<SUBMISSION>
<ACCESSION-NUMBER>0000891618-03-002826
<TYPE>424B3
<PUBLIC-DOCUMENT-COUNT>11
<FILING-DATE>20030602
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>INTUITIVE SURGICAL INC
<CIK>0001035267
<ASSIGNED-SIC>3842
<IRS-NUMBER>770416458
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>424B3
<ACT>33
<FILE-NUMBER>333-104093
<FILM-NUMBER>03728769
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>950 KIFER ROAD
<CITY>SUNNYVALE
<STATE>CA
<ZIP>94086
<PHONE>4085232100
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>950 KIFER ROAD
<CITY>SUNNYVALE
<STATE>CA
<ZIP>94086
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>424B3
<SEQUENCE>1
<FILENAME>f88583b3e424b3.htm
<DESCRIPTION>FORM 424(B)(3)
<TEXT>
<HTML>
<HEAD>
<TITLE>Intuiitve Surgical, Inc. Form 424(b)(3)</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>


<DIV align="right">
<B><FONT size="2">Filed pursuant to
Rule&nbsp;424(b)(3)</FONT></B>
</DIV>



<DIV align="right">
<B><FONT size="2">Registration No.&nbsp;333-104093</FONT></B>
</DIV>


<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="50%"></TD>
    <TD width="50%"></TD>
</TR>

<TR valign="top">
    <TD align="left"><IMG src="f88583b3f8858315.gif" alt="(INTUITIVE LOGO)"></TD>
    <TD align="right"><IMG src="f88583b3f8858304.gif" alt="(COMPUTER MOTION LOGO)"></TD>
</TR>

</TABLE>

<P align="center">
<B><FONT size="2">MERGER PROPOSED&nbsp;&#151; YOUR VOTE IS VERY
IMPORTANT</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical, Inc. and Computer Motion,
Inc. have agreed to a combination of the two companies under the
terms of a merger agreement. We are proposing the merger because
we believe it will benefit the stockholders of both companies by
combining the strengths of the companies in operative surgical
robotics, telesurgery and operating room integration to better
serve hospitals, doctors and patients.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon completion of the merger, Computer Motion
stockholders will be entitled to receive a fraction of a share
of Intuitive Surgical common stock for each share of Computer
Motion common stock owned as of the effective time of the
merger. The fraction of a share of Intuitive Surgical common
stock to be issued with respect to each share of Computer Motion
common stock will be determined by a formula described in the
merger agreement and this joint proxy statement/ prospectus.
Based on the capitalization of Intuitive Surgical and Computer
Motion and the market price of Computer Motion common stock as
of the date of this joint proxy statement/ prospectus and
assuming that the merger is completed on June&nbsp;30, 2003, we
estimate that the exchange ratio will be approximately 0.52. The
exchange ratio will be adjusted proportionately in the event
that the proposed reverse split of Intuitive Surgical&#146;s
common stock is approved by Intuitive Surgical&#146;s
stockholders and implemented by Intuitive Surgical&#146;s board
of directors. After June&nbsp;9, 2003, stockholders may visit
Intuitive Surgical&#146;s website,
<I>www.intuitivesurgical.com</I>, or Computer Motion&#146;s
website, <I>www.computermotion.com</I>, for announcements
regarding the exchange ratio. Stockholders of Intuitive Surgical
will continue to own their existing shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on the estimated exchange ratio of
approximately 0.52 and the number of shares outstanding as of
May&nbsp;15, 2003, the record date, we estimate that, on a
pre-reverse split basis, Intuitive Surgical will issue
approximately 15.6&nbsp;million shares of Intuitive Surgical
common stock in the merger and reserve an additional
approximately 4.8&nbsp;million shares of Intuitive Surgical
common stock for future issuance in connection with Intuitive
Surgical&#146;s assumption of Computer Motion&#146;s outstanding
options and warrants (including out-of-the-money options and
warrants).
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical common stock is traded on the
Nasdaq National Market under the trading symbol
&#147;ISRG.&#148; On May&nbsp;29, 2003, Intuitive Surgical
common stock closed at $8.69 per share as reported on the Nasdaq
National Market.
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The merger cannot be completed unless Intuitive
Surgical stockholders approve the issuance of shares of
Intuitive Surgical common stock pursuant to the merger agreement
and Computer Motion stockholders approve and adopt the merger
agreement. The obligations of Intuitive Surgical and Computer
Motion to complete the merger are also subject to the
satisfaction or waiver of several conditions. More information
about Intuitive Surgical, Computer Motion and the merger, as
well as additional business to be conducted at the Intuitive
Surgical stockholder meeting, is contained in this joint proxy
statement/ prospectus. <B>We encourage you to read this joint
proxy statement/ prospectus, including the section entitled
&#147;Risk Factors&#148; beginning on page&nbsp;23, before
voting.</B>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The board of directors of Intuitive Surgical has
approved the merger agreement and the issuance of shares of
Intuitive Surgical common stock pursuant to the merger
agreement. The board of directors of Computer Motion has
approved the merger agreement. Intuitive Surgical&#146;s board
of directors unanimously recommends that Intuitive Surgical
stockholders vote <B>&#147;FOR&#148; </B>the proposal to issue
shares of Intuitive Surgical common stock pursuant to the merger
agreement. Computer Motion&#146;s board of directors unanimously
recommends that Computer Motion stockholders vote
<B>&#147;FOR&#148; </B>the proposal to approve and adopt the
merger agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical and Computer Motion have each
scheduled a stockholder meeting in connection with the
respective votes required. Your vote is very important. Whether
or not you plan to attend your respective company&#146;s
stockholder meeting, please take the time to vote by marking
your votes on the enclosed proxy card, signing and dating the
proxy card, and returning it to your respective company in the
enclosed envelope.
</FONT>


<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="49%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="48%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sincerely,
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Sincerely,
    </FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <IMG src="f88583b3f8858316.gif" alt="-s- Lonnie Smith"></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <IMG src="f88583b3f8858317.gif" alt="-s- Robert W. Duggan"></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <FONT size="2">Lonnie M. Smith<BR>
     <I>President and Chief Executive Officer<BR>
    </I>Intuitive Surgical, Inc.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Robert W. Duggan<BR>
     <I>Chairman of the Board and<BR>
    Chief Executive Officer<BR>
    </I>Computer Motion, Inc.
    </FONT></TD>
</TR>

</TABLE>
</CENTER>



<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved
of the securities to be issued under this joint proxy statement/
prospectus or determined if this joint proxy statement/
prospectus is truthful or complete. Any representation to the
contrary is a criminal offense. This joint proxy statement/
prospectus is dated May&nbsp;30, 2003, and is first being mailed
to Intuitive Surgical and Computer Motion stockholders on or
about June&nbsp;2, 2003.
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="4">INTUITIVE SURGICAL, INC.</FONT></B>

<DIV align="center">
<B><FONT size="2">950 Kifer Road</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Sunnyvale, California 94086</FONT></B>
</DIV>

<DIV align="center">
<HR size="1" width="30%" align="center" noshade>
</DIV>

<DIV align="center">
<B>NOTICE OF ANNUAL MEETING OF STOCKHOLDERS</B>
</DIV>

<DIV align="center">
<B>TO BE HELD ON JUNE&nbsp;30, 2003</B>
</DIV>

<DIV align="center">
<HR size="1" width="30%" align="center" noshade>
</DIV>

<P align="left">
<FONT size="2">To the Stockholders of Intuitive Surgical, Inc.:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">NOTICE IS HEREBY GIVEN that the annual meeting of
stockholders of Intuitive Surgical, Inc. will be held at the
Summerfield Suites by Wyndham, 900 Hamlin Court, Sunnyvale,
California 94086 on June&nbsp;30 at 8:00&nbsp;a.m., local time,
for the following purposes:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">1.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to approve the issuance of shares of Intuitive
    Surgical common stock, par value $0.001 per share, pursuant to
    the Agreement and Plan of Merger, dated as of March&nbsp;7,
    2003, by and among Intuitive Surgical, Intuitive Merger
    Corporation, which is a wholly owned subsidiary of Intuitive
    Surgical, and Computer Motion, Inc.;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">2.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to approve an amendment to Intuitive
    Surgical&#146;s Amended and Restated Certificate of
    Incorporation to effect a 1-for-2 reverse stock split of
    Intuitive Surgical&#146;s common stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">3.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to elect three Class&nbsp;III members of the
    board of directors of Intuitive Surgical to serve until the
    annual meeting of stockholders of Intuitive Surgical to be held
    in 2006 and until their successors are elected and qualified;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">4.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to approve an amendment to Intuitive
    Surgical&#146;s 2000 Non-Employee Directors&#146; Stock Option
    Plan to increase the annual stock option grant for non-employee
    directors from 5,000 to 10,000 shares, to provide for an
    additional annual grant of options to purchase 5,000 shares to
    committee chairs and to amend the automatic share increase
    provision, subject to adjustment in the event that the proposed
    reverse stock split is approved by Intuitive Surgical&#146;s
    stockholders and implemented by Intuitive Surgical&#146;s board
    of directors;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">5.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to ratify the selection of Ernst &#38; Young LLP
    as the independent auditors of Intuitive Surgical for the
    current fiscal year ending December&nbsp;31, 2003; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">6.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to transact such other business as may properly
    come before the annual meeting or any adjournment or
    postponement thereof.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Please refer to the attached joint proxy
statement/prospectus, which forms a part of this Notice and is
incorporated herein by reference, for further information with
respect to the business to be transacted at the annual meeting.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Stockholders of record at the close of business
on May&nbsp;15, 2003, which we refer to as the record date, are
entitled to notice of, and to vote at, the annual meeting or any
adjournment or postponement of the annual meeting. Directors and
executive officers of Intuitive Surgical owning Intuitive
Surgical common stock representing approximately 7% of the
Intuitive Surgical common stock outstanding as of the record
date have agreed to vote their shares in favor of the proposal
to issue shares of Intuitive Surgical common stock pursuant to
the merger agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The board of directors of Intuitive Surgical
unanimously recommends that you vote <B>&#147;FOR&#148; </B>the
proposal to approve the issuance of Intuitive Surgical common
stock pursuant to the merger agreement, <B>&#147;FOR&#148;
</B>the proposal to approve the amendment to Intuitive
Surgical&#146;s Amended and Restated Certificate of
Incorporation to effect a 1-for-2 reverse stock split of
Intuitive Surgical&#146;s common stock, <B>&#147;FOR&#148;
</B>the nominees to the board of directors listed in this joint
proxy statement/prospectus, <B>&#147;FOR&#148; </B>the proposal
to approve the amendment to Intuitive Surgical&#146;s 2000
Non-Employee Directors&#146; Stock Option Plan and
<B>&#147;FOR&#148;</B> the proposal to ratify Ernst &#38; Young
LLP as the independent auditors of Intuitive Surgical for the
current fiscal year ending December&nbsp;31, 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The presence, in person or by proxy, of shares of
Intuitive Surgical common stock representing a majority of
shares of Intuitive Surgical common stock issued and outstanding
on the record date will be required to establish a quorum at the
annual meeting. Approval of the proposal to issue shares of
Intuitive Surgical common stock pursuant to the merger agreement
requires the affirmative vote of a majority of the total votes
cast at the annual meeting by holders of Intuitive
Surgical&#146;s common stock outstanding as of the record date.
Approval of the proposal to amend Intuitive Surgical&#146;s
Amended and Restated Certificate of Incorporation to effect a
1-for-2 reverse stock split requires the affirmative vote of a
majority of the shares of Intuitive Surgical common stock
outstanding as of the record date. The candidates for director
receiving the highest number of votes, up to the number of
directors to be elected, will be elected to Intuitive
Surgical&#146;s board of directors. Approval of the proposal to
amend Intuitive Surgical&#146;s 2000 Non-Employee
Directors&#146; Stock Option Plan and the proposal to ratify
Ernst &#38; Young LLP as the independent auditors of Intuitive
Surgical for the current fiscal year ending December&nbsp;31,
2003 requires the affirmative vote of a majority of the shares
of Intuitive Surgical common stock represented and entitled to
vote at the annual meeting.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Your vote is important. Please sign, date and
return the enclosed proxy card as soon as possible to make sure
that your shares are represented at the annual meeting. To do
so, you may complete and return the enclosed proxy card. If you
are a stockholder of record of Intuitive Surgical common stock,
you also may cast your vote in person at the annual meeting. If
your shares are held in an account at a brokerage firm or bank,
you should instruct it on how to vote your shares.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">By Order of the Board of Directors,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <IMG src="f88583b3f8858316.gif" alt="-s- Lonnie Smith"></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Lonnie M. Smith
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I><FONT size="2">President and Chief Executive
    Officer</FONT></I></TD>
</TR>

</TABLE>


<DIV align="left">
<FONT size="2">May&nbsp;30, 2003
</FONT>
</DIV>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Please note that attendance at the annual
meeting will be limited to stockholders as of the record date,
or their authorized representatives, and guests of Intuitive
Surgical.</FONT></B>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="4">COMPUTER MOTION, INC.</FONT></B>

<DIV align="center">
<B><FONT size="2">130-B Cremona Drive</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Goleta, California 93117</FONT></B>
</DIV>

<DIV align="center">
<HR size="1" width="30%" align="center" noshade>
</DIV>

<DIV align="center">
<B>NOTICE OF SPECIAL MEETING OF STOCKHOLDERS</B>
</DIV>

<DIV align="center">
<B>TO BE HELD ON JUNE&nbsp;30, 2003</B>
</DIV>

<DIV align="center">
<HR size="1" width="30%" align="center" noshade>
</DIV>

<P align="left">
<FONT size="2">To the Stockholders of Computer Motion, Inc.:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">NOTICE IS HEREBY GIVEN that a special meeting of
stockholders of Computer Motion, Inc. will be held at its
corporate headquarters, 130-B Cremona Drive, Goleta, California
93117 on June&nbsp;30 at 8:00&nbsp;a.m., local time, for the
following purposes:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="3%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">1.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to approve and adopt the Agreement and Plan of
    Merger, dated as of March&nbsp;7, 2003, by and among Intuitive
    Surgical, Inc., Intuitive Merger Corporation, which is a wholly
    owned subsidiary of Intuitive Surgical, and Computer Motion; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">2.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to transact such other business as may properly
    come before the special meeting or any adjournment or
    postponement thereof.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Please refer to the attached joint proxy
statement/prospectus, which forms a part of this Notice and is
incorporated herein by reference, for further information with
respect to the business to be transacted at the special meeting.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Stockholders of record at the close of business
on May&nbsp;15, 2003, which we refer to as the record date, are
entitled to notice of, and to vote at, the special meeting or
any adjournment or postponement of the special meeting.
Directors and executive officers of Computer Motion owning
Computer Motion common and preferred stock representing
approximately 14% of the voting power of the Computer Motion
common and preferred stock outstanding as of the record date
have agreed to vote their shares in favor of the proposal to
approve and adopt the merger agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The board of directors of Computer Motion
recommends that you vote <B>&#147;FOR&#148;</B> the proposal to
approve and adopt the merger agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The presence, in person or by proxy, of a
majority of the votes of outstanding shares of Computer Motion
common stock and preferred stock entitled to vote will be
required to establish a quorum at the Computer Motion special
meeting. The affirmative vote of the holders of a majority of
the votes of the outstanding shares of Computer Motion common
stock and preferred stock, voting together as a single class, is
required to approve and adopt the merger agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Your vote is important. Please sign, date and
return the enclosed proxy card as soon as possible to make sure
that your shares are represented at the special meeting. To do
so, you may complete and return the enclosed proxy card. If you
are a stockholder of record of Computer Motion common or
preferred stock, you also may cast your vote in person at the
special meeting. If your shares are held in an account at a
brokerage firm or bank, you must instruct it on how to vote your
shares. If you do not vote or do not instruct your broker or
bank how to vote, it will have the same effect as voting against
the proposal to approve and adopt the merger agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Please do not send any certificates
representing your Computer Motion common stock at this
time.</FONT></B>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">By Order of the Board of Directors,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <IMG src="f88583b3f8858318.gif" alt="-s- Larry Redfern"></TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Larry Redfern
    </FONT></TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I><FONT size="2">Secretary</FONT></I></TD>
</TR>

</TABLE>


<P align="left">
<FONT size="2">May&nbsp;30, 2003
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Please note that attendance at the special
meeting will be limited to stockholders as of the record date,
or their authorized representatives, and guests of Computer
Motion.</FONT></B>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">ADDITIONAL INFORMATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This joint proxy statement/prospectus
incorporates important business and financial information about
Intuitive Surgical and Computer Motion from other documents that
are not included in or delivered with this joint proxy
statement/prospectus. For a listing of the documents
incorporated by reference into this joint proxy
statement/prospectus, please see the section entitled
&#147;Where You Can Find More Information.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical will provide you with copies
of the information relating to Intuitive Surgical, without
charge, upon written or oral request to:
</FONT>

<P align="center">
<FONT size="2">Intuitive Surgical, Inc.
</FONT>

<DIV align="center">
<FONT size="2">950 Kifer Road
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">Sunnyvale, California 94086
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">(408)&nbsp;523-2100
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">Attention: Investor Relations
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, you may obtain copies of the
information relating to Intuitive Surgical, without charge, by
sending an e-mail to ir@intusurg.com. Furthermore, you may
obtain copies of this information by making a request through
the Intuitive Surgical investor relations web site,
<I>www.intuitivesurgical.com</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Computer Motion will provide you with copies of
the information relating to Computer Motion, without charge,
upon written or oral request to:
</FONT>

<P align="center">
<FONT size="2">Computer Motion, Inc.
</FONT>

<DIV align="center">
<FONT size="2">130-B Cremona Drive
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">Goleta, California 93117
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">(805)&nbsp;968-9600
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">Attention: Investor Relations
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, you may obtain copies of the
information relating to Computer Motion, without charge, by
sending an e-mail to ir@computermotion.com. Furthermore, you may
obtain copies of this information by making a request through
the Computer Motion investor relations web site,
<I>www.computermotion.com</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">In order for you to receive timely delivery of
the documents in advance of the Intuitive Surgical and Computer
Motion stockholder meetings, Intuitive Surgical or Computer
Motion should receive your request no later than June&nbsp;23,
2003.</FONT></B>

<!-- PAGEBREAK -->
<P><HR noshade><P>

<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
<TABLE border="0" width="90%" cellpadding="0" cellspacing="0">
<TR>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="76%"></TD>
</TR>
<TR><TD colspan="9"><A HREF="#000">QUESTIONS AND ANSWERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#001">SUMMARY</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#002">The Companies</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#003">The Merger</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#004">Recommendations of the Boards of Directors</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#005">Stockholders Entitled to Vote; Vote Required in Connection with the Merger Proposals</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#006">Stockholder Support Agreements</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#007">Opinion of Bear Stearns to Intuitive Surgical</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#008">Opinion of H.C. Wainwright to Computer Motion</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#009">Ownership of the Combined Company after the Merger</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#010">Loan and Security Agreement</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#011">Interests of Directors and Executive Officers of Computer Motion in the Merger</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#012">Listing of Intuitive Surgical Common Stock and Delisting of Computer Motion Common Stock</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#013">Appraisal Rights</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#014">Conditions to Completion of the Merger</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#015">No Solicitation by Computer Motion</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#016">Termination of the Merger Agreement</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#017">Termination Fee and Expenses</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#018">Computer Motion Series D Convertible Preferred Stock</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#019">Computer Motion Stock Options and Warrants</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#020">Material United States Federal Income Tax Consequences of the Merger</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#021">Accounting Treatment</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#022">Regulatory Approvals</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#023">Additional Proposals to be Considered by Intuitive Surgical Stockholders</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#024">Summary Historical Financial Data</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#025">Summary Unaudited Pro Forma Condensed Combined Consolidated Financial Data</A></TD></TR>
<TR><TD colspan="9"><A HREF="#026">Comparative Per Share Information</A></TD></TR>
<TR><TD colspan="9"><A HREF="#027">Comparative Per Share Market Price Data</A></TD></TR>
<TR><TD colspan="9"><A HREF="#028">RISK FACTORS</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#029">Risks Related to the Merger</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#030">Risks Related to Computer Motion&#146;s Engagement of Arthur Andersen LLP as its Auditors</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#031">Risks Related to Intuitive Surgical and the Combined Company</A></TD></TR>
<TR><TD colspan="9"><A HREF="#032">CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#033">THE MERGER</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#034">General</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#035">Background of the Merger</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#036">Reasons for the Merger -- Computer Motion</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#037">Opinion of Bear Stearns to Intuitive Surgical</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#038">Regulatory Approvals Required for the Merger</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#039">Material United States Federal Income Tax Consequences</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#040">Accounting Treatment</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#041">Listing of Intuitive Surgical Common Stock</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#042">Delisting and Deregistration of Computer Motion Common Stock</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#043">Restrictions on Sales of Shares of Intuitive Surgical Common Stock Received in the Merger</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#044">Interests of Directors and Executive Officers of Computer Motion in the Merger</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#045">Management and Operations Following the Merger</A></TD></TR>
<TR><TD colspan="9"><A HREF="#046">THE MERGER AGREEMENT</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#047">Effective Time of the Merger and Effect of the Merger</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#048">The Merger Consideration and Conversion of Securities</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#049">General</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#050">Treatment of Computer Motion Series D Convertible Preferred Stock</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#051">Treatment of Computer Motion Stock Options and Warrants</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#052">Representations and Warranties</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#053">Conduct of Business by Computer Motion Prior to Completion of the Merger</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#054">Conduct of Business by Intuitive Surgical Prior to Completion of the Merger</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#055">Additional Agreements</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#056">Stockholder Meetings</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#057">No Solicitation of Other Transactions by Computer Motion</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#058">Conditions to Completion of the Merger</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#059">Termination of the Merger Agreement</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#060">Expenses and Termination Fees</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#061">Expenses</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#062">Amendment and Waiver</A></TD></TR>
<TR><TD colspan="9"><A HREF="#063">STOCKHOLDER SUPPORT AGREEMENTS</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#064">Intuitive Surgical Stockholders</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#065">Computer Motion Stockholders</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#066">LOAN AND SECURITY AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="#067">UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL DATA OF INTUITIVE SURGICAL AND COMPUTER MOTION</A></TD></TR>
<TR><TD colspan="9"><A HREF="#068">COMPARISON OF STOCKHOLDER RIGHTS AND CORPORATE GOVERNANCE MATTERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#069">APPRAISAL RIGHTS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#070">AUTHORIZATION FOR INTUITIVE SURGICAL&#146;S BOARD OF DIRECTORS TO AMEND INTUITIVE SURGICAL&#146;S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT</A></TD></TR>
<TR><TD colspan="9"><A HREF="#071">ELECTION OF NOMINEES TO INTUITIVE SURGICAL&#146;S BOARD OF DIRECTORS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#072">AMENDMENT TO INTUITIVE SURGICAL&#146;S 2000 NON-EMPLOYEE DIRECTORS&#146; STOCK OPTION PLAN</A></TD></TR>
<TR><TD colspan="9"><A HREF="#073">RATIFICATION OF INDEPENDENT AUDITORS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#074">THE INTUITIVE SURGICAL ANNUAL MEETING</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#075">Date, Time, Place and Purpose of the Intuitive Surgical Annual Meeting</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#076">Recommendation of Intuitive Surgical&#146;s Board of Directors</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#077">Record Date; Outstanding Shares; Shares Entitled to Vote</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#078">Quorum and Vote Required</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#079">Voting; Proxies; Revocation</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#080">Abstentions and Broker Non-Votes</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#081">Proxy Solicitation</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#082">Other Business, Adjournments</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#083">Assistance</A></TD></TR>
<TR><TD colspan="9"><A HREF="#084">THE COMPUTER MOTION SPECIAL MEETING</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#085">Date, Time, Place and Purpose of the Computer Motion Special Meeting</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#086">Recommendation of Computer Motion&#146;s Board of Directors</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#087">Record Date; Outstanding Shares; Shares Entitled to Vote</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#088">Quorum and Vote Required</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#089">Voting; Proxies; Revocation</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#090">Abstentions and Broker Non-Votes</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#091">Proxy Solicitation</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#092">Other Business, Adjournments</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#093">Assistance</A></TD></TR>
<TR><TD colspan="9"><A HREF="#094">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF INTUITIVE SURGICAL</A></TD></TR>
<TR><TD colspan="9"><A HREF="#095">CERTAIN INFORMATION WITH RESPECT TO EXECUTIVE OFFICERS OF INTUITIVE SURGICAL</A></TD></TR>
<TR><TD colspan="9"><A HREF="#096">EXECUTIVE COMPENSATION OF INTUITIVE SURGICAL</A></TD></TR>
<TR><TD colspan="9"><A HREF="#097">INTUITIVE SURGICAL COMPENSATION COMMITTEE REPORT</A></TD></TR>
<TR><TD colspan="9"><A HREF="#098">INTUITIVE SURGICAL AUDIT COMMITTEE REPORT</A></TD></TR>
<TR><TD colspan="9"><A HREF="#099">STOCK PERFORMANCE GRAPH</A></TD></TR>
<TR><TD colspan="9"><A HREF="#100">OTHER INFORMATION</A></TD></TR>
<TR><TD colspan="9"><A HREF="#101">LEGAL MATTERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#102">EXPERTS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#103">WHERE YOU CAN FIND MORE INFORMATION</A></TD></TR>
<TR><TD colspan="9"><A HREF="#104">ANNEX B</A></TD></TR>
<TR><TD colspan="9"><A HREF="#105">ANNEX C</A></TD></TR>
<TR><TD colspan="9"><A HREF="#106">ANNEX D</A></TD></TR>
<TR><TD colspan="9"><A HREF="#107">ANNEX E</A></TD></TR>
<TR><TD colspan="9"><A HREF="#108">ANNEX F</A></TD></TR>
<TR><TD colspan="9"><A HREF="#109">ANNEX G</A></TD></TR>
</TABLE>
</CENTER>
<!-- /TOC -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">TABLE OF CONTENTS</FONT></B>


<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="87%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Page</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">QUESTIONS AND ANSWERS
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">SUMMARY
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">The Companies
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">The Merger
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Recommendations of the Boards of Directors
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Stockholders Entitled to Vote; Vote Required in
    Connection with the Merger Proposals
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Stockholder Support Agreements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Opinion of Bear Stearns to Intuitive Surgical
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Opinion of H.C. Wainwright to Computer Motion
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Ownership of the Combined Company after the Merger
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loan and Security Agreement
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interests of Directors and Executive Officers of
    Computer Motion in the Merger
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Listing of Intuitive Surgical Common Stock and
    Delisting of Computer Motion Common Stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Appraisal Rights
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Conditions to Completion of the Merger
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">No Solicitation by Computer Motion
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Termination of the Merger Agreement
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Termination Fee and Expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Computer Motion Series&nbsp;D Convertible
    Preferred Stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Computer Motion Stock Options and Warrants
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Material United States Federal Income Tax
    Consequences of the Merger
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounting Treatment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Regulatory Approvals
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Additional Proposals to be Considered by
    Intuitive Surgical Stockholders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Summary Historical Financial Data
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Summary Unaudited Pro Forma Condensed Combined
    Consolidated Financial Data
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Comparative Per Share Information
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Comparative Per Share Market Price Data
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">RISK FACTORS
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Risks Related to the Merger
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Risks Related to Computer Motion&#146;s
    Engagement of Arthur Andersen LLP as its Auditors
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Risks Related to Intuitive Surgical and the
    Combined Company
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING
    STATEMENTS
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">39</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">THE MERGER
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">General
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Background of the Merger
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Reasons for the Merger&nbsp;&#151; Intuitive
    Surgical
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">47</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Reasons for the Merger&nbsp;&#151; Computer Motion
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Opinion of Bear Stearns to Intuitive Surgical
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Opinion of H.C. Wainwright to Computer Motion
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">61</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Regulatory Approvals Required for the Merger
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Material United States Federal Income Tax
    Consequences
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>


<P align="center"><FONT size="2">i
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>


<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="87%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Page</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounting Treatment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">68</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Listing of Intuitive Surgical Common Stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">69</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Delisting and Deregistration of Computer Motion
    Common Stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">69</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Restrictions on Sales of Shares of Intuitive
    Surgical Common Stock Received in the Merger
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">69</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interests of Directors and Executive Officers of
    Computer Motion in the Merger
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">69</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Management and Operations Following the Merger
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">74</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">THE MERGER AGREEMENT
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Effective Time of the Merger and Effect of the
    Merger
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">The Merger Consideration and Conversion of
    Securities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Treatment of Computer Motion Series D Convertible
    Preferred Stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">77</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Treatment of Computer Motion Stock Options and
    Warrants
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">79</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Representations and Warranties
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Conduct of Business by Computer Motion Prior to
    Completion of the Merger
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">81</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Conduct of Business by Intuitive Surgical Prior
    to Completion of the Merger
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">82</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Additional Agreements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">82</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">No Solicitation of Other Transactions by Computer
    Motion
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">83</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Conditions to Completion of the Merger
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">84</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Termination of the Merger Agreement
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">85</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Expenses and Termination Fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">86</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amendment and Waiver
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">87</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">STOCKHOLDER SUPPORT AGREEMENTS
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">88</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Intuitive Surgical Stockholders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">88</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Computer Motion Stockholders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">88</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">LOAN AND SECURITY AGREEMENT
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">89</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">UNAUDITED PRO FORMA CONDENSED COMBINED
    CONSOLIDATED FINANCIAL DATA OF INTUITIVE SURGICAL AND COMPUTER
    MOTION
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">90</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">COMPARISON OF STOCKHOLDER RIGHTS AND CORPORATE
    GOVERNANCE MATTERS
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">APPRAISAL RIGHTS
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">108</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">AUTHORIZATION FOR INTUITIVE SURGICAL&#146;S BOARD
    OF DIRECTORS TO AMEND INTUITIVE SURGICAL&#146;S AMENDED AND
    RESTATED CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK
    SPLIT
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">109</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">ELECTION OF NOMINEES TO INTUITIVE SURGICAL&#146;S
    BOARD OF DIRECTORS
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">112</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">AMENDMENT TO INTUITIVE SURGICAL&#146;S 2000
    NON-EMPLOYEE DIRECTORS&#146; STOCK OPTION PLAN
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">115</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">RATIFICATION OF INDEPENDENT AUDITORS
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">120</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">THE INTUITIVE SURGICAL ANNUAL MEETING
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">121</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Date, Time, Place and Purpose of the Intuitive
    Surgical Annual Meeting
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">121</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Recommendation of Intuitive Surgical&#146;s Board
    of Directors
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">121</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Record Date; Outstanding Shares; Shares Entitled
    to Vote
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">121</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Quorum and Vote Required
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">122</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Voting; Proxies; Revocation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">122</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Abstentions and Broker Non-Votes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">123</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Proxy Solicitation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">123</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>


<P align="center"><FONT size="2">ii
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>


<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="87%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Page</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other Business; Adjournments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">123</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Assistance
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">123</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">THE COMPUTER MOTION SPECIAL MEETING
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Date, Time, Place and Purpose of the Computer
    Motion Special Meeting
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Recommendation of Computer Motion&#146;s Board of
    Directors
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Record Date; Outstanding Shares; Shares Entitled
    to Vote
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Quorum and Vote Required
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Voting; Proxies; Revocation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Abstentions and Broker Non-Votes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">125</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Proxy Solicitation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">125</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other Business; Adjournments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">125</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Assistance
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">126</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
    AND MANAGEMENT OF INTUITIVE SURGICAL
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">127</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CERTAIN INFORMATION WITH RESPECT TO EXECUTIVE
    OFFICERS OF INTUITIVE SURGICAL
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">130</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">EXECUTIVE COMPENSATION OF INTUITIVE SURGICAL
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">131</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">INTUITIVE SURGICAL COMPENSATION COMMITTEE REPORT
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">133</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">INTUITIVE SURGICAL AUDIT COMMITTEE REPORT
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">135</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">STOCK PERFORMANCE GRAPH
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">137</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">OTHER INFORMATION
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">138</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">LEGAL MATTERS
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">139</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">EXPERTS
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">139</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">WHERE YOU CAN FIND MORE INFORMATION
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">140</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>


<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="11%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Annex A
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Agreement and Plan of Merger, dated as of
    March&nbsp;7, 2003, by and among Intuitive Surgical, Inc.,
    Intuitive Merger Corporation (formerly Iron Acquisition
    Corporation) and Computer Motion, Inc.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Annex B
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Stockholder Support Agreement, dated as of
    March&nbsp;7, 2003, by and among Intuitive Surgical, Inc.,
    Intuitive Merger Corporation (formerly Iron Acquisition
    Corporation) and certain stockholders of Intuitive Surgical, Inc.
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Annex C
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Stockholder Support Agreement, dated as of
    March&nbsp;7, 2003, by and among Intuitive Surgical, Inc.,
    Intuitive Merger Corporation (formerly Iron Acquisition
    Corporation) and certain stockholders of Computer Motion, Inc.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Annex D
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Opinion of Bear, Stearns &#38; Co. Inc.
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Annex E
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Opinion of H.C. Wainwright &#38; Co., Inc.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Annex F
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Form of Certificate of Amendment to Amended and
    Restated Certificate of Incorporation of Intuitive Surgical, Inc.
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Annex G
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Form of Amendment to 2000 Non-Employee
    Directors&#146; Stock Option Plan of Intuitive Surgical, Inc.
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">iii
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "QUESTIONS AND ANSWERS" -->
<DIV align="left"><A NAME="000"></A></DIV>

<P align="center">
<B><FONT size="2">QUESTIONS AND ANSWERS</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Q:&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">Why am I receiving this joint proxy
    statement/prospectus?</FONT></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">A:</FONT></B><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Intuitive Surgical and Computer Motion have
    agreed to combine pursuant to the terms of a merger agreement
    that is described in this joint proxy statement/prospectus. A
    copy of the merger agreement is attached to this joint proxy
    statement/prospectus as Annex A. In order to complete the
    merger, Intuitive Surgical stockholders must vote to approve the
    issuance of shares of Intuitive Surgical common stock pursuant
    to the merger agreement and Computer Motion stockholders must
    vote to approve and adopt the merger agreement.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Intuitive Surgical and Computer Motion will hold
separate meetings of their respective stockholders to obtain
these approvals. In addition to the proposal to issue shares of
Intuitive common stock pursuant to the merger agreement,
Intuitive Surgical stockholders will also be asked
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp; &#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to approve an amendment to Intuitive
    Surgical&#146;s Amended and Restated Certificate of
    Incorporation to effect a 1-for-2 reverse stock split;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp; &#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to elect three Class&nbsp;III members of
    Intuitive Surgical&#146;s board of directors;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp; &#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to approve an amendment to Intuitive
    Surgical&#146;s 2000 Non-Employee Directors&#146; Stock Plan to
    increase the annual stock option grant for non-employee
    directors, to provide for an additional annual grant of options
    to committee chairs and to amend the automatic share increase
    provision; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp; &#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to ratify the selection of Ernst&nbsp;&#38; Young
    LLP as Intuitive Surgical&#146;s independent auditors for the
    current fiscal year ending December&nbsp;31, 2003.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">This joint proxy statement/prospectus contains
    important information about the merger, the additional proposals
    to be considered by the stockholders of Intuitive Surgical and
    the stockholder meetings of Intuitive Surgical and Computer
    Motion, and you should read it carefully. The enclosed voting
    materials allow you to vote your shares without attending your
    stockholder meeting.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Your vote is important. We encourage you to vote
as soon as possible.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Q:&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">Why are Intuitive Surgical and Computer Motion
    proposing the merger?</FONT></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">A:</FONT></B><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">We believe that the merger will provide
    substantial strategic and financial benefits to the stockholders
    of both companies. We believe that the combination will create a
    stronger and more competitive company that will be able to
    better serve the surgical community. We are proposing the merger
    because we believe it will benefit the stockholders of both
    companies by combining the strengths of the companies in
    operative surgical robotics, telesurgery and operating room
    integration to better serve hospitals, doctors and patients. The
    merger will also result in the dismissal of the pending patent
    litigations between Intuitive Surgical and Computer Motion. To
    review the reasons for the merger in greater detail, please see
    &#147;The Merger&nbsp;&#151; Reasons For the Merger&nbsp;&#151;
    Intuitive Surgical&#148; and &#147;The Merger&nbsp;&#151;
    Reasons For the Merger&nbsp;&#151; Computer Motion.&#148;
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Q:&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">What will happen in the merger?</FONT></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">A:</FONT></B><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The businesses of Intuitive Surgical and Computer
    Motion will be combined in a stock-for-stock transaction. At the
    closing, a newly formed, wholly owned subsidiary of Intuitive
    Surgical will merge with Computer Motion, with Computer Motion
    surviving the merger as a wholly owned subsidiary of Intuitive
    Surgical. In exchange for their shares of Computer Motion stock,
    the former stockholders of Computer Motion will receive shares
    of Intuitive Surgical common stock.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Q:&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">What will I receive for my Computer Motion
    shares in the merger?</FONT></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">A:</FONT></B><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Upon completion of the merger, Computer Motion
    stockholders will be entitled to receive a fraction of a share
    of Intuitive Surgical common stock for each share of Computer
    Motion common stock owned as of the effective time of the
    merger. The fraction of a share of Intuitive Surgical common
    stock to be issued with respect to each share of Computer Motion
    common stock will be determined by a formula described in the
    merger agreement
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">1
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD align="left">
    <FONT size="2">and this joint proxy statement/prospectus. Based
    on the capitalization of Intuitive Surgical and Computer Motion
    and the market price of Computer Motion common stock as of the
    date of this joint proxy statement/prospectus and assuming that
    the merger is completed on June&nbsp;30, 2003, we estimate that
    the exchange ratio will be approximately 0.52. The exchange
    ratio will be adjusted proportionately in the event that the
    proposed reverse split of Intuitive Surgical&#146;s common stock
    is approved by Intuitive Surgical&#146;s stockholders and
    implemented by Intuitive Surgical&#146;s board of directors.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">The final exchange ratio will be calculated based
on the total number of fully diluted shares outstanding for
Intuitive Surgical and Computer Motion (including
out-of-the-money options and warrants for both companies)
immediately prior to the effective time of the merger. The
number of Computer Motion&#146;s fully diluted shares will vary
based on the number of shares of Computer Motion common stock
into which Computer Motion&#146;s Series&nbsp;D convertible
preferred stock will be convertible and the number of shares of
Computer Motion common stock which may be issued to pay accrued
dividends on the Series&nbsp;D convertible preferred stock upon
conversion. All shares of Computer Motion Series&nbsp;D
convertible preferred stock will convert into shares of Computer
Motion common stock immediately prior to the effective time of
the merger. Under the terms of the Series&nbsp;D convertible
preferred stock, in the event that the average of the closing
bid prices of Computer Motion&#146;s common stock for the 20
consecutive trading days ending 15&nbsp;consecutive trading days
prior to the Computer Motion special meeting is below $1.86 per
share, the conversion ratio for Computer Motion&#146;s
Series&nbsp;D convertible preferred stock could increase. As a
result, the exchange ratio in the merger may decrease and,
therefore, Computer Motion common stockholders would receive a
lesser number of Intuitive Surgical shares, and Computer Motion
preferred stockholders would receive a greater number of
Intuitive Surgical shares, in the merger. The total number of
shares of Intuitive Surgical common stock to be issued or
reserved for issuance to holders of equity securities of
Computer Motion will not change, unless there is a change in the
fully diluted capitalization of Intuitive Surgical. Any change
in the conversion ratio of the Series&nbsp;D convertible
preferred stock will merely change the proportional allocation
between Computer Motion&#146;s common and preferred
stockholders. Assuming the merger closes on June&nbsp;30, 2003,
Computer Motion common stockholders will receive a minimum of
0.479 (or, in the event the reverse stock split is completed
prior to the merger, 0.239) shares of Intuitive Surgical common
stock for each share of Computer Motion common stock. After
June&nbsp;9, 2003, stockholders may visit Intuitive
Surgical&#146;s website, <I>www.intuitivesurgical.com,</I> or
Computer Motion&#146;s website, <I>www.computermotion.com,</I>
for announcements regarding the exchange ratio. If you would
like to change your vote after you have delivered your proxy,
please see &#147;Can I change my vote after I have delivered my
proxy?&#148; below. Computer Motion stockholders will receive
cash in lieu of any fractional share of Intuitive Surgical
common stock. Please see &#147;The Merger Agreement&nbsp;&#151;
The Merger Consideration and Conversion of Securities.&#148;
</FONT>


<P align="left">
<FONT size="2">Based on the estimated exchange ratio of
approximately 0.52 and the number of shares outstanding as of
the record date, we estimate that, on a pre-reverse split basis,
Intuitive Surgical will issue approximately 15.6&nbsp;million
shares of Intuitive Surgical common stock in the merger and
reserve approximately 4.8&nbsp;million shares of Intuitive
Surgical common stock for future issuance in connection with
Intuitive Surgical&#146;s assumption of Computer Motion&#146;s
outstanding options and warrants (including out-of-the-money
options and warrants). Of the 15.6&nbsp;million shares of
Intuitive Surgical common stock estimated to be issued in the
merger, Intuitive Surgical expects that:
</FONT>

<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">approximately 4.4 million shares will be issued
    upon conversion of shares of Computer Motion&#146;s
    Series&nbsp;D convertible preferred stock outstanding as of the
    record date;
    </FONT></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">less than 0.1 million shares will be issued upon
    conversion of additional shares of Computer Motion&#146;s common
    stock issued as accrued dividends on Computer Motion&#146;s
    Series&nbsp;D convertible preferred stock outstanding as of the
    record date; and
    </FONT></TD>
</TR>


</TABLE>

<P align="center"><FONT size="2">2
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>


<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">approximately 11.1 million shares will be issued
    upon conversion of shares of Computer Motion&#146;s common stock
    outstanding as of the record date.
    </FONT></TD>
</TR>

</TABLE>

<P>


<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">If the conversion ratio for Computer
    Motion&#146;s Series&nbsp;D convertible preferred stock were to
    increase such that the exchange ratio were reduced to 0.479, we
    estimate that, on a pre-reverse split basis, Intuitive Surgical
    will issue approximately 15.9&nbsp;million shares of Intuitive
    Surgical common stock in the merger and reserve approximately
    4.5&nbsp;million&nbsp;shares of Intuitive Surgical common stock
    for future issuance in connection with Intuitive Surgical&#146;s
    assumption of Computer Motion&#146;s outstanding options and
    warrants (including out of the money options and warrants). Of
    the 15.9&nbsp;million shares of Intuitive Surgical common stock
    estimated to be issued in the merger, Intuitive Surgical expects
    that:
    </FONT></TD>
</TR>

</TABLE>

<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">approximately 5.6&nbsp;million shares will be
    issued upon conversion of shares of Computer Motion&#146;s
    Series&nbsp;D convertible preferred stock outstanding as of the
    record date;
    </FONT></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">less than 0.1&nbsp;million shares will be issued
    upon conversion of additional shares of Computer Motion&#146;s
    common stock issued as accrued dividends on Computer
    Motion&#146;s Series&nbsp;D convertible preferred stock
    outstanding as of the record date; and
    </FONT></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">approximately 10.3&nbsp;million shares will be
    issued upon conversion of shares of Computer Motion&#146;s
    common stock outstanding as of the record date.
    </FONT></TD>
</TR>


</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Q:&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">What will happen to the pending litigations
    between Intuitive Surgical and Computer Motion?</FONT></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">A:</FONT></B><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">In connection with the proposed merger, Intuitive
    Surgical and Computer Motion have obtained a stay through
    August&nbsp;31, 2003 of all proceedings in the pending
    litigation proceedings between the companies. As part of the
    stays, the courts have ceased all further activity in the cases
    during the period of stays and will not issue any opinions or
    orders on issues already submitted for decision. The stays may
    be terminated before, or extended beyond, August&nbsp;31, 2003
    under specified circumstances. In the event the merger is
    completed, Intuitive Surgical and Computer Motion will request
    dismissal with prejudice of the pending litigations.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Q:&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">When do you expect the merger to be
    completed?</FONT></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">A:</FONT></B><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">We are working to complete the merger as quickly
    as practicable. We currently expect to complete the merger on
    June 30, 2003. However, we cannot predict the exact timing of
    the completion of the merger.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Q:&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">What rights do I have to seek a valuation or
    appraisal of my shares?</FONT></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">A:</FONT></B><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Neither Intuitive Surgical stockholders nor
    Computer Motion stockholders will have appraisal rights in
    connection with the proposals to be voted on.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Q:&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">What are the expected United States federal
    income tax consequences of the merger?</FONT></B></TD>
</TR>

</TABLE>
<P>


<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">A:</FONT></B><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The merger has been structured to qualify as a
    reorganization for U.S. federal income tax purposes, and
    Computer Motion has received a legal opinion that, subject to
    certain qualifications, the merger will qualify as a
    reorganization under Section&nbsp;368(a) of the Internal Revenue
    Code of 1986, as amended. As a result of qualifying as a
    reorganization, in general, Computer Motion stockholders will
    not recognize gain or loss for U.S. federal income tax purposes
    as a result of the merger, except that Computer Motion
    stockholders will recognize gain or loss with respect to any
    cash they receive in lieu of a fractional share of Intuitive
    Surgical common stock upon completion of the merger. No gain or
    loss will be recognized by Intuitive Surgical stockholders as a
    result of the merger.
    </FONT></TD>
</TR>

</TABLE>


<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Q:&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">Why is Intuitive Surgical proposing a 1-for-2
    reverse stock split?</FONT></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">A:</FONT></B><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The board of directors of Intuitive Surgical
    believes that it is in the best interests of Intuitive Surgical
    to effect a 1-for-2 reverse split of Intuitive Surgical&#146;s
    common stock. The reverse stock split is intended to increase
    the marketability and liquidity of Intuitive Surgical&#146;s
    common stock. In the event that the reverse stock split is
    approved by Intuitive Surgical&#146;s stockholders and
    implemented by Intuitive Surgical&#146;s board of directors, the
    number of shares of Intuitive Surgical common
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">3
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD align="left">
    <FONT size="2">stock to be received by Computer Motion&#146;s
    stockholders in the merger will be reduced by 50%.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Q:&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">Who has been nominated for election to the
    board of directors of Intuitive Surgical?</FONT></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">A:</FONT></B><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The board of directors of Intuitive Surgical has
    nominated James A. Lawrence, Lonnie M. Smith and Richard J.
    Kramer, each of whom is a current director of Intuitive
    Surgical, for election to the board of directors. In addition,
    upon completion of the merger, the size of Intuitive
    Surgical&#146;s board of directors will be increased to nine and
    Robert W. Duggan, Computer Motion&#146;s Chairman and Chief
    Executive Officer, and Eric H. Halvorson, a member of Computer
    Motion&#146;s board of directors, will be appointed to Intuitive
    Surgical&#146;s board of directors.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Q:&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">Why is Intuitive Surgical proposing to amend
    its 2000 Non-Employee Directors&#146; Stock Option
    Plan?</FONT></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">A:</FONT></B><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Intuitive Surgical is proposing to amend its 2000
    Non-Employee Directors&#146; Stock Option Plan to increase the
    annual stock option grant for non-employee directors from 5,000
    to 10,000 shares, to provide for an additional annual grant of
    options to purchase 5,000&nbsp;shares to committee chairs and to
    amend the automatic share increase provision. These share
    amounts will be reduced proportionately in the event that the
    proposed reverse split of Intuitive Surgical&#146;s common stock
    is approved by Intuitive Surgical&#146;s stockholders and
    implemented by Intuitive Surgical&#146;s board of directors.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Q:&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">Where and when are the stockholder
    meetings?</FONT></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">A:</FONT></B><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Intuitive Surgical annual meeting will take
    place at the Summerfield Suites by Wyndham, 900&nbsp;Hamlin
    Court, Sunnyvale, California 94086, on June&nbsp;30, 2003, at
    8:00&nbsp;a.m., local time.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">The Computer Motion special meeting will take
place at Computer Motion&#146;s corporate headquarters,
130-B&nbsp;Cremona Drive, Goleta, California, 93117 on
June&nbsp;30, 2003 at 8:00&nbsp;a.m., local time.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Q:&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">What vote of Intuitive Surgical stockholders
    is required to approve the proposals?</FONT></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">A:</FONT></B><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Approval of the proposal to issue shares of
    Intuitive Surgical common stock pursuant to the merger agreement
    requires the affirmative vote of a majority of the total votes
    cast at the annual meeting by holders of Intuitive
    Surgical&#146;s common stock outstanding as of the record date.
    Directors and executive officers of Intuitive Surgical owning
    Intuitive Surgical common stock representing approximately 7% of
    the shares of Intuitive Surgical common stock outstanding as of
    the record date have agreed to vote their shares in favor of the
    proposal to issue shares of Intuitive Surgical common stock
    pursuant to the merger agreement.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Approval of the proposal to amend Intuitive
Surgical&#146;s Amended and Restated Certificate of
Incorporation to effect a 1-for-2 reverse stock split requires
the affirmative vote of a majority of the shares of Intuitive
Surgical common stock outstanding as of the record date. The
candidates for director receiving the highest number of votes,
up to the number of directors to be elected, will be elected to
Intuitive Surgical&#146;s board of directors. Approval of the
proposal to amend Intuitive Surgical&#146;s 2000 Non-Employee
Directors&#146; Stock Option Plan to increase the annual stock
option grant for non-employee directors, to provide for an
additional annual grant of options to committee chairs and to
amend the automatic share increase provision and the proposal to
ratify Ernst &#38; Young LLP as the independent auditors of
Intuitive Surgical for the current fiscal year ending
December&nbsp;31, 2003 requires the affirmative vote of a
majority of the shares of Intuitive Surgical common stock
represented and entitled to vote at the annual meeting.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Q:&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">What vote of Computer Motion stockholders is
    required to approve and adopt the merger agreement?</FONT></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">A:</FONT></B><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The affirmative vote of the holders of a majority
    of the votes of outstanding shares of Computer Motion common
    stock and preferred stock, voting together as a single class, is
    required to approve and adopt the merger agreement. Each
    Computer Motion stockholder is entitled to one vote for each
    share of
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">4
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD align="left">
    <FONT size="2">common stock held by such stockholder and 1,000
    votes for each share of Series&nbsp;D convertible preferred
    stock held by such stockholder. Directors and executive officers
    of Computer Motion owning Computer Motion common and preferred
    stock representing approximately 14% of the voting power of the
    Computer Motion common and preferred stock outstanding as of the
    record date have agreed to vote their shares in favor of the
    approval and adoption of the merger agreement.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Q:&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">How does my company&#146;s board of directors
    recommend that I vote?</FONT></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">A:</FONT></B><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Intuitive Surgical&#146;s board of directors
    unanimously recommends that Intuitive Surgical stockholders vote
    <B>&#147;FOR&#148;</B> the proposal to issue shares of Intuitive
    Surgical common stock pursuant to the merger agreement,
    <B>&#147;FOR&#148; </B>the proposal to amend Intuitive
    Surgical&#146;s Amended and Restated Certificate of
    Incorporation to effect a 1-for-2 reverse stock split of
    Intuitive Surgical&#146;s common stock, <B>&#147;FOR&#148;
    </B>the nominees to the board of directors listed in this joint
    proxy statement/prospectus, <B>&#147;FOR&#148; </B>the proposal
    to amend the 2000 Non-Employee Directors&#146; Stock Option Plan
    to increase the annual stock option grant for non-employee
    directors, to provide for an additional annual grant of options
    to committee chairs and to amend the automatic share increase
    provision and <B>&#147;FOR&#148; </B>the proposal to ratify
    Ernst &#38; Young LLP as the independent auditors of Intuitive
    Surgical for the current fiscal year ending December&nbsp;31,
    2003. For a more complete description of the recommendation of
    Intuitive Surgical&#146;s board of directors regarding the
    issuance of Intuitive Surgical common stock pursuant to the
    merger agreement, please see &#147;The Merger&nbsp;&#151;
    Reasons For the Merger&nbsp;&#151; Intuitive Surgical.&#148;
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Computer Motion&#146;s board of directors
unanimously recommends that Computer Motion stockholders vote
<B>&#147;FOR&#148;</B> the proposal to approve and adopt the
merger agreement. For a more complete description of the
recommendation of Computer Motion&#146;s board of directors,
please see &#147;The Merger&nbsp;&#151; Reasons For the
Merger&nbsp;&#151; Computer Motion.&#148;
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Q:&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">What do I do now?</FONT></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">A:</FONT></B><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Carefully read and consider the information
    contained in this joint proxy statement/prospectus, including
    its appendices. There are several ways your shares can be
    represented at your stockholder meeting. You can attend your
    stockholder meeting in person or you can indicate on the
    enclosed proxy card how you want to vote and return it in the
    accompanying pre-addressed postage paid envelope. If you sign
    and send in your proxy but do not indicate how you want to vote,
    your proxy will be counted as a vote in favor of the proposals.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Q:&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">How do I cast my vote?</FONT></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">A:</FONT></B><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">If you are a holder of record, you may vote in
    person at your stockholder meeting or by submitting a proxy for
    your stockholder meeting. You can submit your proxy by
    completing, signing, dating and returning the enclosed proxy
    card in the accompanying pre-addressed postage paid envelope.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Q:&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">If my broker holds my shares in &#147;street
    name,&#148; will my broker vote my shares?</FONT></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">A:</FONT></B><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">If you hold your shares in a stock brokerage
    account or if your shares are held by a bank or nominee
    (<I>i.e.</I>, in street name), you should provide the record
    holder of your shares with instructions on how to vote your
    shares. Please refer to the voting instruction card used by your
    broker or nominee to see if you may submit voting instructions
    by telephone.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Q:&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">Can I change my vote after I have delivered my
    proxy?</FONT></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">A:</FONT></B><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Yes. You can change your vote at any time before
    your proxy is voted at your stockholder meeting. You can do this
    in one of three ways: (1)&nbsp;you can send a signed notice of
    revocation; (2)&nbsp;you can grant a new, valid proxy; or
    (3)&nbsp;if you are a holder of record, you can attend your
    stockholder meeting and vote in person; however, your attendance
    alone will not revoke your proxy. If you choose either of the
    first two methods, you must submit your notice of revocation or
    your new proxy to the Secretary of Intuitive Surgical or
    Computer Motion, as appropriate, before the applicable
    stockholder meeting. However, if your shares are held in a
    street name account at a brokerage firm or
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">5
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD align="left">
    <FONT size="2">bank, you should contact your brokerage firm or
    bank to change your vote. If you would like additional
    information and you are an Intuitive Surgical stockholder,
    please see &#147;The Intuitive Surgical Annual
    Meeting&nbsp;&#151; Voting; Proxies; Revocation.&#148; If you
    would like additional information and you are a Computer Motion
    stockholder, please see &#147;The Computer Motion Special
    Meeting&nbsp;&#151; Voting; Proxies, Revocation.&#148;
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Q:&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">What will happen if I abstain from
    voting?</FONT></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">A:</FONT></B><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">In the case of Intuitive Surgical, abstentions
    will be counted as shares that are present and entitled to vote
    for purposes of determining the presence of a quorum at the
    annual meeting. Abstentions (1)&nbsp;will have the same effect
    as voting against the proposal to amend Intuitive
    Surgical&#146;s Amended and Restated Certificate of
    Incorporation to effect a 1-for-2 reverse stock split, the
    proposal to amend Intuitive Surgical&#146;s 2000 Non-Employee
    Directors&#146; Stock Option Plan and the proposal to ratify the
    selection of Ernst&nbsp;&#38; Young LLP as the independent
    auditors for Intuitive Surgical for the current fiscal year
    ending December&nbsp;31, 2003 and (2)&nbsp;will not have any
    impact on approval of the proposal to issue Intuitive Surgical
    common stock pursuant to the merger agreement or the election of
    members to Intuitive Surgical&#146;s board of directors.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">In the case of Computer Motion, abstentions will
be counted as shares that are present and entitled to vote for
purposes of determining the presence of a quorum at the special
meeting. Abstentions will have the same effect as voting against
the proposal to approve and adopt the merger agreement.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Q:&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">Should I send in my Computer Motion stock
    certificates now?</FONT></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">A:</FONT></B><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">No.&nbsp;After the merger is completed, you will
    receive written instructions from the exchange agent on how to
    exchange your Computer Motion stock certificates for Intuitive
    Surgical stock certificates. <B>Please do not send in your
    Computer Motion stock certificates with your proxy.</B>
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Q:&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">What should I do if I receive more than one
    set of voting materials?</FONT></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">A:</FONT></B><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">You may receive more than one set of voting
    materials, including multiple copies of this joint proxy
    statement/prospectus and multiple proxy cards or voting
    instruction cards. For example, if you hold your shares in more
    than one brokerage account, you will receive a separate voting
    instruction card for each brokerage account in which you hold
    shares. If you are a holder of record and your shares are
    registered in more than one name, you will receive more than one
    proxy card. In addition, if you are a stockholder of Intuitive
    Surgical and a stockholder of Computer Motion, you will receive
    one or more separate proxy cards or voting instruction cards for
    each company. Please complete, sign, date and return each proxy
    card and voting instruction card that you receive.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Q:&nbsp;</FONT></B></TD>
    <TD>
    <B><FONT size="2">Who can help answer my questions?</FONT></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">A:</FONT></B><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Intuitive Surgical stockholders who have any
    questions about the merger or how to submit a proxy, or that
    need additional copies of this joint proxy statement/prospectus
    or the enclosed proxy card or voting instructions, should
    contact Investor Relations, Intuitive Surgical, Inc.,
    950&nbsp;Kifer Road, Sunnyvale, California 94086, Telephone
    (408)&nbsp;523-2100 or ir@intusurg.com.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Computer Motion stockholders who have any
questions about the merger or how to submit a proxy, or that
need additional copies of this joint proxy statement/prospectus
or the enclosed proxy card or voting instructions, should
contact Investor Relations, Computer Motion, Inc.,
130-B&nbsp;Cremona Drive, Goleta, California 93117, Telephone
(805)&nbsp;968-9600 or ir@computermotion.com.
</FONT>

<P align="center"><FONT size="2">6
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "SUMMARY" -->
<DIV align="left"><A NAME="001"></A></DIV>

<P align="center">
<B><FONT size="2">SUMMARY</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">The following is a summary of information
contained in this joint proxy statement/prospectus. This summary
may not contain all of the information about the merger or the
other proposals to be considered by the stockholders of
Intuitive Surgical that is important to you. For a more complete
description of the merger and the other proposals to be
considered by the stockholders of Intuitive Surgical, we
encourage you to read carefully this entire joint proxy
statement/prospectus, including the attached annexes. In
addition, we encourage you to read the information incorporated
by reference into this joint proxy statement/prospectus, which
includes important business and financial information about
Intuitive Surgical and Computer Motion that each has filed with
the Securities and Exchange Commission, or the SEC. You may
obtain the information incorporated by reference into this joint
proxy statement/prospectus without charge by following the
instructions in the section entitled &#147;Where You Can Find
More Information.&#148; All share information included in this
joint proxy statement/ prospectus does not give effect to the
proposed reverse stock split of Intuitive Surgical except as
otherwise noted.</FONT></I>

<!-- link2 "The Companies" -->
<DIV align="left"><A NAME="002"></A></DIV>

<P align="left">
<B><FONT size="2">The Companies</FONT></B>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD align="left">
    <FONT size="2">Intuitive Surgical, Inc. <BR>
     950 Kifer Road <BR>
     Sunnyvale, California 94086 <BR>
     (408)&nbsp;523-2100 <BR>
     <BR>
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Intuitive
Surgical designs, manufactures and markets the <I>da Vinci
</I>Surgical System, an advanced surgical system that Intuitive
Surgical believes represents a new generation of
surgery&nbsp;&#151; the third generation. Intuitive Surgical
believes that this new generation of surgery, referred to as
<I>Intuitive</I> surgery, is a revolutionary advance similar in
scope to the previous two generations of surgery&nbsp;&#151;
open surgery and minimally invasive surgery, or MIS. Intuitive
Surgical&#146;s <I>da Vinci </I>Surgical System consists of a
surgeon&#146;s console, a patient side-cart, a high performance
vision system and proprietary &#147;wristed&#148; instruments.
By placing computer-enhanced technology between the surgeon and
patient, Intuitive Surgical believes that its system enables
surgeons to perform better surgery in a manner never before
experienced. The <I>da Vinci</I> Surgical System seamlessly
translates the surgeon&#146;s natural hand movements on
instrument controls at a console into corresponding
micro-movements of instruments positioned inside the patient
through small puncture incisions, or ports. The <I>da Vinci
</I>Surgical System provides the surgeon with the intuitive
control, range of motion, fine tissue manipulation capability
and 3-D visualization characteristic of open surgery, while
simultaneously allowing the surgeon to work through the small
ports of MIS.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD align="left">
    <FONT size="2">Computer Motion, Inc. <BR>
     130-B Cremona Drive <BR>
     Goleta, California 93117 <BR>
     (805)&nbsp;968-9600 <BR>
     <BR>
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Computer
Motion is a high-tech medical device company developing surgical
practices with the goal of ushering in a new era of patient and
physician friendly surgery. This new era is expected to
significantly reduce patient trauma and recovery time and to
dramatically reduce the learning curves of surgeons adapting
these new, less invasive techniques. Computer Motion&#146;s
products automate operating room tasks and simplify various
aspects of surgical procedures, reducing operating cost and
time. Computer Motion&#146;s products, including surgeon
training and education services, play a significant role in
transitioning the surgical community from open procedures to
less invasive procedures increasingly demanded by patients.
Computer Motion&#146;s products have been successfully used
across a broad range of surgical disciplines, including cardiac,
urology, pediatrics, bariatrics and general surgery.
</FONT>

<P align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Computer
Motion develops and markets robotic and computerized surgical
systems that are upgradeable and based on an open system
platform, which allows for networking of the entire operating
room. These systems enhance a surgeon&#146;s performance and
centralize and simplify a surgeon&#146;s control of the
operating room. Computer Motion&#146;s products provide surgeons
with the natural functionality necessary to perform complex MIS
procedures, as well as enable surgeons to control critical
devices in the operating room through simple verbal commands.
Computer Motion believes its products will broaden the scope and
increase the effectiveness of MIS, improve patient outcomes and
create a safer, more efficient and cost-effective operating room.
</FONT>

<P align="center"><FONT size="2">7
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link2 "The Merger" -->
<DIV align="left"><A NAME="003"></A></DIV>

<P align="left">
<B><FONT size="2">The Merger</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical and Computer Motion have
agreed to the combination of Intuitive Surgical and Computer
Motion under the terms of the merger agreement described in this
joint proxy statement/prospectus. We have attached the merger
agreement as Annex A to this joint proxy statement/prospectus.
We encourage you to read the merger agreement in its entirety.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the terms of the merger agreement,
Intuitive Merger Corporation, a newly formed subsidiary of
Intuitive Surgical, will merge with and into Computer Motion,
with Computer Motion surviving the merger and continuing as a
wholly owned subsidiary of Intuitive Surgical. Upon completion
of the merger, each share of Computer Motion common stock will
be converted into the right to receive a fraction of a share of
Intuitive Surgical common stock. The fraction of a share of
Intuitive Surgical common stock to be issued with respect to
each share of Computer Motion common stock will be determined by
a formula described in the merger agreement and this joint proxy
statement/prospectus. Based on the capitalization of Intuitive
Surgical and Computer Motion and the market price of Computer
Motion common stock as of the date of this joint proxy
statement/prospectus and assuming that the merger is completed
on June&nbsp;30, 2003, we estimate that the exchange ratio will
be approximately 0.52. The exchange ratio will be adjusted
proportionately in the event that the proposed reverse split of
Intuitive Surgical&#146;s common stock is approved by Intuitive
Surgical&#146;s stockholders and implemented by Intuitive
Surgical&#146;s board of directors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The final exchange ratio will be calculated based
on the total number of fully diluted shares outstanding for
Intuitive Surgical and Computer Motion immediately prior to the
effective time of the merger. The number of Computer
Motion&#146;s fully diluted shares will vary based on the number
of shares of Computer Motion common stock into which Computer
Motion&#146;s Series&nbsp;D convertible preferred stock will be
convertible and the number of shares of Computer Motion common
stock which may be issued to pay accrued dividends on the
Series&nbsp;D convertible preferred stock upon conversion. All
shares of Computer Motion Series&nbsp;D convertible preferred
stock will convert into shares of Computer Motion common stock
immediately prior to the effective time of the merger. Under the
terms of the Series&nbsp;D convertible preferred stock, in the
event that the average of the closing bid prices of Computer
Motion&#146;s common stock for the 20 consecutive trading days
ending 15 consecutive trading days prior to the Computer Motion
special meeting is below $1.86 per share, the conversion ratio
for Computer Motion&#146;s Series&nbsp;D convertible preferred
stock could increase. As a result, the exchange ratio in the
merger may decrease and, therefore, Computer Motion common
stockholders would receive a lesser number of Intuitive Surgical
shares, and Computer Motion preferred stockholders would receive
a greater number of Intuitive Surgical shares, in the merger.
The total number of shares of Intuitive Surgical common stock to
be issued or reserved for issuance to holders of equity
securities of Computer Motion will not change, unless there is a
change in the fully diluted capitalization of Intuitive
Surgical. Any change in the conversion ratio of the
Series&nbsp;D convertible preferred stock will merely change the
proportional allocation between Computer Motion&#146;s common
and preferred stockholders. Assuming the merger closes on
June&nbsp;30, 2003, Computer Motion common stockholders will
receive a minimum of 0.479 (or, in the event the reverse stock
split is completed prior to the merger, 0.239)&nbsp;shares of
Intuitive Surgical common stock for each share of Computer
Motion common stock. After June&nbsp;9, 2003, stockholders may
visit Intuitive Surgical&#146;s website,
<I>www.intuitivesurgical.com,</I> or Computer Motion&#146;s
website, <I>www.computermotion.com,</I> for announcements
regarding the exchange ratio. Computer Motion stockholders will
receive cash in lieu of any fractional shares of Intuitive
Surgical common stock. Please see &#147;The Merger
Agreement&nbsp;&#151; The Merger Consideration and Conversion of
Securities.&#148;
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on the estimated exchange ratio of
approximately 0.52 and the number of shares outstanding as of
the record date, we estimate that, on a pre-reverse split basis,
Intuitive Surgical will issue approximately 15.6&nbsp;million
shares of Intuitive Surgical common stock in the merger and
reserve approximately 4.8&nbsp;million shares of Intuitive
Surgical common stock for future issuance in connection with
Intuitive Surgical&#146;s assumption of Computer Motion&#146;s
outstanding options and warrants (including out-of-the-money
options and warrants).
</FONT>


<P align="center"><FONT size="2">8
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the proposed merger, Intuitive
Surgical and Computer Motion have obtained a stay through
August&nbsp;31, 2003 of all proceedings in the pending
litigations between the companies. As part of the stays, the
courts have ceased all further activity in the cases during the
period of stays and will not issue any opinions or orders on
issues already submitted for decision. The stays may be
terminated before, or extended beyond, August&nbsp;31, 2003
under specified circumstances. In the event the merger is
completed, Intuitive Surgical and Computer Motion will request
dismissal with prejudice of the pending litigations.
</FONT>

<!-- link2 "Recommendations of the Boards of Directors" -->
<DIV align="left"><A NAME="004"></A></DIV>

<P align="left">
<B><FONT size="2">Recommendations of the Boards of
Directors</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical&#146;s board of directors
believes that the merger is advisable and fair to and in the
best interests of Intuitive Surgical and its stockholders and
unanimously recommends that Intuitive Surgical stockholders vote
<B>&#147;FOR&#148;</B> the proposal to issue Intuitive Surgical
common stock pursuant to the merger agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Computer Motion&#146;s board of directors
believes that the merger agreement and the transactions
contemplated by the merger agreement, including the merger, are
advisable and fair to and in the best interests of Computer
Motion and its stockholders, and recommends that Computer Motion
stockholders vote <B>&#147;FOR&#148; </B>the proposal to approve
and adopt the merger agreement.
</FONT>

<!-- link2 "Stockholders Entitled to Vote; Vote Required in Connection with the Merger Proposals" -->
<DIV align="left"><A NAME="005"></A></DIV>

<P align="left">
<B><FONT size="2">Stockholders Entitled to Vote; Vote Required
in Connection with the Merger Proposals</FONT></B>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You can vote at the Intuitive Surgical annual
meeting if you owned Intuitive Surgical common stock at the
close of business on May&nbsp;15, 2003, the record date for the
Intuitive Surgical annual meeting. On that date, there were
37,126,289&nbsp;shares of Intuitive Surgical common stock
outstanding and entitled to vote. You can cast one vote for each
share of Intuitive Surgical common stock that you owned on that
date. Approval of the proposal to issue shares of Intuitive
Surgical common stock pursuant to the merger agreement requires
the affirmative vote of a majority of the total votes cast at
the annual meeting by holders of Intuitive Surgical&#146;s
common stock outstanding as of the record date.
</FONT>



<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You can vote at the Computer Motion special
meeting if you owned Computer Motion common stock or preferred
stock at the close of business on May&nbsp;15, 2003, the record
date for the Computer Motion special meeting. On that date,
there were 21,556,328&nbsp;shares of Computer Motion common
stock outstanding and entitled to vote and 8,492&nbsp;shares of
Computer Motion Series&nbsp;D convertible preferred stock
outstanding and entitled to vote. Holders of Computer Motion
common stock are entitled to one vote for each share of Computer
Motion common stock owned on the record date, and holders of
Computer Motion Series&nbsp;D convertible preferred stock are
entitled to 1,000 votes for each share of Computer Motion
Series&nbsp;D convertible preferred stock owned on that date.
Approval and adoption of the merger agreement requires the
affirmative vote of a majority of the votes of outstanding
shares of Computer Motion common stock and preferred stock,
voting together as a single class, at the Computer Motion
special meeting.
</FONT>


<!-- link2 "Stockholder Support Agreements" -->
<DIV align="left"><A NAME="006"></A></DIV>

<P align="left">
<B><FONT size="2">Stockholder Support Agreements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical has entered into a stockholder
support agreement with directors and executive officers of
Intuitive Surgical owning Intuitive Surgical common stock
representing approximately 7% of the shares of Intuitive
Surgical common stock outstanding as of the record date,
pursuant to which these stockholders agreed to vote their shares
in favor of the proposal to issue Intuitive Surgical common
stock pursuant to the merger agreement. This stockholder support
agreement is attached to this joint proxy statement/prospectus
as Annex B.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical has entered into a stockholder
support agreement with directors and executive officers of
Computer Motion owning Computer Motion common and preferred
stock representing approximately 14% of the voting power of the
Computer Motion common and preferred stock outstanding as of the
record date, pursuant to which these stockholders agreed to vote
their shares in favor of proposal to approve and adopt the
merger agreement. This stockholder support agreement is attached
to this joint proxy statement/prospectus as Annex&nbsp;C.
</FONT>

<!-- link2 "Opinion of Bear Stearns to Intuitive Surgical" -->
<DIV align="left"><A NAME="007"></A></DIV>

<P align="left">
<B><FONT size="2">Opinion of Bear Stearns to Intuitive
Surgical</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;6, 2003, Bear, Stearns&nbsp;&#38;
Co. Inc. delivered its oral opinion to Intuitive Surgical&#146;s
board of directors, which was subsequently confirmed by delivery
of a written opinion dated as of March&nbsp;6, 2003, based upon
and subject to the
</FONT>

<P align="center"><FONT size="2">9
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">factors and assumptions set forth in the opinion,
that the exchange ratio in the merger was fair from a financial
point of view, to Intuitive Surgical. The full text of Bear,
Stearns&nbsp;&#38; Co. Inc.&#146;s written opinion is attached
to this joint proxy statement/prospectus as Annex&nbsp;D. We
encourage you to read this opinion carefully in its entirety for
a description of the procedures followed, assumptions made,
matters considered and limitations on the review undertaken.
Bear, Stearns&nbsp;&#38; Co. Inc.&#146;s opinion is directed to
Intuitive Surgical&#146;s board of directors and does not
constitute a recommendation to any stockholder as to any matters
relating to the merger.
</FONT>
</DIV>

<!-- link2 "Opinion of H.C. Wainwright to Computer Motion" -->
<DIV align="left"><A NAME="008"></A></DIV>

<P align="left">
<B><FONT size="2">Opinion of H.C.&nbsp;Wainwright to Computer
Motion</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;5, 2003,
H.C.&nbsp;Wainwright&nbsp;&#38; Co., Inc. delivered to Computer
Motion&#146;s board of directors its oral opinion, which was
subsequently confirmed by delivery of a written opinion dated
March&nbsp;5, 2003, that, as of that date, and based upon and
subject to the factors and assumptions set forth in the opinion,
the exchange ratio of shares of Intuitive Surgical common stock
to be received in the merger by Computer Motion stockholders,
which will range from approximately 0.48 to 0.52 shares (without
giving effect to the reverse stock split) for each share of
Computer Motion common stock, was fair to these stockholders,
from a financial point of view. The full text of H.C.
Wainwright&#146;s written opinion is attached to this joint
proxy statement/prospectus as Annex E. We encourage you to read
this opinion carefully in its entirety for a description of the
procedures followed, assumptions made, matters considered and
limitations on the review undertaken. H.C. Wainwright&#146;s
opinion is directed to Computer Motion&#146;s board of directors
and does not constitute a recommendation to any stockholder as
to any matters relating to the merger.
</FONT>

<!-- link2 "Ownership of the Combined Company after the Merger" -->
<DIV align="left"><A NAME="009"></A></DIV>

<P align="left">
<B><FONT size="2">Ownership of the Combined Company after the
Merger</FONT></B>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on the estimated exchange ratio of
approximately 0.52 and the number of shares outstanding as of
the record date, we estimate that, on a pre-reverse split basis,
Intuitive Surgical will issue approximately 15.6&nbsp;million
shares of Intuitive Surgical common stock in the merger and
reserve an additional approximately 4.8&nbsp;million shares of
Intuitive Surgical common stock for future issuance in
connection with Intuitive Surgical&#146;s assumption of Computer
Motion&#146;s outstanding options and warrants (including
out-of-the-money options and warrants). Based on the estimated
exchange ratio of approximately 0.52, we further estimate that,
upon completion of the merger, current Intuitive Surgical
stockholders will own approximately 70% of the then outstanding
shares of Intuitive Surgical common stock and former Computer
Motion stockholders will own approximately 30% of the then
outstanding shares of Intuitive Surgical common stock.
</FONT>


<!-- link2 "Loan and Security Agreement" -->
<DIV align="left"><A NAME="010"></A></DIV>

<P align="left">
<B><FONT size="2">Loan and Security Agreement</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the merger agreement,
Intuitive Surgical has agreed to provide a short-term secured
bridge loan facility of up to $7.3&nbsp;million to Computer
Motion. Computer Motion may use the facility to pay off existing
indebtedness and to fund operations prior to completion of the
merger. The facility will terminate and all outstanding amounts
thereunder will become due and payable 120&nbsp;days following
termination of the merger agreement, subject to specified
acceleration events. Interest on the facility will be payable at
a rate equal to 8% per year and is not due and payable until the
maturity date. As of the date of this joint proxy
statement/prospectus, there was no amount outstanding under this
facility.
</FONT>

<!-- link2 "Interests of Directors and Executive Officers of Computer Motion in the Merger" -->
<DIV align="left"><A NAME="011"></A></DIV>

<P align="left">
<B><FONT size="2">Interests of Directors and Executive Officers
of Computer Motion in the Merger</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">When considering the Computer Motion board of
directors&#146; recommendation that the Computer Motion
stockholders vote <B>&#147;FOR&#148; </B>the proposal to approve
and adopt the merger agreement, Computer Motion stockholders
should be aware that some directors and executive officers of
Computer Motion may have interests in the merger that may be
different from, or in addition to, the interests of Computer
Motion stockholders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Computer Motion board of directors knew about
these additional interests, and considered them, among other
matters, when it approved the merger agreement. These interests
include the following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the employment of Joseph&nbsp;M. DeVivo as Senior
    Vice President, Marketing of Intuitive Surgical upon completion
    of the merger on terms that have yet to be determined;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">10
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the employment of Darrin&nbsp;R. Uecker as Vice
    President and Chief Technical Officer of Intuitive Surgical upon
    completion of the merger on terms that have yet to be determined;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the appointment of Robert&nbsp;W. Duggan and
    Eric&nbsp;H. Halvorson to serve as members of Intuitive
    Surgical&#146;s board of directors, the result of which, as
    non-employee directors of Intuitive Surgical, each of Messrs.
    Duggan and Halvorson will receive an initial grant of an option
    to purchase 20,000 shares (or 10,000 shares on a post-reverse
    split basis) of Intuitive Surgical common stock and, in the
    event Intuitive Surgical stockholders approve the amendment to
    the 2000 Non-Employee Directors&#146; Stock Plan, an annual
    grant of an option to purchase 10,000 shares (or 5,000 shares on
    a post-reverse split basis) of Intuitive Surgical common stock,
    provided that they are serving as non-employee directors on the
    day following each annual meeting;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">stock options to purchase 988,169&nbsp;shares of
    Computer Motion common stock held by Computer Motion executive
    officers and directors will accelerate pursuant to the terms of
    Computer Motion&#146;s stock option plans upon completion of the
    merger and all stock options will be assumed by Intuitive
    Surgical in connection with the merger;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">indemnification provided to the present and
    former executive officers and directors of Computer Motion;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">8,797&nbsp;shares of Series&nbsp;C convertible
    preferred stock of Computer Motion, of which 2,249 shares were
    held by Mr.&nbsp;Duggan, Mr.&nbsp;DeVivo and an investment fund
    affiliated with Robert&nbsp;W. Lautz, a director of Computer
    Motion at the time Computer Motion&#146;s board of directors
    approved the merger agreement, were exchanged for a like number
    of newly-issued Series&nbsp;D convertible preferred stock having
    revised conversion rights in connection with the merger;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">(1)&nbsp;the reduction in the exercise price from
    $1.78 to $1.50 of one series of outstanding warrants to purchase
    1,759,345&nbsp;shares of Computer Motion common stock originally
    issued to investors in Computer Motion&#146;s Series&nbsp;C
    convertible preferred stock financing, of which warrants to
    purchase 449,800&nbsp;shares are held by Mr.&nbsp;Duggan,
    Mr.&nbsp;DeVivo and an investment fund affiliated with
    Mr.&nbsp;Lautz, and (2)&nbsp;the reduction in the exercise price
    from $2.17 to $1.50 of another series of outstanding warrants to
    purchase 1,759,345&nbsp;shares of Computer Motion common stock,
    originally issued to investors in Computer Motion&#146;s
    Series&nbsp;C convertible preferred stock, of which warrants to
    purchase 449,800&nbsp;shares are held by Mr.&nbsp;Duggan,
    Mr.&nbsp;DeVivo and an investment fund affiliated with
    Mr.&nbsp;Lautz, to induce the Series&nbsp;C investors to
    exchange their shares for newly issued Series&nbsp;D convertible
    preferred stock; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a cash payment in the amount of $119,952, less
    the amount of cash dividends to be received prior to the merger,
    to be received prior to the effective time of the merger by an
    investment fund affiliated with Mr.&nbsp;Lautz to induce the
    investment fund to exchange its shares for newly issued
    Series&nbsp;D convertible preferred stock.
    </FONT></TD>
</TR>

</TABLE>

<!-- link2 "Listing of Intuitive Surgical Common Stock and Delisting of Computer Motion Common Stock" -->
<DIV align="left"><A NAME="012"></A></DIV>

<P align="left">
<B><FONT size="2">Listing of Intuitive Surgical Common Stock and
Delisting of Computer Motion Common Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Application will be made to have the Intuitive
Surgical common stock issued in connection with the merger
approved for listing on the Nasdaq National Market, where
Intuitive Surgical common stock currently is traded under the
symbol &#147;ISRG.&#148; If the merger is completed, Computer
Motion common stock will no longer be listed on the Nasdaq
National Market and will be deregistered under the Securities
Exchange Act of 1934, and Computer Motion will no longer file
periodic reports with the SEC.
</FONT>

<!-- link2 "Appraisal Rights" -->
<DIV align="left"><A NAME="013"></A></DIV>

<P align="left">
<B><FONT size="2">Appraisal Rights</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Neither Intuitive Surgical stockholders nor
Computer Motion stockholders will have appraisal rights in
connection with the merger.
</FONT>

<P align="center"><FONT size="2">11
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link2 "Conditions to Completion of the Merger" -->
<DIV align="left"><A NAME="014"></A></DIV>

<P align="left">
<B><FONT size="2">Conditions to Completion of the
Merger</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In order to complete the merger, we must satisfy
a number of conditions, including but not limited to the
following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the registration statement of which this joint
    proxy statement/prospectus forms a part must have been declared
    effective by the SEC and must not be the subject of any stop
    order or related proceedings;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Computer Motion stockholders must approve the
    proposal to approve and adopt the merger agreement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Intuitive Surgical&#146;s stockholders must
    approve the proposal to issue Intuitive Surgical common stock
    pursuant to the merger agreement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the shares of Intuitive Surgical common stock
    issuable in the merger must be approved for listing on Nasdaq;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">there must be no material adverse change to
    Computer Motion&#146;s business that arises out of or relates to
    Computer Motion&#146;s intellectual property or capitalization
    or the incurrence by Computer Motion of any liability or
    obligation; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">each of the patent litigation stays remain in
    full force and effect.
    </FONT></TD>
</TR>

</TABLE>

<!-- link2 "No Solicitation by Computer Motion" -->
<DIV align="left"><A NAME="015"></A></DIV>

<P align="left">
<B><FONT size="2">No Solicitation by Computer Motion</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The merger agreement contains detailed provisions
restricting Computer Motion from seeking an alternative
transaction with another party. These &#147;no
solicitation&#148; provisions prohibit Computer Motion, as well
as its officers, directors, subsidiaries and representatives,
from taking any action to solicit an acquisition proposal from
another party. The merger agreement does not, however, prohibit
Computer Motion or its board of directors from considering, and
potentially recommending, an unsolicited bona fide superior
written proposal under limited circumstances.
</FONT>

<!-- link2 "Termination of the Merger Agreement" -->
<DIV align="left"><A NAME="016"></A></DIV>

<P align="left">
<B><FONT size="2">Termination of the Merger Agreement</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical and Computer Motion can
jointly agree to terminate the merger agreement at any given
time. Either company may also terminate the merger agreement if
the merger is not completed by August&nbsp;31, 2003 and under
other circumstances described in this joint proxy
statement/prospectus.
</FONT>

<!-- link2 "Termination Fee and Expenses" -->
<DIV align="left"><A NAME="017"></A></DIV>

<P align="left">
<B><FONT size="2">Termination Fee and Expenses</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The merger agreement provides that, under
specified circumstances, Intuitive Surgical or Computer Motion
may be required to pay the other party&#146;s expenses related
to the merger up to $1.25&nbsp;million and a termination fee
equal to $2.5&nbsp;million less the amount of any payment for
the other party&#146;s expenses related to the merger.
</FONT>

<!-- link2 "Computer Motion Series D Convertible Preferred Stock" -->
<DIV align="left"><A NAME="018"></A></DIV>

<P align="left">
<B><FONT size="2">Computer Motion Series&nbsp;D Convertible
Preferred Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All shares of Computer Motion Series&nbsp;D
convertible preferred stock will convert into shares of Computer
Motion common stock immediately prior to the effective time of
the merger. The Computer Motion common stock then will be
exchanged for Intuitive Surgical common stock based on the
exchange ratio in the merger. Immediately prior to the closing
of the merger, the holders of Series&nbsp;D convertible
preferred stock must convert such shares into shares of Computer
Motion common stock under one of two methods. First, the holders
may convert the shares of Series&nbsp;D convertible preferred
stock into a number of shares of Computer Motion common stock
determined by dividing the stated value ($1400 per share) of
such Series D convertible preferred stock by the conversion
price of $1.38. Alternatively, the holders may elect to convert
the Series&nbsp;D convertible preferred stock into a number of
shares of Computer Motion common stock determined by dividing
135% of the stated value of the Series&nbsp;D convertible
preferred stock by a conversion price equal to the average
closing bid price of the Computer Motion common stock for the 20
consecutive days ending 15&nbsp;consecutive trading days prior
to the date of the Computer Motion special meeting, but in no
event less than $1.38.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each Series&nbsp;D stockholder must elect the
alternative conversion ratio by delivering a notice to Computer
Motion no later than 12&nbsp;trading days prior to the date of
the special meeting. The shares held by any holder who does not
make such election will convert into Computer Motion common
stock at the regular conversion ratio immediately prior to the
effective time of the merger.
</FONT>

<!-- link2 "Computer Motion Stock Options and Warrants" -->
<DIV align="left"><A NAME="019"></A></DIV>

<P align="left">
<B><FONT size="2">Computer Motion Stock Options and
Warrants</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At the effective time of the merger, each option
or warrant to purchase shares of Computer
</FONT>

<P align="center"><FONT size="2">12
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">Motion common stock outstanding immediately
before the effective time will be assumed by Intuitive Surgical
and converted into and become a right to purchase shares of
Intuitive Surgical common stock. Each option or warrant assumed
by Intuitive Surgical will be exercisable for the number of
shares of Intuitive Surgical common stock equal to the number of
shares of Computer Motion common stock issuable upon exercise of
the option or warrant multiplied by the exchange ratio, rounded
down to the nearest whole share. The per share exercise price
for each option or warrant will be the exercise price of each
Computer Motion option or warrant divided by the exchange ratio,
rounded up to the nearest whole cent. Pursuant to their terms,
the vesting of substantially all of Computer Motion&#146;s
outstanding options will accelerate upon completion of the
merger.
</FONT>
</DIV>

<!-- link2 "Material United States Federal Income Tax Consequences of the Merger" -->
<DIV align="left"><A NAME="020"></A></DIV>

<P align="left">
<B><FONT size="2">Material United States Federal Income Tax
Consequences of the Merger</FONT></B>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Computer Motion expects the merger to be treated
as a tax-free reorganization for U.S. federal income tax
purposes, and Computer Motion has received a legal opinion that,
subject to certain qualifications, the merger will qualify as a
reorganization under Section&nbsp;368(a) of the Internal Revenue
Code of 1986, as amended. As a result of qualifying as a
reorganization, in general, Computer Motion stockholders will
not recognize any gain or loss on the exchange of their shares
of Computer Motion common stock for shares of Intuitive Surgical
common stock pursuant to the merger, except for gain or loss on
fractional shares of Intuitive Surgical common stock for which
cash is received. No gain or loss will be recognized by
Intuitive Surgical stockholders as a result of the merger.
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Tax matters are very complicated, and the tax
consequences of the merger to you will depend on the facts of
your own situation. For a more complete description of the tax
consequences of the merger, please see &#147;The
Merger&nbsp;&#151; Material United States Federal Income Tax
Consequences.&#148; We encourage you to consult your own tax
advisor for a full understanding of the tax consequences of the
merger to you.
</FONT>

<!-- link2 "Accounting Treatment" -->
<DIV align="left"><A NAME="021"></A></DIV>

<P align="left">
<B><FONT size="2">Accounting Treatment</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical will account for the merger
under the purchase method of accounting for business
combinations under United States generally accepted accounting
principles.
</FONT>

<!-- link2 "Regulatory Approvals" -->
<DIV align="left"><A NAME="022"></A></DIV>

<P align="left">
<B><FONT size="2">Regulatory Approvals</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Neither Intuitive Surgical nor Computer Motion is
aware of any material federal or state regulatory requirements
or approvals required for completion of the merger.
</FONT>

<!-- link2 "Additional Proposals to be Considered by Intuitive Surgical Stockholders" -->
<DIV align="left"><A NAME="023"></A></DIV>

<P align="left">
<B><FONT size="2">Additional Proposals to be Considered by
Intuitive Surgical Stockholders</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to the proposal to issue shares of
Intuitive Surgical common stock pursuant to the merger
agreement, Intuitive Surgical stockholders will be asked
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to approve an amendment to Intuitive
    Surgical&#146;s Amended and Restated Certificate of
    Incorporation to effect a 1-for-2 reverse stock split;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to elect three members of Intuitive
    Surgical&#146;s board of directors;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to approve an amendment to Intuitive
    Surgical&#146;s 2000 Non-Employee Directors&#146; Stock Plan to
    increase the annual stock option grant for non-employee
    directors from 5,000 to 10,000 shares, to provide for an
    additional annual grant of options to purchase 5,000 shares to
    committee chairs and to amend the automatic share increase
    provision, subject to adjustment in the event that the proposed
    reverse stock split is approved by Intuitive Surgical&#146;s
    stockholders and implemented by Intuitive Surgical&#146;s board
    of directors; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">to ratify the selection of Ernst &#38; Young LLP
    as Intuitive Surgical&#146;s independent auditors for the
    current fiscal year ending December&nbsp;31, 2003.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Intuitive Surgical&#146;s board of directors
unanimously recommends that Intuitive Surgical stockholders vote
<B>&#147;FOR&#148;</B> each of these proposals (other than the
election of directors) and <B>&#147;FOR&#148; </B>the election
of the nominees to the board of directors listed in this joint
proxy statement/prospectus. This joint proxy
statement/prospectus contains important information about each
of these proposals.
</FONT>

<P align="center"><FONT size="2">13
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link2 "Summary Historical Financial Data" -->
<DIV align="left"><A NAME="024"></A></DIV>

<P align="center">
<B><FONT size="2">Summary Historical Financial Data</FONT></B>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are providing the following information to aid
you in your analysis of the financial aspects of the merger. We
derived this information from the audited financial statements
of Intuitive Surgical and Computer Motion for the years ended
December&nbsp;31, 1998 through December&nbsp;31, 2002 and the
unaudited financial statements of Intuitive Surgical and
Computer Motion for the three months ended March&nbsp;31, 2003.
This information is only a summary, and you should read it
together with our historical financial statements and related
notes contained in the annual and quarterly reports and other
information that we have filed with the SEC and incorporated by
reference in this joint proxy statement/prospectus. See
&#147;Where You Can Find More Information.&#148;
</FONT>


<P align="center">
<B><FONT size="2">Summary Historical Consolidated Financial Data
of Intuitive Surgical</FONT></B>

<P align="center">
<B><FONT size="2">Intuitive Surgical, Inc.</FONT></B>

<DIV align="center">
<B><FONT size="2">(in thousands, except per share
amounts)</FONT></B>
</DIV>


<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="22%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Three Months Ended</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">Fiscal Year Ended December 31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">March&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1998</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(Unaudited)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Consolidated Statements of Operations
    Data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">72,022</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">51,673</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,624</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,192</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,235</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,409</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cost of sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34,584</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28,218</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,031</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,273</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,738</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,507</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gross profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37,438</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23,455</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,593</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">919</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,497</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,902</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating costs and expenses:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Research and development
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,793</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,851</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,734</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,130</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23,208</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,423</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,232</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Selling, general and administrative
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40,864</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29,987</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,136</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,338</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,565</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,209</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,785</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total operating costs and expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">57,657</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43,838</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30,870</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,468</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30,773</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,632</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,017</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(20,219</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(20,383</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(22,277</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(19,549</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(30,773</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,135</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6,115</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest income, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,841</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,641</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,862</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,134</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,330</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">817</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">615</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other income (expense)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(43</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(108</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(117</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(18,421</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(16,700</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(18,523</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(18,415</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(29,443</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,293</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,617</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Basic and diluted net loss per common share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.51</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.47</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.78</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3.81</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8.14</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.06</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.15</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Shares used in computing basic and diluted net
    loss per common share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36,458</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35,815</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23,796</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,837</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,619</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36,862</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36,308</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>


<P align="center"><FONT size="2">14
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>


<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="34%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">As of</FONT></B></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">As of December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">March&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1998</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Unaudited)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Consolidated Balance Sheet Data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash, cash equivalents and short-term investments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">45,009</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50,839</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66,661</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">89,441</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,260</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23,220</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Working capital
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50,697</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52,562</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">67,922</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">83,836</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22,023</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,817</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">89,416</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">91,581</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100,361</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">112,421</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34,455</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28,167</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Notes payable, less current portion
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,531</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,838</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">771</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,861</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,521</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,438</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred compensation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(112</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(223</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(886</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,483</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(943</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,128</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated deficit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(131,084</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(128,791</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(110,370</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(93,670</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(75,147</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(56,732</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total stockholders&#146; equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">62,359</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">63,680</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78,293</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">90,730</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22,211</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,596</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>


<P align="center"><FONT size="2">15
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">Summary Historical Financial Data of Computer
Motion</FONT></B>

<P align="center">
<B><FONT size="2">Computer Motion, Inc.</FONT></B>

<DIV align="center">
<B><FONT size="2">(in thousands, except per share
amounts)</FONT></B>
</DIV>


<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="27%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Three Months Ended</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">Fiscal Year Ended December 31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">March&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1998</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(Unaudited)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Consolidated Statements of Operations
    Data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenue
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,111</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,531</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,732</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,058</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,586</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,011</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,691</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cost of revenue
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,860</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,587</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,577</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,135</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,492</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,740</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,645</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gross profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,251</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,944</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,155</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,923</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,094</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,271</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,046</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Research &#38; development expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,903</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,034</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,564</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,528</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,905</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,701</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,652</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Selling, general &#38; administrative expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,895</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,034</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,318</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,431</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,117</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,693</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,525</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Merger expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">544</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Litigation provision
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,521</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,248</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">480</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,039</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total operating expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35,319</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31,316</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29,362</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22,959</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,022</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,977</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,468</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(21,068</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(16,372</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(16,207</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(14,036</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(12,928</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7,706</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,422</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total other income/(expense)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(53</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(21</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(118</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">681</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,408</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(158</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(30</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss before income tax provision
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(21,121</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(16,393</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(16,325</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13,355</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11,520</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7,864</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,452</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax provision
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(21,151</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(16,413</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(16,349</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13,375</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11,545</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7,874</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,458</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dividend to preferred stockholders and warrant
    holders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,929</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,897</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,362</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,375</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,978</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss available to common stockholders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(32,080</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(20,310</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(17,711</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13,375</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11,545</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9,249</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9,436</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Basic and diluted net loss per share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.93</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.98</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.90</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.57</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.45</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.52</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.65</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Shares used in computing basic and diluted net
    loss per share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,665</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,276</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,309</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,503</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,959</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,694</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,467</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>


<P align="center"><FONT size="2">16
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>


<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="35%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">As of</FONT></B></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">As of December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">March&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1998</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Unaudited)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Consolidated Balance Sheet Data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash, cash equivalents and restricted cash
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,567</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,704</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,067</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,551</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,521</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,313</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Working capital
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,916</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,872</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">749</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,687</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,596</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,354</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,376</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,850</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,186</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23,089</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23,361</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30,444</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred compensation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(257</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(262</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(326</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(605</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(247</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(753</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated deficit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(125,923</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(116,674</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(84,594</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(64,284</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(46,573</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(33,198</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total stockholders&#146; equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,961</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,651</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,862</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,512</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,819</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,870</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>


<P align="center"><FONT size="2">17
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link2 "Summary Unaudited Pro Forma Condensed Combined Consolidated Financial Data" -->
<DIV align="left"><A NAME="025"></A></DIV>

<P align="center">
<B><FONT size="2">Summary Unaudited Pro Forma Condensed Combined
Consolidated Financial Data</FONT></B>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The table below presents selected financial data
from the Intuitive Surgical and Computer Motion unaudited pro
forma condensed combined consolidated statement of operations
for the year ended December&nbsp;31, 2002 and the three months
ended March&nbsp;31, 2003 and from the unaudited pro forma
condensed combined consolidated balance sheet as of
March&nbsp;31, 2003 included in this joint proxy
statement/prospectus. The unaudited pro forma condensed combined
consolidated statement of operations is presented as if the
merger had occurred on January&nbsp;1, 2002 and January&nbsp;1,
2003, respectively. The unaudited pro forma condensed combined
consolidated balance sheet presents the combined financial
position of Intuitive Surgical and Computer Motion as of
March&nbsp;31, 2003 assuming that the merger had been completed
on that date. The unaudited pro forma condensed combined
consolidated financial data is based on the estimates and
assumptions set forth in the notes to such statements, which are
preliminary and have been made solely for the purposes of
developing such pro forma information. The unaudited pro forma
condensed combined consolidated financial data is not
necessarily indicative of the financial position or operating
results that would have been achieved had the merger been
completed as of the dates indicated, nor is it necessarily
indicative of future financial position or operating results.
This information should be read in conjunction with the
unaudited pro forma condensed combined consolidated financial
statements and related notes and the historical financial
statements and related notes of Intuitive Surgical and Computer
Motion included in, or incorporated by reference into, this
joint proxy statement/prospectus.
</FONT>



<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="53%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Pro Forma Combined</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Three Months</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Year Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Ended</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;31, 2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">March&nbsp;31, 2003</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(In thousands, except per share data)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">94,541</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,801</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cost of sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">47,944</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,353</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gross margin
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46,597</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,448</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating costs and expenses:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Research and development
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,104</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,465</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Selling, general and administrative
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">61,272</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,797</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amortization of acquired intangible assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">550</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">139</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total operating costs and expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">87,926</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,401</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(41,329</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11,953</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest and other income, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,745</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">684</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss before income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(39,584</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11,269</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax provision
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(39,614</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11,279</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Basic and diluted net loss per common share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.80</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.22</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Shares used in computing basic and diluted net
    loss per common share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49,639</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50,576</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>


<P align="center"><FONT size="2">18
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>


<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="78%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Combined as of</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">March 31, 2003</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Balance Sheet Data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash, cash equivalents, restricted cash and
    short-term investments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46,278</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Working capital
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55,551</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">211,955</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Notes payable, net of current portion
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,531</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred compensation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(686</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated deficit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(135,284</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total liabilities and stockholders&#146; equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">211,955</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>


<P align="center"><FONT size="2">19
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "Comparative Per Share Information" -->
<DIV align="left"><A NAME="026"></A></DIV>

<P align="center">
<B><FONT size="2">Comparative Per Share Information</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table presents (1)&nbsp;unaudited
loss per share and net book value per share data for each of
Intuitive Surgical and Computer Motion on a historical basis,
(2)&nbsp;unaudited loss per share and net book value per share
data for the combined company on a pro forma basis and
(3)&nbsp;unaudited loss per share and net book value per share
data for Computer Motion on an equivalent pro forma basis. The
unaudited pro forma condensed combined consolidated financial
data is not necessarily indicative of the financial position had
the merger been completed on December&nbsp;31, 2002 or
March&nbsp;31, 2003 or operating results that would have been
achieved by the combined company had the merger been completed
as of the beginning of the periods presented, and should not be
construed as representative of future financial position or
operating results. The pro forma condensed combined consolidated
per common share data presented below have been derived from
unaudited pro forma condensed combined consolidated financial
statements included in this joint proxy statement/ prospectus.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This information is only a summary and should be
read in conjunction with the summary historical financial data
of Intuitive Surgical and Computer Motion, the Intuitive
Surgical and Computer Motion unaudited pro forma condensed
combined consolidated financial statements, and the separate
historical financial statements of Intuitive Surgical and
Computer Motion and related notes included in or incorporated by
reference into this joint proxy statement/prospectus.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="54%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Intuitive Surgical</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Year Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Three Months Ended</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;31, 2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">March&nbsp;31, 2003</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Historical per common share data:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss per share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.51</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.06</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net book value per share(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.73</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.68</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>


<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="54%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Computer Motion</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Year Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Three Months Ended</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;31, 2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">March&nbsp;31, 2003</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Historical per common share data:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss per share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.93</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.52</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net book value per share(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>


<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="54%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Combination</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Year Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Three Months Ended</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">December&nbsp;31, 2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">March&nbsp;31, 2003</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pro forma condensed combined consolidated per
    common share data:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss per share(3)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.80</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.22</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss per equivalent Computer Motion share(2)(3)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.41</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.12</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net book value per combined company&#146;s
    share(1)(3)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.37</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net book value per equivalent Computer Motion
    share(2)(3)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.75</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.69</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The historical net book value per share of
    Intuitive Surgical common stock and Computer Motion common stock
    is computed by dividing common stockholders&#146; equity at
    period end by the number of shares of common stock outstanding
    at the respective period end. The pro forma net book value per
    combined company&#146;s share is computed by dividing the pro
    forma common stockholders&#146; equity by the pro forma number
    of shares of Intuitive Surgical common stock outstanding at the
    respective period end, assuming the merger had been completed on
    that date.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The pro forma loss and net book value per
    equivalent Computer Motion share is calculated by multiplying
    the pro forma combined amounts by an estimated exchange ratio of
    0.52 for each share of Computer Motion common stock. The
    estimated exchange ratio (a)&nbsp;is based on a number of
    assumptions, (b)&nbsp;may be different from the final exchange
    ratio and (c)&nbsp;will be adjusted
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">20
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD align="left">
    <FONT size="2">proportionately in the event that the proposed
    reverse split of Intuitive Surgical&#146;s common stock is
    approved by Intuitive Surgical&#146;s stockholders and
    implemented by Intuitive Surgical&#146;s board of directors.
    Please see &#147;The Merger Agreement&nbsp;&#151; The Merger
    Consideration and Conversion of Securities.&#148;
    </FONT></TD>
</TR>

</TABLE>
<P>


<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Based on the estimated completion date of
    June&nbsp;30, 2003, the anticipated exchange ratio for Computer
    Motion common stock could range from approximately 0.48 to 0.52.
    The pro forma condensed combined consolidated per share data
    above was calculated using an estimated exchange ratio of 0.52.
    If the amounts for the year ended December&nbsp;31, 2002 were
    calculated using an exchange ratio of 0.48, the pro forma
    condensed combined consolidated loss per share would decrease by
    $0.01 per share, loss per equivalent Computer Motion share would
    decrease by $0.03 per share, net book value per combined
    company&#146;s share would decrease by $0.03 per share and net
    book value per equivalent Computer Motion share would decrease
    by $0.15 per share. If the amounts for the three months ended
    March&nbsp;31, 2003 were calculated using an exchange ratio of
    0.48, the pro forma condensed combined consolidated loss per
    share and loss per equivalent Computer Motion share would not
    change, net book value per combined company&#146;s share would
    decrease by $0.03 per share and net book value per equivalent
    Computer Motion share would decrease by $0.14 per share.
    </FONT></TD>
</TR>

</TABLE>


<P align="center"><FONT size="2">21
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "Comparative Per Share Market Price Data" -->
<DIV align="left"><A NAME="027"></A></DIV>

<P align="center">
<B><FONT size="2">Comparative Per Share Market Price
Data</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical common stock trades on the
Nasdaq National Market under the symbol &#147;ISRG.&#148;
Computer Motion common stock trades on the Nasdaq National
Market under the symbol &#147;RBOT.&#148; Neither Intuitive
Surgical nor Computer Motion has ever declared or paid cash
dividends on its common stock. The table below sets forth, for
the periods indicated, the high and low per share sales prices
for Intuitive Surgical common stock and Computer Motion common
stock as reported on the Nasdaq National Market:
</FONT>


<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="58%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Intuitive Surgical</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Computer Motion</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Common Stock</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Common Stock</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">High</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Low</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">High</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Low</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fiscal Year 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">First quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.88</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.66</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Second quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.78</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.88</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Third quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fourth quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.75</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.01</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.61</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.06</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="18"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fiscal Year 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">First quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.39</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Second quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.90</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.92</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.67</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Third quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.77</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.53</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fourth quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.08</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.72</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="18"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fiscal Year 2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">First quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.67</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.73</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.85</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Second quarter (through May&nbsp;29, 2003)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;6, 2003, the last trading day
before we announced the merger, the closing price of Intuitive
Surgical common stock on the Nasdaq National Market was $4.42
per share and the closing price of Computer Motion common stock
on the Nasdaq National Market was $1.65 per share. Based on an
estimated exchange ratio of approximately 0.52&nbsp;shares of
Intuitive Surgical common stock for each outstanding share of
Computer Motion common stock and the closing price of Intuitive
Surgical common stock on March&nbsp;6, 2003, the pro forma
equivalent per share value of Computer Motion common stock on
March&nbsp;6, 2003 was approximately $2.30 per share.
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On May&nbsp;29, 2003, the last trading day prior
to the date of this joint proxy statement/ prospectus, the
closing price of Intuitive Surgical common stock on the Nasdaq
National Market was $8.69, the closing price of Computer Motion
common stock on the Nasdaq National Market was $4.40 and the pro
forma equivalent per share value of Computer Motion common
stock, based on an estimated exchange ratio of approximately
0.52 and the closing price of Intuitive Surgical common stock on
the date of this joint proxy statement/prospectus, was
approximately $4.52 per share.
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The market value of the shares of Intuitive
Surgical common stock that will be issued in exchange for shares
of Computer Motion common stock upon completion of the merger
will not be known at the time Computer Motion stockholders vote
on the proposal to approve and adopt the merger agreement, or at
the time Intuitive Surgical stockholders vote on the proposal to
issue shares of Intuitive Surgical common stock pursuant to the
merger agreement, because the merger will not have been
completed by then.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The above table shows only historical
comparisons. Because the market prices of Intuitive Surgical
common stock and Computer Motion common stock will likely
fluctuate prior to completion of the merger, these comparisons
may not provide meaningful information to Intuitive Surgical
stockholders in determining whether to approve the proposal to
issue shares of Intuitive Surgical common stock pursuant to the
merger agreement or to Computer Motion stockholders in
determining whether to approve the proposal to approve and adopt
the merger agreement. Intuitive Surgical and Computer Motion
stockholders are encouraged to obtain current market quotations
for Intuitive Surgical and Computer Motion common stock and to
review carefully the other information contained or incorporated
by reference in this joint proxy statement/ prospectus in
considering whether to approve these proposals. Please see the
section entitled &#147;Where You Can Find More Information.&#148;
</FONT>

<P align="center"><FONT size="2">22
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "RISK FACTORS" -->
<DIV align="left"><A NAME="028"></A></DIV>

<P align="center">
<B><FONT size="2">RISK FACTORS</FONT></B>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">The merger involves a high degree of risk for
Intuitive Surgical and Computer Motion stockholders. Computer
Motion stockholders will be choosing to invest in Intuitive
Surgical common stock by voting in favor of approval and
adoption of the merger agreement. An investment in shares of
Intuitive Surgical common stock involves a high degree of risk.
In addition to the other information included in this joint
proxy statement/prospectus, including the matters addressed in
&#147;Cautionary Statement Concerning Forward-Looking
Statements,&#148; you should carefully consider the following
risks before deciding whether to vote for approval and adoption
of the merger agreement, in the case of Computer Motion
stockholders, or for the issuance of shares of Intuitive
Surgical common stock pursuant to the merger agreement, in the
case of Intuitive Surgical stockholders. In addition, you should
read and consider the risks associated with the businesses of
Intuitive Surgical and Computer Motion because these risks will
also affect the combined company. These risks can be found in
Intuitive Surgical&#146;s Annual Report on Form&nbsp;10-K/A for
the year ended December&nbsp;31, 2002 and Quarterly Report on
Form&nbsp;10-Q for the three months ended March&nbsp;31, 2003
and in Computer Motion&#146;s Annual Report on Form&nbsp;10-K/A
for the year ended December&nbsp;31, 2002 and Quarterly Report
on Form&nbsp;10-Q for the three months ended March&nbsp;31,
2003. Each of these reports is filed with the SEC and
incorporated by reference into this joint proxy
statement/prospectus. Additional risks and uncertainties not
presently known to Intuitive Surgical and Computer Motion or
that are not currently believed to be important to you also may
adversely affect the merger and the combined company following
the merger.</FONT></I>


<!-- link2 "Risks Related to the Merger" -->
<DIV align="left"><A NAME="029"></A></DIV>

<P align="left">
<B><FONT size="2">Risks Related to the Merger</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">The exchange ratio could decrease in the
    event that the average closing bid price of Computer Motion
    common stock is below $1.86&nbsp;per share during a specified
    period prior to the Computer Motion special
    meeting.</FONT></I></B></TD>
</TR>

