EXHIBIT 10.5

INTEGRATED SURGICAL SYSTEMS, INC.

SERIES D PREFERRED STOCK AND WARRANT

PURCHASE AGREEMENT

December 21, 1995

TABLE OF CONTENTS

                                                                                                    Page
1.   Recapitalization of the Company; Purchase and Sale of Stock and Warrants.....................     1
     1.1        Authorization.....................................................................     1
     1.2        Recapitalization of the Company...................................................     1
     1.3        Sale of Series D Shares and Series D Warrants at the First Closing................     2
     1.4        Option and Call to Purchase Additional Series D Shares and Series D Warrants......     2

2.   Closing Date; Delivery; Rights Offering......................................................     3
     2.1        First Closing.....................................................................     3
     2.2        Second Closing....................................................................     3
     2.3        Offer to Nonparticipating Stockholders............................................     3

3.   Representations and Warranties of the Company................................................     4
     3.1        Organization, Good Standing and Qualification.....................................     4
     3.2        Capitalization....................................................................     4
     3.3        Subsidiaries......................................................................     5
     3.4        Authorization.....................................................................     5
     3.5        Shares, Series D Warrants, Series D Warrant Shares and Conversion Stock...........     5
     3.6        Governmental Consents.............................................................     6
     3.7        Litigation........................................................................     6
     3.8        Proprietary Information Agreements................................................     6
     3.9        Patents and Trademarks............................................................     6
     3.10       Compliance with Other Instruments.................................................     7
     3.11       Agreements; Action................................................................     7
     3.12       Disclosure........................................................................     8
     3.13       Registration Rights...............................................................     8
     3.14       Corporate Documents...............................................................     8
     3.15       Title to Property and Assets......................................................     8
     3.16       Employee Benefit Plans............................................................     9
     3.17       Tax Returns, Payments and Elections...............................................     9
     3.18       Financial Statements..............................................................     9
     3.19       Changes...........................................................................     9
     3.20       Environmental and Safety Laws.....................................................     9
     3.21       Minute Books......................................................................    10
     3.22       Insurance.........................................................................    10
     3.23       Effect of Transaction.............................................................    10
     3.24       Finder's Fee......................................................................    10

4.   Representations and Warranties of the Investors..............................................    10

TABLE OF CONTENTS
(continued)

                                                                                    Page
     4.1        Due Organization and Authorization................................    10
     4.2        Purchase Entirely for Own Account.................................    10
     4.3        Disclosure of Information.........................................    11
     4.4        Investment Experience.............................................    11
     4.5        Restricted Securities.............................................    11
     4.6        Further Limitations on Disposition................................    11
     4.7        Legends...........................................................    12
     4.8        Finder's Fee......................................................    12

5.   Conditions of Investors' Obligations at First Closing........................    12
     5.1        Representations and Warranties....................................    12
     5.2        Performance.......................................................    12
     5.3        Compliance Certificate............................................    12
     5.4        Proceedings and Documents.........................................    12
     5.5        Cancellation of IBM Note and Interest; Amendment of Warrant.......    13
     5.6        Cancellation of Accumulated Dividends.............................    13
     5.7        Opinion of Company Counsel........................................    13
     5.8        Investors Agreement...............................................    13
     5.9        Registration Rights Agreement.....................................    13
     5.10       Restated Certificate of Incorporation.............................    13
     5.11       Stock Certificates................................................    13
     5.12       Board of Directors................................................    13
     5.13       Ramesh Trivedi Involvement........................................    13

6.   Conditions of the Company's Obligations at First Closing.....................    13
     6.1        Representations and Warranties....................................    14
     6.2        Cancellation of IBM Note and Interest.............................    14
     6.3        Cancellation of Accumulated Dividends.............................    14
     6.4        Payment of Purchase Price.........................................    14
     6.5        Restated Certificate of Incorporation.  ..........................    14
     6.6        Investors Agreement...............................................    14

7.   Condition of Investors' Obligations at Second Closing........................    14
     7.1        Representations and Warranties....................................    14
     7.2        Performance.......................................................    14
     7.3        Compliance Certificate............................................    14
     7.4        No Alternative Investor...........................................    15
     7.5        Option Plan.......................................................    15

TABLE OF CONTENTS
(continued)

                                                                       Page
8.   Conditions of the Company's Obligations at Second Closing.......    15
     8.1        Representations and Warranties.......................    15
     8.2        Payment of Purchase Price............................    15

9.   Covenants of the Company........................................    15
     9.1        Delivery of Financial Statements.....................    15
     9.2        Inspection...........................................    16
     9.3        Restrictive Agreements Prohibited....................    16
     9.4        Proprietary Information Agreements...................    16
     9.5        Transactions with Affiliates.........................    16
     9.6        Purchase Rights......................................    17
     9.7        Termination of Covenants.............................    17

10.  Termination and Amendment of Prior Agreements...................    18

11.  Miscellaneous...................................................    18
     11.1       Survival of Warranties...............................    18
     11.2       Successors and Assigns...............................    18
     11.3       Governing Law........................................    18
     11.4       Counterparts.........................................    19
     11.5       Titles and Subtitles.................................    19
     11.6       Notices..............................................    19
     11.7       Payment of Fees and Expenses.........................    19
     11.8       Finder's Fee.........................................    19
     11.9       Amendments and Waivers...............................    19
     11.10      Severability.........................................    19
     11.11      Aggregation of Stock.................................    20
     11.12      Stock Splits.........................................    20

TABLE OF CONTENTS
(continued)

EXHIBITS

A Schedule of Investors

B Restated Certificate of Incorporation

C Schedule of Exceptions

D Employment, Confidential Information and Invention Assignment Agreement

E Opinion of Company Counsel

F Investors Agreement

G Registration Rights Agreement

H Form of Series D Warrant

I Warrant for Purchase of Common Stock (IBM 1995 Common Warrant)

J Warrant for Purchase of Common Stock, as amended (IBM 1991 Common Warrant)

K Warrant Agreement to Purchase Common Stock (Sutter Health Warrant)

L Warrant Agreement to Purchase Common Stock (Sutter VP Warrant)

M Warrant Agreement to Purchase Common Stock (Keystone Warrant)

INTEGRATED SURGICAL SYSTEMS, INC.

SERIES D PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT

THIS SERIES D PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT (the "Agreement") is made as of the 21st day of December 1995, by and between Integrated Surgical Systems, Inc., a Delaware corporation located at 829 West Stadium Lane, Sacramento, California 95834 (the "Company"), and the investors listed on the signature pages hereof, each of which is herein referred to as an "Investor."

THE PARTIES HEREBY AGREE AS FOLLOWS:

1. Recapitalization of the Company; Purchase and Sale of Stock and Warrants.

1.1 Authorization. Before the First Closing (as defined below), the Company shall adopt and file with the Secretary of State of Delaware the Restated Certificate of Incorporation in the form attached hereto as Exhibit B. The shares of Series D Preferred Stock sold to certain of the Investors pursuant to this Agreement are hereinafter referred to as the "Shares." The Warrants to Purchase Shares of Series D Preferred Stock, in the form attached hereto as Exhibit H, sold to certain of the Investors pursuant to this Agreement are hereinafter referred to as the "Series D Warrants." The shares of Series D Preferred Stock issuable upon the conversion of the Series D Warrants are hereinafter referred to as the "Series D Warrant Shares." The total amount of Common Stock and other securities issuable upon conversion of the Shares and the Series D Warrant Shares is hereinafter referred to as the "Conversion Stock." The Shares, the Series D Warrants, the Series D Warrant Shares and the Conversion Stock are hereinafter collectively referred to as the "Securities."

1.2 Recapitalization of the Company. Before and upon the First Closing (as defined below), the Company will complete a recapitalization (the "Recapitalization") consisting of the following:

(a) a reverse 1-for-5 stock split of all outstanding capital stock of the Company and the conversion of all outstanding Series B and Series C Preferred Stock into Common Stock, to be effected upon the filing of the Restated Certificate of Incorporation in the form attached hereto as Exhibit B;

(b) the issuance, before the First Closing, to International Business Machines Corporation ("IBM") of a warrant in the form attached hereto as Exhibit I exercisable for 187,752 shares of Common Stock at $0.01 per share (the "IBM 1995 Common Warrant"), in exchange for the cancellation of the outstanding principal amount of and accrued interest on the Convertible Subordinated Loan Note dated February 6, 1991, issued to IBM;

(c) the issuance, upon the First Closing, to IBM of the Warrant for the Purchase of Common Stock dated February 6, 1991, as amended in the form attached hereto as

Exhibit J (the "IBM 1991 Common Warrant"), amended to extend its term to December 31, 2000 and to adjust the number of shares of Common Stock subject thereto;

(d) the issuance, upon the First Closing, to the holders of the Company's Series B Preferred Stock and Series C Preferred Stock of an aggregate of 60,054 shares of Common Stock in exchange for the cancellation of all accumulated dividends on the Series B Preferred Stock and Series C Preferred Stock;

(e) the issuance, upon the First Closing, to Sutter Health, a California nonprofit public benefit corporation, ("Sutter Health") of a warrant in the form attached hereto as Exhibit K exercisable for 578,353 shares of Common Stock at $0.50 per share (the "Sutter Health Warrant");

(f) the issuance, upon the First Closing, to Sutter Health Venture Partners I, L.P. ("Sutter VP") of a warrant in the form attached hereto as Exhibit L exercisable for 17,605 shares of Common Stock at $0.50 per share (the "Sutter VP Warrant"); and

(g) the issuance, upon the First Closing, to Keystone Financial Corporation, a Pennsylvania Not-For-Profit Corporation ("Keystone") of a warrant in the form attached hereto as Exhibit M exercisable for 64,065 shares of Common Stock at $0.50 per share (the "Keystone Warrant").

