Document:

<PAGE>   1
                                                                   EXHIBIT 10.4

                            INTUITIVE SURGICAL, INC.
                        2000 EMPLOYEE STOCK PURCHASE PLAN

                  ADOPTED BY BOARD OF DIRECTORS MARCH __, 2000
                   APPROVED BY STOCKHOLDERS ___________, 2000
                             TERMINATION DATE: NONE

1.    PURPOSE.

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

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

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

2.    DEFINITIONS.

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

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

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

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

      (e)   "COMPANY" means Intuitive Surgical, Inc., a Delaware corporation.

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

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

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

                                      -1-
<PAGE>   2

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

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

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

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

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

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

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

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

                                      -2-
<PAGE>   3

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

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

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

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

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

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

3.    ADMINISTRATION.

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

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

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

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

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

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

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

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

                                      -3-
<PAGE>   4

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

4.    SHARES SUBJECT TO THE PLAN.

      (a)   Subject to the provisions of Section 13 relating to adjustments upon
changes in securities, the Shares that may be sold pursuant to Rights granted
under the Plan shall not exceed in the aggregate One Million (1,000,000) Shares.
If any Right granted under the Plan shall for any reason terminate without
having been exercised, the Shares not purchased under such Right shall again
become available for the Plan.

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

            (i)   On the day after each annual meeting of stockholders of the
Company (the "Calculation Date") for a period of ten (10) years, commencing with
the annual meeting of stockholders in 2001, the aggregate number of shares of
Common Stock that is available for issuance under the Plan shall automatically
be increased by that number of shares equal to the greater of (1) five-tenths of
one percent (0.5%) of the Diluted Shares Outstanding or (2) the number of shares
of Common Stock sold pursuant to Rights during the prior 12-month period;
provided, however, that the Board, from time to time, may provide for a lesser
increase in the aggregate number of shares of Common Stock that is available for
issuance under the Plan

            (ii)  Subject to the provisions of Section 13 hereof relating to
adjustments upon changes in securities, the increase in the maximum aggregate
number of shares of Common Stock that is available for issuance pursuant to
Rights granted under the Plan shall not exceed Ten Million (10,000,000) Shares.

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

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

                                      -4-
<PAGE>   5

5.    GRANT OF RIGHTS; OFFERING.

      (a)   The Board may from time to time grant or provide for the grant of
Rights to purchase Shares of the Company under the Plan to Eligible Employees in
an Offering on an Offering Date or Dates selected by the Board. Each Offering
shall be in such form and shall contain such terms and conditions as the Board
shall deem appropriate, which shall comply with the requirements of Section
423(b)(5) of the Code that all Employees granted Rights to purchase Shares under
the Plan shall have the same rights and privileges. The terms and conditions of
an Offering shall be incorporated by reference into the Plan and treated as part
of the Plan. The provisions of separate Offerings need not be identical, but
each Offering shall include (through incorporation of the provisions of this
Plan by reference in the document comprising the Offering or otherwise) the
period during which the Offering shall be effective, which period shall not
exceed twenty-seven (27) months beginning with the Offering Date, and the
substance of the provisions contained in Sections 6 through 9, inclusive.

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

6.      ELIGIBILITY.

      (a)   Rights may be granted only to Employees of the Company or, as the
Board may designated as provided in subsection 3(b), to Employees of an
Affiliate. Except as provided in subsection 6(b), an Employee shall not be
eligible to be granted Rights under the Plan unless, on the Offering Date, such
Employee has been in the employ of the Company or the Affiliate, as the case may
be, for such continuous period preceding such grant as the Board may require,
but in no event shall the required period of continuous employment be equal to
or greater than two (2) years.

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

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

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

                                      -5-
<PAGE>   6

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

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

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

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

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

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

7.    RIGHTS; PURCHASE PRICE.

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

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

            (ii)  with a maximum dollar amount designated by the Board that, as
the Board determines for a particular Offering, (1) shall be withheld, in whole
or in part, from such Employee's Earnings (as defined by the Board in each
Offering) during the period which begins

                                      -6-
<PAGE>   7

on the Offering Date (or such later date as the Board determines for a
particular Offering) and ends on the date stated in the Offering, which date
shall be no later than the end of the Offering and/or (2) shall be contributed,
in whole or in part, by such Employee during such period.

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

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

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

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

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

8.    PARTICIPATION; WITHDRAWAL; TERMINATION.

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

      (b)   At any time during an Offering, a Participant may terminate his or
her payroll deductions under the Plan and withdraw from the Offering by
delivering to the Company a

                                      -7-
<PAGE>   8

notice of withdrawal in such form as the Company provides. Such withdrawal may
be elected at any time prior to the end of the Offering except as provided by
the Board in the Offering. Upon such withdrawal from the Offering by a
Participant, the Company shall distribute to such Participant all of his or her
accumulated payroll deductions (reduced to the extent, if any, such deductions
have been used to acquire Shares for the Participant) under the Offering,
without interest unless otherwise specified in the Offering, and such
Participant's interest in that Offering shall be automatically terminated. A
Participant's withdrawal from an Offering will have no effect upon such
Participant's eligibility to participate in any other Offerings under the Plan
but such Participant will be required to deliver a new participation agreement
in order to participate in subsequent Offerings under the Plan.

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

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

9.    EXERCISE.

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

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

                                      -8-
<PAGE>   9

separate account with a financial institution as provided in subsection 8(a),
then the distribution shall be made from the separate account, without interest
unless otherwise specified in the Offering.

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

10.   COVENANTS OF THE COMPANY.

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

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

11.   USE OF PROCEEDS FROM SHARES.

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

                                      -9-
<PAGE>   10

12.   RIGHTS AS A STOCKHOLDER.

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

13.   ADJUSTMENTS UPON CHANGES IN SECURITIES.

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

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

14.   AMENDMENT OF THE PLAN.

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

                                      -10-
<PAGE>   11

any Nasdaq or other securities exchange listing requirements. Currently under
the Code, stockholder approval within twelve (12) months before or after the
adoption of the amendment is required where the amendment will:

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

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

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

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

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

15.   DESIGNATION OF BENEFICIARY.

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

      (b)   The Participant may change such designation of beneficiary at any
time by written notice. In the event of the death of a Participant and in the
absence of a beneficiary validly designated under the Plan who is living at the
time of such Participant's death, the Company shall deliver such Shares and/or
cash to the executor or administrator of the estate of the Participant, or if no
such executor or administrator has been appointed (to the knowledge of the
Company), the Company, in its sole discretion, may deliver such Shares and/or
cash to the spouse or to any one or more dependents or relatives of the
Participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.

                                      -11-
<PAGE>   12

16.   TERMINATION OR SUSPENSION OF THE PLAN.

      (a)   The Board in its discretion may suspend or terminate the Plan at any
time. Unless sooner terminated, the Plan shall terminate at the time that all of
the Shares subject to the Plan's reserve, as increased and/or adjusted from time
to time, have been issued under the terms of the Plan. No Rights may be granted
under the Plan while the Plan is suspended or after it is terminated.

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

17.   EFFECTIVE DATE OF PLAN.

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

                                      -12-<PAGE>   1
                                                                   EXHIBIT 10.5

                            INTUITIVE SURGICAL, INC.

                 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

                                 MARCH 31, 1999

<PAGE>   2

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                          PAGE
                                                                                          -----
<S>     <C>                                                                               <C>
1.      GENERAL............................................................................  2
        1.1    Definitions.................................................................  2

2.      REGISTRATION; RESTRICTIONS ON TRANSFER.............................................  3
        2.1    Restrictions on Transfer....................................................  3
        2.2    Demand Registration.........................................................  4
        2.3    Piggyback Registrations.....................................................  6
        2.4    Form S-3 Registration.......................................................  7
        2.5    Expenses of Registration....................................................  8
        2.6    Obligations of the Company..................................................  8
        2.7    Termination of Registration Rights..........................................  9
        2.8    Delay of Registration; Furnishing Information............................... 10
        2.9    Indemnification............................................................. 10
        2.10   Assignment of Registration Rights........................................... 12
        2.11   Amendment of Registration Rights............................................ 12
        2.12   Limitation on Subsequent Registration Rights................................ 12
        2.13   "Market Stand-Off" Agreement................................................ 13

3.      COVENANTS OF THE COMPANY........................................................... 14
        3.1    Basic Financial Information and Reporting................................... 14
        3.2    Inspection Rights........................................................... 15
        3.3    Confidentiality of Records.................................................. 15
        3.4    Proprietary Information..................................................... 16
        3.5    Stock Vesting............................................................... 16
        3.6    Right of First Refusal...................................................... 16
        3.7    Visitation Rights........................................................... 18
        3.8    Reservation of Common Stock................................................. 18
        3.9    Termination of Covenants.................................................... 18

4.      MISCELLANEOUS...................................................................... 18
        4.1    Governing Law............................................................... 18
        4.2    Survival.................................................................... 18
        4.3    Successors and Assigns...................................................... 19
        4.4    Severability................................................................ 19
        4.5    Amendment and Waiver........................................................ 19
        4.6    Delays or Omissions......................................................... 19
        4.7    Notices..................................................................... 20
        4.8    Attorney's Fees............................................................. 20
        4.9    Titles and Subtitles........................................................ 20
        4.10   Counterparts................................................................ 20
        4.11   Entire Agreement............................................................ 20

SCHEDULES

Schedule of Investors
</TABLE>

                                       i
<PAGE>   3

                 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

        This AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (the "Agreement") is
entered into as of the 31st day of March, 1999, by and among INTUITIVE SURGICAL,
INC., a Delaware corporation (the "Company"), ROBERT G. YOUNGE, FREDERIC H. MOLL
and JOHN G. FREUND (the "Founders"), and the holders of the Company's Preferred
Stock and Common Stock set forth on Exhibit A attached hereto. Such holders
shall be referred to hereinafter as the "Investors" and each individually as an
"Investor."

