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                                                                    Exhibit 10.3

                               THERASENSE, INC.

                         EMPLOYEE STOCK PURCHASE PLAN

     The following constitute the provisions of the Employee Stock Purchase Plan
of Therasense, Inc.

     1.   Purpose. The purpose of the Plan is to provide employees of the
          -------
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the intention
of the Company to have the Plan qualify as an "Employee Stock Purchase Plan"
under Section 423 of the Code. The provisions of the Plan, accordingly, shall be
construed so as to extend and limit participation in a uniform and
nondiscriminatory basis consistent with the requirements of Section 423.

     2.   Definitions.
          -----------

          (a)  "Administrator" shall mean the Board or any Committee designated
                -------------
by the Board to administer the plan pursuant to Section 14.

          (b)  "Board" shall mean the Board of Directors of the Company.
                -----

          (c)  "Change of Control" shall mean the occurrence of any of the
                -----------------
following events:

               (i)   Any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) becomes the "beneficial owner" (as defined in Rule
13d-3 of the Exchange Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the total voting power represented
by the Company's then outstanding voting securities; or

               (ii)  The consummation of the sale or disposition by the Company
of all or substantially all of the Company's assets; or

               (iii) The consummation of a merger or consolidation of the
Company, with any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or its parent) at
least fifty percent (50%) of the total voting power represented by the voting
securities of the Company, or such surviving entity or its parent outstanding
immediately after such merger or consolidation; or

               (iv)  A change in the composition of the Board, as a result of
which fewer than a majority of the Directors are Incumbent Directors. "Incumbent
Directors" shall mean Directors who either (A) are Directors of the Company, as
applicable, as of the date hereof, or (B) are elected, or nominated for
election, to the Board with the affirmative votes of at least a majority of
those Directors whose election or nomination was not in connection with any
transaction described
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in subsections (i), (ii) or (iii) or in connection with an actual or threatened
proxy contest relating to the election of directors of the Company.

          (d)  "Code" shall mean the Internal Revenue Code of 1986, as amended.
                ----

          (e)  "Committee" means a committee of the Board appointed by the
                ---------
Board in accordance with Section 14 hereof.

          (f)  "Common Stock" shall mean the common stock of the Company.
                ------------

          (g)  "Company" shall mean Therasense, Inc., a Delaware corporation.
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          (h)  "Compensation" shall mean all base straight time gross earnings,
                ------------
commissions overtime and shift premium, but exclusive of payments for incentive
compensation, bonuses and other compensation.

          (i)  "Designated Subsidiary" shall mean any Subsidiary selected by
                ---------------------
the Administrator as eligible to participate in the Plan.

          (j)  "Eligible Employee" shall mean any individual who is a common
                -----------------
law employee of the Company or any Designated Subsidiary and whose customary
employment with the Company or Designated Subsidiary is at least twenty (20)
hours per week and more than five (5) months in any calendar year. For purposes
of the Plan, the employment relationship shall be treated as continuing intact
while the individual is on sick leave or other leave of absence approved by the
Company. Where the period of leave exceeds 90 days and the individual's right to
reemployment is not guaranteed either by statute or by contract, the employment
relationship shall be deemed to have terminated on the 91st day of such leave.

          (k)  "Exercise Date" shall mean the first Trading Day on or after May
                -------------
1 and November 1 of each year. The first Exercise Date under the Plan shall be
May 1, 2002.

          (l)  "Fair Market Value" shall mean, as of any date, the value of
                -----------------
Common Stock determined as follows:

               (i)   If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system on
the date of determination, as reported in The Wall Street Journal or such other
source as the Board deems reliable;

               (ii)  If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean of the closing bid and asked prices for the Common Stock on
the date of determination, as reported in The Wall Street Journal or such other
source as the Board deems reliable;

               (iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Board; or

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               (iv)  For purposes of the Offering Date of the first Offering
Period under the Plan, the Fair Market Value shall be the initial price to the
public as set forth in the final prospectus included within the registration
statement in Form S-1 filed with the Securities and Exchange Commission for the
initial public offering of the Company's Common Stock (the "Registration
Statement").

          (m)  "Offering Date" shall mean the first Trading Day of each
                -------------
Offering Period.