</TABLE>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The fraction of a share of Intuitive Surgical
common stock into which each share of Computer Motion common
stock will be converted, or the exchange ratio, will be
determined based on the total number of fully diluted shares
outstanding for Intuitive Surgical and Computer Motion
immediately prior to the effective time of the merger. The
number of Computer Motion&#146;s fully diluted shares will vary
based on the number of shares of Computer Motion common stock
into which Computer Motion&#146;s Series&nbsp;D convertible
preferred stock will be convertible and the number of shares of
Computer Motion common stock which may be issued to pay accrued
dividends on the Series&nbsp;D convertible preferred stock upon
conversion. All shares of Computer Motion Series&nbsp;D
convertible preferred stock will convert into shares of Computer
Motion common stock immediately prior to the effective time of
the merger. Under the terms of the Series&nbsp;D convertible
preferred stock, in the event that the average of the closing
bid prices of Computer Motion common stock for the
20&nbsp;consecutive trading days ending 15&nbsp;consecutive
trading days prior to the Computer Motion special meeting (which
is referred to in this joint proxy statement/ prospectus as the
pricing period) is below $1.86&nbsp;per share, the conversion
ratio for Computer Motion&#146;s preferred stock could increase.
As a result, the exchange ratio with respect to holders of
shares of Computer Motion common stock may decrease. If this
were to occur, the holders of Computer Motion common stock would
receive less than the estimated 0.52&nbsp;shares of Intuitive
Surgical common stock for each share of Computer Motion common
stock they own. This adjustment would have no effect on
stockholders of Intuitive Surgical, who would maintain the same
proportionate ownership interest in the combined company. We do
not know whether such an adjustment will be required. The
anticipated exchange ratio for Computer Motion common stock,
based on the number of fully diluted shares of Intuitive
Surgical and Computer Motion expected to be outstanding on an
assumed closing date of June&nbsp;30, 2003, will range from
approximately 0.48 to 0.52 depending on the average of the
closing bid prices of Computer Motion common stock during the
pricing period. Intuitive Surgical estimates that, as of
June&nbsp;30, 2003, it will have 43.4&nbsp;million shares of
common stock outstanding on a fully diluted basis. Based on the
closing price for Computer Motion&#146;s common stock as of the
date of this joint proxy statement/prospectus, Intuitive
Surgical estimates that, as of June&nbsp;30, 2003, Computer
Motion will have 39.6&nbsp;million shares of common stock
outstanding on a fully diluted basis. The actual fully diluted
</FONT>


<P align="center"><FONT size="2">23
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">capitalization as of June&nbsp;30, 2003 for
Intuitive Surgical and/or Computer Motion may vary from these
estimates as a result of, among other things, the grant or lapse
of employee stock options. After June&nbsp;9, 2003 stockholders
may visit Intuitive Surgical&#146;s website,
<I>www.intuitivesurgical.com</I>, or Computer Motion&#146;s
website, <I>www.computermotion.com</I>, for announcements
regarding the exchange ratio.
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">As a result of the preferred stock
    exchange, Computer Motion common stockholders could receive a
    smaller share of the merger consideration, and Computer Motion
    preferred stockholders could receive a larger share of the
    merger consideration, if the average closing bid price of
    Computer Motion&#146;s common stock is below $1.86 during a
    specified period prior to the Computer Motion special
    meeting.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Computer Motion&#146;s Series&nbsp;C convertible
preferred stock contained provisions that could have restricted
the ability of Computer Motion to enter into the merger
agreement with Intuitive Surgical. As a result, on March&nbsp;6,
2003, all 20&nbsp;holders of Computer Motion&#146;s Series C
convertible preferred stock agreed with Computer Motion to
exchange all of the 8,797 outstanding shares of Series&nbsp;C
convertible preferred stock for a like number of newly-issued
shares of Series&nbsp;D convertible preferred stock. These
holders included Robert W. Duggan, the Chairman and Chief
Executive Officer of Computer Motion, who held 1,091 shares of
preferred stock, Joseph M. DeVivo, the President and Chief
Operating Officer of Computer Motion, who held 100 shares of
preferred stock, and St. Cloud Capital Partners LP, which held
1,071 shares of preferred stock. St. Cloud Capital Partners LP
is affiliated with Robert&nbsp;W. Lautz, who was a director of
Computer Motion at the time the merger agreement was approved,
and who resigned as a director on March&nbsp;21, 2003. Among
other things, the Series&nbsp;D convertible preferred stock
contains revised conversion rights in connection with the merger
whereby the holders of Series&nbsp;D convertible preferred stock
are assured to receive a minimum return of 135% of the original
purchase price of the Series&nbsp;C convertible preferred stock.
As a result of the revised conversion rights, if the average
closing bid price of Computer Motion&#146;s common stock falls
below $1.86 per share during a specified pricing period, then
Computer Motion is obligated to issue additional shares of
Computer Motion common stock upon conversion of the
Series&nbsp;D convertible preferred stock. If this were to
occur, the exchange ratio in the merger would decrease and,
therefore, Computer Motion common stockholders would receive a
lesser number of Intuitive Surgical shares, and Computer Motion
preferred stockholders would receive a greater number of
Intuitive Surgical shares, in the merger. The following table
reflects the changes to the allocation of the merger
consideration between the Computer Motion common stockholders
(including holders of options and warrants to purchase Computer
Motion common stock), on the one hand, and Computer Motion
preferred stockholders, on the other hand, based upon a range of
assumed average Computer Motion closing bid prices during the
pricing period and the number of fully diluted shares of
Intuitive Surgical and Computer Motion expected to be
outstanding on an assumed closing date of June&nbsp;30, 2003.
</FONT>


<CENTER>
<TABLE width="40%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="27%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="26%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="21%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="21%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Allocation of</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average Computer Motion</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Merger Consideration</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Closing Bid Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Common/Preferred)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top" nowrap><FONT size="2">$1.86 and higher</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78%/22%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.85</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78/22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78/22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.75</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">77/23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">77/23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76/24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76/24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">75/25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">75/25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">74/26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">73/27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top" nowrap><FONT size="2">$1.38 and lower</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">73/27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>


<P align="center"><FONT size="2">24
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">The number of shares of Intuitive Surgical
    common stock to be issued to Computer Motion stockholders will
    not be adjusted for possible fluctuations in the value of
    Intuitive Surgical common stock.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a result of Computer Motion stockholders
receiving the merger consideration in the form of shares of
Intuitive Surgical common stock, the value of the merger
consideration to be received by Computer Motion stockholders
will depend on the market price of Intuitive Surgical common
stock at the time the merger is completed. The market price of
Intuitive Surgical common stock at the closing of the merger may
vary from its market prices at the date of this joint proxy
statement/prospectus and at the date of the Intuitive Surgical
and Computer Motion stockholder meetings. These variations may
be caused by a number of factors, including changes in the
businesses, operations or prospects of Intuitive Surgical or
Computer Motion, the timing of the merger and general market and
economic conditions. Neither the exchange ratio nor the merger
consideration will be adjusted for any increase or decrease in
the market price of Intuitive Surgical common stock.
Accordingly, if the market price of Intuitive Surgical common
stock declines prior to the time the merger is completed, the
value of the merger consideration to be received by Computer
Motion stockholders will decline.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, because the merger will be completed
after the stockholder meetings, Intuitive Surgical and Computer
Motion stockholders will not know the exact value of the
Intuitive Surgical common stock that will be issued in
connection with the merger at the time they vote on the merger
proposals. We encourage you to obtain current market quotations
for Intuitive Surgical and Computer Motion shares before you
vote your shares.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">The issuance of shares of Intuitive
    Surgical common stock to Computer Motion stockholders in the
    merger will substantially reduce the percentage interests of
    Intuitive Surgical stockholders.</FONT></I></B></TD>
</TR>

</TABLE>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on the estimated exchange ratio of
approximately 0.52 and the number of shares outstanding as of
the record date, we estimate that, on a pre-reverse split basis,
Intuitive Surgical will issue approximately 15.6&nbsp;million
shares of Intuitive Surgical common stock in the merger and,
upon completion of the merger, current Intuitive Surgical
stockholders will own approximately 70% of the then outstanding
shares of Intuitive Surgical common stock and former Computer
Motion stockholders will own approximately 30% of the then
outstanding shares of Intuitive Surgical common stock.
</FONT>



<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, based on the estimated exchange
ratio of approximately 0.52 and the number of shares outstanding
as of the record date, we estimate that Intuitive Surgical will
reserve approximately 4.8&nbsp;million shares of Intuitive
Surgical common stock for future issuance in connection with
Intuitive Surgical&#146;s assumption of Computer Motion&#146;s
outstanding options and warrants (including out-of-the-money
options and warrants), subject to proportionate reduction in the
event that the proposed reverse stock split is approved by
Intuitive Surgical&#146;s stockholders and implemented by
Intuitive Surgical&#146;s board of directors. The outstanding
warrants of Computer Motion have a range of exercise prices.
Holders of these warrants have the right to an adjustment in the
exercise price of their warrants, and in some cases in the
number of shares issuable upon exercise, if the warrant issuer
sells shares in the future at prices below the exercise prices
of the warrants. These anti-dilution protections may continue to
apply after the merger and thus could result in additional
dilution to stockholders of the combined company if we make
future offerings of capital stock.
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The issuance of shares of Intuitive Surgical
common stock to former Computer Motion stockholders in or after
the merger will cause a significant reduction in the relative
percentage interests of current Intuitive Surgical stockholders
in earnings, voting, liquidation value and book and market
value. The issuance of additional shares of Intuitive Surgical
common stock in future transactions could also reduce the
percentage interests of former Computer Motion stockholders and
Intuitive Surgical stockholders in the combined company. This
dilution could reduce the market price of our common stock.
</FONT>

<P align="center"><FONT size="2">25
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Intuitive Surgical and Computer Motion each
    have incurred substantial losses since inception, expect to
    incur further losses, and may not be able to generate or raise
    sufficient cash to fund their operations, separate or
    combined.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical incurred a net loss of
$18.4&nbsp;million and $2.3&nbsp;million for the year ended 2002
and the quarter ended March&nbsp;31, 2003, respectively, and
Computer Motion incurred a net loss of $21.2&nbsp;million
($32.1&nbsp;million after dividends to preferred stockholders)
and $7.9&nbsp;million ($9.2&nbsp;million after dividends to
preferred stockholders) for the same periods. The extent of our
future losses and the timing of profitability are highly
uncertain, and we may never achieve profitable operations. If
the time required to generate significant revenues and achieve
profitability is longer than anticipated, we may not be able to
continue our operations. In recent periods, Computer Motion has
not generated cash from operations. Both companies expect to
incur additional operating losses in 2003, and both companies
have substantial cash needs. Among other things, total fees and
costs of both companies associated with the merger are currently
projected to be approximately $4.0&nbsp;million. Intuitive
Surgical has agreed to fund up to $7.3&nbsp;million of Computer
Motion&#146;s working capital needs through the effective time
of the merger under the Loan and Security Agreement. Assuming
completion of the merger on or around June&nbsp;30, 2003, we
project that the total combined cash and cash equivalents of the
two companies will be less than $35.0&nbsp;million. We expect
that the capital resources of the combined company, together
with revenue derived from product sales, will be sufficient to
meet the combined company&#146;s working capital needs at least
through 2003. After that, we may need to raise additional funds.
We may not be able to obtain additional financing on favorable
terms, or at all. If we are unable to generate sufficient
capital on acceptable terms to fund our operations, we may not
be able to further develop, enhance or expand the market for our
products and services, and the combined company could fail.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">The combined company may not realize all of
    the anticipated benefits of the merger.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The success of the merger will depend, in part,
on the ability of the combined company to realize the
anticipated synergies, cost savings and growth opportunities
from integrating the business of Computer Motion with the
business of Intuitive Surgical. Intuitive Surgical&#146;s
success in realizing these benefits and the timing of this
realization depend upon the successful, rapid integration of the
operations of Computer Motion with those of Intuitive Surgical.
This integration will be a complex, costly and time-consuming
process and may not succeed as planned. The difficulties of
combining the operations of the companies include, among other
things:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">coordinating and consolidating ongoing and future
    research and development efforts;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">consolidating sales and marketing operations;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">retaining existing customers and attracting new
    customers;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">retaining existing strategic partners and
    attracting new strategic partners;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">retaining key employees;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">consolidating corporate and administrative
    infrastructures;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">integrating and managing the technologies and
    products of the two companies;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">identifying and eliminating redundant and
    underperforming operations and assets;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">using capital assets efficiently to develop the
    business of the combined company;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">minimizing the diversion of management&#146;s
    attention from ongoing business concerns; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">coordinating geographically separate
    organizations.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, Computer Motion&#146;s products
differ in substantial ways from Intuitive Surgical&#146;s
products, and the companies rely on different distributors and
sales channels to sell their products. Both Intuitive Surgical
and Computer Motion are parties to existing distribution
agreements that cannot be terminated prior to the end of their
terms.
</FONT>

<P align="center"><FONT size="2">26
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We do not know whether the combined company will
succeed in addressing these risks or any other problems
encountered in connection with the merger, or whether the
integration of Computer Motion with Intuitive Surgical will
result in the realization of the full benefits anticipated by us
from the merger.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Failure to complete the merger could
    negatively impact both Intuitive Surgical and Computer Motion
    and their stockholders.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the merger is not completed for any reason,
Intuitive Surgical and Computer Motion and their stockholders
will be subject to a number of material risks, including:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the provision in the merger agreement that, under
    specified circumstances, either Intuitive Surgical or Computer
    Motion could be required to pay the other a termination fee and
    expenses of up to an aggregate of $2.5&nbsp;million;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the litigations between the two companies may
    resume;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Computer Motion would be required to repay to
    Intuitive Surgical all amounts loaned under the bridge loan
    facility within 120&nbsp;days following termination of the
    merger agreement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Computer Motion likely would not have sufficient
    cash to repay amounts loaned under the bridge loan, and
    Intuitive Surgical would be at risk that such bridge loan
    amounts would not be repaid unless Computer Motion were able to
    obtain alternative financing;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the market price of Intuitive Surgical common
    stock and Computer Motion common stock may decline to the extent
    that the current market price of such shares reflects a market
    assumption that the merger will be completed;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">costs related to the merger, such as legal and
    accounting fees, must be paid even if the merger is not
    completed;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">benefits that Intuitive Surgical and Computer
    Motion expect to realize from the merger would not be realized;
    and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the diversion of management attention from the
    day-to-day businesses of the companies, and the unavoidable
    disruption to their employees and customers during the period
    before completion of the merger may make it difficult for
    Intuitive Surgical and Computer Motion to regain their financial
    and market positions if the merger does not occur.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, since entering into the merger
agreement on March&nbsp;7, 2003, Computer Motion has made
planning and operations decisions on the basis that the merger
will be completed. These planning and operations decisions may
have been different had Computer Motion not entered into the
merger agreement. For example, if Computer Motion had not
entered into the merger agreement, it may have pursued a debt or
equity financing transaction in order to assure access to
sufficient working capital as an independent company, rather
than rely on the availability of Intuitive Surgical&#146;s cash
assuming the merger will be completed. Moreover, the merger
agreement contains restrictions on Computer Motion&#146;s
incurrence of debt and issuance of equity securities while the
merger is pending. If the merger is not completed, not only will
Computer Motion not have the benefit of Intuitive
Surgical&#146;s cash or have obtained other financing, but
Computer Motion also will have incurred a significant amount of
non-operating expenses associated with the merger that it
otherwise would not have incurred. Consequently, if the merger
is not completed, Computer Motion&#146;s financial condition
likely will be worse than it would have been had it never
entered into the merger agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If Computer Motion and Intuitive Surgical fail to
complete the merger, Computer Motion will face the difficulties
of competing with limited cash resources and will need to
attempt to raise additional debt or equity capital. Such
financing may be available only on terms materially adverse to
Computer Motion, and may not be available at all.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Additionally, if the merger is not completed,
Computer Motion&#146;s stock would no longer be influenced by
the exchange ratio established by the merger agreement, which
could negatively impact Computer Motion&#146;s current market
valuation and stock price.
</FONT>

<P align="center"><FONT size="2">27
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Sales by Intuitive Surgical stockholders or
    former Computer Motion stockholders could cause Intuitive
    Surgical&#146;s common stock price to decline.</FONT></I></B></TD>
</TR>

</TABLE>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The market price of Intuitive Surgical common
stock could decline as a result of sales of a large number of
shares in the market. These sales may also make it more
difficult for the combined company to sell equity securities in
the future at a time and at a price that we deem appropriate to
raise funds through future offerings of common stock. As of
December&nbsp;31, 2002, several entities beneficially owned more
than 5% of the outstanding shares of Intuitive Surgical&#146;s
common stock, including Bear Stearns Asset Management,
Allan&nbsp;G. Lozier, Investor (Guernsey) Limited, Merrill
Lynch&nbsp;&#38; Co., and PaTMarK Company, Inc. Assuming that
the merger is completed, the former stockholders of Computer
Motion will own approximately 30% of the combined company,
subject to the assumptions and adjustments discussed elsewhere
in this joint proxy statement/prospectus. In addition, holders
of warrants to purchase up to 3.7&nbsp;million shares of
Computer Motion common stock outstanding as of the date of this
joint proxy statement/ prospectus will receive Intuitive
Surgical warrants in exchange for their Computer Motion warrants
in connection with the merger. These warrant holders will have
the right to include their shares in resale registration
statements that we will be obligated to file on their behalf.
</FONT>


<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Directors and officers of Computer Motion
    have potential conflicts of interest that may have influenced
    them to recommend the merger.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Some of the directors of Computer Motion who
recommend that you vote in favor of the merger and the officers
of Computer Motion who provided information to Computer
Motion&#146;s board of directors relating to the merger have
employment, indemnification and severance benefit arrangements,
significant ownership interests and rights to acceleration of
stock options that provide them with interests in the merger
that may differ from yours. The receipt of compensation or other
benefits in the merger may have influenced (1)&nbsp;these
directors in making their recommendation that you vote in favor
of the approval and adoption of the merger agreement and
(2)&nbsp;these officers in making recommendations to Computer
Motion&#146;s board of directors relating to the merger. Please
see &#147;The Merger&nbsp;&#151; Interests of Directors and
Executive Officers of Computer Motion in the Merger.&#148;
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Customer, supplier and employee uncertainty
    related to the merger could harm the combined
    company.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical and Computer Motion customers
and suppliers may, in response to the announcement or completion
of the merger, delay purchasing or supply decisions or otherwise
alter existing relationships with Intuitive Surgical or Computer
Motion. Computer Motion believes that its revenues have been
adversely affected by these factors since the announcement of
the merger. Customer and supplier decisions or other adverse
changes in the business relationships of Intuitive Surgical and
Computer Motion with their respective customers and suppliers
could adversely affect the business of the combined company.
Similarly, current and prospective Computer Motion employees may
experience uncertainty about their future as employees of the
combined company until strategies with regard to Computer Motion
are announced or executed. This may adversely affect Intuitive
Surgical&#146;s or Computer Motion&#146;s ability to attract and
retain, and may affect the performance during the transition
period of, key management, sales, marketing and technical
personnel.
</FONT>

<!-- link2 "Risks Related to Computer Motion&#146;s Engagement of Arthur Andersen LLP as its Auditors" -->
<DIV align="left"><A NAME="030"></A></DIV>

<P align="left">
<B><FONT size="2">Risks Related to Computer Motion&#146;s
Engagement of Arthur Andersen LLP as its Auditors</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Computer Motion has not obtained the
    consent of Arthur Andersen LLP to be named in this joint proxy
    statement/prospectus as having audited the Computer Motion
    financial statements. This will limit your ability to assert
    claims against Arthur Andersen.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">After reasonable efforts, Computer Motion has
been unable to obtain the consent of Arthur Andersen LLP to the
incorporation into the registration statement, of which this
joint proxy statement/prospectus forms a part, of their report
with respect to the consolidated financial statements of
Computer Motion for the years ended December&nbsp;31, 2001 and
December&nbsp;31, 2000 which appear in Computer Motion&#146;s
Annual Report on Form&nbsp;10-K for the year ended
December&nbsp;31, 2002. Under these circumstances,
Rule&nbsp;437(a)
</FONT>

<P align="center"><FONT size="2">28
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">under the Securities Act of 1933 permits the
registration statement to be filed without a written consent
from Arthur Andersen. The absence of such consent may limit your
recovery on certain claims. In particular, and without
limitation, you will not be able to assert claims against Arthur
Andersen under Section&nbsp;11 of the Securities Act of 1933 for
any untrue statement of a material fact contained in the
consolidated financial statements of Computer Motion for the
years ended December&nbsp;31, 2001 and December&nbsp;31, 2000
which appear in its Annual Report on Form&nbsp;10-K for the year
ended December&nbsp;31, 2002, or any omission to state a
material fact required to be stated therein.
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">The conviction of Arthur Andersen LLP on
    obstruction of justice charges may adversely affect Arthur
    Andersen&#146;s ability to satisfy claims arising from the
    provision of auditing services to Computer Motion and may impede
    the combined company&#146;s access to capital markets after the
    merger.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Arthur Andersen LLP audited Computer
Motion&#146;s financial statements incorporated by reference in
the registration statement, of which this joint proxy
statement/prospectus forms a part, for the years ended
December&nbsp;31, 2001 and December&nbsp;31, 2000. On
March&nbsp;14, 2002, an indictment was unsealed charging Arthur
Andersen with federal obstruction of justice arising from the
government&#146;s investigation of Enron Corp. On June&nbsp;15,
2002, Arthur Andersen was convicted of these charges. The impact
of this conviction on Arthur Andersen&#146;s financial condition
may adversely affect the ability of Arthur Andersen to satisfy
any claims arising from its provision of auditing services to
Computer Motion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Should Intuitive Surgical seek to access the
public capital markets after completion of the merger, SEC rules
will require Intuitive Surgical to include or incorporate by
reference in any prospectus three years of audited financial
statements. The SEC&#146;s current rules would require Intuitive
Surgical to present audited financial statements for one or more
fiscal years audited by Arthur Andersen and use reasonable
efforts to obtain its consent until the audited financial
statements for the fiscal year ending December&nbsp;31, 2004
become available. If prior to that time the SEC ceases accepting
financial statements audited by Arthur Andersen, it is possible
that the available audited financial statements for the years
ended December&nbsp;31, 2001 and December&nbsp;31, 2000 audited
by Arthur Andersen might not satisfy the SEC&#146;s
requirements. In that case, Intuitive Surgical would be unable
to access the public capital markets unless an independent
accounting firm is able to audit the financial statements
originally audited by Arthur Andersen. Any delay or inability to
access the public capital markets caused by these circumstances
could have a material adverse effect on the combined
company&#146;s business, profitability and growth prospects.
</FONT>

<!-- link2 "Risks Related to Intuitive Surgical and the Combined Company" -->
<DIV align="left"><A NAME="031"></A></DIV>

<P align="left">
<B><FONT size="2">Risks Related to Intuitive Surgical and the
Combined Company</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">As used below, &#147;we&#148; or
&#147;us&#148; refers to Intuitive Surgical or the combined
company after the merger, as the context requires.</FONT></I>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Our future operating results may be below
    securities analysts&#146; or investors&#146; expectations, which
    could cause our stock price to decline.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Because of our limited operating history, we have
limited insight into trends that may emerge in our market and
affect our business. The revenue and income potential of our
market are unproven, and we may be unable to generate
significant revenues. In addition, our costs may be higher than
we, securities analysts or investors expect. If we fail to
generate sufficient revenues or our costs are higher than we
expect, our results of operations will suffer, which in turn
could cause our stock price to decline. Further, future revenue
from sales of our products is difficult to forecast because the
market for new surgical technologies is still evolving. Our
results of operations will depend upon numerous factors,
including:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the progress and results of clinical trials;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">actions relating to regulatory matters;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the extent to which our products gain market
    acceptance;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our timing and ability to develop our
    manufacturing and sales and marketing capabilities;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">29
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">demand for our products;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the progress of surgical training in the use of
    our products;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our ability to develop, introduce and market new
    or enhanced versions of our products on a timely basis;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">product quality problems;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our ability to protect our proprietary rights and
    defend against third party challenges;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our ability to license additional intellectual
    property rights; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">third-party payor reimbursement policies.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our operating results in any particular period
will not be a reliable indication of our future performance. It
is likely that in some future quarters, our operating results
will be below the expectations of securities analysts or
investors. If this occurs, the price of our common stock, and
the value of your investment, will likely decline.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">We experience long and variable sales
    cycles, which could have a negative impact on our results of
    operations for any given quarter.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our <I>da Vinci </I>Surgical System has a lengthy
sales and purchase order cycle because it is a major capital
item and generally requires the approval of senior management at
purchasing institutions. These factors may contribute to
substantial fluctuations in our quarterly operating results,
particularly during the periods in which our sales volume is
low. Because of these fluctuations, it is likely that in some
future quarters our operating results will fall below the
expectations of securities analysts or investors. If that
happens, the market price of our stock would likely decrease.
These fluctuations also mean that you will not be able to rely
upon our operating results in any particular period as an
indication of future performance.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Sales of </FONT></I><FONT size="2">da
    Vinci<I> Surgical Systems to a small number of customers have
    accounted for, and are likely to continue to account for, a
    substantial portion of our revenues, and our revenues could
    decline due to the loss or delay of a single customer
    order.</I></FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A relatively small number of customers account
for a significant portion of our total revenues. In 2000, 2001
and 2002 and the first quarter of 2003, the majority of our
revenues came from the sales of <I>da Vinci </I>Surgical
Systems, which are high revenue dollar items. For the year ended
December&nbsp;31, 2002 and the quarter ended March&nbsp;31,
2003, revenues from sales of <I>da Vinci</I> Surgical Systems
comprised 79% and 72%, respectively, of our total revenues. Due
to the high dollar revenue per system sold, small variations in
system unit sales may cause revenue to vary significantly from
quarter to quarter. For 2001, AB Medica SRL, our Italian
distributor, accounted for 15% of total sales. No customer
accounted for more than 10% of sales during 2000 or 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Due to the high average selling price of the of
<I>da Vinci </I>Surgical System, our failure to add new
customers that make significant purchases of our products could
reduce our future revenues. The loss or delay of individual
orders could have a significant impact on revenues and operating
results.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">If our products do not achieve market
    acceptance, we will not be able to generate the revenue
    necessary to support our business.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our products represent a fundamentally new way of
performing surgery. Achieving physician, patient and third-party
payor acceptance of <I>Intuitive</I> surgery as a preferred
method of performing surgery will be crucial to our success. If
our products fail to achieve market acceptance, hospitals will
not purchase our products and we will not be able to generate
the revenue necessary to support our business. We believe that
physicians&#146; and third-party payors&#146; acceptance of the
benefits of procedures performed using our products will be
essential for acceptance of our products by patients. Physicians
will not recommend the
</FONT>

<P align="center"><FONT size="2">30
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">use of our products unless we can demonstrate
that they produce results comparable or superior to existing
surgical techniques. Even if we can prove the effectiveness of
our products through clinical trials, surgeons may elect not to
use our products for any number of other reasons. For example,
cardiologists may continue to recommend conventional open heart
surgery simply because such surgery is already widely accepted.
In addition, surgeons may be slow to adopt our products because
of the perceived liability risks arising from the use of new
products and the uncertainty of reimbursement from third-party
payors.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We expect that there will be a learning process
involved for surgical teams to become proficient in the use of
our products. Broad use of our products will require training of
surgical teams. Market acceptance could be delayed by the time
required to complete this training. We may not be able to
rapidly train surgical teams in numbers sufficient to generate
adequate demand for our products. We cannot be certain that our
training programs will be cost effective or sufficient to meet
our customers&#146; needs.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">We are involved in intellectual property
    litigation with Brookhill-Wilk&nbsp;1, LLC that may hurt our
    competitive position, may be costly to us and may prevent us
    from selling our products.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On September&nbsp;1, 2000, Brookhill-Wilk&nbsp;1,
LLC, or Wilk, filed a lawsuit against Intuitive Surgical in the
United States District Court for the Southern District of New
York (Case No.&nbsp;00 Civ.&nbsp;6599 (NRB)) alleging that by
making, using, selling or offering for sale our <I>da Vinci
</I>Surgical System, we are infringing U.S. Patent
Nos.&nbsp;5,217,003 and 5,368,015 in willful disregard of
Wilk&#146;s patent rights. These patents concern methods and
devices for &#147;remote&#148; surgery. In March 2001, Wilk
withdrew its assertion of the 015&nbsp;patent against our
company. On November&nbsp;8, 2001, in response to a motion on
one of Intuitive Surgical&#146;s noninfringement defenses, the
District Court granted summary judgment of noninfringement of
the 003 patent in our favor and dismissed Wilk&#146;s complaint
in its entirety without prejudice. Wilk appealed the summary
judgment ruling to the U.S. Court of Appeals for the Federal
Circuit.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On April&nbsp;11, 2003, the Court of Appeals
reversed the District Court&#146;s judgment and remanded the
case for further proceedings. This reversal is based on the
Court of Appeals&#146; determination that the particular claim
limitation at issue should be interpreted differently than as
construed by the District Court. Intuitive Surgical believes
that the Court of Appeals&#146; opinion is not necessarily
inconsistent with the noninfringement defense initially
presented to the District Court and has no bearing on Intuitive
Surgical&#146;s other noninfringement defenses. Intuitive
Surgical has filed a petition for rehearing to request
clarification from the Court of Appeals on the claim
construction adopted. Upon remand, Intuitive Surgical intends to
continue to vigorously defend its rights and, if necessary, is
prepared to continue to dispute the meaning of other portions of
the asserted claim language and to conduct discovery and file
further motions on whether the patent is infringed, valid and/or
enforceable. Intuitive Surgical believes that it will prevail in
the litigation and that it has multiple meritorious defenses to
Wilk&#146;s allegations. However, litigation is unpredictable
and Intuitive Surgical may not prevail. The case remains in its
early stages of discovery in the District Court.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If we lose Wilk&#146;s suit against us, it will
hurt our competitive position, may be costly to us and may
prevent us from selling our products. If we lose the patent
suit, we may need to obtain from Wilk a license to this
technology if we are to continue to market our products that
have been found to infringe Wilk&#146;s patents. This license
could be expensive, which could seriously harm our business. If
Wilk is successful in its suit against us and is unwilling to
grant us a license, we may be required to stop selling our
products that are found to infringe Wilk&#146;s patents unless
we can redesign them so they do not infringe Wilk&#146;s
patents, which we may be unable to do. In addition, we could be
required to pay Wilk damages, including treble damages, which
could be substantial and harm our financial position.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;21, 2001, Wilk filed suit
against Computer Motion alleging that its ZEUS surgical system
infringed upon Wilk&#146;s U.S.&nbsp;Patent Nos.&nbsp;5,217,003
and 5,368,015. Wilk&#146;s complaint sought damages,
attorneys&#146; fees and increased damages alleging willful
patent infringement. On March&nbsp;21, 2001, Computer Motion
served its answer and counterclaim alleging non-infringement of
each patent-in-suit, patent invalidity and unenforceability. On
November&nbsp;8, 2001, the United States District Court for the
Southern District of New York in Wilk&#146;s pending litigation
against Intuitive Surgical issued an order interpreting the
</FONT>

<P align="center"><FONT size="2">31
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">claims of Wilk&#146;s U.S.&nbsp;Patent
No.&nbsp;5,217,003 in a way that Computer Motion believed
excluded current applications of its ZEUS surgical system. In
light of this decision, on November&nbsp;13, 2001, Wilk and
Computer Motion agreed to dismiss the case without prejudice to
refiling upon resolution of the appeal in Wilk&#146;s litigation
against Intuitive Surgical.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This proceeding would be expensive to litigate,
may be protracted and our confidential information may be
compromised. Whether or not we are successful in this lawsuit,
this proceeding could consume substantial amounts of our
financial and managerial resources. At any time Wilk may file
additional claims against our company, or we may file claims
against Wilk, which could increase the risk, expense and
duration of the litigations.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">If we are unable to protect the
    intellectual property contained in our products from use by
    third parties, our ability to compete in the market will be
    harmed.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our commercial success will depend in part on
obtaining patent and other intellectual property protection for
the technologies contained in our products, and on successfully
defending our patents and other intellectual property against
third party challenges.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We will incur substantial costs in obtaining
patents and, if necessary, defending our proprietary rights. The
patent positions of medical device companies, including ours,
can be highly uncertain and involve complex and evolving legal
and factual questions. We do not know whether we will obtain the
patent protection we seek, or that the protection we do obtain
will be found valid and enforceable if challenged. We also do
not know whether we will be able to develop additional
patentable proprietary technologies. If we fail to obtain
adequate protection of our intellectual property, or if any
protection we obtain is reduced or eliminated, others could use
our intellectual property without compensating us, resulting in
harm to our business. We may also determine that it is in our
best interests to voluntarily challenge a third party&#146;s
products or patents in litigation or administrative proceedings,
including patent interferences or reexaminations. In addition,
the laws of certain foreign countries do not protect
intellectual property rights to the same extent as do the laws
of the United States.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Others may assert that our products
    infringe their intellectual property rights, which may cause us
    to engage in costly disputes and, if we are not successful in
    defending ourselves, could also cause us to pay substantial
    damages and prohibit us from selling our products.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are aware of both United States and foreign
patents issued to third parties that relate to computer-assisted
surgery, remote surgery and minimally invasive surgery. Some of
these patents on their face appear broad enough to cover one or
more aspects of our present technology, and may cover aspects of
our future technology. We do not know whether any of these
patents, if challenged, would be held valid, enforceable and
infringed. From time to time, we receive, and likely will
continue to receive, letters from third parties inviting us to
license their patents. We may be sued by, or become involved in
an administrative proceeding with, one or more of these third
parties. We cannot assure you that a court or administrative
body would agree with any arguments or defenses we have
concerning invalidity, unenforceability or noninfringement of
any third-party patent. In addition to the issued patents of
which we are aware, other parties may have filed, and in the
future are likely to file, patent applications covering surgical
products that are similar or identical to ours. We cannot assure
you that any patents issuing from applications filed by a third
party will not cover our products or will not have priority over
our patent applications.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The medical device industry has been
characterized by extensive litigation and administrative
proceedings regarding patents and other intellectual property
rights, and companies have employed such actions to gain a
competitive advantage. If third parties assert infringement or
other intellectual property claims against us as Computer Motion
and Brookhill-Wilk&nbsp;1, LLC have done, our technical and
management personnel will experience a significant diversion of
time and effort and we will incur large expenses defending our
company. If third parties in any patent action are successful,
our patent portfolio may be damaged, we may have to pay
substantial damages, including treble damages, and we may be
</FONT>

<P align="center"><FONT size="2">32
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">required to stop selling our products or obtain a
license which, if available at all, may require us to pay
substantial royalties. We cannot be certain that we will have
the financial resources or the substantive arguments to defend
our patents from infringement or claims of invalidity or
unenforceability, or to defend against allegations of
infringement of third-party patents. In addition, any public
announcements related to litigation or administrative
proceedings initiated by us, or initiated or threatened against
us, could cause our stock price to decline.
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">The rights and measures we rely on to
    protect the intellectual property underlying our products may
    not be adequate to prevent third parties from using our
    technology, which could harm our ability to compete in the
    market.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to patents, we typically rely on a
combination of trade secret, copyright and trademark laws,
nondisclosure agreements and other contractual provisions and
technical security measures to protect our intellectual property
rights. Nevertheless, these measures may not be adequate to
safeguard the technology underlying our products. If they do not
protect our rights adequately, third parties could use our
technology, and our ability to compete in the market would be
reduced. In addition, employees, consultants and others who
participate in developing our products may breach their
agreements with us regarding our intellectual property, and we
may not have adequate remedies for the breach. We also may not
be able to effectively protect our intellectual property rights
in some foreign countries. For a variety of reasons, we may
decide not to file for patent, copyright or trademark protection
outside the United States. We also realize that our trade
secrets may become known through other means not currently
foreseen by us. Notwithstanding our efforts to protect our
intellectual property, our competitors may independently develop
similar or alternative technologies or products that are equal
or superior to our technology and products without infringing
any of our intellectual property rights, or may design around
our proprietary technologies.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Our products rely on licenses from third
    parties, and if we lose access to these technologies, our
    revenues could decline.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We rely on technology that we license from
others, including technology that is integral to our products.
We have entered into license agreements with SRI International,
IBM Corporation, MIT, Olympus Optical Co., Ltd., and Heartport,
Inc., now part of Johnson &#38; Johnson. Any of these agreements
may be terminated for breach. If any of these agreements is
terminated, we may be unable to reacquire the necessary license
on satisfactory terms, or at all. The loss or failure to
maintain these licenses could prevent or delay further
development or commercialization of our products.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Public announcements of litigation events
    may cause our stock price to decline.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the course of our administrative
proceedings and/or lawsuits, there may be public announcements
of the results of hearings, motions, and other interim
proceedings or developments in the litigation. If securities
analysts or investors perceive these results to be negative, it
could have a substantial negative effect on the trading price of
our stock.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Our products are subject to a lengthy and
    uncertain domestic regulatory process. If we do not obtain and
    maintain the necessary domestic regulatory approvals, we will
    not be able to market and sell our products in the United
    States.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our products and operations are subject to
extensive regulation in the United States by the U.S. Food and
Drug Administration, or FDA. The FDA regulates the research,
testing, manufacturing, safety, labeling, storage, record
keeping, promotion, distribution, and production of medical
devices in the United States to ensure that medical products
distributed domestically are safe and effective for their
intended uses. In order for us to market certain products for
use in the United States, we generally must first obtain
clearance from the FDA, pursuant to Section&nbsp;510(k) of the
Federal Food, Drug, and Cosmetic Act, or FFDCA. Clearance under
Section&nbsp;510(k) requires demonstration that a new device is
substantially equivalent to another legally marketed device. If
we modify our products after they receive FDA clearance,
</FONT>

<P align="center"><FONT size="2">33
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">the FDA may require us to submit a separate
510(k) or premarket approval application, or PMA, for the
modified product before we are permitted to market the products
in the U.S. In addition, if we develop products in the future
that are not considered to be substantially equivalent to a
legally marketed device, we will be required to obtain FDA
approval by submitting a PMA.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The FDA may not act favorably or quickly in its
review of our 510(k) or PMA submissions, or we may encounter
significant difficulties and costs in our efforts to obtain FDA
clearance or approval, all of which could delay or preclude sale
of new products in the United States. Furthermore, the FDA may
request additional data or require us to conduct further testing
or compile more data, including clinical data or clinical
studies, in support of a 510(k) submission. The FDA may also,
instead of accepting a 510(k) submission, require us to submit a
PMA, which is typically a much more complex application than a
510(k). To support a PMA, the FDA would likely require that we
conduct one or more clinical studies to demonstrate that the
device is safe and effective, rather than substantially
equivalent to another legally marketed device. We may not be
able to meet the requirements to obtain 510(k) clearance or PMA
approval, or the FDA may not grant any necessary clearances or
approvals. In addition, the FDA may place significant
limitations upon the intended use of our products as a condition
to a 510(k) clearance or PMA approval. Product applications can
also be denied or withdrawn due to failure to comply with
regulatory requirements or the occurrence of unforeseen problems
following clearance or approval. Any delays or failure to obtain
FDA clearance or approvals of new products we develop, any
limitations imposed by the FDA on new product use, or the costs
of obtaining FDA clearance or approvals could have a material
adverse effect on our business, financial condition and results
of operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In order to conduct a clinical investigation
involving human subjects for the purpose of demonstrating the
safety and effectiveness of a device, a company must, among
other things, apply for and obtain Institutional Review Board,
or IRB, approval of the proposed investigation. In addition, if
the clinical study involves a &#147;significant risk&#148; (as
defined by the FDA) to human health, the sponsor of the
investigation must also submit and obtain FDA approval of an
investigational device exemption, or IDE, application. We may
not be able to obtain FDA and/or IRB approval to undertake
clinical trials in the U.S. for any new devices we intend to
market in the United States in the future. If we obtain such
approvals, we may not be able to comply with the IDE and other
regulations governing clinical investigations or the data from
any such trials may not support clearance or approval of the
investigational device. Failure to obtain such approvals or to
comply with such regulations could have a material adverse
effect on our business, financial condition and results of
operations.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Our products are subject to various
    international regulatory processes and approval requirements. If
    we do not obtain and maintain the necessary international
    regulatory approvals, we will not be able to market and sell our
    products in foreign countries.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To be able to market and sell our products in
other countries, we must obtain regulatory approvals and comply
with the regulations of those countries. These regulations,
including the requirements for approvals, and the time required
for regulatory review vary from country to country. Obtaining
and maintaining foreign regulatory approvals are expensive, and
we cannot be certain that we will receive regulatory approvals
in any foreign country in which we plan to market our products.
If we fail to obtain regulatory approval in any foreign country
in which we plan to market our products, our ability to generate
revenue will be harmed.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The European Union requires that manufacturers of
medical products obtain the right to affix the CE&nbsp;mark to
their products before selling them in member countries of the
European Union. The CE mark is an international symbol of
adherence to quality assurance standards and compliance with
applicable European medical device directives. In order to
obtain the right to affix the CE mark to products, a
manufacturer must obtain certification that its processes meet
certain European quality standards. In January 1999, we received
permission to affix the CE mark to our <I>da Vinci </I>Surgical
System and EndoWrist instruments.
</FONT>

<P align="center"><FONT size="2">34
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If we modify existing products or develop new
products in the future, including new instruments, we may need
to apply for permission to affix the CE mark to such products.
In addition, we will be subject to annual regulatory audits in
order to maintain the CE mark permissions we have already
obtained. We cannot be certain that we will be able to obtain
permission to affix the CE mark for new or modified products or
that we will continue to meet the quality and safety standards
required to maintain the permissions we have already received.
If we are unable to maintain permission to affix the CE mark to
our products, we will no longer be able to sell our products in
member countries of the European Union.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">If institutions or surgeons are unable to
    obtain reimbursement from third-party payors for procedures
    using our products, or if reimbursement is insufficient to cover
    the costs of purchasing our products, we may be unable to
    generate sufficient sales to support our business.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Domestic institutions will typically bill the
services performed with our products to various third-party
payors, such as Medicare, Medicaid and other government programs
and private insurance plans. If hospitals do not obtain
sufficient reimbursement from third-party payors for procedures
performed with our products, or if government and private
payors&#146; policies do not permit reimbursement for surgical
procedures performed using our products, we may not be able to
generate the revenues necessary to support our business.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our success in international markets also depends
upon the eligibility of our products for reimbursement through
government-sponsored health care payment systems and third-party
payors. Reimbursement practices vary significantly by country.
Many international markets have government-managed healthcare
systems that control reimbursement for new products and
procedures. Other foreign markets have both private insurance
systems and government-managed systems that control
reimbursement for new products and procedures. Market acceptance
of our products may depend on the availability and level of
reimbursement in any country within a particular time. In
addition, health care cost containment efforts similar to those
we face in the United States are prevalent in many of the other
countries in which we intend to sell our products and these
efforts are expected to continue.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Because our markets are highly competitive,
    customers may choose to purchase our competitors&#146; products
    or may not accept Intuitive surgery, which would result in
    reduced revenue and loss of market share.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Intuitive </FONT></I><FONT size="2">surgery is
a new technology that must compete with established minimally
invasive surgery and open surgery. These procedures are widely
accepted in the medical community and in many cases have a long
history of use. We also face competition from several companies
that are developing new approaches and products for the
minimally invasive surgery market. In addition, we presently
face increasing competition from companies who are developing
robotic and computer-assisted surgical systems. Our revenues may
be reduced or eliminated if our competitors develop and market
products that are more effective or less expensive than our
products. If we are unable to compete successfully, our revenues
will suffer. We may not be able to maintain or improve our
competitive position against current or potential competitors,
especially those with greater resources. In many cases, the
medical conditions that can be treated using our products can
also be treated by drugs or other medical devices and
procedures. Many of these alternative treatments are also widely
accepted in the medical community and have a long history of
use. In addition, technological advances could make such
treatments more effective or less expensive than using our
products, which could render our products obsolete or
unmarketable. We cannot be certain that physicians will use our
products to replace or supplement established treatments or that
our products will be competitive with current or future
technologies.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">If defects are discovered in our products,
    we may incur additional unforeseen costs, hospitals may not
    purchase our products and our reputation may
    suffer.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our products incorporate mechanical parts and
computer software, either of which can contain errors or
failures, especially when first introduced. In addition, new
products or enhancements may contain undetected errors or
performance problems that, despite testing, are discovered only
after commercial
</FONT>

<P align="center"><FONT size="2">35
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">shipment. Because our products are designed to be
used to perform complex surgical procedures, we expect that our
customers will have an increased sensitivity to such defects. We
cannot assure you that our products will not experience errors
or performance problems in the future. If we experience flaws or
performance problems, any of the following could occur:
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">delays in product shipments;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">loss of revenue;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">delay in market acceptance;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">diversion of our resources;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">damage to our reputation;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">increased service or warranty costs; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">product liability claims.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">We have limited experience in manufacturing
    our products and may encounter manufacturing problems or delays
    that could result in lost revenue.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have manufactured a limited number of our
products for sale to customers. We may be unable to establish or
maintain reliable, high-volume manufacturing capacity. Even if
this capacity can be established and maintained, the cost of
doing so may increase the cost of our products and reduce our
ability to compete. We may encounter difficulties in scaling up
production of our products, including:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">problems involving production yields;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">quality control and assurance;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">component supply shortages;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">shortages of qualified personnel; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">compliance with state, federal and foreign
    regulations.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Manufacturing our products is a complex process.
If demand for our products exceeds our manufacturing capacity,
we could develop a substantial backlog of customer orders. If we
are unable to establish and maintain larger-scale manufacturing
capabilities, our ability to generate revenues will be limited
and our reputation in the marketplace would be damaged.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">If our manufacturing facilities do not
    continue to meet federal, state or European manufacturing
    standards, we may be required to temporarily cease all or part
    of our manufacturing operations, which would result in product
    delivery delays and lost revenue.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our manufacturing facilities are subject to
periodic inspection by regulatory authorities and our operations
will continue to be regulated by the FDA for compliance with
Good Manufacturing Practice requirements contained in the
FDA&#146;s Quality System Regulations, or QSR. We are also
required to comply with International Organization for
Standardization, or ISO, quality system standards in order to
produce products for sale in Europe. If we fail to continue to
comply with Good Manufacturing Practice requirements or ISO
standards, we may be required to cease all or part of our
operations until we comply with these regulations. We are
currently in compliance with ISO standards. The FDA inspected
our Mountain View and Sunnyvale facilities in March 2000 and
December 2002, respectively. The Good Manufacturing Practice
issues raised by the FDA during the inspections either were
satisfactorily resolved with the FDA, or we believe can be
resolved by us to the FDA&#146;s satisfaction, although we
cannot assure you that we will be able to do so. We continue to
be subject to FDA inspections at any time. Maintaining such
compliance is difficult and costly. We cannot be certain that
our facilities will be found to comply with Good Manufacturing
Practice requirements or ISO standards in future inspections and
audits by regulatory authorities.
</FONT>

<P align="center"><FONT size="2">36
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The state of California also requires that we
maintain a license to manufacture medical devices. Our
facilities and manufacturing processes were inspected in
February 1998. In March 1998, we passed the inspection and
received a device manufacturing license from the California
Department of Health Services. In March 2002, our facilities and
manufacturing processes in our Sunnyvale facility were
re-inspected by the Food and Drug Branch, or FDB, and we were
issued an updated device manufacturing license for our Sunnyvale
facility. We are subject to periodic inspections by the
California Department of Health Services and if we are unable to
maintain this license following any future inspections, we will
be unable to manufacture or ship any products.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Our reliance on sole and single source
    suppliers could harm our ability to meet demand for our products
    in a timely manner or within budget.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Some of the components necessary for the assembly
of our products are currently provided to us by sole source
suppliers or single source suppliers. We purchase components
through purchase orders rather than long-term supply agreements
and generally do not maintain large volumes of inventory. The
disruption or termination of the supply of components could
cause a significant increase in the costs of these components,
which could affect our profitability. A disruption or
termination in the supply of components could also result in our
inability to meet demand for our products, which could harm our
ability to generate revenues, lead to customer dissatisfaction
and damage our reputation. Furthermore, if we are required to
change the manufacturer of a key component of our products, we
may be required to verify that the new manufacturer maintains
facilities and procedures that comply with quality standards and
with all applicable regulations and guidelines. The delays
associated with the verification of a new manufacturer could
delay our ability to manufacture our products in a timely manner
or within budget.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">The use of our products could result in
    product liability claims that could be expensive, divert
    management&#146;s attention and harm our business.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our business exposes us to significant risks of
product liability claims. The medical device industry has
historically been litigious, and we face financial exposure to
product liability claims if the use of our products were to
cause injury or death. There is also the possibility that
defects in the design or manufacture of our products might
necessitate a product recall. Although we maintain product
liability insurance, the coverage limits of these policies may
not be adequate to cover future claims. Particularly as sales of
our products increase, we may be unable to maintain product
liability insurance in the future at satisfactory rates or in
adequate amounts. A product liability claim, regardless of its
merit or eventual outcome, could result in significant legal
defense costs. A product liability claim or any product recalls
could also harm our reputation or result in a decline in
revenues.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Our growth will place a significant strain
    on our management systems and resources and, if we fail to
    manage our growth, our ability to market, sell and develop our
    products may be harmed.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In order to complete clinical trials, scale-up
manufacturing, expand marketing and distribution capabilities
and develop future products, we must expand our operations. We
expect that future expansion will occur particularly in the
areas of sales and marketing, manufacturing and research and
development. This expansion will likely result in new and
increased responsibilities for management personnel and place
significant strain upon our management, operating and financial
systems and resources. We sell our products primarily through
direct sales, and we currently have a relatively small sales
organization. Our products require a complex marketing and sales
effort targeted at several levels within a prospective
customer&#146;s organization. We face significant challenges and
risks in building and managing our sales team, including
managing geographically dispersed sales efforts and adequately
training our sales people in the use and benefits of our
products. To accommodate our growth and compete effectively, we
will be required to improve our information systems, create
additional procedures and controls and expand, train, motivate
and manage our work force. Our future success will depend in
part on the ability of current and future management personnel
to operate effectively, both independently and as a group. We
cannot be certain that our personnel, systems, procedures and
controls will be adequate to support our future operations.
</FONT>

<P align="center"><FONT size="2">37
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">If we lose our key personnel or are unable
    to attract and retain additional personnel, our ability to
    compete will be harmed.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are highly dependent on the principal members
of our management and scientific staff. Our product development
plans depend in part on our ability to attract and retain
engineers with experience in mechanics, software and optics.
Attracting and retaining qualified personnel will be critical to
our success, and competition for qualified personnel is intense.
We may not be able to attract and retain personnel on acceptable
terms given the competition for such personnel among technology
and healthcare companies, and universities. The loss of any of
these persons or our inability to attract and retain qualified
personnel could harm our business and our ability to compete.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">International sales of our products account
    for a significant portion of our revenues, which exposes us to
    risks inherent in international operations. Our growth may be
    limited if we are unable to successfully manage our
    international activities.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our business currently depends in large part on
our activities in Europe, and a component of our growth strategy
is to expand our presence into additional foreign markets. Sales
to markets outside of the United States accounted for
approximately 18%, 34% and 36% of our sales for 2002, 2001, and
2000, respectively. We will be subject to a number of challenges
that specifically relate to our international business
activities. These challenges include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">failure of local laws to provide the same degree
    of protection against infringement of our intellectual property;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">protectionist laws and business practices that
    favor local competitors, which could slow our growth in
    international markets;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the risks associated with foreign currency
    exchange rate fluctuation;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the expense of establishing facilities and
    operations in new foreign markets; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">building an organization capable of supporting
    geographically dispersed operations.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Currently, a majority of our international sales
are denominated in U.S. dollars. As a result, an increase in the
value of the U.S. dollar relative to foreign currencies could
make our products less competitive in international markets. If
we are unable to meet and overcome these challenges, our
international operations may not be successful, which would
limit the growth of our business.
</FONT>

<P align="center"><FONT size="2">38
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS" -->
<DIV align="left"><A NAME="032"></A></DIV>

<P align="center">
<B><FONT size="2">CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING STATEMENTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This joint proxy statement/prospectus and the
documents incorporated by reference in this joint proxy
statement/prospectus contain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995 with respect to the financial condition, results of
operations, business strategies, operating efficiencies or
synergies, competitive positions, growth opportunities for
existing products, plans and objectives of management, and
markets for the Intuitive Surgical common stock and Computer
Motion common stock and other matters. Statements in this joint
proxy statement/prospectus and the documents incorporated by
reference that are not historical facts are hereby identified as
&#147;forward-looking statements&#148; for the purpose of the
safe harbor provided by Section&nbsp;21E of the Securities
Exchange Act of 1934, as amended, and Section&nbsp;27A of the
Securities Act of 1933, as amended. These forward-looking
statements, including, without limitation, those relating to the
future business prospects, revenues and income, in each case
relating to Intuitive Surgical and Computer Motion, wherever
they occur in this joint proxy statement/prospectus or the
documents incorporated herein by reference, are necessarily
estimates reflecting the best judgment of the respective
management of Intuitive Surgical and Computer Motion and involve
a number of risks and uncertainties that could cause actual
results to differ materially from those suggested by the
forward-looking statements. These forward-looking statements
should, therefore, be considered in light of various important
factors, including those set forth in and incorporated by
reference in this joint proxy statement/prospectus. In addition
to the risk factors identified elsewhere, important factors that
could cause actual results to differ materially from estimates
or projections contained in the forward-looking statements
include but are not limited to the following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Intuitive Surgical&#146;s ability to integrate
    the operations of Computer Motion with those of Intuitive
    Surgical, including the respective research and development
    operations, personnel, product lines and technology, and the
    rate at which the operations of the two companies are integrated;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Intuitive Surgical&#146;s ability to achieve
    anticipated synergies and cost savings of the merger and the
    rate at which these anticipated synergies and costs savings are
    achieved;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">expenditures involved completing the merger and
    integrating the operations of Computer Motion with those of
    Intuitive Surgical, which may require Intuitive Surgical to
    raise additional financing;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">potential delay in the completion the merger as a
    result of governmental or regulatory review, which delay will
    create additional pressure on the limited financial resources of
    both companies;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">potential undisclosed or undiscovered
    obligations, commitments or other liabilities of Computer Motion
    that may become obligations of Intuitive Surgical upon
    completion of the merger;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">timing and success of product development and
    market acceptance of developed products;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">regulatory approvals, clearances and restrictions;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">guidelines and recommendations in the health care
    and patient communities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">intellectual property positions and litigation;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">competition in the medical device industry and in
    the specific market of surgery in which Intuitive Surgical and
    Computer Motion operate; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">unanticipated manufacturing disruptions, delays
    in regulatory approvals of new manufacturing facilities or the
    inability to meet demand for products.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Words such as &#147;estimate,&#148;
&#147;project,&#148; &#147;plan,&#148; &#147;intend,&#148;
&#147;expect,&#148; &#147;anticipate,&#148; &#147;believe&#148;
and similar expressions are intended to identify forward-looking
statements. These forward-looking statements are found at
various places throughout this joint proxy statement/prospectus
and the documents incorporated by reference. You are cautioned
not to place undue reliance on these forward-looking statements,
which speak only as of the date of this joint proxy
statement/prospectus, or in the case of documents incorporated
by reference, as of the date of those documents. Neither
Intuitive Surgical nor Computer Motion undertakes any obligation
to publicly update or release any revisions to these
forward-looking statements to reflect events or circumstances
after the date of this joint proxy statement/prospectus or to
reflect the occurrence of unanticipated events, except as
required by law.
</FONT>

<P align="center"><FONT size="2">39
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "THE MERGER" -->
<DIV align="left"><A NAME="033"></A></DIV>

<P align="center">
<B><FONT size="2">THE MERGER</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">The following is a description of the material
aspects of the merger. While we believe that the following
description covers the material terms of the merger, this
description may not contain all of the information that is
important to you. We encourage you to read carefully this entire
joint proxy statement/prospectus, including the merger agreement
attached to this joint proxy statement/prospectus as Annex A,
for a more complete understanding of the merger.</FONT></I>

<!-- link2 "General" -->
<DIV align="left"><A NAME="034"></A></DIV>

<P align="left">
<B><FONT size="2">General</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each of the Intuitive Surgical board of directors
and the Computer Motion board of directors has approved the
merger agreement pursuant to which the businesses of Intuitive
Surgical and Computer Motion will be combined in a
stock-for-stock merger. At the effective time of the merger,
Intuitive Merger Corporation (formerly Iron Acquisition
Corporation), a newly-formed subsidiary of Intuitive Surgical,
will merge with and into Computer Motion, with Computer Motion
surviving the merger and continuing as a wholly owned subsidiary
of Intuitive Surgical. Upon completion of the merger, Computer
Motion common stockholders will be entitled to receive a
fraction of a share of Intuitive Surgical common stock for each
share of Computer Motion common stock owned as of the effective
time of the merger. The fraction of a share of Intuitive
Surgical common stock to be issued with respect to each share of
Computer Motion common stock will be determined by a formula
described below. Based on the capitalization of Intuitive
Surgical and Computer Motion and the market price of Computer
Motion common stock as of the date of this joint proxy
statement/prospectus and assuming that the merger is completed
on June&nbsp;30, 2003, we estimate that the exchange ratio will
be approximately 0.52. The exchange ratio will be adjusted
proportionately in the event that the proposed reverse split of
Intuitive Surgical&#146;s common stock is approved by Intuitive
Surgical&#146;s stockholders and implemented by Intuitive
Surgical&#146;s board of directors. Stockholders of Intuitive
Surgical will continue to own their existing shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The final exchange ratio will be calculated based
on the total number of fully diluted shares outstanding for
Intuitive Surgical and Computer Motion (including
out-of-the-money options and warrants for both companies)
immediately prior to the effective time of the merger. The
number of Computer Motion&#146;s fully diluted shares will vary
based on the number of shares of Computer Motion common stock
into which Computer Motion&#146;s Series&nbsp;D convertible
preferred stock will be convertible and the number of shares of
Computer Motion common stock which may be issued to pay accrued
dividends on the Series&nbsp;D convertible preferred stock upon
conversion. The Series&nbsp;D convertible preferred stock was
issued in accordance with an Exchange Agreement, dated
March&nbsp;6, 2003, among Computer Motion and the holders of
Computer Motion&#146;s Series&nbsp;C convertible preferred stock
and pursuant to which all outstanding shares of Series&nbsp;C
convertible preferred stock were exchanged for a like number of
newly issued shares of Series&nbsp;D convertible preferred
stock. All shares of Computer Motion Series&nbsp;D convertible
preferred stock will convert into shares of Computer Motion
common stock immediately prior to the effective time of the
merger. In the event that the average closing bid price of
Computer Motion&#146;s common stock for the 20&nbsp;consecutive
trading days ending 15&nbsp;consecutive trading days prior to
the Computer Motion special meeting is below $1.86 per share,
the conversion ratio for Computer Motion&#146;s Series&nbsp;D
convertible preferred stock could increase. In addition, the
Series&nbsp;D convertible preferred stock accrues dividends,
which will be paid by issuance of additional shares of Computer
Motion common stock upon conversion, except for one stockholder
to which cash dividends must be paid. As a result, the exchange
ratio in the merger may decrease.
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On April&nbsp;30, 2003, Computer Motion issued
162,681 shares of common stock at a price per share of $2.80 in
payment of accrued and unpaid dividends on the Series&nbsp;C
convertible preferred stock through March&nbsp;6, 2003, the date
the Series&nbsp;C convertible preferred stock was exchanged for
newly issued Series&nbsp;D convertible preferred stock, as well
as accrued and unpaid dividends on the Series&nbsp;D convertible
preferred stock through April&nbsp;30, 2003. Assuming that the
merger is completed on June&nbsp;30, 2003, dividends in the
approximate amount of $138,520, which will accrue from
May&nbsp;1, 2003 to the conversion of the Series&nbsp;D
convertible preferred stock immediately prior to the effective
time of the merger, will be paid by the issuance of additional
shares of Computer Motion common stock. For this purpose, if the
average closing
</FONT>


<P align="center"><FONT size="2">40
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>


<DIV align="left">
<FONT size="2">bid price of Computer Motion common stock during
the pricing period exceeds $1.86, then the dividends would be
payable based on a price per share valued at 90% of its
volume-weighted average price as reported by Bloomberg for the
20&nbsp;trading days ending June&nbsp;29, 2003. If the average
closing bid price of the Computer Motion common stock for the
20&nbsp;trading days ending June&nbsp;9, 2003, is less than
$1.86, then the dividends would be payable based on a price per
share equal to such average closing price, but in no event less
than $1.38 per share. In addition, assuming that the merger is
completed on June&nbsp;30, 2003, cash dividends in the
approximate amount of $29,988, which will accrue from
May&nbsp;1, 2003 to the conversion of the Series&nbsp;D
convertible preferred stock immediately prior to the effective
time of the merger, will be paid in cash to St.&nbsp;Cloud
Capital Partners&nbsp;LP.
</FONT>
</DIV>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The total number of shares of Intuitive Surgical
common stock to be issued or reserved for issuance to holders of
equity securities of Computer Motion will not change, unless
there is a change in the fully diluted capitalization of
Intuitive Surgical. Any change in the conversion ratio of the
Series&nbsp;D convertible preferred stock will merely change the
proportional allocation between Computer Motion&#146;s common
and preferred stockholders. Assuming the merger closes on
June&nbsp;30, 2003, Computer Motion common stockholders will
receive a minimum of 0.479 (or, in the event the reverse stock
split is completed prior to the merger, 0.239) shares of
Intuitive Surgical common stock for each share of Computer
Motion common stock. After June&nbsp;9, 2003, stockholders may
visit Intuitive Surgical&#146;s website,
<I>www.intuitivesurgical.com,</I> or Computer Motion&#146;s
website, <I>www.computermotion.com,</I> for announcements
regarding the exchange ratio. Computer Motion stockholders will
receive cash in lieu of any fractional shares of Intuitive
Surgical common stock. Please see &#147;The Merger
Agreement&nbsp;&#151; The Merger Consideration and Conversion of
Securities.&#148;
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on the estimated exchange ratio of
approximately 0.52 and the number of shares outstanding as of
the record date, we estimate that, on a pre-reverse split basis,
Intuitive Surgical will issue approximately 15.6&nbsp;million
shares of Intuitive Surgical common stock in the merger and
reserve approximately 4.8&nbsp;million shares of Intuitive
Surgical common stock for future issuance in connection with
Intuitive Surgical&#146;s assumption of Computer Motion&#146;s
outstanding options and warrants (including out-of-the-money
options and warrants).
</FONT>



<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At the effective time of the merger, each
outstanding option and warrant to purchase Computer Motion stock
will cease to represent a right to acquire shares of Computer
Motion stock and will be converted into an option or warrant to
purchase a number of shares of Intuitive Surgical common stock
equal to the number of shares of Computer Motion common stock
subject to such option or warrant multiplied by the exchange
ratio, at a per share exercise price equal to the existing per
share exercise price of such option or warrant divided by the
exchange ratio. In connection with the exchange of the
Series&nbsp;C convertible preferred stock for newly issued
shares of Series&nbsp;D convertible preferred stock, on
March&nbsp;6, 2003, Computer Motion agreed to reduce the
exercise prices of certain outstanding warrants originally
issued to the investors in Computer Motion&#146;s Series&nbsp;C
convertible preferred stock financing in order to induce such
investors to agree to the preferred stock exchange. The exercise
price of one series of warrants to acquire 1,759,345&nbsp;shares
of Computer Motion common stock was reduced from $1.78 to $1.50
per share, and on another series to acquire 1,759,345 shares,
from $2.17 to $1.50 per share. The aggregate benefit to the
holders of such warrants was approximately $1,671,377. The
repricing of the warrants does not affect the merger exchange
ratio. Please see &#147;The Merger&nbsp;&#151; Background of the
Merger&#148; and &#147;The Merger&nbsp;&#151; Interests of
Directors and Executive Officers of Computer Motion&nbsp;&#151;
Preferred Stock Exchange.&#148;
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the proposed merger, Intuitive
Surgical and Computer Motion have obtained an immediate stay
through August&nbsp;31, 2003 of all proceedings in the pending
litigation proceedings between the companies. As part of the
stays, the courts have ceased all further activity in the cases
during the period of stays and will not issue any opinions or
orders on issues already submitted for decision. The stays may
be terminated before, or extended beyond, August&nbsp;31, 2003
under specified circumstances. In the event the merger is
completed, Intuitive Surgical and Computer Motion will request
dismissal with prejudice of the pending litigations.
</FONT>

<P align="center"><FONT size="2">41
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link2 "Background of the Merger" -->
<DIV align="left"><A NAME="035"></A></DIV>

<P align="left">
<B><FONT size="2">Background of the Merger</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Discussions between Intuitive Surgical and
Computer Motion regarding patents and related legal issues
occurred sporadically from 2000 through 2003. Since May 2000 and
March 2001, Intuitive Surgical and Computer Motion have been
engaged in patent infringement disputes in U.S. federal district
courts in California and Delaware, respectively, in addition to
various patent administrative proceedings in the patent offices
of the United States and Europe.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The pending patent litigations between the
companies have created uncertainty for each company&#146;s
products, development efforts and intellectual property, and
also have been a significant drain on each company&#146;s
financial and managerial resources. Accordingly, the companies
preliminarily discussed the topic of a potential merger on
several occasions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In February 2001, Mr.&nbsp;Lonnie Smith,
Intuitive Surgical&#146;s President and Chief Executive Officer,
and Dr.&nbsp;Fred Moll, one of the founders of Intuitive
Surgical and a member of its board of directors, met with
Mr.&nbsp;Duggan, Computer Motion&#146;s Chairman and Chief
Executive Officer, and Dr.&nbsp;Yulun Wang, Computer
Motion&#146;s founder and then Chief Technical Officer, in Santa
Barbara, California to discuss how the ongoing legal disputes
could be resolved. After presentations by the litigation
attorneys from both sides regarding the merits of various legal
positions, the parties discussed several possible business
solutions. While the concept of a potential merger was raised,
it was not pursued further at that time.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In early 2002, Mr.&nbsp;Smith and Dr.&nbsp;Moll
again met with Mr.&nbsp;Duggan and Dr.&nbsp;Wang in Northern
California to discuss various issues related to the ongoing
legal disputes between the companies. While the meeting focused
on the potential advantages of combining the companies into a
single entity, these discussions were not pursued further due to
a lack of agreement as to financial and operational aspects of
the potential combined company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the next several months, Dr.&nbsp;Wang and
Mr.&nbsp;Smith had various discussions regarding whether
Intuitive Surgical would be willing to make an offer to merge
the companies, which offer Dr.&nbsp;Wang could then take to the
board of directors of Computer Motion. These discussions led to
an exploration of how the ongoing legal disputes could be
settled without a merger.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In May 2002, the U.S. Patent and Trademark Office
ruled in favor of Intuitive Surgical regarding one of Computer
Motion&#146;s AESOP patents and one of its ZEUS patents. In June
2002, Computer Motion brought a new litigation in California
federal court challenging the Patent and Trademark Office
rulings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In late May 2002, the Delaware federal court
granted summary judgment that Computer Motion&#146;s AESOP and
ZEUS products literally infringed IBM Corporation&#146;s and
Intuitive Surgical&#146;s U.S.&nbsp;patent rights on
voice-controlled surgical robots and that Computer Motion&#146;s
HERMES product infringed to the extent that it interacts with
the AESOP and ZEUS products. In August 2002, after a multi-day
trial, a Delaware jury returned a verdict in favor of Intuitive
Surgical, finding that Computer Motion had failed to prove that
the patent was invalid and awarding Intuitive Surgical
$4.4&nbsp;million for damage caused by Computer Motion&#146;s
sales of infringing products. The parties then focused on
Computer Motion&#146;s &#147;prosecution laches&#148; defense,
which the judge in the Delaware case was to decide.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the week of September&nbsp;20, 2002 at the
European Association of CardioThoracic Surgeons conference,
executives from Intuitive Surgical and Computer Motion held
various discussions regarding the ongoing legal patent disputes
in the U.S. District courts, including a discussion of the
significant costs of litigation and the associated drain on
management resources.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">After further discussions during the week of
September&nbsp;29, 2002 concerning possible ways of settling the
ongoing patent disputes, both companies agreed to a meeting the
following week. On October&nbsp;4, 2002, Susan Barnes, Intuitive
Surgical&#146;s Chief Financial Officer, Aleks Cukic, Intuitive
Surgical&#146;s Vice President of Business Development and
Strategic Planning, and David Shaw, Intuitive Surgical&#146;s
Vice President of Legal Affairs, met in Santa Barbara with
Darrin Uecker, Computer Motion&#146;s Chief Technical Officer,
Joseph DeVivo, Computer Motion&#146;s President and Chief
Operating Officer, and Ken Stein, Computer
</FONT>

<P align="center"><FONT size="2">42
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">Motion&#146;s Director of Intellectual Property,
to discuss a possible settlement of the pending patent
litigations. During this meeting, the possibility of combining
the two companies was again raised.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the ensuing weeks, further telephonic
discussions took place between senior executives of the
companies. During these discussions, the parties further
evaluated the possibility of forming a new company by merging
Intuitive Surgical and Computer Motion and determined that
another meeting would be in order.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On October&nbsp;21, 2002, Ms.&nbsp;Barnes and
Messrs.&nbsp;Cukic and Shaw of Intuitive Surgical again met with
Messrs.&nbsp;Uecker and DeVivo of Computer Motion in Sunnyvale,
California. During the meeting, the participants concluded that
since discussions to settle the litigation through a
cross-license were proving of limited value, a more productive
discussion would focus on merging the two companies. The
remainder of the meeting was spent discussing the possibility of
a merger at a broad conceptual level. The representatives of
Intuitive Surgical indicated that Intuitive Surgical would
consider making a good-faith offer, and the representatives of
Computer Motion indicated that, in the event such an offer was
received, Computer Motion would review the offer and determine
whether the offer was in the best interests of Computer
Motion&#146;s stockholders. At that time, Computer Motion was in
the final stages of negotiating a new round of financing, so the
parties agreed to move quickly.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">After the October&nbsp;21, 2002 meeting,
executives of Intuitive Surgical and Computer Motion had various
telephonic discussions regarding the possible structure and
timeline for a potential offer and the status of Computer
Motion&#146;s pending financing transaction. During this same
time period, Mr. Smith had several telephonic conversations with
various members of Intuitive Surgical&#146;s board of directors
to keep them apprised, both formally and informally, of
Intuitive Surgical&#146;s discussions with Computer Motion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On October&nbsp;24, 2002, Intuitive Surgical sent
to Computer Motion a preliminary, non-binding proposal to merge
the two companies. The proposal contemplated a combination of
the two companies to form a single surviving entity, 85% of the
equity of which would be owned by the existing equity holders of
Intuitive Surgical and 15% of the equity of which would be owned
by the existing equity holders of Computer Motion. After
reviewing the proposal, the board of directors of Computer
Motion determined that (1)&nbsp;the valuation of Computer Motion
contemplated by the proposal was inappropriately low,
(2)&nbsp;Computer Motion would not accept the terms of the
proposal and (3)&nbsp;Computer Motion would not make a counter
proposal. Instead, the board of directors of Computer Motion
determined to complete the pending financing to further fund
Computer Motion&#146;s operations. Despite the failure to reach
an agreement at this time, the companies agreed that the effort
had been productive and might help in any future attempts to
merge the two companies.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Following the failed merger discussions,
settlement discussions again focused on paths to settle the
ongoing patent disputes, especially in light of the anticipated
rulings of the federal court in Delaware on Computer
Motion&#146;s defense of &#147;prosecution laches.&#148; The
parties began to discuss potential elements of a settlement
proposal, including identification of specific patents and
related intellectual property that might be included in a
potential cross-license agreement. During early December 2002, a
conference call between representatives of the companies,
including their respective internal patent counsel, was held to
discuss the parameters of a potential settlement in greater
detail. On December&nbsp;10, 2002, the Delaware court ruled in
Intuitive Surgical&#146;s favor on Computer Motion&#146;s
prosecution laches defense. Upon learning of such ruling, the
parties were unable to reach agreement as to the terms of a
mutually acceptable settlement and the detailed settlement
discussions terminated on December&nbsp;11, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the week of January&nbsp;27, 2003,
executives of Intuitive Surgical and Computer Motion met at the
Society of Thoracic Surgeons conference in San Diego, California
and again discussed the topic of settling the ongoing patent
disputes, including by means of a merger of the companies.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">After a series of further discussions in early
February 2003 in which the status of the various litigations and
the companies&#146; respective views with regard to the merits
and risks of those litigations were addressed, the companies
once again began to discuss the possibility of a merger. On
February&nbsp;7, 2003, executives of Intuitive Surgical and
Computer Motion agreed that the concept of a combination of the
two
</FONT>

<P align="center"><FONT size="2">43
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">companies merited further consideration.
Immediately following that discussion, the parties were informed
that the federal court in California granted partial summary
judgment in favor of Computer Motion on its allegations that
Intuitive Surgical&#146;s <I>da Vinci </I>surgical system
literally infringes a claim of Computer Motion&#146;s
809&nbsp;patent.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the next several weeks, representatives of
the companies had various conversations. These conversations
were based on a mutual view that ongoing patent litigation
threatened the potential growth of a promising portion of the
surgical industry, and that finite financial and management
resources were better utilized in advancing the products and
technologies of the companies. The companies agreed that a
settlement of the pending litigations was in the best interests
of the companies, and that a merger transaction between the
companies could be an effective method of reaching such a
settlement.
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;13, 2003, Computer Motion
secured a $2.3&nbsp;million short-term bridge loan enabling it
to obtain a bond related to the Delaware case.
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;18 and again on
February&nbsp;25, 2003, outside litigation counsel for both
companies discussed the possibility of a merger, including the
timing of a potential merger transaction vis-&#224;-vis the
trial in federal court in California.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;25, 2003, Messrs.&nbsp;Smith and
Duggan spoke by telephone and arranged for a team from Computer
Motion to meet face-to-face with a team from Intuitive Surgical
to attempt to negotiate a mutually acceptable merger transaction
that would end the pending patent litigations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the evening of February&nbsp;25, 2003,
Mr.&nbsp;Duggan met with Messrs.&nbsp;DeVivo and Uecker to
prepare for the meeting with Intuitive Surgical and to discuss
the parameters of an acceptable merger transaction.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;26, 2003, Messrs.&nbsp;DeVivo
and Uecker of Computer Motion met with Ms.&nbsp;Barnes and
Messrs.&nbsp;Smith and Cukic of Intuitive Surgical in Sunnyvale,
California. At the meeting, the parties discussed the economic
terms of a proposed merger transaction. Following discussions
among representatives of Computer Motion, including
Messrs.&nbsp;DeVivo, Uecker and Duggan, and further discussions
among representatives of Intuitive Surgical, the parties
negotiated a term sheet that contemplated a merger of Intuitive
Surgical and Computer Motion, subject to negotiation of a
definitive agreement and approval by the board of directors of
each company. The term sheet contemplated that Computer
Motion&#146;s equity holders would own 32% and Intuitive
Surgical&#146;s equity holders would own 68% of the combined
company on a fully diluted basis. The term sheet also
contemplated that the combined company would have a nine-member
board of directors, including Mr.&nbsp;Duggan and another
director to be designated by Computer Motion. The term sheet
also contemplated that, upon execution of a definitive merger
agreement, the parties would jointly request stays of all
pending litigations and patent administrative actions between
the parties. In addition, the term sheet contemplated that a
$10.0&nbsp;million termination fee would be payable by any party
that failed to perform its obligations under the definitive
merger agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the week of February&nbsp;24, 2003,
Mr.&nbsp;Duggan updated the board of directors of Computer
Motion on the status of discussions with Intuitive Surgical
regarding the proposed merger transaction and the Board directed
Mr.&nbsp;Duggan and management of Computer Motion to continue to
move forward with discussions on behalf of Computer Motion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Both before and after the February&nbsp;26, 2003
meeting, Mr.&nbsp;Smith had a series of conversations with
various members of Intuitive Surgical&#146;s board of directors
to apprise them of events and to seek their views regarding the
ongoing discussions with Computer Motion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;27, 2003, representatives of
Intuitive Surgical and Computer Motion and their respective
outside counsel met in Los Angeles, California. At this meeting,
the parties discussed the terms of the proposed transaction, as
well as the process and timing related to execution of a
definitive merger agreement. In addition, the parties commenced
detailed business and legal due diligence on one another.
</FONT>

<P align="center"><FONT size="2">44
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">Intuitive Surgical engaged Bear,
Stearns&nbsp;&#38; Co. Inc. on February&nbsp;27, 2003 to render
a fairness opinion in connection with the proposed transaction.
</FONT>
</DIV>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;28, 2003, outside counsel to
Intuitive Surgical presented to Computer Motion and its counsel
drafts of an exclusivity agreement and a mutual confidentiality
agreement. The exclusivity agreement, which was executed by the
parties on March&nbsp;3, 2003, provided that, until
March&nbsp;6, 2003, Computer Motion would not solicit any
proposals to acquire Computer Motion and would not negotiate
with any other party or enter into any agreement with any other
party relating to an acquisition proposal. Intuitive Surgical
also agreed to a reciprocal provision with respect to proposals
to acquire Intuitive Surgical. The parties executed the mutual
confidentiality agreement on March&nbsp;3, 2003.
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the period from February&nbsp;28, 2003 to
March&nbsp;4, 2003, the parties and their respective outside
counsel and Bear Stearns and H.C.&nbsp;Wainwright met in Newport
Beach, California to prepare and negotiate drafts of a
definitive merger agreement and to continue business and legal
due diligence. On February&nbsp;28, 2003, counsel to Intuitive
Surgical presented to Computer Motion and its counsel a draft of
the merger agreement, which provided for a reverse triangular
merger of Computer Motion with a newly-formed subsidiary of
Intuitive Surgical. The draft merger agreement also contemplated
that the directors and executive officers of each party would
execute stockholder support agreements pursuant to which they
would agree to vote their shares of stock in favor of the
transactions contemplated by the merger agreement. Thereafter,
the parties engaged in extensive negotiations regarding the
various terms of the merger agreement, including the following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">In calculating the exchange ratio in accordance
    with the 68%/32% split of fully diluted shares referenced in the
    term sheet, the parties discussed whether certain warrants to
    acquire Computer Motion stock, which warrants had an exercise
    price that was significantly higher than the current market
    price and which were due to expire within one year, should be
    included in the fully diluted calculation. The parties agreed to
    exclude these warrants from the calculation of the exchange
    ratio.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The parties discussed the $10&nbsp;million
    reciprocal termination fee referenced in the term sheet. Based
    on discussion among counsel regarding the enforceability of a
    termination fee of that size in the context of the proposed
    transaction, the parties agreed that the reciprocal termination
    fee would be limited to $2.5&nbsp;million.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Computer Motion objected to having a material
    adverse change condition in the merger agreement, principally
    because of uncertainty as to the effect that the announcement of
    the proposed transaction might have on Computer Motion&#146;s
    revenues, as customers might delay purchasing decisions pending
    completion of the merger and clarification of the combined
    company&#146;s business strategy going forward. Intuitive
    Surgical agreed to limit the material adverse change condition
    to the following three events: (1)&nbsp;any material impairment
    of Computer Motion&#146;s intellectual property; (2)&nbsp;any
    material change in Computer Motion&#146;s outstanding
    capitalization; and (3)&nbsp;the incurrence by Computer Motion
    of any material liabilities or obligations prior to the closing
    of the merger.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Due to Computer Motion&#146;s financial position
    and concern that announcement of the proposed transaction could
    adversely impact its revenues prior to the closing, Computer
    Motion requested that Intuitive Surgical provide it with a
    working capital line of credit of up to $7.3&nbsp;million to
    meet its liquidity needs prior to the closing. The parties
    negotiated a loan agreement and security agreement in parallel
    with negotiation of the merger agreement.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Due to Computer Motion&#146;s concern that if it
    were to agree to a stay of all pending litigations, it would
    lose its ability to move rapidly to trial in California if the
    merger were not completed and the stay in the District Court in
    California ultimately were lifted, the parties agreed to a
    procedure to request a trial date within a specified period of
    time after the termination date of the stay, if the merger
    agreement were to terminate.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The parties and their respective counsel reviewed
    the terms of Computer Motion&#146;s outstanding Series&nbsp;C
    Preferred Stock in light of the proposed transaction. The
    parties determined that it would be desirable to have the
    holders of the Series&nbsp;C Preferred Stock exchange their
    shares into a newly-
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">45
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <FONT size="2">created class of Series&nbsp;D convertible
    preferred stock. The Series&nbsp;D convertible preferred stock
    would (1)&nbsp;provide that the holders would be entitled to
    convert their shares at a conversion ratio that generally would
    return a minimum of 135% of their original purchase price, based
    on the trading prices of Computer Motion&#146;s common stock
    prior to completion of the merger and (2)&nbsp;provide that the
    holders would vote together with the holders of common stock in
    the vote by Computer Motion&#146;s stockholders on the proposed
    merger. From March 3 to March&nbsp;6, 2003, Computer Motion
    negotiated the terms of the exchange with the holders of its
    Series&nbsp;C Preferred Stock. In connection with this
    negotiation, the holders of Computer Motion&#146;s Series&nbsp;C
    convertible preferred stock requested, and Computer Motion
    agreed, to reduce the exercise price on outstanding warrants
    held by the preferred stockholders to acquire Computer Motion
    common stock. The exercise price on one series of warrants to
    acquire 1,759,345 shares was reduced from $1.78 to $1.50 per
    share, and on another series to acquire 1,759,345 shares, from
    $2.17 to $1.50 per share. On March&nbsp;6, Computer Motion
    executed exchange agreements with the holders of all outstanding
    shares of Series&nbsp;C Preferred Stock.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;5, 2003, Intuitive Surgical&#146;s
board of directors held a special meeting in Sunnyvale,
California at which senior management of Intuitive Surgical and
Bear Stearns and outside legal counsel of Intuitive Surgical
were present in person or by telephone. Senior management of
Intuitive Surgical made presentations on the background and
strategic rationale for the proposed transaction.
Representatives of Latham &#38; Watkins LLP, Intuitive
Surgical&#146;s outside legal counsel, reviewed with Intuitive
Surgical&#146;s board of directors the terms of the proposed
agreements and the fiduciary duties of Intuitive Surgical&#146;s
board of directors. Representatives of Bear Stearns made a
presentation on the financial aspects of the proposed
transaction, and confirmed that Bear Stearns was prepared, upon
request of the board and subject to finalization of the terms of
the transaction, to render an opinion as to the fairness of the
transaction from a financial point of view to Intuitive
Surgical. After discussion among the members of the board and
the financial and legal advisors, Intuitive Surgical&#146;s
board of directors authorized management to continue
negotiations of the definitive agreements with Computer Motion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Also on the evening of March&nbsp;5, 2003,
Computer Motion&#146;s board of directors held a special
telephonic meeting to consider the proposed merger with
Intuitive Surgical and related matters, including the approval
of the terms of the Series&nbsp;D convertible preferred stock to
be exchanged for the outstanding Series&nbsp;C convertible
preferred stock as contemplated by the merger negotiation. The
fact that Messrs.&nbsp;Duggan and DeVivo and an affiliate of
Mr.&nbsp;Lautz were holders of Series&nbsp;C convertible
preferred stock to be exchanged for the proposed Series&nbsp;D
convertible preferred stock was known to the board of directors
and, for the record and as a reminder, Mr.&nbsp;Duggan disclosed
this fact to the board at this meeting. Additionally, at this
meeting, Mr.&nbsp;Duggan reported to Computer Motion&#146;s
board of directors on the strategic and business rationale for,
as well as the risks of, this transaction. Representatives of
Stradling Yocca Carlson &#38; Rauth reviewed with the directors
their fiduciary duties. Representatives of H.C.&nbsp;Wainwright
&#38; Co., Inc. presented its financial analysis of the
transaction and discussed the analysis with the board.
H.C.&nbsp;Wainwright then delivered its oral opinion that the
exchange ratio in the merger, which may range from approximately
0.48 to 0.52, was fair to Computer Motion&#146;s stockholders
from a financial point of view and indicated that it would
render a written opinion to that effect. Representatives of
Stradling Yocca Carlson &#38; Rauth then reported to the board
on the material terms and conditions of the merger agreement and
the related transaction documents. Following these
presentations, Computer Motion&#146;s board of directors asked
various questions and discussed the potential merger, the terms
of the Series&nbsp;D convertible preferred stock, the repricing
of the warrants held by the preferred stockholders and the
effect of the exchange of the Series&nbsp;C convertible
preferred stock and the repricing of the warrants on the holders
of common stock of Computer Motion. Following substantial
discussion, Computer Motion&#146;s board of directors, by
unanimous vote (with Messrs.&nbsp;Duggan, DeVivo and Lautz
abstaining solely with respect to the approval of the terms of
the Series&nbsp;D convertible preferred stock and the repricing
of the warrants), determined that the merger was fair to,
advisable and in the best interests of Computer Motion and its
stockholders, and subject to the resolution of open issues
primarily related to the working capital line of credit,
approved the merger, the merger agreement and related matters,
including the terms of the Series&nbsp;D convertible preferred
stock and the repricing of the warrants.
</FONT>

<P align="center"><FONT size="2">46
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the morning on March&nbsp;6, 2003,
Intuitive Surgical&#146;s board of directors held a telephonic
meeting attended by Intuitive Surgical&#146;s senior management,
outside legal counsel and Bear Stearns. Senior management of
Intuitive Surgical and Intuitive Surgical&#146;s legal counsel
and Bear Stearns made presentations on the status of
negotiations of the terms of the proposed merger agreement.
After discussion among the members of the board, outside legal
counsel and the Bear Stearns, Intuitive Surgical&#146;s board of
directors authorized management to continue negotiations of the
definitive agreements with Computer Motion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the evening of March&nbsp;6, 2003,
Intuitive Surgical&#146;s board of directors held a telephonic
meeting attended by Intuitive Surgical&#146;s senior management,
Bear Stearns and outside legal counsel. Senior management of
Intuitive Surgical and Intuitive Surgical&#146;s legal counsel
and Bear Stearns made presentations on the outcome of final
negotiations of the terms of the proposed merger agreement. A
representative of Bear Stearns delivered Bear Stearns&#146; oral
opinion, subsequently confirmed in writing, that the exchange
ratio is fair, from a financial point of view, to Intuitive
Surgical. Following further discussion, the Intuitive Surgical
board of directors, by the unanimous vote of those directors,
(1)&nbsp;determined that the terms of the merger agreement and
the transactions contemplated by the merger agreement were
advisable, fair to and in the best interests of Intuitive
Surgical and its stockholders, (2)&nbsp;adopted resolutions
approving the merger agreement and the transactions contemplated
by the merger agreement and recommending that Intuitive
Surgical&#146;s stockholders approve the issuance of shares
pursuant to the merger agreement and (3)&nbsp;approved the
transactions contemplated by the merger agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Also during the evening of March&nbsp;6, 2003,
Computer Motion&#146;s board of directors held a special
meeting. At the meeting, representatives of Stradling Yocca
Carlson&nbsp;&#38; Rauth summarized for Computer Motion&#146;s
board of directors the modifications to the form of merger
agreement that was approved at the March&nbsp;5, 2003 meeting as
well as modifications to the loan agreement regarding the
working capital line of credit. At the same meeting, the
Computer Motion board of directors unanimously approved the
merger, the merger agreement and related transaction documents,
and unanimously recommended that Computer Motion&#146;s
stockholders approve and adopt the merger agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;7, 2003, prior to the opening of
the Nasdaq National Market, Intuitive Surgical, Intuitive Merger
Corporation and Computer Motion executed the merger agreement
and the loan agreement, and the stockholder support agreements
were executed by the applicable parties. Also on March&nbsp;7,
2003, Intuitive Surgical and Computer Motion issued a joint
press release announcing the execution of the merger agreement.
</FONT>

<P align="left">
<B><FONT size="2">Reasons for the Merger&nbsp;&#151; Intuitive
Surgical</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical&#146;s board of directors has
unanimously approved the merger agreement and the transactions
contemplated by the merger agreement, and recommends that the
Intuitive Surgical stockholders vote <B>&#147;FOR&#148;</B> the
proposal to issue Intuitive Surgical common stock pursuant to
the merger agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In reaching its decision to approve the merger
agreement, Intuitive Surgical&#146;s board of directors
considered a variety of factors, a number of which are
summarized below:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Complementary Nature of
    Technologies.</FONT></I><FONT size="2"> Intuitive
    Surgical&#146;s board of directors believes there is a strategic
    fit between the technologies of Intuitive Surgical and Computer
    Motion, including the core competencies, intellectual property
    rights and focus areas of the companies. Intuitive
    Surgical&#146;s board of directors believes that the merger will
    permit all major products and technologies currently provided by
    both companies to survive to the benefit of the surgical
    community for the foreseeable future. Intuitive Surgical&#146;s
    board of directors further believes that the merger will permit
    the companies to focus the talent and energy of the combined
    organization on developing and growing the application of
    robotics to minimally invasive surgery bringing significant
    benefits to patients, surgeons and medical centers throughout
    the world. Intuitive Surgical&#146;s board of directors believes
    that the combined company has the opportunity to enhance its
    future prospects through the
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">47
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <FONT size="2">development of products utilizing the
    technologies and expertise of Intuitive Surgical and Computer
    Motion.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Dismissal of Patent
    Litigations.</FONT></I><FONT size="2"> Intuitive Surgical&#146;s
    board of directors weighed the benefits of the dismissal of the
    pending patent litigations with Computer Motion upon completion
    of the merger. Intuitive Surgical&#146;s board of directors
    considered the diversion of management&#146;s attention and
    significant expense associated with ongoing patent litigation.
    Intuitive Surgical&#146;s board of directors also weighed the
    possibility that the litigation could result in Intuitive
    Surgical being found to infringe the intellectual property
    rights of Computer Motion, which could be ruled to be valid and
    enforceable and could result in Intuitive Surgical being
    required either to obtain a license from, and pay damages and/or
    royalties to, Computer Motion or, in the event the parties were
    unable to agree on the terms of a license, to redesign or
    withdraw from the market one or more of Intuitive
    Surgical&#146;s products or product configurations.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Synergies.</FONT></I><FONT size="2"> Intuitive
    Surgical&#146;s board of directors evaluated the potential
    synergies of a combination of Intuitive Surgical with Computer
    Motion, including the complementary nature of the businesses of
    Intuitive Surgical and Computer Motion and the opportunity for
    significant cost savings. Intuitive Surgical&#146;s board of
    directors noted that, although no assurances can be given that
    any particular level of synergies will be achieved, Intuitive
    Surgical&#146;s management anticipates annual pre-tax cost
    savings of up to approximately $18&nbsp;million commencing in
    late 2003 as a result of the merger, of which approximately
    $10&nbsp;million will result from a substantial reduction in
    headcount. Intuitive Surgical&#146;s ability to achieve these
    goals is subject to economic conditions and unanticipated
    changes in business conditions, and therefore there can be no
    assurance that these results will be achieved. Please see
    &#147;Cautionary Statement Regarding Forward-Looking
    Statements.&#148;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Terms of Merger Agreement.
    </FONT></I><FONT size="2">Intuitive Surgical&#146;s board of
    directors reviewed the terms of the merger agreement, including
    the following:
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="4%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the merger agreement provides certainty as to the
    maximum number of shares of Intuitive Surgical common stock to
    be issued to Computer Motion equity holders and the percentage
    of the total shares of Intuitive Surgical common stock that
    Computer Motion equity holders will own after the merger on a
    fully diluted basis. Intuitive Surgical&#146;s board of
    directors also considered the premium that the merger
    consideration implied;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the provisions of the merger agreement that limit
    the ability of Computer Motion to solicit other acquisition
    offers. Intuitive Surgical&#146;s board of directors also
    considered the provisions that require the payment of up to a
    $2.5&nbsp;million termination fee by Intuitive Surgical or
    Computer Motion if the merger agreement is terminated due to
    specified reasons. Intuitive Surgical&#146;s board of directors
    believes that these provisions were reasonable under the
    circumstances; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the conditions to completion of the merger, in
    particular the likelihood of obtaining the necessary stockholder
    approvals, the absence of any material regulatory conditions and
    the likelihood that the merger would be completed.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Fairness Opinion of Bear, Stearns &#38; Co.
    Inc. </FONT></I><FONT size="2">Intuitive Surgical&#146;s board
    of directors reviewed the presentation of Bear Stearns and the
    opinion of Bear Stearns as of March&nbsp;6, 2003, as to the
    fairness, from a financial point of view, to Intuitive Surgical
    of the exchange ratio in the merger. Please see &#147;Opinion of
    Bear Stearns to Intuitive Surgical.&#148;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Purchase Accounting Treatment.
    </FONT></I><FONT size="2">Intuitive Surgical&#146;s board of
    directors considered the expected purchase accounting treatment
    of the merger as an acquisition of Computer Motion by Intuitive
    Surgical.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">48
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, Intuitive Surgical&#146;s board of
directors also identified and considered a variety of
potentially negative factors in its deliberations concerning the
merger, a number of which are summarized below:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the risk that the potential benefits sought in
    the merger might not be fully realized;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the risk that the costs of completing the merger
    and integrating the operations of the two companies could
    deplete Intuitive Surgical&#146;s cash resources prior to the
    combined company becoming profitable;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the possibility that the merger might not be
    completed, or that completion might be unduly delayed;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the effect of public announcement of the merger
    on Intuitive Surgical&#146;s stock price;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the potential impact of the merger on the
    strategic partners, employees and customers of the companies, as
    well as any rights that might accrue under contractual
    arrangements if the merger were deemed to constitute a
    &#147;change in control&#148;;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the fact that the Intuitive Surgical common stock
    to be issued in the merger will represent an estimated 28% of
    the then outstanding common stock of the combined company, and
    thus existing Intuitive Surgical stockholders would experience
    significant dilution in their percentage ownership of Intuitive
    Surgical as a result of the merger;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the risk that management&#146;s efforts to
    integrate the two companies will disrupt Intuitive
    Surgical&#146;s operations;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the risk that Computer Motion may be unable to
    repay up to $7.3&nbsp;million to be loaned by Intuitive Surgical
    to Computer Motion under the Loan and Security Agreement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the substantial costs incurred in connection with
    the merger, including costs of integrating the businesses of the
    two companies, severance costs associated with reduction in
    personnel, and transaction expenses arising from the merger;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the risk that despite the efforts of the combined
    company, key management and employees might not remain employed
    by the combined company; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">various other risks associated with the merger
    and the businesses of Intuitive Surgical, Computer Motion and
    the combined company described in the section entitled
    &#147;Risk Factors&#148; and in the documents incorporated by
    reference in this joint proxy statement/prospectus.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical&#146;s board of directors
concluded, however, that overall, the potentially negative
factors associated with the merger were outweighed by the
potential benefits of the merger.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The above discussion of the factors considered by
Intuitive Surgical&#146;s board of directors is not intended to
be exhaustive, but is believed to set forth the principal
factors considered by Intuitive Surgical&#146;s board of
directors. Intuitive Surgical&#146;s board of directors
collectively reached the unanimous conclusion to approve the
merger agreement in light of the various factors described above
and other factors that each member of Intuitive Surgical&#146;s
board of directors felt were appropriate. In view of the wide
variety of factors considered by Intuitive Surgical&#146;s board
of directors in connection with its evaluation of the merger and
the complexity of these matters, Intuitive Surgical&#146;s board
of directors did not consider it practical, and did not attempt,
to quantify, rank or otherwise assign relative weights to the
specific factors it considered in reaching its decision. Rather,
Intuitive Surgical&#146;s board of directors made its
recommendation based on the totality of information presented to
and the investigation conducted by it. In considering the
factors discussed above, individual directors may have given
different weights to different factors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">INTUITIVE SURGICAL&#146;S BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT INTUITIVE SURGICAL STOCKHOLDERS VOTE
<B>&#147;FOR&#148; </B>THE PROPOSAL TO ISSUE INTUITIVE SURGICAL
COMMON STOCK PURSUANT TO THE MERGER AGREEMENT.
</FONT>

<P align="center"><FONT size="2">49
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link2 "Reasons for the Merger -- Computer Motion" -->
<DIV align="left"><A NAME="036"></A></DIV>

<P align="left">
<B><FONT size="2">Reasons for the Merger&nbsp;&#151; Computer
Motion</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In reaching its decision to approve the merger,
Computer Motion&#146;s board of directors identified and
considered a number of potential benefits for Computer Motion
and its stockholders that supported the board&#146;s decision to
approve the merger. These potential benefits include the
following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the fact that the combination of the product
    lines, sales channels and financial resources of Intuitive
    Surgical and Computer Motion should result in a combined company
    that is even more capable of applying surgical robotics to
    traditional surgery, with the ability to offer surgeons and
    hospitals the best possible products and support to serve their
    patients&#146; needs in minimally invasive surgery;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the elimination of costly, long-term patent
    disputes between Computer Motion and Intuitive Surgical, the
    elimination of the potential withdrawal from the market of one
    or more of Computer Motion&#146;s products or product
    configurations, and the ability of the combined company to
    initiate technology sharing and focus its efforts on developing
    and growing the application of robotics to minimally invasive
    surgery;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a stronger balance sheet and cash position
    resulting from a combination of the two companies;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the fact that the merger would combine two
    experienced and respected management teams, resulting in a
    combined management team that is stronger than the management
    teams of each of the individual companies;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the synergies and cost-saving opportunities that
    should result from the combination of the two organizations, as
    redundant operations are eliminated or streamlined;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the larger public float of Intuitive Surgical
    common stock and the corresponding likelihood of increased
    trading liquidity for Computer Motion stockholders as a result
    of the merger; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the expectation that the merger will be tax-free
    to Computer Motion&#146;s stockholders who receive Intuitive
    Surgical common stock in exchange for their Computer Motion
    common stock in the merger (except to the extent they receive
    cash in lieu of fractional shares).
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to the potential benefits accruing to
Computer Motion and its stockholders from the merger, Computer
Motion&#146;s board of directors also considered a number of
other factors in approving the merger, including the following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Computer Motion management&#146;s view of the
    business and prospects of Computer Motion and Intuitive Surgical
    as stand-alone companies and as a combined company;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">historical and recent financial data concerning
    Computer Motion&#146;s and Intuitive Surgical&#146;s respective
    businesses and financial performances;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">historical market prices, trading volume and
    projected earnings of Computer Motion common stock and Intuitive
    Surgical common stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the financial analyses and presentation of H.C.
    Wainwright&nbsp;&#38; Co., Inc. delivered to Computer
    Motion&#146;s board of directors on March&nbsp;5, 2003, as well
    as the opinion of H.C. Wainwright, dated March&nbsp;5, 2003,
    that, as of such date, the exchange ratio of shares of Intuitive
    Surgical common stock to be received in the merger by Computer
    Motion stockholders for each share of Computer Motion common
    stock was fair, from a financial point of view, to the Computer
    Motion stockholders. A copy of H.C. Wainwright&#146;s opinion is
    attached as Annex E to this joint proxy statement/prospectus;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the contractual terms of the merger agreement and
    related transaction documents, including the number of shares of
    Intuitive Surgical common stock being offered to Computer Motion
    stockholders, representations and warranties of the parties,
    conditions to closing and termination fee provisions; and
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">50
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the interests that certain Computer Motion
    officers and directors may have in the merger, in addition to
    their interest as Computer Motion stockholders, including the
    fact that certain directors and officers held shares of
    Series&nbsp;C convertible preferred stock, which were exchanged
    for a like number of shares of newly issued shares of
    Series&nbsp;D convertible preferred stock in contemplation of
    the merger, and such officers and directors hold warrants to
    purchase shares of Computer Motion common stock and the exercise
    prices of such warrants were reduced in connection with the
    preferred stock exchange. Please see &#147;The
    Merger&nbsp;&#151; Interests of Directors and Executive Officers
    of Computer Motion in the Merger&#148; and &#147;The
    Merger&nbsp;&#151; Background of the Merger.&#148;
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In reaching its decision to approve the merger,
Computer Motion&#146;s board of directors also identified and
considered a number of potentially negative factors that could
result from the merger, including the following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the risk that integration of the businesses,
    products and personnel of the two companies will not be
    successfully implemented and may require a significant amount of
    management time and resources;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the risk that the potential synergies and
    cost-saving opportunities identified by Computer Motion and
    Intuitive Surgical will not be fully realized;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the risk that the merger may not be well received
    by customers, business partners and employees of the two
    companies;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the negative impact on the projected revenue of
    the combined company resulting from areas of business overlap;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the risk that Computer Motion may be required to
    repay up to $7.3&nbsp;million borrowed under the Loan and
    Security Agreement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the risk that, in the event that the average
    price per share of Computer Motion common stock during a period
    of 20&nbsp;consecutive trading days ending 15&nbsp;consecutive
    trading days prior to the Computer Motion special meeting is
    below $1.86, the conversion ratio for Computer Motion&#146;s
    Series&nbsp;D convertible preferred stock could increase and, as
    a result, the exchange ratio in the merger could decrease;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the significant cost that will be incurred in
    seeking to complete the merger; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the risk that the merger may not be completed.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Computer Motion&#146;s board of directors
evaluated all of the factors described above in light of their
knowledge of Computer Motion&#146;s business, financial
condition and prospects, Intuitive Surgical&#146;s business,
financial condition and prospects, and the broad surgical
markets in which surgical robotics must compete. In view of the
variety of factors considered by Computer Motion&#146;s board of
directors in its evaluation of the merger, Computer
Motion&#146;s board of directors did not find it practicable to,
and did not, quantify or otherwise assign relative weight to the
specific factors considered in reaching its decision. In
addition, individual members of Computer Motion&#146;s board of
directors may have given different weight to different factors.
The list of factors described in this section as having been
considered by Computer Motion&#146;s board of directors is not
intended to be exhaustive but is believed to include all of the
material factors considered by Computer Motion&#146;s board of
directors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">After considering all of the information and
factors described in this section, Computer Motion&#146;s board
of directors unanimously approved the merger, the merger
agreement and the other transactions contemplated by the merger
agreement. Computer Motion&#146;s board of directors believes
that the merger is consistent with, and in furtherance of,
Computer Motion&#146;s long term business strategy and that the
merger is fair to, advisable and in the best interests of
Computer Motion and its stockholders. Computer Motion&#146;s
board of directors has unanimously recommended that the Computer
Motion stockholders vote &#147;FOR&#148; the proposal to approve
and adopt the merger agreement.</FONT></B>

<P align="center"><FONT size="2">51
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link2 "Opinion of Bear Stearns to Intuitive Surgical" -->
<DIV align="left"><A NAME="037"></A></DIV>

<P align="left">
<B><FONT size="2">Opinion of Bear Stearns to Intuitive
Surgical</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Bear, Stearns&nbsp;&#38; Co. Inc., or Bear
Stearns, has rendered an opinion to Intuitive Surgical&#146;s
board of directors as to the fairness, from a financial point of
view, to Intuitive Surgical of the exchange ratio in the merger.
The full text of the written opinion, dated as of March&nbsp;6,
2003, is attached to this joint proxy statement/prospectus as
<I>Annex&nbsp;D</I>. We encourage you to read the opinion
carefully and in its entirety to understand the procedures
followed, assumptions made, matters considered and limitations
on the review undertaken by Bear Stearns in providing their
opinion. <B>The opinion of Bear Stearns is directed to Intuitive
Surgical&#146;s board of directors and does not constitute a
recommendation to any stockholder as to how that stockholder
should vote on, or take any other action with respect to, the
merger.</B>
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Opinion of Bear Stearns</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At a meeting of Intuitive Surgical&#146;s board
of directors held on March&nbsp;6, 2003, at which Intuitive
Surgical&#146;s board of directors considered the merger and
approved the merger agreement and the merger, Bear Stearns
rendered its oral opinion (which was subsequently confirmed in a
written opinion, dated as of March&nbsp;6, 2003) that, as of
such date and based upon and subject to the matters reviewed
with Intuitive Surgical&#146;s board of directors, the exchange
ratio in the merger was fair to Intuitive Surgical from a
financial point of view.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The description of the Bear Stearns opinion set
forth herein is qualified in its entirety by reference to the
full text of the Bear Stearns opinion set forth in Annex&nbsp;D.
The Bear Stearns opinion is subject to the assumptions and
conditions contained herein and is necessarily based on
economic, market and other conditions, and the information made
available to Bear Stearns, including information with respect to
the number and related terms of options, warrants, shares of
preferred stock and shares of common stock currently outstanding
for both Intuitive Surgical and Computer Motion, as of the date
of the Bear Stearns opinion. Bear Stearns assumes no
responsibility for updating or revising its opinion based on
circumstances or events occurring after the date of the Bear
Stearns opinion. The Bear Stearns opinion did not address
Intuitive Surgical&#146;s underlying decision to pursue the
merger, the relative merits of the merger as compared to any
alternative business strategies that might have existed for
Intuitive Surgical or the effects of any other transaction in
which Intuitive Surgical might have engaged.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the course of performing their review and
analyses for rendering their opinion, Bear Stearns:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed a draft of the merger agreement in
    substantially final form;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed Computer Motion&#146;s Annual Reports to
    Stockholders and Annual Reports on Form&nbsp;10-K for the years
    ended December&nbsp;31, 1999 through 2001, its Quarterly Reports
    on Form&nbsp;10-Q for the periods ended March&nbsp;31, 2002,
    June&nbsp;30, 2002 and September&nbsp;30, 2002, its preliminary
    results for the quarter and year ended December&nbsp;31, 2002
    and its Reports on Form&nbsp;8-K for the three years ended
    March&nbsp;6, 2003;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed certain operating and financial
    information relating to Computer Motion&#146;s business and
    prospects, including projections for the three years ending
    December&nbsp;31, 2005, all as prepared and provided to Bear
    Stearns by Computer Motion&#146;s management;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">met with members of Computer Motion&#146;s senior
    management to discuss Computer Motion&#146;s business,
    operations, historical financial results, financial projections
    and future prospects;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed Intuitive Surgical&#146;s Registration
    Statement on Form&nbsp;S-1 and the related prospectus in
    connection with Intuitive Surgical&#146;s initial public
    offering, Annual Reports to Stockholders and Annual Reports on
    Form&nbsp;10-K for the years ended December&nbsp;31, 2000 and
    2001, its Quarterly Reports on Form&nbsp;10-Q for the periods
    ended March&nbsp;31, 2002, June&nbsp;30, 2002 and
    September&nbsp;30, 2002, a draft dated February&nbsp;28, 2003 of
    Intuitive Surgical&#146;s Annual Report on Form&nbsp;10-K for
    the year ended December&nbsp;31, 2002, which Intuitive
    Surgical&#146;s management has advised Bear Stearns is complete
    and accurate in all material respects, and its Reports on
    Form&nbsp;8-K for the three years ended March&nbsp;6, 2003;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">52
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed certain operating and financial
    information relating to Intuitive Surgical&#146;s business and
    prospects, including projections for the four years ended
    December&nbsp;31, 2006 and guidance for the year ending
    December&nbsp;31, 2007, all as prepared and provided to Bear
    Stearns by Intuitive Surgical&#146;s management;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed projections prepared by Intuitive
    Surgical&#146;s management as to the anticipated operating
    results of Computer Motion for the five years ending
    December&nbsp;31, 2007;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed estimates of cost savings and other
    combination benefits expected to result from the merger,
    prepared and provided to Bear Stearns by Intuitive
    Surgical&#146;s management;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">met with members of Intuitive Surgical&#146;s
    senior management to discuss Intuitive Surgical&#146;s business,
    operations, historical financial results, future prospects, the
    Intuitive Surgical projections, the Computer Motion projections,
    the Computer Motion projections prepared by Intuitive Surgical
    and the estimated pre-tax cost savings of approximately
    $18&nbsp;million annually to be phased in beginning in the third
    quarter of 2003;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed the historical prices, trading multiples
    and trading volumes of the Intuitive Surgical common stock and
    Computer Motion common stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed publicly available financial data, stock
    market performance data and trading multiples of companies which
    Bear Stearns deemed generally comparable to Intuitive Surgical
    and Computer Motion;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed the terms of recent mergers and
    acquisitions of companies which Bear Stearns deemed generally
    comparable to Computer Motion and the merger;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">performed discounted cash flow analyses based on
    the Computer Motion projections, the Intuitive Surgical
    projections and the pro forma combined projections of Computer
    Motion and Intuitive Surgical, each prepared by Intuitive
    Surgical, for the period from January&nbsp;1, 2003 through
    December&nbsp;31, 2007 including the estimated cost savings;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed the pro forma financial results,
    financial condition and capitalization of Intuitive Surgical
    giving effect to the merger; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">conducted the other studies, analyses, inquiries
    and investigations further described in this section.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Bear Stearns relied upon and assumed, without
independent verification, the accuracy and completeness of the
financial and other information, including, without limitation,
the Intuitive Surgical projections, the Computer Motion
projections, the Computer Motion projections prepared by
Intuitive Surgical management and the estimated cost savings
provided to Bear Stearns by Intuitive Surgical and Computer
Motion. With respect to the Intuitive Surgical projections, the
Computer Motion projections, the Computer Motion projections
prepared by Intuitive Surgical management and the estimated cost
savings, Bear Stearns relied on representations that they have
been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the senior managements of
Intuitive Surgical and Computer Motion as to the expected future
performance of Intuitive Surgical and Computer Motion,
respectively; <I>provided, however</I>, that with respect to the
Computer Motion projections prepared by Intuitive Surgical
management, the senior management of Intuitive Surgical advised
Bear Stearns that such Computer Motion projections prepared by
Intuitive Surgical management are based on the best currently
available estimates and judgments of the senior management of
Intuitive Surgical after discussions with the senior management
of Computer Motion. Bear Stearns did not assume any
responsibility for the independent verification of any such
information or of the Intuitive Surgical projections, the
Computer Motion projections, the Computer Motion projections
prepared by Intuitive Surgical and the estimated cost savings
provided to Bear Stearns, and Bear Stearns further relied upon
the assurances of the senior managements of Intuitive Surgical
and Computer Motion that they were unaware of any facts that
would make the information contained in the Intuitive Surgical
projections, the Computer Motion projections, the Computer
Motion projections prepared by Intuitive Surgical management and
the estimated cost savings provided to them incomplete or
misleading.
</FONT>

