Document:

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                                                                    Exhibit 10.2

                               ALTUS MEDICAL, INC.

                                 1998 STOCK PLAN

     1. Purposes of the Plan. The purposes of this Stock Plan are to attract and
        --------------------
retain the best available personnel for positions of substantial responsibility,
to provide additional incentive to Employees, Directors and Consultants and to
promote the success of the Company's business. Options granted under the Plan
may be Incentive Stock Options or Nonstatutory Stock Options, as determined by
the Administrator at the time of grant. Stock Purchase Rights may also be
granted under the Plan.

     2. Definitions. As used herein, the following definitions shall apply:
        -----------

          (a) "Administrator" means the Board or any of its Committees as shall
               -------------
be administering the Plan in accordance with Section 4 hereof.

          (b) "Applicable Laws" means the requirements relating to the
               ---------------
administration of stock option plans under US state corporate laws, US
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any other country or jurisdiction where Options or Stock Purchase Rights are
granted under the Plan.

          (c) "Board" means the Board of Directors of the Company.
               -----

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

          (e) "Committee" means a committee of Directors appointed by the Board
               ---------
in accordance with Section 4 hereof.

          (f) "Common Stock" means the Common Stock of the Company.
               ------------

          (g) "Company" means Altus Medical, Inc., a Delaware corporation.
               -------

          (h) "Consultant" means any person who is engaged by the Company or any
               ----------
Parent or Subsidiary to render consulting or advisory services to such entity.

          (i) "Director" means a member of the Board of Directors of the
               --------
Company.

          (j) "Disability" means total and permanent disability as defined in
               ----------
Section 22(e)(3) of the Code.

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          (k) "Employee" means any person, including Officers and Directors,
               --------
employed by the Company or any Parent or Subsidiary of the Company. A Service
Provider shall not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, on the 181st day of such leave any Incentive Stock
Option held by the Optionee shall cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Nonstatutory Stock Option.
Neither service as a Director nor payment of a director's fee by the Company
shall be sufficient to constitute "employment" by the Company.

          (l) "Exchange Act" means the Securities Exchange Act of 1934, as
               ------------
amended.

          (m) "Fair Market Value" means, as of any date, the value of Common
               -----------------
Stock determined as follows:

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

               (ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for the Common Stock
on the last market trading day prior to the day of determination; or

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

          (n) "Incentive Stock Option" means an Option intended to qualify as an
               ----------------------
incentive stock option within the meaning of Section 422 of the Code.

          (o) "Nonstatutory Stock Option" means an Option not intended to
               -------------------------
qualify as an Incentive Stock Option.

          (p) "Officer" means a person who is an officer of the Company within
               -------
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

          (q) "Option" means a stock option granted pursuant to the Plan.
               ------

          (r) "Option Agreement" means a written or electronic agreement between
               ----------------
the Company and an Optionee evidencing the terms and conditions of an individual
Option grant. The Option Agreement is subject to the terms and conditions of the
Plan.

                                    -2-

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          (s) "Option Exchange Program" means a program whereby outstanding
               -----------------------
Options are exchanged for Options with a lower exercise price.

          (t) "Optioned Stock" means the Common Stock subject to an Option or a
               --------------
Stock Purchase Right.

          (u) "Optionee" means the holder of an outstanding Option or Stock
               --------
Purchase Right granted under the Plan.

          (v) "Parent" means a "parent corporation," whether now or hereafter
               ------
existing, as defined in Section 424(e) of the Code.

          (w) "Plan" means this 1998 Stock Plan.
               ----
          (x) "Restricted Stock" means shares of Common Stock acquired pursuant
               ----------------
to a grant of a Stock Purchase Right under Section 11 below.

          (y) "Service Provider" means an Employee, Director or Consultant.
               ----------------
          (z) "Share" means a share of the Common Stock, as adjusted in
               -----
accordance with Section 12 below.

          (aa) "Stock Purchase Right" means a right to purchase Common Stock
                --------------------
pursuant to Section 11 below.

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

     3. Stock Subject to the Plan. Subject to the provisions of Section 12 of
        -------------------------
the Plan, the maximum aggregate number of Shares which may be subject to option
and sold under the Plan is 2,000,000 Shares. The Shares may be authorized but
unissued, or reacquired Common Stock.

     If an Option or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an Option
Exchange Program, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated). However, Shares that have actually been issued under the Plan, upon
exercise of either an Option or Stock Purchase Right, shall not be returned to
the Plan and shall not become available for future distribution under the Plan,
except that if Shares of Restricted Stock are repurchased by the Company at
their original purchase price, such Shares shall become available for future
grant under the Plan.

     4. Administration of the Plan.
        --------------------------

          (a) Administrator. The Plan shall be administered by the Board or a
              -------------
Committee appointed by the Board, which Committee shall be constituted to comply
with Applicable Laws.

                                    -3-

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          (b) Powers of the Administrator. Subject to the provisions of the Plan
              ---------------------------
and, in the case of a Committee, the specific duties delegated by the Board to
such Committee, and subject to the approval of any relevant authorities, the
Administrator shall have the authority in its discretion:

               (i) to determine the Fair Market Value;

               (ii) to select the Service Providers to whom Options and Stock
Purchase Rights may from time to time be granted hereunder;

               (iii) to determine the number of Shares to be covered by each
such award granted hereunder;

               (iv) to approve forms of agreement for use under the Plan;

               (v) to determine the terms and conditions, of any Option or Stock
Purchase Right granted hereunder. Such terms and conditions include, but are not
limited to, the exercise price, the time or times when Options or Stock Purchase
Rights may be exercised (which may be based on performance criteria), any
vesting acceleration or waiver of forfeiture restrictions, and any restriction
or limitation regarding any Option or Stock Purchase Right or the Common Stock
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine;

               (vi) to determine whether and under what circumstances an Option
may be settled in cash under subsection 9(e) instead of Common Stock;

               (vii) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option has declined since the date the Option was granted;

               (viii) to initiate an Option Exchange Program;

               (ix) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws;

               (x) to allow Optionees to satisfy withholding tax obligations by
electing to have the Company withhold from the Shares to be issued upon exercise
of an Option or Stock Purchase Right that number of Shares having a Fair Market
Value equal to the amount required to be withheld. The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined. All elections by Optionees to have Shares
withheld for this purpose shall be made in such form and under such conditions
as the Administrator may deem necessary or advisable; and

               (xi) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan.

                                       -4-

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          (c) Effect of Administrator's Decision. All decisions, determinations
              ----------------------------------
and interpretations of the Administrator shall be final and binding on all
Optionees.

     5. Eligibility.
        -----------
          (a) Nonstatutory Stock Options and Stock Purchase Rights may be
granted to Service Providers. Incentive Stock Options may be granted only to
Employees.

          (b) Each Option shall be designated in the Option Agreement as either
an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 5(b), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.

          (c) Neither the Plan nor any Option or Stock Purchase Right shall
confer upon any Optionee any right with respect to continuing the Optionee's
relationship as a Service Provider with the Company, nor shall it interfere in
any way with his or her right or the Company's right to terminate such
relationship at any time, with or without cause.

     6. Term of Plan. The Plan shall become effective upon its adoption by the
        ------------
Board. It shall continue in effect for a term of ten (10) years unless sooner
terminated under Section 14 of the Plan.

     7. Term of Option. The term of each Option shall be stated in the Option
        --------------
Agreement; provided, however, that the term shall be no more than ten (10) years
from the date of grant thereof. In the case of an Incentive Stock Option granted
to an Optionee who, at the time the Option is granted, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the term of the Option shall be five (5)
years from the date of grant or such shorter term as may be provided in the
Option Agreement.

     8. Option Exercise Price and Consideration.
        ---------------------------------------
          (a) The per share exercise price for the Shares to be issued upon
exercise of an Option shall be such price as is determined by the Administrator,
but shall be subject to the following:

               (i) In the case of an Incentive Stock Option

                    (A) granted to an Employee who, at the time of grant of such
Option, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the exercise
price shall be no less than 110% of the Fair Market Value per Share on the date
of grant.

                                       -5-

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                    (B) granted to any other Employee, the per Share exercise
price shall be no less than 100% of the Fair Market Value per Share on the date
of grant.

               (ii) In the case of a Nonstatutory Stock Option

                    (A) granted to a Service Provider who, at the time of grant
of such Option, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the exercise price shall be no less than 110% of the Fair Market Value per Share
on the date of grant.

                    (B) granted to any other Service Provider, the per Share
exercise price shall be no less than 85% of the Fair Market Value per Share on
the date of grant.

               (iii) Notwithstanding the foregoing, Options may be granted with
a per Share exercise price other than as required above pursuant to a merger or
other corporate transaction.