          (n)  "Offering Periods" shall mean the periods of approximately
                ----------------
twenty-four (24) months during which an option granted pursuant to the Plan may
be exercised, commencing on the first Trading Day on or after May 1 and November
1 of each year and terminating on the first Trading Day on or after the May 1
and November 1 Offering Period commencement date approximately twenty-four
months later; provided, however, that the first Offering Period under the Plan
shall commence with the first Trading Day on or after the date on which the
Securities and Exchange Commission declares the Company's registration statement
on Form S-1 effective and ending on the first Trading Day on or after the
earlier of (i) November 1, 2003 or (ii) twenty-seven (27) months from the
beginning of the first Offering Period. The duration and timing of Offering
Periods may be changed pursuant to Section 4 of this Plan.

          (o)  "Plan" shall mean this Employee Stock Purchase Plan.
                ----

          (p)  "Purchase Period" shall mean the approximately six (6) month
                ---------------
period commencing on one Exercise Date and ending with the next Exercise Date,
except that the first Purchase Period of any Offering Period shall commence on
the Offering Date and end with the next Exercise Date.

          (q)  "Purchase Price" shall mean 85% of the Fair Market Value of a
                --------------
share of Common Stock on the Offering Date or on the Exercise Date, whichever is
lower; provided however, that the Purchase Price may be adjusted by the
Administrator pursuant to Section 20.

          (r)  "Subsidiary" shall mean a "subsidiary corporation," whether now
                ----------
or hereafter existing, as defined in Section 424(f) of the Code.

          (s)  "Trading Day" shall mean a day on which national stock exchanges
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and the Nasdaq System are open for trading.

     3.   Eligibility.
          -----------

          (a)  First Offering Period. Any individual who is an Eligible Employee
               ---------------------
immediately prior to the first Offering Period shall be automatically enrolled
in the first Offering Period.

          (b)  Subsequent Offering Periods. Any Eligible Employee on a given
               ---------------------------
Offering Date shall be eligible to participate in the Plan.

          (c)  Limitations. Any provisions of the Plan to the contrary
               -----------
notwithstanding, no Eligible Employee shall be granted an option under the Plan
(i) to the extent that, immediately after the grant, such Eligible Employee (or
any other person whose stock would be attributed to such

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Eligible Employee pursuant to Section 424(d) of the Code) would own capital
stock of the Company and/or hold outstanding options to purchase such stock
possessing five percent (5%) or more of the total combined voting power or value
of all classes of the capital stock of the Company or of any Subsidiary, or (ii)
to the extent that his or her rights to purchase stock under all employee stock
purchase plans of the Company and its subsidiaries accrues at a rate which
exceeds Twenty-Five Thousand Dollars ($25,000) worth of stock (determined at the
fair market value of the shares at the time such option is granted) for each
calendar year in which such option is outstanding at any time.

     4.   Offering Periods. The Plan shall be implemented by consecutive,
          ----------------
overlapping Offering Periods with a new Offering Period commencing on the first
Trading Day on or after May 1 and November 1 each year, or on such other date as
the Board shall determine, and continuing thereafter until terminated in
accordance with Section 20 hereof; provided, however, that the first Offering
Period under the Plan shall commence with the first Trading Day on or after the
date upon which the Company's registration statement on Form S-1 is declared
effective by the Securities and Exchange Commission and ending on the earlier of
(i) November 1, 2003 or (ii) twenty-seven (27) months from the beginning of the
first Offering Period. The Board shall have the power to change the duration of
Offering Periods (including the commencement dates thereof) with respect to
future offerings without stockholder approval if such change is announced prior
to the scheduled beginning of the first Offering Period to be affected
thereafter.

     5.   Participation.
          -------------

          (a)  First Offering Period. An Eligible Employee shall be entitled to
               ---------------------
participate in the first Offering Period only if such individual submits a
subscription agreement authorizing payroll deductions in the form of Exhibit A
                                                                     ---------
to this Plan (i) no earlier than the effective date of the Form S-8 registration
statement with respect to the issuance of Common Stock under this Plan and (ii)
no later than ten (10) business days from the effective date of such S-8
registration statement (the "Enrollment Window"). An Eligible Employee's failure
to submit the subscription agreement during the Enrollment Window shall result
in the automatic termination of such individual's participation in the Offering
Period.