<P align="center"><FONT size="2">53
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In arriving at its opinion, Bear Stearns did not
perform or obtain any independent appraisal of the assets or
liabilities (contingent or otherwise) of Intuitive Surgical or
Computer Motion, nor was Bear Stearns furnished with any such
appraisals. Bear Stearns assumed that the merger would be
completed in a timely manner and in accordance with the terms of
the merger agreement without any limitations, restrictions,
conditions, amendments or modifications, regulatory or
otherwise, that collectively would have a material effect on
Intuitive Surgical or Computer Motion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Bear Stearns did not express any opinion as to
the price or range of prices at which the Intuitive Surgical
common stock and Computer Motion common stock may trade
subsequent to the announcement of the merger or as to the price
or range of prices at which the Intuitive Surgical common stock
may trade subsequent to completion of the merger.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Bear Stearns has been previously engaged by
Intuitive Surgical to provide certain investment banking and
financial advisory services for which it received customary
fees. In the ordinary course of business, Bear Stearns and its
affiliates may actively trade the equity and debt securities
and/or bank debt of Intuitive Surgical and Computer Motion for
their own account and for the account of their customers and,
accordingly, may at any time hold a long or short position in
such securities or bank debt. According to publicly available
filings made with the SEC, as of December&nbsp;31, 2002, Bear
Stearns Asset Management, Inc., an affiliate of Bear,
Stearns&nbsp;&#38; Co. Inc., owned an aggregate of 3,241,000
shares of Intuitive Surgical common stock.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Summary of Financial Analyses</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a summary of the material
financial analyses performed by Bear Stearns in connection with
the rendering of their fairness opinion to Intuitive
Surgical&#146;s board of directors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Some of the financial analyses summarized
below include information presented in tabular format. In order
to understand fully Bear Stearns&#146; financial analyses, the
tables must be read together with the text of the summary. The
tables alone are not a complete description of the financial
analyses. Considering the tables alone could create a misleading
or incomplete view of Bear Stearns&#146; financial
analyses</FONT></B><FONT size="2">.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Contribution
Analysis.</FONT></I><FONT size="2"> Bear Stearns performed a
contribution analysis to assist Intuitive Surgical&#146;s board
of directors in valuing Computer Motion based on the relative
contribution of each company to the combined pro forma entity.
In performing the analyses, Bear Stearns used the financial
projections for Intuitive Surgical and Computer Motion, both
prepared by Intuitive Surgical management, and public
information. Bear Stearns calculated the relative contribution
by both Intuitive Surgical and Computer Motion to the combined
entity with respect to the enterprise value and equity value at
market (based on the closing share price of Intuitive
Surgical&#146;s common stock and Computer Motion&#146;s common
stock as of March&nbsp;6, 2003) and at the implied exchange
ratio in the merger as of announcement date, and projected
financial data including revenues, gross profit, EBITDA, EBIT
and net income without estimated cost savings and assuming
realization of 100% and 50% of estimated cost savings expected
to result in the merger. Pretax cost savings are estimated to be
approximately $18&nbsp;million annually to be phased in
beginning in the third quarter of 2003.
</FONT>

<P align="center"><FONT size="2">54
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table illustrates the relative
contribution to equity value, enterprise value and estimated
revenues, gross profit, EBITDA, EBIT and net income of both
Intuitive Surgical and Computer Motion without estimated cost
savings to the combined company:
</FONT>

<P align="center">
<B><FONT size="2">Relative Contribution Without Estimated Cost
Savings</FONT></B>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="56%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Percentage of Contribution</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Intuitive Surgical</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Computer Motion</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity value at market
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">77.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Enterprise value at market
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">72.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity value at deal
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">70.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Enterprise value at deal
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">64.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2003 Estimated revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">72.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2004 Estimated revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">70.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2005 Estimated revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">68.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2003 Estimated gross profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">69.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2004 Estimated gross profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2005 Estimated gross profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">65.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2004 Estimated EBITDA
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">80.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2005 Estimated EBITDA
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2005 Estimated EBIT
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">39.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2005 Estimated Net income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">62.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">&#147;Equity value at market&#148; is defined as
equity value based on the fully diluted shares outstanding and
the closing share prices of Intuitive Surgical&#146;s common
stock and Computer Motion&#146;s common stock as of
March&nbsp;6, 2003. &#147;Enterprise value at market&#148; is
calculated as the sum of the equity value at market and the
value of net debt, any minority interest and preferred stock,
where &#147;net debt&#148; is defined as total debt less cash
and cash equivalents. &#147;Equity value at deal&#148; is
defined as equity value based on the fully diluted shares
outstanding and the closing share prices of Intuitive
Surgical&#146;s common stock and Computer Motion&#146;s common
stock as of March&nbsp;6, 2003 based on the implied exchange
ratio in the merger as of the announcement date of the merger.
&#147;Enterprise value at deal&#148; is calculated as the sum of
the value of equity value at deal and the value of net debt, any
minority interest and preferred stock. &#147;EBITDA&#148; is a
company&#146;s earnings before interest, taxes, depreciation and
amortization. &#147;EBIT&#148; is a company&#146;s earnings
before interest and taxes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table illustrates the relative
contribution to estimated EBITDA, EBIT and net income of both
Intuitive Surgical and Computer Motion with estimated pretax
cost savings of approximately
</FONT>

<P align="center"><FONT size="2">55
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">$18&nbsp;million annually to be phased in
beginning in the third quarter of 2003, assuming realization of
100% and 50% of estimated cost savings expected to result in the
merger to the combined company:
</FONT>
</DIV>

<P align="center">
<B><FONT size="2">Relative Contribution With Estimated Cost
Savings</FONT></B>

<DIV align="center">
<B><FONT size="2">($ in millions)</FONT></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="24%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15"></TD>
    <TD></TD>
    <TD colspan="15"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">100% Estimated Cost Savings Achieved</FONT></B></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">50% Estimated Cost Savings Achieved</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2005</FONT></B></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2005</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2005</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2005</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Estimated</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2005</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2005</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Estimated</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Estimated</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Estimated</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Estimated</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Net</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Estimated</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Estimated</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Estimated</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Net</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">EBITDA</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">EBITDA</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">EBIT</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Income</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">EBITDA</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">EBITDA</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">EBIT</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Income</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Percent Contribution of Intuitive Surgical
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">47.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">39.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Percent Contribution of Computer Motion
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Percent Contribution of Estimated Cost Savings
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">63.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">54.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Valuation of Estimated Cost Savings.
</FONT></I><FONT size="2">Bear Stearns performed a discounted
cash flow analysis of the estimated cost savings expected to
result from the merger (net of any one-time costs to achieve
such cost savings). Pretax cost savings are estimated to be
approximately $18&nbsp;million annually to be phased in
beginning in the third quarter of 2003. In valuing the estimated
cost savings, Bear Stearns used illustrative discount rates
ranging from 14 to 16%, illustrative perpetual growth rates of 2
to 4% and assumed realization of 100% and 50% of estimated cost
savings expected to result in the merger.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table illustrates the implied value
of the estimated cost savings expected to result from the merger
based on the analyses:
</FONT>

<P align="center">
<B><FONT size="2">Valuation of Estimated Cost Savings</FONT></B>

<DIV align="center">
<B><FONT size="2">($ in millions)</FONT></B>
</DIV>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="63%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Discount Rates</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Growth</FONT></B></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Rate</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">14.0%</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">15.0%</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">16.0%</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">100% of Estimated Cost Savings Achieved
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">81.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">73.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">67.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">87.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">79.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">72.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">94.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">85.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">77.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">50% of Estimated Cost Savings Achieved
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">39.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Discounted Cash Flow Analysis.
</FONT></I><FONT size="2">Based on cash flow projections for
Intuitive Surgical and Computer Motion as prepared by Intuitive
Surgical and the pretax cost savings of approximately
$18&nbsp;million annually to be phased in beginning in the third
quarter of 2003 estimated by the management of Intuitive
Surgical management to result from the merger, Bear Stearns
performed a discounted cash flow analysis to assist the
Intuitive Surgical board of directors in valuing Intuitive
Surgical, Computer Motion and the pro forma combined company.
The discounted cash flow relates the value of an asset or
business to the present value of expected future cash flows to
be generated by that asset or business. Discounted cash flow has
two components: (1)&nbsp;the present value of the projected
un-levered after-tax free cash flows for a determined period and
(2)&nbsp;the present value of the terminal value of the asset or
business at the end of the period. Un-levered means free of
interest-bearing assets and liabilities. In the discounted cash
flow analysis, the projected after-tax free cash flows exclude
the impact of interest income and interest expense. The terminal
EBITDA multiple methodology is utilized to calculate a terminal
value by applying a multiple to
</FONT>


<P align="center"><FONT size="2">56
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">the EBITDA of the asset or business in the last
year of the relevant projections. The terminal value calculated
is an estimate for the value of the annual free cash flow of the
asset or business beyond the terminal year projected into
perpetuity.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Bear Stearns performed discounted cash flow
analysis assuming:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">for Intuitive Surgical, a range of illustrative
    discount rates of 13.0% to 15.0% and a range of terminal EBITDA
    multiples (based on estimated 2007 EBITDA) of 8.0x to 10.0x;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">for Computer Motion, a range of illustrative
    discount rates of 15.0% to 17.0% and a range of terminal EBITDA
    multiples (based on estimated 2007 EBITDA) of 8.0x to 10.0x; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">for estimated cost savings, a range of
    illustrative discount rates of 14.0% to 16.0% and illustrative
    perpetual growth rates of 2.0% to 4.0%.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Discounted cash flow valuations were calculated
for Intuitive Surgical on a stand-alone basis, Computer Motion
on a stand-alone basis both including and excluding estimated
cost savings and the pro forma combined company including
estimated cost savings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Using this analysis, Bear Stearns derived a range
of implied equity values per share for Intuitive Surgical,
Computer Motion and the pro forma combined company as follows:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="78%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Range</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Low</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">High</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Intuitive Surgical</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Stand-alone
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.28</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.03</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Computer Motion</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Excluding estimated cost savings
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.28</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.08</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">With 100% of estimated cost savings achieved
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.72</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">With estimated cost savings achieved ranging from
    50% to 100%(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.73</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.94</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Combined Company</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">With 100% of estimated cost savings achieved
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.90</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.03</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Assumes 15% discount rate and 9.0x terminal
    EBITDA multiple.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Comparable Public Companies Analysis.
</FONT></I><FONT size="2">Bear Stearns performed a comparable
public companies analysis to assist Intuitive Surgical&#146;s
board of directors in valuing Computer Motion based on various
financial multiples of selected comparable public companies in
the medical technology industry. In performing this analysis,
Bear Stearns reviewed certain financial information relating to
Computer Motion and compared such information to the
corresponding financial information of other publicly-traded
medical technology companies which Bear Stearns deemed to be
generally comparable to Computer Motion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Bear Stearns compared the projected financial
performance and the resulting multiples as of March&nbsp;6, 2003
of Intuitive Surgical and Computer Motion, and the resulting
multiples of Computer Motion at the implied exchange ratio as of
the merger announcement date to ten publicly-traded medical
technology companies which it deemed generally comparable to
Computer Motion. Such comparable companies consisted of:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="51%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="46%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;Align Technology, Inc.<BR>
    &#149;&nbsp;American Medical Systems Holdings, Inc.<BR>
    &#149;&nbsp;ArthoCare Corporation<BR>
    &#149;&nbsp;CTI Molecular Imaging, Inc.<BR>
    &#149;&nbsp;Given Imaging Ltd.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;Kyphon Inc.<BR>
    &#149;&nbsp;Laserscope<BR>
    &#149;&nbsp;Rita Medical Systems, Inc.<BR>
    &#149;&nbsp;TheraSense, Inc.<BR>
    &#149;&nbsp;Wilson Greatbatch Technologies, Inc.
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">57
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Using publicly available information and market
data as of March&nbsp;6, 2003, and in the case of Intuitive
Surgical and Computer Motion, information based on Intuitive
Surgical management estimates for revenues and gross profit for
both Intuitive Surgical and Computer Motion, Bear Stearns
calculated the following harmonic mean multiples for the above
public comparable companies:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="49%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002 Actual</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003 Estimated</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004 Estimated</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Comparable company harmonic mean as a multiple of:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.81</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.21</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.78</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gross profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Intuitive Surgical at market as a multiple of:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.75</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.36</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.09</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gross profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Computer Motion at market as a multiple of:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.99</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.37</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.98</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gross profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Computer Motion at deal as a multiple of:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.92</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.01</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.44</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gross profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">&#147;Harmonic mean&#148; is calculated by using
the reciprocals of the multiples and gives equal weight to equal
dollar investments in the securities whose ratios are being
averaged. Bear Stearns utilizes the harmonic mean in averaging
ratios in which price is the numerator. &#147;Enterprise
value&#148; is calculated as the sum of the value of the common
equity on a fully diluted basis and the value of net debt, any
minority interest and preferred stock. &#147;Intuitive Surgical
at market&#148; is defined as Intuitive Surgical&#146;s
enterprise value based on the closing share price of the
Intuitive Surgical common stock as of March&nbsp;6, 2003.
&#147;Computer Motion at market&#148; is defined as Computer
Motion&#146;s enterprise value based on the closing share price
of the Computer Motion common stock as of March&nbsp;6, 2003.
&#147;Computer Motion at deal&#148; is defined as Computer
Motion&#146;s enterprise value based on the implied exchange
ratio as of the announcement date of the merger.
</FONT>

<P align="center"><FONT size="2">58
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Selected Precedent Medical Technology
Transactions Analysis</FONT></I><FONT size="2">. Bear Stearns
performed selected precedent transactions analyses to assist
Intuitive Surgical&#146;s board of directors in valuing Computer
Motion based on transaction values expressed as multiples of
various financial measures in selected medical technology
transactions. Using publicly available information, Bear Stearns
reviewed and analyzed certain financial and operating data
relating to the following selected transactions in the medical
technology industry:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="35%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="24%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Target</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Acquiror</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Date Announced</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Date Effective</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Disetronic Holding AG
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Roche Holding AG
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">February&nbsp;10, 2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Pending</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Spine Solutions, Inc.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Synthes-Stratec Inc.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">February&nbsp;6, 2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Pending</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Spinal Dynamics Corp.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Medtronic, Inc.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">June&nbsp;28, 2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">October&nbsp;11, 2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Surgical Dynamics Inc.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Stryker Corporation
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">June&nbsp;4, 2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">July&nbsp;1, 2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">BEI Medical Systems Co., Inc.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Boston Scientific Corporation
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">May&nbsp;14, 2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">July&nbsp;8, 2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fusion Medical Technologies
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Baxter International Inc.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">February&nbsp;27, 2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">May&nbsp;5, 2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Oratec Interventions Inc.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Smith &#38; Nephew plc
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">February&nbsp;14, 2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">March&nbsp;22, 2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">VidaMed Inc.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Medtronic, Inc.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">December&nbsp;6, 2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">April&nbsp;15, 2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">MiniMed Inc.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Medtronic, Inc.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">May&nbsp;30, 2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">June&nbsp;19, 2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Somnus Medical Technologies Inc.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Gyrus Group PLC
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">May&nbsp;7, 2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">June&nbsp;19, 2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Coherent Inc.&nbsp;&#151; Laser Division
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Lumenis Ltd. (f. ESC Medical Systems)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">February&nbsp;26, 2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">April&nbsp;30, 2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Bear Stearns calculated the following multiples
for the selected precedent medical technology transactions in
its analysis:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="66%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Low</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Mean</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Median</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">High</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Enterprise value as a multiple of:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">LTM Revenue
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.08</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21.33</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.78</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">89.83</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">&#147;LTM Revenue&#148; is a company&#146;s
revenue for the last twelve months prior to the announcement of
the transaction.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Bear Stearns noted that the transaction multiple
of 2.92x&nbsp;EBITDA/LTM revenue analyzed for the merger of
Intuitive Surgical and Computer Motion fell within the range of
the corresponding multiples for all the selected precedent
transactions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Bear Stearns noted that none of the precedent
transactions was identical to the merger of Intuitive Surgical
and Computer Motion and that, accordingly, any analysis of the
precedent transactions necessarily involved complex
considerations and judgments concerning differences in industry
and individual company dynamics, stock market valuation
parameters, financial and operating characteristics and various
other factors that would necessarily affect the transaction
multiples in the merger as compared to the multiples for the
precedent transactions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Pro Forma Merger Analysis.
</FONT></I><FONT size="2">Bear Stearns performed a pro forma
merger analysis to assist Intuitive Surgical&#146;s board of
directors in analyzing the financial impact of the merger on
Intuitive Surgical. Bear Stearns reviewed and analyzed certain
pro forma financial impacts of the merger on holders of
Intuitive Surgical based on the following, among other items:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the implied exchange ratio as of the announcement
    date of the merger;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the financial projections provided to Bear
    Stearns by the management of Intuitive Surgical for both
    Intuitive Surgical and Computer Motion;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">59
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an assumption for analytical purposes that the
    combination of Intuitive Surgical and Computer Motion would
    realize estimated pre-tax cost savings of up to approximately
    $18&nbsp;million annually (tax-effected at a 35% tax rate) to be
    phased in beginning in the third quarter of 2003; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an assumption for analytical purposes that there
    would be no financial statement impact of potential
    restructuring costs or other one-time costs associated with the
    merger and that the transaction was effective as of
    January&nbsp;1, 2003.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table shows the projected per share
accretion/(dilution) to Intuitive Surgical&#146;s pro forma
earnings including the projected cost savings for the years
presented.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="49%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003 Estimated</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004 Estimated</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2005 Estimated</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accretion/(dilution) to Intuitive Surgical
    earnings per share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.15</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.09</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Miscellaneous</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with rendering its opinion, Bear
Stearns performed a variety of financial analyses. The
preparation of a fairness opinion involves various
determinations as to the most appropriate and relevant methods
of financial analysis and the application of these methods to
the particular circumstances and, therefore, such an opinion is
not readily susceptible to a partial analysis or summary
description. Accordingly, notwithstanding the analyses
summarized above, Bear Stearns believes that its analyses must
be considered as a whole and that selecting portions of the
analyses and factors considered by them, without considering all
such analyses and factors, or attempting to ascribe relative
weights to some or all such analyses and factors, could create
an incomplete view of the evaluation process underlying the Bear
Stearns opinion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In performing its analyses, Bear Stearns made
numerous assumptions with respect to industry performance,
general business and economic conditions and other matters, many
of which are beyond the control of Intuitive Surgical. The
analyses performed by Bear Stearns are not necessarily
indicative of actual values or actual future results, which may
be significantly more or less favorable than suggested by such
analyses. Bear Stearns did not assign any specific weight to any
of the analyses described above and did not draw any specific
conclusions from or with regard to any one method of analysis.
With respect to the analysis of comparable companies and the
analysis of selected precedent transactions summarized above, no
public company utilized as a comparison is identical to
Intuitive Surgical or Computer Motion, and no transaction is
identical to the merger. Accordingly, an analysis of publicly
traded comparable companies and comparable business combinations
is not mathematical; rather, it involves complex considerations
and judgments concerning the differences in financial and
operating characteristics of the companies and other factors
that could affect the public trading values or announced merger
transaction values, as the case maybe, of Intuitive Surgical or
Computer Motion and the companies to which they were compared.
The analyses do not purport to be appraisals or to reflect the
prices at which any securities may trade at the present time or
at any time in the future. In addition, the Bear Stearns opinion
was just one of the many factors taken into consideration by
Intuitive Surgical&#146;s board of directors. Consequently, Bear
Stearns&#146; analysis should not be viewed as determinative of
the decision of Intuitive Surgical&#146;s board of directors or
Intuitive Surgical&#146;s management with respect to the
fairness of the exchange ratio as set forth in the merger
agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Bear Stearns is an internationally recognized
investment banking firm and is continually engaged in the
valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, secondary
distributions of listed and unlisted securities, private
placements, leveraged buyouts and valuations for estate,
corporate and other purposes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Bear Stearns was selected by Intuitive
Surgical&#146;s board of directors to render a fairness opinion
because of its expertise and its reputation in investment
banking and mergers and acquisitions and its familiarity with
the medical technology industry and Intuitive Surgical.
Intuitive Surgical and Bear Stearns have entered into a letter
agreement, dated as of February&nbsp;27, 2003, relating to the
services to be provided
</FONT>

<P align="center"><FONT size="2">60
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>


<DIV align="left">
<FONT size="2">by Bear Stearns in connection with the merger and
the transactions related to it, under which Intuitive Surgical
agreed to pay Bear Stearns a fee of $250,000 which was payable
upon rendering of its opinion. Intuitive Surgical also agreed to
reimburse Bear Stearns for certain out-of-pocket expenses
incurred in connection with the engagement. Bear Stearns will
not receive any additional fees or payments from Intuitive
Surgical in connection with the merger with Computer Motion.
Intuitive Surgical agreed that, for a two-year period it would
offer Bear Stearns the first opportunity to act as sole lead
underwriter or agent in financing transactions by Intuitive
Surgical and as exclusive financial advisor in merger or
acquisition transactions involving Intuitive Surgical on
customary terms. In addition, Intuitive Surgical agreed to
indemnify Bear Stearns against certain liabilities, including
liabilities under the federal securities law, relating to or
arising out of its engagement. Bear Stearns has not received any
other fees or payments for services provided to Intuitive
Surgical during the preceding two years.
</FONT>
</DIV>


<P align="left">
<B><FONT size="2">Opinion of H.C. Wainwright to Computer
Motion</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">H.C. Wainwright &#38; Co., Inc. has acted as
financial advisor to Computer Motion in connection with the
merger. As part of its engagement, H.C. Wainwright delivered its
oral opinion to Computer Motion&#146;s board of directors at
that board&#146;s March&nbsp;5, 2003 meeting that, as of that
date, and based upon and subject to various considerations set
forth in its opinion, the exchange ratio of shares of Intuitive
Surgical common stock to be received in the merger by Computer
Motion&#146;s stockholders for each share of Computer Motion
common stock was fair, from a financial point of view, to
Computer Motion&#146;s stockholders. H.C. Wainwright
subsequently confirmed its opinion in writing.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">The full text of H.C. Wainwright&#146;s
written opinion, dated March&nbsp;5, 2003, which sets forth,
among other things, the assumptions made, matters considered and
review undertaken by H.C. Wainwright, is attached as Annex E to
this joint proxy statement/prospectus and is incorporated herein
by reference. Computer Motion&#146;s stockholders are urged to
carefully read this opinion in its entirety. The summary of H.C.
Wainwright&#146;s opinion set forth in this joint proxy
statement/prospectus is qualified in its entirety by reference
to the full text of the opinion.</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In arriving at its opinion, H.C. Wainwright,
among other things:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed and analyzed publicly available
    financial statements for Computer Motion and Intuitive Surgical
    and financial information made available to it by Computer
    Motion&#146;s management;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">analyzed internal financial statements, including
    financial projections and other financial and operating data
    prepared by Computer Motion&#146;s management;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">discussed with Computer Motion&#146;s management,
    Computer Motion&#146;s past, current and future prospects;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">compared certain selected financial and stock
    market information for Computer Motion and Intuitive Surgical
    with similar information for selected companies whose securities
    are publicly traded;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed the financial terms of selected recent
    business combinations which it deemed comparable in whole or in
    part; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed the merger agreement.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In arriving at its opinion, H.C. Wainwright
assumed and relied upon, without independent verification, the
accuracy and completeness of all of the financial and other
information reviewed by it for the purposes of providing its
opinion, and did not assume any responsibility for independent
verification of that information. H.C. Wainwright did not assume
any responsibility for the independent valuation and appraisal
of any of Computer Motion&#146;s assets and liabilities. With
respect to financial projections, H.C. Wainwright assumed that
they were reasonably prepared by Computer Motion&#146;s
management on a basis reflecting the best currently available
estimates and judgments of Computer Motion&#146;s future
financial performance. H.C. Wainwright expresses no view as to
those projections or the assumptions on which they
</FONT>

<P align="center"><FONT size="2">61
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">were based. H.C. Wainwright&#146;s opinion was
necessarily based upon financial, economic, market and other
conditions as they existed on the date of its opinion.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The projections furnished to H.C. Wainwright were
prepared by Computer Motion&#146;s management. Computer Motion
does not publicly disclose internal management projections of
the type provided to H.C. Wainwright in connection with H.C.
Wainwright&#146;s analysis of the merger, and those projections
were not prepared with a view toward public disclosure. These
projections were based on numerous variables and assumptions
that are inherently uncertain and may be beyond the control of
management, including, without limitation, factors related to
general economic and competitive conditions. Accordingly, actual
results could vary significantly from those set forth in those
projections.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Set forth below is a brief summary of the
material financial analyses performed by H.C.&nbsp;Wainwright in
connection with its opinion and reviewed with Computer
Motion&#146;s board of directors on March&nbsp;5, 2003.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Historical Stock Price
    Analysis</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">H.C. Wainwright analyzed the price at which
Computer Motion common stock has traded for the last
52&nbsp;weeks. During that time period, Computer Motion&#146;s
52&nbsp;week high and low were $4.24 and $0.53, respectively. In
addition, the average closing price of Computer Motion common
stock over the same period was $1.53 and the closing price of
Computer Motion common stock at the date of the H.C. Wainwright
opinion was $1.41, or approximately 67% below its 52-week high
and approximately 166% above Computer Motion&#146;s 52-week low.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">H.C. Wainwright also analyzed the price at which
Intuitive Surgical&#146;s common stock has traded for the last
52 weeks. During that time period, Intuitive Surgical&#146;s
52-week high and low were $11.25 and $3.67, respectively. In
addition, the average closing price of Intuitive Surgical&#146;s
stock over the same period was $7.60 and the closing price of
Intuitive Surgical&#146;s stock at the date of the H.C.
Wainwright opinion was $4.97, or approximately 56% below its
52-week high and approximately 35% above Intuitive Surgical
52-week low.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The estimated merger exchange ratio of
approximately 0.52 implies a Computer Motion common stock price
of $2.58 based on Intuitive Surgical&#146;s closing stock price
of $4.97 on March&nbsp;5, 2003, which is approximately 39% below
Computer Motion&#146;s 52-week high and approximately 387% above
Computer Motion&#146;s 52-week low.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Historical Market Exchange Ratio
    Analysis</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">H.C. Wainwright assembled the historical market
exchange ratios based on the average closing prices of Intuitive
Surgical common stock and Computer Motion common stock over the
various periods presented and compared that to the merger
exchange ratio. The following table sets forth the ratios of the
average closing prices of Intuitive Surgical common stock
compared to Computer Motion common stock, which do not take into
consideration the merger exchange ratio.
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="78%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average Market</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exchange Ratio</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Period Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Over Period</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">One Trading Day (March&nbsp;4, 2003)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">362.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">One Month Average
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">410.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Three Month Average
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">568.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Six Month Average
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">571.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">12 Month Average
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">497.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The estimated merger exchange ratio of
approximately 0.52 implies a Computer Motion common stock price
of $2.58 based on Intuitive Surgical&#146;s closing stock price
of $4.97 on March&nbsp;5, 2003. The ratio of the closing price
of the Intuitive Surgical common stock of $4.97 compared to the
implied Computer Motion common stock price of $2.58 is 193%,
which is below the historical market exchange ratios of the
</FONT>

<P align="center"><FONT size="2">62
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">average closing price of Intuitive Surgical
common stock to the average closing price of the Computer Motion
common stock for the periods presented above.
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Selected Public Company Trading Valuation
    Analysis</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">H.C. Wainwright compared certain financial
information of Computer Motion with that of the following
selected companies involved in the medical device industry:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Rita Medical Systems, Inc.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">CONMED Corporation
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">CardioDynamics International Corporation
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Laserscope
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Guidant Corporation
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Boston Scientific Corporation
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Stryker Corporation
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Given Imaging Ltd.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">H.C. Wainwright analyzed the relative performance
and value of Computer Motion by comparing certain selected
financial data of Computer Motion with that of the selected
companies, including multiples of:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">enterprise value (defined as market value plus
    debt plus preferred stock minus cash) as a multiple of revenue
    over the latest 12&nbsp;months;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">enterprise value (defined as market value plus
    debt plus preferred stock minus cash) as a multiple of revenue
    during the most recent quarter annualized; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">market value to book value.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To calculate the multiples, H.C. Wainwright used,
for the selected companies, publicly available historical
financial information, and, for Computer Motion, historical
financial information and projections provided by Computer
Motion&#146;s management. The following table summarizes the
results of H.C. Wainwright&#146;s ratio analysis:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="78%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Multiples for</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Selected</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Companies</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Mean</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Median</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Enterprise Value to Preceding 12 Months Revenue
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.22</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.96</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Enterprise Value to Latest Quarter Revenue
    Annualized
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.81</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.79</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Market Value to Book Value
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.32</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.71</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on the multiples for the selected companies
set forth in the table above and other customary valuation
methodologies utilized by H.C. Wainwright, H.C. Wainwright
developed relevant multiple ranges for each of these valuation
methods described in the table. Based on this information, H.C.
Wainwright estimated that the implied enterprise value for
Computer Motion in the merger based on this analysis was
approximately between $26.6&nbsp;million and
$134.4&nbsp;million. This compares to the transaction value of
approximately $78&nbsp;million based on the closing price of
Intuitive Surgical common stock on March&nbsp;5, 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">None of the selected companies are identical to
Computer Motion. Accordingly, H.C. Wainwright believes the
analysis of publicly traded comparable companies is not simply
mathematical in nature. Rather, this analysis involves complex
considerations and qualitative judgments, reflected in H.C.
Wainwright&#146;s opinion, concerning differences in financial
and operating characteristics of the selected
</FONT>

<P align="center"><FONT size="2">63
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">companies and other factors that could affect the
public trading value of the selected companies. Based upon the
Selected Public Company Trading Valuation Analysis, H.C.
Wainwright believes that the transaction value of the merger
falls within an acceptable range.
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Selected Precedent
    Transactions</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">H.C. Wainwright reviewed the financial terms, to
the extent publicly available, of seven announced, pending or
completed merger and acquisition transactions since
January&nbsp;1, 2002, involving targets that were in the medical
technologies industry.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="40%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="28%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="26%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Announcement Date</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Target</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Acquiror</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">February&nbsp;10, 2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Disetronic
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Roche Holding
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">February&nbsp;6, 2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Spine Solutions
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Synthes-Stratec
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">June&nbsp;28, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Spinal Dynamics
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Medtronic Inc.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">June&nbsp;4, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Surgical Dynamics
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Stryker Corp.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">May&nbsp;14, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">BEI Medical Systems
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Boston Scientific
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">February&nbsp;27, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Fusion Medical Technologies
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Baxter International Inc.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">February&nbsp;14, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Oratec Interventions Inc.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Smith &#38; Nephew
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">H.C. Wainwright compared the publicly available
statistics for the precedent transactions listed above to the
relevant financial statistics for the merger based on the
transaction value. The precedent transactions multiples compared
by H.C. Wainwright included, among other things, the mean and
median of the transaction value of the targets to the
target&#146;s revenue over the last twelve months. The following
table summarizes the results of these analyses:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="78%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Multiples for</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Selected</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Transactions</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Mean</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Median</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Announced Transaction Value to Revenue:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12.13</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.15</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on the multiples for the transactions set
forth in the table above and other customary valuation
methodologies utilized by H.C. Wainwright, H.C. Wainwright
estimated that the implied enterprise value for Computer Motion
in the merger based on the analysis was between
$292&nbsp;million and $124&nbsp;million. This compares to the
transaction value of approximately $78&nbsp;million based on the
closing price of Intuitive Surgical common stock on
March&nbsp;5, 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Because the reasons for, and circumstances
surrounding, each of the precedent transactions analyzed were so
diverse, and due to the inherent differences between Computer
Motion&#146;s operations and financial condition and those of
the companies involved in these medical technologies
transactions, H.C. Wainwright believes that a comparable
transaction analysis is not simply mathematical in nature.
Rather, this analysis involves complex considerations and
qualitative judgments concerning differences between the
characteristics of these prior transactions and the merger that
could affect the value of these companies and businesses and
Computer Motion, including the outstanding patent litigation
between Computer Motion and Intuitive Surgical, the timing of
when the precedent transactions took place, current market
conditions and depressed equity valuations, as well as the other
material analyses that are reflected in H.C. Wainwright&#146;s
opinion. Based on the Select Precedent Transactions Analysis,
H.C. Wainwright believes that the transaction value of the
merger falls within an acceptable range.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All multiples for these medical technologies
transactions are based on public information available at the
time of announcement of that transaction, without taking into
account differing market and other conditions during the period
which these medical technologies transactions occurred.
</FONT>

<P align="center"><FONT size="2">64
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Transaction Premium Analysis.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">H.C. Wainwright also analyzed, as publicly
available, the announced transaction premium/discount to the
market value for the selected transactions. The following table
summarizes the results of this analysis:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="76%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Selected Transactions</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Premium/Discount</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mean
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">+36.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Median
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">+28.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Computer Motion
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">+39.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All multiples for these medical technologies
transactions are based on public information available at the
time of announcement of that transaction, without taking into
account differing market and other conditions during the period
which these medical technologies transactions occurred.
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Because the reasons for, and circumstances
surrounding, each of the precedent transactions analyzed were so
diverse, and due to the inherent differences between Computer
Motion&#146;s operations and financial condition and those of
the companies involved in these medical technologies
transactions, H.C. Wainwright believes that a comparable
transaction analysis is not simply mathematical in nature.
Rather, this analysis involves complex considerations and
qualitative judgments concerning differences between the
characteristics of these prior transactions and the merger that
could affect the value of these companies and businesses and
Computer Motion, including the outstanding patent litigation
between Computer Motion and Intuitive Surgical, the timing of
when the precedent transactions took place, current market
conditions and depressed equity valuations, as well as the other
material analyses that are reflected in H.C. Wainwright&#146;s
opinion. Based on the Transaction Premium Analysis, H.C.
Wainwright believes that the transaction premium associated with
the merger falls within an acceptable range.
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In arriving at its opinion, H.C. Wainwright
performed a variety of financial analyses, the material portions
of which are summarized above. The summary set forth above does
not purport to be a complete description of the analyses
performed by H.C. Wainwright or of H.C. Wainwright&#146;s
presentation to Computer Motion&#146;s board of directors. The
preparation of a fairness opinion is a complex analytical
process involving various determinations as to the most
appropriate and relevant methods of financial analyses and the
application of those methods to the particular circumstances
and, therefore, the opinion is not necessarily susceptible to
partial analysis or summary description. In arriving at its
opinion, H.C. Wainwright did not attribute any particular weight
to any analysis or factor considered by it, but rather made
qualitative judgments as to the significance and relevance of
each analysis and factor. Accordingly, H.C.&nbsp;Wainwright
believes that its analyses must be considered as a whole and
that selecting portions of its analyses and the factors
considered by it, without considering all of the analyses and
factors, could create an incomplete view of the process
underlying its analyses set forth in its opinion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">H.C. Wainwright&#146;s opinion does not imply any
conclusion as to the likely trading range for Intuitive
Surgical&#146;s common stock after the date of its opinion or
when issued to Computer Motion&#146;s stockholders in the
merger. In performing its analyses, H.C.&nbsp;Wainwright made
numerous assumptions with respect to industry performance,
general business, economic, market and financial conditions and
other matters, many of which are beyond the control of Computer
Motion and Intuitive Surgical. Any estimates contained in those
analyses are not necessarily indicative of actual past or future
results or values, which may be significantly more or less than
those estimates. Actual values will depend upon several factors,
including changes in interest rates, market conditions, general
economic conditions and other factors that generally influence
the price of securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The terms of the merger were determined through
negotiations between Computer Motion and Intuitive Surgical and
were approved by Computer Motion&#146;s board of directors.
Although H.C.&nbsp;Wainwright provided advice to Computer Motion
during the course of these negotiations, the decision to enter
into the merger was solely that of Computer Motion&#146;s board
of directors. As described above, the opinion and presentation
of H.C.&nbsp;Wainwright to Computer Motion&#146;s board of
directors was only one of a number of factors taken into
consideration by Computer Motion&#146;s board of directors in
making its determination to approve the merger.
H.C.&nbsp;Wainwright&#146;s opinion does not address the merits
of the underlying decision by
</FONT>

<P align="center"><FONT size="2">65
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">Computer Motion to enter into the merger
agreement or to consummate the transactions contemplated by the
merger agreement, and does not constitute a recommendation to
any stockholder as to how that stockholder should vote.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Computer Motion selected H.C.&nbsp;Wainwright as
its financial advisor in connection with the merger based on
H.C.&nbsp;Wainwright&#146;s qualifications, expertise,
reputation and experience in mergers and acquisitions. Computer
Motion originally retained H.C.&nbsp;Wainwright pursuant to a
letter agreement, dated January&nbsp;17, 2002, as supplemented
by a separate letter agreement with respect to the merger, dated
March&nbsp;5, 2003. In connection with an $11.6&nbsp;million
private placement of common stock and warrants in February 2002,
H.C.&nbsp;Wainwright earned a placement fee of cash in the
amount of $806,083 and warrants to purchase 282,886&nbsp;shares
of Computer Motion common stock at an exercise price of $4.60
per share. The exercise price of these warrants were
subsequently reduced to between $1.40 and $4.45 per share. In
connection with a $12.3&nbsp;million private placement of
Series&nbsp;C convertible preferred stock and warrants in
October&nbsp;2002, H.C.&nbsp;Wainwright earned a placement fee
of cash in the amount of $622,473 and warrants to purchase
290,306 shares of Computer Motion common stock at an exercise
price of $0.001 per share. Under the March&nbsp;5, 2003 letter
agreement, Computer Motion agreed to pay H.C.&nbsp;Wainwright a
financial advisory fee in connection with
H.C.&nbsp;Wainwright&#146;s advisory services and to render its
opinion as follows: Computer Motion agreed to pay
H.C.&nbsp;Wainwright cash in the amount of $50,000 upon signing
of the March&nbsp;5, 2003 letter agreement, $50,000 upon filing
of the registration statement of which this joint proxy
statement/prospectus forms a part, and $50,000 upon stockholder
adoption of the merger agreement. Additionally, Computer Motion
issued to H.C.&nbsp;Wainwright warrants to purchase 100,000
shares of Computer Motion common stock exercisable at a purchase
price of $0.001 per share that will become exercisable upon
stockholder approval. Based on Computer Motion&#146;s
March&nbsp;5, 2003 closing price of $1.41, the warrants had a
value of $141,000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Regardless of whether the merger is completed,
subject to the approval by Computer Motion in certain instances,
Computer Motion has agreed to reimburse H.C.&nbsp;Wainwright for
fees and disbursements of H.C.&nbsp;Wainwright&#146;s counsel
and for H.C.&nbsp;Wainwright&#146;s travel and other
out-of-pocket expenses incurred in connection with the merger.
Computer Motion has also agreed to indemnify
H.C.&nbsp;Wainwright and certain related persons to the full
extent lawful against various liabilities, including liabilities
under the federal securities laws arising out of its engagement
or the merger.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">H.C.&nbsp;Wainwright is an internationally
recognized investment banking firm experienced in providing
advice in connection with merger and acquisitions and related
transactions. In the ordinary course of its business,
H.C.&nbsp;Wainwright may effect transactions, for its own
account or for the account of customers, and hold at any time a
long or short position in securities of Computer Motion or
Intuitive Surgical.
</FONT>

<!-- link2 "Regulatory Approvals Required for the Merger" -->
<DIV align="left"><A NAME="038"></A></DIV>

<P align="left">
<B><FONT size="2">Regulatory Approvals Required for the
Merger</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the merger agreement, both Intuitive
Surgical and Computer Motion have agreed to use their reasonable
best efforts to obtain all required governmental approvals and
avoid any action or proceeding by a governmental entity in
connection with the execution of the merger agreement and
completion of the merger. Neither Intuitive Surgical nor
Computer Motion is aware, however, of any material federal or
state regulatory requirements or approvals required for the
execution of the merger agreement or completion of the merger,
other than filing a certificate of merger in Delaware at or
before the effective time of the merger.
</FONT>

<!-- link2 "Material United States Federal Income Tax Consequences" -->
<DIV align="left"><A NAME="039"></A></DIV>

<P align="left">
<B><FONT size="2">Material United States Federal Income Tax
Consequences</FONT></B>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following discussion describes the material
U.S. federal income tax consequences generally applicable to
Computer Motion stockholders as a result of the exchange of
their shares of Computer Motion common or preferred stock for
Intuitive Surgical common stock pursuant to the merger and is
based on the opinion of Stradling Yocca Carlson &#38; Rauth,
counsel to Computer Motion. The only material United States
federal income tax issue generally applicable to Computer Motion
stockholders as a result of the merger is whether the merger
qualifies as a reorganization within the meaning of
</FONT>


<P align="center"><FONT size="2">66
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>


<DIV align="left">
<FONT size="2">Section&nbsp;368(a) of the Internal Revenue Code
of 1986, as amended, or the Code. This discussion is based on
existing provisions of the Code, existing and proposed Treasury
regulations and current administrative rulings and court
decisions, all of which are subject to change. Any such change,
which may or may not be retroactive, could alter the tax
consequences described below.
</FONT>
</DIV>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Computer Motion stockholders should be aware that
this summary does not deal with all federal income tax
considerations that may be relevant to particular Computer
Motion stockholders in light of their particular circumstances.
In particular, this discussion does not address the tax
consequences to Computer Motion stockholders who are foreign
persons, who are financial institutions, who are dealers in
securities, who are insurance companies, who are tax-exempt
entities, who are subject to the alternative minimum tax
provisions of the Code, who do not hold their Computer Motion
stock as a capital asset, who acquired their Computer Motion
common stock pursuant to the exercise of employee stock options
or otherwise as compensation, or who hold Computer Motion stock
as part of a hedge, straddle or conversion transaction. In
addition, the following discussion does not address the tax
consequences of the merger under foreign, state or local tax
laws, the tax consequences of transactions effected prior or
subsequent to, or concurrently with, the merger, whether or not
any such transactions are undertaken in connection with the
merger, including, without limitation, any transaction in which
shares of Computer Motion stock are acquired or shares of
Intuitive Surgical common stock are disposed of, or the tax
consequences of the assumption by Intuitive Surgical of the
Computer Motion options or the tax consequences of the receipt
of rights to acquire Intuitive Surgical common stock. The
following discussion also does not address the tax consequences
to holders of Computer Motion preferred stock relating to any
adjustments in the number of shares of Computer Motion common
stock that will be issuable upon conversion of their preferred
stock. For more information regarding the conversion ratio of
the Computer Motion preferred stock, please see &#147;The Merger
Agreement&nbsp;&#151; The Merger Consideration and Conversion of
Securities.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">COMPUTER MOTION URGES EACH COMPUTER MOTION
STOCKHOLDER TO CONSULT SUCH STOCKHOLDER&#146;S OWN TAX ADVISOR
AS TO THE FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER, AND
ALSO AS TO ANY STATE, LOCAL, FOREIGN OR OTHER TAX CONSEQUENCES,
BASED ON SUCH STOCKHOLDER&#146;S OWN PARTICULAR FACTS AND
CIRCUMSTANCES.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The merger is intended to constitute a
reorganization within the meaning of Section&nbsp;368(a) of the
Code. Subject to the limitations and qualifications set forth
below, the merger generally will result in the following
U.S.&nbsp;federal income tax consequences:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the merger will qualify as a reorganization
    within the meaning of Section&nbsp;368(a) of the Code;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">neither Computer Motion, Intuitive Surgical nor
    Intuitive Merger Corporation will recognize any income, gain or
    loss as a result of the completion of the merger;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the holders of Computer Motion stock will not
    recognize a gain or loss upon the exchange of Computer Motion
    stock for Intuitive Surgical common stock pursuant to the
    merger, except to the extent of cash received in lieu of a
    fractional share of Computer Motion stock, as described below;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the aggregate tax basis of the Intuitive Surgical
    common stock received by Computer Motion stockholders in the
    merger, reduced by any tax basis attributable to fractional
    shares deemed to be disposed of, will be the same as the
    aggregate tax basis of the Computer Motion stock surrendered in
    exchange therefor;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the holding period of the Intuitive Surgical
    common stock received by each Computer Motion stockholder
    pursuant to the merger will include the period during which the
    stock surrendered in exchange therefor was held by such Computer
    Motion stockholder, <I>provided </I>the Computer Motion stock so
    surrendered is a capital asset in the hands of the Computer
    Motion stockholder at the time of the merger; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">cash payments received by holders of Computer
    Motion stock in lieu of a fractional share of Intuitive Surgical
    common stock generally will be treated as if the fractional
    share of Intuitive
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">67
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <FONT size="2">Surgical common stock had been issued in the
    merger and then redeemed by Intuitive Surgical. A Computer
    Motion stockholder receiving cash in lieu of a fractional share
    will recognize gain or loss upon the payment measured by the
    difference, if any, between the amount of cash received and the
    basis in the fractional share.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The parties have not requested and will not
request a ruling from the Internal Revenue Service regarding the
tax consequences of the merger. Stradling Yocca Carlson &#38;
Rauth, a Professional Corporation, has delivered an opinion to
Computer Motion regarding the federal income tax consequences of
the merger described above, which provides that, subject to
certain assumptions, covenants and qualifications, the merger
will qualify as a reorganization within the meaning of
Section&nbsp;368(a) of the Code. However, Computer Motion
stockholders should be aware that opinions of counsel are not
binding on the Internal Revenue Service or the courts, and the
Internal Revenue Service is therefore not precluded from
asserting a contrary opinion. The tax opinion is subject to
assumptions, covenants and qualifications, including but not
limited to the truth and accuracy of certain representations,
including those contained in certificates of officers of
Computer Motion and Intuitive Surgical, without any independent
verification. In particular, the opinion assumes that any loans
made by Intuitive Surgical pursuant to the Loan and Security
Agreement will be treated as debt and not an equity interest in
Computer Motion under federal income tax principles. If any of
such representations, qualifications, covenants or assumptions
mentioned above is inaccurate, or if any change in fact or law
occurs, then the tax consequences of the merger could differ
from those described above. Nevertheless, Computer Motion,
Intuitive Surgical and Intuitive Merger Corporation have agreed
in the merger agreement that each intends that the merger
qualify as a reorganization and that each will treat and report
the merger as such. The treatment of the merger as a
reorganization within the meaning of Section&nbsp;368(a) of the
Code is not a condition to the closing of the merger; however,
if prior to the closing of the merger, Computer Motion
determines that the tax consequences will differ materially from
those described in this joint proxy statement/prospectus and as
provided in the opinion, then Computer Motion will resolicit the
stockholders&#146; vote for approval and adoption of the merger
agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A successful Internal Revenue Service challenge
to the reorganization status of the merger would result in
Computer Motion stockholders recognizing taxable gain or loss
with respect to each share of Computer Motion common or
preferred stock surrendered equal to the difference between the
stockholder&#146;s basis in that share and the fair market
value, as of the effective time of the merger, of the Intuitive
Surgical common stock received in the exchange. In that event, a
stockholder&#146;s aggregate basis in the Intuitive Surgical
common stock received would equal its fair market value, and the
stockholder&#146;s holding period for that stock would begin the
day after the merger.
</FONT>

<!-- link2 "Accounting Treatment" -->
<DIV align="left"><A NAME="040"></A></DIV>

<P align="left">
<B><FONT size="2">Accounting Treatment</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In accordance with accounting principles
generally accepted in the United States, Intuitive Surgical will
account for the merger using the purchase method of accounting.
Under this method of accounting, Intuitive Surgical will record
the average market value of Intuitive Surgical common stock (for
a few days prior to and including the date the stockholders of
both companies approve the merger) issued in the merger, the
fair value of Intuitive Surgical options and warrants issued in
exchange for the options and warrants to purchase shares of
Computer Motion common and preferred stock and the amount of
direct transaction costs and other liabilities associated with
the merger as the estimated purchase price of acquiring Computer
Motion. Intuitive Surgical will allocate the estimated purchase
price to the net tangible and amortizable intangible assets
acquired (primarily developed technology, core technology and
in-process research and development), based on their respective
fair values at the date of the completion of the merger. Any
excess of the estimated purchase price over the fair value of
net assets acquired will be accounted for as goodwill.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Amortizable intangible assets, currently
estimated at $28.6&nbsp;million, will generally be amortized
over useful lives ranging from four to seven&nbsp;years.
In-process research and development, which is currently
estimated at $4.2&nbsp;million, will be expensed during the
fiscal quarter in which the merger is completed. In accordance
with the Statement of Financial Accounting Standards
No.&nbsp;142, &#147;Goodwill and Other
</FONT>

<P align="center"><FONT size="2">68
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">Intangible Assets,&#148; goodwill resulting from
the business combination of $66.0&nbsp;million will not be
amortized but instead will be tested for impairment at least
annually (more frequently if certain indicators are present).
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event that Intuitive Surgical&#146;s
management determines that the value of goodwill has become
impaired, the combined company will incur an accounting charge
for the amount of impairment during the fiscal quarter in which
the determination is made. The amounts listed in the above
paragraph are only preliminary estimates, and actual amounts may
differ from these estimates.
</FONT>

<!-- link2 "Listing of Intuitive Surgical Common Stock" -->
<DIV align="left"><A NAME="041"></A></DIV>

<P align="left">
<B><FONT size="2">Listing of Intuitive Surgical Common
Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical will use reasonable best
efforts to:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">cause the shares of Intuitive Surgical common
    stock to be issued in the merger to be approved for listing on
    the Nasdaq National Market prior to the completion of the
    merger; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">cause the shares of Intuitive Surgical common
    stock to be reserved for issuance upon the exercise of converted
    Computer Motion stock options and warrants to be approved for
    listing on the Nasdaq National Market prior to the completion of
    the merger.
    </FONT></TD>
</TR>

</TABLE>

<!-- link2 "Delisting and Deregistration of Computer Motion Common Stock" -->
<DIV align="left"><A NAME="042"></A></DIV>

<P align="left">
<B><FONT size="2">Delisting and Deregistration of Computer
Motion Common Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the merger is completed, Computer Motion
common stock will be delisted from the Nasdaq National Market
and deregistered under the Securities Exchange Act of 1934 and
Computer Motion will no longer file periodic reports with the
SEC.
</FONT>

<!-- link2 "Restrictions on Sales of Shares of Intuitive Surgical Common Stock Received in the Merger" -->
<DIV align="left"><A NAME="043"></A></DIV>

<P align="left">
<B><FONT size="2">Restrictions on Sales of Shares of Intuitive
Surgical Common Stock Received in the Merger</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The shares of Intuitive Surgical common stock to
be issued in the merger will be registered under the Securities
Act of 1933 and will be freely transferable, except for shares
of Intuitive Surgical common stock issued to any person who is
deemed to be an &#147;affiliate&#148; of Computer Motion prior
to the merger. Persons who may be deemed to be
&#147;affiliates&#148; of Computer Motion prior to the merger
include individuals or entities that control, are controlled by,
or are under common control of Computer Motion prior to the
merger, and may include officers and directors, as well as
significant stockholders of Computer Motion prior to the merger.
Affiliates of Computer Motion prior to the merger may not sell
any of the shares of Intuitive Surgical common stock received by
them in connection with the merger except pursuant to:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an effective registration statement under the
    Securities Act of 1933 covering the resale of those shares;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an exemption under paragraph (d)&nbsp;of
    Rule&nbsp;145 under the Securities Act of 1933; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any other applicable exemption under the
    Securities Act of 1933.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical&#146;s registration statement
on Form&nbsp;S-4, of which this joint proxy statement/prospectus
forms a part, does not cover the resale of shares of Intuitive
Surgical common stock to be received by affiliates of Computer
Motion in the merger.
</FONT>

<!-- link2 "Interests of Directors and Executive Officers of Computer Motion in the Merger" -->
<DIV align="left"><A NAME="044"></A></DIV>

<P align="left">
<B><FONT size="2">Interests of Directors and Executive Officers
of Computer Motion in the Merger</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Some members of Computer Motion&#146;s management
and board of directors have interests in the merger that are in
addition to or different from their interests as Computer Motion
stockholders. The Computer Motion board of directors was aware
of these interests and considered them in approving the merger
agreement and the merger.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Governance Structure and Management
    Positions</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The merger agreement provides for the initial
composition of the board of directors and selected executive
officer positions for Intuitive Surgical after completion of the
merger. Upon completion of the
</FONT>

<P align="center"><FONT size="2">69
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">merger, the board of directors of Intuitive
Surgical will be expanded to add two additional members for a
total of nine directors. The two additional members of Intuitive
Surgical&#146;s board of directors are expected to be Robert
Duggan, the Chairman of the Board and Chief Executive Officer of
Computer Motion, and Eric H. Halvorson, a director of Computer
Motion. Under Intuitive Surgical&#146;s 2000 Non-Employee
Director&#146;s stock option plan, each director of Intuitive
Surgical, including Messrs. Duggan and Halvorson, receives an
initial stock option grant to purchase 20,000 shares of
Intuitive Surgical common stock and annual stock option grants
to purchase 10,000 additional shares of Intuitive Surgical
common stock. Please see &#147;Amendment to Intuitive
Surgical&#146;s 2000 Non-Employee Directors&#146; Stock Option
Plan.&#148; In addition, Joseph M. DeVivo, Computer
Motion&#146;s President and Chief Operating Officer, is expected
to be appointed as Intuitive Surgical&#146;s Senior Vice
President, Marketing, and Darrin R. Uecker, Computer
Motion&#146;s Chief Technical Officer, is expected to be
appointed as Intuitive Surgical&#146;s Vice President and Chief
Technical Officer. As of the date of this joint proxy statement/
prospectus, Intuitive Surgical had not yet determined salary
arrangements for Messrs. DeVivo and Uecker. Please see
&#147;Management and Operations Following the Merger.&#148;
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Indemnification; Directors&#146; and
    Officers&#146; Insurance</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical has agreed to cause to be
maintained charter and bylaw provisions with respect to
indemnification and advancement of expenses that are at least as
favorable to the intended beneficiaries as those contained in
the certificate of incorporation and bylaws of Computer Motion
as in effect on the date of the merger agreement. Intuitive
Surgical has also agreed to provide, for six years after the
merger, directors&#146; and officers&#146; liability insurance
in respect of acts or omissions occurring prior to the merger
covering each person currently covered by the directors&#146;
and officers&#146; liability insurance policy of Computer Motion
on terms and in amounts no less favorable than those of the
policies of Computer Motion.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Severance Agreements and Other
    Arrangements</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In January 2002, Computer Motion entered into a
letter agreement with Eugene W. Teal, Computer Motion&#146;s
Executive Vice President, which provides for an annual base
salary of $160,000 and a target bonus percentage of 50% of
annual base salary. Mr.&nbsp;Teal&#146;s bonus was guaranteed
for the first year of his employment, which began on
January&nbsp;23, 2002. The letter agreement also guarantees
payment of Mr.&nbsp;Teal&#146;s base salary for a two-year
period. In addition, the letter agreement provides that in the
event Computer Motion is acquired or experiences a change in
control, Mr.&nbsp;Teal is guaranteed payment of his base salary
through January&nbsp;22, 2005.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In June 2002, Computer Motion entered into a
letter agreement with Joseph M. DeVivo, Computer Motion&#146;s
President and Chief Operating Officer, which provides for an
annual base salary of $220,000 and a bonus of up to 90% of
annual base salary. The letter agreement guarantees payment of
Mr.&nbsp;DeVivo&#146;s base salary and a 90% bonus for a
one-year period. In addition, in the event Mr.&nbsp;DeVivo
terminates his employment for any reason following 90&nbsp;days
after Computer Motion is acquired or experiences a change in
control, or if Computer Motion terminates Mr.&nbsp;DeVivo&#146;s
employment for any reason other than for cause after one year of
service, Mr.&nbsp;DeVivo is guaranteed payment of his base
salary for a one-year period thereafter.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Stock Option Plans</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of March&nbsp;21, 2003, executive officers and
directors of Computer Motion owned options to purchase an
aggregate of 1,862,999 shares of Computer Motion common stock at
a weighted average exercise price of $3.09 per share. Of this
amount, options to purchase 674,830&nbsp;shares are expected to
be vested and exercisable as of June&nbsp;30, 2003 in accordance
with the normal vesting schedule of those options. Of the
1,188,169&nbsp;options that are expected to be unvested as of
June&nbsp;30, 2003, options to purchase an aggregate of
988,169&nbsp;shares of Computer Motion common stock will
automatically vest and become immediately exercisable in full
upon completion of the merger pursuant to the terms of the 1997
Stock Incentive Plan. Intuitive Surgical will assume all
unexercised Computer Motion options in the merger. In the event
that the reverse stock split is approved by Intuitive
Surgical&#146;s stockholders and implemented by
</FONT>

<P align="center"><FONT size="2">70
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">Intuitive Surgical&#146;s board of directors, the
number of shares issuable in connection with the exercise of
these options and the related exercise prices will be adjusted.
These options will not be repriced in connection with the merger
except for the adjustments necessary to reflect the merger
exchange ratio and the reverse stock split. Please see &#147;The
Merger&nbsp;&#151; General.&#148;
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Preferred Stock Exchange</FONT></I></B></TD>
</TR>

</TABLE>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;6, 2003, prior to the execution of
the merger agreement, all 20&nbsp;holders of Computer
Motion&#146;s Series&nbsp;C convertible preferred stock agreed
with Computer Motion to exchange all of the then
8,797&nbsp;outstanding shares of Series&nbsp;C convertible
preferred stock for a like number of newly-issued shares of
Series&nbsp;D convertible preferred stock. These holders
included Robert W. Duggan, the Chairman and Chief Executive
Officer of Computer Motion, who held 1,091&nbsp;shares of
preferred stock, Joseph M. DeVivo, the President and Chief
Operating Officer of Computer Motion, who held 100&nbsp;shares
of preferred stock, and an investment fund affiliated with
Robert W. Lautz, a director of Computer Motion at the time the
merger agreement was approved, which held 1,071&nbsp;shares of
preferred stock. The following chart compares the material
differences between the Series&nbsp;C convertible preferred
stock and the Series&nbsp;D convertible preferred stock and the
effect of those differences.
</FONT>



<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="32%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="31%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="31%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Terms of Series&nbsp;C</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Terms of Series&nbsp;D</FONT></B></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Convertible Preferred Stock</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Convertible Preferred Stock</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Effect of Differences</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <FONT size="2">Contained provision that may have required the
    vote of holders owning 90% of the Series&nbsp;C convertible
    preferred stock to approve the merger.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">No provision for a separate class vote by the
    holders of Series&nbsp;D convertible preferred stock.
    Series&nbsp;D holders have the right to vote, together with the
    holders of Computer Motion common stock, at any annual meeting
    or special meeting of the stockholders of Computer Motion. Each
    share of Series&nbsp;D convertible preferred stock is entitled
    to one thousand (1,000)&nbsp;votes.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">No class vote is required, so the holders of
    Series&nbsp;D convertible preferred stock will vote together
    with common stock to approve and adopt the merger agreement.
    Each share of Series&nbsp;D convertible preferred stock will be
    entitled to 1,000&nbsp;votes, while each share of common stock
    will be entitled to one vote. As a result, the 8,492&nbsp;shares
    of Series&nbsp;D convertible preferred stock outstanding on the
    record date will represent approximately 28% of the total votes
    entitled to approve and adopt the merger agreement.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <FONT size="2">Convertible only at the option of holder. As a
    result, if holder did not elect to convert, then Intuitive
    Surgical would be required to issue stock with equivalent
    rights, preferences and privileges to the Series&nbsp;C
    convertible preferred stock.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Automatically converts into Computer Motion
    common stock immediately prior to merger. Holders will receive
    Intuitive Surgical common stock in merger.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">All Computer Motion stockholders will receive
    Intuitive Surgical common stock, rather than a combination of
    common stock and preferred stock, in the merger.
    </FONT></TD>
</TR>

</TABLE>
</CENTER>


<P align="center"><FONT size="2">71
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="32%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="31%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="31%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Terms of Series&nbsp;C</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Terms of Series&nbsp;D</FONT></B></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Convertible Preferred Stock</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Convertible Preferred Stock</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Effect of Differences</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <FONT size="2">Contained provision that may have resulted in the
    holders of Series&nbsp;C convertible preferred stock receiving a
    premium for their shares in the merger, such that they would
    receive 135% of the amount that would be received by holders of
    Computer Motion common stock.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Permits holders of Series&nbsp;D convertible
    preferred stock to either (1)&nbsp;voluntarily convert their
    shares based upon the original conversion price of $1.38, or
    (2)&nbsp;elect to convert their shares under an alternative
    floating conversion price that would return at least 135% of the
    original purchase price of the Series&nbsp;C convertible
    preferred stock.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Eliminates any premium to the holders of
    Series&nbsp;D convertible preferred stock if the holders would
    otherwise receive merger consideration in an amount that
    provides a result of 135% of their initial investment and, in
    exchange, provides the holders of Series&nbsp;D convertible
    preferred stock with a guaranteed minimum return of 35% on their
    initial investment.
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The preferred stock exchange was effected in
order to eliminate the provisions of the Series&nbsp;C
convertible preferred stock, described above, that could have
either restricted the ability of Computer Motion to enter into
the merger agreement or affected Intuitive Surgical&#146;s
willingness to enter into the merger agreement. Among other
things, Computer Motion did not want to agree to a stay of all
pending intellectual property litigation upon the execution of
the merger agreement, including its April 2003 trial date in
California, if holders of 10% of the Series&nbsp;C convertible
preferred stock could have blocked adoption of the merger
agreement. In addition, Intuitive Surgical would not have agreed
to issue preferred stock in exchange for Computer Motion&#146;s
Series&nbsp;C convertible preferred stock. Finally, Computer
Motion was not willing to proceed with a merger under a possible
interpretation of the terms of the Series&nbsp;C convertible
preferred stock that would have resulted in the holders of the
Series&nbsp;C convertible preferred stock receiving a 35%
premium as compared to the holders of Computer Motion common
stock, and, in any event, Intuitive Surgical required certainty
as to the aggregate merger consideration it could be required to
issue.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Immediately prior to the closing of the merger,
the holders of Series&nbsp;D convertible preferred stock must
convert such shares into shares of Computer Motion common stock
under one of two methods. First, the holder may convert the
shares of Series&nbsp;D convertible preferred stock into a
number of shares of Computer Motion common stock determined by
dividing the stated value ($1400 per share) of such
Series&nbsp;D convertible preferred stock by the conversion
price of $1.38. Alternatively, the holders may elect to convert
the Series&nbsp;D convertible preferred stock into a number of
shares of Computer Motion common stock determined by dividing
135% of the stated value of the Series&nbsp;D convertible
preferred stock by a conversion price equal to the average
closing bid price of the Computer Motion common stock on the
Nasdaq National Market for the 20&nbsp;consecutive trading days
ending 15&nbsp;consecutive trading days prior to the date of the
Computer Motion special meeting, which we refer to in this joint
proxy statement/prospectus as the pricing period, but in no
event less than $1.38. This alternative conversion ratio may be
higher than the regular conversion ratio if the average closing
bid price of Computer Motion&#146;s common stock falls below
approximately $1.86 during the pricing period.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each holder of Series&nbsp;D convertible
preferred stock must elect the alternative conversion ratio by
delivering a notice to Computer Motion no later than
12&nbsp;trading days prior to the date of the Computer Motion
special meeting. The shares held by any holder who does not make
such election will convert into Computer Motion common stock at
the regular conversion ratio immediately prior to the effective
time of the merger.
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based upon the two alternatives described above,
if the average closing bid price of Computer Motion common stock
during the pricing period exceeds $1.86 per share, then the
8,492&nbsp;shares of outstanding Series&nbsp;D convertible
preferred stock will be convertible into 8,615,072&nbsp;shares
of Computer Motion common stock. If the average closing bid
price of Computer Motion common stock during the pricing period
is equal to or less than $1.86 per share, then the
8,492&nbsp;shares of Series&nbsp;D convertible preferred stock
will be convertible into the following number of shares of
Computer Motion common stock assuming the following range of
average Computer Motion closing bid prices.
</FONT>


<P align="center"><FONT size="2">72
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>


<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="25%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="25%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="23%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="22%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average Computer Motion</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Closing Bid Price During Pricing</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of Shares of Computer</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Period</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Motion Common Stock</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top" nowrap><FONT size="2">$1.863 and higher</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,615,072</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.85</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,675,611</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,916,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.75</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,171,360</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,441,106</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,727,200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,031,175</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,354,761</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,699,920</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,068,883</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,464,200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top" nowrap><FONT size="2">$1.38 and lower</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,630,348</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, the Series&nbsp;D convertible
preferred stock accrues dividends at the rate of 8% per annum
which generally may be paid at the election of Computer Motion
either in cash or in shares of Computer Motion common stock
valued at 90% of its volume-weighted average price as reported
by Bloomberg for the 20&nbsp;trading days immediately prior to
the dividend payment date. On April&nbsp;30, 2003, Computer
Motion issued 162,681&nbsp;shares of Computer Motion common
stock at a price per share of $2.80 in payment of all accrued
and unpaid dividends on the Series&nbsp;C convertible preferred
stock through March&nbsp;6, 2003, the date the Series&nbsp;C
convertible preferred stock was exchanged for the newly issued
Series&nbsp;D convertible preferred, as well as all accrued and
unpaid dividends on the Series&nbsp;D convertible preferred
stock through April&nbsp;30, 2003 (except for dividends payable
to St.&nbsp;Cloud Capital Partners LP, which are required to be
paid in cash). Assuming that the merger is completed on
June&nbsp;30, 2003, dividends in the approximate amount of
$138,520, which will accrue from May&nbsp;1, 2003 to the
conversion of the Series&nbsp;D convertible preferred stock
immediately prior to the effective time of the merger, will be
paid by issuance of additional shares of Computer Motion common
stock (in addition to cash dividends in the amount of $29,988
payable to St.&nbsp;Cloud). For this purpose, if the average
closing bid price of the Computer Motion common stock during the
pricing period exceeds $1.86, then the dividends would be
payable based upon a price per share valued at 90% of its
volume-weighted average price as reported by Bloomberg for the
20&nbsp;trading days ending June&nbsp;29, 2003. If the average
closing bid price of the Computer Motion common stock for the
20&nbsp;trading days ending June&nbsp;9, 2003 is less than
$1.86, then the dividends would be payable based upon a price
per share equal to such average closing bid price but in no
event less than $1.38 per share.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As an inducement to holders to exchange their
shares of Series&nbsp;C convertible preferred stock, Computer
Motion agreed to reduce the exercise price on outstanding common
stock purchase warrants held by the holders of Series&nbsp;C
convertible preferred stock. The exercise price on one series of
warrants to acquire 1,759,345 shares was reduced from $1.78 to
$1.50 per share, and on another series of warrants to acquire
1,759,345 shares, from $2.17 to $1.50 per share. As of the date
of this joint proxy statement/prospectus, Messrs.&nbsp;Duggan
and DeVivo and an investment fund affiliated with Mr.&nbsp;Lautz
collectively owned an aggregate of 449,800&nbsp;warrants of each
such series. The reduced exercise price is conditioned on the
exercise of the warrants prior to 10&nbsp;days following the
mailing of this joint proxy statement/ prospectus. Since the
final exchange ratio will be calculated based on the total
number of fully diluted shares outstanding for Intuitive
Surgical and Computer Motion, including out-of-the-money options
and warrants for both companies, the reduction in exercise
prices of the warrants does not affect the exchange ratio or the
proportion of merger consideration allocated to holders of
Computer Motion common stock since all such derivative
securities are deemed outstanding in a fully diluted calculation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a further inducement to exchange its shares of
Series&nbsp;C convertible preferred stock, Computer Motion has
agreed that, if the merger is completed prior to
September&nbsp;30, 2003, it will pay St.&nbsp;Cloud Capital
Partners LP a fee equal to $119,952 less the amount of any cash
dividends that St. Cloud receives
</FONT>

<P align="center"><FONT size="2">73
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">on account of shares of Series&nbsp;D convertible
preferred stock held by it. This payment is to be made prior to
the effective time of the merger.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Computer Motion has agreed that, if the merger is
not completed by September&nbsp;30, 2003, holders may exchange
their Series&nbsp;D convertible preferred stock for a like
number of shares of Series&nbsp;E convertible preferred stock
having rights and preferences identical to the former
Series&nbsp;C convertible preferred stock.
</FONT>

<!-- link2 "Management and Operations Following the Merger" -->
<DIV align="left"><A NAME="045"></A></DIV>

<P align="left">
<B><FONT size="2">Management and Operations Following the
Merger</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical expects that, initially
following completion of the merger, the businesses and
operations of Computer Motion will, except as described in this
joint proxy statement/prospectus, be continued substantially as
they are currently being conducted. Intuitive Surgical intends
to undertake a comprehensive review of the business, operations,
capitalization and management of Computer Motion with a view to
optimizing development of its potential in conjunction with
Intuitive Surgical&#146;s business.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon completion of the merger, the board of
directors of Intuitive Surgical will be expanded to add two
additional members for a total of nine directors. The two
additional members of Intuitive Surgical&#146;s board of
directors are expected to be as follows:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Robert Duggan has been Chairman of the Board of
    Directors of Computer Motion since 1990 and Chief Executive
    Officer since 1997. Mr.&nbsp;Duggan has been a private venture
    investor for more than 25&nbsp;years, and has participated as a
    director of, investor in and advisor to numerous small and large
    businesses in the medical equipment, computer local and wide
    area networks, PC hardware and software distribution, digital
    encryption, consumer retail goods and outdoor media
    communications industries. He has also assisted in corporate
    planning, capital formation and management for his various
    investments. He is a member of the University of California at
    Santa Barbara Foundation Board of Trustees, as well as the
    University&#146;s Engineering Steering Committee.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Eric H. Halvorson joined Computer Motion in July
    2002 as a member of the board of directors. Mr.&nbsp;Halvorson
    is currently a Visiting Professor of Business Law and Accounting
    at Pepperdine University in Malibu, California, where he
    instructs classes in the Legal and Regulatory Environment of
    Business and Financial Accounting. Previously, he was the
    Executive Vice President and Chief Operating Officer at Salem
    Communications Corporation from 1995 to 2000. Prior to becoming
    the Chief Operating Officer of Salem Communications,
    Mr.&nbsp;Halvorson was Vice President and General Counsel for
    10&nbsp;years. From 1976 until 1985, he was a partner at Godfrey
    and Kahn, a Milwaukee, Wisconsin based law firm.
    Mr.&nbsp;Halvorson is a Certified Public Accountant and holds a
    B.S. degree in Accounting from Bob Jones University and a J.D.
    degree from Duke University School of Law. Mr.&nbsp;Halvorson is
    currently a director of Salem Communications Corp. and Media
    Arts Group, Inc. At Computer Motion, he serves on the audit and
    compensation committees of the board of directors.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">It is currently expected that Mr.&nbsp;Duggan
will be a Class&nbsp;II director continuing in office until
Intuitive Surgical&#146;s 2005 annual meeting of stockholders
and that Mr.&nbsp;Halvorson will be a Class&nbsp;I director
continuing in office until Intuitive Surgical&#146;s 2004 annual
meeting of stockholders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The executive officers of Intuitive Surgical are
expected to continue in their current roles upon completion of
the merger. In addition, Joseph M. DeVivo is expected to be
appointed as Intuitive Surgical&#146;s Senior Vice President,
Marketing and Darrin R. Uecker is expected to be appointed as
Intuitive Surgical&#146;s Vice President and Chief Technical
Officer.
</FONT>

<P align="left">
<B><FONT size="2">Intellectual Property Litigation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On May&nbsp;10, 2000, Computer Motion filed a
lawsuit in United States District Court for the Central District
of California (Case No.&nbsp;CV00-4988 CBM) alleging that by
making, using, selling or offering for sale the <I>da Vinci</I>
Surgical System, Intuitive Surgical is infringing United States
Patent Numbers 5,524,180, 5,762,458, 5,815,640, 5,855,583,
5,878,193, 5,907,664 and 6,001,108, in willful disregard of
</FONT>

<P align="center"><FONT size="2">74
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">Computer Motion&#146;s patent rights. On
June&nbsp;1, 2000, Computer Motion amended its lawsuit to allege
that Intuitive Surgical also infringes U.S. Patent
Number&nbsp;6,063,095. In late 2000, Computer Motion alleged
infringement of a ninth patent, and added U.S. Patent
Number&nbsp;6,102,850 to the litigation. Computer Motion
subsequently alleged that we infringed U.S. Patent
No.&nbsp;6,244,809, which it added to the litigation in May
2002. These ten patents concern various methods and devices for
conducting various aspects of robotic surgery. Of those ten
patents, three are no longer part of the suit. After Computer
Motion lost all of its rights to its 5,855,583 and 5,878,193
patents as a result of Intuitive Surgical&#146;s successful
Patent Office interference proceedings, Computer Motion
voluntarily dismissed those patents from suit. However, Computer
Motion has sought to challenge the interference proceedings by
separate district court appeal. In addition, in November 2002,
the Court granted Intuitive Surgical&#146;s motion for summary
judgment of noninfringement of the 6,102,850 patent. In February
2003, the Court denied Intuitive Surgical&#146;s motion for
summary judgment of noninfringement of the 6,244,809 patent and
granted Computer Motion&#146;s cross-motion for partial summary
judgment of literal infringement of one claim of that patent.
Intuitive Surgical subsequently requested that the Court
reconsider that decision because of perceived flaws in the
Court&#146;s approach to the issue of infringement on summary
judgment. Regardless of what happens on reconsideration,
Intuitive Surgical will continue to defend the 809 patent on
invalidity, based on the earlier robotic surgery work of SRI and
others. Intuitive Surgical still has pending motions for summary
judgment of noninfringement on two more of Computer
Motion&#146;s seven remaining patents-in-suit, numbers 5,907,664
and 6,001,108. At the Court&#146;s request, Intuitive Surgical
will not file further motions for summary judgment until the
remaining pending motions are decided. In late January 2003,
after close of fact discovery, Computer Motion asserted between
26 and 35 new claims of its seven remaining patents-in-suit and
new theories of infringement. Intuitive Surgical has moved to
strike those new assertions as inappropriate at this late stage.
Trial had been calendared for April&nbsp;29, 2003.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the proposed merger, Intuitive
Surgical and Computer Motion have obtained a stay through
August&nbsp;31, 2003 of all proceedings in the pending
litigation proceedings between the companies. As part of the
stays, the courts have ceased all further activity in the cases
during the period of stay, including refraining from issuing any
opinions or orders on issues already submitted for decision. In
addition, the California Court postponed the trial date to a
date no earlier than November&nbsp;30, 2003. The stays may be
terminated before, or extended beyond, August&nbsp;31, 2003
under specified circumstances. In the event the merger is
completed, Intuitive Surgical and Computer Motion will request
dismissal with prejudice of the pending litigation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the merger is not completed by August&nbsp;31,
2003, the stays may be lifted and the California case may
proceed to trial. If the stays are lifted and Intuitive Surgical
ultimately loses the lawsuit with Computer Motion, it will hurt
Intuitive Surgical&#146;s competitive position, may be costly to
Intuitive Surgical and may prevent Intuitive Surgical from
selling its products. In addition, Intuitive Surgical may need
to obtain from Computer Motion a license to this technology if
Intuitive Surgical is to continue to market its products that
have been found to infringe Computer Motion&#146;s patents. This
license could be expensive, or could require Intuitive Surgical
to license to Computer Motion some of its technology, which
would result in a partial loss of Intuitive Surgical&#146;s
competitive advantage in the marketplace, each of which could
seriously harm Intuitive Surgical&#146;s business. If the stays
are lifted and Computer Motion is successful in its suit against
Intuitive Surgical and is unwilling to grant Intuitive Surgical
a license, Intuitive Surgical may be required to stop selling
its products that are found to infringe Computer Motion&#146;s
patents unless Intuitive Surgical can redesign them so they do
not infringe Computer Motion&#146;s patents, which Intuitive
Surgical may be unable to do. In addition, Intuitive Surgical
could be required to pay Computer Motion damages, including
treble damages, which could be substantial and harm Intuitive
Surgical&#146;s financial position.
</FONT>

<P align="center"><FONT size="2">75
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "THE MERGER AGREEMENT" -->
<DIV align="left"><A NAME="046"></A></DIV>

<P align="center">
<B><FONT size="2">THE MERGER AGREEMENT</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">The following summary describes the material
provisions of the merger agreement, which is included in this
joint proxy statement/prospectus as Annex&nbsp;A and is
incorporated by reference in this joint proxy
statement/prospectus. This summary may not contain all of the
information about the merger agreement that is important to you.
We encourage you to read the merger agreement carefully in its
entirety.</FONT></I>

<!-- link2 "Effective Time of the Merger and Effect of the Merger" -->
<DIV align="left"><A NAME="047"></A></DIV>

<P align="left">
<B><FONT size="2">Effective Time of the Merger and Effect of the
Merger</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The merger will become effective upon the filing
of a certificate of merger with the Secretary of State of the
State of Delaware or at such later time as is specified in the
certificate of merger, which is referred to as the effective
time of the merger. At the effective time of the merger,
Intuitive Merger Corporation (formerly Iron Acquisition
Corporation), a newly formed subsidiary of Intuitive Surgical,
will merge with and into Computer Motion and the separate
corporate existence of Intuitive Merger Corporation will cease.
Computer Motion will be the surviving corporation in the merger
and will continue as a wholly owned subsidiary of Intuitive
Surgical.
</FONT>

<!-- link2 "The Merger Consideration and Conversion of Securities" -->
<DIV align="left"><A NAME="048"></A></DIV>

<P align="left">
<B><FONT size="2">The Merger Consideration and Conversion of
Securities</FONT></B>

<DIV>&nbsp;</DIV>

<!-- link2 "General" -->
<DIV align="left"><A NAME="049"></A></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">General</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon completion of the merger, each share of
Computer Motion common stock issued and outstanding immediately
prior to the effective time of the merger will automatically be
converted into the right to receive a fraction of a share of
Intuitive Surgical common stock equal to the exchange ratio (as
described below). All shares of Computer Motion Series&nbsp;D
convertible preferred stock will be converted into shares of
Computer Motion common stock immediately prior to the effective
time of the merger.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Exchange Ratio</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The exchange ratio will be determined pursuant to
a formula based on the total number of fully diluted shares of
Intuitive Surgical and Computer Motion immediately prior to the
effective time of the merger. Specifically, holders of Computer
Motion&#146;s outstanding stock, options and warrants (including
out-of-the-money options and warrants) will receive 32% of the
combined company on a fully diluted basis, and holders of
Intuitive Surgical&#146;s outstanding stock, options and
warrants will retain 68% (including out-of-the-money options and
warrants). Computer Motion&#146;s fully diluted share count will
vary based upon the number of shares of Computer Motion common
stock into which Computer Motion&#146;s Series&nbsp;D
convertible preferred stock is convertible and the number of
shares of Computer Motion common stock which may be issued to
pay accrued dividends on the Series&nbsp;D convertible preferred
stock upon conversion. All shares of Computer Motion
Series&nbsp;D convertible preferred stock will convert into
shares of Computer Motion common stock immediately prior to the
effective time of the merger. The holders of the Series&nbsp;D
convertible preferred stock can choose between two conversion
ratios: a fixed ratio or a floating ratio that varies inversely
based on the average of the closing bid prices of Computer
Motion&#146;s common stock for the 20&nbsp;consecutive trading
days ending 15&nbsp;consecutive trading days prior to the
Computer Motion special meeting, which is referred to in this
joint proxy statement/prospectus as the pricing period. An
increase in the number of shares of Computer Motion common stock
issuable upon conversion of the Series&nbsp;D convertible
preferred stock will decrease the exchange ratio applicable to
the Computer Motion common stock. As a result, the exchange
ratio in the merger may decrease and, therefore, Computer Motion
common stockholders would receive a lesser number of Intuitive
Surgical shares, and Computer Motion preferred stockholders
would receive a greater number of Intuitive Surgical shares, in
the merger. The anticipated exchange ratio for Computer Motion
common stock, based on the number of fully diluted shares of
Intuitive Surgical and Computer Motion expected to be
outstanding on an assumed closing date of June&nbsp;30, 2003,
will range from approximately 0.48 to 0.52 depending on the
average closing bid prices per share of Computer Motion common
stock during the pricing period. The following table reflects
the changes to the exchange ratio based upon a range of assumed
average Computer Motion closing bid prices
</FONT>

<P align="center"><FONT size="2">76
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">during the pricing period and the number of fully
diluted shares of Intuitive Surgical and Computer Motion
expected to be outstanding on an assumed closing date of
June&nbsp;30, 2003.
</FONT>
</DIV>

<CENTER>
<TABLE width="40%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="31%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="31%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="17%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="16%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average Computer Motion</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Anticipated</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Closing Bid Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exchange Ratio</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top" nowrap><FONT size="2">$1.86 and higher</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.515</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.85</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.515</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.512</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.75</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.508</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.505</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.501</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.498</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.494</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.490</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.485</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.481</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top" nowrap><FONT size="2">$1.38 and lower</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.479</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The total number of shares of Intuitive Surgical
common stock to be issued or reserved for issuance to holders of
equity securities of Computer Motion will not change, unless
there is a change in the fully diluted capitalization of
Intuitive Surgical. Any change in the conversion ratio of the
Series&nbsp;D convertible preferred stock will merely change the
proportional allocation between Computer Motion&#146;s common
and preferred stockholders. Assuming the merger closes on
June&nbsp;30, 2003, Computer Motion common stockholders will
receive a minimum of 0.479 (or, in the event the reverse stock
split is completed prior to the merger, 0.239) shares of
Intuitive Surgical common stock for each share of Computer
Motion common stock. After June&nbsp;9, 2003, stockholders may
visit Intuitive Surgical&#146;s website,
<I>www.intuitivesurgical.com</I>, or Computer Motion&#146;s
website, <I>www.computermotion.com</I>, for announcements
regarding the exchange ratio.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The number of shares of Intuitive Surgical common
stock issuable pursuant to the merger agreement will be
proportionately adjusted for any stock split, reverse stock
split, stock dividend or similar event with respect to shares of
Intuitive Surgical common stock or Computer Motion common stock
effected between the date of the merger agreement and the
effective time of the merger, including the proposed 1-for-2
reverse stock split described in this joint proxy
statement/prospectus. Please see &#147;Authorization for
Intuitive Surgical&#146;s Board of Directors to Amend Intuitive
Surgical&#146;s Amended and Restated Certificate of
Incorporation to Effect a Reverse Stock Split.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Promptly after completion of the merger,
Intuitive Surgical&#146;s transfer agent will mail to former
Computer Motion stockholders a letter of transmittal and
instructions to be used in surrendering certificates which
represented shares of Computer Motion common stock prior to the
effective time of the merger. When a former Computer Motion
stockholder delivers these certificates to the exchange agent
along with a properly executed letter of transmittal and any
other required documents, the former Computer Motion stockholder
will receive Intuitive Surgical stock certificates representing
the number of whole shares of Intuitive Surgical common stock to
which the stockholder is entitled under the merger agreement and
cash in lieu of any fractional shares of Intuitive Surgical
common stock.
</FONT>

<!-- link2 "Treatment of Computer Motion Series D Convertible Preferred Stock" -->
<DIV align="left"><A NAME="050"></A></DIV>

<P align="left">
<B><FONT size="2">Treatment of Computer Motion Series&nbsp;D
Convertible Preferred Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All shares of Computer Motion Series&nbsp;D
convertible preferred stock will convert into shares of Computer
Motion common stock immediately prior to the effective time of
the merger. The Computer Motion common stock will then be
exchanged for Intuitive Surgical common stock based on the
exchange ratio in the merger.
</FONT>

<P align="center"><FONT size="2">77
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Immediately prior to the closing of the merger,
the holders of Series&nbsp;D convertible preferred stock must
convert such shares into shares of Computer Motion common stock
under one of two methods. First, the holder may convert the
shares of Series&nbsp;D convertible preferred stock into a
number of shares of Computer Motion common stock determined by
dividing the stated value ($1400 per share) of such
Series&nbsp;D convertible preferred stock by the conversion
price of $1.38. Alternatively, the holders may elect to convert
the Series&nbsp;D convertible preferred stock into a number of
shares of Computer Motion common stock determined by dividing
135% of the stated value of the Series&nbsp;D convertible
preferred stock by a conversion price equal to the average
closing bid price of the Computer Motion common stock on the
Nasdaq National Market for the 20&nbsp;consecutive trading days
ending 15&nbsp;consecutive trading days prior to the date of the
Computer Motion special meeting, which we refer to in this joint
proxy statement/ prospectus as the pricing period, but in no
event less than $1.38. The alternative conversion ratio may be
higher than the regular conversion ratio if the average closing
bid price of Computer Motion&#146;s common stock falls below
approximately $1.86 during the pricing period.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each holder of Series&nbsp;D convertible
preferred stock must elect the alternative conversion ratio by
delivering a notice to Computer Motion no later than
12&nbsp;trading days prior to the date of the Computer Motion
special meeting. The shares held by any holder who does not make
such election will convert into Computer Motion common stock at
the regular conversion ratio immediately prior to the effective
time of the merger.
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based upon the two alternatives described above,
if the average closing bid price of Computer Motion common stock
during the pricing period exceeds $1.86 per share, then the
8,492 shares of outstanding Series&nbsp;D convertible preferred
stock will be convertible into 8,615,072&nbsp;shares of Computer
Motion common stock. If the average closing bid price of
Computer Motion common stock during the pricing period is equal
to or less than $1.86 per share, then the 8,492&nbsp;shares of
Series&nbsp;D convertible preferred stock will be convertible
into the following number of shares of Computer Motion common
stock assuming the following range of average closing bid prices
of Computer Motion common stock during the pricing period.
</FONT>



<CENTER>
<TABLE width="40%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="53%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="20%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="20%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Average Computer Motion</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of Shares</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Closing Bid Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">of Computer Motion</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">During Pricing Period</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Common Stock</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">$1.863 and higher
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,615,072</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1.85
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,675,611</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1.80
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,916,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1.75
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,171,360</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1.70
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,441,106</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1.65
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,727,200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1.60
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,031,175</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1.55
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,354,761</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1.50
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,699,920</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1.45
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,068,883</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1.40
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,464,200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">$1.38 and lower
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,630,348</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, the Series&nbsp;D convertible
preferred stock accrues dividends at the rate of 8% per annum
which generally may be paid at the election of Computer Motion
either in cash or in shares of Computer Motion common stock
valued at 90% of its volume-weighted average price as reported
by Bloomberg for the 20&nbsp;trading days immediately prior to
the dividend payment date. On April&nbsp;30, 2003, Computer
Motion issued 162,681&nbsp;shares of common stock at a price per
share of $2.80 in payment of all accrued and unpaid dividends on
the Series&nbsp;C convertible preferred stock through
March&nbsp;6, 2003, the date the Series&nbsp;C convertible
preferred stock was exchanged for the newly issued Series&nbsp;D
convertible preferred, as well as all accrued and unpaid
dividends on the Series&nbsp;D convertible preferred stock
through April&nbsp;30, 2003
</FONT>

<P align="center"><FONT size="2">78
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">(except for dividends payable to St.&nbsp;Cloud
Capital Partners LP, which are required to be paid in cash).
Assuming that the merger is completed on June&nbsp;30, 2003,
dividends in the approximate amount of $138,520, which will
accrue from May&nbsp;1, 2003 to the conversion of the
Series&nbsp;D convertible preferred stock immediately prior to
the effective time of the merger, will be paid by issuance of
additional shares of Computer Motion common stock (in addition
to cash dividends in the amount of $29,988 payable to
St.&nbsp;Cloud). For this purpose, if the average closing bid
price of the Computer Motion common stock during the pricing
period exceeds $1.86, then the dividends would be payable based
upon a price per share valued at 90% of its volume-weighted
average price as reported by Bloomberg for the 20&nbsp;trading
days ending June&nbsp;29, 2003. If the average closing bid price
of the Computer Motion common stock for the 20&nbsp;trading days
ending June&nbsp;9, 2003, is less than $1.86, then the dividends
would be payable based upon a price per share equal to such
average closing bid price but in no event less than $1.38 per
share.
</FONT>
</DIV>

<!-- link2 "Treatment of Computer Motion Stock Options and Warrants" -->
<DIV align="left"><A NAME="051"></A></DIV>

<P align="left">
<B><FONT size="2">Treatment of Computer Motion Stock Options and
Warrants</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon the effective time of the merger, Intuitive
Surgical will assume all options and warrants to purchase
Computer Motion stock then outstanding under option and warrant
agreements and Computer Motion&#146;s stock option plans.
Substantially all of the Computer Motion options that are
outstanding at the effective time of the merger will accelerate
and become immediately exercisable prior to the effective time
of the merger. After the effective time of the merger, each
option and warrant will represent the right to purchase that
number of shares of Intuitive Surgical common stock equal to the
number of shares of Computer Motion common stock covered by such
option or warrant immediately before the effective time of the
merger multiplied by the exchange ratio, rounded down to the
nearest whole share. The exercise price per share of Intuitive
Surgical common stock subject to each option or warrant will
equal the pre-conversion price per share of Computer Motion
common stock subject to such option or warrant divided by the
exchange ratio, rounded up to the nearest whole cent. The
following table sets forth the number of Computer Motion options
and warrants outstanding as of the date of this joint proxy
statement/ prospectus, together with the anticipated number of
Intuitive Surgical options and warrants to be issued in exchange
therefor, based on the estimated exchange ratio of approximately
0.52 in connection with the merger.
</FONT>


<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="20%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="9"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="9" align="center" nowrap><B><FONT size="1">Computer Motion Options and Warrants</FONT></B></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="9" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Intuitive Surgical Options and Warrants</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Computer Motion</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Estimated Shares of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Common</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted Average</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Estimated</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Intuitive Surgical</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted Average</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Exercise Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Stock(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Common Stock</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise Price</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Less than $1.00
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,370,907</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.73</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Less than $1.92</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,223,105</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.41</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">$1.00 to $2.00
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,670,134</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.39</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">$1.92 to $3.85</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">861,590</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.69</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">$2.01 to $3.00
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">102,519</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">$3.86 to $5.77</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52,888</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">$3.01 to $4.00
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">248,826</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.39</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">$5.78 to $7.69</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">128,365</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">$4.01 to $5.00
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,410,926</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.53</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">$7.70 to $9.62</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,759,631</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.77</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">$5.01 to $6.00
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">226,776</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">$9.63 to $11.54</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">116,989</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">$6.01 to $8.00
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35,650</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.73</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">$11.55 to $15.38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,391</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.98</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">More than $8.00
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,283,317</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">More than $15.38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">662,038</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18.27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,349,055</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Total</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,822,997</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.08</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>


<DIV align="left">
<HR size="1" width="18%" align="left" noshade>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Excludes warrants to purchase 252,836 shares of
    Computer Motion common stock that are exerciseable at $7.71 per
    share of Computer Motion common stock and which expire on
    December&nbsp;31, 2003.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Effective upon the execution of the merger
agreement, Computer Motion&#146;s board of directors took action
under Computer Motion&#146;s employee stock purchase plan to
provide that:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">participants are not permitted to increase their
    payroll deductions or purchase elections from those in effect on
    the date of the merger agreement;
    </FONT></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">no offering period will be commenced after the
    date of the merger agreement; and
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">79
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">each participant&#146;s outstanding right to
    purchase shares of Computer Motion&#146;s common stock under the
    plan will terminate on the day immediately prior to the date on
    which the merger is completed, with all amounts allocated for
    each participant&#146;s account under the employee stock
    purchase plan as of the termination date being used to purchase
    shares of Computer Motion common stock at the applicable
    discount to the market price of Computer Motion&#146;s common
    stock pursuant to the plan, using the termination date as the
    final purchase date for each then outstanding offering period.
    </FONT></TD>
</TR>

</TABLE>

<!-- link2 "Representations and Warranties" -->
<DIV align="left"><A NAME="052"></A></DIV>

<P align="left">
<B><FONT size="2">Representations and Warranties</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The merger agreement contains customary
representations and warranties of Intuitive Surgical and
Computer Motion relating to, among other things, the following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">corporate organization and similar corporate
    matters;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">capital structure;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">authorization, execution, delivery, performance
    and enforceability of, and required consents, approvals, orders
    and authorizations of governmental authorities relating to, the
    merger agreement and related matters;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">approval of the merger agreement by the boards of
    directors of the companies;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">possession of permits and compliance with laws;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">documents filed with the SEC and the accuracy of
    the information contained in those documents;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">accuracy of the information to be provided in
    this joint proxy statement/prospectus;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">absence of specified material changes or events;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">employee benefit plans and other related matters;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">labor and other employment matters and labor
    contracts;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">tax treatment of the merger;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the validity, binding nature and absence of
    material defaults with respect to specified contracts;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">outstanding material litigation;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">compliance with laws related to environmental
    matters;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">intellectual property;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">compliance with laws related to taxes;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">insurance policies;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">receipt of fairness opinions by Intuitive
    Surgical and Computer Motion from Bear, Stearns&nbsp;&#38; Co.
    Inc. and H.C.&nbsp;Wainwright&nbsp;&#38; Co., Inc., respectively;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the respective stockholder votes required for
    approval of the merger;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the absence of finders or brokers fees, except to
    H.C. Wainwright &#38; Co., Inc. and Bear, Stearns &#38; Co. Inc.;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">absence of any threatened or pending product
    liability claims;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">transactions with related parties; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">eligibility to participate in federal health care
    programs.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">80
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link2 "Conduct of Business by Computer Motion Prior to Completion of the Merger" -->
<DIV align="left"><A NAME="053"></A></DIV>

<P align="left">
<B><FONT size="2">Conduct of Business by Computer Motion Prior
to Completion of the Merger</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except as contemplated or required by the merger
agreement or as expressly consented to in writing by Intuitive
Surgical, until the completion of the merger Computer Motion has
agreed to:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">conduct its operations only in the ordinary and
    usual course of business consistent with past practice; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">use its reasonable efforts to preserve its
    present business organization, keep available the services of
    its current executive officers, key employees and consultants
    and preserve its business relationships with third parties.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except as provided in the merger agreement, until
the completion of the merger, Computer Motion has agreed that it
will not, directly or indirectly, do or propose to do any of the
following without the prior written consent of Intuitive
Surgical:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">amend or otherwise change its organizational
    documents;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">issue, sell, pledge, encumber or otherwise
    transfer any shares of capital stock or other equity interests
    other than pursuant to the terms of options outstanding as of
    the date of the merger agreement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">amend, waive or modify any terms of the options
    or warrants outstanding as of the date of the merger agreement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">sell, transfer, lease, license, encumber or
    otherwise dispose of, any property or assets that are material
    to its business except pursuant to contracts existing as of the
    date of merger agreement or in the ordinary course of business;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">declare, make or pay any dividend or other
    distribution with respect to its capital stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">enter into any agreement with respect to the
    voting of its capital stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">effect any split or similar transaction of any
    capital stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">acquire any interests or assets other than in the
    ordinary course of business;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">incur any indebtedness or assume or otherwise
    become responsible for the obligations of any person, except for
    indebtedness incurred in the ordinary course of business or with
    a maturity of not more than one year and not in excess of
    $100,000 in the aggregate;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">terminate, cancel, request or agree to any
    material change in any material contract other than in the
    ordinary course of business;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">enter into any material contract;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">grant any product warranty for a period longer
    than one year from the date of purchase;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">make or authorize any capital expenditures that
    are in the aggregate greater than $100,000;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">except as pursuant to agreements in existence as
    of the date of the merger agreement, increase the compensation
    or benefits of directors, officers or employees;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">except as pursuant to agreements in existence as
    of the date of the merger agreement, grant any rights to
    severance or termination pay to, or enter into any employment or
    severance agreement with, any director, officer or other
    employee;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">take any affirmative action to amend or waive any
    performance or vesting criteria or accelerate vesting under any
    benefit plan;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">pre-pay any long-term debt, except in the
    ordinary course of business in an amount not greater than
    $25,000 in the aggregate;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">81
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">accelerate or delay collection or payment of
    notes, accounts receivable or accounts payable in advance of or
    beyond their regular due dates;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">vary its inventory practices in any material
    respect from past practices;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">make any change in accounting policies or
    procedures other than in the ordinary course of business or as
    required by GAAP or by a government entity;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">waive, release, assign or settle any material
    claims, litigation or arbitration;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">make any material tax election or settle any
    material tax liability;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">take any action that would prevent the merger
    from qualifying as a reorganization within the meaning of
    Section&nbsp;368(a) of the Internal Revenue Code;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">amend, modify or take any action under the its
    rights agreement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">modify, terminate or waive any material rights
    with respect to any confidentiality or standstill agreement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">write up, write down or write off the book value
    of any assets in excess of $200,000 in the aggregate;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">take any action to exempt any person or entity
    from the provisions of any state takeover laws or its rights
    agreement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">take any action that would result in the
    conditions to the merger not being satisfied; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">agree, in writing or otherwise, to take any of
    the foregoing actions.
    </FONT></TD>
</TR>

</TABLE>

<!-- link2 "Conduct of Business by Intuitive Surgical Prior to Completion of the Merger" -->
<DIV align="left"><A NAME="054"></A></DIV>

<P align="left">
<B><FONT size="2">Conduct of Business by Intuitive Surgical
Prior to Completion of the Merger</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except as provided in the merger agreement, until
the completion of the merger Intuitive Surgical has agreed that
it will not, directly or indirectly, do or propose to do any of
the following without the prior written consent of Computer
Motion:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">amend or otherwise change its organizational
    documents;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">declare, make or pay any dividend or other
    distribution with respect to its capital stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">enter into any agreement with respect to the
    voting of its capital stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">make any change in accounting policies or
    procedures other than in the ordinary course of business or as
    required by GAAP or by a government entity;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">waive, release, assign or settle any material
    claims, litigation or arbitration;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">take any action that would prevent the merger
    from qualifying as a reorganization within the meaning of
    Section&nbsp;368(a) of the Internal Revenue Code;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">take any action that would result in the
    conditions to the merger not being satisfied; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">agree, in writing or otherwise, to take any of
    the foregoing actions.
    </FONT></TD>
</TR>

</TABLE>

<!-- link2 "Additional Agreements" -->
<DIV align="left"><A NAME="055"></A></DIV>

<P align="left">
<B><FONT size="2">Additional Agreements</FONT></B>

<!-- link2 "Stockholder Meetings" -->
<DIV align="left"><A NAME="056"></A></DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Stockholder Meetings</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Computer Motion has agreed to call and hold a
meeting of its stockholders as soon as practicable after the
date on which the registration statement of which this joint
proxy statement/prospectus forms a part becomes effective for
the purpose of voting upon the approval of the merger. Computer
Motion&#146;s obligation to hold the special meeting will not be
affected in any way as a result of any changes in the
recommendation of Computer Motion&#146;s board of directors.
Intuitive Surgical has agreed to call and hold a meeting of its
stockholders as soon as practicable after the date on which the
registration statement of
</FONT>

<P align="center"><FONT size="2">82
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">which this joint proxy statement/prospectus
becomes effective for the purpose of voting upon the approval of
the issuance of Intuitive Surgical common stock pursuant to the
merger agreement.
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Access to Information/
    Confidentiality</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each of Intuitive Surgical and Computer Motion
has agreed to provide access to its books and records to the
other party and its directors, officers, employees and other
representatives and comply with its obligations under
confidentiality agreements among the parties.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Consents/ Filings</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical and Computer Motion have
agreed to use their reasonable best efforts to take all
necessary action to make the transactions contemplated by the
merger agreement effective, obtain any and all consents and
licenses and make all necessary filings.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Computer Motion Rights
    Agreement</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Computer Motion has agreed that it will not amend
or take any action with regard to its stockholder rights
agreement, including a redemption of the rights issued under
such agreement.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Patent Litigation</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the terms of the merger agreement,
all pending patent disputes between the parties in the U.S.
federal courts and in the U.S. and European Patent Offices
either have been jointly stayed or are in a period of inactivity
pending completion of the merger. Upon completion of the merger,
all such claims will be dismissed with prejudice. If the merger
is not completed, the stays may be lifted and the proceedings
continued.
</FONT>

<!-- link2 "No Solicitation of Other Transactions by Computer Motion" -->
<DIV align="left"><A NAME="057"></A></DIV>

<P align="left">
<B><FONT size="2">No Solicitation of Other Transactions by
Computer Motion</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The merger agreement provides that Computer
Motion will not through any representatives or otherwise:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">encourage, solicit, initiate or facilitate any
    acquisition proposal (as defined below);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">enter into any agreement with respect to any
    acquisition proposal or enter into any agreement requiring it to
    abandon, terminate or fail to consummate the transactions
    contemplated by the merger agreement; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">participate in any discussions or negotiations
    with, or furnish any information to, another party that may
    reasonably be expected to lead to any acquisition proposal;
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<I><FONT size="2">provided, however</FONT></I><FONT size="2">,
that if, at any time prior to the obtaining of Computer Motion
stockholders&#146; approval of the merger agreement, Computer
Motion&#146;s board of directors determines in good faith, after
consultation with outside counsel, that failing to consider an
unsolicited acquisition proposal would be inconsistent with its
fiduciary duties, Computer Motion may furnish information to,
and participate in discussions with, a person making a superior
proposal. Any information that is furnished to another party
that has made a superior proposal will be provided pursuant to a
confidentiality agreement no more favorable to the other party
than the confidentiality agreement in place between Intuitive
Surgical and Computer Motion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, Computer Motion has agreed that the
Computer Motion board of directors will not, except in the case
of a superior proposal, withdraw or modify its approval and
recommendation of the approval of the merger agreement, approve
or recommend any other acquisition proposal, or cause Computer
Motion to enter into any letter of intent or agreement related
to any other acquisition proposal.
</FONT>

<P align="center"><FONT size="2">83
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The merger agreement defines an acquisition
proposal as any offer or proposal concerning the following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a merger, consolidation, business combination, or
    similar transaction involving Computer Motion;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a sale, lease or other disposition of more than
    20% of Computer Motion&#146;s assets;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the issuance, sale or other disposition of
    securities representing more than 20% of the voting power of
    Computer Motion;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any transaction in which any person or group of
    persons acquires beneficial ownership, or the right to acquire
    beneficial ownership, of 20% or more of the outstanding voting
    capital stock of Computer Motion; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any combination of the foregoing.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The merger agreement defines a superior proposal
as a bona fide acquisition proposal involving a merger of
Computer Motion or the sale, lease or other transfer of 20% or
more of Computer Motion&#146;s assets, voting power or capital
stock made by a third party that was not solicited by Computer
Motion or its affiliates or representatives and which, in the
good faith judgment of Computer Motion&#146;s board of directors:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">if accepted, is reasonably likely to be
    completed; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">if completed, based on a written opinion of
    Computer Motion&#146;s financial advisor, would result in a
    transaction that is more favorable to Computer Motion&#146;s
    stockholders, from a financial point of view, than the
    transactions contemplated by the merger agreement.
    </FONT></TD>
</TR>

</TABLE>

<!-- link2 "Conditions to Completion of the Merger" -->
<DIV align="left"><A NAME="058"></A></DIV>

<P align="left">
<B><FONT size="2">Conditions to Completion of the
Merger</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The obligations of Intuitive Surgical and
Computer Motion to effect the merger are subject to the
fulfillment or waiver, prior to the effective time of the
merger, of various conditions, including the following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the registration statement covering the issuance
    of shares of Intuitive Surgical common stock to be issued
    pursuant to the merger agreement, of which this joint proxy
    statement/prospectus forms a part, will have become effective in
    accordance with the provisions of the Securities Act of 1933 and
    not be subject to any stop order suspending the effectiveness of
    the registration statement issued or threatened by the SEC;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the merger agreement, the merger and the other
    transactions contemplated by the merger agreement will have been
    approved by the requisite vote of the stockholders of Computer
    Motion and Intuitive Surgical;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">no governmental agency or court will have
    instituted any action or proceeding that enjoins or prohibits
    the completion of the merger or any other transaction
    contemplated by the merger agreement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">all material consents, approvals and
    authorizations of any governmental entity or otherwise required
    pursuant to the merger agreement shall have been obtained;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the shares of Intuitive Surgical common stock
    issuable in the merger will have been approved for listing on
    Nasdaq; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">specified patent litigation stays will have been
    obtained and remain in full force and effect.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">84
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, the obligations of Intuitive
Surgical and Intuitive Merger Corporation to effect the merger
are subject to the fulfillment or waiver, prior to the effective
time of the merger, of each of the following conditions:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the representations and warranties of Computer
    Motion will be true and correct as of the effective time of the
    merger (except that those representations and warranties that
    speak as of the date of the merger agreement or some other date
    need only be true as of that date), except where the failure of
    those representations and warranties to be true and correct does
    not have a material adverse effect on Computer Motion;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Computer Motion will have performed or complied
    with all agreements and covenants required by the merger
    agreement, except to the extent such nonperformance or
    noncompliance does not have a material adverse effect on
    Computer Motion;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Computer Motion will have obtained all requisite
    consents, approvals and authorizations, other than consents,
    approvals and authorizations the failure of which to obtain
    would not have a material adverse effect on Computer Motion;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">since the date of the merger agreement, no
    material adverse change to Computer Motion&#146;s business that
    arises out of or relates to (1)&nbsp;any forfeiture, impairment,
    invalidity or diminution in value of Computer Motion&#146;s
    intellectual property, (2)&nbsp;the issuance of any shares of
    capital stock or other equity interests of Computer Motion or
    (3)&nbsp;the incurrence by Computer Motion of any liability or
    obligation (other than pursuant to the Loan and Security
    Agreement); and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">no action or claim will be pending or threatened
    wherein an unfavorable judgment or ruling would prevent
    consummation of any transaction contemplated by the merger
    agreement, cause any transaction contemplated by the merger
    agreement to be rescinded following completion, or materially
    adversely affect the right or powers of Intuitive Surgical to
    own and operate Computer Motion.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, the obligations of Computer Motion
to effect the merger are subject to the fulfillment or waiver,
prior to the effective time of the merger, of each of the
following conditions:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the representations and warranties of Intuitive
    Surgical will be true and correct as of the effective time of
    the merger (except that those representations and warranties
    that speak as of the date of the merger agreement or some other
    date need only be true as of that date), except where the
    failure of those representations and warranties to be true and
    correct does not have a material adverse effect on Intuitive
    Surgical; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Intuitive Surgical will have performed or
    complied with all agreements and covenants required by the
    merger agreement, except to the extent such nonperformance or
    noncompliance does not have a material adverse effect on
    Intuitive Surgical.
    </FONT></TD>
</TR>

