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                                                                    EXHIBIT 10.3

                          REVENUE ADJUSTMENT AGREEMENT

                                 BY AND BETWEEN

                         INTERMUNE PHARMACEUTICALS, INC.

                                       AND

                              CONNETICS CORPORATION

                                  JUNE 27, 2000

                          REVENUE ADJUSTMENT AGREEMENT

         THIS REVENUE ADJUSTMENT AGREEMENT (the "Agreement") is made effective
and entered into as of June 27, 2000 (the "Effective Date") by and between
CONNETICS CORPORATION, a Delaware corporation, with its principal place of
business at 3400 West Bayshore Road, Palo Alto, CA 94303 ("Connetics"), and
INTERMUNE PHARMACEUTICALS, INC., a Delaware corporation, with its principal
place of business at 1710 Gilbreth Road, Suite 301, Burlingame, CA 94010
("InterMune"). Connetics and InterMune may be referred to herein as a "Party" or
collectively as the "Parties."

                                    RECITALS

A.       WHEREAS, the Parties have entered into that certain Collaboration
         Agreement, dated as of April 27, 1999 (the "Collaboration Agreement"),
         by which, among other provisions, InterMune became obligated to pay to
         Connetics: (i) a $500,000 milestone payment on or before March 31,
         2001; and (ii) a $1.5 million milestone payment on or before March 31,
         2002;
B.       WHEREAS, The Parties have entered into that certain Assignment and
         Option Agreement, dated as of June 23, 2000 (the "Assignment
         Agreement"), pursuant to which, among other provisions: (i) Connetics
         assigned to InterMune Connetics' entire right, title and interest in,
         to and under that certain License Agreement for Interferon Gamma by and
         between Connetics and Genentech, Inc. ("Genentech") dated May 5, 1998,
         as amended (the "Genentech License") and (ii) InterMune affirmed its
         obligation to pay to Connetics the $1.5 million milestone payment
         pursuant to the Collaboration Agreement;
C.       WHEREAS, the Parties have entered into that certain Transition
         Agreement, dated as of April 27, 1999 (the "Transition Agreement"), by
         which, among other provisions, the parties have set forth certain
         rights and obligations with respect to the revenue from the sales of
         Actimmune-Registered Trademark-; and
D. WHEREAS, by this Amendment, the Parties now desire to delete Section 5.2 of
the Assignment Agreement and terminate the Collaboration Agreement and
Transition Agreement (each generically, an "Original Agreement," and
collectively, the "Original Agreements") as set forth herein in order to adjust
the Parties' rights and obligations with respect to the revenue from the sales
of Actimmune.

         NOW, THEREFORE, in consideration of the foregoing recitals and mutual
promises hereinafter set forth, the Parties agree as follows:

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1.       DEFINITIONS.

         1.1 ACTIMMUNE. "Actimmune" means the filled and finished form of the
protein encoded by the interferon gamma-1b gene, and sold and distributed under
the trademark ACTIMMUNE-Registered Trademark-, which is owned by Genentech and
licensed to Connetics and its sublicenses under the Genentech License.

         1.2 ACTIMMUNE GROSS MARGIN. "Actimmune Gross Margin" means Actimmune
Net Sales less all applicable Product Cost of Actimmune Units sold, GNE
Royalties, third party royalties payable pursuant to Section 8.4 of the
Genentech License and CORD Distribution Costs.

         1.3 ACTIMMUNE GROSS SALES. "Actimmune Gross Sales" means all revenue
recorded in connection with shipments of Actimmune Units multiplied by the price
per Actimmune Unit, including revenue with associated accounts receivable for
accounting purposes for specific shipment/invoicing transactions with respect to
Actimmune Units, and assumes that invoices are prepared immediately following
notification of shipment of goods, and are dated the same day of shipment.

         1.4 ACTIMMUNE NET SALES. "Actimmune Net Sales" means Actimmune Gross
Sales less adjustments for the following: product returns, Medicare and Medicaid
reimbursements, chargebacks, rebates, state payments, other contractual
reimbursement, and cash discounts.

         1.5 ACTIMMUNE UNITS. "Actimmune Units" means vials of ACTIMMUNE(R) that
are sold as commercial product by InterMune in an arm's length transaction.

         1.6 CORD DISTRIBUTION COSTS. "CORD Distribution Costs" means the actual
payment by InterMune to CORD Logistics, Inc., for distribution services for
sales of Actimmune.

