Document:

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                                                                    EXHIBIT 10.3

                           RESTRICTED STOCK AGREEMENT

     THIS RESTRICTED STOCK AGREEMENT (the "Agreement") is made this 22nd day of
May 2000, by and among The TriZetto Group, Inc., a Delaware corporation (the
"Company"), and ______________ (the "Grantee").

                                    RECITALS

     A. WHEREAS, the Company desires to grant shares of its common stock to
Grantee to encourage the continued service of Grantee as an employee of
QualChoice of Arkansas, Inc. ("QCA"), which service is of benefit to the
Company;

     B. WHEREAS, the Company desires to impose certain restrictions on the
shares of common stock granted hereunder for the benefit of the Company; and

     C. WHEREAS, such grant is being made to Grantee in addition to, and not in
lieu of, any other form of compensation otherwise payable or to be paid to
Grantee.

     NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:

     1. GRANT OF SHARES. The Company hereby grants and delivers to Grantee
________ (____) shares of its common stock (the "Shares"), subject to the terms
and conditions set forth herein.

     2. VESTING OF SHARES.

        2.1 The Shares granted hereunder shall vest and become "Vested Shares"
in four equal annual installments commencing on the first anniversary date of
this Agreement. Shares which have not yet become vested are herein called
"Unvested Shares." No additional Shares shall vest after the date of termination
("Termination Date") of Grantee's "Continuous Service" (as defined below).

        2.2 Notwithstanding the foregoing, all of the Shares shall become fully
vested immediately prior to the consummation of a Change in Control (as defined
in Section 10 below), unless prior to a Change in Control the Company's Board of
Directors determines that, upon its occurrence, the vesting of the Shares will
not accelerate or determines that only the vesting of certain Shares will be
accelerated and/or establishes a different time in respect of such Change in
Control for such acceleration. However, in the case of a transaction intended to
be accounted for as a pooling of interests transaction, the Board of Directors
shall have no discretion with respect to the foregoing acceleration of vesting
of the Shares.

        2.3 As used herein, the term "Continuous Service" means so long as
Grantee is an employee of QCA or the Company. Unless otherwise determined by the
Company's Board of Directors, a leave of absence (regardless of the reason
therefor) shall be deemed to constitute the cessation of Continuous Service as
of the commencement date of the leave.

        2.4 In the event Grantee's Continuous Service terminates due to death or
Total Disability (as defined herein), the Shares shall vest and become Vested
Shares on the Termination Date to the extent such Shares would have vested in
the 90-day period following the Termination

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Date. "Total Disability" means a "total and permanent disability" within the
meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended
(the "Code").

     3. DEPOSIT OF CERTIFICATES. Grantee shall deposit with the Company all
certificates evidencing the Shares together with a properly endorsed stock power
assignment. Upon written request from Grantee, the Company shall reissue and
deliver to Grantee a new certificate evidencing the Vested Shares, and shall
reissue a certificate evidencing the Unvested Shares as of the date thereof,
which Grantee shall deposit with the Company, together with a new properly
endorsed stock power assignment.

     4. CANCELLATION OF UNVESTED SHARES UPON TERMINATION. In the event of
termination of Grantee's Continuous Service, all Unvested Shares as of the
Termination Date shall be immediately cancelled and become null and void. The
Company shall cancel the certificates then deposited with the Company evidencing
the Unvested Shares and reissue a new certificate to Grantee evidencing only the
Vested Shares, if any, as of the Termination Date.

     5. RESTRICTION ON TRANSFER. The Unvested Shares shall not be sold,
exchanged, transferred, pledged, hypothecated or otherwise disposed of, shall
not be assigned or transferred, directly or indirectly and shall not be subject
to execution, attachment or similar process, and any attempted sale or other
disposition shall be null and void.

     6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Grantee as follows:

        6.1 AUTHORIZATION. All corporate action on the part of the Company, its
officers and directors necessary for the authorization, execution and delivery
of this Agreement, the performance of all obligations of the Company hereunder
and the authorization, issuance (or reservation for issuance) and delivery of
the Shares being granted hereunder has been taken or will be taken prior to the
execution of this Agreement, and this Agreement constitutes a valid and legally
binding obligation of the Company which is enforceable in accordance with its
terms.

        6.2 VALID ISSUANCE OF SHARES. The Shares which are being granted
hereunder, when issued, sold and delivered in accordance with the terms hereof
for the consideration expressed herein will be duly and validly issued, fully
paid and nonassessable (except as set forth herein) and, based in part upon the
representations of Grantee in this Agreement, will be issued in compliance with
all applicable federal and state securities laws.

     7. REPRESENTATIONS AND WARRANTIES OF GRANTEE. Grantee represents and
warrants to the Company as follows:

        7.1 Grantee understands that the Shares will be issued by the Company
without registration under the Securities Act of 1933 ("Securities Act") and
without qualification or registration under applicable state securities laws
("Blue Sky Laws") pursuant to exemptions from registration or qualification
contained in the Securities Act and in the Blue Sky Laws. Grantee understands
that the Shares must be held indefinitely unless subsequently registered or
qualified under the Securities Act and under the Blue Sky Laws or unless
exemptions from the registration or qualification requirements under the
Securities Act and under the Blue Sky Laws are available in connection with any
proposed transfer of the Shares by Grantee.

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        7.2 Grantee is acquiring the Shares solely for Grantee's own account for
investment and not with a view to or for sale or distribution of the Shares or
any portion thereof and not with any present intention of selling, offering to
sell or otherwise disposing of or distributing the Shares or any portion
thereof. Grantee also represents that the entire legal and beneficial interest
of the Shares is being acquired for, and will be held for the account of,
Grantee only and neither in whole nor in part for any other person.

        7.3 Grantee agrees that none of the Shares, nor any interest in the
Shares, will be resold or otherwise transferred by Grantee without registration
or qualification under the Securities Act and the Blue Sky Laws unless Grantee
first demonstrates to the satisfaction of the Company that specific exemptions
from such registration or qualification requirements are available with respect
to the proposed transfer and provides the Company an opinion of counsel
satisfactory to the Company that the proposed transfer may be made without
violation of the Securities Act or the Blue Sky Laws and will not affect the
exemptions relied upon by the Company in connection with the original issuance
of the Shares.

        7.4 Grantee acknowledges that the certificates representing the Shares
shall bear the following restrictive legends:

        THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
        SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
        ASSIGNED OR HYPOTHECATED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
        STATEMENT UNDER THE 1933 ACT COVERING SUCH SECURITIES OR IF TRIZETTO
        RECEIVES AN OPINION OF COUNSEL FOR GRANTEE OF THESE SECURITIES
        REASONABLY SATISFACTORY TO TRIZETTO, STATING THAT SUCH SALE, TRANSFER,
        ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
        PROSPECTUS DELIVERY REQUIREMENTS OF THE 1933 ACT.