1.3 Sale of Series D Shares and Series D Warrants at the First Closing. Subject to the terms and conditions of this Agreement, each Investor agrees, severally, to purchase at the First Closing (as defined below) and the Company agrees to sell and issue to each Investor at the First Closing, that number of shares of the Company's Series D Preferred Stock or that number of Series D Warrants, as the case may be, set forth opposite each Investor's name in the column entitled "First Closing" at the purchase prices set forth in Exhibit A attached hereto.

1.4 Option and Call to Purchase Additional Series D Shares and Series D Warrants. Subject to the terms and conditions hereof, at any time from the First Closing Date through the Mandatory Option Exercise Date (as defined below) each Investor will have the option to purchase from the Company no fewer than the number of Series D Shares or Series D Warrants, as the case may be, set forth opposite such Investor's name in the column entitled "Second Closing" at the purchase prices set forth in Exhibit A attached hereto and the Company shall have a call option on the terms set forth below (the "Series D Option"). An Investor may exercise such option by delivering written notice (the "Exercise Notice") to the Company, which notice shall specify the number of shares to be purchased and the date and time at which such purchase and sale will occur (the "Second Closing Date"), which Second Closing Date shall be the tenth day following the date of the Exercise Notice. Unless the context otherwise requires, the term "Closing" shall apply to each of the First Closing and the Second Closing.

Each Investor must exercise its Series D Option, if such Series D Option has not yet been exercised, on or before February 19, 1996 (the "Mandatory Option Exercise Date"), unless the Company shall have received prior to February 19, 1996, from an investor or investors other than the Investors the aggregate amount of $1,000,000 in exchange for the issuance by the Company to such investor or investors of Series D Shares or Series D Warrants on terms at least as advantageous to the Company as the terms set forth in this Agreement.

An Investor may assign its Series D Option only if (a) the Company has consented to the assignment, (b) the assignee is an "Accredited Investor" as defined in Regulation D under the Securities Act of 1933, as amended, and (c) the assignee executes a counterpart of this Agreement, the Investors Agreement and the Registration Rights Agreement.

2. Closing Date; Delivery; Rights Offering.

2.1 First Closing. The closing of the initial purchase and sale of 1,025,641 shares of the Shares and 2,051,282 of the Series D Warrants shall take place at such time and place as the Company and the Investors pursuant hereto mutually agree upon (which time and place are designated as the "First Closing"). At the First Closing the Company shall deliver to each Investor certificate(s) representing the Shares or warrants representing the Series D Warrants which such Investor is purchasing against delivery to the Company by such Investor of a check or wire transfer in the amount of the purchase price therefor payable to the Company's order.

2.2 Second Closing. The closing of the purchase and sale of the Shares and Series D Warrants pursuant to the Series D Option shall take place at such place as the Company and the Investors pursuant hereto mutually agree upon, at 10:00 A.M. on the Second Closing Date specified in the Exercise Notice for each such exercise. At the Second Closing the Company shall deliver to each Investor certificate(s) representing the Shares or warrants representing the Series D Warrants which such Investor is purchasing pursuant to the Series D Option against delivery to the Company by such Investor of a check or wire transfer in the amount of the purchase price therefor payable to the Company's order.

2.3 Offer to Nonparticipating Stockholders. Within 30 days after the First Closing, the Company will offer to all stockholders of the Company that did not purchase shares of Series D Preferred Stock or Series D Warrants pursuant to this Agreement (the "Nonparticipating Stockholders") the opportunity to purchase shares of Series D Preferred Stock (the "Rights Offering"). Up to an aggregate of 1,115,000 shares of Series D Preferred Stock may be sold in accordance with the Rights Offering. Each Nonparticipating Stockholder will have 45 days from receipt of notice of the Rights Offering to elect whether or not to participate in the Rights Offering, and the sale of the shares of Series D Preferred Stock to the Nonparticipating Investors pursuant to this paragraph 2.3 will be completed not later than 90 days after the First Closing. The maximum number of shares of Series D Preferred Stock which any Nonparticipating Stockholder may purchase in the Rights Offering shall be that number of shares of Series D Preferred Stock which bears the same relation to 1,115,000 that the number of Voting Securities (as defined in Section 9.6(c) below)

held by such Nonparticipating Stockholder bears to the total number of Voting Securities held by all Nonparticipating Stockholders. All such sales of Series D Preferred Stock to Nonparticipating Investors shall be made on the terms and conditions set forth in this Agreement. Any shares of Series D Preferred Stock sold pursuant to this paragraph 2.3 shall be deemed to be "Series D Preferred Stock" for all purposes under this Agreement and shall be deemed to be "Shares" sold pursuant to this Agreement, and any purchasers thereof shall be deemed to be "Investors" for all purposes under this Agreement. Should any such sales be made, the Company shall prepare and distribute to the Investors a revised Exhibit A to this Agreement reflecting such sales.

3. Representations and Warranties of the Company. The Company hereby represents and warrants to each Investor that, as of the date of this Agreement, except as set forth on the Schedule of Exceptions attached hereto as Exhibit C, which exceptions shall be deemed to be representations and warranties as if made hereunder, as follows:

3.1 Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as now conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure so to qualify would have a material adverse effect on its business or properties.

3.2 Capitalization. As of and immediately following the First Closing, the authorized capital of the Company consists of:

(a) 5,750,000 shares of Preferred Stock, $0.01 par value (the "Preferred Stock"), of which all 5,750,000 shares have been designated Series D Preferred Stock. Immediately prior to the First Closing, no shares of Series D Preferred Stock will be outstanding. Up to an aggregate of 5,730,383 shares and warrants to purchase shares of Series D Preferred Stock will be sold pursuant to this Agreement (as part of the First Closing, Second Closing and Rights Offering). The rights, preferences, privileges and restrictions of the Shares will be as stated in the Company's Restated Certificate of Incorporation attached hereto as Exhibit B.

(b) 15,000,000 shares of Common Stock, $0.01 par value (the "Common Stock"). As of and immediately following the First Closing, 405,313 shares of Common Stock will be outstanding.

(c) a warrant to purchase up to 187,752 shares of Common Stock at an exercise price of $0.01 per share;

(d) a warrant to purchase up to 100,000 shares of Common Stock at an exercise price of $.05 per share;

(e) warrants to purchase up to 660,024 shares of Common Stock at an exercise price of $0.50 per share;

(f) Outstanding options to purchase up to 111,450 shares of Common Stock (the "Options") pursuant to the Company's 1991 Incentive Stock Option Plan (the "1991 Plan"), and 66,814 shares of Common Stock reserved for future option grants under the 1991 Plan.

(g) Except for (i) the conversion privileges of the Preferred Stock (ii) the rights set forth in the Investors Agreement attached hereto as Exhibit F and in the Amended and Restated Stockholders Agreement dated November 13, 1992, (the "November 1992 Stockholders Agreement") and (iii) as set forth in the Schedule of Exceptions, there are no other outstanding options, warrants, rights (including conversion or preemptive rights) or agreements for the purchase or acquisition from the Company of any shares of its capital stock.

3.3 Subsidiaries. Except for Integrated Surgical Systems B.V., a corporation organized under the laws of the Netherlands and a wholly-owned subsidiary of the Company, the Company does not presently own or control, directly or indirectly, any interest in any other corporation, association, or other business entity.

3.4 Authorization. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement, the performance of all obligations of the Company hereunder and the authorization, issuance (or reservation for issuance) and delivery of the Shares and Series D Warrants being sold hereunder and the Conversion Stock has been taken or will be taken prior to the Closing, and this Agreement constitutes a valid and legally binding obligation of the Company, enforceable in accordance with its terms.

3.5 Shares, Series D Warrants, Series D Warrant Shares and Conversion Stock.

(a) The Shares and Series D Warrants, when issued, sold and delivered in accordance with the terms hereof for the consideration expressed herein, will be duly and validly issued, fully paid and nonassessable and, based in part upon the representations of the Investors in this Agreement, will be issued in compliance with all applicable federal and state securities laws. The Conversion Stock has been duly and validly reserved for issuance and, upon issuance in accordance with the terms of the Restated Certificate of Incorporation, shall be duly and validly issued, fully paid and nonassessable, and issued in compliance with all applicable securities laws, as presently in effect, of the United States and each of the states whose securities laws govern the issuance of any of the Shares or Series D Warrants hereunder. Neither the issuance, initial sale or delivery of the Shares or Series D Warrants by the Company nor the Conversion Stock is subject to any preemptive right of stockholders of the Company which has not been waived.

(b) The outstanding shares of Common Stock are all duly and validly authorized and issued, fully paid and nonassessable and were issued in compliance with all applicable

federal and state securities laws. The shares of Series D Preferred Stock when issued, upon exercise and in accordance with the terms of the Series D Warrant, shall be duly and validly authorized and issued, fully paid and nonassessable, and shall have been issued in compliance with applicable federal and state securities laws. The Common Stock issuable upon conversion of the Series D Preferred Stock has been duly and validly reserved for issuance, and upon issuance in accordance with the terms of the Restated Certificate of Incorporation shall be duly and validly issued, fully paid and nonassessable, and issued in compliance with all applicable securities laws, as presently in effect, of the United States and each of the states whose securities laws govern the issuance of such Common Stock.

3.6 Governmental Consents. No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state, local or provincial governmental authority on the part of the Company is required in connection with the consummation of the transactions contemplated by this Agreement, except qualification (or taking such action as may be necessary to secure an exemption from qualification, if available) of the offer and sale of the Shares and the Series D Warrants (and the Conversion Stock) under the California Corporate Securities law of 1968, as amended, and other Blue Sky laws, which filings and qualifications, if required, will be accomplished in a timely manner.

3.7 Litigation. There is no action, suit, proceeding or investigation pending or currently threatened against the Company which questions the validity of this Agreement or the right of the Company to enter into it, to perform this Agreement or to consummate the transactions contemplated hereby, or which might result, either individually or in the aggregate, in any material adverse changes in the assets, condition, affairs or prospects of the Company, financially or otherwise, or any change in the current equity ownership of the Company, nor is the Company aware that there is any basis for the foregoing. The foregoing includes, without limitation, actions pending or threatened (or any basis therefor known to the Company) involving the prior employment of any of the Company's employees, their use in connection with the Company's business of any information or techniques allegedly proprietary to any of their former employers, or their obligations under any agreements with prior employers. The Company is not a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality. There is no action, suit, proceeding or investigation by the Company currently pending or which the Company intends to initiate.