                                 R E C I T A L S

        WHEREAS, the Company proposes to sell and issue shares of its Preferred
Stock from time to time, including the sale and issuance of Series E Preferred
Stock and warrants to purchase Series F Preferred Stock pursuant to that certain
Series E Preferred Stock Purchase Agreement (the "Purchase Agreement") and
Warrant Purchase Agreement (the "Warrant Agreement"), respectively;

        WHEREAS, as a condition of entering into the Purchase Agreement and the
Warrant Agreement, the purchaser of Series E Preferred Stock under the Purchase
Agreement and recipient of the warrant to purchase Series F Preferred Stock
under the Warrant Agreement (the "Purchaser") has requested that the Company
extend to it registration rights and other rights as set forth below;

        WHEREAS, the Company, the Founders and those undersigned Investors
holding the Company's Series A Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock Series D Preferred Stock and Series E Preferred Stock desire
to grant such rights to the Purchaser by substituting this Agreement, to which
the Purchaser is a party, for that Investors Rights Agreement entered into as of
the 20th day of December, 1995 and amended on the 31st day of January, 1996; the
29th day of January, 1997; the 14th day of November, 1997, and the 31st day of
July, 1998, by and among the Company, the Founders and the holders of all of the
then outstanding shares of the Company's Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series E
Preferred Stock (collectively the "Prior Agreements"); and

        WHEREAS, the Company and the Investors wish to grant certain rights to
and impose certain restrictions on the Founders, as set forth below;

        NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement and in the Purchase Agreement, the parties mutually agree (i) that
effective upon the closing of the sale and issuance of the Series E Preferred
Stock pursuant to the Series E Stock Purchase Agreement, and execution of this
Agreement by Investors holding at least fifty percent (50%) of the Company's
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock and Series E Preferred Stock, all provisions of, rights
granted by, and covenants made in the Prior Agreements

                                       1
<PAGE>   4

are hereby waived, released and terminated in their entirety and shall have no
further force or effect whatsoever and (ii) as follows:

        1. GENERAL

               1.1 DEFINITIONS. As used in this Agreement the following terms
shall have the following respective meanings:

               "Form S-3" means such form under the Securities Act as in effect
on the date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.

               "Holder" means any Investor owning of record Registrable
Securities that have not been sold to the public or any assignee of record of
such Registrable Securities in accordance with Section 2.10 hereof.

               "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
effectiveness of such registration statement or document.

               "Registrable Securities" means (i) Common Stock of the Company
issued or issuable upon conversion of the Shares; (ii) 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, such above-described
securities, and (iii) shares of Common Stock issued to Massachusetts Institute
of Technology ("M.I.T.") pursuant to that certain License Agreement by and
between M.I.T and the Company. Notwithstanding the foregoing, Registrable
Securities shall not include any securities (i) sold by a person to the public
either pursuant to a registration statement or Rule 144, or (ii) sold in a
private transaction in which the transferror's rights under Article II of this
Agreement are not assigned.

               "Registrable Securities then outstanding" shall be the number of
shares determined by calculating the total number of shares of the Company's
Common Stock that are Registrable Securities and either (1) are then issued and
outstanding or (2) are issuable pursuant to then exercisable or convertible
securities.

               "Registration Expenses" shall mean all expenses incurred by the
Company in complying with Sections 2.2, 2.3 and 2.4 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, reasonable fees and disbursements not
to exceed Ten Thousand Dollars ($10,000) of a single special counsel for the
Holders, blue sky fees and expenses and 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).

               "SEC" or "Commission" means the Securities and Exchange
Commission.

               "Securities Act" shall mean the Securities Act of 1933, as
amended.

                                       2
<PAGE>   5

               "Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes, if any, applicable to the sale of
Registrable Securities.

               "Shares" shall mean shares of the Company's Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock and Series F Preferred Stock.

        2. REGISTRATION; RESTRICTIONS ON TRANSFER

               2.1 RESTRICTIONS ON TRANSFER.

                      (a) Each Holder agrees not to make any disposition of all
or any portion of the Registrable Securities (or the Common Stock issuable upon
the conversion thereof) unless and until the transferee has agreed in writing
for the benefit of the Company to be bound by this Section 2.1, provided and to
the extent such Section is then applicable and:

                             (i) There is then in effect a registration
statement under the Securities Act covering such proposed disposition and such
disposition is made in accordance with such registration statement; or

                             (ii) (A) Such Holder shall have notified the
Company of the proposed disposition and shall have furnished the Company with a
detailed statement of the circumstances surrounding the proposed disposition,
and (B) if reasonably requested by the Company, such Holder shall have furnished
the Company with an opinion of counsel, reasonably satisfactory to the Company,
that such disposition will not require registration of such shares under the
Securities Act. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to Rule 144 except in unusual
circumstances.

                             (iii) Notwithstanding the provisions of paragraphs
(i) and (ii) above, no such registration statement or opinion of counsel shall
be necessary for a transfer by a Holder which is (A) a partnership to its
partners or former partners in accordance with partnership interests, or a
corporation to its affiliates, (B) a corporation to its shareholders in
accordance with their interest in the corporation or (C) to the Holder's family
member or trust for the benefit of an individual Holder, provided the transferee
will be subject to the terms of this Section 2.1 to the same extent as if he
were an original Holder hereunder.

                      (b) Each certificate representing Shares or Registrable
Securities shall (unless otherwise permitted by the provisions of this
Agreement) be stamped or otherwise imprinted with a legend substantially similar
to the following (in addition to any legend required under applicable state
securities laws or as provided elsewhere in this Agreement and except that the
Regulation S legend shall be applied only to those securities issued to
Regulation S Purchasers):

        THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
        SECURITIES ACT OF 1933, AS AMENDED, (THE "ACT") AND MAY NOT BE OFFERED,
        SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
        REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL OR

                                       3
<PAGE>   6

        BASED ON OTHER WRITTEN EVIDENCE IN FORM AND SUBSTANCE SATISFACTORY TO
        THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
        HYPOTHECATION IS IN COMPLIANCE THEREWITH.

        THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
        PURSUANT TO REGULATION S OF THE SECURITIES ACT OF 1933, AS AMENDED, (THE
        "ACT") AND MAY NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHETICATED OR
        OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE THEREWITH.

                      (c) The Company shall be obligated to reissue promptly
unlegended certificates at the request of any holder thereof if the holder shall
have obtained an opinion of counsel (which counsel may be counsel to the
Company) reasonably acceptable to the Company to the effect that the securities
proposed to be disposed of may lawfully be so disposed of without registration,
qualification or legend. Upon removal of such legend, the provisions of Section
2.1(a) shall no longer apply.

                      (d) Each Regulation S Purchaser is aware that the Company
will, and the Company agrees that the Company shall, to the extent required by
Regulation S, refuse to register any transfer of the Shares purchased by such
Regulation S Purchaser that is not made in accordance with Regulation S.

                      (e) Any legend endorsed on an instrument pursuant to
applicable state securities laws and the stop-transfer instructions with respect
to such securities shall be removed upon receipt by the Company of an order of
the appropriate blue sky authority authorizing such removal.

               2.2 DEMAND REGISTRATION.

                      2.2.1 Subject to the conditions of this Section 2.2, if
the Company shall receive at any time after the earlier of either (i) January
29, 2000 or (ii) ninety (90) days after the effective date of the registration
statement pertaining to the initial public offering of the Company's Common
Stock (the "Initial Offering"), a written request from the Holders of at least
thirty percent (30%) of the Registrable Securities then outstanding (the
"Initiating Holders") that the Company file a registration statement under the
Securities Act covering the registration of (i) at least twenty percent (20%) of
Registrable Securities or (ii) less than twenty percent (20%) of the Registrable
Securities provided such lesser percentage of Registrable Securities have an
aggregate offering price to the public of not less than $7,500,000, then the
Company shall, within thirty (30) days of the receipt thereof, give written
notice of such request to all Holders, and subject to the limitations of this
Section 2.2, shall use its best efforts to effect, as soon as practicable, the
registration under the Securities Act of all Registrable Securities that the
Holders request to be registered.

                      2.2.2 If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
this Section 2.2 and the Company shall

                                       4
<PAGE>   7

include such information in the written notice referred to in Section 2.2.1. In
such event, the right of any Holder to include his Registrable Securities in
such registration shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall enter
into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by a majority in interest of the
Initiating Holders (which underwriter or underwriters shall be reasonably
acceptable to the Company). Notwithstanding any other provision of this Section
2.2, if the underwriter advises the Company in writing that marketing factors
require a limitation of the number of securities to be underwritten (including
Registrable Securities) then the Company shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares that may be included in the underwriting shall be
allocated to the Holders of such Registrable Securities on a pro rata basis
based on the number of Registrable Securities held by all such Holders
(including the Initiating Holders). Any Registrable Securities excluded or
withdrawn from such underwriting shall be withdrawn from the registration.

                      2.2.3 The Company shall not be required to effect a
registration pursuant to this Section 2.2:

                             (i) after the Company has effected two (2)
registrations pursuant to this Section 2.2 and such registrations have been
declared or ordered effective; or

                             (ii) during the period starting with the date of
filing of, and ending on the date ninety (90) days following the effective date
of the Initial Offering, provided that the Company is making reasonable and good
faith efforts to cause such registration statement to become effective; or

                             (iii) if within thirty (30) days of receipt of a
written request from Initiating Holders pursuant to Section 2.2.1, the Company
gives notice to the Holders of the Company's bona fide good faith intention to
make its Initial Offering within ninety (90) days; or

                             (iv) if the Company shall furnish to Holders
requesting a registration statement pursuant to this Section 2.2, a certificate
signed by the Chairman of the Board stating that in the good faith judgment of
the Board of Directors of the Company, it would be seriously detrimental to the
Company and its shareholders for such registration statement to be filed and it
is therefore essential to defer the filing of such registration statement, in
which event the Company shall have the right to defer such filing for a period
of not more than ninety (90) days after receipt of the request of the Initiating
Holders; provided that such right to delay a request shall be exercised by the
Company no more than twice in any one-year period.

               2.3 PIGGYBACK REGISTRATIONS. The Company promptly shall notify
all Holders in writing of the Company's determination to file any registration
statement under the Securities Act for purposes of a public offering of
securities of the Company (including, but not limited to, registration
statements relating to secondary offerings of securities of the Company, but
excluding registration statements relating to employee benefit plans and
corporate

                                       5
<PAGE>   8

reorganizations) and will afford each such Holder an opportunity to include in
such registration statement all or part of such Registrable Securities held by
such Holder. Each Holder desiring to include in any such registration statement
all or any part of the Registrable Securities held by it shall, within twenty
(20) days after mailing of the above-described notice from the Company, so
notify the Company in writing. Such notice shall state the intended method of
disposition of the Registrable Securities by such Holder. If a Holder decides
not to include all of its Registrable Securities in any registration statement
thereafter filed by the Company, such Holder shall nevertheless continue to have
the right to include any Registrable Securities in any subsequent registration
statement or registration statements as may be filed by the Company with respect
to offerings of its securities, all upon the terms and conditions set forth
herein.

