Document:

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                                                                     EXHIBIT 4.1
                                  XCEED INC.
                         MILLENNIUM STOCK OPTION PLAN

                                   ARTICLE I

Establishment and Purpose

     Section 1.1. Xceed Inc., a Delaware corporation (the "Company"), hereby
establishes a stock option plan to be named the Millennium Stock Option Plan
(the "Plan").

     Section 1.2. The purpose of this Plan is to induce persons to whom the
Company determines to extend offers of employment to agree to become employees
of the Company (or any of its subsidiaries), to offer incentives to new and
existing employees, officers, directors and consultants to contribute to the
Company's progress, and to encourage said persons to promote the best interests
of the Company. This Plan provides for the grant to such persons options to
purchase shares of common stock of the Company, par value $.01 per share (the
"Common Stock") which qualify as incentive stock options ("Incentive Options")
under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
as well as options which may not be so qualified ("Non-Qualified Options").
Incentive Options and Non-Qualified Options may be collectively referred to
hereinafter as the "Options" as the context may require. Persons granted Options
hereunder may be referred to hereinafter as the "Optionees."

     Section 1.3. All Options granted on or after the date that this Plan has
been approved and adopted by the Company's board of directors (the "Board of
Directors") shall be governed by the terms and conditions of this Plan unless
the terms of any such Option specifically indicate that it is not to be so
governed.

     Section 1.4. Any Option granted hereunder which is intended to qualify as
an Incentive Option which, for any reason whatsoever, fails to so qualify, shall
be deemed to be a Non-Qualified Option granted hereunder.

     Section 1.5. Prior to the approval and ratification of this Plan by the
stockholders of the Company, only new employees shall be granted Options under
this Plan.

                                  ARTICLE II

Administration

     Section 2.1. All determinations hereunder concerning the selection of
persons eligible to receive awards under this Plan and determinations with
respect to the timing, pricing and amount of an award hereunder (other than
pursuant to a non-discretionary formula hereinafter set forth, shall be made by
an administrator (the "Administrator"). The Administrator shall be either: (a)
the Board of Directors, or (b) in the discretion of the Board of Directors, a
committee of not less than two members of the Board of Directors (the
"Committee"), each of whom is both (i) a "Non-Employee" Director as such term is
defined in Rule 16b-3 (as such rule may be amended from time to time, "Rule 16b-
3") under the Securities Exchange Act of 1934, as amended (the "Exchange Act")
and (ii) an "Outside Director" as such term is defined in Section 162(m) of the
Code and the regulations thereunder. In the event this Plan is administered by
the Committee, the Committee shall select one of its members to serve as the
chairman thereof and shall hold its meetings at such times and places as it may
determine. In such case, a majority of the total number of members of the
Committee shall be necessary to constitute a quorum; and (i) the affirmative act
of a majority of the members present at any meeting at which a quorum is
present, or (ii) the approval in writing by a majority of the members of the
Committee, shall be
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necessary to constitute action by the Committee. Only the Committee may grant
Options to employees who are covered under Section 162(m) of the Code.

     Section 2.2. The provisions hereof relating to Incentive Options are
intended to comply in every respect with Section 422 of the Code ("Section 422")
and the regulations promulgated thereunder. In the event that any future statute
or regulation shall modify Section 422, this Plan shall be deemed to incorporate
by reference such modification. Any agreement relating to the grant of any
Incentive Option hereunder, which Option is outstanding and unexercised at the
time that any modifying statute or regulation becomes effective, shall also be
deemed to incorporate by reference such modification and no notice of such
modification need be given to the Optionee. Any agreement relating to an
Incentive Option granted hereunder shall provide that the Optionee hold the
stock received upon exercise of such Incentive Option for a minimum of two years
from the date of grant of the Incentive Option and one year from the date of
exercise of such Incentive Option, absent the written approval, consent or
waiver of the Administrator.

     Section 2.3. If any provision of this Plan is determined to disqualify the
shares of Common Stock purchasable upon exercise of an Incentive Option granted
hereunder from the special tax treatment provided by Section 422, such provision
shall be deemed to incorporate by reference the modification required to qualify
such shares of Common Stock for said tax treatment.

     Section 2.4. The Company shall grant Options hereunder in accordance with
determinations made by the Administrator pursuant to the provisions hereof. All
Options granted pursuant hereto shall be clearly identified as Incentive Options
or Non-Qualified Options. The Administrator may from time to time adopt (and
thereafter amend or rescind) such rules and regulations for carrying out this
Plan and take such action in the administration of this Plan, not inconsistent
with the provisions hereof, as it shall deem proper. The Board of Directors or,
subject to the supervision of the Board of Directors, the Committee, as the
Administrator, shall have plenary discretion, subject to the express provisions
of this Plan, to determine which officers, directors, employees and consultants
shall be granted Options, the number of shares subject to each Option, the time
or times when an Option may be exercised (whether in whole or in installments),
the terms and provisions of the respective agreements relating to the grant of
Options (which need not be identical), including such terms and provisions which
may be amended from time to time as shall be required, in the judgment of the
Administrator, to conform to any change in any law or regulation applicable
hereto, and to make all other determinations deemed necessary or advisable for
the administration of this Plan. The interpretation and construction of any
provision of this Plan by the Administrator (unless otherwise determined by the
Board of Directors) shall be final, conclusive and binding upon all persons.

     Section 2.5. No member of the Administrator shall be liable for any action
or determination made in good faith with respect to administration of this Plan
or the Options granted hereunder. Members of the Board of Directors and/or the
Committee, as the Administrator, shall be indemnified by the Company, pursuant
to the Company's bylaws, for any expenses, judgments or other costs incurred as
a result of a lawsuit filed against such member claiming any rights or remedies
arising out of such member's participation in the administration of this Plan.

                                  ARTICLE III

Total Number of Shares to be Optioned

     Section 3.1. There shall be reserved for issuance or transfer upon exercise
of the Options granted from time to time hereunder an aggregate of 3,000,000
shares of Common Stock (subject to adjustment as provided

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in Article VIII hereof). The shares of Common Stock issued upon exercise of any
Option granted hereunder may be shares of Common Stock previously issued and
reacquired by the Company at any time or authorized but unissued shares of
Common Stock, as the Board of Directors from time to time may determine. No
employee may be issued more than 1,000,000 shares pursuant to Options granted
hereunder during the term of the Plan.

     Section 3.2. In the event that any Options outstanding under this Plan for
any reason expire or are terminated without having been exercised in full, the
unpurchased shares of Common Stock subject to such Option and any such
surrendered shares of Common Stock may again be available for transfer
hereunder.

     Section 3.3. No Options shall be granted pursuant hereto to any Optionee
after the tenth anniversary of the earlier of: (a) the date that this Plan is
adopted by the Board of Directors, or (b) the date that this Plan is approved by
the stockholders of the Company.

                                  ARTICLE IV

Eligibility

     Section 4.1. Options may be granted hereunder to employees, officers,
directors and consultants of the Company (or any of its subsidiaries) selected
by the Administrator. For purposes of determining who is an employee with
respect to eligibility hereunder, the provisions of Section 422 of the Code
shall govern. The Administrator may determine (in its sole discretion) that any
person who would otherwise be eligible to be granted Options shall, nonetheless,
be ineligible to receive any award under this Plan.

