Document:

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                                ROSS STORES, INC.
                              FISCAL 1999 FORM 10-K
                                  EXHIBIT 10.5

                           THIRD AMENDED AND RESTATED
                                ROSS STORES, INC.
                             1992 STOCK OPTION PLAN

                        (EFFECTIVE AS OF MARCH 16, 2000)

         1.    ESTABLISHMENT, PURPOSE AND TERM OF PLAN.

               1.1  ESTABLISHMENT. The Second Amended and Restated Ross
Stores, Inc. 1992 Stock Option Plan is hereby amended and restated in its
entirety as the Third Amended and Restated Ross Stores, Inc. 1992 Stock
Option Plan (the "PLAN") effective as of March 16, 2000 (the "EFFECTIVE
DATE").

               1.2  PURPOSE. The purpose of the Plan is to advance the
interests of the Participating Company Group and its stockholders by
providing an incentive to attract, retain and reward persons performing
services for the Participating Company Group and by motivating such persons
to contribute to the growth and profitability of the Participating Company
Group.

               1.3  TERM OF PLAN. The Plan shall continue in effect until the
earlier of its termination by the Board or the date on which all of the
shares of Stock available for issuance under the Plan have been issued and
all restrictions on such shares under the terms of the Plan and the
agreements evidencing Options granted under the Plan have lapsed. However,
all Options shall be granted, if at all, prior to March 16, 2002.

         2.    DEFINITIONS AND CONSTRUCTION.

               2.1  DEFINITIONS. Whenever used herein, the following terms
shall have their respective meanings set forth below:

                    (a)  "BOARD" means the Board of Directors of the Company.
If one or more Committees have been appointed by the Board to administer the
Plan, "BOARD" also means such Committee(s).

                    (b)  "CODE" means the Internal Revenue Code of 1986, as
amended, and any applicable regulations promulgated thereunder.

                    (c)  "CHANGE IN CONTROL" means the occurrence of any of
the following:

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                         (i)   any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act), other than (1) a trustee or other
fiduciary holding stock of the Company under an employee benefit plan of a
Participating Company or (2) a corporation owned directly or indirectly by
the stockholders of the Company in substantially the same proportions as
their ownership of the stock of the Company, becomes the "beneficial owner"
(as defined in Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of stock of the Company representing more than fifty percent
(50%) of the total combined voting power of the Company's then-outstanding
voting stock; or

                         (ii)  an Ownership Change Event or a series of
related Ownership Change Events (collectively, a "TRANSACTION") wherein the
stockholders of the Company immediately before the Transaction do not retain
immediately after the Transaction direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting stock of the Company or, in the event of a sale of assets,
of the corporation or corporations to which the assets of the Company were
transferred (the "TRANSFEREE CORPORATION(S)"); or

                         (iii) a liquidation or dissolution of the Company.

For purposes of the preceding sentence, indirect beneficial ownership shall
include, without limitation, an interest resulting from ownership of the
voting stock of one or more corporations which, as a result of the
Transaction, own the Company or the Transferee Corporation(s), as the case
may be, either directly or through one or more subsidiary corporations. The
Board shall have the right to determine whether multiple Ownership Change
Events are related, and its determination shall be final, binding and
conclusive.

                    (d)  "COMMITTEE" means the Compensation Committee or
other committee of one or more members of the Board duly appointed to
administer the Plan and having such powers as shall be specified by the
Board. Unless the powers of the Committee have been specifically limited, the
Committee shall have all of the powers of the Board granted herein,
including, without limitation, the power to amend or terminate the Plan at
any time, subject to the terms of the Plan and any applicable limitations
imposed by law.

                    (e)  "COMPANY" means Ross Stores, Inc. a Delaware
corporation, or any successor corporation thereto.

                    (f)  "CONSULTANT" means a person engaged to provide
consulting or advisory services (other than as an Employee or a Director) to
a Participating Company, provided that the identity of such person, the
nature of such services or the entity to which such services are provided
would not preclude the Company from offering or selling securities to such
person pursuant to the Plan in reliance on registration on a Form S-8
Registration Statement under the Securities Act.

                    (g)  "DIRECTOR" means a member of the Board.

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                    (h)  "DISABILITY" means the permanent and total
disability of the Optionee within the meaning of Section 22(e)(3) of the Code.

                    (i)  "EMPLOYEE" means any person treated as an
employee (including an officer or a Director who is also treated as an employee)
in the records of a Participating Company and, with respect to any Incentive
Stock Option granted to such person, who is an employee for purposes of Section
422 of the Code; provided, however, that neither service as a Director nor
payment of a director's fee shall be sufficient to constitute employment for
purposes of the Plan.

                    (j) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.

                    (k) "FAIR MARKET VALUE" means, as of any date, the value
of a share of Stock or other property as determined by the Board, in its
discretion, or by the Company, in its discretion, if such determination is
expressly allocated to the Company herein, subject to the following:

                         (i)  If, on such date, the Stock is listed on a
national or regional securities exchange or market system, the Fair Market
Value of a share of Stock shall be the closing price of a share of Stock (or
the closing bid price of a share of Stock if the Stock is so quoted instead)
as quoted on the Nasdaq National Market, The Nasdaq SmallCap Market or such
other national or regional securities exchange or market system constituting
the primary market for the Stock, as reported in THE WALL STREET JOURNAL or
such other source as the Company deems reliable. If the relevant date does
not fall on a day on which the Stock has traded on such securities exchange
or market system, the date on which the Fair Market Value shall be
established shall be the last day on which the Stock was so traded prior to
the relevant date, or such other appropriate day as shall be determined by
the Board, in its discretion.

                         (ii)  If, on such date, the Stock is not listed on a
national or regional securities exchange or market system, the Fair Market
Value of a share of Stock shall be as determined by the Board in good faith
without regard to any restriction other than a restriction which, by its
terms, will never lapse.

                    (l)  "INCENTIVE STOCK OPTION" means an Option intended to
be (as set forth in the Option Agreement) and which qualifies as an incentive
stock option within the meaning of Section 422(b) of the Code.

                    (m)  "INSIDER" means an officer of the Company, Director
or any other person whose transactions in Stock are subject to Section 16 of
the Exchange Act.

                    (n)  "NON-EMPLOYEE DIRECTOR" means a Director who (i) is
not a current employee or officer of a Participating Company; (ii) does not
receive compensation, either directly or indirectly, from a Participating
Company for services rendered as a consultant or in any capacity other than
as a Director, except for an amount that does not exceed the dollar amount
for which disclosure would be required pursuant to Item 404(a) of Regulation
S-K under

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the Securities Act ("REGULATION S-K"); (iii) does not possess an interest in
any other transaction for which disclosure would be required pursuant to Item
404(a) of Regulation S-K; and (iv) is not engaged in a business relationship
for which disclosure would be required pursuant to Item 404(b) of Regulation
S-K.

                    (o)  "NONSTATUTORY STOCK OPTION" means an Option not
intended to be (as set forth in the Option Agreement) or which does not
qualify as an Incentive Stock Option.

                    (p)  "OPTION" means a right to purchase Stock (subject to
adjustment as provided in Section 4.2) pursuant to the terms and conditions
of the Plan. An Option may be either an Incentive Stock Option or a
Nonstatutory Stock Option.

                    (q)  "OPTION AGREEMENT" means a written agreement between
the Company and an Optionee setting forth the terms, conditions and
restrictions of the Option granted to the Optionee and any shares acquired
upon the exercise thereof.

                    (r)  "OPTIONEE" means a person who has been granted one
or more Options.

                    (s)  "OUTSIDE DIRECTOR" means a Director who (i) is not a
current employee of the Company or a member of an affiliated group of
corporations within the meaning of Section 162(m) of the Code (together with
the Company, the "AFFILIATED GROUP"); (ii) is not a former employee of the
Affiliated Group who receives compensation for prior services (other than
benefits under a tax-qualified retirement plan) during the taxable year;
(iii) has not been an officer of the Affiliated Group; and (iv) does not
receive remuneration within the meaning of Section 162(m) of the Code from
the Affiliated Group, either directly or indirectly, in any capacity other
than as a Director.

                    (t)  "OWNERSHIP CHANGE EVENT" means the occurrence of any
of the following with respect to the Company: (i) the direct or indirect sale
or exchange in a single or series of related transactions by the stockholders
of the Company of more than fifty percent (50%) of the voting stock of the
Company; (ii) a merger or consolidation in which the Company is a party; or
(iii) the sale, exchange, or transfer of all or substantially all of the
assets of the Company.

                    (u)  "PARENT CORPORATION" means any present or future
"parent corporation" of the Company, as defined in Section 424(e) of the Code.

                    (v)  "PARTICIPATING COMPANY" means the Company or any
Parent Corporation or Subsidiary Corporation.

                    (w)  "PARTICIPATING COMPANY GROUP" means, at any point in
time, all corporations collectively which are then Participating Companies.

                    (x)  "RULE 16b-3" means Rule 16b-3 under the Exchange
Act, as amended from time to time, or any successor rule or regulation.

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                    (y)  "SECURITIES ACT" means the Securities Act of 1933,
as amended.