                      2.3.1 Underwriting. If the registration statement under
which the Company gives notice under this Section 2.3 is for an underwritten
offering, the Company shall so advise the Holders of Registrable Securities. In
such event, the right of any such Holder to be included in a registration
pursuant to this Section 2.3 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their Registrable Securities through such
underwriting shall enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting. Notwithstanding
any other provision of the Agreement, if the underwriter determines in good
faith that marketing factors require a limitation of the number of shares to be
underwritten, the number of shares that may be included in the underwriting
shall be allocated, first, to the Company; second, to the Holders on a pro rata
basis based on the total number of Registrable Securities held by the Holders;
and third, to any shareholder of the Company (other than a Holder) on a pro rata
basis. No such reduction shall reduce the securities being offered by the
Company for its own account to be included in the registration and underwriting,
and in no event shall the amount of securities of the selling Holders included
in the registration be reduced below thirty percent (30%) of the total amount of
securities included in such registration, unless such offering is the Initial
Offering and such registration does not include shares of any other selling
shareholders, in which event any or all of the Registrable Securities of the
Holders may be excluded in accordance with the immediately preceding sentence.
In no event will shares of any other selling shareholder be included in such
registration which would reduce the number of shares which may be included by
Holders without the written consent of Holders of not less than a majority of
the Registrable Securities proposed to be sold in the offering.

                      2.3.1.1 Right to Terminate Registration. The Company shall
have the right to terminate or withdraw any registration initiated or withdraw
any registration initiated by it under this Section 2.3 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
2.5 hereof.

               2.4 FORM S-3 REGISTRATION. In case the Company shall receive from
any Holder or Holders a written request or requests that the Company effect a
registration on Form S-3 (or any successor to Form S-3) or any similar
short-form registration statement and any related qualification or compliance
with respect to all or a part of the Registrable Securities owned by such Holder
or Holders, the Company will:

                                       6
<PAGE>   9

                      2.4.1 Promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders
of Registrable Securities; and

                      2.4.2 As soon as practicable, effect such registration and
all such qualifications and compliances as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Holder's or Holders' Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any other
Holder or Holders joining in such request as are specified in a written request
given within twenty (20) days after mailing of such written notice from the
Company; provided, however, that the Company shall not be obligated to effect
any such registration, qualification or compliance pursuant to this Section 2.4:

                             (i) if Form S-3 (or such successor or similar form)
is not available for such offering by the Holders; or

                             (ii) if the Holders, together with the holders of
any other securities of the Company entitled to inclusion in such registration,
propose to sell Registrable Securities and such other securities (if any) at an
aggregate price to the public of less than $750,000; or

                             (iii) if the Company shall furnish to the Holders a
certificate signed by the Chairman of the Board of Directors of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its shareholders
for such Form S-3 Registration to be effected at such time, in which event the
Company shall have the right to defer the filing of the Form S-3 registration
statement for a period of not more than ninety (90) days after receipt of the
request of the Holder or Holders under this Section 2.4, provided that the
Company may exercise such right only once in each 12-month period;

                             (iv) after the Company has effected two (2)
registrations pursuant to this Section 2.4 in any twelve (12) month period; or

                             (v) in any particular jurisdiction in which the
Company would be required to qualify to do business or to execute a general
consent to service of process in effecting such registration, qualification or
compliance.

                      2.4.3 Subject to the foregoing, the Company shall file a
Form S-3 registration statement covering the Registrable Securities and other
securities so requested to be registered as soon as practicable after receipt of
the request or requests of the Holders.

               2.5 EXPENSES OF REGISTRATION. All Registration Expenses incurred
in connection with any registration, qualification or compliance pursuant to
Section 2.2 or any registration under Section 2.3 or Section 2.4 herein shall be
borne by the Company. All Selling Expenses incurred in connection with any
registrations hereunder, shall be borne by the holders of the securities so
registered pro rata on the basis of the number of shares so registered. The
Company shall not, however, be required to pay for expenses of any registration
proceeding begun pursuant to Section 2.2 or 2.4, the request of which has been
subsequently withdrawn by the Initiating Holders unless the withdrawal is based
upon material adverse information

                                       7
<PAGE>   10

concerning the Company of which the Initiating Holders were not aware at the
time of such request. If the Holders are required to pay the Registration
Expenses, such expenses shall be borne by the holders of securities (including
Registrable Securities) requesting such registration in proportion to the number
of shares for which registration was requested.

               2.6 OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of any Registrable Securities, the Company shall use its best
efforts, as expeditiously as reasonably possible, to:

                      2.6.1 Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become effective, and, upon the request
of the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for up to one hundred
eighty (180) days or, if earlier, until the Holder or Holders have completed the
distribution related thereto.

                      2.6.2 Prepare and file with the SEC 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.

                      2.6.3 Furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.

                      2.6.4 Use its best efforts to 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.

                      2.6.5 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(s) of such offering. Each
Holder participating in such underwriting shall also enter into and perform its
obligations under such an agreement.

                      2.6.6 Notify each Holder of Registrable Securities 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.

                      2.6.7 Furnish, at the request of a majority of the Holders
participating in the registration, on the date that such Registrable Securities
are delivered to the underwriters for sale, if such securities are being sold
through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such

                                       8
<PAGE>   11

securities becomes effective, (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 and reasonably satisfactory to a majority in interest of the Holders
requesting registration, addressed to the underwriters, if any, and to the
Holders requesting registration of Registrable Securities 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 and
reasonably satisfactory to a majority in interest of the Holders requesting
registration, addressed to the underwriters, if any, and if permitted by
applicable accounting standards, to the Holders requesting registration of
Registrable Securities.

                      2.6.8 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.

                      2.6.9 Provide a transfer agent and registrar for all
Registrable Securities registered pursuant to such registration statement and a
CUSIP number for all such Registrable Securities, in each case not later than
the effective date of such registration.

               2.7 TERMINATION OF REGISTRATION RIGHTS. All registration rights
granted under this Article II shall terminate and be of no further force and
effect five (5) years after the closing of the Company's Initial Offering. In
addition, a Holder's registration rights shall expire if all Registrable
Securities held by and issuable to such Holder may be sold under Rule 144 during
any ninety (90) day period.

               2.8 DELAY OF REGISTRATION; FURNISHING INFORMATION.

                      (a) No Holder shall have any right to obtain or seek an
injunction restraining or otherwise delaying any such registration as the result
of any controversy that might arise with respect to the interpretation or
implementation of this Article II.

                      (b) It shall be a condition precedent to the obligations
of the Company to take any action pursuant to Section 2.2, 2.3 or 2.4 that the
selling Holders shall furnish to the Company such information regarding
themselves, the Registrable Securities held by them, and the intended method of
disposition of such securities as shall be required to effect the registration
of their Registrable Securities.

               2.9 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under Sections 2.2, 2.3 or 2.4:

                      2.9.1 To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners, officers and directors of
each Holder, any underwriter (as defined in the Securities Act) for such Holder
and each person, if any, who controls such Holder or underwriter within the
meaning of the Securities Act or the Securities Exchange Act of 1934, as
amended, (the "1934 Act"), against any losses, claims, damages, or liabilities
(joint or several) to which they may become subject under the Securities Act,
the 1934 Act or other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any of the following statements, omissions or violations

                                       9
<PAGE>   12

(collectively a "Violation") by the Company: (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the 1934 Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the 1934 Act or any state securities law in connection with the offering covered
by such registration statement; and the Company will, as incurred, reimburse
each such Holder, partner, officer or director, underwriter or controlling
person for any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided however, that the indemnity agreement contained in this Section
2.9.1 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 Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability
or action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by such Holder, partner,
officer, director, underwriter or controlling person of such Holder.

                      2.9.2 To the extent permitted by law, each selling Holder,
if Registrable Securities held by such Holder are included in the securities as
to which such registration is being effected, will indemnify and hold harmless
the Company, each of its directors, each of its officers, each person, if any,
who controls the Company within the meaning of the Securities Act, any
underwriter and any other Holder selling securities under such registration
statement or any of such other Holder's partners, directors or officers or any
person who controls such Holder, against any losses, claims, damages or
liabilities (joint or several) to which the Company or any such director,
officer, controlling person, underwriter or other such Holder, or partner,
director, officer or controlling person of such other Holder may become subject
under the Securities Act, the 1934 Act or other federal or state law, insofar as
such losses, claims, damages or liabilities (or actions in respect thereto)
arise out of or are based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished by such Holder under an instrument
duly executed by such Holder and stated to be specifically for use in connection
with such registration; and each such Holder will reimburse, as incurred, any
legal or other expenses reasonably incurred by the Company or any such director,
officer, controlling person, underwriter or other Holder, or partner, officer,
director or controlling person of such other Holder in connection with
investigating or defending any such loss, claim, damage, liability or action if
it is judicially determined that there was such a Violation; provided, however,
that the indemnity agreement contained in this Section 2.9.2 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; provided further, that in no event shall any
indemnity under this Section 2.9 exceed the gross proceeds from the offering
received by such Holder.

                      2.9.3 Promptly after receipt by an indemnified party under
this Section 2.9 of notice of the commencement of any action (including any
governmental action),

                                       10
<PAGE>   13

such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 2.9, deliver to the indemnifying party
a written notice of the commencement thereof and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its own
counsel, with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 2.9, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 2.9.

                      2.9.4 If the indemnification provided for in this Section
2.9 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any losses, claims, damages or liabilities
referred to herein, the indemnifying party, in lieu of indemnifying such
indemnified party thereunder, shall to the extent permitted by applicable law
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability 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 Violation(s) that resulted
in such loss, claim, damage or liability, as well as any other relevant
equitable considerations. The relative fault of the indemnifying party and of
the indemnified party shall be determined by a court of law 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.

                      2.9.5 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.

