<PAGE>

                                                                    Exhibit 10.3

                          OCULEX PHARMACEUTICALS, INC.
                        2000 EMPLOYEE STOCK PURCHASE PLAN

                   ADOPTED BY BOARD OF DIRECTORS March 23, 2000

                 APPROVED BY STOCKHOLDERS                  , 2000
                                          ---------------
                             TERMINATION DATE: NONE


1.       PURPOSE.

         (a)   The purpose of the Plan is to provide a means by which
Employees of the Company and certain designated Affiliates may be given an
opportunity to purchase Shares of the Company.

         (b)   The Company, by means of the Plan, seeks to retain the
services of such Employees, to secure and retain the services of new
Employees and to provide incentives for such persons to exert maximum efforts
for the success of the Company and its Affiliates.

         (c)   The Company intends that the Rights to purchase Shares granted
under the Plan be considered options issued under an "employee stock purchase
plan," as that term is defined in Section 423(b) of the Code.

2.       DEFINITIONS.

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

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

         (c)   "CODE" means the United States Internal Revenue Code of 1986,
as amended.

         (d)   "COMMITTEE" means a Committee appointed by the Board in
accordance with subparagraph 3(c) of the Plan.

         (e)   "COMPANY" means Oculex Pharmaceuticals, Inc., a Delaware
corporation.

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

         (g)   "ELIGIBLE EMPLOYEE" means an Employee who meets the
requirements set forth in the Offering for eligibility to participate in the
Offering.

         (h)   "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or an Affiliate of the Company. Neither service as a
Director nor payment of a director's fee shall be sufficient to constitute
"employment" by the Company or the Affiliate.

                                      -1-
<PAGE>

         (i)   "EMPLOYEE STOCK PURCHASE PLAN" means a plan that grants rights
intended to be options issued under an "employee stock purchase plan," as
that term is defined in Section 423(b) of the Code.

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

         (k)   "FAIR MARKET VALUE" means the value of a security, as
determined in good faith by the Board. If the security is listed on any
established stock exchange or traded on the Nasdaq National Market or the
Nasdaq SmallCap Market, then, except as otherwise provided in the Offering,
the Fair Market Value of the security shall be the closing sales price
(rounded up where necessary to the nearest whole cent) for such security (or
the closing bid, if no sales were reported) as quoted on such exchange or
market (or the exchange or market with the greatest volume of trading in the
relevant security of the Company) on the trading day prior to the relevant
determination date, as reported in THE WALL STREET JOURNAL or such other
source as the Board deems reliable.

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

         (m)   "OFFERING" means the grant of Rights to purchase Shares under
the Plan to Eligible Employees.

         (n)   "OFFERING DATE" means a date selected by the Board for an
Offering to commence.

         (o)   "OUTSIDE DIRECTOR" means a Director who either (i) is not a
current employee of the Company or an "affiliated corporation" (within the
meaning of the Treasury regulations promulgated under Section 162(m) of the
Code), is not a former employee of the Company or an "affiliated corporation"
receiving compensation for prior services (other than benefits under a tax
qualified pension plan), was not an officer of the Company or an "affiliated
corporation" at any time, and is not currently receiving direct or indirect
remuneration from the Company or an "affiliated corporation" for services in
any capacity other than as a Director, or (ii) is otherwise considered an
"outside director" for purposes of Section 162(m) of the Code.

         (p)   "PARTICIPANT" means an Eligible Employee who holds an
outstanding Right granted pursuant to the Plan or, if applicable, such other
person who holds an outstanding Right granted under the Plan.

                                      -2-
<PAGE>

         (q)   "PLAN" means this 2000 Employee Stock Purchase Plan.

         (r)   "PURCHASE DATE" means one or more dates established by the
Board during an Offering on which Rights granted under the Plan shall be
exercised and purchases of Shares carried out in accordance with such
Offering.

         (s)   "RIGHT" means an option to purchase Shares granted pursuant to
the Plan.

         (t)   "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3 as in effect with respect to the Company at the time
discretion is being exercised regarding the Plan.

         (u)   "SECURITIES ACT" means the United States Securities Act of
1933, as amended.

         (v)   "SHARE" means a share of the common stock of the Company.

3.       ADMINISTRATION.

         (a)   The Board shall administer the Plan unless and until the Board
delegates administration to a Committee, as provided in subparagraph 3(c).
Whether or not the Board has delegated administration, the Board shall have
the final power to determine all questions of policy and expediency that may
arise in the administration of the Plan.

         (b)   The Board (or the Committee) shall have the power, subject to,
and within the limitations of, the express provisions of the Plan:

               (i)    To determine when and how Rights to purchase Shares
shall be granted and the provisions of each Offering of such Rights (which
need not be identical).

               (ii)   To designate from time to time which Affiliates of the
Company shall be eligible to participate in the Plan.