          (b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). Such consideration may consist of (1) cash,
(2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six months on the date of surrender, and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which such Option shall be exercised, (5) consideration received by the Company
under a cashless exercise program implemented by the Company in connection with
the Plan, or (6) any combination of the foregoing methods of payment. In making
its determination as to the type of consideration to accept, the Administrator
shall consider if acceptance of such consideration may be reasonably expected to
benefit the Company.

     9. Exercise of Option.
        ------------------

          (a) Procedure for Exercise; Rights as a Shareholder. Any Option
              -----------------------------------------------
granted hereunder shall be exercisable according to the terms hereof at such
times and under such conditions as determined by the Administrator and set forth
in the Option Agreement. Except in the case of Options granted to Officers,
Directors and Consultants, Options shall become exercisable at a rate of no less
than 20% per year over five (5) years from the date the Options are granted.
Unless the Administrator provides otherwise, vesting of Options granted
hereunder to Officers and Directors shall be tolled during any unpaid leave of
absence. An Option may not be exercised for a fraction of a Share.

     An Option shall be deemed exercised when the Company receives: (i) written
or electronic notice of exercise (in accordance with the Option Agreement) from
the person entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is exercised. Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise of
an Option shall be issued in the name of the Optionee or, if requested by the
Optionee, in the name of the Optionee

                                       -6-

<PAGE>

and his or her spouse. Until the Shares are issued (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company), no right to vote or receive dividends or any other rights
as a shareholder shall exist with respect to the Shares, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such
Shares promptly after the Option is exercised. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the
Shares are issued, except as provided in Section 12 of the Plan.

     Exercise of an Option in any manner shall result in a decrease in the
number of Shares thereafter available, both for purposes of the Plan and for
sale under the Option, by the number of Shares as to which the Option is
exercised.

          (b) Termination of Relationship as a Service Provider. If an Optionee
              -------------------------------------------------
ceases to be a Service Provider, such Optionee may exercise his or her Option
within such period of time as is specified in the Option Agreement (of at least
thirty (30) days) to the extent that the Option is vested on the date of
termination (but in no event later than the expiration of the term of the Option
as set forth in the Option Agreement). In the absence of a specified time in the
Option Agreement, the Option shall remain exercisable for three (3) months
following the Optionee's termination. If, on the date of termination, the
Optionee is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall revert to the Plan. If, after termination,
the Optionee does not exercise his or her Option within the time specified by
the Administrator, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.

          (c) Disability of Optionee. If an Optionee ceases to be a Service
              ----------------------
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option Agreement
(of at least six (6) months) to the extent the Option is vested on the date of
termination (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement). In the absence of a specified time
in the Option Agreement, the Option shall remain exercisable for twelve (12)
months following the Optionee's termination. If, on the date of termination, the
Optionee is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall revert to the Plan. If, after termination,
the Optionee does not exercise his or her Option within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.

          (d) Death of Optionee. If an Optionee dies while a Service Provider,
              -----------------
the Option may be exercised within such period of time as is specified in the
Option Agreement (of at least six (6) months) to the extent that the Option is
vested on the date of death (but in no event later than the expiration of the
term of such Option as set forth in the Option Agreement) by the Optionee's
estate or by a person who acquires the right to exercise the Option by bequest
or inheritance. In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Optionee's
termination. If, at the time of death, the Optionee is not vested as to the
entire Option, the Shares covered by the unvested portion of the Option shall
immediately revert to the Plan. If the Option is not so exercised within the
time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.

                                       -7-

<PAGE>

          (e) Buyout Provisions. The Administrator may at any time offer to buy
              -----------------
out for a payment in cash or Shares, an Option previously granted, based on such
terms and conditions as the Administrator shall establish and communicate to the
Optionee at the time that such offer is made.

     10. Non-Transferability of Options and Stock Purchase Rights. The Options
         --------------------------------------------------------
and Stock Purchase Rights may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.

     11. Stock Purchase Rights.
         ---------------------

          (a) Rights to Purchase. Stock Purchase Rights may be issued either
              ------------------
alone, in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer Stock Purchase Rights under the Plan, it shall advise the
offeree in writing or electronically of the terms, conditions and restrictions
related to the offer, including the number of Shares that such person shall be
entitled to purchase, the price to be paid, and the time within which such
person must accept such offer. The terms of the offer shall comply in all
respects with Section 260.140.42 of Title 10 of the California Code of
Regulations. The offer shall be accepted by execution of a Restricted Stock
purchase agreement in the form determined by the Administrator.

          (b) Repurchase Option. Unless the Administrator determines otherwise,
              -----------------
the Restricted Stock purchase agreement shall grant the Company a repurchase
option exercisable upon the voluntary or involuntary termination of the
purchaser's service with the Company for any reason (including death or
disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at such rate as the
Administrator may determine. Except with respect to Shares purchased by
Officers, Directors and Consultants, the repurchase option shall in no case
lapse at a rate of less than 20% per year over five (5) years from the date of
purchase.

          (c) Other Provisions. The Restricted Stock purchase agreement shall
              ----------------
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion.

          (d) Rights as a Shareholder. Once the Stock Purchase Right is
              -----------------------
exercised, the purchaser shall have rights equivalent to those of a shareholder
and shall be a shareholder when his or her purchase is entered upon the records
of the duly authorized transfer agent of the Company. No adjustment shall be
made for a dividend or other right for which the record date is prior to the
date the Stock Purchase Right is exercised, except as provided in Section 12 of
the Plan.

     12. Adjustments Upon Changes in Capitalization, Merger or Asset Sale.
         ----------------------------------------------------------------

          (a) Changes in Capitalization. Subject to any required action by the
              -------------------------
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option or Stock

                                    -8-

<PAGE>

Purchase Right, and the number of shares of Common Stock which have been
authorized for issuance under the Plan but as to which no Options or Stock
Purchase Rights have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option or Stock Purchase Right, as well as
the price per share of Common Stock covered by each such outstanding Option or
Stock Purchase Right, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the number of issued
shares of Common Stock effected without receipt of consideration by the Company.
The conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration." Such adjustment shall
be made by the Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an Option or Stock Purchase Right.

          (b) Dissolution or Liquidation. In the event of the proposed
              --------------------------
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option or Stock Purchase Right until
fifteen (15) days prior to such transaction as to all of the Optioned Stock
covered thereby, including Shares as to which the Option or Stock Purchase Right
would not otherwise be exercisable. In addition, the Administrator may provide
that any Company repurchase option applicable to any Shares purchased upon
exercise of an Option or Stock Purchase Right shall lapse as to all such Shares,
provided the proposed dissolution or liquidation takes place at the time and in
the manner contemplated. To the extent it has not been previously exercised, an
Option or Stock Purchase Right will terminate immediately prior to the
consummation of such proposed action.

          (c) Merger or Asset Sale. In the event of a merger of the Company with
              --------------------
or into another corporation, or the sale of substantially all of the assets of
the Company, each outstanding Option and Stock Purchase Right shall be assumed
or an equivalent option or right substituted by the successor corporation or a
Parent or Subsidiary of the successor corporation. In the event that the
successor corporation refuses to assume or substitute for the Option or Stock
Purchase Right, the Optionee shall fully vest in and have the right to exercise
the Option or Stock Purchase Right as to all of the Optioned Stock, including
Shares as to which it would not otherwise be vested or exercisable. If an Option
or Stock Purchase Right becomes fully vested and exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee in writing or electronically that the
Option or Stock Purchase Right shall be fully exercisable for a period of
fifteen (15) days from the date of such notice, and the Option or Stock Purchase
Right shall terminate upon the expiration of such period. For the purposes of
this paragraph, the Option or Stock Purchase Right shall be considered assumed
if, following the merger or sale of assets, the option or right confers the
right to purchase or receive, for each Share of Optioned Stock subject to the
Option or Stock Purchase Right immediately prior to the merger or sale of
assets, the consideration (whether stock, cash, or other securities or property)
received in the merger or sale of assets by holders of Common Stock for each
Share held on the effective date of the

                                       -9-

<PAGE>

transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets is not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation, provide
for the consideration to be received upon the exercise of the Option or Stock
Purchase Right, for each Share of Optioned Stock subject to the Option or Stock
Purchase Right, to be solely common stock of the successor corporation or its
Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger or sale of assets.

13. Time of Granting Options and Stock Purchase Rights. The date of grant of an
    --------------------------------------------------
Option or Stock Purchase Right shall, for all purposes, be the date on which the
Administrator makes the determination granting such Option or Stock Purchase
Right, or such other date as is determined by the Administrator. Notice of the
determination shall be given to each Service Provider to whom an Option or Stock
Purchase Right is so granted within a reasonable time after the date of such
grant.

     14. Amendment and Termination of the Plan.
         -------------------------------------

          (a) Amendment and Termination. The Board may at any time amend, alter,
              -------------------------
suspend or terminate the Plan.

