Document:

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                                                                    Exhibit 10.5

                                 Adsmart Network
                            Representation Agreement
                            ------------------------

THIS REPRESENTATION AGREEMENT (the "Agreement") is made on this __ day of
December, 1999 (the "Effective Date"), by and between Adsmart Network
("ADSMART") with its principal place of business located at 100 Brickstone
Square, 5th Floor, Andover, MA 01810 and PetPlanet.com, Inc. ("PPI") with its
principal place of business located at 21 Stillman Street, Suite 600, San
Francisco, CA 94107.

         NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, ADSMART and PPI agree to the
following:

1.       ADSMART Responsibilities.

(a)      Representation. ADSMART shall provide, in accordance with the terms of
this Agreement, advertising representation services to PPI, including, without
limitation, (i) soliciting online advertising from advertisers and advertising
agencies (collectively, the "Advertisers"); and (ii) reporting, serving and
tracking advertising campaigns initiated by ADSMART ("Campaigns"),
(collectively, the "Representation Services"), with respect to PPI's web site(s)
(the "Website") set forth in Attachment A ("Attachment A") and made a part of
this Agreement.

(b)      Exclusivity. ADSMART is appointed the exclusive third-party sales
representative for PPI for the Initial Term and all Renewal Terms of this
Agreement, as defined below. For purposes of this Agreement, "exclusive"
third-party sales representative shall mean that PPI shall not retain any
third-party to conduct Representation Services during the Initial Term or any
Renewal Terms.

(c)      Ad Serving and Reporting.

         (i)   Ad Serving. All advertisements sold by ADSMART shall be served by
ADSMART at no additional cost to PPI. PPI shall grant exclusive control to
ADSMART of the inventory allocated to ADSMART by PPI pursuant to Section 2(a)
below, and ADSMART shall have reasonable discretion over the content and nature
of the advertising that can be sold in order to re-coup serving costs. ADSMART
shall not run any advertising Campaign on the Website, which PPI reasonably
determines to be offensive to PPI or its customers or inconsistent with PPI's
published editorial policy.

         (ii)  Specific Requests. If PPI requests that specific paid or non-paid
Campaigns, including, without limitation, house banners, which are not sold by
ADSMART, be served by ADSMART, PPI shall pay ADSMART $.55 per thousand
impressions for all costs associated with serving, auditing and reporting with
respect to such Campaigns ("Serving Fee"). ADSMART shall deduct such fees from
payments owed to PPI for advertising revenue.

         (iii) Default Banners. If ADSMART has no paid Campaigns to serve,
ADSMART shall not charge PPI the Serving Fee to serve the following standard

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sized house banners as default Campaigns: 468x60, 234x60, 125x125. However,
ADSMART shall charge PPI the Serving Fee for all other sized house banners.

         (iv)  Reporting. ADSMART shall provide PPI with the following: (a)
twenty-four (24) hour access to online reporting; and (b) accompanying payment,
as set forth in Section 5(a) below, revenue reports that detail ADSMART
generated activity on the Website, including each Campaign, its duration and the
number of Impressions, as defined below, delivered.

2.       PPI's Responsibilities.

(a)      Impressions. PPI shall allocate a minimum of five-hundred thousand
(500,000) advertising impressions ("Impressions") per month to ADSMART (the
"Allocated Monthly Impressions"). The Allocated Monthly Impressions shall be a
cross section of all available Impressions on the Website. PPI shall place a
maximum of one 468x60 (1) Impression on each page of the Website, unless PPI
receives ADSMART's prior written consent. ADSMART shall have the right to
terminate the Agreement immediately if PPI fails to deliver to ADSMART a minimum
of seventy-five (75%) percent of the Allocated Monthly Impressions each month
for a period of three (3) consecutive months. PPI must notify ADSMART by the
fifteenth (15th) day of the preceding month of a ten (10%) percent or more
increase or decrease in the Allocated Monthly Impressions for the following
month.

(b)      Website Information. Upon execution of this Agreement, PPI shall
provide ADSMART with the following information: (i) available demographic and
psychographic (interest and behavioral) information regarding the Website's
audience, (ii) description of the Website by section, (iii) advertising and
sponsorship opportunities, (iv) technical specifications relating to
advertising, (v) marketing information, and (vi) contact information. PPI shall
keep all information provided to ADSMART current and shall advise ADSMART of new
opportunities regarding the Website and Website features offered by PPI.

(c)      Tracking. Upon execution of this Agreement, PPI shall provide ADSMART
with a detailed inventory projection analysis of the Website's traffic,
including visitor and page view totals for its primary sections.

(d)      Editorial Policy. Upon execution of this Agreement, PPI shall provide
ADSMART with the editorial policy of the Website.

(e)      Privacy Policy. PPI shall have a privacy policy posted on the Website.

(f)      Fulfillment of Advertising Campaigns. PPI shall use its best efforts to
fulfill all Campaigns obtained by ADSMART in a timely manner.