         1.7 GNE ROYALTIES. "GNE Royalties" means the amount of royalties
payable to Genentech, Inc. pursuant to section 8.3 of the Genentech License for
Actimmune Net Sales.

         1.8 PRODUCT MANAGEMENT COSTS. "Product Management Costs" means
InterMune's actual costs to manage sales of Actimmune Units, including all
expenses and services related to sales of such Actimmune Units, such as
maintenance of safety databases, etc., tracked on a regular basis and properly
accounted for.

2.       AMENDMENT OF ASSIGNMENT AGREEMENT.

         Section 5.2 of the Assignment Agreement is deleted in its entirety.
Section 5.1 of the Assignment Agreement is unaffected by this Agreement.

3.       TERMINATION OF COLLABORATION AGREEMENT.

         The Collaboration Agreement is terminated in its entirety.

4.       TERMINATION OF TRANSITION AGREEMENT.

         The Transition Agreement is terminated in its entirety.

5.       INTERMUNE PAYMENTS TO CONNETICS.

         5.1 JUNE 30, 2000. On June 30, 2000, InterMune shall be obligated to
pay and shall pay $5,218,172 to Connetics; provided however, InterMune shall be
credited $484,305 toward this payment.

         5.2 MARCH 31, 2001. On March 31, 2001, InterMune shall pay $942,478 to
Connetics.

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6.       REVENUE RECOGNITION.

         For the fiscal quarter beginning April 1 and ending June 30, 2000, and
without regard to the Effective Date of this Agreement, InterMune shall be
entitled to book and recognize Actimmune Net Sales for sales of all Actimmune
Units and the Actimmune Gross Margin. Effective July 1, 2000, InterMune shall be
entitled to book and recognize all revenues, sales, margins, etc. from the sales
of Actimmune.

7.       OBLIGATIONS TO THIRD PARTIES AND INDEMNIFICATION OF CONNETICS.

         InterMune hereby affirms its obligations pursuant to Section 2.5 of the
Transition Agreement and Section 5.4 of the Assignment Agreement to remit to
Genentech any accounts payable on Actimmune Net Sales for third-party royalties
and for GNE Royalties, all as required by the Genentech License. InterMune
affirms its covenant and agreement to remit the full amount of such royalties
directly to Genentech or the applicable third party, and shall indemnify
Connetics against any action by Genentech or such third party to collect
royalties for Actimmune Unit Sales made after April 27, 1999.

8.       CONFIDENTIALITY.

         8.1 CONFIDENTIAL INFORMATION OBLIGATIONS. As used herein, "Confidential
Information" means all information that a Party discloses to the other Party
under this Agreement or had disclosed to the other Party under the Original
Agreement, provided that Confidential Information shall not include such
information excluded under Section 8.2. Except to the extent expressly
authorized by this Agreement or otherwise agreed in writing by the Parties, each
Party agrees that, during the term of this Agreement and for five (5) years
after the expiration or termination of this Agreement, it shall keep
confidential and shall not publish or otherwise disclose and shall not use for
any purpose other than as provided for in this Agreement any Confidential
Information furnished to it by the other Party pursuant to this Agreement, the
Collaboration Agreement and/or the Transition Agreement.

         8.2 EXCEPTIONS. The obligations set forth in Section 8.1 shall not
apply to any Information that the receiving Party can demonstrate by competent
evidence:

                  (a) was already known to the receiving Party, other than under
an obligation of confidentiality, at the time of disclosure by the other Party;

                  (b) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the receiving Party by the
other Party;

                  (c) became generally available to the public or otherwise part
of the public domain after its disclosure and other than through any act or
omission of the receiving Party in breach of this Agreement;

                  (d) was disclosed to the receiving Party, other than under an
obligation of confidentiality to a third party, by a third party who had no
obligation to the disclosing Party not to disclose such information to others;
or

                  (e) is independently developed by the receiving Party without
using any of the other Party's Confidential Information.

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         8.3 TERMS OF THE AGREEMENT. The Parties agree that the terms of this
Agreement will be considered Confidential Information of both Parties.
Notwithstanding the foregoing, a Party shall have the right to disclose the
material financial terms of the Agreement to any bona fide potential investor,
investment banker, acquirer, merger partner or other potential financial
partner, subject to such Party obtaining the agreement of such party receiving
such Confidential Information to keep such information confidential.