3.8 Proprietary Information Agreements. Each officer and key employee of the Company has executed a Proprietary Information Agreement in the form attached hereto as Exhibit D, and no exceptions have been taken by any such officer or employee to the terms of such agreement. The Company, after reasonable investigation, is not aware that any of its employees are in violation thereof, and the Company will use its best efforts to prevent any such violation.

3.9 Patents and Trademarks. The Company has sufficient title and ownership of, or has the right to use without payment to any other person, all patents, trademarks, service marks, trade names, copyrights, trade secrets, information, proprietary rights and processes necessary for its

business as now conducted and as proposed to be conducted without any conflict with or infringement of the rights of others. The Company has not granted any options, licenses, or agreements of any kind relating to the foregoing, nor is the Company bound by or a party to any options, licenses or agreements of any kind with respect to the patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information, proprietary rights and processes of any other person or entity. The Company has not received any communications alleging that the Company has violated or, by conducting its business as proposed, would violate any of the patents, trademarks, service marks, trade names, copyrights or trade secrets or other proprietary rights of any other person or entity. The Company is not aware that any of its employees is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with the use of his or her best efforts to promote the interests of the Company or that would conflict with the Company's business as proposed to be conducted. Neither the execution nor the delivery of this Agreement, nor the carrying on of the Company's business by the employees of the Company, nor the conduct of the Company's business as proposed, will, to the Company's knowledge, conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant or instrument under which any of such employees is now obligated. The Company does not believe it is or will be necessary to utilize any inventions of any of its employees (or people it currently intends to hire) made prior to their employment by the Company.

3.10 Compliance with Other Instruments.

(a) The Company is not in violation or default in any material respect of any provisions of its Certificate of Incorporation, as amended, or Bylaws or of any material instrument, judgment, order, writ, decree or contract to which it is a party or by which it is bound or, to its knowledge, of any provision of federal or state statute, rule or regulation applicable to the Company. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will not result in any such violation or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any such provision, instrument, judgment, order, writ, decree or contract or an event which results in the creation of any lien, charge or encumbrance upon any assets of the Company.

(b) The Company has avoided every condition, and has not performed any act, the occurrence of which would result in the Company's loss of any material right granted under any license, distribution or other agreement.

3.11 Agreements; Action.

(a) Except for agreements explicitly contemplated hereby, there are no agreements, understandings or proposed transactions between the Company and any of its officers, directors, affiliates, or any affiliate thereof. For purposes of the foregoing, an "affiliate" shall include, but not be limited to, those persons and entities who fall within the definition of "Affiliate" contained in Section 9.5.

(b) There are no agreements, understandings, instruments, contracts or proposed transactions to which the Company is a party or by which it is bound which involve (i) obligations of, or payments to the Company in excess of $25,000, or (ii) the license of any patent, copyright, trade secret or other proprietary right to or from the Company.

(c) The Company has not (i) declared or paid any dividends, or authorized or made any distribution upon or with respect to any class or series of its capital stock, (ii) incurred any indebtedness for money borrowed or incurred any other liabilities individually in excess of $25,000 or in excess of $100,000 in the aggregate, (iii) made any loans or advances to any person, other than ordinary advances for travel expenses, or (iv) sold, exchanged or otherwise disposed of any of its assets or rights, other than in the ordinary course of business.

(d) The Company has not engaged in the past twelve (12) months in any discussion (i) with any representative of any corporation or corporations regarding the consolidation or merger of the Company with or into any such corporation or corporations, (ii) with any corporation, partnership, association or other business entity or any individual regarding the sale, conveyance or disposition of all or substantially all of the assets of the Company, or a transaction or series of related transactions in which more than fifty percent (50%) of the voting power of the Company is disposed of, or (iii) regarding any other form of liquidation, dissolution or winding up of the Company.

(e) Except for the November 1992 Stockholders Agreement and the Investors Agreement, the Company is not a party to or aware of any voting trust or agreement, stockholders agreement, pledge agreement, buy-sell agreement or first refusal or preemptive rights agreement relating to securities of Company.

3.12 Disclosure. The Company has fully provided each Investor with all the information which such Investor has requested for deciding whether to purchase the Shares and all information which the Company believes is reasonably necessary to enable such Investor to make such decision. Neither this Agreement nor any other statements or certificates made or delivered in connection herewith contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements herein or therein not misleading.

3.13 Registration Rights. As of and immediately following the First Closing, the registration rights provided in the Registration Rights Agreement attached hereto as Exhibit G will be the only such rights outstanding.

3.14 Corporate Documents. As of the Closing, the Restated Certificate of Incorporation will be in the form attached hereto as Exhibit B. The Bylaws of the Company are in the form previously provided to the Investors.

3.15 Title to Property and Assets. The Company owns its property and assets free and clear of all mortgages, liens, loans and encumbrances, except such encumbrances and liens which

arise in the ordinary course of business and do not materially impair the Company's ownership or use of such property or assets. With respect to the property and assets it leases, the Company is in compliance with such leases and, to its knowledge, holds a valid leasehold interest free of any liens, claims or encumbrances.

3.16 Employee Benefit Plans. Other than the 401(k) Profit Sharing Plan, Company does not have any other Employee Benefit Plan as defined in the Employee Retirement Income Security Act of 1974.

3.17 Tax Returns, Payments and Elections. The Company has filed all tax returns and reports as required by law. As of their respective filing dates, these returns and reports are true and correct in all material respects. The Company has paid all taxes and other assessments due, except those contested by it in good faith which are listed in the Schedule of Exceptions. The Company has not elected pursuant to the Internal Revenue Code of 1986, as amended (the "Code"), to be treated as a Subchapter S corporation or a collapsible corporation pursuant to Section 341(f) or Section 1362(a) of the Code, nor has it made any other elections pursuant to the Code (other than elections which relate solely to methods of accounting, depreciation or amortization) which would have a material effect on the Company, its financial condition, its business as presently conducted or proposed to be conducted or any of its properties or material assets.

3.18 Financial Statements. The Company has delivered to the Investors its unaudited financial statements for the month ended October 31, 1995 (the "Financial Statements"). The Financial Statements have been prepared in accordance with generally accepted accounting principles ("GAAP") applied on a consistent basis throughout the periods indicated and with each other. The Financial Statements fairly present the financial condition and operating results of the Company as of the dates, and for the periods, indicated therein. Except as set forth in the Financial Statements, the Company has no material liabilities, contingent or otherwise, other than: (a) liabilities incurred in the ordinary course of business subsequent to October 31, 1995; and (b) obligations under contracts and commitments incurred in the ordinary course of business and not required under GAAP to be reflected in the Financial Statements which, in both cases, individually or in the aggregate, are not material to the financial condition or operating results of the Company. Except as disclosed in the Financial Statements, the Company is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation. The Company maintains and will continue to maintain a standard system of accounting established and administered in accordance with GAAP.

3.19 Changes. To the Company's knowledge, since October 31, 1995, there has not been any event of any type that has materially and adversely affected the business, properties, or financial condition of the Company.

3.20 Environmental and Safety Laws. To its knowledge, the Company is not in violation of any applicable statute, law or regulation relating to the environment or occupational health and safety, and to its knowledge, no material expenditures are or will be required in order to comply with any such existing statute, law or regulation.

3.21 Minute Books. The copies of the minute book of the Company made available to counsel to the Investors contain minutes of all meetings of directors and stockholders and all actions by written consent without a meeting by the directors and stockholders since the date of incorporation and reflect all actions by the directors (and any committee of directors) and stockholders with respect to all transactions referred to in such minutes accurately in all material respects.

3.22 Insurance. The Schedule of Exceptions sets forth a complete and accurate list and description, including, but not limited to, annual premiums and the deductibles, of all policies of fire, liability, product liability, workmen's compensation, health and other forms of insurance presently in effect with respect to the Company's business. All such policies are valid, outstanding and enforceable policies and provide insurance coverage for the properties, assets and operations of the Company, of the kinds, in the amounts and against the risks (a) required to comply with laws and (b) customarily maintained by organizations similarly situated. The Company has not been refused any insurance with respect to any aspect of the operations of its business nor has its coverage been limited by any insurance carrier to which it has applied for insurance or with which it has carried insurance. No notice of cancellation or termination has been received with respect to any such policy. The activities and operations of the Company have been conducted in a manner so as to conform in all material respects to all applicable provisions of such insurance policies.

3.23 Effect of Transaction. No creditor, supplier, employee, client or other customer or other person having a material business relationship with the Company has informed the Company that such person intends to change the relationship because of the transactions contemplated by this Agreement.

3.24 Finder's Fee. The Company and its officers, directors or representatives have not incurred any liabilities for any commission or compensation in the nature of a finder's fee.

4. Representations and Warranties of the Investors. Each Investor hereby represents and warrants (with respect to itself) that:

4.1 Due Organization and Authorization. Each Investor has all requisite power and authority to enter into this Agreement and the Investors Agreement and to consummate the transactions contemplated hereby and thereby. The execution and delivery by each Investor of this Agreement and the Investors Agreement and the consummation by each Investor of the transactions contemplated hereby and thereby have been duly authorized by all necessary action pursuant to applicable law, and this Agreement and the Investors Agreement each constitutes the valid and legally binding obligation of each Investor, enforceable in accordance with its terms.

4.2 Purchase Entirely for Own Account. This Agreement is made with each Investor in reliance upon such Investor's representation to the Company, which by such Investor's execution of this Agreement such Investor hereby confirms that the Shares or Series D Warrants, as the case may be, will be acquired for investment for such Investor's own account, not as a nominee or

agent, and not with a view to the resale or distribution of any part thereof, and that such Investor has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, each Investor further represents that such Investor does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person or to any third person, with respect to any of the Securities, except as provided in the preceding sentence. Each Investor represents that it has full power and authority to enter into this Agreement.