</TABLE>

<!-- link2 "Termination of the Merger Agreement" -->
<DIV align="left"><A NAME="059"></A></DIV>

<P align="left">
<B><FONT size="2">Termination of the Merger Agreement</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The merger agreement may be terminated at any
time prior to the effective time of the merger by mutual written
consent of the parties. In addition, the merger agreement may be
terminated at any time prior to the effective time of the merger
by either Intuitive Surgical or Computer Motion under the
following circumstances:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">if the merger has not been completed by
    August&nbsp;31, 2003, unless it is the terminating party&#146;s
    failure to fulfill any obligation under the merger agreement
    that resulted in the failure of the merger to occur on or before
    that date;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">if any governmental entity has issued an order or
    ruling permanently restraining, enjoining or otherwise
    prohibiting the transactions contemplated by the merger
    agreement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">if the approval by the stockholders of Computer
    Motion required for completion of the merger is not obtained,
    unless any of the events specified in the first four bullets of
    the succeeding paragraph
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">85
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <FONT size="2">occurs, in which case only Intuitive Surgical may
    terminate the merger agreement pursuant to this provision; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">if the approval of the stockholders of Intuitive
    Surgical for the issuance of Intuitive Surgical common stock in
    the merger is not obtained at a duly held meeting of the
    stockholders of Intuitive Surgical.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, the merger agreement may be
terminated at any time prior to the effective time of the merger
by Intuitive Surgical under the following circumstances:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">if the Computer Motion board of directors
    (1)&nbsp;withdraws or adversely modifies its recommendation of
    the merger or (2)&nbsp;determines to recommend to the
    stockholders of Computer Motion that they approve an acquisition
    proposal other than that contemplated by the merger agreement or
    has determined to accept a superior proposal;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">if a tender or exchange offer for 35% or more of
    the shares of Computer Motion common stock is commenced and the
    Computer Motion board of directors fails to recommend that the
    stockholders of Computer Motion not tender their shares in such
    offer;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">if any person or group becomes the beneficial
    owner of 35% or more of the outstanding shares of Computer
    Motion common stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">if for any reason Computer Motion fails to call
    or hold the stockholder&#146;s meeting for the purpose of voting
    upon the approval of the merger agreement before August&nbsp;31,
    2003; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">if after the date of the merger agreement
    (1)&nbsp;there occurs a material adverse change to Computer
    Motion that is not cured within 10&nbsp;days after written
    notice thereof or (2)&nbsp;Computer Motion breaches its
    obligations under the merger agreement, such breach would have a
    material adverse effect and such breach is not cured within
    10&nbsp;days after written notice thereof. For this purpose, a
    material adverse change is a material adverse change to Computer
    Motion&#146;s business that arises out of or relates to
    (1)&nbsp;any forfeiture, impairment, invalidity or diminution in
    value of Computer Motion&#146;s intellectual property,
    (2)&nbsp;the issuance of any shares of capital stock or other
    equity interests of Computer Motion or (3)&nbsp;the incurrence
    by Computer Motion of any liability or obligation (other than
    pursuant to the Loan and Security Agreement).
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, the merger agreement may be
terminated at any time prior to the effective time of the merger
by Computer Motion under the following circumstances:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">if the Computer Motion board of directors
    determines to accept a superior proposal, but only if Computer
    Motion&#146;s stockholders fail to approve the merger at the
    Computer Motion special meeting held for the purpose of voting
    upon the approval of the merger agreement and Computer Motion
    pays Intuitive Surgical the termination fee and expenses under
    the merger agreement, unless Computer Motion is then in breach
    of its nonsolicitation obligations under the merger agreement,
    in which case it may not terminate the merger agreement pursuant
    to this provision; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">if after the date of the merger agreement
    Intuitive Surgical breaches specified obligations under the
    merger agreement that are not cured within 10&nbsp;days of the
    written notice thereof.
    </FONT></TD>
</TR>

</TABLE>

<!-- link2 "Expenses and Termination Fees" -->
<DIV align="left"><A NAME="060"></A></DIV>

<P align="left">
<B><FONT size="2">Expenses and Termination Fees</FONT></B>

<DIV>&nbsp;</DIV>

<!-- link2 "Expenses" -->
<DIV align="left"><A NAME="061"></A></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Expenses</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Generally, all fees and expenses incurred in
connection with the merger agreement and the transactions
contemplated by the merger agreement will be paid by the party
incurring those expenses. However, Intuitive Surgical and
Computer Motion will share equally all regulatory filing fees
and expenses related to printing, filing and mailing this joint
proxy statement/prospectus and the related registration
statement.
</FONT>

<P align="center"><FONT size="2">86
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Computer Motion Termination
    Fee</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the merger agreement is terminated because the
merger is not approved by Computer Motion&#146;s stockholders,
Computer Motion will pay Intuitive Surgical an amount equal to
Intuitive Surgical&#146;s expenses related to the merger up to
$1.25&nbsp;million. In addition, in the event an acquisition
proposal has been publicly announced and not expressly and
publicly withdrawn prior to Computer Motion&#146;s stockholder
vote rejecting the merger agreement and (1)&nbsp;Computer Motion
enters into an agreement concerning a transaction that
constitutes an acquisition proposal within 12&nbsp;months of the
termination of the merger agreement or (2)&nbsp;any person other
than Intuitive Surgical purchases a majority of the assets or
equity interests of Computer Motion pursuant to a tender,
exchange or other offer that is publicly announced within
12&nbsp;months of the termination of the merger agreement,
Computer Motion will pay Intuitive Surgical a termination fee of
$2.5&nbsp;million, less the amount of any payment for Intuitive
Surgical&#146;s expenses related to the merger. In addition,
Computer Motion will pay Intuitive Surgical&#146;s expenses and
a termination fee of $2.5&nbsp;million (less the amount of any
payment for Intuitive Surgical&#146;s expenses related to the
merger) if the merger agreement is terminated because:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the Computer Motion board of directors
    (1)&nbsp;withdraws or adversely modifies its recommendation of
    the merger or (2)&nbsp;determines to recommend to the
    stockholders of Computer Motion that they approve an acquisition
    proposal other than that contemplated by the merger agreement or
    has determined to accept a superior proposal;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a tender or exchange offer for 35% or more of the
    shares of Computer Motion common stock is commenced and Computer
    Motion&#146;s board of directors fails to recommend that the
    stockholders of Computer Motion not tender their shares in such
    offer;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a person or group becomes the beneficial owner of
    35% or more of the outstanding shares of Computer Motion&#146;s
    common stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Computer Motion fails to call or hold a
    stockholder meeting for the purpose of voting upon the approval
    of the merger agreement before August&nbsp;31, 2003; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">after the date of the merger agreement,
    (1)&nbsp;there occurs a material adverse change (as described
    above) to Computer Motion that is not cured within 10&nbsp;days
    after written notice thereof or (2)&nbsp;Computer Motion
    breaches its obligations under the merger agreement that are not
    cured within 10 days after written notice thereof.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Intuitive Surgical Termination
    Fee</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the merger agreement is terminated because the
approval of the stockholders of Intuitive Surgical for the
issuance of Intuitive Surgical common stock pursuant to the
merger agreement is not obtained, Intuitive Surgical will pay
Computer Motion an amount equal to Computer Motion&#146;s
expenses related to the merger up to $1.25&nbsp;million. In
addition, Intuitive Surgical will pay Computer Motion&#146;s
expenses and a termination fee of $2.5&nbsp;million (less the
amount of any payment for Computer Motion&#146;s expenses
related to the merger) if the merger agreement is terminated
because Intuitive Surgical breaches specified obligations under
the merger agreement that are not cured within 10&nbsp;days
after written notice thereof.
</FONT>

<!-- link2 "Amendment and Waiver" -->
<DIV align="left"><A NAME="062"></A></DIV>

<P align="left">
<B><FONT size="2">Amendment and Waiver</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subject to applicable law, the parties may amend
the merger agreement in writing at any time prior to the
completion of the merger. At any time prior to the completion of
the merger, any party to the merger agreement may
(1)&nbsp;extend the time for performance of any of the
obligations of the other party, (2)&nbsp;waive any inaccuracies
in the representations and warranties of the other party and
(3)&nbsp;waive compliance by the other party with any of the
agreements or conditions in the merger agreement.
</FONT>

<P align="center"><FONT size="2">87
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "STOCKHOLDER SUPPORT AGREEMENTS" -->
<DIV align="left"><A NAME="063"></A></DIV>

<P align="center">
<B><FONT size="2">STOCKHOLDER SUPPORT AGREEMENTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">The following summary describes the material
provisions of the stockholder support agreements, the forms of
which are attached to this joint proxy statement/prospectus as
Annex&nbsp;B and Annex&nbsp;C and are incorporated by reference
in this joint proxy statement/prospectus. This summary may not
contain all of the information about the stockholder support
agreements that is important to you. We encourage you to read
the stockholder support agreements carefully in their
entirety.</FONT></I>

<!-- link2 "Intuitive Surgical Stockholders" -->
<DIV align="left"><A NAME="064"></A></DIV>

<P align="left">
<B><FONT size="2">Intuitive Surgical Stockholders</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As an inducement to Intuitive Surgical and
Intuitive Merger Corporation to enter into the merger agreement
and in connection with the execution and delivery of the merger
agreement, Susan K. Barnes, Gary S. Guthart, Scott S. Halsted,
Russell C. Hirsch, Richard J. Kramer, James A. Lawrence, Alan J.
Levy, Frederic H. Moll, Jerome J. McNamara and Lonnie M. Smith,
each of whom is an officer and/or director of Intuitive
Surgical, entered into a stockholder support agreement with
Intuitive Surgical and Intuitive Merger Corporation. As of the
record date for the Intuitive Surgical annual meeting, these
stockholders collectively held an aggregate of approximately
2.8&nbsp;million shares of Intuitive Surgical common stock,
representing approximately 7% of the Intuitive Surgical common
stock outstanding on that date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the terms of the stockholder support
agreements, each stockholder agreed to vote (1)&nbsp;in favor of
the issuance of Intuitive Surgical common stock pursuant to the
merger agreement and (2)&nbsp;against any action or agreement
that would impede, interfere with, delay, postpone or attempt to
discourage issuance of Intuitive Surgical common stock pursuant
to the merger agreement. In addition, each stockholder appointed
Lonnie M. Smith and Susan K. Barnes in their respective
capacities as officers of Intuitive Surgical as such
stockholder&#146;s proxy and attorney-in-fact to vote such
stockholder&#146;s shares of Intuitive Surgical common stock in
accordance with the provisions of the stockholder support
agreement and revoked all prior proxies. Each stockholder also
agreed not to sell or otherwise dispose of such
stockholder&#146;s Intuitive Surgical shares nor to solicit any
acquisition proposal.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The stockholder support agreements terminate upon
the earliest to occur of (1)&nbsp;March&nbsp;7, 2005,
(2)&nbsp;the effective time of the merger or
(3)&nbsp;120&nbsp;days after payment of any termination fee
pursuant to the merger agreement. Please see &#147;The Merger
Agreement&nbsp;&#151; Termination of the Merger Agreement.&#148;
</FONT>

<!-- link2 "Computer Motion Stockholders" -->
<DIV align="left"><A NAME="065"></A></DIV>

<P align="left">
<B><FONT size="2">Computer Motion Stockholders</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As an inducement to Intuitive Surgical and
Intuitive Merger Corporation to enter into the merger agreement
and in connection with the execution and delivery of the merger
agreement, Joseph M. DeVivo, Daniel R. Doiron, Robert W. Duggan,
Eric H. Halvorson, Jeffrey O. Henley, William J. Meloche, David
Munjal, Stephen Pedroff, David A. Stuart, Eugene W. Teal and
Darrin R. Uecker, each of whom is an officer and/or director of
Computer Motion, entered into a stockholder support agreement
with Intuitive Surgical and Intuitive Merger Corporation. As of
May&nbsp;15, 2003, the record date for the Computer Motion
special meeting, these stockholders collectively held an
aggregate of approximately 2.8&nbsp;million shares of Computer
Motion common stock and 1,191&nbsp;shares of Computer Motion
Series&nbsp;D convertible preferred stock, collectively
representing approximately 14% of the voting power of the
Computer Motion common and preferred stock outstanding on that
date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the terms of the stockholder support
agreements, each stockholder agreed to vote (1)&nbsp;in favor of
the approval and adoption the merger agreement and
(2)&nbsp;against any action or agreement that would impede,
interfere with, delay, postpone or attempt to discourage the
merger. In addition, each stockholder appointed Lonnie M. Smith
and Susan K. Barnes in their respective capacities as officers
of Intuitive Surgical as such stockholder&#146;s proxy and
attorney-in-fact to vote such stockholder&#146;s shares of
Computer Motion stock in accordance with the provisions of the
stockholder support agreement and revoked all prior proxies.
Each stockholder also agreed not to sell or otherwise dispose of
such stockholder&#146;s Computer Motion shares nor to solicit
any acquisition proposal.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The stockholder support agreements terminate upon
the earliest to occur of (1)&nbsp;March&nbsp;7, 2005,
(2)&nbsp;the effective time of the merger or
(3)&nbsp;120&nbsp;days after payment of any termination fee
pursuant to the merger agreement. Please see &#147;The Merger
Agreement&nbsp;&#151; Termination of the Merger Agreement.&#148;
</FONT>

<P align="center"><FONT size="2">88
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link2 "LOAN AND SECURITY AGREEMENT" -->
<DIV align="left"><A NAME="066"></A></DIV>

<P align="center">
<B><FONT size="2">LOAN AND SECURITY AGREEMENT</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the execution of the merger
agreement, Intuitive Surgical and Computer Motion entered into a
Loan and Security Agreement, pursuant to which Intuitive
Surgical has agreed to provide a short-term secured bridge loan
facility of up to $7.3&nbsp;million to Computer Motion. Computer
Motion will use up to $5.0&nbsp;million of the facility for
working capital and other general corporate purposes and up to
$2.3&nbsp;million of the facility to repay existing
indebtedness. As of the date of this joint proxy statement/
prospectus, no amount is outstanding under this facility. The
facility will terminate and all outstanding amounts thereunder
will become due and payable 120 following termination of the
merger agreement, subject to specified acceleration events
described below. Interest on amounts borrowed under the facility
will accrue at a rate of 8% per year and is not due and payable
until the maturity date. In order to secure repayment of the
loan, Computer Motion granted Intuitive Surgical a
first-priority security interest in, and lien on, specified
assets of Computer Motion, including present and future accounts
receivable, inventory, equipment, letters of credit and
intellectual property rights. There can be no assurance that
this collateral will be sufficient to secure Computer
Motion&#146;s obligations under the Loan and Security Agreement
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Loan and Security Agreement contains
customary representations and warranties by Computer Motion
relating to, among other things, the following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">corporate organization and similar corporate
    matters;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">authorization, execution, delivery, performance
    and enforceability of the Loan and Security Agreement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">purpose of the loan;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">existing indebtedness;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">title to property and assets;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">intellectual property;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">financial condition; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">location of collateral.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The obligation of Intuitive Surgical to make
loans under the facility is subject to customary conditions,
including the following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">execution and delivery of the loan documents and
    other specified documents and certificates from Computer Motion
    in form and substance satisfactory to Intuitive Surgical;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Intuitive Surgical shall have received evidence
    of a valid and perfected first-priority lien and security
    interest in the collateral and intellectual property of Computer
    Motion;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Intuitive Surgical shall have received evidence
    that the merger agreement and other ancillary agreements are in
    full force and effect;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Intuitive Surgical shall have received evidence
    of insurance on specified Computer Motion assets in form and
    substance satisfactory to Intuitive Surgical; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Intuitive Surgical shall have received additional
    terminations and other documents as Intuitive Surgical may
    reasonably request.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Amounts borrowed under the loan and security
agreement, together with accrued interest, will be due and
payable on the earlier to occur of 120&nbsp;days following
termination of the merger agreement or any of the following
events:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the sale, lease, license, exchange or transfer of
    all or substantially all of the assets of Computer Motion (other
    than pursuant to the merger agreement);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the completion of a recapitalization,
    reorganization, merger, consolidation or other transaction
    resulting in the transfer of control of Computer Motion (other
    than pursuant to the merger agreement); or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any voluntary or involuntary action to liquidate,
    dissolve or wind down the business of Computer Motion.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">89
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL DATA OF INTUITIVE SURGICAL AND COMPUTER MOTION" -->
<DIV align="left"><A NAME="067"></A></DIV>

<P align="center">
<B><FONT size="2">UNAUDITED PRO FORMA</FONT></B>

<DIV align="center">
<B><FONT size="2">CONDENSED COMBINED CONSOLIDATED FINANCIAL
DATA</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">OF INTUITIVE SURGICAL AND COMPUTER
MOTION</FONT></B>
</DIV>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following unaudited pro forma condensed
combined consolidated balance sheet as of March&nbsp;31, 2003
and the unaudited pro forma condensed combined consolidated
statement of operations for the year ended December&nbsp;31,
2002 and three months ended March&nbsp;31, 2003 are based on the
historical audited consolidated financial statements of
Intuitive Surgical and Computer Motion for the year ended
December&nbsp;31, 2002, the historical unaudited consolidated
financial statements of Intuitive Surgical and Computer Motion
for the three months ended March&nbsp;31, 2003 and the
assumptions, estimates and adjustments described in the notes to
the unaudited pro forma condensed combined financial statements.
The assumptions, estimates and adjustments are preliminary and
have been made solely for purposes of developing such pro forma
information.
</FONT>



<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The unaudited pro forma condensed combined
balance sheet gives effect to the merger of Intuitive Surgical
and Computer Motion as if it had occurred on March&nbsp;31,
2003. The unaudited pro forma condensed combined consolidated
statements of operations for the year ended December&nbsp;31,
2002 and the three months ended March&nbsp;31, 2003 give effect
to the proposed merger of Intuitive Surgical and Computer Motion
as if it had occurred on January&nbsp;1, 2002 and
January&nbsp;1, 2003, respectively.
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the purchase method of accounting, the
total estimated purchase price, calculated as described in
Note&nbsp;1 to these unaudited pro forma condensed combined
consolidated financial statements, is allocated to the net
tangible and intangible assets of Computer Motion acquired in
connection with the merger, based on their fair values as of the
completion of the merger. A preliminary valuation was conducted
in order to assist management of Intuitive Surgical in
determining the fair values of a significant portion of these
assets. This preliminary valuation has been considered in
management&#146;s estimates of the fair values reflected in
these unaudited pro forma condensed combined consolidated
financial statements. A final determination of these fair
values, which cannot be made prior to the completion of the
merger, will include management&#146;s consideration of a final
valuation. This final valuation will be based on the actual net
tangible and intangible assets of Computer Motion that exist as
of the date of completion of the merger.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Further, the unaudited pro forma condensed
combined consolidated financial statements do not include any
adjustments for liabilities resulting from integration planning,
as management is in the process of making these assessments and
estimates of these costs are not currently known. However,
liabilities ultimately will be recorded for severance or other
costs associated with removing redundant operations that would
affect amounts in the pro forma condensed combined consolidated
financial statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These unaudited pro forma condensed combined
consolidated financial statements have been prepared based on
preliminary estimates of fair values. Amounts allocated to
intangible assets may increase significantly, which could result
in a material increase in amortization of intangible assets.
Therefore, the actual amounts recorded as of the completion of
the merger may differ materially from the information presented
in these unaudited pro forma condensed combined consolidated
financial statements. The impact of ongoing integration
activities, the timing of completion of the merger, and other
changes in Computer Motion&#146;s net tangible and intangible
assets, which occur prior to completion of the merger, as well
as the receipt of the final valuation, could cause material
differences in the information presented.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The unaudited pro forma condensed combined
consolidated financial statements should be read in conjunction
with the historical audited consolidated financial statements
and accompanying notes of Intuitive Surgical and Computer Motion
incorporated by reference into this joint proxy statement/
prospectus, and the summary of selected historical consolidated
financial data included elsewhere in this joint proxy statement/
prospectus. The unaudited pro forma condensed combined
consolidated financial statements are not intended to represent
or be indicative of the consolidated results of operations or
financial condition of Intuitive Surgical that would have been
reported had the merger been completed as of the dates
presented, and should not be taken as representative of the
future consolidated results of operations or financial condition
of the merged entity.
</FONT>

<P align="center"><FONT size="2">90
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">UNAUDITED PRO FORMA CONDENSED COMBINED
CONSOLIDATED</FONT></B>

<P align="center">
<B><FONT size="2">BALANCE SHEET</FONT></B>

<DIV align="center">
<B><FONT size="2">As of March&nbsp;31, 2003</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(in thousands)</FONT></B>
</DIV>


<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="45%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Historical</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Intuitive</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Computer</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Surgical</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Motion</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Adjustments</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Combined</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">ASSETS</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current assets:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22,774</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,269</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,043</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Restricted cash
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,298</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,298</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)(m)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Short-term investments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22,235</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22,235</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts receivable, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,895</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,665</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29,560</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventory, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,282</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,174</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,407</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(a)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,863</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prepaid and other current assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,037</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,036</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,073</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total current assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76,223</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,442</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">109</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">96,774</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Property and equipment, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,823</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,880</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,703</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Intangible and other assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,370</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">54</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,500</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(b)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100,478</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,700</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(c)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">69,854</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(d)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)(f)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">89,416</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,376</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">97,163</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">211,955</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">LIABILITIES AND STOCKHOLDERS&#146;
    EQUITY</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current liabilities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,142</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,069</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,211</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other accrued liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,810</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,340</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(f)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,750</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,400</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)(j)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred revenue
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,140</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,649</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(963</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)(e)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,826</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Bridge loan
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,300</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,298</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)(m)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current portion of notes payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,434</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,434</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total current liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,526</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22,358</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6,661</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41,223</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred revenue
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,057</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(405</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)(e)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">652</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Long-term notes payable and other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,531</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,531</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27,057</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23,415</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7,066</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43,406</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Stockholders&#146; equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">62,359</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,961</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">104,803</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(h)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">168,549</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(574</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)(i)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total liabilities and stockholders&#146; equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">89,416</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,376</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">97,163</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">211,955</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>


<P align="center">
<FONT size="2">See Notes to Unaudited Pro Forma Condensed
Combined Consolidated Financial Statements.
</FONT>

<P align="center"><FONT size="2">91
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">UNAUDITED PRO FORMA CONDENSED COMBINED
CONSOLIDATED</FONT></B>

<P align="center">
<B><FONT size="2">STATEMENT OF OPERATIONS</FONT></B>

<DIV align="center">
<B><FONT size="2">Year Ended December&nbsp;31, 2002</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(in thousands, except per share
data)</FONT></B>
</DIV>


<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="44%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Historical</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Intuitive</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Computer</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Surgical</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Motion</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Adjustments</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Combined</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">72,022</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,111</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,592</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)(g)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">94,541</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cost of sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34,584</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,860</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,500</FONT></TD>
    <TD align="left" valign="bottom" nowrap>&nbsp;<FONT size="2">(b)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">47,944</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gross margin
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37,438</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,251</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,092</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46,597</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating costs and expenses:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Research and development
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,793</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,903</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,592</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)(g)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,104</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Selling, general and administrative
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40,864</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,416</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">347</FONT></TD>
    <TD align="left" valign="bottom" nowrap>&nbsp;<FONT size="2">(i)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">61,272</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,400</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)(j)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">45</FONT></TD>
    <TD align="left" valign="bottom" nowrap>&nbsp;<FONT size="2">(k)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amortization of acquired intangible assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">550</FONT></TD>
    <TD align="left" valign="bottom" nowrap>&nbsp;<FONT size="2">(c)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">550</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total operating costs and expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">57,657</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35,319</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,050</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">87,926</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(20,219</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(21,068</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(42</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(41,329</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest and other income, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,798</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(53</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,745</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss before income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(18,421</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(21,121</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(42</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(39,584</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax provision
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(18,421</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(21,151</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(42</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(39,614</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dividend to Series&nbsp;B preferred stockholders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,978</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,978</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)(l)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dividend to Series&nbsp;C preferred stockholders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,951</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,951</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)(l)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss available to common stockholders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(18,421</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(32,080</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,887</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(39,614</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Basic and diluted net loss per common share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.51</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.93</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.80</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Shares used in computing basic and diluted net
    loss per common share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36,458</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,665</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,484</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49,639</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>


<P align="center">
<FONT size="2">See Notes to Unaudited Pro Forma Condensed
Combined Consolidated Financial Statements.
</FONT>

<P align="center"><FONT size="2">92
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>


<P align="center">
<B><FONT size="2">UNAUDITED PRO FORMA CONDENSED COMBINED
CONSOLIDATED</FONT></B>



<P align="center">
<B><FONT size="2">STATEMENT OF OPERATIONS</FONT></B>



<DIV align="center">
<B><FONT size="2">Three Months Ended March&nbsp;31,
2003</FONT></B>
</DIV>



<DIV align="center">
<B><FONT size="2">(in thousands, except per share
data)</FONT></B>
</DIV>



<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="44%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Historical</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Intuitive</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Computer</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Surgical</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Motion</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Adjustments</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Combined</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,235</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,011</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(445</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)(g)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,801</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cost of sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,738</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,740</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">875</FONT></TD>
    <TD align="left" valign="bottom" nowrap>&nbsp;<FONT size="2">(b)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,353</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gross margin
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,497</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,271</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,320</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,448</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating costs and expenses:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Research and development
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,209</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,701</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(445</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)(g)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,465</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Selling, general and administrative
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,423</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,276</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">87</FONT></TD>
    <TD align="left" valign="bottom" nowrap>&nbsp;<FONT size="2">(i)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,797</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
    <TD align="left" valign="bottom" nowrap>&nbsp;<FONT size="2">(k)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amortization of acquired intangible assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">139</FONT></TD>
    <TD align="left" valign="bottom" nowrap>&nbsp;<FONT size="2">(c)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">139</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total operating costs and expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,632</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,977</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(208</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,401</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss from operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,135</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7,706</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,112</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11,953</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest and other income, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">842</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(158</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">684</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss before income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,293</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7,864</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,112</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11,269</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax provision
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,293</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7,874</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,112</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11,279</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dividend to Series&nbsp;C preferred stockholders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,375</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,375</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)(l)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss available to common stockholders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,293</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9,249</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(263</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11,279</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Basic and diluted net loss per common share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.06</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.52</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.22</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Shares used in computing basic and diluted net
    loss per common share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36,862</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,694</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,980</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50,576</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>



<P align="center">
<FONT size="2">See Notes to Unaudited Pro Forma Condensed
Combined Consolidated Financial Statements.
</FONT>


<P align="center"><FONT size="2">93
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">NOTES TO UNAUDITED PRO FORMA
CONDENSED</FONT></B>

<P align="center">
<B><FONT size="2">COMBINED CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Note&nbsp;1</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Basis of Pro Forma
    Presentation</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;7, 2003, Intuitive Surgical and
Computer Motion entered into an agreement and plan of merger,
which upon completion will result in Computer Motion becoming a
wholly owned subsidiary of Intuitive Surgical in a transaction
to be accounted for using the purchase method. For a discussion
regarding the primary reasons for the merger, please see
&#147;Reasons for the Merger&nbsp;&#151; Intuitive
Surgical&#148; and &#147;Reasons for the Merger&nbsp;&#151;
Computer Motion.&#148; The total estimated purchase price of
approximately $113.0&nbsp;million includes Intuitive Surgical
common stock valued at $94.5&nbsp;million, assumed options and
warrants with a fair value of $16.4&nbsp;million and estimated
direct transaction costs of $2.0&nbsp;million.
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The unaudited pro forma condensed combined
consolidated financial statements provide for the issuance of
approximately 15.2&nbsp;million shares of Intuitive Surgical
common stock, based upon an assumed exchange ratio of 0.52 of a
share of Intuitive Surgical common stock for each outstanding
share of Computer Motion common stock as of April&nbsp;29, 2003.
This assumed exchange ratio is based on a measurement date of
April&nbsp;29, 2003 for the merger.
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The actual fraction of a share of Intuitive
Surgical common stock into which each share of Computer Motion
common stock will be converted, or the exchange ratio, will be
determined based on the total number of fully diluted shares
outstanding for Intuitive Surgical and Computer Motion
immediately prior to completion of the merger. The number of
Computer Motion&#146;s fully diluted shares may vary based upon
the number of shares of common stock into which Computer
Motion&#146;s preferred stock will be convertible and the number
of shares of Computer Motion common stock which may be issued to
pay accrued dividends on the preferred stock upon conversion.
This preferred stock conversion ratio will, in turn, vary
inversely based upon the average closing bid price for Computer
Motion common stock for the 20 consecutive trading days ending
15&nbsp;consecutive trading days prior to the Computer Motion
special meeting, which is referred to herein as the pricing
period. As a result, the measurement date is expected to be the
date the stockholders of both companies approve of the merger.
For purposes of preparing the unaudited pro forma condensed
combined consolidated financial statements, Intuitive Surgical
assumed a measurement date of April&nbsp;29, 2003. Based on an
estimated completion date of June&nbsp;30, 2003, the anticipated
exchange ratio for Computer Motion common stock could range from
approximately 0.48 to 0.52 depending on the average closing bid
price per share of Computer Motion common stock during the
pricing period.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">While the preferred stock conversion ratio and
the merger exchange ratio may change based on the foregoing
factors, the percentage of shares of the combined company to be
issued to holders of Computer Motion stock, warrants and options
on a fully diluted basis is fixed at 32% in the merger agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The average market price per share of Intuitive
Surgical common stock of $6.20 is based on an average of the
closing prices for two days before, the day of, and two days
after the assumed measurement date of April&nbsp;29, 2003
(April&nbsp;25, 28, 29, 30 and May&nbsp;1).
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on the total number of Computer Motion
options and warrants outstanding at April&nbsp;29, 2003,
Intuitive Surgical will assume options and warrants of Computer
Motion entitling the holders to purchase approximately
5.2&nbsp;million shares of Intuitive Surgical common stock at a
weighted average exercise price of $6.73 per share. The actual
number of options, both vested and unvested, and warrants to be
assumed will be determined based on the actual number of
Computer Motion options and warrants outstanding at the
effective time of the merger. The fair value of the outstanding
options, both vested and unvested, and warrants was determined
using a Black-Scholes valuation model with the following
assumptions: no dividend yield; a weighted average expected
volatility of 74%; and a risk-free interest rate of 1.9%. The
model assumed a weighted average expected life of 1.6&nbsp;years
for assumed options and 4&nbsp;years for assumed warrants.
</FONT>


<P align="center"><FONT size="2">94
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The estimated total purchase price of Computer
Motion in the merger is as follows (in thousands):
</FONT>


<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Value of Intuitive Surgical common stock issued
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">94,522</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Assumption of Computer Motion vested warrants and
    options(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,748</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Assumption of Computer Motion unvested options(2)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">694</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total value of Intuitive Surgical securities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">110,964</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Estimated direct transaction costs
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total estimated purchase price
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">112,964</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>


<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The vested warrants and options were valued using
    a Black-Scholes valuation model. This amount includes
    2.3&nbsp;million options that accelerate upon close of the
    merger under the provisions of Computer Motion&#146;s 1997 Plan.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The unvested options were valued using a
    Black-Scholes valuation model.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the merger, Intuitive Surgical
has agreed to provide a short-term, secured bridge loan facility
of up to a maximum of $7.3&nbsp;million to pay certain operating
expenses and repay debt through the completion of the merger.
Please see &#147;Loan and Security Agreement.&#148; As of the
date of this joint proxy statement/ prospectus, no amount has
been drawn against this facility. Goodwill may increase up to
$7.3&nbsp;million from amounts shown below as Computer Motion
draws amounts under the bridge loan facility.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the purchase method of accounting, the
total estimated purchase price as shown in the table above is
allocated to Computer Motion&#146;s net tangible and intangible
assets based on their estimated fair values as of the date of
the completion of the merger. Based on the preliminary
valuation, and subject to material changes upon development of a
final valuation and other factors as described in the
introduction to these unaudited pro forma condensed combined
consolidated financial statements, the preliminary estimated
purchase price is allocated as follows (in thousands):
</FONT>


<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,269</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts receivable, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,665</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventories, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,581</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prepaid and other assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,036</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Property, plant and equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,880</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">54</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts and notes payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9,071</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other accrued liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,940</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred revenue
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,338</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net tangible assets to be assumed
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,136</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amortizable intangible assets to be acquired
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28,200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Goodwill
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">69,854</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred compensation on unvested options
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">574</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">In-process research and development
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total preliminary estimated purchase price
    allocation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">112,964</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>


<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">*&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Deferred compensation on unvested options is
    based on the portion of the intrinsic value (fair value less the
    exercise price) at April&nbsp;29, 2003 related to the future
    vesting period as follows: intrinsic value of the aggregate
    shares multiplied by (remaining vesting period divided by total
    vesting period). Deferred compensation will be amortized into
    compensation expense over a three year period using the graded
    method.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">95
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Of the total estimated purchase price, a
preliminary estimate of $10.1&nbsp;million has been allocated to
net tangible assets to be assumed and $28.2&nbsp;million has
been allocated to amortizable intangible assets to be acquired.
The depreciation and amortization related to the fair value
adjustment to net tangible assets and the amortization related
to the amortizable intangible assets are reflected as pro forma
adjustments to the unaudited pro forma condensed combined
consolidated statements of operations.
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Developed technology, which comprises products
that have reached technological feasibility, includes products
in Computer Motion&#146;s Zeus, Aesop, Hermes, and Socrates
product lines. Core technology represents a combination of
Computer Motion patents, processes and trade secrets. Intuitive
Surgical expects to amortize the developed and core technology
on a straight-line basis over an average estimated life of seven
years.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The value assigned to developed and core
technology was determined by discounting the estimated future
cash flows of the existing products to their present value. The
revenue estimates used to value the developed and core
technology were based on estimates of relevant market sizes and
growth factors, expected trends in technology and the nature and
expected timing of new product introductions by Computer Motion
and its competitors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The rates utilized to discount the net cash flows
of developed and core technology to their present value are
based on Computer Motion&#146;s weighted average cost of
capital. The weighted average cost of capital reflects the
anticipated market acceptance and penetration, market growth
rates and risks related to the impact of potential changes in
future target markets. Based on these factors, a discount rate
of 14% was deemed appropriate for valuing developed and core
technology.
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Of the total estimated purchase price,
approximately $69.9&nbsp;million has been allocated to goodwill.
Goodwill represents the excess of the purchase price of an
acquired business over the fair value of the underlying net
tangible and intangible assets. Goodwill is not deductible for
tax purposes.
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In accordance with the Statement of Financial
Accounting Standards No.&nbsp;142, &#147;Goodwill and Other
Intangible Assets,&#148; goodwill resulting from business
combinations completed subsequent to June&nbsp;30, 2001 will not
be amortized but instead will be tested for impairment at least
annually (more frequently if certain indicators are present). In
the event that the management of the combined company determines
that the goodwill has become impaired, the combined company will
incur an accounting charge for the amount of impairment during
the fiscal quarter in which the determination is made.
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Of the total estimated purchase price, a
preliminary estimate of $4.2&nbsp;million has been allocated to
in-process research and development and will be charged to
expense in the period during which the merger is completed. Due
to its non-recurring nature, the in-process research and
development expense has been excluded in the unaudited pro forma
condensed combined consolidated statement of operations. Ongoing
in-process research and development projects are aimed at
enhancing existing products with improved features and
capabilities. Specific programs comprising the $4.2&nbsp;million
estimated value of in-process research and development are Zeus
Surgical System version&nbsp;3 ($2.9&nbsp;million), Hermes
control center version&nbsp;2 ($1.2&nbsp;million), and
telecollaboration system version&nbsp;2 ($0.1&nbsp;million).
None of these projects is considered to have alternative uses,
and all of these projects are defined and staffed with first
product shipments scheduled for within calender year 2004. The
Company estimated costs to complete the Zeus Surgical System
version&nbsp;3, Hermes control center version&nbsp;2 and the
telecollaboration system version&nbsp;3 are $0.4&nbsp;million,
$0.3&nbsp;million and $0.1&nbsp;million, respectively. Due to
the complementary nature of the companies&#146; products and
technologies, Intuitive Surgical intends to evaluate and
integrate the in-process R&#38;D of both companies into a single
strategy to provide the best possible product solutions to
customers. This may mean redefining in-process R&#38;D at one or
both companies. Continued product innovation and timely release
of in-process R&#38;D projects, once integrated and redefined as
necessary, are believed to be fundamental to the success and
survival of the combined company.
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Computer Motion is currently developing new
products that qualify as in-process research and development in
certain product areas. Projects which qualify as in-process
research and development represent those that have not yet
reached technological feasibility. Technological feasibility is
defined as
</FONT>

<P align="center"><FONT size="2">96
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">being equivalent to completion of a beta-phase
working prototype in which there is no significant remaining
risk relating to the development.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Computer Motion is currently involved in research
and development projects, which are focused on developing new
products, integrating new technologies, improving product
performance and broadening features and functionalities. There
is a risk that these developments and enhancements will not be
competitive with other products using alternative technologies
that offer comparable functionality.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The value assigned to in-process research and
development was determined by considering the importance of each
project to the overall development plan, estimating costs to
develop the purchased in-process research and development into
commercially viable products, estimating the resulting net cash
flows from the projects when completed and discounting the net
cash flows to their present value. The revenue estimates used to
value the purchased in-process research and development were
based on estimates of relevant market sizes and growth factors,
expected trends in technology and the nature and expected timing
of new product introductions by Computer Motion and its
competitors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The rates utilized to discount the net cash flows
to their present value are based on Computer Motion&#146;s
weighted average cost of capital. The weighted average cost of
capital was adjusted to reflect the difficulties and
uncertainties in completing each project and thereby achieving
technological feasibility, the percentage of completion of each
project, anticipated market acceptance and penetration, market
growth rates and risks related to the impact of potential
changes in future target markets. Based on these factors,
discount rates that range from 20% to 22% were deemed
appropriate for valuing the in-process research and development.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pro forma adjustments are necessary to reflect
the estimated purchase price, to adjust amounts related to
Computer Motion&#146;s net tangible and intangible assets to a
preliminary estimate of their fair values, to reflect the
amortization expense related to the estimated amortizable
intangible assets, to reflect changes in depreciation and
amortization expense resulting from the estimated fair value
adjustments to net tangible assets, and to adjust certain
Computer Motion amounts to conform to Intuitive Surgical&#146;s
accounting policies.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical has not identified any
preacquisition contingencies where the related asset, liability
or impairment is probable and the amount of the asset, liability
or impairment can be reasonably estimated. Prior to the end of
the purchase price allocation period, if information becomes
available which would indicate it is probable that such events
have occurred and the amounts can be reasonably estimated, such
items will be included in the purchase price allocation.
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical and Computer Motion have
commenced planning for the post-merger transition. Intuitive
Surgical&#146;s management anticipates annual pre-tax cost
savings of up to $18&nbsp;million commencing in late 2003 as a
result of the merger, of which approximately $10&nbsp;million
will result from a substantial reduction in headcount. The
companies are analyzing possible post-merger plans to enhance
the efficiency and productivity of a merged company. While no
final decisions have been made, the companies are considering
various post-merger opportunities including the consolidation of
manufacturing and administrative functions at corporate
headquarters, maintaining an engineering presence in multiple
locations, and creating a single sales and service force to
cost-effectively serve and support customers world-wide.
Management currently estimates that approximately
$16&nbsp;million of the anticipated cost savings would come from
a reduction in selling, general and administrative expenses of
the combined companies, and approximately $2&nbsp;million from a
reduction in research and development expenses of the combined
companies. These estimates were based on a preliminary analysis
of the expenditures necessary to support the marketing, sales
and administrative functions, as well as product development
functions, of the combined companies. These estimates are not
based on any determination of actual headcount reductions or
estimated reductions in specific items of expense. Accordingly,
the overall cost savings estimate as well as the estimated
components of such savings set forth above are subject to
revision once management finalizes a restructuring plan to be
implemented following closing, Moreover, Intuitive
Surgical&#146;s ability to achieve these goals is subject to
economic conditions and unanticipated changes in business
conditions, and
</FONT>


<P align="center"><FONT size="2">97
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>


<DIV align="left">
<FONT size="2">therefore there can be no assurance that these
results will be achieved. Please see &#147;Cautionary Statement
Regarding Forward-Looking Statements.&#148;
</FONT>
</DIV>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The pro forma adjustments included in the
unaudited pro forma condensed combined consolidated financial
statements are as follows:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(a)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Adjustment to record the difference between the
    preliminary estimate of the fair value and the historical amount
    of Computer Motion&#146;s inventory. An adjustment to the
    statement of operations has not been recorded, as it does not
    have a continuing impact on the business.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(b)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Adjustment to reflect the preliminary estimate of
    the fair value of developed technology. The preliminary fair
    value is $24.5&nbsp;million with an estimated useful life of
    7&nbsp;years, resulting in increased amortization expense of
    $3.5&nbsp;million.
    </FONT></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(c)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Adjustments to reflect the preliminary estimate
    of fair value of purchased intangible assets. Those assets
    consist primarily of customer relationships, trademarks and
    internal use software. The preliminary fair value is
    $3.7&nbsp;million with estimated useful lives from 4 to
    7&nbsp;years, resulting in amortization expense of $550,000 and
    $139,000 for the year ended December&nbsp;31, 2002, and the
    three months ended March&nbsp;31, 2003, respectively.
    </FONT></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(d)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Adjustment to reflect the preliminary estimate of
    the fair value of goodwill.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(e)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Adjustment to reflect the preliminary estimate of
    the fair value of Intuitive Surgical&#146;s legal performance
    obligations under certain service contracts and to eliminate
    historical amounts of Computer Motion&#146;s deferred revenue
    that does not represent a legal performance obligation to the
    combined company.
    </FONT></TD>
</TR>

</TABLE>
<P>


<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="3%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(f)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Adjustment to reflect $1.0&nbsp;million of
    estimated direct transaction costs not incurred as of
    March&nbsp;31, 2003 and to eliminate $1.0&nbsp;million of direct
    transaction costs included in other assets as of March&nbsp;31,
    2003.
    </FONT></TD>
</TR>

</TABLE>

<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(g)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Adjustment to conform Intuitive Surgical and
    Computer Motion&#146;s accounting policies regarding the
    classification of development and grant revenue. The adjustment
    re-classifies non-refundable payments received under grant and
    product development arrangements from revenue to an offset of
    research and development costs.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(h)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Adjustments to stockholders&#146; equity (in
    thousands):
    </FONT></TD>
</TR>

</TABLE>


<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">To record the estimated value of Intuitive
    Surgical shares to be issued and Computer Motion warrants and
    options to be assumed in the merger
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">110,964</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">To record the preliminary estimate of the fair
    value of in-process research and development
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,200</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">To eliminate Computer Motion&#146;s historical
    stockholders&#146; equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,961</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">104,803</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="3%"></TD>
    <TD width="94%"></TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(i)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Adjustment to record the deferred compensation
    and amortization related to unvested options assumed. The
    preliminary estimate is based on the intrinsic value of the
    these options on March&nbsp;20, 2003 for options outstanding on
    March&nbsp;21, 2003. The deferred compensation related to
    unvested options is being amortized using the graded method over
    a three year period, which is the estimated vesting period of
    these options.
    </FONT></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(j)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Adjustment to eliminate the accrual and expense
    as of and for the period ended December&nbsp;31, 2002 and the
    accrual as of March&nbsp;31, 2003 for the litigation settlement
    between Computer Motion and Intuitive Surgical, as collection of
    the underlying judgement will not be pursued. Although IBM
    Corporation was a co-plaintiff with Intuitive Surgical in the
    lawsuit, none of the damage award against Computer Motion was
    payable to IBM because Computer Motion&#146;s infringement was
    determined to have caused injury only to Intuitive
    Surgical&#146;s, and not IBM&#146;s, business.
    </FONT></TD>
</TR>


</TABLE>

<P align="center"><FONT size="2">98
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>


<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(k)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Adjustment to record stock compensation expense
    related to non-employee options assumed in the merger. The fair
    market value of the options was determined using the
    Black-Scholes valuation model with the following assumptions: No
    dividend yield; an expected volatility of 80%; a risk-free
    interest rate of 4.1%; and a contractual life of 9.7&nbsp;years.
    The compensation expense is being amortized using the graded
    method over a three year service period.
    </FONT></TD>
</TR>

</TABLE>

<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="3%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(l)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Adjustment to eliminate the dividends on
    preferred stock due to the assumed conversion of the preferred
    stock to common stock immediately prior to the effective time of
    the merger.
    </FONT></TD>
</TR>

</TABLE>
<P>


<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(m)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Adjustment to record the payment of the
    short-term bridge loan with Agility Capital, LLC that is due
    upon close of the merger.
    </FONT></TD>
</TR>

</TABLE>


<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Note&nbsp;2</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Pro Forma Earnings Per Share</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The pro forma basic and diluted net loss per
share are based on the weighted average number of shares of
Intuitive Surgical common stock outstanding and the weighted
average number of shares of Computer Motion common stock
outstanding multiplied by the estimated exchange ratio. The
weighted average number of shares have been adjusted to reflect
the issuance of approximately 4.6&nbsp;million shares of
Intuitive Surgical&#146;s common stock for the conversion of
Computer Motion&#146;s preferred stock, as if the shares had
been outstanding for the entire period.
</FONT>

<P align="center"><FONT size="2">99
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "COMPARISON OF STOCKHOLDER RIGHTS AND CORPORATE GOVERNANCE MATTERS" -->
<DIV align="left"><A NAME="068"></A></DIV>

<P align="center">
<B><FONT size="2">COMPARISON OF STOCKHOLDER RIGHTS AND CORPORATE
GOVERNANCE MATTERS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Both Intuitive Surgical and Computer Motion are
incorporated under the laws of the State of Delaware. Before the
completion of the merger, the rights of holders of Computer
Motion stock are governed by Delaware law, the Second Amended
and Restated Certificate of Incorporation of Computer Motion and
the Bylaws of Computer Motion. After the completion of the
merger, former Computer Motion stockholders will become
stockholders of Intuitive Surgical, and their rights will be
governed by Delaware law, the Amended and Restated Certificate
of Incorporation of Intuitive Surgical and the Bylaws of
Intuitive Surgical.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">While there are substantial similarities between
the certificates of incorporation and bylaws of Intuitive
Surgical and Computer Motion, a number of differences do exist.
The following is a summary of the material differences between
the rights of Intuitive Surgical stockholders and the rights of
Computer Motion stockholders. While we believe that this summary
covers the material differences between the two, this summary
may not contain all of the information that is important to you.
This summary is not intended to be a complete discussion of the
respective rights of Intuitive Surgical and Computer Motion
stockholders and it is qualified in its entirety by reference to
Delaware law and the various documents of Intuitive Surgical and
Computer Motion that we refer to in this summary. You should
carefully read this entire joint proxy statement/prospectus and
the other documents we refer to in this joint proxy
statement/prospectus for a more complete understanding of the
differences between being a stockholder of Intuitive Surgical
and being a stockholder of Computer Motion. Intuitive Surgical
and Computer Motion have filed with the SEC their respective
documents referred to herein and will send copies of these
documents to you upon your request. Please see &#147;Where You
Can Find More Information.&#148;
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="20%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Intuitive Surgical</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Computer Motion</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <I><FONT size="2">Authorized Capital Stock</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">The authorized capital stock of Intuitive
    Surgical consists of 200,000,000 shares of common stock, par
    value of $0.001 per share, and 5,000,000 shares of preferred
    stock, par value of $0.001 per share.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">The authorized capital stock of Computer Motion
    consists of 50,000,000 shares of common stock, par value of
    $0.001 per share, and 5,000,000 shares of preferred stock, par
    value $0.001 per share, including 12,000 shares of Series&nbsp;A
    junior participating preferred stock, 12,000 shares of
    Series&nbsp;B convertible preferred stock, 10,750 shares of
    Series&nbsp;C convertible preferred stock, and 10,750 shares of
    Series&nbsp;D convertible preferred stock.
    </FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <I><FONT size="2">Number of Directors</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Delaware law provides that a corporation must
    have at least one director and that the number of directors
    shall be fixed by or in the manner provided in the bylaws unless
    the certificate of incorporation fixes the number of directors.
    Intuitive Surgical&#146;s Amended and Restated Certificate of
    Incorporation provides that the number of directors shall be
    fixed from time to time exclusively by the board of directors.
    The number of directors of Intuitive Surgical is currently fixed
    at seven.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Computer Motion&#146;s Second Amended and
    Restated Certificate of Incorporation does not fix the number of
    directors and its bylaws provide that its board of directors
    will consist of seven directors, unless such number is increased
    by the stockholders or the board of directors then in office.
    The number of directors of Computer Motion is currently fixed at
    seven.
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">100
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="20%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Intuitive Surgical</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Computer Motion</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <I><FONT size="2">Cumulative Voting</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Delaware law allows for a corporation&#146;s
    certificate of incorporation to permit stockholders to cumulate
    their votes for directors. The Amended and Restated Certificate
    of Incorporation of Intuitive Surgical provides that holders of
    Intuitive Surgical common stock have cumulative voting rights
    only if, among other things, the corporation ceases to be a
    listed on the Nasdaq National Market.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">The Second Amended and Restated Certificate of
    Incorporation of Computer Motion does not provide for cumulative
    voting for directors.
    </FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <I><FONT size="2">Classification of Board of Directors</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Delaware law permits, but does not require, a
    classified board of directors, divided into as many as three
    classes with staggered terms under which one-half or one-third
    of the directors are elected to terms of two or three years, as
    applicable. Intuitive Surgical&#146;s Amended and Restated
    Certificate of Incorporation provides for three classes of
    directors that serve staggered terms of three years.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Computer Motion&#146;s Second Amended and
    Restated Certificate of Incorporation and Bylaws do not provide
    for the classification of the board of directors.
    </FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <I><FONT size="2">Removal of Directors</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Under Delaware law, directors may be removed from
    office by a majority stockholder vote and in the case of the
    corporation whose board is classified, stockholders may effect
    such removal only for cause. Intuitive Surgical&#146;s Amended
    and Restated Certificate of Incorporation provides that
    directors may be removed as provided by Delaware law. Because
    Intuitive Surgical has a classified board of directors,
    stockholders may effect removal of the directors for cause.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Computer Motion&#146;s Bylaws provide that
    Computer Motion&#146;s directors may be removed from office by a
    majority stockholder vote.
    </FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <I><FONT size="2">Amendment of Certificate of
    Incorporation</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Under Delaware law and Intuitive Surgical&#146;s
    Amended and Restated Certificate of Incorporation the
    certificate of incorporation may be amended by the affirmative
    vote of the holders of a majority of the voting rights of all
    classes of stock entitled to vote. However, the affirmative vote
    of the holders of 66&nbsp;2/3% of the voting power of all of the
    outstanding shares of capital stock of the corporation entitled
    to vote generally in the election of directors, voting together
    as a single class, is required to amend the provisions relating
    to:<BR>
    <BR>
    <BR>
    &#149;&nbsp;the authority, number and classification
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Under Delaware law, Computer Motion&#146;s Second
    Amended and Restated Certificate of Incorporation may be amended
    by the affirmative vote of the holders of a majority of the
    voting rights of all classes of stock entitled to vote.
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">101
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="20%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Intuitive Surgical</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Computer Motion</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">of Intuitive Surgical&#146;s board of
    directors;<BR>
    <BR>
    <BR>
    &#149;&nbsp;the election (including the filling of vacancies)
    and removal of directors;<BR>
    <BR>
    <BR>
    &#149;&nbsp;the procedures required to amend Intuitive
    Surgical&#146;s Bylaws;<BR>
    <BR>
    <BR>
    &#149;&nbsp;stockholder action only being allowed at a duly
    called annual or special meeting;<BR>
    <BR>
    <BR>
    &#149;&nbsp;notice of stockholder nomination of directors and
    other business of stockholders to be brought at any meeting of
    stockholders;<BR>
    <BR>
    <BR>
    &#149;&nbsp;the calling of special meetings;<BR>
    <BR>
    <BR>
    &#149;&nbsp;the elimination of directors&#146; personal
    liability for monetary damages;<BR>
    <BR>
    <BR>
    &#149;&nbsp;indemnification of directors, officers and other
    persons; and<BR>
    <BR>
    <BR>
    &#149;&nbsp;the percentage of shares necessary to amend the
    certificate of incorporation.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <I><FONT size="2">Amendment of Bylaws</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Delaware law provides that a corporation&#146;s
    stockholders entitled to vote have the power to amend bylaws,
    although the corporation&#146;s certificate of incorporation may
    give the board of directors the power to amend the bylaws.
    Intuitive Surgical&#146;s Amended and Restated Certificate of
    Incorporation provides that the bylaws may be amended by
    Intuitive Surgical&#146;s board of directors or by an
    affirmative vote of the holders of 66&nbsp;2/3% of the voting
    power of all stock entitled to vote.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Computer Motion&#146;s Second Amended and
    Restated Certificate of Incorporation provides that the bylaws
    may be amended, altered or repealed by the board of directors.
    </FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <I><FONT size="2">Special Meeting of Stockholders</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Under Delaware law, meetings may be held in the
    manner provided by the bylaws of the corporation. Intuitive
    Surgical&#146;s Amended and Restated Certificate of
    Incorporation and Bylaws provide that special meetings of the
    stockholders may be called by the chairman of the board, the
    chief executive officer, or a majority of the board of directors.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Computer Motion&#146;s Bylaws provide that
    special meetings of the stockholders may be called by the
    chairman of the board, the president, or one-third or more in
    number of directors.
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">102
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="20%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Intuitive Surgical</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Computer Motion</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <I><FONT size="2">Delivery and Notice Requirements of
    Stockholder Nominations and Proposals</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Intuitive Surgical&#146;s Bylaws provide that for
    a stockholder proposal to be brought properly before an annual
    meeting, the proposal must be a proper matter for stockholder
    action under Delaware law and the stockholder must notify the
    corporate secretary of Intuitive Surgical not less than
    90&nbsp;days nor more than 120&nbsp;days prior to the first
    anniversary of the preceding year&#146;s annual meeting.
    However, if the actual date of the annual meeting is more than
    30&nbsp;days before or more than 30&nbsp;days after that
    anniversary date, then notice must be delivered no earlier than
    the 120th day prior to the annual meeting and no later than the
    90th day prior to the annual meeting, or no later than the 10th
    day after the day on which public announcement of the date of
    the annual meeting is first made by Intuitive Surgical.<BR>
    <BR>
    <BR>
    Intuitive Surgical&#146;s Bylaws also provide that in the event
    Intuitive Surgical calls a special meeting of stockholders for
    the purpose of electing directors, a stockholder may nominate a
    person for election if they deliver notice to the secretary of
    Intuitive Surgical no earlier than the 120th day prior to the
    special meeting and no later than the 90th day prior to such
    special meeting, or the 10th day following the day in which
    public announcement of the special meeting is first made by
    Intuitive Surgical.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Computer Motion&#146;s Bylaws provide that for a
    stockholder proposal to be brought properly before any
    stockholder meeting, the stockholder must notify the corporate
    secretary of Computer Motion not less than 45&nbsp;days nor more
    than 90 days prior to such meeting. However, if less than
    55&nbsp;days notice of the meeting is given to stockholders,
    notice by the stockholder must be received no later than the
    10th day after the day on which public disclosure of the meeting
    is first made by Computer Motion.
    </FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <I><FONT size="2">Limitation of Personal Liability
    of&nbsp;Directors and Officers</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">In accordance with Delaware law, Intuitive
    Surgical&#146;s Amended and Restated Certificate of
    Incorporation provides for the indemnification of its directors
    from personal liability to the fullest extent not prohibited by
    Delaware law. Delaware law permits a corporation to eliminate a
    director&#146;s personal liability for monetary damages
    resulting from a breach of fiduciary duty, except in
    circumstances involving wrongful acts, including the
    following:<BR>
    <BR>
    <BR>
    &#149;&nbsp;any breach of the duty of loyalty to the corporation
    or its stockholders;<BR>
    <BR>
    <BR>
    &#149;&nbsp;acts or omissions not in good faith or
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">In accordance with Delaware law, Computer
    Motion&#146;s Second Amended and Restated Certificate of
    Incorporation provides that none of its directors shall be
    personally liable to it or any of its stockholders for monetary
    damages for breach of fiduciary duty as a director. However,
    this provision excludes any limitation on liability for:<BR>
    <BR>
    <BR>
    &#149;&nbsp;any breach of the duty of loyalty to the corporation
    or stockholders;<BR>
    <BR>
    <BR>
    &#149;&nbsp;acts or omissions not in good faith or which involve
    intentional misconduct or a knowing violation of law;
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">103
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="20%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Intuitive Surgical</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Computer Motion</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">which involve intentional misconduct or a knowing
    violation of law;<BR>
    <BR>
    <BR>
    &#149;&nbsp;for any acts under Section&nbsp;174 of the Delaware
    General Corporation Law; or<BR>
    <BR>
    <BR>
    &#149;&nbsp;any transaction from which the director derives an
    improper personal benefit.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <BR>
    <BR>
    <BR>
    <FONT size="2">&#149;&nbsp;unlawful distributions under Delaware
    law; or<BR>
    <BR>
    <BR>
    &#149;&nbsp;any transaction from which the director derives an
    improper personal benefit.
    </FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <I><FONT size="2">Stockholder Rights Plan</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Intuitive Surgical does not have a stockholder
    rights plan.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">On June&nbsp;14, 1999, Computer Motion adopted a
    stockholder rights plan pursuant to a rights agreement. The
    following description of the rights agreement is subject in its
    entirety to the terms and conditions of the rights agreement.
    You should read the rights agreement carefully. See &#147;Where
    You Can Find More Information&#148; below.<BR>
    <BR>
    <BR>
     <I>Exercisability of Rights. </I>Pursuant to Computer
    Motion&#146;s rights agreement, one whole right attaches to each
    share of Computer Motion common stock outstanding on
    June&nbsp;28, 1999. Each right entitles the registered holder to
    purchase from Computer Motion one one- hundredth (1/100) of a
    share of Computer Motion Series A Junior Participating Preferred
    Stock at an initial purchase price of $70.00, subject
    adjustment.<BR>
    <BR>
    <BR>
    The rights do not become exercisable until the earlier to occur
    of:<BR>
    <BR>
    <BR>
    &#149;&nbsp;10 business days following a public announcement
    that a person or group has acquired beneficial ownership of 20%
    or more of Computer Motion&#146;s outstanding common stock,
    or<BR>
    <BR>
    <BR>
    &#149;&nbsp;10 business days following the commencement or
    announcement of an intention to make a tender offer or exchange
    offer, that would result in a person or entity becoming the
    beneficial owner of 20% or more of such outstanding common
    stock.<BR>
    <BR>
    <BR>
     <I>&#147;Flip-In&#148; Feature. </I>If a person or group
    becomes the beneficial owner of 20% or
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">104
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="20%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Intuitive Surgical</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Computer Motion</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">more of the outstanding shares of Computer Motion
    common stock, then each registered holder of a Computer Motion
    right, except for such person or group, will be entitled to
    purchase, upon exercise, shares of Computer Motion common stock
    having a then current market value equal to two times the
    exercise price of the right.<BR>
    <BR>
    <BR>
     <I>&#147;Flip-Over&#148; Feature. </I>Each right will entitle
    the holder, except for a person or group that is the beneficial
    owner of 20% or more of the outstanding shares of Computer
    Motion common stock, to purchase, upon exercise, a number of
    shares of common stock of an acquiring company having a then
    current market value of two times the exercise price of the
    right if an acquiring company obtains 20% or more of the
    outstanding shares of Computer Motion common stock and then one
    of the following occurs:<BR>
    <BR>
    <BR>
    &#149;&nbsp;Computer Motion is involved in a merger, or<BR>
    <BR>
    <BR>
    &#149;&nbsp;Computer Motion sells more than 50% of its assets or
    earning power to an acquiring company.<BR>
    <BR>
    <BR>
    Computer Motion may, at its option, at any time prior to the
    close of business on the tenth day following the day a person or
    group acquires 20% or more of the outstanding common stock of
    Computer Motion, redeem all of the then- outstanding rights at a
    redemption price of $.01 per right, subject to certain
    adjustments.<BR>
    <BR>
    <BR>
    At any time after a person or group acquires 20% or more of the
    outstanding common stock of Computer Motion and prior to the
    acquisition by that person or group of 50% or more of the
    outstanding common stock, Computer Motion&#146;s board of
    directors may cause it to acquire the rights (other than rights
    owned by the person or group that acquired 20%, which
    terminated) of the outstanding shares of
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">105
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="20%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Intuitive Surgical</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Computer Motion</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">common stock of Computer Motion, in whole or in
    part, in exchange for common stock having a value equal to the
    exercise price.<BR>
    <BR>
    <BR>
    Until a right is exercised, the holder thereof, as such, will
    have no rights as a stockholder of the Computer Motion and will
    not have the right to vote or to receive dividends by virtue of
    the right.<BR>
    <BR>
    <BR>
    Any of the provisions of the rights agreement may be amended by
    the board of directors of Computer Motion prior to the exercise
    date. After the exercise date, the provisions of the rights
    agreement may be amended by the board of directors in order to
    cure any ambiguity, to make changes which do not adversely
    affect the interests of holders of rights, or to shorten or
    lengthen any time period under the rights agreement; provided,
    however, that no amendment to adjust the time period governing
    redemption shall be made at such time as the rights are not
    redeemable.<BR>
    <BR>
    <BR>
     <I>Anti-takeover Effects. </I>Computer Motion&#146;s rights
    agreement is designed to maximize the value of Computer
    Motion&#146;s outstanding common stock in the event of an
    unsolicited attempt to take over Computer Motion in a manner or
    on terms that are not approved by the Computer Motion board of
    directors. Once the Computer Motion rights have become
    exercisable, the rights will cause substantial dilution to a
    person or group that attempts to acquire or merge with Computer
    Motion in most cases. The rights could discourage, delay or
    prevent certain types of transactions involving an actual or
    potential change in control of Computer Motion, including
    transactions in which stockholders might otherwise receive a
    premium for their shares over current market prices. The rights
    should not interfere with any merger or other business
    combination approved by the Computer Motion board of directors
    since Computer Motion may redeem the
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">106
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="20%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Intuitive Surgical</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Computer Motion</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">rights prior to the time that a person becomes
    the beneficial owner of 20% or more of outstanding shares of
    Computer Motion common stock.<BR>
    <BR>
    <BR>
    The Computer Motion rights agreement does not apply to the
    merger with Intuitive Surgical.
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">107
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "APPRAISAL RIGHTS" -->
<DIV align="left"><A NAME="069"></A></DIV>

<P align="center">
<B><FONT size="2">APPRAISAL RIGHTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under applicable Delaware law, neither the
stockholders of Intuitive Surgical nor the stockholders of
Computer Motion will have dissenters&#146; rights of appraisal
in connection with the merger.
</FONT>

<P align="center"><FONT size="2">108
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "AUTHORIZATION FOR INTUITIVE SURGICAL&#146;S BOARD OF DIRECTORS TO AMEND INTUITIVE SURGICAL&#146;S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT" -->
<DIV align="left"><A NAME="070"></A></DIV>

<P align="center">
<B><FONT size="2">AUTHORIZATION FOR INTUITIVE SURGICAL&#146;S
BOARD OF DIRECTORS TO AMEND</FONT></B>

<DIV align="center">
<B><FONT size="2">INTUITIVE SURGICAL&#146;S AMENDED AND
RESTATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">CERTIFICATE OF INCORPORATION TO EFFECT A
REVERSE STOCK SPLIT</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical&#146;s board of directors has
unanimously recommended that an amendment to Intuitive
Surgical&#146;s Amended and Restated Certificate of
Incorporation effecting a reverse stock split of Intuitive
Surgical&#146;s common stock be presented to stockholders for
approval at the annual meeting. The amendment is attached as
Annex&nbsp;F to this joint proxy statement/ prospectus. If
approved, this amendment would result in the automatic
conversion of each share of Intuitive Surgical common stock
outstanding as of the time of filing of the amendment with the
Secretary of State of the State of Delaware into one-half of one
share of Intuitive Surgical common stock.
</FONT>

<P align="left">
<B><FONT size="2">General</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical&#146;s board of directors
believes that the reverse stock split will be beneficial to
Intuitive Surgical and its stockholders. The reverse stock split
is intended to increase the marketability and liquidity of
Intuitive Surgical&#146;s common stock. Intuitive
Surgical&#146;s board of directors believes that the current
market price of Intuitive Surgical&#146;s common stock has a
tendency to diminish the effective marketability of the common
stock because of the reluctance of many brokerage firms to
recommend lower-priced stocks to their clients. Additionally,
the policies and practices of a number of brokerage houses tend
to discourage individual brokers within those firms from dealing
in lower-priced stocks. Some of these policies and practices
relate to the payment of broker&#146;s commissions and to
time-consuming procedures that operate to make the handling of
lower-priced stocks economically unattractive to brokers. The
structure of trading commissions also tends to have an adverse
impact upon holders of lower-priced stocks because the brokerage
commission payable on the sale of a lower-priced stock generally
represents a higher percentage of the sales price than the
commission on a relatively higher-priced stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical&#146;s board of directors also
believes that the relatively low price of Intuitive
Surgical&#146;s common stock, when compared with the market
prices of the common stock of other medical device companies,
impairs the marketability of Intuitive Surgical&#146;s common
stock to institutional investors and members of the investing
public and creates a negative impression with respect to
Intuitive Surgical. Theoretically, the number of shares of
Intuitive Surgical common stock outstanding should not, by
itself, affect the marketability of Intuitive Surgical&#146;s
common stock, the type of investor who acquires it or Intuitive
Surgical&#146;s reputation in the medical device industry. In
practice this may not necessarily be the case, as many investors
view low-priced stock as unduly speculative in nature and, as a
matter of practice, avoid or limit investments in such stocks.
The foregoing factors adversely affect not only the liquidity of
Intuitive Surgical&#146;s common stock, but also Intuitive
Surgical&#146;s ability to raise additional capital through a
sale of equity securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical&#146;s board of directors is
hopeful, although no assurance can be given, that the decrease
in the number of shares of Intuitive Surgical common stock
outstanding as a consequence of the proposed reverse stock
split, and the anticipated corresponding increased price per
share, will stimulate interest in Intuitive Surgical&#146;s
common stock and possibly promote greater liquidity for
Intuitive Surgical&#146;s stockholders with respect to those
shares presently held by them. However, the possibility does
exist that such liquidity may be adversely affected by the
reduced number of shares which will be outstanding if the
proposed reverse stock split is effected.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical&#146;s board of directors is
also hopeful that the proposed reverse stock split will result
in a price level for the shares that will mitigate the present
reluctance, policies and practices on the part of brokerage
firms referred to above and diminish the adverse impact of
trading commissions on the potential market for shares of
Intuitive Surgical&#146;s common stock. However, there can be no
assurance that the proposed reverse stock split will achieve the
desired results outlined above, nor can there be any assurance
that the price per share of Intuitive Surgical&#146;s common
stock immediately after the proposed reverse stock split will
increase proportionately with the reverse split or that any
increase can be sustained for a long period of time.
</FONT>

<P align="center"><FONT size="2">109
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If Intuitive Surgical&#146;s stockholders approve
the amendment at the annual meeting, the reverse stock split
will be effected, if at all, only upon a determination by
Intuitive Surgical&#146;s board of directors that the reverse
stock split is in the best interests of Intuitive Surgical and
its stockholders at that time. Intuitive Surgical&#146;s board
of directors may determine to effect the reverse stock split
before or after the merger. Such determination will be based
upon a number of factors, including but not limited to the
then-current price of Intuitive Surgical&#146;s common stock,
the availability of additional working capital, existing and
expected marketability and liquidity of Intuitive
Surgical&#146;s common stock, prevailing market conditions and
the likely effect on the market price of Intuitive
Surgical&#146;s common stock. Notwithstanding approval of the
amendment by the stockholders at the annual meeting, Intuitive
Surgical&#146;s board of directors may, in its sole discretion,
determine not to effect the reverse stock split prior to
Intuitive Surgical&#146;s 2004 annual meeting of stockholders.
If Intuitive Surgical&#146;s board of directors fails to
implement the reverse stock split prior to such meeting,
stockholder approval again would be required prior to
implementing any reverse stock split.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical is not aware of any present
efforts by any persons to accumulate Intuitive Surgical&#146;s
common stock or to obtain control of Intuitive Surgical and the
proposed reverse stock split is not intended to be an
anti-takeover device. The amendment is being sought simply to
enhance the image of Intuitive Surgical, its corporate
flexibility and to price the stock in a price range generally
more acceptable to the brokerage community and to investors.
</FONT>

<P align="left">
<B><FONT size="2">Effects of the Reverse Stock Split</FONT></B>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on the capitalization of Intuitive Surgical
as of the date of this joint proxy statement/ prospectus and
assuming an exchange ratio in the merger of 0.26, we estimate
that approximately 26.6&nbsp;million shares of Intuitive
Surgical&#146;s common stock will be outstanding as a result of
the reverse stock split and assuming that the merger is
completed.
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All outstanding options, warrants, rights and
convertible securities will be appropriately adjusted, as
required by their terms, for the reverse stock split
automatically on the effective date of the reverse stock split.
The reverse stock split will affect all stockholders equally and
will not affect any stockholder&#146;s proportionate equity
interest in Intuitive Surgical except to the extent of cash in
lieu of fractional shares. None of the rights currently accruing
to holders of Intuitive Surgical&#146;s common stock, options or
warrants to purchase common stock, or securities convertible
into common stock will be affected by the reverse stock split.
Following the reverse stock split, each share of new common
stock will entitle the holder thereof to one vote per share and
will otherwise be identical to the existing common stock. The
reverse stock split will reduce by 50% the number of authorized
shares of common and preferred stock of Intuitive Surgical. The
reverse split will have no effect on the par value of Intuitive
Surgical&#146;s stock.
</FONT>

<P align="left">
<B><FONT size="2">Consequences of the Reverse Stock
Split</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each stock certificate representing old common
stock will, after the effective date of the reverse stock split,
represent the appropriate number of shares of new common stock
reflecting the reverse stock split. It will not be necessary for
stockholders to exchange their existing stock certificates.
Stockholders may, however, exchange their certificates if they
so choose.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">No scrip or fractional certificates will be
issued in the reverse stock split. Any fractional number of
shares remaining after applying the reverse stock split to each
certificate representing shares of Intuitive Surgical common
stock then held by any holder will be redeemed at a purchase
price equal to the closing bid price of Intuitive
Surgical&#146;s common stock on the Nasdaq National Market on
the day the reverse stock split is completed. For the purpose of
determining ownership of Intuitive Surgical&#146;s common stock
at the effective date of the reverse stock split, shares will be
considered to be held by the person in whose name those shares
are registered on Intuitive Surgical&#146;s stock records,
regardless of the beneficial ownership of those shares.
</FONT>

<P align="center"><FONT size="2">110
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The reverse stock split may leave certain
stockholders with &#147;odd lots&#148; of common stock (i.e.,
stock in amounts of less than 100&nbsp;shares). These shares may
be more difficult to sell, or require a greater commission per
share to sell, than shares in even multiples of 100.
</FONT>

<P align="left">
<B><FONT size="2">Material Federal Income Tax Consequences of
the Reverse Stock Split</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a summary of the material
anticipated federal income tax consequences of the reverse stock
split to stockholders of Intuitive Surgical. This summary is
based on the provisions of the Internal Revenue Code of 1986, as
amended, or the Code, existing and proposed Treasury regulations
and current administrative rulings and court proceedings, all of
which are subject to change. This summary does not take into
account possible changes in such laws or interpretations,
including amendments to the Code, applicable statutes,
Regulations and proposed Regulations or changes in judicial or
administrative rulings, which may have retroactive effect. No
assurance can be given that any such changes will not adversely
affect the discussion of this summary.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This summary is provided for general information
only and does not purport to address all aspects of the possible
federal income tax consequences of the reverse stock split and
is not intended as tax advice to any person or entity. In
particular, and without limiting the foregoing, this summary
does not consider the federal income tax consequences to
stockholders of Intuitive Surgical in light of their individual
investment circumstances or to stockholders subject to special
treatment under the federal income tax laws (for example, tax
exempt entities, life insurance companies, regulated investment
companies and foreign taxpayers). In addition, this summary does
not address any consequences of the reverse stock split under
any state, local or foreign tax laws. As a result, it is the
responsibility of each stockholder to obtain and rely on advice
from his, her or its personal tax advisor as to (1)&nbsp;the
effect on his, her or its personal tax situation of the reverse
stock split, including the application and effect of state,
local and foreign income and other tax laws, (2)&nbsp;the effect
of possible future legislation and regulations and (3)&nbsp;the
reporting of information required in connection with the reverse
stock split on his, her or its own tax returns. It will be the
responsibility of each stockholder to prepare and file all
appropriate federal, state and local tax returns.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">No ruling from the Internal Revenue Service or
opinion of counsel will be obtained regarding the federal income
tax consequences to the stockholders of Intuitive Surgical as a
result of the reverse stock split. Accordingly, each stockholder
is encouraged to consult his, her or its tax advisor regarding
the specific tax consequences of the proposed transaction to
such stockholder, including the application and effect of state,
local and foreign income and other tax laws.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical believes that the reverse
stock split will qualify as a &#147;recapitalization&#148; under
Section&nbsp;368(a)(1)(E) of the Code. As a result, no gain or
loss will be recognized by Intuitive Surgical or its
stockholders in connection with the reverse stock split. A
stockholder of Intuitive Surgical who exchanges his, her or its
old common stock solely for new common stock will recognize no
gain or loss for federal income tax purposes except to the
extent of cash received in lieu of fractional shares. A
stockholder&#146;s aggregate tax basis in his, her or its shares
of new common stock will be the same as his, her or its
aggregate tax basis in the old common stock. The holding period
of the new common stock will include the period during which the
old common stock was held, <I>provided </I>all such common stock
was held as a capital asset on the date of the exchange.
</FONT>

<P align="left">
<B><FONT size="2">Recommendation of Intuitive Surgical&#146;s
Board of Directors</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">INTUITIVE SURGICAL&#146;S BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT INTUITIVE SURGICAL STOCKHOLDERS VOTE
<B>&#147;FOR&#148; </B>THE PROPOSAL TO AMEND INTUITIVE
SURGICAL&#146;S AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION TO EFFECT A 1-FOR-2 REVERSE STOCK SPLIT.
</FONT>

<P align="center"><FONT size="2">111
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "ELECTION OF NOMINEES TO INTUITIVE SURGICAL&#146;S BOARD OF DIRECTORS" -->
<DIV align="left"><A NAME="071"></A></DIV>

<P align="center">
<B><FONT size="2">ELECTION OF NOMINEES TO INTUITIVE
SURGICAL&#146;S BOARD OF DIRECTORS</FONT></B>

<P align="left">
<B><FONT size="2">General</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical&#146;s board of directors
currently consists of seven members, divided into three classes.
Three Class&nbsp;III directors are to be elected at the annual
meeting to serve a three-year term expiring at the 2006 annual
meeting of stockholders or until a successor has been elected
and qualified. The remaining four directors will continue to
serve their respective terms. In connection with the completion
of the merger, the size of Intuitive Surgical&#146;s board of
directors will be increased to nine members, divided into three
classes. Please see &#147;The Merger&nbsp;&#151; Management and
Operations Following the Merger.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Messrs.&nbsp;Richard J. Kramer, James A. Lawrence
and Lonnie M. Smith have been nominated by Intuitive
Surgical&#146;s board of directors to serve as Class&nbsp;III
directors. If reelected, Mr. Smith is expected to continue to
serve as the Chairman of Intuitive Surgical&#146;s board of
directors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Shares represented by the accompanying proxy will
be voted for the election of the nominees recommended by
Intuitive Surgical&#146;s board of directors unless the proxy is
marked in such a manner so as to withhold authority to vote. In
the event that any nominee should be unavailable for election as
a result of an unexpected occurrence, such shares will be voted
for the election of such substitute nominee as Intuitive
Surgical&#146;s board of directors may propose. Each person
nominated for election has agreed to serve if elected, and
management has no reason to believe that any nominee will be
unable to serve.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The names of the nominees and directors, their
ages as of March&nbsp;31, 2003 and certain other information
about them are set forth below:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="41%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="39%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Director</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name of Nominee or Director</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Age</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Principal Occupation</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Since</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Scott S. Halsted(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">General Partner, Morgan Stanley Dean Witter
    Venture Partners
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1997</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Russell C. Hirsch, M.D., Ph.D.(2)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Managing Partner, Prospect Venture Partners
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1995</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Richard J. Kramer(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">President, R.J. Kramer Associates
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">James A. Lawrence(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Executive Vice President and Chief Financial
    Officer of General Mills, Inc.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Alan J. Levy, Ph.D.(2)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">President and Chief Executive Officer of Vertis
    Neuroscience, Inc.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Frederic H. Moll, M.D.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">51</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Vice President and Medical Director of Intuitive
    Surgical
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1995</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Lonnie M. Smith
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">58</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">President and Chief Executive Officer of
    Intuitive Surgical
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1996</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">member of audit committee
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">member of compensation committee
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Nominees for election for a three-year term
expiring at the 2006 annual meeting of stockholders</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Richard J. Kramer
</FONT></I></B><FONT size="2">has been a member of Intuitive
Surgical&#146;s board of directors since February 2000.
Mr.&nbsp;Kramer is President of R.J. Kramer Associates, a
healthcare consulting firm he founded in January 2001. From 1989
to 1999, he served as the President and Chief Executive Officer
of Catholic Healthcare West, operating 48 hospitals in the
western United States. From 1982 to 1989, Mr.&nbsp;Kramer was
Executive Vice President of Allina Health, the largest
integrated health care system in Minnesota. Mr.&nbsp;Kramer
received a B.S. in Rehabilitation Education from Pennsylvania
State University, an M.S. in Rehabilitation Counseling from
Syracuse University and an M.S. in Hospital and Health Care
Administration from the University of Minnesota.
</FONT>

<P align="center"><FONT size="2">112
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">James A. Lawrence
</FONT></I></B><FONT size="2">has been a member of Intuitive
Surgical&#146;s board of directors since March 2000. He has been
Executive Vice President and Chief Financial Officer of General
Mills, Inc. since 1998. Mr.&nbsp;Lawrence has also held
positions as Executive Vice President and Chief Financial
Officer for Northwest Airlines, and President and Chief
Executive Officer of Pepsi-Cola Asia, Middle East, Africa. He
has also chaired and co-founded LEK Partnership, a corporate
strategy and merger/ acquisition consulting firm headquartered
in London, England. Mr.&nbsp;Lawrence currently serves as a
director of TransTechnology Corporation and Avnet, Inc.
Mr.&nbsp;Lawrence holds a B.A. in Economics from Yale University
and an M.B.A. from Harvard Business School.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Lonnie M. Smith
</FONT></I></B><FONT size="2">has been Intuitive Surgical&#146;s
President and Chief Executive Officer since May 1997 and has
served as a member of Intuitive Surgical&#146;s board of
directors since December 1996 and has served as the Chairman of
Intuitive Surgical&#146;s board of directors since
April&nbsp;2003. From 1977 until joining Intuitive Surgical,
Mr.&nbsp;Smith was with Hillenbrand Industries, Inc., a public
holding company, serving as the Senior Executive Vice President,
a member of the Office of the President, and Director since
1982, as Executive Vice President of American Tourister, Inc.,
from 1978 to 1982, and as a Senior Vice President of Corporate
Planning from 1977 to 1978. Mr.&nbsp;Smith has also held
positions with The Boston Consulting Group and IBM.
Mr.&nbsp;Smith currently serves as a director of Biosite
Diagnostics, Inc. Mr.&nbsp;Smith holds a B.S.E.E. from Utah
State University and an M.B.A. from Harvard Business School.
</FONT>

<P align="left">
<B><FONT size="2">Class&nbsp;II directors continuing in office
until the 2005 annual meeting of stockholders</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Russell C. Hirsch, M.D., Ph.D.
</FONT></I></B><FONT size="2">has been a member of Intuitive
Surgical&#146;s board of directors since December 1995.
Dr.&nbsp;Hirsch has been a Managing Partner of Prospect Venture
Partners since 2001. Prior to joining Prospect Venture Partners,
Dr.&nbsp;Hirsch was a member of the Health Care Technology Group
at Mayfield Fund, a venture capital firm. He joined Mayfield
Fund in 1992, served as a Venture Partner from 1993 to 1994 and
a General Partner from 1995 to 2000. From 1984 to 1992,
Dr.&nbsp;Hirsch conducted research in the laboratories of Nobel
Laureate Harold Varmus, M.D. and Don Ganem, M.D. at the
University of California, San Francisco. Dr.&nbsp;Hirsch holds a
B.S. in Chemistry from the University of Chicago and an M.D. and
a Ph.D. from the University of California, San Francisco.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Frederic H. Moll, M.D.
</FONT></I></B><FONT size="2">is a co-founder of Intuitive
Surgical and has served as Vice President, Medical Director and
as a member of Intuitive Surgical&#146;s board of directors
since Intuitive Surgical&#146;s inception. In 1989,
Dr.&nbsp;Moll co-founded Origin Medsystems, Inc., a medical
device company, and served as Medical Director through 1995.
Origin was acquired by Eli Lilly &#38; Company in 1992 and is
now a wholly-owned subsidiary of Tyco Health Care. In 1984,
Dr.&nbsp;Moll founded Endotherapeutics, Inc., a medical device
company, which was acquired by United States Surgical
Corporation in 1992. Dr.&nbsp;Moll holds a B.A. from the
University of California, Berkeley, an M.S. in Management from
Stanford University&#146;s Sloan Program and an M.D. from the
University of Washington.
</FONT>

<P align="left">
<B><FONT size="2">Class&nbsp;I directors continuing in office
until the 2004 annual meeting of stockholders</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Scott S. Halsted
</FONT></I></B><FONT size="2">has been a member of Intuitive
Surgical&#146;s board of directors since March 1997.
Mr.&nbsp;Halsted joined Morgan Stanley in 1987, and has been a
general partner at Morgan Stanley Dean Witter Venture Partners
since 1997. Mr.&nbsp;Halsted currently serves as a director of
several private healthcare companies. Mr.&nbsp;Halsted holds
A.B. and B.E. degrees in Biomechanical Engineering from
Dartmouth College and an M.M. degree from Northwestern
University.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Alan J. Levy, Ph.D.
</FONT></I></B><FONT size="2">has been a member of Intuitive
Surgical&#146;s board of directors since February 2000.
Dr.&nbsp;Levy is President, Chief Executive Officer and a member
of the board of directors of Vertis Neuroscience, Inc., a
biotechnology company he co-founded in 1999. From 1993 to 1998,
Dr.&nbsp;Levy served as President and Chief Executive Officer of
Heartstream, Inc., a medical device company that was acquired by
Hewlett-Packard in 1998. Prior to joining Heartstream, he was
President of Heart Technology,<I> </I>Inc., a medical device
company that was acquired by Boston Scientific in 1995. Before
joining Heart Technology, Dr.&nbsp;Levy was Vice President of
Research and New Business Development and a member of the board
of the Ethicon, a division of Johnson &#38; Johnson.
Dr.&nbsp;Levy holds a B.S. in chemistry from City University of
New York and a Ph.D. in organic chemistry from Purdue University.
</FONT>

<P align="center"><FONT size="2">113
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">Director Compensation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Directors currently receive no cash compensation
from us for their services as members of the board or for
attendance at committee meetings. Directors may be reimbursed
for expenses in connection with attendance at board of directors
and committee meetings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In March 2000, Intuitive Surgical adopted the
2000 Non-Employee Directors&#146; Stock Option Plan to provide
for the automatic grant of options to purchase shares of common
stock to our non-employee directors who are not employees of
Intuitive Surgical or any affiliate of Intuitive Surgical. All
non-employee directors elected after the completion of Intuitive
Surgical&#146;s initial public offering receive an initial
option to purchase 20,000 shares of common stock. In connection
with our annual meeting of stockholders held in 2002, all
non-employee directors received an option to purchase 5,000
shares of common stock. In connection with the annual meeting,
all non-employee directors will receive an option to purchase
5,000 shares of common stock. If our stockholders approve the
proposed amendment to the 2000 Non-Employee Directors&#146;
Stock Option Plan at the annual meeting, each non-employee
director will receive an option to purchase an additional 5,000
shares and committee chairs will receive an option to purchase
an additional 5,000 shares of common stock. All grant amounts
under the 2000 Non-Employee Directors&#146; Stock Option Plan
will be reduced proportionately in the event that the proposed
reverse stock split is approved by Intuitive Surgical&#146;s
stockholders and implemented by Intuitive Surgical&#146;s board
of directors. Please see &#147;Amendment to Intuitive
Surgical&#146;s 2000 Non-Employee Directors&#146; Stock Option
Plan.&#148;
</FONT>

<P align="left">
<B><FONT size="2">Committees of the Board of Directors</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2002, Intuitive Surgical&#146;s board of
directors held four meetings. Intuitive Surgical&#146;s board of
directors has two standing committees, the audit committee and
the compensation committee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical&#146;s audit committee has
responsibility for reviewing and making recommendations
regarding employment of independent accountants, the annual
audit of our financial statements, internal controls and
accounting practices and policies. The members of Intuitive
Surgical&#146;s audit committee are Scott S. Halsted,
Richard&nbsp;J. Kramer and James&nbsp;A. Lawrence.
Mr.&nbsp;Lawrence serves as the Chairman of Intuitive
Surgical&#146;s audit committee. In 2002, Intuitive
Surgical&#146;s audit committee met seven times and each member
of the audit committee attended 100% with the exception of
Mr.&nbsp;Halsted who attended 71% of those meetings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical&#146;s compensation committee
has responsibility for determining the nature and amount of
compensation for management and for administering our employee
benefit plans. The members of Intuitive Surgical&#146;s
compensation committee are Alan&nbsp;J. Levy and Russell&nbsp;C.
Hirsch. Dr.&nbsp;Levy serves as the Chairman of Intuitive
Surgical&#146;s compensation committee. In 2002, Intuitive
Surgical&#146;s compensation committee met two times and each
member of the compensation committee attended 100% of those
meetings.
</FONT>

<P align="left">
<B><FONT size="2">Compliance With Section&nbsp;16(a) Under the
Securities Exchange Act of 1934</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Section&nbsp;16(a) of the Securities Exchange Act
of 1934 requires that executive officers, directors, and persons
who own more than 10% of a registered class of equity securities
file reports of ownership and changes in ownership (Forms 3, 4
and 5) with the SEC. Executive officers, directors and
greater-than-10% holders are required to furnish copies of all
of these forms which they file.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based solely on a review of these reports or
written representations from certain reporting persons,
Intuitive Surgical believes that during 2002, all filing
requirements applicable to officers, directors, greater-than-10%
beneficial owners and other persons subject to
Section&nbsp;16(a) of the Exchange Act were met.
</FONT>

<P align="left">
<B><FONT size="2">Recommendation of Intuitive Surgical&#146;s
Board of Directors</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">INTUITIVE SURGICAL&#146;S BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT INTUITIVE SURGICAL STOCKHOLDERS VOTE
<B>&#147;FOR&#148; </B>EACH OF THE NOMINEES TO INTUITIVE
SURGICAL&#146;S BOARD OF DIRECTORS.
</FONT>

<P align="center"><FONT size="2">114
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "AMENDMENT TO INTUITIVE SURGICAL&#146;S 2000 NON-EMPLOYEE DIRECTORS&#146; STOCK OPTION PLAN" -->
<DIV align="left"><A NAME="072"></A></DIV>

<P align="center">
<B><FONT size="2">AMENDMENT TO INTUITIVE
SURGICAL&#146;S</FONT></B>

<DIV align="center">
<B><FONT size="2">2000 NON-EMPLOYEE DIRECTORS&#146; STOCK OPTION
PLAN</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical stockholders are being asked
to approve an amendment to the Intuitive Surgical&#146;s 2000
Non-Employee Directors&#146; Stock Option Plan, or
Directors&#146; Plan. Under the current terms of the
Directors&#146; Plan, each non-employee director receives an
initial option to purchase 20,000 shares of Intuitive Surgical
common stock upon his or her election to Intuitive
Surgical&#146;s board of directors as a non-employee director.
Subsequently, each non-employee director with at least six
months of service receives an annual grant of options to
purchase 5,000 shares of Intuitive Surgical common stock on the
day after each annual stockholders&#146; meeting. The
stockholders of Intuitive Surgical are now being asked to amend
the Directors&#146; Plan to increase the annual stock option
grant for non-employee directors from 5,000 to 10,000 shares and
to provide an additional annual grant of options to purchase
5,000 shares for committee chairs, effective on the day after
the annual meeting. As of the date of this joint proxy
statement/ prospectus, James A. Lawrence served as Chairman of
Intuitive Surgical&#146;s audit committee, and Alan&nbsp;J. Levy
served as Chairman of Intuitive Surgical&#146;s compensation
committee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the current terms of the Directors&#146;
Plan, the automatic share increase provision provides for an
annual increase on the day after each annual stockholders&#146;
meeting equal to the greater of (1)&nbsp;three-tenths of one
percent of Intuitive Surgical&#146;s outstanding common stock on
such date (calculated on a fully-diluted basis) or (2)&nbsp;the
number of shares of Intuitive Surgical common stock subject to
options granted during the prior 12-month period. Intuitive
Surgical&#146;s board of directors may, however, provide for a
lesser increase in its discretion. The stockholders of Intuitive
Surgical are also being asked to amend the Directors&#146; Plan
to revise the automatic share increase provision so that the
number of shares of common stock reserved under the
Directors&#146; Plan will be automatically increased by the
lesser of (1)&nbsp;three-tenths of one percent of Intuitive
Surgical&#146;s outstanding common stock on such date
(calculated on a fully-diluted basis), (2)&nbsp;200,000 shares
or (3)&nbsp;such lesser amount as Intuitive Surgical&#146;s
board of directors may determine from time to time.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical&#146;s board of directors
approved the proposed amendment on March&nbsp;25, 2003,
effective upon stockholder approval. This amendment is intended
to enable Intuitive Surgical to continue to provide its
non-employee directors with stock incentives and to ensure that
Intuitive Surgical can continue to provide such incentives at
levels determined appropriate by Intuitive Surgical&#146;s board
of directors.
</FONT>

<P align="left">
<B><FONT size="2">Directors&#146; Plan History</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In September 1998, Intuitive Surgical&#146;s
board of directors adopted, and the stockholders subsequently
approved, the Directors&#146; Plan. Originally, 300,000 shares
of common stock were reserved for issuance under the
Directors&#146; Plan. This amount currently increases
automatically each year on the day after each annual
stockholders&#146; meeting as described above.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of the record date, options (net of cancelled,
repurchased or expired options) covering an aggregate of 90,000
shares had been granted under the Directors&#146; Plan and
426,612 shares (plus any shares that might in the future be
returned to the Directors&#146; Plan as a result of
cancellations, repurchases or expiration of options) remained
available for future grant under the Directors&#146; Plan,
including the 109,125 shares added to reserve on May&nbsp;24,
2002 pursuant to the existing automatic share increase
provisions of the Directors&#146; Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Below is a summary of the principal provisions of
the Directors&#146; Plan assuming approval of this proposal,
which summary is qualified in its entirety by reference to the
full text of the Directors&#146; Plan. The full text of the
proposed amendment to the Directors&#146; Plan is attached as
<I>Annex&nbsp;G</I> to this joint proxy statement/ prospectus.
Intuitive Surgical will provide, without charge, to each person
to whom this joint proxy statement/prospectus is delivered, upon
request of such person and by first class mail within one
business day of receipt of such request, a copy of the
Directors&#146; Plan. Any such request should be directed as
follows: Investor Relations, Intuitive Surgical, Inc.,
950&nbsp;Kifer Road, Sunnyvale, California 94086; telephone
number (408)&nbsp;523-2100.
</FONT>

<P align="center"><FONT size="2">115
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">General</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The purpose of the Directors&#146; Plan is to
provide a means by which non-employee directors may be given an
opportunity to benefit from increases in value of Intuitive
Surgical&#146;s common stock through the granting of
nonstatutory stock options. Intuitive Surgical, by means of the
Directors&#146; Plan, seeks to retain the services of its
non-employee directors, to secure and retain the services of new
non-employee directors and to provide incentives for such
persons to exert maximum efforts to promote the success of
Intuitive Surgical and its affiliates. Nonstatutory stock
options granted under the Directors&#146; Plan are not intended
to qualify as incentive stock options, as defined under Section
422 of the Internal Revenue Code. Please see &#147;Federal
Income Tax Information&#148; for a discussion of the tax
treatment of nonstatutory stock options.
</FONT>

<P align="left">
<B><FONT size="2">Administration</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Directors&#146; Plan is administered by
Intuitive Surgical&#146;s board of directors. Intuitive
Surgical&#146;s board of directors has the final power to
construe and interpret the Directors&#146; Plan and options
granted under it, and to establish, amend and revoke rules and
regulations for its administration.
</FONT>

<P align="left">
<B><FONT size="2">Shares Subject to the Directors&#146;
Plan</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of the record date, 426,612&nbsp;shares of
Intuitive Surgical common stock are reserved for issuance under
the Directors&#146; Plan, including the 109,125&nbsp;shares
added to the reserve in 2002 pursuant to the existing automatic
share increase provisions of the Directors&#146; Plan. If this
proposal is approved by Intuitive Surgical&#146;s stockholders,
the automatic share increase provision will be revised so that
the share reserve will increase automatically each year for
10&nbsp;years on the day after each annual stockholders&#146;
meeting, commencing in 2003 and continuing through 2013, by a
number of shares equal to the lesser of (1)&nbsp;three-tenths of
one percent of the Intuitive Surgical outstanding common stock
on such date (calculated on a fully-diluted basis),
(2)&nbsp;200,000 shares or (3)&nbsp;such lesser number as
Intuitive Surgical&#146;s board of directors may determine from
time to time.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If any option expires or terminates, in whole or
in part, without having been exercised in full, the common stock
not purchased under such option reverts to, and again becomes
available for issuance under, the Directors&#146; Plan. The
common stock subject to the Directors&#146; Plan may be unissued
shares or reacquired shares, bought on the market or otherwise.
</FONT>

<P align="left">
<B><FONT size="2">Eligibility</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Directors&#146; Plan provides that
nonstatutory options may be granted only to non-employee
directors of Intuitive Surgical. A &#147;non-employee
director&#148; is defined in the Directors&#146; Plan as a
director of Intuitive Surgical who is not otherwise an employee
of Intuitive Surgical or any affiliate. As of the record date,
five of Intuitive Surgical&#146;s directors are eligible to
participate in the Directors&#146; Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Option grants under the Directors&#146; Plan are
non-discretionary. Pursuant to the terms of the Directors&#146;
Plan, (1)&nbsp;each non-employee director automatically is
granted, upon his or her initial election or appointment as a
non-employee director, an option to purchase 20,000 shares of
common stock, which is referred to as the initial grant; and
(2)&nbsp;each person who is serving as a Non-Employee Director
on the day following each annual meeting of stockholders
automatically is granted an option to purchase 10,000 shares of
common stock, which is referred to as an annual grant, assuming
approval of this proposal.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, on the day following each annual
meeting of stockholders, each non-employee director who is
serving as a chairman of any committee duly established by
Intuitive Surgical&#146;s board of directors shall be granted an
additional option to purchase 5,000 shares of common stock,
which is referred to as a committee chairman grant, assuming
approval of this proposal.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All grant amounts under the 2000 Non-Employee
Directors&#146; Stock Option Plan will be reduced
proportionately in the event that the proposed reverse stock
split is approved by Intuitive Surgical&#146;s stockholders and
implemented by Intuitive Surgical&#146;s board of directors.
</FONT>

<P align="center"><FONT size="2">116
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">Terms of Options</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Term and Termination</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">No option granted under the Directors&#146; Plan
is exercisable by any person after the expiration of
10&nbsp;years from the date the option is granted. An
optionholder whose service relationship with Intuitive Surgical
or any affiliate (whether as a Non-Employee Director of
Intuitive Surgical or subsequently as an employee, director or
consultant of either Intuitive Surgical or an affiliate) ceases
for any reason may exercise vested options for the term provided
in the option agreement (three months generally, 12&nbsp;months
in the event of disability and 18&nbsp;months in the event of
death).
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Exercise Price</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The exercise price of options granted under the
Directors&#146; Plan is equal to 100% of the fair market value
of Intuitive Surgical&#146;s common stock. The fair market value
of the common stock is defined in the Directors&#146; Plan as
the closing sales price for such stock on the Nasdaq National
Market on the last market trading day prior to the day of
determination.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Consideration</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The exercise price of options granted under the
Directors&#146; Plan may be paid, to the extent provided in the
option agreement between Intuitive Surgical and the
optionholder, in any combination of the following: (1)&nbsp;by
cash or check; or (2)&nbsp;by delivery of other common stock of
Intuitive Surgical held by the non-employee director for at
least 6&nbsp;months, or such longer or shorter period of time
required to avoid a charge to earnings for financial accounting
purposes; or (3)&nbsp;pursuant to a program developed under
Regulation&nbsp;T as promulgated by the Federal Reserve Board
that, prior to the issuance of the common stock, results in
either the receipt of cash by Intuitive Surgical or the receipt
of irrevocable instructions to pay the aggregate exercise price
to Intuitive Surgical from the sale proceeds.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Transferability</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the Directors&#146; Plan, an option may not
be transferred by the optionholder, except by will or by the
laws of descent and distribution or to a family member. During
the lifetime of an optionholder, an option may be exercised only
by the optionholder or a permitted transferee. Notwithstanding
the foregoing, the optionholder may designate a third party who,
in the event of the death of the optionholder, shall thereafter
be entitled to exercise the option.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Vesting</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Initial Grants to new non-employee directors
under the Directors&#146; Plan vest in equal monthly
installments over the 36&nbsp;months following the date of grant
for a total vesting period of three years. Annual grants to
continuing non-employee directors and to committee chairmen
shall vest in equal monthly installments over a period of one
year from the date of grant. Such vesting is conditioned upon
continued service as a director, employee or consultant of
Intuitive Surgical.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Other Provisions</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The option agreement may contain such other
terms, provisions and conditions not inconsistent with the
Directors&#146; Plan as may be determined by Intuitive
Surgical&#146;s board of directors.
</FONT>

<P align="left">
<B><FONT size="2">Adjustments Upon Changes in Common
Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If any change is made in the common stock subject
to the Directors&#146; Plan or subject to any option granted
under the Directors&#146; Plan, without receipt of consideration
by Intuitive Surgical (through merger, consolidation,
reorganization recapitalization, stock dividend, dividend in
property other than cash, stock split, liquidating, dividend,
combination of shares, exchange of shares, change in corporate
structure or otherwise) and including the proposed reverse stock
split, the number of shares reserved for issuance under
</FONT>

<P align="center"><FONT size="2">117
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">the Directors&#146; Plan and options outstanding
thereunder and the class, number of shares and price per share
of stock subject to such outstanding options will be
appropriately adjusted.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Directors&#146; Plan provides that, in the
event of (1)&nbsp;a consolidation or merger in which Intuitive
Surgical is not the surviving corporation; (2)&nbsp;a reverse
merger in which Intuitive Surgical is the surviving corporation
but the shares of common stock outstanding immediately preceding
the merger are converted by virtue of the merger into other
property, whether in the form of securities, cash or otherwise;
or (3)&nbsp;any sale, lease or other disposition of all or
substantially all of the assets of Intuitive Surgical, the
occurrence of any of which is referred to as a change in
control, then any surviving corporation or acquiring corporation
shall assume any options outstanding under the Directors&#146;
Plan or substitute similar options for any options outstanding.
If any surviving or acquiring corporation refuses to assume such
options or substitute similar options, then the vesting of such
options outstanding under the Directors&#146; Plan shall be
accelerated in full and the options terminated if not exercised
at or prior to such event.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the surviving or acquiring corporation assumes
the outstanding options under the Directors&#146; Plan but a
non-employee director is not elected or appointed to the board
of directors of the surviving or acquiring corporation at the
first meeting of such board of directors after the change in
control, then the vesting of the options outstanding under the
Directors&#146; Plan held by such non-employee director is
accelerated by 18&nbsp;months on the day after the first meeting
of the board of directors of the surviving or acquiring
corporation.
</FONT>

<P align="left">
<B><FONT size="2">Amendment, Termination or Suspension of the
Directors&#146; Plan</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical&#146;s board of directors may
amend, suspend or terminate the Directors&#146; Plan at any time
or from time to time. No amendment shall be effective unless
approved by the stockholders of Intuitive Surgical within
12&nbsp;months before or after the adoption of the amendment,
where such amendment requires stockholder approval in order for
the Directors&#146; Plan to satisfy the requirements of
Rule&nbsp;16b-3 of the Securities Exchange Act of 1934 or any
Nasdaq or securities exchange listing requirement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">No options may be granted under the
Directors&#146; Plan while the Directors&#146; Plan is suspended
or after it is terminated.
</FONT>

<P align="left">
<B><FONT size="2">Federal Income Tax Information</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a general summary under current
law of the material federal income tax consequences to Intuitive
Surgical and participants in the Directors&#146; Plan with
respect to the grant and exercise of options under the
Directors&#146; Plan. This summary deals with the general tax
principles that apply and is provided only for general
information. Some kinds of taxes, such as state and local income
taxes, are not discussed. Tax laws are complex and subject to
change and may vary depending on individual circumstances and
from locality to locality. The summary does not discuss all
aspects of income taxation that may be relevant to an optionee
in light of his or her personal investment circumstances. This
summarized tax information is not tax advice.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Options granted under the Directors&#146; Plan
are nonstatutory options. Nonstatutory stock options granted
under the Directors&#146; Plan generally have the following
federal income tax consequences. There are no tax consequences
to the optionholder or Intuitive Surgical by reason of the grant
of a nonstatutory stock option. Upon exercise of a nonstatutory
stock option, the optionholder normally will recognize taxable
ordinary income equal to the excess of the stock&#146;s fair
market value on the date of exercise over the option exercise
price. Generally, Intuitive Surgical will be entitled (subject
to the requirement of reasonableness) to a business expense
deduction equal to the taxable ordinary income realized by the
optionholder. Upon disposition of the stock, the optionholder
will recognize a capital gain or loss equal to the difference
between the selling price and the sum of the amount paid for
such stock plus any amount recognized as ordinary income upon
exercise of such option. Such gain or loss will be long or
short-term depending on whether the stock was held for more than
one year.
</FONT>

<P align="center"><FONT size="2">118
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">New Plan Benefits</FONT></B>

<P align="center">
<B><FONT size="2">2000 Non-Employee Directors&#146; Stock Option
Plan(1)</FONT></B>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="67%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Dollar</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name and Position</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value($)(2)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Units(1)(3)</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Each Non-Employee Director
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Each Non-Employee Director Also Serving as
    Committee Chairman
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">84,900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">All Non-Employee Directors as a Group
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">339,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Only non-employee directors of Intuitive Surgical
    are eligible to participate in the Directors&#146; Plan.
    Pursuant to the terms of the Directors&#146; Plan, (1)&nbsp;each
    non-employee director automatically is granted, upon his or her
    initial election or appointment as a non-employee director, an
    option to purchase 20,000 shares of common stock, which is
    referred to as the initial grant; (2)&nbsp;each person who is
    serving as a non-employee director on the day following each
    annual meeting of stockholders automatically is granted an
    option to purchase 10,000&nbsp;shares of common stock, which is
    referred to as an annual grant, assuming approval of this
    proposal; and (3)&nbsp;each non-employee director who is serving
    as a chairman of any committee duly established by the Board of
    Directors is granted an additional option to purchase
    5,000&nbsp;shares of common stock, which is referred to as a
    committee chairman grant, assuming approval of this proposal.
    All grant amounts under the 2000 Non-Employee Directors&#146;
    Stock Option Plan will be reduced proportionately in the event
    that the proposed reverse stock split is approved by Intuitive
    Surgical&#146;s stockholders and implemented by Intuitive
    Surgical&#146;s board of directors. The initial grants, annual
    grants and committee chairman grants are subject to the vesting
    provisions described above. Please see &#147;Terms of
    Options.&#148; Currently, Intuitive Surgical has five
    non-employee directors, all of whom are eligible to receive
    annual grants and 2 of whom are eligible to receive committee
    chairman grants following the annual meeting.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Value based on the closing price of Intuitive
    Surgical&#146;s common stock on March&nbsp;25, 2003 of $5.66.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes shares underlying annual grants and
    committee chairman grants to be made to five eligible
    non-employee directors following the annual meeting.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Recommendation of Intuitive Surgical&#146;s
Board of Directors</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">INTUITIVE SURGICAL&#146;S BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT INTUITIVE SURGICAL STOCKHOLDERS VOTE
<B>&#147;FOR&#148; </B>THE PROPOSAL TO AMEND INTUITIVE
SURGICAL&#146;S 2000 NON-EMPLOYEE DIRECTORS&#146; STOCK OPTION
PLAN TO INCREASE THE ANNUAL STOCK OPTION GRANT FOR NON-EMPLOYEE
DIRECTORS FROM 5,000 TO 10,000&nbsp;SHARES, TO PROVIDE FOR AN
ADDITIONAL ANNUAL GRANT OF OPTIONS TO PURCHASE 5,000&nbsp;SHARES
TO COMMITTEE CHAIRS AND TO AMEND THE AUTOMATIC SHARE INCREASE
PROVISION.
</FONT>

<P align="center"><FONT size="2">119
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "RATIFICATION OF INDEPENDENT AUDITORS" -->
<DIV align="left"><A NAME="073"></A></DIV>

<P align="center">
<B><FONT size="2">RATIFICATION OF INDEPENDENT AUDITORS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical&#146;s board of directors has
appointed Ernst&nbsp;&#38; Young LLP as Intuitive
Surgical&#146;s independent accountants for the fiscal year
ending December&nbsp;31, 2003, and Intuitive Surgical&#146;s
stockholders are being asked to ratify such selection. The vote
of Intuitive Surgical&#146;s stockholders with respect to this
proposal will not be binding on Intuitive Surgical&#146;s board
of directors. Ernst&nbsp;&#38; Young LLP has been engaged as
Intuitive Surgical&#146;s independent auditors since 1996. A
representative of Ernst&nbsp;&#38; Young LLP is expected to be
present at the annual meeting, and will be given an opportunity
to make a statement if he or she desires to do so, and is
expected to be available to respond to appropriate questions.
</FONT>