         8.4 PERMITTED DISCLOSURE. Notwithstanding the limitations in this
Section 8, each Party may disclose Confidential Information belonging to the
other Party (or otherwise subject to this Section 8), to the extent such
disclosure is reasonably necessary in the following instances, but solely for
the limited purpose of such necessity:

                  (a)      filing or prosecuting patents;

                  (b)      regulatory and tax filings;

                  (c)      prosecuting or defending litigation;

                  (d) complying with applicable governmental laws or regulations
or valid court orders; and

                  (e) disclosure to a party's affiliates, licensees,
sublicensees, employees, consultants or agents who agree to be bound by similar
terms of confidentiality and non-use at least equivalent in scope to those set
forth in this Article 8.

         Notwithstanding the foregoing, in the event a Party is required to make
a disclosure of the other Party's Confidential Information pursuant to this
Section 8.4, it will give reasonable advance notice to the other Party of such
disclosure and endeavor in good faith to secure confidential treatment of such
information. In any event, the Parties agree to take all reasonable action to
avoid disclosure of Confidential Information hereunder. Further, the Parties
agree to consult with one another on the provisions of this Agreement to be
redacted in any filings made by a Party with the United States Securities and
Exchange Commission or as otherwise required by law.

9.       TERMINATION

         9.1 TERM OF AGREEMENT. The term of this Agreement shall expire upon
InterMune's payment of the full amounts to Connetics pursuant to Sections 5.1
and 5.2.

         9.2 TERMINATION FOR MATERIAL BREACH. If either Party shall default in a
material manner with respect to any material provision of this Agreement and the
other Party shall have given the defaulting Party written notice of such
default, the defaulting Party shall have thirty (30) days to cure such default.
If such default is not cured within such thirty (30) day period, the
non-defaulting Party shall have the right, upon notice to the defaulting Party
and without prejudice to any other rights the non-defaulting Party may have, to
terminate this Agreement unless the defaulting Party is in the process of
attempting in good faith to remedy such default, in which case, the thirty (30)
day cure period shall be extended by an additional thirty (30) days.

         9.3 SURVIVING RIGHTS. The obligations and rights of the Parties under
Sections 7, 8, 9, 10.3, 10.6, 10.7, and 10.11 shall survive any termination or
expiration of the Agreement.

         9.4 ACCRUED RIGHTS AND SURVIVING OBLIGATIONS. The termination or
expiration of the Agreement for any reason shall be without prejudice to any
rights which shall have accrued to the benefit of either Party prior to such
termination or expiration, including any damages arising from any breach

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hereunder. Such termination or expiration shall not relieve either Party from
obligations, which are expressly indicated to survive termination or expiration
of the Agreement.

         9.5 BANKRUPTCY RIGHTS. In the event that this Agreement is terminated
or rejected by a Party or its receiver or trustee under applicable bankruptcy
laws due to such Party's bankruptcy, then all rights and licenses granted under
or pursuant to this Agreement by such Party to the other Party are, and shall
otherwise be deemed to be, for purposes of Section 365(n) of the Bankruptcy Code
and any similar law or regulation in any other country, licenses of rights to
"intellectual property" as defined under Section 101(52) of the Bankruptcy Code.

10.      MISCELLANEOUS.

         10.1 WAIVER. No waiver by either Party hereto of any breach or default
of any of the covenants or agreements herein set forth shall be deemed a waiver
as to any subsequent or similar breach or default.

        10.2 ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the Parties hereto and their permitted successors and assigns;
provided, however, that InterMune may not assign any of its rights and
obligations hereunder without the prior written consent of Connetics, except as
incident to the merger, consolidation, reorganization or acquisition of stock or
assets affecting substantially all of the assets or actual voting control of
InterMune. Any assignment or attempted assignment by InterMune in violation of
the terms of this Section 10.2 shall be null and void and of no legal effect.

         10.3 NOTICES. Any notice or other communication required or permitted
to be given to either Party hereto shall be in writing and shall be deemed to
have been properly given and to be effective on the date of delivery if
delivered in person or by facsimile or five (5) days after mailing by registered
or certified mail, postage paid, to the other Party at the following address:

         In the case of InterMune:               InterMune Pharmaceuticals, Inc.
                                                 1710 Gilbreth Road,
                                                 Suite 301
                                                 Burlingame, CA 94010
                                                 Fax: (650) 259-0774
                                                 Attention:  General Counsel

         with a copy to:                         Cooley Godward LLP
                                                 Five Palo Alto Square
                                                 3000 El Camino Real
                                                 Palo Alto, CA 94306
                                                 Fax: (650) 849-7400
                                                 Attention:  Barclay Kamb

         In the case of Connetics:               Connetics Corporation
                                                 3400 West Bayshore Road
                                                 Palo Alto, CA 94303
                                                 Fax: (650) 843-2899
                                                 Attention:  General Counsel

Either Party may change its address for communications by a notice to the other

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Party in accordance with this Section.