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

               (iv)   To amend the Plan as provided in paragraph 14.

               (v)    Generally, to exercise such powers and to perform such
acts as it deems necessary or expedient to promote the best interests of the
Company and its Affiliates and to carry out the intent that the Plan be treated
as an Employee Stock Purchase Plan.

         (c)   The Board may delegate administration of the Plan to a
Committee of the Board composed of two (2) or more members, all of the
members of which Committee may be, in the discretion of the Board,
Non-Employee Directors and/or Outside Directors. If administration is
delegated to a Committee, the Committee shall have, in connection with the
administration of the

                                      -3-
<PAGE>

Plan, the powers theretofore possessed by the Board, including the power to
delegate to a subcommittee of two (2) or more Outside Directors any of the
administrative powers the Committee is authorized to exercise (and references in
this Plan to the Board shall thereafter be to the Committee or such a
subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.

4.       SHARES SUBJECT TO THE PLAN.

         (a)   Subject to the provisions of paragraph 13 relating to
adjustments upon changes in securities, the Shares that may be sold pursuant
to Rights granted under the Plan shall not exceed in the aggregate Four
Hundred Thousand (400,000) Shares. If any Right granted under the Plan shall
for any reason terminate without having been exercised, the Shares not
purchased under such Right shall again become available for the Plan.

         (b)   The aggregate number of Shares that may be sold pursuant to
Rights granted under the Plan as specified in paragraph 4(a) hereof
automatically shall be increased as follows:

               (i)    For a period of ten (10) years, on the last day of each
fiscal year (the "Calculation Date"), commencing in 2000, the aggregate
number of Shares specified in paragraph 4(a) hereof shall be increased by the
greater of (1) that number of Shares equal to two percent (2%) of the Diluted
Shares Outstanding or (2) that number of Shares that have been sold pursuant
to Rights granted under the Plan in the prior 12-month period; provided,
however, that the Board of Directors may provide for a lesser increase in the
number of Shares in any year.

               (ii)   The maximum aggregate number of Shares that may be sold
pursuant to Rights granted under the Plan shall not increase by more than Five
Million (5,000,000) Shares during said 10-year period.

               (iii)  For purposes of paragraph 4(b)(i) hereof, "Diluted Shares
Outstanding" shall mean, as of any date, (1) the number of outstanding Shares on
such Calculation Date, plus (2) the number of Shares issuable upon such
Calculation Date assuming the conversion of all outstanding Preferred Stock and
convertible notes, plus (3) the additional number of dilutive Common Stock
equivalent shares outstanding as the result of any options or warrants
outstanding during the fiscal year, calculated using the treasury stock method.

         (c)   The Shares subject to the Plan may be unissued Shares or
Shares that have been bought on the open market at prevailing market prices
or otherwise.

5.       GRANT OF RIGHTS; OFFERING.

         (a)   The Board may from time to time grant or provide for the grant
of Rights to purchase Shares of the Company under the Plan to Eligible
Employees in an Offering on an Offering Date or Dates selected by the Board.
Each Offering shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate, which shall comply with

                                      -4-
<PAGE>

the requirements of Section 423(b)(5) of the Code that all Employees granted
Rights to purchase Shares under the Plan shall have the same rights and
privileges. The terms and conditions of an Offering shall be incorporated by
reference into the Plan and treated as part of the Plan. The provisions of
separate Offerings need not be identical, but each Offering shall include
(through incorporation of the provisions of this Plan by reference in the
document comprising the Offering or otherwise) the period during which the
Offering shall be effective, which period shall not exceed twenty-seven (27)
months beginning with the Offering Date, and the substance of the provisions
contained in paragraphs 6 through 9, inclusive.

         (b)   If a Participant has more than one Right outstanding under the
Plan, unless he or she otherwise indicates in agreements or notices delivered
hereunder: (i) each agreement or notice delivered by that Participant will be
deemed to apply to all of his or her Rights under the Plan, and (ii) an
earlier-granted Right (or a Right with a lower exercise price, if two Rights
have identical grant dates) will be exercised to the fullest possible extent
before a later-granted Right (or a Right with a higher exercise price if two
Rights have identical grant dates) will be exercised.

6.       ELIGIBILITY.

         (a)   Rights may be granted only to Employees of the Company or, as
the Board may designated as provided in subparagraph 3(b), to Employees of an
Affiliate.

               (i)    Except as provided in subparagraph 6(b), an Employee
shall not be eligible to be granted Rights under the Plan unless, on the
Offering Date, such Employee has been in the employ of the Company or the
Affiliate, as the case may be, for such continuous period preceding such
grant as the Board may require in the Offering, but in no event shall the
required period of continuous employment be equal to or greater than two (2)
years.

               (ii)   The Board may provide in an Offering that Employees whose
customary employment is twenty (20) hours or less per week shall not be eligible
to participate.

