Document:

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                                                                    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.

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         (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.

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         (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

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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

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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:

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               (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.

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         (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

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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.

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         (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.

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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;

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               (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.

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         (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.<PAGE>

                                                              Exhibit 10.4

                          OCULEX PHARMACEUTICALS, INC.
                           401 (k) PROFIT SHARING PLAN

                            Effective Date 01/01/1996

This document is description of the Plan. It is intended that the language be
clear and understandable. The law governing plans is very complicated.
Consequently, the language in the law and the Plan is very technical and
legal. The government requires that the Plan document and this description
contain much of the same language. If this description says something
different from what the Plan says, the Plan must be followed. A copy of the
Plan is available for inspection by contacting the Plan Administrator, whose
telephone number is on the Plan Information Page.

                        Date Prepared: February 14, 1996

<PAGE>

                          OCULEX PHARMACEUTICALS, INC.
                           401 (k) PROFIT SHARING PLAN

                                TABLE OF CONTENTS

<TABLE>
<S>    <C>                                                                              <C>
I.     PLAN INFORMATION..................................................................1

II.    ELIGIBILITY REQUIREMENTS..........................................................2

III    PLAN CONTRIBUTIONS................................................................3

                Generally................................................................3
                Effective Deferral Contributions.........................................3
                Profit Sharing Contribution..............................................3
                Additional Contributions.................................................3
                Matching Contributions...................................................4
                Compensation: ...........................................................4

IV     PLAN BENEFITS AND METHODS OF PAYMENTS.............................................5

                Distributions: ..........................................................5
                Hardship Distributions:..................................................5
                Rollover Contributions...................................................6
                Payment of Your Distribution.............................................6
                Amount and Form of Payment of Your Distribution..........................6

V.     PLAN ADMINISTRATION...............................................................8

                Plan Operation: .........................................................8
                Plan Administrator: .....................................................8
                Trustee: ................................................................8
                Investment of Plain Assets: .............................................8
                Plan Insurance: .........................................................8

VI.    LOSS OR DENIAL OF BENEFITS........................................................9

                Vesting: ................................................................9
                Break in Service: .......................................................9
                Beneficiary Designation: ................................................9

VII.   TERMINATION OF THE PLAN .........................................................10

VIII.  YOUR RIGHTS UNDER ERISA..........................................................11
</TABLE>

<PAGE>

                          OCULEX PHARMACEUTICALS, INC.
                           401 (k) PROFIT SHARING PLAN

I.       PLAN INFORMATION.

<TABLE>
<S>                                                    <C>
Plan Name:                                             Oculex Pharmaceuticals, Inc.
                                                       401 (k) Profit Sharing Plan

Employer:                                              Oculex Pharmaceuticals, Inc.

Address:                                               3180 Porter Drive, Building
                                                       Palo Alto, CA 94304

Employer Identification Number of Plan Sponsor:        77-0228667

Plan Serial Number:                                    001

Type of Plan:                                          401(k) Profit Sharing Plan

Normal Retirement Age:                                 65

Trustee(s):                                            State Street Bank & Trust Company

Business Address:                                      Two Heritage Drive
                                                       Quincy, MA 02171

Administrator and Plan Sponsor:                        Oculex Pharmaceuticals, Inc.

Business Address:                                      3180 Porter Drive, Building #1
                                                       Palo Alto, CA 94304

Phone Number:                                          (415) 813-1031

Agent for services of legal process:                   Plan Administrator (see above)

Note: Service of legal process may be made upon a
Plan Trustee or the Plan Administrator.

Ending Date of Plan's Year:                            December 31
</TABLE>

                          SUMMARY PLAN DESCRIPTION
                                   PAGE 1

<PAGE>

                          OCULEX PHARMACEUTICALS, INC.
                           401 (k) PROFIT SHARING PLAN

II.      ELIGIBILITY REQUIREMENTS.

After you start work, and have completed the required period of service for
eligibility, you will enter the Plan on the next entry date

To be eligible to become a participant in the Plan, you must, as of these
dates: January 1, April 1, July 1, October 1.

1.   have attained age 21.

2.   not be covered by a collective bargaining agreement (i.e., not in a
     union).

3.   not be a nonresident alien and not earning any U.S income

4.   All individuals, in a class of employees normally eligible, who are
     employed on January, 1, 1996, will be eligible to participate in the Plan
     immediately. All other employees, hired after January 1, 1996, will be
     required to meet the above eligibility requirements.

                          SUMMARY PLAN DESCRIPTION
                                   PAGE 2

<PAGE>

                          OCULEX PHARMACEUTICALS, INC.
                           401 (k) PROFIT SHARING PLAN

III. PLAN CONTRIBUTIONS.

Once you have satisfied the eligibility requirements, you become a
Participant automatically.

GENERALLY:

The amount of Contributions in the Plan are determined by the sum of Elective
Deferral Contributions, Profit Sharing Contributions, Matching Contributions,
Rollover Contributions, and additional contributions which may be made by the
employer during the year. These contributions are based on the profits of the
Company.

Your social security benefits are paid by the government and are in addition
to the benefits paid from the Plan. The existence of this Plan and the
contributions made to it will not affect your social security benefits in any
way.

ELECTIVE DEFERRAL CONTRIBUTIONS:

You may elect to reduce your salary and have the amount contributed to the
Trust. The amount may not be more than the lesser of:

1.   15% of your pay, or

2.   $ 9500 as adjusted to reflect annual federal cost of living increases, or

3.   such lesser amount as determined by the discrimination tests for the Plan.

You may choose to begin Elective Deferral Contributions on 1/1, 4/1, 7/1 or
10/1.

Your election will be effective with the 1st pay period following the period
in which you make the election. Your action will remain in effect until
modified or terminated by you, You can modify your election effective 1/1,
4/1, 7/1 or 10/1. You may terminate your deferrals at any time. Contact your
Plan Administrator for the deadline for making modification requests. Because
it is a Cash or Deferred Arrangement, this Plan must meet special tests which
assure that highly compensated employees do not make significantly more
Elective Deferral Contributions to the Plan than non-highly compensated
employees. If, under the test, the contributions of the highly compensated
employees exceed the amount permitted, the employer must either return some
of the Elective Deferral Contributions, or make additional contributions on
behalf of certain participants. The additional contributions will be treated
as Elective Deferred Contributions. You may not contribute more than $9500
(as adjusted under Federal Law) to all 401(k) type plans to which you belong.
You must apply to your Plan Administrator in writing for a refund of any
Elective Deferred Contribution by 03/01.

