.

                  (i) Notwithstanding Section 10(b) above, in the event of
termination of an Optionee's Continuous Service Status as a result of his or her
total and permanent disability (within the meaning of Section 22(e)(3) of the
Code), such Optionee may, but only within twelve months (or such other period of
time as is determined by the Administrator, with such determination in the case
of an Incentive Stock Option made at the time of grant of the Option) from the
date of such termination (but in no event later than the expiration date of the
term of such Option as set forth in the Option agreement), exercise the Option
to the extent he or she was vested in the Optioned Stock at the date of such
termination. To the extent that the Optionee was not vested in the Optioned
Stock at the date of termination, or if the Optionee does not exercise such
Option to the extent so vested within the time specified above, the Option shall
terminate and the Optioned Stock underlying the unexercised portion of the
Option shall revert to the Plan.

                  (ii) In the event of termination of an Optionee's Continuous
Service Status as a result of a disability which does not fall within the
meaning of total and permanent disability (as set forth in Section 22(e)(3) of
the Code), such Optionee may, but only within twelve months (or such other
period of time as is determined by the Administrator, with such determination in
the case of an Incentive Stock Option made at the time of grant of the Option)
from the date of such termination (but in no event later than the expiration
date of the term of such Option as set forth in the Option agreement), exercise
the Option to the extent he or she was vested in the Optioned Stock at the date
of such termination. However, to the extent that such Optionee fails to exercise
an Option that is an Incentive Stock Option (within the meaning of Section 422
of the Code) within three months of the date of such termination, the Option
will not qualify for Incentive Stock Option treatment under the Code. To the
extent that the Optionee was not vested in the Optioned Stock at the date of
termination, or if the Optionee does not exercise such Option to the extent so
vested within the time period specified above, the Option shall terminate and
the Optioned Stock underlying the unexercised portion of the Option shall revert
to the Plan.

                                      -12-
<PAGE>
            (d) DEATH OF OPTIONEE. Notwithstanding Section 10(b) above, in the
event of the death of an Optionee during the period of Continuous Service Status
since the date of grant of the Option, or within 30 days following termination
of the Optionee's Continuous Service Status, the Option may be exercised, at any
time within twelve months following the date of death (but in no event later
than the expiration date of the term of such Option as set forth in the Option
agreement), by such Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only to the extent that the
Optionee was vested in the Optioned Stock at the date of death or, if earlier,
the date of termination of the Optionee's Continuous Service Status. To the
extent that the Optionee was not vested in the Optioned Stock at the date of
death or termination, as the case may be, or if the Optionee or his or her
estate or other person acquiring the right to exercise the Option as a result of
his or her death does not exercise such Option to the extent so vested within
the time specified above, the Option shall terminate and the Optioned Stock
underlying the unexercised portion of the Option shall revert to the Plan.

            (e) EXTENSION OF EXERCISE PERIOD. The Administrator shall have full
power and authority to extend the period of time for which an Option is to
remain exercisable following termination of an Optionee's Continuous Status as
an Employee or Consultant from the periods set forth in Sections 10(b), 10(c)
and 10(d) above or in the Option agreement to such greater time as the Board
shall deem appropriate, provided that in no event shall such Option be
exercisable later than the date of expiration of the term of such Option as set
forth in the Option agreement.

      11. STOCK PURCHASE RIGHTS.

            (a) RIGHTS TO PURCHASE. Stock Purchase Rights may be issued either
alone, in addition to, or in tandem with other Awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer Stock Purchase Rights under the Plan, it shall advise the
offeree in writing of the terms, conditions and restrictions related to the
offer, including the number of Shares that such person shall be entitled to
purchase, the price to be paid, the form of consideration that may be used to
purchase shares (which form of consideration shall be consistent with those
forms set forth in Section 9(b) above), and the time within which such person
must accept such offer. If required by the Applicable Laws, the purchase price
of Shares subject to Stock Purchase Rights shall not be less than 85% of the
Fair Market Value of the Shares as of the date of the offer, or, in the case of
a Ten Percent Holder, the price shall not be less than 100% of the Fair Market
Value of the Shares as of the date of the offer. If the Applicable Laws do not
impose the requirements set forth in the preceding sentence, the purchase price
of Shares subject to Stock Purchase Rights shall be as determined by the
Administrator (subject to any requirements imposed by applicable state law that
the Participant pay at least the per Share par value for the Shares being
exercised). The offer to purchase Shares subject to Stock Purchase Rights shall
be accepted by execution of a Restricted Stock Purchase agreement in the form
determined by the Administrator.

            (b) REPURCHASE OPTION.

                                      -13-
<PAGE>
                  (i) GENERAL. Unless the Administrator determines otherwise,
the Restricted Stock Purchase agreement shall grant the Company a repurchase
option exercisable upon the voluntary or involuntary termination of the
purchaser's Continuous Service Status for any reason. The purchase price for
Shares repurchased pursuant to the Restricted Stock Purchase agreement shall be
such price as is determined by the Administrator and permitted under the
Applicable Laws. The repurchase option shall lapse at such rate and upon such
conditions as the Administrator may determine; provided, however, that with
respect to Stock Purchase Rights granted on any date on which the Common Stock
is not a Listed Security and if then required by the Applicable Laws, with
respect to a purchaser who is not an officer, Director or Consultant of the
Company or of any Parent or Subsidiary of the Company, it shall lapse at a
minimum rate of 20% per year.

                  (ii) LEAVE OF ABSENCE. The Administrator shall have the
discretion to determine whether and to what extent the lapsing of Company
repurchase rights shall be tolled during any unpaid leave of absence; provided,
however, that in the absence of such determination, such lapsing shall be tolled
during any such unpaid leave (unless otherwise required by the Applicable Laws).
In the event of military leave, the lapsing of Company repurchase rights shall
toll during any unpaid portion of such leave, provided that, upon a
Participant's returning from military leave (under conditions that would entitle
him or her to protection upon such return under the Uniform Services Employment
and Reemployment Rights Act), he or she shall be given "vesting" credit with
respect to Shares purchased pursuant to the Restricted Stock Purchase agreement
to the same extent as would have applied had the Participant continued to
provide services to the Company throughout the leave on the same terms as he or
she was providing services immediately prior to such leave.

            (c) OTHER PROVISIONS. The Restricted Stock Purchase agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion. In
addition, the provisions of Restricted Stock Purchase agreements need not be the
same with respect to each purchaser.

            (d) RIGHTS AS A STOCKHOLDER. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
stockholder, and shall be a stockholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 15
of the Plan.