     Section 4.2. The Administrator shall (in its discretion) determine the
persons to be granted Options, the time or times at which Options shall be
granted, the number of shares of Common Stock subject to each Option, the terms
of a vesting or forfeiture schedule, if any, the type of Option issued, the
period during which such Options may be exercised, the manner in which Options
may be exercised and all other terms and conditions of the Options; provided,
however, no Option shall be granted which has terms or conditions inconsistent
with those stated in Articles V and VI hereof. Relevant factors in making such
determinations may include the value of the services rendered by the respective
Optionee, his or her present and potential contributions to the Company, and
such other factors which are deemed relevant by the Administrator in
accomplishing the purpose of this Plan.

                                   ARTICLE V

Terms and Conditions of Options

     Section 5.1. Each Option granted under this Plan shall be evidenced by a
stock option agreement (the "Option Agreement") in a form consistent with this
Plan, provided that the following terms and conditions shall apply:

     (a) The price at which each share of Common Stock covered by an Option may
     be purchased shall be set forth in the Option Agreement and shall be
     determined by the Administrator, provided that the option price for any
     Incentive Option shall not be less than the "fair market value" of the
     shares of Common Stock at the time of grant determined. Notwithstanding the
     foregoing, if an Incentive Option to purchase shares of Common Stock is
     granted hereunder to an Optionee who, on the date of the grant, directly or
     indirectly owns more than ten percent (10%) of the voting power of all
     classes of capital

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     stock of the Company (or its parent or subsidiary), not including the
     shares of Common Stock obtainable upon exercise of the Option, the minimum
     exercise price of such Option shall be not less than one hundred ten
     percent (110%) of the "fair market value" of the shares of Common Stock on
     the date of grant determined in accordance with Section 5.1(b) below.

     (b) The "fair market value" shall be determined by the Administrator, which
     determination shall be binding upon the Optionee, the Company and its
     officers, directors, employees and consultants. The determination of the
     "fair market value" shall be based upon the following: (i) if the Common
     Stock is not listed and traded upon a recognized securities exchange and
     there is no report of stock prices with respect to the Common Stock
     published by a recognized stock quotation service, on the basis of the
     recent purchases and sales of the Common Stock in arms-length transactions;
     (ii) if the Common Stock is not then listed and traded upon a recognized
     securities exchange or quoted on the NASDAQ National Market System, and
     there are reports of stock prices by a recognized quotation service, upon
     the basis of the last reported sale or transaction price of the Common
     Stock on the date of grant as reported by a recognized quotation service,
     or, if there is no last reported sale or transaction price on that day,
     then upon the basis of the mean of the last reported closing bid and
     closing asked prices for the Common Stock on that day or on the date
     nearest preceding that day; or (iii) if the Common Stock shall then be
     listed and traded upon a recognized securities exchange or quoted on the
     NASDAQ National Market System, upon the basis of the last reported sale or
     transaction price at which shares of Common Stock were traded on such
     recognized securities exchange on the date of grant or, if the Common Stock
     was not traded on such date, upon the basis of the last reported sale or
     transaction price on the date nearest preceding that date. The
     Administrator shall also consider such other factors relating to the "fair
     market value" of the Common Stock as it shall deem appropriate.

     (c) For the purpose of determining whether an Optionee owns more than ten
     percent (10%) of the voting power of all classes of stock of the Company,
     an Optionee shall be considered to own those shares of stock which are
     owned directly or indirectly through brothers and sisters (including half-
     blooded siblings), spouse, ancestors and lineal descendants; and
     proportionately as a shareholder of a corporation, a partner of a
     partnership, and/or a beneficiary of a trust or an estate that owns shares
     of capital stock of the Company.

     (d) Notwithstanding any other provision hereof, in accordance with the
     provisions of Section 422(d) of the Code, to the extent that the aggregate
     "fair market value" (determined at the time the Option is granted) of the
     shares of Common Stock with respect to which Incentive Options (without
     reference to this provision) are exercisable for the first time by any
     individual in any calendar year under any and all stock option plans of the
     Company (and its subsidiary corporations and its parent, if any) exceeds
     $100,000, such Options shall be treated as Non-Qualified Options.

     (e) An Optionee may, in the Administrator's discretion, be granted more
     than one Option during the duration of this Plan and may be issued a
     combination of Non-Qualified Options and Incentive Options.

     (f) The duration of any Option shall be within the sole discretion of the
     Administrator; provided, however, that any Incentive Option granted to a
     ten percent (10%) or less stockholder or any Non-Qualified Option shall, by
     its terms, be exercised within ten years after the date the Option is
     granted and any Incentive Option granted to a greater than ten percent
     (10%) stockholder shall, by its terms, be exercised within five years after
     the date the Option is granted.

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     (g) An Option shall not be transferable by the Optionee other than by will,
     or by the laws of descent and distribution. An Option may be exercised
     during the Optionee's lifetime only by the Optionee.

     (h) At least six (6) months shall elapse from the date on which an Option
     is granted to an officer, director, or beneficial owner of more than ten
     percent (10%) of the outstanding shares of Common Stock of the Company
     under this Plan by the Administrator to the date on which any share of
     Common Stock underlying such Option is sold, unless the Administrator
     otherwise consents in writing.

                                  ARTICLE VI

Employment or Service of Optionee

     Section 6.1. If the employment or service of an Optionee is terminated for
cause, the option rights of such Optionee, both accrued and future, under any
then outstanding Option shall terminate immediately, subject to the provisions
of any employment agreement between the Company (or any subsidiary) and an
Optionee which, by its terms, provides otherwise. In the event that an employee
who is an Optionee hereunder has entered into a written employment agreement
with the Company (or a subsidiary), "cause" shall have the meaning attributed
thereto in such employment agreement; otherwise, "cause" shall mean incompetence
in the performance of duties, disloyalty, dishonesty, theft, embezzlement,
unauthorized disclosure of patents, processes or trade secrets of the Company,
individually or as an employee, partner, associate, officer or director of any
organization. The determination of the existence and the proof of "cause" shall
be made by the Administrator and, subject to the review of any determination
made by the Administrator, such determination shall be binding on the Optionee
and the Company.

     Section 6.2. Subject to the provisions of any employment agreement between
the Company (or a subsidiary) and an Optionee, if the employment or service of
an Optionee is terminated by either the Optionee or the Company for any reason
other than cause, death, or for disability (as defined in Section 22(e)(3) of
the Code or pursuant to the terms of such an employment agreement), the option
rights of such Optionee under any then outstanding Option shall, subject to the
provisions of Section 5.1(h) hereof, be exercisable by such Optionee at any time
prior to the expiration of the Option or within three months after the date of
such termination, whichever period of time is shorter, but only to the extent of
the accrued right to exercise an Option at the date of such termination.

     Section 6.3. Subject to the provisions of any employment agreement between
the Company (or a subsidiary) and an Optionee, in the case of an Optionee who
becomes disabled (as defined by Section 22(e)(3) of the Code or pursuant to the
terms of such an employment agreement), the option rights of such Optionee under
any then outstanding Option shall, subject to the provisions of Section 5.1(h)
hereof, be exercisable by such Optionee at any time prior to the expiration of
the Option or within one year after the date of termination of employment or
service due to disability, whichever period of time is shorter, but only to the
extent of the accrued right to exercise an Option at the date of such
termination

     Section 6.4. In the event of the death of an Optionee, the option rights of
such Optionee under any then outstanding Option shall be exercisable by the
person or persons to whom these rights pass by will or by the laws of descent
and distribution, at any time prior to the expiration of the Option or within
three years after the date of death, whichever period of time is shorter, but
only to the extent of the accrued right to exercise an Option at the date of
death. If a person or estate acquires the right to exercise an Option by bequest
or inheritance, the Administrator may require reasonable evidence as to the
ownership of such Option, and may require such consents and releases of taxing
authorities as the Administrator may deem advisable.

