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IBM Credit Corporation
Installment Payment Master Agreement

         Thank you for doing business with us. We are committed to providing you
         with the highest quality financial offerings. If, at any time, you have
         any questions or problems, please let us know.

         This Installment Payment Master Agreement (called the "Agreement")
         covers the terms and conditions under which we finance various charges.

         This Agreement has four parts:

              Part 1 - Definitions;
              Part 2 - Our Offerings;
              Part 3 - Payment; and
              Part 4 - General.

         The specific amount financed, the interest rate charged, and the period
         over which the amount is financed are together referred to as an
         Installment Payment Transaction (called the "Transaction"). Each
         Transaction is listed as a separate line item on a Supplement to this
         Agreement. A Supplement may contain additional terms for its
         Transactions. You agree to those terms by signing the Supplement. Each
         Transaction is contingent upon a review of your credit by us.

         This Agreement and its applicable Supplements are the complete
         agreement regarding the Transactions and replace any prior oral or
         written communications between both parties.

         By signing below, both parties agree to the terms of this Agreement.
         Once signed, any reproduction of this Agreement or a Supplement made by
         reliable means (for example, photocopy or facsimile) is considered an
         original.






         Agreed to:                         Agreed to:
         Petco Animal Supplies Inc             IBM Credit Corporation
                                               Stamford, Connecticut 06904-2399

         By                                 By
              Authorized Signature                  Authorized Signature
         Name (type or print):                 Name (type or print):

         Date:                              Date:

         Customer number: 7083749                   Agreement number: 7116026

                                     IBM Office number: pAH

         Customer Address:                       IBM Office address:
         9125 Rehco Rd.                          4800 FALLS OF THE NEUSE RD
         San Diego,   CA 92121-2270              RALEIGH   NC 27609-5491


                                    Page 1 of 6

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IBM Credit Corporation
Installment Payment Master Agreement

         Part I - Definitions

         1.1 Definitions

                  Addition is any Machine or Program associated with a Machine
                  previously financed under this Agreement. Customer-set-up
                  Machine is an IBM Machine that you set up according to IBM
                  instructions. Date of Installation is the following:

                  1. for a Machine -

                     a. the business day after the day IBM installs it or, if
                        you defer installation, makes it available to you for
                        installation; or

                     b. the second business day after the end of the standard
                        transit allowance period for a Customer-set-up
                        Machine or a non-IBM Machine.

                  2. for a Program, the latest of -

                     a. the day after its testing period ends;

                     b. 10 days after ISIC4 ships it; or

                     C. the day you are authorized to make an Additional License
                        Copy or a copy of a Distributed Feature.

                  Machine is a machine, its features, conversions, upgrades,
                  elements, or accessories, or any combination of them. We use
                  the terms "IBM Machine" and "non-IBM Machine" if applicable.

                  Modification is any IBM field installable upgrade, feature or
                  accessory added to any Machine. Planning Date is the date
                  stated in the Supplement that financing for each Transaction
                  is scheduled to begin. For a Machine, it is the estimated date
                  the Machine will be put into service. For a Program, it is the
                  estimated Date of Installation. For all other financed
                  charges, it is the date you choose for the financing to begin.

                  Product is a Machine or a Program.

                  Program is all the following, including features and any whole
                  or partial copies:

                  1. machine-readable instructions;

                  2. a collection of machine-readable data, such as a data base;
                     and

                  3. related materials, including documentation and listings, in
                     any form.

                  Service is assistance or use of a resource (such as a
                  network).

                  Term is the number of payment periods stated in the
                  Supplement. The Term of a Transaction begins on the date
                  interest starts. It ends on the last day of the last payment
                  period. If you prepay a Transaction, its Term ends when you
                  complete the prepayment.

                  You and Your refer to you, the Customer. You must be a
                  commercial business.

                  We, Us and Our refer to:

                  1. IBM Credit Corporation (IBM Credit), a wholly owned
                     subsidiary of International Business Machines Corporation
                     (IBM)-

                  2. a partnership in which IBM Credit is a partner, or

                  3. a business enterprise for which IBM Credit is an agent.

                  IBM Credit will remain as the active manager for all matters
                  under this Agreement.



                                    Page 2 of 6

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IBM Credit Corporation
Installment Payment Master Agreement

              Part 2 - Our Offerings

              2-1   Machines

                    We finance charges for Machines you purchase from IBM or us.
                    For a Machine we finance, you agree to:

                    1.   keep the Machine free from encumbrances of any kind,
                         except those established by us under this Agreement, or
                         by you with our prior written consent;

                    2.   promptly pay all taxes, interest, and other charges
                         associated with the Machine, excluding taxes based on
                         our net income; and

                    3.   keep the Machine in good operating condition.