          (b) Shareholder Approval. The Board shall obtain shareholder approval
              --------------------
of any Plan amendment to the extent necessary and desirable to comply with
Applicable Laws.

          (c) Effect of Amendment or Termination. No amendment, alteration,
              ----------------------------------
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to Options granted under the
Plan prior to the date of such termination.

     15. Conditions Upon Issuance of Shares.
         ----------------------------------

          (a) Legal Compliance. Shares shall not be issued pursuant to the
              ----------------
exercise of an Option unless the exercise of such Option and the issuance and
delivery of such Shares shall comply with Applicable Laws and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.

          (b) Investment Representations. As a condition to the exercise of an
              --------------------------
Option, the Administrator may require the person exercising such Option to
represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.

     16. Inability to Obtain Authority. The inability of the Company to obtain
         -----------------------------
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any

                                      -10-

<PAGE>

liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.

     17. Reservation of Shares. The Company, during the term of this Plan, shall
         ---------------------
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

     18. Shareholder Approval. The Plan shall be subject to approval by the
         --------------------
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the degree and manner
required under Applicable Laws.

     19. Information to Optionees and Purchasers. The Company shall provide to
         ---------------------------------------
each Optionee and to each individual who acquires Shares pursuant to the Plan,
not less frequently than annually during the period such Optionee or purchaser
has one or more Options or Stock Purchase Rights outstanding, and, in the case
of an individual who acquires Shares pursuant to the Plan, during the period
such individual owns such Shares, copies of annual financial statements. The
Company shall not be required to provide such statements to key employees whose
duties in connection with the Company assure their access to equivalent
information.

                                      -11-<PAGE>

                                                                    Exhibit 10.6

                 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

1.   Certain Definitions ....................................................  1

2.   Transferability ........................................................  2

     2.1    Restrictions on Transferability .................................  2
     2.2    Restrictive Legend ..............................................  2
     2.3    Notice of Proposed Transfers ....................................  3
     2.4    Removal of Restrictions on Transfer of Securities ...............  4

3.   Registration Rights ....................................................  4

     3.1    Requested Registration ..........................................  4
     3.2    Company Registration ............................................  6
     3.3    Registration on Form S-3 ........................................  7
     3.4    Expenses of Registration ........................................  8
     3.5    Registration Procedures .........................................  8
     3.6    Indemnification ................................................. 10
     3.7    Information by Holder ........................................... 12
     3.8    Rule 144 Reporting .............................................. 12
     3.9    Transfer of Registration Rights ................................. 13
     3.10   Standoff Agreement .............................................. 13
     3.11   Limitation on Subsequent Registration Rights .................... 13
     3.12   Termination of Registration Rights .............................. 13

4.   Right of First Offer ................................................... 14

     4.1    Right of First Offer Upon Issuances of Securities
            by the Company .................................................. 14

5.   Covenants of the Company ............................................... 15

     5.1    Financial Information for all Investors ......................... 15
     5.2    Financial Information for Major Investors ....................... 16
     5.3    Inspection ...................................................... 16
     5.4    Confidentiality ................................................. 17
     5.5    Qualified Small Business ........................................ 17
     5.6    Stock Vesting ................................................... 17
     5.7    Restrictions on Sales; Assignment of Right of First Refusal ..... 17
     5.8    Indemnification ................................................. 17
     5.9    Termination of Covenants ........................................ 18

6.   General Provisions ..................................................... 18

     6.1    Amendment and Waiver ............................................ 18
     6.2    Governing Law ................................................... 18
     6.3    Successors and Assigns .......................................... 18

                                      -i-

<PAGE>

                               TABLE OF CONTENTS
                                  (continued)

                                                                            Page
                                                                            ----

     6.4    Severability .................................................... 18
     6.5    Notices ......................................................... 18
     6.6    Counterparts .................................................... 18
     6.7    Titles and Subtitles ............................................ 19
     6.8    Expenses ........................................................ 19
     6.9    Aggregation of Stock ............................................ 19
     6.10   Delays or Omissions ............................................. 19

                                      -ii-

<PAGE>

                      AMENDED AND RESTATED RIGHTS AGREEMENT

     This Amended and Restated Rights Agreement ("Agreement") is entered into as
of November 12, 1999 by and among Altus Medical, Inc., a Delaware
corporation (the "Company") and the investors set forth on Exhibit A hereto (the
"Investors").

     WHEREAS, the Company and certain of the Investors have entered into an
Investor Rights Agreement dated as of November 19, 1998 (the "Previous Investor
Rights Agreement");

     WHEREAS, the Company and the Investors desire to amend and restate and
replace in its entirety the Previous Investor Rights Agreement with the terms
and conditions of this Agreement;

     WHEREAS, certain of the Investors are purchasing the Company's Series B
Preferred Stock pursuant to a Series B Preferred Stock Purchase Agreement of
even date herewith (the "Series B Agreement"); and

     WHEREAS, in order to induce the Investors to consummate their purchase of
the Series B Preferred Stock of the Company, the parties have agreed to enter
into this Agreement upon the terms and conditions set forth below.

     NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:

     1.    Certain Definitions. All terms not otherwise defined in this
           -------------------
Agreement shall have the meaning set forth in the Series B Agreement. As used in
this Agreement, the following terms shall have the following respective
meanings:

           1.1   "Commission" shall mean the Securities and Exchange Commission
                  ----------
or any other federal agency at the time administering the Securities Act.

           1.2   "Holder" shall mean the Investors holding Registrable
                  ------
Securities and any person holding such securities to whom the rights under this
Agreement have been transferred in accordance with Section 3. 9 hereof.

           1.3   "Initiating Holders" shall mean any Holder or Holders who in
                  ------------------
the aggregate hold at least 50% of the Registrable Securities.

           1.4   "Registrable Securities" means (1) the Common Stock issuable or
                  ----------------------
issued upon conversion of the Series A Preferred Stock and Series B Preferred
Stock and (2) any Common Stock of the Company issued as (or issuable upon the
conversion or exercise of any warrant, right or other security which is issued
as) a dividend or other distribution with respect to, or in exchange for or in
replacement of, the shares referenced in (1) above, excluding in all cases,
however, (i) any

<PAGE>

Registrable Securities sold by a person in a transaction in which such person's
rights under this Agreement are not assigned, or (ii) any Registrable Securities
sold to or through a broker or dealer or underwriter in a public distribution or
a public securities transaction.

           1.5   The terms "register," "registered" and "registration" refer to
                            --------    ----------       ------------
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.

           1.6   "Registration Expenses" shall mean all expenses, except Selling
                  ---------------------
Expenses as defined below, incurred by the Company in complying with Sections
3.1, 3.2 and 3.3 hereof, including, without limitation, all registration,
qualification and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, fees and disbursements of one special
counsel to the Holders not to exceed $25,000, blue sky fees and expenses, the
expense of any special audits incident to or required by any such registration
(but excluding the compensation of regular employees of the Company which shall
be paid in any event by the Company).

           1.7   "Restricted Securities" shall mean the securities of the
                  ---------------------
Company required to bear the legend set forth in Section 2.2 hereof.

           1.8   "Securities Act" shall mean the Securities Act of 1933, as
                  --------------
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.

           1.9   "Selling Expenses" shall mean all underwriting discounts,
                  ----------------
selling commissions and stock transfer taxes.

     2.    Transferability
           ---------------

           2.1   Restrictions on Transferability. The Registrable Securities
                 -------------------------------
shall not be sold, assigned, transferred or pledged except upon the conditions
specified in this Section 2, which conditions are intended to ensure compliance
with the provisions of the Securities Act. The Investors will cause any proposed
purchaser, assignee, transferee, or pledgee of the Registrable Securities held
by the Investors to agree to take and hold such securities subject to the
provisions and upon the conditions specified in this Section 2.

           2.2   Restrictive Legend. Each certificate representing (i)
                 ------------------
Registrable Securities and (ii) any other securities issued in respect of the
Registrable Securities upon any stock split, stock dividend, recapitalization,
merger, consolidation or similar event, shall (unless otherwise permitted by the
provisions of Section 2.3 below) be stamped or otherwise imprinted with legends
in the following forms (in addition to any legend required under applicable
state securities laws):

                                      -2-

<PAGE>

                 (a) THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER
SUCH ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER
EVIDENCE, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS
NOT REQUIRED.

                 (b) THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE
TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE
COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF
THE COMPANY.

           The Investors and Holders consent to the Company making a notation on
its records and giving instructions to any transfer agent of the Registrable
Securities in order to implement the restrictions on transfer established in
this Section 2.