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     Section 6.5. The Administrator may also provide that an employee must be
continuously employed by the Company for such period of time as the
Administrator, in its discretion, deems advisable before the right to exercise
any portion of an Option granted to such employee will accrue, and may also set
such other targets, restrictions or other terms relating to the employment of
the Optionee which targets, restrictions, or terms must be fulfilled or complied
with, as the case may be, prior to the exercise of any portion of an Option
granted to any employee.

     Section 6.6. Options granted hereunder shall not be affected by any change
of duties or position, so long as the Optionee continues in the service of the
Company.

     Section 6.7. Nothing contained in this Plan or in any Option granted
pursuant hereto shall confer upon any Optionee any right with respect to
continuance of employment or service by the Company nor interfere in any way
with the right of the Company to terminate the Optionee's employment or service
or change the Optionee's compensation at any time.

                                  ARTICLE VII

Purchase of Shares

     Section 7.1. Except as provided in this Article VII, an Option shall be
exercised by tender to the Company of the full exercise price of the shares of
Common Stock with respect to which an Option is exercised and written notice of
the exercise. The right to purchase shares of Common Stock shall be cumulative
so that, once the right to purchase any shares of Common Stock has accrued, such
shares or any part thereof may be purchased at any time thereafter until the
expiration or termination of the Option. A partial exercise of an Option shall
not affect the right of the Optionee to subsequently exercise his or her Option
from time to time, in accordance with this Plan, as to the remaining number of
shares of Common Stock subject to the Option. The purchase price payable upon
exercise of an Option shall be in United States dollars and shall be payable in
cash or by certified bank check. Notwithstanding the foregoing, in lieu of cash,
an Optionee may, with the approval of the Administrator, exercise his or her
Option by tendering to the Company shares of Common Stock owned by him or her
having an aggregate fair market value at least equal to the aggregate purchase
price. The "fair market value" of any shares of Common Stock so surrendered
shall be determined by the Administrator in accordance with Section 5.1(b)
hereof.

     Section 7.2. Except as provided in Article VI above, an Option may not be
exercised unless the holder thereof is an employee of the Company at the time of
exercise.

     Section 7.3. No Optionee or Optionee's executor, administrator, legatee, or
distributee or other permitted transferee, shall be deemed to be a holder of any
shares of Common Stock subject to an Option for any purpose whatsoever unless
and until such Option has been exercised and a stock certificate or certificates
for the shares of Common Stock purchased by the Optionee are issued to the
Optionee in accordance with the terms of this Plan. No adjustment shall be made
for dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior to
the date that any such stock certificate is issued, except as provided in
Article VIII hereof.

     Section 7.4. If: (i) the listing, registration or qualification of the
Options issued hereunder or of any securities issuable upon exercise of such
Options (the "Subject Securities") upon any securities exchange or quotation
system or under federal or state law is necessary as a condition of or in
connection with the issuance

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or exercise of the Options; (ii) the consent or approval of any governmental
regulatory body is necessary as a condition of or in connection with the
issuance or exercise of the Options; or (iii) any other consent or approval
required by applicable law, rule or regulation is necessary as a condition of or
in connection with the issuance or exercise of the Options, the Company shall
not be obligated to deliver the certificates representing the Subject Securities
or to accept or to recognize an Option exercise unless and until such listing,
registration, qualification, consent or approval shall have been effected or
obtained. The Company will take reasonable action to so list, register, or
qualify the Options and the Subject Securities, or effect or obtain such consent
or approval, so as to allow for issuance and/or exercise.

     Section 7.5. An Optionee may be required to represent to the Company as a
condition of his or her exercise of Options issued under this Plan that: (i) the
Subject Securities acquired upon exercise of his or her Option are being
acquired by him or her for investment purposes only and not with a view to
distribution or resale, unless counsel for the Company is then of the view that
such a representation is not necessary and is not required under the Securities
Act of 1933, as amended (the "Securities Act"), or any other applicable statute,
law, regulation or rule; and (ii) that the Optionee shall make no exercise or
disposition of an Option or of the Subject Securities in contravention of the
Securities Act, the Exchange Act of 1934, or the rules and regulations
thereunder. Optionees may also be required to provide (as a condition precedent
to exercise of an Option) such documentation as may be reasonably requested by
the Company to assure compliance with applicable law and the terms and
conditions of this Plan and the subject Option.

     Section 7.6. An Option may be exercised by tender to the Administrator of a
written notice of exercise together with advice of the delivery of an order to a
broker to sell part or all of the shares of Common Stock subject to such
exercise notice and an irrevocable order to such broker to deliver to the
Company (or its transfer agent) sufficient proceeds from the sale of such shares
to pay the exercise price and any withholding taxes. All documentation and
procedures to be followed in connection with such a "cashless exercise" shall be
approved in advance by the Administrator.

                                  ARTICLE VIII

Change in Number of Outstanding Shares of Stock, Adjustments, Reorganizations,
Etc.

     Section 8.1. In the event that the outstanding shares of Common Stock of
the Company are hereafter increased or decreased or changed into or exchanged
for a different number of shares or kind of shares or other securities of the
Company or of another corporation by reason of reorganization, merger,
consolidation, recapitalization, reclassification, stock split, combination of
shares, or a dividend payable in capital stock, appropriate adjustment shall be
made by the Administrator in the number and kind of shares for the purchase of
which Options may be granted under this Plan, including the maximum number that
may be granted to any one person. In addition, the Administrator shall make
appropriate adjustments in the number and kind of shares as to which outstanding
Options, or portions thereof then unexercised, shall be exercisable, to the end
that the Optionee's proportionate interest shall be maintained as before the
occurrence to the unexercised portion of the Option and with a corresponding
adjustment in the option price per share. Any such adjustment made by the
Administrator shall be conclusive.

     Section 8.2. The grant of an Option hereunder shall not affect in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part of
its business or assets.

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     Section 8.3. Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company as a result of which the
outstanding securities of the class then subject to Options hereunder are
changed into or exchanged for cash or property or securities not of the
Company's issue, or upon a sale of substantially all the property of the Company
to an association, person, party, corporation, partnership, or control group as
that term is construed for purposes of the Exchange Act, this Plan shall
terminate, and all Options theretofore granted hereunder shall terminate, unless
provision be made in writing in connection with such transaction for the
continuance of this Plan and/or for the assumption of Options theretofore
granted, or the substitution for such Options of options covering the stock of a
successor employer corporation, or a parent or a subsidiary thereof, with
appropriate adjustments as to the number and kind of shares and prices, in which
event this Plan and options theretofore granted shall continue in the manner and
under the terms so provided. If this Plan and unexercised Options shall
terminate pursuant to the foregoing sentence, all persons owning any unexercised
portions of Options then outstanding shall have the right, at such time prior to
the consummation of the transaction causing such termination as the Company
shall designate, to exercise the unexercised portions of their Options,
including the portions thereof which would, but for this Section 8.3 not yet be
exercisable.