        ANY SALE, ASSIGNMENT, TRANSFER, PLEDGE, OR OTHER DISPOSITION OF THE
        SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE IS RESTRICTED BY, AND
        SUBJECT TO, THE TERMS OF A RESTRICTED STOCK AGREEMENT DATED AS OF MAY
        22, 2000. A COPY OF SAID AGREEMENT IS ON FILE WITH THE SECRETARY OF THIS
        CORPORATION.

        7.5 Grantee understands that the Shares are restricted securities within
the meaning of Rule 144 promulgated under the Securities Act; that the exemption
from registration under Rule 144 will not be available in any event for at least
one year from the date of grant of the Shares to Grantee, and even then will not
be available unless (i) a public trading market then exists for the Shares of
the Company, (ii) adequate current public information concerning the Company is
then available to the public, (iii) Grantee has been the beneficial owner of the
Shares at least one year prior to the sale, and (iv) other terms and conditions
of Rule 144 are complied with; and that any sale of the Shares may be made by it
only in limited amounts in accordance with such terms and conditions, as amended
from time to time.

        7.6 Grantee understands that counsel for the Company may rely upon the
foregoing for the purposes of rendering an opinion in connection with the
issuance of the Shares. Grantee hereby agrees to indemnify the Company and its
officers, directors, agents,

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and counsel and hold them harmless from and against any and all damages suffered
and liabilities incurred by them (including costs of investigation, defense, and
attorneys' fees) arising out of any breach by Grantee of the agreements or
inaccuracy in the representations and warranties which Grantee has made herein.

     8. SHARES FREE AND CLEAR. All Shares relinquished to the Company, or its
assignee(s), as the case may be, pursuant to this Agreement shall be delivered
by Grantee free and clear of all claims, liens and encumbrances of every nature
(except the provisions of this Agreement and any conditions concerning the
Shares relating to compliance with applicable federal or state securities laws),
and the purchaser thereof shall acquire full and complete title and right to all
of the shares, free and clear of any claims, liens and encumbrances of every
nature (again except for the provisions of this Agreement and such securities
laws).

     9. RECAPITALIZATION. In the event that, as the result of a stock split or
stock dividend or combination of shares or any other change, or exchange for
other securities, by reclassification, or recapitalization of the Shares,
Grantee shall be entitled to new or additional or different shares of stock or
securities, such new or additional or different shares of stock or securities
shall be deemed "Shares" for the purposes of this Agreement and shall be subject
to all of the terms and conditions hereof, and the certificate or certificates
for, or other evidences of, such shares shall be imprinted with the legend
provided in Section 7.4 above.

     10. CHANGE IN CONTROL. For the purposes of this Agreement, "Change in
Control" means any of the following:

        (a) Approval by the stockholders of the Company of the dissolution or
liquidation of the Company;

        (b) Approval by the stockholders of the Company of an agreement to merge
or consolidate, or otherwise reorganize, with or into one or more entities that
are not Subsidiaries or other affiliates, as a result of which less than 50% of
the outstanding voting securities of the surviving or resulting entity
immediately after the reorganization are, or will be, owned, directly or
indirectly, by stockholders of the Company immediately before such
reorganization (assuming for purposes of such determination that there is no
change in the record ownership of the Company's securities from the record date
for such approval until such reorganization and that such record owners hold no
securities of the other parties to such reorganization), but including in such
determination any securities of the other parties to such reorganization held by
affiliates of the Company);

        (c) Approval by the stockholders of the Company of the sale of
substantially all of the Company's business and/or assets to a person or entity
that is not a Subsidiary or other affiliate;

        (d) Any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act but excluding any person described in and satisfying the
conditions of Rule 13d-1(b)(1) thereunder), other than a person that is a
stockholder of the Company on the Effective Date, becoming the beneficial owner
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing more than 50% of the combined voting
power of the Company's then outstanding securities entitled to then vote
generally in the election of directors of the Company; or

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        (e) During any period not longer than two consecutive years, individuals
who at the beginning of such period constituted the Board cease to constitute at
least a majority thereof, unless the election, or the nomination for election by
the Company's stockholders, of each new Board member was approved by a vote of
at least three-fourths of the Board members then still in office who were Board
members at the beginning of such period (including for these purposes, new
members whose election or nomination was so approved).

     11. NO AGREEMENT TO RETAIN STATUS. Nothing in this Agreement shall be
construed to constitute or be evidence of any agreement or understanding,
express or implied, on the part of the Company or QCA to retain Grantee in his
or her status as an employee of QCA or the Company.

     12. IRC SECTION 83(b) ELECTION. Grantee acknowledges that he or she has
consulted with a tax advisor and considered the advisability of all tax
elections in connection with the grant of the Shares and the execution and
delivery of this Agreement, including the making of an election under Section
83(b) of the Code, and any similar elections under Arkansas or applicable state
law. Grantee acknowledges that he or she is solely responsible to make any such
election and that the Company has no responsibility to make any such election.
If Grantee desires to make the election provided under Section 83(b) of the
Code, Grantee must file such election with the Internal Revenue Service within
thirty (30) days of the date of this Agreement, substantially in the form
attached as Exhibit A hereto and, if required, a comparable form of election
with applicable state taxing authorities. The parties hereto acknowledge and
agree that the total fair market value of the Shares as of the date of this
Agreement is $11.9375 per share.

     13. MISCELLANEOUS.

        13.1 NOTICES. Any notice required or permitted to be given to a party
pursuant to the provisions of this Agreement shall be in writing and shall be
effective upon personal delivery or upon deposit in the U.S. mail, postage
prepaid and properly addressed to the party to be notified as set forth below
such party's signature or at such other address as such party may designate by
ten (10) days' advance written notice to the other parties hereto.

        13.2 STOP TRANSFER ORDERS. Grantee understands and agrees that, in order
to ensure compliance with the restrictions referred to herein, the Company may
issue appropriate "stop-transfer" instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.

        13.3 "MARKET STAND-OFF" AGREEMENT. Grantee agrees that, if requested by
the Company or the managing underwriter of any proposed public offering of the
Company's securities, Grantee will not sell or otherwise transfer or dispose of
any Shares held by Grantee without the prior written consent of the Company or
such underwriter, as the case may be, during such period of time, not to exceed
180 days following the effective date of the registration statement filed by the
Company with respect to such offering, as the Company or the underwriter may
specify.

        13.4 SUCCESSORS AND ASSIGNS. This Agreement and the rights and
obligations of the parties hereunder shall inure to the benefit of, and be
binding upon, their respective permitted successors, assigns and legal
representatives.

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        13.5 SEVERABILITY. In the event one or more of the provisions of this
Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.

        13.6 AMENDMENTS AND WAIVERS. Any amendment or modification of this
Agreement shall be effective only if evidenced by a written instrument executed
by duly authorized representatives of the parties hereto. Any party may waive
its individual rights hereunder, either prospectively or retroactively, which
shall be effective only if evidenced by a written instrument executed by a duly
authorized representative of such party. In no event shall such waiver of any
rights hereunder constitute the waiver of such rights in any future instance
unless the waiver so specifies in writing.