<P align="left">
<B><FONT size="2">Recommendation of Intuitive Surgical&#146;s
Board of Directors</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">INTUITIVE SURGICAL&#146;S BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT INTUITIVE SURGICAL STOCKHOLDERS VOTE
<B>&#147;FOR&#148; </B>THE PROPOSAL TO RATIFY THE SELECTION OF
ERNST&nbsp;&#38; YOUNG LLP AS INTUITIVE SURGICAL&#146;S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING
DECEMBER&nbsp;31, 2003.
</FONT>

<P align="center"><FONT size="2">120
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "THE INTUITIVE SURGICAL ANNUAL MEETING" -->
<DIV align="left"><A NAME="074"></A></DIV>

<P align="center">
<B><FONT size="2">THE INTUITIVE SURGICAL ANNUAL
MEETING</FONT></B>

<!-- link2 "Date, Time, Place and Purpose of the Intuitive Surgical Annual Meeting" -->
<DIV align="left"><A NAME="075"></A></DIV>

<P align="left">
<B><FONT size="2">Date, Time, Place and Purpose of the Intuitive
Surgical Annual Meeting</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The annual meeting of Intuitive Surgical
stockholders will be held at 8:00&nbsp;a.m., local time, on
June&nbsp;30, 2003 at the Summerfield Suites by Wyndham,
900&nbsp;Hamlin Court, Sunnyvale, California 94086. The purpose
of the Intuitive Surgical annual meeting is to consider and vote
on proposals (1)&nbsp;to issue shares of Intuitive Surgical
common stock pursuant to the merger agreement, (2)&nbsp;to
approve an amendment to Intuitive Surgical&#146;s Amended and
Restated Certificate of Incorporation to effect a 1-for-2
reverse stock split of Intuitive Surgical&#146;s common stock,
(3)&nbsp;to elect three Class&nbsp;III members of the board of
directors of Intuitive Surgical to serve until the annual
meeting of stockholders of Intuitive Surgical to be held in 2006
and until their successors are elected and qualified,
(4)&nbsp;to approve an amendment to the 2000 Non-Employee
Directors&#146; Stock Option Plan to increase the annual stock
option grant for non-employee directors from 5,000 to
10,000&nbsp;shares, to provide for an additional annual grant of
options to purchase 5,000&nbsp;shares to committee chairs and to
amend the automatic share increase provision and (5)&nbsp;to
ratify the selection of Ernst &#38; Young LLP as the independent
auditors of Intuitive Surgical for the current fiscal year
ending December&nbsp;31, 2003 and to transact such other
business as may properly come before the annual meeting or any
adjournment or postponement thereof. Proxies voting against the
proposal to issue shares of Intuitive Surgical common stock
pursuant to the merger agreement will not be voted
<B>&#147;FOR&#148;</B> adjournment in order to continue to
solicit proxies.
</FONT>

<!-- link2 "Recommendation of Intuitive Surgical&#146;s Board of Directors" -->
<DIV align="left"><A NAME="076"></A></DIV>

<P align="left">
<B><FONT size="2">Recommendation of Intuitive Surgical&#146;s
Board of Directors</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical&#146;s board of directors has
unanimously approved the merger agreement, and unanimously
recommends that Intuitive Surgical stockholders vote
<B>&#147;FOR&#148; </B>the proposal to issue Intuitive Surgical
common stock pursuant to the merger agreement. Intuitive
Surgical&#146;s board of directors has unanimously approved the
amendment to Intuitive Surgical&#146;s Amended and Restated
Certificate of Incorporation to effect a 1-for-2 reverse stock
split of Intuitive Surgical&#146;s common stock, and unanimously
recommends that Intuitive Surgical stockholders vote
<B>&#147;FOR&#148; </B>the proposal to amend Intuitive
Surgical&#146;s Amended and Restated Certificate of
Incorporation. Intuitive Surgical&#146;s board of directors
unanimously recommends that Intuitive Surgical Stockholders vote
<B>&#147;FOR&#148; </B>the election of the nominees to the board
of directors listed in this joint proxy statement/prospectus.
Intuitive Surgical&#146;s board of directors has unanimously
approved the amendment to the 2000 Non-Employee Directors&#146;
Stock Option Plan to increase the annual stock option grant for
non-employee directors from 5,000 to 10,000&nbsp;shares, to
provide for an additional annual grant of options to purchase
5,000&nbsp;shares to committee chairs and to amend the automatic
share increase provision, and unanimously recommends that
Intuitive Surgical stockholders vote <B>&#147;FOR&#148; </B>the
proposal to amend the 2000 Non-Employee Directors&#146; Stock
Option Plan. Intuitive Surgical&#146;s board of directors has
unanimously approved the engagement of Ernst &#38; Young LLP as
the independent auditors of Intuitive Surgical for the current
fiscal year ending December&nbsp;31, 2003, and unanimously
recommends that Intuitive Surgical stockholders vote
<B>&#147;FOR&#148; </B>the proposal to ratify the selection of
Ernst &#38; Young LLP as the independent auditors of Intuitive
Surgical for the current fiscal year ending December&nbsp;31,
2003.
</FONT>

<!-- link2 "Record Date; Outstanding Shares; Shares Entitled to Vote" -->
<DIV align="left"><A NAME="077"></A></DIV>

<P align="left">
<B><FONT size="2">Record Date; Outstanding Shares; Shares
Entitled to Vote</FONT></B>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Only holders of record of Intuitive Surgical
common stock at the close of business on the record date,
May&nbsp;15, 2003, are entitled to notice of and to vote at the
annual meeting. As of the record date, there were
37,126,289&nbsp;shares of Intuitive Surgical common stock issued
and outstanding, including approximately 2.8&nbsp;million shares
beneficially owned by our executive officers and directors, or
approximately 7% of the outstanding shares of Intuitive Surgical
common stock as of that date. A list of Intuitive Surgical
stockholders will be available for review at Intuitive
Surgical&#146;s executive offices during regular business hours
for a period of 10&nbsp;days prior to the annual meeting. Each
share of Intuitive Surgical common stock is entitled to one vote.
</FONT>


<P align="center"><FONT size="2">121
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link2 "Quorum and Vote Required" -->
<DIV align="left"><A NAME="078"></A></DIV>

<P align="left">
<B><FONT size="2">Quorum and Vote Required</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A quorum of stockholders is necessary to hold a
valid annual meeting. The presence, in person or by proxy, of
shares of Intuitive Surgical common stock representing a
majority of shares of Intuitive Surgical common stock issued and
outstanding on the Intuitive Surgical record date will
constitute a quorum. Abstentions and broker
&#147;non-votes,&#148; discussed below, count as present for
establishing a quorum.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Approval of the proposal to issue shares of
Intuitive Surgical common stock pursuant to the merger agreement
requires the approval of a majority of the total votes cast at
the annual meeting by holders of Intuitive Surgical&#146;s
common stock outstanding as of the record date. Approval of the
proposal to amend Intuitive Surgical&#146;s Amended and Restated
Certificate of Incorporation requires the approval of a majority
of the shares of Intuitive Surgical common stock outstanding as
of the record date. The candidates for director receiving the
highest number of votes, up to the number of directors to be
elected, shall be elected to the Intuitive Surgical board of
directors. Approval of the proposal to amend Intuitive
Surgical&#146;s 2000 Non-Employee Directors&#146; Stock Option
Plan to increase the annual stock option grant for non-employee
directors from 5,000 to 10,000&nbsp;shares, to provide for an
additional annual grant of options to purchase 5,000&nbsp;shares
to committee chairs and to amend the automatic share increase
provision and the proposal to ratify Ernst&nbsp;&#38; Young LLP
as the independent auditors of Intuitive Surgical for the
current fiscal year ending December&nbsp;31, 2003 requires the
affirmative vote of a majority of the shares of Intuitive
Surgical common stock represented and entitled to vote at the
annual meeting.
</FONT>

<!-- link2 "Voting; Proxies; Revocation" -->
<DIV align="left"><A NAME="079"></A></DIV>

<P align="left">
<B><FONT size="2">Voting; Proxies; Revocation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A proxy card is enclosed for your use. We ask
that you sign, date and return the proxy card in the
accompanying envelope, which is postage prepaid if you mail it
in the United States. Unless there are different instructions on
the proxy, all shares represented by valid proxies (and not
revoked before they are voted) will be voted at the annual
meeting <B>&#147;FOR&#148; </B>each of the proposals other than
the election of directors and <B>&#147;FOR&#148; </B>each of the
nominees for election to the board of directors listed in this
joint proxy statement/prospectus. With respect to any other
business that may properly come before the annual meeting and be
submitted to a vote of stockholders, proxies will be voted in
accordance with the best judgment of the designated proxy
holders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Stockholders of record may vote by either
completing and returning the enclosed proxy card prior to the
annual meeting, voting in person at the annual meeting, or
submitting a signed proxy card at the annual meeting.
</FONT>

<P align="left">
<B><FONT size="2">Your vote is important. Accordingly, please
sign and return the accompanying proxy card whether or not you
plan to attend the annual meeting in person.</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You may revoke your proxy at any time before it
is actually voted at the meeting by:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">delivering written notice of revocation to
    Intuitive Surgical&#146;s Secretary at 950&nbsp;Kifer Road,
    Sunnyvale, California 94086;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">submitting a later dated proxy; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">attending the annual meeting and voting in person.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Your attendance at the annual meeting will not,
by itself, constitute revocation of your proxy. You may also be
represented by another person present at the annual meeting by
executing a form of proxy designating that person to act on your
behalf. Shares may only be voted by or on behalf of the record
holder of shares as indicated in Intuitive Surgical&#146;s stock
transfer records. If you are a beneficial owner but your shares
are held of record by another person, such as a stock brokerage
firm or bank, that person must vote the shares as the record
holder in accordance with the beneficial holder&#146;s
instructions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All votes cast at the annual meeting will be
tabulated by the persons appointed by us to act as inspectors of
election for the annual meeting.
</FONT>

<P align="center"><FONT size="2">122
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link2 "Abstentions and Broker Non-Votes" -->
<DIV align="left"><A NAME="080"></A></DIV>

<P align="left">
<B><FONT size="2">Abstentions and Broker Non-Votes</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Shares represented by proxies that reflect
abstentions or &#147;broker non-votes&#148; (<I>i.e.</I>, shares
held by a broker or nominee which are represented at the
meeting, but with respect to which the broker or nominee is not
empowered to vote on a particular proposal) will be counted as
shares that are present and entitled to vote for purposes of
determining the presence of a quorum but will not be counted as
votes <B>&#147;FOR&#148; </B>or <B>&#147;AGAINST&#148; </B>a
particular proposal in determining whether stockholder approval
of a matter has been obtained. Broker non-votes are not deemed
to be entitled to vote for purposes of determining whether
stockholder approval of a matter has been obtained. As a result,
broker non-votes are not included in the tabulation of voting
results on any proposal, other than the proposal to amend
Intuitive Surgical&#146;s Amended and Restated Certificate of
Incorporation to effect a 1-for-2 reverse stock split, the
approval of which requires a majority of the shares of Intuitive
Surgical common stock outstanding as of the record date.
Abstentions and broker non-votes will have the effect of a vote
against the proposal to amend Intuitive Surgical&#146;s Amended
and Restated Certificate of Incorporation. In addition,
abstentions will have the effect of a vote against the proposal
to approve an amendment to Intuitive Surgical&#146;s 2000
Non-Employee Directors&#146; Stock Option Plan and the proposal
to ratify the selection of Ernst&nbsp;&#38; Young LLP as the
independent auditors for Intuitive Surgical for the current
fiscal year ending December&nbsp;31, 2003. Abstentions will have
no effect on the proposal to issue shares of Intuitive Surgical
common stock pursuant to the merger agreement or the election of
members to Intuitive Surgical&#146;s board of directors. Broker
non-votes will have no effect on the proposal to issue Intuitive
Surgical common stock pursuant to the merger agreement or on any
of the proposals other than the proposal to amend Intuitive
Surgical&#146;s Amended and Restated Certificate of
Incorporation to effect a 1-for-2 reverse stock split.
</FONT>

<!-- link2 "Proxy Solicitation" -->
<DIV align="left"><A NAME="081"></A></DIV>

<P align="left">
<B><FONT size="2">Proxy Solicitation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This solicitation is made on behalf of Intuitive
Surgical&#146;s board of directors and Intuitive Surgical will
pay the costs of solicitation, except that Intuitive Surgical
and Computer Motion have each agreed to pay one-half of the
costs of filing, printing and mailing this joint proxy
statement/prospectus and related proxy materials. Intuitive
Surgical&#146;s directors, officers and employees may also
solicit proxies by telephone, telegraph, fax or personal
interview. Intuitive Surgical will not pay any additional
compensation to directors, officers or other employees for such
services, but may reimburse them for reasonable out-of-pocket
expenses in connection with such solicitation. Intuitive
Surgical will reimburse banks, brokerage firms and other
custodians, nominees and fiduciaries for reasonable expenses
incurred by them in sending proxy material to its stockholders.
</FONT>

<!-- link2 "Other Business, Adjournments" -->
<DIV align="left"><A NAME="082"></A></DIV>

<P align="left">
<B><FONT size="2">Other Business, Adjournments</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of the date of this joint proxy
statement/prospectus, Intuitive Surgical&#146;s board of
directors does not know of any matter that will be presented for
consideration at the annual meeting other than as described in
this joint proxy statement/prospectus. If the annual meeting is
adjourned for any reason, the approval of any of the proposals
may be considered and voted upon by stockholders at the
subsequent reconvened meeting, if any.
</FONT>

<!-- link2 "Assistance" -->
<DIV align="left"><A NAME="083"></A></DIV>

<P align="left">
<B><FONT size="2">Assistance</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If you need assistance in completing your proxy
card or have questions regarding the annual meeting, please
contact:
</FONT>

<P align="center">
<FONT size="2">Intuitive Surgical, Inc.
</FONT>

<DIV align="center">
<FONT size="2">950&nbsp;Kifer Road
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">Sunnyvale, California 94086
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">(408)&nbsp;523-2100
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">Attn: Investor Relations
</FONT>
</DIV>

<P align="center"><FONT size="2">123
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "THE COMPUTER MOTION SPECIAL MEETING" -->
<DIV align="left"><A NAME="084"></A></DIV>

<P align="center">
<B><FONT size="2">THE COMPUTER MOTION SPECIAL MEETING</FONT></B>

<DIV>&nbsp;</DIV>

<!-- link2 "Date, Time, Place and Purpose of the Computer Motion Special Meeting" -->
<DIV align="left"><A NAME="085"></A></DIV>

<DIV align="left">
<B><FONT size="2">Date, Time, Place and Purpose of the Computer
Motion Special Meeting</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The special meeting of Computer Motion
stockholders will be held at 8:00&nbsp;a.m., local time, on
June&nbsp;30, 2003 at Computer Motion&#146;s corporate
headquarters, 130-B Cremona Drive, Goleta, California 93117. The
purpose of the Computer Motion special meeting is to consider
and vote on a proposal to approve and adopt the merger agreement
and to transact any other business that properly comes before
the Computer Motion special meeting or any adjournment or
postponement of thereof. Approval and adoption of the merger
agreement will constitute approval of the merger and the other
transactions contemplated by the merger agreement. Proxies
voting against the proposal to approve and adopt the merger
agreement will not be voted <B>&#147;FOR&#148; </B>adjournment
in order to continue to solicit proxies.
</FONT>

<!-- link2 "Recommendation of Computer Motion&#146;s Board of Directors" -->
<DIV align="left"><A NAME="086"></A></DIV>

<P align="left">
<B><FONT size="2">Recommendation of Computer Motion&#146;s Board
of Directors</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Computer Motion&#146;s board of directors
believes that the merger is consistent with, and in furtherance
of, Computer Motion&#146;s long term business strategy and that
the merger is fair to, advisable and in the best interests of
Computer Motion and its stockholders. Computer Motion&#146;s
board of directors has unanimously recommended that Computer
Motion stockholders vote <B>&#147;FOR&#148; </B>the proposal to
approve and adopt the merger agreement.
</FONT>

<!-- link2 "Record Date; Outstanding Shares; Shares Entitled to Vote" -->
<DIV align="left"><A NAME="087"></A></DIV>

<P align="left">
<B><FONT size="2">Record Date; Outstanding Shares; Shares
Entitled to Vote</FONT></B>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Only holders of record of Computer Motion common
and preferred stock at the close of business on the record date,
May&nbsp;15, 2003, are entitled to notice of and to vote at the
special meeting. As of the record date, there were
21,556,328&nbsp;shares of Computer Motion common stock
outstanding and entitled to vote at the special meeting and
8,492&nbsp;shares of Computer Motion preferred stock outstanding
and entitled to vote at the special meeting. Each share of
Computer Motion common stock is entitled to one vote. Each share
of Computer Motion Series&nbsp;D convertible preferred stock is
entitled to 1,000 votes. As a result, the 8,492&nbsp;shares of
Series&nbsp;D convertible preferred stock outstanding on the
record date will represent approximately 28% of the total votes
entitled to approve and adopt the merger agreement. As of the
record date, our executive officers and directors owned an
aggregate of approximately 2.8&nbsp;million shares of Computer
Motion common stock and 1,191&nbsp;shares of Computer Motion
Series&nbsp;D convertible preferred stock, collectively
representing approximately 14% of the voting power of the
outstanding Computer Motion common and preferred stock as of
that date. A list of Computer Motion stockholders will be
available for review at Computer Motion&#146;s executive offices
during regular business hours for a period of 10&nbsp;days prior
to the special meeting.
</FONT>


<!-- link2 "Quorum and Vote Required" -->
<DIV align="left"><A NAME="088"></A></DIV>

<P align="left">
<B><FONT size="2">Quorum and Vote Required</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A quorum of stockholders is necessary to hold a
valid special meeting. The presence, in person or by proxy, of a
majority of the votes of outstanding shares of Computer Motion
common stock and preferred stock entitled to vote is necessary
to constitute a quorum at the Computer Motion special meeting.
Abstentions and broker &#147;non-votes,&#148; discussed below,
count as present for establishing a quorum.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The affirmative vote of the holders of a majority
of the votes of the outstanding shares of Computer Motion common
stock and preferred stock, voting together as a single class, is
required to approve and adopt the merger agreement.
</FONT>

<!-- link2 "Voting; Proxies; Revocation" -->
<DIV align="left"><A NAME="089"></A></DIV>

<P align="left">
<B><FONT size="2">Voting; Proxies; Revocation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A proxy card is enclosed for your use. We ask
that you sign, date and return the proxy card in the
accompanying envelope, which is postage prepaid if you mail it
in the United States. Unless there are different instructions on
the proxy, all shares represented by valid proxies (and not
revoked before they are voted) will be voted at the special
meeting <B>&#147;FOR&#148; </B>the approval and adoption of the
merger agreement. With respect to any other business that may
properly come before the special meeting and be submitted to
</FONT>

<P align="center"><FONT size="2">124
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">a vote of stockholders, proxies will be voted in
accordance with the best judgment of the designated proxy
holders.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Stockholders of record may vote by either
completing and returning the enclosed proxy card prior to the
special meeting, voting in person at the special meeting, or
submitting a signed proxy card at the special meeting.
</FONT>

<P align="left">
<B><FONT size="2">Your vote is important. Accordingly, please
sign and return the accompanying proxy card whether or not you
plan to attend the special meeting in person.</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You may revoke your proxy at any time before it
is actually voted at the meeting by:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">delivering written notice of revocation to
    Computer Motion&#146;s Secretary at 130-B Cremona Drive, Goleta,
    California 93117;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">submitting a later dated proxy; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">attending the special meeting and voting in
    person.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Your attendance at the special meeting will not,
by itself, constitute revocation of your proxy. You may also be
represented by another person present at the special meeting by
executing a form of proxy designating that person to act on your
behalf. Shares may only be voted by or on behalf of the record
holder of shares as indicated in Computer Motion&#146;s stock
transfer records. If you are a beneficial owner but your shares
are held of record by another person, such as a stock brokerage
firm or bank, that person must vote the shares as the record
holder in accordance with the beneficial holder&#146;s
instructions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All votes cast at the special meeting will be
tabulated by the persons appointed by us to act as inspectors of
election for the special meeting.
</FONT>

<!-- link2 "Abstentions and Broker Non-Votes" -->
<DIV align="left"><A NAME="090"></A></DIV>

<P align="left">
<B><FONT size="2">Abstentions and Broker Non-Votes</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Shares represented by proxies that reflect
abstentions will be counted as shares that are present and
entitled to vote for purposes of determining the presence of a
quorum and will have the effect of votes cast against approval
and adoption of the merger agreement at the Computer Motion
special meeting for purposes of determining whether stockholder
approval of the merger agreement has been obtained. Because the
only matter to be considered at the Computer Motion special
meeting is a matter as to which brokers have no discretionary
authority, there will be no broker non-votes at the Computers
Motion special meeting.
</FONT>

<!-- link2 "Proxy Solicitation" -->
<DIV align="left"><A NAME="091"></A></DIV>

<P align="left">
<B><FONT size="2">Proxy Solicitation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This solicitation is made on behalf of Computer
Motion&#146;s board of directors and Computer Motion will pay
the costs of solicitation, except that Intuitive Surgical and
Computer Motion have each agreed to pay one-half of the costs of
filing, printing and mailing this joint proxy
statement/prospectus and related proxy materials. Computer
Motion&#146;s directors, officers and employees may also solicit
proxies by telephone, telegraph, fax or personal interview.
Computer Motion will not pay any additional compensation to
directors, officers or other employees for such services, but
may reimburse them for reasonable out-of-pocket expenses in
connection with such solicitation. Computer Motion will
reimburse banks, brokerage firms and other custodians, nominees
and fiduciaries for reasonable expenses incurred by them in
sending proxy material to its stockholders.
</FONT>

<!-- link2 "Other Business, Adjournments" -->
<DIV align="left"><A NAME="092"></A></DIV>

<P align="left">
<B><FONT size="2">Other Business, Adjournments</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of the date of this joint proxy
statement/prospectus, Computer Motion&#146;s board of directors
does not know of any matter that will be presented for
consideration at the special meeting other than as described in
this joint proxy statement/prospectus. If the special meeting is
adjourned for any reason, the approval of any of the proposals
may be considered and voted upon by stockholders at the
subsequent reconvened meeting, if any.
</FONT>

<P align="center"><FONT size="2">125
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link2 "Assistance" -->
<DIV align="left"><A NAME="093"></A></DIV>

<P align="left">
<B><FONT size="2">Assistance</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If you need assistance in completing your proxy
card or have questions regarding the special meeting, please
contact:
</FONT>

<P align="center">
<FONT size="2">Computer Motion, Inc.
</FONT>

<DIV align="center">
<FONT size="2">130-B Cremona Drive
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">Goleta, California 93117
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">(805)&nbsp;968-9600
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">Attn: Investor Relations
</FONT>
</DIV>

<P align="center"><FONT size="2">126
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF INTUITIVE SURGICAL" -->
<DIV align="left"><A NAME="094"></A></DIV>

<P align="center">
<B><FONT size="2">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS</FONT></B>

<DIV align="center">
<B><FONT size="2">AND MANAGEMENT OF INTUITIVE SURGICAL</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The information in the following table sets forth
the ownership of Intuitive Surgical common stock, as of
February&nbsp;28, 2003, by (i)&nbsp;each person who, to our
knowledge, beneficially owns more than 5% of the outstanding
shares of Intuitive Surgical common stock; (ii)&nbsp;each named
executive officer of Intuitive Surgical; (iii)&nbsp;each of
Intuitive Surgical&#146;s directors; and (iv)&nbsp;all of
Intuitive Surgical&#146;s directors and executive officers, as a
group. As of February&nbsp;28, 2003, Intuitive Surgical had
36,920,459 shares of common stock outstanding.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Shares Beneficially</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Shares Beneficially</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Owned Prior to the</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Owned After the</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Merger</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Merger</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name and Address of Beneficial Owner(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percent</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percent</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">5% Stockholders</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Bear Stearns Asset Management, Inc.(2)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,241,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,241,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <FONT size="2">383 Madison Avenue, 29th Floor<BR>
    New York, NY 10179
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Investor (Guernsey) Limited
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,529,545</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,529,545</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <FONT size="2">National Westminster House<BR>
    Le Truchot, St. Peter Port<BR>
    Guernsey, Channel Islands, GY1 4PW
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">PatMarK Company, Inc.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,287,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,287,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <FONT size="2">Suite&nbsp;530<BR>
    300 Delaware Ave.<BR>
    Wilmington, DE 19801
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Merrill Lynch &#38; Co., Inc.(3)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,952,786</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,952,786</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <BR>
    <FONT size="2">World Financial Center, North Tower<BR>
    New York, NY 10381
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Allan G. Lozier
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,948,386</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,948,386</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <FONT size="2">6336 Pershing Dr.<BR>
    Omaha, NE 68110
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Directors and Officers</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Frederic H. Moll, M.D.(4)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,413,716</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,413,716</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Lonnie M. Smith(5)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,123,961</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,123,961</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Susan K. Barnes(6)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">316,380</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">316,380</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gary S. Guthart, Ph.D(7)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">164,421</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">164,421</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Russell C. Hirsch, M.D., Ph.D.(8)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">108,738</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">108,738</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Scott S. Halsted(9)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">99,328</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">99,328</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jerome J. McNamara(10)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">91,353</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">91,353</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Alan J. Levy, Ph.D.(11)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30,869</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30,869</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">James A. Lawrence(12)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Richard J. Kramer(13)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">All Named Executive Officers and Directors as a
    group (10&nbsp;persons)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,402,766</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,402,766</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">*</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents less than 1% of the issued and
    outstanding shares.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Beneficial ownership is determined in accordance
    with the rules of the SEC and generally includes voting or
    investment power with respect to securities. Shares of common
    stock subject to options and warrants which are currently
    exercisable, or will become exercisable within 60&nbsp;days of
    February&nbsp;28, 2003, are deemed outstanding for computing the
    percentage of the person or entity holding such securities but
    are not outstanding for computing the percentage of any other
    person or entity.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">127
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD align="left">
    <FONT size="2">Applicable percentage ownership after the merger
    is based on an assumed exchange ratio in the merger of
    approximately 0.52 and an estimated 52,322,508&nbsp;shares of
    Intuitive Surgical common stock expected to be outstanding upon
    completion of the merger (without giving effect to the proposed
    reverse stock split). Except as indicated by footnote, and
    subject to the community property laws where applicable, to
    Intuitive Surgical&#146;s knowledge the persons named in the
    table above have sole voting and investment power with respect
    to all shares of Intuitive Surgical common stock shown as
    beneficially owned by them. Unless otherwise indicated, the
    address for each person is Intuitive Surgical&#146;s address at
    950 Kifer Road, Sunnyvale, California 94086.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">As of December&nbsp;31, 2002, Bear Stearns Asset
    Management Inc. beneficially owned 3,241,000 shares of Intuitive
    Surgical&#146;s common stock and held the sole power to vote or
    direct the vote of all such shares. The S&#38;P Stars Portfolio
    has the right to receive and the power to direct the receipt of
    dividends from and the proceeds for the sale of greater than 5%
    of the common stock of Intuitive Surgical. The number of shares
    beneficially owned is based solely on a joint Schedule&nbsp;13G
    filed with the SEC on January&nbsp;27, 2003.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">As of December&nbsp;31, 2002, Merrill Lynch &#38;
    Co., Inc., on behalf of Merrill Lynch Investment Managers,
    beneficially owned 1,952,786 shares of Intuitive Surgical common
    stock and held shared power to vote or direct the vote of all
    such shares. The number of shares beneficially owned is based
    solely on a joint Schedule&nbsp;13G filed with the SEC on
    January&nbsp;8, 2003.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(4)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 64,163&nbsp;shares issuable pursuant to
    options exercisable within 60 days of February&nbsp;28, 2003.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(5)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 123,961&nbsp;shares issuable pursuant to
    options exercisable within 60&nbsp;days of February&nbsp;28,
    2003.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(6)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 111,874&nbsp;shares issuable pursuant to
    options exercisable within 60&nbsp;days of February&nbsp;28,
    2003.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(7)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 131,124&nbsp;shares issuable pursuant to
    options exercisable within 60&nbsp;days of February&nbsp;28,
    2003.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(8)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 28,887 shares issuable pursuant to
    options exercisable within 60 days of February&nbsp;28, 2003.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(9)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 54,701 held by Morgan Stanley Venture
    Partners&nbsp;III, L.P., 5,252 shares held by Morgan Stanley
    Venture Investors&nbsp;III, L.P. and 28,887 shares issuable
    pursuant to options exercisable within 60&nbsp;days of
    February&nbsp;28, 2003. Mr.&nbsp;Halsted is a General Partner of
    Morgan Stanley Dean Witter Venture Partners, an affiliate of
    Morgan Stanley Venture Investors III, L.P., and disclaims
    beneficial ownership of the shares owned by Morgan Stanley
    Venture Investors III, L.P., except to the extent of his
    pecuniary interest therein.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(10)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 91,353&nbsp;shares issuable pursuant to
    options exercisable within 60 days of February&nbsp;28, 2003.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(11)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 30,000 shares issuable pursuant to
    options exercisable within 60 days of February&nbsp;28, 2003.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(12)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 10,000 shares issuable pursuant to
    options exercisable within 60 days of February&nbsp;28, 2003.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(13)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 24,000 shares issuable pursuant to
    options exercisable within 60 days of February&nbsp;28, 2003.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">128
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Equity Compensation Plan
    Information</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table contains information as of
December&nbsp;31, 2002 for all of Intuitive Surgical&#146;s
equity compensation plans, including Intuitive Surgical&#146;s
2000 Equity Incentive Plan, 2000 Employee Stock Purchase Plan
and 2000 Non-Employee Directors&#146; Stock Option Plan. All of
the equity compensation plans of Intuitive Surgical have been
approved by stockholders.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of Securities</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Remaining Available for</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of Securities</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted-Average</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Future Issuance Under</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">to be Issued Upon</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise Price of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Equity Compensation</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Outstanding</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Plans (Excluding</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Outstanding Options,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Options, Warrants</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Securities Reflected in</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Warrants and Rights</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">and Rights</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Column&nbsp;(A))</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Plan Category</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(A)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(B)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(C)</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity Compensation Plans Approved by Stockholders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,904,160</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.96</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,109,891</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(2)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity Compensation Plans Not Approved by
    Stockholders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,904,160</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.96</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,109,891</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes (i)&nbsp;4,814,160&nbsp;shares of common
    stock issuable upon exercise of options granted under Intuitive
    Surgical&#146;s 2000 Equity Incentive Plan, of which
    2,194,494&nbsp;shares were exercisable as of December&nbsp;31,
    2002, and (ii)&nbsp;90,000&nbsp;shares of common stock under
    Intuitive Surgical&#146;s 2000 Non-Employee Directors Stock
    Option Plan, of which 72,912&nbsp;shares were exercisable as of
    December&nbsp;31, 2002.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes (i)&nbsp;5,744,842&nbsp;shares of common
    stock available for issuance under Intuitive Surgical&#146;s
    2000 Equity Incentive Plan, (ii)&nbsp;938,437&nbsp;shares of
    common stock available for issuance under Intuitive
    Surgical&#146;s 2000 Employee Stock Purchase Plan and
    (iii)&nbsp;426,612&nbsp;shares of common stock available for
    issuance under Intuitive Surgical&#146;s 2000 Non-Employee
    Directors&#146; Stock Option Plan.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">129
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "CERTAIN INFORMATION WITH RESPECT TO EXECUTIVE OFFICERS OF INTUITIVE SURGICAL" -->
<DIV align="left"><A NAME="095"></A></DIV>

<P align="center">
<B><FONT size="2">CERTAIN INFORMATION WITH RESPECT TO</FONT></B>

<DIV align="center">
<B><FONT size="2">EXECUTIVE OFFICERS OF INTUITIVE
SURGICAL</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Set forth below is information regarding each of
Intuitive Surgical&#146;s executive officers as of
April&nbsp;30, 2003.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="45%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="45%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Age</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Position</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Lonnie M. Smith
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">58</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">President, Chief Executive Officer and Chairman
    of the Board of Directors
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Susan K. Barnes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">49</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Senior Vice President, Chief Financial Officer
    and Assistant Secretary
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Frederic H. Moll, M.D.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">51</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Vice President, Medical Director, and Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jerome J. McNamara
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Senior Vice President, Worldwide Sales
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gary&nbsp;S. Guthart, Ph.D.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">37</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Senior Vice President, Product Operations
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The principal occupations and positions for at
least the past five years of the executive officers named above
are as follows:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Lonnie M. Smith
</FONT></I></B><FONT size="2">Please see &#147;Election of
Nominees to Intuitive Surgical&#146;s Board of Directors.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Susan K. Barnes,
</FONT></I></B><FONT size="2">Senior Vice President, Chief
Financial Officer and Assistant Secretary, has been Intuitive
Surgical&#146;s Chief Financial Officer and Assistant Secretary
since May 1997. From January 1995 to September 1996,
Ms.&nbsp;Barnes founded and served as Managing Director of the
Private Equity Group of Jefferies and Company, Inc., an
investment bank. From January 1994 to January 1995, she founded
and served as Managing General Partner of Westwind Capital
Partners, a private equity fund. From June 1991 to January 1994,
Ms.&nbsp;Barnes served as Chief Financial Officer and Managing
Director of BLUM Capital Partners, L.P., formerly Richard C.
Blum &#38; Associates, Inc., a merchant banking firm. From
September 1985 to June 1991, she served as Vice President and
Chief Financial Officer of NeXT Computer, Inc., a computer
company. Prior to forming NeXT with Steve Jobs, Ms.&nbsp;Barnes
was Controller of the Macintosh Division at Apple Computer.
Ms.&nbsp;Barnes holds a B.A. from Bryn Mawr College and an
M.B.A. from the Wharton School, University of Pennsylvania.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Frederic H. Moll, M.D.
</FONT></I></B><FONT size="2">Please see &#147;Election of
Nominees to Intuitive Surgical&#146;s Board of Directors.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Jerome J. McNamara,
</FONT></I></B><FONT size="2">Senior Vice President, Worldwide
Sales, joined Intuitive Surgical in April 1999 from Valley Lab
where he was Vice President of Marketing. Prior to this,
Mr.&nbsp;McNamara worked at United States Surgical Corporation
for nearly 17&nbsp;years where he held positions in senior sales
management, marketing, and national accounts. Mr.&nbsp;McNamara
graduated from the University of Pennsylvania with a B.A. degree
in Biology.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Gary&nbsp;S. Guthart, Ph.D.,
</FONT></I></B><FONT size="2">Senior Vice President, Product
Operations, joined Intuitive Surgical in April 1996 and became
Vice President, Engineering in November 1999. Previously,
Dr.&nbsp;Guthart was part of the core team developing foundation
technology for computer enhanced-surgery at SRI International
(formally Stanford Research Institute). While at SRI, he also
developed technologies for vibration and acoustic control of
large-scale systems. Upon receiving his doctorate degree from
the California Institute of Technology, he was honored with the
Richard Bruce Chapman Memorial Award. In addition,
Dr.&nbsp;Guthart holds a B.S. in Engineering from the University
of California, Berkeley, and an M.S. and Ph.D. in Engineering
Science from the California Institute of Technology.
</FONT>

<P align="center"><FONT size="2">130
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "EXECUTIVE COMPENSATION OF INTUITIVE SURGICAL" -->
<DIV align="left"><A NAME="096"></A></DIV>

<P align="center">
<B><FONT size="2">EXECUTIVE COMPENSATION OF INTUITIVE
SURGICAL</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth summary
information concerning the compensation paid to our chief
executive officer and other executive officers for services to
Intuitive Surgical in all capacities.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Annual Compensation</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Securities</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Underlying</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Name and Principle Position</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Year</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Salary</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Bonus</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Options</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Lonnie M. Smith
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">354,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">125,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">President and Chief
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">350,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Executive Officer
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">325,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Susan K. Barnes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">225,833</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Senior Vice President and
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">220,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37,989</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Chief Financial Officer
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">202,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Frederic H. Moll
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">168,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">M.D., Vice President
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">210,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">85,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">and Medical Director
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">205,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jerome J. McNamara, Jr.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">239,750</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">136,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">75,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Senior Vice President,
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">190,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">96,661</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Worldwide Sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">162,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gary S. Guthart
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">225,417</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">75,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Senior Vice President,
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">190,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36,278</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">75,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Product Operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">170,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Employment Agreements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In February 1997, Intuitive Surgical entered into
an agreement with Lonnie M. Smith, its President and Chief
Executive Officer, providing that, in the case of involuntary
termination other than for cause, Mr.&nbsp;Smith&#146;s salary
and benefits will continue to be paid for a period of one year
from the date of termination. Cause is defined in the agreement
to include conviction for any felony, participation in a fraud
or act of dishonesty against Intuitive Surgical, willful breach
of Intuitive Surgical&#146;s policies, or a material breach by
Mr.&nbsp;Smith of his employment agreement or of his proprietary
information and inventions agreement.
</FONT>

<P align="left">
<B><FONT size="2">Option Grants in Fiscal Year 2002</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth each grant of
stock options during 2002 to each of the individuals listed on
the previous table. The exercise price of each option was equal
to the fair value of Intuitive Surgical&#146;s common stock as
valued by the board of directors on the date of grant. The
exercise price may be paid in cash or in shares of Intuitive
Surgical&#146;s common stock valued at fair value on the
exercise date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The potential realizable value is calculated
based on the 10-year term of the option at the time of grant.
Stock price appreciation of 5% and 10% is assumed pursuant to
rules promulgated by the SEC and does not represent a prediction
of Intuitive Surgical&#146;s stock price performance. The
potential realizable values at 5% and 10% appreciation are
calculated by:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">multiplying the number of shares of common stock
    subject to a given option by the fair market value at the date
    of grant;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">assuming that the aggregate stock value derived
    from that calculation compounds at the annual 5% or 10% rate
    shown in the table until the expiration of the options; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">subtracting from that result the aggregate option
    exercise price.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The shares listed in the following table under
&#147;Number of Securities Underlying Options Granted&#148; are
subject to vesting. Upon completion of six months of service
from the vesting start date, 12.5% of the option shares vest and
the balance vest in a series of equal monthly installments over
the next 42&nbsp;months
</FONT>

<P align="center"><FONT size="2">131
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">of service. Each option has a 10-year term,
subject to earlier termination if the optionee&#146;s service
with Intuitive Surgical ceases.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Percentages shown under &#147;Percentage of Total
Options Granted to Employees in Fiscal Year 2002&#148; are based
on an aggregate of 1,976,000 options granted to employees of
Intuitive Surgical under Intuitive Surgical&#146;s stock option
plans during the fiscal year ended December&nbsp;31, 2002.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="26%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Individual Grants</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percentage of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Potential Realizable Value</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total Options</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">at Assumed Annual Rates</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Securities</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Granted to</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">of Stock Price Appreciation</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Underlying</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Employees in</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">for Option Term</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Options</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fiscal Year</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Expiration</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Granted</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Per Share</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">5%</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">10%</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Lonnie M. Smith
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">125,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2/1/12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">727,159</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,842,765</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Susan K. Barnes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">75,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2/1/12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">436,296</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,105,659</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3/14/12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">145,432</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">368,553</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Frederic H. Moll, M.D.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2/1/12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">290,864</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">737,106</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jerome J. McNamara, Jr.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2/1/12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">290,864</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">737,106</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.84</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3/25/12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">154,780</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">392,061</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gary S. Guthart
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">75,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2/1/12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">436,296</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,105,659</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Fiscal Year-End Option Values</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth the number and
value of securities underlying unexercised options that are held
by each of the individuals listed in the Summary Compensation
Table as of December&nbsp;31, 2002. Amounts shown under the
column &#147;Value of Unexercised In-The-Money Options at
December&nbsp;31, 2002&#148; are based on the market price of
$6.16 on that date, without taking into account any taxes that
may be payable in connection with the transaction, multiplied by
the number of shares underlying the option, less the exercise
price payable for these shares. Intuitive Surgical&#146;s stock
option plans allow for the early exercise of options granted to
employees. All options exercised early are subject to repurchase
by us at the original exercise price, upon the optionee&#146;s
cessation of service prior to the vesting of the shares.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="45%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Number of Securities</FONT></B></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Underlying</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Value of Unexercised</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Unexercised Options</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">In-the-Money Options</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">at December&nbsp;31, 2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">at December&nbsp;31, 2002</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercisable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Unexercisable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercisable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Unexercisable</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Lonnie M. Smith
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">97,914</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">177,086</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Susan K. Barnes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">93,123</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">131,878</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">82,101</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,987</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Frederic H. Moll, M.D.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">51,143</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">83,857</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jerome J. McNamara, Jr.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78,851</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">91,149</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">110,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gary S. Guthart
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">117,061</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">98,439</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">236,980</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Compensation Committee Interlocks and Insider
Participation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2002, the compensation committee consisted
of Russell&nbsp;C. Hirsch,&nbsp;M.D., Ph.D. and Alan&nbsp;J.
Levy,&nbsp;Ph.D., neither of whom is a present or former officer
or employee of Intuitive Surgical. In addition, during 2002 none
of our officers had an &#147;interlock&#148; relationship, as
that term is defined by the SEC, to report.
</FONT>

<P align="center"><FONT size="2">132
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "INTUITIVE SURGICAL COMPENSATION COMMITTEE REPORT" -->
<DIV align="left"><A NAME="097"></A></DIV>

<P align="center">
<B><FONT size="2">INTUITIVE SURGICAL COMPENSATION COMMITTEE
REPORT</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2002, the compensation committee of
Intuitive Surgical&#146;s board of directors was comprised of
Russell C. Hirsch, M.D., Ph.D. and Alan J. Levy,&nbsp;Ph.D., two
non-employee directors, who administered Intuitive
Surgical&#146;s executive compensation programs and policies.
Dr.&nbsp;Levy serves as Chairman of the Committee. The Committee
is responsible for establishing and monitoring the general
compensation policies and compensation plans of Intuitive
Surgical, as well as the specific compensation levels for
executive officers. The Committee also has the authority and
power to grant stock options under Intuitive Surgical&#146;s
2000 Equity Incentive Plan. Executive officers who are also
directors have not participated in deliberations or decisions
involving their own compensation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is the compensation
committee&#146;s report submitted to Intuitive Surgical&#146;s
board of directors addressing the compensation of executive
officers for fiscal 2002.
</FONT>

<P align="left">
<B><FONT size="2">Compensation Policy and Philosophy</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our executive compensation policy is designed to:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">attract and retain qualified executives who will
    contribute to Intuitive Surgical&#146;s long-term success;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reward executives for achieving Intuitive
    Surgical&#146;s goals, and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">link executive compensation and stockholder
    interests through equity-based plans.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical believes that in order to
attract and retain qualified executives, its compensation
policies must be competitive with comparable companies in
similar industries. The compensation mix reflects a balance of
cash payments, consisting of base salary, cash bonus payments,
and long-term stock-based incentives in the form of stock
options. The emphasis in incentive compensation is placed on
stock options that more closely align the financial interests of
Intuitive Surgical&#146;s employees with its stockholders.
</FONT>

<P align="left">
<B><FONT size="2">Executive Compensation Components</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As discussed below, Intuitive Surgical&#146;s
executive compensation package is primarily comprised of three
components: base salary, annual incentive bonuses and stock
options.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Base Salary.</FONT></I><FONT size="2"> The
Committee establishes base salaries for executive officers based
on its review of the base salaries of executive officers in
comparable companies and in similar industries. Base salaries
for executives are reviewed annually and adjusted based on
industry compensation surveys and individual experience and
performance in achieving our objectives.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Annual Incentive Bonuses.
</FONT></I><FONT size="2">Intuitive Surgical&#146;s incentive
plan provides a cash incentive opportunity for all
non-commissioned employees including executive officers.
Achievement of specific company metrics determine overall plan
payment levels, then individual performance levels are
considered to determine individual incentive payments. Bonuses
were paid to employees and certain executives in 2002 for
performance achieved during fiscal year 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Long Term Incentive
Compensation.</FONT></I><FONT size="2"> Intuitive
Surgical&#146;s equity incentive plans provide for long-term
incentive compensation for our employees including executive
officers. A significant portion of the total compensation
package for executive officers is in the form of stock option
awards. These awards give employees an equity interest in
Intuitive Surgical, thereby aligning the interests of executive
officers and stockholders and providing incentive to maximize
stockholder value. Stock option positions for all employees,
including executives, were reviewed in 2002 and adjusted based
on industry surveys and number of options previously granted, as
well as contributions to Intuitive Surgical&#146;s success.
</FONT>

<P align="left">
<B><FONT size="2">Compensation of Chief Executive
Officer</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The compensation for Intuitive Surgical&#146;s
Chief Executive Officer, Lonnie Smith, for fiscal 2002 was
comprised of base salary, annual incentive bonus and long-term
incentive compensation in the form of
</FONT>

<P align="center"><FONT size="2">133
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">stock options. The Committee regularly reviews
the performance and compensation of Mr.&nbsp;Smith following the
criteria discussed above under &#147;Executive Compensation
Components.&#148; The Committee awarded stock options and a cash
bonus to Mr.&nbsp;Smith in February 2002. In July 2002, the
Committee reviewed Mr.&nbsp;Smith&#146;s cash compensation
according to the criteria discussed above and increased
Mr.&nbsp;Smith&#146;s base salary by 2.3%.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Internal Revenue Code
Section&nbsp;162(m)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Section&nbsp;162(m) of the Internal Revenue Code
limits Intuitive Surgical&#146;s tax deduction to
$1&nbsp;million for compensation paid to certain executive
officers named in this joint proxy statement/prospectus unless
the compensation is performance based. Since the cash
compensation paid by Intuitive Surgical to each of its executive
officers is expected to be well below $1&nbsp;million and the
Committee believes that options granted would meet the
requirements for qualifying as performance-based, the Committee
believes that these limitations did not impact the company in
2002. It is the Committee&#146;s intention to qualify, to the
extent reasonable, the executive officers&#146; compensation for
deductibility under applicable tax law.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">COMPENSATION COMMITTEE
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Russell C. Hirsch, M.D., Ph.D.
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Alan J. Levy, Ph.D.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">The foregoing compensation committee report
shall not be deemed incorporated by reference into any filing
under the Securities Act or the Exchange Act, and shall not
otherwise be deemed filed under these acts, except to the extent
Intuitive Surgical specifically incorporates by reference into
such filings.</FONT></I>

<P align="center"><FONT size="2">134
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "INTUITIVE SURGICAL AUDIT COMMITTEE REPORT" -->
<DIV align="left"><A NAME="098"></A></DIV>

<P align="center">
<B><FONT size="2">INTUITIVE SURGICAL AUDIT COMMITTEE
REPORT</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During fiscal 2002, the audit committee of
Intuitive Surgical&#146;s board of directors was comprised of
Scott C. Halsted, Richard J. Kramer and James A. Lawrence, all
of whom are &#147;independent&#148; directors, as determined in
accordance with the Nasdaq Stock Market&#146;s regulations.
Mr.&nbsp;Lawrence serves as the chairman of the audit committee.
The audit committee operates in pursuant to a written charter
adopted by Intuitive Surgical&#146;s board of directors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Management is responsible for Intuitive
Surgical&#146;s internal controls and the financial reporting
process. The independent accountants are responsible for
performing an independent audit of Intuitive Surgical&#146;s
consolidated financial statements in accordance with generally
accepted auditing standards and to issue a report thereon. The
audit committee&#146;s responsibility is to monitor and oversee
these processes. The following is the audit committee&#146;s
report submitted to Intuitive Surgical&#146;s board of directors
for the fiscal year ended December&nbsp;31, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The audit committee has:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed and discussed Intuitive Surgical&#146;s
    audited financial statements with management and the independent
    accountants;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">discussed with Ernst &#38; Young LLP, Intuitive
    Surgical&#146;s independent auditors, the matters required to be
    discussed by Statement on Auditing Standards No.&nbsp;61, as may
    be modified or supplemented; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">received from Ernst &#38; Young LLP the written
    disclosures and the letter regarding their independence as
    required by Independence Standards Board Standard No.&nbsp;1, as
    may be modified or supplemented, and discussed the
    auditors&#146; independence with them.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, based on the review and discussions
referred to above, the audit committee recommended to Intuitive
Surgical&#146;s board of directors that the audited financial
statements be included in Intuitive Surgical&#146;s Annual
Report on Form&nbsp;10-K for the fiscal year ended
December&nbsp;31, 2002 for filing with the SEC.
</FONT>

<P align="left">
<B><FONT size="2">Audit and Audit Related Fees</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Audit Fees. </FONT></I><FONT size="2">The
aggregate fees billed for professional services rendered for the
audit of Intuitive Surgical&#146;s annual financial statements
for the fiscal years ended December&nbsp;31, 2002 and 2001 and
the reviews of the financial statements included in Intuitive
Surgical&#146;s Forms&nbsp;10-Q for that fiscal year were
$230,301 and $235,000, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Financial Information Systems Design and
Implementation Fees. </FONT></I><FONT size="2">For the fiscal
year ended December&nbsp;31, 2002, Intuitive Surgical paid no
fees to its principal accountants for professional services
rendered in connection with the operation, supervision or
management of Intuitive Surgical&#146;s information systems or
local area network, or for the design or implementation of a
hardware or software system for aggregating source data
underlying Intuitive Surgical&#146;s financial statements, or
generating information that is significant to such statements,
taken as a whole.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">All Other Fees. </FONT></I><FONT size="2">The
aggregate fees billed for services rendered by Intuitive
Surgical&#146;s principal accountants, other than described
above, for the fiscal years ended December&nbsp;31, 2002 and
2001 were $50,090 and $78,252, respectively. The nature of these
services include tax return preparation and 401(k) compliance
services.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical&#146;s audit committee has
considered whether the provision of services described above
under the captions &#147;Audit Fees&#148; and &#147;Financial
Information Systems Design and Implementation Fees&#148; are
compatible with maintaining the principal accountant&#146;s
independence, and has determined that the
</FONT>

<P align="center"><FONT size="2">135
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">provision of such services to Intuitive Surgical
does not compromise the principal accountant&#146;s independence.
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">AUDIT COMMITTEE
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Scott C. Halsted
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Richard J. Kramer
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">James A. Lawrence
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I><FONT size="2">The foregoing audit committee report shall not
    be deemed incorporated by reference into any filing under the
    Securities Act or the Exchange Act, and shall not otherwise be
    deemed filed under these acts, except to the extent Intuitive
    Surgical specifically incorporates by reference into such
    filings.</FONT></I></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">136
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "STOCK PERFORMANCE GRAPH" -->
<DIV align="left"><A NAME="099"></A></DIV>

<P align="center">
<B><FONT size="2">STOCK PERFORMANCE GRAPH</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following graph compares the cumulative total
stockholder return on Intuitive Surgical&#146;s common stock (no
dividends have been paid thereon) with the cumulative total
return of (1)&nbsp;the Nasdaq Composite Index and (2)&nbsp;the
S&#38;P Healthcare Index, over the indicated periods extending
through the end of 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The historical stock market performance of the
common stock shown below is not necessarily indicative of future
stock performance.
</FONT>

<P align="center">
<B><FONT size="2">COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
INTUITIVE</FONT></B>

<DIV align="center">
<B><FONT size="2">SURGICAL, NASDAQ COMPOSITE, AND S&#38;P HEALTH
CARE INDEX</FONT></B>
</DIV>

<P align="left">
<IMG src="f88583b3f8858303.gif" alt="(COMPARISON GRAPH)">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="49%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="17"></TD>
</TR>

<TR>
    <TD colspan="17" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">6/12/00</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">12/00</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">12/01</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">12/02</FONT></B></TD>
</TR>

<TR>
    <TD colspan="17"></TD>
</TR>

<TR>
    <TD colspan="17" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;Intuitive Surgical, Inc.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">94</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">111</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">68</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;NASDAQ Composite
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;S&#38;P Healthcare Index
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">122</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">106</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">85</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left">

</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">The stock performance graph above shall not be
deemed incorporated by reference by any general statement
incorporating by reference this proxy statement into any filing
under the Securities Act or under the Exchange Act, except to
the extent Intuitive Surgical specifically incorporates this
information by reference, and shall not otherwise be deemed
filed under these acts.</FONT></I>

<P align="center"><FONT size="2">137
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "OTHER INFORMATION" -->
<DIV align="left"><A NAME="100"></A></DIV>

<P align="center">
<B><FONT size="2">OTHER INFORMATION</FONT></B>

<P align="left">
<B><FONT size="2">Other Matters at the Annual Meeting</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical does not know of any matters
to be presented at the annual meeting other than those mentioned
in this joint proxy statement/prospectus. If any other matters
are properly brought before the annual meeting, it is intended
that the proxies will be voted in accordance with the best
judgment of the person or persons voting the proxies.
</FONT>

<P align="left">
<B><FONT size="2">Independent Public Accountants</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical&#146;s auditors for the fiscal
year ended December&nbsp;31, 2002 were Ernst &#38; Young LLP. A
representative of Ernst &#38; Young LLP will be present at the
annual meeting, will have an opportunity to make a statement if
he so desires and is expected to be available to respond to
appropriate questions.
</FONT>

<P align="left">
<B><FONT size="2">Stockholder Proposals for 2004 Annual
Meeting</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Any stockholder who meets the requirements of the
proxy rules under the Exchange Act may submit to the Intuitive
Surgical&#146;s board of directors proposals to be considered
for submission to the stockholders at the 2004 annual meeting.
Proposals must comply with the requirements of Rule&nbsp;14a-8
under the Exchange Act and be submitted in writing by notice
delivered or mailed by first-class United States mail, postage
prepaid, to Intuitive Surgical&#146;s Secretary at Intuitive
Surgical, Inc., 950 Kifer Road, Sunnyvale, California 94086 and
must be received no later than December&nbsp;19, 2003. Your
notice must include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">your name and address and the text of the
    proposal to be introduced;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the number of shares of stock you hold of record,
    beneficially own and represent by proxy as of the date of your
    notice; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a representation that you intend to appear in
    person or by proxy at the meeting to introduce the proposal
    specified in your notice.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">The chairman of the meeting may refuse to
acknowledge the introduction of your proposal if it is not made
in compliance with the foregoing procedures or the applicable
provisions of Intuitive Surgical&#146;s bylaws. Intuitive
Surgical&#146;s bylaws also provide for separate notice
procedures to recommend a person for nomination as a director or
to propose business to be considered by stockholders at a
meeting.
</FONT>

<P align="center"><FONT size="2">138
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "LEGAL MATTERS" -->
<DIV align="left"><A NAME="101"></A></DIV>

<P align="center">
<B><FONT size="2">LEGAL MATTERS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Latham &#38; Watkins LLP has rendered an opinion
about certain legal matters with respect to the Intuitive
Surgical common stock being offered by this prospectus. Certain
United States federal income tax consequences of the merger will
be passed upon for Computer Motion by Stradling Yocca Carlson
&#38; Rauth.
</FONT>

<!-- link1 "EXPERTS" -->
<DIV align="left"><A NAME="102"></A></DIV>

<P align="center">
<B><FONT size="2">EXPERTS</FONT></B>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The consolidated financial statements and
schedule of Intuitive Surgical, Inc. appearing in Intuitive
Surgical&#146;s Annual Report on Form&nbsp;10-K/A for the year
ended December&nbsp;31, 2002 have been audited by Ernst &#38;
Young LLP, independent auditors, as set forth in their report
included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by
reference in reliance upon such report given on the authority of
such firm as experts in accounting and auditing.
</FONT>



<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The consolidated financial statements of Computer
Motion, Inc. at December&nbsp;31, 2002, and for the year then
ended, appearing in Computer Motion, Inc.&#146;s Annual Report
on Form&nbsp;10-K/A have been audited by Ernst&nbsp;&#38; Young
LLP, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference, (which
contain an explanatory paragraph describing conditions that
raise substantial doubt about Computer Motion Inc.&#146;s
ability to continue as a going concern as described in
Note&nbsp;1 to the consolidated financial statements). Such
consolidated financial statements are incorporated herein by
reference in reliance upon such report given on the authority of
such firm as experts in accounting and auditing.
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">After reasonable efforts, Computer Motion has
been unable to obtain the consent of Arthur Andersen LLP to the
incorporation into the registration statement, of which this
joint proxy statement/prospectus is a part, of their report with
respect to the consolidated financial statements of Computer
Motion which appear in its Annual Report on Form&nbsp;10-K for
the year ended December&nbsp;31, 2001 and December&nbsp;31,
2000. Under these circumstances, Rule&nbsp;437(a) under the
Securities Act permits the registration statement to be filed
without a written consent from Arthur Andersen. The absence of
such consent may limit your recovery on certain claims. In
particular, and without limitation, you will not be able to
assert claims against Arthur Andersen under Section&nbsp;11 of
the Securities Act for any untrue statement of a material fact
contained in Computer Motion&#146;s financial statements which
appear in its Annual Report on Form&nbsp;10-K for the year ended
December&nbsp;31, 2001 and December&nbsp;31, 2000 or any
omission to state a material fact required to be stated therein.
</FONT>

<P align="center"><FONT size="2">139
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "WHERE YOU CAN FIND MORE INFORMATION" -->
<DIV align="left"><A NAME="103"></A></DIV>

<P align="center">
<B><FONT size="2">WHERE YOU CAN FIND MORE INFORMATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical and Computer Motion file
annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy these
reports, statements or other information filed by either
Intuitive Surgical or Computer Motion at the SEC&#146;s Public
Reference Room at 450&nbsp;Fifth Street, N.W.,
Washington,&nbsp;D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the public reference
rooms. The SEC filings of Intuitive Surgical and Computer Motion
are also available to the public from commercial document
retrieval services and at the web site maintained by the SEC at
<I>www.sec.gov</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical has filed a registration
statement on Form&nbsp;S-4 to register with the SEC the
Intuitive Surgical common stock to be issued to Computer Motion
stockholders in the merger. This joint proxy statement/
prospectus is a part of that registration statement and
constitutes a proxy statement and a prospectus of Intuitive
Surgical, in addition to being a proxy statement of Computer
Motion for the Computer Motion special meeting. The registration
statement, including the attached exhibits and schedules,
contains additional relevant information about Intuitive
Surgical and Computer Motion and Intuitive Surgical common
stock. As allowed by SEC rules, this joint proxy statement/
prospectus does not contain all the information you can find in
the registration statement or the exhibits to the registration
statement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The SEC allows Intuitive Surgical and Computer
Motion to &#147;incorporate by reference&#148; information into
this joint proxy statement/ prospectus. This means that
Intuitive Surgical and Computer Motion can disclose important
information to you by referring you to another document filed
separately with the SEC. The information incorporated by
reference is considered to be a part of this joint proxy
statement/ prospectus, except for any information that is
superseded by information that is included directly in this
joint proxy statement/ prospectus or incorporated by reference
subsequent to the date of this joint proxy statement/ prospectus.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This joint proxy statement/ prospectus
incorporates by reference the documents listed below that
Intuitive Surgical and Computer Motion have previously filed
with the SEC. They contain important information about Intuitive
Surgical and Computer Motion and their financial condition. The
following documents, which were filed by Intuitive Surgical with
the SEC, are incorporated by reference into this joint proxy
statement/ prospectus:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">annual report of Intuitive Surgical on
    Form&nbsp;10-K/A for the year ended December&nbsp;31, 2002,
    filed with the SEC on May&nbsp;30, 2003;
    </FONT></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">quarterly report of Intuitive Surgical on
    Form&nbsp;10-Q for the quarter ended March&nbsp;31, 2003, filed
    with the SEC on May&nbsp;15, 2003;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">report of Intuitive Surgical on Form&nbsp;8-K
    filed with the SEC on March&nbsp;7, 2003; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the description of Intuitive Surgical&#146;s
    common stock set forth in the Registration Statement on
    Form&nbsp;8-A, filed with the SEC on May&nbsp;26, 2000.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, Intuitive Surgical incorporates by
reference additional documents that it may file with the SEC
pursuant to Sections&nbsp;13(a), 13(c), 14 or 15(d) of the
Exchange Act between the date of this joint proxy statement/
prospectus and the dates of the Intuitive Surgical annual
meeting. These documents include periodic reports, such as
annual reports on Form&nbsp;10-K, quarterly reports on
Form&nbsp;10-Q and current reports on Form&nbsp;8-K, as well as
proxy statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following documents, which were filed by
Computer Motion with the SEC, are incorporated by reference into
this joint proxy statement/ prospectus:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">annual report of Computer Motion on
    Form&nbsp;10-K/A for the year ended December&nbsp;31, 2002,
    filed with the SEC on May&nbsp;29, 2003;
    </FONT></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">quarterly report of Computer Motion on
    Form&nbsp;10-Q for the quarter ended March&nbsp;31, 2003, filed
    with the SEC on May&nbsp;15, 2003;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">140
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">report of Computer Motion on Form&nbsp;8-K filed
    with the SEC on February&nbsp;7, 2003;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">report of Computer Motion on Form&nbsp;8-K filed
    with the SEC on February&nbsp;24, 2003; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">report of Computer Motion on Form&nbsp;8-K filed
    with the SEC on March&nbsp;11, 2003.
    </FONT></TD>
</TR>

</TABLE>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This joint proxy statement/prospectus is
accompanied by a copy of Computer Motion&#146;s annual report on
Form&nbsp;10-K/A for the year ended December&nbsp;31, 2002 and
quarterly report on Form&nbsp;10-Q for the three months ended
March&nbsp;31, 2003.
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical has supplied all information
contained or incorporated by reference into this joint proxy
statement/prospectus relating to Intuitive Surgical, and
Computer Motion has supplied all the information relating to
Computer Motion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You can obtain any of the documents incorporated
by reference into this joint proxy statement/prospectus through
Intuitive Surgical or Computer Motion, as the case may be, or
from the SEC through the SEC&#146;s Internet Web site at the
address described above. Documents incorporated by reference are
available from Intuitive Surgical and Computer Motion without
charge, excluding any exhibits to those documents, unless the
exhibit is specifically incorporated by reference as an exhibit
in this joint proxy statement/prospectus.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Intuitive Surgical stockholders and Computer
Motion stockholders may request a copy of information
incorporated by reference into this joint proxy
statement/prospectus by contacting the investor relations
department for each of Intuitive Surgical and Computer Motion at:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="56%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="41%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Intuitive Surgical, Inc.<BR>
    950&nbsp;Kifer Road<BR>
    Sunnyvale, California 94086<BR>
    (408)&nbsp;523-2100<BR>
    Attn: Investor Relations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Computer Motion, Inc.<BR>
    130-B Cremona Drive<BR>
    Goleta, California 93117<BR>
    (805)&nbsp;968-9600<BR>
    Attn: Investor Relations
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, you may obtain copies of the
information relating to Intuitive Surgical, without charge, by
sending an e-mail to ir@intusurg.com. Furthermore, you may
obtain copies of some of this information by making a request
through the Intuitive Surgical investor relations web site,
<I>www.intuitivesurgical.com.</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, you may obtain copies of the
information relating to Computer Motion, without charge, by
sending an e-mail to ir@computermotion.com. Furthermore, you may
obtain copies of some of this information by making a request
through the Computer Motion investor relations web site,
<I>www.computermotion.com</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">In order for you to receive timely delivery of
the documents in advance of the Intuitive Surgical and Computer
Motion special meetings, Intuitive Surgical or Computer Motion
should receive your request no later than June&nbsp;23,
2003.</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">We have not authorized anyone to give any
information or make any representation about the merger or our
companies that is different from, or in addition to, that
contained in this joint proxy statement/ prospectus or in any of
the materials that we have incorporated into this joint proxy
statement/ prospectus. Therefore, if anyone does give you
information of this sort, you should not rely on it. If you are
in a jurisdiction where offers to exchange or sell, or
solicitations of offers to exchange or purchase, the securities
offered by this joint proxy statement/prospectus or the
solicitation of proxies is unlawful, or if you are a person to
whom it is unlawful to direct these types of activities, then
the offer presented in this joint proxy statement/prospectus
does not extend to you. The information contained in this joint
proxy statement/ prospectus is accurate only as of the date of
this document unless the information specifically indicates that
another date applies.</FONT></B>

<P align="center"><FONT size="2">141
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">ANNEX&nbsp;A</FONT></B>

<P align="center">
<B><FONT size="2">AGREEMENT AND PLAN OF MERGER</FONT></B>

<P align="center">
<B><FONT size="2">BY AND AMONG</FONT></B>

<P align="center">
<B><FONT size="2">INTUITIVE SURGICAL, INC.,</FONT></B>

<P align="center">
<B><FONT size="2">INTUITIVE MERGER CORPORATION</FONT></B>

<P align="center">
<B><FONT size="2">(FORMERLY IRON ACQUISITION
CORPORATION)</FONT></B>

<P align="center">
<B><FONT size="2">AND</FONT></B>

<P align="center">
<B><FONT size="2">COMPUTER MOTION, INC.</FONT></B>

<P align="center">
<B><FONT size="2">DATED AS OF MARCH&nbsp;7, 2003</FONT></B>

<P align="center"><FONT size="2">A-1
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">AGREEMENT AND PLAN OF MERGER, dated as of
March&nbsp;7, 2003 (this &#147;Agreement&#148;), by and among
Intuitive Surgical, Inc., a Delaware corporation
(&#147;Parent&#148;), Intuitive Merger Corporation (formerly
Iron Acquisition Corporation), a Delaware corporation and a
wholly owned subsidiary of Parent (&#147;Merger Sub&#148;), and
Computer Motion, Inc., a Delaware corporation (the
&#147;Company&#148;).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">WHEREAS, the respective Boards of Directors of
Parent, Merger Sub and the Company have approved and declared
advisable the merger of Merger Sub with and into the Company
(the &#147;Merger&#148;) upon the terms and subject to the
conditions of this Agreement and in accordance with the General
Corporation Law of the State of Delaware (the &#147;DGCL&#148;);
and
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">WHEREAS, the respective Boards of Directors of
Parent and the Company have determined that the Merger is in
furtherance of and consistent with their respective business
strategies and is in the best interest of their respective
stockholders, and Parent has approved this Agreement and the
Merger as the sole stockholder of Merger Sub; and
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">WHEREAS, as a condition to and inducement to the
Company&#146;s willingness to enter into this Agreement,
simultaneously with the execution of this Agreement, each of the
stockholders of Parent listed on Exhibit&nbsp;A have entered
into support agreements with the Company in the form attached
hereto as Exhibit&nbsp;B (the &#147;Parent Support
Agreements&#148;); and
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">WHEREAS, as a condition to and inducement to
Parent&#146;s and the Merger Sub&#146;s willingness to enter
into this Agreement, simultaneously with the execution of this
Agreement, each of the stockholders of the Company listed on
Exhibit&nbsp;C have entered into support agreements with Parent
and Merger Sub in the form attached hereto as Exhibit&nbsp;D
(the &#147;Company Support Agreements&#148;); and
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">WHEREAS, simultaneously with the execution and
delivery of this Agreement, Parent and the Company have entered
into a loan and security agreement dated the date hereof; (the
&#147;Loan Agreement&#148;); and
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">WHEREAS, for federal income tax purposes, it is
intended that the Merger shall qualify as a reorganization
within the meaning of Section&nbsp;368(a) of the Internal
Revenue Code of 1986, as amended (the &#147;Code&#148;);
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">NOW, THEREFORE, in consideration of the foregoing
and the respective representations, warranties, covenants and
agreements set forth in this Agreement and intending to be
legally bound hereby, the parties hereto agree as follows:
</FONT>

<P align="center">
<FONT size="2">ARTICLE&nbsp;I
</FONT>

<P align="center">
<FONT size="2">THE MERGER
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;1.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>The
Merger.</I> Upon the terms and subject to satisfaction or waiver
of the conditions set forth in this Agreement, and in accordance
with the DGCL, Merger Sub, at the Effective Time, shall be
merged with and into the Company. As a result of the Merger, the
separate corporate existence of Merger Sub shall cease and the
Company shall continue as the surviving corporation of the
Merger (the &#147;Surviving Corporation&#148;).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;1.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Effective
Time.</I> As soon as practicable after the satisfaction or, if
permissible, waiver of the conditions set forth in
Article&nbsp;6, the parties hereto shall cause the Merger to be
consummated by filing a certificate of merger (the
&#147;Certificate of Merger&#148;) with the Secretary of State
of the State of Delaware, in such form as required by, and
executed in accordance with the relevant provisions of, the DGCL
(the date and time of such filing, or if another date and time
is specified in such filing, such specified date and time, being
the &#147;Effective Time&#148;).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;1.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Effect
of the Merger.</I> At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of the
DGCL. Without limiting the generality of the foregoing, at the
Effective Time, except as otherwise provided herein, all the
property, rights, privileges, powers and franchises of the
Company and Merger Sub shall vest in the Surviving Corporation,
and all debts,
</FONT>

<P align="center"><FONT size="2">A-2
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">liabilities and duties of the Company and Merger
Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;1.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Certificate
of Incorporation; By-laws.</I> At the Effective Time, the
Certificate of Incorporation and the By-laws of the Surviving
Corporation shall be amended in their entirety to contain the
provisions set forth in the Certificate of Incorporation and the
By-laws of Merger Sub, each as in effect immediately prior to
the Effective Time, as the same may be amended in accordance
with Section&nbsp;5.13.1 hereof.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;1.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Directors
and Officers.</I> The directors of Merger Sub immediately prior
to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with
the Certificate of Incorporation and By-laws of the Surviving
Corporation. The officers of the Company immediately prior to
the Effective Time shall be the initial officers of the
Surviving Corporation, each to hold office in accordance with
the Certificate of Incorporation and By-laws of the Surviving
Corporation.
</FONT>

<P align="center">
<FONT size="2">ARTICLE&nbsp;II
</FONT>

<P align="center">
<FONT size="2">CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;2.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Conversion
of Securities.</I> At the Effective Time, by virtue of the
Merger and without any action on the part of Merger Sub, the
Company or the holders of any of the following securities:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;2.1.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Conversion
    Generally.</I>
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;2.1.1.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Company
    Common Stock.</I> Each share of common stock, par value $0.001
    per share, of the Company (&#147;Company Common Stock&#148;)
    issued and outstanding immediately prior to the Effective Time
    (other than any shares of Company Common Stock to be canceled
    pursuant to Section&nbsp;2.1.2), including the associated rights
    of the Company (the &#147;Company Rights&#148;) pursuant to the
    Rights Agreement, dated as of June&nbsp;14, 1999, between the
    Company and American Stock Transfer and Trust Company, as Rights
    Agent (the &#147;Company Rights Agreement&#148;) shall be
    converted, subject to Section&nbsp;2.2.5, into the right to
    receive a number of shares of common stock, par value $0.001 per
    share, of Parent (&#147;Parent Common Stock&#148;), equal to the
    Exchange Ratio. All such shares of Company Common Stock shall no
    longer be outstanding and shall automatically be canceled and
    retired and shall cease to exist, and each certificate
    previously representing any such shares shall thereafter
    represent the right to receive a certificate representing the
    shares of Parent Common Stock into which such Company Common
    Stock was converted in the Merger. Certificates previously
    representing shares of Company Common Stock shall be exchanged
    for certificates representing whole shares of Parent Common
    Stock issued in consideration therefor upon the surrender of
    such certificates in accordance with the provisions of
    Section&nbsp;2.2, without interest. No fractional share of
    Parent Common Stock shall be issued, and in lieu thereof, a cash
    payment shall be made pursuant to Section&nbsp;2.2.5 hereof.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;2.1.1.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Company
    Preferred Stock.</I> Each share of preferred stock, par value
    $0.001 per share, of the Company (the &#147;Company Preferred
    Stock&#148; and, together with the Company Common Stock, the
    &#147;Company Stock&#148;) issued and outstanding immediately
    prior to the Effective Time (other than any shares of Company
    Preferred Stock to be canceled pursuant to Section&nbsp;2.1.2),
    shall be converted, subject to Section&nbsp;2.2.5, into the
    right to receive a number of shares of Parent Common Stock equal
    to that number of shares of Company Common Stock into which the
    Company Preferred Stock would have been convertible multiplied
    by the Exchange Ratio. All such shares of Company Preferred
    Stock shall no longer be outstanding and shall automatically be
    canceled and retired and shall cease to exist, and each
    certificate previously representing any such shares shall
    thereafter represent the right to receive a certificate
    representing the shares of Parent Common Stock into which such
    Company Preferred Stock was converted in the Merger.
    Certificates previously representing shares of Company Preferred
    Stock
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-3
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">shall be exchanged for certificates representing
    whole shares of Parent Common Stock issued in consideration
    therefor upon the surrender of such certificates in accordance
    with the provisions of Section&nbsp;2.2, without interest. No
    fractional share of Parent Common Stock shall be issued, and in
    lieu thereof, a cash payment shall be made pursuant to
    Section&nbsp;2.2.5 hereof.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;2.1.1.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Warrants.</I>
    At the Effective Time, all unexercised and unexpired warrants to
    purchase Company Common Stock (&#147;Company Warrants&#148;)
    then outstanding will be assumed by Parent. Each Company Warrant
    so assumed by Parent under this Agreement will continue to have,
    and be subject to, the same terms and conditions as set forth in
    such Company Warrant and any agreements executed in connection
    therewith immediately prior to the Effective Time, except that
    (i)&nbsp;each Company Warrant will be exercisable (or will
    become exercisable in accordance with its terms) for that number
    of whole shares of Parent Common Stock equal to the product of
    the number of shares of Company Common Stock that were issuable
    upon exercise of such Company Warrant immediately prior to the
    Effective Time multiplied by the Exchange Ratio, rounded down to
    the nearest whole number of shares of Parent Common Stock and
    (ii)&nbsp;the per share exercise price for the shares of Parent
    Common Stock issuable upon exercise of such Company Warrant
    assumed, will be equal to the quotient determined by dividing
    the exercise price per share of Company Common Stock at which
    such Company Warrant was exercisable immediately prior to the
    Effective Time by the Exchange Ratio, rounded up to the nearest
    whole cent.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;2.1.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cancellation
    of Certain Shares.</I> Each share of Company Stock held by
    Parent, Merger Sub, any wholly-owned subsidiary of Parent or
    Merger Sub, in the treasury of the Company or by any
    wholly-owned subsidiary of the Company immediately prior to the
    Effective Time shall be canceled and extinguished without any
    conversion thereof and no payment shall be made with respect
    thereto.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;2.1.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Merger
    Sub.</I> Each share of common stock, par value $0.001 per share,
    of Merger Sub issued and outstanding immediately prior to the
    Effective Time shall be converted into and be exchanged for one
    newly and validly issued, fully paid and nonassessable share of
    common stock of the Surviving Corporation.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;2.1.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Change
    in Shares.</I> If between the date of this Agreement and the
    Effective Time the outstanding shares of Parent Common Stock or
    Company Stock shall have been changed into a different number of
    shares or a different class, by reason of any stock dividend,
    subdivision, reclassification, recapitalization, split,
    combination or exchange of shares, the Exchange Ratio shall be
    correspondingly adjusted to reflect such stock dividend,
    subdivision, reclassification, recapitalization, split,
    combination or exchange of shares.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;2.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Exchange
of Certificates.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;2.2.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Exchange
    Agent.</I> As of the Effective Time, Parent shall deposit, or
    shall cause to be deposited, with Computer Share, Inc. or
    another bank or trust company designated by Parent and
    reasonably satisfactory to the Company (the &#147;Exchange
    Agent&#148;), for the benefit of the holders of shares of
    Company Stock, for exchange in accordance with this
    Article&nbsp;2, through the Exchange Agent, certificates
    representing the shares of Parent Common Stock (such
    certificates for shares of Parent Common Stock, together with
    cash in lieu of fractional shares and any dividends or
    distributions with respect thereto, being hereinafter referred
    to as the &#147;Exchange Fund&#148;) issuable pursuant to
    Section&nbsp;2.1 in exchange for outstanding shares of Company
    Stock. The Exchange Agent shall, pursuant to irrevocable
    instructions, deliver the Parent Common Stock contemplated to be
    issued pursuant to Section&nbsp;2.1 out of the Exchange Fund.
    Except as contemplated by Section&nbsp;2.2.5 hereof, the
    Exchange Fund shall not be used for any other purpose.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;2.2.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Exchange
    Procedures.</I> Promptly after the Effective Time, Parent shall
    instruct the Exchange Agent to mail to each holder of record of
    a certificate or certificates which immediately prior to the
    Effective Time represented outstanding shares of Company Stock
    (the &#147;Certificates&#148;)
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-4
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">(A)&nbsp;a letter of transmittal (which shall
    specify that delivery shall be effected, and risk of loss and
    title to the Certificates shall pass, only upon proper delivery
    of the Certificates to the Exchange Agent and shall be in
    customary form) and (B)&nbsp;instructions for use in effecting
    the surrender of the Certificates in exchange for certificates
    representing shares of Parent Common Stock. Upon surrender of a
    Certificate for cancellation to the Exchange Agent together with
    such letter of transmittal, properly completed and duly
    executed, and such other documents as may be required pursuant
    to such instructions, the holder of such Certificate shall be
    entitled to receive in exchange therefor a certificate
    representing that number of whole shares of Parent Common Stock
    which such holder has the right to receive in respect of the
    shares of Company Stock formerly represented by such Certificate
    (after taking into account all shares of Company Stock then held
    by such holder), cash in lieu of fractional shares of Parent
    Common Stock to which such holder is entitled pursuant to
    Section&nbsp;2.2.5 and any dividends or other distributions to
    which such holder is entitled pursuant to Section&nbsp;2.2.3,
    and the Certificate so surrendered shall forthwith be canceled.
    No interest will be paid or accrued on any cash in lieu of
    fractional shares or on any unpaid dividends and distributions
    payable to holders of Certificates. In the event of a transfer
    of ownership of shares of Company Stock which is not registered
    in the transfer records of the Company, a certificate
    representing the proper number of shares of Parent Common Stock
    may be issued to a transferee if the Certificate representing
    such shares of Company Stock is presented to the Exchange Agent,
    accompanied by all documents required to evidence and effect
    such transfer and by evidence that any applicable stock transfer
    taxes have been paid. Until surrendered as contemplated by this
    Section&nbsp;2.2, each Certificate shall be deemed at any time
    after the Effective Time to represent only the right to receive
    upon such surrender the certificate representing shares of
    Parent Common Stock, cash in lieu of any fractional shares of
    Parent Common Stock to which such holder is entitled pursuant to
    Section&nbsp;2.2.5 and any dividends or other distributions to
    which such holder is entitled pursuant to Section&nbsp;2.2.3.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;2.2.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Distributions
    with Respect to Unexchanged Shares of Parent Common Stock.</I>
    No dividends or other distributions declared or made after the
    Effective Time with respect to Parent Common Stock with a record
    date after the Effective Time shall be paid to the holder of any
    unsurrendered Certificate with respect to the shares of Parent
    Common Stock represented thereby, and no cash payment in lieu of
    fractional shares shall be paid to any such holder pursuant to
    Section&nbsp;2.2.5, unless and until the holder of such
    Certificate shall surrender such Certificate. Subject to the
    effect of escheat, tax or other applicable Laws, following
    surrender of any such Certificate, there shall be paid to the
    holder of the certificates representing whole shares of Parent
    Common Stock issued in exchange therefor, without interest,
    (A)&nbsp;promptly, the amount of any cash payable with respect
    to a fractional share of Parent Common Stock to which such
    holder is entitled pursuant to Section&nbsp;2.2.5 and the amount
    of dividends or other distributions with a record date after the
    Effective Time theretofore paid with respect to such whole
    shares of Parent Common Stock and (B)&nbsp;at the appropriate
    payment date, the amount of dividends or other distributions,
    with a record date after the Effective Time but prior to
    surrender and a payment date occurring after surrender, payable
    with respect to such whole shares of Parent Common Stock.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;2.2.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Further
    Rights in Company Stock.</I> All shares of Parent Common Stock
    issued upon conversion of the shares of Company Stock in
    accordance with the terms hereof (including any cash paid
    pursuant to Section&nbsp;2.2.3 or Section&nbsp;2.2.5) shall be
    deemed to have been issued in full satisfaction of all rights
    pertaining to such shares of Company Stock.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;2.2.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Fractional
    Shares.</I> No certificates or scrip representing fractional
    shares of Parent Common Stock shall be issued upon the surrender
    for exchange of Certificates, no dividend or distribution with
    respect to Parent Common Stock shall be payable on or with
    respect to any fractional share and such fractional share
    interests will not entitle the owner thereof to any rights of a
    stockholder of Parent.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;2.2.5.1 As promptly as practicable
    following the Effective Time, the Exchange Agent shall determine
    the difference between (A)&nbsp;the number of full shares of
    Parent Common Stock delivered to the Exchange Agent by Parent
    pursuant to Section&nbsp;2.2.1 and (B)&nbsp;the
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-5
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">aggregate number of full shares of Parent Common
    Stock to be distributed to holders of Company Stock pursuant to
    Section&nbsp;2.2.2 (such difference being the &#147;Excess
    Shares&#148;). As soon after the Effective Time as practicable,
    the Exchange Agent, as agent for such holders of Parent Common
    Stock, shall sell the Excess Shares at then prevailing prices on
    Nasdaq, all in the manner provided in this Section&nbsp;2.2.5.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;2.2.5.2 The sale of the Excess
    Shares by the Exchange Agent shall be executed on Nasdaq and
    shall be executed in round lots to the extent practicable. Until
    the net proceeds of any such sale or sales have been distributed
    to such holders of Company Stock, the Exchange Agent will hold
    such proceeds in trust for such holders of Company Stock as part
    of the Exchange Fund. The Company shall pay all commissions,
    transfer taxes and other out-of-pocket transaction costs of the
    Exchange Agent incurred in connection with such sale or sales of
    Excess Shares. In addition, the Company shall pay the Exchange
    Agent&#146;s compensation and expenses in connection with such
    sale or sales. The Exchange Agent shall determine the portion of
    such net proceeds to which each holder of Company Stock shall be
    entitled, if any, by multiplying the amount of the aggregate net
    proceeds by a fraction, the numerator of which is the amount of
    the fractional share interest to which such holder of Company
    Stock is entitled (after taking into account all shares of
    Parent Common Stock to be issued to such holder) and the
    denominator of which is the aggregate amount of fractional share
    interests to which all holders of Company Stock are entitled.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;2.2.5.3 As soon as practicable after
    the determination of the amount of cash, if any, to be paid to
    holders of Company Stock with respect to any fractional share
    interests, the Exchange Agent shall promptly pay such amounts to
    such holders of Company Stock subject to and in accordance with
    the terms of Section&nbsp;2.2.3.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;2.2.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Termination
    of Exchange Fund.</I> Any portion of the Exchange Fund which
    remains undistributed to the holders of Company Stock for six
    months after the Effective Time shall be delivered to Parent
    upon demand, and any holders of Company Stock who have not
    theretofore complied with this Article&nbsp;2 shall thereafter
    look only to Parent for the shares of Parent Common Stock, any
    cash in lieu of fractional shares of Parent Common Stock to
    which they are entitled pursuant to Section&nbsp;2.2.5 and any
    dividends or other distributions with respect to Parent Common
    Stock to which they are entitled pursuant to Section&nbsp;2.2.3,
    in each case, without any interest thereon.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;2.2.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>No
    Liability.</I> Neither Parent nor the Company shall be liable to
    any holder of shares of Company Stock for any such shares of
    Parent Common Stock (or dividends or distributions with respect
    thereto) or cash from the Exchange Fund delivered to a public
    official pursuant to any abandoned property, escheat or similar
    Law.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;2.2.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Lost
    Certificates.</I> If any Certificate shall have been lost,
    stolen or destroyed, upon the making of an affidavit of that
    fact by the person claiming such Certificate to be lost, stolen
    or destroyed and, if required by Parent, the posting by such
    person of a bond, in such reasonable amount as Parent may
    direct, as indemnity against any claim that may be made against
    it with respect to such Certificate, the Exchange Agent will
    issue in exchange for such lost, stolen or destroyed Certificate
    the shares of Parent Common Stock, any cash in lieu of
    fractional shares of Parent Common Stock to which the holders
    thereof are entitled pursuant to Section&nbsp;2.2.5 and any
    dividends or other distributions to which the holders thereof
    are entitled pursuant to Section&nbsp;2.2.3, in each case,
    without any interest thereon.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;2.2.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Withholding.</I>
    Parent or the Exchange Agent shall be entitled to deduct and
    withhold from the consideration otherwise payable pursuant to
    this Agreement to any holder of Company Stock such amounts as
    Parent or the Exchange Agent are required to deduct and withhold
    under the Code, or any provision of state, local or foreign tax
    Law, with respect to the making of such payment. To the extent
    that amounts are so withheld by Parent or the Exchange Agent,
    such withheld amounts shall be treated for all purposes of this
    Agreement as having been paid to the
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-6
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">holder of Company Stock in respect of whom such
    deduction and withholding was made by Parent or the Exchange
    Agent.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;2.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stock
Transfer Books.</I> At the Effective Time, the stock transfer
books of the Company shall be closed and thereafter, there shall
be no further registration of transfers of shares of Company
Stock theretofore outstanding on the records of the Company.
From and after the Effective Time, the holders of certificates
representing shares of Company Stock outstanding immediately
prior to the Effective Time shall cease to have any rights with
respect to such shares of Company Stock except as otherwise
provided herein or by Law. On or after the Effective Time, any
Certificates presented to the Exchange Agent or Parent for any
reason shall be converted into the shares of Parent Common
Stock, any cash in lieu of fractional shares of Parent Common
Stock to which the holders thereof are entitled pursuant to
Section&nbsp;2.2.5 and any dividends or other distributions to
which the holders thereof are entitled pursuant to
Section&nbsp;2.2.3.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;2.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stock
Options.</I> At the Effective Time, all unexercised and
unexpired options to purchase Company Common Stock
(&#147;Company Options&#148;) then outstanding, under any stock
option plan of the Company, including the Company&#146;s Tandem
Stock Option Plan, the Company&#146;s 1997 Stock Incentive Plan
or any other plan, agreement or arrangement (the &#147;Company
Stock Option Plans&#148;), whether or not then exercisable, will
be assumed by Parent. Each Company Option so assumed by Parent
under this Agreement will continue to have, and be subject to,
the same terms and conditions as set forth in the Company Stock
Option Plan and any agreements thereunder immediately prior to
the Effective Time, except that (i)&nbsp;each Company Option
will be exercisable (or will become exercisable in accordance
with its terms) for that number of whole shares of Parent Common
Stock equal to the product of the number of shares of Company
Common Stock that were issuable upon exercise of such Company
Option immediately prior to the Effective Time multiplied by the
Exchange Ratio, rounded down to the nearest whole number of
shares of Parent Common Stock and (ii)&nbsp;the per share
exercise price for the shares of Parent Common Stock issuable
upon exercise of such Company Option assumed, will be equal to
the quotient determined by dividing the exercise price per share
of Company Common Stock at which such Company Option was
exercisable immediately prior to the Effective Time by the
Exchange Ratio, rounded up to the nearest whole cent. The
conversion of any Company Options which are incentive stock
options within the meaning of Section&nbsp;422 of the Code, into
options to purchase Parent Common Stock shall be made so as not
to constitute a &#147;modification&#148; of such Company Options
within the meaning of Section&nbsp;424 of the Code. Continuous
employment with the Company or its subsidiaries shall be
credited to the optionee for purposes of determining the vesting
of all assumed Company Options after the Effective Time.
</FONT>

<P align="center">
<FONT size="2">ARTICLE&nbsp;III
</FONT>

<P align="center">
<FONT size="2">REPRESENTATIONS AND WARRANTIES OF THE COMPANY
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except as set forth in the Disclosure Schedule
delivered by the Company to Parent prior to the execution of
this Agreement (the &#147;Company Disclosure Schedule&#148;),
which identifies exceptions by specific Section references, the
Company hereby represents and warrants to Parent as follows:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;3.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Organization
and Qualification; Subsidiaries.</I> The Company is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Each
subsidiary of the Company (each a &#147;Company Subsidiary&#148;
and, collectively, the &#147;Company Subsidiaries&#148;) has
been duly organized, and is validly existing and in good
standing under the laws of the jurisdiction of its incorporation
or organization, as the case may be. Each of the Company and
each Company Subsidiary has the requisite power and authority
and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now
being conducted. Each of the Company and each Company Subsidiary
is duly qualified or licensed to do business, and is in good
standing, in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its
business makes such qualification, licensing or good standing
necessary, except for such failures to be so qualified, licensed
or in good standing that would not, individually or in the
aggregate, reasonably be
</FONT>

<P align="center"><FONT size="2">A-7
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">expected to have a Company Material Adverse
Effect. Section&nbsp;3.1 of the Company Disclosure Schedule sets
forth a true and complete list of all of the Company
Subsidiaries. Except as set forth in Section&nbsp;3.1 of the
Company Disclosure Schedule, none of the Company or any Company
Subsidiary holds an Equity Interest in any other person.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;3.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Certificate
of Incorporation and By-laws; Corporate Books and Records.</I>
The copies of the Company&#146;s Second Amended and Restated
Certificate of Incorporation (the &#147;Company
Certificate&#148;) and By-laws (the &#147;Company By-laws&#148;)
that are listed as exhibits to the Company&#146;s Form&nbsp;10-K
for the year ended December&nbsp;31, 2001 are complete and
correct copies thereof as in effect on the date hereof (the
&#147;Company Form&nbsp;10-K&#148;). The Company is not in
violation of any of the provisions of the Company Certificate or
the Company By-laws. True and complete copies of all minute
books of the Company have been made available by the Company to
Parent.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;3.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Capitalization.</I>
The authorized capital stock of the Company consists of
50,000,000 shares of Company Common Stock and 5,000,000 shares
of Company Preferred Stock. As of the date hereof,
(A)&nbsp;17,842,157 shares of Company Common Stock (other than
treasury shares) were issued and outstanding, all of which were
validly issued and fully paid, nonassessable and free of
preemptive rights, (B)&nbsp;no shares of Company Common Stock
were held in the treasury of the Company or by the Company
Subsidiaries, and (C)&nbsp;5,537,142 shares of Company Common
Stock were issuable (and such number was reserved for issuance)
upon exercise of Company Options outstanding as of such date. As
of the date hereof, of the 5,000,000 shares of authorized
Company Preferred Stock, 12,000 shares have been designated as
Series&nbsp;A Junior Participating Preferred Stock; 12,000
shares have been designated as Series&nbsp;B Convertible
Preferred Stock; 10,750 shares of Company Preferred Stock have
been designated as Series&nbsp;C Convertible Preferred Stock,
8,965 shares of which have been designated as Series&nbsp;C-1
Convertible Preferred Stock and 1,785 shares of which have been
designated as Series&nbsp;C-2 Convertible Preferred Stock;
10,750 shares of Company Preferred Stock have been designated as
Series&nbsp;D Convertible Preferred Stock (&#147;Series&nbsp;D
Convertible Preferred Stock&#148;), 8,965 shares of which have
been designated as Series&nbsp;D-1 Convertible Preferred Stock
(&#147;Series&nbsp;D-1 Convertible Preferred Stock&#148;) and
1,785 shares of which have been designated as Series&nbsp;D-2
Convertible Preferred Stock (&#147;Series&nbsp;D-2 Convertible
Preferred Stock&#148;). As of the date hereof, 7,726 shares of
Series&nbsp;D-1 Convertible Preferred Stock and 1,071 shares of
Series&nbsp;D-2 Convertible Preferred Stock are issued and
outstanding, and there are no other shares of Company Preferred
Stock outstanding. Except for Company Options to purchase not
more than 5,537,142 shares of Company Common Stock and Company
Warrants to purchase not more than 7,416,887 shares of Company
Common Stock outstanding as of the date hereof, Company Rights
outstanding under the Company Rights Agreement and arrangements
and agreements set forth in Section&nbsp;3.3 of the Company
Disclosure Schedule, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character
to which the Company or any Company Subsidiary is a party or by
which the Company or any Company Subsidiary is bound relating to
the issued or unissued capital stock or other Equity Interests
of the Company or any Company Subsidiary, or securities
convertible into or exchangeable for such capital stock or other
Equity Interests, or obligating the Company or any Company
Subsidiary to issue or sell any shares of its capital stock or
other Equity Interests, or securities convertible into or
exchangeable for such capital stock of, or other Equity
Interests in, the Company or any Company Subsidiary. Since
December&nbsp;31, 2001, the Company has not issued any shares of
its capital stock, or securities convertible into or
exchangeable for such capital stock or other Equity Interests,
other than those shares of capital stock reserved for issuance
as set forth in this Section&nbsp;3.3 or Section&nbsp;3.3 of the
Company Disclosure Schedule. Section&nbsp;3.3 of the Company
Disclosure Schedule sets forth a true and complete list, as of
the date hereof, of the prices at which outstanding Company
Options may be exercised under the applicable Company Stock
Option Plan, the number of Company Options outstanding at each
such price and the vesting schedule of the Company Options for
each officer of the Company and the prices at which outstanding
Company Warrants may be exercised, the number of Company
Warrants outstanding at each such price and the number of shares
of Company Common Stock into which each such Company Warrant is
convertible. All shares of Company Common Stock subject to
issuance under the Company Stock Option Plans, upon issuance
prior to the Effective Time on the terms and conditions
specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid,
</FONT>

<P align="center"><FONT size="2">A-8
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">nonassessable and free of preemptive rights.
There are no outstanding contractual obligations of the Company
or any Company Subsidiary (A)&nbsp;restricting the transfer of,
(B)&nbsp;affecting the voting rights of, (C)&nbsp;requiring the
repurchase, redemption or disposition of, or containing any
right of first refusal with respect to, (D)&nbsp;requiring the
registration for sale of, or (E)&nbsp;granting any preemptive or
antidilutive right with respect to, any shares of Company Stock
or any capital stock of, or other Equity Interests in, the
Company or any Company Subsidiary. Except as set forth in
Section&nbsp;3.3 of the Company Disclosure Schedule, each
outstanding share of capital stock of each Company Subsidiary is
duly authorized, validly issued, fully paid, nonassessable and
free of preemptive rights and is owned, beneficially and of
record, by the Company or another Company Subsidiary free and
clear of all security interests, liens, claims, pledges,
options, rights of first refusal, agreements, limitations on the
Company&#146;s or such other Company Subsidiary&#146;s voting
rights, charges and other encumbrances of any nature whatsoever.
There are no outstanding contractual obligations of the Company
or any Company Subsidiary to provide funds to, or make any
investment (in the form of a loan, capital contribution or
otherwise) in, any Company Subsidiary or any other person, other
than guarantees by the Company of any indebtedness or other
obligations of any wholly-owned Company Subsidiary.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;3.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Authority.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;3.4.1 The Company has all necessary
    corporate power and authority to execute and deliver this
    Agreement and each Ancillary Agreement, to perform its
    obligations hereunder and thereunder and to consummate the
    transactions contemplated by this Agreement and each Ancillary
    Agreement to be consummated by the Company. The execution and
    delivery of this Agreement and each Ancillary Agreement by the
    Company and the consummation by the Company of the transactions
    contemplated hereby and thereby have been duly and validly
    authorized by all necessary corporate action and no other
    corporate proceedings on the part of the Company and no
    stockholder votes are necessary to authorize this Agreement or
    any Ancillary Agreement or to consummate the transactions
    contemplated hereby and thereby other than, with respect to the
    Merger, as provided in Section&nbsp;3.20. The Board of Directors
    of the Company (the &#147;Company Board&#148;) has approved this
    Agreement and each Ancillary Agreement, declared advisable the
    transactions contemplated hereby and thereby and has directed
    that this Agreement and the transactions contemplated hereby be
    submitted to the Company&#146;s stockholders for approval at a
    meeting of such stockholders. This Agreement and each Ancillary
    Agreement has been duly authorized and validly executed and
    delivered by the Company and constitute a legal, valid and
    binding obligation of the Company, enforceable against the
    Company in accordance with their respective terms.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;3.4.2 The Company has taken all
    appropriate actions so that the restrictions on business
    combinations contained in Section&nbsp;203 of the DGCL will not
    apply with respect to or as a result of this Agreement or any
    Ancillary Agreement and the transactions contemplated hereby and
    thereby, including the Merger, without any further action on the
    part of the stockholders or the Company Board. True and complete
    copies of all Company Board resolutions reflecting such actions
    have been previously provided to Parent. No other state takeover
    statute or similar statute or regulation is applicable to or
    purports to be applicable to the Merger or any other transaction
    contemplated by this Agreement or any Ancillary Agreement.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;3.4.3 The Company Rights Agreement
    has been amended so that: (A)&nbsp;Parent, Merger Sub and each
    Parent Subsidiary are each exempt from the definition of
    &#147;Acquiring Person&#148; contained in the Company Rights
    Agreement, and no &#147;Stock Acquisition Date&#148; or
    &#147;Distribution Date&#148; or &#147;Triggering Event&#148;
    (as such terms are defined in the Company Rights Agreement) will
    occur as a result of the execution of this Agreement or any
    Ancillary Agreement or the consummation of the Merger and the
    other transactions contemplated by this Agreement or any
    Ancillary Agreement and (B)&nbsp;the Company Rights Agreement
    will terminate and the Company Rights will expire immediately
    prior to the Effective Time. The Company Rights Agreement, as so
    amended, has not been further amended or modified. True and
    complete copies of the Company Rights Agreement and of all
    amendments thereto through the date hereof have been previously
    provided to Parent.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-9
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;3.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>No
Conflict; Required Filings and Consents.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;3.5.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
    execution and delivery of this Agreement and each Ancillary
    Agreement by the Company does not, and the performance of this
    Agreement and each Ancillary Agreement by the Company will not,
    (A)&nbsp;(assuming, the stockholder approval set forth in
    Section&nbsp;3.20 is obtained) conflict with or violate any
    provision of the Company Certificate or Company By-laws or any
    equivalent organizational documents of any Company Subsidiary,
    (B)&nbsp;assuming that all consents, approvals, authorizations
    and permits described in Section&nbsp;3.5.2 have been obtained
    and all filings and notifications described in
    Section&nbsp;3.5.2 have been made and any waiting periods
    thereunder have terminated or expired, conflict with or violate
    any Law applicable to the Company or any Company Subsidiary or
    by which any property or asset of the Company or any Company
    Subsidiary is bound or affected or (C)&nbsp;require any consent
    or approval under, result in any breach of or any loss of any
    benefit under, constitute a change of control or default (or an
    event which with notice or lapse of time or both would become a
    default) under or give to others any right of termination,
    vesting, amendment, acceleration or cancellation of, or result
    in the creation of a lien or other encumbrance on any property
    or asset of the Company or any Company Subsidiary pursuant to,
    any note, bond, mortgage, indenture, contract, agreement, lease,
    license, Company Permit or other instrument or obligation.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;3.5.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
    execution and delivery of this Agreement and each Ancillary
    Agreement by the Company does not, and the performance of this
    Agreement and each Ancillary Agreement by the Company will not,
    require any consent, approval, authorization or permit of, or
    filing with or notification to, any Governmental Entity or any
    other person, except (A)&nbsp;under the Exchange Act, the
    Securities Act, any applicable Blue Sky Laws and the rules and
    regulations of Nasdaq and the filing and recordation of the
    Certificate of Merger as required by the DGCL and (B)&nbsp;where
    failure to obtain such consents, approvals, authorizations or
    permits, or to make such filings or notifications to a person
    other than a Governmental Entity, would not, individually or in
    the aggregate, reasonably be expected to (x)&nbsp;prevent or
    materially delay consummation of the Merger, (y)&nbsp;otherwise
    prevent or materially delay performance by the Company of any of
    its material obligations under this Agreement or any Ancillary
    Agreement or (z)&nbsp;have a Company Material Adverse Effect.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;3.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Permits;
Compliance With Law.</I> Each of the Company and each Company
Subsidiary is in possession of all authorizations, licenses,
permits, certificates, approvals and clearances of any
Governmental Entity necessary for the Company and each Company
Subsidiary to own, lease and operate its properties or to carry
on its respective businesses substantially in the manner
described in the Company SEC Filings filed prior to the date
hereof and substantially as it is being conducted as of the date
hereof (the &#147;Company Permits&#148;), and all such Company
Permits are valid, and in full force and effect, except where
the failure to have, or the suspension or cancellation of, or
failure to be valid or in full force and effect of, any of the
Company Permits would not, individually or in the aggregate,
reasonably be expected to (A)&nbsp;prevent or materially delay
consummation of the Merger, (B)&nbsp;otherwise prevent or
materially delay performance by the Company of any of its
material obligations under this Agreement or any Ancillary
Agreement or (C)&nbsp;have a Company Material Adverse Effect.
None of the Company or any Company Subsidiary is in conflict
with, or in default or violation of, (x)&nbsp;any Law applicable
to the Company or any Company Subsidiary or by which any
property or asset of the Company or any Company Subsidiary is
bound or affected or (y)&nbsp;any Company Permits, except for
any such conflicts, defaults or violations that would not,
individually or in the aggregate, reasonably be expected to
(A)&nbsp;prevent or materially delay consummation of the Merger,
(B)&nbsp;otherwise prevent or materially delay performance by
the Company of any of its material obligations under this
Agreement or any Ancillary Agreement or (C)&nbsp;have a Company
Material Adverse Effect.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;3.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>SEC
Filings; Financial Statements.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;3.7.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
    Company has timely filed all registration statements,
    prospectuses, forms, reports, definitive proxy statements,
    schedules and documents required to be filed by it under the
    Securities Act or the Exchange Act, as the case may be, since
    January&nbsp;1, 2000 (collectively, the
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-10
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">&#147;Company SEC Filings&#148;). Each Company
    SEC Filing (A)&nbsp;as of its date, complied in all material
    respects with the requirements of the Securities Act or the
    Exchange Act, as the case may be, and (B)&nbsp;did not, at the
    time it was filed, contain any untrue statement of a material
    fact or omit to state a material fact required to be stated
    therein or necessary in order to make the statements made
    therein, in the light of the circumstances under which they were
    made, not misleading. As of the date of this Agreement, no
    Company Subsidiary is subject to the periodic reporting
    requirements of the Exchange Act.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;3.7.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
    of the consolidated financial statements (including, in each
    case, any notes thereto) contained in the Company SEC Filings
    was prepared in accordance with GAAP applied (except as may be
    indicated in the notes thereto and, in the case of unaudited
    quarterly financial statements, as permitted by Form&nbsp;10-Q
    under the Exchange Act) on a consistent basis throughout the
    periods indicated (except as may be indicated in the notes
    thereto), and each presented fairly the consolidated financial
    position, results of operations and cash flows of the Company
    and the consolidated Company Subsidiaries as of the respective
    dates thereof and for the respective periods indicated therein
    (subject, in the case of unaudited statements, to normal
    year-end adjustments which did not and would not, individually
    or in the aggregate, reasonably be expected to have a Company
    Material Adverse Effect). The books and records of the Company
    and each Company Subsidiary have been, and are being, maintained
    in accordance with applicable legal and accounting requirements.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;3.7.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except
    as and to the extent set forth on the consolidated balance sheet
    of the Company and the consolidated Company Subsidiaries as of
    December&nbsp;31, 2001 included in the Company Form&nbsp;10-K
    for the year ended December&nbsp;31, 2001, including the notes
    thereto, none of the Company or any consolidated Company
    Subsidiary has any liabilities or obligations of any nature
    (whether accrued, absolute, contingent or otherwise) that would
    be required to be reflected on a balance sheet or in notes
    thereto prepared in accordance with GAAP, except for liabilities
    or obligations incurred in the ordinary course of business since
    December&nbsp;31, 2001 that would not, individually or in the
    aggregate, reasonably be expected to (A)&nbsp;prevent or
    materially delay consummation of the Merger, (B)&nbsp;otherwise
    prevent or materially delay performance by the Company of any of
    its material obligations under this Agreement or any Ancillary
    Agreement or (C)&nbsp;have a Company Material Adverse Effect.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;3.7.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
    Company has previously provided to Parent a complete and correct
    copy of any amendment or modification which has not yet been
    filed with the SEC to any agreement, document or other
    instrument which previously had been filed by the Company with
    the SEC pursuant to the Securities Act or the Exchange Act.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;3.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Disclosure
Documents.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;3.8.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
    Proxy Statement and any Other Filings, and any amendments or
    supplements thereto, at (A)&nbsp;the time the Registration
    Statement is declared effective, (B)&nbsp;the time the Proxy
    Statement (or any amendment thereof or supplement thereto) is
    first mailed to the stockholders of the Company, (C)&nbsp;if
    applicable, the time the Proxy Statement (or any amendment
    thereof or supplement thereto) is first mailed to stockholders
    of Parent, (D)&nbsp;the time of the Company Stockholders&#146;
    Meeting, (E)&nbsp;the time of the Parent Stockholders&#146;
    Meeting, and (F)&nbsp;the Effective Time, will comply as to form
    in all material respects with the applicable requirements of the
    Securities Act, the Exchange Act and other applicable Laws.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;3.8.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
    Proxy Statement and any Other Filings, and any amendments or
    supplements thereto, do not, and will not, at (A)&nbsp;the time
    the Registration Statement is declared effective, (B)&nbsp;the
    time the Proxy Statement (or any amendment thereof or supplement
    thereto) is first mailed to the stockholders of the Company,
    (C)&nbsp;the time the Proxy Statement (or any amendment thereof
    or supplement thereto) is first mailed to stockholders of
    Parent, (D)&nbsp;the time of the Company Stockholders&#146;
    Meeting, (E)&nbsp;the time of the Parent Stockholders&#146;
    Meeting, and (F)&nbsp;the Effective Time, contain any untrue
    statement of a material fact or omit to state any material fact
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-11
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">required to be stated therein or necessary in
    order to make the statements made therein, in light of the
    circumstances under which they were made, not misleading. The
    representations and warranties contained in this
    Section&nbsp;3.8.2 will not apply to statements or omissions
    included in the Proxy Statement or any Other Filings based upon
    information furnished in writing to the Company by Parent or
    Merger Sub specifically for use therein.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;3.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Absence
of Certain Changes or Events.</I> Since September&nbsp;30, 2002,
except as specifically contemplated by, or as disclosed in, this
Agreement or Section&nbsp;3.9 of the Company Disclosure
Schedule, the Company and each Company Subsidiary has conducted
its businesses in the ordinary course consistent with past
practice. During the period from October&nbsp;1, 2002 through
the date of this Agreement, there has not been any Company
Material Adverse Effect or an event or development that would,
individually or in the aggregate, reasonably be expected to have
a Company Material Adverse Effect. Since September&nbsp;30,
2002, there has not been any event or development that would,
individually or in the aggregate, reasonably be expected to
prevent or materially delay the performance of this Agreement or
any Ancillary Agreement by the Company. Neither the Company nor
any Company Subsidiary has taken any action during the period
from October&nbsp;1, 2002 through the date of this Agreement
that, if taken during the period from the date of this Agreement
through the Effective Time, would constitute a breach of
Section&nbsp;5.1.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;3.10&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Employee
Benefit Plans</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;3.10.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.10.1
    of the Company Disclosure Schedule sets forth a true and
    complete list of each &#147;employee benefit plan&#148; as
    defined in Section&nbsp;3(3) of ERISA and any other plan,
    policy, program, practice, agreement, understanding or
    arrangement (whether written or oral) providing compensation or
    other benefits to any current or former director, officer,
    employee or consultant (or to any dependent or beneficiary
    thereof of the Company or any ERISA Affiliate), which are now,
    or were within the past 6&nbsp;years, maintained, sponsored or
    contributed to by the Company or any ERISA Affiliate, or under
    which the Company or any ERISA Affiliate has any obligation or
    liability, whether actual or contingent, including, without
    limitation, all incentive, bonus, deferred compensation,
    vacation, holiday, cafeteria, medical, disability, stock
    purchase, stock option, stock appreciation, phantom stock,
    restricted stock or other stock-based compensation plans,
    policies, programs, practices or arrangements (each a
    &#147;Company Benefit Plan&#148;). Neither the Company, nor to
    the knowledge of the Company, or any other person or entity, has
    any express or implied commitment, whether legally enforceable
    or not, to modify, change or terminate any Company Benefit Plan,
    other than with respect to a modification, change or termination
    required by ERISA or the Code.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">With respect to each Company Benefit Plan, the
Company has delivered to Parent true, correct and complete
copies of (A)&nbsp;each Company Benefit Plan (or, if not written
a written summary of its material terms), including without
limitation all plan documents, adoption agreements, trust
agreements, insurance contracts or other funding vehicles and
all amendments thereto, (B)&nbsp;all summaries and summary plan
descriptions, including any summary of material modifications,
(C)&nbsp;the most recent annual reports (Form&nbsp;5500 series)
filed with the IRS with respect to such Company Benefit Plan
(and, if the most recent annual report is a Form&nbsp;5500R, the
most recent Form&nbsp;5500C filed with respect to such Company
Benefit Plan), (D)&nbsp;the most recent actuarial report or
other financial statement relating to such Company Benefit Plan,
(E)&nbsp;the most recent determination or opinion letter, if
any, issued by the IRS with respect to any Company Benefit Plan
and any pending request for such a determination letter,
(F)&nbsp;the most recent nondiscrimination tests performed under
the Code (including 401(k) and 401(m) tests) for each Company
Benefit Plan, and (G)&nbsp;all filings made with any
Governmental Entity, including but not limited any filings under
the Voluntary Compliance Resolution or Closing Agreement Program
or the Department of Labor Delinquent Filer Program.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;3.10.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
    Company Benefit Plan has been administered in all material
    respects in accordance with its terms and all applicable Laws,
    including ERISA and the Code, and contributions required to be
    made under the terms of any of the Company Benefit Plans as of
    the date of this
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-12
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Agreement have been timely made or, if not yet
    due, have been properly reflected on the most recent
    consolidated balance sheet filed or incorporated by reference in
    the Company SEC Filings prior to the date of this Agreement.
    With respect to the Company Benefit Plans, no event has occurred
    and, to the knowledge of the Company, there exists no condition
    or set of circumstances in connection with which the Company
    could be subject to any material liability (other than for
    routine benefit liabilities) under the terms of, or with respect
    to, such Company Benefit Plans, ERISA, the Code or any other
    applicable Law.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Section&nbsp;3.10.3
</FONT></I><FONT size="2">Except as disclosed on
Section&nbsp;3.10.3 of the Company Disclosure Schedule:
(A)&nbsp;each Company Benefit Plan which is intended to qualify
under Section&nbsp;401(a), Section&nbsp;401(k),
Section&nbsp;401(m) or Section 4975(e)(6) of the Code has either
received a favorable determination letter from the IRS as to its
qualified status or the remedial amendment period for such
Company Benefit Plan has not yet expired, and each trust
established in connection with any Company Benefit Plan which is
intended to be exempt from federal income taxation under
Section&nbsp;501(a) of the Code is so exempt, and to the
Company&#146;s knowledge no fact or event has occurred that
could adversely affect the qualified status of any such Company
Benefit Plan or the exempt status of any such trust, (B)&nbsp;to
the Company&#146;s knowledge there has been no prohibited
transaction (within the meaning of Section&nbsp;406 of ERISA or
Section 4975 of the Code and other than a transaction that is
exempt under a statutory or administrative exemption) with
respect to any Company Benefit Plan that could result in
liability to the Company or an ERISA Affiliate, (C)&nbsp;each
Company Benefit Plan can be amended, terminated or otherwise
discontinued after the Effective Time in accordance with its
terms, without liability (other than (i)&nbsp;liability for
ordinary administrative expenses typically incurred in a
termination event or (ii)&nbsp;if the Company Benefit Plan is a
pension benefit plan subject to Part 2 of Title I of ERISA,
liability for the accrued benefits as of the date of such
termination (if and to the extent required by ERISA) to the
extent that either there are sufficient assets set aside in a
trust or insurance contract to satisfy such liability or such
liability is reflected on the most recent consolidated balance
sheet filed or incorporated by reference in the Company SEC
Filings prior to the date of this Agreement), (D)&nbsp;no suit,
administrative proceeding, action or other litigation has been
brought, or to the knowledge of the Company is threatened,
against or with respect to any such Company Benefit Plan,
including any audit or inquiry by the IRS or United States
Department of Labor (other than routine benefits claims),
(E)&nbsp;neither the Company nor any ERISA Affiliate has any
liability under ERISA Section&nbsp;502, (F)&nbsp;all tax, annual
reporting and other governmental filings required by ERISA and
the Code have been timely filed with the appropriate
Governmental Entity and all notices and disclosures have been
timely provided to participants, (G) all contributions and
payments to such Company Benefit Plan are deductible under Code
sections 162 or 404, (H)&nbsp;no amount is subject to Tax as
unrelated business taxable income under Section&nbsp;511 of the
Code, and (I)&nbsp;no excise tax could be imposed upon the
Company under Chapter&nbsp;43 of the Code.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Section&nbsp;3.10.4
</FONT></I><FONT size="2">Neither the Company nor any of its
ERISA Affiliates sponsors, maintains, contributes to or has an
obligation to contribute to, or has sponsored, maintained,
contributed to or had an obligation to contribute to, any
&#147;employee pension benefit plan&#148; (as defined in
Section&nbsp;3(2) of ERISA) that is subject to Title IV of ERISA
or Section&nbsp;412 of the Code, or any &#147;multiemployer
plan&#148; as defined in Section&nbsp;3(37) of ERISA
(&#147;Multiemployer Plan&#148;).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Section&nbsp;3.10.5
</FONT></I><FONT size="2">Neither the Company nor any of its
ERISA Affiliates sponsors, contributes to or has any liability
with respect to any employee benefit plan, program or
arrangement that provides benefits to non-resident aliens with
no United States source income outside of the United States.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Section&nbsp;3.10.6
</FONT></I><FONT size="2">Except as set forth on
Section&nbsp;3.10.6 of the Company Disclosure Schedule, no
amount that could be received (whether in cash or property or
the vesting of property), as a result of the consummation of the
transactions contemplated by this Agreement or any Ancillary
Agreement, by any employee, officer or director of the Company
or any Company Subsidiary who is a &#147;disqualified
individual&#148; (as such term is defined in proposed Treasury
Regulation&nbsp;Section&nbsp;1.280G-1) under any Company Benefit
Plan could be characterized as an &#147;excess parachute
payment&#148; (as defined in Section&nbsp;280G(b)(1) of the
Code). Set forth in Section&nbsp;3.10.6 of the Company
Disclosure Schedule is (A)&nbsp;the estimated maximum amount
that could be paid to any disqualified individual as a result of
the
</FONT>