         10.4 HEADINGS. The headings of the several sections are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.

         10.5 AMENDMENT. No amendment or modification hereof shall be valid or
binding upon the Parties unless made in writing and signed by both Parties.

         10.6 GOVERNING LAW. This Agreement shall be governed exclusively by the
laws of the State of California as such law applies to contracts entered into
between and to be performed by California residents entirely in the State of
California.

         10.7 DISPUTE RESOLUTION.

                (a) In the event of any controversy or claim arising out of,
relating to or in connection with any provision of this Agreement, or the rights
or obligations of the Parties hereunder, the Parties shall try to settle their
differences amicably between themselves by referring the disputed matter to the
President of InterMune and the Chief Executive Officer of Connetics for
discussion and resolution. Either Party may initiate such informal dispute
resolution by sending written notice of the dispute to the other Party, and
within ten (10) days after such notice such representatives of the Parties shall
meet for attempted resolution by good faith negotiations. If such personnel are
unable to resolve such dispute within thirty (30) days of initiating such
negotiations, either Party may seek to have such dispute resolved by binding
arbitration under this Section 10.7. The arbitration shall be held in Palo Alto,
California according to the Commercial Arbitration Rules of the American
Arbitration Association (the "Rules"). The arbitration will be conducted by a
panel of three (3) arbitrators who are knowledgeable in the subject matter that
is at issue in the dispute, are not affiliated directly or indirectly with
either Party, and are selected by mutual agreement of the Parties. Failing such
agreement, the arbitrators shall be selected appointed as provided in the Rules.
During the arbitration, the Parties shall have such discovery rights as the
arbitrators may allow, consistent with the discovery permitted by the Federal
Code of Civil Procedure. In conducting the arbitration, the arbitrators shall
apply the rules of evidence applicable in California, and shall be able to
decree any and all relief of an equitable nature, including but not limited to
such relief as a temporary restraining order, a preliminary injunction, a
permanent injunction, or replevin of property, as well as specific performance.
The arbitrators shall also be able to award direct and indirect damages, but
shall not award any other form of damage (e.g., punitive or exemplary damages).
The reasonable fees and expenses, of the arbitrators, along with the reasonable
legal fees and expenses of the prevailing Party (including all expert witness
fees and expenses), the fees and expenses of a court reporter, and any expenses
for a hearing room, shall be paid as follows: If the arbitrators rule in favor
of one Party on all disputed issues in the arbitration, the losing Party shall
pay one hundred percent (100%) of such fees and expenses; if the arbitrators
rule in favor of one Party on some issues and the other Party on other issues,
the arbitrators shall issue with the rulings a written determination as to how
such fees and expenses shall be allocated between the Parties. The arbitrators
shall allocate fees and expenses in a way that bears a reasonable relationship
to the outcome of the arbitration, with the Party prevailing on more issues, or
on issues of greater value or gravity, recovering a relatively larger share of
its legal fees and expenses. The decision of the arbitrators shall be final and
may be entered, sued on or enforced by the Party in whose favor it runs in any
court of competent jurisdiction at the option of such Party. Whether a claim,
dispute or other matter in question would be barred by the applicable statute of
limitations, which statute of limitations also shall apply to any claim or

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disputes subject to arbitration under this Section, shall be determined by
binding arbitration pursuant to this Section.

                  (b) Notwithstanding anything to the contrary in this
Agreement, either Party may (without resort to arbitration) seek immediate
injunctive or other interim relief from any court of competent jurisdiction with
respect to any breach of Section 9 hereof, or as necessary to enforce and
prevent infringement of the patent rights, copyright rights, trademarks, trade
secrets, or other intellectual property rights owned or controlled by a Party or
its Affiliates.