               (iii)  The Board may provide in an Offering that Employees whose
customary employment is for not more than five (5) months in any calendar year
shall not be eligible to participate.

               (iv)   The Board may provide in an Offering that Employees who
are highly compensated Employees within the meaning of Section 423(b)(4)(D) of
the Code shall not be eligible to participate.

         (b)   The Board may provide that each person who, during the course
of an Offering, first becomes an Eligible Employee will, on a date or dates
specified in the Offering which coincides with the day on which such person
becomes an Eligible Employee or which occurs thereafter, receive a Right
under that Offering, which Right shall thereafter be deemed to be a part of
that Offering. Such Right shall have the same characteristics as any Rights
originally granted under that Offering, as described herein, except that:

                                      -5-
<PAGE>

               (i)    the date on which such Right is granted shall be the
"Offering Date" of such Right for all purposes, including determination of
the exercise price of such Right;

               (ii)   the period of the Offering with respect to such Right
shall begin on its Offering Date and end coincident with the end of such
Offering; and

               (iii)  the Board may provide that if such person first becomes
an Eligible Employee within a specified period of time before the end of the
Offering, he or she will not receive any Right under that Offering.

         (c)   No Employee shall be eligible for the grant of any Rights
under the Plan if, immediately after any such Rights are granted, such
Employee owns stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company or of
any Affiliate. For purposes of this subparagraph 6(c), the rules of Section
424(d) of the Code shall apply in determining the stock ownership of any
Employee, and stock which such Employee may purchase under all outstanding
rights and options shall be treated as stock owned by such Employee.

         (d)   An Eligible Employee may be granted Rights under the Plan only
if such Rights, together with any other Rights granted under all Employee
Stock Purchase Plans of the Company and any Affiliates, as specified by
Section 423(b)(8) of the Code, do not permit such Eligible Employee's rights
to purchase Shares of the Company or any Affiliate to accrue at a rate which
exceeds twenty five thousand dollars ($25,000) of the fair market value of
such Shares (determined at the time such Rights are granted) for each
calendar year in which such Rights are outstanding at any time.

7.       RIGHTS; PURCHASE PRICE.

         (a)   On each Offering Date, each Eligible Employee, pursuant to an
Offering made under the Plan, shall be granted the Right to purchase up to
the number of Shares purchasable either:

               (i)    with a percentage designated by the Board not exceeding
fifteen percent (15%) of such Employee's Earnings (as defined by the Board in
each Offering) during the period which begins on the Offering Date (or such
later date as the Board determines for a particular Offering) and ends on the
date stated in the Offering, which date shall be no later than the end of the
Offering; or

               (ii)   with a maximum dollar amount designated by the Board
that, as the Board determines for a particular Offering, (1) shall be
withheld, in whole or in part, from such Employee's Earnings (as defined by
the Board in each Offering) during the period which begins on the Offering
Date (or such later date as the Board determines for a particular Offering)
and ends on the date stated in the Offering, which date shall be no later
than the end of the Offering and/or (2) shall be contributed, in whole or in
part, by such Employee during such period.

                                      -6-
<PAGE>

         (b)   The Board shall establish one or more Purchase Dates during an
Offering on which Rights granted under the Plan shall be exercised and
purchases of Shares carried out in accordance with such Offering.

         (c)   In connection with each Offering made under the Plan, the
Board may specify a maximum amount of Shares that may be purchased by any
Participant as well as a maximum aggregate amount of Shares that may be
purchased by all Participants pursuant to such Offering. In addition, in
connection with each Offering that contains more than one Purchase Date, the
Board may specify a maximum aggregate amount of Shares which may be purchased
by all Participants on any given Purchase Date under the Offering. If the
aggregate purchase of Shares upon exercise of Rights granted under the
Offering would exceed any such maximum aggregate amount, the Board shall make
a pro rata allocation of the Shares available in as nearly a uniform manner
as shall be practicable and as it shall deem to be equitable.

         (d)   The purchase price of Shares acquired pursuant to Rights
granted under the Plan shall be not less than the lesser of:

               (i)    an amount equal to eighty-five percent (85%) of the
fair market value of the Shares on the Offering Date; or

               (ii)   an amount equal to eighty-five percent (85%) of the
fair market value of the Shares on the Purchase Date.