           2.3   Notice of Proposed Transfers. The holder of each certificate
                 ----------------------------
representing Restricted Securities by acceptance thereof agrees to comply in all
respects with the provisions of this Section 2.3. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities (other than (i) a
transfer not involving a change in beneficial ownership, (ii) in transactions
involving the distribution without consideration of Restricted Securities by the
holders to any of its partners, or retired partners, or to the estate of any of
its partners or retired partners, (iii) a transfer to an affiliated fund,
partnership or company, which is not a competitor of the Company, subject to
compliance with applicable securities laws, (iv) a corporation to its
stockholders in accordance with their interest in the corporation, (v) a limited
liability company to its members or former members in accordance with their
interest in the limited liability company, (vi) or the transfer by gift, will or
intestate succession of any holder to his spouse or lineal descendants or
ancestors), unless there is in effect a registration statement under the
Securities Act covering the proposed transfer, the holder thereof shall give
written notice to the Company of such holder's intention to effect such
transfer, sale, assignment or pledge. Each such notice shall describe the manner
and circumstances of the proposed transfer, sale, assignment or pledge in
sufficient detail, and shall be accompanied, at such holder's expense and if
reasonably requested by the Company by either (i) an unqualified written opinion
of legal counsel who shall, and whose legal opinion shall be, reasonably
satisfactory to the Company addressed to the Company, to the effect that the
proposed transfer of the Restricted Securities may be effected without
registration under the Securities Act, or (ii) a "no action" letter from the
Commission to the effect that the transfer of such securities without
registration will not result in a recommendation by the staff of the Commission
that action be taken with respect thereto, whereupon the holder of such
Restricted Securities shall be entitled to transfer such Restricted Securities
in accordance with the terms of the notice delivered by the holder to the
Company; provided, however, that the Company will not require an opinion of
legal counsel or a no action letter for transactions made pursuant to Rule
144(k) under the Securities Act except in unusual circumstances. Each
certificate evidencing the Restricted Securities transferred as above provided
shall bear the appropriate restrictive legend set forth in Section 2.2 above,
except that such certificate shall not bear such restrictive legend if in the
opinion of counsel for such holder

                                      -3-

<PAGE>

and in the reasonable opinion of the Company such legend is not required in
order to establish compliance with any provision of the Securities Act.

           2.4   Removal of Restrictions on Transfer of Securities. Any legend
                 -------------------------------------------------
referred to in Section 2.2 hereof stamped on a certificate evidencing (i) the
Registrable Securities or (ii) any other securities issued in respect of the
Registrable Securities upon any stock split, stock dividend, recapitalization,
merger, consolidation or similar event and the stock transfer instructions and
record notations with respect to such security shall be removed and the Company
shall issue a certificate without such legend to the holder of such security if
such security is registered under the Securities Act, or if such holder provides
the Company with an opinion of counsel (which may be counsel for the Company)
reasonably acceptable to the Company to the effect that a public sale or
transfer of such security may be made without qualification, legend, or
registration under the Securities Act.

     3.    Registration Rights.
           -------------------

           3.1   Requested Registration.
                 ----------------------

                 (a)   Requested Registration. If the Company shall receive from
                       ----------------------
Initiating Holders a written request that the Company effect any registration
(other than a registration on Form S-3 or any related form of registration
statement) with respect to Registrable Securities and the anticipated aggregate
offering price to the public, excluding underwriting discounts and commissions,
is at least eight million dollars ($8,000,000), the Company will:

                       (i)  within thirty days of the receipt by the Company of
such notice, give written notice of the proposed registration, qualification or
compliance to all other Holders; and

                       (ii) as soon as practicable, use its best efforts to
effect such registration, qualification or compliance (including, without
limitation, appropriate qualification under applicable blue sky or other state
securities laws and appropriate compliance with applicable regulations issued
under the Securities Act and any other governmental requirements or regulations)
as may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Registrable Securities as are
specified in such request, together with all or such portion of the Registrable
Securities of any Holder or Holders joining in such request as are specified in
a written request received by the Company within 20 days after receipt of such
written notice from the Company;

     Provided, however, that the Company shall not be obligated to take any
action to effect any such registration, qualification or compliance pursuant to
this Section 3.1:

                            (A) In any particular jurisdiction in which the
Company would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;

                                      -4-

<PAGE>

                            (B) Prior to the earlier of November 12, 2002 or one
hundred eighty (180) days following the effective date of the registration
statement pertaining to a firm commitment underwritten initial public offering
(an "IPO");

                            (C) If the Company delivers a written notice to the
Initiating Holders, within thirty (30) days of its receipt of a registration
request from such Initiating Holders, of its intent to file a registration
statement for an IPO within ninety (90) days;

                            (D) If the Company's Common Stock is not listed on a
national securities exchange (as defined in the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) and the Initiating Holders do not request that
such offering be firmly underwritten by underwriters selected by the Company
(subject to the consent of the Holders of a majority of the Registrable
Securities proposed to be included in the underwriting);

                            (E)  During the period starting with the date sixty
(60) days prior to the Company's estimated date of filing of, and ending on the
date one hundred eighty (180) days immediately following the effective date of,
any registration statement pertaining to securities of the Company (other than a
registration of securities in a Rule 145 transaction or with respect to an
employee benefit plan), provided that the Company is actively employing in good
faith all reasonable efforts to cause such registration statement to become
effective;

                            (F) After the Company has effected two such
registrations pursuant to this Section 3.1(a) (counting for this purpose only
registrations which have been declared or ordered effective and registrations
which have been withdrawn by the Holders as to which the Holders have not
elected to bear the Registration Expenses);

                            (G) If the Initiating Holders propose to dispose of
shares of Registrable Securities which may be immediately registered on Form S-3
pursuant to a request under Section 3.3 hereof;

                            (H) If the Company shall furnish to such Holders a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors it would be seriously detrimental to
the Company or its stockholders for a registration statement to be filed at such
time, then the Company's obligation to use its best efforts to register, qualify
or comply under this Section 3.1 shall be deferred for a period not to exceed
ninety (90) days from the date of receipt of written request from the Initiating
Holders; provided, however, that the Company shall not exercise such right more
than once in any twelve-month period.

     Subject to the foregoing clauses (A) through (H), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable, after receipt of the request or requests of
the Initiating Holders.

                 (b)   Underwriting. In the event that a registration pursuant
                       ------------
to Section 3.1 is for a registered public offering involving an underwriting,
the Company shall so advise the Holders

                                      -5-

<PAGE>

as part of the notice given pursuant to Section 3.1(a)(i). In such event, the
right of any Holder to registration pursuant to Section 3.1 shall be conditioned
upon such Holder's participation in the underwriting arrangements required by
this Section 3.1, and the inclusion of such Holder's Registrable Securities in
the underwriting to the extent requested shall be limited to the extent provided
herein.

                 The Company shall (together with all Holders proposing to
distribute their securities through such underwriting) enter into an
underwriting agreement in customary form with the managing underwriter of
recognized national standing selected for such underwriting by the Company and
acceptable to the Holders of a majority of the Registrable Securities proposed
to be included in such underwriting. Notwithstanding any other provision of this
Section 3.1, if the managing underwriter advises the Initiating Holders in
writing that marketing factors require a limitation of the number of shares to
be underwritten, then the Company shall so advise all Holders of Registrable
Securities which would otherwise be underwritten pursuant hereto, and the number
of shares of Registrable Securities that may be included in the registration and
underwriting shall be allocated among all Holders thereof in proportion, as
nearly as practicable, to the respective amounts of Registrable Securities held
by such Holders at the time of filing the registration statement or in such
other manner as shall be agreed to by the Company and Holders of a majority of
the Registrable Securities proposed to be included in such registration. No
Registrable Securities excluded from the underwriting by reason of the
underwriter's marketing limitation shall be included in such registration;
provided, however, that the number of shares of Registrable Securities to be
--------  -------
included in such underwriting and registration shall not be reduced unless all
other securities of the Company are first entirely excluded from the
underwriting and registration. To facilitate the allocation of shares in
accordance with the above provisions, the Company or the underwriters may round
the number of shares allocated to any Holder to the nearest 100 shares.

                 If any Holder of Registrable Securities disapproves of the
terms of the underwriting, such Holder may elect to withdraw therefrom by
written notice to the Company, the managing underwriter and the Initiating
Holders. The Registrable Securities and/or other securities so withdrawn shall
also be withdrawn from registration.

           3.2   Company Registration.
                 --------------------

                 (a)   Notice of Registration. If at any time or from time to
                       ----------------------
time the Company shall determine to register any of its securities, either for
its own account or the account of a security holder or holders, other than (i) a
registration relating solely to employee benefit plans, (ii) a registration
relating solely to a Commission Rule 145 transaction, or (iii) a registration
pursuant to Section 3.1 hereof, the Company will:

                       (i)  promptly give to each Holder of Registrable
Securities written notice thereof; and

                       (ii) use its best efforts to include in such registration
(and any related qualification under blue sky laws or other compliance), and in
any underwriting involved

                                      -6-

<PAGE>

therein, all the Registrable Securities specified in a written request or
requests, made within 10 days after receipt of such written notice from the
Company, by any Holder of Registrable Securities, subject to Section 3.2(b)
hereof.