PROFIT SHARING CONTRIBUTIONS:

The Employer may decide to make additional contributions which will be
subject to the "Vesting Schedule" shown Section VI below. The Profit Sharing
Contribution will be allocated to your account in the ratio that your
compensation bears to the compensation of all participants. Forfeitures of
this contribution shall be allocated with the Profit Sharing Contribution.

ADDITIONAL CONTRIBUTIONS:

The employer may make special contributions to enable the Elective Deferral
Contributions and Matching Contributions to pass discrimination tests
required under the Internal Revenue Code. These contributions are called
Qualified Non-Elective Contributions in the Plan Document and Adoption
Agreement and will be made in the manner required for thee purpose of passing
the tests.

                         SUMMARY PLAN DESCRIPTION
                                   PAGE 3

<PAGE>

                          OCULEX PHARMACEUTICALS, INC.
                           401 (k) PROFIT SHARING PLAN

MATCHING CONTRIBUTIONS:

The Employer may make Matching Contributions to the Plan to all Participants
who have Elective Deferral Contributions. These contributions are 100% vested

This contributions will be equal to 50% of your Elective Deferral.

This contribution shall not be made in excess of $ 1000.

These contributions must meet special tests which assure that highly
compensated employees do not make significantly more Matching Contributions
to the Plan than non-highly compensated employees. If, under the test
contributions of the highly compensated employees exceed the amount
permitted, the employer must reallocate some of the Matching Contribution,
make additional contributions, distribute some of the vested contributions,
or hold the excess in the Plan and use it as part of the employer's matching
contribution for the next year.

COMPENSATION:

All your contributions are based on the amount you are paid.

Your pay or earnings are the sum of your W-2 earnings and amounts deferred
through a salary deferral agreement under an IRC 401(k) Plan, through a
Cafeteria Plan under IRC 125, a SEP under 402(h), or through an annuity under
IRC 403(b).

The amount of your compensation which will be used for plan purposes will be
that paid to you during the Plan Year beginning each January 1 and ending
each December 31.

                           SUMMARY PLAN DESCRIPTION
                                     PAGE 4

<PAGE>

                          OCULEX PHARMACEUTICALS, INC.
                           401 (k) PROFIT SHARING PLAN

IV.       PLAN BENEFITS AND METHODS OF PAYMENTS.

DISTRIBUTIONS:

You may elect to receive a distribution from the 40l(k) Plan if you:

          1.   Separate from service,

          2.   Die, or

          3.   Become disabled.

Also, you may receive a distribution of you salary deferral contributions:

          1.   If the Plan terminates and there is no successor Plan, or
          2.   If the employer or most of his working assets are sold to another
               unrelated company, or
          3.   If the employer sells its interest in a subsidiary to another
               unrelated company, or
          4.   If you have a "financial hardship". (Note: Applicable to Salary
               Deferral Contributions, as defined below only.)

When you are ready to begin receiving your benefit, contact the Plan
Administrator, Thc Plan cannot compel you to take a distribution, unless your
benefit is less than $3,500 until the year following the year in which you
reach 70 1/2. If you have not separated from service or elected your benefit
by that time, it will automatically be paid to you. You may receive it in
installments or in a lump sum.

HARDSHIP DISTRIBUTIONS:

You may receive a distribution of Elective Deferrals (and earnings thereon
accrued as of December 3l, 1988) in the event of hardship. The following is a
general explanation of the rules for such a distribution.

Contact the Plan Administrator for complete detail and application. This is a
taxable distribution.

Hardship is defined as an immediate and heavy financial need where you lack
other available resources. You will need to receive your spouse's consent to
the distribution.

The following are the only financial needs considered immediate and heavy for
which you may receive a hardship distribution:

          -    incurred or necessary medical expenses of the Employee, the
               Employee's spouse, children, or dependents;

          -    the purchase (excluding mortgage payments) of a principal
               residence for the Employee;

          -    payment of tuition for the next 12 months of post-secondary
               education for the Employee, the Employee's spouse, children or
               dependents;

          -    the prevention of eviction of the Employee from, or a foreclosure
               on the mortgage of, the Employee's principal residence.

In order to qualify for a hardship distribution, you must first obtain all
other types of distributions and all nontaxable loans permitted under all
plans maintained by the Employer.

                           SUMMARY PLAN DESCRIPTION
                                   PAGE 5

<PAGE>

                          OCULEX PHARMACEUTICALS, INC.
                           401 (k) PROFIT SHARING PLAN

Your right to make Elective Deferrals will be suspended for twelve months
after the receipt of the hardship distribution.

The amount you may receive may not be in excess of the amount of an immediate
and heavy financial need, or the amount of your Elective Deferrals.

The amount of Elective Deferrals you will be allowed to make for the taxable
year immediately following the taxable year of the hardship distribution, may
not be in excess of the applicable limit under Section 402(g) of the Code
(the $7,000 limit adjusted for cost of living) for that taxable year, less
the amount of your Elective Deferrals made in the taxable year of the
hardship distribution.

The determination of the existence of financial hardship, and the amount
required to be distributed to meet the need created by the hardship, shall be
made in a nondiscriminatory manner by the Plan Administrator according to the
written rules and regulations of the Plan.

To apply for a financial hardship distribution you must:

         1.       Complete an application for the Plan Administrator,

         2.       Provide proof to the Administrator of expenditures showing the
                  amount of the withdrawal needed, and

         3.       Provide proof to the Administrator, such as bank statements,
                  showing that there are no other financial resources available
                  to meet the expense.

ROLLOVER CONTRIBUTIONS:

You may apply to the Plan Administrator asking the Plan to receive a
contribution of a distribution to you from another qualified plan. If the
Plan accepts this money, it is called a Rollover Contribution. Under rules
established by the Plan Administrator, the Plan will not accept such a
contribution if the distribution to you was from a Defined Benefit Plan, or
other Plan to which IRC 417 spousal rights apply. Contact the Plan
Administrator about the rules and process for making this type of
contribution.