                    (z)  "SERVICE" means an Optionee's employment or service
with the Participating Company Group, whether in the capacity of an Employee,
a Director or a Consultant. An Optionee's Service shall not be deemed to have
terminated merely because of a change in the capacity in which the Optionee
renders Service to the Participating Company Group or a change in the
Participating Company for which the Optionee renders such Service, provided
that there is no interruption or termination of the Optionee's Service.
Furthermore, an Optionee's Service shall not be deemed to have terminated if
the Optionee takes any military leave, sick leave, or other bona fide leave
of absence approved by the Company; provided, however, that if any such leave
exceeds ninety (90) days, on the one hundred eighty-first (181st) day
following the commencement of such leave any Incentive Stock Option held by
the Optionee shall cease to be treated as an Incentive Stock Option and
instead shall be treated thereafter as a Nonstatutory Stock Option unless the
Optionee's right to return to Service with the Participating Company Group is
guaranteed by statute or contract. Unless otherwise provided by the Board in
the grant of an Option and set forth in the Option Agreement evidencing such
Option, an approved leave of absence shall be treated as Service for purposes
of determining vesting under the Option. The Optionee's Service shall be
deemed to have terminated either upon an actual termination of Service or
upon the corporation for which the Optionee performs Service ceasing to be a
Participating Company. Subject to the foregoing, the Company, in its
discretion, shall determine whether the Optionee's Service has terminated and
the effective date of such termination.

                    (aa) "STOCK" means the common stock of the Company,
as adjusted from time to time in accordance with Section 4.2.

                    (bb) "SUBSIDIARY CORPORATION" means any present or
future "subsidiary corporation" of the Company, as defined in Section 424(f)
of the Code.

                    (cc) "TEN PERCENT OWNER OPTIONEE" means an Optionee who,
at the time an Option is granted to the Optionee, owns stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of a Participating Company within the meaning of Section 422(b)(6) of
the Code.

               2.2  CONSTRUCTION. Captions and titles contained herein are
for convenience only and shall not affect the meaning or interpretation of
any provision of the Plan. Except when otherwise indicated by the context,
the singular shall include the plural and the plural shall include the
singular. Use of the term "or" is not intended to be exclusive, unless the
context clearly requires otherwise.

         3.    ADMINISTRATION.

               3.1  ADMINISTRATION BY THE BOARD. The Plan shall be
administered by the Board. All questions of interpretation of the Plan or of
any Option shall be determined by the

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Board, and such determinations shall be final and binding upon all persons
having an interest in the Plan or such Option.

               3.2  AUTHORITY OF OFFICERS. Any officer of a Participating
Company shall have the authority to act on behalf of the Company with respect
to any matter, right, obligation, determination or election which is the
responsibility of or which is allocated to the Company herein, provided the
officer has apparent authority with respect to such matter, right,
obligation, determination or election.

               3.3  POWERS OF THE BOARD. In addition to any other powers set
forth in the Plan and subject to the provisions of the Plan, the Board shall
have the full and final power and authority, in its discretion:

                    (a)  to determine the persons to whom, and the time or
times at which, Options shall be granted and the number of shares of Stock to
be subject to each Option;

                    (b)  to designate Options as Incentive Stock Options or
Nonstatutory Stock Options;

                    (c)  to determine the Fair Market Value of shares of
Stock or other property;

                    (d)  to determine the terms, conditions and restrictions
applicable to each Option (which need not be identical) and any shares
acquired upon the exercise thereof, including, without limitation, (i) the
exercise price of the Option, (ii) the method of payment for shares purchased
upon the exercise of the Option, (iii) the method for satisfaction of any tax
withholding obligation arising in connection with the Option or such shares,
including by the withholding or delivery of shares of stock, (iv) the timing,
terms and conditions of the exercisability of the Option or the vesting of
any shares acquired upon the exercise thereof, (v) the time of the expiration
of the Option, (vi) the effect of the Optionee's termination of Service with
the Participating Company Group on any of the foregoing, and (vii) all other
terms, conditions and restrictions applicable to the Option or such shares
not inconsistent with the terms of the Plan;

                    (e)  to approve one or more forms of Option Agreement;

                    (f)  to amend, modify, extend, cancel or renew any Option
or to waive any restrictions or conditions applicable to any Option or any
shares acquired upon the exercise thereof;

                    (g)  to accelerate, continue, extend or defer the
exercisability of any Option or the vesting of any shares acquired upon the
exercise thereof, including with respect to the period following an
Optionee's termination of Service with the Participating Company Group;

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                    (h)  to prescribe, amend or rescind rules, guidelines and
policies relating to the Plan, or to adopt supplements to, or alternative
versions of, the Plan, including, without limitation, as the Board deems
necessary or desirable to comply with the laws of, or to accommodate the tax
policy or custom of, foreign jurisdictions whose citizens may be granted
Options; and

                    (i)  to correct any defect, supply any omission or
reconcile any inconsistency in the Plan or any Option Agreement and to make
all other determinations and take such other actions with respect to the Plan
or any Option as the Board may deem advisable to the extent not inconsistent
with the provisions of the Plan or applicable law.

               3.4  ADMINISTRATION WITH RESPECT TO INSIDERS. With respect to
participation by Insiders in the Plan, at any time that any class of equity
security of the Company is registered pursuant to Section 12 of the Exchange
Act, the Plan shall be administered in compliance with the requirements, if
any, of Rule 16b-3. For this purpose, the Board may delegate authority to
administer the Plan to a Committee composed solely of two or more
Non-Employee Directors.

               3.5  ADMINISTRATION IN COMPLIANCE WITH SECTION 162(m). The
Board may establish a Committee composed solely of two or more Outside
Directors to approve the grant of any Option which might reasonably be
anticipated to result in the payment of employee remuneration that would
otherwise exceed the limit on employee remuneration deductible for income tax
purposes pursuant to Section 162(m) of the Code.

               3.6  INDEMNIFICATION. In addition to such other rights of
indemnification as they may have as members of the Board or officers or
employees of the Participating Company Group, members of the Board and any
officers or employees of the Participating Company Group to whom authority to
act for the Board or the Company is delegated shall be indemnified by the
Company against all reasonable expenses, including attorneys' fees, actually
and necessarily incurred in connection with the defense of any action, suit
or proceeding, or in connection with any appeal therein, to which they or any
of them may be a party by reason of any action taken or failure to act under
or in connection with the Plan, or any right granted hereunder, and against
all amounts paid by them in settlement thereof (provided such settlement is
approved by independent legal counsel selected by the Company) or paid by
them in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such
action, suit or proceeding that such person is liable for gross negligence,
bad faith or intentional misconduct in duties; provided, however, that within
sixty (60) days after the institution of such action, suit or proceeding,
such person shall offer to the Company, in writing, the opportunity at its
own expense to handle and defend the same.

         4.    SHARES SUBJECT TO PLAN.

               4.1  MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to adjustment
as provided in Section 4.2, the maximum aggregate number of shares of Stock
that may be issued under the Plan shall be thirty-five million
(35,000,000)(1) and shall consist of authorized but

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(1) As adjusted through the two-for-one stock split effective on September 22,
    1999.

<PAGE>

unissued or reacquired shares of Stock or any combination thereof. If an
outstanding Option for any reason expires or is terminated or canceled or if
shares of Stock are acquired upon the exercise of an Option subject to a
Company repurchase option and are repurchased by the Company at the
Optionee's exercise price, the shares of Stock allocable to the unexercised
portion of such Option or such repurchased shares of Stock shall again be
available for issuance under the Plan; provided, however, that in no event
shall more than 35,000,000 shares of Stock be available for issuance pursuant
to the exercise of Incentive Stock Options (the "ISO SHARE ISSUANCE LIMIT").

               4.2  ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the
event of any stock dividend, stock split, reverse stock split,
recapitalization, merger, combination, exchange of shares, reclassification
or similar change in the capital structure of the Company, appropriate
adjustments shall be made in the number and class of shares subject to the
Plan and to any outstanding Options, in the Section 162(m) Grant Limit set
forth in Section 5.4, in the ISO Share Issuance Limit set forth in Section
4.1, and in the exercise price per share of any outstanding Options. If a
majority of the shares which are of the same class as the shares that are
subject to outstanding Options are exchanged for, converted into, or
otherwise become (whether or not pursuant to an Ownership Change Event)
shares of another corporation (the "NEW SHARES"), the Board may unilaterally
amend the outstanding Options to provide that such Options are exercisable
for New Shares. In the event of any such amendment, the number of shares
subject to, and the exercise price per share of, the outstanding Options
shall be adjusted in a fair and equitable manner as determined by the Board,
in its discretion. Notwithstanding the foregoing, any fractional share
resulting from an adjustment pursuant to this Section 4.2 shall be rounded
down to the nearest whole number, and in no event may the exercise price of
any Option be decreased to an amount less than the par value, if any, of the
stock subject to the Option. The adjustments determined by the Board pursuant
to this Section 4.2 shall be final, binding and conclusive.

         5.    ELIGIBILITY AND OPTION LIMITATIONS.

               5.1  PERSONS ELIGIBLE FOR OPTIONS. Options may be granted only
to Employees (including Directors who are also Employees) and Consultants.
For purposes of the foregoing sentence, the term "Employees" shall include
persons who become Employees within thirty (30) days of the date of grant of
an Option to such person. Eligible persons may be granted more than one (1)
Option.

               5.2  OPTION GRANT RESTRICTIONS. Any person who is not an
Employee on the effective date of the grant of an Option to such person may
be granted only a Nonstatutory Stock Option. An Incentive Stock Option
granted to a prospective Employee upon the condition that such person become
an Employee shall be deemed granted effective on the date such person
commences Service, with an exercise price determined as of such date in
accordance with Section 6.1. Notwithstanding the foregoing, no Director who
is not also an Employee shall be eligible to be granted an Option, even if
such person is also a Consultant.