                      2.9.6 The obligations of the Company and Holders under
this Section 2.9 shall survive the completion of any offering of Registrable
Securities in a registration statement, and otherwise.

               2.10 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Securities pursuant to this Article II may be
assigned by a Holder to a transferee or assignee of Registrable Securities which
(i) is a subsidiary, parent, general partner, limited partner or retired partner
of a Holder, (ii) is a Holder's family member or trust for the benefit of an
individual Holder, or (iii) acquires at least one hundred thousand (100,000)
shares of Registrable Securities (as adjusted for stock splits and
combinations); provided, however, (A) the transferor shall, within ten (10) days
after such transfer, furnish to the Company written

                                       11
<PAGE>   14

notice of the name and address of such transferee or assignee and the securities
with respect to which such registration rights are being assigned and (B) such
transferee shall agree to be subject to all restrictions set forth in this
Agreement.

               2.11 AMENDMENT OF REGISTRATION RIGHTS. Any provision of this
Article II may be amended and the observance thereof 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
not less than fifty percent (50%) of the Registrable Securities. Any amendment
or waiver effected in accordance with this Section 2.11 shall be binding upon
each Holder and the Company. By acceptance of any benefits under this Article
II, Holders of Registrable Securities hereby agree to be bound by the provisions
hereunder.

               2.12 LIMITATION ON SUBSEQUENT REGISTRATION RIGHTS. After the date
of this Agreement, the Company shall not, without the prior written consent of
the Holders not less than fifty percent (50%) of the Registrable Securities,
enter into any agreement with any holder or prospective holder of any securities
of the Company that would grant such holder registration rights senior to those
granted to the Holders hereunder.

               2.13 "MARKET STAND-OFF" AGREEMENT. If requested by a
representative of the underwriters of Common Stock (or other securities) of the
Company, each Holder and Founder shall not sell or otherwise transfer or dispose
of any Common Stock (or other securities) of the Company held by such Holder or
Founder (other than those included in the registration) for a period specified
by the representative of the underwriters, not to exceed one hundred eighty
(180) days following the effective date of a registration statement of the
Company filed under the Securities Act (the "Effective Date"), provided that:

                      (a) such agreement shall apply only to the Company's
Initial Offering; and

                      (b) all officers and directors of the Company enter into
similar agreements.

        The obligations described in this Section 2.13 shall not apply to a
registration relating solely to employee benefit plans on Form S-1 or Form S-8
or similar forms that may be promulgated in the future, or a registration
relating solely to a Commission Rule 145 transaction on Form S-4 or similar
forms that may be promulgated in the future. The Company may impose
stop-transfer instructions with respect to the shares of Common Stock (or other
securities) subject to the foregoing restriction until the end of said one
hundred eighty (180) day period.

               2.14 RULE 144 REPORTING. With a view to making available to the
Holders the benefits of certain rules and regulations of the SEC which may
permit the sale of the Registrable Securities to the public without
registration, the Company agrees to use its best efforts to:

                      (a) Make and keep public information available, as those
terms are understood and defined in SEC Rule 144 or any similar or analogous
rule promulgated under the Securities Act, at all times after the effective date
of the first registration filed by the Company for an offering of its securities
to the general public;

                                       12
<PAGE>   15

                      (b) File with the SEC, in a timely manner, all reports and
other documents required of the Company under the Securities Act and the 1934
Act; and

                      (c) So long as a Holder owns any Registrable Securities,
furnish to such Holder forthwith upon request: a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144 of
the Securities Act, and of 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 as a
Holder may reasonably request in availing itself of any rule or regulation of
the SEC allowing it to sell any such securities without registration.

        3. COVENANTS OF THE COMPANY

               3.1 BASIC FINANCIAL INFORMATION AND REPORTING.

                      3.1.1 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.

                      3.1.2 So long as an Investor (with its affiliates) shall
own not less than (i) two million (2,000,000) shares of Registrable Securities
(as adjusted for stock splits and combinations), (ii) two hundred thousand
(200,000) shares of Series C Preferred Stock (as adjusted for stock splits and
combinations), (iii) two hundred thousand (200,000) shares of Series D Preferred
Stock (as adjusted for stock splits and combinations), (iv) two hundred thousand
(200,000) shares of Series E Preferred Stock, or (v) two hundred thousand
(200,000) shares of Series F Preferred Stock (as adjusted for stock splits and
combinations) (a "Major Investor" which term shall include each Founder
regardless of the number of shares such Founder holds) as soon as practicable
after the end of each fiscal year of the Company, and in any event within ninety
(90) days thereafter, the Company will furnish each Major Investor a
consolidated balance sheet of the Company, as at the end of such fiscal year,
and a consolidated statement of income and a consolidated statement of cash
flows of the Company, for such year, all 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. Such
financial statements shall be accompanied by a report and opinion thereon by
independent public accountants of national standing selected by the Company's
Board of Directors.

                      3.1.3 The Company will furnish each Major Investor as soon
as practicable after the end of the first, second and third quarterly accounting
periods in each fiscal year of the Company, and in any event within forty-five
(45) days thereafter, a consolidated balance sheet of the Company as of the end
of each such quarterly period, and a consolidated statement of income and a
consolidated statement of cash flows of the Company for such period and for the
current fiscal year to date, prepared in accordance with generally accepted
accounting principles, with the exception that no notes need be attached to such
statements and year-end audit adjustments may not have been made.

                                       13
<PAGE>   16

                      3.1.4 The Company will furnish each such Major Investor
(i) at least thirty (30) days prior to the beginning of each fiscal year an
annual budget and operating plans for such fiscal year (and as soon as
available, any subsequent revisions thereto); and (ii) as soon as practicable
after the end of each month, and in any event within twenty (20) days
thereafter, a consolidated balance sheet of the Company as of the end of each
such month, and a consolidated statement of income and a consolidated statement
of cash flows of the Company for such month and for the current fiscal year to
date, including a comparison to plan figures for such period, prepared in
accordance with generally accepted accounting principles, with the exception
that no notes need be attached to such statements and year-end audit adjustments
may not have been made.

               3.2 INSPECTION RIGHTS. Each Major Investor shall have the right
to visit and inspect any of the properties of the Company or any of its
subsidiaries, to discuss the affairs, finances and accounts of the Company or
any of its subsidiaries with its officers, and to review such information
regarding the Company as is reasonably requested all at such reasonable times
and as often as may be reasonably requested; provided, however, that the Company
shall not be obligated under this Section 3.2 with respect to a competitor of
the Company or with respect to information which the Board of Directors
determines in good faith is confidential and should not, therefore, be
disclosed.

               3.3 CONFIDENTIALITY OF RECORDS.

                      3.3.1 Each Investor agrees not to use Confidential
Information (as hereinafter defined) of the Company for its own use or for any
purpose except to evaluate and enforce its equity investment in the Company.
Except as permitted under subsection (b) below, each Investor agrees to use its
best efforts not to disclose such Confidential Information to any third parties.
Each Investor shall undertake to treat such Confidential Information in a manner
consistent with the treatment of its own information of such proprietary nature
and agrees that it shall protect the confidentiality of and use reasonable best
efforts to prevent disclosure of the Confidential Information to prevent it from
falling into the public domain or the possession of unauthorized persons. Each
transferee of any Investor who receives Confidential Information shall agree to
be bound by such provisions. For purposes of this Section, "Confidential
Information" means any information, technical data, or know-how, including, but
not limited to, the Company's licenses, research, products, software, services,
development, inventions, consultants' identities, processes, designs, drawings,
engineering, marketing, finances, or business partners disclosed by the Company
either directly or indirectly in writing, orally or by drawings or inspection of
parts or equipment.

                      3.3.2 Confidential Information does not include
information, technical data or know-how which (i) is in the Investor's
possession at the time of disclosure as shown by Investor's files and records
immediately prior to the time of disclosure; (ii) before or after it has been
disclosed to the Investor, it is part of the public knowledge or literature, not
as a result of any action or inaction of the Investor; (iii) is approved for
release by written authorization of Company; or (iv) is rightfully disclosed to
Investor by a third party without restriction. The provisions of this Section
shall not apply (i) to the extent that an Investor is required to disclose
Confidential Information pursuant to any law, statute, rule or regulation or any
order of any court or jurisdiction process or pursuant to any direction, request
or requirement (whether or not

                                       14
<PAGE>   17

having the force of law but if not having the force of law being of a type with
which institutional investors in the relevant jurisdiction are accustomed to
comply) of any self-regulating organization or any governmental, fiscal,
monetary or other authority; (ii) to the disclosure of Confidential Information
to an Investor's employees, counsel, accountants or other professional advisors
or to affiliates for reporting purposes only; (iii) to the extent that an
Investor needs to disclose Confidential Information for the protection of any of
such Investor's rights or interest against the Company, whether under this
Agreement or otherwise; or (iv) to the disclosure of Confidential Information to
a prospective transferee of securities which agrees to be bound by the
provisions of this Section in connection with the receipt of such Confidential
Information.

               3.4 PROPRIETARY INFORMATION. The Company shall require all
employees of and consultants to the Company who have access to proprietary
information of the Company to enter into agreements in the Company's standard
form providing for the protection of proprietary information and inventions.

               3.5 STOCK VESTING. Unless otherwise approved by the Board of
Directors, all stock options and other stock equivalents issued after the date
of this Agreement to employees, directors, consultants and other service
providers, except with respect to the Founders, shall be subject to vesting
monthly over a four (4) year period. With respect to any shares of stock
purchased by any such person, the Company's repurchase option shall provide that
(i) 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, (ii) no such
stock may be transferred prior to vesting, and (iii) the sale of all such stock
shall be subject to a right of first refusal in favor of the Company or its
assignees.