<P align="center"><FONT size="2">A-13
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">transactions contemplated by this Agreement or
any Ancillary Agreement under all employment, severance and
termination agreements, other compensation arrangements and
Company Benefit Plans currently in effect, and (B)&nbsp;the
&#147;base amount&#148; (as defined in Section&nbsp;280G(b)(e)
of the Code) for each such individual as of the date of this
Agreement.
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;3.10.7 Except as required by Law, no
    Company Benefit Plan provides any of the following retiree or
    post-employment benefits to any person: medical, disability or
    life insurance benefits. No Company Benefit Plan is a voluntary
    employee benefit association under Section&nbsp;501(a)(9) of the
    Code. The Company and each ERISA Affiliate are in material
    compliance with (i)&nbsp;the requirements of the applicable
    health care continuation and notice provisions of the
    Consolidated Omnibus Budget Reconciliation Act of 1985, as
    amended, and the regulations (including proposed regulations)
    thereunder and any similar state law and (ii)&nbsp;the
    applicable requirements of the Health Insurance Portability and
    Accountability Act of 1996, as amended, and the regulations
    (including the proposed regulations) thereunder.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;3.11&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Labor
and Other Employment Matters.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;3.11.1 Each of the Company and each
    Company Subsidiary is in compliance with all applicable Laws
    respecting labor, employment, fair employment practices, terms
    and conditions of employment, workers&#146; compensation,
    occupational safety, plant closings, and wages and hours. None
    of the Company or any Company Subsidiary is liable for any
    payment to any trust or other fund or to any Governmental
    Entity, with respect to unemployment compensation benefits,
    social security or other benefits or obligations for employees
    (other than routine payments to be made in the ordinary course
    of business and consistent with past practice). Except as set
    forth in Section 3.11.1 of the Company Disclosure Schedule, none
    of the Company or any Company Subsidiary is a party to any
    collective bargaining or other labor union contract applicable
    to persons employed by the Company or any Company Subsidiary,
    and no collective bargaining agreement or other labor union
    contract is being negotiated by the Company or any Company
    Subsidiary. There is no labor dispute, strike, slowdown or work
    stoppage against the Company or any Company Subsidiary pending
    or, to the knowledge of the Company, threatened which may
    interfere in any respect that would have a Company Material
    Adverse Effect with the respective business activities of the
    Company or any Company Subsidiary. No labor union or similar
    organization has otherwise been certified to represent any
    persons employed by the Company or any Company Subsidiary or has
    applied to represent such employees or, to the knowledge of the
    Company, is attempting to organize so as to represent such
    employees. None of the Company, any Company Subsidiary or their
    respective representatives or employees has committed any unfair
    labor practices in connection with the operation of the
    respective businesses of the Company or any Company Subsidiary,
    and there is no charge or complaint against the Company or any
    Company Subsidiary by the National Labor Relations Board or any
    comparable state or foreign agency pending or, to the knowledge
    of the Company, threatened, except where such unfair labor
    practice, charge or complaint would not, individually or in the
    aggregate, reasonably be expected to have a Company Material
    Adverse Effect. None of the Company or any Company Subsidiary is
    delinquent in payments to any of its employees for any wages,
    salaries, commissions, bonuses or other direct compensation for
    any services performed for it or amounts required to be
    reimbursed to such employees. Each of the Company and each
    Company Subsidiary has withheld all amounts required by Law or
    by agreement to be withheld from the wages, salaries, and other
    payments to employees, and is not liable for any arrears of
    wages or any Taxes or any penalty for failure to comply with any
    of the foregoing. There are no material pending claims against
    the Company or any Company Subsidiary under any workers&#146;
    compensation plan or policy or for long term disability. There
    are no material controversies pending or, to the knowledge of
    the Company, threatened, between the Company or any Company
    Subsidiary and any of their current or former employees, which
    controversies have or could reasonably be expected to result in
    an action, suit, proceeding, claim, arbitration or investigation
    before any Governmental Entity. To the Company&#146;s knowledge,
    no employee of the Company or any Company Subsidiary is in any
    material respect in violation of any term of any employment
    contract, non-disclosure agreement, non-competition
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-14
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">agreement, or any restrictive covenant to a
    former employer relating to the right of any such employee to be
    employed by the Company or such Company Subsidiary because of
    the nature of the business conducted or presently proposed to be
    conducted by it or to the use of trade secrets or proprietary
    information of others. No employee of the Company or any Company
    Subsidiary has given notice, nor is the Company otherwise aware,
    that such employee intends to terminate his or her employment
    with the Company or such Company Subsidiary.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;3.11.2 The Company has identified in
    Section&nbsp;3.11.2 of the Company Disclosure Schedule and has
    made available to Parent true and complete copies of
    (A)&nbsp;all severance and employment agreements with directors,
    officers or employees of or consultants to the Company or any
    Company Subsidiary, (B)&nbsp;all severance programs and policies
    of the Company and each Company Subsidiary with or relating to
    its employees, and (C)&nbsp;all plans, programs, agreements and
    other arrangements of the Company and each Company Subsidiary
    with or relating to its directors, officers, employees or
    consultants which contain change in control provisions. Except
    as set forth in Section&nbsp;3.11.2 of the Company Disclosure
    Schedule, none of the execution and delivery of this Agreement
    or any Ancillary Agreement or the consummation of the
    transactions contemplated hereby or thereby will (either alone
    or in conjunction with any other event, such as termination of
    employment) (A)&nbsp;result in any payment (including, without
    limitation, severance, unemployment compensation, parachute or
    otherwise) becoming due to any director or any employee of the
    Company or any Company Subsidiary or affiliate from the Company
    or any Company Subsidiary or affiliate under any Company Benefit
    Plan or otherwise, (B)&nbsp;significantly increase any benefits
    otherwise payable under any Company Benefit Plan or
    (C)&nbsp;result in any acceleration of the time of payment or
    vesting of any material benefits. No individual who is a party
    to an employment agreement listed in Section&nbsp;3.11.2 of the
    Company Disclosure Schedule or any agreement incorporating
    change in control provisions with the Company has terminated
    employment or been terminated, nor has any event occurred that
    could give rise to a termination event, in either case under
    circumstances that has given, or could give, rise to a severance
    obligation on the part of the Company under such agreement.
    Section&nbsp;3.11.2 of the Company Disclosure Schedule sets
    forth the Company&#146;s best estimates of the amounts payable
    to the executives listed therein, as a result of the
    transactions contemplated by this Agreement, any Ancillary
    Agreement, and/or any subsequent employment termination
    (including any cash-out or acceleration of options and
    restricted stock and any &#147;gross-up&#148; payments with
    respect to any of the foregoing), based on compensation data
    applicable as of the date of the Company Disclosure Schedule and
    the assumptions stated therein.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;3.11.3 There are no pending or
    threatened claims (other than claims for benefits in the
    ordinary course), lawsuits or arbitrations which have been
    asserted or instituted against any Company Benefit Plan, any
    fiduciaries thereof with respect to their duties to the Company
    Benefit Plans or the assets of any of the trusts under any of
    the Company Benefit Plans which could reasonably be expected to
    result in any material liability of the Company or any Company
    Subsidiary to the Pension Benefit Guaranty Corporation
    (&#147;PBGC&#148;), the Department of Treasury, the Department
    of Labor or any Multiemployer Plan.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;3.12&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Tax
Treatment.</I> None of the Company, any Company Subsidiary or,
to the knowledge of the Company, any of the Company&#146;s
affiliates has taken or agreed to take any action that would
prevent the Merger from qualifying as a reorganization within
the meaning of Section&nbsp;368(a) of the Code. The Company is
not aware of any agreement, plan or other circumstance that
would prevent the Merger from qualifying as a reorganization
within the meaning of Section&nbsp;368(a) of the Code.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;3.13&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Contracts.</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except as filed as exhibits to the Company SEC
Filings filed prior to the date of this Agreement, or as
disclosed in Section&nbsp;3.13 of the Company Disclosure
Schedule, none of the Company or any Company Subsidiary is a
party to or bound by any contract (A)&nbsp;any of the benefits
to any party of which will be increased, or the vesting of the
benefits to any party of which will be accelerated, by the
occurrence of any of the transactions contemplated by this
Agreement or any Ancillary Agreement, or the value of any of the
</FONT>

<P align="center"><FONT size="2">A-15
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">benefits to any party of which will be calculated
on the basis of any of the transactions contemplated by this
Agreement or any Ancillary Agreement, or (B)&nbsp;which, as of
the date hereof, (1)&nbsp;is a &#147;material contract&#148; (as
such term is defined in Item&nbsp;601(b)(10) of
Regulation&nbsp;S-K of the SEC), (2)&nbsp;involves aggregate
expenditures in excess of $250,000, other than contracts for the
purchase of raw materials, components or manufacturing goods and
contracts for the sale of the Company&#146;s products in the
ordinary course of business, (3)&nbsp;involves annual
expenditures in excess of $250,000 and is not cancelable within
one year, other than contracts for the purchase of raw
materials, components or manufacturing goods and contracts for
the sale of the Company&#146;s products in the ordinary course
of business, (4)&nbsp;contains any non-compete or exclusivity
provisions with respect to any line of business or geographic
area with respect to the Company, any Company Subsidiary or any
of the Company&#146;s current or future affiliates, or which
restricts the conduct of any line of business by the Company,
any Company Subsidiary or any of the Company&#146;s current or
future affiliates or any geographic area in which the Company,
any Company Subsidiary or any of the Company&#146;s current or
future affiliates may conduct business, in each case in any
material respect, (5)&nbsp;involves the sale of a Company
Product to a customer or distributor and provides for a right of
refund or return for any reason, including upon the occurrence
of specified events or otherwise or (6)&nbsp;would prohibit or
materially delay the consummation of the Merger or any of the
transactions contemplated by this Agreement or any Ancillary
Agreement. Each Contract of the type described in this
Section&nbsp;3.13, whether or not set forth in Section&nbsp;3.13
of the Company Disclosure Schedule, is referred to herein as a
&#147;Company Material Contract.&#148; Each Company Material
Contract is valid and binding on the Company and each Company
Subsidiary party thereto and, to the Company&#146;s knowledge,
each other party thereto, and in full force and effect, and the
Company and each Company Subsidiary has in all material respects
performed all obligations required to be performed by it to the
date hereof under each Company Material Contract and, to the
Company&#146;s knowledge, each other party to each Company
Material Contract has in all material respects performed all
obligations required to be performed by it under such Company
Material Contract, except as would not, individually or in the
aggregate, reasonably be expected to (1)&nbsp;prevent or
materially delay consummation of the Merger, (2)&nbsp;otherwise
prevent or materially delay performance by the Company of any of
its material obligations under this Agreement or any Ancillary
Agreement, or (3)&nbsp;result in a Company Material Adverse
Effect. None of the Company or any Company Subsidiary knows of,
or has received notice of, any violation or default under (or
any condition which with the passage of time or the giving of
notice would cause such a violation of or default under) any
Company Material Contract or any other contract to which it is a
party or by which it or any of its properties or assets is
bound, except for violations or defaults that would not,
individually or in the aggregate, reasonably be expected to
(1)&nbsp;prevent or materially delay consummation of the Merger,
(2)&nbsp;otherwise prevent or materially delay performance by
the Company of any of its material obligations under this
Agreement or any Ancillary Agreement or (3) result in a Company
Material Adverse Effect. Section&nbsp;3.13 of the Company
Disclosure Schedule provides the Company&#146;s good faith
estimate of the additional costs which will accrue to the
Company under the contracts described in clause (A)&nbsp;of
Section&nbsp;3.13 as a result of the transactions contemplated
by this Agreement or any Ancillary Agreement.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;3.14&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Litigation.</I>
Except as and to the extent set forth in Company SEC Filings
filed prior to the date of this Agreement or in
Section&nbsp;3.14 of the Company Disclosure Schedule,
(A)&nbsp;there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of the Company,
threatened in writing against the Company or any Company
Subsidiary or reasonably likely to be brought against the
Company or any Company Subsidiary or for which the Company or
any Company Subsidiary is obligated to indemnify a third party
that (1)&nbsp;has had or would, individually or in the
aggregate, reasonably be expected to have a Company Material
Adverse Effect or (2)&nbsp;as of the date hereof, challenges the
validity or propriety, or seeks to prevent or materially delay
consummation of the Merger or any other transaction contemplated
by this Agreement or any Ancillary Agreement and (B)&nbsp;none
of the Company or any Company Subsidiary is subject to any
outstanding order, writ, injunction, decree or arbitration
ruling, award or other finding which has had or would,
individually or in the aggregate, reasonably be expected to
(1)&nbsp;prevent or materially delay consummation of the Merger,
(2)&nbsp;otherwise prevent or materially delay performance by
the Company of any of its material obligations under this
Agreement or any Ancillary Agreement, or (3)&nbsp;result in a
Company Material Adverse Effect.
</FONT>

<P align="center"><FONT size="2">A-16
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;3.15&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Environmental
Matters.</I> Except as would not, individually or in the
aggregate, reasonably be expected to have a Company Material
Adverse Effect:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;3.15.1 The Company and each Company
    Subsidiary (A)&nbsp;is in compliance with all, and is not
    subject to any liability, with respect to any, applicable
    Environmental Laws, (B)&nbsp;holds or has applied for all
    Environmental Permits necessary to conduct their current
    operations, and (C)&nbsp;is in compliance with their respective
    Environmental Permits.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;3.15.2 None of the Company or any
    Company Subsidiary has received any written notice, demand,
    letter, claim or request for information alleging that the
    Company or any Company Subsidiary may be in violation of, or
    liable under, any Environmental Law.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;3.15.3 None of the Company or any
    Company Subsidiary (A)&nbsp;has entered into or agreed to any
    consent decree or order or is subject to any judgment, decree or
    judicial order relating to compliance with Environmental Laws,
    Environmental Permits or the investigation, sampling,
    monitoring, treatment, remediation, removal or cleanup of
    Hazardous Materials and, to the knowledge of the Company, no
    investigation, litigation or other proceeding is pending or
    threatened in writing with respect thereto, or (B)&nbsp;is an
    indemnitor in connection with any claim threatened or asserted
    in writing by any third-party indemnitee for any liability under
    any Environmental Law or relating to any Hazardous Materials.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;3.15.4 None of the real property
    owned or leased by the Company or any Company Subsidiary is
    listed or, to the knowledge of the Company, proposed for listing
    on the &#147;National Priorities List&#148; under CERCLA, as
    updated through the date hereof, or any similar state or foreign
    list of sites requiring investigation or cleanup.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;3.16&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Intellectual
Property.</I> Excepting the Intellectual Property owned or
controlled by Parent and/or Merger Sub, the Company owns or has
the defensible right to use, whether through ownership,
licensing or otherwise, all Intellectual Property significant to
the businesses of the Company and each Company Subsidiary in
substantially the same manner as such businesses are conducted
on the date hereof (&#147;Material Company Intellectual
Property&#148;). Excepting the Intellectual Property owned or
controlled by Parent and/or Merger Sub, except as set forth in
Section&nbsp;3.16 of the Company Disclosure Schedule and except
as would not, individually or in the aggregate, reasonably be
expected to have a material adverse impact on the validity or
value of any Material Company Intellectual Property and
excluding prior communications or dealings with Parent:
(A)&nbsp;no written claim of invalidity or conflicting ownership
rights with respect to any Material Company Intellectual
Property has been made by a third party and no such Material
Company Intellectual Property is the subject of any pending or,
to the Company&#146;s knowledge, threatened action, suit, claim,
investigation, arbitration or other proceeding; (B)&nbsp;no
person or entity has given notice to the Company or any Company
Subsidiary that the use of any Material Company Intellectual
Property by the Company, any Company Subsidiary or any licensee
is infringing or has infringed any domestic or foreign patent,
trademark, service mark, trade name, or copyright or design
right, or that the Company, any Company Subsidiary or any
licensee has misappropriated or improperly used or disclosed any
trade secret, confidential information or know-how; (C)&nbsp;the
making, using, selling, manufacturing, marketing, licensing,
reproduction, distribution, or publishing of any process,
machine, manufacture or product related to any Material Company
Intellectual Property, is not presently believed to infringe any
domestic or foreign patent, trademark, service mark, trade name,
copyright or other intellectual property right of any third
party, and does not and will not involve the misappropriation or
improper use or disclosure of any trade secrets, confidential
information or know-how of any third party; (D)&nbsp;there is
not believed to exist any prior act or current conduct or use by
the Company, any Company Subsidiary or any third party that
would void or invalidate any Material Company Intellectual
Property; and (E)&nbsp;the execution, delivery and performance
of this Agreement and each Ancillary Agreement by the Company
and the consummation of the transactions contemplated hereby and
thereby will not breach, violate or conflict with any instrument
or agreement concerning any Material Company Intellectual
Property, will not cause the forfeiture or termination or give
rise to a right of forfeiture or termination of any of the
Material Company Intellectual Property or impair the right of
Parent or the Surviving
</FONT>

<P align="center"><FONT size="2">A-17
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">Corporation to make, use, sell, license or
dispose of, or to bring any action for the infringement of any
Material Company Intellectual Property. In addition, the matters
disclosed on Section&nbsp;3.16 of the Company Disclosure
Schedule would not, individually or in the aggregate, reasonably
be expected to have a Company Material Adverse Effect.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;3.17&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Taxes.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;3.17.1 The Company and each Company
    Subsidiary has timely filed all Tax Returns with the appropriate
    taxing authorities required to be filed as of the date hereof,
    taking into account any extensions of time within which to file
    such Tax Returns. The Tax Returns accurately reflected in all
    material respects and will accurately reflect in all material
    respects all liability for Taxes of the Company and such Company
    Subsidiaries for the periods covered thereby. Except as provided
    in Schedule&nbsp;3.17.1, all material Taxes owed by the Company
    and each Company Subsidiary for all taxable years or other
    taxable periods that end on or before the Effective Time, and,
    with respect to any taxable year or other taxable period
    beginning before and ending after the Effective Time, whether or
    not shown as being due on any Tax Return, have been paid and the
    Company and each Company Subsidiary have provided adequate
    reserves in accordance with GAAP in their financial statements
    for any Taxes that have not been paid, whether or not shown as
    being due on any Tax Returns. No claim has ever been made by an
    authority in a jurisdiction where the Company or any Company
    Subsidiary does not file Tax Returns that the Company or any
    Company Subsidiary is or may be subject to taxation by that
    jurisdiction.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;3.17.2 Except as provided in
    Schedule&nbsp;3.17.2, no deficiencies for Taxes with respect to
    the Company and any Company Subsidiary have been claimed,
    proposed or assessed by any taxing authority or other
    Governmental Entity. Except as provided in Schedule&nbsp;3.17.2,
    there are no audits or other administrative proceedings or court
    proceedings presently pending with regard to any Taxes or Tax
    Returns of the Company or any Company Subsidiary and none of the
    Company or any Company Subsidiary has received a written notice
    or announcement of any audits or proceedings. To the
    Company&#146;s knowledge, no such audits or proceedings are
    contemplated. No requests for waivers of time to assess any
    Taxes are pending and none of the Company or any Company
    Subsidiary has waived any statute of limitations with respect to
    Taxes or agreed to any extension of time with respect to any Tax
    assessment or deficiency for any open tax year.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;3.17.3 There are no Tax liens upon
    any property or assets of the Company or any Company Subsidiary
    except liens for current Taxes not yet due and payable and liens
    for Taxes that are being contested in good faith by appropriate
    proceedings.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;3.17.4 The Company and each Company
    Subsidiary has withheld and paid all material Taxes required to
    have been withheld and paid in connection with amounts paid or
    owing to any employee, independent contractor, creditor,
    stockholder, or other third party.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;3.17.5 Neither the Company nor any
    Company Subsidiary has been included in any
    &#147;consolidated,&#148; &#147;unitary&#148; or combined Tax
    Return, other than the consolidated, unified or combined Tax
    Returns of a Company Subsidiary filed with other Company
    Subsidiaries and/or the Company, provided for under the laws of
    the United States, any foreign jurisdiction or any state or
    locality with respect to Taxes for any taxable period for which
    the statute of limitations has not expired. None of the Company
    or any Company Subsidiary is responsible for the Taxes of any
    other person under Treasury
    Regulation&nbsp;Section&nbsp;1.1502-6 (or any similar provision
    of state, local, or foreign law), as a transferee, by contract,
    or otherwise.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;3.17.6 None of the Company or any
    Company Subsidiary has (i)&nbsp;filed a consent pursuant to
    Section&nbsp;341(f) of the Code or agreed to have
    Section&nbsp;341(f)(2) of the Code apply to any disposition of
    any asset owned by it; (ii)&nbsp;agreed, or is required, to make
    any adjustment under Section&nbsp;481(a) of the Code by reason
    of a change in accounting method or otherwise; (iii)&nbsp;made
    an election, or is required to treat any of its assets as owned
    by another person or as &#147;tax-exempt use property&#148; or
    &#147;tax-exempt bond financed property&#148; within the meaning
    of Section&nbsp;168 of the Code;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-18
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">(iv)&nbsp;made a consent dividend election under
    Section&nbsp;565 of the Code; or (v)&nbsp;made any of the
    foregoing elections or is required to apply any of the foregoing
    rules under any comparable state, local or foreign Tax provision.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;3.17.7 The Company has not been a
    United States real property holding corporation within the
    meaning of Section&nbsp;897(c)(2) of the Code during the
    applicable period described in Section&nbsp;897(c)(1)(A)(ii) of
    the Code.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;3.17.8 None of the interest payable
    by the Company or any Company Subsidiary under outstanding
    indebtedness is nondeductible under Code Section 163 or is
    treated as interest on corporate acquisition indebtedness under
    Code Section&nbsp;279.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;3.17.9 None of the Company or any
    Company Subsidiary is a party to, is bound by or has any
    obligation under any Tax sharing or Tax indemnity agreement or
    similar contract or arrangement.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;3.17.10 There are no other
    transactions or facts existing with respect to the Company
    and/or its Subsidiaries which by reason of the consummation of
    the transactions contemplated by this Agreement will result in
    the Company and/or the Company Subsidiaries recognizing income.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;3.18&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Insurance.</I>
The Company maintains insurance coverage with reputable
insurers, or maintains self-insurance practices, in such amounts
and covering such risks as are in accordance with normal
industry practice for companies engaged in businesses similar to
that of the Company (taking into account the cost and
availability of such insurance).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;3.19&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Opinion
of Financial Advisors.</I> H.C.&nbsp;Wainwright &#38; Co. (the
&#147;Company Financial Advisor&#148;) has delivered to the
Company Board its written opinion that the Exchange Ratio is
fair from a financial point of view to the holders of Company
Stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;3.20&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Vote
Required.</I> The affirmative vote of the holders of a majority
of the outstanding shares of Company Common Stock and
Series&nbsp;D Convertible Preferred Stock, voting together as a
single class on an as-converted basis, are the only votes, if
any, of the holders of any class or series of capital stock or
other Equity Interests of the Company necessary to approve the
Merger.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;3.21&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Brokers
and Other Advisors.</I> No broker, finder, investment banker or
other person (other than the Company Financial Advisor, the fees
and expenses of which will be paid by the Company) is entitled
to any brokerage, finder&#146;s or other fee or commission in
connection with the Merger or any other transaction contemplated
by this Agreement or any Ancillary Agreement based upon
arrangements made by or on behalf of the Company or any Company
Subsidiary. The Company has heretofore made available to Parent
a true and complete copy of all agreements between the Company
and the Company Financial Advisor pursuant to which such firm
would be entitled to any payment or indemnification in
connection with the Merger or any other transaction contemplated
by this Agreement or any Ancillary Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;3.22&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Product
Liability.</I> As used in this Section&nbsp;3.22, the term
&#147;Company Product&#148; shall mean any product designed,
manufactured, shipped, sold, marketed, distributed and/or
otherwise introduced into the stream of commerce by or on behalf
of the Company or any Company Subsidiary, including, without
limitation, any product sold by the Company or any Company
Subsidiary as a distributor, agent, or pursuant to any other
contractual relationship; and the term &#147;Company
Defect&#148; shall mean a defect or impurity of any kind,
whether in design, manufacture, processing or otherwise,
including, without limitation, any dangerous propensity
associated with any reasonably foreseeable use of a Company
Product, or the failure to know of the existence of any defect,
impurity or dangerous propensity. Except as set forth in
Section&nbsp;3.22 of the Company Disclosure Schedule, there is
no pending or, to the knowledge of the Company, threatened,
claim, action, suit, inquiry, proceeding or investigation by any
individual or Governmental Entity in which a Company Product is
alleged to have a Company Defect, except any such claim, action,
suit, inquiry proceeding or investigation which would not be
reasonably likely to have, individually or in the aggregate, a
Company Material Adverse Effect.
</FONT>

<P align="center"><FONT size="2">A-19
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;3.23&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Transactions
with Affiliates.</I> Other than as previously disclosed by the
Company in any filing with the SEC prior to the date of this
Agreement, since January&nbsp;1, 2000, the Company has not
entered into any agreement or engaged in any transaction with
any current or former director, officer or holder of five
percent or more of the outstanding voting securities of the
Company (calculated assuming conversion or exercise of all
securities convertible into or exercisable or exchangeable for
voting securities of the Company). Other than as previously
disclosed by the Company in any filing with the SEC prior to the
date of this Agreement, since January&nbsp;1, 2000, no executive
officer or director of the Company, either in such capacity or
in his or her individual capacity, has entered into any
agreement or engaged in any transaction with any current or
former employee, customer, distributor, vendor or any other
person, except for any agreement or transaction pursuant to
which the Company receives no direct or indirect benefit and
undertakes no direct or indirect obligation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;3.24&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Federal
Healthcare Matters.</I> The Company (i)&nbsp;is not currently
excluded, debarred, or otherwise ineligible to participate in
the federal health care programs as defined in
42&nbsp;U.S.C.&nbsp;&#167;&nbsp;1320a-7b(f) (the &#147;Federal
Healthcare Programs&#148;); (ii)&nbsp;has not been charged with
or convicted of a criminal offense related to the provision of
health care items or services and (iii)&nbsp;is not under
investigation or otherwise aware of any circumstances which may
result in the Company being excluded from participation in the
Federal Healthcare Programs.
</FONT>

<P align="center">
<FONT size="2">ARTICLE&nbsp;IV
</FONT>

<P align="center">
<FONT size="2">REPRESENTATIONS AND WARRANTIES OF PARENT AND
MERGER SUB
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except as set forth in the Disclosure Schedule
delivered by Parent and Merger Sub to the Company prior to the
execution of this Agreement (the &#147;Parent Disclosure
Schedule&#148;), which identifies exceptions by specific Section
references, Parent and Merger Sub hereby jointly and severally
represent and warrant to the Company as follows:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;4.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Organization
and Qualification; Subsidiaries.</I> Each of Parent and Merger
Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Each of
Merger Sub and the other subsidiaries of Parent (each a
&#147;Parent Subsidiary&#148; and, collectively, the
&#147;Parent Subsidiaries&#148;) has been duly organized, and is
validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, as the case
may be. Each of Parent and each Parent Subsidiary has the
requisite power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry
on its business as it is now being conducted. Each of Each of
Parent and each Parent Subsidiary is duly qualified or licensed
to do business, and is in good standing, in each jurisdiction
where the character of the properties owned, leased or operated
by it or the nature of its business makes such qualification,
licensing or good standing necessary, except for such failures
to be so qualified, licensed or in good standing that would not,
individually or in the aggregate, reasonably be expected to have
a Parent Material Adverse Effect. Section&nbsp;4.1 of the Parent
Disclosure Schedule sets forth a true and complete list of all
of the Parent Subsidiaries. Except as set forth in
Section&nbsp;4.1 of the Parent Disclosure Schedule, none of
Parent or any Parent Subsidiary holds an Equity Interest in any
other person.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;4.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Certificate
of Incorporation and By-laws; Corporate Books and Records.</I>
The copies of Parent&#146;s Amended and Restated Certificate of
Incorporation (the &#147;Parent Certificate&#148;) and By-laws
(the &#147;Parent By-laws&#148;) that are listed as exhibits to
Parent&#146;s Form&nbsp;10-K for the year ended
December&nbsp;31, 2001 are complete and correct copies thereof
as in effect on the date hereof (the &#147;Parent
Form&nbsp;10-K&#148;). Parent is not in violation of any of the
provisions of the Parent Certificate or the Parent By-laws. True
and complete copies of all minute books of Parent have been made
available by Parent to the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;4.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Capitalization.</I>
The authorized capital stock of Parent consists of 200,000,000
shares of Parent Common Stock and 5,000,000 shares of preferred
stock, par value $0.001 per share (the &#147;Parent Preferred
Stock&#148;). As of the date hereof, (A)&nbsp;36,974,978 shares
of Parent Common Stock (other than treasury shares) were issued
and outstanding, all of which were validly issued and fully
paid, nonassessable
</FONT>

<P align="center"><FONT size="2">A-20
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">and free of preemptive rights, (B)&nbsp;no shares
of Parent Common Stock were held in the treasury of Parent or by
the Parent Subsidiaries, and (C)&nbsp;6,512,652 shares of Parent
Common Stock were issuable (and such number was reserved for
issuance) upon exercise of options to purchase Parent Common
Stock (&#147;Parent Options&#148;) outstanding as of such date.
As of the date hereof, no shares of Parent Preferred Stock are
issued or outstanding. Except for Parent Options to purchase not
more than 6,512,652 shares of Parent Common Stock, warrants to
purchase not more than 5,081 shares of Company Common Stock
outstanding as of the date hereof and arrangements and
agreements set forth in Section&nbsp;4.3 of the Parent
Disclosure Schedule, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character
to which Parent or any Parent Subsidiary is a party or by which
Parent or any Parent Subsidiary is bound relating to the issued
or unissued capital stock or other Equity Interests of Parent or
any Parent Subsidiary, or securities convertible into or
exchangeable for such capital stock or other Equity Interests,
or obligating Parent or any Parent Subsidiary to issue or sell
any shares of its capital stock or other Equity Interests, or
securities convertible into or exchangeable for such capital
stock of, or other Equity Interests in, Parent or any Parent
Subsidiary. Since December&nbsp;31, 2002, Parent has not issued
any shares of its capital stock, or securities convertible into
or exchangeable for such capital stock or other Equity
Interests, other than those shares of capital stock reserved for
issuance as set forth in this Section&nbsp;4.3 or
Section&nbsp;4.3 of the Parent Disclosure Schedule. Parent has
previously provided the Company with a true and complete list,
as of the date hereof, of the prices at which outstanding Parent
Options may be exercised under the applicable Parent Stock
Option Plan, the number of Parent Options outstanding at each
such price and the vesting schedule of the Parent Options for
each officer of Parent. All shares of Parent Common Stock
subject to issuance under the Parent Stock Option Plans, upon
issuance prior to the Effective Time on the terms and conditions
specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. There are no
outstanding contractual obligations of Parent or any Parent
Subsidiary (A)&nbsp;restricting the transfer of,
(B)&nbsp;affecting the voting rights of, (C)&nbsp;requiring the
repurchase, redemption or disposition of, or containing any
right of first refusal with respect to, (D)&nbsp;requiring the
registration for sale of, or (E)&nbsp;granting any preemptive or
antidilutive right with respect to, any shares of Parent Common
Stock or any capital stock of, or other Equity Interests in,
Parent or any Parent Subsidiary. Except as set forth in
Section&nbsp;4.3 of the Parent Disclosure Schedule, each
outstanding share of capital stock of each Parent Subsidiary is
duly authorized, validly issued, fully paid, nonassessable and
free of preemptive rights and is owned, beneficially and of
record, by Parent or another Parent Subsidiary free and clear of
all security interests, liens, claims, pledges, options, rights
of first refusal, agreements, limitations on Parent&#146;s or
such other Parent Subsidiary&#146;s voting rights, charges and
other encumbrances of any nature whatsoever. There are no
outstanding contractual obligations of Parent or any Parent
Subsidiary to provide funds to, or make any investment (in the
form of a loan, capital contribution or otherwise) in, any
Parent Subsidiary or any other person, other than guarantees by
Parent of any indebtedness or other obligations of any
wholly-owned Parent Subsidiary.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;4.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Authority.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.4.1 Each of Parent and Merger Sub
    has all necessary corporate power and authority to execute and
    deliver this Agreement and each Ancillary Agreement to which it
    is a party, to perform its obligations hereunder and thereunder
    and to consummate the transactions contemplated by this
    Agreement and each Ancillary Agreement to be consummated by it.
    Each of (A)&nbsp;the execution and delivery of this Agreement
    and each Ancillary Agreement to which it is a party by each of
    Parent and Merger Sub, as applicable, and the consummation by
    Parent and Merger Sub of the transactions contemplated hereby
    and thereby and (B)&nbsp;the issuance of shares of Parent Common
    Stock in accordance with the Merger, have been duly and validly
    authorized by all necessary corporate action (including approval
    by Parent as sole stockholder of Merger Sub), and no other
    corporate proceedings on the part of Parent and Merger Sub and
    no other stockholder votes are necessary to authorize this
    Agreement or any such Ancillary Agreement or to consummate the
    transactions contemplated hereby and thereby other than, with
    respect to the Merger, as provided in Section&nbsp;4.20. Each of
    the Board of Directors of Parent (the &#147;Parent Board&#148;)
    and the Board of Directors of Merger Sub (the &#147;Merger Sub
    Board&#148;) has approved this Agreement and each Ancillary
    Agreement to which Parent or Merger Sub, as applicable, is a
    party, declared advisable the
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-21
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">transactions contemplated hereby or thereby and
    has directed that this Agreement and each such Ancillary
    Agreement and the transactions contemplated hereby and thereby
    be submitted to Parent&#146;s stockholders for approval at a
    meeting of such stockholders and to Parent, as the sole
    stockholder of Merger Sub, for approval. This Agreement and each
    Ancillary Agreement to which Parent or Merger Sub is a party
    have been duly authorized and validly executed and delivered by
    Parent and Merger Sub, as applicable, and constitute a legal,
    valid and binding obligation of Parent and Merger Sub,
    enforceable against Parent and Merger Sub in accordance with its
    terms.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.4.2 Each of Parent and Merger Sub
    has taken all appropriate actions so that the restrictions on
    business combinations contained in Section 203 of the DGCL will
    not apply with respect to or as a result of this Agreement or
    any Ancillary Agreement to which Parent or Merger Sub is a party
    and the transactions contemplated hereby and thereby, including
    the Merger, without any further action on the part of the
    stockholders of Parent or Merger Sub or the Parent Board or the
    Merger Sub Board. True and complete copies of all Parent Board
    resolutions and Merger Sub Board resolutions reflecting such
    actions have been previously provided to the Company. No other
    state takeover statute or similar statute or regulation is
    applicable to or purports to be applicable to the Merger or any
    other transaction contemplated by this Agreement or any
    Ancillary Agreement to which Parent or Merger Sub is a party.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;4.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>No
Conflict; Required Filings and Consents.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.5.1 The execution and delivery of
    this Agreement and each Ancillary Agreement to which Parent or
    Merger Sub is a party do not, and the performance thereof by
    Parent and Merger Sub will not, (A)&nbsp;(assuming, the
    stockholder approval set forth in Section&nbsp;4.20 is obtained)
    conflict with or violate any provision of the Certificate of
    Incorporation or By-laws of Parent or Merger Sub,
    (B)&nbsp;assuming that all consents, approvals, authorizations
    and permits described in Section&nbsp;4.5.2 have been obtained
    and all filings and notifications described in
    Section&nbsp;4.5.2 have been made, and that the stockholders of
    Parent have approved the issuance of the shares of Parent Common
    Stock to be issued in connection with the Merger, and any
    waiting periods thereunder have terminated or expired, conflict
    with or violate any Law applicable to Parent or any Parent
    Subsidiary or by which any property or asset of Parent or any
    Parent Subsidiary is bound or affected or (C)&nbsp;require any
    consent or approval under, result in any breach of or any loss
    of any benefit under, constitute a change of control or default
    (or an event which with notice or lapse of time or both would
    become a default) under or give to others any right of
    termination, vesting, amendment, acceleration or cancellation
    of, or result in the creation of a lien or other encumbrance on
    any property or asset of Parent or any Parent Subsidiary
    pursuant to, any note, bond, mortgage, indenture, contract,
    agreement, lease, license, Parent Permit or other instrument or
    obligation.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.5.2 The execution and delivery of
    this Agreement and each Ancillary Agreement to which Parent or
    Merger Sub is a party do not, and the performance hereof and
    thereof by Parent and Merger Sub will not, require any consent,
    approval, authorization or permit of, or filing with or
    notification to, any Governmental Entity or any other person,
    except (A)&nbsp;under the Exchange Act, the Securities Act, any
    applicable Blue Sky Laws and the rules and regulations of Nasdaq
    and the filing and recordation of the Certificate of Merger as
    required by the DGCL and (B)&nbsp;where failure to obtain such
    consents, approvals, authorizations or permits, or to make such
    filings or notifications to a person other than a Governmental
    Entity, would not, individually or in the aggregate, reasonably
    be expected to (x)&nbsp;prevent or materially delay consummation
    of the Merger, (y)&nbsp;otherwise prevent or materially delay
    performance by Parent or Merger Sub of any of their material
    obligations under this Agreement or any Ancillary Agreement or
    (z)&nbsp;have a Parent Material Adverse Effect.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;4.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Permits;
Compliance With Law.</I> Each of Parent and each Parent
Subsidiary is in possession of all authorizations, licenses,
permits, certificates, approvals and clearances of any
Governmental Entity necessary for Parent and each Parent
Subsidiary to own, lease and operate its properties or to carry
on its respective businesses substantially in the manner
described in the Parent SEC Filings filed prior to the date
hereof and substantially as it is being conducted as of the date
hereof (the
</FONT>

<P align="center"><FONT size="2">A-22
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">&#147;Parent Permits&#148;), and all such Parent
Permits are valid, and in full force and effect, except where
the failure to have, or the suspension or cancellation of, or
failure to be valid or in full force and effect of, any of the
Parent Permits would not, individually or in the aggregate,
reasonably be expected to (A)&nbsp;prevent or materially delay
consummation of the Merger, (B)&nbsp;otherwise prevent or
materially delay performance by Parent or Merger Sub of any of
their material obligations under this Agreement or any Ancillary
Agreement or (C)&nbsp;have a Parent Material Adverse Effect.
None of Parent or any Parent Subsidiary is in conflict with, or
in default or violation of, (x)&nbsp;any Law applicable to
Parent or any Parent Subsidiary or by which any property or
asset of Parent or any Parent Subsidiary is bound or affected or
(y)&nbsp;any Parent Permits, except for any such conflicts,
defaults or violations that would not, individually or in the
aggregate, reasonably be expected to (A)&nbsp;prevent or
materially delay consummation of the Merger, (B)&nbsp;otherwise
prevent or materially delay performance by Parent or Merger Sub
of any of their material obligations under this Agreement or any
Ancillary Agreement to which it is a party or (C)&nbsp;have a
Parent Material Adverse Effect.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;4.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>SEC
Filings; Financial Statements.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.7.1 Parent has timely filed all
    registration statements, prospectuses, forms, reports,
    definitive proxy statements, schedules and documents required to
    be filed by it under the Securities Act or the Exchange Act, as
    the case may be, since January&nbsp;1, 2000 (collectively, the
    &#147;Parent SEC Filings&#148;). Each Parent SEC Filing
    (A)&nbsp;as of its date, complied in all material respects with
    the requirements of the Securities Act or the Exchange Act, as
    the case may be, and (B)&nbsp;did not, at the time it was filed,
    contain any untrue statement of a material fact or omit to state
    a material fact required to be stated therein or necessary in
    order to make the statements made therein, in the light of the
    circumstances under which they were made, not misleading. As of
    the date of this Agreement, no Parent Subsidiary is subject to
    the periodic reporting requirements of the Exchange Act.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.7.2 Each of the consolidated
    financial statements (including, in each case, any notes
    thereto) contained in the Parent SEC Filings was prepared in
    accordance with GAAP applied (except as may be indicated in the
    notes thereto and, in the case of unaudited quarterly financial
    statements, as permitted by Form&nbsp;10-Q under the Exchange
    Act) on a consistent basis throughout the periods indicated
    (except as may be indicated in the notes thereto), and each
    presented fairly the consolidated financial position, results of
    operations and cash flows of Parent and the consolidated Parent
    Subsidiaries as of the respective dates thereof and for the
    respective periods indicated therein (subject, in the case of
    unaudited statements, to normal year-end adjustments which did
    not and would not, individually or in the aggregate, reasonably
    be expected to have a Parent Material Adverse Effect). The books
    and records of Parent and each Parent Subsidiary have been, and
    are being, maintained in accordance with applicable legal and
    accounting requirements.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.7.3 Except as and to the extent
    set forth on the consolidated balance sheet of Parent and the
    consolidated Parent Subsidiaries as of December&nbsp;31, 2001
    included in the Parent Form&nbsp;10-K for the year ended
    December&nbsp;31, 2001, including the notes thereto, none of
    Parent or any consolidated Parent Subsidiary has any liabilities
    or obligations of any nature (whether accrued, absolute,
    contingent or otherwise) that would be required to be reflected
    on a balance sheet or in notes thereto prepared in accordance
    with GAAP, except for liabilities or obligations incurred in the
    ordinary course of business since December&nbsp;31, 2001 that
    would not, individually or in the aggregate, reasonably be
    expected to (A)&nbsp;prevent or materially delay consummation of
    the Merger, (B)&nbsp;otherwise prevent or materially delay
    performance by Parent or Merger Sub of any of their material
    obligations under this Agreement or any Ancillary Agreement to
    which it is a party or (C)&nbsp;have a Parent Material Adverse
    Effect.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.7.4 Parent has previously provided
    to the Company a complete and correct copy of any amendment or
    modification which has not yet been filed with the SEC to any
    agreement, document or other instrument which previously had
    been filed by Parent with the SEC pursuant to the Securities Act
    or the Exchange Act.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-23
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;4.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Disclosure
Documents.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.8.1 The Registration Statement,
    the Proxy Statement and any Other Filings, and any amendments or
    supplements thereto, at (A)&nbsp;the time the Registration
    Statement is declared effective, (B)&nbsp;the time the Proxy
    Statement (or any amendment thereof or supplement thereto) is
    first mailed to the stockholders of the Company, (C)&nbsp;if
    applicable, the time the Proxy Statement (or any amendment
    thereof or supplement thereto) is first mailed to stockholders
    of Parent, (D)&nbsp;the time of the Company Stockholders&#146;
    Meeting, (E)&nbsp;the time of the Parent Stockholders&#146;
    Meeting, and (F)&nbsp;the Effective Time, will comply as to form
    in all material respects with the applicable requirements of the
    Securities Act, the Exchange Act and other applicable Laws.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.8.2 The Registration Statement,
    the Proxy Statement and any Other Filings, and any amendments or
    supplements thereto, do not, and will not, at (A)&nbsp;the time
    the Registration Statement is declared effective, (B)&nbsp;the
    time the Proxy Statement (or any amendment thereof or supplement
    thereto) is first mailed to the stockholders of the Company,
    (C)&nbsp;the time the Proxy Statement (or any amendment thereof
    or supplement thereto) is first mailed to stockholders of
    Parent, (D)&nbsp;the time of the Company Stockholders&#146;
    Meeting, (E)&nbsp;the time of the Parent Stockholders&#146;
    Meeting, and (F)&nbsp;the Effective Time, contain any untrue
    statement of a material fact or omit to state any material fact
    required to be stated therein or necessary in order to make the
    statements made therein, in light of the circumstances under
    which they were made, not misleading. The representations and
    warranties contained in this Section&nbsp;4.8.2 will not apply
    to statements or omissions included in the Registration
    Statement, the Proxy Statement or any Other Filings based upon
    information furnished in writing to Parent or Merger Sub by the
    Company specifically for use therein.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;4.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Absence
of Certain Changes or Events.</I> Since September&nbsp;30, 2002,
except as specifically contemplated by, or as disclosed in, this
Agreement or Section&nbsp;4.9 of the Parent Disclosure Schedule,
Parent and each Parent Subsidiary has conducted its businesses
in the ordinary course consistent with past practice. During the
period from October&nbsp;1, 2002 through the date of this
Agreement, there has not been any Parent Material Adverse Effect
or an event or development that would, individually or in the
aggregate, reasonably be expected to have a Parent Material
Adverse Effect. Since September&nbsp;30, 2002, there has not
been any event or development that would, individually or in the
aggregate, reasonably be expected to prevent or materially delay
the performance of this Agreement or any Ancillary Agreement by
Parent or Merger Sub. Neither Parent nor any Parent Subsidiary
has taken any action during the period from October&nbsp;1, 2002
through the date of this Agreement that, if taken during the
period from the date of this Agreement through the Effective
Time, would constitute a breach of Section&nbsp;5.2.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;4.10&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Employee
Benefit Plans.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.10.1 Section&nbsp;4.10.1 of the
    Parent Disclosure Schedule sets forth a true and complete list
    of each &#147;employee benefit plan&#148; as defined in
    Section&nbsp;3(3) of ERISA and any other plan, policy, program,
    practice, agreement, understanding or arrangement (whether
    written or oral) providing compensation or other benefits to any
    current or former director, officer, employee or consultant (or
    to any dependent or beneficiary thereof of Parent or any ERISA
    Affiliate), which are now, or were within the past 6&nbsp;years,
    maintained, sponsored or contributed to by Parent or any ERISA
    Affiliate, or under which Parent or any ERISA Affiliate has any
    obligation or liability, whether actual or contingent,
    including, without limitation, all incentive, bonus, deferred
    compensation, vacation, holiday, cafeteria, medical, disability,
    stock purchase, stock option, stock appreciation, phantom stock,
    restricted stock or other stock-based compensation plans,
    policies, programs, practices or arrangements (each a
    &#147;Parent Benefit Plan&#148;). Neither Parent, nor to the
    knowledge of Parent, or any other person or entity, has any
    express or implied commitment, whether legally enforceable or
    not, to modify, change or terminate any Parent Benefit Plan,
    other than with respect to a modification, change or termination
    required by ERISA or the Code.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">With respect to each Parent Benefit Plan, Parent
has delivered to the Company true, correct and complete copies
of (A)&nbsp;each Parent Benefit Plan (or, if not written a
written summary of its material
</FONT>

<P align="center"><FONT size="2">A-24
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">terms), including without limitation all plan
documents, adoption agreements, trust agreements, insurance
contracts or other funding vehicles and all amendments thereto,
(B)&nbsp;all summaries and summary plan descriptions, including
any summary of material modifications, (C)&nbsp;the most recent
annual reports (Form&nbsp;5500 series) filed with the IRS with
respect to such Parent Benefit Plan (and, if the most recent
annual report is a Form&nbsp;5500R, the most recent
Form&nbsp;5500C filed with respect to such Parent Benefit Plan),
(D)&nbsp;the most recent actuarial report or other financial
statement relating to such Parent Benefit Plan, (E)&nbsp;the
most recent determination or opinion letter, if any, issued by
the IRS with respect to any Parent Benefit Plan and any pending
request for such a determination letter, (F)&nbsp;the most
recent nondiscrimination tests performed under the Code
(including 401(k) and 401(m) tests) for each Parent Benefit
Plan, and (G)&nbsp;all filings made with any Governmental
Entity, including but not limited any filings under the
Voluntary Compliance Resolution or Closing Agreement Program or
the Department of Labor Delinquent Filer Program.
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.10.2 Each Parent Benefit Plan has
    been administered in all material respects in accordance with
    its terms and all applicable Laws, including ERISA and the Code,
    and contributions required to be made under the terms of any of
    the Parent Benefit Plans as of the date of this Agreement have
    been timely made or, if not yet due, have been properly
    reflected on the most recent consolidated balance sheet filed or
    incorporated by reference in the Parent SEC Filings prior to the
    date of this Agreement. With respect to the Parent Benefit
    Plans, no event has occurred and, to the knowledge of Parent,
    there exists no condition or set of circumstances in connection
    with which Parent could be subject to any material liability
    (other than for routine benefit liabilities) under the terms of,
    or with respect to, such Parent Benefit Plans, ERISA, the Code
    or any other applicable Law.
    </FONT></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.10.3 Except as disclosed on
    Section 4.10.3 of the Parent Disclosure Schedule: (A)&nbsp;each
    Parent Benefit Plan which is intended to qualify under
    Section&nbsp;401(a), 401(k), Section&nbsp;401(m) or
    Section&nbsp;4975(e)(6) of the Code has either received a
    favorable determination letter from the IRS as to its qualified
    status or the remedial amendment period for such Parent Benefit
    Plan has not yet expired, and each trust established in
    connection with any Parent Benefit Plan which is intended to be
    exempt from federal income taxation under Section&nbsp;501(a) of
    the Code is so exempt, and to Parent&#146;s knowledge no fact or
    event has occurred that could adversely affect the qualified
    status of any such Parent Benefit Plan or the exempt status of
    any such trust, (B)&nbsp;to Parent&#146;s knowledge there has
    been no prohibited transaction (within the meaning of
    Section&nbsp;406 of ERISA or Section&nbsp;4975 of the Code and
    other than a transaction that is exempt under a statutory or
    administrative exemption) with respect to any Parent Benefit
    Plan that could result in liability to Parent or an ERISA
    Affiliate, (C)&nbsp;each Parent Benefit Plan can be amended,
    terminated or otherwise discontinued after the Effective Time in
    accordance with its terms, without liability (other than
    (i)&nbsp;liability for ordinary administrative expenses
    typically incurred in a termination event or (ii)&nbsp;if the
    Parent Benefit Plan is a pension benefit plan subject to Part 2
    of Title I of ERISA, liability for the accrued benefits as of
    the date of such termination (if and to the extent required by
    ERISA) to the extent that either there are sufficient assets set
    aside in a trust or insurance contract to satisfy such liability
    or such liability is reflected on the most recent consolidated
    balance sheet filed or incorporated by reference in the Parent
    SEC Filings prior to the date of this Agreement), (D)&nbsp;no
    suit, administrative proceeding, action or other litigation has
    been brought, or to the knowledge of Parent is threatened,
    against or with respect to any such Parent Benefit Plan,
    including any audit or inquiry by the IRS or United States
    Department of Labor (other than routine benefits claims),
    (E)&nbsp;neither Parent nor any ERISA Affiliate has any
    liability under ERISA Section&nbsp;502, (F)&nbsp;all tax, annual
    reporting and other governmental filings required by ERISA and
    the Code have been timely filed with the appropriate
    Governmental Entity and all notices and disclosures have been
    timely provided to participants, (G)&nbsp;all contributions and
    payments to such Parent Benefit Plan are deductible under Code
    sections&nbsp;162 or 404, (H)&nbsp;no amount is subject to Tax
    as unrelated business taxable income under Section&nbsp;511 of
    the Code, and (I)&nbsp;no excise tax could be imposed upon
    Parent under Chapter&nbsp;43 of the Code.
    </FONT></TD>
</TR>


</TABLE>

<P align="center"><FONT size="2">A-25
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.10.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Neither
    Parent nor any of its ERISA Affiliates sponsors, maintains,
    contributes to or has an obligation to contribute to, or has
    sponsored, maintained, contributed to or had an obligation to
    contribute to, any &#147;employee pension benefit plan&#148; (as
    defined in Section&nbsp;3(2) of ERISA) that is subject to
    Title&nbsp;IV of ERISA or Section&nbsp;412 of the Code, or any
    Multiemployer Plan.
    </FONT></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.10.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Neither
    Parent nor any of its ERISA Affiliates sponsors, contributes to
    or has any liability with respect to any employee benefit plan,
    program or arrangement that provides benefits to non-resident
    aliens with no United States source income outside of the United
    States.
    </FONT></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.10.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except
    as set forth on Section&nbsp;4.10.6 of the Parent Disclosure
    Schedule, no amount that could be received (whether in cash or
    property or the vesting of property), as a result of the
    consummation of the transactions contemplated by this Agreement
    or any Ancillary Agreement, by any employee, officer or director
    of Parent or any Parent Subsidiary who is a &#147;disqualified
    individual&#148; (as such term is defined in proposed Treasury
    Regulation&nbsp;Section&nbsp;1.280G-1) under any Parent Benefit
    Plan could be characterized as an &#147;excess parachute
    payment&#148; (as defined in Section&nbsp;280G(b)(1) of the
    Code). Set forth in Section&nbsp;4.10.6 of the Parent Disclosure
    Schedule is (A)&nbsp;the estimated maximum amount that could be
    paid to any disqualified individual as a result of the
    transactions contemplated by this Agreement or any Ancillary
    Agreement under all employment, severance and termination
    agreements, other compensation arrangements and Parent Benefit
    Plans currently in effect, and (B)&nbsp;the &#147;base
    amount&#148; (as defined in Section&nbsp;280G(b)(e) of the Code)
    for each such individual as of the date of this Agreement.
    </FONT></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.10.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except
    as required by Law, no Parent Benefit Plan provides any of the
    following retiree or post-employment benefits to any person:
    medical, disability or life insurance benefits. No Parent
    Benefit Plan is a voluntary employee benefit association under
    Section&nbsp;501(a)(9) of the Code. Parent and each ERISA
    Affiliate are in material compliance with (i)&nbsp;the
    requirements of the applicable health care continuation and
    notice provisions of the Consolidated Omnibus Budget
    Reconciliation Act of 1985, as amended, and the regulations
    (including proposed regulations) thereunder and any similar
    state law and (ii)&nbsp;the applicable requirements of the
    Health Insurance Portability and Accountability Act of 1996, as
    amended, and the regulations (including the proposed
    regulations) thereunder.
    </FONT></TD>
</TR>


</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;4.11&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Labor
and Other Employment Matters.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.11.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
    of Parent and each Parent Subsidiary is in compliance with all
    applicable Laws respecting labor, employment, fair employment
    practices, terms and conditions of employment, workers&#146;
    compensation, occupational safety, plant closings, and wages and
    hours. None of Parent or any Parent Subsidiary is liable for any
    payment to any trust or other fund or to any Governmental
    Entity, with respect to unemployment compensation benefits,
    social security or other benefits or obligations for employees
    (other than routine payments to be made in the ordinary course
    of business and consistent with past practice). Except as set
    forth in Section&nbsp;4.11.1 of the Parent Disclosure Schedule,
    none of Parent or any Parent Subsidiary is a party to any
    collective bargaining or other labor union contract applicable
    to persons employed by Parent or any Parent Subsidiary, and no
    collective bargaining agreement or other labor union contract is
    being negotiated by Parent or any Parent Subsidiary. There is no
    labor dispute, strike, slowdown or work stoppage against Parent
    or any Parent Subsidiary pending or, to the knowledge of Parent,
    threatened which may interfere in any respect that would have a
    Parent Material Adverse Effect with the respective business
    activities of Parent or any Parent Subsidiary. No labor union or
    similar organization has otherwise been certified to represent
    any persons employed by Parent or any Parent Subsidiary or has
    applied to represent such employees or, to the knowledge of
    Parent, is attempting to organize so as to represent such
    employees. None of Parent, any Parent Subsidiary or their
    respective representatives or employees has committed any unfair
    labor practices in connection with the operation of the
    respective businesses of Parent or any Parent Subsidiary, and
    there is no charge or complaint against Parent or any Parent
    Subsidiary by the National Labor Relations Board or any
    comparable state or foreign agency pending
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-26
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">or, to the knowledge of Parent, threatened,
    except where such unfair labor practice, charge or complaint
    would not, individually or in the aggregate, reasonably be
    expected to have a Parent Material Adverse Effect. None of
    Parent or any Parent Subsidiary is delinquent in payments to any
    of its employees for any wages, salaries, commissions, bonuses
    or other direct compensation for any services performed for it
    or amounts required to be reimbursed to such employees. Each of
    Parent and each Parent Subsidiary has withheld all amounts
    required by Law or by agreement to be withheld from the wages,
    salaries, and other payments to employees, and is not liable for
    any arrears of wages or any Taxes or any penalty for failure to
    comply with any of the foregoing. There are no material pending
    claims against Parent or any Parent Subsidiary under any
    workers&#146; compensation plan or policy or for long term
    disability. There are no material controversies pending or, to
    the knowledge of Parent, threatened, between Parent or any
    Parent Subsidiary and any of their current or former employees,
    which controversies have or could reasonably be expected to
    result in an action, suit, proceeding, claim, arbitration or
    investigation before any Governmental Entity. To Parent&#146;s
    knowledge, no employee of Parent or any Parent Subsidiary is in
    any material respect in violation of any term of any employment
    contract, non-disclosure agreement, non-competition agreement,
    or any restrictive covenant to a former employer relating to the
    right of any such employee to be employed by Parent or such
    Parent Subsidiary because of the nature of the business
    conducted or presently proposed to be conducted by it or to the
    use of trade secrets or proprietary information of others. No
    employee of Parent or any Parent Subsidiary has given notice,
    nor is Parent otherwise aware, that such employee intends to
    terminate his or her employment with Parent or such Parent
    Subsidiary.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.11.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Parent
    has identified in Section&nbsp;4.11.2 of the Parent Disclosure
    Schedule and has made available to the Company true and complete
    copies of (A)&nbsp;all severance and employment agreements with
    directors, officers or employees of or consultants to Parent or
    any Parent Subsidiary, (B)&nbsp;all severance programs and
    policies of Parent and each Parent Subsidiary with or relating
    to its employees, and (C)&nbsp;all plans, programs, agreements
    and other arrangements of Parent and each Parent Subsidiary with
    or relating to its directors, officers, employees or consultants
    which contain change in control provisions. Except as set forth
    in Section&nbsp;4.11.2 of the Parent Disclosure Schedule, none
    of the execution and delivery of this Agreement or any Ancillary
    Agreement or the consummation of the transactions contemplated
    hereby or thereby will (either alone or in conjunction with any
    other event, such as termination of employment) (A)&nbsp;result
    in any payment (including, without limitation, severance,
    unemployment compensation, parachute or otherwise) becoming due
    to any director or any employee of Parent or any Parent
    Subsidiary or affiliate from Parent or any Parent Subsidiary or
    affiliate under any Parent Benefit Plan or otherwise,
    (B)&nbsp;significantly increase any benefits otherwise payable
    under any Parent Benefit Plan or (C)&nbsp;result in any
    acceleration of the time of payment or vesting of any material
    benefits. No individual who is a party to an employment
    agreement listed in Section&nbsp;4.11.2 of the Parent Disclosure
    Schedule or any agreement incorporating change in control
    provisions with Parent has terminated employment or been
    terminated, nor has any event occurred that could give rise to a
    termination event, in either case under circumstances that has
    given, or could give, rise to a severance obligation on the part
    of Parent under such agreement. Section&nbsp;4.11.2 of the
    Parent Disclosure Schedule sets forth Parent&#146;s best
    estimates of the amounts payable to the executives listed
    therein, as a result of the transactions contemplated by this
    Agreement, any Ancillary Agreement, and/or any subsequent
    employment termination (including any cash-out or acceleration
    of options and restricted stock and any &#147;gross-up&#148;
    payments with respect to any of the foregoing), based on
    compensation data applicable as of the date of the Parent
    Disclosure Schedule and the assumptions stated therein.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.11.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
    are no pending or threatened claims (other than claims for
    benefits in the ordinary course), lawsuits or arbitrations which
    have been asserted or instituted against any Parent Benefit
    Plan, any fiduciaries thereof with respect to their duties to
    the Parent Benefit Plans or the assets of any of the trusts
    under any of the Parent Benefit Plans which could reasonably be
    expected to result in any material liability of Parent or any
    Parent Subsidiary to the PBGC, the Department of Treasury, the
    Department of Labor or any Multiemployer Plan.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-27
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;4.12&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Tax
Treatment.</I> None of Parent, any Parent Subsidiary or, to the
knowledge of Parent, any of Parent&#146;s affiliates has taken
or agreed to take any action that would prevent the Merger from
qualifying as a reorganization within the meaning of
Section&nbsp;368(a) of the Code. Parent is not aware of any
agreement, plan or other circumstance that would prevent the
Merger from qualifying as a reorganization within the meaning of
Section&nbsp;368(a) of the Code.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;4.13&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Contracts.</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except as filed as exhibits to the Parent SEC
Filings filed prior to the date of this Agreement, or as
disclosed in Section&nbsp;4.13 of the Parent Disclosure
Schedule, none of Parent or any Parent Subsidiary is a party to
or bound by any contract (A)&nbsp;any of the benefits to any
party of which will be increased, or the vesting of the benefits
to any party of which will be accelerated, by the occurrence of
any of the transactions contemplated by this Agreement or any
Ancillary Agreement, or the value of any of the benefits to any
party of which will be calculated on the basis of any of the
transactions contemplated by this Agreement or any Ancillary
Agreement, or (B)&nbsp;which, as of the date hereof, (1)&nbsp;is
a &#147;material contract&#148; (as such term is defined in
Item&nbsp;601(b)(10) of Regulation&nbsp;S-K of the SEC),
(2)&nbsp;involves aggregate expenditures in excess of $250,000,
other than contracts for the purchase of raw materials,
components or manufacturing goods and contracts for the sale of
Parent&#146;s products in the ordinary course of business,
(3)&nbsp;involves annual expenditures in excess of $250,000 and
is not cancelable within one year, other than contracts for the
purchase of raw materials, components or manufacturing goods and
contracts for the sale of Parent&#146;s products in the ordinary
course of business, (4)&nbsp;contains any non-compete or
exclusivity provisions with respect to any line of business or
geographic area with respect to Parent, any Parent Subsidiary or
any of Parent&#146;s current or future affiliates, or which
restricts the conduct of any line of business by Parent, any
Parent Subsidiary or any of Parent&#146;s current or future
affiliates or any geographic area in which Parent, any Parent
Subsidiary or any of Parent&#146;s current or future affiliates
may conduct business, in each case in any material respect,
(5)&nbsp;involves the sale of a Parent Product to a customer or
distributor and provides for a right of refund or return for any
reason, including upon the occurrence of specified events or
otherwise or (6)&nbsp;would prohibit or materially delay the
consummation of the Merger or any of the transactions
contemplated by this Agreement or any Ancillary Agreement. Each
Contract of the type described in this Section&nbsp;4.13,
whether or not set forth in Section&nbsp;4.13 of the Parent
Disclosure Schedule, is referred to herein as a &#147;Parent
Material Contract.&#148; Each Parent Material Contract is valid
and binding on Parent and each Parent Subsidiary party thereto
and, to Parent&#146;s knowledge, each other party thereto, and
in full force and effect, and Parent and each Parent Subsidiary
has in all material respects performed all obligations required
to be performed by it to the date hereof under each Parent
Material Contract and, to Parent&#146;s knowledge, each other
party to each Parent Material Contract has in all material
respects performed all obligations required to be performed by
it under such Parent Material Contract, except as would not,
individually or in the aggregate, reasonably be expected to
(1)&nbsp;prevent or materially delay consummation of the Merger,
(2)&nbsp;otherwise prevent or materially delay performance by
Parent or Merger Sub of any of their material obligations under
this Agreement or any Ancillary Agreement to which it is a
party, or (3)&nbsp;result in a Parent Material Adverse Effect.
None of Parent or any Parent Subsidiary knows of, or has
received notice of, any violation or default under (or any
condition which with the passage of time or the giving of notice
would cause such a violation of or default under) any Parent
Material Contract or any other contract to which it is a party
or by which it or any of its properties or assets is bound,
except for violations or defaults that would not, individually
or in the aggregate, reasonably be expected to (1)&nbsp;prevent
or materially delay consummation of the Merger,
(2)&nbsp;otherwise prevent or materially delay performance by
Parent or Merger Sub of any of their material obligations under
this Agreement or any Ancillary Agreement to which it is a party
or (3)&nbsp;result in a Parent Material Adverse Effect.
Section&nbsp;4.13 of the Parent Disclosure Schedule provides
Parent&#146;s good faith estimate of the additional costs which
will accrue to Parent under the contracts described in
clause&nbsp;(A) of Section&nbsp;4.13 as a result of the
transactions contemplated by this Agreement or any Ancillary
Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;4.14&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Litigation.</I>
Except as and to the extent set forth in Parent SEC Filings
filed prior to the date of this Agreement or in
Section&nbsp;4.14 of the Parent Disclosure Schedule,
(A)&nbsp;there is no suit,
</FONT>

<P align="center"><FONT size="2">A-28
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">claim, action, proceeding or investigation
pending or, to the knowledge of Parent, threatened in writing
against Parent or any Parent Subsidiary or reasonably likely to
be brought against Parent or any Parent Subsidiary or for which
Parent or any Parent Subsidiary is obligated to indemnify a
third party that (1)&nbsp;has had or would, individually or in
the aggregate, reasonably be expected to have a Parent Material
Adverse Effect or (2)&nbsp;as of the date hereof, challenges the
validity or propriety, or seeks to prevent or materially delay
consummation of the Merger or any other transaction contemplated
by this Agreement or any Ancillary Agreement and (B)&nbsp;none
of Parent or any Parent Subsidiary is subject to any outstanding
order, writ, injunction, decree or arbitration ruling, award or
other finding which has had or would, individually or in the
aggregate, reasonably be expected to (1)&nbsp;prevent or
materially delay consummation of the Merger, (2)&nbsp;otherwise
prevent or materially delay performance by Parent or Merger Sub
of any of their material obligations under this Agreement or any
Ancillary Agreement, or (3)&nbsp;result in a Parent Material
Adverse Effect.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;4.15&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Environmental
Matters.</I> Except as would not, individually or in the
aggregate, reasonably be expected to have a Parent Material
Adverse Effect:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.15.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Parent
    and each Parent Subsidiary (A)&nbsp;is in compliance with all,
    and is not subject to any liability, with respect to any,
    applicable Environmental Laws, (B)&nbsp;holds or has applied for
    all Environmental Permits necessary to conduct their current
    operations, and (C)&nbsp;is in compliance with their respective
    Environmental Permits.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.15.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None
    of Parent or any Parent Subsidiary has received any written
    notice, demand, letter, claim or request for information
    alleging that Parent or any Parent Subsidiary may be in
    violation of, or liable under, any Environmental Law.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.15.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None
    of Parent or any Parent Subsidiary (A)&nbsp;has entered into or
    agreed to any consent decree or order or is subject to any
    judgment, decree or judicial order relating to compliance with
    Environmental Laws, Environmental Permits or the investigation,
    sampling, monitoring, treatment, remediation, removal or cleanup
    of Hazardous Materials and, to the knowledge of Parent, no
    investigation, litigation or other proceeding is pending or
    threatened in writing with respect thereto, or (B)&nbsp;is an
    indemnitor in connection with any claim threatened or asserted
    in writing by any third-party indemnitee for any liability under
    any Environmental Law or relating to any Hazardous Materials.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.15.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None
    of the real property owned or leased by Parent or any Parent
    Subsidiary is listed or, to the knowledge of Parent, proposed
    for listing on the &#147;National Priorities List&#148; under
    CERCLA, as updated through the date hereof, or any similar state
    or foreign list of sites requiring investigation or cleanup.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;4.16&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Intellectual
Property.</I> Excepting the Intellectual Property owned or
controlled by the Company, Parent owns or has the defensible
right to use, whether through ownership, licensing or otherwise,
all Intellectual Property significant to the businesses of
Parent and each Parent Subsidiary in substantially the same
manner as such businesses are conducted on the date hereof
(&#147;Material Parent Intellectual Property&#148;). Excepting
the Intellectual Property owned or controlled by the Company,
except as set forth in Section&nbsp;4.16 of the Parent
Disclosure Schedule and except as would not, individually or in
the aggregate, reasonably be expected to have a material adverse
impact on the validity or value of any Material Parent
Intellectual Property and excluding prior communications or
dealings with the Company: (A)&nbsp;no written claim of
invalidity or conflicting ownership rights with respect to any
Material Parent Intellectual Property has been made by a third
party and no such Material Parent Intellectual Property is the
subject of any pending or, to Parent&#146;s knowledge,
threatened action, suit, claim, investigation, arbitration or
other proceeding; (B)&nbsp;no person or entity has given notice
to Parent or any Parent Subsidiary that the use of any Material
Parent Intellectual Property by Parent, any Parent Subsidiary or
any licensee is infringing or has infringed any domestic or
foreign patent, trademark, service mark, trade name, or
copyright or design right, or that Parent, any Parent Subsidiary
or any licensee has misappropriated or improperly used or
disclosed any trade secret, confidential information or
know-how; (C)&nbsp;the making, using, selling, manufacturing,
marketing, licensing, reproduction, distribution, or
</FONT>

<P align="center"><FONT size="2">A-29
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">publishing of any process, machine, manufacture
or product related to any Material Parent Intellectual Property,
is not presently believed to infringe any domestic or foreign
patent, trademark, service mark, trade name, copyright or other
intellectual property right of any third party, and does not and
will not involve the misappropriation or improper use or
disclosure of any trade secrets, confidential information or
know-how of any third party; (D)&nbsp;there is not believed to
exist any prior act or current conduct or use by Parent, any
Parent Subsidiary or any third party that would void or
invalidate any Material Parent Intellectual Property; and
(E)&nbsp;the execution, delivery and performance of this
Agreement and each Ancillary Agreement by Parent and Merger Sub
and the consummation of the transactions contemplated hereby and
thereby will not breach, violate or conflict with any instrument
or agreement concerning any Material Parent Intellectual
Property, will not cause the forfeiture or termination or give
rise to a right of forfeiture or termination of any of the
Material Parent Intellectual Property or impair the right of
Parent or the Surviving Corporation to make, use, sell, license
or dispose of, or to bring any action for the infringement of
any Material Parent Intellectual Property. In addition, the
matters disclosed on Section&nbsp;4.16 of the Parent Disclosure
Schedule would not, individually or in the aggregate, reasonably
be expected to have a Parent Material Adverse Effect.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;4.17&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Taxes.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.17.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Parent
    and each Parent Subsidiary has timely filed all Tax Returns with
    the appropriate taxing authorities required to be filed as of
    the date hereof, taking into account any extensions of time
    within which to file such Tax Returns. The Tax Returns have
    accurately reflected in all material respects and will
    accurately reflect in all material respects all liability for
    Taxes of Parent and such Parent Subsidiaries for the periods
    covered thereby. Except as provided in Schedule&nbsp;4.17.1, all
    material Taxes owed by Parent and each Parent Subsidiary for all
    taxable years or other taxable periods that end on or before the
    Effective Time, and, with respect to any taxable year or other
    taxable period beginning before and ending after the Effective
    Time, whether or not shown as being due on any Tax Return, have
    been paid and Parent and each Parent Subsidiary have provided
    adequate reserves in accordance with GAAP in their financial
    statements for any Taxes that have not been paid, whether or not
    shown as being due on any Tax Returns. No claim has ever been
    made by an authority in a jurisdiction where Parent or any
    Parent Subsidiary does not file Tax Returns that Parent or any
    Parent Subsidiary is or may be subject to taxation by that
    jurisdiction.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.17.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except
    as provided in Schedule&nbsp;4.17.2, no deficiencies for Taxes
    with respect to Parent and any Parent Subsidiary have been
    claimed, proposed or assessed by any taxing authority or other
    Governmental Entity. Except as provided in Schedule&nbsp;4.17.2,
    there are no audits or other administrative proceedings or court
    proceedings presently pending with regard to any Taxes or Tax
    Returns of Parent or any Parent Subsidiary and none of Parent or
    any Parent Subsidiary has received a written notice or
    announcement of any audits or proceedings. To Parent&#146;s
    knowledge, no such audits or proceedings are contemplated. No
    requests for waivers of time to assess any Taxes are pending and
    none of Parent or any Parent Subsidiary has waived any statute
    of limitations with respect to Taxes or agreed to any extension
    of time with respect to any Tax assessment or deficiency for any
    open tax year.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.17.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
    are no Tax liens upon any property or assets of Parent or any
    Parent Subsidiary except liens for current Taxes not yet due and
    payable and liens for Taxes that are being contested in good
    faith by appropriate proceedings.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.17.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Parent
    and each Parent Subsidiary has withheld and paid all material
    Taxes required to have been withheld and paid in connection with
    amounts paid or owing to any employee, independent contractor,
    creditor, stockholder, or other third party.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.17.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Neither
    Parent nor any Parent Subsidiary has been included in any
    &#147;consolidated,&#148; &#147;unitary&#148; or combined Tax
    Return, other than the consolidated, unified or combined Tax
    Returns of a Parent Subsidiary filed with other Parent
    Subsidiaries and/or the Company, provided for under the laws of
    the United States, any foreign jurisdiction or any state or
    locality with respect to Taxes for any taxable period for which
    the statute of limitations has not expired. None of
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-30
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">the Company or any Company Subsidiary is
    responsible for the Taxes of any other person under Treasury
    Regulation&nbsp;Section&nbsp;1.1502-6 (or any similar provision
    of state, local, or foreign law), as a transferee, by contract,
    or otherwise.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.17.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None
    of Parent or any Parent Subsidiary has (i)&nbsp;filed a consent
    pursuant to Section&nbsp;341(f) of the Code or agreed to have
    Section 341(f)(2) of the Code apply to any disposition of any
    asset owned by it; (ii)&nbsp;agreed, or is required, to make any
    adjustment under Section&nbsp;481(a) of the Code by reason of a
    change in accounting method or otherwise; (iii)&nbsp;made an
    election, or is required to treat any of its assets as owned by
    another person or as &#147;tax-exempt use property&#148; or
    &#147;tax-exempt bond financed property&#148; within the meaning
    of Section&nbsp;168 of the Code; (iv)&nbsp;made a consent
    dividend election under Section&nbsp;565 of the Code; or
    (v)&nbsp;made any of the foregoing elections or is required to
    apply any of the foregoing rules under any comparable state,
    local or foreign Tax provision.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.17.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Parent
    has not been a United States real property holding corporation
    within the meaning of Section&nbsp;897(c)(2) of the Code during
    the applicable period described in Section&nbsp;897(c)(1)(A)(ii)
    of the Code.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.17.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None
    of the interest payable by Parent or any Parent Subsidiary under
    outstanding indebtedness is nondeductible under Code Section 163
    or is treated as interest on corporate acquisition indebtedness
    under Code Section&nbsp;279.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.17.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None
    of Parent or any Parent Subsidiary is a party to, is bound by or
    has any obligation under any Tax sharing or Tax indemnity
    agreement or similar contract or arrangement.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;4.17.10&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
    are no other transactions or facts existing with respect to
    Parent and/or its Subsidiaries which by reason of the
    consummation of the transactions contemplated by this Agreement
    will result in Parent and/or the Parent Subsidiaries recognizing
    income.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;4.18&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Insurance.</I>
Parent maintains insurance coverage with reputable insurers, or
maintains self-insurance practices, in such amounts and covering
such risks as are in accordance with normal industry practice
for companies engaged in businesses similar to that of Parent
(taking into account the cost and availability of such
insurance).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;4.19&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Opinion
of Financial Advisors.</I> Bear, Stearns &#38; Co. Inc. (the
&#147;Parent Financial Advisor&#148;) has delivered to the
Parent Board its written opinion that the Exchange Ratio is fair
from a financial point of view to Parent.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;4.20&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Vote
Required.</I> The affirmative vote of the holders of a majority
of the outstanding shares of Parent Common Stock is the only
vote, if any, of the holders of any class or series of capital
stock or other Equity Interests of Parent necessary to approve
the Share Issuance. The affirmative vote of Parent, as the sole
stockholder of Merger Sub, is the only vote, if any, of the
holders of any class or series of capital stock or other Equity
Interests of Merger Sub necessary to approve the Merger.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;4.21&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Brokers
and Other Advisors.</I> No broker, finder, investment banker or
other person (other than the Parent Financial Advisor, the fees
and expenses of which will be paid by Parent) is entitled to any
brokerage, finder&#146;s or other fee or commission in
connection with the Merger or any other transaction contemplated
by this Agreement or any Ancillary Agreement based upon
arrangements made by or on behalf of Parent or any Parent
Subsidiary. Parent has heretofore made available to the Company
a true and complete copy of all agreements between Parent and
the Parent Financial Advisor pursuant to which such firm would
be entitled to any payment or indemnification in connection with
the Merger or any other transaction contemplated by this
Agreement or any Ancillary Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;4.22&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Product
Liability.</I> As used in this Section&nbsp;4.22, the term
&#147;Parent Product&#148; shall mean any product designed,
manufactured, shipped, sold, marketed, distributed and/or
otherwise introduced into the stream of commerce by or on behalf
of Parent or any Parent Subsidiary, including, without
limitation, any product sold by Parent or any Parent Subsidiary
as a distributor, agent, or pursuant to any other contractual
relationship; and the term &#147;Parent Defect&#148; shall mean
a defect or impurity of any
</FONT>

<P align="center"><FONT size="2">A-31
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">kind, whether in design, manufacture, processing
or otherwise, including, without limitation, any dangerous
propensity associated with any reasonably foreseeable use of a
Parent Product, or the failure to know of the existence of any
defect, impurity or dangerous propensity. Except as set forth in
Section&nbsp;4.22 of the Parent Disclosure Schedule, there is no
pending or, to the knowledge of Parent, threatened, claim,
action, suit, inquiry, proceeding or investigation by any
individual or Governmental Entity in which a Parent Product is
alleged to have a Parent Defect, except any such claim, action,
suit, inquiry proceeding or investigation which would not be
reasonably likely to have, individually or in the aggregate, a
Parent Material Adverse Effect.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;4.23&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Transactions
with Affiliates.</I> Other than as previously disclosed by the
Company in any filing with the SEC prior to the date of this
Agreement, since January&nbsp;1, 2000, Parent has not entered
into any agreement or engaged in any transaction with any
current or former director, officer or holder of five percent or
more of the outstanding voting securities of Parent (calculated
assuming conversion or exercise of all securities convertible
into or exercisable or exchangeable for voting securities of
Parent). Other than as previously disclosed by the Company in
any filing with the SEC prior to the date of this Agreement,
since January&nbsp;1, 2000, no executive officer or director of
Parent, either in such capacity or in his or her individual
capacity, has entered into any agreement or engaged in any
transaction with any current or former employee, customer,
distributor, vendor or any other person, except for any
agreement or transaction pursuant to which Parent receives no
direct or indirect benefit and undertakes no direct or indirect
obligation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;4.24&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Federal
Healthcare Matters.</I> The Company (i)&nbsp;is not currently
excluded, debarred, or otherwise ineligible to participate in
the Federal Healthcare Programs; (ii)&nbsp;has not been charged
with or convicted of a criminal offense related to the provision
of health care items or services and (iii)&nbsp;is not under
investigation or otherwise aware of any circumstances which may
result in the Company being excluded from participation in the
Federal Healthcare Programs.
</FONT>

<P align="center">
<FONT size="2">ARTICLE&nbsp;V
</FONT>

<P align="center">
<FONT size="2">COVENANTS
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;5.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Conduct
of Business by the Company Pending the Closing.</I> The Company
agrees that, between the date of this Agreement and the
Effective Time, except as set forth in Section&nbsp;5.1 of the
Company Disclosure Schedule or as specifically permitted by any
other provision of this Agreement, unless Parent shall otherwise
agree in writing, the Company will, and will cause each Company
Subsidiary to, (A)&nbsp;conduct its operations only in the
ordinary and usual course of business consistent with past
practice and (B) subject to the prohibitions contained in
Section&nbsp;5.1.6, use its reasonable efforts to keep available
the services of the current executive officers, key employees
and consultants of the Company and each Company Subsidiary and
to preserve the current relationships of the Company and each
Company Subsidiary with such of the customers, suppliers and
other persons with which the Company or any Company Subsidiary
has significant business relations as is reasonably necessary to
preserve substantially intact its business organization. Without
limiting the foregoing, and as an extension thereof, except as
set forth in Section&nbsp;5.1 of the Company Disclosure Schedule
or as specifically permitted by any other provision of this
Agreement, the Company shall not (unless required by applicable
Law or the regulations or requirements of Nasdaq), and shall not
permit any Company Subsidiary to, between the date of this
Agreement and the Effective Time, directly or indirectly, do, or
agree to do, any of the following without the prior written
consent of Parent:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.1.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;amend
    or otherwise change its certificate of incorporation or by-laws
    or equivalent organizational documents;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.1.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)&nbsp;issue,
    sell, pledge, dispose of, grant, transfer or encumber, or
    authorize the issuance, sale, pledge, disposition, grant,
    transfer or encumbrance of any shares of capital stock of, or
    other Equity Interests in, the Company or any Company Subsidiary
    of any class, or securities convertible or exchangeable or
    exercisable for any shares of such capital stock or other Equity
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-32
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Interests, or any options (other than options to
    purchase up to an aggregate of 50,000&nbsp;shares of Company
    Common Stock to be granted pursuant to the Company&#146;s 1997
    Stock Incentive Plan, in each case consistent with past
    practice), warrants or other rights of any kind to acquire any
    shares of such capital stock or other Equity Interests or such
    convertible or exchangeable securities, or any other ownership
    interest (including, without limitation, any such interest
    represented by contract right), of the Company or any Company
    Subsidiary, other than the issuance of Company Common Stock (and
    the related Company Rights) upon the exercise of Company Options
    or Company Warrants outstanding as of the date hereof in
    accordance with their terms as of the date hereof (or, if a
    Triggering Event (as defined in the Company Rights Agreement) by
    a party other than Parent or Merger Sub shall occur, the Company
    Rights), (B)&nbsp;amend, waive or modify any terms of any
    Company Options or Company Warrants, including, without
    limitation, by directly or indirectly increasing or reducing the
    exercise price of or the number of shares of Company Common
    Stock subject to any Company Option or Company Warrant
    (<I>provided, however</I>, that, solely with respect to this
    Section&nbsp;5.1.2(B), Parent&#146;s prior written consent shall
    not be unreasonably withheld) or (C), sell, pledge, dispose of,
    transfer, lease, license, guarantee or encumber, or authorize
    the sale, pledge, disposition, transfer, lease, license,
    guarantee or encumbrance of, any material property or assets
    (including Intellectual Property) of the Company or any Company
    Subsidiary, except pursuant to the Loan Agreement, existing
    contracts or commitments or the sale or purchase of goods in the
    ordinary course of business consistent with past practice, or
    enter into any commitment or transaction outside the ordinary
    course of business consistent with past practice other than
    transactions between a wholly-owned Company Subsidiary and the
    Company or another wholly-owned Company Subsidiary;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.1.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;declare,
    set aside, make or pay any dividend or other distribution
    (whether payable in cash, stock, property or a combination
    thereof) with respect to any of its capital stock (other than
    dividends paid by a wholly-owned Company Subsidiary to the
    Company or to any other wholly-owned Company Subsidiary) or
    enter into any agreement with respect to the voting of its
    capital stock; <I>provided, however</I>, that the Company shall
    be permitted to pay dividends on the Series&nbsp;D Preferred
    Stock in accordance with the requirements of Section&nbsp;2 of
    the certificate of designations relating to the Series&nbsp;D
    Preferred Stock; <I>and provided further</I>, that any such
    dividends paid on the Series&nbsp;D-1 Preferred Stock shall be
    paid in shares of Company Common Stock to the fullest extent
    possible;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.1.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;reclassify,
    combine, split, subdivide or redeem, purchase or otherwise
    acquire, directly or indirectly, any of its capital stock, other
    Equity Interests or other securities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.1.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)&nbsp;acquire
    (including, without limitation, by merger, consolidation, or
    acquisition of stock or assets) any interest in any person or
    any division thereof or any assets, other than acquisitions of
    assets in the ordinary course of business consistent with past
    practice and any other acquisitions for consideration that do
    not exceed $100,000 in the aggregate for the Company and the
    Company Subsidiaries taken as a whole, (B)&nbsp;incur any
    indebtedness for borrowed money or issue any debt securities
    (other than pursuant to the Loan Agreement) or assume, guarantee
    or endorse, or otherwise as an accommodation become responsible
    for, the obligations of any person (other than a wholly-owned
    Company Subsidiary) for borrowed money, except for indebtedness
    for borrowed money incurred in the ordinary course of business
    or other indebtedness for borrowed money with a maturity of not
    more than one year in a principal amount not, in the aggregate,
    in excess of $100,000 for the Company and the Company
    Subsidiaries taken as a whole, (C)&nbsp;(i) terminate, cancel or
    request any material change in, or agree to any material change
    in, any Company Material Contract other than in the ordinary
    course of business consistent with past practice,
    (ii)&nbsp;enter into any Company Material Contract or
    (iii)&nbsp;grant any product warranty for a period longer than
    one year from the date of purchase to any customer of the
    Company, (D)&nbsp;make or authorize any capital expenditure,
    other than capital expenditures that are not, in the aggregate,
    in excess of $100,000 for the Company and the Company
    Subsidiaries taken as a whole or (E)&nbsp;enter into or amend
    any contract, agreement, commitment or arrangement that, if
    fully performed, would not be permitted under this
    Section&nbsp;5.1.5;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-33
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.1.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except
    as may be required by contractual commitments or corporate
    policies with respect to severance or termination pay in
    existence on the date of this Agreement as disclosed in
    Section&nbsp;3.11.2 of the Company Disclosure Schedule:
    (A)&nbsp;increase the compensation or benefits payable or to
    become payable to its directors, officers or employees (except
    for increases in accordance with past practices in salaries or
    wages of employees of the Company or any Company Subsidiary
    which are not across-the-board increases); (B)&nbsp;grant any
    rights to severance or termination pay to, or enter into any
    employment or severance agreement with, any director, officer or
    other employee of the Company or any Company Subsidiary, or
    establish, adopt, enter into or amend any collective bargaining,
    bonus, profit sharing, thrift, compensation, stock option,
    restricted stock, pension, retirement, deferred compensation,
    employment, termination, severance or other plan, agreement,
    trust, fund, policy or arrangement for the benefit of any
    director, officer or employee, except to the extent required by
    applicable Law or the terms of a collective bargaining agreement
    in existence on the date of this Agreement; or (C)&nbsp;take any
    affirmative action to amend or waive any performance or vesting
    criteria or accelerate vesting, exercisability or funding under
    any Company Benefit Plan.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.1.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)&nbsp;pre-pay
    any long-term debt, except in the ordinary course of business in
    an amount not to exceed $25,000 in the aggregate for the Company
    and the Company Subsidiaries taken as a whole, or pay, discharge
    or satisfy any claims, liabilities or obligations (absolute,
    accrued, contingent or otherwise), except in the ordinary course
    of business consistent with past practice and in accordance with
    their terms and except as contemplated by the Loan Agreement,
    (B)&nbsp;accelerate or delay collection of notes or accounts
    receivable in advance of or beyond their regular due dates or
    the dates when the same would have been collected in the
    ordinary course of business consistent with past practice,
    (C)&nbsp;delay or accelerate payment of any account payable in
    advance of its due date or the date such liability would have
    been paid in the ordinary course of business consistent with
    past practice or (D)&nbsp;vary the Company&#146;s inventory
    practices in any material respect from the Company&#146;s past
    practices;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.1.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;make
    any change in accounting policies or procedures, other than in
    the ordinary course of business consistent with past practice or
    except as required by GAAP or by a Governmental Entity;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.1.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;waive,
    release, assign, settle or compromise any material claims, or
    any material litigation or arbitration, except as expressly
    contemplated by Section&nbsp;5.17;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.1.10&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;make
    any material tax election or settle or compromise any material
    liability for Taxes;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.1.11&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;take,
    or agree to take, any action that would prevent the Merger from
    qualifying as a reorganization within the meaning of
    Section&nbsp;368(a) of the Code;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.1.12&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;amend
    or modify, or propose to amend or modify, or otherwise take any
    action under, the Company Rights Agreement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.1.13&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;modify,
    amend or terminate, or waive, release or assign any material
    rights or claims with respect to any confidentiality or
    standstill agreement to which the Company is a party;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.1.14&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;write
    up, write down or write off the book value of any assets,
    individually or in the aggregate, for the Company and the
    Company Subsidiaries taken as a whole, in excess of $200,000,
    except for depreciation and amortization in accordance with GAAP
    consistently applied;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.1.15&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;take
    any action to exempt or make not subject to (A)&nbsp;the
    provisions of Section&nbsp;203 of the DGCL, (B)&nbsp;any other
    state takeover law or state law that purports to limit or
    restrict business combinations or the ability to acquire or vote
    shares or (C)&nbsp;the Company Rights Agreement, any person or
    entity (other than Parent, Merger Sub or any Parent Subsidiary)
    or any action taken thereby, which person, entity or action
    would have otherwise been subject to the restrictive provisions
    thereof and not exempt therefrom;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-34
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.1.16&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;take
    any action that is intended or would reasonably be expected to
    result in any of the conditions to the Merger set forth in
    Article 6 not being satisfied; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.1.17&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;authorize
    or enter into any agreement or otherwise make any commitment to
    do any of the foregoing.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;5.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Conduct
of Business by Parent Pending the Closing.</I> Except as set
forth in Section&nbsp;5.2 of the Parent Disclosure Schedule or
as specifically permitted by any other provision of this
Agreement, Parent shall not (unless required by applicable Law
or any stock exchange regulations applicable to Parent), and
shall not permit any Parent Subsidiary to, between the date of
this Agreement and the Effective Time, directly or indirectly,
do, or agree to do, any of the following, without the prior
written consent of the Company:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.2.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;amend
    or otherwise change its certificate of incorporation or by-laws
    or equivalent organizational documents;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.2.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;declare,
    set aside, make or pay any dividend or other distribution
    (whether payable in cash, stock, property or a combination
    thereof) with respect to any of its capital stock (other than
    dividends paid by a wholly-owned Parent Subsidiary to Parent or
    to any other wholly-owned Parent Subsidiary) or enter into any
    agreement with respect to the voting of its capital stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.2.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;make
    any change in accounting policies or procedures, other than in
    the ordinary course of business consistent with past practice or
    except as required by GAAP or by a Governmental Entity;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.2.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;waive,
    release, assign, settle or compromise any material claims, or
    any material litigation or arbitration, except as expressly
    contemplated by Section&nbsp;5.17;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.2.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;take,
    or agree to take, any action that would prevent the Merger from
    qualifying as a reorganization within the meaning of
    Section&nbsp;368(a) of the Code;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.2.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;take
    any action that is intended or would reasonably be expected to
    result in any of the conditions to the Merger set forth in
    Article 6 not being satisfied; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.2.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;authorize
    or enter into any agreement or otherwise make any commitment to
    do any of the foregoing.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;5.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cooperation.</I>
The Company and Parent shall coordinate and cooperate in
connection with (A)&nbsp;the preparation of the Registration
Statement, the Proxy Statement and any Other Filings,
(B)&nbsp;determining whether any action by or in respect of, or
filing with, any Governmental Entity is required, or any
actions, consents, approvals or waivers are required to be
obtained from parties to any Company Material Contracts, in
connection with the consummation of the Merger, and
(C)&nbsp;seeking any such actions, consents, approvals or
waivers or making any such filings, furnishing information
required in connection therewith or with the Registration
Statement, the Proxy Statement or any Other Filings and timely
seeking to obtain any such actions, consents, approvals or
waivers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;5.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Registration
Statement; Proxy Statement.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.4.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
    promptly as practicable after the execution of this Agreement,
    Parent and the Company shall prepare and the Company shall file
    with the SEC a joint proxy statement relating to the meeting of
    the Company&#146;s stockholders to be held in connection with
    the Merger and the meeting of Parent&#146;s stockholders to be
    held in connection with the issuance of shares of Parent Common
    Stock contemplated hereby (together with any amendments thereof
    or supplements thereto, the &#147;Proxy Statement&#148;) and
    Parent shall prepare and file with the SEC a registration
    statement on Form&nbsp;S-4 (together with all amendments
    thereto, the &#147;Registration Statement&#148;) in which the
    Proxy Statement shall be included as a prospectus, in connection
    with the registration under the Securities Act of the shares of
    Parent Common Stock to be issued to the stockholders of the
    Company pursuant to the Merger. Each of Parent and the Company
    shall prepare and file with the SEC any Other Filings as and
    when required or requested by the SEC. Each of Parent and the
    Company will use all
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-35
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">reasonable efforts to respond to any comments
    made by the SEC with respect to the Proxy Statement and any
    Other Filings, and to cause the Registration Statement to become
    effective as promptly as practicable. Prior to the effective
    date of the Registration Statement, Parent shall take all or any
    action required under any applicable federal or state securities
    laws in connection with the issuance of shares of Parent Common
    Stock in the Merger. Each of Parent and the Company shall
    furnish all information concerning it and the holders of its
    capital stock as the other may reasonably request in connection
    with such actions and the preparation of the Registration
    Statement, the Proxy Statement and any Other Filings. As
    promptly as practicable after the Registration Statement shall
    have become effective, each of the Company and Parent shall mail
    the Proxy Statement to its stockholders. The Proxy Statement
    shall (subject to the last sentence of Section&nbsp;5.7.3
    hereof) include (i)&nbsp;the recommendation of the Company Board
    that adoption of the Agreement by the Company&#146;s
    stockholders is advisable and that the Company Board has
    determined that the Merger is fair and in the best interests of
    the Company&#146;s stockholders and (ii)&nbsp;the recommendation
    of the Parent Board in favor of the issuance of shares of Parent
    Common Stock contemplated hereby.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">Subject to the last sentence of
    Section&nbsp;5.7.3 hereof, no amendment or supplement (other
    than pursuant to Rule&nbsp;425 of the Securities Act with
    respect to releases made in compliance with Section&nbsp;5.10 of
    this Agreement) to the Proxy Statement, the Registration
    Statement or any Other Filings will be made by Parent or the
    Company without the approval of the other party (which approval
    shall not be unreasonably withheld or delayed). Parent and the
    Company each will advise the other, promptly after it receives
    notice thereof, of the time when the Registration Statement has
    become effective or any supplement or amendment has been filed,
    of the issuance of any stop order, the suspension of the
    qualification of the Parent Common Stock issuable in connection
    with the Merger for offering or sale in any jurisdiction, or any
    request by the SEC for amendment of the Proxy Statement, the
    Registration Statement or any Other Filings or comments thereon
    and responses thereto or requests by the SEC for additional
    information.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">If at any time prior to the Effective Time, any
    event or circumstance relating to Parent or any Parent
    Subsidiary, or their respective officers or directors, should be
    discovered by Parent which should be set forth in an amendment
    or a supplement to the Registration Statement, the Proxy
    Statement or any Other Filing, Parent shall promptly inform the
    Company. All documents that Parent is responsible for filing
    with the SEC in connection with the transactions contemplated
    herein will comply as to form and substance in all material
    respects with the applicable requirements of the Securities Act
    and the rules and regulations thereunder, the Exchange Act and
    the rules and regulations thereunder, and other applicable Law.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">If at any time prior to the Effective Time, any
    event or circumstance relating to the Company or any Company
    Subsidiary, or their respective officers or directors, should be
    discovered by the Company which should be set forth in an
    amendment or a supplement to the Registration Statement, the
    Proxy Statement or any Other Filing, the Company shall promptly
    inform Parent. All documents that the Company is responsible for
    filing with the SEC in connection with the transactions
    contemplated herein will comply as to form and substance in all
    material respects with the applicable requirements of the
    Securities Act and the rules and regulations thereunder, the
    Exchange Act and the rules and regulations thereunder and other
    applicable Law.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;5.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stockholders&#146;
Meetings.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.5.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
    Company shall call and hold a meeting of its stockholders (the
    &#147;Company Stockholders&#146; Meeting&#148;) as promptly as
    practicable for the purpose of voting upon the approval of the
    Merger, and the Company shall use its best efforts to hold the
    Company Stockholders&#146; Meeting as soon as practicable after
    the date on which the Registration Statement becomes effective.
    The Company&#146;s obligation under this Section&nbsp;5.5.1
    shall not be affected in any way as a result of any change in
    the Company Recommendation permitted by Section&nbsp;5.7.3.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.5.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Parent
    shall call and hold a meeting of its stockholders (the
    &#147;Parent Stockholders&#146; Meeting&#148;) as promptly as
    practicable for the purpose of voting upon the approval of the
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-36
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Share Issuance, and Parent shall use its best
    efforts to hold the Parent Stockholders&#146; Meeting as soon as
    practicable after the date on which the Registration Statement
    becomes effective.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;5.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Access
to Information; Confidentiality.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.6.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except
    as required pursuant to any confidentiality agreement or similar
    agreement or arrangement to which the Company or any Company
    Subsidiary is a party (which such person shall use its
    reasonable best efforts to cause the counterparty to waive),
    from the date of this Agreement to the Effective Time, the
    Company shall, and shall cause each Company Subsidiary and each
    of their respective directors, officers, employees, accountants,
    consultants, legal counsel, advisors, and agents and other
    representatives (collectively, the &#147;Company
    Representatives&#148;) to (A)&nbsp;provide to Parent and Merger
    Sub and their respective officers, directors, employees,
    accountants, consultants, legal counsel, advisors, agents and
    other representatives (collectively, the &#147;Parent
    Representatives&#148;) access at reasonable times upon prior
    notice to the officers, employees, agents, properties, offices
    and other facilities of such party and its subsidiaries and to
    the books and records thereof and (B)&nbsp;furnish promptly such
    information concerning the business, properties, contracts,
    assets, liabilities, personnel and other aspects of such party
    and its subsidiaries as the other party or its Representatives
    may reasonably request, except in each case for information
    relating to the Company&#146;s pending patent applications and
    trade secrets.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">Except as required pursuant to any
    confidentiality agreement or similar agreement or arrangement to
    which Parent or any Parent Subsidiary is a party (which such
    person shall use its reasonable best efforts to cause the
    counterparty to waive), from the date of this Agreement to the
    Effective Time, Parent shall, and shall cause each Parent
    Subsidiary and each Parent Representative to (A)&nbsp;provide to
    the Company and the Company Representatives access at reasonable
    times upon prior notice to the officers, employees, agents,
    properties, offices and other facilities of such party and its
    subsidiaries and to the books and records thereof and
    (B)&nbsp;furnish promptly such information concerning the
    business, properties, contracts, assets, liabilities, personnel
    and other aspects of such party and its subsidiaries as the
    other party or its Representatives may reasonably request,
    except in each case for information relating to Parent&#146;s
    pending patent applications and trade secrets.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">No investigation conducted pursuant to this
    Section&nbsp;5.6.1 shall affect or be deemed to modify or limit
    any representation or warranty made in this Agreement.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.6.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With
    respect to the information disclosed pursuant to
    Section&nbsp;5.6.1, the parties shall comply with, and shall
    cause their respective Representatives to comply with, all of
    their respective obligations under the Confidentiality Agreement
    previously executed by the Company and Parent (the
    &#147;Confidentiality Agreement&#148;).
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;5.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No
Solicitation of Transactions.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.7.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None
    of the Company or any Company Subsidiary shall, directly or
    indirectly, take (and the Company shall not authorize or permit
    the Company Representatives or, to the extent within the
    Company&#146;s control, other affiliates to take) any action to
    (A)&nbsp;encourage (including by way of furnishing non-public
    information), solicit, initiate or facilitate any Acquisition
    Proposal, (B)&nbsp;enter into any agreement with respect to any
    Acquisition Proposal or enter into any agreement, arrangement or
    understanding requiring it to abandon, terminate or fail to
    consummate the Merger or any other transaction contemplated by
    this Agreement or (C)&nbsp;participate in any way in discussions
    or negotiations with, or furnish any information to, any person
    in connection with, or take any other action to facilitate any
    inquiries or the making of any proposal that constitutes, or
    could reasonably be expected to lead to, any Acquisition
    Proposal; <I>provided, however</I>, that if, at any time prior
    to the obtaining of the Company&#146;s stockholders&#146;
    approval of the Merger, the Company Board determines in good
    faith, after consultation with outside counsel, that it would
    otherwise constitute a breach of the directors&#146; fiduciary
    duties to stockholders, the Company may, in response to a
    Superior Proposal and subject to the Company&#146;s compliance
    with Section&nbsp;5.5.1 and Section&nbsp;5.7.2, (x)&nbsp;furnish
    information with respect to the Company and the Company
    Subsidiaries to the person making such Superior
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-37
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Proposal pursuant to a customary confidentiality
    agreement the benefits of the terms of which are no more
    favorable to the other party to such confidentiality agreement
    than those in place with Parent and (y) participate in
    discussions with respect to such Superior Proposal. Upon
    execution of this Agreement, the Company shall cease immediately
    and cause to be terminated any and all existing discussions or
    negotiations with any parties conducted heretofore with respect
    to an Acquisition Proposal and promptly request that all
    confidential information with respect thereto furnished on
    behalf of the Company be returned.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.7.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
    Company shall, as promptly as practicable (and in no event later
    than 24 hours after receipt thereof), advise Parent of any
    inquiry received by it relating to any potential Acquisition
    Proposal and of the material terms of any proposal or inquiry,
    including the identity of the person and its affiliates making
    the same, that it may receive in respect of any such potential
    Acquisition Proposal, or of any information requested from it or
    of any negotiations or discussions being sought to be initiated
    with it, shall furnish to Merger Sub a copy of any such proposal
    or inquiry, if it is in writing, or a written summary of any
    such proposal or inquiry, if it is not in writing and shall keep
    Parent fully informed on a prompt basis with respect to any
    developments with respect to the foregoing.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.7.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Neither
    the Company Board nor any committee thereof shall
    (A)&nbsp;withdraw or modify, or propose publicly to withdraw or
    modify, in a manner adverse to Parent, the approval or
    recommendation by the Company Board or such committee of the
    adoption and approval of the Merger (the &#147;Company
    Recommendation&#148;) and the matters to be considered at the
    Company Stockholders&#146; Meeting, (B)&nbsp;other than the
    Merger, approve or recommend, or propose publicly to approve or
    recommend, any Acquisition Proposal or (C)&nbsp;other than the
    Merger, cause the Company to enter into any letter of intent,
    agreement in principle, acquisition agreement or other similar
    agreement related to any Acquisition Proposal. Nothing contained
    in this Section&nbsp;5.7 shall prohibit the Company
    (x)&nbsp;from taking and disclosing to its stockholders a
    position contemplated by Rule&nbsp;14d-9 or Rule&nbsp;14e-2(a)
    promulgated under the Exchange Act or (y)&nbsp;in the event that
    a Superior Proposal is made and the Company Board determines in
    good faith, after consultation with outside counsel, that it
    would otherwise constitute a breach of its fiduciary duty to
    stockholders, from withdrawing or modifying its recommendation
    of the Merger no earlier than five business days following the
    day of delivery of written notice to Parent of its intention to
    do so, so long as the Company continues to comply with all other
    provisions of this Agreement including, without limitation,
    Section&nbsp;5.5.1 hereof.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;5.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Appropriate
Action; Consents; Filings.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.8.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
    Company and Parent shall use their reasonable best efforts to
    (A)&nbsp;take, or cause to be taken, all appropriate action, and
    do, or cause to be done, all things necessary, proper or
    advisable under applicable Law or otherwise to consummate and
    make effective the transactions contemplated by this Agreement
    and each Ancillary Agreement as promptly as practicable, (B)
    obtain from any Governmental Entity any consents, licenses,
    permits, waivers, approvals, authorizations or orders required
    to be obtained or made by Parent or the Company or any of their
    respective Subsidiaries, or to avoid any action or proceeding by
    any Governmental Entity, in connection with the authorization,
    execution and delivery of this Agreement and each Ancillary
    Agreement and the consummation of the transactions contemplated
    herein and therein, including, without limitation, the Merger,
    and (C)&nbsp;make all necessary filings, and thereafter make any
    other required submissions, with respect to this Agreement and
    each Ancillary Agreement and the Merger required under
    (x)&nbsp;the Securities Act and the Exchange Act, and any other
    applicable federal or state securities Laws and (y)&nbsp;any
    other applicable Law; <I>provided</I>, that Parent and the
    Company shall cooperate with each other in connection with the
    making of all such filings, including providing copies of all
    such documents to the non-filing party and its advisors prior to
    filing and, if requested, to accept all reasonable additions,
    deletions or changes suggested in connection therewith and,
    <I>provided, however</I>, that nothing in this
    Section&nbsp;5.8.1 shall require Parent to agree to
    (AA)&nbsp;the imposition of conditions, (BB)&nbsp;the
    requirement of divestiture of assets or property or
    (CC)&nbsp;the requirement of expenditure of money by
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-38
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Parent or the Company to a third party in
    exchange for any such consent. The Company and Parent shall
    furnish to each other all information required for any
    application or other filing under the rules and regulations of
    any applicable Law (including all information required to be
    included in the Proxy Statement and the Registration Statement)
    in connection with the transactions contemplated by this
    Agreement and each Ancillary Agreement. Nothing contained in
    this Agreement shall give Parent or Merger Sub, directly or
    indirectly, the right to control or direct the operations of the
    Company prior to the consummation of the Merger. Prior to the
    consummation of the Merger, the Company shall exercise,
    consistent with the terms and conditions of this Agreement,
    complete control and supervision over its operations.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.8.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
    Company and Parent shall give (or shall cause their respective
    Subsidiaries to give) any notices to third parties, and use, and
    cause their respective Subsidiaries to use, all reasonable
    efforts to obtain any third party consents, (A)&nbsp;necessary,
    proper or advisable to consummate the transactions contemplated
    in this Agreement and each Ancillary Agreement, (B) required to
    be disclosed in the Company Disclosure Schedule or the Parent
    Disclosure Schedule, as applicable, (C)&nbsp;required to prevent
    a Company Material Adverse Effect from occurring prior to or
    after the Effective Time or a Parent Material Adverse Effect
    from occurring after the Effective Time or (D) otherwise
    referenced in Section&nbsp;6.1.4 or Section&nbsp;6.2.3. In the
    event that either party shall fail to obtain any third party
    consent described in the first sentence of this
    Section&nbsp;5.8.2, such party shall use all reasonable efforts,
    and shall take any such actions reasonably requested by the
    other party hereto, to minimize any adverse effect upon the
    Company and Parent, their respective Subsidiaries, and their
    respective businesses resulting, or which could reasonably be
    expected to result after the Effective Time, from the failure to
    obtain such consent.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.8.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From
    the date of this Agreement until the Effective Time, the Company
    shall promptly notify Parent in writing of any pending or, to
    the knowledge of the Company, threatened action, suit,
    arbitration or other proceeding or investigation by any
    Governmental Entity or any other person (A) challenging or
    seeking material damages in connection with the Merger or the
    conversion of Company Stock into Parent Common Stock pursuant to
    the Merger or (B)&nbsp;seeking to restrain or prohibit the
    consummation of the Merger or otherwise limit the right of
    Parent or any Parent Subsidiary to own or operate all or any
    portion of the businesses or assets of the Company or any
    Company Subsidiary, which in either case would reasonably be
    expected to have a Company Material Adverse Effect prior to or
    after the Effective Time or a Parent Material Adverse Effect
    after the Effective Time.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;5.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain
Notices. From and after the date of this Agreement until the
Effective Time, each party hereto shall promptly notify the
other party hereto of (A)&nbsp;the occurrence, or
non-occurrence, of any event that would be likely to cause any
condition to the obligations of any party to effect the Merger
and the other transactions contemplated by this Agreement or any
Ancillary Agreement not to be satisfied or (B)&nbsp;the failure
of the Company or Parent, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with
or satisfied by it pursuant to this Agreement or any Ancillary
Agreement which would reasonably be expected to result in any
condition to the obligations of any party to effect the Merger
and the other transactions contemplated by this Agreement or any
Ancillary Agreement not to be satisfied; <I>provided,
however</I>, that the delivery of any notice pursuant to this
Section&nbsp;5.9 shall not cure any breach of any representation
or warranty requiring disclosure of such matter prior to the
date of this Agreement or otherwise limit or affect the remedies
available hereunder to the party receiving such notice.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;5.10&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Public
Announcements. Parent and the Company shall consult with each
other before issuing any press release or otherwise making any
public statements with respect to the Merger and shall not issue
any such press release or make any such public statement prior
to such consultation, except as may be required by applicable
Law or any listing agreement with Nasdaq.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;5.11&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stock
Exchange Listing.</I> Parent shall promptly prepare and submit
to Nasdaq and any other applicable exchange a listing
application covering the shares of Parent Common Stock to be
</FONT>

