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                                                                     Exhibit 4.2


                            PRICE ENTERPRISES, INC.
                      2001 STOCK OPTION AND INCENTIVE PLAN
                        (As amended September 10, 2001)

    Price Enterprises, Inc., a Maryland corporation, has adopted the Price
Enterprises, Inc. 2001 Stock Option and Incentive Plan (the "Plan"),
effective September 18, 2001, for the benefit of its eligible Employees,
Consultants and Directors.

    The purposes of the Plan are as follows:

(1) To provide an additional incentive for Directors, key Employees and
    Consultants (as such terms are defined below) to further the growth,
    development and financial success of the Company by personally benefiting
    through the ownership of Company stock and/or rights which recognize such
    growth, development and financial success.

(2) To enable the Company to obtain and retain the services of Directors, key
    Employees and Consultants considered essential to the long range success of
    the Company by offering them an opportunity to own stock in the Company
    and/or rights which will reflect the growth, development and financial
    success of the Company.

                                   ARTICLE I.
                                  DEFINITIONS

    Wherever the following terms are used in the Plan they shall have the
meanings specified below, unless the context clearly indicates otherwise. The
singular pronoun shall include the plural where the context so indicates.

    1.1.  "ADMINISTRATOR" shall mean the entity that conducts the general
administration of the Plan as provided herein. With reference to the
administration of the Plan with respect to Options granted to Independent
Directors, the term "Administrator" shall refer to the Board. With reference to
the administration of the Plan with respect to any other Award, the term
"Administrator" shall refer to the Committee unless the Board has assumed the
authority for administration of the Plan generally as provided in Section 10.1.

    1.2.  "AFFILIATE" shall mean a representative of an individual or an entity
owning (within the meaning of Section 424(d) of the Code) more than 10% of the
total combined voting power of all classes of stock of the Company or any other
individual deemed by the Board, in good faith, to be an "Affiliate."

    1.3.  "AWARD" shall mean an Option, a Restricted Stock award, a Performance
Award, a Dividend Equivalents award, a Deferred Stock award, a Stock Payment
award or a Stock Appreciation Right which may be awarded or granted under the
Plan (collectively, "Awards").

    1.4.  "AWARD AGREEMENT" shall mean a written agreement executed by an
authorized officer of the Company and the Holder which shall contain such terms
and conditions with respect to an Award as the Administrator shall determine,
consistent with the Plan.

    1.5.  "AWARD LIMIT" shall mean 1,000,000 shares of Common Stock, as adjusted
pursuant to Section 11.3; PROVIDED, HOWEVER, that solely with respect to
Performance Awards granted pursuant to Section 8.2(b), Award Limit shall mean
$1,000,000.

    1.6.  "BOARD" shall mean the Board of Directors of the Company.

    1.7.  "CODE" shall mean the Internal Revenue Code of 1986, as amended.

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    1.8.  "COMMITTEE" shall mean the Compensation Committee of the Board, or
another committee or subcommittee of the Board, appointed as provided in
Section 10.1.

    1.9.  "COMMON STOCK" shall mean the common stock of the Company, par value
$0.0001 per share.

    1.10.  "COMPANY" shall mean Price Enterprises, Inc., a Maryland corporation.

    1.11.  "CONSULTANT" shall mean any consultant or adviser if:

    (a) The consultant or adviser renders bona fide services to the Company;

    (b) The services rendered by the consultant or adviser are not in connection
with the offer or sale of securities in a capital-raising transaction and do not
directly or indirectly promote or maintain a market for the Company's
securities; and

    (c) The consultant or adviser is a natural person who has contracted
directly with the Company to render such services.

    1.12.  "DEFERRED STOCK" shall mean Common Stock awarded under Article VIII
of the Plan.

    1.13.  "DIRECTOR" shall mean a member of the Board.

    1.14.  "DIVIDEND EQUIVALENT" shall mean a right to receive the equivalent
value (in cash or Common Stock) of dividends paid on Common Stock, awarded under
Article VIII of the Plan.

    1.15.  "DRO" shall mean a domestic relations order as defined by the Code or
Title I of the Employee Retirement Income Security Act of 1974, as amended, or
the rules thereunder.

    1.16.  "EMPLOYEE" shall mean any officer or other employee (as defined in
accordance with Section 3401(c) of the Code) of the Company, or of any
corporation which is a Subsidiary.

    1.17.  "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.

    1.18.  "FAIR MARKET VALUE" of a share of Common Stock as of a given date
shall be (a) the closing price of a share of Common Stock on the principal
exchange on which shares of Common Stock are then trading, if any (or as
reported on any composite index which includes such principal exchange), on the
trading day previous to such date, or if shares were not traded on the trading
day previous to such date, then on the next preceding date on which a trade
occurred, or (b) if Common Stock is not traded on an exchange but is quoted on
Nasdaq or a successor quotation system, the mean between the closing
representative bid and asked prices for the Common Stock on the trading day
previous to such date as reported by Nasdaq or such successor quotation system,
or (c) if Common Stock is not publicly traded on an exchange and not quoted on
Nasdaq or a successor quotation system, the Fair Market Value of a share of
Common Stock as established by the Administrator acting in good faith.

    1.19.  "HOLDER" shall mean a person who has been granted or awarded an
Award.

    1.20.  "INCENTIVE STOCK OPTION" shall mean an option which conforms to the
applicable provisions of Section 422 of the Code and which is designated as an
Incentive Stock Option by the Administrator.

    1.21.  "INDEPENDENT DIRECTOR" shall mean a member of the Board who is not
and has not been an Employee or officer or Affiliate of the Company.

    1.22.  "NON-QUALIFIED STOCK OPTION" shall mean an Option which is not
designated as an Incentive Stock Option by the Administrator.

    1.23.  "OPTION" shall mean a stock option granted under Article IV of the
Plan. An Option granted under the Plan shall, as determined by the
Administrator, be either a Non-Qualified Stock Option or an Incentive Stock
Option; PROVIDED, HOWEVER, that Options granted to Independent Directors and
Consultants shall be Non-Qualified Stock Options.

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    1.24.  "PERFORMANCE AWARD" shall mean a cash bonus, stock bonus or other
performance or incentive award that is paid in cash, Common Stock or a
combination of both, awarded under Article VIII of the Plan.

    1.25.  "PERFORMANCE CRITERIA" shall mean the following business criteria
with respect to the Company, any Subsidiary or any division or operating unit:
(a) net income, (b) pre-tax income, (c) operating income, (d) cash flow,
(e) earnings per share, (f) return on equity, (g) return on invested capital or
assets, (h) cost reductions or savings, (i) funds from operations,
(j) appreciation in the fair market value of Common Stock, and (k) earnings
before any one or more of the following items: interest, taxes, depreciation or
amortization.

    1.26.  "PLAN" shall mean the Price Enterprises, Inc. 2001 Stock Option and
Incentive Plan.

    1.27.  "RESTRICTED STOCK" shall mean Common Stock awarded under Article VII
of the Plan.

    1.28.  "RULE 16b-3" shall mean Rule 16b-3 promulgated under the Exchange
Act, as such Rule may be amended from time to time.

    1.29.  "SECTION 162(m) PARTICIPANT" shall mean any key Employee designated
by the Administrator as a key Employee whose compensation for the fiscal year in
which the key Employee is so designated or a future fiscal year may be subject
to the limit on deductible compensation imposed by Section 162(m) of the Code.

    1.30.  "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.

    1.31.  "STOCK APPRECIATION RIGHT" shall mean a stock appreciation right
granted under Article IX of the Plan.

    1.32.  "STOCK PAYMENT" shall mean (a) a payment in the form of shares of
Common Stock, or (b) an option or other right to purchase shares of Common
Stock, as part of a deferred compensation arrangement, made in lieu of all or
any portion of the compensation, including without limitation, salary, bonuses
and commissions, that would otherwise become payable to a key Employee or
Consultant in cash, awarded under Article VIII of the Plan.

    1.33.  "SUBSIDIARY" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.

    1.34.  "SUBSTITUTE AWARD" shall mean an Option granted under this Plan upon
the assumption of, or in substitution for, outstanding equity awards previously
granted by a company or other entity in connection with a corporate transaction,
such as a merger, combination, consolidation or acquisition of property or
stock; PROVIDED, HOWEVER, that in no event shall the term "Substitute Award" be
construed to refer to an award made in connection with the cancellation and
repricing of an Option.