               3.6 RIGHT OF FIRST REFUSAL. The Company hereby grants to each
Major Investor, unless waived by the holders of at least a majority of the
shares held by the Major Investors, the right of first refusal to purchase a pro
rata share of New Securities (as defined below) that the Company may, from time
to time, propose to sell and issue. For purposes of this Section 3.6 only, the
term "Major Investor" shall include Guidant Corporation ("Guidant"). The Company
shall provide such information to a mutually-agreed upon Guidant employee
("Guidant Reviewer") in connection with the exercise of Guidant's rights under
this Section 3.6, as Guidant may reasonably request. The Company and Guidant
acknowledge and agree that any information delivered in accordance with this
Section 3.6 is (i) Confidential Information, (ii) subject to the confidentiality
provisions as set forth in Section 3.3 hereof and (iii) is to be provided to the
Guidant Reviewer only and is not to be disclosed to any other employee, agent or
affiliate of Guidant. Each Major Investor's pro rata share, for purposes of this
right of first refusal, is the ratio of (X) the number of shares of Registrable
Securities then owned by such Major Investor to (Y) the total number of shares
of Common Stock of the Company outstanding immediately prior to the issuance of
the New Securities, assuming full conversion of all shares of outstanding
Preferred Stock of the Company and exercise of all outstanding options and
warrants to purchase securities of the Company. This right of first refusal
shall be subject to the following provisions:

                      3.6.1 "New Securities" shall mean any offering by the
Company of any Common Stock or Preferred Stock of the Company, whether now
authorized or not, and rights,

                                       15
<PAGE>   18

options, or warrants to purchase said Common Stock or Preferred Stock, and
securities of any type whatsoever that are, or may become, convertible into said
Common Stock or Preferred Stock; provided, however, that "New Securities" does
not include (i) securities issuable upon conversion of the Shares; (ii)
securities issued upon conversion or exchange of currently outstanding
securities, (iii) securities offered to the public pursuant to a registration
statement filed under the Securities Act; (iv) securities issued pursuant to the
acquisition of another corporation by the Company by merger, purchase of
substantially all of the assets, or other reorganization whereby the Company
owns more than 50% of the voting power of such corporation; (v) shares of the
Company's Common Stock (or related options) issued or issuable at any time to
employees, directors or consultants of the Company, or any subsidiary, pursuant
to any employee stock offering, plan, or arrangement approved by the Board of
Directors; (vi) shares of the Company's Common Stock or Preferred Stock issued
in connection with any stock split, stock dividend, or recapitalization by the
Company; (vii) securities issued in connection with equipment lease financings
or other financings with commercial lenders; (viii) shares of the Company's
Common Stock or Preferred Stock issued in connection with strategic transactions
involving the Company and other entities, including (A) joint ventures,
manufacturing, marketing or distribution arrangements or (B) technology transfer
or development arrangements; provided that such strategic transactions and the
issuance of shares therein, has been approved by the Company's Board of
Directors.

                      3.6.2 In the event that the Company proposes to undertake
an issuance of New Securities, it shall give each Holder written notice of its
intention, describing the type of New Securities, the price, and the general
terms upon which the Company proposes to issue the same. Each Holder shall have
twenty (20) business days from the date of mailing of any such notice to agree
to purchase its pro rata share of such New Securities for the price and upon the
general terms specified in the notice by giving written notice to the Company
and stating therein the quantity of New Securities to be purchased.
Notwithstanding the foregoing, the Company shall not be required to offer or
sell New Securities to any Holder who would cause the Company to be in violation
of applicable federal or state securities laws by virtue of such offer or sale.

                      3.6.3 In the event that any Holder fails or Holders fail
to exercise in full the right of first refusal within said twenty (20) business
day period, the Company shall give written notice of such failure to every other
Holder who gave timely notice to the Company of its exercise in full of its
first refusal rights (a "Fully Participating Holder"). Any such Fully
Participating Holder may then elect to purchase the New Securities respecting
which the Holders' rights were not exercised ("Available New Securities"), at a
price and upon general terms materially no more favorable to the purchasers
thereof than specified in the Company's notice, by notifying the Company in
writing within ten (10) business days from the date of mailing of any such
notice. In the event that the Fully Participating Holders give timely notice of
elections to purchase, in addition to their original pro rata share of the New
Securities, an aggregate of more than the Available New Securities available,
such Fully Participating Holders shall purchase that percentage of the total of
Available New Securities as each such Fully Participating Holder's present
ownership of Registrable Securities bears to the total number of shares of all
Fully Participating Holders who have given timely notice of their election to
purchase additional shares.

                                       16
<PAGE>   19

                      3.6.4 In the event (i) there are no Fully Participating
Holders or (ii) the Fully Participating Holders do not timely elect to purchase
all Available New Securities, the Company shall have one hundred and twenty
(120) days thereafter to sell (or enter into an agreement pursuant to which the
sale of Available New Securities covered thereby shall be closed, if at all,
within thirty (30) days from the date of said agreement) the Available New
Securities respecting which the Fully Participating Holders' rights were not
exercised at a price and upon general terms materially no more favorable to the
purchasers thereof than specified in the Company's notice. In the event the
Company has not sold the Available New Securities within said one hundred and
twenty (120) day period (or sold and issued Available New Securities in
accordance with the foregoing within one hundred and twenty (120) days from the
date of said agreement), the Company shall not thereafter issue or sell any
Available New Securities without first offering such securities to the Holders
in the manner provided above.

                      3.6.5 The right of first refusal of each Holder under this
Section 3.6 may be transferred to any transferee who is or becomes a Holder. For
purposes of this Section 3.6, Holder includes any general partner or affiliate
of Holder. A Holder shall be entitled to apportion the right of first refusal
granted it among itself and its partners and affiliates in such proportions as
it deems appropriate.

                      3.6.6 Notwithstanding the foregoing, the consent of
Guidant shall be required for any amendment or waiver of this Section 3.6.

               3.7 VISITATION RIGHTS. To the extent a Founder is not a member of
the board of directors, the Company shall allow one representative designated by
each of the Founders to attend all meetings of the Company's board of directors
in a nonvoting capacity, and in connection therewith, the Company shall give
such representative copies of all notices, minutes, consents and other
materials, financial or otherwise, which the Company provides to its board of
directors.
               3.8 RESERVATION OF COMMON STOCK. The Company will at all times
reserve and keep available, solely for issuance and delivery upon the conversion
of the Preferred Stock, all Common Stock issuable from time to time upon such
conversion.

               3.9 TERMINATION OF COVENANTS. All covenants of the Company
contained in Article III of this Agreement shall expire and terminate as to each
Investor and the Founders on the Effective Date of the Company's first firm
commitment underwritten public offering registered under the Securities Act.

        4. MISCELLANEOUS

               4.1 GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.

               4.2 SURVIVAL. The representations, warranties, covenants, and
agreements made herein shall survive any investigation made by any Holder and
the closing of the transactions contemplated hereby. All statements as to
factual matters contained in any certificate or other instrument delivered by or
on behalf of the Company pursuant hereto in

                                       17
<PAGE>   20

connection with the transactions contemplated hereby shall be deemed to be
representations and warranties by the Company hereunder solely as of the date of
such certificate or instrument.

               4.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors, and administrators of
the parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of Registrable Securities from time to time;
provided, however, that prior to the receipt by the Company of adequate written
notice of the transfer of any Registrable Securities specifying the full name
and address of the transferee, the Company may deem and treat the person listed
as the holder of such shares in its records as the absolute owner and holder of
such shares for all purposes, including the payment of dividends or any
redemption price.

               4.4 SEVERABILITY. In case any provision of the Agreement shall be
invalid, illegal, or unenforceable, the validity, legality, and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.

               4.5 AMENDMENT AND WAIVER.

                      4.5.1 Except as otherwise expressly provided, this
Agreement may be amended or modified only upon the written consent of the
Company and the holders of not less than fifty percent (50%) of the Registrable
Securities.

                      4.5.2 Except as otherwise expressly provided, the
obligations of the Company and the rights of the Holders under this Agreement
may be waived only with the written consent of the holders of not less than
fifty percent (50%) of the Registrable Securities.

                      4.5.3 Notwithstanding the foregoing, subject to Section
2.12, this Agreement may be amended with only the written consent of the Company
to modify Exhibit A to include additional purchasers of Shares as "Investors,"
"Holders" and parties hereto.

                      4.5.4 Notwithstanding the foregoing, the consent of the
Founder shall be required for any amendment or waiver of this Agreement which
materially increases such Founder's obligations or diminishes such Founder's
rights hereunder.

               4.6 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.

               4.7 NOTICES. All notices required or permitted hereunder shall be
in writing and shall be deemed effectively given: (i) upon personal delivery to
the party to be notified, (ii)

                                       18
<PAGE>   21

when sent by confirmed telex or facsimile if sent during normal business hours
of the recipient; if not, then on the next business day, (iii) five (5) days
after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (iv) one (1) day after deposit with a nationally
recognized overnight courier, having specified next day delivery, with written
verification of receipt. All communications shall be sent to the Company or a
Founder at the address as set forth on the signature page hereof and to the
Investors at the address set forth on the Schedule of Investors or at such other
address as any party may designate by ten (10) days advance written notice to
the other parties hereto.

               4.8 ATTORNEY'S FEES. In the event that any dispute among the
parties to this Agreement should result in litigation, the prevailing party in
such dispute shall be entitled to recover from the losing party all fees, costs
and expenses of enforcing any right of such prevailing party under or with
respect to this Agreement, including without limitation, such reasonable fees
and expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals.

               4.9 TITLES AND SUBTITLES. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.

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

               4.11 ENTIRE AGREEMENT. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subjects hereof. The Prior Agreements are hereby amended and restated in their
entirety by this Agreement and the Company, the Founders and the Investors agree
that this Agreement shall supersede and replace the rights and obligations of
the Company, the Founders and the Investors granted to them under the Prior
Agreements.

                                       19
<PAGE>   22

        IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.

COMPANY:                             INVESTORS:

INTUITIVE SURGICAL, INC.             MAYFIELD VIII
                                     a California Limited Partnership
                                     By: Mayfield VIII Management, L.L.C.
                                         a Delaware Limited Liability
By: /s/ LONNIE M. SMITH                  Company, its General Partner
   -------------------------------
    Lonnie M. Smith
    Chief Executive Officer

                                     By: /s/ RUSSELL C. HIRSCH
                                        ----------------------------------------
FOUNDERS:                                Russell C. Hirsch, Managing Member

                                     MAYFIELD ASSOCIATES FUND II
/s/ FREDERIC H. MOLL                 a California Limited Partnership
----------------------------------
FREDERIC H. MOLL

/s/ ROBERT G. YOUNGE                  By: /s/ A. GRANT HEIDRICH
----------------------------------       ---------------------------------------
ROBERT G. YOUNGE                         A. Grant Heidrich, III, General Partner

/s/ JOHN G. FREUND                        SIERRA VENTURES V, L.P.
----------------------------------    By: SV Associates V, L.P.,
JOHN G. FREUND                            its General Partner

                                      By: /s/ PETRI T. VAINIO
                                          --------------------------------------
                                          Petri T. Vainio, General Partner

                                      ALLAN G. LOZIER

                                      /s/ ALLAN G. LOZIER
                                      ------------------------------------------

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   23

                                          GC&H INVESTMENTS

                                          By: /s/ JOHN L. CARDOZA
                                             -----------------------------------
                                              John L. Cardoza, Executive Partner

                                          ALLAN JOHNSTON

                                          /s/ ALLAN JOHNSTON
                                          -------------------------------------
                                          GUIDANT CORPORATION

                                          By:
                                             -----------------------------------
                                              F. Thomas Watkins, Vice President

                                          RWI GROUP, L.P.

