Document:

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                                                                   Exhibit 10.18

                       FORM OF RESTRICTED STOCK AGREEMENT

         THIS RESTRICTED STOCK AGREEMENT (the "Agreement") made as of the ____
day of _____________, ____, between PETCO Animal Supplies, Inc., a Delaware
corporation (the "Company"), and _____________, an employee of the Company or a
Subsidiary of the Company (the "Employee"):

         WHEREAS, the Company has established the 1994 Stock Option and
Restricted Stock Plan for Executive and Key Employees of PETCO Animal Supplies,
Inc. (as amended or restated from time to time, the "Plan"); and

         WHEREAS, the Company wishes to carry out the Plan (the terms of which
are hereby incorporated by reference and made a part of this Agreement); and

         WHEREAS, the Plan provides for the issuance of shares of the Company's
Common Stock, $0.001 par value, subject to certain restrictions thereon
(hereinafter referred to as "Restricted Stock"); and

         WHEREAS, the Stock Option Committee of the Company's Board of Directors
(the "Committee"), appointed to administer the Plan, has determined that it
would be to the advantage and best interest of the Company and its shareholders
to issue the Restricted Stock provided for herein to the Employee in
consideration of services to the Company and/or its Subsidiaries, and has
advised the Company thereof and instructed the undersigned Officer to issue said
Restricted Stock;

         NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

         Whenever the following terms are used below in this Agreement they
shall have the meaning specified below unless the context clearly indicates to
the contrary.

SECTION 1.1 - RESTRICTED STOCK

         "Restricted Stock" shall mean shares of the Company's Common Stock
issued under this Agreement and subject to the Restrictions imposed hereunder.

SECTION 1.2 - PLAN

         "Plan" shall mean the 1994 Stock Option and Restricted Stock Plan for
Executive and Key Employees of PETCO Animal Supplies, Inc., as amended or
restated from time to time.

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SECTION 1.3 - PRONOUNS

         The masculine pronoun shall include the feminine and neuter, and the
singular the plural, where the context so indicates.

SECTION 1.4 - RESTRICTIONS

         "Restrictions" shall mean the restrictions on sale or other transfer
and the exposure to forfeiture imposed upon the Restricted Stock under this
Agreement.

SECTION 1.5 - SECRETARY

         "Secretary" shall mean the Secretary of the Company.

SECTION 1.6 - SUBSIDIARY

         "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 50 percent
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

SECTION 1.7 - TERMINATION OF EMPLOYMENT

         "Termination of Employment" shall mean the time when the
employee-employer relationship between the Employee and the Company or a
Subsidiary is terminated for any reason, including, but not by way of
limitation, a termination by resignation, discharge, death or retirement, but
excluding any termination where there is a simultaneous reemployment by the
Company or a Subsidiary. The Committee, in its absolute discretion, shall
determine the effect of all other 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 good cause, and all
questions of whether particular leaves of absence constitute Terminations of
Employment.

                                   ARTICLE II
                          ISSUANCE OF RESTRICTED STOCK

SECTION 2.1 - ISSUANCE OF RESTRICTED STOCK

         In consideration of the Employee's agreement to remain in the employ of
the Company or a Subsidiary and for other good and valuable consideration, on
the date hereof the Company irrevocably issues to the Employee _____________
shares of its $0.001 par value Common Stock upon the terms and conditions set
forth in this Agreement.

SECTION 2.2 - CONSIDERATION TO THE COMPANY

         As partial consideration for the issuance of Restricted Stock by the
Company, the Employee agrees to render faithful and efficient services to the
Company or a Subsidiary with such duties and responsibilities as the Company
shall from time to time prescribe for a period of

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at least one (1) year from the date that this Restricted Stock is issued.
Nothing in this Agreement or in the Plan shall, however, confer upon the
Employee any right to continue in the employ of the Company or any Subsidiary
or shall interfere with or restrict in any way the rights of the Company and
its Subsidiaries, which are hereby expressly reserved, to terminate or
discharge the Employee at any time for any reason whatsoever, with or without
good cause.

                                   ARTICLE III
                                  RESTRICTIONS

SECTION 3.1 - FORFEITURE OF RESTRICTED STOCK

         All shares of Restricted Stock shall be forfeited back to the Company
immediately upon a Termination of Employment for any reason.