    1.35.  "TERMINATION OF CONSULTANCY" shall mean the time when the engagement
of a Holder as a Consultant to the Company or a Subsidiary is terminated for any
reason, with or without cause, including, but not by way of limitation, by
resignation, discharge, death or retirement, but excluding terminations where
there is a simultaneous commencement of employment with the Company or any
Subsidiary. The Administrator, in its absolute discretion, shall determine the
effect of all matters and questions relating to Termination of Consultancy,
including, but not by way of limitation, the question of whether a Termination
of Consultancy resulted from a discharge for good cause, and all questions of
whether a particular leave of absence constitutes a Termination of Consultancy.
Notwithstanding any other provision of the Plan, the Company or any Subsidiary
has an absolute and unrestricted right to terminate a Consultant's service at
any time for any reason whatsoever, with or without cause, except to the extent
expressly provided otherwise in writing.

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    1.36.  "TERMINATION OF DIRECTORSHIP" shall mean the time when a Holder who
is an Independent Director ceases to be a Director for any reason, including,
but not by way of limitation, a termination by resignation, failure to be
elected, death or retirement. The Board, in its sole and absolute discretion,
shall determine the effect of all matters and questions relating to Termination
of Directorship with respect to Independent Directors.

    1.37.  "TERMINATION OF EMPLOYMENT" shall mean the time when the
employee-employer relationship between a Holder and the Company or any
Subsidiary is terminated for any reason, with or without cause, including, but
not by way of limitation, a termination by resignation, discharge, death,
disability or retirement; but excluding (a) terminations where there is a
simultaneous reemployment or continuing employment of a Holder by the Company or
any Subsidiary, (b) at the discretion of the Administrator, terminations which
result in a temporary severance of the employee-employer relationship, and
(c) at the discretion of the Administrator, terminations which are followed by
the simultaneous establishment of a consulting relationship by the Company or a
Subsidiary with the former employee. The Administrator, in its absolute
discretion, shall determine the effect of all matters and questions relating to
Termination of Employment, including, but not by way of limitation, the question
of whether a Termination of Employment resulted from a discharge for cause, and
all questions of whether a particular leave of absence constitutes a Termination
of Employment; PROVIDED, HOWEVER, that, with respect to Incentive Stock Options,
a leave of absence, change in status from an employee to an independent
contractor or other change in the employee-employer relationship shall
constitute a Termination of Employment if, and to the extent that, such leave of
absence, change in status or other change interrupts employment for the purposes
of Section 422(a)(2) of the Code and the then applicable regulations and revenue
rulings under said Section.

                                  ARTICLE II.
                             SHARES SUBJECT TO PLAN

    2.1.  SHARES SUBJECT TO PLAN.

        (a) The shares of stock subject to Awards shall be the Company's Common
    Stock. Subject to adjustment as provided in Section 11.3, the aggregate
    number of such shares which may be issued upon exercise of such Options or
    rights or upon any such Awards under the Plan shall not exceed 3,000,000
    (the "Aggregate Limit"). The shares of Common Stock issuable upon exercise
    of such Options or rights or upon any such awards may be either previously
    authorized but unissued shares or treasury shares.

        (b) The Aggregate Limit shall automatically increase on January 1 of
    each calendar year during the term of the Plan, commencing on January 1,
    2002, by 10% of the Aggregate Limit in effect for the immediately preceding
    calendar year; PROVIDED, HOWEVER, that in no event shall the Aggregate Limit
    under the Plan exceed 5,000,000.

        (c) The maximum number of shares which may be subject to Awards granted
    under the Plan to any individual in any calendar year shall not exceed the
    Award Limit. To the extent required by Section 162(m) of the Code, shares
    subject to Options which are canceled continue to be counted against the
    Award Limit.

    2.2.  ADD-BACK OF OPTIONS AND OTHER RIGHTS.  If any Option, or other right
to acquire shares of Common Stock under any other Award under the Plan, expires
or is canceled without having been fully exercised, or is exercised in whole or
in part for cash as permitted by the Plan, the number of shares subject to such
Option or other right but as to which such Option or other right was not
exercised prior to its expiration, cancellation or exercise may again be
optioned, granted or awarded hereunder, subject to the limitations of
Section 2.1. Furthermore, any shares subject to Awards which are adjusted
pursuant to Section 11.3 and become exercisable with respect to shares of stock
of another corporation

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shall be considered cancelled and may again be optioned, granted or awarded
hereunder, subject to the limitations of Section 2.1. Shares of Common Stock
which are delivered by the Holder or withheld by the Company upon the exercise
of any Award under the Plan, in payment of the exercise price thereof or tax
withholding thereon, may again be optioned, granted or awarded hereunder,
subject to the limitations of Section 2.1. If any shares of Restricted Stock are
surrendered by the Holder or repurchased by the Company pursuant to Section 7.4
or 7.5 hereof, such shares may again be optioned, granted or awarded hereunder,
subject to the limitations of Section 2.1. Notwithstanding the provisions of
this Section 2.2, no shares of Common Stock may again be optioned, granted or
awarded if such action would cause an Incentive Stock Option to fail to qualify
as an incentive stock option under Section 422 of the Code.

                                  ARTICLE III.
                               GRANTING OF AWARDS

    3.1.  AWARD AGREEMENT.  Each Award shall be evidenced by an Award Agreement.
Award Agreements evidencing Awards intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall contain such
terms and conditions as may be necessary to meet the applicable provisions of
Section 162(m) of the Code. Award Agreements evidencing Incentive Stock Options
shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 422 of the Code.

    3.2.  PROVISIONS APPLICABLE TO SECTION 162(m) PARTICIPANTS.

        (a) The Committee, in its discretion, may determine whether an Award is
    to qualify as performance-based compensation as described in
    Section 162(m)(4)(C) of the Code.

        (b) Notwithstanding anything in the Plan to the contrary, the Committee
    may grant any Award to a Section 162(m) Participant, including Restricted
    Stock the restrictions with respect to which lapse upon the attainment of
    performance goals which are related to one or more of the Performance
    Criteria and any performance or incentive award described in Article VIII
    that vests or becomes exercisable or payable upon the attainment of
    performance goals which are related to one or more of the Performance
    Criteria.

        (c) To the extent necessary to comply with the performance-based
    compensation requirements of Section 162(m)(4)(C) of the Code, with respect
    to any Award granted under Articles VII and VIII which may be granted to one
    or more Section 162(m) Participants, no later than ninety (90) days
    following the commencement of any fiscal year in question or any other
    designated fiscal period or period of service (or such other time as may be
    required or permitted by Section 162(m) of the Code), the Committee shall,
    in writing, (i) designate one or more Section 162(m) Participants,
    (ii) select the Performance Criteria applicable to the fiscal year or other
    designated fiscal period or period of service, (iii) establish the various
    performance targets, in terms of an objective formula or standard, and
    amounts of such Awards, as applicable, which may be earned for such fiscal
    year or other designated fiscal period or period of service, and
    (iv) specify the relationship between Performance Criteria and the
    performance targets and the amounts of such Awards, as applicable, to be
    earned by each Section 162(m) Participant for such fiscal year or other
    designated fiscal period or period of service. Following the completion of
    each fiscal year or other designated fiscal period or period of service, the
    Committee shall certify in writing whether the applicable performance
    targets have been achieved for such fiscal year or other designated fiscal
    period or period of service. In determining the amount earned by a
    Section 162(m) Participant, the Committee shall have the right to reduce
    (but not to increase) the amount payable at a given level of performance to
    take into account additional factors that the Committee may deem relevant to
    the assessment of individual or corporate performance for the fiscal year or
    other designated fiscal period or period of service.

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        (d) Furthermore, notwithstanding any other provision of the Plan, any
    Award which is granted to a Section 162(m) Participant and is intended to
    qualify as performance-based compensation as described in
    Section 162(m)(4)(C) of the Code shall be subject to any additional
    limitations set forth in Section 162(m) of the Code (including any amendment
    to Section 162(m) of the Code) or any regulations or rulings issued
    thereunder that are requirements for qualification as performance-based
    compensation as described in Section 162(m)(4)(C) of the Code, and the Plan
    shall be deemed amended to the extent necessary to conform to such
    requirements.