          (b)  Subsequent Offering Periods. An Eligible Employee may become a
               ---------------------------
participant in the Plan by completing a subscription agreement authorizing
payroll deductions in the form of Exhibit A to this Plan and filing it with the
                                  ---------
Company's payroll office prior to the applicable Offering Date.

     6.   Payroll Deductions.
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          (a)  At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each payday
during the Offering Period in an amount not exceeding (i) one hundred percent
(100%) of the Compensation which he or she receives on each payday in 2001 and
(ii) fifteen percent (15%) of the Compensation which he or she receives on each
payday during the Offering Period thereafter. If a participant elects to have
payroll deductions made on each payday in 2001 at a rate higher than fifteen
percent (15%), then he or she must also authorize in the applicable subscription
agreement a rate of fifteen percent (15%) or less for each payday after 2001.
Notwithstanding the foregoing, if a payday occurs on an Exercise Date, a
participant shall have the payroll deductions made on such day applied to his or
her account under

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the new Offering Period or Purchase Period, as the case may be. A participant's
subscription agreement shall remain in effect for successive Offering Periods
unless terminated as provided in Section 10 hereof.

          (b)  Payroll deductions for a participant shall commence on the first
payday following the Offering Date and shall end on the last payday in the
Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in Section 10 hereof; provided,
however, that for the first Offering Period, payroll deductions shall commence
on the first payday on or following the end of the Enrollment Window.

          (c)  All payroll deductions made for a participant shall be credited
to his or her account under the Plan and shall be withheld in whole percentages
only. A participant may not make any additional payments into such account.

          (d)  A participant may discontinue his or her participation in the
Plan as provided in Section 10 hereof, or may increase or decrease the rate of
his or her payroll deductions during the Offering Period by completing or filing
with the Company a new subscription agreement authorizing a change in payroll
deduction rate. The Administrator may, in its discretion, limit the nature
and/or number of participation rate changes during any Offering Period. The
change in rate shall be effective with the first full payroll period following
five (5) business days after the Company's receipt of the new subscription
agreement unless the Company elects to process a given change in participation
more quickly.

          (e)  Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3(b) hereof, a participant's
payroll deductions may be decreased to zero percent (0%) at any time during a
Purchase Period. Payroll deductions shall recommence at the rate provided in
such participant's subscription agreement at the beginning of the first Purchase
Period which is scheduled to end in the following calendar year, unless
terminated by the participant as provided in Section 10 hereof.

          (f)  At the time the option is exercised, in whole or in part, or at
the time some or all of the Company's Common Stock issued under the Plan is
disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, if any, which arise upon
the exercise of the option or the disposition of the Common Stock. At any time,
the Company may, but shall not be obligated to, withhold from the participant's
compensation the amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to the Company
any tax deductions or benefits attributable to sale or early disposition of
Common Stock by the Eligible Employee.

     7.   Grant of Option. On the Offering Date of each Offering Period, each
          ---------------
Eligible Employee participating in such Offering Period shall be granted an
option to purchase on each Exercise Date during such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Eligible Employee's payroll deductions
accumulated prior to such Exercise Date and retained in the Participant's
account as of the Exercise Date by the applicable Purchase Price; provided that
in no event shall an Eligible Employee be permitted to purchase during each
Purchase Period more than 10,000 shares of the Company's Common Stock (subject
to any adjustment pursuant to Section 19), and provided further

                                      -5-
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that such purchase shall be subject to the limitations set forth in Sections
3(b) and 12 hereof. The Eligible Employee may accept the grant of such option by
turning in a completed Subscription Agreement (attached hereto as Exhibit A) to
                                                                  ---------
the Company on or prior to an Offering Date, or with respect to the first
Offering Period, prior to the last day of the Enrollment Window. The
Administrator may, for future Offering Periods, increase or decrease, in its
absolute discretion, the maximum number of shares of the Company's Common Stock
an Eligible Employee may purchase during each Purchase Period of such Offering
Period. Exercise of the option shall occur as provided in Section 8 hereof,
unless the participant has withdrawn pursuant to Section 10 hereof. The option
shall expire on the last day of the Offering Period.