      12. STOCK AWARDS. In addition to Options and Stock Purchase Rights and
subject to Section 3 above, the Administrator may also, in its discretion, grant
other forms of equity-based awards ("Stock Awards") under the Plan, including
stock bonus awards, restricted stock awards (including awards involving
restricted stock units), stock appreciation rights, phantom stock rights and
similar types of awards. In accordance with Section 4 above, the Administrator
shall have the authority to determine the terms and conditions of Stock Awards.

      13. TAXES.

                                      -14-
<PAGE>
            (a) As a condition of the grant, vesting or exercise of an Award, or
of the issuance of Shares, granted under the Plan, the Participant (or in the
case of the Participant's death, the person exercising the Award) shall make
such arrangements as the Administrator may require for the satisfaction of any
applicable federal, state, local or foreign withholding tax obligations that may
arise in connection with such grant, vesting, exercise or issuance. The Company
shall not be required to issue any Award or Shares under the Plan until such
obligations are satisfied. If the Administrator allows the withholding or
surrender of Shares to satisfy a Participant's tax withholding obligations under
this Section 13 (whether pursuant to Section 13(c), (d) or (e), or otherwise),
the Administrator shall not allow Shares to be withheld in an amount that
exceeds the minimum statutory withholding rates for federal and state tax
purposes, including payroll taxes.

            (b) In the case of an Employee and in the absence of any other
arrangement, the Employee shall be deemed to have directed the Company to
withhold or collect from his or her compensation an amount sufficient to satisfy
such tax obligations from the next payroll payment otherwise payable after the
date of an exercise of the Award.

            (c) This Section 13(c) shall apply only after the date, if any, upon
which the Common Stock becomes a Listed Security. In the case of Participant
other than an Employee (or in the case of an Employee where the next payroll
payment is not sufficient to satisfy such tax obligations, with respect to any
remaining tax obligations), in the absence of any other arrangement and to the
extent permitted under the Applicable Laws, the Participant shall be deemed to
have elected to have the Company withhold from the Shares to be issued upon
exercise of the Award that number of Shares having a Fair Market Value
determined as of the applicable Tax Date (as defined below) equal to the amount
required to be withheld. For purposes of this Section 13, the Fair Market Value
of the Shares to be withheld shall be determined on the date that the amount of
tax to be withheld is to be determined under the Applicable Laws (the "Tax
Date").

            (d) If permitted by the Administrator, in its discretion, a
Participant may satisfy his or her tax withholding obligations upon exercise of
an Award by surrendering to the Company Shares that have a Fair Market Value
determined as of the applicable Tax Date equal to the amount required to be
withheld. In the case of Shares previously acquired from the Company that are
surrendered under this Section 13(d), such Shares must have been owned by the
Participant for more than six (6) months on the date of surrender (or such other
period of time as is required for the Company to avoid adverse accounting
charges).

            (e) Any election or deemed election by a Participant to have Shares
withheld to satisfy tax withholding obligations under Section 13(c) or (d) above
shall be irrevocable as to the particular Shares as to which the election is
made and shall be subject to the consent or disapproval of the Administrator.
Any election by a Participant under Section 13(d) above must be made on or prior
to the applicable Tax Date.

            (f) In the event an election to have Shares withheld is made by a
Participant and the Tax Date is deferred under Section 83 of the Code because no
election is filed under

                                      -15-
<PAGE>
Section 83(b) of the Code, the Participant shall receive the full number of
Shares with respect to which the Award is exercised but such Participant shall
be unconditionally obligated to tender back to the Company the proper number of
Shares on the Tax Date.

      14. NON-TRANSFERABILITY OF AWARDS. Options, Stock Purchase Rights and
Stock Awards may not be sold, pledged, assigned, hypothecated, transferred or
disposed of in any manner other than by will or by the laws of descent or
distribution; provided however that, after the date, if any, upon which the
Common Stock becomes a Listed Security, the Administrator may in its discretion
grant transferable Nonstatutory Stock Options pursuant to Option agreements
specifying (i) the manner in which such Nonstatutory Stock Options are
transferable and (ii) that any such transfer shall be subject to the Applicable
Laws. The designation of a beneficiary by an Optionee will not constitute a
transfer. An Award may be exercised, during the lifetime of the holder of the
Award, only by such holder or a transferee permitted by this Section 14.

      15. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, CORPORATE TRANSACTIONS AND
CERTAIN OTHER TRANSACTIONS.

            (a) CHANGES IN CAPITALIZATION. Subject to any required action by the
stockholders of the Company or any other action required by the Applicable Laws,
the following shall be proportionately adjusted for any increase or decrease in
the number of issued Shares of Common Stock resulting from a stock split,
reverse stock split, stock dividend, combination, recapitalization or
reclassification of the Common Stock (including any change in the number of
Shares of Common Stock effected in connection with a change of domicile of the
Company), or any other increase or decrease in the number of issued shares of
Common Stock effected without receipt of consideration by the Company:

                  (i) the number of Shares of Common Stock covered by each
            outstanding Award;

                  (ii) the specified numbers of Shares set forth in each of
            Section 3(a), the final sentence of Section 3 and Section 8 above;

                  (iii) the number of Shares of Common Stock that have been
            authorized for issuance under the Plan but as to which no Awards
            have yet been granted or that have been returned to the Plan upon
            cancellation or expiration of an Award; and

                  (iv) the price per Share of Common Stock covered by each such
            outstanding Award;

provided however that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration."
Such adjustment shall be made by the Administrator, whose determination in that
respect shall be final, binding and conclusive. Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by

                                      -16-
<PAGE>
reason thereof shall be made with respect to, the number or price of Shares of
Common Stock subject to an Award.

            (b) DISSOLUTION OR LIQUIDATION. In the event of the dissolution or
liquidation of the Company, each outstanding Award shall terminate immediately
prior to the consummation of such action, unless otherwise provided by the
Administrator.

            (c) CORPORATE TRANSACTIONS. In the event of a Corporate Transaction,
each outstanding Award shall be assumed or an equivalent award shall be
substituted by the successor corporation or a Parent or Subsidiary of such
successor corporation, unless such successor corporation does not agree to
assume the outstanding Awards or to substitute equivalent awards, in which case
such Awards shall terminate upon the consummation of the transaction.