PAYMENT OF YOUR DISTRIBUTION:

Once you become eligible for a distribution and elect to receive it, the
Trustee will be instructed to pay it out.

The amount of this distribution will be the vested portion of your plan money.

It cannot be specified exactly how long it will take tar you to receive this
distribution, for two reasons:

         1.       The Plan Administrator must await the next quarterly valuation
                  of the trust to establish the value of your account.

         2.       After you leave, the Plan Administrator must calculate your
                  exact years of vesting, prepare a final statement of you
                  account, prepare an IRS form showing how it is taxable, and
                  have a check prepared.

Of course, your employer is interested in paying benefits when due, but must
do so in an orderly course of business. For this mason, it is anticipated
that rely distribution u/ill lake a reasonable length of time.

                          SUMMARY PLAN DESCRIPTION
                                   PAGE 6

<PAGE>

                          OCULEX PHARMACEUTICALS, INC.
                           401 (k) PROFIT SHARING PLAN

AMOUNT AND FORM OF PAYMENT OF YOUR DISTRIBUTION:

The amount of your benefit in this Plan depends on the amount in your
account, and the extent to which you are vested in that amount.

The benefit farms available are: 1. Lump Sum.  2 Installment Payments

You can defer paying taxes on all or a portion of your distribution by
requesting that the Plan transfer it directly to Individual Retirement
Account or a Qualified Defined Contribution Plan. This is called a direct
rollover.

If you elect a DIRECT ROLLOVER from this plan to your new plan or IRA, no
money will be withheld or payment of federal income taxes. At the time of
your distribution you will want to be sure to speak with the Plan
Administrator to how you can accomplish a DIRECT ROLLOVER.

If you do not elect to make a DIRECT ROLLOVER to a Qualified Defined
Contribution Plan or IRA, the Employer will be required to withhold 20% of
any monies you receive to pay federal income taxes.

You may still receive your money and then decide to roll it over, as long as
you do so within 60 days of the date of payment. But the withholding will
have already occurred at the time of distribution and you will pay taxes on
this amount as well as any other amount you do not rollover. If you decide to
rollover the whole distribution including amount that was withheld, you must
provide other money to replace the amount withheld. The withholding will be
credited against any income tax you owe for the year, and when you file your
income tax return, you may get a refund of the amount withheld.

If you are ever going to receive a distribution, be sure to review carefully
the Notice of Taxation of Distribution that will receive from your Plan
Administrator.

If you keep all or a part of your distribution, then you must show the
payment as income on your tax return for that You or your tax preparer should
calculate the tax when you prepare the return.

If you have applied for and received a Hardship Distribution, the amount must
be reported by, you as income in the it was received. A Hardship Distribution
will always be given to you as a lump sum.

If you are under 59 1/2 when you receive a distribution, you will be liable
for an early distribution tax unless you roll amount into an Individual
Retirement Account.

Plan Administrator cannot give you legal or tax advice. You should rely on
your own personal tax advisor when time comes to decide on how you wish to
take distribution and to determine the tax consequences of receiving a
distribution.

                           SUMMARY PLAN DESCRIPTION
                                     PAGE 7

<PAGE>

                         OCULEX PHARMACEUTICALS, INC.
                         401 (k) PROFIT SHARING PLAN

V.      PLAN ADMINISTRATION.

PLAN OPERATION:

Your employer makes contributions to the Plan. These contribution can never
go back to the employer. The Trustee, each year, tells the Plan Administrator
what the trust is worth and the Plan Administrator then must divide the funds
among all of the plan participants accounts. The Plan Administrator may issue
a statement of his account to each participant. The Plan Administrator must
give the value of your account to you if you request it in writing.

PLAN ADMINISTRATOR:

The plan is administered by the Plan Administrator, whose name is typed on
the Plan Information page. Your employer has appointed the Plan Administrator
and can change the Plan Administrator at any time. The Plan Administrator has
the sole and ultimate responsibility to interpret Plan provisions and
determine Plan Benefits, and responsible for such things as keeping plan
records and reporting to government agencies.

TRUSTEES:

Your plan is funded by a Trust. The name of the Trustee is typed on the Plan
Information page. Your employer has appointed the Trustee and can change the
Trustee at any time. The job of the Trustee is to safe keep the fund of money
in the Plan and to invest the money.

INVESTMENT OF PLAN ASSETS:

In your Plan each Participant has an individual Investment Account. This
account will hold the Salary Deferral Contributions, additional
contributions, Profit Sharing Contributions, and Matching Contribution
allocable to the Participant. Rollover Contributions will also be included.

You must direct the Trustee as to how your assets are to be invested. The
employer and Plan Administrator will select a series of mutual funds or
pooled investment accounts for you to invest in. You may direct the
investment of your account assets into any investment permitted by regulation
and the policy of the Plan. Note that the Plan Administrator, the Employer,
and the Trustee will not provide investment advice. You are totally
responsible for investment selection which you make. Your Employer is not
responsible for the financial gains or losses to your account which result
from your directions.

PLAN INSURANCE:

You may have heard that the government provides insurance to pay pension
benefits if a Plan fails. This Plan is not eligible for such insurance
because contributions are made right into your own account. If the Plan
terminates or your employer goes out of business, you will be entitled to
receive all the benefits in your account at the time. This amount could be
more or less than the total amount of contributions made to your account
depending on your investment expenses.

                           SUMMARY PLAN DESCRIPTION
                                     PAGE 8

<PAGE>

                         OCULEX PHARMACEUTICALS, INC.
                         401 (k) PROFIT SHARING PLAN

VI.     LOSS OR DENIAL OF BENEFITS.

You should be aware that some actions by you or the employer may result in a
1oss or denial of benefits from your Plan.

Also, because a 401(k) Plan must pass special nondiscrimination tests,
sometimes your contributions will have to be returned to you as excess
contributions which the Plan cannot continue to hold. If the Plan returns
contributions, you will have to pay income taxes on them.

VESTING:

Your plan does not have a vesting schedule. You are immediately and 100%
vested in your benefits once you begin participation.

If you have reached Normal Retirement Age, if you die, if you are totally and
permanently disabled, or if the Plan is terminated then your balance of these
funds becomes 100% vested. This means that you or your beneficiaries get the
entire value of your accounts. You are always 100% vested in your Elective
Deferral contributions to this Plan.