(g)      In-House Sales. ADSMART acknowledges that PPI's in-house sales force
shall have the right to continue its advertising sales efforts during the
Initial Term and all Renewal Terms of this Agreement. ADSMART and PPI agree to
cooperate to prevent duplication of sales efforts and conflicts and to inform
each

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other of targeted advertisers. To facilitate this process, PPI shall provide
ADSMART with a written report each month, which shall include the names of all
potential advertisers being solicited by PPI, number of Impressions and dates
and duration of the advertising campaign. In addition, all Advertisers listed on
Attachment B ("Attachment B") and made a part of this Agreement shall be
retained by PPI as its house account list to be solicited by PPI's in-house
sales force. If PPI executes an insertion order with an Advertiser that is not
listed on Attachment B, then PPI must remit payment to ADSMART of the ADSMART
Commission, as set forth in Section 4 below, from revenue derived from such
Advertiser's Campaign. PPI may modify Attachment B once every three (3) months
commencing on the Effective Date upon thirty (30) days written notice to
ADSMART. For the avoidance of doubt, if PPI modifies Attachment B to add an
Advertiser to its house account list, which Advertiser has executed an insertion
order with ADSMART prior to such modification, then PPI must honor and fulfill
such insertion order.

(h)      Advertiser Exclusions. ADSMART shall not pursue any Advertiser listed
on Attachment C ("Attachment C") and made a part of this Agreement. PPI may
modify Attachment C once every three (3) months commencing on the Effective Date
upon thirty (30) days written notice to ADSMART. For the avoidance of doubt, if
PPI modifies Attachment C to exclude an Advertiser, which Advertiser has
executed an insertion with ADSMART prior to such modification, then PPI must
honor and fulfill such insertion order.

3.       Marketing Material

(a)      Highlighting and Approval. ADSMART shall highlight the Website in its
World Wide Web site on the Internet located at www.adsmart.net and within its
media kit. PPI shall have the right to review in advance and approve the final
version of PPI's media kit, provided that such approval will not be unreasonably
withheld.

(b)      Marketing Materials. PPI agrees and acknowledges that ADSMART may
market and promote the Website to potential Advertisers, by such means as it
deems appropriate, including, without limitation, listing the Website in
directories, trade publications, ADSMART proposals and presentations,
advertisements, and other promotional opportunities.

(c)      Promotional Material. PPI agrees to provide ADSMART with reasonable
amounts of PPI's promotional materials.

(d)      Press Releases. Except as required by law or as authorized by this
Agreement, both parties must approve all press releases or announcements
referring to the Agreement or ADSMART/PPI relationship prior to their release to
the press or any third party. However, ADSMART does not need to obtain prior
approval from PPI for any press release, in which PPI's Website is listed among
other websites represented by ADSMART as part of the ADSMART network.

(e)      Registry as Agent. PPI authorizes ADSMART to register as PPI's
advertising sales agent in all relevant periodicals, directories, and other

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marketing sources identified by ADSMART and approved in advance by PPI within
the scope of and during the Initial Term and all Renewal Terms of this
Agreement.

4.       Compensation. As consideration for the Representation Services provided
by ADSMART under this Agreement, PPI shall pay ADSMART a commission equal to
thirty-five (35%) percent of all Net Advertising Revenue (the "ADSMART
Commission"). "Net Advertising Revenue" is defined as gross advertising revenue
invoiced by ADSMART arising out of Campaigns sold and placed on the Website by
ADSMART during the term of this Agreement, less advertising agency commissions
(which shall not exceed fifteen (15%) percent), where applicable, and credits,
refunds and sales or use taxes.

5.       Billing and Payment.

(a)      ADSMART shall be responsible for invoicing and collecting all
advertising revenue from Advertisers on behalf of PPI. ADSMART shall remit
amounts due to PPI upon ninety (90) days following the end of each month in
which a Campaign generated advertising revenue on the Website, regardless of
whether ADSMART collects advertising revenue from Advertisers for such
Campaigns.

(b)      ADSMART shall remit payments to:
         Rick Ferber - Vice President Advertising & Promotions
         PetPlanet.com
         21 Stillman Street, Suite 600
         San Francisco, CA 94107
         rferber@petplanet.com
         415-243-9000 ext. 115
         415-243-3399 fax

6.       Confidential Information. "Confidential Information" means all
information identified in written or verbal format, or otherwise, held by the
Disclosing Party as confidential, trade secret or proprietary information.
Confidential Information shall also include the terms and conditions of this
Agreement. "Disclosing Party" is the party disclosing Confidential Information.
"Receiving Party" is the party receiving Confidential Information. The Receiving
Party shall not use the Confidential Information except to carry out the
purposes of this Agreement, or disclose the Confidential Information to any
third party except (a) the terms and conditions of this Agreement may be
disclosed as required by law, and (b) other than persons in the direct employ of
the Receiving Party who have a need to have access to and knowledge of the
Confidential Information solely for the purpose authorized above. Each party
shall take appropriate measures by instruction and agreement prior to disclosure
to such employees to assure against unauthorized use or disclosure, and such
persons shall have agreed in writing to maintain the confidentiality of such
information. The Receiving Party shall have no obligation with respect to
information which (i) was rightfully in possession of or known to the Receiving
Party without any obligation of confidentiality prior to receiving it from the
Disclosing Party; (ii) is, or subsequently becomes, legally and publicly
available without breach of this Agreement; (iii) is rightfully obtained by the
Receiving Party from a source other

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than the Disclosing Party without any obligation of confidentiality; or (iv) is
disclosed by the Receiving Party under a valid order of a court or government
agency, provided that the Receiving Party provides prior written notice to the
Disclosing Party of such obligation and the opportunity to oppose such
disclosure. Upon written demand of the Disclosing Party, the Receiving Party
shall cease using the Confidential Information provided by the Disclosing Party
and return the Confidential Information and all copies, notes or extracts
thereof to the Disclosing Party within seven (7) days of receipt of notice.