        13.7 GOVERNING LAW. Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware without regard to
conflict of law principles thereunder.

        13.8 ATTORNEYS' FEES. If any party shall bring an action in law or
equity against another to enforce or interpret any of the terms, covenants and
provisions of this Agreement, the prevailing party in such action shall be
entitled to reasonable attorneys' fees which the other party hereby agrees to
pay.

        13.9 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties pertaining to its subject matter and supersedes all prior or
contemporaneous written or oral agreements and understandings of the parties,
either express or implied.

        13.10 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be an original but all of which together shall constitute one
instrument.

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     IN WITNESS WHEREOF, the parties have executed this Restricted Stock
Agreement as of the day and first above written.

                                      COMPANY:

                                      THE TRIZETTO GROUP, INC.

                                      By:
                                          --------------------------------------

                                      Name:
                                            ------------------------------------

                                      Its:
                                           -------------------------------------

                                      Address: 567 San Nicholas Drive, Suite 360
                                               Newport Beach, California  92660

                                      HOLDER:

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

                                      Name:
                                            ------------------------------------

                                      Address:
                                               ---------------------------------

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

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                                    EXHIBIT A

May 22, 2000

Internal Revenue Service Center
5104 N. Blyth
Fresno, California  93722

     RE: ELECTION UNDER SECTION 83(b) OF THE INTERNAL REVENUE CODE

Dear Sir or Madam:

     The undersigned performed services in connection with which property was
transferred to the undersigned that, at the time of transfer, was not
transferable by the undersigned and was subject to a substantial risk of
forfeiture. The undersigned hereby makes this election pursuant to Section 83(b)
of the Internal Revenue Code.

     In connection with this election, the undersigned hereby provides you with
the following information:

     1. The undersigned's name, address, social security number, and taxable
year are as follows:

                  Name and Address:
                                       -----------------------

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

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

                  Social Security No.:
                                       -----------------------

                  Taxable Year:        Calendar Year 2000

     2. A description of the property with respect to which the election is
being made:

        _______ shares of Common Stock, $.001 par value per share, (the
        "Shares"), of The TriZetto Group, Inc., a Delaware corporation
        (the "Company").

     3. The date on which the property was transferred: May 22, 2000.

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     4. A description of the nature of the restrictions to which the property is
subject:

        The Company may cancel all or a portion of the Shares from the
        undersigned in accordance with the terms of a Restricted Stock
        Agreement between the undersigned and the Company. In the event the
        undersigned should cease to be a service provider to the Company at
        any time, the unvested Shares will be cancelled by the Company. The
        Shares will vest in four equal annual installments commencing on the
        first anniversary date of the Restricted Stock Agreement.

     5. The fair market value at the time of transfer (determined without regard
to any restriction other than a restriction which by its terms will never lapse)
of the property with respect to which the election is being made: $____ per
share, which results in an aggregate fair market value of $______.

     6. The amount paid for such property: $0.

     There are enclosed herewith two copies of this written statement for
filing. Please stamp the third copy enclosed herewith as having been received
and return it to the undersigned in the enclosed, self-addressed, postage-paid
envelope.

     The undersigned has also submitted a copy of this statement to the person
for whom the services were performed.

                                Very truly yours,

                                ------------------------------------------------<PAGE>   1
                                                                    EXHIBIT 10.1

                            STOCK PURCHASE AGREEMENT

                               DATED JUNE 29, 2000

                                     BETWEEN

                                 COMPUTER MOTION

                                       AND

                             THE INVESTORS LISTED ON

                                SCHEDULE A HERETO

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                                 COMPUTER MOTION

                            STOCK PURCHASE AGREEMENT

        THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of the 29
day of June, 2000, by and between Computer Motion, Inc., a Delaware corporation
(the "Company"), and the persons or entities listed on Schedule A attached
hereto (individually, an "Investor" and collectively, the "Investors").

        WHEREAS, the Company and Investors wish to enter into this Agreement to
set forth the terms of Investors' purchase of Common Stock from the Company.

        NOW THEREFORE, BE IT RESOLVED, that the parties hereto, intending to be
legally bound, hereby agree as follows:

        1. PURCHASE AND SALE OF COMMON STOCK.

           1.1 SALE AND ISSUANCE OF COMMON STOCK. Subject to the terms and
conditions of this Agreement, each Investor agrees to purchase, and the Company
agrees to sell and issue to each Investor, at the Closing, that number of shares
of the Company's Common Stock set forth opposite such Investor's name on
Schedule A (the "Shares") for the purchase price set forth thereon, which shall
equal the average of the high and low prices for the Company's Common Stock
reported on the Nasdaq National Market of the five business days prior to the
date of this agreement.

            1.2 CLOSING.

                (a) Subject to the satisfaction or waiver of the conditions set
forth in Sections 4 and 5 hereof, the purchase and sale of the Shares to the
Investors shall take place at 10:00 a.m., on June 30, 2000, or at such other
time as the Company and Investors mutually agree upon, either orally or in
writing (which time and place is designated as the "Closing").

                (b) Subject to the terms of this Agreement, at the Closing, the
Company shall deliver to each Investor a certificate representing that number of
Shares set forth opposite such Investor's name on Schedule A, against payment of
the purchase price therefor by check, wire transfer, the cancellation of
indebtedness, or any combination thereof, or such form of payment as shall be
mutually agreed upon by each Investor and the Company.

        2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

        Except as disclosed in the Schedules attached hereto by reference to the
specific Section or Sections hereof to which the disclosure pertains, the
Company represents and warrants to the Investors as follows:

           2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
own and operate its properties and assets and to carry on its business as
presently conducted. The Company is duly qualified and authorized to transact
business and is in good standing as a foreign corporation in each jurisdiction

<PAGE>   3

where the nature of its activities and of its properties makes such
qualification necessary, except where failure to so qualify would not have a
material adverse effect upon the Company.

           2.2 CAPITALIZATION. The authorized capital stock of the Company
consists of 25,000,000 shares of Common Stock, $.001 par value, and 5,000,000
shares of Preferred Stock, $.001 par value. As of May 11, 2000, there were
issued and outstanding 8,731,345 shares of Common Stock and no shares of
Preferred Stock. Immediately following the Closing all issued and outstanding
shares of the Company's capital stock will have been duly authorized, validly
issued, fully paid and non-assessable and issued in compliance with federal and
state securities laws. The Company has reserved (a) an aggregate of 1,308,894
shares of Common Stock for issuance upon the exercise of certain other warrants
at an exercise price ranging from $4.57 to $7.71 per share (the "Warrants") and
(b) an aggregate of 3,493,361 shares of Common Stock for issuance pursuant to
the Company's Incentive Stock Option, Nonqualified Stock Option and Restricted
Stock Purchase Plans, of which 1,842,349 shares are subject to currently
outstanding options. Except as set forth in the immediately preceding sentence,
none of the Common Stock is subject to any preemptive or subscription right, any
voting trust agreement or other contract, agreement, arrangement, option,
warrant, call, commitment or other right of any character obligating or
entitling the Company to issue, sell, redeem or repurchase any of its
securities, and there is no outstanding security of any kind convertible into or
exercisable or exchangeable for Common Stock. Except as set forth on Schedule
2.2 attached hereto, there are no agreements or arrangements pursuant to which
the Company is or could be required to register shares of the Company's capital
stock or other securities under the Securities Act of 1933, as amended (the
"Securities Act"), or other agreements or arrangements (including voting
agreements) with or, to the knowledge of the Company, among any security holders
of the Company with respect to any securities of the Company.