                                          By: /s/ DONALD A. LUCAS
                                             -----------------------------------
                                              Donald A. Lucas

                                          WILLIAM H. ABBOTT, TRUSTEE FOR THE
                                          ABBOTT LIVING TRUST DATED 08/20/87

                                          By: /s/ WILLIAM H. ABBOTT
                                             -----------------------------------
                                              William H. Abbott, Trustee

                                          PAUL A. BROOKE

                                          /s/ PAUL A. BROOKE
                                          -------------------------------------

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   24

                                          STANFORD UNIVERSITY

                                          By: /s/ CAROL GILMER
                                             -----------------------------------
                                          Its: Assistant Secretary
                                              ----------------------------------

                                          JOSEPH M. MANDATO AND ELIZABETH R.
                                          MANDATO TTEES OF THE MANDATO
                                          FAMILY TRUST

                                          By: /s/ JOSEPH M. MANDATO
                                             -----------------------------------
                                              Joseph M. Mandato, Trustee

                                          ROBERT OKUN

                                          /s/ ROBERT OKUN
                                          --------------------------------------

                                          HOWARD M. HOLSTEIN

                                          /s/ HOWARD M. HOLSTEIN
                                          --------------------------------------

                                          PETER DICKSTEIN

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

                                          WILLIAM JENKINS

                                          /s/ WILLIAM JENKINS
                                          --------------------------------------

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   25

                                MORGAN STANLEY VENTURE PARTNERS III, L.P.

                                By:  Morgan Stanley Venture Partners III, L.L.C.
                                     Its General Partner

                                By:  Morgan Stanley Venture Capital III, Inc.
                                     Institutional Managing Member

                                By: /s/ SCOTT S. HALSTED
                                   ---------------------------------------------
                                    Scott S. Halsted
                                    General Partner

                                MORGAN STANLEY VENTURE INVESTORS III, L.P.

                                By:  Morgan Stanley Venture Partners III, L.L.C.
                                     Its General Partner

                                By:  Morgan Stanley Venture Capital III, Inc.
                                     Institutional Managing Member

                                By: /s/ SCOTT S. HALSTED
                                   ---------------------------------------------
                                    Scott S. Halsted
                                    General Partner

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   26

                                         PATMARK COMPANY, INC.

                                         By: /s/ JAMES D. VAN DE VELDE
                                            ------------------------------------
                                             James D. Van De Velde
                                             President

                                          HUNTERSVILLE ROAD INVESTORS L.P.

                                         By: /s/ W. AUGUST HILLENBRAND
                                            ------------------------------------
                                         Its:
                                             -----------------------------------

                                          WESTWOOD ASSOCIATES, L.P.

                                         By: /s/ LAWRENCE T. KENNEDY
                                            ------------------------------------
                                             Lawrence T. Kennedy
                                             Chairman, Treasurer

                                         W. AUGUST HILLENBRAND

                                         /s/ W. AUGUST HILLENBRAND
                                         ---------------------------------------

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   27

                                         PRICE BROTHERS INVESTMENT PARTNERSHIP
                                         By:  Price Brothers Investment Corp.,
                                              its General Partner

                                         By: /s/ JOHN PRICE
                                            ------------------------------------
                                             John Price
                                             Vice President

                                         ROSE REVOCABLE TRUST

                                         By: /s/ G. LYNN ROSE
                                            ------------------------------------
                                         Its: Trustee

                                         HARRY S. ROBBINS AND SUSAN K. ROBBINS,
                                         TRUSTEES OF THE ROBBINS FAMILY TRUST
                                         D/T/D 4/15/91

                                         By: /s/ HARRY S. ROBBINS
                                            ------------------------------------
                                             Harry S. Robbins, Trustee

                                         By: /s/ SUSAN K. ROBBINS
                                            ------------------------------------
                                             Susan K. Robbins, Trustee

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   28

                                         JUDD MELTZER

                                         /s/ JUDD MELTZER
                                         ---------------------------------------

                                         WENDY MELTZER

                                         /s/ WENDY MELTZER
                                         ---------------------------------------

                                         SEELIG FREUND

                                         /s/ SEELIG FREUND
                                         ---------------------------------------

                                         CHARMIAN FREUND

                                         /s/ CHARMIAN FREUND
                                         ---------------------------------------

                                         BERNARD WEISS

                                         /s/ BERNARD WEISS
                                         ---------------------------------------

                                         DORIS WEISS

                                         /s/ DORIS WEISS
                                         ---------------------------------------

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   29

                                     STAR BAY PARTNERS, L.P.,
                                     a California Limited Partnership

                                     By: APH Capital Management LLC,
                                         a California Limited Liability Company,
                                         its General Partner

                                     By: Levensohn Capital Management LLC,
                                         a California Limited Liability Company,
                                         its Managing Member

                                     By: /s/ PASCAL N. LEVENSOHN
                                        ----------------------------------------
                                         Pascal N. Levensohn
                                         Managing Member

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   30

                                     TRIAXIS TRUST AG

                                     By: /s/ H.P. JOHN
                                        ----------------------------------------
                                     Its: Chairman
                                         ---------------------------------------

                                      BANK JULIUS BAER & CO. LTD.

                                     By:
                                        ----------------------------------------
                                     Its:
                                         ---------------------------------------

                                      CBG COMPAGNIE BANCAIRE GENEVE

                                     By:
                                        ----------------------------------------
                                         Michele Streuli     Thierry Mory
                                         Vice President      Mandator

                                     LGT BANK IN LIECHTENSTEIN AG

                                     By:
                                        ----------------------------------------
                                     Its:
                                         ---------------------------------------

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   31

                                        RICHARD C. BLUM

                                        /s/ RICHARD C. BLUM
                                        ----------------------------------------

                                        N. COLIN LIND

                                        /s/ N. COLIN LIND
                                        ----------------------------------------

                                        JEFFREY W. UBBEN

                                        /s/ JEFFREY W. UBBEN
                                        ----------------------------------------

                                        MURRAY A. INDICK

                                        /s/ MURRAY A. INDICK
                                        ----------------------------------------

                                        GEORGE F. HAMEL, JR.

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

                                        MARC T. SCHOLVINCK

                                        /s/ MARC T. SCHOLVINCK
                                        ----------------------------------------

                                        R. CRAIG LIND

                                        /s/ R. CRAIG LIND
                                        ----------------------------------------

                                        TIMOTHY H. UBBEN

                                        /s/ TIMOTHY H. UBBEN
                                        ----------------------------------------

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   32

                                       INSURANCE COMPANY SUPPORTED
                                       ORGANIZATIONS PENSION PLAN TRUST

                                       By: Mellon Bank, N.A., solely in its
                                       capacity as Trustee for the Insurance
                                       Company Supported Organizations Pension
                                       Plan Trust (as directed by The Benefits
                                       Connection Group, Inc.), and not in its
                                       individual capacity.

                                       By: /s/ CAROLE BRUNO
                                          -------------------------------------
                                           Carole Bruno, Authorized Signatory

                                       BK CAPITAL PARTNERS, IV, L.P.

                                        By:   Richard C. Blum & Associates, L.P.
                                              Its General Partner

                                       By: /s/ MARC T. SCHOLVINCK
                                          -------------------------------------
                                           Marc T. Scholvinck, Managing Director

                                       PRISM PARTNERS I, L.P.

                                        By: /s/ JERALD M. WEINTRAB
                                           -------------------------------------
                                        Its: Managing General Partner
                                            ------------------------------------

                                       RICHARD C. BLUM & ASSOCIATES, L.P.

                                       By: /s/ MARC T. SCHOLVINCK
                                          -------------------------------------
                                           Marc T. Scholvinck, Managing Director

                                       THOMAS L. KEMPNER TRUST AND WILLIAM
                                       PERLMUTH TRUSTEES U/W CARL M. LOEB FBO
                                       THOMAS L. KEMPNER

                                        By: /s/ THOMAS L. KEMPNER
                                           -------------------------------------
                                        Its: Trustee
                                            ------------------------------------

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   33

                                        SUSAN J. SCHMIDT

                                        /s/ SUSAN J. SCHMIDT
                                        ----------------------------------------

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   34

                                        OR TRUST

                                        By: /s/ GEORGE A. PAVLOV
                                           -------------------------------------
                                            George A. Pavlov
                                            Authorized Signatory

                                        RUSSELL C. HIRSCH

                                        /s/ RUSSELL C. HIRSCH
                                        ----------------------------------------

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   35

                                         DBI I, L.P.