7.       PPI's Representations and Warranties. PPI represents and warrants that
(i) it has full power and authority to enter into this Agreement, (ii) this
Agreement does not conflict with any other agreement or commitment made by PPI,
(iii) it shall not do anything to knowingly or intentionally harm or bring into
disrepute or disparage ADSMART or any Advertiser, (iv) the Website is year 2000
compliant and shall provide such documentation prior to December 15, 1999, and
(v) it shall use its commercially reasonable efforts to provide its services in
accordance with the terms of this Agreement and in accordance with industry
standards.

8.       ADSMART's Representations and Warranties. ADSMART represents and
warrants that (i) it has full power and authority to enter into this Agreement,
(ii) this Agreement does not conflict with any other agreement or commitment
made by ADSMART, (iii) it shall not do anything to knowingly or intentionally
harm or bring into disrepute or disparage PPI, and (iv) it shall use its
commercially reasonable efforts to provide its services in accordance with the
terms of this Agreement and inaccordance with industry standards.

9.       Warranty Disclaimer. EXCEPT FOR THE EXPRESS REPRESENTATIONS AND
WARRANTIES PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR
WARRANTY EXPRESS OR IMPLIED WITH RESPECT TO ANY MATTER WHATSOEVER, INCLUDING
WITHOUT LIMITATION, NETWORK FAILURES, THIRD-PARTY AD SERVING DIFFICULTIES, THE
SOFTWARE PROGRAMS, SERVICES PROVIDED HEREUNDER, OR ANY OUTPUT OR RESULTS
THEREOF. BOTH PARTIES SPECIFICALLY DISCLAIM ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

10.      Indemnification. If notified promptly in writing, each party agrees to
indemnify, defend, and hold harmless the other party, and its successors,
officers, directors, employees, agents and assigns, from and against any and all
third party actions, causes of action, claims, demands, costs, liabilities,
expenses and damages arising out of or in connection with any claim which, if
true, would be a breach of the warranties, representations, obligations and
covenants set forth in this Agreement. ADSMART is not a party to and has no
liability for any and all problems which may arise in connection with the
Website, including, without limitation, failure to fulfill an advertising
insertion order obtained as part of the Representation Services. The
indemnifying party will control the defense and settlement of each claim.

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11.      Limitation of Liability. ADSMART's total liability arising out of this
Agreement or the services provided hereunder, whether based on contract, tort or
otherwise, shall not exceed commissions paid to ADSMART for Campaigns run on
PPI's behalf or $100,000, whichever is less.

12.      Exclusion of Damages. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR
SPECIAL, INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES, INCLUDING, BUT NOT
LIMITED TO, LOSS OF DATA, LOSS OF USE, OR LOSS OF PROFITS ARISING HEREUNDER OR
FROM THE PROVISION OF SERVICES, INCLUDING ADVERTISING ON THE WEBSITE, EVEN IF
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

13.      Term and Termination.

(a)      Basic Provisions. This Agreement shall have an initial term of one year
(the "Initial Term") and shall automatically renew for periods of one year
thereafter (each, a "Renewal Term"), unless either party provides ninety (90)
days written notice of their intent to terminate the Agreement immediately prior
to any renewal.

(b)      Minimum Term. At the completion of an initial evaluation period of six
(6) months, either party may terminate this Agreement upon ninety-(90) days
written notice to the other party. If either party does not execute this option,
this Agreement shall remain in full force and effect.

(c)      Breach and Cure. In the event a party is given written notice that it
is in material breach of this Agreement, it shall have thirty (30) days from the
date of such notice to cure its breach. On the failure to cure, the
non-breaching party may terminate this Agreement by written notice with such
termination effective on the date of said written notice. In the event of
termination pursuant to this section, all Net Advertising Revenue due PPI (minus
all ad-serving fees & compensations due ADSMART, including ADSMART Commissions)
prior to termination shall be paid in accordance with this Agreement.

(d)      Content. Notwithstanding any other provisions in this Agreement,
ADSMART may, in its sole discretion, decide to terminate this Agreement
immediately by providing written notice to PPI if ADSMART determines that PPI
content contains material that is pornographic, excessively violent or contains
abusive and/or foul language.

(e)      For a period of three (3) months following the expiration or earlier
termination of this Agreement, ADSMART shall continue to be entitled to its
ADSMART Commission for Net Advertising Revenue generated from any and all
Advertisers that initially executed an insertion order with ADSMART during the
Initial Term or any Renewal Terms of this Agreement.

14.      Non-Solicitation. PPI agrees that during the Initial Term and all
Renewal Terms of this Agreement and for a period of six (6) months following the
expiration or earlier termination of this Agreement, PPI shall not solicit the
services of any ADSMART employee, including, without limitation, as a full or
part-time employee or independent contractor.