           2.3 AUTHORIZATION. All corporate action on the part of the Company,
its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement, the performance of the Company's
obligations hereunder and the authorization, issuance, sale and delivery of the
Shares has been taken or will be taken prior to the Closing. This Agreement when
executed and delivered by the Company, shall constitute a valid and legally
binding obligation of the Company, enforceable against the Company in accordance
with its terms except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors' rights generally, (b) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies, or (c) to the extent the indemnification provisions in Section 6.6
below may be limited by applicable federal or state securities law.

           2.4 VALID ISSUANCE OF THE SHARES; COMPLIANCE WITH SECURITIES LAWS.
When issued, sold and delivered in compliance with the provisions of this
Agreement and the Company's certificate of incorporation, the Shares will be
duly and validly issued, fully paid and nonassessable and will be free of any
liens, encumbrances, and restrictions on transfer other than restrictions on
transfer under this Agreement and applicable state and federal securities laws.
Assuming the accuracy of the representations and warranties of the Investors set
forth in this Agreement, the offer, sale and issuance of the Shares as
contemplated by this Agreement are exempt from the registration requirements of
the Securities Act, and have been registered or qualified (or are exempt from
registration or qualification) under the registration, permit, or qualification
requirements under all applicable state securities laws.

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<PAGE>   4

           2.5 GOVERNMENTAL CONSENTS. All consents, approvals, orders, or
authorizations of, or registrations, qualifications, designations, declarations,
or filings with, any governmental authority, required on the part of the Company
in connection with the valid execution and delivery of this Agreement, the
offer, sale or issuance of the Shares, or the consummation of any other
transaction contemplated hereby have been obtained, or will be effective at the
Closing, except for notices required or permitted to be filed with certain state
and federal securities commissions after the Closing, which notices will be
filed by the Company on a timely basis.

           2.6 SEC FILINGS. The Company has filed with the Securities and
Exchange Commission (the "SEC") all reports, schedules, forms, statements and
other documents required pursuant to the Securities Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), since August 11, 1997
(collectively, and in each case including all exhibits and schedules thereto and
documents incorporated by reference therein, the "SEC Documents"). As of their
respective dates, the SEC Documents complied as to form in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case may
be, and the rules and regulations of the SEC promulgated thereunder applicable
to such SEC Documents. As of their respective dates, (i) none of the SEC
Documents (including any and all financial statements included therein) filed
pursuant to the Securities Act or any rule or regulation thereunder contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, and (ii) none of the SEC Documents (including any and
all financial statements included therein) filed pursuant to the Exchange Act or
any rule or regulation thereunder contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Except to the extent
that information contained in any SEC Document has been revised or superseded by
a later filed SEC Document, none of the SEC Documents (including any and all
financial statements included therein) contains any untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The consolidated
financial statements of the Company included in all SEC Documents filed since
August 11, 1997 (the "SEC Financial Statements") comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles (except, in the case of
unaudited consolidated quarterly statements, as permitted by Form 10-Q of the
SEC), applied on a consistent basis during the periods involved (except as may
be indicated in the notes thereto). The SEC Financial Statements fairly present
the consolidated financial position of the Company as of the dates thereof and
the consolidated results of its operations and cash flows for the periods then
ended (subject, in the case of unaudited quarterly statements, to normal
recurring audit adjustments). The Company does not have any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
required by generally accepted accounting principles to be recognized or
disclosed on a consolidated balance sheet of the Company or in the notes
thereto, except (i) liabilities reflected in the consolidated unaudited balance
sheet of the Company as of December 31, 1999 or the notes thereto (subject to
ordinary year-end adjustments), (ii) liabilities disclosed in any SEC Documents
filed by the Company prior to the date of this Agreement with respect to any
period ending, or date occurring, after December 31, 1999, and (iii) liabilities
incurred since December 31, 1999 in the ordinary course of business consistent
with past practice.

           2.7 FULL DISCLOSURE. The Company has provided Investors with all the
information that Investors have requested for deciding whether to purchase the
Shares. Neither this

                                       3

<PAGE>   5

Agreement nor the representations and warranties contained herein, nor any other
written statements or certificates made or delivered in connection herewith,
when read together, contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements herein or therein not
misleading.

           2.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in SEC
documents, since December 31, 1999, the Company has conducted its business only
in the ordinary course consistent with past practice, and there is not and has
not been: (i) since December 31, 1999, any condition, event or occurrence which
has had a material adverse effect on the business, properties, financial
condition or results of operations of the Company (a "Material Adverse Effect");
(ii) since December 31, 1999, any condition, event or occurrence which as of the
date of this Agreement, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect with respect to the Company; or (iii)
since December 31, 1999, any condition, event or occurrence which, individually
or in the aggregate, could reasonably be expected to prevent or materially delay
the ability of the Company to consummate the transactions contemplated by this
Agreement or perform its obligations hereunder.

           2.9 LITIGATION. Except as disclosed in SEC documents, there is (a) no
suit, action, arbitration or proceeding pending, and (b) to the knowledge of the
Company, no suit, action, arbitration or proceeding threatened against or
investigation pending with respect to the Company that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect with
respect to the Company or prevent or materially delay the ability of the Company
to consummate the transactions contemplated by this Agreement or to perform its
obligations hereunder, nor is there any judgment, decree, citation, injunction,
rule or order of any court or administrative or governmental body or agency (a
"Governmental Entity") or arbitrator outstanding against the Company which,
individually or in the aggregate, has or could reasonably be expected to have,
any such effect.

           2.10 NO CONFLICTS OR DEFAULTS. The execution and delivery of this
Agreement by the Company and the consummation of the transactions contemplated
hereby do not and will not (a) contravene the certificate of incorporation or
by-laws of the Company or (b) with or without the giving of notice or the
passage of time, (i) violate, conflict with, or result in a breach of, or a
default or loss of rights under, any material covenant, agreement, mortgage,
indenture, lease, instrument, permit or license to which the Company is a party
or by which the Company or any of its assets is bound, or any judgment, order or
decree, or any law, rule or regulation to which the Company or any of its assets
is subject, or (ii) result in the creation of, or give any party the right to
create, any lien, charge, security interest, encumbrance or any other right or
adverse interest upon any of the capital stock or assets of the Company.