SECTION 3.2 - LEGEND

         Certificates representing shares of Restricted Stock issued pursuant to
this Agreement shall, until all restrictions lapse and new certificates are
issued pursuant to Section 3.3, bear the following legend:

         "The shares represented by this certificate are subject to
         reacquisition by PETCO Animal Supplies, Inc. and such shares may not be
         sold or otherwise transferred except pursuant to the provisions of the
         Restricted Stock Agreement by and between PETCO Animal Supplies, Inc.
         and the registered owner of such shares."

SECTION 3.3 - LAPSE OF RESTRICTIONS

         (a)      The Restrictions shall lapse as follows:

                  (1)      The Restrictions shall lapse with respect to
         thirty-three and one-third percent (33 1/3%) of the shares of
         Restricted Stock on the first anniversary of the date that the
         Restricted Stock is issued.

                  (2)      The Restrictions shall lapse with respect to
         thirty-three and one-third percent (33 1/3%) of the shares of
         Restricted Stock on the second anniversary of the date that the
         Restricted Stock is issued.

                  (3)      The Restrictions shall lapse with respect to
         thirty-three and one-third percent (33 1/3%) of the shares of
         Restricted Stock on the third anniversary of the date that the
         Restricted Stock is issued.

         (b)      Upon the lapse of the Restrictions, the Company shall cause
new certificates to be issued and delivered to the Employee or his legal
representative, free from the legend provided for in Section 3.2 and any of the
other Restrictions. Notwithstanding the preceding sentence, no such new
certificate shall be delivered to Employee or his legal representative unless
and until Employee or his legal representative shall have paid to the Company in
cash the full amount of all federal and state withholding or other employment
taxes applicable to the taxable income of the Employee resulting from the lapse
of the Restrictions.

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SECTION 3.4 - MERGER, CONSOLIDATION, EXCHANGE, ACQUISITION, LIQUIDATION OR
DISSOLUTION

         In the event of the merger or consolidation of the Company with or into
another corporation, the acquisition by another corporation or person of all or
substantially all of the Company's assets or 80% or more of the Company's then
outstanding voting stock or the liquidation or dissolution of the Company, the
Committee may, in its absolute discretion and on such terms and conditions as it
deems appropriate, provide by resolution adopted prior to such event that, at
some time prior to the effective date of such event, the Restrictions upon some
or all shares of Restricted Stock shall immediately expire and/or that some or
all of such shares shall cease to be subject to forfeiture under Section 3.1.

SECTION 3.5 - RESTRICTIONS ON NEW SHARES

         In the event that the outstanding shares of the Company's Common Stock
are changed into or exchanged for a different number or kind of shares or other
securities of the Company or of another corporation pursuant to a merger of the
Company into another corporation, or the exchange of all or substantially all of
the assets of the Company for the securities of another corporation, or the
acquisition by another corporation of 80% or more of the Company's then
outstanding voting stock, or the liquidation or dissolution of the Company, or a
stock split-up or stock dividend, such new or additional or different shares or
securities that are attributable to the Employee in his capacity as the owner of
the Restricted Stock, shall be considered to be Restricted Stock and shall be
subject to all of the Restrictions, unless the Committee provides, pursuant to
Section 3.4, for the expiration of the Restrictions on the shares of Restricted
Stock underlying the distribution of the new or additional shares or securities.

                                   ARTICLE IV
                                OTHER PROVISIONS

SECTION 4.1 - ADMINISTRATION

         The Committee shall have the power to interpret the Plan and this
Agreement and to adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith and to interpret or revoke
any such rules. All actions taken and all interpretations and determinations
made by the Committee in good faith shall be final and binding upon the
Employee, the Company and all other interested persons. No member of the
Committee shall be personally liable for any action, determination, or
interpretation made in good faith with respect to the Plan or the Restricted
Stock.

SECTION 4.2 - RESTRICTED STOCK NOT TRANSFERABLE

         Neither the Restricted Stock nor any interest or right therein or part
thereof shall be liable for the debts, contracts, or engagements of the Employee
or his 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; PROVIDED, HOWEVER, that this Section 4.2
shall not prevent transfers by will or by the applicable laws of descent and
distribution.