    3.3.  LIMITATIONS APPLICABLE TO SECTION 16 PERSONS.  Notwithstanding any
other provision of the Plan, the Plan, and any Award granted or awarded to any
individual who is then subject to Section 16 of the Exchange Act, shall be
subject to any additional limitations set forth in any applicable exemptive rule
under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of
the Exchange Act) that are requirements for the application of such exemptive
rule. To the extent permitted by applicable law, the Plan and Awards granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such applicable exemptive rule.

    3.4.  CONSIDERATION.  In consideration of the granting of an Award under the
Plan, the Holder shall agree, in the Award Agreement, to remain in the employ of
(or to consult for or to serve as an Independent Director of, as applicable) the
Company or any Subsidiary for a period of at least one year (or such shorter
period as may be fixed in the Award Agreement or by action of the Administrator
following grant of the Award) after the Award is granted (or, in the case of an
Independent Director, until the next annual meeting of stockholders of the
Company).

    3.5.  AT-WILL EMPLOYMENT.  Nothing in the Plan or in any Award Agreement
hereunder shall confer upon any Holder any right to continue in the employ of,
or as a Consultant for, the Company or any Subsidiary, or as a director of the
Company, or shall interfere with or restrict in any way the rights of the
Company and any Subsidiary, which are hereby expressly reserved, to discharge
any Holder at any time for any reason whatsoever, with or without cause, except
to the extent expressly provided otherwise in a written employment agreement
between the Holder and the Company and any Subsidiary.

                                  ARTICLE IV.
           GRANTING OF OPTIONS TO EMPLOYEES AND INDEPENDENT DIRECTORS

    4.1.  ELIGIBILITY.  Any Employee or Consultant selected by the Committee
pursuant to Section 4.4(a)(i) shall be eligible to be granted an Option. Each
Independent Director of the Company shall be eligible to be granted Options at
the times and in the manner set forth in Section 4.5.

    4.2.  DISQUALIFICATION FOR STOCK OWNERSHIP.  No person may be granted an
Incentive Stock Option under the Plan if such person, at the time the Incentive
Stock Option is granted, owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any then
existing Subsidiary or parent corporation (within the meaning of Section 422 of
the Code) unless such Incentive Stock Option conforms to the applicable
provisions of Section 422 of the Code.

    4.3.  QUALIFICATION OF INCENTIVE STOCK OPTIONS.  No Incentive Stock Option
shall be granted to any person who is not an Employee.

    4.4.  GRANTING OF OPTIONS TO EMPLOYEES AND CONSULTANTS.

        (a) The Committee shall from time to time, in its absolute discretion,
    and subject to applicable limitations of the Plan:

           (i) Determine which Employees are key Employees and select from among
       the key Employees or Consultants (including Employees or Consultants who
       have previously received Awards under the Plan) such of them as in its
       opinion should be granted Options;

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           (ii) Subject to the Award Limit, determine the number of shares to be
       subject to such Options granted to the selected key Employees or
       Consultants;

           (iii) Subject to Section 4.3, determine whether such Options are to
       be Incentive Stock Options or Non-Qualified Stock Options and whether
       such Options are to qualify as performance-based compensation as
       described in Section 162(m)(4)(C) of the Code; and

           (iv) Determine the terms and conditions of such Options, consistent
       with the Plan; PROVIDED, HOWEVER, that the terms and conditions of
       Options intended to qualify as performance-based compensation as
       described in Section 162(m)(4)(C) of the Code shall include, but not be
       limited to, such terms and conditions as may be necessary to meet the
       applicable provisions of Section 162(m) of the Code.

        (b) Upon the selection of a key Employee or Consultant to be granted an
    Option, the Committee shall instruct the Secretary of the Company to issue
    the Option and may impose such conditions on the grant of the Option as it
    deems appropriate.

        (c) Any Incentive Stock Option granted under the Plan may be modified by
    the Committee, with the consent of the Holder, to disqualify such Option
    from treatment as an "incentive stock option" under Section 422 of the Code.

    4.5.  GRANTING OF OPTIONS TO INDEPENDENT DIRECTORS.

        (a) Each Independent Director who is elected or reelected to the Board
    at the 2001 annual meeting of the Company's stockholders shall be granted an
    Option to purchase 10,000 shares of Common Stock (subject to adjustment as
    provided in Section 11.3 of the Plan). Each other person who becomes an
    Independent Director during the term of the Plan shall be granted an Option
    to purchase 10,000 shares of Common Stock (subject to adjustment as provided
    in Section 11.3) on the date such Independent Director is first elected or
    appointed to the Board.

        (b) Commencing with each annual meeting of the Company's stockholders
    subsequent to the 2001 annual meeting of the Company's stockholders, each
    Independent Director who is reelected to the Board during the term of the
    Plan shall receive an Option to purchase 5,000 shares of Common Stock
    (subject to adjustment as provided in Section 11.3).

    4.6.  OPTIONS IN LIEU OF CASH COMPENSATION.  Options may be granted under
the Plan to Employees and Consultants in lieu of cash bonuses which would
otherwise be payable to such Employees and Consultants and to Independent
Directors in lieu of directors' fees which would otherwise be payable to such
Independent Directors, pursuant to such policies which may be adopted by the
Administrator from time to time.

                                   ARTICLE V.
                                TERMS OF OPTIONS

    5.1.  OPTION PRICE.  The price per share of the shares subject to each
Option granted to Employees and Consultants shall be no less than 85% of the
Fair Market Value of a share of Common Stock on the date the Option is granted
and:

        (a) In the case of Options intended to qualify as performance-based
    compensation as described in Section 162(m)(4)(C) of the Code, such price
    shall not be less than 100% of the Fair Market Value of a share of Common
    Stock on the date the Option is granted;

        (b) In the case of Incentive Stock Options such price shall not be less
    than 100% of the Fair Market Value of a share of Common Stock on the date
    the Option is granted (or the date the Option is modified, extended or
    renewed for purposes of Section 424(h) of the Code);

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        (c) In the case of Incentive Stock Options granted to an individual then
    owning (within the meaning of Section 424(d) of the Code) more than 10% of
    the total combined voting power of all classes of stock of the Company or
    any Subsidiary or parent corporation thereof (within the meaning of
    Section 422 of the Code), such price shall not be less than 110% of the Fair
    Market Value of a share of Common Stock on the date the Option is granted
    (or the date the Option is modified, extended or renewed for purposes of
    Section 424(h) of the Code).

    5.2.  OPTION TERM.  The term of an Option granted to an Employee or
Consultant shall be set by the Committee in its discretion; PROVIDED, HOWEVER,
that, in the case of Incentive Stock Options, the term shall not be more than
10 years from the date the Incentive Stock Option is granted, or five years from
the date the Incentive Stock Option is granted if the Incentive Stock Option is
granted to an individual then owning (within the meaning of Section 424(d) of
the Code) more than 10% of the total combined voting power of all classes of
stock of the Company or any Subsidiary or parent corporation thereof (within the
meaning of Section 422 of the Code). Except as limited by requirements of
Section 422 of the Code and regulations and rulings thereunder applicable to
Incentive Stock Options, the Committee may extend the term of any outstanding
Option in connection with any Termination of Employment or Termination of
Consultancy of the Holder, or amend any other term or condition of such Option
relating to such a termination.

    5.3.  OPTION VESTING.

        (a) The period during which the right to exercise, in whole or in part,
    an Option granted to an Employee or a Consultant vests in the Holder shall
    be set by the Committee and the Committee may determine that an Option may
    not be exercised in whole or in part for a specified period after it is
    granted. At any time after grant of an Option, the Committee may, in its
    sole and absolute discretion and subject to whatever terms and conditions it
    selects, accelerate the period during which an Option granted to an Employee
    or Consultant vests.

        (b) No portion of an Option granted to an Employee or Consultant which
    is unexercisable at Termination of Employment or Termination of Consultancy
    as applicable, shall thereafter become exercisable, except as may be
    otherwise provided by the Committee either in the Award Agreement or by
    action of the Committee following the grant of the Option.

        (c) To the extent that the aggregate Fair Market Value of stock with
    respect to which "incentive stock options" (within the meaning of
    Section 422 of the Code, but without regard to Section 422(d) of the Code)
    are exercisable for the first time by a Holder during any calendar year
    (under the Plan and all other incentive stock option plans of the Company
    and any parent or subsidiary corporation, within the meaning of Section 422
    of the Code) of the Company, exceeds $100,000, such Options shall be treated
    as Non-Qualified Stock Options to the extent required by Section 422 of the
    Code. The rule set forth in the preceding sentence shall be applied by
    taking Options into account in the order in which they were granted. For
    purposes of this Section 5.3(c), the Fair Market Value of stock shall be
    determined as of the time the Option with respect to such stock is granted.