BREAK IN SERVICES:

Once you have become a participant in the Plan, you will remain a participant
until a year (which ends on December 31 ) passes, during which you did not
work 500 hours. This is called a 1 year break in service. If you return
before having 5 consecutive 1 year breaks in service, then you continue to
participate in the Plan as if you had never left the employer.

Other circumstances which may cause either a reduction or denial of benefits:

A.   If the employer amends the Plan to reduce future contributions, then your
     account will not grow at the same rate.

B    If the employer terminates the Plan, then your account will have no further
     contributions.

C.   If your salary decreases, then your allocation of the contribution will be
     less.

D.   If the Plan investments do poorly, then your account balance will decrease.

BENEFICIARY DESIGNATION:

If you die before benefits are distributed to you, the Trustee will pay out
the whole amount to the beneficiary you have set forth on the beneficiary
designation form on file with the Employer.

Make sure you keep this form current.

                           SUMMARY PLAN DESCRIPTION
                                     PAGE 9

<PAGE>

                         OCULEX PHARMACEUTICALS, INC.
                         401 (k) PROFIT SHARING PLAN

VII.    TERMINATION OF THE PLAN.

While the Plan is intended to be permanent, the employer reserves the right
to amend or terminate the Plan. If the Plan is terminated, you will
immediately become 100% vested in all your benefits in the Plan.

                           SUMMARY PLAN DESCRIPTION
                                     PAGE 10

<PAGE>

                         OCULEX PHARMACEUTICALS, INC.
                         401 (k) PROFIT SHARING PLAN

VIII.   YOUR RIGHTS UNDER ERISA.

As a participant in this plan you are entitled to certain rights and
protections under the Employees Retirement Income Security Act of 1974
(ERISA). ERISA provides that all plan participants shall be entitled to
examine, without charge, at the Plan Administrators office and at other
specified location, all plan documents, including insurance contracts,
collective bargaining agreements and copies of all documents filed by the
Plan with the U.S. Department of Labor, such as detailed annual reports and
Plan descriptions.

Obtain copies of all plan documents and other plan information upon written
request to the Plan Administrator. The Administrator may make a reasonable
charge for the copies.

Receive a summary of the Plans annual financial report. The Plan
Administrator is required by law to furnish each participant with a copy of
this summary annual report.

In addition to creating rights for plan participants, ERISA imposes duties
upon the people who are responsible for the operation of the employee benefit
plan. The people who operate your plan, called Fiduciaries of the Plan, have
a duty to do so prudently and in the interest of you and other plan
participants and beneficiaries. No one, including your employer, your union,
or any ether person, may fire you or otherwise discriminate against you in
any way to prevent you from obtaining a pension benefit or exercising your
rights under ERISA.

If your claim for a pension benefit is denied in whole or in part you must
receive a written explanation of the reason for the denial. You have the
right to have the Plan reviewed and reconsider your claim. Under ERISA, there
are steps you can take to enforce the above rights. For instance, if you
request materials from the Plan and do not receive them within 30 days, you
may file suit in a federal court. In such a case, the court may require the
Plan Administrator to provide the materials and pay you up to $100 a day
until you receive the materials, unless the materials were not sent because
of reasons beyond the control of the Administrator.

If you have a claim for benefits which is denied or ignored, in whole or in
part, you may file suit in a state or federal court. If it should happen that
the Plan fiduciaries misuse the Plans money, or if you are discriminated
against for asserting your rights, you may seek assistance from the U.S.
Department of Labor, or you may file suit in Federal Court. The Court will
decide who pays Court Cost and Legal Fees. If you are successful the Court
may order the person you have sued to pay these costs and fees. If you lose,
the Court may order you to pay these costs and fees, for example, if it finds
your claim is frivolous.

The Plan Administrator has the sole and ultimate authority to define and
interpret plan language, terms and documentation.

If you have any questions about your plan, you should contact the Plan
Administrator.

If you have any questions about this statement or about your rights under
ERISA, you should contact the nearest area office of the U.S. Labor
Management Services Administration, Department of Labor.

                           SUMMARY PLAN DESCRIPTION
                                     PAGE 11

<PAGE>

             PROTOTYPE 401(k) PROFIT SHARING PLAN ADOPTION AGREEMENT

The undersigned employer(s) - OCULEX PHARMACEUTICALS, INC. hereinafter referred
to as the "Employer", hereby adopts the WELLS FARGO BANK NA Prototype Standard
401(k) profit Sharing Plan and Trust.

1.       EMPLOYER TAX IDENTIFICATION NUMBER  77-0228667
                                            ---------------------------------

2.       The EFFECTIVE DATE of the Plan shall be  JANUARY 1, 1996
                                                 ----------------------------

3.       The EFFECTIVE DATE of this amendment
                                              -------------------------------

4.       The ANNIVERSARY DATE of the Plan shall be   DECEMBER 31
                                                   --------------------------

5.       The ENTRY DATE(S) of the Plan:

         5.1      JANUARY 1                      shall be the first Entry Date.
                  -------------------------------

         5.2      APRIL 1                        shall be the second Entry Date.
                  -------------------------------

         5.3      JULY 1                         shall be the third Entry Date.
                  -------------------------------

         5.4      OCTOBER 1                      shall be the fourth Entry Date.
                  -------------------------------

                  (The Entry Date(s) may not postpone entry into the Plan later
                  than the earlier of (a) the first day of the Plan Year
                  beginning after the date on which an Employee satisfies the
                  requirements of Section 6 below, or b) the date 6 months
                  after the date such requirements were satisfied).

6.       ELIGIBILITY REQUIREMENTS - Each Employee will be eligible to
         participate in this Plan in accordance with Section 5 of this Adoption
         Agreement, except the following:

         6.1      ___X___ Employees who have not attained the age of ___21___
                  (cannot exceed 21).

         6.2      _______ Employees who have not completed __________ Year(s)
                  of Service (cannot exceed 1 year unless the Plan provides a
                  nonforfeitable right to 100% of the Participant's account
                  balance derived form Employer contributions after not more
                  than 2 years of Service in which case up to 2 years is
                  permissible. If the Year(s) of Service selected is or
                  includes a fractional year, an Employee will not be required
                  to complete any specified Hours of Service to receive credit
                  for such fractional year.)