                                   ARTICLE IX

Duration, Amendment and Termination

     Section 9.1. The Board of Directors may at any time terminate this Plan or
make such amendments hereto as it shall deem advisable and in the best interests
of the Company, without action on the part of the stockholders of the Company
unless such approval is required pursuant to Section 422 of the Code or the
regulations thereunder or other federal or state law, rule or regulation;
provided, however, that no such termination or amendment shall, without the
consent of the individual to whom any Option shall theretofore have been
granted, affect or impair the rights of such individual under such Option.
Pursuant to Section 422(b) of the Code, no Incentive Option may be granted
pursuant to this Plan after ten years from the date this Plan is adopted or the
date this Plan is approved by the stockholders of the Company, whichever is
earlier.

                                   ARTICLE X

Restrictions

     Section 10.1. Any Options and shares of Common Stock issued pursuant hereto
shall be subject to such restrictions on transfer and limitations as shall, in
the opinion of the Administrator, be necessary or advisable to assure compliance
with the laws, rules and regulations of the United States government or any
state or jurisdiction thereof. In addition, the Administrator may in any Option
Agreement impose such other restrictions upon the disposition or exercise of an
Option or upon the sale or other disposition of the shares of Common Stock
deliverable upon exercise thereof as the Administrator may, in its sole
discretion, determine. By accepting the grant of an Option pursuant hereto, each
Optionee shall agree to any such restrictions.

     Section 10.2. Any certificate evidencing shares of Common Stock issued
pursuant to exercise of an Option shall bear such legends and statements as the
Administrator, the Board of Directors or counsel to the Company shall deem
advisable to assure compliance with the laws, rules and regulations of the
United States government or any state or jurisdiction thereof. No certificate
evidencing shares of Common Stock shall be delivered pursuant to exercise of the
Options granted under this Plan until the Company has obtained such consents or
approvals from such regulatory bodies of the United States government or any
state or jurisdiction thereof as the Administrator, the Board of Directors or
counsel to the Company deems necessary or advisable.

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                                   ARTICLE XI

Financial Assistance

     Section 11.1 The Company is vested with the authority hereunder to assist
any employee to whom an Option is granted hereunder (including any officer or
director of the Company or any of its subsidiaries who is also an employee) in
the payment of the purchase price payable upon exercise of such Option, by
lending the amount of such purchase price to such employee on such terms and at
such rates of interest and upon such security (or unsecured) as shall have been
authorized by or under authority of the Board of Directors. Any such assistance
shall comply with the requirements of Regulation G promulgated by the Board of
the Federal Reserve System, as amended from time to time, and any other
applicable law, rule or regulation.

                                  ARTICLE XII

Application of Funds

     Section 12.1. The proceeds received by the Company from the issuance and
sale of Common Stock upon exercise of Options granted pursuant to this Plan are
to be added to the general funds of the Company and used for its corporate
purposes as determined by the Board of Directors.

                                 ARTICLE XIII

Effectiveness of Plan

     Section 13.1 This Plan shall become effective upon adoption by the Board of
Directors, and Options may be issued hereunder from and after that date subject
to the provisions of Section 3.3 above. This Plan must be approved by the
Company's stockholders in accordance with the applicable provisions (relating to
the issuance of stock or options) of the Company's governing documents and state
law or, if no such approval is prescribed therein, by the affirmative vote of
the holders of a majority of the votes cast at a duly held stockholders meeting
at which a quorum representing a majority of all the Company's outstanding
voting stock is present and voting (in person or by proxy) or, without regard to
any required time period for approval, by any other method permitted by Section
422 of the Code and the regulations thereunder. If such stockholder approval is
not obtained within one year of the adoption of this Plan by the Board of
Directors or within such other time period required under Section 422 of the
Code and the regulations thereunder, this Plan shall remain in force; provided
however, that all Options issued and issuable hereunder shall automatically be
deemed to be Non-Qualified Options.

IN WITNESS WHEREOF, pursuant to the approval of this Plan by the Board of
Directors, this Plan is executed and adopted this 13th day of January, 2000.

                                    XCEED INC.

                                    By: /s/ Werner G. Haase
                                        -------------------
                                    Werner G. Haase, Chief Executive Officer

                                       9<PAGE>

                                                                   EXHIBIT 10.17

                            WEB SERVICES AGREEMENT

This Web Services Agreement ("Agreement") is made and entered into as of the 2nd
day of May, 2000 (the "Effective Date"), by and between Shoe Pavilion
Corporation, a corporation organized and existing pursuant to the laws of the
state of Washington, with principal offices at 3200-F Regatta Boulevard,
Richmond, California 94804 ("SP"); and Shoesite.com dba Zappos.com, a
corporation organized and existing pursuant to the laws of the State of
California, with principal offices at 1000 Van Ness, Suite 213, San Francisco,
California, 94109 ("Zappos"); with respect to the following facts and
circumstances:

     WHEREAS, SP is engaged in the business of marketing and selling shoes at
various store locations throughout the United States and through its electronic
commerce Web site on the Internet at URL:  www.ShoePavilion.com (the "SP Web
                                           --------------------       ------
Site");
----

     WHEREAS, Zappos is engaged in the business of marketing and selling shoes
by designing, developing, hosting and maintaining an electronic commerce Web
site on the Internet at URL:  www.Zappos.com (the "Zappos Web Site") and
                              --------------       ---------------
providing back-end customer order and fulfillment services;

     WHEREAS, the parties desire that SP engage Zappos to exclusively design,
develop, host and operate the SP Web Site, which will include providing
electronic commerce capabilities and back-end customer order and fulfillment
services by Zappos personnel at SP warehouse locations; and

     NOW, THEREFORE, the parties hereby agree as follows:

     1.  DEFINITIONS

               (a) "Deliverable" means the version of the SP Web Site to be
                   ------------
     delivered by Zappos to SP by a specified date in accordance with the
     Milestone Delivery Schedule. The Deliverables are set forth in Exhibit A
                                                                    ---------
     attached hereto.

               (b) "Design Specifications" means the written description of
                   -----------------------
     the SP Web Site's functional and aesthetic aspects, as prepared by Zappos
     and mutually agreed by the parties, including without limitation, the
     design, functions, interfaces and technical requirements, all as set forth
     in Exhibit C attached hereto. The parties agree that the SP Web Site shall
        ---------
     have functionalities similar to the Zappos Web Site.

               (c) "Intellectual Property Rights" means any and all now known or
                   ------------------------------
     hereafter existing rights associated with works of authorship or inventions
     throughout the universe, including but not limited to copyrights, patents,
     trademarks, and all other intellectual and industrial property and
     proprietary rights (of every kind and nature throughout the universe and
     however designated) relating to intangible property.

                                       1
<PAGE>

               (d) "Maintenance" means (a) making such corrections to the SP Web
                    -----------
     Site and to related server hardware and network connections
     required to ensure that the SP Web Site will be available for use on the
     World Wide Web at all times and will conform to the Design Specifications,
     (b) tracking and reporting of usage patterns, and (c) establishing a back-
     up data protection plan for the SP Web Site.

               (e) "Milestone" means any task to be completed by SP by a
                    ---------
      specified date in accordance with the Milestone Delivery Schedule.
      The Milestones are set forth in Exhibit A attached hereto.

               (f) "Milestone Delivery Schedule" means the description attached
                    ---------------------------
      Whereto as Exhibit A of the Milestones and Deliverables to be delivered
                 ---------
      and the dates by which each Milestone is to be completed and each
      Deliverable is to be delivered to SP.