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SECTION 4.3 - CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES

         The Company shall not be required to issue or deliver any certificate
or certificates for shares of stock pursuant to this Agreement 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; and

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

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

                  (d)      The lapse of such reasonable period of time as the
         Committee may from time to time establish for reasons of administrative
         convenience.

SECTION 4.4 - ESCROW

         The Secretary or such other escrow holder as the Committee may appoint
shall retain physical custody of the certificates representing the Restricted
Stock, including shares of Restricted Stock issued pursuant to Section 3.5,
until all of the Restrictions expire or shall have been removed; PROVIDED,
HOWEVER, that in no event shall Employee retain physical custody of any
certificates representing Restricted Stock issued to him.

SECTION 4.5 - NOTICES

         Any notice to be given under the terms of this Agreement to the Company
shall be addressed to the Company in care of its Secretary and any notice to be
given to the Employee shall be addressed to him at the address given beneath his
signature hereto. By a notice given pursuant to this Section, either party may
hereafter designate a different address for notices to be given to him. Any
notice which is required to be given to the Employee shall, if the Employee is
then deceased, be given to the Employee's personal representative if such
representative has previously informed the Company of his status and address by
written notice under this Section. Any notice shall have been deemed duly given
when enclosed in a properly sealed envelope or wrapper addressed as aforesaid,
deposited (with postage prepaid) in a post office or branch post office
regularly maintained by the United States Postal Service.

SECTION 4.6 - RIGHTS AS SHAREHOLDER

         Except as otherwise provided herein, the holder of the Restricted Stock
shall have all the rights of a shareholder with respect to the Restricted Stock,
including the right to vote the Restricted Stock and the right to receive all
dividends or other distributions paid or made with respect to the Restricted
Stock.

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SECTION 4.7 - TITLES

         Titles are provided herein for convenience only and are not to serve as
a basis for interpretation or construction of this Agreement.

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         IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto.

                                     PETCO ANIMAL SUPPLIES, INC.

                                     By
                                        ----------------------------------------

                                     -------------------------------------------
                                                       EMPLOYEE

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

                                     -------------------------------------------
                                                       Address

                                     Employee's Taxpayer Identification Number:

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

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                                                                   Exhibit 10.23

                          THE 2002 INCENTIVE AWARD PLAN

                                       OF

                           PETCO ANIMAL SUPPLIES, INC.

                  PETCO Animal Supplies, Inc., a Delaware corporation, has
adopted the 2002 Incentive Award Plan of PETCO Animal Supplies, Inc., (the
"Plan"), effective as of February 19, 2002, 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 10.2.

                  1.2.     "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").

                  1.3.     "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.

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                  1.4.     "AWARD LIMIT" shall mean 500,000 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 $1,500,000.

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

                  1.6.     A "CHANGE IN CONTROL" shall be deemed to occur:

                           (a)      if any person or entity (or related group of
                  persons or entities) other than persons or entities owning
                  more than five percent of the Company's outstanding securities
                  as of the effective date of the Plan is or becomes the
                  "beneficial owner" (within the meaning of Rule 13d-3 under the
                  Exchange Act), directly or indirectly, of securities of the
                  Company representing 50% or more of the combined voting power
                  of the Company's then outstanding securities;

                           (b)      upon the consummation of a Transaction which
                  was previously approved by the Company's stockholders; or

                           (c)      if, during the term of the Plan, members of
                  the Incumbent Board cease for any reason to constitute at
                  least a majority of the Board.

                           Notwithstanding the foregoing, a Change in Control
                  pursuant to subparagraphs (b) and (c) above shall not be
                  deemed to occur if immediately following the consummation of a
                  Transaction or other event approved by the Incumbent Board,
                  holders of the Company's voting securities immediately prior
                  to a Transaction either continue to own at least 50% of the
                  combined voting power of the Company's then outstanding voting
                  securities if the Company survives the Transaction or then own
                  voting securities representing at least 50% of the combined
                  voting power of each surviving entity after a Transaction.

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

                  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 $0.001 per share.