         6.3      ___X___ Employees included in a unit of Employees covered by
                  a collective bargaining agreement between the Employer and
                  Employee Representatives, if retirement benefits were the
                  subject of good faith bargaining. For this purpose, the term
                  "Employee Representatives" does not include any organization
                  more than half of whose members are employees who are owners,
                  officers, or executives of the Employer.

         6.4      ___X___ Employees who are nonresident aliens and who earn no
                  earned income from the Employer which constitutes income from
                  sources within the United States.

         The term "Employee" shall include all Employees of this Employer and
         any other employer aggregated with this Employer under Internal Revenue
         Code Section 414(b), (c) or (m) and individuals required to be
         considered Employees or any such Employer under code Section 414(n) or
         under regulations under code Section 414(o).

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<PAGE>

7.       COMPENSATION shall mean all of each Participant's:

         7.1      ___X___ W-2 earnings.

         7.2      _______ Compensation (as that term is defined in Section
                  415(c)(3) of the Code)

         Which is actually paid to the Participant during:

         7.3      ___X___ The Plan Year.

         7.4      _______ the taxable year ending with or within the Plan Year.

         7.5      _______ The Limitation year ending with or within the Plan
                  Year.

         Compensation:

         7.6      ___X___ Shall include

         7.7      _______ Shall not include

         Employer contributions made pursuant to a salary reduction agreement
         which are not includible in the gross income of the employee under
         Sections 125, 402(a)(8), 402(h) or 403(b) of the code.

8.       NORMAL RETIREMENT AGE shall mean:

         The later of age ___65___ (not to exceed age 65) or the _____________
         (not exceed 5th) anniversary of the first day of the first Plan Year
         in which the Participant commenced participation in the Plan.

9.       VESTING

         If the participant terminates prior to Normal Retirement Age he shall
         receive a percentage of his Accrued Benefit according to the vesting
         schedule checked below:

         9.1      ___X___ One hundred Percent schedule.

                  100% at all times

         9.2      _______ Twenty Percent Schedule

                  20% after the second Covered Year of Service and 20% for each
                  additional Covered year of Service.

         9.3      _______ Variable Schedule

                  Based on Covered Years of Service after Year:

                  1________                 4________(at least 50%)

                  2________(at least 20%)   5________(at least 80%)

                  3________(at least 40%)   6 100%

         9.4      ________ Three Year Vesting Schedule

                  100% vested after the completion of three (3) Covered Years of
                  Service.

Page 2

<PAGE>

                  If the vesting schedule under the Plan(s) shifts in or out of
                  the above vesting schedule for any Plan Year because of the
                  Plan's top heavy status, such shift is an amendment to the
                  vesting schedule and the election in Section 1.4 of the Plan
                  applies.

         Notwithstanding the above, the Accrued Benefit shall become fully
         vested at Normal Retirement Age.

10.      CONTRIBUTIONS

         10.1     _______ EMPLOYER CONTRIBUTIONS The Employer may make
                  contributions to the Plan without regard to current or
                  accumulated earnings and profits for the taxable year or
                  years ending with or within the Plan year.

                  Unless this option is elected, the Plan will be subject to the
                  requirement that employer contributions be made out of current
                  or accumulated net profits. Accordingly, all employer
                  contributions under the Plan, including Employer discretionary
                  contributions, Elective Deferrals and qualified Non-elective
                  Contributions, will be limited to the Employer's net profits.

         10.2     _______ ELECTIVE DEFERRALS - A Participant may elect to have
                  his or her Compensation reduced by the following percentage
                  or amount per pay period, or for a specified pay period or
                  periods, as designated in writing to the Plan Administrator:

                  a.      ___X___ An amount not in excess of ___15___ percent
                          of a Participant's Compensation.

                  b.      _______ an amount not in excess of $________ of a
                          participant's Compensation.

                  No participant shall be permitted to have Elective Deferrals
                  made under this plan during any calendar year in excess of
                  $7,000, multiplied by the Adjustment Factor.

                  c.       A participant may elect to commence Elective
                           Deferrals as of 1/1, 4/1, 7/1 OR 10/1 (ENTER AT LEAST
                           ONE DATE OR PERIOD DURING A CALENDAR YEAR). Such
                           election shall become effective as of the 1ST (ENTER
                           NUMBER) pay period following the pay period during
                           which the Participant's election to commence Elective
                           Deferrals was made, or as soon as administratively
                           feasible thereafter.

                  d.       A Participant's election to have Elective Deferrals
                           made pursuant to a salary reduction agreement shall
                           remain in effect until modified or terminated. A
                           Participant may modify the amount of Elective
                           Deferral as 1/1, 4/1, 7/1 OR 10/1 (ENTER AT LEAST ONE
                           DATE OR PERIOD DURING A CALENDAR YEAR). Such election
                           shall become effective as of the 1ST (ENTER NUMBER)
                           pay period following the pay period during which the
                           participant's election to modify Elective Deferrals
                           was made, or as soon as administratively feasible
                           thereafter.

                  e.       _________ A participant may base Elective Deferrals
                           on cash bonuses that, at the Participant's
                           election, may be contributed of the plan or received
                           by the Participant in cash.

                  f.       A Participant shall be afforded a reasonable period
                           to elect to defer amounts described above. Such
                           election shall become effective as of the _________
                           (ENTER NUMBER) pay period following the pay period
                           during which the Participant's election to make such
                           Elective Deferrals was made, or as soon as
                           administratively feasible thereafter.

                  g.       A participant shall designate the amount and
                           frequency of his or her Elective Deferrals in the
                           form and manner specified by the Plan Administrator.

Page 3

<PAGE>

         10.3     _______ EMPLOYER PROFIT SHARING CONTRIBUTIONS. In addition
                  to Elective Deferrals, Qualified Non-elective Contributions,
                  Qualified Matching Contributions and Matching Contributions,
                  the employer may make additional contributions under the Plan
                  which shall be made solely at the discretion of the employer
                  but not in excess of 15% of Participant Compensation, up to
                  the maximum amount specified in Section 5.5 of the Plan.