               (g)  "SP Content" means the existing online content of SP, as
                     ----------
     well as information with respect to inventor, product information, samples
     to be photographed, design structure, imagery, and any audio and
     audiovisual material, photographs, logos, trademarks, service marks, any
     materials provided by SP for incorporation in the SP Site and original
     elements of audiovisual or visual displays created hereunder specifically
     for SP.

               (h)  "SP Products" means the SP products to be offered for sale
                     -----------
      through the SP Web Site, as described in Exhibit B attached hereto. SP may
      modify Exhibit B in its sole discretion
             ---------
      from time to time in writing as necessary to meet-its business
      obligations.

               (i)  "Statement of Work" means the written description attached
                     -----------------
      hereto as Exhibit A of the work to be performed by Zappos in the
                ---------
      development of the ent of the SP Web Site.

               (j)  "SP Web Site" means the so-called HTML "home page" on the
                     -----------
     World Wide Web for the SP online storefront at URL: www.ShoePavilion.com,
     and other linked pages and all portions thereof, capable of running in a
     satisfactory manner, including without limitation, all HTML or other
     formatted text files, all related graphics files, data files, modules,
     routines and objects, and the computer software and all other script or
     program files required to exploit such materials and that collectively
     control the display of and user interaction with the SP Web Site and have
     the features and capabilities described in the Design Specifications,
     together with all Maintenance thereto.

          2.   DEVELOPMENT OF THE SP WEB SITE

              2.1  Zappos Obligations. Zappos will develop, and use commercially
     reasonable efforts to launch the SP Web Site on or before May 15, 2000.
     Specifically, but without limiting the generality of the foregoing, Zappos
     will be responsible for :

               (a)  development, design and implementation of the interfaces and
     navigation (information design) for the SP Web Site, and development,
     installation and testing of the SP Web Site in accordance with the Design
     Specifications and Statement of Work;

                                       2
<PAGE>

               (b)  providing or obtaining, at its expense, all necessary
     programming and other production services and hardware and software to
     implement the Design Specifications; and

               (c)  delivering the Deliverables to SP, in conformity with the
     Design Specifications, the Statement of Work, and Milestone Delivery
     Schedule.

              2.2  SP Obligations. SP shall use commercially reasonable efforts
to assist in Zappos' development of the SP Web Site described in Section 2.1.
Without limiting the generality of the foregoing obligations, SP will be
responsible for:

               (a)  providing Zappos with initial access to the SP Content
     pursuant to the Milestone Delivery Schedule; an d

               (b)  assisting in the migration of inventory data to the SP Web
     Site in the required format for all of the SP Products.

              2.3  Revisions. SP shall have ten (10) business days from the
delivery of any Deliverable to review and request in writing from Zappos
revisions to the Deliverable. Upon receipt of such requests, Zappos shall use
commercially reasonable efforts to implement such revision requests that the
Deliverable is within the scope of, and consistent with, the Design
Specifications, and the Statement of Work.

              2.4  Exclusivity. The parties agree that Zappos will be the
exclusive provider of web site development services, web site hosting services
and web site operation services and capabilities (the "Exclusive Services") for
the SP Web Site and for any other e-commerce enabled web site selling SP
Products, subject to the right of SP to advertise SP Products on the Internet
pursuant to advertising agreements currently in force between SP and each of
Yahoo! and America Online.

              2.5  Delay in Implementation of Service. The parties acknowledge
that the development and launch of the SP Web Site is a cooperative effort
requiring the diligent efforts of both parties. Therefore, in the event the SP
Web Site is not available on or before June 1, 2000, either party may, at any
time thereafter, terminate this Agreement immediately upon written notice. Such
termination will be each party's sole remedy and sole liability with respect to
the failure of the SP Web Site to be available on or prior to such date.

     3.  OPERATION OF THE SP WEB SITE

              3.1 Operation of the SP Web Site. As between the parties, Zappos
will be responsible for the Maintenance and operation of the SP Web Site. Zappos
shall configure, install, house, maintain, upgrade, monitor, modify and operate
the computer equipment, server and other software, network equipment and
components, bandwidth and connectivity necessary to host and to operate the SP
Web Site. Zappos shall operate the SP Web Site on Zappos' computer servers in a
fashion substantially similar to the fashion in which it operates the Zappos Web
Site. However, the parties acknowledge that the SP Web Site may not operate
continuously

                                       3
<PAGE>

or in an error-free fashion. SP will provide updated SP Content on
a routine basis as business dictates, including updated product information
reflecting current SP Products available for sale and providing samples of new
SP Products to be photographed by Zappos.

              3.2 SP Web Site Payments and Order Fulfillment.

               (a) Zappos personnel will be responsible for credit card
authorizations and processing of payments from customer purchase to Zappos'
account. Zappos will be responsible for the fulfillment of customer purchases of
SP Products on the SP Web Site, including without limitation, picking and
packing shoes from SP's warehouse located at 3200-F Regatta Boulevard, Richmond,
California 94804, shipping orders to customers pursuant to customer
instructions; billing and collecting on customer orders, including authorizing
and processing credit card transactions; and online customer sales support.
Notwithstanding the foregoing, SP will at all times retain title to SP Products
until the SP Products are shipped to the customer from SP's warehouse, at which
time the title will pass to the customer .

               (b)  SP will be responsible for providing SP Products to fulfill
customer orders on the SP Web Site and agrees to keep Zappos updated of
inventory levels. The SP Products will be sold to customers at sales prices and
terms to be determined by SP, but in no event will such prices and terms differ
from those of SP store locations .

               (c)  Zappos will calculate, invoice, collect any and all state
and local sales, gross receipts, use, property, license, value added,
withholding, excise or similar tax, federal, state or local, levied or assessed
with respect to the purchase of SP Products and any and all related duties,
tariffs, imposts and similar charges ("Taxes") (other than any taxes arising on
Client's net income) and shall remit all such Taxes to the appropriate
authorities as and when due, and timely file any and all necessary forms and
reports regarding the same. Zappos shall hold SP harmless from and against any
failure of Zappos to collect and remit such Taxes, and shall provide SP with a
quarterly report providing evidence of the payment thereof.

               (d) Zappos will provide SP with a daily reconciliation of the SP
Products picked and packed from the SP Warehouse with the SP Products that were
in fact shipped and sold.

            3.3 Customer Support. Zappos shall use commercially reasonable
efforts to correct any non-conformity in the SP Web Site that causes the SP Web
Site not to conform with the specifications therefor in Exhibit C. Zappos shall
                                                        ---------
provide customer support to users of the SP Web Site in the same manner it
provides such support to users of the Zappos Web Site. SP shall not facilitate,
instruct or encourage its walk-in store customers to contact Zappos for customer
support.

            3.4  Zappos' Employees. Zappos shall maintain a staff of employees,
including those located in the SP Warehouse, as required to meet Zappos' order
fulfillment obligations and other obligations that require a presence in SP's
physical locations, all of whom shall be the employees of Zappos but shall be
subject to the rules, regulations, standards of service and conduct established
by SP for its own employees. Zappos shall be responsible for all

                                       4
<PAGE>
payments to be made to Zappos' employees and for the provision of worker's
compensation insurance, payroll taxes and other obligations incurred in the
hiring and use of its employees.