               5.3  FAIR MARKET VALUE LIMITATION. To the extent that options
designated as Incentive Stock Options (granted under all stock option plans
of the Participating Company

<PAGE>

Group, including the Plan) become exercisable by an Optionee for the first
time during any calendar year for stock having a Fair Market Value greater
than One Hundred Thousand Dollars ($100,000), the portions of such options
which exceed such amount shall be treated as Nonstatutory Stock Options. For
purposes of this Section 5.3, options designated as Incentive Stock Options
shall be taken into account in the order in which they were granted, and the
Fair Market Value of stock shall be determined as of the time the option with
respect to such stock is granted. If the Code is amended to provide for a
different limitation from that set forth in this Section 5.3, such different
limitation shall be deemed incorporated herein effective as of the date and
with respect to such Options as required or permitted by such amendment to
the Code. If an Option is treated as an Incentive Stock Option in part and as
a Nonstatutory Stock Option in part by reason of the limitation set forth in
this Section 5.3, the Optionee may designate which portion of such Option the
Optionee is exercising. In the absence of such designation, the Optionee
shall be deemed to have exercised the Incentive Stock Option portion of the
Option first. Separate certificates representing each such portion shall be
issued upon the exercise of the Option.

               5.4  SECTION 162(m) GRANT LIMIT. Subject to adjustment as
provided in Section 4.2, no person shall be granted one or more Options
within any calendar year which in the aggregate are for the purchase of more
than 1,970,622 shares(2) (representing that number of shares equal to 2% of
the number of shares of Stock issued and outstanding at the close of business
on the records of the Company's transfer agent on April 10, 1995) (the
"SECTION 162(m) GRANT LIMIT"). An Option which is canceled in the same
calendar year of the Company in which it was granted shall continue to be
counted against the Section 162(m) Grant Limit for such period.

         6.    TERMS AND CONDITIONS OF OPTIONS.

               Options shall be evidenced by Option Agreements specifying the
number of shares of Stock covered thereby, in such form as the Board shall
from time to time establish. No Option or purported Option shall be a valid
and binding obligation of the Company unless evidenced by a fully executed
Option Agreement. Option Agreements may incorporate all or any of the terms
of the Plan by reference and shall comply with and be subject to the
following terms and conditions:

               6.1  EXERCISE PRICE. The exercise price for each Option shall
be established in the discretion of the Board; provided, however, that (a)
the exercise price per share for any Option shall be not less than one
hundred percent (100%) of the Fair Market Value of a share of Stock on the
effective date of grant of the Option and (b) no Option granted to a Ten
Percent Owner Optionee shall have an exercise price per share less than one
hundred ten percent (110%) of the Fair Market Value of a share of Stock on
the effective date of grant of the Option. Notwithstanding the foregoing, an
Option (whether an Incentive Stock Option or a Nonstatutory

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(2) On April 10, 1995, a total of 24,632,786 shares of common stock were
outstanding, two percent of which is 492,655 shares. Under Section 4.2, this
limit was adjusted to 985,311 shares to reflect a two-for-one stock split on
March 5, 1997 (2% of 49,265,572 shares), and to 1,970,622 shares to reflect a
two-for-one stock split on September 22, 1999 (2% of 98,531,144 shares).

<PAGE>

Stock Option) may be granted with an exercise price lower than the minimum
exercise price set forth above if such Option is granted pursuant to an
assumption or substitution for another option in a manner qualifying under the
provisions of Section 424(a) of the Code.

               6.2  EXERCISABILITY AND TERM OF OPTIONS. Options shall be
exercisable at such time or times, or upon such event or events, and subject
to such terms, conditions, performance criteria and restrictions as shall be
determined by the Board and set forth in the Option Agreement evidencing such
Option; provided, however, that (a) no Incentive Stock Option shall be
exercisable after the expiration of ten (10) years after the effective date
of grant of such Option, (b) no Incentive Stock Option granted to a Ten
Percent Owner Optionee shall be exercisable after the expiration of five (5)
years after the effective date of grant of such Option, and (c) no
Nonstatutory Stock Option shall be exercisable after the expiration of ten
(10) years and one (1) month after the effective date of grant of such
Option. Subject to the foregoing, unless otherwise specified by the Board in
the grant of an Option, any Option granted hereunder shall terminate ten (10)
years after the effective date of grant of the Option, unless earlier
terminated in accordance with its provisions.

               6.3  PAYMENT OF EXERCISE PRICE.

                    (a)  FORMS OF CONSIDERATION AUTHORIZED. Except as
otherwise provided below, payment of the exercise price for the number of
shares of Stock being purchased pursuant to any Option shall be made (i) in
cash or by check, (ii) by tender to the Company, or attestation to the
ownership, of shares of Stock owned by the Optionee having a Fair Market
Value (as determined by the Company without regard to any restrictions on
transferability applicable to such stock by reason of federal or state
securities laws or agreements with an underwriter for the Company) not less
than the exercise price, (iii) by delivery of a properly executed notice
together with irrevocable instructions to a broker providing for the
assignment to the Company of the proceeds of a sale or loan with respect to
some or all of the shares being acquired upon the exercise of the Option
(including, without limitation, through an exercise complying with the
provisions of Regulation T as promulgated from time to time by the Board of
Governors of the Federal Reserve System) (a "CASHLESS EXERCISE"), (iv)
provided that the Optionee is an Employee (unless otherwise not prohibited by
law, including, without limitation, any regulation promulgated by the Board
of Governors of the Federal Reserve System) and in the Company's sole
discretion at the time the Option is exercised, by delivery of the Optionee's
promissory note in a form approved by the Company for the aggregate exercise
price, provided that, if the Company is incorporated in the State of
Delaware, the Optionee shall pay in cash that portion of the aggregate
exercise price not less than the par value of the shares being acquired, (v)
by such other consideration as may be approved by the Board from time to time
to the extent permitted by applicable law, or (vi) by any combination
thereof. The Board may at any time or from time to time, by approval of or by
amendment to the standard forms of Option Agreement described in Section 7,
or by other means, grant Options which do not permit all of the foregoing
forms of consideration to be used in payment of the exercise price or which
otherwise restrict one or more forms of consideration.

                    (b)  LIMITATIONS ON FORMS OF CONSIDERATION.

<PAGE>

                         (i)  TENDER OF STOCK. Notwithstanding the foregoing,
an Option may not be exercised by tender to the Company, or attestation to
the ownership, of shares of Stock to the extent such tender or attestation
would constitute a violation of the provisions of any law, regulation or
agreement restricting the redemption of the Company's stock. Unless otherwise
provided by the Board, an Option may not be exercised by tender to the
Company, or attestation to the ownership, of shares of Stock unless such
shares either have been owned by the Optionee for more than six (6) months or
were not acquired, directly or indirectly, from the Company.

                         (ii)  CASHLESS EXERCISE. The Company reserves, at
any and all times, the right, in the Company's sole and absolute discretion,
to establish, decline to approve or terminate any program or procedures for
the exercise of Options by means of a Cashless Exercise.

                         (iii) PAYMENT BY PROMISSORY NOTE. No promissory note
shall be permitted if the exercise of an Option using a promissory note would
be a violation of any law. Any permitted promissory note shall be on such
terms as the Board shall determine at the time the Option is granted. The
Board shall have the authority to permit or require the Optionee to secure
any promissory note used to exercise an Option with the shares of Stock
acquired upon the exercise of the Option or with other collateral acceptable
to the Company. Unless otherwise provided by the Board, if the Company at any
time is subject to the regulations promulgated by the Board of Governors of
the Federal Reserve System or any other governmental entity affecting the
extension of credit in connection with the Company's securities, any
promissory note shall comply with such applicable regulations, and the
Optionee shall pay the unpaid principal and accrued interest, if any, to the
extent necessary to comply with such applicable regulations.

               6.4  TAX WITHHOLDING. The Company shall have the right, but
not the obligation, to deduct from the shares of Stock issuable upon the
exercise of an Option, or to accept from the Optionee the tender of, a number
of whole shares of Stock having a Fair Market Value, as determined by the
Company, equal to all or any part of the federal, state, local and foreign
taxes, if any, required by law to be withheld by the Participating Company
Group with respect to such Option or the shares acquired upon the exercise
thereof. Alternatively or in addition, in its discretion, the Company shall
have the right to require the Optionee, through payroll withholding, cash
payment or otherwise, including by means of a Cashless Exercise, to make
adequate provision for any such tax withholding obligations of the
Participating Company Group arising in connection with the Option or the
shares acquired upon the exercise thereof. The Fair Market Value of any
shares of Stock withheld or tendered to satisfy any such tax withholding
obligations shall not exceed the amount determined by the applicable minimum
statutory withholding rates. The Company shall have no obligation to deliver
shares of Stock or to release shares of Stock from an escrow established
pursuant to the Option Agreement until the Participating Company Group's tax
withholding obligations have been satisfied by the Optionee.

               6.5  REPURCHASE RIGHTS. Shares issued under the Plan may be
subject to one or more repurchase options or other conditions and
restrictions as determined by the Board in its discretion at the time the
Option is granted. The Company shall have the right to assign at any

<PAGE>

time any repurchase right it may have, whether or not such right is then
exercisable, to one or more persons as may be selected by the Company. Upon
request by the Company, each Optionee shall execute any agreement evidencing
such transfer restrictions prior to the receipt of shares of Stock hereunder
and shall promptly present to the Company any and all certificates
representing shares of Stock acquired hereunder for the placement on such
certificates of appropriate legends evidencing any such transfer restrictions.