                 (b)   Underwriting. If the registration of which the Company
                       ------------
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 3.2(a)(i). In such event the right of any Holder to
registration pursuant to Section 3.2 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company) enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company.
Notwithstanding any other provision of this Section 3.2, if the managing
underwriter determines that marketing factors require a limitation of the number
of shares to be underwritten, the managing underwriter may limit the Registrable
Securities and other securities to be distributed through such underwriting, but
in no event shall (i) any shares being sold by a stockholder exercising a demand
registration right similar to that granted in Section 3.1 be excluded from such
offering, (ii) the number of Registrable Securities to be included in such
offering be less than 25% of the total number of securities to be included in
such offering, unless such offering is the IPO and such registration does not
include shares of any other selling stockholder in which event any or all of the
Registrable Securities of the Holders may be excluded from such offering or
(iii) the number of Registrable Securities to be included in such offering be
reduced below the number of Registrable Securities requested to be registered
pursuant to Section 3.2(a) above in order for shares of other selling
stockholders to be included, unless Holders of at least two thirds (2/3) of the
Registrable Securities proposed to be sold in such offering agree to include the
shares held by such selling stockholders. The Company shall so advise all
Holders distributing their securities through such underwriting of such
limitation, and the number of shares of Registrable Securities that may be
included in the registration and underwriting shall be allocated among all
Holders in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities held by such Holders at the time of filing the
registration statement or in such other manner as shall be agreed to by the
Company and Holders of a majority of the Registrable Securities proposed to be
included in such registration. To facilitate the allocation of shares in
accordance with the above provisions, the Company may round the number of shares
allocated to any Holder or holder to the nearest 100 shares. If any Holder or
holder disapproves of the terms of any such underwriting, such Holder or holder
may elect to withdraw therefrom by written notice to the Company and the
managing underwriter. Any securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration.

                 (c)   Right to Terminate Registration. The Company shall have
                       -------------------------------
the right to terminate or withdraw any registration initiated by it under this
Section 3.2 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration. The Registration
Expenses of such withdrawn registration shall be borne by the Company in
accordance with Section 3.4 hereof.

           3.3   Registration on Form S-3.
                 ------------------------

                                      -7-

<PAGE>

                 (a)   If any Holder of the Registrable Securities requests that
the Company file a registration statement on Form S-3 (or any successor form to
Form S-3), or any similar short-form registration statement, for a public
offering of Registrable Securities, the reasonably anticipated aggregate price
to the public, excluding underwriting discounts and commissions, is not less
than $500,000 and the Company is a registrant entitled to use Form S-3 to
register the Registrable Securities for such an offering, the Company shall use
its best efforts to cause such Registrable Securities to be registered on such
form for the offering as soon as practicable after receipt of the request or
requests of the Holders and to cause such Registrable Securities to be qualified
in such jurisdictions as the Holder or Holders may reasonably request. After the
Company's first public offering of its securities, the Company will use its best
efforts to qualify for Form S-3 registration or a similar short-form
registration. The provisions of Section 3.1(b) shall be applicable to each
registration initiated under this Section 3.3.

                 (b)   Notwithstanding the foregoing, the Company shall not be
obligated to take any action pursuant to this Section 3.3: (i) in any particular
jurisdiction in which the Company would be required to execute a general consent
to service of process in effecting such registration, qualification or
compliance unless the Company is already subject to service in such jurisdiction
and except as may be required by the Securities Act; (ii) if the Company, within
thirty (30) days of the receipt of the request of the initiating Holders, gives
notice of its bona fide intention to effect the filing of a registration
statement with the Commission within sixty (60) days of receipt of such request
(other than with respect to a registration statement relating to a Rule 145
transaction, or an offering solely to employees); (iii) during the period
starting with the date sixty (60) days prior to the Company's estimated date of
filing of, and ending on the date three (3) months immediately following, the
effective date of any registration statement pertaining to securities of the
Company (other than a registration of securities in a Rule 145 transaction or
with respect to an employee benefit plan), provided that the Company is actively
employing in good faith reasonable efforts to cause such registration statement
to become effective; or (iv) if the Company shall furnish to such Holder a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors it would be seriously detrimental to
the Company or its stockholders for registration statements to be filed in the
near future, then the Company's obligation to use its best efforts to file a
registration statement shall be deferred for a period not to exceed 90 days from
the receipt of the request to file such registration by such Holder; provided,
however, that the Company shall not exercise such right more than once in any
twelve-month period.

           3.4   Expenses of Registration. All Registration Expenses incurred in
                 ------------------------
connection with registrations pursuant to Sections 3.1, 3.2 and 3.3 shall be
borne by the Company, provided that all Registration Expenses incurred in
connection with registrations pursuant to Section 3.3 in excess of five (5)
shall be borne by the holders of securities included in such registration pro
rata on the basis of the number of shares so registered. All Selling Expenses
relating to securities registered pursuant to Sections 3.1, 3.2 and 3.3 shall be
borne by the holders of securities included in such registration pro rata on the
basis of the number of shares so registered.

           3.5   Registration Procedures. In the case of each registration,
                 -----------------------
qualification or compliance effected by the Company pursuant to this Section 3,
the Company will keep each Holder

                                      -8-

<PAGE>

advised in writing as to the initiation of each registration, qualification and
compliance and as to the completion thereof. The Company will use its best
efforts to:

                 (a)   Prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective until the earlier to occur
of (i) ninety (90) days or (ii) the distribution described in the Registration
Statement has been completed;

                 (b)   Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement;

                 (c) Furnish to the Holders participating in such registration
and to the underwriters of the securities being registered, if any, such
reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents they may reasonably
request in order to facilitate the disposition of Registrable Securities by
them;

                 (d) Register and qualify the securities covered by such
registration statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Holders, provided that the
Company shall not be required in connection therewith or as a condition thereto
to qualify to do business or to file a general consent to service of process in
any such states or jurisdictions;

                 (e) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such offering;

                 (f) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar securities
issued by the Company are then listed;

                 (g) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration;

                 (h) Notify each Holder covered by such registration statement
at any time when a prospectus relating thereto is required to be delivered under
the Securities Act of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing. The Company will use
its best efforts to amend or supplement such prospectus in order to cause such
prospectus not to include any untrue statement of a material or

                                      -9-

<PAGE>

omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances then
existing; and

                 (i)   Furnish, on the date that such Registrable Securities are
delivered to the underwriters for sale, if such securities are being sold
through underwriters, (i) an opinion, dated as of such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and (ii) a letter dated as of
such date, from the independent certified public accountants of the Company, in
form and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering addressed to the
underwriters.

           3.6   Indemnification.
                 ---------------

                 (a)   The Company will indemnify each Holder, each of its
officers, directors, partners and legal counsel, and each person controlling
such Holder within the meaning of Section 15 of the Securities Act, with respect
to which registration, qualification or compliance has been effected pursuant to
this Section 3, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, 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, in light of the circumstances in which they were made,
not misleading, or any violation by the Company of the Securities Act or any
rule or regulation promulgated under the Securities Act or any state securities
laws applicable to the Company in connection with any such registration,
qualification or compliance, and the Company will reimburse each such Holder,
each of its officers, directors, partners, and legal counsel and each person
controlling such Holder, each such underwriter and each person who controls any
such underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating, preparing 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 or alleged untrue
statement or omission, made in reliance upon and in conformity with written
information furnished to the Company by such Holder, controlling person or
underwriter and stated to be specifically for use therein.

                 (b)   To the extent permitted by law, each Holder will, if
Registrable Securities held by such Holder are included in the securities as to
which such registration, qualification or compliance is being effected,
indemnify the Company, each of its directors, officers, and legal counsel, each
underwriter, if any, of the Company's securities covered by such a registration
statement, each person who controls the Company or such underwriter within the
meaning of Section 15 of the Securities Act, and each other Holder, each of its
officers, directors,

                                      -10-

<PAGE>

partners and legal counsel and each person controlling such Holder 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 the Company, such Holders, such directors,
officers, persons, underwriters or control persons 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) is 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 such Holder and
stated to be specifically for use therein if it is judicially determined that
there was such an untrue statement (or alleged untrue statement) or omission (or
alleged omission) 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 such Holder and stated to be
specifically for use therein; provided however, that the indemnity provision
contained in this Section 3.6(b) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Holder, which consent shall not be
unreasonably withheld. Notwithstanding the foregoing, the liability of each
Holder under this sub Section (b) shall be limited in an amount equal to the net
proceeds to each such Holder of Registrable Securities sold as contemplated
herein, unless such liability resulted from willful misconduct or gross
negligence by such Holder.