4.3 Disclosure of Information. Each Investor believes it has received all the information it considers necessary or appropriate for deciding whether to purchase the Shares. Each Investor further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Shares. The foregoing, however, does not limit or modify the representations and warranties of the Company in
Section 3 of this Agreement or the right of the Investors to rely thereon.

4.4 Investment Experience. Each Investor is an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, and bear the economic risk of its investment and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Shares or the Series D Warrants. If other than an individual, the Investor also represents it has not been organized for the purpose of acquiring the Shares or the Series D Warrants.

4.5 Restricted Securities. Each Investor understands that the Shares or Series D Warrants it is purchasing are characterized as "restricted securities" under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act of 1933, as amended (the "Act") only in certain limited circumstances. In this connection, each Investor represents that it is familiar with Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Act.

4.6 Further Limitations on Disposition. Without in any way limiting the representations set forth above, each Investor further agrees not to make any disposition of all or any portion of the Shares or Series D Warrants (or the Conversion Stock) unless and until:

(a) There is then in effect a Registration Statement under the Act covering such proposed disposition and such disposition is made in accordance with such Registration Statement; or

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

4.7 Legends. It is understood that the certificates evidencing the Shares and Series D Warrants (and the Conversion Stock) may bear one or all of the following legends:

(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT."

(b) Any legend required by the laws of any applicable state and by the Investors Agreement.

4.8 Finder's Fee. The Investors and its officers, partners, employees or representatives have not incurred any liabilities for any commission or compensation in the nature of a finder's fee.

5. Conditions of Investors' Obligations at First Closing. The obligations of each Investor under Section 1.3 of this Agreement are subject to the fulfillment on or before the First Closing of each of the following conditions, the waiver of which shall not be effective against any Investor that does not consent in writing thereto:

5.1 Representations and Warranties. The representations and warranties of the Company contained in Section 3 shall be true on and as of the First Closing with the same effect as though such representations and warranties had been made on and as of the date of such First Closing.

5.2 Performance. The Company shall have performed and complied with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the First Closing.

5.3 Compliance Certificate. The President of the Company shall deliver to each Investor at the First Closing a certificate dated as of the First Closing date certifying as to the fulfillment of the conditions specified in Sections 5.1 and 5.2.

5.4 Proceedings and Documents. All corporate and other proceedings in connection with the transactions contemplated at the First Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to each Investor and counsel to any of the Investors, and they shall have received all such counterpart originals and certified or other copies of such documents as they may reasonably request.

5.5 Cancellation of IBM Note and Interest; Amendment of Warrant. Before the First Closing, IBM shall have agreed to the cancellation of the IBM Note and all accrued interest with respect to the IBM Note, and the IBM Note and all such accrued interest shall have been cancelled, in exchange for the IBM 1995 Common Warrant, and the Company shall have agreed to amend the IBM 1991 Common Warrant, all as described in Section 1.2 hereof.

5.6 Cancellation of Accumulated Dividends. All accumulated dividends with respect to the Series B and Series C Preferred Stock shall have been cancelled in exchange for shares of Common Stock, as described in Section 1.2 hereof.

5.7 Opinion of Company Counsel. Each Investor shall have received from Wilson, Sonsini, Goodrich & Rosati, counsel for the Company, an opinion, dated as of the First Closing, in the form attached hereto as Exhibit E.

5.8 Investors Agreement. The Investors Agreement in the form attached hereto as Exhibit F shall have been executed and delivered by all of the parties thereto.

5.9 Registration Rights Agreement. The Company, IBM and the holders of 50% of the Registrable Securities (as defined therein) shall have executed and delivered the Registration Rights Agreement attached hereto as Exhibit G.

5.10 Restated Certificate of Incorporation. The Restated Certificate of Incorporation attached hereto as Exhibit B shall have been accepted for filing by the Delaware Secretary of State.

5.11 Stock Certificates. The Company shall have delivered to the Investors the certificates and warrants referred to Section 2.1.

5.12 Board of Directors. As of the date of the First Closing, the Company's Board of Directors shall consist of John Kapoor (or another designee of E.J. Financial), James McGroddy, Paul Pankow, Wendy Shelton-Paul and Ramesh Trivedi. Subject to the provisions of Section 6.7 of the Integrated Surgical Systems, Inc. Series C Preferred Stock Purchase Agreement dated November 13, 1992 (the "Series C Agreement"), Keystone Financial Group shall have the right to designate one individual who shall have Board observer rights as provided in the Series C Agreement and who shall be furnished the same materials as provided to members of the Company's Board of Directors.

5.13 Ramesh Trivedi Involvement. The Company and Ramesh Trivedi shall have entered into a final agreement, the form of which shall have been approved by the Investors, concerning Mr. Trivedi's employment by the Company.

6. Conditions of the Company's Obligations at First Closing. The obligations of the Company to each Investor under this Agreement are subject to the fulfillment on or before the First

Closing of each of the following conditions, the waiver of which shall not be effective unless consented to in writing by the Company:

6.1 Representations and Warranties. The representations and warranties of each Investor contained in Section 4 shall be true on and as of the First Closing with the same effect as though such representations and warranties had been made on and as of the First Closing.

6.2 Cancellation of IBM Note and Interest. Before the First Closing, IBM shall have agreed to the cancellation of the IBM Note and all accrued interest with respect to the IBM Note, and the IBM Note and all such accrued interest shall have been cancelled, in exchange for the IBM 1995 Common Warrant, all as described in Section 1.2 hereof.

6.3 Cancellation of Accumulated Dividends. All accumulated dividends with respect to the Series B and Series C Preferred Stock shall have been cancelled in exchange for shares of Common Stock, as described in Section 1.2 hereof.

6.4 Payment of Purchase Price. All of the Investors shall have delivered the purchase price provided for in Section 2.1.

6.5 Restated Certificate of Incorporation. The Restated Certificate of Incorporation attached hereto as Exhibit B shall have been accepted for filing by the Delaware Secretary of State.

6.6 Investors Agreement. The Investors Agreement in the form attached hereto as Exhibit F shall have been executed and delivered by all of the parties thereto.

7. Condition of Investors' Obligations at Second Closing. The obligations of each Investor under Section 1.4 of this Agreement are subject to the fulfillment on or before the Second Closing of the following conditions, the waiver of which shall not be effective against any Investor that does not consent in writing thereto:

7.1 Representations and Warranties. The representations and warranties of the Company contained in Section 3 shall be true on and as of the Second Closing with the same effect as though such representations and warranties had been made on and as of the date of such Second Closing.

7.2 Performance. The Company shall have performed and complied with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Second Closing.

7.3 Compliance Certificate. The President of the Company shall deliver to each Investor at the Second Closing a certificate dated as of the Second Closing date certifying as to the fulfillment of the conditions specified in Sections 7.1 and 7.2.

7.4 No Alternative Investor. The Company shall not have received prior to February 19, 1996, from an investor or investors other than the Investors the aggregate amount of $1,000,000 in exchange for the issuance by the Company to such investor or investors of Series D Shares or Series D Warrants on terms at least as advantageous to the Company as the terms set forth in this Agreement.

7.5 Option Plan. The Company's 1995 Stock Plan shall have been approved by the Board of Directors and the stockholders of the Company, the Company's 1991 Incentive Stock Option Plan shall have been terminated, and all holders of vested options thereunder shall have agreed to cancel their vested options in exchange for new options under the Company's 1995 Stock Plan.

8. Conditions of the Company's Obligations at Second Closing. The obligations of the Company to each Investor under this Agreement are subject to the fulfillment on or before the Second Closing of each of the following conditions, the waiver of which shall not be effective unless consented to in writing by the Company:

8.1 Representations and Warranties. The representations and warranties of each Investor contained in Section 4 shall be true on and as of the Second Closing with the same effect as though such representations and warranties had been made on and as of the Second Closing.

8.2 Payment of Purchase Price. All of the Investors shall have delivered the purchase price provided for in Section 2.2.

9. Covenants of the Company.

9.1 Delivery of Financial Statements. The Company shall deliver to each Investor that holds, together with its affiliates, an aggregate of 500,000 shares of the Securities:

(a) as soon as practicable, but in any event within ninety (90) days after the end of each fiscal year of the Company, a capitalization chart setting forth the principal stockholders of the Company, and a balance sheet and statements of operations and cash flow for such fiscal year. Such year-end financial reports shall be in reasonable detail, prepared in accordance with generally accepted accounting principles ("GAAP"), and audited and certified by independent public accountants of nationally recognized standing selected by the Company.

(b) within thirty (30) days after the end of each month, and until a public offering of Common Stock of the Company, an unaudited statement of operations and balance sheet for and as of the end of such month, in reasonable detail and prepared in accordance with GAAP, subject to year end audit adjustments and the absence of footnotes;

(c) within forty-five (45) days prior to the end of each fiscal year, a budget and business plan for the next fiscal year, prepared on a monthly basis, including a balance

sheet and statement of operations for such months and, as soon as prepared, any other budgets or revised budgets prepared by the Company;

(d) with respect to the financial statements called for in subsection (b) of this Section 9.1, an instrument executed by the Chief Financial Officer, President or Chairman of the Company and certifying that such Financial Statements were prepared in accordance with GAAP consistently applied with prior practice for earlier periods and fairly present the financial condition of the Company and its results of operation for the period specified, subject to year-end audit adjustments and the absence of footnotes;

(e) such other information relating to the financial condition, business, prospects or corporate affairs of the Company as each Investor may from time to time request, provided, however, that the Company shall not be obligated to provide information which it deems in good faith to be proprietary.

9.2 Inspection. The Company shall permit each Investor which holds, together with its affiliates, an aggregate of 500,000 shares of the Securities, to visit and inspect the Company's properties, to examine its books of account and records and to discuss the Company's affairs, finances and accounts with its officers, all at such reasonable times as may be requested by the Investor; pro vided, however, that the Company shall not be obligated pursuant to this Section 9.2 to provide access to any information which it reasonably considers to be a trade secret or similar confidential information.