    5.4.  TERMS OF OPTIONS GRANTED TO INDEPENDENT DIRECTORS.  The price per
share of the shares subject to each Option granted to an Independent Director
shall equal 100% of the Fair Market Value of a share of Common Stock on the date
the Option is granted. Options granted to Independent Directors shall be 100%
vested and immediately exercisable on the date the Option is granted. Subject to
Section 6.6, the term of each Option granted to an Independent Director shall be
10 years from the date the Option is granted.

    5.5.  SUBSTITUTE AWARDS.  Notwithstanding the foregoing provisions of this
Article V to the contrary, in the case of an Option that is a Substitute Award,
the price per share of the shares subject

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to such Option may be less than the Fair Market Value per share on the date of
grant, PROVIDED, that the excess of:

        (a) The aggregate Fair Market Value (as of the date such Substitute
    Award is granted) of the shares subject to the Substitute Award; over

        (b) The aggregate exercise price thereof;

does not exceed the excess of:

        (c) The aggregate fair market value (as of the time immediately
    preceding the transaction giving rise to the Substitute Award, such fair
    market value to be determined by the Committee) of the shares of the
    predecessor entity that were subject to the grant assumed or substituted for
    by the Company; over

        (d) The aggregate exercise price of such shares.

                                  ARTICLE VI.
                              EXERCISE OF OPTIONS

    6.1.  PARTIAL EXERCISE.  An exercisable Option may be exercised in whole or
in part. However, an Option shall not be exercisable with respect to fractional
shares and the Administrator may require that, by the terms of the Option, a
partial exercise be with respect to a minimum number of shares.

    6.2.  MANNER OF EXERCISE.  All or a portion of an exercisable Option shall
be deemed exercised upon delivery of all of the following to the Secretary of
the Company or his or her office:

        (a) A written notice complying with the applicable rules established by
    the Administrator stating that the Option, or a portion thereof, is
    exercised. The notice shall be signed by the Holder or other person then
    entitled to exercise the Option or such portion of the Option;

        (b) Such representations and documents as the Administrator, in its
    absolute discretion, deems necessary or advisable to effect compliance with
    all applicable provisions of the Securities Act and any other federal or
    state securities laws or regulations. The Administrator may, in its absolute
    discretion, also take whatever additional actions it deems appropriate to
    effect such compliance including, without limitation, placing legends on
    share certificates and issuing stop-transfer notices to agents and
    registrars;

        (c) In the event that the Option shall be exercised pursuant to
    Section 11.1 by any person or persons other than the Holder, appropriate
    proof of the right of such person or persons to exercise the Option; and

        (d) Full cash payment to the Secretary of the Company for the shares
    with respect to which the Option, or portion thereof, is exercised. However,
    the Administrator may, in its discretion, (i) allow a delay in payment up to
    30 days from the date the Option, or portion thereof, is exercised;
    (ii) allow payment, in whole or in part, through the delivery of shares of
    Common Stock which have been owned by the Holder for at least six months,
    duly endorsed for transfer to the Company with a Fair Market Value on the
    date of delivery equal to the aggregate exercise price of the Option or
    exercised portion thereof; (iii) allow payment, in whole or in part, through
    the surrender of shares of Common Stock then issuable upon exercise of the
    Option having a Fair Market Value on the date of Option exercise equal to
    the aggregate exercise price of the Option or exercised portion thereof;
    (iv) allow payment, in whole or in part, through the delivery of property of
    any kind which constitutes good and valuable consideration; (v) allow
    payment, in whole or in part, through the delivery of a full recourse
    promissory note bearing interest (at no less than such rate as shall then
    preclude the imputation of interest under the Code) and payable upon such
    terms as may be prescribed by the Administrator; (vi) allow payment, in
    whole or in

                                       9

<Page>

    part, through the delivery of a notice that the Holder has placed a market
    sell order with a broker with respect to shares of Common Stock then
    issuable upon exercise of the Option, and that the broker has been directed
    to pay a sufficient portion of the net proceeds of the sale to the Company
    in satisfaction of the Option exercise price, PROVIDED that payment of such
    proceeds is then made to the Company upon settlement of such sale; or
    (vii) allow payment through any combination of the consideration provided in
    the foregoing subparagraphs (ii), (iii), (iv), (v) and (vi). In the case of
    a promissory note, the Administrator may also prescribe the form of such
    note and the security to be given for such note. The Option may not be
    exercised, however, by delivery of a promissory note or by a loan from the
    Company when or where such loan or other extension of credit is prohibited
    by law.

    6.3.  CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES.  The Company shall not
be required to issue or deliver any certificate or certificates for shares of
stock purchased upon the exercise of any Option or portion thereof prior to
fulfillment of all of the following conditions:

        (a) The admission of such shares to listing on all stock exchanges on
    which such class of stock is then listed;

        (b) The completion of any registration or other qualification of such
    shares under any state or federal law, or under the rulings or regulations
    of the Securities and Exchange Commission or any other governmental
    regulatory body which the Administrator shall, in its absolute discretion,
    deem necessary or advisable;

        (c) The obtaining of any approval or other clearance from any state or
    federal governmental agency which the Administrator shall, in its absolute
    discretion, determine to be necessary or advisable;

        (d) The lapse of such reasonable period of time following the exercise
    of the Option as the Administrator may establish from time to time for
    reasons of administrative convenience; and

        (e) The receipt by the Company of full payment for such shares,
    including payment of any applicable withholding tax, which in the discretion
    of the Administrator may be in the form of consideration used by the Holder
    to pay for such shares under Section 6.2(d).

    6.4.  RIGHTS AS STOCKHOLDERS.  Holders shall not be, nor have any of the
rights or privileges of, stockholders of the Company in respect of any shares
purchasable upon the exercise of any part of an Option unless and until
certificates representing such shares have been issued by the Company to such
Holders.

    6.5.  OWNERSHIP AND TRANSFER RESTRICTIONS.  The Administrator, in its
absolute discretion, may impose such restrictions on the ownership and
transferability of the shares purchasable upon the exercise of an Option as it
deems appropriate. Any such restriction shall be set forth in the respective
Award Agreement and may be referred to on the certificates evidencing such
shares. The Holder shall give the Company prompt notice of any disposition of
shares of Common Stock acquired by exercise of an Incentive Stock Option within
(a) two years from the date of granting (including the date the Option is
modified, extended or renewed for purposes of Section 424(h) of the Code) such
Option to such Holder, or (b) one year after the transfer of such shares to such
Holder.

    6.6.  LIMITATIONS ON EXERCISE OF OPTIONS GRANTED TO DIRECTORS.  Unless
otherwise specified by the Board in the Stock Option Agreement evidencing the
Option, no Option granted to a Director may be exercised to any extent by
anyone after the first to occur of the following events:

        (a) The expiration of 12 months from the date of the Holder's death;

                                      10

<Page>

        (b) The expiration of 12 months from the date of the Holder's
    Termination of Directorship by reason of his or her permanent and total
    disability (within the meaning of Section 22(e)(3) of the Code);

        (c) The expiration of three months from the date of the Holder's
    Termination of Directorship for any reason other than such Holder's death or
    his or her permanent and total disability, unless the Holder dies within
    said three-month period; or

        (d) The expiration of 10 years from the date the Option was granted.

    6.7.  ADDITIONAL LIMITATIONS ON EXERCISE OF OPTIONS.  Holders may be
required to comply with any timing or other restrictions with respect to the
settlement or exercise of an Option, including a window-period limitation, as
may be imposed in the discretion of the Administrator.

                                  ARTICLE VII.
                           AWARD OF RESTRICTED STOCK

    7.1.  ELIGIBILITY.  Subject to the Award Limit, Restricted Stock may be
awarded to any Employee who the Committee determines is a key Employee or any
Consultant who the Committee determines should receive such an Award.

    7.2.  AWARD OF RESTRICTED STOCK.

        (a) The Committee may from time to time, in its absolute discretion:

           (i) Determine which Employees are key Employees and select from among
       the key Employees or Consultants (including Employees or Consultants who
       have previously received other awards under the Plan) such of them as in
       its opinion should be awarded Restricted Stock; and

           (ii) Determine the purchase price, if any, and other terms and
       conditions applicable to such Restricted Stock, consistent with the Plan.