           2.11 COMPLIANCE WITH LAWS. The Company holds all permits, licenses,
variances, exemptions, orders and approvals of all Governmental entities which
are material to the operation of the businesses of the Company (the "Company
Permits"). The Company is in compliance with the terms of the Company Permits,
except where the failure so to comply, individually or in the aggregate, would
not have a Material Adverse Effect with respect to the Company. The businesses
of the Company are not being conducted in violation of any law (domestic or
foreign), ordinance or regulation of any Governmental Entity, except for
possible violations which, individually or in the aggregate, do not and could
not reasonably be expected to have a Material Adverse Effect with respect to the
Company.

                                       4

<PAGE>   6

        3. REPRESENTATIONS AND WARRANTIES OF INVESTORS.

        Each Investor, severally and not jointly, hereby represents and warrants
to the Company as follows:

           3.1 LEGAL POWER. Investor has the power and authority to enter into
this Agreement, to purchase the Shares hereunder and to carry out and perform
its obligations under the terms of this Agreement.

           3.2 DUE EXECUTION. This Agreement has been duly authorized, executed
and delivered by Investor, and, upon due execution and delivery by the Company,
this Agreement will be a valid and binding obligation of Investor, enforceable
in accordance with its terms, except (a) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application
affecting enforcement of creditors' rights generally, (b) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies, or (c) to the extent the indemnification provisions in
Section 6.6 below may be limited by applicable federal or state securities law.

           3.3 INFORMATION. Investor believes that it, or its representatives,
have received all information Investor considers necessary for evaluating the
risks and merits of acquiring the Shares. Investor further represents that
Investor has had the opportunity to ask questions and receive answers from the
Company regarding the terms and conditions of the Shares and the business,
properties, prospects and financial condition of the Company. The foregoing,
however, does not limit or modify the representations and warranties of the
Company in Section 2 of this Agreement or the right of Investor to rely thereon.

           3.4 INVESTMENT REPRESENTATIONS.

               (a) Investor is acquiring the Shares for its own account, not as
nominee or agent, for investment and not with a view to, or for resale in
connection with, any distribution or public offering thereof within the meaning
of the Securities Act .

               (b) Investor understands that (i) the Shares have not been
registered under the Securities Act by reason of a specific exemption therefrom,
that the securities are "restricted securities" and the Investor must hold the
Shares indefinitely, and that it must, therefore, bear the economic risk of such
investment indefinitely, unless a subsequent disposition thereof is registered
under the Securities Act or is exempt from such registration; (ii) each
certificate representing the Shares will be endorsed with the following legend:

        "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
        UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE "1933 ACT") AND MAY
        NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED EXCEPT PURSUANT TO AN
        EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT COVERING SUCH
        SECURITIES OR IF THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE
        HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY,
        STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT
        FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE 1933
        ACT."

                                       5

<PAGE>   7

and (iii) the Company will instruct any transfer agent not to register the
transfer of any of the Shares unless the conditions specified in the foregoing
legend are satisfied; provided, however, that no such opinion of counsel shall
be necessary if the sale, transfer or assignment is made pursuant to SEC Rule
144 and the Investor provides the Company with evidence reasonably satisfactory
to the Company and its counsel that the proposed transaction satisfies the
requirements of Rule 144. The Company agrees to remove the foregoing legend from
any securities if the requirements of SEC Rule 144(k) (or any successor rule or
regulation) apply with respect to such securities and the Company and its
counsel are provided with reasonably satisfactory evidence that the requirements
of Rule 144(k) apply.

               (c) Investor has not been offered the Shares by any form of
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by such media.

               (d) Investor acknowledges that it is able to fend for itself, can
bear the economic risk of its investment and has such knowledge and experience
in financial and business matters that it is capable of evaluating the merits
and risks of acquisition of the Shares and of making an informed investment
decision with respect thereto.

               (e) Investor's principal place of business or address is as set
forth on the signature page hereto, and, if it is an individual, it does not
reside in any state of the United States other than the state, if any, specified
in its address on the signature page.

               (f) Investor acknowledges that an investment in the Shares is
speculative and involves a high degree of risk of loss of all or part of
Investor's investment therein.

               (g) Investor is an "accredited investor" within the meaning of
SEC Rule 501(a) of Regulation D of the Securities Act of 1933, as presently in
effect (the "Securities Act").

               (h) Investor understands that the foregoing representations and
warranties are to be relied upon by the Company as a basis for exemption of the
sale of the Shares under the Securities Act, under the securities laws of all
applicable states and for other purposes. In the event any of such
representations and warranties become inaccurate or untrue prior to the Closing,
the Investor will promptly notify the Company.

               (i) Investor was not formed for the specific purpose of acquiring
the Shares.

           3.5 FURTHER REPRESENTATIONS BY FOREIGN INVESTORS. If Investor is not
a U.S. person or entity such Investor hereby represents that it is satisfied as
to the full observance of the laws of such Investor's jurisdiction in connection
with the purchase of the Shares or any use of this Agreement, including (i) the
legal requirements with such Investor's jurisdiction for the purchase of the
Shares, (ii) any foreign exchange restrictions applicable to such purchase,
(iii) any governmental or other consents that may need to be obtained, and (iv)
the income tax and other tax consequences, if any, which may be relevant to the
purchase, holding, redemption, sale, or transfer of the Shares.

                                       6

<PAGE>   8

Such Investor's purchase of and payment for, and such Investor's continued
beneficial ownership of, the Shares will not violate any applicable securities
or other laws of such Investor's jurisdiction.

        4. CONDITIONS OF THE INVESTORS' OBLIGATIONS AT CLOSING.

        The obligations of Investors under subsection 1.1 of this Agreement are
subject to the fulfillment on or before the Closing of each of the following
conditions, the waiver of which shall not be effective against Investors unless
consented to by Investors in writing thereto:

           4.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in Section 2 shall be true and correct in
all material respects on and as of the Closing, except those representations and
warranties qualified by materiality, which shall be true and correct in all
respects, with the same force and effect as though such representations and
warranties had been made on and as of the Closing.

           4.2 PERFORMANCE OF OBLIGATIONS. The Company shall have performed and
complied in all material respects with all agreements, obligations and
conditions contained herein that are required to be performed or complied with
by it on or prior to the Closing.

           4.3 COMPLIANCE CERTIFICATE. The Company shall deliver to Investors at
the Closing a Certificate, executed by the President of the Company, certifying
that the conditions specified in subsections 4.1 and 4.2 have been fulfilled.

           4.4 QUALIFICATIONS. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States, of
any state or any foreign country that are required in connection with the lawful
sale and issuance of the Shares pursuant to this Agreement shall have been duly
obtained and shall be effective on and as of the Closing. No stop order or other
order enjoining the sale of the Shares shall have been issued and no proceedings
for such purpose shall be pending or, to the knowledge of the Company,
threatened by the SEC, the California Commissioner of Corporations, or any
commissioner of corporations or similar officer of any other state or foreign
country having jurisdiction over this transaction. At the time of the Closing,
the sale and issuance of the Shares shall be legally permitted by all laws and
regulations to which Investor and the Company are subject.