9.3 Restrictive Agreements Prohibited. Neither the Company nor any of its subsidiaries shall become a party to any agreement which by its terms restricts the Company's performance of this Agreement.

9.4 Proprietary Information Agreements. The Company shall use its best efforts to obtain, and shall cause its subsidiaries, if any, to use their best efforts to obtain, a Proprietary Information Agreement in substantially the form of Exhibit D from all future officers, key employees and other employees who will have access to confidential information of the Company or any of its subsidiaries, upon their employment by the Company or any of its subsidiaries.

9.5 Transactions with Affiliates. Except for transactions contemplated by this Agreement or as otherwise approved by a majority of directors, neither the Company nor any of its subsidiaries shall enter into any transaction with any director, officer, employee or holder of more than 5% of the outstanding capital stock of any class of the Company or any of its subsidiaries, member of the family of any such person, or any corporation, partnership, trust or other entity in which any such person, or member of the family of any such person, either alone or together with other persons affiliated with the Company, is a director, officer, trustee, partner or holder of more than 5% of the outstanding capital stock thereof (collectively, "Affiliates"), except for transactions on customary terms negotiated on an arms-length basis or related to such person's employment.

9.6 Purchase Rights.

(a) Whenever the Company proposes to issue, deliver or sell any Voting Securities (as defined below), other than (i) shares of Common Stock (or options therefor) to employees, consultants and directors of the Company, (ii) securities issuable upon exercise or conversion of outstanding securities, or
(iii) securities issued in connection with any stock split, stock dividend or recapitalization of the Company as a result of which an Investor's percentage interest in the Total Voting Power of the Company (as defined below) would be reduced, the Company shall give each Investor written notice at least sixty (60) days prior to such issuance and shall offer to sell to each Investor and, if such offer is accepted in writing by an Investor within sixty (60) days of receipt by the Investor of such offer, shall sell to the Investor, at a purchase price per share equal to the sale price of such Voting Securities, up to and including that amount of such Voting Securities which, if purchased by an Investor, would result in the Investor retaining its percentage interest in the Total Voting Power of the Company in effect prior to such issuance, of Voting Securities. For the purpose of the preceding sentence, if the sale price at which the Company proposes to issue, deliver or sell any Voting Securities is to be paid with consideration other than cash, then the purchase price at which the Investor may acquire such Voting Securities shall be equal in value but payable entirely in cash. The closing of any purchase and sale of Voting Securities pursuant to this Section 9.6 shall take place on such date, within thirty (30) days after acceptance by the Investor of an offer by the Company, as shall be specified by the Investor in such acceptance.

(b) The term "Total Voting Power of the Company" shall mean the total number of votes which may be cast in the election of directors of the Company at any meeting of stockholders of the Company if all Voting Securities assuming full conversion, exchange or exercise of all securities (including rights, warrants, options, convertible notes and other convertible securities) convertible into, exchangeable for or exercisable for any securities of the Company entitled to vote generally in the election of directors of the Company who are present and voted at such meeting, other than votes that may be cast only by one class or series of stock (other than Common Stock) or upon the happening of a contingency.

(c) The term "Voting Securities" shall mean the shares of Common Stock and other securities of the Company entitled to vote generally in the election of directors of the Company, and any other securities (including rights, warrants, options, convertible notes and other convertible securities) convertible into, exchangeable for or exercisable for any Common Stock or other securities referred to above (whether or not presently convertible, exchangeable or exercisable).

(d) The rights granted under this Section 9.6 are not transferable and shall terminate with respect to each Investor when such Investor holds less than 500,000 shares of the Securities.

9.7 Termination of Covenants. The covenants set forth in this
Section 9 shall terminate and be of no further force or effect when (a) (i) the sale of securities pursuant to a registration statement filed by the Company under the Act in connection with a firm commitment

underwritten offering of its securities to the general public is consummated and
(ii) such offering results in the automatic conversion of the Shares pursuant to the Restated Certificate of Incorporation or (b) when the Company first becomes subject to the periodic reporting requirements of Sections 12(g) or 15(d) of the Securities Exchange Act of 1934, whichever event shall first occur.

10. Termination and Amendment of Prior Agreements.

(a) The covenants set forth in Section 7.16, Section 7.17, Article IX and Article X of the IBM Loan Agreement are hereby terminated.
Section 11.02 of the IBM Loan Agreement is hereby amended to delete the references contained therein to Section 10.03, 10.04, 10.05, 10.06 or 10.07 of the IBM Loan Agreement. The foregoing amendments to the IBM Loan Agreement shall be effective upon execution of this Agreement by the Company and IBM.

(b) The IBM Note is terminated effective immediately prior to the execution of this Agreement by the Company and IBM. Such termination shall operate as a waiver of any condition or restriction on such termination and results from the payment in full of all outstanding principal and interest accrued thereon.

(c) The IBM 1991 Common Warrant is hereby amended to provide that the purchase rights represented by such Common Warrant are exercisable on or before December 31, 2000. The foregoing amendment to the Common Warrant shall be effective upon execution of this Agreement by the Company and IBM.

11. Miscellaneous.

11.1 Survival of Warranties. The warranties, representations and covenants of the Company and Investors contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing and shall in no way be affected by any investigation of the subject matter thereof made by or on behalf of the Investors or the Company.

11.2 Successors and Assigns. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

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

11.4 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

11.5 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

11.6 Notices. Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given upon personal delivery to the party to be notified or upon deposit with the United States Post Office, by registered or certified mail, postage prepaid and addressed to the party to be notified at the address indicated for such party in Exhibit A or, in the case of the Company, on the first page of this Agreement, or at such other address as such party may designate by ten (10) days' advance written notice to the other parties.

11.7 Payment of Fees and Expenses. The Company and the Investors shall each bear their own legal and other expenses incurred with respect to this transaction.

11.8 Finder's Fee. Each Investor agrees to indemnify and to hold harmless the Company from any liability for any commission or compensation in the nature of a finders' fee (and the costs and expenses of defending against such liability or asserted liability) for which the Investor or any of its officers, partners, employees, or representatives is responsible. The Company agrees to indemnify and hold harmless each Investor from any liability for any commission or compensation in the nature of a finders' fee (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible.

11.9 Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the holders of at least a majority of the Shares or Conversion Stock outstanding. Any amendment or waiver effected in accordance with this Section 11.9 shall be binding upon each holder of any securities purchased under this Agreement at the time outstanding (including securities into which such securities are convertible), each future holder of all such securities, and the Company; provided, however, that no condition set forth in Section 5 or Section 7 hereof may be waived with respect to any Investor that does not consent thereto.

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

11.11 Aggregation of Stock. All Shares or Series D Warrants held or acquired by affiliated entities or persons shall be aggregated together for the purpose of determining the availability of any rights under this Agreement.

11.12 Stock Splits. All references to numbers of shares in this Agreement shall be appropriately adjusted to reflect any stock dividend, split, combination or other recapitalization of shares by the Company occurring after the date of this Agreement.

11.13 Ambiguities. The provisions of this Agreement shall be interpreted without regard to the drafting source and as if both parties drafted this Agreement in a reasonable manner to effect the purpose of the parties.

IN WITNESS WHEREOF, the parties have executed this Series D Preferred Stock and Warrant Purchase Agreement as of the date first above written.

INTEGRATED SURGICAL SYSTEMS, INC.

By: _______________________________

Title: ____________________________

INTERNATIONAL BUSINESS MACHINES
CORPORATION

By: _______________________________

Title: ____________________________

EJ FINANCIAL INVESTMENTS V, L.P.

By: _______________________________

Title: ____________________________

                                         First Closing                       Second Closing(1)
                                     ----------------------               ---------------------
                                     Series D                             Series D
                                     Shares or          Purchase          Shares or       Purchase
Name and Address                     Warrants            Price            Warrants         Price
- ----------------------               ----------       -------------       ----------      ----------
International Business Machines      2,051,282        $1,333,333.30       1,025,640       $666,666.00
  Corporation                        (warrants)                           (warrants)
IBM Research Division
T.J. Watson Research Center
Yorktown Heights, NY 10598
Attn: Daniel P. McCurdy

EJ Financial Investments V, L.P.     1,025,641        $  666,666.65         512,820       $333,333.00
c/o EJ Financial Enterprises, Inc.    (shares)                              (shares)
225 East Deerpath
Suite 250
Lake Forest, IL 60045
Attn: Robert May

TOTAL                                3,076,923        $1,999,999.95       1,538,460       $999,999.00

(1) Assumes that the Second Closing involves $999,999.00 aggregate principal amount of investment at $0.65 per Series D Share or Series D Warrant.

EXHIBIT B

RESTATED CERTIFICATE OF INCORPORATION

OF

INTEGRATED SURGICAL SYSTEMS, INC.

Integrated Surgical Systems, Inc., a corporation organized and existing under the laws of the State of Delaware (the "Corporation"), hereby certifies that:

1. The name of the Corporation is Integrated Surgical Systems, Inc. The Corporation was originally incorporated under the same name, and the original Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on October 1, 1990.

2. This Certificate restates and amends the provisions of the Corporation's Certificate of Incorporation to read as set forth in Exhibit A attached to this Certificate.

3. This restatement and amendment of the Corporation's Certificate of Incorporation has been duly adopted by the Corporation's Board of Directors in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware, and by the holders of each class of outstanding stock entitled to vote thereon as a class by written consent given in accordance with Section 228 of the General Corporation Law of the State of Delaware. Written notice pursuant to Section 228 has been given to those stockholders of the Corporation who have not consented in writing to this action.

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Restatement of Certificate of Incorporation to be signed by Ramesh Trivedi, its President, this 20th day of December, 1995.

INTEGRATED SURGICAL SYSTEMS, INC.

