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EXHIBIT 10.58
 
  A.
    
    THE OBJECTIVE OF THE ANNUAL INCENTIVE PLAN is to financially
reward employees for their contributions to the success and
profitability of RedEnvelope, Inc.B.
    
    PARTICIPANTS: This plan applies to RedEnvelope, Inc. full-time
and part-time employees who 1.) began work on or before the
first day of the Companys fourth fiscal quarter, 2.) are
employed on the day bonuses are paid, and 3.) are not enrolled
in any other bonus, sales, or incentive plan.C.
    
    CHANGES IN PLAN: The Company reserves the right to modify the
Annual Bonus Plan in total or in part, at any time. Any such
change must be in writing and approved by the Compensation
Committee of the Board of Directors. The Compensation Committee
or plan designers reserve the right to interpret the plan
document as needed.D.
    
    ENTIRE AGREEMENT: This Plan is the entire agreement between
RedEnvelope, Inc. and the employee regarding the subject matter
of this Plan and supersedes all prior compensation or incentive
plans or any written or verbal representations regarding the
subject matter of this Plan.
  A.
    
    ELIGIBLE EARNINGS are defined as base wages or salary payments,
overtime, shift differentials, and payments made for time off.
Eligible earnings do not include moving or relocation
allowances, educational reimbursements, or other bonuses or
commissions. The eligible earnings received during the fiscal
year represent the basis for the bonus calculation.B.
    
    BONUS TARGET is a percentage level of eligible earnings
determined by each participants position.C.
    
    COMPANY PERFORMANCE FACTOR is based on the Company achieving an
established a net income target. The net income target must be
achieved for any bonus to be paid. The Board of Directors will
approve the applicable target for each fiscal year within the
first 90 days of each fiscal year. The Company performance
factor is capped at 150% of the annual target.D.
    
    INDIVIDUAL PERFORMANCE FACTOR is based on the managers
evaluation of the participants performance and contribution for
the fiscal year. This factor may range from 25% to 175% of an
individuals target bonus. The assigned factor may also be a
zero resulting in no bonus based on the managers evaluation of
performance and contribution.E.
    
    BONUS FORMULA AND CALCULATION EXAMPLE: Assume participant with
eligible earnings of $50,000 at the 5% target level, individual
performance factor of 115%, and Company performance of 100% of
target.
  IndividualEligible Earnings
    
    Target Incentive
    
    Company Achievement
    
    Performance
    
    Annual Bonus Amount$50,000 X
    
    5% X
    
    100% X
    
    115% =
    
    $
    2,875.00
  F.
    
    BONUS PAYMENTS: Bonuses will be paid as soon as practicable
after the Company announces its financial results for the fiscal
year, which generally occurs in May. All bonus payments will be
made net of applicable withholding taxes.G.
    
    TRANSFERS: Employees who are participants in the Plan and who
transfer to a new position not governed by this Plan will be
eligible on a pro-rata basis for the applicable period and paid
as defined by the Plan. Any exceptions to the Plan must be
designated in writing and approved by the Chief Executive
Officer.H.
    
    EMPLOYMENT AT WILL: The employment of all Plan participants at
RedEnvelope is for an indefinite period of time and is
terminable at any time by either party, with or without cause
being shown or advance notice by either party. This Plan shall
not be construed to create a contract of employment for a
specified period of time between RedEnvelope, Inc. and any Plan
participant.