                                         By: /s/ DOUG BOSCH
                                            ------------------------------------

                                         Print Name:  Doug Bosch
                                                    ----------------------------

                                         Title:  CEO, Doug Bosch Interests,
                                                 General Partner
                                               ---------------------------------

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   36

                                        MORTON MEYERSON

                                        /s/ TERRY PENDLETON
                                        ----------------------------------------
                                        Attorney in fact

                                        /s/ JANICE HUDSON
                                        ----------------------------------------
                                        Attorney in fact

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   37

                                        DAVID N. MEYERSON EDS TRUST U/A
                                        R. GORDON APPLEMAN TRUSTEE DTD
                                        6/01/70

                                         By:  /s/ R. GORDON APPLEMAN TRUSTEE
                                            ------------------------------------

                                         Print Name:  R. Gordon Appleman
                                                    ----------------------------

                                         Title:  Trustee
                                               ---------------------------------

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   38

                                         THE MARTI A. MEYERSON EDS TRUST
                                         U/A R. GORDON APPLEMAN TRUSTEE
                                         DTD 6/01/70

                                         By:  /s/ R. GORDON APPLEMAN TRUSTEE
                                            ------------------------------------

                                         Print Name:  R. Gordon Appleman
                                                    ----------------------------

                                         Title:  Trustee
                                               ---------------------------------

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   39

                                         MARUBENI AMERICA CORPORATION

                                         By: /s/ T. NAKABAYASHI
                                            ------------------------------------

                                         Print Name: T. Nakabayashi
                                                    ----------------------------

                                         Title: Group Executive & SVP,
                                                Power Systems,
                                                Telecommunications & Electronics
                                                Group
                                               ---------------------------------

                                         MARUBENI CORPORATION

                                         By:  /s/ M. OKAMURA
                                            ------------------------------------

                                         Print Name:  M. Okamura
                                                    ----------------------------

                                         Title:  General Manager of Electronics
                                                 Dept.
                                               ---------------------------------

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   40

                                         INVESTOR (GUERNSEY) LIMITED

                                         By:  /s/ OUJE HELMBERG
                                            ------------------------------------

                                         Print Name:  Ouje Helmberg
                                                    ----------------------------

                                         Title:  Director
                                               ---------------------------------

                                         By:  /s/ DAVID C. JEFFRIES
                                            ------------------------------------

                                         Print Name:  David C. Jeffries
                                                    ----------------------------

                                         Title:  Director
                                               ---------------------------------

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   41

                                         FORETHOUGHT LIFE INSURANCE COMPANY

                                         By:  /s/ GUY M. COOPER
                                            ------------------------------------

                                         Print Name:  Guy M. Cooper
                                                    ----------------------------

                                         Title:  Chief Investment Officer
                                               ---------------------------------

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   42

                                         IS INVESTMENTS, LLC

                                         By:  /s/ FRED GUMBINNER
                                            ------------------------------------

                                         Print Name:  Fred Gumbinner
                                                    ----------------------------

                                         Title:  Manager
                                               ---------------------------------

                                         LESLIE J. GOLDMAN

                                         /s/ LESLIE J. GOLDMAN
                                         ---------------------------------------

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   43

                                        FRANEY, PARR & MUHA, INC.

                                        By: /s/ JOHN R. MUHA
                                           -------------------------------------
                                            John R. Muha
                                            President

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   44

                                        FRANKLIN R. SILBEY

                                        /s/ FRANKLIN R. SILBEY
                                        ----------------------------------------

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   45

                                        RUSSELL C. HIRSCH TRUST

                                        By: /s/ RUSSELL C. HIRSCH, TRUSTEE
                                           -------------------------------------
                                            Russell C. Hirsch, Trustee

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   46

                                        UNGER FAMILY TRUST

                                        By: /s/ WILLIAM D. UNGER
                                           -------------------------------------
                                            William D. Unger, Trustee

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   47

                                        DALAL REVOCABLE TRUST U/D/T DTD 7/31/90,
                                        YOGEN K. & MARGARET J. DALAL, TTEES

                                        By: /s/ YOGEN K. DALAL
                                           -------------------------------------
                                            Yogen K. Dalal

                                        By: /s/ MARGARET J. DALAL
                                           -------------------------------------
                                            Margaret J. Dalal

                                        NINA M. DALAL 1993 TRUST U/T/A 7/21/93,
                                        RAJEN K. DALAL, TRUSTEE

                                        By: /s/ RAJEN K. DALAL, TRUSTEE
                                           -------------------------------------
                                            Rajen K. Dalal, Trustee

                                        ALEX R. DALAL 1993 TRUST U/T/A 7/21/93,
                                        RAJEN K. DALAL, TRUSTEE

                                        By: /s/ RAJEN K. DALAL, TRUSTEE
                                           -------------------------------------
                                            Rajen K. Dalal, Trustee

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   48

                                        MASSACHUSETTS INSTITUTE OF TECHNOLOGY

                                        By:  /s/ LORI PRESSMAN
                                           -------------------------------------

                                        Print Name:  Lori Pressman
                                                   -----------------------------

                                        Title:       Assistant Director
                                                Technology Licensing Officer
                                              ----------------------------------

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
                                 SIGNATURE PAGE

<PAGE>   49

                             SCHEDULE OF INVESTORS

<TABLE>
<CAPTION>
                                            Series A      Series B      Series C       Series D       Series E       Series F
Name and Address                            Preferred     Preferred     Preferred      Preferred      Preferred      Warrants
===============================================================================================================================
<S>                                         <C>            <C>          <C>            <C>            <C>            <C>
Mayfield VIII                               2,565,000           --        912,000        337,630        118,750        118,750
2800 Sand Hill Road, Suite 250
Menlo Park, CA 94025
Attn: Russell C. Hirsch

Mayfield Associates Fund II                   135,000           --         48,000         17,770          6,250          6,250
2800 Sand Hill Road, Suite 250
Menlo Park, CA 94025
Attn: A. Grant Heidrich, III

Sierra Ventures V, L.P.                     2,300,000           --        600,000        125,000        125,000        125,000
3000 Sand Hill Road
Building 4, Suite 210
Attn: Petri T. Vainio

Frederic H. Moll                              150,000           --             --             --             --             --
P.O. Box 620635
Woodside, CA 94062

Robert G. Younge                              100,000           --             --             --             --             --
550 Westridge Drive
Portola Valley, CA 94028

John G. Freund and Linda G                     50,000           --             --             --             --             --
  Sexton, Trustees of the Freund/
  Sexton Living Trust Dated
  February 8, 1991
86 Alejandra Avenue
Atherton, CA 94027

William H. Abbott, Trustee                     25,000           --             --             --             --             --
  For the Abbott Living Trust
  dated 08/20/87
1507 Louisa Court
Palo Alto, CA 94303

Paul A. Brooke                                 25,000           --             --             --             --             --
Tower Hill Road
Tuxedo Park, NY 10987

Stanford University                            25,000           --             --             --             --             --
c/o Stanford Management Company
2770 Sand Hill Road
Menlo Park, CA 94025
Attn: Carol Gilmer

GC&H Investments                               20,000           --         10,000             --          6,500          6,500
One Maritime Plaza, 20th Floor
San Francisco, CA 94111
</TABLE>

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT

<PAGE>   50

<TABLE>
<CAPTION>
                                            Series A      Series B      Series C       Series D       Series E       Series F
Name and Address                            Preferred     Preferred     Preferred      Preferred      Preferred      Warrants
===============================================================================================================================
<S>                                         <C>            <C>          <C>            <C>            <C>            <C>
Joseph M. Mandato and Elizabeth R              20,000           --         10,000             --             --             --
  Mandato TTEES of the Mandato
  Family Trust
82 Monte Vista Avenue
Atherton, CA 94027

Harry S. Robbins & Susan K.                    20,000           --             --             --             --             --
  Robbins Trustees of the Robbins
  Family Trust D/T/D 4/15/91
15244 Montalvo Heights Court
Saratoga, CA 95070

Howard M. Holstein                              7,500           --             --             --             --             --
850 Potomac School Terrace
Potomac, MD 20854

Guidant Corporation                                --      470,000        290,000             --             --             --
c/o Origin Medsystems, Inc.
135 Constitution Drive
Menlo Park, CA 94025
Attn: F. Thomas Watkins

Allan G. Lozier                                    --           --      1,200,000        116,000        312,500        312,500
c/o Lozier Corporation
6226 Pershing Drive
Omaha, NE 678110

RWI Group, L.P.                                    --           --        100,000             --             --             --
720 University Avenue, Suite 103
Palo Alto, CA 94301
Attn: Donald A. Lucas

Allan Johnston                                     --           --          5,000             --             --             --
c/o Synergy Partners International
1010 El Camino Real, Suite 300
Menlo Park, CA 94025

Robert Okun                                        --           --          5,000             --             --             --
c/o Synergy Partners International
1010 El Camino Real, Suite 300
Menlo Park, CA 94025

William M. Jenkins                                 --           --          4,000             --             --             --
2208 16th Avenue East
Seattle, WA 98112

Peter M. Dickstein                                 --           --          1,000             --             --             --
3746 Sacramento Street
San Francisco, CA 94118
</TABLE>

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
<PAGE>   51

<TABLE>
<CAPTION>
                                            Series A      Series B      Series C       Series D       Series E       Series F
Name and Address                            Preferred     Preferred     Preferred      Preferred      Preferred      Warrants
===============================================================================================================================
<S>                                         <C>            <C>          <C>            <C>            <C>            <C>
Morgan Stanley Venture                             --           --      1,368,600             --        114,050        114,050
  Partners III, L.P.
3000 Sand Hill Road
Building 4, Suite 250
Menlo Park, CA 94025
Attn: Scott S. Halsted

Morgan Stanley Venture                             --           --        131,400             --         10,950         10,950
  Investors III, L.P.
3000 Sand Hill Road
Building 4, Suite 250
Menlo Park, CA 94025
Attn: Scott S. Halsted

PaTMarK Company, Inc.                              --           --      1,000,000         37,500      1,250,000      1,250,000
c/o Hillenbrand Industries, Inc.
700 State Route, 46 East
Batesville, IN 47006
Attn: Thomas E. Brewer

Huntersville Road Investors L.P.                   --           --        250,000         87,500        125,000        125,000
c/o Hillenbrand Industries, Inc.
700 State Route, 46 East
Batesville, IN 47006
Attn: Thomas E. Brewer

Rose Revocable Trust                               --           --             --         28,600             --             --
c/o Goldman, Sachs & Co.
555 California Street, 44th Floor
San Francisco, Ca 94104
Attn: G. Lynn Rose

Westwood Associates, L.P.                          --           --         33,000             --        125,000        125,000
c/o Hillenbrand Industries, Inc.
700 State Route, 46 East
Batesville, IN 47006
Attn: Thomas E. Brewer

Price Brothers Investment                          --           --         12,000             --             --             --
  Partnership
1218 Third Avenue, #1115
Seattle, WA 98101
Attn: John Price

Mr. Judd Meltzer                                   --           --         10,000             --             --             --
Mrs. Wendy Meltzer
900 Park Avenue
New York, NY 10028
</TABLE>