            For purposes of this Section 15(c), an Award shall be considered
assumed, without limitation, if, at the time of issuance of the stock or other
consideration upon a Corporate Transaction, each holder of an Award would be
entitled to receive upon exercise of the Award the same number and kind of
shares of stock or the same amount of property, cash or securities as such
holder would have been entitled to receive upon the occurrence of the
transaction if the holder had been, immediately prior to such transaction, the
holder of the number of Shares of Common Stock covered by the Award at such time
(after giving effect to any adjustments in the number of Shares covered by the
Award as provided for in this Section 15); provided however that if such
consideration received in the transaction is not solely common stock of the
successor corporation or its Parent, the Administrator may, with the consent of
the successor corporation, provide for the consideration to be received upon
exercise of the Award to be solely common stock of the successor corporation or
its Parent equal to the Fair Market Value of the per Share consideration
received by holders of Common Stock in the transaction.

            (d) CERTAIN DISTRIBUTIONS. In the event of any distribution to the
Company's stockholders of securities of any other entity or other assets (other
than dividends payable in cash or stock of the Company) without receipt of
consideration by the Company, the Administrator may, in its discretion,
appropriately adjust the price per Share of Common Stock covered by each
outstanding Award to reflect the effect of such distribution.

      16. TIME OF GRANTING AWARDS. The date of grant of an Award shall, for all
purposes, be the date on which the Administrator makes the determination
granting such Award, or such other date as is determined by the Administrator;
provided however that in the case of any Incentive Stock Option, the grant date
shall be the later of the date on which the Administrator makes the
determination granting such Incentive Stock Option or the date of commencement
of the Optionee's employment relationship with the Company. Notice of the
determination shall be given to each Employee or Consultant to whom an Award is
so granted within a reasonable time after the date of such grant.

      17. AMENDMENT AND TERMINATION OF THE PLAN.

            (a) AUTHORITY TO AMEND OR TERMINATE. Subject to the Applicable Laws,
the Board may at any time amend, alter, suspend, discontinue or terminate the
Plan, but no

                                      -17-
<PAGE>
amendment, alteration, suspension, discontinuation or termination (other than an
adjustment made pursuant to Section 15 above) shall be made that would
materially and adversely affect the rights of any Participant under any
outstanding Award, without his or her consent as required in Section 17(b)
below. To the extent required by the Applicable Laws, the Company shall obtain
stockholder approval of any Plan amendment in such a manner and to such a degree
as required.

            (b) EFFECT OF AMENDMENT OR TERMINATION. No amendment or termination
of the Plan shall materially and adversely affect Awards already granted, unless
mutually agreed otherwise between the Participant and the Administrator, which
agreement must be in writing and signed by the Participant and the Company.

      18. CONDITIONS UPON ISSUANCE OF SHARES. Notwithstanding any other
provision of the Plan or any agreement entered into by the Company pursuant to
the Plan, the Company shall not be obligated, and shall have no liability for
failure, to issue or deliver any Shares under the Plan unless such issuance or
delivery would comply with the Applicable Laws, with such compliance determined
by the Company in consultation with its legal counsel.

      As a condition to the exercise of an Award, the Company may require the
person exercising such Award to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required by law.

      19. RESERVATION OF SHARES. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

      20. AGREEMENTS. Awards shall be evidenced by written agreements in such
form(s) as the Administrator shall from time to time approve.

      21. STOCKHOLDER APPROVAL. If required by the Applicable Laws, continuance
of the Plan shall be subject to approval by the stockholders of the Company
within twelve months before or after the date the Plan is adopted or amended in
any material respect requiring stockholder approval. Such stockholder approval
shall be obtained in the degree and manner required under the Applicable Laws.

      22. GOVERNING LAW. The Plan, Awards made under the Plan and any written
agreements reflecting such Awards shall be governed by and construed and
interpreted in accordance with the laws of the State of Delaware, without giving
effect to principles of conflicts of law.

                                      -18-
<PAGE>
                                REDENVELOPE, INC.

                                 1999 STOCK PLAN

                          NOTICE OF STOCK OPTION GRANT

<<Optionee>>
<<OptioneeAddress1>>
<<OptioneeAddress2>>

      You have been granted an option to purchase Common Stock of RedEnvelope,
Inc., (the "Company") as follows:

      Board Approval Date:         <<BoardApprovalDate>>

      Date of Grant (Later
      of Board Approval Date or
      Commencement of
      Employment/Consulting):      <<GrantDate>>

      Exercise Price Per Share:    <<ExercisePrice>>

      Total Number of Shares
      Granted:                     <<NoofShares>>

      Total Exercise Price:        <<TotalExercisePrice>>

      Type of Option:              <<NoSharesISO>> Shares Incentive Stock
      Option

                                   <<NoSharesNSO>> Shares Nonstatutory Stock
      Option

      Expiration Date:             <<Term>>/<<ExpirDate>>

      Vesting Commencement Date:   <<VestingCommenceDate>>

      Vesting/Exercise Schedule:   So long as your employment or
                                   consulting relationship with the
                                   Company continues such that there is no
                                   interruption or termination of your
                                   Continuous Service Status, the Shares
                                   underlying this Option shall vest and
                                   become exercisable in accordance with
                                   the following schedule:  25% of the
                                   Shares subject to the Option shall vest
                                   and become exercisable on the 12 month
                                   anniversary of the Vesting Commencement
                                   Date and 1/48th of the total number of
                                   Shares subject to the Option shall vest
                                   and become exercisable each month
                                   thereafter.

                                      -19-
<PAGE>

      Vesting Acceleration:        Notwithstanding the above, in the event
                                   you are Involuntarily Terminated (as
                                   defined in the Plan) by the Company or
                                   its successor at the time of, or within
                                   12 months following consummation of,
                                   the Change of Control, then the rate at
                                   which you vest in the Option Shares
                                   shall accelerate, and this Option (or
                                   an award substituted therefore) shall
                                   become exercisable, as to 25% of the
                                   then-unvested Shares (but only up to
                                   the total number of Option Shares set
                                   forth above) as of immediately prior to
                                   the effective date of termination of
                                   your Continuous Service Status.

      Termination Period:          Option may be exercised for three (3)
                                   months after termination of employment
                                   or consulting relationship except as
                                   set out in Section 5 of the Stock
                                   Option Agreement (but in no event later
                                   than the Expiration Date).  Optionee is
                                   responsible for keeping track of these
                                   exercise periods following termination
                                   for any reason of his or her service
                                   relationship with the Company.  The
                                   Company will not provide further notice
                                   of such periods.

      Transferability:             This Option may not be transferred.

      By your signature and the signature of the Company's representative below,
you and the Company agree that this option is granted under and governed by the
terms and conditions of the RedEnvelope, Inc. 1999 Stock Plan and the Stock
Option Agreement, both of which are attached and made a part of this document.