              2.2   Modifications and Additions

                    We finance charges for Modifications and Additions you
                    purchase from IBM or us. For Modifications and Additions we
                    finance, you agree to:

                    1.   ensure that the Machine with which the Modifications
                         and Additions will be associated is free from
                         encumbrances of any kind, except those established by
                         us under this Agreement; and

                    2.   keep modified Machines and Additions to them in
                         accordance with the requirements of Section 2.1.

                    We may offer to refinance a Machine when we finance a
                    Modification to it. Changes to the Annual Interest Rate,
                    Payment Amount, and Term will then be specified in a new
                    Supplement.

              2.3   Other Charges

                    We finance one-time charges for IBM Programs and Services.
                    Your obligation to make payments is not affected by the
                    termination of any Service or license for a Program, unless
                    such termination occurs before the date interest starts.
                    We may agree to finance other one-time charges associated
                    with the installation of-IBM Products.

              2.4   Discounts, Allowances and Adjustments

                    The purchase price or one-time charge we finance is the same
                    amount that you would have paid IBM or us after all
                    discounts and adjustments. If this amount changes after you
                    sign the Supplement and before the date interest starts, we
                    will adjust the Supplement accordingly and notify you.




                                    Page 3 of 6





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IBM Credit Corporation
Installment Payment Master Agreement

              Part 3 - Payment

              3.1   Your Obligation to Pay

                    You will pay all amounts specified in the Supplement.
                    Payment will be made through the IBM Branch Office unless we
                    notify you otherwise.

                    Your obligation to pay will continue regardless of any
                    dispute you may have with respect to the financed Products
                    or Services.

              3.2   Interest Commencement

                    Unless otherwise specified in the Supplement, interest
                    starts on:

                    1.  the date that payment of the purchase price or one-time
                        charge is due for Products and Services; or

                    2.  the date we provide you the funding for all other
                        charges.

              3.3   Invoicing

                    Payment Amounts for monthly payment periods are invoiced as
                    of the first day of each calendar month and are due on the
                    first day of the following month. When the interest
                    commencement date is not the first day of the calendar month
                    or when the initial Term will not expire on the last day of
                    the calendar month, the applicable Payment Amount will be
                    prorated on the basis of a 30-day month. In these cases, the
                    number of invoices will exceed the number of payment periods
                    specified in the Supplement.

                    Payment Amounts for all other payment periods (for example,
                    annual) are invoiced 30 calendar days before the end of
                    their payment period and are due on the day following the
                    close of the respective payment period.

              3.4   Rate Protection

                    The Supplement states a Planning Date for each Transaction,
                    and one Quote Validity Date for all Transaction rates on the
                    Supplement. These rates are not subject to change provided
                    that:

                    1.  the Supplement is signed and returned to us by the Quote
                        Validity Date; and

                    2.  the Product is installed within the same calendar month
                        as its Planning Date.

              3.5   Prepayment

                    We will not charge any loan origination fees.  If you decide
                    to prepay a Transaction, you agree to pay us a prepayment
                    fee for our unrecovered administrative expense and changes
                    in funding costs. The Supplement describes how the
                    prepayment fee is determined. You may prepay any Transaction
                    by paying all outstanding amounts due plus the remaining
                    principal balance and any prepayment fee. If you prepay a
                    Transaction for a Machine, you must also prepay any
                    Transaction for related non-IBM charges.

              3.6   Delinquent Payments

                    If you do not make a payment by its due date, you agree to
                    pay us, on demand, an additional 2% per month late charge or
                    the maximum allowed by law, whichever is less. The late
                    charge will accrue on a cumulative basis until the
                    outstanding payments and late charges are paid.



                                    Page 4 of 6

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IBM Credit Corporation
Installment Payment Master Agreement

              Part 4 - General

              4.1     Events of Default

                      You will be in default if:

                      1.  you do not pay any amount within seven days after its
                          due date;

                      2.  you fail to maintain insurance as required under this
                          Agreement;

                      3.  you make any misrepresentation in a credit application
                          you give us;

                      4.  you make an assignment for the benefit of creditors,
                          or you consent to the appointment of a trustee or
                          receiver, or either is appointed for you or for a
                          substantial part of your property without your
                          consent;

                      5.  any petition or proceeding is filed by or against you
                          under any bankruptcy, insolvency, or similar law;

                      6.  you breach any other provision of this Agreement and
                          that breach continues for fifteen days after you
                          receive written notice from us; or

                      7.  you make a bulk transfer subject to the provisions of
                          the Uniform Commercial Code or otherwise dispose of
                          substantial assets without receiving equivalent value.

              4.2     Remedies

                      If you are in default, we may do one or more of the
                      following:

                      1.  declare the Transaction and all associated
                          Transactions to be in default;

                      2.  recover from you all amounts that are or will be due;


                      3.  repossess or render unusable any or all Machines,
                          Modifications, or Additions without demand, notice,
                          court order, or other process, and retain all payments
                          made as partial compensation for their use and
                          depreciation;

                      4.  require you, at your expense, to assemble and ship
                          Addition to a location we specify-, and

                      5.  recover from you reasonable attorney's fees and legal
                          expenses incurred in exercising any of our rights
                          under this Agreement.