8.       PARTICIPATION; WITHDRAWAL; TERMINATION.

         (a)   An Eligible Employee may become a Participant in the Plan
pursuant to an Offering by delivering a participation agreement to the
Company within the time specified in the Offering, in such form as the
Company provides. Each such agreement shall authorize payroll deductions of
up to the maximum percentage specified by the Board of such Employee's
Earnings during the Offering (as defined in each Offering). The payroll
deductions made for each Participant shall be credited to a bookkeeping
account for such Participant under the Plan and either may be deposited with
the general funds of the Company or may be deposited in a separate account in
the name of, and for the benefit of, such Participant with a financial
institution designated by the Company. To the extent provided in the
Offering, a Participant may reduce (including to zero) or increase such
payroll deductions. To the extent provided in the Offering, a Participant may
begin such payroll deductions after the beginning of the Offering. A
Participant may make additional payments into his or her account only if
specifically provided for in the Offering and only if the Participant has not
already had the maximum permitted amount withheld during the Offering.

         (b)   At any time during an Offering, a Participant may terminate
his or her payroll deductions under the Plan and withdraw from the Offering
by delivering to the Company a notice of withdrawal in such form as the
Company provides. Such withdrawal may be elected at any time prior to the end
of the Offering except as provided by the Board in the Offering. Upon such
withdrawal from the Offering by a Participant, the Company shall distribute
to such Participant all of his or her accumulated payroll deductions (reduced
to the extent, if any, such

                                      -7-
<PAGE>

deductions have been used to acquire Shares for the Participant) under the
Offering, without interest unless otherwise specified in the Offering, and such
Participant's interest in that Offering shall be automatically terminated. A
Participant's withdrawal from an Offering will have no effect upon such
Participant's eligibility to participate in any other Offerings under the Plan
but such Participant will be required to deliver a new participation agreement
in order to participate in subsequent Offerings under the Plan.

         (c)   Rights granted pursuant to any Offering under the Plan shall
terminate immediately upon cessation of any participating Employee's
employment with the Company or a designated Affiliate for any reason (subject
to any post-employment participation period required by law) or other lack of
eligibility. The Company shall distribute to such terminated Employee all of
his or her accumulated payroll deductions (reduced to the extent, if any,
such deductions have been used to acquire Shares for the terminated Employee)
under the Offering, without interest unless otherwise specified in the
Offering. If the accumulated payroll deductions have been deposited with the
Company's general funds, then the distribution shall be made from the general
funds of the Company, without interest. If the accumulated payroll deductions
have been deposited in a separate account with a financial institution as
provided in subparagraph 8(a), then the distribution shall be made from the
separate account, without interest unless otherwise specified in the Offering.

         (d)   Rights granted under the Plan shall not be transferable by a
Participant otherwise than by will or the laws of descent and distribution,
or by a beneficiary designation as provided in paragraph 15 and, otherwise
during his or her lifetime, shall be exercisable only by the person to whom
such Rights are granted.

9.       EXERCISE.

         (a)   On each Purchase Date specified therefor in the relevant
Offering, each Participant's accumulated payroll deductions and other
additional payments specifically provided for in the Offering (without any
increase for interest) will be applied to the purchase of Shares up to the
maximum amount of Shares permitted pursuant to the terms of the Plan and the
applicable Offering, at the purchase price specified in the Offering. No
fractional Shares shall be issued upon the exercise of Rights granted under
the Plan unless specifically provided for in the Offering.

         (b)   Unless otherwise specifically provided in the Offering, the
amount, if any, of accumulated payroll deductions remaining in any
Participant's account after the purchase of Shares that is equal to the
amount required to purchase one or more whole Shares on the final Purchase
Date of the Offering shall be distributed in full to the Participant at the
end of the Offering, without interest. If the accumulated payroll deductions
have been deposited with the Company's general funds, then the distribution
shall be made from the general funds of the Company, without interest. If the
accumulated payroll deductions have been deposited in a separate account with
a financial institution as provided in subparagraph 8(a), then the
distribution shall be made from the separate account, without interest unless
otherwise specified in the Offering.

                                      -8-
<PAGE>

         (c)   No Rights granted under the Plan may be exercised to any
extent unless the Shares to be issued upon such exercise under the Plan
(including Rights granted thereunder) are covered by an effective
registration statement pursuant to the Securities Act and the Plan is in
material compliance with all applicable state, foreign and other securities
and other laws applicable to the Plan. If on a Purchase Date in any Offering
hereunder the Plan is not so registered or in such compliance, no Rights
granted under the Plan or any Offering shall be exercised on such Purchase
Date, and the Purchase Date shall be delayed until the Plan is subject to
such an effective registration statement and such compliance, except that the
Purchase Date shall not be delayed more than twelve (12) months and the
Purchase Date shall in no event be more than twenty-seven (27) months from
the Offering Date. If, on the Purchase Date of any Offering hereunder, as
delayed to the maximum extent permissible, the Plan is not registered and in
such compliance, no Rights granted under the Plan or any Offering shall be
exercised and all payroll deductions accumulated during the Offering (reduced
to the extent, if any, such deductions have been used to acquire Shares)
shall be distributed to the Participants, without interest unless otherwise
specified in the Offering. If the accumulated payroll deductions have been
deposited with the Company's general funds, then the distribution shall be
made from the general funds of the Company, without interest. If the
accumulated payroll deductions have been deposited in a separate account with
a financial institution as provided in subparagraph 8(a), then the
distribution shall be made from the separate account, without interest unless
otherwise specified in the Offering.