            3.5  Conduct of Zappos. Zappos shall: (i) never knowingly
misrepresent SP Products; (ii) cause its advertising relating to the SP Products
and the SP Web Site to be truthful; (iii) conduct its services under this
Agreement so as to protect the business reputation of SP; (iv) comply with laws,
rules and regulations applicable to its activities, including but not limited to
advertising conducted by Zappos; and (v) exercise its reasonable efforts to meet
future objectives established by SP with respect to the brands of SP Products
carried and the depth of merchandise assortment.

            3.6  Settlement of Customer Disputes. Zappos shall bear all costs
and expenses associated with processing of customer returns of SP Products in
accordance with SP's prevailing policy for SP's store locations. SP will
generally not accept returns (a) where the customer has worn the shoes, (b)
where there is no shoe box accompanying the return, (c) where the customer does
not have an original receipt, or (d) in similar situations where it would be
difficult for SP to re-sell the shoes. Settlements of substantial disputes
(including but not limited to disputes as to SP Product quality or refunds not
meeting SP's prevailing policy for SP's store locations) with customers with
regard to SP Products shall be under the control of SP and shall be settled by
SP. SP shall adjust any such controversy in a reasonable manner, but shall in no
event be required to give an allowance or make a refund in excess of the
original cost to the customer of the merchandise.

     4.  MARKETING, ADVERTISING AND RIGHTS TO USER INFORMATION

            4.1 Promotion of the SP Web Site. SP shall use reasonable efforts to
promote the SP Web Site, including without limitation promoting the SP Web Site
through marketing and public relations channels available to SP as of the
Effective Date, including on its shopping bags, receipts, advertisements, etc.

            4.2  Rights to User Information. The parties acknowledge that in
connection with the operation of the SP Web Site, Zappos will collect certain
user and transactional information about users of and transactions conducted
through the SP Web Site ("SP User Information"). Zappos will provide reports of
the SP User Information to SP to be mutually agreed by the parties. SP shall own
all right, title and interest in all SP User Information. Zappos will protect
and will not disclose any SP User Information and Zappos will: (a) use such SP
User Information only as reasonably required for the performance of its
obligations under this Agreement; (b) not deliver or disclose any SP User
Information to any third party; and (c) not use any SP User Information to
perform any services for any third party.

            4.3  Zappos Web Site. Zappos will have exclusive rights to feature
SP products in the "Specials" section of the Zappos Web Site. It is agreed that
the "Specials" section shall feature approximately various SP Products and will
be updated on a daily basis.

     5.  PUBLICITY. SP and Zappos shall cooperate to develop a mutually
acceptable press release announcing the relationship described herein no later
than 30 days from the

                                       5
<PAGE>

Effective Date. SP and Zappos shall make such press release available on
their respective Web sites and will distribute such press releases to the media.
Under no circumstances may either party reveal the terms of this Agreement other
than to potential investors or acquirors for diligence purposes or pursuant to
the requirement of a governmental agency required by operation of law.

     6.  COSTS, FEES, AND PAYMENTS

           6.1  Costs. As between the parties, Zappos will bear all the costs
associated with deploying the SP Web Site on the World Wide Web, rendering the
Exclusive Services, including updating the SP Content, rendering fulfillment
services for orders placed through the SP Web Site, including the payment of all
packaging, shipping and freight costs, and performing any ongoing corrections,
enhancements or support for the SP Web Site. Zappos will bear the production
costs associated with presentation of SP Products for sale on the SP Web Site,
including photography of sample SP Products provided by SP. SP will bear the
cost associated with supplying SP Content, including updates to such content in
the format required by Zappos, sample SP Products to be used in production, SP
Products for order fulfillment and SP mailing labels. Zappos will bear all costs
associated with supplying personnel to pick and package shoes at the SP
warehouse.

            6.2  Payments. Zappos will provide SP with daily sales reports by
sending SP an electronic file in a format previously agreed upon by the parties.
Zappos will provide weekly reports to SP detailing (i) weekly gross sales, (iii)
daily Taxes and duties collected in accordance with Section 3.2(c), using sales
tax identification numbers provided by Zappos, (iii) quantity, product name and
product number for all SP Products sold during the each day of the preceding
week, (iv) the amount of discounts, credits and other adjustments from gross
sales which may be deducted therefrom in the computation of Net Sales for such
week, the resulting amount of Net Sales for such week, any other deductions
permitted under this Agreement, and the computation of the amount of payable to
SP thereunder for such week (the "Weekly Report"). Zappos will wire on a weekly
basis to the commercial bank designated by SP below 80% of Net Sales collected
during the preceding week. For purposes of this Agreement, "Net Sales" shall
mean (i) the total (gross) amounts received for or in connection with any and
all sales of merchandise, whether such sales shall be for cash or credit, all of
which sales shall be accounted for and included as part of the total (gross)
amounts; less (ii) customer returns, allowances, credits or refunds, and Taxes
as are collected from customers.

     7.  WARRANTIES AND INDEMNIFICATIONS.

            7.1 Each party represents, warrants and covenants to the other party
that it is a corporation duly organized, and has the power and authority to
enter into this Agreement. Zappos warrants that the software and other materials
created or used by Zappos in fulfilling its obligations under this Agreement
(with the exception of materials provided by SP) will not infringe the
proprietary rights of any third party, including any intellectual property,
trade secrets, patents, trademarks, copyrights or other third right of such
party. EXCEPT AS SET FORTH ABOVE, NEITHER PARTY MAKES ANY WARRANTIES TO THE
OTHER

                                       6
<PAGE>

PARTY, EITHER EXPRESS OR IMPLIED, AND HEREBY DISCLAIMS ANY IMPLIED WARRANTIES OF
MERCHANTABILITY, AND FITNESS FOR A PARTICULAR PURPOSE.

            7.2  Zappos agrees to defend, indemnify and hold harmless SP, its
parent, subsidiaries and affiliates and their respective officers, directors,
employees, and agents from and against all claims, actions, suits, demands,
proceedings, obligations, liabilities, damages, losses, judgments and expenses
(including costs of collection, attorneys' fees and other costs of defense)
(collectively "Damages"), arising out of or resulting from claims or allegations
of infringement of the proprietary rights of any third party, including any
intellectual property, trade secrets, patents, trademarks, copyrights or other
third right of such party arising out of Zappos' services under this Agreement.

     8.  TERM AND TERMINATION.

            8.1  Term and Termination. This Agreement will become effective on
the Effective Date and shall remain force for an initial term ending on December
31, 2000. Thereafter, the term of this Agreement will continue until terminated
as described in Section 8.

            8.2  Termination at Will. Either party may terminate this Agreement
upon one hundred twenty (120) days' prior written notice at any time after the
end of the initial term described in Section 8.1.

            8.3  Events of Default. A party may terminate this Agreement and its
further obligations hereunder upon the occurrence of any of the following events
of default (subject to Section 8.5) :

               (a)  The other party ceases business in the ordinary course,
     makes an assignment for the benefit of its creditors, or lacks adequate
     funding to sustain business in the ordinary course for the next thirty (30)
     days; or

               (b)  The other party is in material default of any provision of
this Agreement.

            8.4  Cure Period for Event of Default. Upon the occurrence of any
event of default entitling a party to terminate this Agreement, the non-
defaulting party may send notice of termination, specifying the nature of the
default, to the other party. The defaulting party may have 30 calendar days,
following the date of such notice to enable it to cure the default to the non-
defaulting party's satisfaction (assuming that the default is susceptible of
cure). Failure to cure the default will result in termination without further
notice by the non-defaulting party.