               6.6  EFFECT OF TERMINATION OF SERVICE.

                    (a)  OPTION EXERCISABILITY. Subject to earlier
termination of the Option as otherwise provided herein and unless otherwise
provided by the Board in the grant of an Option and set forth in the Option
Agreement, an Option shall be exercisable after an Optionee's termination of
Service only during the applicable time period determined in accordance with
this Section 6.6 and thereafter shall terminate:

                         (i)  DISABILITY. If the Optionee's Service
terminates because of the Disability of the Optionee, the Option, to the
extent unexercised and exercisable on the date on which the Optionee's
Service terminated, may be exercised by the Optionee (or the Optionee's
guardian or legal representative) at any time prior to the expiration of
twelve (12) months (or such longer period of time as determined by the Board,
in its discretion) after the date on which the Optionee's Service terminated,
but in any event no later than the date of expiration of the Option's term as
set forth in the Option Agreement evidencing such Option (the "OPTION
EXPIRATION DATE").

                         (ii)  DEATH. If the Optionee's Service terminates
because of the death of the Optionee, the Option, to the extent unexercised
and exercisable on the date on which the Optionee's Service terminated, may
be exercised by the Optionee's legal representative or other person who
acquired the right to exercise the Option by reason of the Optionee's death
at any time prior to the expiration of twelve (12) months (or such longer
period of time as determined by the Board, in its discretion) after the date
on which the Optionee's Service terminated, but in any event no later than
the Option Expiration Date. The Optionee's Service shall be deemed to have
terminated on account of death if the Optionee dies within three (3) months
(or such longer period of time as determined by the Board, in its discretion)
after the Optionee's termination of Service.

                         (iii) TERMINATION FOR CAUSE. Notwithstanding any
other provision of the Plan to the contrary, if the Optionee's Service is
terminated for Cause, as defined by the Optionee's Option Agreement or
contract of employment or service (or, if not defined in any of the
foregoing, as defined below), the Option, to the extent unexercised and
exercisable by the Optionee on the date on which the Optionee's Service
terminated, may be exercised by the Optionee at any time prior to the
expiration of three (3) months after the date on which the Optionee's Service
terminated, but in any event no later than the Option Expiration Date. Unless
otherwise defined by the Optionee's Option Agreement or contract of
employment or service, for purposes of this Section 6.6(a)(iii) "CAUSE" shall
mean any of the following: (1) the Optionee's theft, dishonesty, or
falsification of any Participating Company documents or records; (2) the
Optionee's improper use or disclosure of a Participating Company's
confidential

<PAGE>

or proprietary information; (3) any action by the Optionee which has a
detrimental effect on a Participating Company's reputation or business; (4)
the Optionee's failure or inability to perform any reasonable assigned duties
after written notice from a Participating Company of, and a reasonable
opportunity to cure, such failure or inability; (5) any material breach by
the Optionee of any employment or service agreement between the Optionee and
a Participating Company, which breach is not cured pursuant to the terms of
such agreement; or (6) the Optionee's conviction (including any plea of
guilty or nolo contendere) of any criminal act which impairs the Optionee's
ability to perform his or her duties with a Participating Company.

                         (iv)  OTHER TERMINATION OF SERVICE. If the
Optionee's Service terminates for any reason, except Disability, death or
Cause, the Option, to the extent unexercised and exercisable by the Optionee
on the date on which the Optionee's Service terminated, may be exercised by
the Optionee at any time prior to the expiration of three (3) months (or such
longer period of time as determined by the Board, in its discretion, or as
provided by the Option Agreement evidencing such Option) after the date on
which the Optionee's Service terminated, but in any event no later than the
Option Expiration Date.

                    (b)  EXTENSION IF EXERCISE PREVENTED BY LAW.
Notwithstanding the foregoing other than termination of an Optionee's Service
for Cause, if the exercise of an Option within the applicable time periods
set forth in Section 6.6(a) is prevented by the provisions of Section 9
below, the Option shall remain exercisable until three (3) months (or such
longer period of time as determined by the Board, in its discretion) after
the date the Optionee is notified by the Company that the Option is
exercisable, but in any event no later than the Option Expiration Date.

                    (c)  EXTENSION IF OPTIONEE SUBJECT TO SECTION 16(b).
Notwithstanding the foregoing other than termination of an Optionee's Service
for Cause, if a sale within the applicable time periods set forth in Section
6.6(a) of shares acquired upon the exercise of the Option would subject the
Optionee to suit under Section 16(b) of the Exchange Act, the Option shall
remain exercisable until the earliest to occur of (i) the tenth (10th) day
following the date on which a sale of such shares by the Optionee would no
longer be subject to such suit, (ii) the one hundred and ninetieth (190th)
day after the Optionee's termination of Service, or (iii) the Option
Expiration Date.

               6.7  TRANSFERABILITY OF OPTIONS. During the lifetime of the
Optionee, an Option shall be exercisable only by the Optionee or the
Optionee's guardian or legal representative. No Option shall be assignable or
transferable by the Optionee, except by will or by the laws of descent and
distribution. Notwithstanding the foregoing, to the extent permitted by the
Board, in its discretion, and set forth in the Option Agreement evidencing
such Option, a Nonstatutory Stock Option shall be assignable or transferable
subject to the applicable limitations, if any, described in the General
Instructions to the Form S-8 Registration Statement under the Securities Act.

<PAGE>

         7.    STANDARD FORMS OF OPTION AGREEMENT.

               7.1  OPTION AGREEMENT. Unless otherwise provided by the Board
at the time the Option is granted, an Option shall comply with and be subject
to the terms and conditions set forth in the form of Option Agreement
approved by the Board concurrently with its adoption of the Plan and as
amended from time to time.

               7.2  AUTHORITY TO VARY TERMS. The Board shall have the
authority from time to time to vary the terms of any standard form of Option
Agreement described in this Section 7 either in connection with the grant or
amendment of an individual Option or in connection with the authorization of
a new standard form or forms; provided, however, that the terms and
conditions of any such new, revised or amended standard form or forms of
Option Agreement are not inconsistent with the terms of the Plan.

         8.    EFFECT OF CHANGE IN CONTROL.

               Except as otherwise provided by the Board in the grant of any
Option and set forth in the Option Agreement evidencing such Option, in the
event of a Change in Control, the Board, in its discretion, shall either (a)
arrange for the surviving, continuing, successor, or purchasing corporation
or parent corporation thereof, as the case may be (the "ACQUIRING
CORPORATION"), to either assume the Company's rights and obligations under
outstanding Options or substitute for outstanding Options substantially
equivalent options for the Acquiring Corporation's stock, or (b) provide that
any unexercisable or unvested portion of such outstanding Option and any
shares acquired upon the exercise thereof held by an Optionee whose Service
has not terminated prior to such date shall be immediately exercisable and
vested in full as of the date ten (10) days prior to the Change in Control.
Furthermore, the Board may, in its discretion, provide in any Option
Agreement or employment or other agreement between the Optionee and a
Participating Company that if the Optionee's Service ceases as a result of a
"Termination After Change in Control" (as defined in such agreement) then the
exercisability and vesting of any Option held by such Optionee and any shares
acquired upon the exercise thereof shall be accelerated effective as of the
date on which the Optionee's Service terminated to such extent, if any, as
shall have been determined by the Board, in its discretion, and set forth in
such agreement. The exercise or vesting of any Option and any shares acquired
upon the exercise thereof that was permissible solely by reason of this
Section 8 shall be conditioned upon the consummation of the Change in
Control. Any Options which are neither assumed or substituted for by the
Acquiring Corporation in connection with the Change in Control nor exercised
as of the date of the Change in Control shall terminate and cease to be
outstanding effective as of the date of the Change in Control.

         9.    COMPLIANCE WITH SECURITIES LAW.

               The grant of Options and the issuance of shares of Stock upon
exercise of Options shall be subject to compliance with all applicable
requirements of federal, state and foreign law with respect to such
securities. Options may not be exercised if the issuance of shares of Stock
upon exercise would constitute a violation of any applicable federal, state
or foreign securities laws or other law or regulations or the requirements of
any stock exchange or market system

<PAGE>

upon which the Stock may then be listed. The inability of the Company to
obtain from any regulatory body having jurisdiction the authority, if any,
deemed by the Company's legal counsel to be necessary to the lawful issuance
and sale of any shares hereunder shall relieve the Company of any liability
in respect of the failure to issue or sell such shares as to which such
requisite authority shall not have been obtained. As a condition to the
exercise of any Option, the Company may require the Optionee to satisfy any
qualifications that may be necessary or appropriate, to evidence compliance
with any applicable law or regulation and to make any representation or
warranty with respect thereto as may be requested by the Company.

         10.   TERMINATION OR AMENDMENT OF PLAN.

               The Board may terminate or amend the Plan at any time.
However, subject to changes in applicable law, regulations or rules that
would permit otherwise, without the approval of the Company's stockholders,
there shall be (a) no increase in the maximum aggregate number of shares of
Stock that may be issued under the Plan (except by operation of the
provisions of Section 4.2), (b) no change in the class of persons eligible to
receive Incentive Stock Options, and (c) no other amendment of the Plan that
would require approval of the Company's stockholders under any applicable
law, regulation or rule. No termination or amendment of the Plan shall affect
any then outstanding Option unless expressly provided by the Board. In any
event, no termination or amendment of the Plan may adversely affect any then
outstanding Option without the consent of the Optionee, unless such
termination or amendment is required to enable an Option designated as an
Incentive Stock Option to qualify as an Incentive Stock Option or is
necessary to comply with any applicable law, regulation or rule.