                 (c)   Each party entitled to indemnification under this Section
3.6 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Section 3 unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action
and provided further, that the Indemnifying Party shall not assume the defense
for matters as to which there is a conflict of interest or separate and
different defenses but shall bear the expense of such defense nevertheless. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation.

                                      -11-

<PAGE>

                 (d)   If the indemnification provided for in this Section 3.6
is held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage or expense referred to
herein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission, provided that in no event shall any contribution by a
Holder hereunder exceed the net proceeds from the offering received by such
Holder.

                 (e)   Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.

                 (f)   The obligations of the Company and Holders under this
Section 3.6 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 3, and otherwise.

           3.7   Information by Holder. The Holder or Holders of Registrable
                 ---------------------
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held by
them, and the distribution proposed by such Holder or Holders as the Company may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Section 3.

           3.8   Rule 144 Reporting. With a view to making available the
                 ------------------
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Restricted Securities to the public without
registration, after such time as a public market exists for the Common Stock of
the Company, the Company agrees to use its best efforts to:

                 (a)   Make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act, at all
times after the effective date that the Company becomes subject to the reporting
requirements of the Securities Act or the Exchange Act;

                 (b)   File with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements); and

                                      -12-

<PAGE>

                 (c)   So long as a Holder owns any Restricted Securities to
furnish to the Holder forthwith upon request a written statement by the Company
as to its compliance with the reporting requirements of said Rule 144 (at any
time after 90 days after the effective date of the first registration statement
filed by the Company for an offering of its securities to the general public),
and of the Securities Act and the Exchange Act (at any time after it has become
subject to such reporting requirements), a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents of the
Company and other information in the possession of or reasonably obtainable by
the Company as a Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing a Holder to sell any such securities
without registration.

           3.9   Transfer of Registration Rights. The rights to cause the
                 -------------------------------
Company to register securities granted Holders under Sections 3.1, 3.2 and 3.3
may be assigned to a transferee or assignee who acquires at least 100,000 shares
of Registrable Securities, to another Holder, to a transferee or assignee
acquiring 10% or more of the outstanding stock of the Company, or to any
transferee or assignee who is or was a subsidiary, parent organization, partner,
limited partner, limited liability company member, retired partner, family
member or trust of a Holder or the estate of such person or entity, provided
that any such transfers may otherwise be effected in accordance with applicable
securities laws and such transferee or assignee agrees to be subject to all
restrictions set forth in this Agreement.

           3.10  Standoff Agreement. Each Holder agrees, upon request of the
                 ------------------
Company or the underwriters managing any underwritten offering of the Company's
securities, not to sell, make any short sale of, loan, grant any option for the
purchase of, or otherwise transfer or dispose of any Registrable Securities
(other than those included in the registration) without the prior written
consent of the Company or such underwriters, as the case may be, for a period of
time not to exceed 180 days from the effective date of such registration,
provided that:

                 (a)   such agreement shall only apply to the IPO; and

                 (b)   all officers, directors and holders of more than one
percent (1%) of the Company's outstanding voting stock have entered into similar
agreements.

           3.11  Limitation on Subsequent Registration Rights. After the date of
                 --------------------------------------------
this Agreement, the Company shall not, without the prior written consent of the
Holders of at least seventy-five percent (75%) of the Registrable Securities
then outstanding, enter into any agreement with any holder or prospective holder
of any securities of the Company that would grant such holder registration
rights pari passu or senior to those granted to the Holders hereunder.

           3.12  Termination of Registration Rights. The rights granted under
                 ----------------------------------
this Section 3 shall terminate on the earlier of (i) the fifth anniversary of
the closing of the IPO pursuant to a registration statement filed under the
Securities Act or (ii) on such date as all Registrable Securities may be sold
under Rule 144 during any 90-day period (without regard to Rule 144(k)).

                                      -13-

<PAGE>

     4.    Right of First Offer.
           --------------------

           4.1   Right of First Offer Upon Issuances of Securities by the
                 --------------------------------------------------------
                 Company.
                 -------

                 (a)   The Company hereby grants on the terms set forth in this
Section 4.1 to each Investor who holds at least 250,000 shares of Registrable
Securities (as adjusted for stock splits, stock dividends, recapitalizations and
the like) (a "Major Investor"), the right of first offer to purchase all or any
part of such Major Investor's pro rata share of the New Securities (as defined
in Section 4.1(b)) which the Company may, from time to time, propose to sell and
issue. The Major Investors may purchase said New Securities on the same terms
and at the same price at which the Company proposes to sell the New Securities.
The pro rata share of each Major Investor, for purposes of this right of first
offer, is the ratio of the total number of shares of Common Stock held by such
Major Investor, including any shares of Common Stock into which shares of
Preferred Stock held by such Major Investor are convertible, to the total number
of shares of Common Stock outstanding immediately prior to the issuance of the
New Securities (including any shares of Common Stock into which outstanding
shares of Preferred Stock are convertible).

                 (b)   "New Securities" shall mean any capital stock of the
Company, whether now authorized or not, and any rights, options or warrants to
purchase said capital stock, and securities of any type whatsoever that are, or
may become, convertible into said capital stock; provided that "New Securities"
does not include (i) shares purchased under the Series B Agreement or the
Registrable Securities, (ii) securities offered pursuant to a registration
statement filed under the Securities Act, (iii) securities issued pursuant to
the acquisition of another corporation by the Company by merger, purchase of
substantially all of the assets, or other reorganization approved by the Board
of Directors of the Company including at least one of the representatives
designated by the Investors, (iv) all shares of Common Stock or other securities
hereafter issued or issuable to officers, directors, employees, scientific
advisors or consultants of the Company pursuant to any employee or consultant
stock offering, plan or arrangement approved by the Board of Directors of the
Company, (v) securities issued pursuant to any rights or agreements outstanding
as of the date of this Agreement and options and warrants outstanding as of the
date of this Agreement, (vi) all shares of Common Stock or other securities
hereafter issued in connection with or as consideration for acquisition or
licensing of technology approved by the Board of Directors of the Company
including at least one of the representatives designated by the Investors and
(vii) all shares of Common Stock or other securities issued in connection with
equipment leasing or equipment financing arrangements and similar transactions
approved by the Board of Directors of the Company including at least one of the
representatives designated by the Investors.

                 (c)   In the event the Company proposes to undertake an
issuance of New Securities, it shall give to the Major Investors written notice
(the "Notice") of its intention, describing the type of New Securities, the
price, the terms upon which the Company proposes to issue the same, and a
statement as to the number of days from receipt of such Notice within which the
Major Investors must respond to such Notice. The Major Investors shall have
thirty (30) days from the date of receipt of the Notice to purchase any or all
of the New Securities for the price and upon the terms specified in the Notice
by giving written notice to the Company and stating therein

                                      -14-

<PAGE>

the quantity of New Securities to be purchased and forwarding payment for such
New Securities to the Company if immediate payment is required by such terms.

                 (d)   If not all of the Major Investors elect to purchase their
pro rata share of the New Securities, then the Company shall promptly notify in
writing the Major Investors who do so elect and shall offer such Major Investors
the right to acquire such unsubscribed shares. The Major Investors shall have
five (5) days after receipt of such notice to notify the Company of its election
to purchase all or a portion thereof of the unsubscribed shares. In the event
the Major Investors fail to exercise in full the right of first offer within
said period, the Company shall have ninety (90) days thereafter to sell or enter
into an agreement (pursuant to which the sale of New Securities covered thereby
shall be closed, if at all, within thirty (30) days from date of said agreement)
to sell the New Securities respecting which the Major Investor rights were not
exercised, at a price and upon general terms no more favorable to the purchasers
thereof than specified in the Notice. In the event the Company has not sold the
New Securities within said ninety (90) day period (or sold and issued New
Securities in accordance with the foregoing within thirty (30) days from the
date of said agreement), the Company shall not thereafter issue or sell any New
Securities without first offering such securities to the Major Investors in the
manner provided above.

                 (e)   The right of first offer granted under this Section 4.1
shall expire upon:

                       (i)  The date upon which a registration statement filed
by the Company under the Securities Act (other than a registration of securities
in a Rule 145 transaction or with respect to an employee benefit plan) in
connection with an underwritten public offering of its securities, at a per
share price not less than $8.00 (as adjusted for stock splits, stock dividends,
recapitalizations and the like) per share and for a total offering of not less
than $15.0 million (before deduction of underwriters' commissions and expenses)
(a "Qualified Offering"), first becomes effective and the securities registered
thereunder are sold.

                       (ii) For each Major Investor, the date on which such
Major Investor no longer holds a minimum of 250,000 Registrable Securities (as
adjusted for stock splits, stock dividends, recapitalizations and the like).