      In addition, you agree and acknowledge that your rights to any Shares
underlying the Option will be earned only as you provide services to the Company
over time, that the grant of the Option is not as consideration for services you
rendered to the Company prior to your Vesting Commencement Date, and that
nothing in this Notice or the attached documents confers upon you any right to
continue your employment or consulting relationship with the Company for any
period of time, nor does it interfere in any way with your right or the
Company's right to terminate that relationship at any time, for any reason, with
or without cause.

                                          RedEnvelope, Inc.

                                          By:
------------------------------                --------------------------------
<<Optionee>>                              Name:
                                               -------------------------------
                                          Title:
                                                 -----------------------------

                                      -20-
<PAGE>
                                REDENVELOPE, INC.

                                 1999 STOCK PLAN

                             STOCK OPTION AGREEMENT

         1. GRANT OF OPTION. RedEnvelope, Inc., a Delaware corporation (the
"Company"), hereby grants to <<Optionee>> ("Optionee"), an option (the "Option")
to purchase the total number of shares of Common Stock (the "Shares") set forth
in the Notice of Stock Option Grant (the "Notice"), at the exercise price per
Share set forth in the Notice (the "Exercise Price") subject to the terms,
definitions and provisions of the RedEnvelope, Inc. 1999 Stock Plan (the "Plan")
adopted by the Company, which is incorporated in this Agreement by reference.
Unless otherwise defined in this Agreement, the terms used in this Agreement
shall have the meanings defined in the Plan. This Stock Option Agreement shall
be deemed executed by the Company and Optionee upon execution by such parties of
the Notice.

         2. DESIGNATION OF OPTION. This Option is intended to be an Incentive
Stock Option as defined in Section 422 of the Code only to the extent so
designated in the Notice, and to the extent it is not so designated or to the
extent the Option does not qualify as an Incentive Stock Option, it is intended
to be a Nonstatutory Stock Option.

         Notwithstanding the above, if designated as an Incentive Stock Option,
in the event that the Shares subject to this Option (and all other Incentive
Stock Options granted to Optionee by the Company or any Parent or Subsidiary,
including under other plans of the Company) that first become exercisable in any
calendar year have an aggregate fair market value (determined for each Share as
of the date of grant of the option covering such Share) in excess of $100,000,
the Shares in excess of $100,000 shall be treated as subject to a Nonstatutory
Stock Option, in accordance with Section 5(c) of the Plan.

         3. EXERCISE OF OPTION. This Option shall be exercisable during its term
in accordance with the Vesting/Exercise Schedule set out in the Notice and with
the provisions of Section 10 of the Plan as follows:

                  (a) RIGHT TO EXERCISE.

                      (i) This Option may not be exercised for a fraction of
a share.

                      (ii) In the event of Optionee's death, disability or other
termination of employment, the exercisability of the Option is governed by
Section 5 below, subject to the limitations contained in this Section 3.

                      (iii) In no event may this Option be exercised after the
Expiration Date of the Option as set forth in the Notice.
<PAGE>
            (b) METHOD OF EXERCISE.

                            (i) This Option shall be exercisable by delivering
to the Company (or its designee) a written notice of exercise (in the form
attached as Exhibit A or in any other form of notice approved by the Plan
Administrator including pursuant to electronic exercise procedures) which shall
state Optionee's election to exercise the Option, the number of Shares in
respect of which the Option is being exercised, and such other representations
and agreements as to the holder's investment intent with respect to such Shares
as may be required by the Company pursuant to the provisions of the Plan. Such
written notice shall be signed by Optionee and shall be delivered to the Company
(or its designee) by such means as are determined by the Plan Administrator in
its discretion to constitute adequate delivery (including pursuant to electronic
exercise procedures). The written notice shall be accompanied by payment of the
Exercise Price. This Option shall be deemed to be exercised upon receipt by the
Company (or its designee) of such written notice accompanied by the Exercise
Price.

                            (ii) As a condition to the exercise of this Option
and as further set forth in Section 13 of the Plan, Optionee agrees to make
adequate provision for federal, state or other tax withholding obligations, if
any, which arise upon the vesting or exercise of the Option, or disposition of
Shares, whether by withholding, direct payment to the Company, or otherwise.

                            (iii) The Company is not obligated, and will have no
liability for failure, to issue or deliver any Shares upon exercise of the
Option unless such issuance or delivery would comply with the Applicable Laws,
with such compliance determined by the Company in consultation with its legal
counsel. This Option may not be exercised until such time as the Plan has been
approved by the stockholders of the Company, or if the issuance of such Shares
upon such exercise or the method of payment of consideration for such shares
would constitute a violation of any applicable federal or state securities or
other law or regulation, including any rule under Part 221 of Title 12 of the
Code of Federal Regulations as promulgated by the Federal Reserve Board. As a
condition to the exercise of this Option, the Company may require Optionee to
make any representation and warranty to the Company as may be required by the
Applicable Laws. Assuming such compliance, for income tax purposes the Shares
shall be considered transferred to Optionee on the date on which the Option is
exercised with respect to such Shares.

         4. METHOD OF PAYMENT. Payment of the Exercise Price shall be by any of
the following, or a combination of the following, at the election of Optionee:

            (a) cash, check or wire transfer; or

            (b) following the date, if any, upon which the Common Stock is a
Listed Security, and if the Company is at such time permitting "same day sale"
cashless brokered exercises, delivery of a properly executed exercise notice
together with irrevocable instructions to a broker participating in such
cashless brokered exercise program to deliver promptly to the Company the amount
required to pay the exercise price (and applicable withholding taxes).

                                      -2-
<PAGE>
         5. TERMINATION OF RELATIONSHIP. Following the date of termination of
Optionee's Continuous Service Status for any reason (the "Termination Date"),
Optionee may exercise the Option only as set forth in the Notice and this
Section 5. To the extent that Optionee is not vested in the Option Shares as of
the Termination Date, or if Optionee does not exercise this Option within the
Termination Period set forth in the Notice or the termination periods set forth
below, the Option shall terminate in its entirety. In no event, may any Option
be exercised after the Expiration Date of the Option as set forth in the Notice.

            (a) TERMINATION. In the event of termination of Optionee's
Continuous Service Status other than as a result of Optionee's disability or
death, Optionee may, to the extent otherwise so entitled at the date of such
termination (the "Termination Date"), exercise this Option during the
Termination Period set forth in the Notice.

            (b) OTHER TERMINATIONS. In connection with any termination other
than a termination covered by Section 5(a), Optionee may exercise the Option
only as described below:

            (i) TERMINATION UPON DISABILITY OF OPTIONEE. In the event of
termination of Optionee's Continuous Service Status as a result of Optionee's
disability, Optionee may, but only within twelve months from the Termination
Date, exercise this Option to the extent Optionee was vested in the Option
Shares as of such Termination Date.