         11.   MISCELLANEOUS PROVISIONS.

               11.1      PROVISION OF INFORMATION. Each Optionee shall be
given access to information concerning the Company equivalent to that
information generally made available to the Company's common stockholders.

               11.2      BENEFICIARY DESIGNATION. Each Optionee may file with
the Company a written designation of a beneficiary who is to receive any
benefit under the Plan to which the Optionee is entitled in the event of such
Optionee's death before he or she receives any or all of such benefit. Each
designation will revoke all prior designations by the same Optionee, shall be
in a form prescribed by the Company, and will be effective only when filed by
the Optionee in writing with the Company during the Optionee's lifetime. If a
married Optionee designates a beneficiary other than the Optionee's spouse,
the effectiveness of such designation shall be subject to the consent of the
Optionee's spouse.

               11.3      RIGHTS AS A STOCKHOLDER. An Optionee shall have no
rights as a stockholder with respect to any shares covered by an Option until
the date of the issuance of a certificate for such shares (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company). No adjustment shall be made for dividends,
distributions or other rights for which the record date is prior to the date
such certificate is issued, except as provided in Section 4.2 or another
provision of the Plan.

<PAGE>

               11.4      RIGHTS AS EMPLOYEE, CONSULTANT OR DIRECTOR. No
person, even though eligible pursuant to Section 5, shall have a right to be
granted an Option, or, having been once been granted an Option, to be granted
an additional Option. Nothing in the Plan or any Option Agreement shall
confer on any Optionee a right to remain an Employee, Consultant or Director,
or interfere with or limit in any way the right of a Participating Company to
terminate the Optionee's Service at any time.

               11.5      CONTINUATION OF PRIOR VERSIONS OF THE PLAN AS TO
OUTSTANDING OPTIONS. Notwithstanding any other provision of the Plan to the
contrary, each Option outstanding prior to the Effective Date shall continue
to be governed by the terms of the applicable version of the Plan as in
effect on the date of grant of such Option. For purposes of the preceding
sentence, such prior versions of the Plan include the Ross Stores, Inc. 1984
Stock Option Plan adopted on February 24, 1984; the Amended and Restated Ross
Stores, Inc. 1984 Stock Option Plan adopted on February 19, 1987; the Second
Amended and Restated Ross Stores, Inc. 1984 Stock Option Plan adopted on
March 14, 1988; the Third Amended and Restated Ross Stores, Inc. 1984 Stock
Option Plan adopted on March 17, 1989; the Fourth Amended and Restated Ross
Stores, Inc. 1984 Stock Option Plan adopted on March 18, 1991; the Ross
Stores, Inc. 1992 Stock Option Plan adopted on March 16, 1992; the Amended
and Restated Ross Stores, Inc. 1992 Stock Option Plan adopted on March 16,
1995; and the Second Amended and Restated Ross Stores, Inc. 1992 Stock Option
Plan adopted on May 28, 1998.

         IN WITNESS WHEREOF, the undersigned Secretary of the Company
certifies that the foregoing sets forth the Third Amended and Restated Ross
Stores, Inc. 1992 Stock Option Plan as duly adopted by the Board on March 16,
2000.

                                   ------------------------------------
                                   Secretary<PAGE>

                                ROSS STORES, INC.
                              FISCAL 1999 FORM 10-K
                                  EXHIBIT 10.7

                                ROSS STORES, INC.

                           2000 EQUITY INCENTIVE PLAN

                            ADOPTED [MARCH 16, 2000]

1.       PURPOSES.

         (a) ELIGIBLE STOCK AWARD RECIPIENTS. The persons eligible to receive
Stock Awards are the Employees, Directors and Consultants of the Company and
its Affiliates.

         (b) AVAILABLE STOCK AWARDS. The purpose of the Plan is to provide a
means by which eligible recipients of Stock Awards may be given an
opportunity to benefit from increases in value of the Common Stock through
the granting of the following Stock Awards: (i) Nonstatutory Stock Options,
(ii) restricted stock bonus awards and (iii) rights to acquire restricted
stock.

         (c) GENERAL PURPOSE. The Company, by means of the Plan, seeks to
retain the services of the group of persons eligible to receive Stock Awards,
to secure and retain the services of new members of this group and to provide
incentives for such persons to exert maximum efforts for the success of the
Company and its Affiliates.

2.       DEFINITIONS.

         (a) "AFFILIATE" means any parent corporation or subsidiary
corporation of the Company, whether now or hereafter existing, as those terms
are defined in Sections 424(e) and (f), respectively, of the Code.

         (b) "BOARD" means the Board of Directors of the Company.

         (c) "CAUSE" means any of the following: (i) the Optionholder's
theft, dishonesty, or falsification of any Company or Affiliate documents or
records; (ii) the Optionholder's improper use or disclosure of the Company's
or an Affiliate's confidential or proprietary information; (iii) any action
by the Optionholder which has a detrimental effect on the Company's or an
Affiliate's reputation or business; (iv) the Optionholder's failure or
inability to perform any reasonable assigned duties after written notice from
the Company or an Affiliate of, and thirty (30) days to cure, such failure or
inability; (v) any material breach by the Optionholder of any employment or
service agreement between the Optionholder and the Company or an Affiliate,
which breach is not cured pursuant to the terms of such agreement; or (vi)
the Optionholder's conviction (including any plea of guilty or nolo
contendere) of any criminal act which impairs the Optionholder's ability to
perform his or her duties with the Company or an Affiliate.

<PAGE>

         (d) "CHANGE IN CONTROL" means the occurrence of any of the following:

             (i) any "person" (as such term is used in Section 13(d) and
14(d) of the Exchange Act), other than (1) a trustee or other fiduciary
holding stock of the Company under an employee benefit plan of the Company or
an Affiliate or (2) a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportion as their
ownership of the stock of the Company, becomes the "beneficial owner" (as
defined in Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of the stock of the Company representing more than fifty percent
(50%) of the total combined voting power of the Company's then-outstanding
voting stock; or

             (ii) an Ownership Change Event or series of related Ownership
Change Events (collectively, a "Transaction") wherein the stockholders of the
Company immediately before the Transaction do not retain immediately after
the Transaction direct or indirect beneficial ownership of more than fifty
percent (50%) of the total combined voting power of the outstanding voting
stock of the Company or, in the event of a sale of assets, of the corporation
or corporations to which the assets of the Company were transferred (the
"Transferee Corporation(s)");

             (iii) a liquidation or dissolution of the Company.

For purposes of the preceding sentence, indirect beneficial ownership shall
include, without limitation, an interest resulting from ownership of the
voting stock of one or more corporations which, as a result of the
Transaction, own the Company or the Transferee Corporation(s), as the case
may be, either directly or through one or more subsidiary corporations. The
Board shall have the right to determine whether multiple Ownership Change
Events are related, and its determination shall be final, binding and
conclusive.

         (e) "CODE" means the Internal Revenue Code of 1986, as amended.

         (f) "COMMITTEE" means a committee of one or more members of the
Board appointed by the Board in accordance with subsection 3(c).

         (g) "COMMON STOCK" means the common stock of the Company.

         (h) "COMPANY" means Ross Stores, Inc., a Delaware corporation.

         (i) "CONSULTANT" means any person, including an advisor, (i) engaged by
the Company or an Affiliate to render consulting or advisory services and who is
compensated for such services. However, the term "Consultant" shall not include
either Directors who are not compensated by the Company for their services as
Directors or Directors who are merely paid a director's fee by the Company for
their services as Directors.

         (j) "CONTINUOUS SERVICE" means that the Participant's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. The Participant's Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Participant

<PAGE>

renders such service, provided that there is no interruption or termination
of the Participant's Continuous Service. For example, a change in status from
an Employee of the Company to a Consultant of an Affiliate or a Director will
not constitute an interruption of Continuous Service. The Board or the chief
executive officer of the Company, in that party's sole discretion, may
determine whether Continuous Service shall be considered interrupted in the
case of any leave of absence approved by that party, including sick leave,
military leave or any other personal leave.

         (k) "COVERED EMPLOYEE" means the chief executive officer and the
four (4) other highest compensated officers of the Company for whom total
compensation is required to be reported to shareholders under the Exchange
Act, as determined for purposes of Section 162(m) of the Code.

         (l) "DIRECTOR" means a member of the Board of Directors of the Company.

         (m) "DISABILITY" means the permanent and total disability of a
person within the meaning of Section 22(e)(3) of the Code.

         (n) "EMPLOYEE" means any person employed by the Company or an
Affiliate. Mere service as a Director or payment of a director's fee by the
Company or an Affiliate shall not be sufficient to constitute "employment" by
the Company or an Affiliate.

         (o) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

         (p) "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock determined as follows:

             (i) If the Common Stock is listed on any established stock
exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap
Market, the Fair Market Value of a share of Common Stock shall be the closing
sales price for such stock (or the closing bid if no sales were reported) as
quoted on such exchange or market (or the exchange or market with the
greatest volume of trading in the Common Stock) on the date of grant, or if
the date of grant is not a market trading day, then the last market trading
day prior to the date of grant, as reported in THE WALL STREET JOURNAL or
such other source as the Board deems reliable.