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
<PAGE>   52

<TABLE>
<CAPTION>
                                            Series A      Series B      Series C       Series D       Series E       Series F
Name and Address                            Preferred     Preferred     Preferred      Preferred      Preferred      Warrants
===============================================================================================================================
<S>                                         <C>            <C>          <C>            <C>            <C>            <C>
Dr. Seelig Freund                                  --           --          5,000             --             --             --
Mrs. Charmian Freund
1185 Park Avenue, Apt. 3F
New York, NY 10128

Dr. Bernard Weiss                                  --           --          5,000             --             --             --
Mrs. Doris Weiss
119 East 84th Street, Apt. 8A
New York, NY 10028

Star Bay Partners, L.P.                            --           --             --        375,000        125,000        125,000
c/o Levensohn Capital Management
44 Montgomery Street
Suite 2000
San Francisco, CA 94104
Attn:  Pascal N. Levensohn

Triaxis Trust AG                                   --           --             --        184,500             --             --
Buerglistrasse 6
8027 Zuerich
Attn: Hans-Peter John

Bank Julius Baer & Co. Ltd.                        --           --             --        165,500             --             --
Bahmhoifstmasse 36
8010 Zuerich
Switzerland
Attn: Simon Newson

CBG Compagnie Bancaire Geneve                      --           --             --        125,000             --             --
Avenue de Rumine 20
Case postale 220
CH-1005 LAUSANNE
Switzerland
Attn: Thierry Mory

LGT Bank in Liechtenstein AG                       --           --             --         25,000             --             --
P.O. Box 85
FL-9490
Vaduz Liechtenstein

Insurance Company Supported                        --           --             --         75,000         25,000         25,000
  Organizations Pension Plan Trust
c/o Richard C. Blum &
  Associates, L.P.
909 Montgomery Street, Suite 400
San Francisco, CA 94133
</TABLE>

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
<PAGE>   53

<TABLE>
<CAPTION>
                                            Series A      Series B      Series C       Series D       Series E       Series F
Name and Address                            Preferred     Preferred     Preferred      Preferred      Preferred      Warrants
===============================================================================================================================
<S>                                         <C>            <C>          <C>            <C>            <C>            <C>
BK Capital Partners IV, L.P.                       --           --             --        187,500         56,250         56,250
c/o Richard C. Blum &
  Associates, L.P.
909 Montgomery Street, Suite 400
San Francisco, CA 94133
Attn: Marc T. Scholvinck

Prism Partners I, L.P.                             --           --             --         62,500             --             --
c/o Richard C. Blum &
  Associates, L.P.
909 Montgomery Street, Suite 400
San Francisco, CA 94133

Richard C. Blum & Associates, L.P.                 --           --             --         90,500         22,100         22,100
c/o Richard C. Blum &
  Associates, L.P.
909 Montgomery Street, Suite 400
San Francisco, CA 94133
Attn: Marc T. Scholvinck

Richard C. Blum                                    --           --             --         18,750          4,975          4,975
c/o Richard C. Blum &
  Associates, L.P.
909 Montgomery Street, Suite 400
San Francisco, CA 94133

N. Colin Lind                                      --           --             --          8,750          2,225          2,225
c/o Richard C. Blum &
  Associates, L.P.
909 Montgomery Street, Suite 400
San Francisco, CA 94133

Jeffrey W. Ubben                                   --           --             --          2,500            650            650
c/o Richard C. Blum &
  Associates, L.P.
909 Montgomery Street, Suite 400
San Francisco, CA 94133

Timothy H. Ubben                                   --           --             --         18,750          4,975          4,975
c/o Richard C. Blum &
  Associates, L.P.
909 Montgomery Street, Suite 400
San Francisco, CA 94133

Murray A. Indick                                   --           --             --          1,250            325            325
c/o Richard C. Blum &
  Associates, L.P.
909 Montgomery Street, Suite 400
San Francisco, CA 94133
</TABLE>

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
<PAGE>   54

<TABLE>
<CAPTION>
                                            Series A      Series B      Series C       Series D       Series E       Series F
Name and Address                            Preferred     Preferred     Preferred      Preferred      Preferred      Warrants
===============================================================================================================================
<S>                                         <C>            <C>          <C>            <C>            <C>            <C>
George F. Hamel, Jr.                               --           --             --            625            150            150
c/o Richard C. Blum &
  Associates, L.P.
909 Montgomery Street, Suite 400
San Francisco, CA 94133

Marc T. Scholvinck                                 --           --             --          2,500            650            650
c/o Richard C. Blum &
  Associates, L.P.
909 Montgomery Street, Suite 400
San Francisco, CA 94133

R. Craig Lind                                      --           --             --          1,250            325            325
c/o Richard C. Blum &
  Associates, L.P.
909 Montgomery Street, Suite 400
San Francisco, CA 94133

Thomas L. Kempner Trust and                        --           --             --         28,250          6,875          6,875
  William Permuth Trustee u/w Carl
  M. Loeb FBO Thomas L. Kempner
c/o Richard C. Blum &
  Associates, L.P.
909 Montgomery Street, Suite 400
San Francisco, CA 94133

Susan J. Schmidt                                   --           --             --          1,875            500            500
3111 Jackson Street, #3
San Francisco, CA 94115

W August Hillenbrand                               --           --             --             --        125,000        125,000
c/o Hillenbrand Industries, Inc.
700 State Route, 46 East
Batesville, IN 47006

Russell C. Hirsch                                  --           --             --             --          3,125          3,125
c/o Mayfield Fund, Suite 250
2800 Sand Hill Road
Menlo Park, CA 94025

OR Trust                                           --           --             --             --         52,875         52,875
c/o Mayfield Fund
2800 Sand Hill Road, Suite 250
Menlo Park, CA 94025

DBI I, L.P.                                        --           --             --             --        125,000        125,000
c/o Kim Combs
3760 Olympia
Houston, TX 77019
</TABLE>

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
<PAGE>   55

<TABLE>
<CAPTION>
                                            Series A      Series B      Series C       Series D       Series E       Series F
Name and Address                            Preferred     Preferred     Preferred      Preferred      Preferred      Warrants
===============================================================================================================================
<S>                                         <C>            <C>          <C>            <C>            <C>            <C>
Morton Meyerson                                    --           --             --             --        125,000        125,000
c/o Morgan Stanley
1221 Avenue of the Americas, 4th Floor
New York, NY 10020
Attn:  Alan D. Glatt

David N. Meyerson EDS Trust U/A                    --           --             --             --         62,500         62,500
R. Gordon Appleman Trustee DTD
6/01/70
c/o Morgan Stanley
1221 Avenue of the Americas, 4th Floor
New York, NY 10020
Attn:  Alan D. Glatt

The Marti A. Meyerson EDS Trust U/A                --           --             --             --         62,500         62,500
R. Gordon Appleman Trustee DTD
6/01/70
c/o Morgan Stanley
1221 Avenue of the Americas, 4th Floor
New York, NY 10020
Attn:  Alan D. Glatt

Marubeni America Corporation                       --           --             --             --        312,500        312,500
450 Lexington Avenue, 36th Floor
New York, NY 10017
Attn: H. Fukuda or his successor

Marubeni Corporation                               --           --             --             --        312,500        312,500
4-2, Ohtemachi
1-Chome, Chiyoda-Ku
Tokyo 100-8800 Japan
Attn: M. Okamura, Electronic Dept.

Investor (Guernsey) Limited                        --           --             --             --      1,250,000      1,250,000
PO Box 626
National Westminster House
Le Tuchot St Peter Port
Guernsey Channel Islands
GY 1 4PW

Forethought Life Insurance Company                 --           --             --             --        125,000        125,000
Forethought Center
Batesville, IN 47006
Attn:  Guy Mac Cooper

IS Investments, LLC                                --           --             --             --         37,500         37,500
c/o Columbia Energy Group
13880 Dulles Corner Lane
Herndon, VA 20171-4600
Attn: Frederic R. Gumbinner
</TABLE>

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
<PAGE>   56

<TABLE>
<CAPTION>
                                            Series A      Series B      Series C       Series D       Series E       Series F
Name and Address                            Preferred     Preferred     Preferred      Preferred      Preferred      Warrants
===============================================================================================================================
<S>                                         <C>            <C>          <C>            <C>            <C>            <C>
Leslie J. Goldman                                  --           --             --             --         12,500         12,500
c/o Skadden, Arps, Slate, Meagher &
  Flom LLP
1440 New York Avenue, N.W
Washington, D.C. 20005-2111

Franey, Parr & Muha, Inc.                          --           --             --             --          6,250          6,250
Dulles Gateway Center I
13921 Park Center Road, Suite 160
Herndon, VA 20171

Franklin R. Silbey                                 --           --             --             --          6,250          6,250
9430 Sunnyfield Court
Potomac, MD 20854

Russell C. Hirsch Trust                            --           --             --             --          3,125          3,125
c/o Mayfield Fund
2800 Sand Hill Road, Suite 250
Menlo Park, CA 94025

Unger Family Trust                                 --           --             --             --         12,500         12,500
c/o Mayfield Fund
2800 Sand Hill Road, Suite 250
Menlo Park, CA 94025
Attn: William D. Unger

Dalal Revocable Trust U/D/T DTD                    --           --             --             --         12,500         12,500
  7/31/90, Yogen K. & Margaret J.
  Dalal, TTEE
c/o Mayfield Fund
2800 Sand Hill Road, Suite 250
Menlo Park, CA 94025

Nina M. Dalal 1993 Trust U/T/A                     --           --             --             --          3,125          3,125
  7/21/93, Rajen K. Dalal, TTEE
c/o Mayfield Fund
2800 Sand Hill Road, Suite 250
Menlo Park, CA 94025

Alex R. Dalal 1993 Trust U/T/A                     --           --             --             --          3,125          3,125
  7/21/93, Rajen K. Dalal, TTEE
c/o Mayfield Fund
2800 Sand Hill Road, Suite 250
Menlo Park, CA 94025

TOTAL                                       5,442,500      470,000      6,000,000      2,125,000      5,096,875      5,096,875
</TABLE>

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
<PAGE>   57

Massachusetts Institute of Technology          35,834 SHARES OF COMMON STOCK
Five Cambridge Center
Kendall Square
Room NE25-230
Cambridge, MA  02142-1493
Attn: Lori Pressman

                              AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00004-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00004-of-00352.parquet"}]]