            (ii) DEATH OF OPTIONEE. In the event of the death of Optionee (a)
during the term of this Option and while an Employee or Consultant of the
Company and having been in Continuous Service Status since the date of grant of
the Option, or (b) within thirty (30) days after Optionee's Termination Date,
the Option may be exercised at any time within twelve months following the date
of death by Optionee's estate or by a person who acquired the right to exercise
the Option by bequest or inheritance, but only to the extent Optionee was vested
in the Option Shares as of the Termination Date.

         6. NON-TRANSFERABILITY OF OPTION. [EXCEPT AS OTHERWISE SET FORTH IN THE
NOTICE,] [T]his Option may not be transferred in any manner otherwise than by
will or by the laws of descent or distribution and may be exercised during the
lifetime of Optionee only by him or her. The terms of this Option shall be
binding upon the executors, administrators, heirs, successors and assigns of
Optionee.

         7. TAX CONSEQUENCES. Below is a brief summary as of the date of this
Option of certain of the federal tax consequences of exercise of this Option and
disposition of the Shares under the laws in effect as of the Date of Grant. THIS
SUMMARY IS INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING
OF THE SHARES.

                  (a) INCENTIVE STOCK OPTION.

                           (i) TAX TREATMENT UPON EXERCISE AND SALE OF SHARES.
If this Option qualifies as an Incentive Stock Option, there will be no regular
federal income tax liability upon

                                      -3-
<PAGE>
the exercise of the Option, although the excess, if any, of the fair market
value of the Shares on the date of exercise over the Exercise Price will be
treated as an adjustment to the alternative minimum tax for federal tax purposes
and may subject Optionee to the alternative minimum tax in the year of exercise.
If Shares issued upon exercise of an Incentive Stock Option are held for at
least one year after exercise and are disposed of at least two years after the
Option grant date, any gain realized on disposition of the Shares will also be
treated as long-term capital gain for federal income tax purposes. If Shares
issued upon exercise of an Incentive Stock Option are disposed of within such
one-year period or within two years after the Option grant date, any gain
realized on such disposition will be treated as compensation income (taxable at
ordinary income rates) to the extent of the difference between the Exercise
Price and the lesser of (i) the fair market value of the Shares on the date of
exercise, or (ii) the sale price of the Shares.

                           (ii) NOTICE OF DISQUALIFYING DISPOSITIONS. With
respect to any Shares issued upon exercise of an Incentive Stock Option, if
Optionee sells or otherwise disposes of such Shares on or before the later of
(i) the date two years after the Option grant date, or (ii) the date one year
after the date of exercise, OPTIONEE SHALL IMMEDIATELY NOTIFY THE COMPANY IN
WRITING OF SUCH DISPOSITION. Optionee acknowledges and agrees that he or she may
be subject to income tax withholding by the Company on the compensation income
recognized by Optionee from the early disposition by payment in cash or out of
the current earnings paid to Optionee.

                  (b) NONSTATUTORY STOCK OPTION. If this Option does not qualify
as an Incentive Stock Option, there may be a regular federal (and state) income
tax liability upon the exercise of the Option. Optionee will be treated as
having received compensation income (taxable at ordinary income tax rates) equal
to the excess, if any, of the fair market value of the Shares on the date of
exercise over the Exercise Price. If Optionee is an Employee, the Company will
be required to withhold from Optionee's compensation or collect from Optionee
and pay to the applicable taxing authorities an amount equal to a percentage of
this compensation income at the time of exercise. If Shares issued upon exercise
of a Nonstatutory Stock Option are held for at least one year, any gain realized
on disposition of the Shares will be treated as long-term capital gain for
federal income tax purposes.

         8. EFFECT OF AGREEMENT. Optionee acknowledges receipt of a copy of the
Plan and represents that he or she is familiar with the terms and provisions
thereof (and has had an opportunity to consult counsel regarding the Option
terms), and hereby accepts this Option and agrees to be bound by its contractual
terms as set forth herein and in the Plan. Optionee hereby agrees to accept as
binding, conclusive and final all decisions and interpretations of the Plan
Administrator regarding any questions relating to the Option. In the event of a
conflict between the terms and provisions of the Plan and the terms and
provisions of the Notice and this Agreement, the Plan terms and provisions shall
prevail. The Option, including the Plan, constitutes the entire agreement
between Optionee and the Company on the subject matter hereof and supersedes all
proposals, written or oral, and all other communications between the parties
relating to such subject matter.

                                      -4-
<PAGE>
                                    EXHIBIT A

                               NOTICE OF EXERCISE

To:               RedEnvelope, Inc.
Attn:             Stock Option Administrator
Subject:          Notice of Intention to Exercise Stock Option

         This is official notice that the undersigned ("Optionee") intends to
exercise Optionee's option to purchase         shares of RedEnvelope, Inc.
Common Stock, under and pursuant to the Company's 1999 Stock Plan and the Stock
Option Agreement dated         , as follows:

                  Grant Number:
                                      ------------------------------------------

                  Date of Purchase:
                                      ------------------------------------------

                  Number of Shares:
                                      ------------------------------------------

                  Purchase Price:
                                      ------------------------------------------

                  Method of Payment
                  of Purchase Price:
                                      ------------------------------------------

         Social Security No.:
                                    --------------------------------------------

         The shares should be issued as follows:

                  Name:
                               ----------------------------------------

                  Address:
                               ----------------------------------------

                               ----------------------------------------

                               ----------------------------------------

                  Signed:
                               ----------------------------------------

                  Date:
                               ----------------------------------------

                                      -5-
<PAGE>
                                REDENVELOPE, INC.

                                 1999 STOCK PLAN

                       RESTRICTED STOCK PURCHASE AGREEMENT

         This Restricted Stock Purchase Agreement (the "Agreement") is made as
of <<Date>>, by and between RedEnvelope, Inc., a Delaware corporation (the
"Company"), and <<Purchaser>> ("Purchaser") pursuant to the Company's 1999 Stock
Plan (the "Plan") Stock Plan. To the extent any capitalized terms used in this
Agreement are not defined, they shall have the meaning ascribed to them in the
Plan.