             (ii) In the absence of such markets for the Common Stock, the
Fair Market Value shall be determined in good faith by the Board.

         (q) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or a subsidiary,
does not receive compensation (directly or indirectly) from the Company or
its parent or a subsidiary for services rendered as a consultant or in any
capacity other than as a Director (except for an amount as to which
disclosure would not be required under Item 404(a) of Regulation S-K
promulgated pursuant to the Securities Act ("Regulation S-K")), does not
possess an interest in any other transaction as to which disclosure would be
required under Item 404(a) of Regulation S-K and is not engaged in a business
relationship as to which disclosure would be required under Item 404(b) of
Regulation S-K; or (ii) is otherwise considered a "non-employee director" for
purposes of Rule 16b-3.

<PAGE>

         (r) "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an "incentive stock option" within the meaning of Section 422 of
the Code and the regulations promulgated thereunder.

         (s) "OFFICER" means a person who possesses the authority of an
"officer" as that term is used in Rule 4460(i)(1)(A) of the Rules of the
National Association of Securities Dealers, Inc. For purposes of the Plan, a
person in the position of "Vice President" or higher shall be classified as
an "Officer" unless the Board or Committee expressly finds that such person
does not possess the authority of an "officer" as that term is used in Rule
4460(i)(1)(A) of the Rules of the National Association of Securities Dealers,
Inc.

         (t) "OPTION" means a Nonstatutory Stock Option granted pursuant to
the Plan.

         (u) "OPTION AGREEMENT" means a written agreement between the Company
and an Optionholder evidencing the terms and conditions of an individual
Option grant. Each Option Agreement shall be subject to the terms and
conditions of the Plan.

         (v) "OPTIONHOLDER" means a person to whom an Option is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Option.

         (w) "OWNERSHIP CHANGE EVENT" means the occurrence of any of the
following with respect to the Company: (i) the direct or indirect sale or
exchange in a single or series of related transactions by the stockholders of
the Company of more than fifty percent (50%) of the voting stock of the
Company; (ii) a merger or consolidation in which the Company is a party; or
(iii) the sale, exchange, or transfer of all or substantially all of the
assets of the Company.

         (x) "PARTICIPANT" means a person to whom a Stock Award is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.

         (y)  "PLAN" means this Ross Stores, Inc. 2000 Equity Incentive Plan.

         (z) "RULE 16b-3" means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.

         (aa) "SECURITIES ACT" means the Securities Act of 1933, as amended.

         (bb) "STOCK AWARD" means any right granted under the Plan, including an
Option, a stock purchase award and a restricted stock bonus award.

         (cc) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of
an individual Stock Award grant. Each Stock Award Agreement shall be subject
to the terms and conditions of the Plan.

3.       ADMINISTRATION.

         (a) ADMINISTRATION BY BOARD. The Board shall administer the Plan
unless and until the Board delegates administration to a Committee, as
provided in subsection 3(c).

<PAGE>

         (b) POWERS OF BOARD. The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:

             (i) To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each Stock Award
shall be granted; what type or combination of types of Stock Award shall be
granted; the provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be permitted to
receive Common Stock pursuant to a Stock Award; and the number of shares of
Common Stock with respect to which a Stock Award shall be granted to each
such person.

             (ii) To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award
Agreement, in a manner and to the extent it shall deem necessary or expedient
to make the Plan fully effective.

             (iii) To amend the Plan or a Stock Award as provided in Section
12.

             (iv) Generally, to exercise such powers and to perform such acts
as the Board deems necessary or expedient to promote the best interests of
the Company which are not in conflict with the provisions of the Plan.

         (c) DELEGATION TO COMMITTEE.

             (i) GENERAL. The Board may delegate administration of the Plan
to a Committee or Committees of one (1) or more members of the Board, and the
term "Committee" shall apply to any person or persons to whom such authority
has been delegated. If administration is delegated to a Committee, the
Committee shall have, in connection with the administration of the Plan, the
powers theretofore possessed by the Board, including the power to delegate to
a subcommittee any of the administrative powers the Committee is authorized
to exercise (and references in this Plan to the Board shall thereafter be to
the Committee or subcommittee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish the Committee at any time and revest
in the Board the administration of the Plan.

             (ii) COMMITTEE COMPOSITION WHEN COMMON STOCK IS PUBLICLY TRADED.
At such time as the Common Stock is publicly traded, in the discretion of the
Board, a Committee may consist solely of two or more Outside Directors, in
accordance with Section 162(m) of the Code, and/or solely of two or more
Non-Employee Directors, in accordance with Rule 16b-3. Within the scope of
such authority, the Board or the Committee may (1) delegate to a committee of
one or more members of the Board who are not Outside Directors the authority
to grant Stock Awards to eligible persons who are either (a) not then Covered
Employees and are not expected to be Covered Employees at the time of
recognition of income resulting from such Stock Award or (b) not persons with
respect to whom the Company wishes to comply with Section 162(m) of the Code
and/or) (2) delegate to a committee of one or more members of the Board who
are not Non-Employee Directors the authority to grant Stock Awards to
eligible persons who are not then subject to Section 16 of the Exchange Act.

<PAGE>

         (d) EFFECT OF BOARD'S DECISION. All determinations, interpretations
and constructions made by the Board in good faith shall not be subject to
review by any person and shall be final, binding and conclusive on all
persons.

4.       SHARES SUBJECT TO THE PLAN.

         (a) SHARE RESERVE. Subject to the provisions of Section 11 relating
to adjustments upon changes in Common Stock, the Common Stock that may be
issued pursuant to Stock Awards shall not exceed in the aggregate four
million (4,000,000) shares of Common Stock.

         (b) REVERSION OF SHARES TO THE SHARE RESERVE. If any Stock Award
shall for any reason expire or otherwise terminate, in whole or in part,
without having been exercised in full, the shares of Common Stock not
acquired under such Stock Award shall revert to and again become available
for issuance under the Plan.

         (c) SOURCE OF SHARES. The shares of Common Stock subject to the Plan
may be unissued shares or reacquired shares, bought on the market or
otherwise.

5.       ELIGIBILITY.

         (a) ELIGIBILITY FOR SPECIFIC STOCK AWARDS. Stock Awards may be
granted to Employees, Directors and Consultants.

         (b) RESTRICTIONS ON ELIGIBILITY. Notwithstanding the foregoing, the
aggregate number of shares issued pursuant to Stock Awards granted to
Officers and Directors cannot exceed forty percent (40%) of the number of
shares reserved for issuance under the Plan as determined at the time of each
such issuance to an Officer or Director, except that there shall be excluded
from this calculation shares issued to Officers not previously employed by
the Company pursuant to Stock Awards granted as an inducement essential to
such individuals entering into employment contracts with the Company.

         (c)  CONSULTANTS.

             (i) A Consultant shall not be eligible for the grant of a Stock
Award if, at the time of grant, a Form S-8 Registration Statement under the
Securities Act ("Form S-8") is not available to register either the offer or
the sale of the Company's securities to such Consultant because of the nature
of the services that the Consultant is providing to the Company, or because
the Consultant is not a natural person, or as otherwise provided by the rules
governing the use of Form S-8, unless the Company determines both (i) that
such grant (A) shall be registered in another manner under the Securities Act
(E.G., on a Form S-3 Registration Statement) or (B) does not require
registration under the Securities Act in order to comply with the
requirements of the Securities Act, if applicable, and (ii) that such grant
complies with the securities laws of all other relevant jurisdictions.

             (ii) Form S-8 generally is available to consultants and advisors
only if (i) they are natural persons; (ii) they provide bona fide services to
the issuer, its parents, its majority-owned subsidiaries or majority-owned
subsidiaries of the issuer's parent; and (iii) the services are

<PAGE>

not in connection with the offer or sale of securities in a capital-raising
transaction, and do not directly or indirectly promote or maintain a market
for the issuer's securities.

6.       OPTION PROVISIONS.

         Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:

         (a) TERM. The term of an Option shall be the term determined by the
Board, either at the time of grant of the Option or as the Option may be
amended thereafter.

         (b) EXERCISE PRICE OF A NONSTATUTORY STOCK OPTION. The exercise
price of each Nonstatutory Stock Option shall be not less than eighty-five
percent (85%) of the Fair Market Value of the Common Stock subject to the
Option on the date the Option is granted. Notwithstanding the foregoing, a
Nonstatutory Stock Option may be granted with an exercise price lower than
that set forth in the preceding sentence if such Option is granted pursuant
to an assumption or substitution for another option in a manner satisfying
the provisions of Section 424(a) of the Code.

         (c) CONSIDERATION. The purchase price of Common Stock acquired
pursuant to an Option shall be paid, to the extent permitted by applicable
statutes and regulations, either (i) in cash at the time the Option is
exercised or (ii) at the discretion of the Board at the time of the grant of
the Option (or subsequently in the case of a Nonstatutory Stock Option) (1)
by delivery to the Company of other Common Stock, (2) according to a deferred
payment or other similar arrangement with the Optionholder or (3) in any
other form of legal consideration that may be acceptable to the Board. Unless
otherwise specifically provided in the Option, the purchase price of Common
Stock acquired pursuant to an Option that is paid by delivery to the Company
of other Common Stock acquired, directly or indirectly from the Company,
shall be paid only by shares of the Common Stock of the Company that have
been held for more than six (6) months (or such longer or shorter period of
time required to avoid a charge to earnings for financial accounting
purposes). At any time that the Company is incorporated in Delaware, payment
of the Common Stock's "par value," as defined in the Delaware General
Corporation Law, shall not be made by deferred payment.