            8.5  Effect of Termination. Upon expiration or termination of this
Agreement, each party shall return or destroy the Confidential Information (as
defined herein) of the other party. The rights and obligations of the parties
pursuant to Sections 3.2(c), 4.2, 6, 7, 8.5, 9.3, 9.4, 10, 11, 12 and 13 will
survive termination or expiration of this Agreement for any reason.

                                       7
<PAGE>

     9.  LICENSES AND OWNERSHIP

            9.1  Trademark License. Each party ("Licensor") grants to the other
party ("Licensee") a non-exclusive, non-transferable, royalty-free right to
display, the trademarks, domain names and logos adopted by Licensor ("Marks"),
solely to perform Licensee's obligations under this Agreement. In addition,
subject to Sections 5 and 9, Licensee may display the Marks on an appropriate
area of its Web site indicating its business associates and strategic alliances.

            9.2  Review. Licensee shall submit to Licensor all representations
of the Marks that Licensee intends to use in connection with the license granted
in Section 9.1, for Licensor's approval of design, color, presentation, quality,
and conformance with the Licensor's trademark and branding policies. Licensee
shall not publish, disseminate, exhibit, or otherwise distribute any such
representation without the Licensor's prior written permission. Once Licensor
grants its approval, Licensor shall not unreasonably withdraw its approval, and
Licensee will not be obligated to seek further approval for substantially
similar uses of the Mark.

            9.3  Assignment of Goodwill. If Licensee, in the course of
performing its services hereunder, acquires any goodwill or reputation in any of
the Marks, all such goodwill or reputation will automatically vest in Licensor
when and as, on an on-going basis, such acquisition of goodwill or reputation
occurs, as well as at the expiration or termination of this Agreement, without
any separate payment or other consideration of any kind to Licensee, and
Licensee agrees to take all such actions necessary to effect such vesting.
Licensee shall not contest the validity of any of the Marks or Licensor's
exclusive ownership of them. During the term of this Agreement, Licensee shall
not adopt, use, or register, whether as a corporate name, trademark, service
mark or other indication of origin, any of the Marks, or any word or mark
confusingly similar to them in any jurisdiction.

            9.4  Retained Rights. Each party hereby reserves all intellectual
property rights not explicitly granted in this Agreement. For the avoidance of
doubt, the parties agree that: (a) with the exception of the trade dress,
graphical design and general appearance (the "look and feel") of the SP Web
Site, Zappos owns all Intellectual Property Rights associated with the SP Web
Site as delivered, including hardware, software, web design and programming; and
(b) SP owns the domain name www.ShoePavilion.com, the SP Marks and name, the SP
                            -------------------
Content as it currently exists and as it may be updated from time to time, the
"look and feel" of the SP Web Site prior to, during and upon termination of this
Agreement, and hardware, software, web design and programming currently used on
the SP Web Site prior to any commencement of work by Zappos.

                                       8
<PAGE>

     10.  LIMITATION OF LIABILITY. EXCEPT FOR ANY LIABILITY ARISING OUT OF A
BREACH OF SECTION 11 ("CONFIDENTIALITY") OR ZAPPOS' THIRD PARTY RIGHTS WARRANTY
UNDER SECTION 7.1, OR ZAPPOS' INDEMNIFICATION OBLIGATIONS UNDER SECTION 7.2,
NEITHER PARTY WILL BE LIABLE TO THE OTHER FOR ANY LOST PROFITS, LOSS OF MARKET
OR OPPORTUNITY AND/OR INCIDENTAL OR CONSEQUENTIAL LOSS OR DAMAGE HOWSOEVER
ARISING (WHETHER OR NOT ARISING OUT OF THE NEGLIGENCE OF ZAPPOS OR SP, OR THEIR
RESPECTIVE EMPLOYEES OR AGENTS) IN CONNECTION WITH THE SUBJECT MATTER OF THIS
AGREEMENT, PURSUANT TO ANY CLAIM IN CONTRACT, NEGLIGENCE, TORT, STRICT
LIABILITY, OR OTHER THEORY.

     11.  CONFIDENTIALITY

             11.1   "Confidential Information" is any information disclosed by
one party to the other in connection with this Agreement and which the receiving
party knows or has reason to know is regarded as confidential information by the
disclosing party. The Confidential Information will include, but will not be
limited to, trade secrets, the structure, sequence and organization of the
source code of computer software, marketing plans, techniques, processes,
procedures and formulae, sales information, sales volume, sales figures,
earnings, business plans, business development plans, and mergers and
acquisitions. For each item of Confidential Information, the party disclosing
the item will be called the "Disclosing Party," and the party receiving the item
will be called the "Receiving Party."

            11.2  Non-Use and Non-Disclosure. The Receiving Party shall hold all
Confidential Information of the Disclosing Party in trust and confidence, and
protect it as the Receiving Party would protect its own confidential information
(which, in any event, will not be less than reasonable protection) and shall not
use such Confidential Information for any purpose other than that contemplated
by this Agreement. Unless agreed by the Disclosing Party in writing, the
Receiving Party shall not disclose any Confidential Information of the
Disclosing Party, by publication or otherwise, to any person other than
employees and contractors (such as contract manufacturers or software
developers) who (i) are bound to written confidentiality obligations consistent
with and at least as restrictive as those set forth herein and (ii) have a need
to know such Confidential Information for purposes of enabling a party to
exercise its rights and perform its obligations pursuant to this Agreement. The
foregoing confidentiality obligation will be effective for a period of three
years after first disclosure of the Confidential Information pursuant to the
terms of this Agreement, provided however, that each party will comply with any
obligations of confidentiality as may be imposed pursuant to agreements with
third parties for longer periods if the Disclosing Party discloses to the other
in writing such obligations of confidentiality that may be imposed pursuant to
such agreements with third parties at the time of disclosure.

            11.3  Exceptions. The obligations specified in Section 11.2 will not
apply to any Confidential Information to the extent that:

                                       9
<PAGE>

               (a)  it is already known to the Receiving Party without
     restriction prior to the time of disclosure by the Disclosing Party;

               (b)  it is acquired by the Receiving Party from a third party
     without confidentiality restriction;

               (c)  it is independently developed or acquired by the Receiving
     Party by employees or contractors without access to such Confidential
     Information ;

               (d)  it is approved for release by written authorization of the
     Disclosing Party;

               (e)  it is in the public domain at the time it is disclosed or
     subsequently falls within the public domain through no wrongful action of
     the Receiving Party;

               (f)  it is furnished to a third party by the Disclosing Party
     without a similar restriction on that third party's right of disclosure;

               (g)  it is disclosed pursuant to the requirement of a
     governmental agency or disclosure is permitted or required by operation of
     law, provided that the Receiving Party use its best efforts to notify the
     Disclosing Party in advance of such disclosure and seeks confidential
     treatment for such Confidential Information.

            11.4  Confidentiality of Agreement. Each party agrees that the terms
and conditions of this Agreement will be treated as Confidential Information;
provided that each party may disclose the terms and conditions of this
Agreement: (a) to legal counsel; (b) in confidence, to accountants, banks, and
financing sources and their advisors; (c) in connection with promotional and
marketing activities permitted by this Agreement; and (d) in confidence, in
connection with the enforcement of this Agreement or rights under this
Agreement.