         1. SALE OF STOCK. Subject to the terms and conditions of this
Agreement, on the Purchase Date (as defined below) the Company will issue and
sell to Purchaser, and Purchaser agrees to purchase from the Company,
<<NoofShares>> shares of the Company's Common Stock (the "Shares") at a purchase
price of $<<PurchasePrice>> per Share for a total purchase price of
$<<TotalPurchasePrice>>. The term "Shares" refers to the purchased Shares and
all securities received in replacement of the Shares or as stock dividends or
splits, all securities received in replacement of the Shares in a
recapitalization, merger, reorganization, exchange or the like, and all new,
substituted or additional securities or other properties to which Purchaser is
entitled by reason of Purchaser's ownership of the Shares.

         2. PURCHASE. The purchase and sale of the Shares under this Agreement
shall occur at the principal office of the Company, in accordance with Section
11 of the Plan, simultaneously with the execution of this Agreement by the
parties or on such other date as the Company and Purchaser shall agree (the
"Purchase Date"). On the Purchase Date, the Company will deliver to Purchaser a
certificate representing the Shares to be purchased by Purchaser (which shall be
issued in Purchaser's name) against payment of the purchase price therefor by
Purchaser by check made payable to the Company.

         3. LIMITATIONS ON TRANSFER. In addition to any other limitation on
transfer created by applicable securities laws, Purchaser shall not assign,
encumber or dispose of any interest in the Shares while the Shares are subject
to the Company's Repurchase Option (as defined below). After any Shares have
been released from the Repurchase Option, Purchaser shall not assign, encumber
or dispose of any interest in such Shares except in compliance with the
provisions below and applicable securities laws.

                  (a) REPURCHASE OPTION.

                           (i) In the event of the voluntary or involuntary
termination of Purchaser's Continuous Service Status for any reason (including
death or disability), with or without cause, the Company shall upon the date of
such termination (the "Termination Date") have an irrevocable, exclusive option
(the "Repurchase Option") for a period of [90 DAYS] from such date to repurchase
all or any portion of the Shares held by Purchaser as of the Termination Date
which have not yet been released from the Company's Repurchase Option at [THE
ORIGINAL

                                      -6-
<PAGE>
PURCHASE PRICE PER SHARE SPECIFIED IN SECTION 1] (adjusted for any stock splits,
stock dividends and the like).

                           (ii) Unless the Company notifies Purchaser within [90
DAYS] from the date of termination of Purchaser's employment or consulting
relationship that it does not intend to exercise its Repurchase Option with
respect to some or all of the Shares, the Repurchase Option shall be deemed
automatically exercised by the Company as of the [90TH DAY] following such
termination, provided that the Company may notify Purchaser that it is
exercising its Repurchase Option as of a date prior to such [90TH DAY]. Unless
Purchaser is otherwise notified by the Company pursuant to the preceding
sentence that the Company does not intend to exercise its Repurchase Option as
to some or all of the Shares to which it applies at the time of termination,
execution of this Agreement by Purchaser constitutes written notice to Purchaser
of the Company's intention to exercise its Repurchase Option with respect to all
Shares to which such Repurchase Option applies. The Company, at its choice, may
satisfy its payment obligation to Purchaser with respect to exercise of the
Repurchase Option by either (A) delivering a check to Purchaser in the amount of
the purchase price for the Shares being repurchased, or (B) [IN THE EVENT
PURCHASER IS INDEBTED TO THE COMPANY, CANCELING AN AMOUNT OF SUCH INDEBTEDNESS
EQUAL TO THE PURCHASE PRICE FOR THE SHARES BEING REPURCHASED, OR (C) BY A
COMBINATION OF (A) AND (B) SO THAT THE COMBINED PAYMENT AND CANCELLATION OF
INDEBTEDNESS EQUALS SUCH PURCHASE PRICE]. In the event of any deemed automatic
exercise of the Repurchase Option pursuant to this Section 3(a)(ii) in which
Purchaser is indebted to the Company, such indebtedness equal to the purchase
price of the Shares being repurchased shall be deemed automatically canceled as
of the [90TH DAY] following termination of Purchaser's employment or consulting
relationship unless the Company otherwise satisfies its payment obligations. As
a result of any repurchase of Shares pursuant to this Section 3(a), the Company
shall become the legal and beneficial owner of the Shares being repurchased and
shall have all rights and interest therein or related thereto, and the Company
shall have the right to transfer to its own name the number of Shares being
repurchased by the Company, without further action by Purchaser.

                           (iii) <<Initial%Unvested>> of the Shares shall
initially be subject to the Repurchase Option. <<CliffVestAmount>> of the total
number of shares shall be released from the Repurchase Option on the
<<CliffMonthNumber>> month anniversary of the Vesting Commencement Date (as set
forth on the signature page of this Agreement), and an additional
<<MonthlyVesting%>> of the total number of Shares shall be released from the
Repurchase Option each month after the date of issuance of the Shares on the
Monthly Vesting Date (as set forth on the signature page of this Agreement),
until all Shares are released from the Repurchase Option. Fractional shares
shall be rounded to the nearest whole share. Notwithstanding the above, in the
event that the Purchaser is Involuntarily Terminated (as defined in the Plan) at
the time of or within 12 months following consummation of the Change of Control,
then the rate at which the Company's Repurchase Option lapses shall accelerate
as to 25% of the Shares that would otherwise then be subject to such Repurchase
Right (but only up to the total number of Shares set forth in Section 1 above)
as of immediately prior to the effective date of termination of the Purchaser's
Continuous Service Status.

                                      -7-
<PAGE>
                  (b) RESTRICTIONS BINDING ON TRANSFEREES. All transferees of
Shares or any interest therein will receive and hold such Shares or interest
subject to the provisions of this Agreement, including insofar as applicable the
Company's Repurchase Option. Any sale or transfer of the Shares shall be void
unless the provisions of this Agreement are satisfied.

                  (c) TERMINATION OF RIGHTS. Upon the expiration or exercise of
the Repurchase Option, a new certificate or certificates representing the Shares
not repurchased shall be issued, on request, without the legend referred to in
Section 5(a) below and delivered to Purchaser.

         4. ESCROW OF UNVESTED SHARES. For purposes of facilitating the
enforcement of the provisions of Section 3 above, Purchaser agrees, immediately
upon receipt of the certificate(s) for the Shares subject to the Repurchase
Option, to deliver such certificate(s), together with an Assignment Separate
from Certificate in the form attached to this Agreement as Exhibit A executed by
Purchaser and by Purchaser's spouse (if required for transfer), in blank, to the
Secretary of the Company, or the Secretary's designee, to hold such
certificate(s) and Assignment Separate from Certificate in escrow and to take
all such actions and to effectuate all such transfers and/or releases as are in
accordance with the terms of this Agreement. Purchaser hereby acknowledges that
the Secretary of the Company, or the Secretary's designee, is so appointed as
the escrow holder with the foregoing authorities as a material inducement to
make this Agreement and that said appointment is coupled with an interest and is
accordingly irrevocable. Purchaser agrees that said escrow holder shall not be
liable to any party hereof (or to any other party). The escrow holder may rely
upon any letter, notice or other document executed by any signature purported to
be genuine and may resign at any time. Purchaser agrees that if the Secretary of
the Company, or the Secretary's designee, resigns as escrow holder for any or no
reason, the Board of Directors of the Company shall have the power to appoint a
successor to serve as escrow holder pursuant to the terms of this Agreement.