         10.8 FORCE MAJEURE. Any delays in performance by any Party under this
Agreement shall not be considered a breach of this Agreement if and to the
extent caused by occurrences beyond the reasonable control of the Party
affected, including but not limited to acts of God, embargoes, governmental
restrictions, fire, flood, explosion, riots, wars, civil disorder, rebellion or
sabotage. The Party suffering such occurrence shall immediately notify the other
Party as soon as practicable, and any time for performance hereunder shall be
extended by the actual time of delay caused by the occurrence.

         10.9 SEVERABILITY. If any part of this Agreement is declared invalid by
any legally governing authority having jurisdiction over either Party, then such
declaration shall not affect the remainder of the Agreement and the Parties
shall revise the invalidated part in a manner that will render such provision
valid without impairing the Parties' original interest.

        10.10 CUMULATIVE RIGHTS. The rights, powers and remedies hereunder shall
be in addition to, and not in limitation of, all rights, powers and remedies
provided at law or in equity, or under any other agreement between the Parties.
All of such rights, powers and remedies shall be cumulative, and may be
exercised successively or cumulatively.

         10.11 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which shall
constitute together the same document.

         10.12 ENTIRE AGREEMENT. This Agreement embodies the entire
understanding of the Parties with respect to the subject matter hereof and
supersedes and terminates all previous communications, representations or
understandings, either oral or written, between the Parties relating to the
subject matter hereof.

         IN WITNESS WHEREOF, both InterMune and Connetics have executed this
Agreement, as of the day and year first written above.

  INTERMUNE PHARMACEUTICALS, INC.                      CONNETICS CORPORATION

By: /s/ W. SCOTT HARKONEN                   By: /s/ THOMAS G. WIGGANS
   -----------------------------                --------------------------------
Print Name: W. Scott Harkonen               Print Name: Thomas G. Wiggans
            --------------------                        ------------------------
Title: Pres. & CEO                          Title: Pres. & CEO
       -------------------------                   -----------------------------

                                       7<PAGE>   1

                                                                    EXHIBIT 10.8

                                 METRICOM, INC.

                        1991 EMPLOYEE STOCK PURCHASE PLAN

                            Adopted November 12, 1991
                             Approved March 19, 1992
                            Amended January 24, 1996
                             Approved April 24, 1996
                             Amended April 29, 1998
                             Approved June 26, 1998
                             Amended August 16, 1999
                            Approved October 15, 1999
                            Amended February 18, 2000
                             Approved June 26, 2000

1. PURPOSE.

        (a) The purpose of the Plan is to provide a means by which employees of
Metricom, Inc., a California corporation (the "Company"), and its Affiliates, as
defined in subparagraph 1(b), which are designated as provided in subparagraph
2(b), may be given an opportunity to purchase stock of the Company.

        (b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company, as those terms are defined
in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended (the "Code").

        (c) The Company, by means of the Plan, seeks to retain the services of
its 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.

        (d) The Company intends that the rights to purchase stock of the Company
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. ADMINISTRATION.

        (a) The Plan shall be administered by the Board of Directors (the
"Board") of the Company unless and until the Board delegates administration to a
Committee, as provided in subparagraph 2(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 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 stock shall be
granted and the provisions of each offering of such rights (which need not be
identical).

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                (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 13.

                (v) Generally, to exercise such powers and to perform such acts
as the Board deems necessary or expedient to promote the best interests of the
Company.

        (c) The Board may delegate administration of the Plan to a Committee
composed of not fewer than two (2) members of the Board (the "Committee"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, 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.

3. SHARES SUBJECT TO THE PLAN.

        Subject to the provisions of paragraph 12 relating to adjustments upon
changes in stock, the stock that may be sold pursuant to rights granted under
the Plan shall not exceed in the aggregate one million fifty thousand
(1,050,000) shares of the Company's common stock (the "Common Stock"). If any
right granted under the Plan shall for any reason terminate without having been
exercised, the Common Stock not purchased under such right shall again become
available for the Plan.

4. GRANT OF RIGHTS; OFFERING.

        The Board or the Committee may from time to time grant or provide for
the grant of rights to purchase Common Stock of the Company under the Plan to
eligible employees (an "Offering") on a date or dates (the "Offering Date(s)")
selected by the Board or the Committee. Each Offering shall be in such form and
shall contain such terms and conditions as the Board or the Committee shall deem
appropriate. If an employee has more than one right outstanding under the Plan,
unless he or she otherwise indicates in agreements or notices delivered
hereunder: (1) each agreement or notice delivered by that employee will be
deemed to apply to all of his or her rights under the Plan, and (2) a right with
a lower exercise price (or an earlier-granted right, if two rights have
identical exercise prices), will be exercised to the fullest possible extent
before a right with a higher exercise price (or a later-granted right, if two
rights have identical exercise prices) will be exercised. 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
Offering or otherwise) the substance of the provisions contained in paragraphs 5
through 8, inclusive.