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15.      Miscellaneous. Sections 4, 6, 7, 8, 9, 10, 11, 12, 13(d), 14 and 15 and
the accompanying provisions of any Attachment shall survive expiration or
earlier termination of this Agreement. Nothing in this Agreement shall be deemed
to create a partnership or joint venture between the parties and neither ADSMART
nor PPI shall hold itself out as the agent of the other, except for that
specified in this Agreement. Neither party shall be liable to the other for
delays or failures in performance resulting from causes beyond the reasonable
control of that party, including, but not limited to, acts of God, labor
disputes or disturbances, material shortages or rationing, riots, acts of war,
governmental regulations, communication or utility failures, or casualties. Any
notice required or permitted to be given by either party under this Agreement
shall be in writing and shall be personally delivered or sent by a reputable
overnight mail service (e.g., Federal Express), or by first class mail
(certified or registered). Failure by either party to enforce any provision of
this Agreement shall not be deemed a waiver of future enforcement of that or any
other provision. Any waiver, amendment or other modification of any provision of
this Agreement shall be effective only if in writing and signed by the parties.
If for any reason a court of competent jurisdiction finds any provision of this
Agreement to be unenforceable, that provision of the Agreement shall be enforced
to the maximum extent permissible so as to effect the intent of the parties, and
the remainder of this Agreement shall continue in full force and effect. This
agreement shall be interpreted under the laws of the State of New York, and the
parties submit to the exclusive jurisdiction of the courts of the State of New
York, including the federal courts located there. This Agreement may be assigned
by PPI without the prior written consent by ADSMART. Headings used in this
Agreement are for ease of reference only and shall not be used to interpret any
aspect of this Agreement. This Agreement shall be binding on permitted
successors and assigns. This Agreement, including all attachments which are
incorporated herein by reference, constitutes the entire agreement between the
parties with respect to the subject matter hereof, and supersedes and replaces
all prior and contemporaneous understandings or agreements, written or oral,
regarding such subject matter.

IN WITNESS OF THE FOREGOING, the parties have caused the Agreement to be signed
as of the Effective Date set forth above.

ADSMART NETWORK                           PETPLANET.COM, INC.

By:    John Federman                      By:   Steven E. Marder
       ------------------------------           --------------------------------

Name:  /s/ John Federman                  Name: /s/ Steven E. Marder
       ------------------------------           --------------------------------

Title: Chairman & CEO                     Title: CEO
       ------------------------------           --------------------------------

Date:  12/14/99                           Date: 12/6/99
       ------------------------------           --------------------------------

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                                  Attachment A

         This Attachment dated the Effective Date supersedes any previous
drafted Attachment.

         Representation by ADSMART for PPI includes the following Website(s):

         Site Name - http://www.petplanet.com, including any url owned by PPI,
its parents or any subsidiaries.

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                                  Attachment B
                                 House Accounts

         This Attachment dated the Effective Date supersedes any previous
drafted Attachment.

         ADSMART is not to contact any of the following accounts on behalf of
PPI, unless PPI formally notifies ADSMART in writing:

         Ralston-Purina
         Sun Seed
         Heinz Pet Products
         Hartz
         Whiskas
         Bil-Jac
         FourPaws
         OnlinePhotoContest.com
         Expressly Portraits/the Picture People
         Nylabone
         Pet Music
         PC Flowers

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                                  Attachment C
                              Advertiser Exclusions

         This Attachment dated the Effective Date supersedes any previous
drafted Attachment.

         ADSMART is not to contact any of the following accounts on behalf of
PPI, unless PPI formally notifies ADSMART in writing:

         PETsMART.com
         PETsMART
         Pets.com
         Petopia.com
         Petco
         Petstore.com
         Allpets.com

                                       10<PAGE>
                                                                    EXHIBIT 10.6

                               PETPLANET.COM, INC.
                             1999 STOCK OPTION PLAN

     1. Purposes of the Plan. The purposes of this Stock Option Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees, Directors and
Consultants of the Company and Related Entities and to promote the success of
the Company's business.

     2. Definitions. As used herein, the following definitions shall apply:

          (a) "Administrator" means the Board or any of the Committees appointed
to administer the Plan.

          (b) "Applicable Laws" means the legal requirements relating to the
administration of stock incentive plans, if any, under applicable provisions of
federal securities laws, state corporate and securities laws, the Code, the
rules of any applicable stock exchange or national market system, and the rules
of any foreign jurisdiction applicable to Options granted to residents therein.

          (c) "Board" means the Board of Directors of the Company.

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

          (e) "Committee" means any committee appointed by the Board to
administer the Plan.

          (f) "Common Stock" means the Common Stock of the Company.

          (g) "Company" means PetPlanet.com, Inc.

          (h) "Consultant" means any person (other than an Employee or Director,
solely with respect to rendering services in such person's capacity as a
Director) who is engaged by the Company or any Parent or Subsidiary to render
consulting or advisory services as an independent contractor and is compensated
for such services.

          (i) "Continuous Status as an Employee, Director or Consultant" means
that the employment, director or consulting relationship with the Company, any
Parent, or Subsidiary, is not interrupted or terminated. Continuous Status as an
Employee, Director or Consultant shall not be considered interrupted in the case
of (i) any leave of absence approved by the Company or (ii) transfers between
locations of the Company or between the Company, its Parent, any Subsidiary, or
any successor. A leave of absence approved by the Company shall include sick
leave, military leave, or any other personal leave approved by an authorized
representative of the Company. For purposes of Incentive Stock Options, no such
leave may exceed ninety (90) days, unless reemployment upon expiration of such
leave is guaranteed by statute or contract.

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          (j) "Corporate Transaction" means any of the following transactions to
which the Company is a party:

               (i) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the state in which the Company is incorporated;

               (ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company (including the capital stock of
the Company's subsidiary corporations) in connection with the complete
liquidation or dissolution of the Company;

               (iii) any reverse merger in which the Company is the surviving
entity but in which securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities are
transferred to a person or persons different from those who held such securities
immediately prior to such merger; or

               (iv) acquisition by any person or related group of persons (other
than the Company or by a Company-sponsored employee benefit plan) of beneficial
ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities
possessing more than fifty percent (50%) of the total combined voting power of
the Company's outstanding securities, but excluding any such transaction that
the Administrator determines shall not be a Corporate Transaction.