         5. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.

                  (a) LEGENDS. The certificate or certificates representing the
Shares shall bear the following legend (as well as any legends required by
applicable state and federal corporate and securities laws):

                      THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE
TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE
COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF
THE COMPANY.

                   (b) STOP-TRANSFER NOTICES. Purchaser agrees that, in order to
ensure compliance with the restrictions referred to herein, the Company may
issue appropriate "stop transfer" instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.

                  (c) REFUSAL TO TRANSFER. The Company shall not be required (i)
to transfer on its books any Shares that have been sold or otherwise transferred
in violation of any of the

                                      -8-
<PAGE>
provisions of this Agreement or (ii) to treat as owner of such Shares or to
accord the right to vote or pay dividends to any purchaser or other transferee
to whom such Shares shall have been so transferred.

         6. NO EMPLOYMENT RIGHTS. Nothing in this Agreement shall affect in any
manner whatsoever the right or power of the Company, or a Parent, Subsidiary or
Affiliate of the Company, to terminate Purchaser's employment or consulting
relationship, for any reason, with or without cause.

         7. SECTION 83(b) ELECTION. Purchaser understands that Section 83(a) of
the Internal Revenue Code of 1986, as amended (the "Code"), taxes as ordinary
income the difference between the amount paid for the Shares and the fair market
value of the Shares as of the date any restrictions on the Shares lapse. In this
context, "restriction" means the right of the Company to buy back the Shares
pursuant to the Repurchase Option set forth in Section 3(a) of this Agreement.
Purchaser understands that Purchaser may elect to be taxed at the time the
Shares are purchased, rather than when and as the Repurchase Option expires, by
filing an election under Section 83(b) (an "83(b) Election") of the Code with
the Internal Revenue Service within 30 days from the date of purchase. Even if
the fair market value of the Shares at the time of the execution of this
Agreement equals the amount paid for the Shares, the election must be made to
avoid income under Section 83(a) in the future. Purchaser understands that
failure to file such an election in a timely manner may result in adverse tax
consequences for Purchaser. Purchaser further understands that an additional
copy of such election form should be filed with his or her federal income tax
return for the calendar year in which the date of this Agreement falls.
Purchaser acknowledges that the foregoing is only a summary of the effect of
United States federal income taxation with respect to purchase of the Shares
hereunder, and does not purport to be complete. Purchaser further acknowledges
that the Company has directed Purchaser to seek independent advice regarding the
applicable provisions of the Code, the income tax laws of any municipality,
state or foreign country in which Purchaser may reside, the tax consequences of
Purchaser's death and the decision as to whether or not to file an 83(b)
Election in connection with the acquisition of the Shares.

         Purchaser agrees that he will execute and deliver to the Company with
this executed Agreement a copy of the Acknowledgment and Statement of Decision
Regarding Section 83(b) Election (the "Acknowledgment"), attached hereto as
Exhibit B. Purchaser further agrees that Purchaser will execute and submit with
the Acknowledgment a copy of the 83(b) Election, attached hereto as Exhibit C,
if Purchaser has indicated in the Acknowledgment his or her decision to make
such an election.

         8. MISCELLANEOUS.

            (a) GOVERNING LAW. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
Delaware, without giving effect to principles of conflicts of law.

                                      -9-
<PAGE>
            (b) ENTIRE AGREEMENT; ENFORCEMENT OF RIGHTS. This Agreement sets
forth the entire agreement and understanding of the parties relating to the
subject matter herein and merges all prior discussions between them. No
modification of or amendment to this Agreement, nor any waiver of any rights
under this Agreement, shall be effective unless in writing signed by the parties
to this Agreement. The failure by either party to enforce any rights under this
Agreement shall not be construed as a waiver of any rights of such party.

            (c) SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (i) such
provision shall be excluded from this Agreement, (ii) the balance of this
Agreement shall be interpreted as if such provision were so excluded and (iii)
the balance of this Agreement shall be enforceable in accordance with its terms.

            (d) CONSTRUCTION. This Agreement is the result of negotiations
between and has been reviewed by each of the parties hereto and their respective
counsel, if any; accordingly, this Agreement shall be deemed to be the product
of all of the parties hereto, and no ambiguity shall be construed in favor of or
against any one of the parties hereto.

            (e) NOTICES. Any notice required or permitted by this Agreement
shall be in writing and shall be deemed sufficient when delivered personally or
sent by telegram or fax or 48 hours after being deposited in the U.S. mail, as
certified or registered mail, with postage prepaid, and addressed to the party
to be notified at such party's address or fax number as set forth below or as
subsequently modified by written notice.

            (f) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.

            (g) SUCCESSORS AND ASSIGNS. The rights and benefits of this
Agreement shall inure to the benefit of, and be enforceable by the Company's
successors and assigns. The rights and obligations of Purchaser under this
Agreement may only be assigned with the prior written consent of the Company.

                            [Signature Page Follows]

                                      -10-
<PAGE>
         The parties have executed this Agreement as of the date first set forth
above.

                                        COMPANY:

                                        REDENVELOPE, INC.

                                        By:
                                           -------------------------------------
                                        Title:
                                              ----------------------------------
                                        Address:
                                                --------------------------------

                                                --------------------------------

         PURCHASER ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT
TO SECTION 3 HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS AN EMPLOYEE OR
CONSULTANT AT THE WILL OF THE COMPANY. PURCHASER FURTHER ACKNOWLEDGES AND AGREES
THAT NOTHING IN THIS AGREEMENT SHALL CONFER UPON PURCHASER ANY RIGHT WITH
RESPECT TO CONTINUATION OF SUCH EMPLOYMENT OR CONSULTING RELATIONSHIP WITH THE
COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH PURCHASER'S RIGHT OR THE
COMPANY'S RIGHT TO TERMINATE PURCHASER'S EMPLOYMENT OR CONSULTING RELATIONSHIP
AT ANY TIME, WITH OR WITHOUT CAUSE.