                                       2.
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5. ELIGIBILITY.

        (a) Rights may be granted only to employees of the Company or, as the
Board or the Committee may designate as provided in subparagraph 2(b), to
employees of any Affiliate of the Company. Except as provided in subparagraph
5(b), an employee of the Company or any Affiliate 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 any Affiliate for such continuous period
preceding such grant as the Board or the Committee may require, but in no event
shall the required period of continuous employment be equal to or greater than
two (2) years. In addition, unless otherwise determined by the Board or the
Committee, no employee of the Company or any Affiliate shall be eligible to be
granted rights under the Plan, unless, on the Offering Date, such employee's
customary employment with the Company or such Affiliate is at least twenty (20)
hours per week and at least five (5) months per calendar year.

        (b) The Board or the Committee may provide that, each person who, during
the course of an Offering, first becomes an eligible employee of the Company or
designated Affiliate will, on a date or dates specified in the Offering which
coincides with the day on which such person becomes an eligible employee or
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:

                        (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 Offering Period for such right shall begin on
its Offering Date and end coincident with the end of such Offering; and

                        (iii) the Board or the Committee 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 employees 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 5(d), 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 "employee stock
purchase plans" of the Company and any Affiliates, as specified by Section
423(b)(8) of the Code, do not permit such employee's rights to purchase stock of
the Company or any Affiliate to accrue at a rate which exceeds twenty-five
thousand dollars ($25,000) of fair market value of such stock (determined at the
time such rights are granted) for each calendar year in which such rights are
outstanding at any time.

                                       3.
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6. 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 the number
of shares of Common Stock of the Company purchasable with up to fifteen percent
(15%) of such employee's Earnings (as defined in Section 7(a)) 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 more than twenty-seven (27) months after the Offering Date (the
"Offering Period"). In connection with each Offering made under this Plan, the
Board or the Committee shall specify a maximum number of shares which may be
purchased by any employee as well as a maximum aggregate number of shares which
may be purchased by all eligible employees pursuant to such Offering. In
addition, in connection with each such Offering, the Board or the Committee may
specify a maximum aggregate number of shares which may be purchased by all
eligible employees on any given Exercise Date (as defined in the Offering) under
the Offering. If the aggregate purchase of shares upon exercise of rights
granted under the Offering would exceed any such maximum aggregate number, the
Board or the Committee 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.

        (b) The purchase price of stock 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 stock on the Offering Date; or

                (ii) an amount equal to eight-five percent (85%) of the fair
market value of the stock on the Exercise Date.

7. PARTICIPATION; WITHDRAWAL; TERMINATION.

        (a) An eligible employee may become a participant in an Offering by
delivering an 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 fifteen percent (15%) of such employee's
Earnings during the Offering Period. "Earnings" is defined as base salary or
wages and including amounts elected to be deferred by the employee (that would
otherwise have been paid) under the Company's 401(k) Plan, and may include or
exclude bonuses, commissions, overtime pay, incentive pay, profit sharing, other
remuneration paid directly to the employee, the cost of employee benefits paid
for by the Company or an Affiliate, education or tuition reimbursements, imputed
income arising under any group insurance or benefit program, traveling expenses,
business and moving expense reimbursements, income received in connection with
stock options, contributions made by the Company or an Affiliate under any
employee benefit plan, and similar items of compensation as determined by the
Board or Committee and as set forth in the Offering. The payroll deductions made
for each participant shall be credited to an account for such participant under
the Plan and shall be deposited with the general funds of the Company. At any
time during the Offering a participant may terminate his or her payroll
deductions. A participant may reduce, increase or begin such payroll deductions
after the beginning of any Offering Period only as provided for in the Offering.
A participant

                                       4.
<PAGE>   5

may not make any additional payments into his or her account unless expressly
provided for in the Offering.