     8.   Exercise of Option.
          ------------------

          (a)  Unless a participant withdraws from the Plan as provided in
Section 10 hereof, his or her option for the purchase of shares shall be
exercised automatically on the Exercise Date, and the maximum number of full
shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares shall be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Purchase Period or Offering Period, subject to earlier withdrawal by the
participant as provided in Section 10 hereof. Any other funds left over in a
participant's account after the Exercise Date shall be returned to the
participant. During a participant's lifetime, a participant's option to purchase
shares hereunder is exercisable only by him or her.

          (b)  If the Administrator determines that, on a given Exercise Date,
the number of shares with respect to which options are to be exercised may
exceed (i) the number of shares of Common Stock that were available for sale
under the Plan on the Offering Date of the applicable Offering Period, or (ii)
the number of shares available for sale under the Plan on such Exercise Date,
the Administrator may in its sole discretion (x) provide that the Company shall
make a pro rata allocation of the shares of Common Stock available for purchase
on such Offering Date or Exercise Date, as applicable, in as uniform a manner as
shall be practicable and as it shall determine in its sole discretion to be
equitable among all participants exercising options to purchase Common Stock on
such Exercise Date, and continue all Offering Periods then in effect, or (y)
provide that the Company shall make a pro rata allocation of the shares
available for purchase on such Offering Date or Exercise Date, as applicable, in
as uniform a manner as shall be practicable and as it shall determine in its
sole discretion to be equitable among all participants exercising options to
purchase Common Stock on such Exercise Date, and terminate any or all Offering
Periods then in effect pursuant to Section 20 hereof. The Company may make pro
rata allocation of the shares available on the Offering Date of any applicable
Offering Period pursuant to the preceding sentence, notwithstanding any
authorization of additional shares for issuance under the Plan by the Company's
stockholders subsequent to such Offering Date.

     9.   Delivery. As soon as reasonably practicable after each Exercise Date
          --------
on which a purchase of shares occurs, the Company shall arrange the delivery to
each participant the shares purchased upon exercise of his or her option in a
form determined by the Administrator.

     10.  Withdrawal.
          ----------

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          (a)  A participant may withdraw all but not less than all the payroll
deductions credited to his or her account and not yet used to exercise his or
her option under the Plan at any time by giving written notice to the Company in
the form of Exhibit B to this Plan. All of the participant's payroll deductions
            ---------
credited to his or her account shall be paid to such participant promptly after
receipt of notice of withdrawal and such participant's option for the Offering
Period shall be automatically terminated, and no further payroll deductions for
the purchase of shares shall be made for such Offering Period. If a participant
withdraws from an Offering Period, payroll deductions shall not resume at the
beginning of the succeeding Offering Period unless the participant delivers to
the Company a new subscription agreement.

          (b)  A participant's withdrawal from an Offering Period shall not
have any effect upon his or her eligibility to participate in any similar plan
which may hereafter be adopted by the Company or in succeeding Offering Periods
which commence after the termination of the Offering Period from which the
participant withdraws.

     11.  Termination of Employment. In the event a participant ceases to be
          -------------------------
an Eligible Employee of the Company or any Designated Subsidiary, as applicable,
his or her option shall remain exercisable for a period of three (3) months from
the date of such Eligible Employee's termination. Upon the expiration of such
three (3) month period or a date prior to the expiration of such three (3) month
period if requested by the participant, any payroll deductions credited to such
participant's account during the Offering Period but not yet used to purchase
shares under the Plan shall be returned to such participant or, in the case of
his or her death, to the person or persons entitled thereto under Section 15
hereof, and such participant's option shall be automatically terminated.

     12.  Interest. No interest shall accrue on the payroll deductions of a
          --------
participant in the Plan.

     13.  Stock.
          -----

          (a)  Subject to adjustment upon changes in capitalization of the
Company as provided in Section 19 hereof, the maximum number of shares of the
Company's Common Stock which shall be made available for sale under the Plan
shall be 1,000,000 shares, plus an annual increase to be added on the first day
of the Company's fiscal year, beginning in 2002, equal to the lesser of (i)
1,000,000 shares, (ii) 1.5% of the outstanding shares on such date or (iii) an
amount determined by the Board.

          (b)  Until the shares are issued (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company), a participant shall only have the rights of an unsecured creditor with
respect to such shares, and no right to vote or receive dividends or any other
rights as a stockholder shall exist with respect to such shares.