        (b) The Committee shall establish the purchase price, if any, and form
    of payment for Restricted Stock; PROVIDED, HOWEVER, that such purchase price
    shall be no less than the par value of the Common Stock to be purchased,
    unless otherwise permitted by applicable state law. In all cases, legal
    consideration shall be required for each issuance of Restricted Stock.

        (c) Upon the selection of a key Employee or Consultant to be awarded
    Restricted Stock, the Committee shall instruct the Secretary of the Company
    to issue such Restricted Stock and may impose such conditions on the
    issuance of such Restricted Stock as it deems appropriate.

    7.3.  RIGHTS AS STOCKHOLDERS.  Subject to Section 7.4, upon delivery of the
shares of Restricted Stock to the escrow holder pursuant to Section 7.6, the
Holder shall have, unless otherwise provided by the Committee, all the rights of
a stockholder with respect to said shares, subject to the restrictions in his or
her Award Agreement, including the right to receive all dividends and other
distributions paid or made with respect to the shares; PROVIDED, HOWEVER, that
in the discretion of the Committee, any extraordinary distributions with respect
to the Common Stock shall be subject to the restrictions set forth in
Section 7.4.

    7.4.  RESTRICTION.  All shares of Restricted Stock issued under the Plan
(including any shares received by holders thereof with respect to shares of
Restricted Stock as a result of stock dividends, stock splits or any other form
of recapitalization) shall, in the terms of each individual Award Agreement, be
subject to such restrictions as the Committee shall provide, which restrictions
may include, without limitation, restrictions concerning voting rights and
transferability and restrictions based on duration of employment or consultancy
with the Company, Company performance and

                                      11
<Page>

individual performance; PROVIDED, HOWEVER, that except with respect to shares of
Restricted Stock granted to Section 162(m) Participants, by action taken after
the Restricted Stock is issued, the Committee may, on such terms and conditions
as it may determine to be appropriate, remove any or all of the restrictions
imposed by the terms of the Award Agreement. Restricted Stock may not be sold or
encumbered until all restrictions are terminated or expire. If no consideration
was paid by the Holder upon issuance, a Holder's rights in unvested Restricted
Stock shall lapse, and such Restricted Stock shall be surrendered to the Company
without consideration, upon Termination of Employment or, if applicable, upon
Termination of Consultancy with the Company; PROVIDED, HOWEVER, that the
Committee in its sole and absolute discretion may provide that such rights shall
not lapse in the event of a Termination of Employment following a "change of
control or ownership" (within the meaning of Treasury Regulation
Section 1.162-27(e)(2)(v) or any successor regulation thereto) of the Company or
because of the Holder's death or disability; PROVIDED, FURTHER, except with
respect to shares of Restricted Stock granted to Section 162(m) Participants,
the Committee in its sole and absolute discretion may provide that no such lapse
or surrender shall occur in the event of a Termination of Employment, or a
Termination of Consultancy, without cause or following any change in control of
the Company or because of the Holder's retirement, or otherwise.

    7.5.  REPURCHASE OF RESTRICTED STOCK.  The Committee shall provide in the
terms of each individual Award Agreement that the Company shall have the
right to repurchase from the Holder the Restricted Stock then subject to
restrictions under the Award Agreement immediately upon a Termination of
Employment or, if applicable, upon a Termination of Consultancy between the
Holder and the Company, at a cash price per share equal to the price paid by
the Holder for such Restricted Stock; PROVIDED, HOWEVER, that the Committee
in its sole and absolute discretion may provide that no such right of
repurchase shall exist in the event of a Termination of Employment following
a "change of ownership or control" (within the meaning of Treasury Regulation
Section 1.162-27(e)(2)(v) or any successor regulation thereto) of the Company
or because of the Holder's death or disability; PROVIDED, FURTHER, that,
except with respect to shares of Restricted Stock granted to Section 162(m)
Participants, the Committee in its sole and absolute discretion may provide
that no such right of repurchase shall exist in the event of a Termination of
Employment without cause or following any change in control of the Company or
because of the Holder's retirement, or otherwise.

    7.6.  ESCROW.  The Secretary of the Company or such other escrow holder as
the Committee may appoint shall retain physical custody of each certificate
representing Restricted Stock until all of the restrictions imposed under the
Award Agreement with respect to the shares evidenced by such certificate expire
or shall have been removed.

    7.7.  LEGEND.  In order to enforce the restrictions imposed upon shares of
Restricted Stock hereunder, the Committee shall cause a legend or legends to be
placed on certificates representing all shares of Restricted Stock that are
still subject to restrictions under Award Agreements, which legend or legends
shall make appropriate reference to the conditions imposed thereby.

    7.8.  SECTION 83(b) ELECTION.  If a Holder makes an election under
Section 83(b) of the Code, or any successor section thereto, to be taxed with
respect to the Restricted Stock as of the date of transfer of the Restricted
Stock rather than as of the date or dates upon which the Holder would otherwise
be taxable under Section 83(a) of the Code, the Holder shall deliver a copy of
such election to the Company immediately after filing such election with the
Internal Revenue Service. Notwithstanding the foregoing, the Administrator, in
its sole discretion, may provide in the Award Agreement underlying an award of
Restricted Stock that the Holder shall be unable to make an 83(b) election with
respect to the Restricted Stock, in which case the Holder shall be restricted
from making an 83(b) election with respect to such Restricted Stock.

                                      12
<Page>

                                 ARTICLE VIII.
    PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS, DEFERRED STOCK, STOCK PAYMENTS

    8.1.  ELIGIBILITY.  Subject to the Award Limit, one or more Performance
Awards, Dividend Equivalents, awards of Deferred Stock and/or Stock Payments may
be granted to any Employee whom the Committee determines is a key Employee or
any Consultant whom the Committee determines should receive such an Award.

    8.2.  PERFORMANCE AWARDS.

        (a) Any key Employee or Consultant selected by the Committee may be
    granted one or more Performance Awards. The value of such Performance Awards
    may be linked to any one or more of the Performance Criteria or other
    specific performance criteria determined appropriate by the Committee, in
    each case on a specified date or dates or over any period or periods
    determined by the Committee. In making such determinations, the Committee
    shall consider (among such other factors as it deems relevant in light of
    the specific type of award) the contributions, responsibilities and other
    compensation of the particular key Employee or Consultant.

        (b) Without limiting Section 8.2(a), the Committee may grant Performance
    Awards to any 162(m) Participant in the form of a cash bonus payable upon
    the attainment of objective performance goals which are established by the
    Committee and relate to one or more of the Performance Criteria, in each
    case on a specified date or dates or over any period or periods determined
    by the Committee. Any such bonuses paid to 162(m) Participants shall be
    based upon objectively determinable bonus formulas established in accordance
    with the provisions of Section 3.2. The maximum amount of any Performance
    Award payable to a 162(m) Participant under this Section 8.2(b) shall not
    exceed the Award Limit with respect to any calendar year.

    8.3.  DIVIDEND EQUIVALENTS.

        (a) Any key Employee or Consultant selected by the Committee may be
    granted Dividend Equivalents based on the dividends declared on Common
    Stock, to be credited as of dividend payment dates, during the period
    between the date a Stock Appreciation Right, Deferred Stock or Performance
    Award is granted, and the date such Stock Appreciation Right, Deferred Stock
    or Performance Award is exercised, vests or expires, as determined by the
    Committee. Such Dividend Equivalents shall be converted to cash or
    additional shares of Common Stock by such formula and at such time and
    subject to such limitations as may be determined by the Committee.

        (b) Any Holder of an Option who is an Employee or Consultant selected by
    the Committee may be granted Dividend Equivalents based on the dividends
    declared on Common Stock, to be credited as of dividend payment dates,
    during the period between the date an Option is granted, and the date such
    Option is exercised, vests or expires, as determined by the Committee. Such
    Dividend Equivalents shall be converted to cash or additional shares of
    Common Stock by such formula and at such time and subject to such
    limitations as may be determined by the Committee.

        (c) Any Holder of an Option who is an Independent Director selected by
    the Board may be granted Dividend Equivalents based on the dividends
    declared on Common Stock, to be credited as of dividend payment dates,
    during the period between the date an Option is granted and the date such
    Option is exercised, vests or expires, as determined by the Board. Such
    Dividend Equivalents shall be converted to cash or additional shares of
    Common Stock by such formula and at such time and subject to such
    limitations as may be determined by the Board.