           4.5 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
and instruments incident thereto shall be reasonably satisfactory in form and
substance to Investor, which shall have received all such counterpart original
and certified or other copies of such documents as it may reasonably request.

        5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING.

           The obligations of the Company to Investors under this Agreement are
subject to the fulfillment, on or before the Closing, of each of the following
conditions by Investor:

           5.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Investors contained in Section 3 hereof shall be true and correct
in all material respects on and as of the Closing, except those representations
and warranties qualified by materiality, which shall be true

                                       7

<PAGE>   9

and correct in all respects, with the same force and effect as though such
representations and warranties had been made on and as of the Closing.

           5.2 QUALIFICATIONS. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States, of
any state or any foreign country that are required in connection with the lawful
sale and issuance of the Shares pursuant to this Agreement shall have been duly
obtained and shall be effective on and as of the Closing. No stop order or other
order enjoining the sale of the Shares shall have been issued and no proceedings
for such purpose shall be pending or, to the knowledge of the Company,
threatened by the SEC, the California Commissioner of Corporations, or any
commissioner of corporations or similar officer of any other state or foreign
country having jurisdiction over this transaction. At the time of the Closing,
the sale and issuance of the Shares shall be legally permitted by all laws and
regulations to which Investor and the Company are subject.

           5.3 PERFORMANCE. All covenants, agreements and conditions contained
in this Agreement to be performed by Investors on or prior to the Closing shall
have been performed or complied with in all material respects.

        6. REGISTRATION OF SHARES.

        The Company hereby grants to each of the Investors the registration
rights set forth in this Section 6 with respect to the Registrable Securities
(as hereinafter defined) owned by such Investors. The Company and the Investors
agree that the registration rights provided herein set forth the sole and entire
agreement on the subject matter between the Company and the Investors.

           6.1 DEFINITIONS.

               (a) The terms "register," "registered," and "registration" refer
to a registration effected by filing with SEC a registration statement (the
"Registration Statement") in compliance with the Securities Act and applicable
rules and regulations thereunder, and the declaration or ordering by the SEC of
the effectiveness of such Registration Statement.

               (b) The term "Registrable Shares" means the Shares issued to the
Investors pursuant to this Agreement and any Common Stock of the Company issued
as (or issuable upon the conversion or exercise of any warrant, right, or other
security that is issued as) a dividend or other distribution with respect to, or
in exchange or in replacement of, such Registrable Shares. In the event of any
recapitalization by the Company, whether by stock split, reverse stock split,
stock dividend or the like, the number of shares of Registrable Shares used
throughout this Agreement for various purposes shall be proportionately
increased or decreased, provided, however, that any such security shall cease to
be a Registrable Share at such time as it is publicly saleable without
restriction, pursuant to Rule 144(k) of the Securities Act, or otherwise.

               (c) The term "Initiating Investors" means any Investor or
Investors of not less than fifty percent (50%) of the Registrable Shares held by
all of the Investors then outstanding and not registered pursuant to paragraph
6.3 of this Agreement.

           6.2 "PIGGY BACK" REGISTRATION. If at any time the Company shall
determine to register under the Securities Act (including pursuant to a demand
of any stockholder of the Company exercising registration rights other than
pursuant to Section 6.3 hereof) any of its Common Stock

                                       8

<PAGE>   10

(other than a registration relating solely to the sale of securities to
participants in a Company employee benefits plan, a registration on any form
which does not include substantially the same information as would be required
to be included in a registration statement covering the sale of Registrable
Shares or a registration in which the only Common Stock being registered is
common stock issuable upon conversion of debt securities which are also being
registered), it shall send to each Investor written notice of such determination
and, if within fifteen (15) days after receipt of such notice, such Investor
shall so request in writing, the Company shall use its commercially reasonable
best efforts to include in such registration statement all or any part of the
Registrable Shares that such Investor requests to be registered. If such
registration involves an underwritten public offering and the total amount of
securities, including Registrable Shares, requested by stockholders to be
included in such offering exceeds the amount of securities that the managing
underwriter determines in its sole discretion is compatible with the success of
the offering, then the Company shall be required to include in the offering only
that number of such securities, including Registrable Shares, which the managing
underwriter determines in its sole discretion will not jeopardize the success of
the offering (the securities so included to be apportioned in the following
order of priority (A) first, to the Company, (B) second, among the Investors,
and (C) third, to the extent additional securities may be included therein, pro
rata among the other selling stockholders according to the total amount of
securities owned by each such stockholder). For purposes of the preceding
parenthetical concerning apportionment, for any selling stockholder which is a
holder of Registrable Shares and which is a partnership or corporation, the
partners, retired partners and stockholders of such holder, or the estates and
family members of any such partners and retired partners and any trusts for the
benefit of any of the foregoing persons shall be deemed to be a single "selling
stockholder", and any pro-rata reduction with respect to such "selling
stockholder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"selling stockholder," as defined in this sentence. If any Investor disapproves
of the terms of such underwriting, he may elect to withdraw therefrom by written
notice to the Company and the underwriter. No incidental right under this
Section 6.2 shall be construed to limit any registration required under Section
6.3.

           6.3 DEMAND REGISTRATION. If the Company shall receive from the
Initiating Investors a written demand (a "Demand Registration") that the Company
effect any registration under the Securities Act with respect to all or a part
of the Registrable Shares held by the Initiating Investors the Company will (i)
as soon as reasonably practicable, give written notice of such request to all
Investors; (ii) use its best efforts to effect such registration as soon as
practicable and as will permit or facilitate the sale and distribution of all or
such portion of the Initiating Investors' Registrable Shares as are specified in
such demand (including any Registrable Shares which are held by Investors, which
such Investors request to include in such registration within twenty (20) days
after the receipt of the notice given pursuant to (i) above), and (iii) use its
best efforts to cause such registration to remain effective until the earlier to
occur of the date (A) the Registrable Shares covered thereby have been sold, or
(B) the Investors are able to use Rule 144 of the Securities Act to sell the
Shares without restriction, provided that the Company shall not be obligated to
take any action to effect any such registration, pursuant to this Section 6.3:

               (a) At any time prior to three (3) months following the Closing;

               (b) After the Company has effected one registration pursuant to
this Section 6.3; or

                                       9

<PAGE>   11

               (c) If the Company shall furnish to the Initiating Investors a
certificate signed by the President of the Company, stating that in the good
faith judgment of the Board of Directors of the Company it would be seriously
detrimental to the Company and its shareholders for such Registration Statement
to be filed at the date filing would be required, in which case the Company
shall have an additional period of not more than 180 days within which to file
such Registration Statement.