          (c)  Shares to be delivered to a participant under the Plan shall be
registered in the name of the participant or in the name of the participant and
his or her spouse.

     14.  Administration. The Administrator shall administer the Plan and
          --------------
shall have full and exclusive discretionary authority to construe, interpret and
apply the terms of the Plan, to determine eligibility and to adjudicate all
disputed claims filed under the Plan. Every finding, decision and

                                      -7-
<PAGE>

determination made by the Administrator shall, to the full extent permitted by
law, be final and binding upon all parties.

     15.  Designation of Beneficiary.
          --------------------------

          (a)  A participant may file a written designation of a beneficiary
who is to receive any shares and cash, if any, from the participant's account
under the Plan in the event of such participant's death subsequent to an
Exercise Date on which the option is exercised but prior to delivery to such
participant of such shares and cash. In addition, a participant may file a
written designation of a beneficiary who is to receive any cash from the
participant's account under the Plan in the event of such participant's death
prior to exercise of the option. If a participant is married and the designated
beneficiary is not the spouse, spousal consent shall be required for such
designation to be effective.

          (b)  Such designation of beneficiary may be changed by the participant
at any time by written notice. In the event of the death of a participant and in
the absence of a beneficiary validly designated under the Plan who is living at
the time of such participant's death, the Company shall deliver such shares
and/or cash to the executor or administrator of the estate of the participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its discretion, may deliver such shares and/or
cash to the spouse or to any one or more dependents or relatives of the
participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.

          (c)  All beneficiary designations shall be in such form and manner as
the Administrator may designate from time to time.

     16.  Transferability. Neither payroll deductions credited to a
          ---------------
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 15 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.

     17.  Use of Funds. All payroll deductions received or held by the Company
          ------------
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions. Until
shares are issued, participants shall only have the rights of an unsecured
creditor.

     18.  Reports. Individual accounts shall be maintained for each
          -------
participant in the Plan. Statements of account shall be given to participating
Eligible Employees at least annually, which statements shall set forth the
amounts of payroll deductions, the Purchase Price, the number of shares
purchased and the remaining cash balance, if any.

     19.  Adjustments Upon Changes in Capitalization, Dissolution, Liquidation,
          --------------------------------------------------------------------
Merger or Change of Control.
---------------------------

          (a)  Changes in Capitalization. Subject to any required action by the
               -------------------------
stockholders of the Company, the maximum number of shares of the Company's
Common Stock which shall be

                                      -8-
<PAGE>

made available for sale under the Plan, the maximum number of shares each
participant may purchase each Purchase Period (pursuant to Section 7), the
number of shares that may be added annually to the shares reserved under the
Plan (pursuant to Section 13(a)), as well as the price per share and the number
of shares of Common Stock covered by each option under the Plan which has not
yet been exercised 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 change in the number of shares of Common Stock
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration." Such adjustment shall
be made by the Administrator, whose determination in that respect shall be
final, binding and conclusive. 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 thereof
shall be made with respect to, the number or price of shares of Common Stock
subject to an option.

          (b)  Dissolution or Liquidation. In the event of the proposed
               --------------------------
dissolution or liquidation of the Company, the Offering Period then in progress
shall be shortened by setting a new Exercise Date (the "New Exercise Date"), and
shall terminate immediately prior to the consummation of such proposed
dissolution or liquidation, unless provided otherwise by the Administrator. The
New Exercise Date shall be before the date of the Company's proposed dissolution
or liquidation. The Administrator shall notify each participant in writing, at
least ten (10) business days prior to the New Exercise Date, that the Exercise
Date for the participant's option has been changed to the New Exercise Date and
that the participant's option shall be exercised automatically on the New
Exercise Date, unless prior to such date the participant has withdrawn from the
Offering Period as provided in Section 10 hereof.

          (c)  Merger or Change of Control. In the event of a merger or Change
               ---------------------------
of Control, each outstanding option shall be assumed or an equivalent option
substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation refuses to
assume or substitute for the option, any Purchase Periods then in progress shall
be shortened by setting a New Exercise Date and any Offering Periods then in
progress shall end on the New Exercise Date. The New Exercise Date shall be
before the date of the Company's proposed merger or Change of Control. The
Administrator shall notify each participant in writing, at least ten (10)
business days prior to the New Exercise Date, that the Exercise Date for the
participant's option has been changed to the New Exercise Date and that the
participant's option shall be exercised automatically on the New Exercise Date,
unless prior to such date the participant has withdrawn from the Offering Period
as provided in Section 10 hereof.