                  Employer contributions under this Section 10.3 shall be
                  allocated in proportion to compensation and shall vest in
                  accordance with the vesting schedule specified in Section 9
                  of this Adoption Agreement. Forfeitures of Profit Sharing
                  Contributions shall be:

                  a.       ___X___ added to and allocate in the same manner as
                           the Contribution.

                  b.       _______ applied to reduce the Contribution.

11.      QUALIFIED NON-ELECTIVE CONTRIBUTIONS

         11.1     _______ The employer will make Qualified Non-elective
                  Contributions to the plan. If the Employer does make
                  Qualified Non-elective Contributions to the plan, then the
                  amount of such contributions to the plan of each Plan Year
                  shall be:

                  a.       _______ percent (not to exceed 15 percent) of the
                           Compensation of all Participants eligible to share
                           in the allocation.

                  b.       _______ percent of the net profits, but in no event
                           more than $______________________for any Plan year.

                  c.       ___X___ An amount as determined by the Employer.
                           The amount of the special Qualified Non-elective
                           Contributions allocated under Section 11.2 below
                           will be the amount needed to meet the Average
                           Actual Deferral Percentage test stated in
                           Section 11.4 of the Plan.

         11.2     Allocations of Qualified Non-elective Contributions to each
                  Participant's account shall be made to the accounts of:

                  a.       _______ All participants.

                  b.       ___X___ Only Non-highly compensated Participants.

         11.3     Allocations of Qualified Non-elective Contributions to each
                  Participant's account shall be made (elect one):

                  a.       _______ In the ratio in which each Participant's
                           Compensation for the Plan year bears to the total
                           Compensation of all participants for such Plan Year.

                  b.       In the ratio in which each Participant's Compensation
                           not in excess of $_________ for the Plan year bears
                           to the total Compensation of all participants not in
                           excess of $__________ for such Plan Year.

12.      QUALIFIED MATCHING CONTRIBUTIONS

         12.1     _______ The Employer will make Qualified Matching
                  Contributions to the plan on behalf of participants who make
                  Elective Deferrals.

Page 4

<PAGE>

         12.2     _______ the employer will make Qualified Matching
                  Contributions to the plan on behalf of:

                  a.       _______ All participants who make Elective
                           Deferrals.

                  b.       _______ All participants who are Non-highly
                           Compensated Employees and who make Elective
                           Deferrals.

         12.3     The amount of such Qualified Matching Contributions and on
                  behalf of each participant as specified in Section 12.2 of
                  this adoption agreement shall be:

                  a.       _______ percent of the Elective Deferral made for
                           each Plan Year.

                  b.       _______ the sum of _______ percent of the portion
                           of the Elective Deferral which does not exceed
                           _______ percent of the portion of the Participant's
                           Compensation, plus _______ percent of the portion
                           of the Elective Deferral which exceeds _______
                           percent of the Participant's Compensation, but does
                           not exceed _______ percent of the
                           Participant's Compensation.

                  c.       _______ The Employer shall not match Elective
                           Deferrals as provided in a or b above in excess of
                           $_________ or in excess of _______ percent
                           of the Participant's Compensation.

         12.4     Qualified Matching contributions and Qualified Non-Elective
                  contributions may be taken into account as Elective Deferrals
                  for purposes of calculating the Actual Deferral percentages.
                  In determining Elective Deferrals for the purpose of the ADP
                  test, the Employer shall include:

                  a.       _______ Qualified Matching Contributions.

                  b.       ___X___ Qualified Non-Elective Contributions.

                  under this Plan or any other Plan of the Employer as provided
                  by regulations under the Code.

         12.5     The amount of qualified Matching Contributions made under
                  Section 12.1 of this plan and taken into account as Elective
                  Deferrals for purposes of calculating the Actual Deferral
                  percentage, subject to such other requirements as may be
                  prescribed by the Secretary of the Treasury, shall be:

                  a.       _______ All such Qualified Matching Contributions.

                  b.       _______ Such Qualified Matching Contributions that
                           are needed to meet the Actual Deferral Percentage
                           test.

         12.6     The amount of Qualified Non-Elective Contributions made under
                  Section 11 of this plan and taken into account as Elective
                  Deferrals for purposes of calculating the Actual Deferral
                  Percentages, subject to such other requirements as may be
                  prescribed by the Secretary of the Treasury, shall be:

                  a.       _______ All such qualified Non-elective
                           Contributions.

                  b.       ___X___ Such Qualified Non-elective Contributions
                           that are needed to meet the Actual Deferral
                           Percentage test stated in Section 11.4(F) of the
                           plan.

Page 5

<PAGE>

13.      MATCHING CONTRIBUTIONS

         13.1     _______ The Employer will make Matching Contributions to
                  the plan on behalf of Participants who make Elective
                  Deferrals. The Employer will make matching Contributions
                  to the plan on behalf of:

                  a.       _______ All participants who make Elective
                           Deferrals.

                  b.       ___X___ All Participants who are Non-highly
                           Compensated Employees and who make Elective
                           Deferrals.

         13.2     Matching contributions will be:

                  a.       _______ Nonforfeitable when made.

                  b.       ___X___ Subject to the vesting schedule applicable
                           to employer contributions, other than Elective
                           Deferrals and Qualified Non-elective Contributions
                           under the plan.

         13.3     The amount of such Matching Contributions made on behalf of
                  each Participant shall be:

                  a.       ___X___ ___50___ percent of the Elective Deferral
                           made of Each Plan Year.

                  b.       _______ the sum of _______ percent  of the portion
                           of the Elective Deferral which does not exceed
                           _______ percent of the Participant's Compensation
                           plus _______ percent of the portion of the
                           Elective Deferral which exceeds _______ percent of
                           the Participant's Compensation, but does not exceed
                           _______ percent of the Participant's Compensation.

                  c.       ___X___ The Employer shall not match Elective
                           Deferrals as provided in a or b above in excess of
                           $1,000 or in excess of __N/A__ percent of the
                           Participant's Compensation.

                  The level of contributions chosen by the Employer is subject
                  to both the Section 401(m)(2) discrimination test and the
                  section 415 limitations.

14.      SPECIAL DISTRIBUTIONS

         Elective Deferrals, qualified matching Contributions, Qualified
         Non-elective Contributions and income allocable to such amounts shall
         be distributable upon separation from service, death, or disability, as
         defined in the underlying plan document, and, in addition:

         14.1     ___X___ Termination of the plan without the establishment of
                  another defined contribution plan.