          (k) "Director" means a member of the Board.

          (l) "Dividend Equivalent Right" means a right entitling the Optionee
to compensation measured by dividends paid with respect to Common Stock.

          (m) "Employee" means any person, including an Officer or Director, who
is an employee of the Company or any Parent or Subsidiary for purposes of
Section 422 of the Code. The payment of a director's fee by the Company or a
Parent or Subsidiary shall not be sufficient to constitute "employment" by the
Company.

          (n) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

          (o) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:

               (i) Where there exists a public market for the Common Stock, the
Fair Market Value shall be (A) the closing price for a Share for the last market
trading day prior to the time of the determination (or, if no closing price was
reported on that date, on the last trading date on which a closing price was
reported) on the stock exchange determined by the Administrator to be the
primary market for the Common Stock or the Nasdaq National Market, whichever is
applicable or (B) if the Common Stock is not traded on any such exchange or
national market system, the average of the closing bid and asked prices of a
Share on the Nasdaq Small Cap Market for the day prior to the time of the
determination (or, if no such prices were reported on that date, on the last
date on which such prices were reported), in each case, as reported in The Wall
Street Journal or such other source as the Administrator deems reliable; or

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               (ii) In the absence of an established market for the Common Stock
of the type described in (i), above, the Fair Market Value thereof shall be
determined by the Administrator in good faith and in a manner consistent with
any applicable federal or state securities laws.

          (p) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.

          (q) "Non-Qualified Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.

          (r) "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

          (s) "Option" means a stock option granted pursuant to the Plan. ------

          (t) "Option Agreement" means the written agreement evidencing the
grant of an Option executed by the Company and the Optionee, including any
amendments thereto.

          (u) "Optionee" means an Employee, Director or Consultant who receives
an Option under the Plan.

          (v) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.

          (w) "Plan" means this PetPlanet.com, Inc. 1999 Stock Option Plan.

          (x) "Registration Date" means the first to occur of (i) the closing of
a secondary sale to the general public of (A) the Common Stock or (B) the same
class of securities of a successor corporation (or its Parent) issued pursuant
to a Corporate Transaction in exchange for or in substitution of the Common
Stock, pursuant to a registration statement filed with and declared effective by
the Securities and Exchange Commission under the Securities Act of 1933, as
amended; and (ii) in the event of a Corporate Transaction, the date of the
consummation of the Corporate Transaction if the same class of securities of the
successor corporation (or its Parent) issuable in such Corporate Transaction
shall have been sold to the general public pursuant to a registration statement
filed with and declared effective by the Securities and Exchange Commission
under the Securities Act of 1933, as amended on or prior to the date of
consummation of such Corporate Transaction.

          (y) "Restricted Stock" means Shares issued under the Plan to the
Optionee for such consideration, if any, and subject to such restrictions on
transfer, rights of first refusal, repurchase provisions, forfeiture provisions,
and other terms and conditions as established by the Administrator.

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          (z) "Share" means a share of the Common Stock.

          (aa) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.

     2. Stock Subject to the Plan.

          (a) Subject to the provisions of Section 11(a), below, the maximum
aggregate number of Shares which may be issued pursuant to all Option grants
(including Incentive Stock Options) is 1,800,000 Shares. The Shares may be
authorized, but unissued, or reacquired Common Stock.

          (b) If an Option expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an Option exchange program, or
if any unissued Shares are retained by the Company upon exercise of an Option in
order to satisfy the exercise price for such Option or any withholding taxes due
with respect to such Option, such unissued or retained Shares shall become
available for future grant or sale under the Plan (unless the Plan has
terminated). Shares that actually have been issued under the Plan pursuant to an
Option shall not be returned to the Plan and shall not become available for
future distribution under the Plan, except that if unvested Shares are
forfeited, or repurchased by the Company at their original purchase price, such
Shares shall become available for future grant under the Plan.

     3. Administration of the Plan.

          (a) Plan Administrator. With respect to grants of Options to
Employees, Directors, Officers or Consultants, the Plan shall be administered by
(A) the Board or (B) a Committee (or a subcommittee of the Committee) designated
by the Board, which Committee shall be constituted in such a manner as to
satisfy Applicable Laws and to permit such grants and related transactions under
the Plan to be exempted from Section 16(b) of the Exchange Act in accordance
with Rule 16b-3. Once appointed, such Committee shall continue to serve in its
designated capacity until otherwise directed by the Board.

          (b) Multiple Administrative Bodies. The Plan may be administered by
different bodies with respect to Directors, Officers, Consultants, and Employees
who are neither Directors nor Officers.

          (c) Powers of the Administrator. Subject to Applicable Laws and the
provisions of the Plan (including any other powers given to the Administrator
hereunder), and except as otherwise provided by the Board, the Administrator
shall have the authority, in its discretion:

               (i) to select the Employees, Directors and Consultants to whom
Options may be granted from time to time hereunder;

               (ii) to determine whether and to what extent Options are granted
hereunder;

                                      -4-
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               (iii) to determine the number of Shares or the amount of other
consideration to be covered by each Option granted hereunder;

               (iv) to approve forms of Option Agreement for use under the Plan;

               (v) to determine the terms and conditions of any Option granted
hereunder;

               (vi) to establish additional terms, conditions, rules or
procedures to accommodate the rules or laws of applicable foreign jurisdictions
and to afford Optionees favorable treatment under such laws; provided, however,
that no Option shall be granted under any such additional terms, conditions,
rules or procedures with terms or conditions which are inconsistent with the
provisions of the Plan;

               (vii) to amend the terms of any outstanding Option granted under
the Plan, provided that any amendment that would adversely affect the Grantee's
rights under an outstanding option grant shall not be made without the Optionees
written consent;

               (viii) to construe and interpret the terms of the Plan and
Options granted pursuant to the Plan; and

               (ix) to take such other action, not inconsistent with the terms
of the Plan, as the Administrator deems appropriate.