        (d) Dividend Equivalents granted with respect to Options intended to be
    qualified performance-based compensation for purposes of Section 162(m) of
    the Code shall be payable, with respect to pre-exercise periods, regardless
    of whether such Option is subsequently exercised.

                                      13
<Page>

    8.4.  STOCK PAYMENTS.  Any key Employee or Consultant selected by the
Committee may receive Stock Payments in the manner determined from time to time
by the Committee. The number of shares shall be determined by the Committee and
may be based upon the Performance Criteria or other specific performance
criteria determined appropriate by the Committee, determined on the date such
Stock Payment is made or on any date thereafter.

    8.5.  DEFERRED STOCK.  Any key Employee or Consultant selected by the
Committee may be granted an award of Deferred Stock in the manner determined
from time to time by the Committee. The number of shares of Deferred Stock shall
be determined by the Committee and may be linked to the Performance Criteria or
other specific performance criteria determined to be appropriate by the
Committee, in each case on a specified date or dates or over any period or
periods determined by the Committee. Common Stock underlying a Deferred Stock
award will not be issued until the Deferred Stock award has vested, pursuant to
a vesting schedule or performance criteria set by the Committee. Unless
otherwise provided by the Committee, a Holder of Deferred Stock shall have no
rights as a Company stockholder with respect to such Deferred Stock until such
time as the Award has vested and the Common Stock underlying the Award has been
issued.

    8.6.  TERM.  The term of a Performance Award, Dividend Equivalent, award of
Deferred Stock and/or Stock Payment shall be set by the Committee in its
discretion.

    8.7.  EXERCISE OR PURCHASE PRICE.  The Committee may establish the exercise
or purchase price of a Performance Award, shares of Deferred Stock or shares
received as a Stock Payment; PROVIDED, HOWEVER, that such price shall not be
less than the par value of a share of Common Stock, unless otherwise permitted
by applicable state law.

    8.8.  EXERCISE UPON TERMINATION OF EMPLOYMENT, TERMINATION OF CONSULTANCY OR
TERMINATION OF DIRECTORSHIP.  A Performance Award, Dividend Equivalent, award of
Deferred Stock and/or Stock Payment is exercisable or payable only while the
Holder is an Employee, Consultant or Independent Director, as applicable;
PROVIDED, HOWEVER, that the Administrator in its sole and absolute discretion
may provide that the Performance Award, Dividend Equivalent, award of Deferred
Stock and/or Stock Payment may be exercised or paid subsequent to a Termination
of Employment following a "change of control or ownership" (within the meaning
of Section 1.162-27(e)(2)(v) or any successor regulation thereto) of the
Company; PROVIDED, FURTHER, that except with respect to Performance Awards
granted to Section 162(m) Participants, the Administrator in its sole and
absolute discretion may provide that Performance Awards may be exercised or paid
following a Termination of Employment, or a Termination of Consultancy, without
cause, or following a change in control of the Company, or because of the
Holder's retirement, death or disability, or otherwise.

    8.9.  FORM OF PAYMENT.  Payment of the amount determined under Section 8.2
or 8.3 above shall be in cash, in Common Stock or a combination of both, as
determined by the Committee. To the extent any payment under this Article VIII
is effected in Common Stock, it shall be made subject to satisfaction of all
provisions of Section 6.3.

                                  ARTICLE IX.
                           STOCK APPRECIATION RIGHTS

    9.1.  GRANT OF STOCK APPRECIATION RIGHTS.  A Stock Appreciation Right may be
granted to any key Employee or Consultant selected by the Committee. A Stock
Appreciation Right may be granted (a) in connection and simultaneously with the
grant of an Option, (b) with respect to a previously granted Option, or
(c) independent of an Option. A Stock Appreciation Right shall be subject to
such terms and conditions not inconsistent with the Plan as the Committee shall
impose and shall be evidenced by an Award Agreement.

    9.2.  COUPLED STOCK APPRECIATION RIGHTS.

                                      14
<Page>

        (a) A Coupled Stock Appreciation Right ("CSAR") shall be related to a
    particular Option and shall be exercisable only when and to the extent the
    related Option is exercisable.

        (b) A CSAR may be granted to the Holder for no more than the number of
    shares subject to the simultaneously or previously granted Option to which
    it is coupled.

        (c) A CSAR shall entitle the Holder (or other person entitled to
    exercise the Option pursuant to the Plan) to surrender to the Company
    unexercised a portion of the Option to which the CSAR relates (to the extent
    then exercisable pursuant to its terms) and to receive from the Company in
    exchange therefor an amount determined by multiplying the difference
    obtained by subtracting the Option exercise price from the Fair Market Value
    of a share of Common Stock on the date of exercise of the CSAR by the number
    of shares of Common Stock with respect to which the CSAR shall have been
    exercised, subject to any limitations the Committee may impose.

    9.3.  INDEPENDENT STOCK APPRECIATION RIGHTS.

        (a) An Independent Stock Appreciation Right ("ISAR") shall be unrelated
    to any Option and shall have a term set by the Committee. An ISAR shall be
    exercisable in such installments as the Committee may determine. An ISAR
    shall cover such number of shares of Common Stock as the Committee may
    determine. The exercise price per share of Common Stock subject to each ISAR
    shall be set by the Committee. An ISAR is exercisable only while the Holder
    is an Employee or Consultant; PROVIDED, that the Committee may determine
    that the ISAR may be exercised subsequent to Termination of Employment, or
    Termination of Consultancy, without cause, or following a change in control
    of the Company, or because of the Holder's retirement, death or disability,
    or otherwise.

        (b) An ISAR shall entitle the Holder (or other person entitled to
    exercise the ISAR pursuant to the Plan) to exercise all or a specified
    portion of the ISAR (to the extent then exercisable pursuant to its terms)
    and to receive from the Company an amount determined by multiplying the
    difference obtained by subtracting the exercise price per share of the ISAR
    from the Fair Market Value of a share of Common Stock on the date of
    exercise of the ISAR by the number of shares of Common Stock with respect to
    which the ISAR shall have been exercised, subject to any limitations the
    Committee may impose.

    9.4.  PAYMENT AND LIMITATIONS ON EXERCISE.

        (a) Payment of the amounts determined under Section 9.2(c) and 9.3(b)
    above shall be in cash, in Common Stock (based on its Fair Market Value as
    of the date the Stock Appreciation Right is exercised) or a combination of
    both, as determined by the Committee. To the extent such payment is effected
    in Common Stock it shall be made subject to satisfaction of all provisions
    of Section 6.3 above pertaining to Options.

        (b) Holders of Stock Appreciation Rights may be required to comply with
    any timing or other restrictions with respect to the settlement or exercise
    of a Stock Appreciation Right, including a window-period limitation, as may
    be imposed in the discretion of the Committee.

                                   ARTICLE X.
                                 ADMINISTRATION

    10.1.  COMPENSATION COMMITTEE.  The Compensation Committee (or another
committee or a subcommittee of the Board assuming the functions of the Committee
under the Plan) shall consist solely of two or more Independent Directors
appointed by and holding office at the pleasure of the Board, each of whom is
both a "non-employee director" as defined by Rule 16b-3 and an "outside
director" for purposes of Section 162(m) of the Code. Appointment of Committee
members shall be

                                      15
<Page>

effective upon acceptance of appointment. Committee members may resign at any
time by delivering written notice to the Board. Vacancies in the Committee may
be filled by the Board.

    10.2.  DUTIES AND POWERS OF COMMITTEE.  It shall be the duty of the
Committee to conduct the general administration of the Plan in accordance with
its provisions. The Committee shall have the power to interpret the Plan and the
Award Agreements, and to adopt such rules for the administration, interpretation
and application of the Plan as are consistent therewith, to interpret, amend or
revoke any such rules and to amend any Award Agreement provided that the rights
or obligations of the Holder of the Award that is the subject of any such Award
Agreement are not affected adversely. Any such grant or award under the Plan
need not be the same with respect to each Holder. Any such interpretations and
rules with respect to Incentive Stock Options shall be consistent with the
provisions of Section 422 of the Code. In its absolute discretion, the Board may
at any time and from time to time exercise any and all rights and duties of the
Committee under the Plan except with respect to matters which under Rule 16b-3
or Section 162(m) of the Code, or any regulations or rules issued thereunder,
are required to be determined in the sole discretion of the Committee.
Notwithstanding the foregoing, the full Board, acting by a majority of its
members in office, shall conduct the general administration of the Plan with
respect to Options and Dividend Equivalents granted to Independent Directors.