10.      COVENANTS OF THE COMPANY.

         (a)   During the terms of the Rights granted under the Plan, the
Company shall ensure that the amount of Shares required to satisfy such
Rights are available.

         (b)   The Company shall seek to obtain from each federal, state,
foreign or other regulatory commission or agency having jurisdiction over the
Plan such authority as may be required to issue and sell Shares upon exercise
of the Rights granted under the Plan. If, after reasonable efforts, the
Company is unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the lawful
issuance and sale of Shares under the Plan, the Company shall be relieved
from any liability for failure to issue and sell Shares upon exercise of such
Rights unless and until such authority is obtained.

11.      USE OF PROCEEDS FROM SHARES.

         Proceeds from the sale of Shares pursuant to Rights granted under the
Plan shall constitute general funds of the Company.

12.      RIGHTS AS A STOCKHOLDER.

         A Participant shall not be deemed to be the holder of, or to have any
of the rights of a holder with respect to, Shares subject to Rights granted
under the Plan unless and until the Participant's Shares acquired upon exercise
of Rights under the Plan are recorded in the books of the Company.


                                      -9-
<PAGE>

13.      ADJUSTMENTS UPON CHANGES IN SECURITIES.

         (a)   If any change is made in the Shares subject to the Plan, or
subject to any Right, without the receipt of consideration by the Company
(through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares,
change in corporate structure or other transaction not involving the receipt
of consideration by the Company), the Plan will be appropriately adjusted in
the class(es) and maximum number of Shares subject to the Plan pursuant to
subparagraph 4(a), and the outstanding Rights will be appropriately adjusted
in the class(es), number of Shares and purchase limits of such outstanding
Rights. The Board shall make such adjustments, and its determination shall be
final, binding and conclusive. (The conversion of any convertible securities
of the Company shall not be treated as a transaction that does not involve
the receipt of consideration by the Company.)

         (b)   In the event of: (i) a dissolution, liquidation, or sale of
all or substantially all of the assets of the Company; (ii) a merger or
consolidation in which the Company is not the surviving corporation; or (iii)
a reverse merger in which the Company is the surviving corporation but the
Shares outstanding immediately preceding the merger are converted by virtue
of the merger into other property, whether in the form of securities, cash or
otherwise, then: (1) any surviving or acquiring corporation shall assume
Rights outstanding under the Plan or shall substitute similar rights
(including a right to acquire the same consideration paid to Stockholders in
the transaction described in this subparagraph 13(b)) for those outstanding
under the Plan, or (2) in the event any surviving or acquiring corporation
refuses to assume such Rights or to substitute similar rights for those
outstanding under the Plan, then, as determined by the Board in its sole
discretion such Rights may continue in full force and effect or the
Participants' accumulated payroll deductions (exclusive of any accumulated
interest which cannot be applied toward the purchase of Shares under the
terms of the Offering) may be used to purchase Shares immediately prior to
the transaction described above under the ongoing Offering and the
Participants' Rights under the ongoing Offering thereafter terminated.

14.      AMENDMENT OF THE PLAN.

         (a)   The Board at any time, and from time to time, may amend the
Plan. However, except as provided in paragraph 13 relating to adjustments
upon changes in securities and except as to minor amendments to benefit the
administration of the Plan, to take account of a change in legislation or to
obtain or maintain favorable tax, exchange control or regulatory treatment
for Participants or the Company or any Affiliate, no amendment shall be
effective unless approved by the stockholders of the Company to the extent
stockholder approval is necessary for the Plan to satisfy the requirements of
Section 423 of the Code, Rule 16b-3 under the Exchange Act and any Nasdaq or
other securities exchange listing requirements. Currently under the Code,
stockholder approval within twelve (12) months before or after the adoption
of the amendment is required where the amendment will:

               (i)    Increase the amount of Shares reserved for Rights under
the Plan;

                                      -10-
<PAGE>

               (ii)   Modify the provisions as to eligibility for
participation in the Plan to the extent such modification requires
stockholder approval in order for the Plan to obtain employee stock purchase
plan treatment under Section 423 of the Code or to comply with the
requirements of Rule 16b-3; or

               (iii)  Modify the Plan in any other way if such modification
requires stockholder approval in order for the Plan to obtain employee stock
purchase plan treatment under Section 423 of the Code or to comply with the
requirements of Rule 16b-3.

         (b)   It is expressly contemplated that the Board may amend the Plan
in any respect the Board deems necessary or advisable to provide Employees
with the maximum benefits provided or to be provided under the provisions of
the Code and the regulations promulgated thereunder relating to Employee
Stock Purchase Plans and/or to bring the Plan and/or Rights granted under it
into compliance therewith.