<P align="center"><FONT size="2">A-39
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">issued in the Merger and shall use its reasonable
best efforts to cause such shares to be approved for listing on
Nasdaq, subject to official notice of issuance, prior to the
Effective Time.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;5.12&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Employee
Benefit Matters.</I> With respect to any Parent Benefit Plan in
which any director, officer or employee of the Company or any
Company Subsidiary (the &#147;Company Employees&#148;) will
participate effective as of the Effective Time, Parent shall, or
shall cause the Surviving Corporation to, recognize all service
of the Company Employees with the Company or a Company
Subsidiary, as the case may be, for purposes of eligibility for
participation in, but not for purposes of benefit accrual, in
any such Parent Benefit Plan; provided, however , that with
regard to vacation, on and after the Effective Time, Parent
shall provide, or shall cause to be provided, each Company
Employee with credit for service under the Parent vacation
policy pursuant to the terms of such policy as may be amended
from time to time. Prior to the Effective Time, the Company
Board, or an appropriate committee of non-employee directors
thereof, shall adopt a resolution consistent with the
interpretive guidance of the SEC so that the acquisition by any
officer or director of the Company who may become a covered
person of Parent for purposes of Section&nbsp;16 of the Exchange
Act and the rules and regulations thereunder
(&#147;Section&nbsp;16&#148;) of shares of Parent Common Stock
or options to acquire Parent Common Stock pursuant to this
Agreement and the Merger shall be an exempt transaction for
purposes of Section&nbsp;16.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;5.13&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Indemnification
of Directors and Officers.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.13.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Parent
    and the Surviving Corporation agree that the indemnification
    obligations set forth in the Company Certificate and Company
    By-laws shall survive the Merger (and, prior to the Effective
    Time, Parent shall cause the Certificate of Incorporation and
    By-laws of Merger Sub to reflect such provisions) and shall not
    be amended, repealed or otherwise modified for a period of six
    years after the Effective Time in any manner that would
    adversely affect the rights thereunder of any individual who on
    or prior to the Effective Time was a director, officer, trustee,
    fiduciary, employee or agent of the Company or any Company
    Subsidiary or who served at the request of the Company or any
    Company Subsidiary as a director, officer, trustee, partner,
    fiduciary, employee or agent of another corporation,
    partnership, joint venture, trust, pension or other employee
    benefit plan or enterprise, unless such amendment or
    modification is required by Law.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.13.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
    six years from the Effective Time, the Surviving Corporation
    shall provide to the Company&#146;s current directors and
    officers an insurance and indemnification policy that provides
    coverage for events occurring prior to the Effective Time (the
    &#147;D&#38;O Insurance&#148;) that is no less favorable than
    the Company&#146;s existing policy (true and complete copies
    which have been previously provided to Parent) or, if
    substantially equivalent insurance coverage is unavailable, the
    best available coverage; <I>provided, however</I>, that the
    Surviving Corporation shall not be required to pay an annual
    premium for the D&#38;O Insurance in excess of 150% of the last
    annual premium paid prior to the date of this Agreement, which
    premium the Company represents and warrants to be approximately
    $315,000. The provisions of the immediately preceding sentence
    shall be deemed to have been satisfied if prepaid policies have
    been obtained prior to the Effective Time for purposes of this
    Section 5.13, which policies provide such directors and officers
    with coverage for an aggregate period of six years with respect
    to claims arising from facts or events that occurred on or
    before the Effective Time, including, without limitation, in
    respect of the transactions contemplated by this Agreement. If
    such prepaid policies have been obtained prior to the Effective
    Time, Parent shall, and shall cause the Surviving Corporation
    to, maintain such policies in full force and effect, and
    continue to honor the obligations thereunder. The obligations
    under this Section&nbsp;5.13 shall not be terminated or modified
    in such a manner as to adversely affect any indemnitee to whom
    this Section&nbsp;5.13 applies without the consent of such
    affected indemnitee (it being expressly agreed that the
    indemnitees to whom this Section&nbsp;5.13 applies shall be
    third party beneficiaries of this Section 5.13).
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.13.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
    the event Parent or the Surviving Corporation (A) consolidates
    with or merges into any other person and shall not be the
    continuing or surviving corporation or entity of such
    consolidation or merger or (B)&nbsp;transfers all or
    substantially all of its properties and assets to any person,
    then, and in each such case, proper provisions shall be made so
    that such continuing or
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-40
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">surviving corporation or entity or transferee of
    such assets, as the case may be, shall assume the obligations
    set forth in this Section&nbsp;5.13.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;5.14&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Plan
of Reorganization.</I> This Agreement is intended to constitute
a &#147;plan of reorganization&#148; within the meaning of
Treasury Regulation Section&nbsp;1.368-2(g). Each party hereto
shall use its reasonable best efforts to cause the Merger to
qualify, and will not knowingly take any actions or cause any
actions to be taken which could reasonably be expected to
prevent the Merger from qualifying, as a reorganization within
the meaning of Section 368(a) of the Code.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;5.15&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Affiliate
Agreements.</I> The Company shall, within five business days of
the date hereof, deliver to Parent a list (reasonably
satisfactory to counsel for Parent) setting forth the names of
all persons who are expected to be, at the time of the Company
Stockholders&#146; Meeting, &#147;affiliates&#148; of the
Company for purposes of Rule&nbsp;145 under the Securities Act.
The Company shall furnish such information and documents as
Parent may reasonably request for the purpose of reviewing the
list. The Company shall use its reasonable best efforts to cause
each person who is identified as an affiliate in the list
furnished or supplemented pursuant to this Section&nbsp;5.15 to
execute a written agreement, as soon as practicable after the
date hereof, as to such person&#146;s prospective compliance
with the restrictions imposed by Rule&nbsp;145 under the
Securities Act on transfer of the shares of Parent Common Stock
received by such person in the Merger.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;5.16&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Company
Rights Agreement.</I> The Company covenants and agrees that it
will not (i)&nbsp;redeem the Company Rights, (ii)&nbsp;amend the
Company Rights Agreement or (iii)&nbsp;take any action which
would allow any person (as defined in the Company Rights
Agreement) other than Parent, Merger Sub or any Parent
Subsidiary to acquire beneficial ownership (for purposes of this
Section&nbsp;5.16, as defined in the Company Rights Agreement)
of 20% or more of the outstanding shares of Company Common Stock
without causing a Distribution Date or a Triggering Event (as
each such term is defined in the Company Rights Agreement) to
occur.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;5.17&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Patent
Litigation and Administrative Proceedings.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.17.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Patent
    litigation counsel for both parties shall, within one day of
    execution of this Agreement or as soon thereafter as possible,
    cooperate in good faith to jointly file papers in the U.S.
    District Courts for the Central District of California and the
    District of Delaware, requesting that an immediate stay of all
    proceedings be entered in the following civil actions: C.D. Cal.
    Case Nos. CV 00-4988-CBM and CV 02-5888-CBM, and D. Del. Case
    No.&nbsp;01-203-SLR. The duration of each requested stay shall
    be through and including August&nbsp;31, 2003. Before seeking
    the stay in Delaware, counsel for Parent shall exercise all
    reasonable efforts to acquire IBM Corporation&#146;s consent to
    stay all further proceedings in Delaware. As part of the
    requested stays, the parties shall request that the courts cease
    all further activity in the cases during the period of stay,
    including refraining from issuing any further opinions or orders
    on issues already previously submitted for decision. In the
    event that the Merger is not consummated within the duration of
    the first stay to be obtained, and if both parties believe that
    an extension of the stays would be justified or desirable, then
    patent litigation counsel shall cooperate to request appropriate
    extensions of the stays in each forum.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.17.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon
    execution of this Agreement, patent prosecution counsel for both
    parties shall immediately confer in good faith for the purpose
    of seeking to stay opposition proceedings in the European Patent
    Office, and will file papers as soon as practicable jointly
    requesting either that the opposition proceeding No.&nbsp;IK/
    I-12053, be stayed through and including August 31, 2003 or
    until further notice (if possible) or that any impending filing
    deadlines be extended by at least six months.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.17.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Within
    three days after consummation of the Merger, (i) patent
    litigation counsel for both parties shall cooperate in good
    faith to jointly file papers in all of the stayed litigations
    requesting dismissal with prejudice of all claims, counterclaims
    and cross-claims (if any), and before seeking such dismissal in
    Delaware, counsel for Parent shall exercise all reasonable
    efforts to acquire IBM Corporation&#146;s consent to such
    dismissal; (ii) patent prosecution counsel for both parties
    shall seek dismissal with prejudice (or similar terminating
    relief) of all opposition proceedings;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-41
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">and (iii)&nbsp;in accordance with 35 U.S.C.
    &#167; 135(c) and 37 C.F.R. &#167;&#167; 1.661 and 1.666, the
    parties shall promptly jointly submit a copy of this Agreement
    to the United States Patent Office in Interference Nos. 104,643,
    104,644, and 104,645.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.17.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject
    to Section&nbsp;5.17.5, if for any reason this Agreement is
    terminated by either party prior to consummation of the Merger,
    then, upon five days&#146; written notice by the party seeking
    to lift the stays, that party may unilaterally request that the
    stays in each of the litigations be immediately lifted and may
    also immediately request a status conference.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.17.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
    part of the stay requested in C.D. Cal. Case Nos. CV 00-4988-CBM
    pursuant to Section&nbsp;5.17.1, the parties shall jointly
    request that the court reserve the earliest available trial date
    no earlier than November 30, 2003; <I>provided, however</I>,
    that if this Agreement is terminated pursuant to
    Section&nbsp;7.1.4, 7.1.5, 7.1.6 or 7.1.7, the Company agrees
    and hereby stipulates that it will not thereafter request,
    suggest or justify a trial date any earlier than
    February&nbsp;29, 2004, and hereby agrees to take all necessary
    and reasonable steps to seek from the court an additional
    three-month extension of the trial date under these
    circumstances.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;5.17.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Within
    one day of the execution of this Agreement or as soon thereafter
    as practicable, patent litigation counsel for both parties shall
    jointly stipulate and request that the Company be immediately
    relieved from the Delaware court&#146;s requirement that it post
    a bond as security for the damage award due Parent, without
    prejudice to possible future reinstatement; <I>provided,
    however</I>, that as part of that stipulation, the Company shall
    also stipulate to an immediate reimposition of the previous bond
    requirement should the stay in Delaware be lifted prior to
    consummation of the Merger upon termination of this Agreement
    for any reason, without any further obligation or requirement of
    Parent to act. Parent&#146;s counsel shall promptly exercise all
    reasonable efforts to acquire IBM Corporation&#146;s consent to
    effectuate this relief, if such consent is deemed necessary or
    desirable to do so.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;5.18&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Board
of Directors.</I> Parent agrees to increase the size of the
Parent Board and shall have validly elected directors such that
immediately following the Effective Time, the Parent Board shall
consist of nine directors, including Robert Duggan and one other
individual to be proposed by the Company as soon as practicable
after the date of this Agreement and satisfactory to Parent.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;5.19&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Termination
of 401(k) Plan.</I> At the request of Parent, the Company shall,
effective not later than the day immediately prior to the day on
which the Effective Time occurs, terminate the Company&#146;s
401(k) Plan (the &#147;401(k) Plan&#148;) and no further
contributions shall be made to the 401(k) Plan. The Company
shall provide to Parent and Merger Sub (i)&nbsp;executed
resolutions by the Company Board authorizing the termination and
(ii)&nbsp;an executed amendment to the 401(k) Plan sufficient to
assure compliance with all applicable requirements of the
Internal Revenue Code and regulations thereunder so that the
tax-qualified status of the 401(k) Plan will be maintained at
the time of termination.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;5.20&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Employee
Stock Purchase Plan.</I> Effective as of the date hereof, the
Company Board, or, if appropriate, any committee of the Company
Board administering the Company&#146;s Employee Stock Purchase
Plan (the &#147;ESPP&#148;)), shall adopt such resolutions or
take such other actions as may be required to provide that
(i)&nbsp;participants may not increase their payroll deductions
or purchase elections from those in effect on the date of this
Agreement, (ii)&nbsp;no offering period shall be commenced after
the date of this Agreement, (iii)&nbsp;each participant&#146;s
outstanding right to purchase shares of Company Common Stock
under the ESPP shall terminate on the day immediately prior to
the day on which the Effective Time occurs, provided that all
amounts allocated to each participant&#146;s account under the
ESPP as of such date shall thereupon be used to purchase from
the Company whole shares of Company Common Stock at the
applicable price determined under the terms of the ESPP for
then-outstanding offering periods using such date as the final
purchase date for each such offering period, and (iv)&nbsp;the
ESPP shall terminate immediately following the purchases of
Company Common Stock on the day prior to the day on which the
Effective Time occurs.
</FONT>

<P align="center"><FONT size="2">A-42
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<FONT size="2">ARTICLE&nbsp;VI
</FONT>

<P align="center">
<FONT size="2">CLOSING CONDITIONS
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Conditions
to Obligations of Each Party Under This Agreement.</I> The
respective obligations of each party to effect the Merger and
the other transactions contemplated herein shall be subject to
the satisfaction at or prior to the Effective Time of the
following conditions, any or all of which may be waived, in
whole or in part, to the extent permitted by applicable Law:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;6.1.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Effectiveness
    of the Registration Statement.</I> The Registration Statement
    shall have been declared effective by the SEC under the
    Securities Act. No stop order suspending the effectiveness of
    the Registration Statement shall have been issued by the SEC and
    no proceedings for that purpose shall have been initiated or, to
    the knowledge of Parent or the Company, threatened by the SEC.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;6.1.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stockholder
    Approval.</I> This Agreement and the Merger and the other
    transactions contemplated hereby shall have been approved and
    adopted by the requisite vote of the stockholders of the Company
    and by the requisite vote of the stockholders of Parent, to the
    extent, in each case, that stockholder approval is required
    under the DGCL or by Nasdaq.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;6.1.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>No
    Order.</I> No Governmental Entity, nor any federal or state
    court of competent jurisdiction or arbitrator shall have
    enacted, issued, promulgated, enforced or entered any statute,
    rule, regulation, executive order, decree, judgment, injunction
    or arbitration award or finding or other order (whether
    temporary, preliminary or permanent), in any case which is in
    effect and which prevents or prohibits consummation of the
    Merger or any other transactions contemplated in this Agreement
    or any Ancillary Agreement.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;6.1.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Consents
    and Approvals.</I> All consents, approvals and authorizations of
    any Governmental Entity set forth in Section&nbsp;3.5.2,
    Section&nbsp;4.5.2 or otherwise required to be set forth in the
    related sections of the Company Disclosure Schedule or the
    Parent Disclosure Schedule shall have been obtained, in each
    case, without (A)&nbsp;the imposition of conditions,
    (B)&nbsp;the requirement of divestiture of assets or property or
    (C)&nbsp;the requirement of expenditure of money by Parent or
    the Company to a third party in exchange for any such consent,
    except as would not be reasonably likely to have a Company
    Material Adverse Effect or Parent Material Adverse Effect, as
    applicable.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;6.1.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Exchange
    Listing.</I> The shares of Parent Common Stock issuable to the
    Company&#146;s stockholders in the Merger shall have been
    approved for listing on Nasdaq, subject to official notice of
    issuance.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;6.1.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Litigation
    Stays.</I> Each of the patent litigation stays referred to in
    Section&nbsp;5.17.1 shall have been obtained and remain in full
    force and effect.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Additional
Conditions to Obligations of Parent and Merger Sub.</I> The
obligations of Parent and Merger Sub to effect the Merger and
the other transactions contemplated herein are also subject to
the following conditions:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;6.2.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Representations
    and Warranties.</I> Each of (i)&nbsp;the representations and
    warranties of the Company contained in this Agreement and each
    Ancillary Agreement (other than the Loan Agreement) that are
    qualified by Company Material Adverse Effect shall be true and
    correct as of the date hereof and as of the Effective Time as
    though made on and as of the Effective Time (except that those
    representations and warranties which address matters only as of
    a particular date need only be true and correct as of such
    date), and (ii)&nbsp;the representations and warranties of the
    Company contained in this Agreement and each Ancillary Agreement
    (other than the Loan Agreement) which are not so qualified
    (including, without limitation, those which are qualified by the
    phrase &#147;material&#148;) shall be true and correct as of the
    date hereof and as of the Effective Time as though made on and
    as of the Effective Time (except that those representations and
    warranties which address matters only as of a particular date
    need only remain true and correct as of such date), except to
    the extent that the failure of any such representation or
    warranty to be true and correct has not had and could not
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-43
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">reasonably be likely to have a Company Material
    Adverse Effect. Parent shall have received a certificate of the
    Chief Executive Officer or Chief Financial Officer of the
    Company to that effect.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;6.2.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Agreements
    and Covenants.</I> The Company shall have performed or complied
    with all agreements and covenants required by this Agreement and
    each Ancillary Agreement (other than the Loan Agreement) to be
    performed or complied with by it on or prior to the Effective
    Time, except to the extent that such nonperformance or
    noncompliance has not had and could not reasonably be likely to
    have a Company Material Adverse Effect. Parent shall have
    received a certificate of the Chief Executive Officer or Chief
    Financial Officer of the Company to that effect.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;6.2.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Consents
    and Approvals.</I> All consents, approvals and authorizations
    listed on Schedule&nbsp;6.2.3 or of any person other than a
    Governmental Entity required to be set forth in Section&nbsp;3.5
    or Section&nbsp;4.5 or the related sections of the Company
    Disclosure Schedule or the Parent Disclosure Schedule shall have
    been obtained in each case, without (A)&nbsp;the imposition of
    conditions, (B)&nbsp;the requirement of divestiture of assets or
    property or (C)&nbsp;the requirement of expenditure of money by
    Parent or the Company to a third party in exchange for any such
    consent, except as has not had and could not reasonably be
    likely to have a Company Material Adverse Effect or Parent
    Material Adverse Effect, as applicable.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;6.2.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Material
    Adverse Change.</I> Since the date of this Agreement, there
    shall not have occurred any Company Material Adverse Change.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;6.2.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Court
    Proceedings.</I> No action or claim shall be pending or
    threatened before any court or quasi-judicial or administrative
    agency of any federal, state, local or foreign jurisdiction or
    before any arbitrator wherein an unfavorable injunction,
    judgment, order, decree, ruling or charge would (A)&nbsp;prevent
    consummation of any of the transactions contemplated by this
    Agreement or any Ancillary Agreement, (B)&nbsp;cause any of the
    transactions contemplated by this Agreement or any Ancillary
    Agreement to be rescinded following consummation thereof or
    (C)&nbsp;materially adversely affect the right or powers of
    Parent to own, operate or control the Company, and no such
    injunction, judgment, order, decree, ruling or charge shall be
    in effect.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Additional
Conditions to Obligations of the Company.</I> The obligation of
the Company to effect the Merger and the other transactions
contemplated herein are also subject to the following conditions:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;6.3.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Representations
    and Warranties.</I> Each of (i)&nbsp;the representations and
    warranties of Parent contained in this Agreement and each
    Ancillary Agreement (other than the Loan Agreement) that are
    qualified by Parent Material Adverse Effect shall be true and
    correct as of the date hereof and as of the Effective Time as
    though made on and as of the Effective Time (except that those
    representations and warranties which address matters only as of
    a particular date need only be true and correct as of such
    date), and (ii)&nbsp;the representations and warranties of
    Parent contained in this Agreement and each Ancillary Agreement
    (other than the Loan Agreement) which are not so qualified
    (including, without limitation, those which are qualified by the
    phrase &#147;material&#148;) shall be true and correct as of the
    date hereof and as of the Effective Time as though made on and
    as of the Effective Time (except that those representations and
    warranties which address matters only as of a particular date
    need only remain true and correct as of such date), except to
    the extent that the failure of any such representation or
    warranty to be true and correct has not had and could not
    reasonably be likely to have a Parent Material Adverse Effect.
    The Company shall have received a certificate of the Chief
    Executive Officer or Chief Financial Officer of Parent to that
    effect.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;6.3.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Agreements
    and Covenants.</I> Parent shall have performed or complied with
    all agreements and covenants required by this Agreement and each
    Ancillary Agreement (other than the Loan Agreement) to be
    performed or complied with by it on or prior to the Effective
    Time, except to the extent that such nonperformance or
    noncompliance has not had and could not reasonably be likely to
    have a Parent Material Adverse Effect. The Company shall have
    received a certificate of the Chief Executive Officer or Chief
    Financial Officer of Parent to that effect.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-44
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<FONT size="2">ARTICLE&nbsp;VII
</FONT>

<P align="center">
<FONT size="2">TERMINATION, AMENDMENT AND WAIVER
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;7.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Termination.</I>
This Agreement may be terminated, and the Merger contemplated
hereby may be abandoned, at any time prior to the Effective
Time, by action taken or authorized by the Board of Directors of
the terminating party or parties, whether before or after
approval of the matters presented in connection with the Merger
by the stockholders of the Company and Parent:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;7.1.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By
    mutual written consent of Parent and the Company, by action of
    their respective Boards of Directors;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;7.1.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By
    either the Company or Parent if the Merger shall not have been
    consummated prior to August&nbsp;31, 2003 (the &#147;Termination
    Date&#148;); <I>provided, however</I>, that the right to
    terminate this Agreement under this Section&nbsp;7.1.2 shall not
    be available to any party whose failure to fulfill any
    obligation under this Agreement has been the cause of, or
    resulted in, the failure of the Merger to occur on or before
    such date;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;7.1.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By
    either the Company or Parent if any Governmental Entity shall
    have issued an order, decree or ruling or taken any other action
    permanently restraining, enjoining or otherwise prohibiting the
    transactions contemplated by this Agreement or any Ancillary
    Agreement, and such order, decree, ruling or other action shall
    have become final and nonappealable (which order, decree, ruling
    or other action the parties shall have used their reasonable
    best efforts to resist, resolve or lift, as applicable, subject
    to the provisions of Section&nbsp;5.8);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;7.1.4 By either Parent or the
    Company if the approval by the stockholders of the Company
    required for the consummation of the Merger or the other
    transactions contemplated hereby shall not have been obtained by
    reason of the failure to obtain the required vote at a duly held
    meeting of stockholders of the Company or at any adjournment
    thereof; <I>provided, however</I>, that if this Agreement is
    then terminable pursuant to Section&nbsp;7.1.5 by Parent, the
    Company shall not have a right to terminate under this
    Section&nbsp;7.1.4;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;7.1.5 By Parent if (A)&nbsp;the
    Company Board shall have withdrawn, or adversely modified, or
    failed upon Parent&#146;s request to reconfirm its
    recommendation of the Merger or this Agreement (or determined to
    do so); (B)&nbsp;the Company Board shall have determined to
    recommend to the stockholders of the Company that they approve
    an Acquisition Proposal other than that contemplated by this
    Agreement or shall have determined to accept a Superior
    Proposal; (C)&nbsp;a tender offer or exchange offer that, if
    successful, would result in any person or group becoming a
    beneficial owner of 35% or more of the outstanding shares of
    Company Common Stock and/or securities convertible into or
    exercisable or exchangeable for 35% or more of the outstanding
    shares of Company Common Stock is commenced (other than by
    Parent or an affiliate of Parent) and the Company Board fails to
    recommend that the stockholders of the Company not tender their
    shares in such tender or exchange offer; (D)&nbsp;any person
    (other than Parent or an affiliate of Parent) or group becomes
    the beneficial owner of 35% or more of the outstanding shares of
    Company Common Stock; or (E)&nbsp;for any reason the Company
    fails to call or hold the Company Stockholders&#146; Meeting by
    the Termination Date;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;7.1.6 By the Company, if the Company
    Board determines to accept a Superior Proposal, but only after
    the Company (A)&nbsp;holds the Company Stockholders&#146;
    Meeting and has failed to obtain the stockholder approval
    required for consummation of the Merger and the other
    transactions contemplated hereby, and (B)&nbsp;fulfills its
    obligations under Section&nbsp;7.2 hereof upon such termination
    (<I>provided</I> that the Company&#146;s right to terminate this
    Agreement under this Section&nbsp;7.1.6 shall not be available
    if the Company is then in breach of Section&nbsp;5.7);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;7.1.7 By Parent, if since the date
    of this Agreement, there shall have been any event, development
    or change of circumstance that constitutes, has had or could
    reasonably be expected to have, individually or in the
    aggregate, a Company Material Adverse Change and such Company
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-45
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Material Adverse Change is not cured within
    10&nbsp;days after written notice thereof or if
    (A)(1)&nbsp;there shall be breached any covenant or agreement on
    the part of a party other than Parent or Merger Sub set forth in
    this Agreement or any Ancillary Agreement (other than the Loan
    Agreement) or (2)&nbsp;any representation or warranty of a party
    other than Parent or Merger Sub set forth in this Agreement or
    any Ancillary Agreement (other than the Loan Agreement) shall
    have become untrue, (B)&nbsp;such breach or misrepresentation is
    not cured within 10&nbsp;days after written notice thereof and
    (C)&nbsp;such breach or misrepresentation would cause the
    conditions set forth in Section&nbsp;6.2.1 or Section&nbsp;6.2.2
    not to be satisfied;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;7.1.8 By the Company, if (A)(1)
    Parent has breached any covenant or agreement on the part of
    Parent or Merger Sub set forth in this Agreement or any
    Ancillary Agreement or (2)&nbsp;any representation or warranty
    of Parent or Merger Sub set forth in this Agreement or any
    Ancillary Agreement shall have become untrue, (B)&nbsp;such
    breach or misrepresentation is not cured within 10&nbsp;days
    after written notice thereof and (C)&nbsp;such breach or
    misrepresentation would cause the conditions set forth in
    Section&nbsp;6.3.1 or Section&nbsp;6.3.2 not to be satisfied; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;7.1.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By
    either Parent or the Company if the approval by the stockholders
    of Parent required for the Share Issuance or the other
    transactions contemplated hereby shall not have been obtained by
    reason of the failure to obtain the required vote at a duly held
    meeting of stockholders of Parent or at any adjournment thereof.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;7.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Effect
of Termination.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;7.2.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Limitation
    on Liability.</I> In the event of termination of this Agreement
    by either the Company or Parent as provided in Section&nbsp;7.1,
    this Agreement shall forthwith become void and there shall be no
    liability or obligation on the part of Parent or the Company or
    their respective Subsidiaries, officers or directors except
    (x)&nbsp;with respect to Section&nbsp;5.6.2, Section&nbsp;5.10,
    Section&nbsp;5.17 this Section&nbsp;7.2 and Article&nbsp;8 and
    (y)&nbsp;with respect to any liabilities or damages incurred or
    suffered by a party as a result of the willful and material
    breach by the other party of any of its representations,
    warranties, covenants or other agreements set forth in this
    Agreement or any Ancillary Agreement.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;7.2.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Parent
    Expenses.</I> Parent and the Company agree that if this
    Agreement is terminated pursuant to Section&nbsp;7.1.4, 7.1.5,
    7.1.6 or 7.1.7, then the Company shall pay Parent an amount
    equal to the sum of Parent&#146;s Expenses up to an amount equal
    to $1,250,000.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;7.2.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Company
    Expenses.</I> Parent and the Company agree that if this
    Agreement is terminated pursuant to Section&nbsp;7.1.8 or
    Section&nbsp;7.1.9 then Parent shall pay to the Company an
    amount equal to the sum of the Company&#146;s Expenses up to an
    amount equal to $1,250,000.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;7.2.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Payment
    of Expenses.</I> Payment of Expenses pursuant to Section 7.2.2
    or Section&nbsp;7.2.3 shall be made not later than two business
    days after delivery to the other party of notice of demand for
    payment and a documented itemization setting forth in reasonable
    detail all Expenses of the party entitled to receive payment
    (which itemization may be supplemented and updated from time to
    time by such party until the 90th day after such party delivers
    such notice of demand for payment).
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;7.2.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Termination
    Fee.</I>
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;7.2.5.1 In addition to any payment
    required by the foregoing provisions of this Section&nbsp;7.2,
    (A)&nbsp;in the event that this Agreement is terminated pursuant
    to Section&nbsp;7.1.5, Section&nbsp;7.1.6 or Section&nbsp;7.1.7,
    then the Company shall pay to Parent immediately prior to such
    termination, in the case of a termination by the Company, or
    within two business days thereafter, in the case of a
    termination by Parent, a termination fee of $2,500,000
    (<I>provided, however</I>, that this amount shall be reduced by
    and to the extent of any payment of Parent expenses pursuant to
    Section&nbsp;7.2.2) and (B)&nbsp;in the event that this
    Agreement is terminated pursuant to Section&nbsp;7.1.4, and an
    Acquisition Proposal has been publicly announced and not
    expressly and publicly
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-46
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">withdrawn prior to the Company Stockholders&#146;
    Meeting, then the Company shall pay Parent, no later than two
    days after the earlier to occur of (x)&nbsp;the date the Company
    or any Company Subsidiary enter into an agreement concerning a
    transaction that constitutes an Acquisition Proposal,
    <I>provided</I> that such agreement is entered into within
    12&nbsp;months of the termination of this Agreement or
    (y)&nbsp;the date any person or persons (other than Parent)
    purchases at least a majority of the consolidated assets or
    Equity Interests of the Company and the Company Subsidiaries,
    <I>provided</I> that any tender, exchange or other offer or
    arrangement for the Company&#146;s voting securities is first
    publicly announced within 12 months of the termination of this
    Agreement, a termination fee of $2,500,000 (<I>provided,
    however</I>, that this amount shall be reduced by and to the
    extent of any payment of Parent expenses pursuant to
    Section&nbsp;7.2.2).
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;7.2.5.2 In addition to any payment
    required by the foregoing provisions of this Section, in the
    event that this Agreement is terminated pursuant to
    Section&nbsp;7.1.8, then Parent shall pay to the Company, within
    two business days thereafter, a termination fee of $2,500,000
    (<I>provided, however</I>, that this amount shall be reduced by
    and to the extent of any payment of Company expenses pursuant to
    Section&nbsp;7.2.3).
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;7.2.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>All
    Payments.</I> All payments under Section&nbsp;7.2 shall be made
    by wire transfer of immediately available funds to an account
    designated by the party entitled to receive payment.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;7.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Amendment.</I>
This Agreement may be amended by the parties hereto by action
taken by or on behalf of their respective Boards of Directors at
any time prior to the Effective Time; <I>provided, however</I>,
that, after approval of the Merger by the stockholders of the
Company, no amendment may be made without further stockholder
approval which, by Law or in accordance with the rules of any
relevant stock exchange, requires further approval by such
stockholders. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;7.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Waiver.</I>
At any time prior to the Effective Time, any party hereto may
(A)&nbsp;extend the time for the performance of any of the
obligations or other acts of the other party hereto,
(B)&nbsp;waive any inaccuracies in the representations and
warranties of the other party contained herein or in any
document delivered pursuant hereto, and (C)&nbsp;waive
compliance by the other party with any of the agreements or
conditions contained herein; <I>provided, however</I>, that
after any approval of the transactions contemplated by this
Agreement by the stockholders of the Company, there may not be,
without further approval of such stockholders, any extension or
waiver of this Agreement or any portion thereof which, by Law or
in accordance with the rules of any relevant stock exchange,
requires further approval by such stockholders. Any such
extension or waiver shall be valid only if set forth in an
instrument in writing signed by the party or parties to be bound
thereby, but such extension or waiver or failure to insist on
strict compliance with an obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;7.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Fees
and Expenses.</I> Subject to Section&nbsp;7.2.1,
Section&nbsp;7.2.2 and Section&nbsp;7.2.3 hereof, all expenses
incurred by the parties hereto shall be borne solely and
entirely by the party which has incurred the same; <I>provided,
however</I>, that each of Parent and the Company shall pay
one-half of the expenses related to printing, filing and mailing
the Registration Statement and the Proxy Statement and all SEC
and other regulatory filing fees incurred in connection with the
Registration Statement and the Proxy Statement.
</FONT>

<P align="center">
<FONT size="2">ARTICLE&nbsp;VIII
</FONT>

<P align="center">
<FONT size="2">GENERAL PROVISIONS
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;8.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Non-Survival
of Representations and Warranties.</I> None of the
representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive
the Effective Time. This Section&nbsp;8.1 shall not limit any
covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
</FONT>

<P align="center"><FONT size="2">A-47
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;8.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Notices.</I>
Any notices or other communications required or permitted under,
or otherwise in connection with this Agreement, shall be in
writing and shall be deemed to have been duly given when
delivered in person or upon confirmation of receipt when
transmitted by facsimile transmission (but only if followed by
transmittal by national overnight courier or hand for delivery
on the next business day) or on receipt after dispatch by
registered or certified mail, postage prepaid, addressed, or on
the next business day if transmitted by national overnight
courier, in each case as follows:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">If to Parent or Merger Sub, addressed to it at:
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Intuitive Surgical, Inc.
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">950 Kifer Road
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Sunnyvale, California 94086
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Facsimile: (408)&nbsp;523-1390
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Attention: Lonnie M. Smith, President and Chief
    Executive Officer
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">with a mandated copy (which shall not constitute
    notice) to:
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Latham &#38; Watkins LLP
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">505 Montgomery Street, Suite&nbsp;1900
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">San Francisco, California 94111-2562
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Facsimile: (415)&nbsp;395-8095
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Attention: John M. Newell, Esq.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">If to the Company, addressed to it at:
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Computer Motion, Inc.
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">130-B Cremona Drive
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Santa Barbara, California 93117
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Facsimile: (805)&nbsp;968-4920
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Attention: Robert W. Duggan, Chairman of the
    Board and Chief
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Executive Officer
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">with a mandated copy (which shall not constitute
    notice) to:
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Stradling Yocca Carlson &#38; Rauth
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">302 Olive Street
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Santa Barbara, California 93101
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Facsimile: (805)&nbsp;564-1044
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Attention: David E. Lafitte, Esq.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;8.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Certain
Definitions.</I> For purposes of this Agreement, the term:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;affiliate&#148;</FONT></I></B><FONT size="2">
means a person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common
control with, the first-mentioned person;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;Acquisition
Proposal&#148;</FONT></I></B><FONT size="2"> means any offer or
proposal concerning any (A)&nbsp;merger, consolidation, business
combination, or similar transaction involving the Company or any
Company Subsidiary, (B)&nbsp;sale, lease or other disposition
directly or indirectly by merger, consolidation, business
combination, share exchange, joint venture, or otherwise of
assets of the Company or any Company Subsidiary representing 20%
or more of the consolidated assets of the Company and the
Company Subsidiaries, (C)&nbsp;issuance, sale, or other
disposition of (including by way of merger, consolidation,
business combination, share exchange, joint venture, or any
similar transaction) securities (or options, rights or warrants
to purchase, or securities convertible into or exchangeable for
such securities) representing 20% or more of the voting power of
the Company or (D)&nbsp;transaction in which any person shall
acquire beneficial ownership, or the right to acquire beneficial
ownership or any group shall have been formed which beneficially
owns or has the right to acquire beneficial ownership of 20% or
more of the outstanding voting capital stock of the Company or
(E)&nbsp;any combination of the foregoing (other than the
Merger); <I>provided, however</I>, that for purposes of
</FONT>

<P align="center"><FONT size="2">A-48
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">Section&nbsp;7.2.5.1(B)(x), the 20% figures
stated in this definition of &#147;Acquisition Proposal&#148;
shall instead be 50%.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;Ancillary Agreements&#148;
</FONT></I></B><FONT size="2">means the Company Support
Agreements, the Parent Support Agreements and the Loan Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;beneficial
ownership&#148;</FONT></I></B><FONT size="2"> (and related terms
such as &#147;beneficially owned&#148; or &#147;beneficial
owner&#148;) has the meaning set forth in Rule&nbsp;13d-3 under
the Exchange Act.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;Blue Sky
Laws&#148;</FONT></I></B><FONT size="2"> means state securities
or &#147;blue sky&#148; laws.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;business
day&#148;</FONT></I></B><FONT size="2"> means any day other than
a day on which the SEC shall be closed.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;CERCLA&#148;</FONT></I></B><FONT size="2">
means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended as of the date hereof.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;Company Allocable Shares&#148;
</FONT></I></B><FONT size="2">means (x)&nbsp;the Parent Total
Fully Diluted Shares divided by 0.68, minus (y)&nbsp;the Parent
Total Fully Diluted Shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;Company Material Adverse
Change&#148;</FONT></I></B><FONT size="2"> means any event,
development or change affecting, or condition having an effect
on, the Company and the Company Subsidiaries that is material to
the assets, liabilities, business, financial condition or
results of operations of the Company and the Company
Subsidiaries, taken as a whole, which arises out of or relates
to (i)&nbsp;any forfeiture, impairment, invalidity or diminution
in value of the Material Company Intellectual Property which is
unrelated to any litigation, dispute or proceeding between
Parent and the Company; (ii)&nbsp;any violation of
Section&nbsp;5.1.2(A) or (iii)&nbsp;the incurrence by the
Company or any of the Company Subsidiaries of any liabilities or
obligations of any nature (whether accrued, absolute, contingent
or otherwise), other than pursuant to the Loan Agreement, except
in the case of any of the events listed in clauses&nbsp;(i),
(ii) or (iii) of this definition that would not, individually or
in the aggregate, reasonably be likely to result in a Company
Material Adverse Effect.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;Company Material Adverse
Effect&#148;</FONT></I></B><FONT size="2"> means any change
affecting, or condition having an effect on, the Company and the
Company Subsidiaries that is, or would reasonably be likely to
be, materially adverse to the assets, liabilities, business,
financial condition or results of operations of the Company and
the Company Subsidiaries, taken as a whole, other than any
change or condition relating to the economy or securities
markets in general, or the industry in which the Company
operates in general, and not specifically relating to the
Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;Company Total Fully Diluted
Shares&#148; </FONT></I></B><FONT size="2">means, as of
immediately prior to the consummation of the Merger, the sum of
(x)&nbsp;the number of shares of Company Common Stock
outstanding, (y)&nbsp;the number of shares of Company Common
Stock into which any outstanding convertible or exchangeable
securities (including any outstanding Company Preferred Stock)
may be converted or exchanged, and (z)&nbsp;the number of shares
of Company Common Stock issuable upon exercise of all
outstanding Company Options and Company Warrants (whether or not
such convertible or exchangeable securities or Company Options
or Company Warrants are then convertible, exchangeable or
exercisable, and regardless of the conversion, exchange or
exercise price of any such securities), but excluding for
purposes of this calculation (if then outstanding) the shares of
Company Common Stock issuable upon exercise of the Company
Warrants to acquire 396,578 shares of Company Common Stock at
$4.57 per share, and excluding the shares of Company Common
Stock issuable upon exercise of the Company Warrants to acquire
252,836 shares of Company Common Stock at $7.71 per share.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;contracts&#148;</FONT></I></B><FONT size="2">
means any of the agreements, contracts, leases, powers of
attorney, notes, loans, evidence of indebtedness, purchase
orders, letters of credit, settlement agreements, franchise
agreements, undertakings, covenants not to compete, employment
agreements, licenses, instruments, obligations, commitments,
understandings, policies, purchase and sales orders, quotations
and other executory commitments to which any company is a party
or to which any of the assets of the companies are subject,
whether oral or written, express or implied.
</FONT>

<P align="center"><FONT size="2">A-49
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;control&#148;</FONT></I></B><FONT size="2">
(including the terms &#147;controlled by&#148; and &#147;under
common control with&#148;) means the possession, directly or
indirectly or as trustee or executor, of the power to direct or
cause the direction of the management or policies of a person,
whether through the ownership of stock or as trustee or
executor, by contract or credit arrangement or otherwise.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;Environmental
Laws&#148;</FONT></I></B><FONT size="2"> means any federal,
state, local or foreign statute, law, ordinance, regulation,
rule, code, treaty, writ or order and any enforceable judicial
or administrative interpretation thereof, including any judicial
or administrative order, consent decree, judgment, stipulation,
injunction, permit, authorization, policy, opinion, or agency
requirement, in each case having the force and effect of law,
relating to the pollution, protection, investigation or
restoration of the environment, health and safety as affected by
the environment or natural resources, including, without
limitation, those relating to the use, handling, presence,
transportation, treatment, storage, disposal, release,
threatened release or discharge of Hazardous Materials or noise,
odor, wetlands, pollution or contamination.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;Environmental
Permits&#148;</FONT></I></B><FONT size="2"> means any permit,
approval, identification number, license and other authorization
required under any applicable Environmental Law.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;Equity
Interest&#148;</FONT></I></B><FONT size="2"> means any share,
capital stock, partnership, member or similar interest in any
entity, and any option, warrant, right or security (including
debt securities) convertible, exchangeable or exercisable
therefor.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;ERISA&#148;</FONT></I></B><FONT size="2">
means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;ERISA
Affiliate&#148;</FONT></I></B><FONT size="2"> shall mean any
entity or trade or business (whether or not incorporated) other
than the Company that together with the Company is considered
under common control and treated as a single employer under
Section&nbsp;4.14(b), (c), (m)&nbsp;or (o)&nbsp;of the Code.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;Exchange
Act&#148;</FONT></I></B><FONT size="2"> shall mean Securities
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;Exchange Ratio&#148;
</FONT></I></B><FONT size="2">means the number obtained by
dividing (x)&nbsp;the Company Allocable Shares by (y)&nbsp;the
Company Total Fully Diluted Shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;Expenses&#148;</FONT></I></B><FONT size="2">
includes all reasonable out-of-pocket expenses (including,
without limitation, all fees and expenses of counsel,
accountants, investment bankers, experts and consultants to a
party hereto and its affiliates) incurred by a party or on its
behalf in connection with or related to the authorization,
preparation, negotiation, execution and performance of this
Agreement and the transactions contemplated hereby, including
the preparation, printing, filing and mailing of the Proxy
Statement and the solicitation of shareholder approvals and all
other matters related to the transactions contemplated hereto.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;GAAP&#148;</FONT></I></B><FONT size="2">
means generally accepted accounting principles as applied in the
United States.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;Governmental
Entity&#148;</FONT></I></B><FONT size="2"> means domestic or
foreign governmental, administrative, judicial or regulatory
authority.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;group&#148;</FONT></I></B><FONT size="2">
is defined as in the Exchange Act, except where the context
otherwise requires.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;Hazardous
Materials&#148;</FONT></I></B><FONT size="2"> means (A)&nbsp;any
petroleum, petroleum products, byproducts or breakdown products,
radioactive materials, asbestos-containing materials or
polychlorinated biphenyls or (B)&nbsp;any chemical, material or
other substance defined or regulated as toxic or hazardous or as
a pollutant or contaminant or waste under any applicable
Environmental Law.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;Intellectual
Property&#148;</FONT></I></B><FONT size="2"> means all
intellectual property or other proprietary rights of every kind,
foreign or domestic, including all patents, patent applications,
inventions (whether or not patentable), processes, products,
technologies, discoveries, copyrightable and copyrighted works,
apparatus, trade secrets, trademarks, trademark registrations
and applications, domain names, service marks, service mark
registrations and applications, trade names, trade secrets,
know-how, trade dress, copyright registrations,
</FONT>

<P align="center"><FONT size="2">A-50
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">customer lists, confidential marketing and
customer information, licenses, confidential technical
information, software, and all documentation thereof.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;IRS&#148;
</FONT></I></B><FONT size="2">means the United States Internal
Revenue Service.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;knowledge&#148;</FONT></I></B><FONT size="2">
will be deemed to be present when the matter in question was
brought to the attention of any officer of Parent or the
Company, as the case may be.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;Law&#148;</FONT></I></B><FONT size="2">
means foreign or domestic law, statute, code, ordinance, rule,
regulation, order, judgment, writ, stipulation, award,
injunction, decree or arbitration award or finding.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;Other Filings&#148;
</FONT></I></B><FONT size="2">means all filings made by or
required to be made by, the Company or Parent, as the case may
be, with the SEC other than the Registration Statement and the
Proxy Statement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;Parent Material Adverse
Effect&#148;</FONT></I></B><FONT size="2"> means any change
affecting, or condition having an effect on, Parent, Merger Sub
and the Parent Subsidiaries that is, or would reasonably be
likely to be, materially adverse to the assets, liabilities,
business, financial condition or results of operations of Parent
and the Parent Subsidiaries, taken as a whole, other than any
change or condition relating to the economy or securities
markets in general, or the industry in which Parent operates in
general, and not specifically relating to Parent.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;Parent Total Fully Diluted
Shares&#148; </FONT></I></B><FONT size="2">means, as of
immediately prior to the consummation of the Merger, the sum of
(x)&nbsp;the number of shares of Parent Common Stock
outstanding, (y)&nbsp;the number of shares of Parent Common
Stock into which any outstanding convertible or exchangeable
securities (including any outstanding Parent Preferred Stock)
may be converted or exchanged, and (z)&nbsp;the number of shares
of Parent Common Stock issuable upon exercise of all outstanding
Parent Options and warrants to purchase shares of Parent Common
Stock (whether or not such convertible or exchangeable
securities or Parent Options or warrants to purchase shares of
Parent Common Stock are then convertible, exchangeable or
exercisable, and regardless of the conversion, exchange or
exercise price of any such securities).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;person&#148;</FONT></I></B><FONT size="2">
means an individual, corporation, limited liability company,
partnership, association, trust, unincorporated organization,
other entity or group (as defined in Section&nbsp;13(d) of the
Exchange Act).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;SEC&#148;
</FONT></I></B><FONT size="2">means the Securities and Exchange
Commission.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;Securities
Act&#148;</FONT></I></B><FONT size="2"> means the Securities Act
of 1933, as amended, and the rules and regulations promulgated
thereunder.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;Share Issuance&#148;
</FONT></I></B><FONT size="2">means the issuance of Parent
Common Stock pursuant to Section&nbsp;2.1.1.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;subsidiary&#148;</FONT></I></B><FONT size="2">
or <B><I>&#147;subsidiaries&#148;</I></B> of Parent, the
Company, the Surviving Corporation or any other person means any
corporation, partnership, joint venture or other legal entity of
which Parent, the Company, the Surviving Corporation or such
other person, as the case may be (either alone or through or
together with any other subsidiary), owns, directly or
indirectly, a majority of the stock or other equity interests
the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of
such corporation or other legal entity.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;Superior
Proposal&#148;</FONT></I></B><FONT size="2"> means a bona fide
Acquisition Proposal made by a third party which was not
solicited by the Company, any Company Subsidiary, any Company
Representatives or any other affiliates and which, in the good
faith judgment of the Company Board, taking into account, to the
extent deemed appropriate by the Company Board, the various
legal, financial and regulatory aspects of the proposal and the
person making such proposal (A)&nbsp;if accepted, is reasonably
likely to be consummated, and (B)&nbsp;if consummated would,
based upon the written advice of the Company Financial Advisor,
result in a transaction that is more favorable to the
Company&#146;s stockholders, from a financial point of view,
than the transactions contemplated by this Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;Taxes&#148;</FONT></I></B><FONT size="2">
means any and all taxes, fees, levies, duties, tariffs, imposts
and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts
imposed with respect
</FONT>

<P align="center"><FONT size="2">A-51
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">thereto) imposed by any Governmental Entity or
domestic or foreign taxing authority, including, without
limitation, income, franchise, windfall or other profits, gross
receipts, property, sales, use, net worth, capital stock,
payroll, employment, social security, workers&#146;
compensation, unemployment compensation, excise, withholding, ad
valorem, stamp, transfer, value-added, gains tax and license,
registration and documentation fees.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;Tax
Returns&#148;</FONT></I></B><FONT size="2"> means any report,
return (including information return), claim for refund,
election, estimated tax filing or declaration required to be
supplied to any Governmental Entity or domestic or foreign
taxing authority with respect to Taxes, including any schedule
or attachment thereto, and including any amendments thereof.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;8.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Terms
Defined Elsewhere.</I> The following terms are defined elsewhere
in this Agreement, as indicated below:
</FONT>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="75%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="22%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;401(k) Plan&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 5.19
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Agreement&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Preamble
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Certificate of
    Merger&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 1.2
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Certificates&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 2.2.2
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Certificate of
    Amendment&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 5.5.1
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Code&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Recitals
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Company&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Preamble
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Company Benefit
    Plan&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 3.10.1
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Company Board&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 3.4.1
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Company By-laws&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 3.2
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Company
    Certificate&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 3.2
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Company Common
    Stock&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 2.1.1.1
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Company Defect&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 3.22
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Company Disclosure
    Schedule&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Article 3
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Company Employees&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 5.12
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Company Financial
    Advisor&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 3.19
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Company
    Form&nbsp;10-K&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 3.2
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Company Material
    Contract&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 3.13
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Company Options&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 2.4
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Company Permits&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 3.6
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Company Preferred
    Stock&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 2.1.1.2
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Company Product&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 3.22
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Company
    Recommendation&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 5.7.3
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Company
    Representatives&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 5.6.1
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Company Rights&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 2.1.1.1
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Company Rights
    Agreement&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 2.1.1.1
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Company SEC
    Filings&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 3.7.1
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Company Preferred
    Stock&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 2.1.1.2
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Company Stock&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 2.1.1.2
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Company Stockholders&#146;
    Meeting&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 5.5.1
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Company
    Subsidiary&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 3.1
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Company Support
    Agreements&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Recitals
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Company Warrants&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 2.1.1.3
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Confidentiality
    Agreement&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 5.6.2
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">A-52
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="75%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="22%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;D&#38;O Insurance&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 5.13.2
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;DGCL&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Recitals
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Effective Time&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 1.2
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;ESPP&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 5.20
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Excess Shares&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 2.2.5.1
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Exchange Agent&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 2.2.1
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Exchange Fund&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 2.2.1
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Federal Healthcare
    Programs&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 3.24
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Loan Agreement&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Recitals
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Material Company Intellectual
    Property&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 3.16
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Material Parent Intellectual
    Property&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 4.16
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Merger&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Recitals
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Merger Sub&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Preamble
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Merger Sub Board&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 4.4.1
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Multiemployer
    Plan&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 3.10.4
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Parent&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Preamble
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Parent Benefit
    Plan&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 4.10.1
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Parent Board&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 4.4.1
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Parent By-laws&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 4.2
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Parent
    Certificate&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 4.2
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Parent Common
    Stock&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 2.1.1.1
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Parent Defect&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 4.22
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Parent Disclosure
    Schedule&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Article 4
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Parent Financial
    Advisor&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 4.19
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Parent
    Form&nbsp;10-K&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 4.2
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Parent Material
    Contract&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 4.13
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Parent Options&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 4.3
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Parent Permits&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 4.6
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Parent Preferred
    Stock&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 4.3
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Parent Product&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 4.22
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Parent
    Representatives&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 5.6.1
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Parent SEC
    Filings&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 4.7.1
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Parent Stockholders&#146;
    Meeting&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 5.5.2
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Parent Subsidiary&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 4.1
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Parent Support
    Agreements&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Recitals
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;PBGC&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 3.11.3
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Proxy Statement&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 5.4.1
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Registration
    Statement&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 5.4.1
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Section&nbsp;16&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 5.12
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Series&nbsp;D Convertible Preferred
    Stock&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 3.3
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Series&nbsp;D-1 Convertible Preferred
    Stock&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 3.3
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Series&nbsp;D-2 Convertible Preferred
    Stock&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 3.3
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Surviving
    Corporation&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 1.1
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">&#147;Termination Date&#148;</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Section 7.1.2
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">A-53
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;8.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Headings.</I>
The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;8.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Severability.</I>
If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of Law or
public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so
long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the
end that transactions contemplated hereby are fulfilled to the
extent possible.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;8.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Entire
Agreement.</I> This Agreement (together with the Exhibits,
Parent and Company Disclosure Schedules and the other documents
delivered pursuant hereto), each Ancillary Agreement and the
Confidentiality Agreement constitute the entire agreement of the
parties and supersede all prior agreements and undertakings,
both written and oral, between the parties, or any of them, with
respect to the subject matter hereof and, except as otherwise
expressly provided herein, are not intended to confer upon any
other person any rights or remedies hereunder.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;8.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Assignment.</I>
This Agreement shall not be assigned by operation of law or
otherwise.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;8.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Parties
in Interest.</I> This Agreement shall be binding upon and inure
solely to the benefit of each party hereto and their respective
successors and assigns, and nothing in this Agreement, express
or implied, other than pursuant to Section&nbsp;5.13, is
intended to or shall confer upon any other person any right,
benefit or remedy of any nature whatsoever under or by reason of
this Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;8.10&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Mutual
Drafting.</I> Each party hereto has participated in the drafting
of this Agreement, which each party acknowledges is the result
of extensive negotiations between the parties.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;8.11&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Governing
Law; Consent to Jurisdiction; Waiver of Trial by Jury.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;8.11.1 This Agreement shall be
    governed by, and construed in accordance with, the Laws of the
    State of Delaware, without regard to laws that may be applicable
    under conflicts of laws principles.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;8.11.2 Each of the parties hereto
    hereby irrevocably and unconditionally submits, for itself and
    its property, to the exclusive jurisdiction of any Delaware
    State court, or Federal court of the United States of America,
    sitting in Delaware, and any appellate court from any thereof,
    in any action or proceeding arising out of or relating to this
    Agreement or the agreements delivered in connection herewith or
    the transactions contemplated hereby or thereby or for
    recognition or enforcement of any judgment relating thereto, and
    each of the parties hereby irrevocably and unconditionally
    (A)&nbsp;agrees not to commence any such action or proceeding
    except in such courts, (B)&nbsp;agrees that any claim in respect
    of any such action or proceeding may be heard and determined in
    such Delaware State court or, to the extent permitted by law, in
    such Federal court, (C)&nbsp;waives, to the fullest extent it
    may legally and effectively do so, any objection which it may
    now or hereafter have to the laying of venue of any such action
    or proceeding in any such Delaware State or Federal court, and
    (D)&nbsp;waives, to the fullest extent permitted by law, the
    defense of an inconvenient forum to the maintenance of such
    action or proceeding in any such Delaware State or Federal
    court. Each of the parties hereto agrees that a final judgment
    in any such action or proceeding shall be conclusive and may be
    enforced in other jurisdictions by suit on the judgment or in
    any other manner provided by law. Each party to this Agreement
    irrevocably consents to service of process in the manner
    provided for notices in Section&nbsp;8.2. Nothing in this
    Agreement will affect the right of any party to this Agreement
    to serve process in any other manner permitted by law.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">SECTION&nbsp;8.11.3 EACH PARTY ACKNOWLEDGES AND
    AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT
    IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
    THEREFORE IT HEREBY IRREVOCA-
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-54
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">BLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY
    HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
    INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY
    OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE
    TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY
    CERTIFIES AND ACKNOWLEDGES THAT (A)&nbsp;NO REPRESENTATIVE,
    AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
    OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
    LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (B)&nbsp;IT
    UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS,
    (C)&nbsp;IT MAKES SUCH WAIVERS VOLUNTARILY, AND (D)&nbsp;IT HAS
    BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
    THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
    SECTION&nbsp;8.11.3.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;8.12&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Disclosure.</I>
Any matter disclosed in any section of a party&#146;s Disclosure
Schedule shall be considered disclosed for other sections of
such Disclosure Schedule, but only to the extent such matter on
its face would reasonably be expected to be pertinent to a
particular section of a party&#146;s Disclosure Schedule in
light of the disclosure made in such section. The provision of
monetary or other quantitative thresholds for disclosure does
not and shall not be deemed to create or imply a standard of
materiality hereunder.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;8.13&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Counterparts.</I>
This Agreement may be executed in one or more counterparts, and
by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all
of which taken together shall constitute one and the same
agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;8.14&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Specific
Performance.</I> The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly
agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law
or in equity.
</FONT>

<P align="center"><FONT size="2">A-55
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">IN WITNESS WHEREOF, Parent, Merger Sub and the
Company have caused this Agreement to be executed as of the date
first written above by their respective officers thereunto duly
authorized.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <B><FONT size="2">INTUITIVE SURGICAL, INC.</FONT></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ LONNIE M. SMITH
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Name:&nbsp;Lonnie M. Smith
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Title:&nbsp;&nbsp;President and Chief Executive
    Officer
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <B><FONT size="2">INTUITIVE MERGER CORPORATION</FONT></B></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">(Formerly Iron Acquisition Corporation)
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ LONNIE M. SMITH
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Name:&nbsp;Lonnie M. Smith
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="5%"></TD>
    <TD width="55%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">Title:</FONT></TD>
    <TD align="left">
    <FONT size="2">President, Chief Executive Officer and Secretary
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <B><FONT size="2">COMPUTER MOTION, INC.</FONT></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ ROBERT W. DUGGAN
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Name:&nbsp;Robert W. Duggan
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="5%"></TD>
    <TD width="55%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">Title:</FONT></TD>
    <TD align="left">
    <FONT size="2">Chairman of the Board and Chief Executive Officer
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-56
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "ANNEX B" -->
<DIV align="left"><A NAME="104"></A></DIV>

<P align="center">
<B><FONT size="2">ANNEX B</FONT></B>

<P align="center">
<B><FONT size="2">STOCKHOLDER SUPPORT AGREEMENT</FONT></B>

<P align="center">
<B><FONT size="2">BY AND AMONG</FONT></B>

<P align="center">
<B><FONT size="2">INTUITIVE SURGICAL, INC.,</FONT></B>

<P align="center">
<B><FONT size="2">INTUITIVE MERGER CORPORATION</FONT></B>

<DIV align="center">
<B><FONT size="2">(FORMERLY IRON ACQUISITION
CORPORATION)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">AND</FONT></B>

<P align="center">
<B><FONT size="2">CERTAIN STOCKHOLDERS OF INTUITIVE SURGICAL,
INC.</FONT></B>

<P align="center">
<B><FONT size="2">DATED AS OF MARCH 7, 2003</FONT></B>

<P align="center"><FONT size="2">B-1
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">STOCKHOLDER SUPPORT AGREEMENT, dated as of
March&nbsp;7, 2003 (this &#147;Agreement&#148;), by and among
Intuitive Surgical, Inc., a Delaware corporation
(&#147;Parent&#148;), Intuitive Merger Corporation (formerly
Iron Acquisition Corporation), a Delaware corporation and a
wholly owned subsidiary of Parent (&#147;Merger Sub&#148;), and
the parties listed on Annex A hereto (each, a
&#147;Stockholder&#148; and, collectively, the
&#147;Stockholders&#148;).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">WHEREAS, simultaneously with the execution of
this Agreement, Parent, Merger Sub and Computer Motion, Inc., a
Delaware corporation (the &#147;Company&#148;), are entering
into an Agreement and Plan of Merger (the &#147;Merger
Agreement&#148;) (with all capitalized terms used but not
defined herein having the meanings set forth in the Merger
Agreement), pursuant to which Merger Sub will merge with and
into the Company, with the Company continuing as the surviving
corporation and a wholly owned subsidiary of Parent (the
&#147;Merger&#148;), which Merger Agreement has been approved by
the Boards of Directors of the Company, Merger Sub and Parent;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">WHEREAS, in accordance with the Merger Agreement,
Parent will issue shares (the &#147;Share Issuance&#148;) of
common stock, par value $0.001 per share (&#147;Parent Common
Stock&#148;), as consideration for the acquisition by Parent of
all outstanding equity interests of the Company (the
&#147;Merger Consideration&#148;);
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">WHEREAS, each Stockholder owns the number of
shares of Parent Common Stock set forth opposite its name on
Annex A hereto (such shares of Parent Common Stock, together
with any other shares of capital stock of Parent acquired by
such Stockholder after the date hereof and during the term of
this Agreement, including any shares issued upon the exercise of
any warrants or options, the conversion of any convertible
securities or otherwise, being collectively referred to herein
as the &#147;Subject Shares&#148;);
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">WHEREAS, as a condition to the willingness of the
Company to enter into the Merger Agreement, the Company has
required that each Stockholder agree and, in order to induce the
Company to enter into the Merger Agreement, each Stockholder has
agreed, to enter into this Agreement; and
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">WHEREAS, this Agreement has been approved by the
Board of Directors of the Company for purposes of
Section&nbsp;203 of the General Corporation Law of the State of
Delaware (the &#147;DGCL&#148;).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">NOW, THEREFORE, in consideration of the foregoing
and the respective representations, warranties, covenants and
agreements set forth in this Agreement and intending to be
legally bound, the parties hereto agree as follows:
</FONT>

<P align="center">
<FONT size="2">ARTICLE&nbsp;I
</FONT>

<P align="center">
<FONT size="2">REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each Stockholder, severally and not jointly,
hereby represents and warrants to Parent and Merger Sub as
follows:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;1.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Organization.</I>
Such Stockholder is either (a)&nbsp;a corporation, partnership
or limited liability company, duly organized, validly existing
and in good standing under the laws of the jurisdiction of such
Stockholder&#146;s organization, or (b)&nbsp;a natural person
residing in the United States.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;1.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Authority.</I>
Such Stockholder has all necessary power and authority to
execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated by
this Agreement to be consummated by such Stockholder. The
execution and delivery of this Agreement by such Stockholder and
the consummation by it of the transactions contemplated hereby
have been duly and validly authorized by all necessary action of
such Stockholder and no other proceedings on the part of such
Stockholder are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement
has been duly authorized and validly executed and delivered by
such Stockholder and constitutes a legal, valid and binding
obligation of such Stockholder, enforceable against such
Stockholder in accordance with its terms.
</FONT>

<P align="center"><FONT size="2">B-2
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;1.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>The
Subject Shares.</I> Such Stockholder is the record and
beneficial owner of, and has good and marketable title to, the
Subject Shares set forth opposite its name on Annex A hereto.
Such Stockholder does not own, of record or beneficially, any
shares of capital stock of Parent (or rights to acquire any such
shares) other than the Subject Shares set forth opposite its
name on Annex A hereto. Such Stockholder has (a)&nbsp;the sole
right to vote, (b)&nbsp;the sole power of disposition,
(c)&nbsp;the sole power to issue instructions with respect to
the matters set forth in Articles&nbsp;3, 4 and 5 hereof,
(d)&nbsp;the sole power to demand appraisal rights, if
applicable, and (e)&nbsp;the sole power to agree to all of the
matters set forth in this Agreement, in each case with respect
to all of such Stockholder&#146;s Subject Shares, with no
limitations, qualifications or restrictions on such rights,
subject to applicable federal securities laws and the terms of
this Agreement. Except for this Agreement, none of such
Stockholder&#146;s Subject Shares are subject to any voting
trust or other agreement, arrangement or restriction with
respect to the voting or disposition of such Stockholder&#146;s
Subject Shares. To such Stockholder&#146;s knowledge, all of its
Subject Shares are validly issued, fully paid and non-assessable.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;1.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>No
Conflicts.</I> The execution and delivery of this Agreement by
such Stockholder do not, and the performance of this Agreement
by such Stockholder will not, (a)&nbsp;conflict with or violate
any provision of the certificate or articles of incorporation or
by-laws or any equivalent organizational documents of such
Stockholder, (b)&nbsp;conflict with or violate any Law
applicable to such Stockholder or by which any property or asset
of such Stockholder is bound or affected, (c)&nbsp;require any
consent or approval under, result in any breach of, or loss of
any benefit under, or constitute a change of control or default
(or any event which with notice or lapse of time or both would
become a default) under, or give to others any right of
termination, vesting, amendment, acceleration or cancellation
of, or result in the creation of a lien or other encumbrance on
any property or asset of such Stockholder pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license,
permit or other instrument or obligation. The execution and
delivery of this Agreement by such Stockholder does not, and the
performance of this Agreement by such Stockholder will not,
require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Entity or other
person.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;1.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Brokers.</I>
No broker, finder or investment banker (other than the Company
Financial Advisor) is entitled to any brokerage, finder&#146;s
or other fee or commission in connection with the Merger based
upon arrangements made by or on behalf of such Stockholder.
</FONT>

<P align="center">
<FONT size="2">ARTICLE&nbsp;II
</FONT>

<P align="center">
<FONT size="2">REPRESENTATIONS AND WARRANTIES OF PARENT AND
MERGER SUB
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each of Parent and Merger Sub, jointly and
severally, hereby represents and warrants to each Stockholder as
follows:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;2.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Organization.</I>
Each of Parent and Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;2.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Authority.</I>
Each of Parent and Merger Sub has all necessary corporate power
and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions
contemplated by this Agreement to be consummated by Parent and
Merger Sub, respectively. The execution and delivery of this
Agreement by Parent and Merger Sub and the consummation by
Parent and Merger Sub of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate
action of Parent and Merger Sub and no other corporate
proceedings on the part of Parent or Merger Sub are necessary to
authorize this Agreement or to consummate the transactions
contemplated hereby (other than the approval of Parent, as sole
stockholder of Merger Sub, to the Merger and the approval of the
stockholders of Parent to the Share Issuance). This Agreement
has been duly authorized and validly executed and delivered by
Parent and Merger Sub and constitutes a legal, valid and binding
obligation of Parent and Merger Sub, enforceable against Parent
and Merger Sub in accordance with its terms.
</FONT>

<P align="center"><FONT size="2">B-3
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;2.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>No
Conflicts.</I> The execution and delivery of this Agreement by
Parent and Merger Sub do not, and the performance of this
Agreement by Parent and Merger Sub will not, (a)&nbsp;conflict
with or violate any provision of the certificate of
incorporation or by-laws of Parent or Merger Sub,
(b)&nbsp;conflict with or violate any Law applicable to Parent
or Merger Sub or by which any property or asset of Parent or
Merger Sub is bound or affected, (c)&nbsp;require any consent or
approval under, result in any breach of, or loss of any benefit
under, or constitute a change of control or default (or any
event which with notice or lapse of time or both would become a
default) under, or give to others any right of termination,
vesting, amendment, acceleration or cancellation of, or result
in the creation of a lien or other encumbrance on any property
or asset of Parent or Merger Sub pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit
or other instrument or obligation. The execution and delivery of
this Agreement by Parent and Merger Sub do not, and the
performance of this Agreement by Parent and Merger Sub will not,
require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Entity or other
person, except as may be required under the Exchange Act, the
Securities Act, any applicable Blue Sky Law or, the rules and
regulations of Nasdaq.
</FONT>

<P align="center">
<FONT size="2">ARTICLE&nbsp;III
</FONT>

<P align="center">
<FONT size="2">AGREEMENT TO VOTE
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each Stockholder, severally and not jointly,
agrees that:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;3.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Agreement
to Vote in Favor of the Approval of the Share Issuance.</I> At
any Parent Stockholders&#146; Meeting called to vote upon the
Share Issuance, however called, or at any adjournment thereof or
in connection with any written consent of the holders of Parent
Common Stock or in any other circumstances upon which a vote,
consent or other approval with respect to the Share Issuance is
sought, such Stockholder shall be present (in person or by
proxy) and shall vote (or cause to be voted) all Subject Shares
then beneficially owned by such Stockholder in favor of
(a)&nbsp;the Share Issuance and (b)&nbsp;any other matter
necessary for the consummation of the transactions contemplated
by the Share Issuance, the Merger or the Merger Agreement. In
addition, each Stockholder agrees that it will, upon request by
Parent, furnish written confirmation, in form and substance
reasonably satisfactory to Parent, of such Stockholder&#146;s
support for the Share Issuance. Each Stockholder acknowledges
receipt and review of a copy of the Merger Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;3.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Agreement
to Vote Against Acquisition Proposals.</I> At any Parent
Stockholders&#146; Meeting, however called, or at any
adjournment thereof or in connection with any written consent of
the holders of Parent Common Stock or in any other circumstances
upon which a vote, consent or other approval is sought, such
Stockholder shall be present (in person or by proxy) and shall
vote (or cause to be voted) all Subject Shares then beneficially
owned by such Stockholder against any action or agreement that
would impede, interfere with, delay, postpone or attempt to
discourage the Share Issuance, the Merger or the other
transactions contemplated by this Agreement and the Merger
Agreement, including, but not limited to the following:
(a)&nbsp;any Acquisition Proposal or extraordinary corporate
transaction, such as a merger, consolidation or other business
combination involving the Company or any of its subsidiaries
(other than the Merger); (b)&nbsp;a sale, lease, license or
transfer of a material amount of assets of the Company or any of
its subsidiaries or a reorganization, recapitalization,
dissolution, winding up or liquidation of the Company or any of
its subsidiaries; (c)&nbsp;any change in the management or board
of directors of the Company, except as contemplated by the
Merger Agreement or otherwise agreed to in writing by Parent;
(d)&nbsp;any material change in the present capitalization or
dividend policy of the Company; (e)&nbsp;any material change in
the Company&#146;s corporate structure, business, the Company
Certificate or the Company By-laws; or (f)&nbsp;any action or
agreement that would result in a breach of any representation,
warranty, covenant, agreement or other obligation of the Company
under the Merger Agreement or which could result in any of the
conditions to the Company&#146;s obligations under the Merger
Agreement not being fulfilled.
</FONT>

<P align="center"><FONT size="2">B-4
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<FONT size="2">ARTICLE&nbsp;IV
</FONT>

<P align="center">
<FONT size="2">GRANT OF IRREVOCABLE PROXY; APPOINTMENT OF PROXY
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;4.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Grant
of Proxy.</I> Each Stockholder hereby irrevocably grants to and
appoints Lonnie M. Smith and Susan K. Barnes, in their
respective capacities as officers of Parent, and any individual
who shall hereafter succeed to their respective offices of
Parent, and each of them individually, such Stockholder&#146;s
proxy and attorney-in-fact (with full power of substitution),
for and in the name, place and stead of such Stockholder, to
vote such Stockholder&#146;s Subject Shares, or grant a consent
or approval in respect of such Subject Shares, (a)&nbsp;in favor
of the Share Issuance and any other matter necessary for the
consummation of the transactions contemplated by the Merger
Agreement and (b)&nbsp;against any action or agreement that
would impede, interfere with, delay, postpone or attempt to
discourage the Share Issuance, the Merger or the other
transactions contemplated by this Agreement and the Merger
Agreement, including, but not limited to: (i)&nbsp;any
Acquisition Proposal or extraordinary corporate transaction,
such as a merger, consolidation or other business combination
involving the Company or any of its subsidiaries (other than the
Merger); (ii)&nbsp;a sale, lease, license or transfer of a
material amount of assets of the Company or any of its
subsidiaries or a reorganization, recapitalization, dissolution,
winding up or liquidation of the Company or any of its
subsidiaries; (iii)&nbsp;any change in the management or board
of directors of the Company, except as contemplated by the
Merger Agreement or otherwise agreed to in writing by Parent;
(iv)&nbsp;any material change in the present capitalization or
dividend policy of the Company; (v)&nbsp;any material change in
the Company&#146;s corporate structure, business, the Company
Certificate or the Company By-laws or (vi)&nbsp;any action or
agreement that would result in a breach of any representation,
warranty, covenant, agreement or other obligation of the Company
under the Merger Agreement or which could result in any of the
conditions to the Company&#146;s obligations under the Merger
Agreement not being fulfilled.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;4.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Revocation
of Prior Proxies.</I> Such Stockholder represents that any
proxies heretofore given in respect of such Stockholder&#146;s
Subject Shares are revocable, and that all such proxies are
hereby revoked.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;4.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Irrevocable
Proxy Coupled With an Interest.</I> Such Stockholder hereby
affirms that the irrevocable proxy set forth in this
Article&nbsp;4 is coupled with an interest, and may under no
circumstances be revoked. Such Stockholder hereby ratifies and
confirms all that such irrevocable proxy may lawfully do or
cause to be done by virtue hereof. Such irrevocable proxy is
executed and intended to be irrevocable in accordance with the
provisions of Section&nbsp;212(e) of the DGCL.
</FONT>

<P align="center">
<FONT size="2">ARTICLE&nbsp;V
</FONT>

<P align="center">
<FONT size="2">COVENANTS AND AGREEMENTS
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;5.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Restriction
on Transfer.</I> Each Stockholder agrees not (a)&nbsp;to sell,
transfer, pledge, encumber, assign or otherwise dispose of
(collectively, &#147;Transfer&#148;), or enter into any
contract, option or other arrangement or understanding with
respect to the Transfer by such Stockholder of, any of the
Subject Shares or offer any interest in any thereof to any
Person other than pursuant to the terms of the Merger or this
Agreement, (b)&nbsp;to enter into any voting arrangement or
understanding, whether by proxy, power of attorney, voting
agreement, voting trust or otherwise with respect to the Subject
Shares in connection with, directly or indirectly, any
Acquisition Proposal or otherwise and agrees not to commit or
agree to take any of the foregoing actions or (c)&nbsp;take any
action that would make any representation or warranty of such
Stockholder contained herein untrue or incorrect or have the
effect of preventing or disabling such Stockholder from
performing its obligations under this Agreement. Notwithstanding
the foregoing, each Stockholder shall have the right to Transfer
Subject Shares to an Affiliate upon the due execution and
delivery to Parent by such transferee of a legal, valid and
binding counterpart to this Agreement so long as any such
Transfer is not intended to circumvent the provisions of this
Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;5.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>No
Solicitation of Alternative Transactions.</I> No Stockholder
shall, directly or indirectly, take any action to, and each
Stockholder shall use its reasonable best efforts to cause its
agents
</FONT>

<P align="center"><FONT size="2">B-5
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">and representatives (including investment
bankers, attorneys or accountants) not to, (a)&nbsp;encourage
(including by way of furnishing non-public information),
solicit, initiate or facilitate any Acquisition Proposal,
(b)&nbsp;enter into any agreement with respect to any
Acquisition Proposal or enter into any agreement, arrangement or
understanding requiring the Company to abandon, terminate or
fail to consummate the Merger or any other transaction
contemplated by this Agreement or the Merger Agreement or
(c)&nbsp;participate in any way in discussions or negotiations
with, or furnish any information to, any person in connection
with, or take any other action to facilitate any inquiries or
the making of any proposal that constitutes, or could reasonably
be expected to lead to, any Acquisition Proposal. Upon the
execution of this Agreement, each Stockholder shall cease
immediately and cause to be terminated any and all existing
discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Proposal and promptly
request that all confidential information with respect thereto
furnished by such Stockholder be returned. Each Stockholder
shall, as promptly as practicable (and in no event later than 24
hours after receipt thereof), advise Parent of any inquiry
received by it relating to any potential Acquisition Proposal
and of the material terms of any proposal or inquiry, including
the identity of the person and its affiliates making the same,
that it may receive in respect of any such potential Acquisition
Proposal, or of any information requested from it or of any
negotiations or discussions being sought to be initiated with
it, and shall furnish to Parent a copy of any such proposal or
inquiry, if it is in writing, or a written summary of any such
proposal or inquiry, if it is not in writing, and shall keep
Parent fully informed on a prompt basis with respect to any
developments with respect to the foregoing.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;5.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Further
Assurances.</I> From time to time and without additional
consideration, each Stockholder shall use its reasonable best
efforts to assist and cooperate with Parent and to take, or
cause to be taken, all appropriate action, and to do, or cause
to be done, all things necessary, proper or advisable under any
applicable Law or otherwise to consummate and make effective, in
the most expeditious manner practicable, the Share Issuance, the
transactions contemplated by this Agreement and the Merger
Agreement. Without limiting the generality of the foregoing,
each Stockholder shall, from time to time, execute and deliver,
or cause to be executed and delivered, such additional or
further consents, documents and other instruments and shall take
all such other action as Parent may reasonably request for the
purpose of effectively carrying out the Share Issuance, the
transactions contemplated by this Agreement and the Merger
Agreement, including promptly making all regulatory filings and
applications, and to obtain all licenses, permits, consents,
approvals, authorizations, qualification and orders of
governmental authorities and parties to contracts as are
necessary for the consummation of the Share Issuance, the
transactions contemplated by this Agreement and the Merger
Agreement.
</FONT>

<P align="center">
<FONT size="2">ARTICLE&nbsp;VI
</FONT>

<P align="center">
<FONT size="2">GENERAL PROVISIONS
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Termination.</I>
Except with respect to Section&nbsp;6.3, which shall survive
termination, this Agreement, and all obligations, agreements and
waivers hereunder, will terminate and be of no further force and
effect on the earliest of (a)&nbsp;5:00&nbsp;p.m., Pacific
Standard Time, on the second anniversary of the date hereof,
(b)&nbsp;the Effective Time and (c)&nbsp;120&nbsp;days after
payment of any termination fee set forth in Section&nbsp;7.2.5
of the Merger Agreement; <I>provided, however</I>, that nothing
herein shall relieve any party from liability for any breach
hereof.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Board
of Directors Action.</I> No action taken by the Board of
Directors of Parent (including, without limitation, the
withdrawal, modification or amendment of the recommendation of
the Board of Directors of Parent that the stockholders of the
Parent vote in favor of the adoption of the Share Issuance)
shall modify, alter, change or otherwise affect the obligations
of any Stockholder hereunder.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stockholder
Capacity.</I> No person executing this Agreement who is or
becomes during the term hereof a director or officer of Parent
makes any agreement or understanding herein in his or her
capacity as such director or officer. Each Stockholder signs
solely in its capacity as the record holder and beneficial owner
of such Stockholder&#146;s Subject Shares and nothing herein
shall limit or affect any actions taken by any Stockholder in
his or her capacity as an officer or director of the Company to
the extent
</FONT>

<P align="center"><FONT size="2">B-6
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">specifically permitted by the Merger Agreement.
This Section&nbsp;6.3 shall survive termination of this
Agreement.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Parent
Guarantee.</I> Parent hereby guarantees the due performance of
any and all obligations and liabilities of Merger Sub under or
arising out of this Agreement and the transactions contemplated
hereby.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Enforcement.</I>
The parties agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties
shall be entitled to the remedy of specific performance of such
provisions and to an injunction or injunctions and/or such other
equitable relief as may be necessary to prevent breaches of this
Agreement and to enforce specifically the terms and provisions
of this Agreement in any court of competent jurisdiction, this
being in addition to any other remedy to which they are entitled
at law or in equity.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stop
Transfer Order.</I> In furtherance of this Agreement,
concurrently herewith, each Stockholder shall, and hereby does
authorize Parent&#146;s counsel to, notify Parent&#146;s
transfer agent that there is a stop transfer order with respect
to all of the Subject Shares (and that this Agreement places
limits on the voting and transfer of such shares).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Adjustments
to Prevent Dilution, Etc.</I> In the event of a stock dividend
or distribution, or any change in Parent&#146;s capital stock by
reason of any stock dividend, split-up, reclassification,
recapitalization, combination or the exchange of shares, the
term &#147;Subject Shares&#148; shall be deemed to refer to and
include the Subject Shares as well as all such stock dividends
and distributions and any shares into which or for which any or
all of the Subject Shares may be changed or exchanged. In such
event, the amount to be paid per share by Parent in the Merger
shall be proportionately adjusted.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Amendments.</I>
This Agreement may not be modified, altered, supplemented or
amended except by an instrument in writing signed by each of the
parties hereto.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Notice.</I>
All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered in person or upon
confirmation or receipt when transmitted by facsimile
transmission (but only if followed by transmittal by national
overnight courier or hand for delivery on the next business day)
or on receipt after dispatch by registered or certified mail,
postage prepaid, addressed, or on the next business day if
transmitted by national overnight courier to Parent or Merger
Sub in accordance with Section&nbsp;8.2 of the Merger Agreement
and to the Stockholders at their respective addresses set forth
in Annex A hereto (or to such other address as any party may
have furnished to the other parties in writing).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.10&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Interpretation.</I>
When a reference is made in this Agreement to Sections, such
reference shall be to a Section to this Agreement unless
otherwise indicated. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.11&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Counterparts.</I>
This Agreement may be executed in one or more counterparts, all
of which shall be considered one and the same agreement, and
shall become effective when one or more of the counterparts have
been signed by each of the parties and delivered to the other
party, it being understood that each party need not sign the
same counterpart.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.12&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Severability.</I>
If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of Law or
public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so
long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the
end that the transactions contemplated hereby are fulfilled to
the extent possible.
</FONT>

<P align="center"><FONT size="2">B-7
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.13&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Entire
Agreement; No Third-Party Beneficiaries.</I> This Agreement
(including, without limitation, the documents and instruments
referred to herein) (a)&nbsp;constitutes the entire agreement
and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject
matter hereof and (b)&nbsp;is not intended to confer upon any
Person other than the parties hereto any rights or remedies
hereunder.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.14&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Governing
Law.</I> This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without
regard to laws that may be applicable under conflicts of laws
principals.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.15&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Costs
and Expenses.</I> All costs and expenses incurred in connection
with this Agreement and the consummation of the transactions
contemplated hereby shall be paid by the party incurring such
expenses.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.16&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Multiple
Stockholders.</I> All representations, warranties, covenants and
agreements of the Stockholders in this Agreement are several and
not joint, and solely relate to matters involving the subject
Stockholder and not any of the other Stockholders.
</FONT>

<P align="center">
<FONT size="2">(Signature Pages Follow)
</FONT>

<P align="center"><FONT size="2">B-8
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">IN WITNESS WHEREOF, Parent, Merger Sub and each
Stockholder have caused this Agreement to be signed by their
respective officer thereunto duly authorized as of the date
first written above.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="60%"></TD>
    <TD width="40%"></TD>
</TR>

<TR valign="top">
    <TD align="left">
    <B><FONT size="2">INTUITIVE SURGICAL, INC.</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
    <TD width="40%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ LONNIE SMITH
    </FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="60%"></TD>
    <TD width="40%"></TD>
</TR>

<TR valign="top">
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD align="left">
    <FONT size="2">Name:&nbsp;Lonnie Smith
    </FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="55%"></TD>
    <TD width="40%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">Title:</FONT></TD>
    <TD align="left">
    <FONT size="2">President and Chief Executive Officer
    </FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="60%"></TD>
    <TD width="40%"></TD>
</TR>

<TR valign="top">
    <TD align="left">
    <B><FONT size="2">INTUITIVE MERGER CORPORATION</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD align="left">
    <B><FONT size="2">(FORMERLY IRON ACQUISITION <BR>
     CORPORATION)</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
    <TD width="40%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ LONNIE SMITH
    </FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="60%"></TD>
    <TD width="40%"></TD>
</TR>

<TR valign="top">
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD align="left">
    <FONT size="2">Name:&nbsp;Lonnie Smith
    </FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD align="left">
    <FONT size="2">Title:&nbsp;&nbsp;&nbsp;Director
    </FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD align="left">
    <B><FONT size="2">STOCKHOLDER</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
    <TD width="40%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ SUSAN BARNES
    </FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="60%"></TD>
    <TD width="40%"></TD>
</TR>

<TR valign="top">
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD align="left">
    <FONT size="2">Name:&nbsp;Susan Barnes
    </FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
    <TD width="40%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ GARY GUTHART
    </FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="60%"></TD>
    <TD width="40%"></TD>
</TR>

<TR valign="top">
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD align="left">
    <FONT size="2">Name:&nbsp;Gary Guthart
    </FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
    <TD width="40%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ SCOTT HALSTED
    </FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="60%"></TD>
    <TD width="40%"></TD>
</TR>

<TR valign="top">
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD align="left">
    <FONT size="2">Name:&nbsp;Scott Halsted
    </FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
    <TD width="40%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ RUSSELL HIRSCH
    </FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="60%"></TD>
    <TD width="40%"></TD>
</TR>

<TR valign="top">
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD align="left">
    <FONT size="2">Name:&nbsp;Russell Hirsch
    </FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
    <TD width="40%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ RICHARD KRAMER
    </FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="60%"></TD>
    <TD width="40%"></TD>
</TR>

<TR valign="top">
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD align="left">
    <FONT size="2">Name:&nbsp;Richard Kramer
    </FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">B-9
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
    <TD width="40%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ JIM LAWRENCE
    </FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="60%"></TD>
    <TD width="40%"></TD>
</TR>

<TR valign="top">
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD align="left">
    <FONT size="2">Name:&nbsp;Jim Lawrence
    </FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
    <TD width="40%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ ALAN LEVY
    </FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="60%"></TD>
    <TD width="40%"></TD>
</TR>

<TR valign="top">
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD align="left">
    <FONT size="2">Name:&nbsp;Alan Levy
    </FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
    <TD width="40%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ FRED MOLL
    </FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="60%"></TD>
    <TD width="40%"></TD>
</TR>

<TR valign="top">
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD align="left">
    <FONT size="2">Name:&nbsp;Fred Moll
    </FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
    <TD width="40%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ JEROME MCNAMARA
    </FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="60%"></TD>
    <TD width="40%"></TD>
</TR>

<TR valign="top">
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD align="left">
    <FONT size="2">Name:&nbsp;Jerome McNamara
    </FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
    <TD width="40%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ LONNIE SMITH
    </FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="60%"></TD>
    <TD width="40%"></TD>
</TR>

<TR valign="top">
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD align="left">
    <FONT size="2">Name:&nbsp;Lonnie Smith
    </FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">B-10
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">ANNEX A</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="23%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="58%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Address</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Subject Shares</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Susan Barnes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">c/o Intuitive Surgical, Inc., 950 Kifer Road,
    Sunnyvale, CA 94086
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">204,506</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gary Guthart
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">c/o Intuitive Surgical, Inc., 950 Kifer Road,
    Sunnyvale, CA 94086
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">33,297</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Scott Halsted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">c/o Intuitive Surgical, Inc., 950 Kifer Road,
    Sunnyvale, CA 94086
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">70,441</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Russell Hirsch
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">c/o Intuitive Surgical, Inc., 950 Kifer Road,
    Sunnyvale, CA 94086
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">79,851</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Richard Kramer
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">c/o Intuitive Surgical, Inc., 950 Kifer Road,
    Sunnyvale, CA 94086
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jim Lawrence
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">c/o Intuitive Surgical, Inc., 950 Kifer Road,
    Sunnyvale, CA 94086
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">20,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Alan Levy
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">c/o Intuitive Surgical, Inc., 950 Kifer Road,
    Sunnyvale, CA 94086
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">869</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fred Moll
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">c/o Intuitive Surgical, Inc., 950 Kifer Road,
    Sunnyvale, CA 94086
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1,349,553</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jerome McNamara
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">c/o Intuitive Surgical, Inc., 950 Kifer Road,
    Sunnyvale, CA 94086
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Lonnie Smith
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">c/o Intuitive Surgical, Inc., 950 Kifer Road,
    Sunnyvale, CA 94086
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Total</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><B><FONT size="2">2,758,517</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">B-11
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "ANNEX C" -->
<DIV align="left"><A NAME="105"></A></DIV>

<P align="center">
<B><FONT size="2">ANNEX C</FONT></B>

<P align="center">
<B><FONT size="2">STOCKHOLDER SUPPORT AGREEMENT</FONT></B>

<P align="center">
<B><FONT size="2">BY AND AMONG</FONT></B>

<P align="center">
<B><FONT size="2">INTUITIVE SURGICAL, INC.,</FONT></B>

<P align="center">
<B><FONT size="2">INTUITIVE MERGER CORPORATION</FONT></B>

<DIV align="center">
<B><FONT size="2">(FORMERLY IRON ACQUISITION
CORPORATION)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">AND</FONT></B>

<P align="center">
<B><FONT size="2">CERTAIN STOCKHOLDERS OF COMPUTER MOTION,
INC.</FONT></B>

<P align="center">
<B><FONT size="2">DATED AS OF MARCH&nbsp;7, 2003</FONT></B>

<P align="center"><FONT size="2">C-1
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">STOCKHOLDER SUPPORT AGREEMENT, dated as of
March&nbsp;7, 2003 (this &#147;Agreement&#148;), by and among
Intuitive Surgical, Inc., a Delaware corporation
(&#147;Parent&#148;), Intuitive Merger Corporation (formerly
Iron Acquisition Corporation), a Delaware corporation and a
wholly owned subsidiary of Parent (&#147;Merger Sub&#148;), and
the parties listed on Annex A hereto (each, a
&#147;Stockholder&#148; and, collectively, the
&#147;Stockholders&#148;).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">WHEREAS, simultaneously with the execution of
this Agreement, Parent, Merger Sub and Computer Motion, Inc., a
Delaware corporation (the &#147;Company&#148;), are entering
into an Agreement and Plan of Merger (the &#147;Merger
Agreement&#148;) (with all capitalized terms used but not
defined herein having the meanings set forth in the Merger
Agreement), pursuant to which Merger Sub will merge with and
into the Company, with the Company continuing as the surviving
corporation and a wholly owned subsidiary of Parent (the
&#147;Merger&#148;), which Merger Agreement has been approved by
the Boards of Directors of the Company, Merger Sub and Parent;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">WHEREAS, each Stockholder owns the number of
shares of Company Common Stock set forth opposite its name on
Annex&nbsp;A hereto (such shares of Company Common Stock,
together with any other shares of capital stock of the Company
acquired by such Stockholder after the date hereof and during
the term of this Agreement, including any shares issued upon the
exercise of any warrants or options, the conversion of any
convertible securities or otherwise, being collectively referred
to herein as the &#147;Subject Shares&#148;);
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">WHEREAS, as a condition to the willingness of
Parent and Merger Sub to enter into the Merger Agreement, Parent
has required that each Stockholder agree and, in order to induce
Parent and Merger Sub to enter into the Merger Agreement, each
Stockholder has agreed, to enter into this Agreement; and
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">WHEREAS, this Agreement has been approved by the
Board of Directors of the Company for purposes of
Section&nbsp;203 of the General Corporation Law of the State of
Delaware (the &#147;DGCL&#148;).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">NOW, THEREFORE, in consideration of the foregoing
and the respective representations, warranties, covenants and
agreements set forth in this Agreement and intending to be
legally bound, the parties hereto agree as follows:
</FONT>

<P align="center">
<FONT size="2">ARTICLE&nbsp;I
</FONT>

<P align="center">
<FONT size="2">REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each Stockholder, severally and not jointly,
hereby represents and warrants to Parent and Merger Sub as
follows:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;1.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Organization.</I>
Such Stockholder is either (a)&nbsp;a corporation, partnership
or limited liability company, duly organized, validly existing
and in good standing under the laws of the jurisdiction of such
Stockholder&#146;s organization, or (b)&nbsp;a natural person
residing in the United States.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;1.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Authority.</I>
Such Stockholder has all necessary power and authority to
execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated by
this Agreement to be consummated by such Stockholder. The
execution and delivery of this Agreement by such Stockholder and
the consummation by it of the transactions contemplated hereby
have been duly and validly authorized by all necessary action of
such Stockholder and no other proceedings on the part of such
Stockholder are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement
has been duly authorized and validly executed and delivered by
such Stockholder and constitutes a legal, valid and binding
obligation of such Stockholder, enforceable against such
Stockholder in accordance with its terms.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;1.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>The
Subject Shares.</I> Such Stockholder is the record and
beneficial owner of, and has good and marketable title to, the
Subject Shares set forth opposite its name on Annex A hereto.
Such Stockholder does not own, of record or beneficially, any
shares of capital stock of the Company (or rights to acquire any
such shares) other than the Subject Shares set forth opposite
its name on Annex A hereto.
</FONT>

<P align="center"><FONT size="2">C-2
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">Such Stockholder has (a)&nbsp;the sole right to
vote, (b)&nbsp;the sole power of disposition, (c)&nbsp;the sole
power to issue instructions with respect to the matters set
forth in Articles&nbsp;3, 4 and 5 hereof, (d)&nbsp;the sole
power to demand appraisal rights, if applicable, and
(e)&nbsp;the sole power to agree to all of the matters set forth
in this Agreement, in each case with respect to all of such
Stockholder&#146;s Subject Shares, with no limitations,
qualifications or restrictions on such rights, subject to
applicable federal securities laws and the terms of this
Agreement. Except for this Agreement, none of such
Stockholder&#146;s Subject Shares are subject to any voting
trust or other agreement, arrangement or restriction with
respect to the voting or disposition of such Stockholder&#146;s
Subject Shares. To such Stockholder&#146;s knowledge, all of its
Subject Shares are validly issued, fully paid and non-assessable.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;1.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>No
Conflicts.</I> The execution and delivery of this Agreement by
such Stockholder do not, and the performance of this Agreement
by such Stockholder will not, (a)&nbsp;conflict with or violate
any provision of the certificate or articles of incorporation or
by-laws or any equivalent organizational documents of such
Stockholder, (b)&nbsp;conflict with or violate any Law
applicable to such Stockholder or by which any property or asset
of such Stockholder is bound or affected, (c)&nbsp;require any
consent or approval under, result in any breach of, or loss of
any benefit under, or constitute a change of control or default
(or any event which with notice or lapse of time or both would
become a default) under, or give to others any right of
termination, vesting, amendment, acceleration or cancellation
of, or result in the creation of a lien or other encumbrance on
any property or asset of such Stockholder pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license,
permit or other instrument or obligation. The execution and
delivery of this Agreement by such Stockholder does not, and the
performance of this Agreement by such Stockholder will not,
require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Entity or other
person.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;1.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Brokers.</I>
No broker, finder or investment banker (other than the Company
Financial Advisor) is entitled to any brokerage, finder&#146;s
or other fee or commission in connection with the Merger based
upon arrangements made by or on behalf of such Stockholder.
</FONT>

<P align="center">
<FONT size="2">ARTICLE&nbsp;II
</FONT>

<P align="center">
<FONT size="2">REPRESENTATIONS AND WARRANTIES OF PARENT AND
MERGER SUB
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each of Parent and Merger Sub, jointly and
severally, hereby represents and warrants to each Stockholder as
follows:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;2.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Organization.</I>
Each of Parent and Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;2.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Authority.</I>
Each of Parent and Merger Sub has all necessary corporate power
and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions
contemplated by this Agreement to be consummated by Parent and
Merger Sub, respectively. The execution and delivery of this
Agreement by Parent and Merger Sub and the consummation by
Parent and Merger Sub of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate
action of Parent and Merger Sub and no other corporate
proceedings on the part of Parent or Merger Sub are necessary to
authorize this Agreement or to consummate the transactions
contemplated hereby (other than the approval of Parent, as sole
stockholder of Merger Sub, to the Merger and the approval of the
stockholders of Parent to the Share Issuance). This Agreement
has been duly authorized and validly executed and delivered by
Parent and Merger Sub and constitutes a legal, valid and binding
obligation of Parent and Merger Sub, enforceable against Parent
and Merger Sub in accordance with its terms.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;2.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>No
Conflicts.</I> The execution and delivery of this Agreement by
Parent and Merger Sub do not, and the performance of this
Agreement by Parent and Merger Sub will not, (a)&nbsp;conflict
with or violate any provision of the certificate of
incorporation or by-laws of Parent or Merger Sub,
(b)&nbsp;conflict with or violate any Law applicable to Parent
or Merger Sub or by which any property or asset of Parent or
Merger Sub is bound or affected, (c)&nbsp;require any consent or
approval under, result in any breach of, or
</FONT>

<P align="center"><FONT size="2">C-3
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">loss of any benefit under, or constitute a change
of control or default (or any event which with notice or lapse
of time or both would become a default) under, or give to others
any right of termination, vesting, amendment, acceleration or
cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of Parent or Merger Sub
pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit or other instrument or
obligation. The execution and delivery of this Agreement by
Parent and Merger Sub do not, and the performance of this
Agreement by Parent and Merger Sub will not, require any
consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entity or other person, except
as may be required under the Exchange Act, the Securities Act,
any applicable Blue Sky Law or, the rules and regulations of
Nasdaq.
</FONT>
</DIV>

<P align="center">
<FONT size="2">ARTICLE&nbsp;III
</FONT>

<P align="center">
<FONT size="2">AGREEMENT TO VOTE
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each Stockholder, severally and not jointly,
agrees that:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;3.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Agreement
to Vote in Favor of the Adoption of the Merger Agreement.</I> At
any Company Stockholders&#146; Meeting called to vote upon the
Merger Agreement and the transactions contemplated thereby,
however called, or at any adjournment thereof or in connection
with any written consent of the holders of Company Common Stock
or in any other circumstances upon which a vote, consent or
other approval with respect to the Merger Agreement and the
transactions contemplated thereby is sought, such Stockholder
shall be present (in person or by proxy) and shall vote (or
cause to be voted) all Subject Shares then beneficially owned by
such Stockholder in favor of (a)&nbsp;the Merger and adoption of
the Merger Agreement and the transactions contemplated thereby
and (b)&nbsp;any other matter necessary for the consummation of
the transactions contemplated by the Merger Agreement. In
addition, each Stockholder agrees that it will, upon request by
Parent, furnish written confirmation, in form and substance
reasonably satisfactory to Parent, of such Stockholder&#146;s
support for the Merger Agreement and the Merger. Each
Stockholder acknowledges receipt and review of a copy of the
Merger Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;3.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Agreement
to Vote Against Acquisition Proposals.</I> At any Company
Stockholders&#146; Meeting, however called, or at any
adjournment thereof or in connection with any written consent of
the holders of Company Common Stock or in any other
circumstances upon which a vote, consent or other approval is
sought, such Stockholder shall be present (in person or by
proxy) and shall vote (or cause to be voted) all Subject Shares
then beneficially owned by such Stockholder against any action
or agreement that would impede, interfere with, delay, postpone
or attempt to discourage the Merger or the other transactions
contemplated by this Agreement and the Merger Agreement,
including, but not limited to the following: (a)&nbsp;any
Acquisition Proposal or extraordinary corporate transaction,
such as a merger, consolidation or other business combination
involving the Company or any of its subsidiaries (other than the
Merger); (b)&nbsp;a sale, lease, license or transfer of a
material amount of assets of the Company or any of its
subsidiaries or a reorganization, recapitalization, dissolution,
winding up or liquidation of the Company or any of its
subsidiaries; (c)&nbsp;any change in the management or board of
directors of the Company, except as contemplated by the Merger
Agreement or otherwise agreed to in writing by Parent;
(d)&nbsp;any material change in the present capitalization or
dividend policy of the Company; (e)&nbsp;any material change in
the Company&#146;s corporate structure, business, the Company
Certificate or the Company By-laws; or (f)&nbsp;any action or
agreement that would result in a breach of any representation,
warranty, covenant, agreement or other obligation of the Company
under the Merger Agreement or which could result in any of the
conditions to the Company&#146;s obligations under the Merger
Agreement not being fulfilled.
</FONT>

<P align="center">
<FONT size="2">ARTICLE&nbsp;IV
</FONT>

<P align="center">
<FONT size="2">GRANT OF IRREVOCABLE PROXY; APPOINTMENT OF PROXY
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;4.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Grant
of Proxy.</I> Each Stockholder hereby irrevocably grants to and
appoints Lonnie M. Smith and Susan K. Barnes, in their
respective capacities as officers of Parent, and any individual
who shall hereafter succeed to their respective offices of
Parent, and each of them individually, such
</FONT>

<P align="center"><FONT size="2">C-4
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">Stockholder&#146;s proxy and attorney-in-fact
(with full power of substitution), for and in the name, place
and stead of such Stockholder, to vote such Stockholder&#146;s
Subject Shares, or grant a consent or approval in respect of
such Subject Shares, (a)&nbsp;in favor of the Merger and
adoption of the Merger Agreement and the transactions
contemplated thereby and any other matter necessary for the
consummation of the transactions contemplated by the Merger
Agreement and (b)&nbsp;against any action or agreement that
would impede, interfere with, delay, postpone or attempt to
discourage the Merger or the other transactions contemplated by
this Agreement and the Merger Agreement, including, but not
limited to: (i)&nbsp;any Acquisition Proposal or extraordinary
corporate transaction, such as a merger, consolidation or other
business combination involving the Company or any of its
subsidiaries (other than the Merger); (ii)&nbsp;a sale, lease,
license or transfer of a material amount of assets of the
Company or any of its subsidiaries or a reorganization,
recapitalization, dissolution, winding up or liquidation of the
Company or any of its subsidiaries; (iii)&nbsp;any change in the
management or board of directors of the Company, except as
contemplated by the Merger Agreement or otherwise agreed to in
writing by Parent; (iv)&nbsp;any material change in the present
capitalization or dividend policy of the Company; (v)&nbsp;any
material change in the Company&#146;s corporate structure,
business, the Company Certificate or the Company By-laws or
(vi)&nbsp;any action or agreement that would result in a breach
of any representation, warranty, covenant, agreement or other
obligation of the Company under the Merger Agreement or which
could result in any of the conditions to the Company&#146;s
obligations under the Merger Agreement not being fulfilled.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;4.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Revocation
of Prior Proxies.</I> Such Stockholder represents that any
proxies heretofore given in respect of such Stockholder&#146;s
Subject Shares are revocable, and that all such proxies are
hereby revoked.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;4.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Irrevocable
Proxy Coupled With an Interest.</I> Such Stockholder hereby
affirms that the irrevocable proxy set forth in this
Article&nbsp;4 is coupled with an interest, and may under no
circumstances be revoked. Such Stockholder hereby ratifies and
confirms all that such irrevocable proxy may lawfully do or
cause to be done by virtue hereof. Such irrevocable proxy is
executed and intended to be irrevocable in accordance with the
provisions of Section&nbsp;212(e) of the DGCL.
</FONT>