    10.3.  MAJORITY RULE; UNANIMOUS WRITTEN CONSENT.  The Committee shall act by
a majority of its members in attendance at a meeting at which a quorum is
present or by a memorandum or other written instrument signed by all members of
the Committee.

    10.4.  COMPENSATION; PROFESSIONAL ASSISTANCE; GOOD FAITH ACTIONS.  Members
of the Committee shall receive such compensation, if any, for their services as
members as may be determined by the Board. All expenses and liabilities which
members of the Committee incur in connection with the administration of the Plan
shall be borne by the Company. The Committee may, with the approval of the
Board, employ attorneys, consultants, accountants, appraisers, brokers or other
persons. The Committee, the Company and the Company's officers and Directors
shall be entitled to rely upon the advice, opinions or valuations of any such
persons. All actions taken and all interpretations and determinations made by
the Committee or the Board in good faith shall be final and binding upon all
Holders, the Company and all other interested persons. No members of the
Committee or Board shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or Awards, and all
members of the Committee and the Board shall be fully protected by the Company
in respect of any such action, determination or interpretation.

    10.5.  DELEGATION OF AUTHORITY TO GRANT AWARDS.  The Committee may, but need
not, delegate from time to time some or all of its authority to grant Awards
under the Plan to a committee consisting of one or more members of the Committee
or of one or more officers of the Company; PROVIDED, HOWEVER, that the Committee
may not delegate its authority to grant Awards to individuals (a) who are
subject on the date of the grant to the reporting rules under Section 16(a) of
the Exchange Act, (b) who are Section 162(m) Participants, or (c) who are
officers of the Company who are delegated authority by the Committee hereunder.
Any delegation hereunder shall be subject to the restrictions and limits that
the Committee specifies at the time of such delegation of authority and may be
rescinded at any time by the Committee. At all times, any committee appointed
under this Section 10.5 shall serve in such capacity at the pleasure of the
Committee.

                                  ARTICLE XI.
                            MISCELLANEOUS PROVISIONS

    11.1.  NOT TRANSFERABLE.

                                      16
<Page>

        (a) No Award under the Plan may be sold, pledged, assigned or
    transferred in any manner other than by will or the laws of descent and
    distribution or, subject to the consent of the Administrator, pursuant to a
    DRO, unless and until such Award has been exercised, or the shares
    underlying such Award have been issued, and all restrictions applicable to
    such shares have lapsed. No Award or interest or right therein shall be
    liable for the debts, contracts or engagements of the Holder or his or her
    successors in interest or shall be subject to disposition by transfer,
    alienation, anticipation, pledge, encumbrance, assignment or any other means
    whether such disposition be voluntary or involuntary or by operation of law
    by judgment, levy, attachment, garnishment or any other legal or equitable
    proceedings (including bankruptcy), and any attempted disposition thereof
    shall be null and void and of no effect, except to the extent that such
    disposition is permitted by the preceding sentence.

        (b) During the lifetime of the Holder, only he or she may exercise an
    Option or other Award (or any portion thereof) granted to him or her under
    the Plan, unless it has been disposed of with the consent of the
    Administrator pursuant to a DRO. After the death of the Holder, any
    exercisable portion of an Option or other Award may, prior to the time when
    such portion becomes unexercisable under the Plan or the applicable Award
    Agreement, be exercised by his or her personal representative or by any
    person empowered to do so under the deceased Holder's will or under the then
    applicable laws of descent and distribution.

    11.2.  AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN.  Except as
otherwise provided in this Section 11.2, the Plan may be wholly or partially
amended or otherwise modified, suspended or terminated at any time or from time
to time by the Administrator. However, without approval of the Company's
stockholders given within 12 months before or after the action by the
Administrator, no action of the Administrator may, except as provided in
Section 11.3, increase the limits imposed in Section 2.1 on the maximum number
of shares which may be issued under the Plan upon the exercise of any Incentive
Stock Options. No amendment, suspension or termination of the Plan shall,
without the consent of the Holder, alter or impair any rights or obligations
under any Award theretofore granted or awarded, unless the Award itself
otherwise expressly so provides. No Awards may be granted or awarded during any
period of suspension or after termination of the Plan, and in no event may any
Incentive Stock Option be granted under the Plan after the first to occur of the
following events:

        (a) The expiration of 10 years from the date the Plan is adopted by the
    Board; or

        (b) The expiration of 10 years from the date the Plan is approved by the
    Company's stockholders under Section 11.4.

    11.3.  CHANGES IN COMMON STOCK OR ASSETS OF THE COMPANY, ACQUISITION OR
LIQUIDATION OF THE COMPANY AND OTHER CORPORATE EVENTS.

        (a) Subject to Section 11.3(d), in the event that the Administrator
    determines that any dividend or other distribution (whether in the form of
    cash, Common Stock, other securities or other property), recapitalization,
    reclassification, stock split, reverse stock split, reorganization, merger,
    consolidation, split-up, spin-off, combination, repurchase, liquidation,
    dissolution, or sale, transfer, exchange or other disposition of all or
    substantially all of the assets of the Company, or exchange of Common Stock
    or other securities of the Company, issuance of warrants or other rights to
    purchase Common Stock or other securities of the Company, or other similar
    corporate transaction or event, in the Administrator's sole discretion,
    affects the Common Stock such that an adjustment is determined by the
    Administrator to be appropriate in order to prevent dilution or enlargement
    of the benefits or potential benefits intended to be made available under
    the Plan or

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    with respect to an Award, then the Administrator shall, in such manner as it
    may deem equitable, adjust any or all of:

           (i) The number and kind of shares of Common Stock (or other
       securities or property) with respect to which Awards may be granted or
       awarded (including, but not limited to, adjustments of the limitations in
       Section 2.1 on the maximum number and kind of shares which may be issued
       and adjustments of the Award Limit);

           (ii) The number and kind of shares of Common Stock (or other
       securities or property) subject to outstanding Awards; and

           (iii) The grant or exercise price with respect to any Award.

        (b) Subject to the terms and conditions of the respective Award
    Agreements and Sections 11.3(d), in the event of any transaction or event
    described in Section 11.3(a) or any unusual or nonrecurring transactions or
    events affecting the Company, any affiliate of the Company, or the financial
    statements of the Company or any affiliate, or of changes in applicable
    laws, regulations or accounting principles, the Administrator, in its sole
    and absolute discretion, and on such terms and conditions as it deems
    appropriate, either by the terms of the Award or by action taken prior to
    the occurrence of such transaction or event and either automatically or upon
    the Holder's request, is hereby authorized to take any one or more of the
    following actions whenever the Administrator determines that such action is
    appropriate in order to prevent dilution or enlargement of the benefits or
    potential benefits intended to be made available under the Plan or with
    respect to any Award under the Plan, to facilitate such transactions or
    events or to give effect to such changes in laws, regulations or principles:

           (i) To provide for either the purchase of any such Award for an
       amount of cash equal to the amount that could have been attained upon the
       exercise of such Award or realization of the Holder's rights had such
       Award been currently exercisable or payable or fully vested or the
       replacement of such Award with other rights or property selected by the
       Administrator in its sole discretion;

           (ii) To provide that the Award cannot vest, be exercised or become
       payable after such event;

           (iii) To provide that such Award shall be exercisable as to all
       shares covered thereby, notwithstanding anything to the contrary in
       Section 5.3 or 5.4 or the provisions of such Award;

           (iv) To provide that such Award be assumed by the successor or
       survivor corporation, or a parent or subsidiary thereof, or shall be
       substituted for by similar options, rights or awards covering the stock
       of the successor or survivor corporation, or a parent or subsidiary
       thereof, with appropriate adjustments as to the number and kind of shares
       and prices; and

           (v) To make adjustments in the number and type of shares of Common
       Stock (or other securities or property) subject to outstanding Awards,
       and in the number and kind of outstanding Restricted Stock or Deferred
       Stock and/or in the terms and conditions of (including the grant or
       exercise price), and the criteria included in, outstanding options,
       rights and awards and options, rights and awards which may be granted in
       the future.

           (vi) To provide that, for a specified period of time prior to such
       event, the restrictions imposed under an Award Agreement upon some or all
       shares of Restricted Stock or Deferred Stock may be terminated, and, in
       the case of Restricted Stock, some or all shares of such Restricted Stock
       may cease to be subject to repurchase under Section 7.5 or forfeiture
       under Section 7.4 after such event.