                       (iii) The tenth anniversary of the date of this
Agreement.

                 (f)   The right of first offer granted under this Section 4.1
is assignable by the Investors to any transferee of a minimum of 100,000
Registrable Securities (as adjusted for stock splits, stock dividends,
recapitalizations and the like).

     5.    Covenants of the Company.
           ------------------------

           5.1   Financial Information for all Investors. The Company will
                 ---------------------------------------
provide each Investor the following reports for so long as the Investor is a
holder of Registrable Securities, including for purposes of this Section 5 any
such Registrable Securities which have been transferred to a constituent partner
of an Investor:

                                      -15-

<PAGE>

           (a)   The Company will maintain true books and records of account in
which full and correct entries will be made of all its business transactions
pursuant to a system of accounting established and administered in accordance
with generally accepted accounting principles consistently applied, and will set
aside on its books all such proper accruals and reserves as shall be required
under generally accepted accounting principles consistently applied.

           (b)   As soon as practicable after the end of each fiscal year, and
in any event within 90 days thereafter, consolidated balance sheets of the
Company and its subsidiaries, if any, as of the end of such fiscal year, and
consolidated statements of income, stockholders' equity and cash flows of the
Company and its subsidiaries, if any, for such year, prepared in accordance with
generally accepted accounting principles and setting forth in each case in
comparative form the figures for the previous fiscal year, all in reasonable
detail, audited by independent public accountants of national standing selected
by the Board of Directors of the Company.

           (c)   As soon as practicable after the end of each quarter and in
any event within 30 days thereafter, a consolidated balance sheet of the Company
and its subsidiaries, if any, as of the end of each such quarter, consolidated
statements of income, consolidated statements of changes in financial condition,
and a consolidated statement of cash flow of the Company and its subsidiaries
for such period and for the current fiscal year to date, prepared in accordance
with generally accepted accounting principles (other than for accompanying
notes) subject to changes resulting from year-end audit adjustments, all in
reasonable detail and signed by the principal financial or accounting officer of
the Company.

           5.2   Financial Information for Major Investors. The Company will
                 -----------------------------------------
provide each Major Investor the following reports for so long as such Major
Investor is a holder of at least 250,000 Registrable Securities, including for
purposes of this Section 5 any such shares of Registrable Securities which have
been transferred to a constituent partner of a Major Investor:

           (a)   As soon as practicable after the end of each month and in
any event within 30 days thereafter, a consolidated balance sheet of the Company
and its subsidiaries, if any, as of the end of each such month, consolidated
statements of income, consolidated statements of changes in financial condition,
and a consolidated statement of cash flow of the Company and its subsidiaries
for such period and for the current fiscal year to date, and setting forth in
each case in comparative form the figures for corresponding periods in the
budget, prepared in accordance with generally accepted accounting principles
(other than for accompanying notes), subject to changes resulting from year-end
audit adjustments, all in reasonable detail and signed by the principal
financial or accounting officer of the Company.

           (b)   A copy of the annual budget for the next fiscal year of
the Company containing profit and loss projections, cash flow projections, and
capital expenditures, as soon as it is available but in any event within thirty
(30) days prior to the end of the current fiscal year.

           5.3   Inspection. Upon providing the Company thirty (30) days written
                 ----------
notice, each Major Investor shall have full and free access to visit and inspect
the Company's properties during

                                      -16-

<PAGE>

normal business hours and to discuss the affairs, finances and accounts of the
Company with its officers, and to review such information as is reasonably
requested all at such reasonable times and as often as may be reasonably
requested.

           5.4   Confidentiality. Each Investor agrees that any information
                 ---------------
obtained by such Investor pursuant to this Section 5 which is identified by the
Company as being proprietary to the Company or otherwise confidential will not
be disclosed without the prior written consent of the Company. Each Investor
further acknowledges and understands that any information so obtained which may
be considered "inside" non-public information will not be utilized by such
Investor in connection with purchases and/or sales of the Company's securities
except in compliance with applicable state and federal anti-fraud statutes.

           5.5   Qualified Small Business. The Company will use its commercially
                 ------------------------
reasonable efforts to comply with the reporting and recordkeeping requirements
of Section 1202 of the Internal Revenue Code of 1986 (the "Code"), as amended,
any regulations promulgated thereunder and any similar state laws and
regulations, and except as provided otherwise herein, in the Series B Agreement,
or in the Company's Restated Certificate of Incorporation, the Company agrees
not to repurchase any stock of the Company if such repurchase would cause the
Series A Preferred Stock, the Series B Preferred Stock or the Registrable
Securities not to qualify as "qualified small business stock" as defined in
Section 1202(c) of the Code.

           5.6   Stock Vesting. Unless otherwise approved by the Board of
                 -------------
Directors of the Company, all stock options and other stock equivalents issued
after the date of this Agreement to employees, directors, consultants and other
service providers shall be subject to vesting as follows: (a) twenty-five
percent (25%) of such stock shall vest at the end of the first year following
the earlier of the date of issuance or such person's services commencement date
with the company, and (b) seventy-five percent (75%) of such stock shall vest
over the remaining three (3) years. With respect to any shares of stock
purchased by any such person, the Company's repurchase option shall provide that
upon such person's termination of employment or service with the Company, with
or without cause, the Company or its assignee (to the extent permissible under
applicable securities laws and other laws) shall have the option to purchase at
cost any unvested shares of stock held by such person.

           5.7   Restrictions on Sales; Assignment of Right of First Refusal.
                 -----------------------------------------------------------
The Company's Bylaws shall contain a right of first refusal on all transfers of
Common Stock. In the event the Company elects not to exercise such right of
first refusal the Company may have on a proposed transfer of any of the
Company's outstanding capital stock pursuant to the Company's charter documents,
by contract or otherwise, the Company shall assign such right of first refusal
to each Major Investor. In the event of such assignment, each Major Investor
shall have a right to purchase its pro rata portion of the capital stock
proposed to be transferred.

           5.8   Indemnification. The Company will indemnify members of the
                 ---------------
Board of Directors of the Company to the broadest extent permitted by applicable
law and will indemnify

                                      -17-

<PAGE>

each Investor for any claims brought against the Investors by any third party
(including any other stockholder of the Company) as a result of the Series B
Preferred Stock financing.

           5.9   Termination of Covenants. The covenants of the Company set
                 ------------------------
forth in this Section 5 shall terminate in all respects on the earlier to occur
of (i) date of the closing of an initial firm commitment underwritten public
offering pursuant to an effective registration statement under the Securities
Act, covering the offer and sale of the Company's Common Stock and (ii) the
tenth anniversary of the date of this Agreement.

     6.    General Provisions.
           ------------------

           6.1   Amendment and Waiver. Except as otherwise expressly provided,
                 --------------------
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 the holders of at least seventy-five percent (75%) of the Registrable
Securities then outstanding. Any amendment or waiver effected in accordance with
this Section 6.1 shall be binding upon each holder of any Registrable Securities
at the time outstanding, each future holder of all such securities and the
Company.

           6.2   Governing Law. This Agreement shall be governed by and
                 -------------
construed under the internal laws of the State of California without regard to
conflict of laws provisions.

           6.3   Successors and Assigns. Except as otherwise expressly provided,
                 ----------------------
the provisions of this Agreement shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors, and administrators of the
parties.

           6.4   Severability. In case any provision of this Agreement becomes
                 ------------
or is declared by a court of competent jurisdiction to be unenforceable, this
Agreement shall continue in full force and effect without said provision;
provided, however, that no such severability shall be effective if it materially
changes the economic benefit of this Agreement to any party.

           6.5   Notices. All notices and other communications required or
                 -------
permitted hereunder shall be in writing and shall be deemed effectively given
upon personal delivery, by facsimile, by courier or overnight delivery or upon
deposit with the United States Post Office, by first class mail, postage
prepaid, addressed: (a) if to the Investors, at the Investor address as set
forth on Exhibit A hereto, or at such other address as the Investors shall have
furnished to the Company in writing, or (b) if to the Company, at its current
address or at such other address as the Company shall have furnished to the
Investors in writing. Notices that are mailed shall be deemed received five (5)
days after deposit in United States mail.

           6.6   Counterparts.  This Agreement may be executed in any number of
                 ------------
counterparts, each of which is an original, and all of which together shall
constitute one instrument.

                                      -18-

<PAGE>

           6.7   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.

           6.8   Expenses. If any action at law or in equity is necessary to
                 --------
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.

           6.9   Aggregation of Stock. All shares of Registrable Securities held
                 --------------------
or acquired by affiliated entities or persons shall be aggregated together for
the purpose of determining the availability of any rights under this Agreement.