By: _____________________________
Ramesh Trivedi, President

EXHIBIT A

RESTATED CERTIFICATE OF INCORPORATION

OF

INTEGRATED SURGICAL SYSTEMS, INC.

1. The name of this corporation is Integrated Surgical Systems, Inc. (the "Corporation").

2. The address of the Corporation's registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle, Zip Code 19801. The name of its registered agent at such address is The Corporation Trust Company.

3. The purpose of the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.

4. The Corporation is authorized to issue two classes of capital stock:
Preferred Stock, $0.01 par value per share, and Common Stock, $0.01 par value per share. The total number of shares of Preferred Stock which the Corporation shall have the authority to issue is 5,750,000 of which 5,750,000 shares shall be designated Series D Preferred Stock ("Series D Preferred"). The total number of shares of Common Stock which the Corporation shall have the authority to issue is 15,000,000. The Series D Preferred is herein collectively referred to as the "Preferred Stock."

Upon the filing of this Restated Certificate of Incorporation with the Delaware Secretary of State, each currently outstanding share of Common Stock, Series B Preferred Stock and Series C Preferred Stock shall be split up and converted into 0.20 shares of Common Stock, and the Series A Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock shall be eliminated from the authorized capital stock of the corporation. No shares of Series A Preferred Stock have ever been issued or outstanding. Also upon the filing of this Restated Certificate of Incorporation, each $8.87 of accrued dividends with respect to the Series B Preferred Stock shall be converted into 0.20 shares of Common Stock and each $10.56 of accrued dividends with respect to the Series C Preferred Stock shall be converted into 0.20 shares of Common Stock. No fractional shares shall be issued in connection with such reverse stock split and conversion and the number of shares issuable to each stockholder shall be determined by rounding upward to the next whole share on a certificate-by-certificate basis.

The relative rights, preferences, privileges and restrictions granted to or imposed upon the respective classes of shares of capital stock or holders thereof are as set forth below.

Section 1. Ranking. The Series D Preferred shall rank, subject to the rights of any other series of Preferred Stock which may from time to time come into existence pursuant to the terms hereof, prior to any other equity securities of the Corporation, including the Common Stock, upon liquidation, dissolution or winding-up.

Section 2. Dividends.

The holders of Series D Preferred shall be entitled to receive a dividend (the "Participating Dividend" for such series) payable in cash on the payment date for each cash dividend declared on the shares of Common Stock in an amount per share of Preferred Stock of such series equal to the number of shares (or fraction thereof) of Common Stock into which each share of Preferred Stock on such series is then convertible times the cash dividend to be paid on each full share of Common Stock.

Following the filing of this Restated Certificate of Incorporation, the right to dividends on shares of the Common Stock and Preferred Stock shall not be cumulative, and no right shall accrue to holders of Common Stock or Series D Preferred Stock by reason of the fact that dividends on said shares are not declared in any prior period.

Section 3. Liquidation. The shares of Series D Preferred shall rank prior to the shares of Common Stock and any other class or series of capital stock of the Corporation ranking junior to the Series D Preferred Stock upon liquidation, dissolution or winding-up, so that in the event of any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, the holders of shares of Series D Preferred shall be entitled to receive out of the assets of the Corporation available for distribution to its stockholders, whether from capital, surplus or earnings, before any distribution is made to holders of shares of Common Stock or any other such junior stock, an amount per share equal to $0.65 for each outstanding share of Series D Preferred (the "Original Series D Issue Price") plus an amount equal to all accrued and unpaid dividends on each share of Series D Preferred (such sum being referred to as the liquidation preference of the Series D Preferred). After payment has been made to the holders of the Series D Preferred of the full amount to which they shall be entitled, the remaining assets of the Corporation shall be distributed ratably to the holders of any capital stock of the Corporation ranking junior to the Series D Preferred.

If the assets and funds of the Corporation distributable among the holders of shares of Series D Preferred shall be insufficient to permit the payment in full to such holders of the respective liquidation preferences payable to such holders, in the event of any liquidation, dissolution or winding up of the Corporation, then the entire assets and funds of the Corporation legally available for distribution shall be distributed among such holders ratably in proportion to the aggregate liquidation preferences of the shares of Preferred Stock held by such holders.

For purposes of this Section 3, an Acquisition (as defined below) shall be treated as a liquidation, dissolution or winding-up of the Corporation. For purposes of this section "Acquisition" shall mean any consolidation, merger or other reorganization of the Corporation; any sale, exchange or other disposition (whether in one transaction or a series of related transactions) of all, or any substantial part, of the assets of the Corporation and its subsidiaries taken as a whole; or any other transaction or series of related transactions which would result in the holders of the Voting Securities immediately prior thereto continuing to beneficially own less than a majority of the Total Voting

Power (as defined in Section 4(d)(iii)) of the Corporation, successor or acquiring corporation immediately thereafter.

Section 4. Voting.

(a) Except as otherwise required by law and as set forth herein, the holders of shares of Series D Preferred issued and outstanding shall have no right to vote their shares of Series D Preferred.

(b) The holders of shares of Series D Preferred shall have the right to vote, together with the holders of all the outstanding shares of Common Stock and not by classes (except as otherwise provided in this Section 4 or by applicable law), on all matters on which holders of shares of Common Stock have the right to vote. Each holder of shares of Series D Preferred shall have the right, for the shares of Series D Preferred held by such holder on the applicable record date, to cast that number of votes on each such matter equal to the number of shares of Common Stock into which such shares of Series D Preferred could be converted as of such record date, with any fractions rounded down to the next full vote, multiplied by the number of votes per share which the holders of shares of Common Stock then have with respect to such matter.

(c) Whenever holders of shares of Series D Preferred or Common Stock are required or permitted to take any action by vote, such action may be taken without a meeting by written consent, setting forth the action so taken and signed by the holders of shares of Series D Preferred or Common Stock, as the case may be, having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all such shares entitled to vote thereon were present and voted.

(d) The consent of holders of at least a majority of the outstanding shares of Series D Preferred, voting separately as a class, shall be required before the Corporation shall (or shall permit any of its subsidiaries to):

(i) either directly or indirectly or through merger, consolidation or other reorganization with any other person, amend, alter or repeal any of the provisions hereof so as to affect adversely the powers, preferences or relative, participating, optional or other special rights of the Series D Preferred;

(ii) adopt any amendment to the Corporation's Restated Certificate of Incorporation to change the Corporation's authorized capital; or

(iii) enter into any Control Transaction (as defined below) with any person.

"Control Transaction" shall mean any consolidation, merger or other reorganization of the Corporation; any sale, lease, exchange or other disposition (whether in one transaction or a series of related transactions) of all, or any substantial part, of the assets of the

Corporation and its subsidiaries taken as a whole; or any other transaction or series of related transactions which would result in the holders of the Voting Securities immediately prior thereto continuing to beneficially own less than fifty percent (50%) of the Total Voting Power of the Corporation, successor or acquiring corporation immediately thereafter.

"Total Voting Power of the Corporation" shall mean the total number of votes that may be cast in the election of directors of the Corporation at any meeting of stockholders of the Corporation if all Voting Securities (assuming full conversion, exchange or exercise of all securities (including rights, warrants and options) convertible into, exchangeable for or exercisable for any securities of the Corporation entitled to vote generally in the election of directors of the Corporation) were present and voted at such meeting, other than votes that may be cast only by one class or series of stock (other than Common Stock) or upon the happening of a contingency.

"Voting Securities" shall mean the shares of Common Stock and any other securities of the Corporation entitled to vote generally in the election of directors of the Corporation, and any other securities (including rights, warrants and options) convertible into, exchangeable for or exercisable for, any of the foregoing (whether or not presently convertible, exchangeable or exercisable).

(e) In addition to voting together with the holders of Voting Securities for the election of other directors of the Corporation, the holders of record of the Series D Preferred, voting separately as a class (the "Series D Group"), to the exclusion of the holders of Common Stock and any other series of Preferred Stock then outstanding, shall, at any annual meeting of stockholders for the election of directors (and at each subsequent annual meeting of stockholders), vote for the election of two directors (each a "Series D Director") of the Corporation. In the election of the Series D Directors, the holders of Series D Preferred shall be entitled to cast one vote per share of Series D Preferred they hold. Any director who shall have been elected pursuant to this Section 4(e) may be removed at any time by, and removed without cause only by, the affirmative vote of the holders of the Preferred Stock of the group that had elected such director who are entitled to cast a majority of the votes entitled to be cast for the election of any such director at a special meeting of such holders called for that purpose, and any vacancy thereby created may be filled only by the vote of such holders of the Preferred Stock of such group. The holder of each share of Preferred Stock shall be entitled to notice of any stockholders' meeting in accordance with the Bylaws of the Corporation and shall vote with the holders of the Common Stock upon the election of the remaining directors authorized by the Bylaws of the Corporation. The Corporation shall take any action from time to time as shall be necessary to amend the Bylaws of the Corporation to provide for a change in the authorized number of members of the Board as may be required to give effect to this Section 4(e).

Section 5. Conversion.

(a) General. On the terms and subject to the conditions of this
Section 5, the holder of a share of Series D Preferred shall have the right, at its option, at any time (subject to the next sentence and to Section
5(i)) to convert such share into that number of shares of Common Stock

(calculated as to each conversion to the nearest 1/100th of a share) obtained by dividing the Original Series D Issue Price (as defined in Section 3) by the Conversion Price for such series (as defined in Section 5(d)) and by surrender of such share pursuant to Section 5(b) (the shares of Common Stock issuable upon such conversion being called "Conversion Shares").