<P align="center">
<FONT size="2">ARTICLE&nbsp;V
</FONT>

<P align="center">
<FONT size="2">COVENANTS AND AGREEMENTS
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;5.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Restriction
on Transfer.</I> Each Stockholder agrees not (a)&nbsp;to sell,
transfer, pledge, encumber, assign or otherwise dispose of
(collectively, &#147;Transfer&#148;), or enter into any
contract, option or other arrangement or understanding with
respect to the Transfer by such Stockholder of, any of the
Subject Shares or offer any interest in any thereof to any
Person other than pursuant to the terms of the Merger or this
Agreement[; provided, however, that notwithstanding the
foregoing prohibition, Stockholder may pledge up to
1,500,000&nbsp;shares of Stockholder&#146;s Subject Shares to a
bank or similar financial institution for the sole purpose of
securing a personal loan](1), (b)&nbsp;to enter into any voting
arrangement or understanding, whether by proxy, power of
attorney, voting agreement, voting trust or otherwise with
respect to the Subject Shares in connection with, directly or
indirectly, any Acquisition Proposal or otherwise and agrees not
to commit or agree to take any of the foregoing actions or
(c)&nbsp;take any action that would make any representation or
warranty of such Stockholder contained herein untrue or
incorrect or have the effect of preventing or disabling such
Stockholder from performing its obligations under this
Agreement. Notwithstanding the foregoing, each Stockholder shall
have the right to Transfer Subject Shares to an Affiliate upon
the due execution and delivery to Parent by such transferee of a
legal, valid and binding counterpart to this Agreement so long
as any such Transfer is not intended to circumvent the
provisions of this Agreement.
</FONT>

<DIV align="left">

</DIV>

<P align="left">
<HR size="1" width="25%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Bracketed language applies to the Stockholder
    Support Agreement entered into with Robert Duggan only.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">C-5
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;5.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>No
Solicitation of Alternative Transactions.</I> No Stockholder
shall, directly or indirectly, take any action to, and each
Stockholder shall use its reasonable best efforts to cause its
agents and representatives (including investment bankers,
attorneys or accountants) not to, (a)&nbsp;encourage (including
by way of furnishing non-public information), solicit, initiate
or facilitate any Acquisition Proposal, (b)&nbsp;enter into any
agreement with respect to any Acquisition Proposal or enter into
any agreement, arrangement or understanding requiring the
Company to abandon, terminate or fail to consummate the Merger
or any other transaction contemplated by this Agreement or the
Merger Agreement or (c)&nbsp;participate in any way in
discussions or negotiations with, or furnish any information to,
any person in connection with, or take any other action to
facilitate any inquiries or the making of any proposal that
constitutes, or could reasonably be expected to lead to, any
Acquisition Proposal. Upon the execution of this Agreement, each
Stockholder shall cease immediately and cause to be terminated
any and all existing discussions or negotiations with any
parties conducted heretofore with respect to any Acquisition
Proposal and promptly request that all confidential information
with respect thereto furnished by such Stockholder be returned.
Each Stockholder shall, as promptly as practicable (and in no
event later than 24 hours after receipt thereof), advise Parent
of any inquiry received by it relating to any potential
Acquisition Proposal and of the material terms of any proposal
or inquiry, including the identity of the person and its
affiliates making the same, that it may receive in respect of
any such potential Acquisition Proposal, or of any information
requested from it or of any negotiations or discussions being
sought to be initiated with it, and shall furnish to Parent a
copy of any such proposal or inquiry, if it is in writing, or a
written summary of any such proposal or inquiry, if it is not in
writing, and shall keep Parent fully informed on a prompt basis
with respect to any developments with respect to the foregoing.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;5.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Further
Assurances.</I> From time to time and without additional
consideration, each Stockholder shall use its reasonable best
efforts to assist and cooperate with Parent and to take, or
cause to be taken, all appropriate action, and to do, or cause
to be done, all things necessary, proper or advisable under any
applicable Law or otherwise to consummate and make effective, in
the most expeditious manner practicable, the transactions
contemplated by this Agreement and the Merger Agreement. Without
limiting the generality of the foregoing, each Stockholder
shall, from time to time, execute and deliver, or cause to be
executed and delivered, such additional or further consents,
documents and other instruments and shall take all such other
action as Parent may reasonably request for the purpose of
effectively carrying out the transactions contemplated by this
Agreement and the Merger Agreement, including promptly making
all regulatory filings and applications, and to obtain all
licenses, permits, consents, approvals, authorizations,
qualification and orders of governmental authorities and parties
to contracts as are necessary for the consummation of the
transactions contemplated by this Agreement and the Merger
Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;5.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Waiver
of Dissenter&#146;s and Appraisal Rights.</I> Each Stockholder
agrees that it will not exercise any rights to dissent from the
Merger or request appraisal of its respective Subject Shares
pursuant to Section&nbsp;262 of the DGCL or any other similar
provisions of law in connection with the Merger.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;5.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Lock-Up
Agreement.</I> Each Stockholder agrees that, in connection with
any public offering of Parent Common Stock or securities
convertible into Parent Common Stock conducted by Parent after
the Effective Time (a &#147;Financing&#148;) and at the request
of any managing underwriter of such Financing, it will enter
into a customary &#147;lock-up&#148; agreement pursuant to which
it will agree beginning on the date of the final prospectus
delivered in connection with such Financing and ending on a date
no later than ninety (90)&nbsp;days thereafter, to not, directly
or indirectly, without the prior written consent of such
managing underwriter, issue, sell, offer or agree to sell, grant
any option for the sale of, pledge, make any short sale or
maintain any short position, establish or maintain any &#147;put
equivalent position&#148; (within the meaning of
Rule&nbsp;16-a-1(h) under the Exchange Act), enter into any
swap, derivative or other arrangement that transfers to another,
in whole or in part, any of the economic consequences of
ownership of Parent Common Stock (whether any such transaction
is to be settled by delivery of Parent Common Stock, other
securities, cash or other consideration) or otherwise dispose
of, any Parent Common Stock (or any securities convertible into,
exercisable for or exchangeable for Parent Common Stock) or
interest therein of Parent or any Parent Subsidiary.
</FONT>

<P align="center"><FONT size="2">C-6
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<FONT size="2">ARTICLE&nbsp;VI
</FONT>

<P align="center">
<FONT size="2">GENERAL PROVISIONS
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Termination.</I>
Except with respect to Sections&nbsp;5.5 and 6.3, which shall
survive termination, this Agreement, and all obligations,
agreements and waivers hereunder, will terminate and be of no
further force and effect on the earliest of
(a)&nbsp;5:00&nbsp;p.m., Pacific Standard Time, on the second
anniversary of the date hereof, (b)&nbsp;the Effective Time and
(c)&nbsp;120&nbsp;days after payment of any termination fee set
forth in Section&nbsp;7.2.5 of the Merger Agreement;
<I>provided, however</I>, that nothing herein shall relieve any
party from liability for any breach hereof.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Board
of Directors Action.</I> No action taken by the Board of
Directors of the Company (including, without limitation, the
withdrawal, modification or amendment of the recommendation of
the Board of Directors of the Company that the stockholders of
the Company vote in favor of the adoption of the Merger
Agreement) shall modify, alter, change or otherwise affect the
obligations of any Stockholder hereunder.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stockholder
Capacity.</I> No person executing this Agreement who is or
becomes during the term hereof a director or officer of the
Company makes any agreement or understanding herein in his or
her capacity as such director or officer. Each Stockholder signs
solely in its capacity as the record holder and beneficial owner
of such Stockholder&#146;s Subject Shares and nothing herein
shall limit or affect any actions taken by any Stockholder in
his or her capacity as an officer or director of the Company to
the extent specifically permitted by the Merger Agreement. This
Section&nbsp;6.3 shall survive termination of this Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Parent
Guarantee.</I> Parent hereby guarantees the due performance of
any and all obligations and liabilities of Merger Sub under or
arising out of this Agreement and the transactions contemplated
hereby.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Enforcement.</I>
The parties agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties
shall be entitled to the remedy of specific performance of such
provisions and to an injunction or injunctions and/or such other
equitable relief as may be necessary to prevent breaches of this
Agreement and to enforce specifically the terms and provisions
of this Agreement in any court of competent jurisdiction, this
being in addition to any other remedy to which they are entitled
at law or in equity.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stop
Transfer Order.</I> In furtherance of this Agreement,
concurrently herewith, each Stockholder shall, and hereby does
authorize the Company&#146;s counsel to, notify the
Company&#146;s transfer agent that there is a stop transfer
order with respect to all of the Subject Shares (and that this
Agreement places limits on the voting and transfer of such
shares).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Adjustments
to Prevent Dilution, Etc.</I> In the event of a stock dividend
or distribution, or any change in the Company&#146;s capital
stock by reason of any stock dividend, split-up,
reclassification, recapitalization, combination or the exchange
of shares, the term &#147;Subject Shares&#148; shall be deemed
to refer to and include the Subject Shares as well as all such
stock dividends and distributions and any shares into which or
for which any or all of the Subject Shares may be changed or
exchanged. In such event, the amount to be paid per share by
Parent in the Merger shall be proportionately adjusted.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Amendments.</I>
This Agreement may not be modified, altered, supplemented or
amended except by an instrument in writing signed by each of the
parties hereto.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Notice.</I>
All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered in person or upon
confirmation or receipt when transmitted by facsimile
transmission (but only if followed by transmittal by national
overnight courier or hand for delivery on the next business day)
or on receipt after dispatch by registered or certified mail,
postage prepaid, addressed, or on the next business day if
transmitted by national overnight courier to Parent or Merger
Sub in accordance with Section&nbsp;8.2 of the Merger Agreement
and to the Stockholders at their respective
</FONT>

<P align="center"><FONT size="2">C-7
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">addresses set forth in Annex&nbsp;A hereto (or to
such other address as any party may have furnished to the other
parties in writing).
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.10&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Interpretation.</I>
When a reference is made in this Agreement to Sections, such
reference shall be to a Section to this Agreement unless
otherwise indicated. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.11&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Counterparts.</I>
This Agreement may be executed in one or more counterparts, all
of which shall be considered one and the same agreement, and
shall become effective when one or more of the counterparts have
been signed by each of the parties and delivered to the other
party, it being understood that each party need not sign the
same counterpart.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.12&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Severability.</I>
If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of Law or
public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so
long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the
end that the transactions contemplated hereby are fulfilled to
the extent possible.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.13&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Entire
Agreement; No Third-Party Beneficiaries.</I> This Agreement
(including, without limitation, the documents and instruments
referred to herein) (a)&nbsp;constitutes the entire agreement
and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject
matter hereof and (b)&nbsp;is not intended to confer upon any
Person other than the parties hereto any rights or remedies
hereunder.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.14&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Governing
Law.</I> This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without
regard to laws that may be applicable under conflicts of laws
principals.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.15&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Costs
and Expenses.</I> All costs and expenses incurred in connection
with this Agreement and the consummation of the transactions
contemplated hereby shall be paid by the party incurring such
expenses.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SECTION&nbsp;6.16&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Multiple
Stockholders.</I> All representations, warranties, covenants and
agreements of the Stockholders in this Agreement are several and
not joint, and solely relate to matters involving the subject
Stockholder and not any of the other Stockholders.
</FONT>

<P align="center">
<FONT size="2">(Signature Pages Follow)
</FONT>

<P align="center"><FONT size="2">C-8
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">IN WITNESS WHEREOF, Parent, Merger Sub and each
Stockholder have caused this Agreement to be signed by their
respective officer thereunto duly authorized as of the date
first written above.
</FONT>

<P align="left">
<B><FONT size="2">INTUITIVE SURGICAL, INC.</FONT></B>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ SUSAN K. BARNES
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">
<HR size="1" width="73%" align="left" noshade>
</DIV>

<DIV align="left">
<FONT size="2">Name:&nbsp;Susan K. Barnes
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Title:&nbsp;&nbsp;Chief Financial Officer
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">INTUITIVE MERGER CORPORATION</FONT></B>

<DIV align="left">
<B><FONT size="2">(FORMERLY IRON ACQUISITION
CORPORATION)</FONT></B>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ SUSAN K. BARNES
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">
<HR size="1" width="73%" align="left" noshade>
</DIV>

<DIV align="left">
<FONT size="2">Name:&nbsp;Susan K. Barnes
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Title:&nbsp;&nbsp;Director
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">STOCKHOLDERS</FONT></B>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ ROBERT DUGGAN
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">
<HR size="1" width="73%" align="left" noshade>
</DIV>

<DIV align="left">
<FONT size="2">Name:&nbsp;Robert Duggan
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ EUGENE TEAL
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">
<HR size="1" width="73%" align="left" noshade>
</DIV>

<DIV align="left">
<FONT size="2">Name: Eugene Teal
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ DAVID STUART
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">
<HR size="1" width="73%" align="left" noshade>
</DIV>

<DIV align="left">
<FONT size="2">Name: David Stuart
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ DAVID MUNJAL
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">
<HR size="1" width="73%" align="left" noshade>
</DIV>

<DIV align="left">
<FONT size="2">Name: David Munjal
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ JEFFREY HENLEY
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">
<HR size="1" width="73%" align="left" noshade>
</DIV>

<DIV align="left">
<FONT size="2">Name: Jeffrey Henley
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ DARRIN UECKER
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">
<HR size="1" width="73%" align="left" noshade>
</DIV>

<DIV align="left">
<FONT size="2">Name: Darrin Uecker
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ ERIC HALVORSON
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">
<HR size="1" width="73%" align="left" noshade>
</DIV>

<DIV align="left">
<FONT size="2">Name: Eric Halvorson
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ DANIEL DOIRON
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">
<HR size="1" width="73%" align="left" noshade>
</DIV>

<DIV align="left">
<FONT size="2">Name: Daniel Doiron
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ JOSEPH DEVIVO
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">
<HR size="1" width="73%" align="left" noshade>
</DIV>

<DIV align="left">
<FONT size="2">Name: Joseph DeVivo
</FONT>
</DIV>

<P align="center"><FONT size="2">C-9
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ STEPHEN PEDROFF
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">
<HR size="1" width="73%" align="left" noshade>
</DIV>

<DIV align="left">
<FONT size="2">Name: Stephen Pedroff
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ WILLIAM MELOCHE
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">
<HR size="1" width="73%" align="left" noshade>
</DIV>

<DIV align="left">
<FONT size="2">Name: William Meloche
</FONT>
</DIV>

<P align="center"><FONT size="2">C-10
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">ANNEX A</FONT></B>


<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="16%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="64%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Address</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Subject Shares</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Robert Duggan
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">c/o Computer Motion, Inc.<BR>
    130-B Cremona Drive, Santa Barbara, CA 93117
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">3,629,095</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Daniel Doiron
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">c/o Computer Motion, Inc.<BR>
    130-B Cremona Drive, Santa Barbara, CA 93117
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">72,953</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jeffrey Henley
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">c/o Computer Motion, Inc.<BR>
    130-B Cremona Drive, Santa Barbara, CA 93117
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">158,203</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">David Stuart
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">c/o Computer Motion, Inc.<BR>
    130-B Cremona Drive, Santa Barbara, CA 93117
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1,924</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Darrin Uecker
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">c/o Computer Motion, Inc.<BR>
    130-B Cremona Drive, Santa Barbara, CA 93117
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">B Meloche
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">c/o Computer Motion, Inc.<BR>
    130-B Cremona Drive, Santa Barbara, CA 93117
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">S Pedroff
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">c/o Computer Motion, Inc.<BR>
    130-B Cremona Drive, Santa Barbara, CA 93117
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">8,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">David Munjal
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">c/o Computer Motion, Inc.<BR>
    130-B Cremona Drive, Santa Barbara, CA 93117
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">3,584</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Joseph DeVivo
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">c/o Computer Motion, Inc.<BR>
    130-B Cremona Drive, Santa Barbara, CA 93117
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">100,842</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Eugene Teal
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">c/o Computer Motion, Inc.<BR>
    130-B Cremona Drive, Santa Barbara, CA 93117
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Eric Halvorson
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">c/o Computer Motion, Inc.<BR>
    130-B Cremona Drive, Santa Barbara, CA 93117
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">8,918</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Total</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><B><FONT size="2">3,983,519</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>


<P align="center"><FONT size="2">C-11
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "ANNEX D" -->
<DIV align="left"><A NAME="106"></A></DIV>

<DIV align="center">
<B><FONT size="2"> ANNEX D</FONT></B>
</DIV>

<P align="center">
<IMG src="f88583b3f8858312.gif" alt="(BEAR STEARNS LETTERHEAD)">

<DIV align="left">
<B><FONT size="2"> </FONT></B><FONT size="2">As of March&nbsp;6,
2003
</FONT>
</DIV>

<P align="left">
<FONT size="2">The Board of Directors <BR>
 Intuitive Surgical, Inc. <BR>
 950 Kifer Road <BR>
 Sunnyvale, CA 94086
</FONT>

<P align="left">
<FONT size="2">Gentlemen:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We understand that Intuitive Surgical, Inc.
(&#147;Intuitive Surgical&#148;), Iron Acquisition Corporation,
a wholly owned subsidiary of Intuitive Surgical (&#147;Merger
Sub&#148;), and Computer Motion, Inc. (&#147;Computer
Motion&#148;) will enter into an Agreement and Plan of Merger
(the &#147;Merger Agreement&#148;) pursuant to which Merger Sub
shall be merged with and into Computer Motion (the
&#147;Merger&#148;). Pursuant to the Merger Agreement, each
share of common stock, par value $0.001 per share, of Computer
Motion (&#147;Computer Motion Common Stock&#148;) issued and
outstanding will be converted into the right to receive a number
of shares of common stock, par value $0.001 per share, of
Intuitive Surgical (&#147;Intuitive Surgical Common Stock&#148;)
equal to the Exchange Ratio (as defined in the Merger Agreement)
and each share of preferred stock, par value $0.001 per share,
of Computer Motion (&#147;Computer Motion Preferred Stock&#148;)
issued and outstanding will be converted into the right to
receive a number of shares of Intuitive Surgical Common Stock
equal to that number of shares of Computer Motion Common Stock
into which the Computer Motion Preferred Stock would have been
convertible multiplied by the Exchange Ratio. The Computer
Motion Common Stock together with the Computer Motion Preferred
Stock is referred to as the Computer Motion Stock. All
unexercised and unexpired warrants to purchase Computer Motion
Stock (&#147;Computer Motion Warrants&#148;) will be assumed by
Intuitive Surgical. Each Computer Motion Warrant so assumed by
Intuitive Surgical under the Merger Agreement will continue to
have, and be subject to, the same terms and conditions as set
forth in such Computer Motion Warrant and any agreements
executed in connection therewith, except that (i)&nbsp;each
Computer Motion Warrant will be exercisable (or will become
exercisable in accordance with its terms) for that number of
whole shares of Intuitive Surgical Common Stock equal to the
product of the number of shares of Computer Motion Common Stock
that were issuable upon exercise of such Computer Motion Warrant
(or issuable upon conversion of the Computer Motion Preferred
Stock issuable upon exercise of such Computer Motion Warrant)
multiplied by the Exchange Ratio, rounded down to the nearest
whole number of shares of Intuitive Surgical Common Stock and
(ii)&nbsp;the per share exercise price for the shares of
Intuitive Surgical Common Stock issuable upon exercise of such
Computer Motion Warrant assumed, will be equal to the quotient
determined by dividing the exercise price per share of Computer
Motion Common Stock at which such Computer Motion Warrant was
exercisable by the Exchange Ratio, rounded up to the nearest
whole cent. You have provided us with a draft of the Merger
Agreement which is in substantially final form.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You have asked us to render our opinion as to
whether the Exchange Ratio is fair, from a financial point of
view, to Intuitive Surgical.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the course of performing our review and
analyses for rendering this opinion, we have:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed a draft of the Merger Agreement in
    substantially final form;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed Computer Motion&#146;s Annual Reports to
    Shareholders and Annual Reports on Form&nbsp;10-K for the years
    ended December&nbsp;31, 1999 through 2001, its Quarterly Reports
    on Form&nbsp;10-Q for the periods ended March&nbsp;31, 2002,
    June&nbsp;30, 2002 and September&nbsp;30, 2002, its preliminary
    results for the quarter and year ended December&nbsp;31, 2002
    and its Reports on Form&nbsp;8-K for the three years ended the
    date hereof;
    </FONT></TD>
</TR>

</TABLE>

<P align="center">
<IMG src="f88583b3f8858314.gif" alt="(BEAR STEARNS LETTERHEAD)">

<P align="center"><FONT size="2">D-1
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">Intuitive Surgical, Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">As of March&nbsp;6, 2003
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Page 2
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed certain operating and financial
    information relating to Computer Motion&#146;s business and
    prospects, including projections for the three years ended
    December&nbsp;31, 2005, all as prepared and provided to us by
    Computer Motion&#146;s management (the &#147;Computer Motion
    Projections&#148;);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">met with certain members of Computer
    Motion&#146;s senior management to discuss Computer
    Motion&#146;s business, operations, historical financial
    results, the Computer Motion Projections and future prospects;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed Intuitive Surgical&#146;s IPO Prospectus
    on Form S-1 Registration Statement dated June&nbsp;13, 2000,
    Annual Reports to Shareholders and Annual Reports on
    Form&nbsp;10-K for the years ended December&nbsp;31, 2000 and
    2001, its Quarterly Reports on Form&nbsp;10-Q for the periods
    ended March&nbsp;31, 2002, June&nbsp;30, 2002 and
    September&nbsp;30, 2002, a draft dated February&nbsp;28, 2003 of
    Intuitive Surgical&#146;s Annual Report on Form&nbsp;10-K for
    the year ended December&nbsp;31, 2002, which you have advised us
    is complete and accurate in all material respects, and its
    Reports on Form&nbsp;8-K for the three years ended the date
    hereof;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed certain operating and financial
    information relating to Intuitive Surgical&#146;s business and
    prospects, including projections for the four years ended
    December&nbsp;31, 2006 and guidance for the year ended
    December&nbsp;31, 2007, all as prepared and provided to us by
    Intuitive Surgical&#146;s management (the &#147;Intuitive
    Surgical Projections&#148;);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed projections prepared by Intuitive
    Surgical&#146;s management as to the anticipated operating
    results of Computer Motion for the five years ended
    December&nbsp;31, 2007 (the &#147;Adjusted Computer Motion
    Projections&#148;);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed certain estimates of cost savings and
    other combination benefits expected to result from the Merger,
    prepared and provided to us by Intuitive Surgical&#146;s
    management (the &#147;Potential Synergies&#148;);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">met with certain members of Intuitive
    Surgical&#146;s senior management to discuss Intuitive
    Surgical&#146;s business, operations, historical financial
    results, future prospects, the Intuitive Surgical Projections,
    the Computer Motion Projections, the Adjusted Computer Motion
    Projections and the Potential Synergies;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed the historical prices, trading multiples
    and trading volumes of the Intuitive Surgical Common Stock and
    Computer Motion Common Stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed publicly available financial data, stock
    market performance data and trading multiples of companies which
    we deemed generally comparable to Intuitive Surgical and
    Computer Motion;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed the terms of recent mergers and
    acquisitions of companies which we deemed generally comparable
    to Computer Motion and the Merger;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">performed discounted cash flow analyses based on
    the Adjusted Computer Motion Projections, the Intuitive Surgical
    Projections and the pro forma combined projections of Computer
    Motion and Intuitive Surgical for the period from
    January&nbsp;1, 2003 through December&nbsp;31, 2007 including
    the Potential Synergies;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed the pro forma financial results,
    financial condition and capitalization of Intuitive Surgical
    giving effect to the Merger; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">conducted such other studies, analyses, inquiries
    and investigations as we deemed appropriate.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have relied upon and assumed, without
independent verification, the accuracy and completeness of the
financial and other information, including without limitation
the Intuitive Surgical Projections, the
</FONT>

<P align="center"><FONT size="2">D-2
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">Intuitive Surgical, Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">As of March&nbsp;6, 2003
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Page 3
</FONT>
</DIV>

<P align="left">
<FONT size="2">Adjusted Computer Motion Projections and the
Potential Synergies, provided to us by Intuitive Surgical and
Computer Motion. With respect to the Intuitive Surgical
Projections, the Computer Motion Projections, the Adjusted
Computer Motion Projections and the Potential Synergies, we have
relied on representations that they have been reasonably
prepared on bases reflecting the best currently available
estimates and judgments of the senior managements of Intuitive
Surgical and Computer Motion as to the expected future
performance of Intuitive Surgical and Computer Motion,
respectively; provided, however, with respect to the Adjusted
Computer Motion Projections, the senior management of Intuitive
Surgical have advised us that such Adjusted Computer Motion
Projections are based on the best currently available estimates
and judgments of the senior management of Intuitive Surgical
after discussions with the senior management of Computer Motion.
We have not assumed any responsibility for the independent
verification of any such information or of the Intuitive
Surgical Projections, the Computer Motion Projections, the
Adjusted Computer Motion Projections and the Potential Synergies
provided to us, and we have further relied upon the assurances
of the senior managements of Intuitive Surgical and Computer
Motion that they are unaware of any facts that would make the
information, the Intuitive Surgical Projections, the Computer
Motion Projections, the Adjusted Computer Motion Projections and
the Potential Synergies provided to us incomplete or misleading.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In arriving at our opinion, we have not performed
or obtained any independent appraisal of the assets or
liabilities (contingent or otherwise) of Intuitive Surgical or
Computer Motion, nor have we been furnished with any such
appraisals. We have assumed that the Merger will be consummated
in a timely manner and in accordance with the terms of the
Merger Agreement without any limitations, restrictions,
conditions, amendments or modifications, regulatory or
otherwise, that collectively would have a material effect on
Intuitive Surgical or Computer Motion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We do not express any opinion as to the price or
range of prices at which the Intuitive Surgical Common Stock and
Computer Motion Common Stock may trade subsequent to the
announcement of the Merger or as to the price or range of prices
at which the Intuitive Surgical Common Stock may trade
subsequent to the consummation of the Merger.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Bear Stearns has been previously engaged by
Intuitive Surgical to provide certain investment banking and
financial advisory services for which we received customary
fees. In the ordinary course of business, Bear Stearns and its
affiliates may actively trade the equity and debt securities
and/or bank debt of Intuitive Surgical and Computer Motion for
our own account and for the account of our customers and,
accordingly, may at any time hold a long or short position in
such securities or bank debt.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">It is understood that this letter is intended for
the benefit and use of the Board of Directors of Intuitive
Surgical in connection with their consideration of the Merger
and does not constitute a recommendation to the Board of
Directors of Intuitive Surgical or any holders of Intuitive
Surgical Common Stock as to how to vote in connection with the
Merger. This opinion does not address Intuitive Surgical&#146;s
underlying business decision to pursue the Merger, the relative
merits of the Merger as compared to any alternative business
strategies that might exist for Intuitive Surgical or the
effects of any other transaction in which Intuitive Surgical
might engage. This letter is not to be used for any other
purpose, or be reproduced, disseminated, quoted from or referred
to at any time, in whole or in part, without our prior written
consent; provided, however, that this letter may be included in
its entirety in any joint proxy statement/prospectus to be
distributed to the holders of Intuitive Surgical Common Stock in
connection with the Merger. Our opinion is subject to the
assumptions and conditions contained herein and is necessarily
based on economic, market and other conditions, and the
information made available to us, including information with
respect to the number and related terms of options, warrants,
shares of preferred stock and shares of common stock currently
outstanding for both Intuitive Surgical and Computer Motion, as
of the date hereof. We assume no responsibility for updating or
revising our opinion based on circumstances or events occurring
after the date hereof.
</FONT>

<P align="center"><FONT size="2">D-3
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">Intuitive Surgical, Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">As of March&nbsp;6, 2003
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Page 4
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on and subject to the foregoing, it is our
opinion that, as of the date hereof, the Exchange Ratio is fair,
from a financial point of view, to Intuitive Surgical.
</FONT>

<P align="left">
<FONT size="2">Very truly yours,
</FONT>

<P align="left">
<FONT size="2">BEAR, STEARNS &#38; CO. INC.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="60%"></TD>
    <TD width="40%"></TD>
</TR>

<TR valign="top">
    <TD align="center">
    <IMG src="f88583b3f8858311.gif" alt="(Signature of Senior Managing Director)"></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
    <TD width="40%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="60%"></TD>
    <TD width="40%"></TD>
</TR>

<TR valign="top">
    <TD align="center">
    <FONT size="2">Senior Managing Director
    </FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">D-4
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<!-- link1 "ANNEX E" -->
<DIV align="left"><A NAME="107"></A></DIV>

<P align="center">
<B><FONT size="2">ANNEX E</FONT></B>

<P align="center">
<IMG src="f88583b3f8858313.gif" alt="(HC WAINWRIGHT LETTERHEAD)">

<P align="right">
<FONT size="2">March&nbsp;5, 2003
</FONT>

<P align="left">
<FONT size="2">Board of Directors
</FONT>

<DIV align="left">
<FONT size="2">Computer Motion, Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">130-B Cremona Drive
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Goleta, CA 93117
</FONT>
</DIV>

<P align="left">
<FONT size="2">To The Board of Directors:
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under an engagement letter dated March&nbsp;5,
2003, Computer Motion, Inc. (&#147;RBOT&#148;, the
&#147;Company&#148;) retained H.C. Wainwright &#38; Co., Inc.
(&#147;HCW&#148;) to act as its financial advisor in connection
with the acquisition of RBOT by Intuitive Surgical, Inc.
(&#147;ISRG&#148;) as set forth in the Agreement and Plan of
Merger (the &#147;Merger&#148;). The Merger Agreement provides
for the merger (the &#147;Merger&#148;) of RBOT with and into
ISRG in the form of a triangular merger, pursuant to which ISRG
will issue a number of shares of its common stock determined
pursuant to a formula as set forth in the Merger Agreement which
will range from approximately .48 to .52&nbsp;shares for each
share of RBOT common stock. Following the Merger, the new
company will operate under the name Intuitive Surgical, Inc.
</FONT>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">HCW was selected by RBOT&#146;s board of
directors to act as RBOT&#146;s financial advisor based on
HCW&#146;s qualifications, reputation and expertise in the
medical equipment sector, as well as HCW&#146;s familiarity with
RBOT. In connection with its services to RBOT to act as
financial advisor to the Company, HCW was requested to render an
opinion as to the fairness of the Merger to the shareholders of
RBOT.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The HCW opinion sets forth, among other things,
assumptions made, procedures followed, matters considered and
limitations on the scope of review undertaken by HCW in the
course of rendering its opinion. RBOT stockholders are urged to
read the HCW opinion carefully in its entirety. The HCW opinion
addresses the fairness of the aggregate consideration to be paid
and the applicable exchange ratio to the RBOT stockholders, from
a financial point of view as of the date of the HCW opinion, and
does not constitute a recommendation to any stockholder as to
how such stockholder should vote at the RBOT stockholders
special meeting.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In arriving at its opinion, HCW reviewed certain
publicly available business and financial information relating
to RBOT and ISRG, as well as the Merger Agreement. HCW also
reviewed certain other information, including financial
forecasts, provided to it by RBOT and ISRG, and met with
RBOT&#146;s and ISRG&#146;s management to discuss the business,
both past and current, and future prospects of RBOT and ISRG.
HCW also considered certain financial and stock market data of
RBOT and ISRG, and HCW compared that data with similar data for
other publicly held companies in businesses HCW deemed similar
to those of RBOT and ISRG. HCW considered the financial terms,
to the extent publicly available, of certain other recent
business combinations and other transactions which have recently
been effected and that HCW deemed relevant. HCW also considered
such other information, financial studies, analyses and
investigations and financial, economic and market criteria,
which it deemed relevant. HCW is familiar with RBOT and the
terms of the Merger, having participated in certain discussions
and negotiations leading to the Merger Agreement between
representatives of RBOT and representatives of ISRG and their
financial advisors. In connection with its review, HCW did not
assume any responsibility for independent verification of any of
the foregoing information and relied on the completeness and
accurateness in all material respects as represented by RBOT and
ISRG. With respect to financial forecasts, HCW assumed that they
had been reasonably prepared on a basis reflecting the best
currently available estimates and judgments of the management of
RBOT and ISRG as to the future financial
</FONT>

<P align="center"><FONT size="2">E-1
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">performance of RBOT and ISRG, respectively. RBOT
also informed HCW and therefore HCW based its opinion on the
assumption that the Merger would be treated as a tax-free
reorganization for federal income tax purposes. In addition, HCW
did not make an independent evaluation or appraisal of the
assets or liabilities (contingent or otherwise) of RBOT or ISRG,
nor was HCW furnished with any such evaluations or appraisals.
The HCW opinion is necessarily based upon financial, economic,
market and other conditions as they existed and could be
evaluated as of the date of the HCW opinion. HCW did not express
any opinion as to what the value of the ISRG common stock
actually will be when issued to RBOT&#146;s stockholders
pursuant to the merger or the prices at which such common stock
will trade subsequent to the merger.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The exchange ratio was determined by
arm&#146;s-length negotiation between the parties. In preparing
the HCW opinion, HCW performed a variety of financial and
comparative analyses. The preparation of a fairness opinion is a
complex process and is not necessarily susceptible to partial
analysis or summary description. HCW believes that its analyses
must be considered as a whole and that selecting portions of its
analyses and of the factors considered by it, without
considering all analyses and factors, could create a misleading
view of the process underlying the HCW opinion. No company or
transaction used in the analysis performed by HCW as a
comparison is identical to RBOT, ISRG or the contemplated
Merger. In addition, HCW may have given various analyses more or
less weight than other analyses, and may have deemed various
assumptions more or less probable than other assumptions, so
that the range of valuation resulting from any particular
analysis undertaken should not be taken to be HCW&#146;s view of
the actual value of RBOT or ISRG. In performing its analyses,
HCW made numerous assumptions with respect to industry
performance, general business and economic conditions and other
matters, many of which are beyond the control of RBOT and ISRG.
The analyses performed by HCW are not necessarily indicative of
actual values or actual future results, which may be
significantly more or less favorable than suggested by such
analyses. In addition, analyses relating to the value of
businesses or assets do not purport to be appraisals or to
necessarily reflect the prices at which businesses or assets may
actually be sold. The analyses performed were prepared solely as
part of HCW&#146;s analysis of the fairness of the aggregate
consideration and the applicable exchange ratio to RBOT from a
financial point of view and were provided to the RBOT board of
directors in connection with the delivery of the HCW opinion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The scope of HCW&#146;s opinion is expressly
limited to the contents herein. It is understood that this
letter is not intended to confer any rights or remedies upon any
other entity or persons, and may not be quoted or referred to
for any other purpose without prior written consent, except for
inclusion in a proxy statement/prospectus related to the Merger
that we have has an opportunity to review. In the ordinary
course of our business, HCW may have actively traded the equity
securities of RBOT and may continue to actively trade the equity
securities pf the newly created corporate entity as a result of
the transaction. In addition, certain individuals who are
employees or are affiliated with HCW have in the past and may
currently be shareholders of RBOT.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based upon and subject to the foregoing, it is
HCW&#146;s opinion that, as of the date hereof, the exchange
ratio to be received by its stockholders in connection with the
transaction outlined herein is fair to the RBOT stockholders.
</FONT>

<P align="left">
<FONT size="2">Very truly yours,
</FONT>

<P align="left">
<FONT size="2">H.C. Wainwright &#38; Co., Inc.
</FONT>

<P align="center"><FONT size="2">E-2
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "ANNEX F" -->
<DIV align="left"><A NAME="108"></A></DIV>

<P align="center">
<B><FONT size="2">ANNEX F</FONT></B>

<P align="center">
<B><FONT size="2">FORM OF</FONT></B>

<DIV align="center">
<B><FONT size="2">CERTIFICATE OF AMENDMENT TO</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">AMENDED AND RESTATED</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">CERTIFICATE OF INCORPORATION</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">OF</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">INTUITIVE SURGICAL, INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">a Delaware Corporation</FONT></B>

<P align="center">
<B><FONT size="2">Pursuant to &#167;&nbsp;242 of the General
Corporation Law</FONT></B>

<DIV align="center">
<B><FONT size="2">of the State of Delaware</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">It is hereby certified that:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following
amendment to the Amended and Restated Certificate of
Incorporation of the corporation has been duly adopted in
accordance with the provisions of Section&nbsp;242 of the
General Corporation Law of the State of Delaware:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">Paragraph&nbsp;(a) of Article&nbsp;Four of
    Exhibit&nbsp;A of the Amended and Restated Certificate of
    Incorporation is hereby amended to read in its entirety as
    follows:
    </FONT></TD>
</TR>

</TABLE>
<P>


<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">&#147;A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CLASSES OF
    STOCK. This corporation is authorized to issue two classes of
    stock to be designated, respectively, &#147;Common Stock&#148;
    and &#147;Preferred Stock.&#148; The total number of shares
    which the corporation is authorized to issue is one hundred two
    million five hundred thousand (102,500,000)&nbsp;shares, of
    which one hundred million (100,000,000)&nbsp;shares shall be
    Common Stock, par value $0.001 per share, and two million five
    hundred thousand (2,500,000)&nbsp;shares shall be Preferred
    stock, par value $0.001 per share.
    </FONT></TD>
</TR>

</TABLE>

<P>


<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">When the foregoing amendment becomes effective,
    (i)&nbsp;each share of Common Stock issued and outstanding or
    held in the treasury of the corporation immediately prior to the
    time this amendment becomes effective shall be reclassified and
    changed into and shall constitute one-half&nbsp;(&nbsp;1/2) of
    one fully paid and nonassessable share of Common Stock and
    (ii)&nbsp;each share of Preferred Stock issued and outstanding
    or held in the treasury of the corporation immediately prior to
    the time this amendment becomes effective shall be reclassified
    and changed into and shall constitute one-half&nbsp;(&nbsp;1/2)
    of one fully paid and nonassessable share of Preferred Stock, in
    each case without the necessity of further action of any kind
    (the &#147;Reverse Split&#148;). Any fractional shares remaining
    after applying the Reverse Split to each certificate
    representing shares of Common Stock or Preferred Stock then held
    by any holder shall be redeemed at a purchase price equal to the
    closing bid price of the Common Stock on the Nasdaq National
    Market on the effective date of the Reverse Split. Shares of
    capital stock that were outstanding prior to the Reverse Split,
    and that are not outstanding after and as a result of the
    Reverse Split, shall resume the status of authorized but
    unissued shares of Common Stock or Preferred Stock, as the case
    may be.&#148;
    </FONT></TD>
</TR>

</TABLE>


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The capital of
the corporation will not be reduced under or by reason of the
foregoing amendment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">IN WITNESS WHEREOF, this Certificate is hereby
executed by the undersigned
on &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2003.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">By:&nbsp;<HR size="1" align="left" noshade>
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Name:
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Title:
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">F-1
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "ANNEX G" -->
<DIV align="left"><A NAME="109"></A></DIV>

<P align="center">
<B><FONT size="2">ANNEX G</FONT></B>

<P align="center">
<B><FONT size="2">FORM OF</FONT></B>

<DIV align="center">
<B><FONT size="2">AMENDMENT TO THE</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">2000 NON-EMPLOYEE DIRECTORS&#146; STOCK OPTION
PLAN</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">OF INTUITIVE SURGICAL, INC.</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the authority reserved to the Board
of Directors (the &#147;Board&#148;) of Intuitive Surgical,
Inc., a corporation organized under the laws of the State of
Delaware (the &#147;Company&#148;), under Section&nbsp;12(a) of
the Company&#146;s 2000 Non-Employee Directors&#146; Stock
Option Plan (the &#147;Plan&#148;), the Board hereby amends the
Plan as follows:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Definitions.</I>
A new Subsection 2(f) is hereby added to the Plan and the
current Subsections 2(f) through 2(y) are renumbered accordingly
to reflect such addition. The new Subsection 2(f) shall read in
its entirety as follows:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">&#147;(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Committee
    Chairman Grant&#148; means an Option granted annually to all
    Non-Employee Directors who meet the specified criteria pursuant
    to subsection 6(c) of the Plan.&#148;
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Evergreen
Share Reserve Increase.</I> Section&nbsp;4(b)(i) is amended to
read in its entirety as follows:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">&#147;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding
    subsection 4(a) hereof, on the day after each Annual Meeting
    (the &#147;Calculation Date&#148;) for a period of ten
    (10)&nbsp;years, commencing with the annual meeting in 2003, 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 lesser of (1)&nbsp;three-tenths of
    one percent (0.3%) of the Diluted Shares Outstanding,
    (2)&nbsp;200,000 shares, or (3)&nbsp;such lesser number as may
    be determined by the Board.&#148;
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-Discretionary
Grants.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subsection 6(b)
    is amended to read in its entirety as follows:
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">&#147;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Annual
    Grants.</I> Without any further action of the Board, on the day
    following each Annual Meeting, commencing with the Annual
    Meeting in 2001, each person who is then a Non-Employee
    Director, and has been a Non-Employee Director for at least six
    (6)&nbsp;months, automatically shall be granted an Annual Grant
    to purchase Five Thousand (5,000) shares of Common Stock on the
    terms and conditions set forth herein; provided, however, that
    such amount shall be increased to Ten Thousand (10,000) shares
    of Common Stock commencing with the Annual Meeting in 2003.&#148;
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following
    Subsection 6(c) is added to Section&nbsp;6 of the Plan to read
    in its entirety as follows:
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">&#147;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Committee
    Chairman Grants.</I> Without any further action of the Board, on
    the day following each Annual Meeting, commencing with the
    Annual Meeting in 2003, each person who is then a Non-Employee
    Director and who is then serving as chairman of a Board
    committee, automatically shall be granted an additional
    Committee Chairman Grant to purchase Five Thousand (5,000)
    shares of Common Stock on the terms and conditions set forth
    herein.&#148;
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Option
Provisions.</I> The following Subsection 7(e)(iii) is added to
Section&nbsp;7 of the Plan to read in its entirety as follows:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">&#147;(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Committee
    Chairman Grants shall provide for vesting of 1/12 of the shares
    subject to the Option each month for one (1)&nbsp;year after the
    date of the grant.&#148;
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Amendment
shall be submitted for approval at the annual meeting of
shareholders of the Company scheduled to be held on
June&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2003, or any
postponement or adjournment thereof. Such
</FONT>

<P align="center"><FONT size="2">G-1
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">stockholder approval shall be obtained in the
degree and manner required under applicable state and federal
law.
</FONT>
</DIV>

<P align="center">
<FONT size="2">**********
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">I hereby certify that the foregoing Amendment to
the Plan was duly adopted by the Board of Directors of Intuitive
Surgical, Inc., effective as of
March&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Executed on
this &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;day
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2003.
</FONT>

<P align="left">


<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <FONT size="2">Secretary
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">G-2
</FONT>
</BODY>
</HTML>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>GRAPHIC
<SEQUENCE>3
<FILENAME>f88583b3f8858315.gif
<DESCRIPTION>GRAPHIC
<TEXT>
begin 644 f88583b3f8858315.gif
M1TE&.#EAF@`]`/?_````````,P``9@``F0``S```_P`S```S,P`S9@`SF0`S
MS``S_P!F``!F,P!F9@!FF0!FS`!F_P"9``"9,P"99@"9F0"9S`"9_P#,``#,
M,P#,9@#,F0#,S`#,_P#_``#_,P#_9@#_F0#_S`#__S,``#,`,S,`9C,`F3,`
MS#,`_S,S`#,S,S,S9C,SF3,SS#,S_S-F`#-F,S-F9C-FF3-FS#-F_S.9`#.9
M,S.99C.9F3.9S#.9_S/,`#/,,S/,9C/,F3/,S#/,_S/_`#/_,S/_9C/_F3/_
MS#/__V8``&8`,V8`9F8`F68`S&8`_V8S`&8S,V8S9F8SF68SS&8S_V9F`&9F
M,V9F9F9FF69FS&9F_V:9`&:9,V:99F:9F6:9S&:9_V;,`&;,,V;,9F;,F6;,
MS&;,_V;_`&;_,V;_9F;_F6;_S&;__YD``)D`,YD`9ID`F9D`S)D`_YDS`)DS
M,YDS9IDSF9DSS)DS_YEF`)EF,YEF9IEFF9EFS)EF_YF9`)F9,YF99IF9F9F9
MS)F9_YG,`)G,,YG,9IG,F9G,S)G,_YG_`)G_,YG_9IG_F9G_S)G__\P``,P`
M,\P`9LP`F<P`S,P`_\PS`,PS,\PS9LPSF<PSS,PS_\QF`,QF,\QF9LQFF<QF
MS,QF_\R9`,R9,\R99LR9F<R9S,R9_\S,`,S,,\S,9LS,F<S,S,S,_\S_`,S_
M,\S_9LS_F<S_S,S___\``/\`,_\`9O\`F?\`S/\`__\S`/\S,_\S9O\SF?\S
MS/\S__]F`/]F,_]F9O]FF?]FS/]F__^9`/^9,_^99O^9F?^9S/^9___,`/_,
M,__,9O_,F?_,S/_,____`/__,___9O__F?__S/___P``````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M`````````````````````"P`````F@`]```(_P"O"1Q(L*#!@P@3*ER8D)5#
MAPPC2IQ(L:+%BQ@)/MR8L:/'CR!#&MS(4:3)DRA3DGR8LJ7+EQ170H1)LV9-
MF39SZE19<J?/GQU9`AU*M*C1HTB3*EW*M*G3IU"C8@P4B"%55@2O*F1%M6M7
MK`VI:A2[4.M6KU[!AJU:-I!:@68/<D7;U2I9N&[/TLV[=BQ;A7$1SJ7[5N[=
MA(&O)?:[U^Y?Q7SM%A9\>*[DB8LI/];L5V_!PPB_#LQ\D'1!RP-1`XY\.:+J
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M(I,F$FBEFDLFN&5\:-+F)5^#4<GFF'"2R1F%`J99)F1L*IEEFX@5:NBA+"8)
MHG(K!AGFI(BFAZ"3CG+IJ*")JB5IG(`ZM%R?I,)&J9M[W?F6D8H2!NJIJ%+_
M5"5AW\V46H+SX<J@4*[I:FNO,>&*DU3$%FOLL<@FJ^RRS#;K[+/01BOMM-16
M:^VU/@V&[;+[B:KKMD85622XQC[D5E69DAONN1"EJVY1YRKV*U*B/O?K9"NM
M9=R^ILU[JV'U,A7D<(?EUAAUPTGHHX.9;<>K4G<IC%M6A15<&%<4SW;Q7Q(?
MU]Z"3576X6@5/V9P;QN7S-U(\8Z,[,#$D0RIAV]U#'!Q5GGK\LM@S@Q7R3W'
M!M9M.`OMYG\^<VNSQ0MCK/&N3ALM=5@!)UVNU4RO_+-M-6^VM,E=!HTTLA&?
M')O+LDD,FLT*=QPUA%KS[%;"(;IL,Z':%DWGVKV%%MU=L9^.%+A&->\V,'K\
*`H?O:22E%!``.S\_
`
end

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>GRAPHIC
<SEQUENCE>4
<FILENAME>f88583b3f8858304.gif
<DESCRIPTION>GRAPHIC
<TEXT>
begin 644 f88583b3f8858304.gif
M1TE&.#EA%@$Y`*+_`/___[^_OW]_?S\_/P```````````````"P`````%@$Y
M```#_PBZW/XPRDFKO3CKS;MG@3`0I"!\:*JN;.N^J4#.-#'`>*[O?+_)I(')
M5",$?,BD<LF<!$:$DP,X.S:OV*S6$PA:']W9;4LNF[=0J80:/;O?<!ST.ZG%
M[_@\9GZ!EO2`@8!\%%9A08*)BF:$$F&&-(N2DTN/%'Y&"E!CE)U7(6IEEA.8
M)%8C)R*>JTEI9XA.138*74<RH:RY,#.X62.<$K*P5C.Z>\8@O0M=P%JC:\)_
MM+S(EP35`%W*<=)UT:8*;`Q#`G13Y&OEH.7A0Q'D)H[Q"R;FFB7U$.3V].SN
MYP'664$G;PB_:3;^)=M&:U\$4``,_B!AX5LQ`':R%5'VI/_(P2`U1-!HMD#6
M-B`,NBTHU<9!*9(*2O@A"9(&FY8/6,(\%*D!2@@L3YK,\,R1Q2`WRPUU$(W?
MR)=5'@B#^3,FSG!+&?BAXK0(33%0*3ZX*6:*++/7<@KC1T7(Q3ZS*I`]B@\6
M`"%H.5&1"NXN+"#*I!VR5Q7C57IBP=BUFQ+1$WM1_<8%[&`PPDQ,#X]+O#EN
MQ+>=!ZJ,A9G"7+I[O:5=R;DDSL*CK:JA[)-S[,^KT7XI[#HWW]FV-=-&&%@S
M8M_W?`,A')RA2\^FZ9J\W6#T<-?`<]]6&1NV<=Z=SV:&V3A[>;29BS,$;[A9
MF%[>G8/H6X&G=%/4S\_7W"W^;_W_G0$8H#[1_!?,:\VA5YUQ^;$76W<)5O!+
M!O?9P1@$%RZ7WG$"8M<A;A^"2&!I!\K77X0#AMA@:U8I!Z%VQO%U4`0L'75#
M9#329QARAIGGX8;)P4??;>PAU(QZWO@H6V6,7??C6"SB1@<44,(HA66U\4A:
MA;;P8@)>#1R2RB8&BKCD>`'YH=@L'7WGA0S/)40$C_F=:6:/?-F0)FB-&2$"
M+NR)&0*9"IY)12]UYG@?)T&IY16&"%J99PT'U<A1$4R*MZ")D89H'XY94I-B
MJ)16J1\08"X397U<:A72B&5!JB2>F94*`4^NK'GA95Z4*2N'3X:)R0`S2J;C
MG6'60.R(__IAB1AYK-+%3PCUL8-#"=16>X&U#W&;Q3R%>$N4N!N$`%F,%GSJ
M$1Z)8N.N1EIF<)I\9+3[;C4R0*O!.N1R@^Z][J(",`7V#IS+JOOB`V<@^1AL
M,,+RONKPQ`S_BP&F%&><QRTQ2*SQQV]PC,*Z()?,2+P8W*2OR2PG`7&Z)+<L
M<Q,O2^CQS#B[C'*T/>7LLP\UJP;JST1?NS,IRA:M=`Y!WQKSTE"OL'#"MD9M
M=<<<O'3UUBC(4"Q027,M=@<6Q]GSV&A?O'(#+'V=]MN;N9T<#7+##3<S-E=M
M]]XY%JMNW7R_792KR@(>N."]AE/CVH<'KJY7AC=N]^.B2F[Y&@6E].M!`@`[
`
end

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>GRAPHIC
<SEQUENCE>5
<FILENAME>f88583b3f8858316.gif
<DESCRIPTION>GRAPHIC
<TEXT>
begin 644 f88583b3f8858316.gif
M1TE&.#EAE@`R`/?_````````,P``9@``F0``S```_P`S```S,P`S9@`SF0`S
MS``S_P!F``!F,P!F9@!FF0!FS`!F_P"9``"9,P"99@"9F0"9S`"9_P#,``#,
M,P#,9@#,F0#,S`#,_P#_``#_,P#_9@#_F0#_S`#__S,``#,`,S,`9C,`F3,`
MS#,`_S,S`#,S,S,S9C,SF3,SS#,S_S-F`#-F,S-F9C-FF3-FS#-F_S.9`#.9
M,S.99C.9F3.9S#.9_S/,`#/,,S/,9C/,F3/,S#/,_S/_`#/_,S/_9C/_F3/_
MS#/__V8``&8`,V8`9F8`F68`S&8`_V8S`&8S,V8S9F8SF68SS&8S_V9F`&9F
M,V9F9F9FF69FS&9F_V:9`&:9,V:99F:9F6:9S&:9_V;,`&;,,V;,9F;,F6;,
MS&;,_V;_`&;_,V;_9F;_F6;_S&;__YD``)D`,YD`9ID`F9D`S)D`_YDS`)DS
M,YDS9IDSF9DSS)DS_YEF`)EF,YEF9IEFF9EFS)EF_YF9`)F9,YF99IF9F9F9
MS)F9_YG,`)G,,YG,9IG,F9G,S)G,_YG_`)G_,YG_9IG_F9G_S)G__\P``,P`
M,\P`9LP`F<P`S,P`_\PS`,PS,\PS9LPSF<PSS,PS_\QF`,QF,\QF9LQFF<QF
MS,QF_\R9`,R9,\R99LR9F<R9S,R9_\S,`,S,,\S,9LS,F<S,S,S,_\S_`,S_
M,\S_9LS_F<S_S,S___\``/\`,_\`9O\`F?\`S/\`__\S`/\S,_\S9O\SF?\S
MS/\S__]F`/]F,_]F9O]FF?]FS/]F__^9`/^9,_^99O^9F?^9S/^9___,`/_,
M,__,9O_,F?_,S/_,____`/__,___9O__F?__S/___P``````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M`````````````````````"P`````E@`R```(_P"O"1Q(L*#!@P@3*ES(L*'#
MAPA76+$"L:+%BQ@S:FQHA=4U5A0WBAQ)LN3%%0-#FES)LJ7(CBE=RIQ)4R'*
MF#5)JLS)4^#.G00!`.V)T`H`H@^-6I'HL2),@:R:%IPH%>E!5D*M<CSJ<^)3
MAC=]%AVJ=>"*L&43DOWH=:U8G%.ON;6*-2U#K@N7?H6J,JI!OW.19K6;D!5:
MAB"?_CP8,G#/B1L3MX1<$:30L"`-*B8L]K#%CE5+.EZXHBG3N&_M4MS[V>-H
MBYXC4UU*\+7,QAMOVGZ86695UD1#]K88U>]'EJ4C\TY\FJ?*W;5+]UT)O2CO
M@HFK0S1<&R,`CYA7AO_&:+MMVQ5X61I/[53W6_38QS/4SOCJ]ZGT,28G&+OA
M_>==%3280L/)15)LTJ&64X$^R3>?>U`9^!N#C'%W37\7C6?<8@N2A>%"]UWX
MGH%FC491<0["]A=:`-:T7WP9XH6;@7W1-I]K^6'W(GMO46B2CP)]J!!E-':U
MV&LY'I2@6?(UE>20*1I&5442Q83;3E4Z-!=T,*FT(T%^"?G91%DB)!29`*2I
MYIE$#I3>E$6Z*6:):FT7TDWK59AD=E.FR%=>7JDID5'\2:572NF1!L"7<!V'
MW4`6B@C<7VTF!2>5&9(9Z("$\O7:6>!IZ"6D?W[$XH"DS0EIF9EJA"=\()VT
M=1]@\RU:&Y&EH23EH(/J-6E2B:KU*T2J%C;E3XMF"=176(4(IE%G\37>DPH*
M2Q*0&`VW6D?<#A:M9:ARIJ6?F*ZDJUM-+9HFJ^(V%.E(>8J&)+GM6F<2M?5:
M5>RX^?:+&+U.^2MPG2;M.S!A^$(%\,'B+NQNP@Q'W)W$%!]8\<6Y.8SQQI!J
MS#%2'O\5\L>/:30LR9R-W"#*!V-;F,$LTZ4QHS'[&^]5E=;,<,Y=J:PS40$!
"`#L_
`
end

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>GRAPHIC
<SEQUENCE>6
<FILENAME>f88583b3f8858317.gif
<DESCRIPTION>GRAPHIC
<TEXT>
begin 644 f88583b3f8858317.gif
M1TE&.#EAK``N`/?_````````,P``9@``F0``S```_P`S```S,P`S9@`SF0`S
MS``S_P!F``!F,P!F9@!FF0!FS`!F_P"9``"9,P"99@"9F0"9S`"9_P#,``#,
M,P#,9@#,F0#,S`#,_P#_``#_,P#_9@#_F0#_S`#__S,``#,`,S,`9C,`F3,`
MS#,`_S,S`#,S,S,S9C,SF3,SS#,S_S-F`#-F,S-F9C-FF3-FS#-F_S.9`#.9
M,S.99C.9F3.9S#.9_S/,`#/,,S/,9C/,F3/,S#/,_S/_`#/_,S/_9C/_F3/_
MS#/__V8``&8`,V8`9F8`F68`S&8`_V8S`&8S,V8S9F8SF68SS&8S_V9F`&9F
M,V9F9F9FF69FS&9F_V:9`&:9,V:99F:9F6:9S&:9_V;,`&;,,V;,9F;,F6;,
MS&;,_V;_`&;_,V;_9F;_F6;_S&;__YD``)D`,YD`9ID`F9D`S)D`_YDS`)DS
M,YDS9IDSF9DSS)DS_YEF`)EF,YEF9IEFF9EFS)EF_YF9`)F9,YF99IF9F9F9
MS)F9_YG,`)G,,YG,9IG,F9G,S)G,_YG_`)G_,YG_9IG_F9G_S)G__\P``,P`
M,\P`9LP`F<P`S,P`_\PS`,PS,\PS9LPSF<PSS,PS_\QF`,QF,\QF9LQFF<QF
MS,QF_\R9`,R9,\R99LR9F<R9S,R9_\S,`,S,,\S,9LS,F<S,S,S,_\S_`,S_
M,\S_9LS_F<S_S,S___\``/\`,_\`9O\`F?\`S/\`__\S`/\S,_\S9O\SF?\S
MS/\S__]F`/]F,_]F9O]FF?]FS/]F__^9`/^9,_^99O^9F?^9S/^9___,`/_,
M,__,9O_,F?_,S/_,____`/__,___9O__F?__S/___P``````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M`````````````````````"P`````K``N```(_P"O"1Q(L*#!@ZRL`%C(<`6K
M@Q`C2IQ(L:+%BQ@S:I3(:@4`*U8>#NRXL:3)DRA3JB38T6'$%2MCRIQ),Z-"
MD1$!U-S)LZ=*5A\IDO1YTHI'A@Q!$ETZL:5%`#B97@1J!2)(`"NJ2MT*-*I$
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M%&3]G1:58M=X^-6`\8'TW$7D+9;1?E@EI1=6QB7'UX5]L6C<9==AA)E!,3((
MFH-6M4;=:!$^Q"-](/J8X4)1'J3>0%<:MYJ3]B5'W34XIB<A1"KZ*!!C:U%Y
M498HML62=M`Q.9YN7T98ID'MF5G04%!)M^9I%+I)WWAZE460:@,A6I":%-WI
MHU*FR?;G>HYR1]"50:;'&WH?Y7G:DRR!*I-2CBE*D7HEVN25BG+.N>E\H['_
MXNFE7V5*GUMX%AE36+J-N9A7AA+J'VY$!GIFF'-FAJRP?54%W5&Z)8AB0D89
M1>%5E5;44%]9+LI;9=K9.FNR(T%79XI97>LEHZ>Q16%06/D9KE;W!>>JB`ME
M&Q^[X5:9J&1TK192K^))FNBSR=&%:XJ^/8C@?9Y]Y'"#:X&6E8@"-Q22;`XB
MA92#(*'%T)X2DK?<86'"Q!^$`TE')W3B(INOO(E^9&R36,X6%*G\AGN@8@#6
M_#/('7M,,J>P,H23:L/E?*Q68#D6GI-]W3@;4*^%MVRR;>+<<E"C8;SG4;?V
M?*A[,1Z%5JH"72S=5?D6!&V^#ZJLTX,BY7GEV_9Z[U>@U$V+.;)J(F4M4K>C
MCEQL>G,FM;#0#H7'UXA1258FOJ+FFM2G'?LFZS6?'TR4;"5?J]59(]D*IH#4
MKOW0N.5F_I=]'A*&U\?E>>:7>(\':Y.SLO.4%T(A6]F3;`;C&7%5"9+,%M9S
MW>WO5D-&-RB1P2-&Y8,YK5;QS2DV:#9&-F,8)TZA'YK]J<75UOVAX+>M-';Z
M,G5EPXO7E+%YONK)DXK'@=GH'-4__ZD%3V@1(&P*:,"9W,9<QT'<4M+7P*4,
M"8*9J5\%-P@CS"00>QP,X4KJ@[J1*$^$*(R+BR16O>&E\(4_J0VDKC*]DP0$
"`#L_
`
end

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>GRAPHIC
<SEQUENCE>7
<FILENAME>f88583b3f8858318.gif
<DESCRIPTION>GRAPHIC
<TEXT>
begin 644 f88583b3f8858318.gif
M1TE&.#EAC0`^`(```/___P```"'Y!```````+`````"-`#X```+_A(^IR^T/
MHYRTVLN"UKC[#X+;$83FB9X<6:;N"V<K&==V.M/WSB/MDV/UAK?@P@A`$I>F
MG\PI9"8W4&E%:5!B8=0NU6K!:HG;;!7L\(Z09=PY@TYW%5_Z^]5.Y,E.8SW*
ML^>3)H/G!S73(MAT(79XA^$(:`;)Y3/2L,5155))T;;Y,S>DQO*'F=FIIRKB
M:3J:\^?6)SN5QRJT>.1J6FAK-FNGE@BIN)KTL:C9B:B"NEJ+_)Q+B]RA[,E,
M!WQMG,HIRIFE-Q[YR1O[=0BDHVG=^_J+B'O%RPV1KCK]3GGY7DSO%Z4Y0;2%
ML:<LWC`O\("MD,0/$RJ&EW25DX#-(;,U_P1'<7MXYR&\9QX'-II@<>,4>;04
M34RWTLX@C07W[8N`+N5+D,=Z41RX,*A0CQ8ORK%7<5XJ:"7)O0JE;JC4IDZ_
M=3LIS-NNJ!1C]5OY$V@I?L*2-8'IX8TL6)_N)141PB;<DT7G(05RMZQ,LY'R
MBG7AM^&VN8T"VS`<,U/<:W&.I*U4=/!!Q'C2XF1$M_&D>O@HZPBC>6;ARV</
M&@6#V%7D7:!/2UE-%HXSSJZ9I,[FV5_;SU8HJ\Z]&5_HVKO9H<@+/#1N'+2'
M$Y9]_(ISS(J9%Y_.ES5@E,VPFW9<&6-W[_64HA%'OC!5VY+33U;>WKU\0KKG
IVX=._/[]\?K[)QS^[]]^?01(X(`$^A?.@0CRIJ!]T30X'VP0*E@``#L_
`
end

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>GRAPHIC
<SEQUENCE>8
<FILENAME>f88583b3f8858303.gif
<DESCRIPTION>GRAPHIC
<TEXT>
begin 644 f88583b3f8858303.gif
M1TE&.#EA0@(U`??_````````,P``9@``F0``S```_P`S```S,P`S9@`SF0`S
MS``S_P!F``!F,P!F9@!FF0!FS`!F_P"9``"9,P"99@"9F0"9S`"9_P#,``#,
M,P#,9@#,F0#,S`#,_P#_``#_,P#_9@#_F0#_S`#__S,``#,`,S,`9C,`F3,`
MS#,`_S,S`#,S,S,S9C,SF3,SS#,S_S-F`#-F,S-F9C-FF3-FS#-F_S.9`#.9
M,S.99C.9F3.9S#.9_S/,`#/,,S/,9C/,F3/,S#/,_S/_`#/_,S/_9C/_F3/_
MS#/__V8``&8`,V8`9F8`F68`S&8`_V8S`&8S,V8S9F8SF68SS&8S_V9F`&9F
M,V9F9F9FF69FS&9F_V:9`&:9,V:99F:9F6:9S&:9_V;,`&;,,V;,9F;,F6;,
MS&;,_V;_`&;_,V;_9F;_F6;_S&;__YD``)D`,YD`9ID`F9D`S)D`_YDS`)DS
M,YDS9IDSF9DSS)DS_YEF`)EF,YEF9IEFF9EFS)EF_YF9`)F9,YF99IF9F9F9
MS)F9_YG,`)G,,YG,9IG,F9G,S)G,_YG_`)G_,YG_9IG_F9G_S)G__\P``,P`
M,\P`9LP`F<P`S,P`_\PS`,PS,\PS9LPSF<PSS,PS_\QF`,QF,\QF9LQFF<QF
MS,QF_\R9`,R9,\R99LR9F<R9S,R9_\S,`,S,,\S,9LS,F<S,S,S,_\S_`,S_
M,\S_9LS_F<S_S,S___\``/\`,_\`9O\`F?\`S/\`__\S`/\S,_\S9O\SF?\S
MS/\S__]F`/]F,_]F9O]FF?]FS/]F__^9`/^9,_^99O^9F?^9S/^9___,`/_,
M,__,9O_,F?_,S/_,____`/__,___9O__F?__S/___P``````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M`````````````````````"P`````0@(U`0`(_P"O"1Q(L*#!@P@3*ES(L*'#
MAQ`C2IQ(L:+%BQ@S:MS(L:/'CR!#BAQ)LJ3)DRA3JES)LJ7+ES"O`2BXPHI`
M5@``L(K)LZ?/GT"#"AU*=".K%3,'XK0I4V#2HE"C2IU*M:I5J*RL/+U6TZ85
MIE^OBAU+MJS9LV>?KLCJ%2Q3@E_?HIU+MZ[=NW@9)LUZ+6S8OG+AYAU,N+#A
MPS^3:LT)P,I1@6L1!D9,N;+ERYCU%OS;=47"R9E#BQY-^FQ@5CL%_I5<NK7K
MU[#K@HY-N[;MVRUGX][-N[?OB;I_"Q].G'?PXLB3*\]\?+GSY]#I-H].O;KU
MHM.O:]_.767V[N##B__/^'V\^?/H6:=?S[Z]P?+NX\M_#G^^_?N_Z^/?SS^V
M_OX`!LB<@`06Z)^!""88VG\*-NA@50P^*.&$045(X848YI;AAAP296&'((:H
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M)B^]T-E;G)>NSCO8OOQ6:Q^W>I:&IZO^%BR;>_C6U-O"9A*%E,`.@]0P;>^J
M2QS%"<<$)<89=[2Q:_B&?"^W%;=D*<DECP@>P,YNR[+*(UDJ9LPFG8P9PC[7
M!K*_.C,&,\\I5D=ST/G=#&S1.R,M$M-Y=7QT?"!?35"T15/-K]?2-0MV=`0K
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M+4_>`U#[*L.M(=7*3Y`A4PB?M"RH5-`K<9I@M8"6P;ET3(766<Q-L(0:&J8O
M*%!S58<4B,#1"`EN-E*,6__^$C)!C:I3.436$9?(Q"8N,4Q.C&(4J:=$*5KQ
MBD[,H!`!1<393%!\4#PA_/ICNVI)KGPAVB)@NGA#H(!15K1Z7US$>"WQ\!"&
M52$@W5+8H:=HR2F`;.-/WNBJ\S5$CG*+4J&2$SWDD<V!S[O0D:*FI!(2A6`'
M-`JA=%9%/)ZDC.'!WF;$UD()>1(GQ,I;*9DW*$X2*BK>&YXG!Q:U]QQPEO1Q
M(0%7*;I64I%0O*0(3@JXD$8&LU^&+,@+:X1+[7D0.X2B(ZE@52>SW>R8VOG?
MO&:'S?LTDWEJZR9*$&D\68TQ(F"TDRP=I$?MD;)#WWR(E0!H%W)*,R[F^Z4Y
MQ7G_'E&R\EP8BF=$,GD9<N80BJQRX"'1Z""!]BZ<KB'DE]A72XCD[WN5F2<_
MKT)(8NHOF3!Z9X$<:A&"^C!M/M+F1=87()*N%**BL=*.J/2_C"QS/R[%B$9'
MPZ(]^5.GW3M8:_Z7TP#^U*8B94]1-^*KI:+/2N)D*7J<:I1=!M`L*M48'\=#
M59/I\*IDR2JL&)I-W#05K&&=*4DB&4/>[!2M5CGJU)*:2]\0%:YQ52A)R$J3
MC=JEJR4Q*5ZE(M>UDG68$_N750<K%;&FY'DZ\JMTDN,EB3$V*H[U3CD]>J#E
M"/:R0\FL2N@D6;0`5G:+!:U0"FN2=.[FM"ZI+&Q+QMJ<_U&OM%B]SF=5ZY/:
M@N2$9MW.6WG[$]&6JU02[(YLB0L4X[JK,3WEB@@%&<-G,I=T((W.7V:2*WH*
M9CRJO.ZW]`J=I?24C:/L)!;7RUY?,JR]\(VO?.?+WA32][Z\O-1,T&N_].Q6
MO-`B+R.'J*K^KB>\`(YM=A4+F9W\D;KFJ2QN$_R9!0^'H)6$\%2M2V'O6!@S
M8Y+L;/L'TPZG1,"7B4MT0S+BL@S7Q*U%,67V^R<6"^B_,`Z);PTSD_VVJ\5S
M:>J$<SS,(;M1)R2<&H)>G..I?3@O)P/R77#<9*]ZMS".Y-Z#A%QEVW(6+PBU
ML828W.7;R?AC`>5PF<UL07WY5?_*B.'RFCN28;R([\T[3.V<1Y1=(_^6*X!6
M\D<MNV<^TQ.Q9*%Q#U=:NS,7&B+M_&%8:X(J0;-/SX\6IMI06I8L,[5'=\VT
M18KVY=`"T](V.BO=7BGJQU50K?<[M9C_MLMRYJ35UWLUK&D#9Z'I&M>YIJ)5
M@#OK/14-V,$V6O\6+3JVB1'9RE2VVY2%ZKV=\'B>GC,JR_(49B>M6+;>RAQ_
MU6L*=_O'SJ9>D!:6.FACA=K%SA[7^.?N07J[I(P==_7J'1-\[I6X;($2O?F]
MUNK1R*(0S!:%YYUM@E^$GE?^#*5'^.5RXX?=_G9X1K9T;\74L,$:7OC0_-QD
MCF=G5JK_*N*3[LOREKN<O=1[N<QG3O/V+JEZ@F*>?FN,,XN;LH,9U[@MSWDC
M`@,JY*T.>)X:+G2'V/#!JVKZ*%&W0*D'BY(5Y9+5/P/T>V^=>5]?*-4''G88
ME7V@C?3Y`\]>$:4/B^U1A_M%&$YRYJK]=?H.>M/O_E2,9SO<9>8[6ND.EPH&
M7NXO\?NQNRQXYKH]3(='?'$K6'4`-UZ\X=X?TP=[^>L"GGRH\SKZ.N_X12+D
MCJ`E?:LU7W?]2?XN&QS]ZPD#2L.I7NK&E-KMO[[.C.V>[;5?^^Q1%OK-G^CW
MP\=;Z9"/Y>2;]9K,='YO.+<AYDM?(:BO_O4'G,+6:W?[SHF]_WLL6V<#@S_\
M=4O/4@().5Z=7[<L',^4^*OU]PNWD=Q9BU\*?*>5U_S_`!B``CB`+V<I!,A$
MJ\07^W=T<6=_YY%[]:)(W?4LUN>`)R%^'\,4\&9^%M@>P;<;)L*`2->!4U5\
MWC<8%4B"[K-\!T%LMI&"*N@3MN."0A.##9)(,1=<-O@@A)2",+B#1$&#O`:$
M#R*$G46$"F*$L/&#2-A<LO:"3>A\3!B%ID2%PS>%5GB#6?AZ6+B%&.6%<M>%
M8$@@8CB&+66&P(>&9U>&:HA3;1AV;/B&0B6'5A>'=(@U=XA[>;AF2'(36?==
M>]AD$]@4A-B`@6AB(<@F(MA_ZG6`CO_XB)`8B9(XB5=T3'Y"?X!XB#E6:9CH
M?IH(8P`TB(;XB9:'+#NQ@?5'B@DF1]AB-JKH;G;XBN$1B[+8';18B^6"B[AV
MB[K85KV8:;SXB]\GC(46C,1X+\>X9\:8C(S$C&NVC,Z(9M%89=`XC?EAC4U6
MC=AH'-L(8]K8C;?QC>!8@^.88.)8CDN(CI:GCIC'CI[GCG8'C\1UCO+('/Y'
MB?B8C_JXC_R8CZ564H,R5=QQC@0I(@69BP@)(@=95@D)3P/)'2=X&!%9CQ19
MD19YD1C)>+BB)N13*CN1%4LB>I8A%R"I%(LHDJ$1@LKGD2NI%!,)2\A%DBU)
M-R\9&]"U)B'_-$,K)T!'\22G.%VQ`4)X0VE@(5U)AHJV07Y$R9.4EAJ$EI1O
M`29,Z9-#N9,'8Q-\P1?/Y$>0H2M#*8JO(4.!U!0@24-@:1M;24%=&1F/H68V
MF3MLY!ELZ1E<:1_[A9.+.)0"Y$>=V!J0\QAMP47\]X*GT2(V49<H.9*3$1F'
MJ9;)<Q^N(C$\$D$T(B=\.9BNP7$TXAE=U)?^`4&5Z6".F9@<1)+G)9ICJ14U
MF9D4Q!<B2&@M<IEYR9IS8BT\YV^D69JU.2=CJ4;A^!9'X92]F9,7]Y%/R1G(
M=71A`74V.2<AZ9@/UGZ\IH')^2>>&99)8B=M$A81)Q]ZE'!.$24J_QEI?TB;
MG2,K2H%U!_=:3!$FXPEKN1EG8!$X:!.;XY.1^)F?^KF?_-F?_OF?`!J@`CJ@
M!%J@!GJ@")J@"KJ@#-J@#OJ@$!JA$IJ!_5BA%GJA&)JA,O>/P#&A7U@\'FH@
M34*/(2HS)E.B9'@X*'IC*KJB`#*B+OJB+1JC;GBB-%JC('JC%S>CJD.BB6=Z
MQPBC$S$C'+HU,`-!(74US0$:*GD7K^93X\*C\B0E#Z$R[=>>??$0E[)BVJ,9
MMC083PHC==D7XO8EJ:%(=[(59$9E*X65JSD2;>80,@6<\"F>!'%N19>E\7FG
MUE1MY*$ZPN9.>OJ1W8*36)DO;X&5'K,::_^1B'B3B`K8?Y):B'#A&*@!GMQF
M>&**I2,T0WXXEI9E)L'YE001JD6:(D`FEI#FE%B*7D)9B(NVG#6V<7T:;W]J
M4:]6I,O9E$NQ7639&#ZVDDV9GNKBJUIQF+Y"B,JRI93:?\=ZE$`96KHVK;H6
M*%H!JKF29(]*J4FQ%C;DJ>`J0%PQ4[ZR%FH%K/333K5VF-U2GFGAE@NQGM1)
M/ZNQ%7@ZKH:Y,^/V)(.#KT-YKMRY:TW!KS0R3X>J$]NVGK`CI9%#K0Y[GT>W
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MHBMA<8E8Z1FBJY=X>ZC-*IB`E"O2.15PRTK_6I4BM!JR"B@Z:[.=ZIAZV;>!
MJ1:%B+`ANW]_T:2FH6Y:RJ=[X9N,*ZGGUK2RZJM[L6V]VVU\BKVR^ZA'_]&=
M9L>YG2NP?;I%2#&N:PL9MQ:R]1EM4;-I-39,85M):E,3S*F(A%A)M6M")XN[
MXSJKW:IB3D'`]0H9E*:P.ENP3;F`NTJ5/=FHG>$7WAJM:*&$I]<9ITAIYS4;
M>!K!->0K;/&Z6`K"8$*7.DE/$\M=^&L3RB+!S4:^7'NJ09&5-"RNT_><)(DM
MB8J;1DJ3I[MJ6R,G)E+$HDF2KU*2D#JK+F0H"*<NKFFI%%BV,YF5J/&1EBJN
M)=D78[*Y,\DKCKJ2K1C%+22D0WK#%?)DFX,B_9N-#$N"/BH<9JRC\S''=(R'
M,GS'2O7&>NQ??-S'#_C'@,Q5@CS(LUC(AFR+B!.<R`VI$>2DH9`<R9(\R93L
%*`$!`#L_
`
end

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>GRAPHIC
<SEQUENCE>9
<FILENAME>f88583b3f8858312.gif
<DESCRIPTION>GRAPHIC
<TEXT>
begin 644 f88583b3f8858312.gif
M1TE&.#EAIP)&`/?_````````,P``9@``F0``S```_P`S```S,P`S9@`SF0`S
MS``S_P!F``!F,P!F9@!FF0!FS`!F_P"9``"9,P"99@"9F0"9S`"9_P#,``#,
M,P#,9@#,F0#,S`#,_P#_``#_,P#_9@#_F0#_S`#__S,``#,`,S,`9C,`F3,`
MS#,`_S,S`#,S,S,S9C,SF3,SS#,S_S-F`#-F,S-F9C-FF3-FS#-F_S.9`#.9
M,S.99C.9F3.9S#.9_S/,`#/,,S/,9C/,F3/,S#/,_S/_`#/_,S/_9C/_F3/_
MS#/__V8``&8`,V8`9F8`F68`S&8`_V8S`&8S,V8S9F8SF68SS&8S_V9F`&9F
M,V9F9F9FF69FS&9F_V:9`&:9,V:99F:9F6:9S&:9_V;,`&;,,V;,9F;,F6;,
MS&;,_V;_`&;_,V;_9F;_F6;_S&;__YD``)D`,YD`9ID`F9D`S)D`_YDS`)DS
M,YDS9IDSF9DSS)DS_YEF`)EF,YEF9IEFF9EFS)EF_YF9`)F9,YF99IF9F9F9
MS)F9_YG,`)G,,YG,9IG,F9G,S)G,_YG_`)G_,YG_9IG_F9G_S)G__\P``,P`
M,\P`9LP`F<P`S,P`_\PS`,PS,\PS9LPSF<PSS,PS_\QF`,QF,\QF9LQFF<QF
MS,QF_\R9`,R9,\R99LR9F<R9S,R9_\S,`,S,,\S,9LS,F<S,S,S,_\S_`,S_
M,\S_9LS_F<S_S,S___\``/\`,_\`9O\`F?\`S/\`__\S`/\S,_\S9O\SF?\S
MS/\S__]F`/]F,_]F9O]FF?]FS/]F__^9`/^9,_^99O^9F?^9S/^9___,`/_,
M,__,9O_,F?_,S/_,____`/__,___9O__F?__S/___P``````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M`````````````````````"P`````IP)&```(_P"O"1Q(\)H5``@3*D1H92"K
MA1`1$CP(L>"U%1$3KFAHL:/'CR!#BAQ)LJ3)DRA3JES)LJ7+ES!CRIQ)LZ;-
MFSAS"LRX<,5`BCP!3(QH\6%0`#YU*EW*M*G3IU"C2IU*M:K5E1B/`N`(E">K
MGT0M:D5ZM:S9LVC3JEW+MJW;D$`W6IF;-:'`N'/SSMTZ4"%0C@3]ZEWX]:WA
MPX@3*U[,N/',OP6[?H4,TBC2N&+M$K3,U['GSZ!#BQY-&B;EP`D;GO8(66%F
MB9%3EYY-N[;MV[BKKMZ9<+)LD'6_U@7,&_90AKF3*U_.O'GSW5WO_O[HVN#T
MXD(+#G?.O;OW[^#1_O]E-?CW[MC(KW$N6-VAW_#PX\O'?7#CBL(L6<E-JAZG
M??P%D9<7?Q_IUYE,?]6E$'_CC941@(+EM=!\%%9HH6-\'>321CL)1-Y-&L[5
MD88>9@>7B0BF%A&!?W7EX'4+/GCAC#36B%:&)EJ!WUQ?D<?*CQTAU:-Z0JH'
MF(`>ZOBCCR+>I6.`EWETX$5.?D0BCT]6B9*+*Q;VUXLKHH809PC=9^.9:*;)
MU&5F7B.4B&8"\!52&(U89F$9-B24?@8E1:=09/'E4Y.H_;@"BU,*=!^?=DI'
M7G;W64$@2:MUE52+>NE5EUP2:H:===>I*>JHI*XDZ*!;U1FGGL05E=6<>F[_
MM!6?)![(UZUM.G0?6:T>U&MVB4HGK(8/&;EEJ)SYEEZ0O;$W774*`ECJM-16
M&YAJ6Y'XDZ]NMCI1B:QVNYFDP`)V:T,&0HBMG%#^NI.WU@W[)HHGG??>>7UY
M"M:RU7$VJ;4`!XPFCC^R*URXMA)G(KNG>EALK>:R^B2'^<XII[1U_E2LFP4#
M>.6\1.)W:$GG;8<OJ&2A9UQ["L(K\,LPPU??084=.K&LNYII%$'[U;S10R("
MC5'!.@MY65Y0"LIN9)QZ>&B/2ZN'44-##VT=G/]:&:J;LIV\W6M+M\=ULS&7
M;3:U+E>X6\LHNZR0M(K^)K:E9]=M]YEIJZW1@!6A_\QIIF(?!UO@T=YM^.&(
MDZ:@5](YF#61=JVWV82)5V[YY6Z-)?*+:0L6.,HI8R[ZZ*0[Q>6"Q)W.D]8\
M>>MBZ;#'[A9=7DI:>ZY7\XR[=GIN*/OOP`<O4NT&<;2GEGWQ!S1(A.87M?#0
M1P\\1WPR>I=%-"O:I(\.(4V]DLCKF.5$DG8_68]9BH]^\4G"W7U>M8_?E,=(
M,U^_20+R*/W^_*<;MXG^(]^E@D:U]<DE.^A2C=1"YB;L-;`OUP.23QXRIPXU
M4(*N`E-&%I<1P7V.@PMIU>)$^#9=M8Y_*!0>B>R#J,A04#7H.M@#100I]'&E
M=P_\B?:V99"+T`6'P.K0?O^(0R8->NXH'M17B8Z"J`4ES3BJVUH*ISBZ-W&$
M8A;4H7W85SP:5BD[^AG4#1](+TZAZ&(YM&`0&TBO)1HQ(GM!XD!`"+>Q$`@B
MTM*(&T](Q3Z2#H9W\5AD&"BB0A:0?0@L'J.>M,9`]@4P%!M9#]<81$F:*X3E
MR5:G&#*@.!XM4UCTR];F5CCLE,E9G8$(X(+EQU;635*$:AHL>V6F"3Y-/Y):
M5*H.):CM_2QD%`27TY;V(:GQA8+!/*"AIN1$!Z*RC2=SSYT^1\UGX5%,Z&JF
M"UW)S6YB2(D@^5PT&W<K<(K3FGTKSKJ,X\UVNI,Q)1S).9<EI69]+5_L).<E
MD?+_'G6"SGWO#*A`;]3/D,R3E6)"H!X3:I%[ID9!^#1>00=*T8I6A8-89%8^
MV\:\WT@.G_3BS#YUU,_?8#1O%DVI2F=21(VX[Z">-"*$4L,WL<D&HF.C'D]V
MM]*>AN<A2<'E20QT19Z"I3(I$VI]H$;$6);O+OQY#WEV9Z`-@@U[#WTC/6,4
MD9D>\SW3J6J8?$K6\&2OARE9&DK3:"<O_22H<&N2(2&(UAX6,VMB#>$SL<H0
MK>K+-:I\S14!2T\C962M94UL;4@Z&1XJLI#2*A:0VN<PDAK)?8RMJP\UZUC^
M1+6A7&Q>@#BX5Y5E"I1[R^09(Z=-;.[Q9'G=J&)G>QNJ_PTJ@H#D$+SDXA#A
M&$J7Z@&H;36[O!$9CZYL_=!31=N14G[*M-0A&TCW":EXNO9_>@6.=6G+W<4J
MBD.X7"'[W!88"#:I2*SY;J]<=E[DT@N2M),GC,`9S8-&53-D$JPTLQM.*7;W
MOZ#1J1BU\ZC)BJ6\'3IO1@=)I$DQ5TN>1:ZB#BS?K=+7OYAYXL(\U95678>#
M:YTH@$?\F2/MB5W4BU3G>%8S+@JE3;UR3V38RY7U9=%8+-Z,1Y+%4.@V5XKQ
MM*EU+4/$P/:G(R(EL9(](]3K62=7$V3OE'@;QD>1-%Q.`PP1G^:J-FU1.EK>
MD?S<M.#7]5AP;I,NS^2F+W_M*_]1(]Q)F2FWY#J3RL!FL6-IDRA'O@Y.B6SS
MY^1*JI7'V?G0,P)H5<:B83]KQ67K^2A(#;:U0#,:T9CN)A.E)1GM<"ZZ9>KT
MH$\9'0W[*2A&S;2J^4<75;Z4SJ#3"NL.FT%:>UHSK0ZAHE?-ZU[[^M>D@J7-
M,MKDS0CG0$^-&U>*4J12`Q5N4YMCLK]<96!;NYUCY*QH@71%<^EPL\2%6EUC
M2"0&ZQ:0<VWDM=?MRN;)580>0AX`M53,(Z?Q2?@):94B[-EBCIG=`$<AH1+(
MQ20Q^,9.GK`S%?ZM$6414(_,=L`GSNH4[Z7@&,=S2"&T\(1[W-@/SV&VD$?Q
MDJM0XAC_=S=[#HYP/,MOLO>#Y!RII"A_[]KD.,?<]E"<<2W'^\;4FWEO?TZ@
MR7(ZWOA6C0$9GO.FDZ[:3_XM@)+R-6Y=Q*,F]I3R"&?2:3\5ZDX/>PKQ;!+$
MBOWL(R;[2,R.]K:[_>UPC[O<YT[WNMM=8!N[N]X/W<8M[?WOHV.2DF"(I,$+
MZ$<*X]YE'8OXQA<L@6*N[)*V!S[S.=8@/E(\X#??G!-?#TX*O&`B^U)!#%))
M/U7^T(?V))P)H_Z6(RLDCHUE)G2A:DX5Y+SNE</(X$Y8]IB_(,>+-T2[6K'F
M_7GQ#XT?VMP.2>&3&2,E=T]]W(0WE@4NS/4][*206M:7?DKN8O?'&#1)`EWZ
M:JR^^FO#H5RAOGGMUW[NASO)!"_;BY8D8_/'R_^1+>E2N:=NZS>``=9Z/#-[
MP<<@,(1OT>9#]<%EO.6`#7A`AU)+/C$R$;@G#8A+OO%XQ46`(!B"(CB"S!$0
"`#L_
`
end

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>GRAPHIC
<SEQUENCE>10
<FILENAME>f88583b3f8858314.gif
<DESCRIPTION>GRAPHIC
<TEXT>
begin 644 f88583b3f8858314.gif
M1TE&.#EA!@(>`/?_````````,P``9@``F0``S```_P`S```S,P`S9@`SF0`S
MS``S_P!F``!F,P!F9@!FF0!FS`!F_P"9``"9,P"99@"9F0"9S`"9_P#,``#,
M,P#,9@#,F0#,S`#,_P#_``#_,P#_9@#_F0#_S`#__S,``#,`,S,`9C,`F3,`
MS#,`_S,S`#,S,S,S9C,SF3,SS#,S_S-F`#-F,S-F9C-FF3-FS#-F_S.9`#.9
M,S.99C.9F3.9S#.9_S/,`#/,,S/,9C/,F3/,S#/,_S/_`#/_,S/_9C/_F3/_
MS#/__V8``&8`,V8`9F8`F68`S&8`_V8S`&8S,V8S9F8SF68SS&8S_V9F`&9F
M,V9F9F9FF69FS&9F_V:9`&:9,V:99F:9F6:9S&:9_V;,`&;,,V;,9F;,F6;,
MS&;,_V;_`&;_,V;_9F;_F6;_S&;__YD``)D`,YD`9ID`F9D`S)D`_YDS`)DS
M,YDS9IDSF9DSS)DS_YEF`)EF,YEF9IEFF9EFS)EF_YF9`)F9,YF99IF9F9F9
MS)F9_YG,`)G,,YG,9IG,F9G,S)G,_YG_`)G_,YG_9IG_F9G_S)G__\P``,P`
M,\P`9LP`F<P`S,P`_\PS`,PS,\PS9LPSF<PSS,PS_\QF`,QF,\QF9LQFF<QF
MS,QF_\R9`,R9,\R99LR9F<R9S,R9_\S,`,S,,\S,9LS,F<S,S,S,_\S_`,S_
M,\S_9LS_F<S_S,S___\``/\`,_\`9O\`F?\`S/\`__\S`/\S,_\S9O\SF?\S
MS/\S__]F`/]F,_]F9O]FF?]FS/]F__^9`/^9,_^99O^9F?^9S/^9___,`/_,
M,__,9O_,F?_,S/_,____`/__,___9O__F?__S/___P``````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M`````````````````````"P`````!@(>```(_P"O"1Q(L*#!@P@3*ES(L*'#
MAQ`C2IQ(L:+%BQ@S:MS(L:/'CR!#BAQ)LJ3)DRA3JES)LJ5+CJQ2QE0YDV5-
MDS=/YA2Y<V7/EP5_`AUJL*:5HU98Y:PY,R;2I`)S6@F*]!HKI#&96MT:->K1
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MG8;S">?<AV"M1B)@JM%WWHD!/N@B<7G!Z"!R`9KH'8?OK0":C/?5."%YZ\E7
MY(S=@0CAA2(&&5^22A:7W'LB(LDBC#\RB%N(*,:8GI)??2@F<#]BZ-!45-)(
MY)+HV0@D5D\Q6=^<](7WVUY\;3@7=%ON=^>7X!U5X(-8EC7HGT8NZ:)^;@+8
MI&`^ALD>@Y$.9X5N7CII*51!=@GH4\I5A12F49;:J(R!7OJEI/6-=2639++_
MYVI^J]I'HI/9K6BF1)7REIR@DY6'IYTX]E9CL/2-2>N43:4)W7LK!@8HM%:Z
ME=:AUT$K58ZC\L>BJJ=E:I^`MZFYZ++C[C=FN>(BZRN'3P[KI8O:LHL>O<W:
M^^>G1PX'YKC2[LK0O>7"!E]X:MZ+9U)Q0J@9@U?AN1-RF"'V&'^B>C5OQ>X^
M=E]IB-&:ZIB1IB4L9LMBUBM<:JZ\+\6:C6699B5#G*BW+KM7<JH1>POD>`7;
MG%B_&9\U=*:7/2P=9FE=:*?`&)89DM0B44V2U1YA_9'6&G$]DM<L@0WUV!.)
MC9'9&:&]D=H5L6V1VQ'!W379@-)M]]UXYZWWWGSW_^WWWX`'+OC@A!=N^.&(
M)Z[XXHPW[OCCD$<N^>245V[YY9AGKOGFG'?N^>>@AR[ZZ*27;OKIJ*>N^NJL
MMRXZE:['GI#<%-&.D.US$X[[VPO!;M+N%P&_=M5B,=UBS^#Q^3"<!/6:V<T^
M9VNP8M0G-G%!UD5LKF+605]]I2SSF633H(ZX[5OA?V=7S2%3[YW'7E$?,\HB
MRJPQA#_W9]R.]9>&?,C,@4W/</4\Z#U/?$;#7[(XY2O^O4Q2R5M@4X(VLTV%
M2EH4\Y&&E`:?$TVO7Y!Q%*LZHR=XA;!N!$N/AXRE+!%A"H)]BE7*W!6LA)WK
M9`U"%`E_52N?$8:&`W1,7/\4]K/3L(M?_3FB]TAS("@M"C_[T1:ZND*C'T8Q
M2E#4X?U&R$3^U"M=*0(:P,8EQ1YFIT5:HA.9F#>07EVL2BE$$P.)HT84OD6&
MFO(4CNKCLCK^[UNB0E[_#-2;]84),5J:%+D8>*2458].>QRC(AWI'12YQ7EU
M;"&_BD>62'5/D6DLH!JA![]8*?&,>3H/8IQ7I1MFABG;,Z$9NW7&?]VI3,5J
MI+I&EBWMO0Q]\+EDQC"XF%L)R5'1PP\C6[FP3]KF7;Q$DR]UF$L#UE!5THSD
M9%RFJWU=$UNE>AZV-)E+ZM`16-FTY75RQLP%R1"5X(RAN43FRGB:$#<5^N2S
M=L/_BN94\D;'\EVBG&,CI;PGE&CQGB]I=-!L/6V3$+R?($$4H28VL4G;L:A5
MB,4;@_Z33!E5GT@3ZB5G=N>(LMI.0U'Z)Y,^1T&W[`Y!8053C*X)8@.4)@U#
MY"<@A=2A_\&I7A2DT=N%D:0V_$YX+G85T;#&,7^95=,\)D#%P'%^HN$,5*-J
MU?I%QHAFT>KUGKJ5D$GF)DW=C%JKE%:MN`8RAND,6]K*HO;$)HQVC2M<%4/7
MK<KE@7`UEFG4FM;GK7!>A8V+7D.#&B=JE:UHB6K\X#JQT9358-Z$Y5O?BDR[
J">],4XM:X3XK$=(&CS:F/>WE9L.3D+!6)H5[;4ED2Q/:!M"VMB$)"``[
`
end

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>GRAPHIC
<SEQUENCE>11
<FILENAME>f88583b3f8858311.gif
<DESCRIPTION>GRAPHIC
<TEXT>
begin 644 f88583b3f8858311.gif
M1TE&.#EANP`Y`/?_````````,P``9@``F0``S```_P`S```S,P`S9@`SF0`S
MS``S_P!F``!F,P!F9@!FF0!FS`!F_P"9``"9,P"99@"9F0"9S`"9_P#,``#,
M,P#,9@#,F0#,S`#,_P#_``#_,P#_9@#_F0#_S`#__S,``#,`,S,`9C,`F3,`
MS#,`_S,S`#,S,S,S9C,SF3,SS#,S_S-F`#-F,S-F9C-FF3-FS#-F_S.9`#.9
M,S.99C.9F3.9S#.9_S/,`#/,,S/,9C/,F3/,S#/,_S/_`#/_,S/_9C/_F3/_
MS#/__V8``&8`,V8`9F8`F68`S&8`_V8S`&8S,V8S9F8SF68SS&8S_V9F`&9F
M,V9F9F9FF69FS&9F_V:9`&:9,V:99F:9F6:9S&:9_V;,`&;,,V;,9F;,F6;,
MS&;,_V;_`&;_,V;_9F;_F6;_S&;__YD``)D`,YD`9ID`F9D`S)D`_YDS`)DS
M,YDS9IDSF9DSS)DS_YEF`)EF,YEF9IEFF9EFS)EF_YF9`)F9,YF99IF9F9F9
MS)F9_YG,`)G,,YG,9IG,F9G,S)G,_YG_`)G_,YG_9IG_F9G_S)G__\P``,P`
M,\P`9LP`F<P`S,P`_\PS`,PS,\PS9LPSF<PSS,PS_\QF`,QF,\QF9LQFF<QF
MS,QF_\R9`,R9,\R99LR9F<R9S,R9_\S,`,S,,\S,9LS,F<S,S,S,_\S_`,S_
M,\S_9LS_F<S_S,S___\``/\`,_\`9O\`F?\`S/\`__\S`/\S,_\S9O\SF?\S
MS/\S__]F`/]F,_]F9O]FF?]FS/]F__^9`/^9,_^99O^9F?^9S/^9___,`/_,
M,__,9O_,F?_,S/_,____`/__,___9O__F?__S/___P``````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M`````````````````````"P`````NP`Y```(_P"O"1Q(L*#!@P@3*ES(L*'#
MAQ`C2DQH9:+%BQ@S:MS(L>`*`!4[BAQ)LJ1)@E8`J&1ULJ7+ES`-LEJ1DF5,
M@:RL6+%YLZ?/ACEI@HRIT\I'E4-_*EU*\&-.`#"/JMQYC97*A3J9*K0*8(76
MARL_OCP:LJ#5L@;%?I6I4B@`GFO9OLUZ\FE2A'?-=HV+LBM/HWS9>J5Z,F5>
MO&B;0@U\[6-BJXP)^J59V#%<A%8O"ZS)V/%!NH&M"DW<\:A7ARD/BN[\%B'H
MN*M7:.;8-N)A@2M.\_7L6O?:F6]O:S3J-Z):CZWY9E9(&797H[,Q`A>^\*Q!
MSLJ3NUX\7/9%H[*U<_\$[AOB5;WEO^YEGEZB8>H,4^H4O_%H=(9.T;/&ROW[
M5?A;/=<?1X;=QQ]IQ\6%74+-792??!.UY=U(.?F77FX&^F1=0C.1!M%9+#V5
MH4RF1290<9+1]U5N`;;W4$JZ?>0B<[69F)]B(_9THVHL^H?65,8!:>-A"RJH
MXD"K.3CA0.N!)61D,!949%Q-LN7A0QA*.6!\*YEX#80X1I:@EE>BMN1`9S+$
M58X_1=D7FS<M]QF`7,+)X8Z,N3D0F)VU!YZ=UQTI$9Z!Z8D;G4I-^529J&UI
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M!3<IXDC.K?1Z.8\<\59#.XTD<3!WI#9.8YN'*XPV/4GEY`8S/A[3,TMT;KQ:
MH:BQ0S</9R=PB0'N$^NO<XBZ18[O"7?`^.;>J,PGPKYJ9)D*CU_O6!),NE93
M*]^3MFN;S*GITF]4(8-O$4\N\]F7-*WKPF\??J7717_^^L_")9_W[,</.]?@
*RV^_QY:''Q``.S\_
`
end

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>GRAPHIC
<SEQUENCE>12
<FILENAME>f88583b3f8858313.gif
<DESCRIPTION>GRAPHIC
<TEXT>
begin 644 f88583b3f8858313.gif
M1TE&.#EA`P-?`/?_````````,P``9@``F0``S```_P`S```S,P`S9@`SF0`S
MS``S_P!F``!F,P!F9@!FF0!FS`!F_P"9``"9,P"99@"9F0"9S`"9_P#,``#,
M,P#,9@#,F0#,S`#,_P#_``#_,P#_9@#_F0#_S`#__S,``#,`,S,`9C,`F3,`
MS#,`_S,S`#,S,S,S9C,SF3,SS#,S_S-F`#-F,S-F9C-FF3-FS#-F_S.9`#.9
M,S.99C.9F3.9S#.9_S/,`#/,,S/,9C/,F3/,S#/,_S/_`#/_,S/_9C/_F3/_
MS#/__V8``&8`,V8`9F8`F68`S&8`_V8S`&8S,V8S9F8SF68SS&8S_V9F`&9F
M,V9F9F9FF69FS&9F_V:9`&:9,V:99F:9F6:9S&:9_V;,`&;,,V;,9F;,F6;,
MS&;,_V;_`&;_,V;_9F;_F6;_S&;__YD``)D`,YD`9ID`F9D`S)D`_YDS`)DS
M,YDS9IDSF9DSS)DS_YEF`)EF,YEF9IEFF9EFS)EF_YF9`)F9,YF99IF9F9F9
MS)F9_YG,`)G,,YG,9IG,F9G,S)G,_YG_`)G_,YG_9IG_F9G_S)G__\P``,P`
M,\P`9LP`F<P`S,P`_\PS`,PS,\PS9LPSF<PSS,PS_\QF`,QF,\QF9LQFF<QF
MS,QF_\R9`,R9,\R99LR9F<R9S,R9_\S,`,S,,\S,9LS,F<S,S,S,_\S_`,S_
M,\S_9LS_F<S_S,S___\``/\`,_\`9O\`F?\`S/\`__\S`/\S,_\S9O\SF?\S
MS/\S__]F`/]F,_]F9O]FF?]FS/]F__^9`/^9,_^99O^9F?^9S/^9___,`/_,
M,__,9O_,F?_,S/_,____`/__,___9O__F?__S/___P``````````````````
M````````````````````````````````````````````````````````````
M````````````````````````````````````````````````````````````
M`````````````````````"P``````P-?```(_P"O"1Q(L*#!@P@3*ES(L*'#
MAQ`C2IQ(L:+%BQ@S:MS(L:/'CR!#BAQ)LJ3)DRA3JES)LJ7+ES!CRIQ)LZ;-
MFSASZMS)LZ?/GT"#"AU*M*C1HTB3*EW*M*G3IU"C4K0"H.H**]>H6F65T,H*
MJU:L<$7(ZFM55F6K8LT*8(5!L073JKTF=RS=KVZUMF7;EFM:KGK#`E@K4.\*
MNUG-7CTL4.Y@M&8'\ZU*>2Y"JFX=>@4+=R`KK9TA&@9LE:!6Q)O;AD4LM;7K
MU[!C%]1JNFI"5J4%?F5H^9KM@9D)XB9,L+?OO<4'TBXLN;!=L\R#\Q6.%SB`
M@L8M]SV.=3?"%6[!,__$C?R:=]W-O[)NN)PY`-2$R0<_+[N^_?OX@>86N#]N
M?]^\-7><<NM]19Q[=I'WGFG*_<868=+EUMYQP<DGW'4-+HB@;HUI1Y9D5"UD
M87+H$>?@0_TIQF"'Y?&7WXLPQBBC2MD)B%V+A3$$W70<SO8?C\[M%Y9GVC47
M&G?N%2?@C\1-N!Q:2>9X$%58V7@0D^A)=]QZ"QF7FET84OC6C&26:>:9HIV5
M(9>@3;0<>""RAA9E!O77G9I9W8B58!A*=QI_`O[)UX%UMOCCCV^U==5";4Z)
MYT#&,21HGB/F.2B:F&:J:::@A94:0G2Z:9M85)HW9JA*-DE7;F$"VMV`1^[_
M6%V&D)X(JFJ>1HHDH[;>VNJ-OS:JV8EKF0786JANJNRRS,;&&9]:LDCHL-?E
M-=B169&FX892FG?69WK"99N65NVH9&:59N7I6IV&9:R/VSI*6UJ,^6<ED5::
MZY"=+(8G;;,`!RRP4C5.*ZQ$6ST8+;M>$HOO5:QAEIE:B)'')VN6'2QFE!S3
MFI!W<WEUF:[<UAIMEP)"B=Y[F6D\\,LPQTS3I)/6=B^*OVD<&64FMDB<BO`B
M:^MR#6NH<6_]'8KCA0RSW!7)0);,WJ/$R=?TM#)GK?76(NFKKYX&<7EE<^3%
MU7.%O:G<;Z)A&EB0K"WJ6S2^\45J\=.$)3LVH7Z=_TB>V!\[3-"[KH;-]>&(
M)XZPH2F71_A=7*FGT(GY`KNF<@:Y[2-A(8(==7]_6Q<FS;U.&#:>?ZH]^*-E
MC24Y>L\MB)O8_%[8ZN.M>PNXXKSW'G.E6@7GI%KNUHIU82:^735EKN,Y>YU<
MMCJDS7F3_5]:[FZW,IB/`OIKYI7!B:A[GFII(&:(A=SKJHXOK&6[P4'M^_ST
M+_O9NNKB[US8TWMV?&-Q$<YJ&K,N4JWK6-@26\7,IC]/H:6`4\)6`1]X0`)6
M\#;]^\SN+-B5:8%+-]&ZGZ?H,L(`\N]`'ZR?"E?(PA;.I%XNC*$,9TA#H<"P
MACC,H0YWB)(-\O"'0`RB$/^'2,0B&O&(2$RB$I?(Q"8Z\8F;$J$/;W(_NC1F
MBNPQ3?\\,Y820O&+8)QAJ3:"Q8;LKBSH`=1%/N,@\8BG,?5RX\G"2,<Z)FZ,
M&<&-1O28$`&AJXQD&="#V`+"!NWI>W9,I")C-L;53,^!CTS0:BQVORINL3..
M7,O=\I<J`%K2@/Z+#]9^\S?&#`=?N5ND*E<IL$;N92^G%,OL1*;'1?WF+)CQ
MC5MF:2VW(.<W$&N5@JK'%E_FY9CF\>5Z'"0H`QFI>ZR,IC31Y,HJ]>DZ=R)D
M+KER2VQ*9ES>'&0W`:6ZNQ1)G->13.N^22@'L?&;WO2+RZ9)SWK>IYJ"I)(U
M'>C_K06-LU2V(1ZIX*E&]DEG+&6#%3SQB!DOUJI#[%.H6*Z34'M:]**PP:>#
M@*DA**5%D*,BZ.O8:$TU=M&/#5(C0`=3'MR@JU#,X8^UV,)&F6+TICA]BD9'
MITE<^08POGQ,2$OJTB&MU%5OW!9RZC74`4DN<M>2$RG?\[R?TI*J\<JI5K<:
M%"GFKY*>">45IZ?!2D(2+E7\Z@#+JJZ*I96$!C0@`KN8P`MN,5M:Y*I>]\K7
MOOKUKX`-K&`'2]C"&O:PB$VL8A?+V,8Z]K&0C:QD)TO9REKVLIC-K&8WR]G.
M>O:SH`VM:$=+VM*:]K2H3:UJ5\O:UKKVM;"-K6QG2]O:_]KVMKC-K6YWR]O>
M^O:WP`VN<(=+W.(:][C(3:YRE\O<YCKWN="-KG2G2]WJ6O>ZV,VN=K?+W>YZ
M][O@#:]XQTO>\IKW-2D4CG(<"D%)B>B\\.6(71(X&X1V4(MWQ5;^L"+"SJ07
MKYG;C/(LV$XX\HI1_XNO@MU[ES'6%(Z-#-LNT<7>&Q(8>>X"3.2`0\*XN(YS
MBS(/[=;;I8709\$H9D\7(0HIS*V*@+-!EFY88V'@+-!%INIP9^:HKK'REWEU
M(G&/Z8(6;L+U+5X1)7\UB<DJ:G#(4$[Q=4_6*D2VS3\/9%]'YZB@]>PI;P!"
MWG<PM\43AYF/$R[+5:K4X<S=I?\X["*RJ:@2N2_C>,E2ONY=VXQC`1+(/P?R
M#GB\,L<3PZ5_Z12RV:1TUQ!#RHL_AC)5#_)!&(JL6.YB<X^G1]$U(S+/S]TS
MN=RL:.3AR)8V_L[/Q.PBGDX)PX1NTH&^IT%LYJW&YBE?A"SU*PP95<9[!K5T
M[UK.7ZFNS!V"3YCSYZ552WK9>^:<KIN$L44#"-$_)76?$S.6CH;YURX2F16%
M/=TMJ@Q,PK%OE%W]YWKI=W^LSC&X=AQ@]MJYG,LNS"YMW>*JPA@X:"/2`'W-
M7T]W9\WDIFZ%UAR:,)6%GSE63F;RPE^$3CS&<N9PNSG\W_ZZ%:Y>'N!Z/:[6
MT(A<A&'_]1^&P0HES@$RX<25-J0?J3]+"9#)1WIK*"-F[3_#_.<\23"C@$[T
M9KT\Y45/NM*7SO2F.YU93\;P1+RJ\\N(R.291&NP(R:G*2$PV$]'[7R[;AIU
M1Q"_!]*O5]OK53ZO[CE'[U#>-M@YA;Q.Q*N:N]ENU^8'2_S#Q0L[:SUZ%;+5
M_>%&DO";X=HD7$.<X2T3.5S<)SR+=`[?5Y+4&VU^^1'#>]>I!F"\!9_:EK&X
MSSW]MY#[1&,%'I3$:!R<ZH-D>@+*DX)N!\ZK1GY%*%$4[!.MO6YVGWG4@]G`
MKR:]:O5;Y>)'/-G@ZC+R#P*T%0$-VPR*Y15SW*<XGTXZ$X<,_\)_WY6\VWQ5
M/%XVNY<]Z,WW2/FHI77R>I[`?/5I,5RNG,"?O:)9#C_)F[9+8I-!J8=HF.=B
M_I=7?=1B\18F;2-)\)=:WS-J;Z.`ZW5JFH9WE"9,*,1OVV9SLV)L,W4\_8-M
MB(9K+N8M[_,_#JAH+1AO[Q:!H65LU99N%BAO\3(D/'4T91=DV)>"WL(?ZK87
M7@$X&30?SY95*Y)&-QADGT<B&MAP,AA_-CAN^79NH[=^>.5N@`-Z%2AO@98^
M<H=),G9?J<88V/8\[J>!'PAVV[9+\[=X%2)T4[A9_L5PZ`9A(O<^%S<DYW9Q
M;P,8?C9CG+=A-Z=>LS=N1FAO%C17DSAT4.:&=I=Q2?"A9%58AZ7%+C570NUU
D?AP$<H>(9"@T7\1&AS%ABI@(70>810$3=ZG(7*[HBB@1$``[
`
end

</TEXT>
</DOCUMENT>
</SUBMISSION>