           6.10  Delays or Omissions. It is agreed that no delay or omission to
                 -------------------
exercise any right, power, or remedy accruing to any Holder, upon any breach,
default or noncompliance of the Company under this Agreement shall impair any
such right, power, or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of any
similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent, or approval of any kind or character on
any Holder's part of any breach, default or noncompliance under the Agreement or
any waiver on such Holder's part of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, by law, or otherwise afforded to Holders, shall be cumulative and not
alternative.

                                      -19-

<PAGE>

     IN WITNESS WHEREOF, this Amended and Restated Rights Agreement has been
executed as of the date first above written.

                                    ALTUS MEDICAL, INC., INC.

                                    By:    /s/ Kevin P. Connors
                                       -----------------------------------------
                                       Kevin P. Connors, President

                                    Address:
                                    1181 Chess Drive, Suite B
                                    Foster City, CA  94404

<PAGE>

                                    INVESTORS:

                                    ALTA CALIFORNIA PARTNERS II, L.P.
                                    By:  Alta California Management Partners II,
                                         LLC

                                    By:       /s/ Guy Nohra
                                         ---------------------------------------
                                         General Partner

                                    ALTA EMBARCADERO PARTNERS II, LLC

                                    By:      /s/ Guy Nohra
                                         ---------------------------------------
                                         Member

                                    MEDVENTURE ASSOCIATES III, L.P.

                                    By:      /s/ Annette J. Campbell-White
                                         ---------------------------------------

                                    Name: Annette J. Campbell-White
                                          --------------------------------------

                                    Title: Managing Member of MedVenture
                                           ------------------------------
                                    Associates Asset Management III Co.
                                    -----------------------------------
                                    L.L.C.
                                    ------
                                    the General Partner of MedVenture
                                    ----------------------------------
                                    Associates III, L.P.
                                    --------------------------------------------

                                         /s/ Joe Davin
                                    --------------------------------------------
                                    JOE DAVIN

                                         /s/ Clare M. Meister
                                    --------------------------------------------
                                    CLARE M. MEISTER

<PAGE>

                                    ADAM VENTURES L.P.
                                    a Delaware limited partnership

                                    By:  ADAM VENTURES MANAGEMENT, L.L.C.

                                    By:
                                         ---------------------------------------
                                    Name:    J. Casey McGlynn
                                    Title:   General Partner

                                    DR. HENRI CARLE, P.C.

                                    Name:
                                          --------------------------------------
                                    Title:
                                           -------------------------------------

                                    RICHARD G. CARO TRUST

                                    By:
                                         ---------------------------------------
                                    Name:  Richard G. Caro
                                    Title: Trustee

                                    --------------------------------------------
                                    JOHN J. CONNORS

                                         /s/ Kevin P. Connors
                                    --------------------------------------------
                                    KEVIN P. CONNORS

                                    --------------------------------------------
                                    ANN MARIE FITZPATRICK

<PAGE>

                                    FURBERSHAW REVOCABLE TRUST

                                    By:
                                         ---------------------------------------
                                         Gerard A. Furbershaw, Trustee

                                    By:
                                         ---------------------------------------
                                         Michelle A.B. Furbershaw, Trustee

                                    --------------------------------------------
                                    DONALD W. GROOT, M.D.

                                    --------------------------------------------
                                    DAVID R. HOLBROOKE

                                    LUNAR FUND LLC

                                    By:
                                         ---------------------------------------
                                    Name:
                                          --------------------------------------
                                    Title:
                                           -------------------------------------

                                    MEDVEN AFFILIATES III, L.P.

                                    By:      /s/ Annette J. Campbell-White
                                         ---------------------------------------

                                    Name:    /s/ Annette J. Campbell-White
                                         ---------------------------------------

                                    Title: Managing Member of MedVenture
                                           -----------------------------
                                           Associates Asset Management III Co.
                                           -----------------------------------
                                           L.L.C.
                                           ------
                                           the General Partner of MedVenture
                                           ---------------------------------
                                           Associates III, L.P.
                                           -------------------------------------

                                    DR. SERGE NADEAU, P.C.

<PAGE>

                                    Name:
                                          --------------------------------------
                                    Title:
                                           -------------------------------------

                                    NUR OWEN PREMO

                                    By:
                                         ---------------------------------------
                                    Name:
                                          --------------------------------------
                                    Title:
                                           -------------------------------------

                                    OSTOICH TRUST FUND

                                    By:
                                         ---------------------------------------
                                         Vladimir Ostoich, Trustee

                                    By:
                                         ---------------------------------------
                                         Liliana Ostoich, Trustee

                                    --------------------------------------------
                                    JEFF SMITH

                                    TRUSTEE, WSGR RETIREMENT PLAN
                                    FBO J. CASEY MCGLYNN

                                    By:
                                         ---------------------------------------
                                    Name:
                                          --------------------------------------
                                    Title:
                                           -------------------------------------

                                    WS INVESTMENT COMPANY 98B

                                    By:
                                         ---------------------------------------
                                    Name:
                                          --------------------------------------

<PAGE>

                                    Title:
                                          --------------------------------------

<PAGE>

                                    EXHIBIT A
                                    ---------

                              SCHEDULE OF INVESTORS
                              ---------------------

                                          Series A             Purchase
          Investors                   Preferred Stock           Price
-----------------------------------  ------------------  -------------------

Adam Ventures L.P.                         50,000              $50,000
c/o J. Casey McGlynn, Esq.
650 Page Mill Road
Palo Alto, CA  94304

Richard G. Caro Trust                      20,000              $20,000
830 Dubuque Avenue
South San Francisco, CA  94080

Dr. Henri Carle, P.C.                      33,000              $33,000
Attn:  Patricia Johnston
207 11523 100th Avenue
Edmonton, Alberta
Canada P5K0J8

John J. Connors                            50,000              $50,000
2138 1/2 Camino Los Cerros
Menlo Park, CA  94025

Kevin P. Connors                           38,000              $38,000
1181 Chess Drive, Suite B
Foster City, CA  94404

Ann Marie Fitzpatrick                      6,000               $6,000
924 West Fremont
Sunnyvale, CA  94087

<PAGE>

                                          Series A             Purchase
          Investors                   Preferred Stock           Price
-----------------------------------  ------------------  -------------------

Furbershaw Revocable Trust                 20,000              $20,000
Gerard A. Furbershaw
Michelle A.B. Furbershaw
214 Pope Street
Menlo Park, CA  94025

Donald W. Groot, M.D.                      57,000              $57,000
207 11523 100th Avenue
Edmonton, Alberta
Canada P5K0J8

David R. Holbrooke                         25,000              $25,000
120 Bulkey Avenue #405
Sausalito, CA  94964

Lunar Fund LLC                             10,000              $10,000
537 Hamilton Avenue
Palo Alto, CA  94301

MedVenture Associates III, L.P.         1,439,759           $1,439,759
MedVen Affiliates III, L.P.                61,241              $61,241
4 Orinda Way, Building D, #150
Orinda, CA  94563
Attn:  Annette J. Campbell-White

Nur Owen Premo                             100,000             $100,000
544 South Eighth Street
San Jose, CA  95112

<PAGE>

                                          Series A             Purchase
          Investors                   Preferred Stock           Price
-----------------------------------  ------------------  -------------------

Dr. Serge Nadeau, P.C.                      10,000              $10,000
2709-8210 111 St.
Edmonton, Alberta
Canada T6G2C7

Jeff Smith                                  20,000              $20,000
182 Warren Road
San Mateo, CA  94401

Vladimir and Liliana                        10,000              $10,000
Ostoich Trust Fund
61 Coronado Avenue
Los Altos, CA  94022

WS Investment Company 98B                   25,000              $25,000
650 Page Mill Road
Palo Alto, CA  94304
Attn:  J. Casey McGlynn

WSGR Retirement Plan                        25,000              $25,000
FBO J. Casey McGlynn
650 Page Mill Road
Palo Alto, CA  94304
Attn:  J. Casey McGlynn

<PAGE>

                                          Series B             Purchase
          Investors                   Preferred Stock           Price
-----------------------------------  ------------------  -------------------

Joe Dorin                                   25,000              $50,000

Clare M. Meister                            25,000              $50,000

Alta California Partners II, L.P.        1,357,846           $2,715,692
1 Embarcadero Center
Suite 4050
San Francisco, CA 94111

Alta Embarcadero Partners II, LLC           17,154              $34,308
1 Embarcadero Center
Suite 4050
San Francisco, CA 94111

MedVenture Associates III, L.P.          1,199,000
4 Orinda Way, Building D, #150                               $2,398,000
Orinda, California 94563

MedVen Affiliates III, L.P.                 51,000
4 Orinda Way, Building D, #150                                 $102,000
Orinda, California 94563

<PAGE>

<PAGE>

                                    EXHIBIT D

                 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

                               ALTUS MEDICAL, INC.

                                November 12, 1999

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00033-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00033-of-00352.parquet"}]]