          (d) Effect of Administrator's Decision. All decisions, determinations
and interpretations of the Administrator shall be conclusive and binding on all
persons.

     4. Eligibility.

          (a) Recipients. Options other than Incentive Stock Options may be
granted to Employees, Directors and Consultants. Incentive Stock Options may be
granted only to Employees. An Employee, Director or Consultant who has been
granted an Option may, if otherwise eligible, be granted additional Options.
Options may be granted to such Employees of the Company and its subsidiaries who
are residing in foreign jurisdictions as the Administrator may determine from
time to time.

          (b) Employment Relationship. The Plan shall not confer upon any
Optionee any right with respect to continuation of an employment or consulting
relationship with the Company, nor shall it interfere in any way with such
Optionee's right or the Company's right to terminate his or her employment or
consulting relationship at any time, with or without cause.

     5. Terms and Conditions of Options.

          (a) Type of Options. The Administrator is authorized under the Plan to
grant any type of option award to an Employee, Director or Consultant that is
not inconsistent with the provisions of the Plan and that by its terms involves
or might involve the issuance of (i) Shares, (ii) an Option or (iii) any other
security with the value derived from the value of the Shares. Such Options
grants include, without limitation, Options, or sales or bonuses of Restricted
Stock, and an Option may consist of one such security or benefit, or two or more
of them in any combination or alternative.

                                      -5-
<PAGE>

          (b) Designation of Option Grant. Each Option shall be designated in
the Option Agreement. In the case of an Option, the Option shall be designated
as either an Incentive Stock Option or a Non-Qualified Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of Shares subject to Options designated as Incentive Stock Options which
become exercisable for the first time by a Optionee during any calendar year
(under all plans of the Company or any Parent or Subsidiary) exceeds $100,000,
such excess Options, to the extent of the Shares covered thereby in excess of
the foregoing limitation, shall be treated as Non-Qualified Stock Options. For
this purpose, Incentive Stock Options shall be taken into account in the order
in which they were granted, and the Fair Market Value of the Shares shall be
determined as of the date the Option with respect to such Shares is granted.

          (c) Conditions of Option. Subject to the terms of the Plan, the
Administrator shall determine the provisions, terms, and conditions of each
Option including, but not limited to, the Option vesting schedule, repurchase
provisions, rights of first refusal, forfeiture provisions, form of payment
(cash, Shares, or other consideration) upon settlement of the Option, payment
contingencies, and satisfaction of any performance criteria. The performance
criteria established by the Administrator may be based on any one of, or
combination of, increase in share price, earnings per share, total stockholder
return, return on equity, return on assets, return on investment, net operating
income, cash flow, revenue, economic value added, personal management
objectives, or other measure of performance selected by the Administrator.
Partial achievement of the specified criteria may result in a payment or vesting
corresponding to the degree of achievement as specified in the Option Agreement.

          (d) Acquisitions and Other Transactions. The Administrator may issue
Options under the Plan in settlement, assumption or substitution for,
outstanding awards or obligations to grant future awards in connection with the
Company or a Parent or Subsidiary acquiring another entity, an interest in
another entity or an additional interest in a Parent or Subsidiary whether by
merger, stock purchase, asset purchase or other form of transaction. Such Option
grants shall be at the discretion of the Board and subject to terms of the
applicable transaction.

          (e) Term of Option. The term of each Option shall be the term stated
in the Option Agreement, provided, however, that the term of an Incentive Stock
Option shall be no more than ten (10) years from the date of grant thereof.
However, in the case of an Incentive Stock Option granted to a Optionee who, at
the time the Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the term of the Incentive Stock Option shall be five (5) years
from the date of grant thereof or such shorter term as may be provided in the
Option Agreement.

          (f) Non-Transferability of Options. Options may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee; provided however, that the
Optionee may designate a beneficiary of the Optionee's Incentive Stock Option in
the event of the Optionee's death on beneficiary designation form provided by
the Administrator.

                                      -6-
<PAGE>

          (g) Time of Granting Options. The date of grant of an Option shall for
all purposes be the date on which the Administrator makes the determination to
grant such Option, or such other date as is determined by the Administrator.
Notice of the grant determination shall be given to each Employee, Director or
Consultant to whom an Option is so granted within a reasonable time after the
date of such grant.

     6. Option Exercise or Purchase Price, Consideration and Taxes.

          (a) Exercise or Purchase Price. The exercise or purchase price, if
any, for an Option shall be as follows:

               (i) In the case of an Incentive Stock Option:

                    (A) granted to an Employee who, at the time of the grant of
such Incentive Stock Option owns stock representing more than ten percent (10%)
of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be not less than one hundred ten
percent (110%) of the Fair Market Value per Share on the date of grant; or

                    (B) granted to any Employee other than an Employee described
in the preceding paragraph, the per Share exercise price shall be not less than
one hundred percent (100%) of the Fair Market Value per Share on the date of
grant.

               (ii) In the case of a Non-Qualified Stock Option:

                    (A) granted to a person who, at the time of the grant of
such Option, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
per Share exercise price shall be not less than one hundred ten percent (110%)
of the Fair Market Value per Share on the date of grant.