                  1.10.    "COMPANY" shall mean PETCO Animal Supplies, Inc., a
Delaware 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

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                  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.    The "INCUMBENT BOARD" consists of the members of the
Board as of the effective date of the Plan, to the extent they continue to serve
as Board members and any individual who becomes a Board member after the
effective date of the Plan if (i) his or her election or nomination as a
director was approved by a vote of at least two-thirds of the then

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Incumbent Board and such person does not own more than 20% of the combined
voting power of the Company's then outstanding securities, or (ii) such
individual is a representative of an institutional investor that either owns
less than 20% of the combined voting power of the Company's then outstanding
securities or was represented on the Board as of the effective date of the Plan.

                  1.22.    "INDEPENDENT DIRECTOR" shall mean a member of the
Board who is not an Employee of the Company.

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

                  1.24.    "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.

                  1.25.    "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.

                  1.26.    "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.

                  1.27.    "PLAN" shall mean the 2002 Incentive Award Plan of
PETCO Animal Supplies, Inc.

                  1.28.    "PUBLIC TRADING DATE" shall mean the first date upon
which Common Stock of the Company is listed (or approved for listing) upon
notice of issuance on any securities exchange or designated (or approved for
designation) upon notice of issuance as a national market security on an
interdealer quotation system.

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

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

                  1.31.    "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.

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

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

                  1.34.    "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.

                  1.35.    "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.

                  1.36.    "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.

                  1.37.    "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.

                  1.38.    "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.

                  1.39.    "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,

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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 good cause, and all questions of whether a
particular leave of absence constitutes a Termination of Employment.

                  1.40.    A "TRANSACTION" means a merger, consolidation or
reorganization, a distribution of the Company's assets to the stockholders of
the Company by spin-off, split-up or otherwise, a sale or disposition of all or
substantially all of the Company's assets or a liquidation or dissolution of the
Company.

                                   ARTICLE II.

                             SHARES SUBJECT TO PLAN

                  2.1.     SHARES SUBJECT TO PLAN.

                           (a)      The shares of stock subject to Awards shall
                  be Common Stock, initially shares of the Company's Common
                  Stock.

                           (b)      Subject to adjustment as provided in Section
                  11.3, the Aggregate number of shares of the Company's Common
                  Stock which may be issued upon exercise of Options or rights
                  or upon any such Award under the Plan shall be 1,115,006 (the
                  "Aggregate Limit"). The Aggregate Limit shall automatically
                  increase on March 1 of each year during the term of the Plan,
                  commencing on March 1, 2003, by an amount equal to 2.0% of the
                  total number of issued and outstanding shares of the Company's
                  Common Stock outstanding as of the last day of the fiscal year
                  immediately preceding such March 1; PROVIDED, HOWEVER, that,
                  with respect to Incentive Stock Options, in no event shall the
                  aggregate number of shares of the Company's Common Stock which
                  may be issued upon exercise of Incentive Stock Options exceed
                  10,000,000.

                           (c)      With respect to Options granted to
                  Independent Directors pursuant to Section 4.5 of the Plan, the
                  aggregate number of shares of the Company's Common Stock which
                  may be issued upon exercise of such Options under the Plan
                  shall be 55,750. This aggregate share limit shall
                  automatically increase on March 1 of each year during the term
                  of the Plan, commencing on March 1, 2003, by an amount equal
                  to 0.1% of the total number of shares of the Company's Common
                  Stock outstanding as of the last day of the fiscal year
                  immediately preceding such March 1.

                           (d)      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; PROVIDED,
                  HOWEVER, that the foregoing limitation shall not apply prior
                  to the Public Trading Date and, following the Public Trading
                  Date, the foregoing limitation shall not apply until the
                  earliest of: (i) the first material

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                  modification of the Plan (within the meaning of Section 162(m)
                  of the Code and the regulations issued thereunder); (ii) the
                  issuance of all of the shares of Common Stock reserved for
                  issuance under the Plan; (iii) the expiration of the Plan;
                  (iv) the first meeting of stockholders at which Directors are
                  to be elected that occurs after the close of the third
                  calendar year following the calendar year in which occurred
                  the first registration of an equity security of the Company
                  under Section 12 of the Exchange Act; or (v) such other date
                  required by Section 162(m) of the Code and the rules and
                  regulations promulgated thereunder. 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 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.