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<Page>

        (c) Subject to Sections 11.3(d), 3.2 and 3.3, the Administrator may, in
    its discretion, include such further provisions and limitations in any
    Award, agreement or certificate, as it may deem equitable and in the best
    interests of the Company.

        (d) With respect to Awards which are granted to Section 162(m)
    Participants and are intended to qualify as performance-based compensation
    under Section 162(m)(4)(C), no adjustment or action described in this
    Section 11.3 or in any other provision of the Plan shall be authorized to
    the extent that such adjustment or action would cause such Award to fail to
    so qualify under Section 162(m)(4)(C), or any successor provisions thereto.
    No adjustment or action described in this Section 11.3 or in any other
    provision of the Plan shall be authorized to the extent that such adjustment
    or action would cause the Plan to violate Section 422(b)(1) of the Code.
    Furthermore, no such adjustment or action shall be authorized to the extent
    such adjustment or action would result in short-swing profits liability
    under Section 16 or violate the exemptive conditions of Rule 16b-3 unless
    the Administrator determines that the Award is not to comply with such
    exemptive conditions. The number of shares of Common Stock subject to any
    Award shall always be rounded to the next whole number.

        (e) Notwithstanding the foregoing, in the event that the Company becomes
    a party to a transaction that is intended to qualify for "pooling of
    interests" accounting treatment and, but for one or more of the provisions
    of this Plan or any Award Agreement would so qualify, then this Plan and any
    Award Agreement shall be interpreted so as to preserve such accounting
    treatment, and to the extent that any provision of the Plan or any Award
    Agreement would disqualify the transaction from pooling of interests
    accounting treatment (including, if applicable, an entire Award Agreement),
    then such provision shall be null and void. All determinations to be made in
    connection with the preceding sentence shall be made by the independent
    accounting firm whose opinion with respect to "pooling of interests"
    treatment is required as a condition to the Company's consummation of such
    transaction.

        (f) The existence of the Plan, the Award Agreement and the Awards
    granted hereunder shall not affect or restrict in any way the right or power
    of the Company or the shareholders of the Company to make or authorize any
    adjustment, recapitalization, reorganization or other change in the
    Company's capital structure or its business, any merger or consolidation of
    the Company, any issue of stock or of options, warrants or rights to
    purchase stock or of bonds, debentures, preferred or prior preference stocks
    whose rights are superior to or affect the Common Stock or the rights
    thereof or which are convertible into or exchangeable for Common Stock, or
    the dissolution or liquidation of the company, or any sale or transfer of
    all or any part of its assets or business, or any other corporate act or
    proceeding, whether of a similar character or otherwise.

    11.4.  APPROVAL OF PLAN BY STOCKHOLDERS.  The Plan will be submitted for the
approval of the Company's stockholders within 12 months after the date of the
Board's initial adoption of the Plan. Awards may be granted or awarded prior to
such stockholder approval, provided that such Awards shall not be exercisable
nor shall such Awards vest prior to the time when the Plan is approved by the
stockholders, and provided further that if such approval has not been obtained
at the end of said twelve-month period, all Awards previously granted or awarded
under the Plan shall thereupon be canceled and become null and void. In
addition, if the Board determines that Awards other than Options or Stock
Appreciation Rights which may be granted to Section 162(m) Participants should
continue to be eligible to qualify as performance-based compensation under
Section 162(m)(4)(C) of the Code, the Performance Criteria must be disclosed to
and approved by the Company's stockholders no later than the first stockholder
meeting that occurs in the fifth year following the year in which the Company's
stockholders previously approved the Performance Criteria.

    11.5.  TAX WITHHOLDING.  The Company shall be entitled to require payment in
cash or deduction from other compensation payable to each Holder of any sums
required by federal, state or local tax law

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to be withheld with respect to the issuance, vesting, exercise or payment of any
Award. The Administrator may in its discretion and in satisfaction of the
foregoing requirement allow such Holder to elect to have the Company withhold
shares of Common Stock otherwise issuable under such Award (or allow the return
of shares of Common Stock) having a Fair Market Value equal to the sums required
to be withheld. Notwithstanding any other provision of the Plan, the number of
shares of Common Stock which may be withheld with respect to the issuance,
vesting, exercise or payment of any Award (or which may be repurchased from the
Holder of such Award within six months after such shares of Common Stock were
acquired by the Holder from the Company) in order to satisfy the Holder's
federal and state income and payroll tax liabilities with respect to the
issuance, vesting, exercise or payment of the Award shall be limited to the
number of shares which have a Fair Market Value on the date of withholding or
repurchase equal to the aggregate amount of such liabilities based on the
minimum statutory withholding rates for federal and state tax income and payroll
tax purposes that are applicable to such supplemental taxable income.

    11.6.  LOANS.  The Committee may, in its discretion, extend one or more
loans to key Employees in connection with the exercise or receipt of an Award
granted or awarded under the Plan, or the issuance of Restricted Stock or
Deferred Stock awarded under the Plan. The terms and conditions of any such loan
shall be set by the Committee.

    11.7.  FORFEITURE PROVISIONS.  Pursuant to its general authority to
determine the terms and conditions applicable to Awards under the Plan, the
Administrator shall have the right to provide, in the terms of Awards made under
the Plan, or to require a Holder to agree by separate written instrument, that
(a)(i) any proceeds, gains or other economic benefit actually or constructively
received by the Holder upon any receipt or exercise of the Award, or upon the
receipt or resale of any Common Stock underlying the Award, must be paid to the
Company, and (ii) the Award shall terminate and any unexercised portion of the
Award (whether or not vested) shall be forfeited, if (b)(i) a Termination of
Employment, Termination of Consultancy or Termination of Directorship occurs
prior to a specified date, or within a specified time period following receipt
or exercise of the Award, or (ii) the Holder at any time, or during a specified
time period, engages in any activity in competition with the Company, or which
is inimical, contrary or harmful to the interests of the Company, as further
defined by the Administrator or (iii) the Holder incurs a Termination of
Employment, Termination of Consultancy or Termination of Directorship for cause.

    11.8.  EFFECT OF PLAN UPON OPTIONS AND COMPENSATION PLANS.  The adoption of
the Plan shall not affect any other compensation or incentive plans in effect
for the Company or any Subsidiary. Nothing in the Plan shall be construed to
limit the right of the Company (a) to establish any other forms of incentives or
compensation for Employees, Directors or Consultants of the Company or any
Subsidiary, or (b) to grant or assume options or other rights or awards
otherwise than under the Plan in connection with any proper corporate purpose
including but not by way of limitation, the grant or assumption of options in
connection with the acquisition by purchase, lease, merger, consolidation or
otherwise, of the business, stock or assets of any corporation, partnership,
limited liability company, firm or association.

    11.9.  COMPLIANCE WITH LAWS.  The Plan, the granting and vesting of Awards
under the Plan and the issuance and delivery of shares of Common Stock and the
payment of money under the Plan or under Awards granted or awarded hereunder are
subject to compliance with all applicable federal and state laws, rules and
regulations (including but not limited to state and federal securities law and
federal margin requirements) and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith. Any securities delivered under
the Plan shall be subject to such restrictions, and the person acquiring such
securities shall, if requested by the Company, provide such assurances and
representations to the Company as the Company may deem necessary or desirable to
assure compliance with all applicable legal requirements. To the extent
permitted by applicable law, the Plan and Awards granted or awarded

                                      20
<Page>

hereunder shall be deemed amended to the extent necessary to conform to such
laws, rules and regulations.

    11.10.  TITLES.  Titles are provided herein for convenience only and are not
to serve as a basis for interpretation or construction of the Plan.

    11.11.  GOVERNING LAW.  The Plan and any agreements hereunder shall be
administered, interpreted and enforced under the internal laws of the State of
Maryland without regard to conflicts of laws thereof.

                                    *  *  *

    I hereby certify that the foregoing Plan was duly adopted by the Board of
Directors of Price Enterprises, Inc. on April 12, 2001.

    Executed on this 18th day of September, 2001.

                                                  /s/ S. Eric Ottesen
                                          --------------------------------------
                                                        Secretary

                                    *  *  *

    I hereby certify that the foregoing Plan was approved by the stockholders of
Price Enterprises, Inc. on September 11, 2001.

    Executed on this 18th day of September, 2001.

                                                  /s/ S. Eric Ottesen
                                          --------------------------------------
                                                        Secretary

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