         14.2     ___X___ As soon as administratively feasible after the
                  disposition by the Employer to an unrelated corporation of
                  substantially all of the assets (within the meaning of Code
                  Section 409(d)(2)) used in a trade or business of the
                  Employer if the Employer continues to maintain this Plan
                  after such disposition, but only with respect to Employees
                  who continue employment with the corporation acquiring such
                  assets.

         14.3     ___X___ A soon as administratively feasible after the
                  disposition by the Employer to an unrelated entity of the
                  Employer's interest in a subsidiary (within the meaning of
                  Code Section 409(d)(3)) if the Employer continues to
                  maintain this plan, but only with respect to Employees who
                  continue employment with such subsidiary.

Page 6

<PAGE>

         14.4     ___X___ Upon the hardship of the Participant, to the extent
                  provided for in Section 11.6(C) of the Plan, and subject to
                  applicable regulations prescribed by the Secretary of the
                  Treasury.

15.      CLAIMS FOR EXCESS ELECTIVE DEFERRALS - Participants who claim Excess
         Elective Deferrals for the preceding calendar year must submit their
         claims in writing to the plan administrator by MARCH 1 (SPECIFY A DATE
         BETWEEN MARCH 1 AND APRIL 15).

         Excess Elective Deferrals that are distributed after April 16 are not
         only includible in the participant's gross income in the taxable year
         when made, but are also includible in the Participant's gross income
         again in the year when distributed.

         The Plan permits distributions of Excess Contributions and Excess
         Aggregate Contributions on or before the last day of the Plan Year
         after the Plan Year in which such excess amounts arose. Distribution of
         such amounts, or other corrective action, is required under Sections
         401(k)(3) and 401(m)(6) of the Code if the plan is to maintain its
         tax-qualified status. However, if such excess amounts, plus any income
         and minus any loss allocable thereto, are distributed more than 2 1/2
         months after the last day of the Plan Year in which such excess amounts
         arose, then section 4979 of the Code imposes a ten (10) percent excise
         tax on the Employer maintaining the plan with respect to such amounts.

         The Employer may choose to limit its acceptance of claims to a date
         that is no later than March.

16.      AVERAGE CONTRIBUTION PERCENTAGE

         16.1     In computing the Average Contribution percentage, the employer
                  shall take into account, and include as Contribution
                  Percentage Amounts:

                  a.       _______ Elective Deferrals.

                  b.       ___X___ Qualified Non-elective Contributions under
                           this plan or any employer, as provided by
                           regulations.

         16.2     The amount of Qualified Non-elective Contributions that are
                  made under Section 11.4(i) of this plan and taken into account
                  as Contribution Percentage Amounts for purposes of calculating
                  the Average Contribution Percentage, subject to such other
                  requirements as may be prescribed by Secretary of the
                  Treasury, shall be:

                  a.       _______ All such Qualified Non-elective
                           Contributions.

                  b.       ___X___ Such qualified Non-elective Contributions
                           that are needed to meet the Average Contribution
                           Percentage test stated in Section 11.8 of the plan.

         16.3     The amount of Elective Deferrals made under Section 11.4(B) of
                  this plan and taken into account as Contribution Percentage
                  Amounts for purposes of calculating the Average Contribution
                  Percentage, subject to such other requirements as may be
                  prescribed by the Secretary of the Treasury, shall be:

                  a.       _______ All such Elective Deferrals.

                  b.       ___X___ Such Elective Deferrals that are needed to
                           meet the Average Contribution Percentage test
                           stated in Section 11.8 of the Plan.

17.      FORFEITURES. Forfeitures of Matching Contributions shall be: (Required
         if the Employer elects to make Matching Contributions in this Adoption
         Agreement)

Page 7

<PAGE>

         17.1     ___X___ Applied in the current year of forfeiture to reduce
                  employer contributions.

         17.2     _______ Allocated in the current year of forfeiture, after
                  all other forfeitures under the plan, to each participant's
                  Matching Contribution account in the ratio which each
                  Participant's Compensation for the Plan Year bears to the
                  total Compensation of all participants for such Plan Year.
                  Such forfeitures will not be allocated to the account of
                  any Highly Compensated Employee.

18.      INDIVIDUAL INVESTMENT ACCOUNTS.

         Individual Investment Accounts for Elective Deferrals, Qualified
         Non-elective Contributions, Qualified Matching Contributions and
         Matching Contributions:

         18.1     _______ Will not be used.

         18.2     _______ Will be used as follows:

                  Each participant will have a separate Individual Investment
                  Account which will contain the amount allocated to the
                  Participant Account. Each Participant will have the power to
                  direct the investment with respect to his Individual
                  Investment Account subject to such rules as the Administrator
                  and the Trustee may deem necessary. Gains and losses of the
                  Account shall accrue to such Account only.

         Individual Investment Accounts for Employer Contributions under
         Section 10.3 of this Adoption Agreement.

         18.3     _______ Will not be used.

         18.4     _______ Will be used as follows:

                  Each participant will have a separate Individual Investment
                  Account which will contain the amount allocated to the
                  Participant Account. Each Participant will have the power to
                  direct the investment with respect to his Individual
                  Investment Account subject to such rules as the Administrator
                  and the Trustee may deem necessary. Gains and losses of the
                  Account shall accrue to such Account only.

19.      LIMITATION YEAR shall mean each 12 consecutive month period ending on
         DECEMBER 31.

         NOTE: A written resolution must be adopted by the Employer if the
         Limitation Year is other than the calendar year.

20.      LIMITATION OF BENEFITS - If the Employer maintains or has ever,
         maintained, in addition to this Plan, one or more plans which are
         either qualified defined benefit plans or qualified defined
         contribution plans other than paired plan:
                         Plan #01 - Adoption Agreement 001
              Plan #02 - Adoption Agreement 001, 002, 003, 004, 006, 007
         in which any Participant in this Plan is (or was) a participant or
         could possibly become a participant, the Employer must complete this
         Section. The Employer must also complete this Section if it maintain a
         welfare benefit fund, as defined in Code Section 419(e), or an
         individual medical account, as defined in Code Section 415(1)(2) under
         which amounts are treated as annual additions with respect to any
         Participant in this Plan.