                    (B) granted to any person other than a person described in
the preceding paragraph, the per Share exercise price shall be not less than
eighty-five percent (85%) of the Fair Market Value per Share on the date of
grant.

               (iii) In the case of the sale of Shares:

                    (A) granted to a person who, at the time of the grant of
such Option, or at the time the purchase is consummated, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share purchase price shall be not
less than one hundred percent (100%) of the Fair Market Value per share on the
date of grant.

                                      -7-
<PAGE>

                    (B) granted to any person other than a person described in
the preceding paragraph, the per Share purchase price shall be not less than
eighty-five percent (85%) of the Fair Market Value per Share on the date of
grant.

               (iv) In the case of other Options, such price as is determined by
the Administrator.

               (v) Notwithstanding the foregoing provisions of this Section
7(a), in the case of an Option issued pursuant to Section 6(d), above, the
exercise or purchase price for the grant shall be determined in accordance with
Section 424(a) of the Code.

          (b) Consideration. Subject to Applicable Laws, the consideration to be
paid for the Shares to be issued upon exercise or purchase of an Option
including the method of payment, shall be determined by the Administrator (and,
in the case of an Incentive Stock Option, shall be determined at the time of
grant). In addition to any other types of consideration the Administrator may
determine, the Administrator is authorized to accept as consideration for Shares
issued under the Plan the following, provided that the portion of the
consideration equal to the par value of the Shares must be paid in cash or other
legal consideration permitted by the Delaware General Corporation Law:

               (i) cash;

               (ii) check;

               (iii) a cashless exercise program approved by the Administrator
and the Board; or

               (iv) any combination of the foregoing methods of payment.

          (c) Taxes. No Shares shall be delivered under the Plan to any Optionee
or other person until such Optionee or other person has made arrangements
acceptable to the Administrator for the satisfaction of any foreign, federal,
state, or local income and employment tax withholding obligations, including,
without limitation, obligations incident to the receipt of Shares or the
disqualifying disposition of Shares received on exercise of an Incentive Stock
Option. Upon exercise of an Option the Company shall withhold or collect from
Optionee an amount sufficient to satisfy such tax obligations.

      7. Exercise of Option.

          (a) Procedure for Exercise; Rights as a Shareholder.

               (i) Any Option granted hereunder shall be exercisable at such
times and under such conditions as determined by the Administrator under the
terms of the Plan and specified in the Option Agreement, but in the case of an
Option, in no case at a rate of less than 20% per year over five (5) years from
the date the Option is granted.

                                      -8-
<PAGE>

               (ii) An Option shall be deemed to be exercised when written
notice of such exercise has been given to the Company in accordance with the
terms of the Option by the person entitled to exercise the Option and full
payment for the Shares with respect to which the Option is exercised has been
received by the Company. Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company) of the stock certificate evidencing such Shares, no right to vote or
receive dividends or any other rights as a shareholder shall exist with respect
to Shares subject to an Option, notwithstanding the exercise of an Option or
other Option. The Company shall issue (or cause to be issued) such stock
certificate promptly upon exercise of the Option. No adjustment will be made for
a dividend or other right for which the record date is prior to the date the
stock certificate is issued, except as provided in the Option Agreement or
Section 11(a), below.

          (b) Exercise of Option Following Termination of Employment, Director
or Consulting Relationship. In the event of termination of a Optionee's
Continuous Status as an Employee, Director or Consultant with the Company for
any reason other than disability or death (but not in the event of a Optionee's
change of status from Employee to Consultant or from Consultant to Employee),
such Optionee may, but only within three (3) months after the date of such
termination (but in no event later than the expiration date of the term of such
Option as set forth in the Option Agreement), exercise his or her Option to the
extent that the Optionee was entitled to exercise it at the date of such
termination or to such other extent as may be determined by the Administrator.
If the Optionee should die within three (3) months after the date of such
termination, the Optionee's estate or the person who acquired the right to
exercise the Option by bequest or inheritance may exercise the Option to the
extent that the Optionee was entitled to exercise it at the date of such
termination within twelve (12) months of the Optionee's date of death, but in no
event later than the expiration date of the term of such Option as set forth in
the Option Agreement. In the event of a Optionee's change of status from
Employee to Consultant, an Employee's Incentive Stock Option shall convert
automatically to a Non-Qualified Stock Option on the ninety-first (91) day
following such change of status. If the Optionee does not exercise such Option
to the extent so entitled within the time specified herein, the Option shall
terminate.

          (c) Disability of Optionee. In the event of termination of a
Optionee's Continuous Status as an Employee, Director or Consultant as a result
of his or her disability, Optionee may, but only within twelve (12) months from
the date of such termination (and in no event later than the expiration date of
the term of such Option as set forth in the Option Agreement), exercise the
Option to the extent otherwise entitled to exercise it at the date of such
termination; provided, however, that if such disability is not a "disability" as
such term is defined in Section 22(e)(3) of the Code, in the case of an
Incentive Stock Option such Incentive Stock Option shall automatically convert
to a Non-Qualified Stock Option on the day three (3) months and one day
following such termination. To the extent that Optionee is not entitled to
exercise the Option at the date of termination, or if Optionee does not exercise
such Option to the extent so entitled within the time specified herein, the
Option shall terminate.