           6.4 REGISTRATION PROCEDURES. When the Company effects the
registration of the Registrable Shares under the Securities Act pursuant to
Section 6.3 hereof, the Company will, at its expense, as expeditiously and as
reasonably possible, use its reasonable best efforts, to:

               (a) In accordance with the Securities Act and the rules and
regulations of the SEC, prepare and file with the SEC a Registration Statement
with respect to such securities and use its best efforts to cause such
Registration Statement to become and remain effective for the period described
in Section 6.3, and prepare and file with the SEC such amendments to such
Registration Statement and supplements to the prospectus contained therein as
may be necessary to keep such Registration Statement effective for such period
and such Registration Statement and prospectus accurate and complete for such
period;

               (b) Furnish to Investors such reasonable number of copies of the
Registration Statement, preliminary prospectus, final prospectus and such other
documents as Investor may reasonably request in order to facilitate the public
offering of such securities;

               (c) Use its best efforts to register or qualify the securities
covered by such Registration Statement under such state securities or blue sky
laws of such jurisdictions as Investor may reasonably request within twenty (20)
days following the original filing of such Registration Statement, except that
the Company shall not for any purpose be required to execute a general consent
to service of process or to qualify to do business as a foreign corporation in
any jurisdiction where it is not so qualified;

               (d) Notify Investors, promptly after it shall receive notice
thereof, of the date and time when such Registration Statement and each
post-effective amendment thereto has become effective or a supplement to any
prospectus forming a part of such Registration Statement has been filed;

               (e) Notify Investors promptly of any request by the SEC for the
amending or supplementing of such Registration Statement or prospectus or for
additional information;

               (f) Notify Investors promptly if, at the time when a prospectus
relating to such securities is required to be delivered under the Securities
Act, any event has occurred as the result of which any such prospectus or any
other prospectus as then in effect would include an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading and prepare and
promptly file with the SEC, and promptly notify Investors of the filing of, such
amendments or supplements to such Registration Statement or prospectus as may be
necessary to correct such statements or omissions;

               (g) In case any Investor is required to deliver a prospectus at a
time when the prospectus then in circulation is not in compliance with the
Securities Act or the rules and

                                       10

<PAGE>   12

regulations of the SEC, prepare promptly upon request such amendments or
supplements to such Registration Statement and such prospectus as may be
necessary in order for such prospectus to comply with the requirements of the
Securities Act and such rules and regulations;

               (h) Advise Investors, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the SEC
suspending the effectiveness of such Registration Statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such
stop order should be issued; and

               (i) Cause all such securities to be listed on each securities
exchange on which similar securities issued by the Company are then listed,
provided that the applicable listing requirements are satisfied.

           6.5 EXPENSES. With respect to any registration effected pursuant to
Section 6.2 or 6.3 hereof, the Company agrees to bear all fees, costs and
expenses of and incidental to such registration and the public offering in
connection therewith, provided however, that Investors shall bear all
underwriting discounts and commissions, state transfer taxes and brokerage
commissions. The fees, costs and expenses of registration to be borne by the
Company as provided in this Section 6.5 shall include, without limitation, all
registration, filing and NASD fees, printing expenses, fees and disbursements of
counsel and accountants for the Company, and all legal fees and disbursements
and other expenses of complying with state securities or blue sky laws of any
jurisdictions in which the securities to be offered are to be registered or
qualified.

           6.6 INDEMNIFICATION.

               (a) The Company will, and does hereby undertake to, indemnify and
hold harmless each Investor, each of such Investor's officers, directors,
partners and agents, and each person controlling such Investor, with respect to
any registration, qualification, or compliance effected pursuant to this Section
6, and each underwriter, if any, and each person who controls within the meaning
of Section 15 of the Securities Act any underwriter, of the Registrable Shares
held by or issuable to such Investor, against all claims, losses, damages, and
liabilities (or actions in respect thereto) to which they may become subject
under the Securities Act, the Exchange Act, or other federal or state law
arising out of or based on (i) any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus, offering circular, or
other similar document (including any related Registration Statement,
notification, or the like) incident to any such registration, qualification, or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (ii) any violation or alleged violation by the
Company of any federal, state or common law rule or regulation applicable to the
Company in connection with any such registration, qualification, or compliance,
and will reimburse, as incurred, each Investor, each underwriter, and each
director, officer, partner, agent and controlling person, for any legal and any
other expenses reasonably incurred in connection with investigating or defending
any such claim, loss, damage, liability, or action; provided that the Company
will not be liable in any such case to the extent that any such claim, loss,
damage, liability or expense, arises out of or is based on any untrue statement
or omission based upon written information furnished to the Company by an
instrument duly executed by any of the Investors or underwriter and stated to be
specifically for use therein.

                                       11

<PAGE>   13

               (b) Each Investor will, if Registrable Securities held by or
issuable to such Investor are included in such registration, qualification, or
compliance, severally and not jointly, indemnify the Company, each of its
directors, officers, legal counsel and accountants and each underwriter, if any,
of the Company's securities covered by such Registration Statement, each person
controlling the Company or such underwriter, within the meaning of Section 15 of
the Securities Act, against all claims, losses, damages, and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such Registration
Statement, prospectus, offering circular, or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse,
as incurred, the Company, and each such underwriter or other person, for any
legal or any other expenses reasonably incurred in connection with investigating
or defending any such claim, loss, damage, liability, or action, in each case to
the extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) was made in such
Registration Statement, prospectus, offering circular, or other document, in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Investor and stated to be
specifically for use therein; provided, however, that the liability of each such
Investor hereunder shall be limited to the gross proceeds received by such
Investor from the sale of securities under such Registration Statement. In no
event will any Investor be required to enter into any agreement or undertaking
in connection with any registration under this Section 6 providing for any
indemnification or contribution obligations on the part of such Investor greater
than such Investor's obligations under this Section 6.

               (c) Promptly after receipt by a party indemnified pursuant to the
provisions of paragraph (a) or (b) of this Section 6.6 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party shall, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of such Sections
6.6(a) or 6.6(b), notify the indemnifying party of the commencement thereof;
provided, however, that the failure to so notify the indemnifying party shall
not relieve the indemnifying party from any liability which it may have to the
indemnified party otherwise than hereunder unless the failure to give such
notice is materially prejudicial to the idemnifying party's ability to defend
such action. In case such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party shall have the right to participate in, and to the extent that it may
wish, jointly assume the defense thereof, with counsel reasonably satisfactory
to such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election to so assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party pursuant to the
provisions of Section 6.6(a) or 6.6(b) for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation (except if representation
of such indemnified party by counsel to the indemnifying party would be
inappropriate due to actual or potential conflicting interests between the
indemnified party and any other party represented by such counsel). No
indemnifying party shall be liable to an indemnified party for any settlement of
any action or claim without the consent of the indemnifying party.

           6.7 REPORTING REQUIREMENTS UNDER THE EXCHANGE ACT. The Company shall
timely file such information, documents and reports as the SEC may require or
prescribe under Section 13 or 15(d) of the Exchange Act. The Company
acknowledges and agrees that the purposes of the requirements contained in this
Section 6.7 are to enable Investors to comply with the current public
information requirement contained in paragraph (c) of Rule 144 should any
Investor ever wish

                                       12

<PAGE>   14

to dispose of any of the Registrable Shares without registration under the
Securities Act in reliance upon Rule 144 (or any other similar exemptive
provision).