                                       7
<Page>

                           (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.

                           (d)      Furthermore, notwithstanding any other
                  provision of the Plan, any Award which is granted to a Section
                  162(m) Participant and which 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

                                       8
<Page>

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 or any Subsidiary.

                                   ARTICLE IV.

                        GRANTING OF OPTIONS TO EMPLOYEES,
                      CONSULTANTS 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

                                       9
<Page>

                           Consultants who have previously received Awards under
                           the Plan) such of them as in its opinion should be
                           granted Options;

                                    (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. During
the term of the Plan, each person who is an Independent Director as of the
Public Trading Date automatically shall be granted (a) an Option to purchase
15,000 shares of Common Stock (subject to adjustment as provided in Section
11.3) on the Public Trading Date, and (b) an Option to purchase 3,000 shares of
Common Stock (subject to adjustment as provided in Section 11.3) on each
anniversary of the Public Trading Date during the term of the Plan, PROVIDED
such person is an Independent Director as of such anniversary. During the term
of the Plan, a person who is initially elected or appointed to the Board after
the Public Trading Date and who is an Independent Director at the time of such
initial election or appointment automatically shall be granted (x) an Option to
purchase 15,000 shares of Common Stock (subject to adjustment as provided in
Section 11.3) on the date of such initial election or appointment, and (y) an
Option to purchase 3,000 shares of Common Stock (subject to adjustment as
provided in Section 11.3) on each anniversary of the date of such initial
election or appointment during the term of the Plan, PROVIDED such person is an
Independent Director as of such anniversary. All the foregoing Option grants
authorized by this Section 4.5 are subject to stockholder approval of the Plan.

                  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

                                       10
<Page>

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 set by the
Committee; PROVIDED, HOWEVER, that such price 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);

                           (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

                                       11
<Page>

                  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; PROVIDED, HOWEVER, that the
price of each share subject to each Option granted to Independent Directors on
the Public Trading Date shall equal the initial public offering price per share
of Common Stock. Options granted to Independent Directors shall be fully
exercisable at the time of grant and, 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 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

                                       12
<Page>

                  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 of 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

                                       13
<Page>

                  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 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.

                                       14
<Page>

                  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
INDEPENDENT DIRECTORS. No Option granted to an Independent 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;

                           (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

                                       15
<Page>

                                    (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 with
the Company, Company performance and 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
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, 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 a Change in Control of the Company or
because of the Holder's retirement, or otherwise.

                                       16
<Page>

                  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 or a
Termination of Consultancy without cause or following a 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.

                                  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

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                  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 of the
                  Company.

                  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

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                  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.

                  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 one or more of 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 one or
more of 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

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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.

                           (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

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                  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 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

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<Page>

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. 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. 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 (in which event any reference herein to the Committee with respect to
such authority shall be deemed a reference to the Board), 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.

                  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.

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<Page>

                                   ARTICLE XI.

                            MISCELLANEOUS PROVISIONS

                  11.1.    NOT TRANSFERABLE.

                           (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
Option. 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

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                           (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(e), 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 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)      In the event of a Change in Control of the
                  Company 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:

                                       24
<Page>

                                    (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;

                                    (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; and

                                    (vii)    To provide that each outstanding
                           Award shall, immediately prior to the effective date
                           of such event, automatically become fully exercisable
                           for all of the shares of Common Stock at the time
                           subject to such rights and may be exercised for any
                           or all of those shares as fully-vested shares of
                           Common Stock.

                           (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.

                                       25
<Page>

                           (d)      With respect to Awards which are granted to
                  Section 162(m) Participants and which 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)      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
                  stockholders 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 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

                                       26
<Page>

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 income tax 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

                                       27
<Page>

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 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.

                                       28
<Page>

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

                                      * * *

                  I hereby certify that the foregoing Plan was duly adopted by
the Board of Directors of PETCO Animal Supplies, Inc. on February 19, 2002.

                                      * * *

                  I hereby certify that the foregoing Plan was approved by the
stockholders of PETCO Animal Supplies, Inc. on February 19, 2002.

                  Executed on this 19th day of February, 2002.

                                            /s/ JAMES M. MYERS
                                            ------------------------------------
                                            James M. Myers
                                            Secretary

                                       29

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