(b) Conversion Procedures. In order to exercise the conversion privilege, the holder of any shares of Series D Preferred to be converted shall surrender the certificate representing such shares at the principal office of the Corporation, with a written notice stating that such holder elects to convert all or a specified whole number of such shares pursuant to this Section 5 and specifying the name or names in which such holder wishes the certificate or certificates for Conversion Shares to be issued. In the case of any mandatory conversion pursuant to Section 5(i), on or after the date of the occurrence of the event set forth in Section 5(i) (and within 10 days after receipt of written notice, if any, from the Corporation of the occurrence of such event), each holder of shares of Series D Preferred shall surrender the certificate representing such shares at the principal office of the Corporation, together with a written notice specifying the name or names in which such holder wishes the certificate or certificates for Conversion Shares to be issued. Unless the Conversion Shares are to be issued in the same name as the name in which such shares of Series D Preferred are registered, the certificate representing the shares surrendered for conversion shall be accompanied by instruments of transfer, in form satisfactory to the Corporation, duly executed by the holder or its duly authorized attorney. As promptly as practicable after such surrender of a certificate for shares of Series D Preferred, and in any event within five business days (as defined below) thereafter, the Corporation shall issue and deliver at such office to such holder, or on such holder's written order,
(i) a certificate or certificates for the applicable number of full Conversion Shares, (ii) if less than the full number of shares of Series D Preferred evidenced by the surrendered certificate is being converted, a new certificate, of like tenor, for the number of shares of Series D Preferred evidenced by such surrendered certificate less the number of shares being converted and (iii) the cash payment in settlement of any fractional Conversion Share provided for in Section 5(c).

Upon conversion of any shares of Series D Preferred, the holder thereof shall be entitled to receive an amount equal to all declared and unpaid dividends on such shares prior to such conversion. The payment for such declared and unpaid dividends on a mandatory conversion under Section 5(i) shall be paid in cash or Common Stock at the election of the Corporation. For purposes of the payment of the declared and unpaid dividend in Common Stock, the fair market value of the Common Stock shall be deemed to be the issuance price of the Common Stock in the public offering which triggers the mandatory conversion under Section 5(i).

A "business day" is a day other than a Saturday, Sunday or other day on which banks in the State of New York or the State of California are authorized to be closed.

In the case of the exercise of the conversion privilege, each conversion shall be deemed to have been effected as of the close of business on the date on which the certificate for shares of Series D Preferred is surrendered and such notice is received by the Corporation as aforesaid, and the person or persons in whose name or names any certificate or certificates for

Conversion Shares are issuable shall be deemed to have become the holder or holders of such Conversion Shares at such time on such date and such conversion shall be at the applicable Conversion Price in effect at such time on such date, unless the stock transfer books of the Corporation are closed on that date, in which event such person or persons shall be deemed to have become such holder or holders of record at the close of business on the next day on which such stock transfer books are open (provided that if such books shall remain closed for five days, such fifth day shall be the date any such person shall become such a holder), but such conversion shall be at the applicable Conversion Price in effect on the date on which such certificate was surrendered and such notice was received. In the case of any mandatory conversion pursuant to Section 5(i), on the date of the occurrence of the event set forth in Section 5(i), each holder of shares of Series D Preferred shall be deemed to be a holder of record of the Common Stock issuable upon such conversion, notwithstanding that the certificates representing such shares of Series D Preferred shall not have been surrendered at the office of the Corporation, that notice from the Corporation shall not have been received by any holder of shares of Series D Preferred or that the certificates evidencing such shares of Common Stock shall not then be actually delivered to such person. Upon delivery, all Conversion Shares shall be duly authorized, validly issued, fully paid, nonassessable, free of all liens and charges and not subject to any preemptive or subscription rights.

(c) Settlement of Fractional Conversion Shares. No fractional Conversion Shares or scrip representing fractions of Conversion Shares shall be issued upon conversion of shares of Series D Preferred. Instead of any fractional Conversion Share otherwise deliverable, the Corporation shall pay to the holder of the converted shares an amount in cash equal to the current market price (as defined below) of such fractional Conversion Share on the date of conversion. If more than one share is surrendered for conversion at one time by the same holder, the number of full Conversion Shares shall be computed on the basis of the aggregate number of shares so surrendered. The "current market price" per share of Common Stock on any day is the average of the daily market prices for the 30 consecutive trading days immediately prior to the day in question. The "daily market price" of a share of Common Stock is the price of a share of Common Stock on the relevant day, determined on the basis of the last reported sale price, regular way, of the Common Stock as reported on the composite tape, or similar reporting system, for issues listed or admitted to trading on the New York Stock Exchange (or if the Common Stock is not then listed or admitted to trading on the New York Stock Exchange, on the principal national securities exchange on which the Common Stock is then listed or admitted to trading) or on the Nasdaq National Market or, if there is no such reported sale on the day in question, on the basis of the average of the closing bid and asked quotations as so reported or, if the Common Stock is not then listed or admitted to trading on any national securities exchange or on the Nasdaq National Market on the basis of the average of the high bid and low asked quotations on the day in question in the over-the-counter market as reported by the National Association of Securities Dealers' Automated Quotation System, or, if not so quoted, as reported by National Quotation Bureau, Incorporated, or a similar organization. If the current market price is not determinable as aforesaid, it shall be determined in good faith by the Board and evidence of such determination shall be filed with the minutes of the Corporation. A "trading day" is a day on which the principal national securities exchange on which the Common Stock is listed or admitted to trading

is open for the transaction of business or, if the Common Stock is not then listed or admitted to trading on any national securities exchange, any day other than Saturday, Sunday or a federal holiday.

(d) Conversion Price. "Series D Conversion Price" shall mean $0.65 as adjusted pursuant to this Section 5(d). "Conversion Price" shall generally mean the Series D Conversion Price. The Series D Conversion Price (and the kind and amount of consideration receivable by holders of shares of Series D Preferred upon conversion) shall be adjusted from time to time as follows:

(i) If, after the date of the Corporation's Series D Preferred Stock and Warrant Purchase Agreement with respect to the Series D Conversion Price (such date being referred to as the "Conversion Reference Date" for such series), the Corporation (A) pays a dividend or makes a distribution on the Common Stock in shares of Common Stock, (B) subdivides or combines its outstanding shares of Common Stock into a greater or smaller number of shares or
(C) issues by reclassification of the Common Stock any shares of capital stock of the Corporation, then the Series D Conversion Price in effect immediately prior to such action shall be adjusted so that the holder of any share of Series D Preferred thereafter surrendered for conversion shall be entitled to receive, at the time of such conversion, the number of shares of Common Stock or other capital stock of the Corporation that it would have owned or been entitled to receive immediately following such action had such share been converted immediately prior to such action or the record date therefor, whichever is earlier. Such adjustment shall become effective immediately after the record date, in the case of a dividend or distribution, or immediately after the effective date, in the case of a subdivision, combination or reclassification.

(ii) If the Corporation issues any Additional Shares as defined below for a consideration per share less than the Conversion Price for a series of Preferred Stock in effect immediately prior to such issuance, then the Conversion Price for such series shall be adjusted by multiplying such Conversion Price in effect immediately prior to such issuance by a fraction (I) the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to the issuance of such Additional Shares plus the number of shares of Common Stock that the aggregate consideration for such Additional Shares would purchase at a consideration per share equal to such Conversion Price and (II) the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to the issuance of such Additional Shares plus the number of Additional Shares so issued. Such adjustment shall become effective immediately after the issuance of such Additional Shares. For purposes of this Section 5, the issuance of any Additional Shares or other securities, warrants, options or rights includes any sale and any reissuance or resale.

"Additional Shares" shall mean any shares of Common Stock of the Corporation issued by the Corporation, excluding:

(A) any shares of Common Stock issued upon the exercise of the Warrant issued by the Corporation on February 6, 1991, for the purchase of 500,000 shares of Common Stock (prior to the split-up effected herein), as amended on the First Closing Date, as defined in the Corporation's Series D Preferred Stock and Warrant Purchase Agreement;

(B) any shares of Common Stock issued upon the exercise of the warrants issued by the Corporation on the First Closing Date to purchase an aggregate of 846,845 shares of Common Stock (as such number of shares may be increased on the Second Closing Date pursuant to the terms of such warrants), as those terms are defined in the Corporation's Series D Preferred Stock and Warrant Purchase Agreement;

(C) any shares of Common Stock issued upon conversion of the Series D Preferred issuable upon the exercise of any warrant to purchase shares of Series D Preferred issued by the Corporation on the First Closing Date or the Second Closing Date, as those terms are defined in the Corporation's Series D Preferred Stock and Warrant Purchase Agreement;

(D) any shares of Common Stock issued upon the conversion of the Series D Preferred;

(E) up to 1,640,762 shares of Common Stock issuable
(x) to any officer, employee, consultant or director of the Corporation pursuant to any arrangement or plan, including any incentive stock plan, adopted by the Board of Directors of the Corporation or (y) pursuant to the conversion of Rights or Convertible Securities (as defined in Section 5(d)(iii)) issuable to lending or leasing institutions; and

(E) up to 4,000 shares of Common Stock issuable at fair market value to vendors of goods or services to the Corporation in payment for such goods and services.

(iii) If, after the Series D Preferred Conversion Reference Date, the Corporation issues any warrants, options or other rights entitling the holders thereof to subscribe for or purchase either any Additional Shares or evidences of debt, shares of capital stock or other securities that are convertible into or exchangeable for, with or without payment of additional consideration, Additional Shares (such warrants, options or other rights being called "Rights" and such convertible or exchangeable evidences of debt, shares of capital stock or other securities being called "Convertible Securities"), and the consideration per share for which Additional Shares may at any time thereafter be issuable pursuant to such Rights or Convertible Securities (when added to the consideration per share of Common Stock, if any, received for such Rights), is less than the Conversion Price for the Series D Preferred, the Series D Preferred Conversion Price shall be adjusted as provided in Section 5(d)(ii) on the basis that (A) the maximum number of Additional Shares issuable pursuant to all such Rights or necessary to effect the conversion or exchange of all such Convertible Securities shall be deemed to have been issued and (B) the aggregate consideration (plus the consideration, if any, received for such Rights) for such maximum number of Additional Shares shall be deemed to be the consideration received and receivable by the Corporation for the issuance of such Additional Shares pursuant to such Rights or Convertible Securities.