                      If we repossess a Modification, it is your responsibility
                      to restore the, remaining Machine to good working order.
                      We have no liability for costs or damages caused by the
                      removal of such Modification or by your failure to
                      fulfill your responsibilities.

                      Upon repossession or return of a Machine, Modification
                      or Addition, we will dispose of it in a commercially
                      reasonable manner. After deducting our expenses for the
                      repossession and disposition, we will apply the net
                      proceeds toward the amounts due. You will pay us any
                      deficiency between the net proceeds and the unpaid
                      amounts due. We will pay to you any excess net proceeds.

                      We may pursue any other remedy available at law or in
                      equity.

              4.3     Security Interest

                      We reserve a purchase money security interest in each
                      Machine we finance, its substitutions, replacements,
                      accessions, Modifications, Additions and any associated
                      proceeds until we receive all amounts due. You will
                      cooperate with us to perfect our security interest.

                      You authorize us to act as your agent and
                      attorney-in-fact for the limited purpose of preparing
                      executing in your name, and filing on your behalf,
                      financing statements or other document covering
                      Machines, Modifications, and Additions financed by us.

                      Each Machine must be kept at the location specified in
                      this Agreement, where we may Inspect it at any
                      reasonable time. Each Machine will remain personal
                      property, and will not become a fixture to real
                      property. Until your financial obligation on a
                      Transaction is satisfied, you may not modify or
                      otherwise dispose of the Machine, Modification, or
                      Addition, in whole or in part, without our prior written
                      consent.



                                    Page 5 of 6

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         IBM CREDIT CORPORATION
                                       North Castle Drive
                                       Armonk, HY 10504-1785
                                       914/499-1900
                                       www.financing.ibm.com

                        ADDENDUM TO INSTALLMENT PAMENT SUPPLEMENT

                                                    Installment Payment
         Enterprise No. 7116026                     Master Agreement No. 7116026

            Customer No. 7083749                        Supplement No. IDOO14924

         We and PETCO ANIMAL SUPPLIES INC (You) agree that for the purposes of
         the referenced Supplement only, the Installment Payment Master
         Agreement between the parties is hereby modified as follows:

                In the Introductory Section, in line 13 after "item" add "which
                represents the Financing of all of the Machines, identified by
                model and type and the related items as described in such line
                item."

                In Section 2.2 Modifications and Additions, delete the last two
                sentences.

                In Section 3.5 Prepayment, delete the last sentence and replace
                with "If you prepay any Transaction specified on the Supplement
                as Option I, you must also prepay any Transaction specified on
                the Supplement as Option T."

                In Section 4.2 Remedies in line 1, delete "associated".

                In Section 4.3 Security Interest at the beginning of the Section
                add the following new paragraph:

                Lessee grants to Lessor a security interest in all of Lessee's
                right, title and interest in and to, whether now owned or
                hereafter acquired or existing, the following (Collateral): (a)
                all equipment financed hereunder and specified on the invoices
                attached to the Supplement, all parts thereof, accessions
                thereto and documents therefor (including all hardware and all
                other information processing equipment of every type and
                description) (Machines) and, all proceeds of all of the
                foregoing Collateral and, to the extent not otherwise included,
                all payments under insurance or and indemnity, warranty or
                guaranty, payable by reason of loss or damage to or otherwise
                with respect to any of the foregoing Collateral.

                In Section 4.4 Insurance, in line 5 delete "If a Machine,
                Modification or Additions suffers a Loss" and replace with "In
                the event Machine Losses suffered under each Transaction
                represent more than 5% of the total number of Machines that
                comprise such Transaction."

                      NO CHANGES TO THIS ADDENDUM ARE AUTHORIZED
          Oct 1, 1998                                 Addendum No. Q01636873-03

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                             IBM Credit Corporation



             In Section 4.5 Assignment and Relocation, in line 2 delete
             "relocate". - in line 3 after consent, add the following new
             seztence: "With prompt notification, you may relocate any Machine
             under each Transaction provided the number of Machines relocated
             under each Transaction does not represent more than 5% of the total
             number of Machines that comprise such Transaction. Any relocation
             of Machines which will cause the total number of Machines relocated
             to exceed 5% of the total number of Machines that comprise such
             Transaction, requires our prior written consent."


        Prepared by: D DRIVER

        Accepted by:
        IBM Credit Corporation                      PETCO ANIMAL SUPPLIES INC


        by
                    Authorized Signature                   Authorized Signature


                Name (Type or Print)   Date          Name (Type or Print)   Date










                    NO CHANGES TO THIS ADDENDUM ARE AUTHORIZED
       Oct 1, 1998                                    Addendum No. Q01638973-03

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