     20.  Amendment or Termination.
          ------------------------

          (a)  The Administrator may at any time and for any reason terminate
or amend the Plan. Except as otherwise provided in the Plan, no such termination
can affect options previously granted, provided that an Offering Period may be
terminated by the Administrator on any Exercise Date if the Administrator
determines that the termination of the Offering Period or the Plan is in the
best interests of the Company and its stockholders. Except as provided in
Section 19 and this Section 20 hereof, no amendment may make any change in any
option theretofore granted which adversely affects the rights of any
participant. To the extent necessary to comply with Section 423

                                      -9-
<PAGE>

of the Code (or any successor rule or provision or any other applicable law,
regulation or stock exchange rule), the Company shall obtain stockholder
approval in such a manner and to such a degree as required.

          (b)  Without stockholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Administrator shall be entitled to change the Offering Periods, limit the
frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Administrator determines in its sole discretion advisable which are
consistent with the Plan.

          (c)  In the event the Administrator determines that the ongoing
operation of the Plan may result in unfavorable financial accounting
consequences, the Board may, in its discretion and, to the extent necessary or
desirable, modify or amend the Plan to reduce or eliminate such accounting
consequence including, but not limited to:

               (i)   increasing the Purchase Price for any Offering Period
including an Offering Period underway at the time of the change in Purchase
Price;

               (ii)  shortening any Offering Period so that Offering Period
ends on a new Exercise Date, including an Offering Period underway at the time
of the Board action; and

               (iii) allocating shares.

Such modifications or amendments shall not require stockholder approval or the
consent of any Plan participants.

     21.  Notices. All notices or other communications by a participant to the
          -------
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form and manner specified by the Company at the
location, or by the person, designated by the Company for the receipt thereof.

     22.  Conditions Upon Issuance of Shares. Shares shall not be issued with
          ----------------------------------
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.

          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

                                      -10-
<PAGE>

shares if, in the opinion of counsel for the Company, such a representation is
required by any of the aforementioned applicable provisions of law.

     23.  Term of Plan. The Plan shall become effective upon the earlier to
          ------------
occur of its adoption by the Board of Directors or its approval by the
stockholders of the Company. It shall continue in effect until terminated under
Section 20 hereof.

     24.  Automatic Transfer to Low Price Offering Period. To the extent
          -----------------------------------------------
permitted by any applicable laws, regulations, or stock exchange rules if the
Fair Market Value of the Common Stock on any Exercise Date in an Offering Period
is lower than the Fair Market Value of the Common Stock on the Offering Date of
such Offering Period, then all participants in such Offering Period shall be
automatically withdrawn from such Offering Period immediately after the exercise
of their option on such Exercise Date and automatically re-enrolled in the
immediately following Offering Period.

                                      -11-
<PAGE>

                                   EXHIBIT A
                                   ---------


                               THERASENSE, INC.

                         EMPLOYEE STOCK PURCHASE PLAN

                            SUBSCRIPTION AGREEMENT



_____ Original Application                             Offering Date:___________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)


1.    ____________________ hereby elects to participate in the Therasense, Inc.
      Employee Stock Purchase Plan (the "Employee Stock Purchase Plan") and
      subscribes to purchase shares of the Company's Common Stock in accordance
      with this Subscription Agreement and the Employee Stock Purchase Plan.

2.    I hereby authorize payroll deductions from each paycheck in the amount of
      (i) ____% of my Compensation on each payday during 2001 (from 0 to 100%)
      and (ii) ____% of my Compensation each payday after 2001 (from 0 to 15%)
      during the Offering Period in accordance with the Employee Stock Purchase
      Plan. (Please note that no fractional percentages are permitted.)

3.    I understand that said payroll deductions shall be accumulated for the
      purchase of shares of Common Stock at the applicable Purchase Price
      determined in accordance with the Employee Stock Purchase Plan. I
      understand that if I do not withdraw from an Offering Period, any
      accumulated payroll deductions will be used to automatically exercise my
      option.