         (c)   Rights and obligations under any Rights granted before
amendment of the Plan shall not be impaired by any amendment of the Plan,
except with the consent of the person to whom such Rights were granted, or
except as necessary to comply with any laws or governmental regulations, or
except as necessary to ensure that the Plan and/or Rights granted under the
Plan comply with the requirements of Section 423 of the Code.

15.      DESIGNATION OF BENEFICIARY.

         (a)   A Participant may file a written designation of a beneficiary
who is to receive any Shares and/or cash, if any, from the Participant's
account under the Plan in the event of such Participant's death subsequent to
the end of an Offering but prior to delivery to the 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 during an Offering.

         (b)   The Participant may change such designation of beneficiary 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 sole 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.

16.      TERMINATION OR SUSPENSION OF THE PLAN.

         (a)   The Board in its discretion may suspend or terminate the Plan
at any time. No Rights may be granted under the Plan while the Plan is
suspended or after it is terminated.

                                      -11-
<PAGE>

         (b) Rights and obligations under any Rights granted while the Plan
is in effect shall not be impaired by suspension or termination of the Plan,
except as expressly provided in the Plan or with the consent of the person to
whom such Rights were granted, or except as necessary to comply with any laws
or governmental regulation, or except as necessary to ensure that the Plan
and/or Rights granted under the Plan comply with the requirements of Section
423 of the Code.

17.      EFFECTIVE DATE OF PLAN.

         The Plan shall become effective as determined by the Board, but no
Rights granted under the Plan shall be exercised unless and until the Plan has
been approved by the stockholders of the Company within twelve (12) months
before or after the date the Plan is adopted by the Board, which date may be
prior to the effective date set by the Board.


                                      -12-
<PAGE>

                          OCULEX PHARMACEUTICALS, INC.
                        2000 EMPLOYEE STOCK PURCHASE PLAN
                                    OFFERING

                             ADOPTED MARCH 23, 2000


1.       GRANT OF RIGHTS.

         (a) The Board of Directors ("Board") of Oculex Pharmaceuticals, inc., a
Delaware corporation (the "Company"), pursuant to the Company's 2000 Employee
Stock Purchase Plan (the "Plan"), hereby authorizes the grant of Rights to
purchase Shares of the Company to all Eligible Employees (an "Offering").
Defined terms not explicitly defined in this Offering but defined in the Plan
shall have the same definitions as in the Plan. In the event of any conflict
between the provisions of an Offering and those of the Plan (including
interpretations, amendments, rules and regulations that may from time to time be
promulgated and adopted pursuant to the Plan), the provisions of the Plan shall
control.

         (b) An "Offering Date" is the first day of an Offering. An Offering may
consist of one purchase period or may be divided into shorter purchase periods
("Purchase Periods"). A "Purchase Date" is the last day of a Purchase Period or
the Offering, as the case may be.

         (c) Except as otherwise provided, each Offering hereunder shall be
twenty-four (24) months long and shall be divided into four (4) shorter Purchase
Period approximately six (6) months in length. Except as otherwise provided,
Purchase Periods shall begin every June 1 and December 1, and Purchase dates
shall be every May 31 and November 31. Offerings shall be consecutive. A new
Offering shall start the day after the current Offering ends.

         (d) The first Offering shall begin on the effective date of the initial
public offering of the Shares and end on May 31, 2002 (the "Initial Offering");
provided, however, that the Initial Offering cannot exceed twenty-seven (27)
months. The Initial Offering will be divided into four (4) shorter Purchase
Periods of approximately six (6) months in duration, with the initial Purchase
Period ending on November 30, 2000, the second Purchase Period ending on May 31,
2001, the third Purchase Period ending on November 30, 2001 and the fourth
Purchase Period ending on May 31, 2002.

         (e) Thereafter consecutive 24-month Offerings shall begin on June 1,
2002 and on each subsequent second anniversary of the most recent Offering Date.
Each Offering after the Initial Offering shall end on the day prior to the
second anniversary of its Offering Date unless sooner terminated as provided
below.

         (f) If on the first day of a new Purchase Period during an Offering the
fair market value of the Shares is less than it was on the Offering Date for
that Offering, that day shall become the next Offering Date, and the Offering
that would otherwise have continued in effect shall immediately terminate.


                                      -1-
<PAGE>

         (g) Prior to the commencement of any Offering, the Board may change any
or all terms of such Offering and any subsequent Offerings. The granting of
Rights pursuant to each Offering hereunder shall occur on each respective
Offering Date unless, prior to such date (i) the Board (or such Committee)
determines that such Offering shall not occur, or (ii) no Shares remain
available for issuance under the Plan in connection with the Offering.