         In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be
interest under the deferred payment arrangement.

         (d) TRANSFERABILITY OF A NONSTATUTORY STOCK OPTION. A Nonstatutory
Stock Option shall be transferable to the extent provided in the Option
Agreement. If the Nonstatutory Stock Option does not provide for
transferability, then the Nonstatutory Stock Option shall not be transferable
except by will or by the laws of descent and distribution and shall be
exercisable during the lifetime of the Optionholder only by the Optionholder.
Notwithstanding the foregoing, the Optionholder may, by delivering written
notice to the Company, in a form

<PAGE>

satisfactory to the Company, designate a third party who, in the event of the
death of the Optionholder, shall thereafter be entitled to exercise the
Option.

         (e) VESTING GENERALLY. The total number of shares of Common Stock
subject to an Option may, but need not, vest and therefore become exercisable
in periodic installments that may, but need not, be equal. The Option may be
subject to such other terms and conditions on the time or times when it may
be exercised (which may be based on performance or other criteria) as the
Board may deem appropriate. The vesting provisions of individual Options may
vary. The provisions of this subsection 6(e) are subject to any Option
provisions governing the minimum number of shares of Common Stock as to which
an Option may be exercised.

         (f) TERMINATION OF CONTINUOUS SERVICE. In the event an
Optionholder's Continuous Service terminates for any reason other than upon
the Optionholder's death or Disability, the Optionholder may exercise his or
her Option (to the extent that the Optionholder was entitled to exercise such
Option as of the date of termination) but only within such period of time
ending on the earlier of (i) the date three (3) months following the
termination of the Optionholder's Continuous Service (or such longer or
shorter period specified in the Option Agreement), or (ii) the expiration of
the term of the Option as set forth in the Option Agreement. If, after
termination, the Optionholder does not exercise his or her Option within the
time specified in the Option Agreement, the Option shall terminate.

         (g) EXTENSION OF TERMINATION DATE. An Optionholder's Option
Agreement may also provide that if the exercise of the Option following the
termination of the Optionholder's Continuous Service (other than upon the
Optionholder's death or Disability) would be prohibited at any time solely
because the issuance of shares of Common Stock would violate the registration
requirements under the Securities Act, then the Option shall terminate on the
earlier of (i) the expiration of the term of the Option set forth in the
Option Agreement, or (ii) the expiration of a period of three (3) months
after the termination of the Optionholder's Continuous Service during which
the exercise of the Option would not be in violation of such registration
requirements.

         (h) DISABILITY OF OPTIONHOLDER. In the event that an Optionholder's
Continuous Service terminates as a result of the Optionholder's Disability,
the Optionholder may exercise his or her Option (to the extent that the
Optionholder was entitled to exercise such Option as of the date of
termination), but only within such period of time ending on the earlier of
(i) the date twelve (12) months following such termination (or such longer or
shorter period specified in the Option Agreement) or (ii) the expiration of
the term of the Option as set forth in the Option Agreement. If, after
termination, the Optionholder does not exercise his or her Option within the
time specified herein, the Option shall terminate.

         (i) DEATH OF OPTIONHOLDER. In the event (i) an Optionholder's
Continuous Service terminates as a result of the Optionholder's death or (ii)
the Optionholder dies within the period (if any) specified in the Option
Agreement after the termination of the Optionholder's Continuous Service for
a reason other than death, then the Option may be exercised (to the extent
the Optionholder was entitled to exercise such Option as of the date of
death) by the Optionholder's estate, by a person who acquired the right to
exercise the Option by bequest or inheritance or by a person designated to
exercise the Option upon the Optionholder's death

<PAGE>

pursuant to subsection 6(d), but only within the period ending on the earlier
of (1) the date twelve (12) months following the date of death (or such
longer or shorter period specified in the Option Agreement) or (2) the
expiration of the term of such Option as set forth in the Option Agreement.
If, after death, the Option is not exercised within the time specified
herein, the Option shall terminate.

         (j) EARLY EXERCISE. The Option may, but need not, include a
provision whereby the Optionholder may elect at any time before the
Optionholder's Continuous Service terminates to exercise the Option as to any
part or all of the shares of Common Stock subject to the Option prior to the
full vesting of the Option. Any unvested shares of Common Stock so purchased
may be subject to a repurchase option in favor of the Company or to any other
restriction the Board determines to be appropriate. The Company will not
exercise its repurchase option until at least six (6) months (or such longer
or shorter period of time required to avoid a charge to earnings for
financial accounting purposes) have elapsed following exercise of the Option
unless the Board otherwise specifically provides in the Option.

         (k) RE-LOAD OPTIONS.

             (i) Without in any way limiting the authority of the Board to
make or not to make grants of Options hereunder, the Board shall have the
authority (but not an obligation) to include as part of any Option Agreement
a provision entitling the Optionholder to a further Option (a "Re-Load
Option") in the event the Optionholder exercises the Option evidenced by the
Option Agreement, in whole or in part, by surrendering other shares of Common
Stock in accordance with this Plan and the terms and conditions of the Option
Agreement. Unless otherwise specifically provided in the Option, the
Optionholder shall not surrender shares of Common Stock acquired, directly or
indirectly from the Company, unless such shares have been held for more than
six (6) months (or such longer or shorter period of time required to avoid a
charge to earnings for financial accounting purposes).

             (ii) Any such Re-Load Option shall (1) provide for a number of
shares of Common Stock equal to the number of shares of Common Stock
surrendered as part or all of the exercise price of such Option; (2) have an
expiration date which is the same as the expiration date of the Option the
exercise of which gave rise to such Re-Load Option; and (3) have an exercise
price which is equal to one hundred percent (100%) of the Fair Market Value
of the Common Stock subject to the Re-Load Option on the date of exercise of
the original Option. Notwithstanding the foregoing, a Re-Load Option shall be
subject to the same exercise price and term provisions heretofore described
for Options under the Plan.

             (iii) There shall be no Re-Load Options on a Re-Load Option. Any
such Re-Load Option shall be subject to the availability of sufficient shares
of Common Stock under subsection 4(a) and shall be subject to such other
terms and conditions as the Board may determine which are not inconsistent
with the express provisions of the Plan regarding the terms of Options.

<PAGE>

7.       PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.

         (a) RESTRICTED STOCK BONUS AWARDS. Each restricted stock bonus
agreement shall be in such form and shall contain such terms and conditions
as the Board shall deem appropriate. The terms and conditions of restricted
stock bonus agreements may change from time to time, and the terms and
conditions of separate restricted stock bonus agreements need not be
identical, but each restricted stock bonus agreement shall include (through
incorporation of provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions:

             (i) CONSIDERATION. A restricted stock bonus award may be awarded
in consideration for past services actually rendered to the Company or an
Affiliate for its benefit.

             (ii) VESTING. Shares of Common Stock awarded under the
restricted stock bonus agreement may, but need not, be subject to a share
repurchase option in favor of the Company in accordance with a vesting
schedule to be determined by the Board.

             (iii) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. In the
event a Participant's Continuous Service terminates, the Company may
reacquire any or all of the shares of Common Stock held by the Participant
which have not vested as of the date of termination under the terms of the
restricted stock bonus agreement.

             (iv) TRANSFERABILITY. Rights to acquire shares of Common Stock
under the restricted stock bonus agreement shall be transferable by the
Participant only upon such terms and conditions as are set forth in the
restricted stock bonus agreement, as the Board shall determine in its
discretion, so long as Common Stock awarded under the restricted stock bonus
agreement remains subject to the terms of the restricted stock bonus
agreement.

         (b) STOCK PURCHASE AWARDS. Each stock purchase agreement shall be in
such form and shall contain such terms and conditions as the Board shall deem
appropriate. The terms and conditions of the stock purchase agreements may
change from time to time, and the terms and conditions of separate stock
purchase agreements need not be identical, but each stock purchase agreement
shall include (through incorporation of provisions hereof by reference in the
agreement or otherwise) the substance of each of the following provisions:

             (i) PURCHASE PRICE. The purchase price under each stock purchase
agreement shall be such amount as the Board shall determine and designate in
such stock purchase agreement. The purchase price shall not be less than
eighty-five percent (85%) of the Common Stock's Fair Market Value on the date
such award is made or at the time the purchase is consummated.

             (ii) CONSIDERATION. The purchase price of Common Stock acquired
pursuant to the stock purchase agreement shall be paid either: (i) in cash at
the time of purchase; (ii) at the discretion of the Board, according to a
deferred payment or other similar arrangement with the Participant; or (iii)
in any other form of legal consideration that may be acceptable to the Board
in its discretion; provided, however, that at any time that the Company is
incorporated in Delaware, then payment of the Common Stock's "par value," as
defined in the Delaware General Corporation Law, shall not be made by
deferred payment.

<PAGE>

             (iii) VESTING. Shares of Common Stock acquired under the stock
purchase agreement may, but need not, be subject to a share repurchase option
in favor of the Company in accordance with a vesting schedule to be
determined by the Board.

             (iv) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. In the
event a Participant's Continuous Service terminates, the Company may
repurchase or otherwise reacquire any or all of the shares of Common Stock
held by the Participant which have not vested as of the date of termination
under the terms of the stock purchase agreement.