            11.5  Maintenance of Confidentiality by Zappos Employees. To the
extent that Zappos maintains employees and/or independent contractors at the SP
Warehouse or other SP locations, such Zappos' employees and independent
contractors shall be subject to the same confidentiality obligations and
standards, including obligations and standards with regard to insider trading of
SP Confidential Information, as SP's own employees.

          12.  JURISDICTION AND APPLICABLE LAW

            12.1  Arbitration. Any claim, dispute, or controversy arising out of
or in connection with or relating to this Agreement or the breach or alleged
breach thereof will, if not resolved within 30 days, may be submitted by either
party to binding arbitration by the American Arbitration Association in the
County of Contra Costa, State of California, United States of America under the
commercial rules then in effect for that Association, except as provided herein.
Each party shall choose one arbitrator within thirty (30) days of receipt of the
notice of intent to arbitrate. Within sixty (60) days of receipt of the notice
of intent to arbitrate, the two arbitrators will choose a neutral third
arbitrator who will act as chairman. All chosen arbitrators

                                       10
<PAGE>

must have experience related to the subject of the dispute. If no
arbitrator is appointed within the times herein provided, or any extension of
time that is mutually agreed upon, the Association will make such appointment
within thirty (30) days of such failure. The parties will be entitled to
discovery as provided in Sections 1283.05 and 1283.1 of the Code of Civil
Procedure of the State of California or any successor provision, whether or not
the California Arbitration Act is deemed to apply to the arbitration. The award
rendered by the arbitrators will include costs of arbitration, reasonable
attorneys' fees, and reasonable costs for expert and other witnesses, and
judgment on such award may be entered in any court having jurisdiction thereof.
Nothing in this Agreement will be deemed as preventing either party from seeking
injunctive relief (or any other provisional remedy) from any court having
jurisdiction over the parties and the subject matter of the dispute as necessary
to protect either party's name, proprietary information, trade secrets, know
how, or any other proprietary rights.

            12.2  Choice of Forum. The parties hereby submit to the jurisdiction
of, and waive any venue objections against, the United States District Court for
the Northern District of California, San Francisco Branch and the Superior and
Municipal Courts of the State of California, San Francisco County, in any
litigation arising out of the Agreement.

            12.3  Governing Law. This Agreement will be governed by and
construed under the laws of the United States and the State of California,
without regard to choice of law provisions.

     13.  MISCELLANEOUS.

            13.1  Event of Force Majeure. If the performance of this Agreement
or any obligations hereunder is prevented, restricted, or interfered with by
reason of acts of God, acts of an governmental authority, riot, revolution,
fires, or war, or other cause beyond the reasonable control of the parties
hereto ("Force Majeure"), the party so effected will be excused from such
performance until such Force Majeure is removed, provided that the party so
affected will use its best efforts to avoid or remove such causes of non-
performance and shall continue performance hereunder with the utmost dispatch
whenever such causes are removed. In no event will this provision apply to
excuse a party from any payment obligations under this Agreement.

            13.2  Waiver. Any waiver of breach or default pursuant to this
Agreement will not be a waiver of any other subsequent default. Failure or delay
by either party to enforce any term or condition of this Agreement will not
constitute a waiver of such term or condition.

            13.3  Severability. To the extent that any provision of this
Agreement is found by a court of competent jurisdiction to be invalid or
unenforceable, that provision notwithstanding, the remaining provisions of this
Agreement will remain in full force and effect and such invalid or unenforceable
provision will be deleted.

            13.4  Assignment. Neither party may assign, voluntarily, by
operation of law, or otherwise, any rights or delegate any duties under this
Agreement (other than third-party technical infrastructure and the right to
receive payments) without the other party's prior written consent, and any
attempt to do so without that consent will be void; provided, however, that

                                       11
<PAGE>

either party may assign any of its rights or obligations under this Agreement in
connection with a sale of substantially all of its assets, merger, public
offering or other reorganization transaction, except to a direct competitor of
the other party. This Agreement will bind and inure to the benefit of the
parties and their respective successors and permitted assigns.

            13.5  Notices. Any notice required or permitted pursuant to this
Agreement must be in writing delivered by hand, overnight courier, telecopy,
facsimile, or certified or registered mail to the address listed below and will
be effective (i) upon receipt, (ii) if by overnight courier, two business days
after deposit with DHL, UPS or FedEx for overnight delivery, or (iii) if by
certified or registered mail, five business days after deposit in a U.S.P.S.
mail box addressed as follows:

     Shoesite.com dba Zappos.com
     1000 Van Ness, Suite 213
     San Francisco, California  94109
     Attn:  Chief Executive Officer

     Shoe Pavilion Corporation
     3200-F Regatta Blvd.
     Richmond, California 94804
     Attn: Dmitry Beinus, Chief Executive Officer

            13.6  Amendment. No alteration, waiver, cancellation, or any other
change or modification in any term or condition of this Agreement will be valid
or binding on either party unless made in writing and signed by duly authorized
representatives of both parties.

            13.7  Counterparts. This Agreement may be executed in one or more
counterparts, including facsimiles, each of which will be deemed to be a
duplicate original, but all of which, taken together, will be deemed to
constitute a single instrument.

            13.8  Entire Agreement. The terms and conditions herein contained,
including all Exhibits hereto, constitute the entire agreement between the
parties with respect to the subject matter of this Agreement and supersede any
previous and contemporaneous agreements and understandings, whether oral or
written, between the parties hereto with respect to the subject matter hereof.
There are no other agreements, understandings, representations, or promises
between the parties with respect to the subject matter of this Agreement.

            13.9  Construction. This Agreement is the product of negotiation
between the parties and their respective counsel. This Agreement will be
interpreted fairly in accordance with its terms and conditions and without any
strict construction in favor of either party. Any ambiguity will not be
interpreted against the drafting party.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized representatives as of the Effective
Date.

                                       12
<PAGE>

<TABLE>
<CAPTION>
Shoesite.com                                               Shoe Pavilion Corporation
dba Zappos.com
<S>                                             <C>

By:                                             By:

Name:                                           Name:

Title:                                          Title:

Date:                                           Date:
</TABLE>

                                       13
<PAGE>

                                   Exhibit A

                               STATEMENT OF WORK

Milestones/Deliverable                         Milestone Delivery Schedule

Initial Access to SP Content                   April 25, 2000

Alpha Version (design & core functionality)    May 1, 2000

Beta Version
(full functionality subject to errors
excluding credit card functionality)           May 15, 2000

Final Version                                  May 20, 2000
(full functionality & errors corrected
excluding credit card functionality)

Launch Version/Scheduled Launch Date           May 20, 2000
(full functionality & errors corrected
including credit card functionality)

                                       14
<PAGE>

                                   Exhibit B

                                  SP Products

          The following are the products authorized by SP for ordering by
customers on the SP Web Site and fulfillment by Zappos on behalf of SP through
the SP Web Site :

All products currently being offered by SP for retail sale in SP stores, except
for those products in the sole discretion of SP management, that it deems not
appropriate for sale on the SP and Zappos Web Sites.

                                       15
<PAGE>

                                   Exhibit C

                             Design Specifications

The SP Web Site to have the exact same functionality and aesthetic aspects in
terms of look and feel of the Zappos Web Site, including but not limited to,
shopping cart functionality, credit card processing and payment, customer
service, etc. all incorporating the SP branding.

                                       16

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