           6.8 INVESTOR INFORMATION. The Company may require Investors to
furnish the Company such information with respect to Investors and the
distribution of the Registrable Shares as the Company may from time to time
reasonably request in writing as shall be required by law or by the SEC in
connection therewith.

           6.9 TRANSFER OF REGISTRATION RIGHTS. The registration rights of the
Investors under this Agreement may be transferred (i) in the case of an
individual, to any member of the immediate family of such individual or to any
trust for the benefit of the individual or any such family member or members,
(ii) to any partner or affiliate of such Investor, (iii) to any transferee
provided (1) that the transferee receives the lesser of (A) at least __________
Registrable Shares (as constituted on the date hereof) or (B) all of the
Registrable Shares held by such Investor; (2) the transferee is bound by the
terms of this Agreement; and (3) the Company is given written notice prior to
such transfer. Notwithstanding the foregoing, the registration rights of
Investors under this Agreement may not be transferred to an entity, or a person
controlled by, under common control with or controlling such entity, which is a
direct competitor of the Company.

        7. MISCELLANEOUS.

           7.1 ENTIRE AGREEMENT. This Agreement, the Schedules hereto, and the
documents referred to herein constitute the full and entire understanding and
agreement between the parties and no party shall be liable or bound to any to
any other party in any manner by any warranties, representations or covenants
except as specifically set forth herein or therein.

           7.2 SURVIVAL OF WARRANTIES. Unless otherwise set forth in this
Agreement, the warranties, representations and agreements of the Company and
Investors contained herein shall survive the execution and delivery of this
Agreement and the Closing and shall in no way be affected by any investigation
of the subject matter thereof made by or on behalf of Investors or the Company.

           7.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the parties
(including permitted transferees of any Shares sold hereunder). Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.

           7.4 GOVERNING LAW; JURISDICTION AND VENUE; ATTORNEY'S FEES. This
Agreement and all acts and transactions pursuant hereto and the rights and
obligations of the parties hereto shall be governed by and construed under the
laws of the State of California without reference to principles of conflicts of
laws. The parties hereby consent and agree that the United States District for
the Central District of California or the California Superior Court for Santa
Barbara County will have exclusive jurisdiction over any legal action or
proceeding arising out of or relating to this Agreement, and each party consents
to the in personam jurisdiction of such courts for the purpose of any such
action or proceeding and agrees that venue is proper in such courts. If any
action at law or in equity is necessary to enforce or interpret the terms of
this Agreement, the prevailing party shall be

                                       13

<PAGE>   15

entitled to reasonable attorney's and expert witness fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.

           7.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.

           7.6 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

           7.7 NOTICES. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery, delivery by nationally recognized
overnight courier or five days after deposit with the United States Post Office,
by registered or certified mail, postage prepaid and addressed to the party to
be notified at the address indicated for such party on the signature page
hereto, or at such address as such party may designate by ten days advance
written notice to the other party.

           7.8 FINDERS' FEES. Each Investor agrees to indemnify and to hold
harmless the Company from any liability for any commission or compensation in
the nature of a finders' fee to any broker or other person or firm (and the
costs and expenses of defending against such liability or asserted liability)
for which such Investor or any of its officers, partners, employees or
representatives is responsible. The Company agrees to indemnify and hold
harmless Investors from any liability for any commission or compensation in the
nature of a finders' fee to any broker or other person or firm (and the costs
and expenses of defending against such liability or asserted liability) for
which the Company or any of its officers, employees or representatives is
responsible.

           7.9 EXPENSES. Irrespective of whether the Closing is effected, the
Company and each Investor shall each pay all costs and expenses that it incurs
with respect to the negotiation, execution, delivery and performance of this
Agreement.

           7.10 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Investors
holding a majority of the Shares purchased hereunder. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon all the
Investors and the securities purchased under this Agreement at the time
outstanding (including securities into which such securities have been
converted), each future holder of all such securities and the Company.

           7.11 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and the balance of the Agreement shall be
enforceable in accordance with its terms.

           7.12 INFORMATION CONFIDENTIAL. Each Investor acknowledges that the
information received by it pursuant hereto is confidential and for such
Investor's use only, and it will refrain from using such information or
reproducing, disclosing, or disseminating such information to any other person
(other than its employees, affiliates, agents, or partners having a need to know
the contents of such information and its attorneys), except in connection with
the exercise of rights under this Agreement, unless the Company has made such
information available to the public generally or it is required by a
governmental body to disclose such information.

                                       14

<PAGE>   16

        IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.

Address:                               COMPUTER MOTION, INC.

130-B Cremona Drive
Goleta, California  93117              By:
                                           -------------------------------------
                                           Gordon L. Rogers,
                                           Chief Financial Officer and Secretary

                                       15

<PAGE>   17

Address:                                    PATRICIA DUGGAN

                                            By:
--------------------------------               ---------------------------------

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

Address:                                    BLAZON PROFIT SHARING PLAN

                                            By:
--------------------------------               ---------------------------------

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

Address:                                    ROBERT W. DUGGAN

                                            By:
--------------------------------               ---------------------------------

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

Address:                                    IAIN JONES

                                            By:
--------------------------------               ---------------------------------

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

Address:                                    GREGORY J. RUEHLE

                                            By:
--------------------------------               ---------------------------------

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

Address:                                    MICHAEL SHIELDS

                                            By:
--------------------------------               ---------------------------------

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

Address:                                    MORRIS M. JURKOWITZ

                                            By:
--------------------------------               ---------------------------------

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

Address:                                    J.C. BENNETT

                                            By:
--------------------------------               ---------------------------------

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

Address:                                    PEI LUN ZHANG

                                            By:
--------------------------------               ---------------------------------

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

                                       16

<PAGE>   18

                                   SCHEDULE A

                                                                    TOTAL
                                   NO. OF SHARES OF  PRICE PER     PURCHASE
PURCHASER                            COMMON STOCK      SHARE        PRICE
                                   ----------------  ---------  --------------
Patricia Duggan                        260,790        $7.669    $1,999,998.51
Blazon Profit Sharing Plan             195,593        $7.669    $1,500,002.72
Robert W. Duggan                        75,778        $7.669    $  581,141.48
Iain Jones                               5,067        $7.669    $   38,858.82
Gregory J. Ruehle                        6,520        $7.669    $   50,001.88
Michael Shields                          6,520        $7.669    $   50,001.88
Morris M. Jurkowitz                     40,000        $7.669    $  306,760.00
J.C. Bennett                             1,363        $7.669    $   10,452.85
Pei Lun Zhang                            3,260        $7.669    $   25,000.94
TOTAL SHARES PURCHASED AT CLOSING      594,891        $7.669    $4,562,219.08

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