         (h) Notwithstanding any other provisions of an Offering, if the terms
of an Offering as previously established by the Board of Directors of the
Company would, as a result of a change to applicable accounting standards,
generate a charge to earnings, such Offering shall terminate effective as of the
day prior to the date such change to accounting standards would otherwise first
apply to the Offering (the "Offering Termination Date"), and such Offering
Termination Date shall be the final Purchase Date of such Offering. A subsequent
Offering shall commence on such date and on such terms as shall be provided by
the Board of Directors of the Company.

2.       ELIGIBLE EMPLOYEES.

         (a) All employees of the Company and each of its Affiliates
incorporated in the United States and in Singapore shall be granted Rights to
purchase Shares under each Offering on the Offering Date of such Offering,
provided that each such employee otherwise meets the employment requirements of
subparagraph 6(a) of the Plan and has been continuously employed for at least
ten (10) days on the Offering Date of such Offering (an "Eligible Employee");
however, the 10-day eligibility requirement shall be waived with respect to the
Initial Offering only.

         (b) Notwithstanding the foregoing, the following employees shall NOT be
Eligible Employees or be granted Rights under an Offering: (i) part-time or
seasonal employees whose customary employment is twenty (20) hours or less per
week or five (5) months or less per calendar year or (ii) 5% stockholders
(including ownership through unexercised options) described in subparagraph 6(c)
of the Plan.

         (c) Notwithstanding the foregoing, each person who first becomes an
Eligible Employee during any Offering will, on the next June 1 or December 1
during that Offering, receive a Right under such Offering, which Right shall
thereafter be deemed to be a part of the Offering. Such Right shall have the
same characteristics as any Rights originally granted under the Offering except
that:

                  (i) the date on which such Right is granted shall be the
"Offering Date" of such Right for all purposes, including determination of the
exercise price of such Right; and

                  (ii) the Offering for such Right shall begin on its Offering
Date and end coincident with the end of the ongoing Offering.


                                      -2-
<PAGE>

3.       RIGHTS.

         (a) Subject to the limitations contained herein and in the Plan, on
each Offering Date each Eligible Employee shall be granted the Right to purchase
the number of Shares purchasable with up to fifteen percent (15%) of such
Eligible Employee's Earnings paid during such Offering after the Eligible
Employee first commences participation; provided, however, that no employee may
purchase Shares on a particular Purchase Date that would result in more than
fifteen percent (15%) of such employee's Earnings in the period from the
Offering Date to such Purchase Date having been applied to purchase Shares under
all ongoing Offerings under the Plan and all other Company plans intended to
qualify as "employee stock purchase plans" under Section 423 of the Internal
Revenue Code of 1986, as amended (the "Code").

         (b) For this Offering, "Earnings" means the total compensation paid to
an employee, including all salary, wages (including amounts elected to be
deferred by the employee, that would otherwise have been paid, under any cash or
deferred arrangement established by the Company), overtime pay, commissions,
bonuses, and other remuneration paid directly to the employee, but excluding
profit sharing, the cost of employee benefits paid for by the Company, education
or tuition reimbursements, imputed income arising under any Company group
insurance or benefit program, traveling expenses, business and moving expense
reimbursements, income received in connection with stock options, contributions
made by the Company under any employee benefit plan, and similar items of
compensation.

         (c) Notwithstanding the foregoing, the maximum number of Shares an
Eligible Employee may purchase on any Purchase Date in an Offering shall be such
number of Shares as has a fair market value (determined as of the Offering Date
for such Offering) equal to (x) $25,000 multiplied by the number of calendar
years in which the Right under such Offering has been outstanding at any time,
minus (y) the fair market value of any other Shares (determined as of the
relevant Offering Date with respect to such Shares) which, for purposes of the
limitation of Section 423(b)(8) of the Code, are attributed to any of such
calendar years in which the Right is outstanding. The amount in clause (y) of
the previous sentence shall be determined in accordance with regulations
applicable under Section 423(b)(8) of the Code based on (i) the number of Shares
previously purchased with respect to such calendar years pursuant to such
Offering or any other Offering under the Plan, or pursuant to any other Company
plans intended to qualify as "employee stock purchase plans" under Section 423
of the Code, and (ii) the number of Shares subject to other Rights outstanding
on the Offering Date for such Offering pursuant to the Plan or any other such
Company plan.

         (d) The maximum aggregate number of Shares available to be purchased by
all Eligible Employees under an Offering shall be the number of Shares remaining
available under the Plan on the Offering Date. If the aggregate purchase of
Shares upon exercise of Rights granted under the Offering would exceed the
maximum aggregate number of Shares available, the Board shall make a pro rata
allocation of the Shares available in a uniform and equitable manner.