             (v) TRANSFERABILITY. Rights to acquire shares of Common Stock
under the stock purchase agreement shall be transferable by the Participant
only upon such terms and conditions as are set forth in the stock purchase
agreement, as the Board shall determine in its discretion, so long as Common
Stock awarded under the stock purchase agreement remains subject to the terms
of the stock purchase agreement.

8.       COVENANTS OF THE COMPANY.

         (a) AVAILABILITY OF SHARES. During the terms of the Stock Awards,
the Company shall keep available at all times the number of shares of Common
Stock required to satisfy such Stock Awards.

         (b) SECURITIES LAW COMPLIANCE. The Company shall seek to obtain from
each regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to grant Stock Awards and to issue and sell
shares of Common Stock upon exercise of the Stock Awards; provided, however,
that this undertaking shall not require the Company to register under the
Securities Act the Plan, any Stock Award or any Common Stock issued or
issuable pursuant to any such Stock Award. If, after reasonable efforts, the
Company is unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the lawful
issuance and sale of Common Stock under the Plan, the Company shall be
relieved from any liability for failure to issue and sell Common Stock upon
exercise of such Stock Awards unless and until such authority is obtained.

9.       USE OF PROCEEDS FROM STOCK.

         Proceeds from the sale of Common Stock pursuant to Stock Awards
shall constitute general funds of the Company.

10.      MISCELLANEOUS.

         (a) ACCELERATION OF EXERCISABILITY AND VESTING. The Board shall have
the power to accelerate the time at which a Stock Award may first be
exercised or the time during which a Stock Award or any part thereof will
vest in accordance with the Plan, notwithstanding the provisions in the Stock
Award stating the time at which it may first be exercised or the time during
which it will vest.

         (b) SHAREHOLDER RIGHTS. No Participant shall be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any
shares of Common Stock subject to such

<PAGE>

Stock Award unless and until such Participant has satisfied all requirements
for exercise of the Stock Award pursuant to its terms.

         (c) NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan or
any instrument executed or Stock Award granted pursuant thereto shall confer
upon any Participant any right to continue to serve the Company or an
Affiliate in the capacity in effect at the time the Stock Award was granted
or shall affect the right of the Company or an Affiliate to terminate (i) the
employment of an Employee with or without notice and with or without cause,
(ii) the service of a Consultant pursuant to the terms of such Consultant's
agreement with the Company or an Affiliate or (iii) the service of a Director
pursuant to the Bylaws of the Company or an Affiliate, and any applicable
provisions of the corporate law of the state in which the Company or the
Affiliate is incorporated, as the case may be.

             (i) INVESTMENT ASSURANCES. The Company may require a
Participant, as a condition of exercising or acquiring Common Stock under any
Stock Award, (i) to give written assurances satisfactory to the Company as to
the Participant's knowledge and experience in financial and business matters
and/or to employ a purchaser representative reasonably satisfactory to the
Company who is knowledgeable and experienced in financial and business
matters and that he or she is capable of evaluating, alone or together with
the purchaser representative, the merits and risks of exercising the Stock
Award; and (ii) to give written assurances satisfactory to the Company
stating that the Participant is acquiring Common Stock subject to the Stock
Award for the Participant's own account and not with any present intention of
selling or otherwise distributing the Common Stock. The foregoing
requirements, and any assurances given pursuant to such requirements, shall
be inoperative if (1) the issuance of the shares of Common Stock upon the
exercise or acquisition of Common Stock under the Stock Award has been
registered under a then currently effective registration statement under the
Securities Act or (2) as to any particular requirement, a determination is
made by counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws. The Company may,
upon advice of counsel to the Company, place legends on stock certificates
issued under the Plan as such counsel deems necessary or appropriate in order
to comply with applicable securities laws, including, but not limited to,
legends restricting the transfer of the Common Stock.

         (d) WITHHOLDING OBLIGATIONS. To the extent provided by the terms of
a Stock Award Agreement, the Participant may satisfy any federal, state or
local tax withholding obligation relating to the exercise or acquisition of
Common Stock under a Stock Award by any of the following means (in addition
to the Company's right to withhold from any compensation paid to the
Participant by the Company) or by a combination of such means: (i) tendering
a cash payment; (ii) authorizing the Company to withhold shares of Common
Stock from the shares of Common Stock otherwise issuable to the Participant
as a result of the exercise or acquisition of Common Stock under the Stock
Award, provided, however, that no shares of Common Stock are withheld with a
value exceeding the minimum amount of tax required to be withheld by law; or
(iii) delivering to the Company owned and unencumbered shares of Common Stock.

<PAGE>

11.      ADJUSTMENTS UPON CHANGES IN STOCK.

         (a) CAPITALIZATION ADJUSTMENTS. If any change is made in the Common
Stock subject to the Plan, or subject to any Stock Award, without the receipt
of consideration by the Company (through merger, consolidation,
reorganization, recapitalization, reincorporation, stock dividend, dividend
in property other than cash, stock split, liquidating dividend, combination
of shares, exchange of shares, change in corporate structure or other
transaction not involving the receipt of consideration by the Company), the
Plan will be appropriately adjusted in the class(es) and maximum number of
securities subject to the Plan pursuant to subsection 4(a), and the
outstanding Stock Awards will be appropriately adjusted in the class(es) and
number of securities and price per share of Common Stock subject to such
outstanding Stock Awards. The Board shall make such adjustments, and its
determination shall be final, binding and conclusive. (The conversion of any
convertible securities of the Company shall not be treated as a transaction
"without receipt of consideration" by the Company.)

         (b) EFFECT OF CHANGE IN CONTROL. Except as otherwise provided by the
Board in the grant of any Stock Award and set forth in the Stock Award
Agreement evidencing such Stock Award, in the event of a Change in Control,
the Board, in its discretion, shall either (a) arrange for the surviving,
continuing, successor, or purchasing corporation or parent corporation
thereof, as the case may be (the "Acquiring Corporation"), to either assume
the Company's rights and obligations under outstanding Stock Awards or
substitute for outstanding Stock Awards substantially equivalent stock awards
for the Acquiring Corporation's stock, or (b) provide that any unexercisable
or unvested portion of such outstanding Stock Awards and any shares acquired
upon the exercise thereof held by a Participant whose Continuous Service has
not terminated prior to such date shall be immediately exercisable and vested
in full as of the date ten (10) days prior to the Change in Control.
Furthermore, the Board may, in its discretion, provide in any Stock Award
Agreement or employment or other agreement between the Participant and a the
Company or an Affiliate that if the Participant's Continuous Service ceases
as a result of a Change in Control then the exercisability and vesting of any
Stock Award held by such Participant and any shares acquired upon the
exercise thereof shall be accelerated effective as of the date on which the
Participant's Continuous Service terminated to such extent, if any, as shall
have been determined by the Board, in its discretion, and set forth in such
agreement. The exercise or vesting of any Stock Award and any shares of
Common Stock acquired upon the exercise thereof that was permissible solely
by reason of this Section 11(b) shall be conditioned upon the consummation of
the Change in Control. Any Stock Awards which are neither assumed or
substituted for by the Acquiring Corporation in connection with the Change in
Control nor exercised as of the date of the Change in Control shall terminate
and cease to be outstanding effective as of the date of the Change in Control.

12.      AMENDMENT OF THE PLAN AND STOCK AWARDS.

         (a) AMENDMENT OF PLAN. The Board at any time, and from time to time,
may amend the Plan.

         (b) SHAREHOLDER APPROVAL. The Board may, in its sole discretion, submit
any amendment to the Plan for shareholder approval, including, but not limited
to, amendments to the Plan intended to satisfy the requirements of Section 422
of the Code, Rule 16b-3, any Nasdaq

<PAGE>

or securities exchange listing requirements or Section 162(m) of the Code and
the regulations thereunder regarding the exclusion of performance-based
compensation from the limit on corporate deductibility of compensation paid
to certain executive officers.

         (c) CONTEMPLATED AMENDMENTS. It is expressly contemplated that the
Board may amend the Plan in any respect the Board deems necessary or
advisable to provide eligible Employees with the maximum benefits provided or
to be provided under the provisions of the Code and the regulations
promulgated thereunder and/or to bring the Plan and/or Options into
compliance therewith.

         (d) NO IMPAIRMENT OF RIGHTS. Rights under any Stock Award granted
before amendment of the Plan shall not be impaired by any amendment of the
Plan unless (i) the Company requests the consent of the Participant and (ii)
the Participant consents in writing.

         (e) AMENDMENT OF STOCK AWARDS. The Board at any time, and from time
to time, may amend the terms of any one or more Stock Awards; provided,
however, that the rights under any Stock Award shall not be impaired by any
such amendment unless (i) the Company requests the consent of the Participant
and (ii) the Participant consents in writing.

13.      TERMINATION OR SUSPENSION OF THE PLAN.

         (a) PLAN TERM. The Board may suspend or terminate the Plan at any
time. No Stock Awards may be granted under the Plan while the Plan is
suspended or after it is terminated.

         (b) NO IMPAIRMENT OF RIGHTS. Suspension or termination of the Plan
shall not impair rights and obligations under any Stock Award granted while
the Plan is in effect except with the written consent of the Participant.

14.      EFFECTIVE DATE OF PLAN.

         The Plan shall become effective as determined by the Board.

15.      CHOICE OF LAW.

         The law of the State of California shall govern all questions
concerning the construction, validity and interpretation of this Plan,
without regard to such state's conflict of laws rules.

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