        (b) If a participant terminates his or her payroll deductions, such
participant may 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 Period. 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 deductions have been used to acquire stock for the
participant) under the Offering without interest, 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 other 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 an Affiliate, for any reason, and 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 stock for the terminated employee), without interest; provided, however,
that subject to the right of the terminated employee to withdraw from the
Offering and receive a distribution of his or her accumulated payroll deductions
(as described in paragraph 7(b)), in the event that a participating employee's
employment ceases within three (3) months of the next Exercise Date, the balance
in such employee's account shall be held and used to purchase Common Stock for
the terminated employee on such Exercise Date pursuant to the terms of the
ongoing Offering.

        (d) Rights granted under the Plan shall not be transferable, and shall
be exercisable only by the person to whom such rights are granted.

8. EXERCISE.

        (a) On each exercise date, as defined in the relevant Offering (an
"Exercise Date"), each participant's accumulated payroll deductions (without any
increase for interest) will be applied to the purchase of whole shares of stock
of the Company, up to the maximum number 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. The amount, if any, of accumulated payroll
deductions remaining in each participant's account after the purchase of shares
which is less than the amount required to purchase one share of stock on the
final Exercise Date of an Offering shall be held in each such participant's
account for the purchase of shares under the next Offering under the Plan,
unless such participant withdraws from such next Offering, as provided in
subparagraph 7(b), or is no longer eligible to be granted rights under the Plan,
as provided in paragraph 5, in which case such amount shall be distributed to
such participant after such Exercise Date, without interest. The amount, if any,
of accumulated payroll deductions remaining in any participant's account after
the purchase of shares which is equal to the amount required to purchase whole
shares of stock

                                       5.
<PAGE>   6

on the final Exercise Date of an Offering shall be distributed in full to such
participant after such Exercise Date, without interest.

        (b) No rights granted under the Plan may be exercised to any extent
unless the Plan (including rights granted thereunder) is covered by an effective
registration statement pursuant to the Securities Act of 1933, as amended. If,
on an Exercise Date of any Offering hereunder, the Plan is not so registered, no
rights granted under the Plan or any Offering shall be exercised and all payroll
deductions accumulated and not previously applied to the purchase of Common
Stock shall be distributed to the participants, without interest.

9. COVENANTS OF THE COMPANY.

        (a) During the terms of the rights granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such rights.

        (b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock 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 stock under the Plan, the
Company shall be relieved from any liability for failure to issue and sell stock
upon exercise of such rights unless and until such authority is obtained.

10. USE OF PROCEEDS FROM STOCK.

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

11. RIGHTS AS A SHAREHOLDER.

        A participant shall not be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to rights granted
under the Plan unless and until certificates representing such shares shall have
been issued.

12. ADJUSTMENTS UPON CHANGES IN STOCK.

        (a) If any change is made in the stock subject to the Plan, or subject
to any rights granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), the Board shall make
appropriate adjustments in the maximum number of shares subject to the Plan and
the number of shares and price per share of stock subject to outstanding rights.

        (b) In the event of: (1) a dissolution or liquidation of the Company;
(2) a merger or consolidation in which the Company is not the surviving
corporation; (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise; or (4) any other capital

                                       6.
<PAGE>   7

reorganization in which more than fifty percent (50%) of the shares of the
Company entitled to vote are exchanged, then, as determined by the Board in its
sole discretion, any surviving corporation shall assume outstanding rights or
substitute similar rights for those under the Plan, such rights shall continue
in full force and effect, or such rights shall be exercised immediately prior to
such event.

13. 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 12 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the shareholders of
the Company within 12 months before or after the adoption of the amendment,
where the amendment will:

                (i) Increase the number of shares reserved for rights under the
Plan; or

                (ii) Modify the provisions as to eligibility for participation
in the Plan or modify the Plan in any other way to the extent such modification
requires shareholder approval in order for the Plan to obtain employee stock
purchase plan treatment under Section 423 of the Code.

                It is expressly contemplated that the Board may amend the Plan
in any respect the Board deems necessary or advisable to provide eligible
employees with the maximum benefits provided or to be provided under the
provisions of the Code and the regulations promulgated thereunder relating to
employee stock purchase plans and/or to bring the Plan and/or rights granted
under it into compliance therewith.

        (b) Rights and obligations under any rights granted before amendment of
the Plan shall not be altered or impaired by any amendment of the Plan, except
with the consent of the person to whom such rights were granted.

14. TERMINATION OR SUSPENSION OF THE PLAN.

        (a) The Board 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.

        (b) Rights and obligations under any rights granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the person to whom such rights were granted.

                                       7.

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