          (d) Death of Optionee. In the event of the death of a Optionee, the
Option may be exercised at any time within twelve (12) months following the date
of death (but in no event later than the expiration of the term of such Option
as set forth in the Option Agreement), by the Optionee's estate or by a person
who acquired the right to exercise the Option by bequest or inheritance, but
only to the extent that the Optionee was entitled to exercise the Option at the
date of death. If, at the time of death, the Optionee was not entitled to
exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall immediately revert to the Plan. If, after death, the
Optionee's estate or a person who acquired the right to exercise the Option by
bequest or inheritance does not exercise the Option within the time specified
herein, the Option shall terminate.

                                      -9-
<PAGE>

          (e) Buyout Provisions. The Administrator may at any time offer to buy
out for a payment in cash or Shares, an Option previously granted, based on such
terms and conditions as the Administrator shall establish and communicate to the
Optionee at the time that such offer is made.

      8. Conditions Upon Issuance of Shares.

          (a) Shares shall not be issued pursuant to the exercise of an Option
unless the exercise of such Option and the issuance and delivery of such Shares
pursuant thereto shall comply with all Applicable Laws, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.

          (b) As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the time
of any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any
Applicable Laws.

     9. Repurchase Rights. If the provisions of an Option Agreement grant to the
Company the right to repurchase Shares upon termination of the Optionee's
Continuing Status as an Employee, Director or Consultant, the Option Agreement
shall provide that the repurchase price will be either:

          (a) The higher of the original purchase price or Fair Market Value on
the date of termination of the Optionee's Continuous Status as an Employee,
Director or Consultant, if the right to repurchase must be exercised for cash or
cancellation of purchase money indebtedness for the Shares within ninety (90)
days of the termination of the Optionee's Continuous Status as an Employee,
Director or Consultant, and the right terminates when the Company's securities
become publicly traded; or

          (b) The original purchase price, provided (i) the right to repurchase
at the original purchase price lapses at the rate of at least twenty percent
(20%) per year over five (5) years from the date the Option is granted (without
respect to the date the Option was exercised or became exercisable), which right
must be exercised for cash or cancellation of purchase money indebtedness for
the Shares within ninety (90) days of termination of the Optionee's Continuous
Status as an Employee, Director or Consultant, and (ii) if the repurchase right
is assignable, the assignee must pay the Company upon assignment of the right,
(unless the assignee is a one hundred percent (100%) owned subsidiary of the
Company or is the parent of the Company owning one hundred percent (100%) of the
stock of the Company) cash equal to the difference between the original purchase
price and Fair Market Value if the original purchase price is less than Fair
Market Value.

                                      -10-
<PAGE>

     10. Adjustments Upon Changes in Capitalization or Corporate Transaction.

          (a) Adjustments upon Changes in Capitalization. Subject to any
required action by the shareholders of the Company, the number of Shares covered
by each outstanding Option, and the number of Shares which have been authorized
for issuance under the Plan but as to which no Options have yet been granted or
which have been returned to the Plan, as well as the price per share of Common
Stock covered by each such outstanding Option, shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend, combination
or reclassification of the Common Stock, or any other similar event resulting in
an increase or decrease in the number of issued shares of Common Stock. Except
as expressly provided herein, no issuance by the Company of shares of stock of
any class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason hereof shall be made with respect to, the
number or price of Shares subject to an Option.

          (b) Corporate Transaction.

               (i) Termination of Option if Not Assumed. In the event of a
Corporate Transaction, each Option will termination upon the consummation of the
Corporation Transaction, unless the Option is assumed by the successor
corporation or Parent thereof in connection with the Corporate Transaction.

               (ii) Acceleration of Option Upon Corporate Transaction. Except as
provided otherwise in an individual Option Agreement, in the event of any
Corporate Transaction there will not be any acceleration of vesting or
exercisability of any Option.

          (c) Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by the shareholders of the
Company. It shall continue in effect for a term of ten (10) years unless sooner
terminated.

     11. Amendment, Suspension or Termination of the Plan.

          (a) The Board may at any time amend, suspend or terminate the Plan. To
the extent necessary to comply with Applicable Laws, the Company shall obtain
shareholder approval of any Plan amendment in such a manner and to such a degree
as required.

          (b) No Option may be granted during any suspension of the Plan or
after termination of the Plan.

          (c) Any amendment, suspension or termination of the Plan shall not
affect Options already granted, and such Options shall remain in full force and
effect as if the Plan had not been amended, suspended or terminated, unless
mutually agreed otherwise between the Optionee and the Administrator, which
agreement must be in writing and signed by the Optionee and the Company.

                                      -11-
<PAGE>

     12. Reservation of Shares.

          (a) The Company, during the term of the Plan, will at all times
reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.

          (b) The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
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.

     13. NO EFFECT ON TERMS OF EMPLOYMENT. THE PLAN SHALL NOT CONFER UPON ANY
OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTING
RELATIONSHIP WITH THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH HIS OR HER
RIGHT OR THE COMPANY'S RIGHT TO TERMINATE HIS OR HER EMPLOYMENT OR CONSULTING
RELATIONSHIP AT ANY TIME, WITH OR WITHOUT CAUSE.

     14. Shareholder Approval. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the degree and manner required under Applicable Laws. Any Option exercised
before shareholder approval is obtained shall be rescinded if shareholder
approval is not obtained within the time prescribed, and Shares issued on the
exercise of any such Option shall not be counted in determining whether
shareholder approval is obtained.

     15. Information to Optionees. The Company shall provide to each Optionee,
during the period for which such Optionee has one or more Options outstanding,
copies of financial statements at least annually and all annual reports and
other information which is provided to all shareholders of the Company.

                                      -12-

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