4.    I have received a copy of the complete Employee Stock Purchase Plan. I
      understand that my participation in the Employee Stock Purchase Plan is in
      all respects subject to the terms of the Plan. I understand that my
      ability to exercise the option under this Subscription Agreement is
      subject to stockholder approval of the Employee Stock Purchase Plan.

5.    Shares purchased for me under the Employee Stock Purchase Plan should be
      issued in the name(s) of (Eligible Employee or Eligible Employee and
      Spouse only).

6.    I understand that if I dispose of any shares received by me pursuant to
      the Plan within 2 years after the Offering Date (the first day of the
      Offering Period during which I purchased such shares) or one year after
      the Exercise Date, I will be treated for federal income tax purposes as
      having received ordinary income at the time of such disposition in an
      amount equal to the excess of the fair market value of the shares at the
      time such shares were purchased by me over the price which I paid for the
      shares. I hereby agree to notify the Company in writing within 30 days
              --------------------------------------------------------------
      after the date of any disposition of my shares and I will make adequate
      -----------------------------------------------------------------------
<PAGE>

      provision for Federal, state or other tax withholding obligations, if any,
      -------------------------------------------------------------------------
      which arise upon the disposition of the Common Stock. The Company may, but
      ----------------------------------------------------
      will not be obligated to, withhold from my compensation the amount
      necessary to meet any applicable withholding obligation including any
      withholding necessary to make available to the Company any tax deductions
      or benefits attributable to sale or early disposition of Common Stock by
      me. If I dispose of such shares at any time after the expiration of the
      2-year and 1-year holding periods, I understand that I will be treated for
      federal income tax purposes as having received income only at the time of
      such disposition, and that such income will be taxed as ordinary income
      only to the extent of an amount equal to the lesser of (1) the excess of
      the fair market value of the shares at the time of such disposition over
      the purchase price which I paid for the shares, or (2) 15% of the fair
      market value of the shares on the first day of the Offering Period. The
      remainder of the gain, if any, recognized on such disposition will be
      taxed as capital gain.

7.    I hereby agree to be bound by the terms of the Employee Stock Purchase
      Plan. The effectiveness of this Subscription Agreement is dependent upon
      my eligibility to participate in the Employee Stock Purchase Plan.

8.    In the event of my death, I hereby designate the following as my
      beneficiary(ies) to receive all payments and shares due me under the
      Employee Stock Purchase Plan:


      NAME:  (Please print)_____________________________________________________
                              (First)                    (Middle)         (Last)



      __________________________      __________________________________________
      Relationship

      __________________________      __________________________________________
      Percentage Benefit              (Address)

      NAME: (please print)
      --------------------------------------------------------------------------
                              (First)                    (Middle)         (Last)


      __________________________      __________________________________________
      Relationship

      __________________________      __________________________________________
      Percentage of Benefit           (Address)

                                      -2-
<PAGE>

         Employee's Social
         Security Number:            ____________________________________

         Employee's Address:         ____________________________________

                                     ____________________________________

                                     ____________________________________


I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.


Dated:_________________________      ____________________________________
                                     Signature of Employee


                                     ____________________________________
                                     Spouse's Signature (If beneficiary
                                     other than spouse)

                                      -3-
<PAGE>

                                   EXHIBIT B
                                   ---------

                               THERASENSE, INC.

                         EMPLOYEE STOCK PURCHASE PLAN

                             NOTICE OF WITHDRAWAL



        The undersigned participant in the Offering Period of the Therasense,
Inc. Employee Stock Purchase Plan which began on ____________, ______ (the
"Offering Date") hereby notifies the Company that he or she hereby withdraws
from the Offering Period. He or she hereby directs the Company to pay to the
undersigned as promptly as practicable all the payroll deductions credited to
his or her account with respect to such Offering Period. The undersigned
understands and agrees that his or her option for such Offering Period will be
automatically terminated. The undersigned understands further that no further
payroll deductions will be made for the purchase of shares in the current
Offering Period and the undersigned shall be eligible to participate in
succeeding Offering Periods only by delivering to the Company a new Subscription
Agreement.

                                           Name and Address of Participant:

                                           ________________________________

                                           ________________________________

                                           ________________________________


                                           Signature:

                                           ________________________________

                                           Date:___________________________