                                                     PURCHASER:

                                                     <<PURCHASER>>

                                                     ---------------------------
                                                     (Signature)

                                                     Address:

                                                     ---------------------------

                                                     ---------------------------

Vesting Commencement
Date:
     --------------------

I, _____________________, spouse of <<Purchaser>>, have read and
hereby approve the foregoing Agreement. In consideration of the Company's
granting my spouse the right to purchase the Shares as set forth in the
Agreement, I hereby agree to be irrevocably bound by the Agreement and further
agree that any community property or similar interest that I may have in the
Shares shall be similarly bound by the Agreement. I hereby appoint my spouse as
my attorney-in-fact with respect to any amendment or exercise of any rights
under the Agreement.

                                                     ---------------------------
                                                      Spouse of <<Purchaser>>

                                      -11-
<PAGE>
                                    EXHIBIT A

                      ASSIGNMENT SEPARATE FROM CERTIFICATE

         FOR VALUE RECEIVED and pursuant to that certain Common Stock Purchase
Agreement between the undersigned ("Purchaser") and RedEnvelope, Inc. (the
"Company") dated <<Date>> (the "Agreement"), Purchaser hereby sells, assigns and
transfers unto the Company                              (      ) shares
of the Common Stock of the Company standing in Purchaser's name on the Company's
books and represented by Certificate No.     , and does hereby irrevocably
constitute and appoint                           to transfer said stock on the
books of the Company with full power of substitution in the premises. THIS
ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY THE AGREEMENT AND THE EXHIBITS
THERETO.

Dated:
      ------------------------

                                         Signature:

                                         ------------------------------
                                        <<Purchaser>>

                                         ------------------------------
                                         Spouse of <<Purchaser>> (if applicable)

Instruction: Please do not fill in any blanks other than the signature line. The
purpose of this assignment is to enable the Company to exercise its repurchase
option set forth in the Agreement without requiring additional signatures on the
part of Purchaser.
<PAGE>
                                    EXHIBIT B

                    ACKNOWLEDGMENT AND STATEMENT OF DECISION
                        REGARDING SECTION 83(b) ELECTION

         The undersigned has entered a stock purchase agreement with
RedEnvelope, Inc., a Delaware corporation (the "Company"), pursuant to which the
undersigned is purchasing                shares of Common Stock of the Company
(the "Shares"). In connection with the purchase of the Shares, the undersigned
hereby represents as follows:

         1. The undersigned has carefully reviewed the stock purchase agreement
pursuant to which the undersigned is purchasing the Shares.

         2. The undersigned either [check and complete as applicable]:

         (a)      has consulted, and has been fully advised by, the
                  undersigned's own tax advisor,                        ,
                  whose business address is                             ,
                  regarding the federal, state and local tax consequences of
                  purchasing the Shares, and particularly regarding the
                  advisability of making elections pursuant to Section 83(b) of
                  the Internal Revenue Code of 1986, as amended (the "Code") and
                  pursuant to the corresponding provisions, if any, of
                  applicable state law; or

         (b)      has knowingly chosen not to consult such a tax advisor.

         3.       The undersigned hereby states that the undersigned has decided
                  [check as applicable]:

         (a)      to make an election pursuant to Section 83(b) of the
                  Code, and is submitting to the Company, together with the
                  undersigned's executed Common Stock Purchase Agreement, an
                  executed form entitled "Election Under Section 83(b) of the
                  Internal Revenue Code of 1986"; or

         (b)      not to make an election pursuant to Section 83(b) of the Code.
<PAGE>
         4. Neither the Company nor any subsidiary or representative of
the Company has made any warranty or representation to the undersigned with
respect to the tax consequences of the undersigned's purchase of the Shares or
of the making or failure to make an election pursuant to Section 83(b) of the
Code or the corresponding provisions, if any, of applicable state law.

Date:
       ------------------------------              -----------------------------
                                                   <<Purchaser>>

Date:
      ------------------------------              ------------------------------
                                                  Spouse of <<Purchaser>>
<PAGE>
                                    EXHIBIT C

                          ELECTION UNDER SECTION 83(b)

                      OF THE INTERNAL REVENUE CODE OF 1986

         The undersigned taxpayer hereby elects, pursuant to Section 83(b) of
the Internal Revenue Code, to include in taxpayer's gross income for the current
taxable year, the amount of any compensation taxable to taxpayer in connection
with taxpayer's receipt of the property described below:

1.       The name, address, taxpayer identification number and taxable year of
         the undersigned are as follows:

         NAME OF TAXPAYER: <<Purchaser>>

         NAME OF SPOUSE:

         ADDRESS:
                         -------------------------------------

                         -------------------------------------

         IDENTIFICATION NO. OF TAXPAYER:

         IDENTIFICATION NO. OF SPOUSE:

         TAXABLE YEAR:

2.       The property with respect to which the election is made is described as
         follows:               shares of the Common Stock $     par value, of
         RedEnvelope, Inc., a Delaware corporation (the "Company").

3.       The date on which the property was transferred is:

4.       The property is subject to the following restrictions:

         Repurchase option at cost in favor of the Company upon termination of
         taxpayer's employment or consulting relationship.

5.       The fair market value at the time of transfer, determined without
         regard to any restriction other than a restriction which by its terms
         will never lapse, of such property is: $               .

6.       The amount (if any) paid for such property:  $

The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said property.

The undersigned understands that the foregoing election may not be revoked
except with the consent of the Commissioner.

Dated:
      ----------------                             -----------------------------
                                                   Taxpayer
Dated:
      ----------------                             -----------------------------
                                                   Spouse of Taxpayer
<PAGE>
                                     RECEIPT

         RedEnvelope, Inc. hereby acknowledges receipt of a check in the amount
of $___________ given by <<Purchaser>> as consideration for Certificate No. ____
________________ for __________ shares of Common Stock of RedEnvelope, Inc.

Dated:
      -------------

                                               RedEnvelope, Inc.

                                           By:
                                                  ---------------------------

                                           Title:
                                                  ------------------------------
<PAGE>
                               RECEIPT AND CONSENT

         The undersigned hereby acknowledges receipt of a photocopy of
Certificate No.         for             shares of Common Stock of RedEnvelope,
Inc. (the "Company").

         The undersigned further acknowledges that the Secretary of the Company,
or his or her designee, is acting as escrow holder pursuant to the Restricted
Stock Purchase Agreement Purchaser has previously entered into with the Company.
As escrow holder, the Secretary of the Company, or his or her designee, holds
the original of the aforementioned certificate issued in the undersigned's name.

Dated:
      -----------------

                                                         -----------------------
                                                         <<Purchaser>>

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00055-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00055-of-00352.parquet"}]]