         If the Participant is covered under another qualified defined
         contribution plan maintained by the Employer, other than a master or
         prototype plan:

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<PAGE>

         20.1     _______ The provisions of Section 5.5(B) of the Plan will
                  apply as if the other plan were a master or prototype plan.

         20.2     _______ The total Annual Additions will be limited to the
                  maximum permissible amount and excess amounts will be
                  reduced in a manner that precludes Employer discretion, as
                  follows:

                  ____________________________________________________________
                  ____________________________________________________________
                  ____________________________________________________________

         20.3     _______ If the Participant is or has ever been a Participant
                  in a defined benefit plan maintained by the Employer, the
                  benefits under the plans will be limited as follows (this
                  method must preclude Employer discretion):

                  ____________________________________________________________
                  ____________________________________________________________
                  ____________________________________________________________

21.      MINIMUM CONTRIBUTION FOR TOP HEAVY PLAN - If the Employer maintains
         one or more defined benefit plans in which a Participant participates
         in addition to this Plan and does not maintain any other defined
         contribution plans in which a Participant participates, the minimum
         benefit requirement applicable to Top Heavy Plans shall be met under
         this Plan.

         If the minimum benefit requirement is met under this Plan, the
         additional minimum benefit:

         21.1     _______ Shall be provided.

         21.2     _______ Shall not be provided.

22.      YEAR OF SERVICE shall mean

         22.1     ___X___ 1000 Hours of Service

         22.2     _______ _______Hours of Service (less than 1000 Hours of
                  Service).

         In the event the plan would otherwise fail the nondiscrimination tests
         of Code Sections 401(a)(26) or 410(b), for purposes of allocating
         Employer Profit Sharing Contribution the above Hour of Service
         requirement shall be changed for that Year to a 500 hour requirement.

23. PREDECESSOR EMPLOYER - Service with the following Predecessor Employer(s):

______________________________________________________________________________

         shall be counted for purposes of:

         23.1     _______ eligibility Years of Service

         23.2     _______ vesting (Covered Years of Service)

24. ADMINISTRATOR shall mean:

         24.1     ___X___ The Employer

         24.2     _______ Individuals specified in Section 28.

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<PAGE>

25.      OTHER BENEFITS

         25.1     _______ Early Retirement Benefit (fully vested): Subject to
                  the Joint and Survivor Annuity requirements, any Participant
                  may retire and receive the entire amount in his Participant
                  Account provided he has attained age ____ and has at least
                  ____ Covered Years of Service.

26.      ACTUARIAL EQUIVALENT

         For purposes of establishing present value to compute the top heavy
         ratio, benefit payments shall be discounted only for mortality and
         interest based on the following:

         26.1     _______ Pre-Retirement Interest Rate _______%

         26.2     _______ Post-Retirement Mortality Table: ___________ with
                  __________% interest.

27.      PARTICIPATING AFFILIATES - Each Affiliate (i.e., each member of a
         controlled group of corporations, commonly controlled group of
         business, or an affiliated service group within the meaning of Section
         414 of the Code) must adopt this Plan as a Participating Affiliate.
         (Attach additional signature pages if there is more than one
         Participating Affiliate.)

         Participating Affiliate Name _____________ Employer I.D. _____________

         Address ___________________________________ Taxable Year _____________

         By __________________ Title __________________ Date __________________

28.      ADMINISTRATOR - If Option 24.2 is elected the following named
         individuals shall serve as Plan Administrator.

         Signature by the Administrator (if other than the Employer) is in
         acknowledgment of acceptance of appointment.

         Administrator(s) Name(s):           Signature(s):

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

         Optional Provision - To be elected if Plan Section 10.6(E) is not
         elected.

29.      Appointment of Trustee - Signature by the Trustee is in
         acknowledgment of acceptance of appointment.

         Trustee(s) Name(s):                 Signature(s):
         State Street Bank & Trust Company
         ----------------------------------  ---------------------------------
         ----------------------------------  ---------------------------------
         ----------------------------------  ---------------------------------

         Optional Provision - To be elected if Plan Section 10.7 is elected.

30.      Insurance Trustee - Signature by the Trustee is in acknowledgment of
         acceptance of appointment.

         Insurance Trustee Name:                            Signature:

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

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<PAGE>

31.      ADOPTION AGREEMENT USAGE

         This Adoption Agreement is only to be used with basic Defined
         Contribution Plan document 02.

         An Employer who has even maintained or who later adopts any plan
         (including a welfare benefit fund, as defined in Section 419(e) of the
         Code, which provides post-retirement medical benefits allocated to
         separate accounts for key employees as defined in Code Section
         419A(d)(3), or an individual medical account, as defined in Section
         415(1)(2) of the code) in addition to this Plan other than paired
         plans:
                             Plan #01 - Adoption Agreement 001
                Plan #02 - Adoption Agreement 001, 002, 003, 004, 006, 007
         may not rely on the opinion letter issued by the National Office of the
         Internal Revenue Service as evidence that this Plan is qualified under
         Section 401 of the Internal Revenue Code. If the Employer who adopts or
         maintains multiple plans other than the paid plans identified above
         wishes to obtain reliance that its plans are qualified, application for
         a determination letter should be made to the appropriate Key District
         Director of Internal Revenue.

         Failure of the Employer to properly complete this Adoption Agreement
         may result in the disqualification of this Plan.

32.      SPONSORING ORGANIZATION - The Sponsoring organization or its authorized
         representative identified below will inform the adopting employer of
         any amendments made to the Plan or of the discontinuance or abandonment
         of the Plan.

         The organization sponsoring this Plan is Wells Fargo Bank NA

         The authorized representative of the sponsoring organization is Wells
         Fargo Bank NA:
                  111 Sutter Street, 16th Floor,
                  San Francisco, CA  94163, number (415) 396-6290

         The Employer represents that the legal and tax aspects of this Plan and
         Trust have been duly considered and passed upon by its attorney and/or
         tax advisor who has determined that if is suitable and has been
         properly completed and adopted.

         ADOPTION FOR THE EMPLOYER

         Date of Execution ___________ ________________________ Title _________
                                       Signature

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