                                      -3-
<PAGE>

4.       PURCHASE PRICE.

         (a) The purchase price of the Shares under the Offering shall be the
lesser of eighty-five percent (85%) of the fair market value of the Shares on
the Offering Date or eighty-five percent (85%) of the fair market value of the
Shares on the Purchase Date, in each case rounded up to the nearest whole cent
per Share.

         (b) For the Initial Offering, the fair market value of the Shares at
the time when the Offering commences shall be the price per Share at which
Shares are first sold to the public in the Company's initial public offering as
specified in the final prospectus with respect to that offering.

5.       PARTICIPATION.

         (a) A person who is an Eligible Employee at the start of an Offering
may elect to participate in such Offering either at the beginning of the
Offering or at the start of any Purchase Period during the Offering.

         (b) A Participant who is enrolled in an Offering automatically will be
enrolled in the next Offering that commences after the current Offering ends.

         (c) An Eligible Employee shall become a Participant in an Offering by
delivering an agreement authorizing payroll deductions. Such deductions must be
in whole percentages, with a minimum percentage of one percent (1%) and a
maximum percentage of fifteen percent (15%) of Earnings. A Participant may not
make additional payments into his or her account. The agreement shall be made on
such enrollment form as the Company provides, and must be delivered to the
Company at least ten (10) days before the Offering Date, or before such later
date specified in subparagraph 2(c), in advance of the date of participation to
be effective, unless a later time for filing the enrollment form is set by the
Board for all Eligible Employees with respect to a given Offering Date. For the
Initial Offering, the time for filing an enrollment form and commencing
participation for individuals who are Eligible Employees on the Offering Date
for the Initial Offering may be after the Offering Date, as determined by the
Company and communicated to such Eligible Employees.

         (d) If the agreement authorizing payroll deductions is required to be
delivered to the Company or designated Affiliate a specified number of days
before the Offering Date to be effective, then an employee who becomes eligible
during the required delivery period shall not be considered to be an Eligible
Employee at the beginning of the Offering but may elect to participate during
the Offering as provided in subparagraph 2(c).

6. CHANGING PARTICIPATION LEVEL DURING OFFERING; WITHDRAWAL FROM OFFERING.

         (a) A Participant may not increase his or her deductions during the
course of a Purchase Period. A Participant may increase or decrease his or her
deductions prior to the beginning of a new Purchase Period or a new Offering, to
be effective at the beginning of such


                                      -4-
<PAGE>

new Purchase Period or new Offering. A Participant shall make a change in the
his or her participation level by delivering a notice to the Company in such
form as the Company provides up to ten (10) days before the start of such new
Purchase Period or new Offering (or such shorter period of time determined by
the Company and communicated to Participants).

         (b) A Participant may reduce (including to zero) his or her deductions
once (and only once) during a Purchase Period, effective as soon as
administratively practicable. A Participant shall make a change in the his or
her participation level by delivering a notice to the Company in such form as
the Company provides up to ten (10) days before the end of such Purchase Period
(or such shorter period of time determined by the Company and communicated to
Participants).

         (c) Except as otherwise specifically provided herein, a Participant may
not increase or decrease his or her participation level during the course of an
Offering.

         (d) Notwithstanding the foregoing, a Participant may withdraw from an
Offering and receive his or her accumulated payroll deductions from the Offering
(reduced to the extent, if any, such deductions have been used to acquire Shares
for the Participant on any prior Purchase Dates), without interest, or reduce
his or her participation percentage to zero (0), at any time prior to the end of
the Offering, excluding only each ten (10) day period immediately preceding a
Purchase Date (or such shorter period of time determined by the Company and
communicated to Participants) by delivering a withdrawal notice to the Company
in such form as the Company provides.

7.       PURCHASES.

         Subject to the limitations contained herein, on each Purchase Date,
each Participant's accumulated payroll deductions (without any increase for
interest) shall be applied to the purchase of whole Shares, up to the maximum
number of Shares permitted under the Plan and the Offering.

8.       NOTICES AND AGREEMENTS.

         Any notices or agreements provided for in an Offering or the Plan shall
be given in writing, in a form provided by the Company, and unless specifically
provided for in the Plan or this Offering shall be deemed effectively given upon
receipt or, in the case of notices and agreements delivered by the Company, five
(5) days after deposit in the United States mail, postage prepaid.

9.       EXERCISE CONTINGENT ON STOCKHOLDER APPROVAL.

         The Rights granted under an Offering are subject to the approval of the
Plan by the Shareholders as required for the Plan to obtain treatment as a
tax-qualified employee stock purchase plan under Section 423 of the Code.


                                      -5-
<PAGE>

10.      OFFERING SUBJECT TO PLAN.

         Each Offering is subject to all the provisions of the Plan, and its
provisions are hereby made a part of the Offering, and is further subject to all
interpretations, amendments, rules and regulations which may from time to time
be promulgated and adopted pursuant to the Plan.