(iv) If, after the Series D Preferred Conversion Reference Date, the Corporation issues Convertible Securities and the consideration per share for which Additional Shares may at any time thereafter be issuable pursuant to such Convertible Securities is less than the

Conversion Price for such series, such Conversion Price shall be adjusted as provided in Section 5(d)(ii) on the basis that (A) the maximum number of Additional Shares necessary to effect the conversion or exchange of all such Convertible Securities shall be deemed to have been issued and (B) the aggregate consideration for such maximum number of Additional Shares shall be deemed to be the consideration received and receivable by the Corporation for the issuance of such Additional Shares pursuant to such Convertible Securities. No adjustment of a Conversion Price shall be made under this Section 5(d)(iv) upon the issuance of any Convertible Securities issued pursuant to the exercise of any Rights, to the extent that such adjustment was previously made upon the issuance of such Rights pursuant to Section 5(d)(iii).

(v) For purposes of Sections 5(d)(iii) and 5(d)(iv), the relevant Series D Conversion Price shall be the applicable Conversion Price in effect immediately prior to the earlier of (A) the record date for the holders of Common Stock entitled to receive the Rights or Convertible Securities and (B) the initial issuance of the Rights or Convertible Securities, and the adjustment provided for in either such Section shall become effective immediately after the earlier of the times specified in clauses (A) and (B).

(vi) No adjustment of any Conversion Price shall be made under Section 5(d)(ii) upon the issuance of any Additional Shares pursuant to the exercise of any Rights or of any conversion or exchange rights pursuant to any Convertible Securities, if such adjustment was previously made in connection with the issuance of such Rights or Convertible Securities (or in connection with the issuance of any Rights therefor) pursuant to Section 5(d)(iii) or 5(d)(iv).

(vii) If any Rights (or any portions thereof) that gave rise to an adjustment pursuant to Section 5(d)(iii) or any conversion or exchange rights pursuant to any Convertible Securities that gave rise to an adjustment pursuant to Section 5(d)(iii) or 5(d)(iv) expire or terminate without the exercise thereof and/or if by reason of the provisions of such Rights or Convertible Securities there has been any increase, with the passage of time or otherwise, in the consideration payable upon the exercise thereof, then the Series D Conversion Price shall be readjusted (but to no greater extent than originally adjusted) on the basis of (A) eliminating from the computation Additional Shares corresponding to such expired or terminated Rights or conversion or exchange rights, (B) treating the Additional Shares, if any, actually issued or issuable pursuant to the previous exercise of such Rights or conversion or exchange rights as having been issued for the consideration actually received and receivable therefor and (C) treating any such Rights or conversion or exchange rights that remain outstanding as being subject to exercise on the basis of the consideration payable upon the exercise or conversion thereof as is in effect at such time; provided, however, that any consideration actually received by the Corporation in connection with the issuance of such Rights or Convertible Securities shall form part of the readjustment computation even though such Rights or conversion or exchange rights expired without being exercised. The Series D Conversion Price shall be adjusted as provided in Section 5(d)(ii) and any applicable provisions of
Section 5(d)(iii) or 5(d)(iv) as a result of any increase in the number of Additional Shares issuable, or any decrease in the consideration payable upon any issuance of Additional Shares, pursuant to any antidilution provisions of any Rights or Convertible Securities.

(viii) (A) If any Additional Shares, Convertible Securities or Rights are issued for cash, the consideration received therefor shall be deemed to be the amount of cash received.

(B) If any Additional Shares, Convertible Securities or Rights are offered by the Corporation for subscription, the consideration received therefor shall be deemed to be the subscription price.

(C) If any Additional Shares, Convertible Securities or Rights are sold to underwriters or dealers for public offering without a subscription offering, the consideration received therefor shall be deemed to be the public offering price.

(D) In any case covered by Section 5(d)(viii) (A), (B) or (C), in determining the amount of any consideration received by the Corporation in whole or in part other than in cash, the amount of such consideration shall be deemed to be the fair market value of such consideration as determined in good faith by the Board of Directors of the Corporation, and evidence of such determination shall be filed with the minutes of the Corporation. If Additional Shares are issued as part of a unit with Rights, the consideration received for the Rights shall be deemed to be the portion of the consideration received for such unit determined in good faith at the time of issuance by the Board of directors of the Corporation, and evidence of such determination shall be filed with the minutes of the Corporation. If the Board does not make any such determination, the consideration received for the Rights shall be deemed to be zero. In either event, the consideration received for the Additional Shares shall be deemed to be the consideration received for such unit less the consideration deemed to have been received for the Rights.

(E) In any case covered by Section 5(d)(viii) (A), (B), (C) or (D), in determining the amount of consideration received by the Corporation, (I) any amounts received or receivable for accrued interest or accrued dividends shall be excluded and (II) any compensation, underwriting commissions or concessions or expenses paid or incurred in connection therewith shall not be deducted.

(F) In any case covered by Section 5(d)(viii) (A), (B), (C) or (D), there shall be added to the consideration received by the Corporation at the time of issuance or sale (I) the minimum aggregate amount of additional consideration payable to the Corporation upon the exercise of Rights that relate to Convertible Securities and (II) the minimum aggregate amount of consideration payable upon the conversion or exchange thereof.

(G) If any Additional Shares, Convertible Securities or Rights are issued in connection with any merger, consolidation or other reorganization in which the Corporation is the surviving corporation, the amount of consideration received therefor shall be deemed to be the fair market value, as determined in good faith by the Board of Directors of the Corporation, of such portion of the assets and business of the non-surviving person or persons as the Board of Directors of the Corporation determines in good faith to be attributable to such Additional Shares, Convertible

Securities or Rights, and evidence of such determination shall be filed with the minutes of the Corporation.

(ix) If the corporation effects any merger, consolidation or other reorganization to which the Corporation is a party (other than a merger or consolidation in which the Corporation is the surviving corporation), any sale or conveyance to another person of all or substantially all the assets of the Corporation or any statutory exchange of securities with another person (including any exchange effected in connection with a merger of a third person into the Corporation), the holder of each share of Series D Preferred then outstanding shall have the right thereafter to convert such share into the kind and amount of consideration receivable pursuant to such transaction by a holder of the number of shares of Common Stock into which such share of Series D Preferred might have been converted immediately prior to such transaction, assuming such holder of Common Stock failed to exercise its rights of election, if any, as to the kind or amount of consideration receivable upon such transaction (provided that if the kind or amount of consideration receivable pursuant to such transaction is not the same for each share of Common Stock in respect of which such rights of election shall not have been exercised ("non-electing share"), then, for purposes of this Section 5(d)(ix), the kind and amount of consideration receivable pursuant to such transaction for each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares). Thereafter, the holders of shares of Series D Preferred shall be entitled to appropriate adjustments with respect to their conversion rights to the end that the provisions set forth in this Section 5 shall correspondingly be made applicable, as nearly as may reasonably be, to any consideration thereafter deliverable on conversion of shares of Series D Preferred. Notwithstanding the foregoing, this Section 5(d)(ix) shall not apply, with regard to any series, to an event which is treated as a liquidation, dissolution or winding-up of the Corporation with respect to such series pursuant to Section 3.

(x) If a purchase, tender or exchange offer is made to the holders of outstanding shares of Common Stock and, upon the consummation of such offer, the person having made such offer (together with its affiliates) beneficially owns 50% or more of the outstanding shares of Common Stock, the Corporation shall not effect any merger, consolidation or other reorganization with or sale, lease or other disposition of material assets or issuance of securities to the person having made such offer or any affiliate of such person, unless prior to the consummation thereof each holder of shares of Series D Preferred shall have been given a reasonable opportunity to elect to receive, upon conversion of the shares of Series D Preferred then held by such holder (in lieu of the kind and amount of consideration otherwise receivable upon conversion pursuant to this Section 5(d)), the consideration that would have been received pursuant to such offer by a holder of that number of shares of the Common Stock into which one share of Series D Preferred might then be converted if all such shares had been tendered and accepted pursuant to such offer.

(xi) If the Corporation distributes generally to holders of its outstanding shares of Common Stock or any other securities entitled generally to participate in the earnings or assets of the Corporation ("Common Equity") evidences of its debt, securities or other assets (excluding any cash dividends and excluding any dividends or distributions payable in Rights or

Convertible Securities for which adjustment is otherwise made pursuant to this
Section 5(d)), each Conversion Price shall be adjusted by multiplying such Conversion Price in effect immediately prior to the record date for such dividend or distribution by a fraction of which (X) the numerator shall be the current market price per share of the Common Equity (determined, if the Common Equity is not Common Stock, in the same way that the current market price for Common Stock is determined) on such record date less the then fair market value, as determined in good faith by the Board of Directors of the Corporation, of the portion of the evidences of debt, securities or other assets so distributed or applicable to the holder of one share of Common Equity and (Y) the denominator shall be such current market price per share of the Common Equity, and evidence of such determination shall be filed with the minutes of the Corporation. Such adjustment shall become effective immediately after the record date for such dividend or distribution.

(xii) If a state of facts not specifically controlled by the provisions of this Section 5(d) occurs or is proposed that would result in the conversion provisions of the Series D Preferred Stock not being fairly protected in accordance with the essential intent and principles of such provisions, the Board of Directors of the Corporation shall make an adjustment in the application of such provisions, in accordance with such essential intent and principles, so as to protect such conversion provisions, and evidence of the determination by the Board of Directors of the Corporation of such adjustment shall be filed with the minutes of the Corporation.

(xiii) No adjustment in the Series D Conversion Price shall be required to be made unless it would require an increase or decrease of at least one cent, but any adjustments not made because of this Section 5(d)(xiii) shall be carried forward and taken into account in any subsequent adjustment otherwise required. All calculations under this Section 5(d) shall be made to the nearest cent or to the nearest 1/100th of a share, as the case may be. All adjustments with respect to a transaction or event shall apply to subsequent such transactions and events. Anything in this Section 5(d) to the contrary notwithstanding, the Board of directors of the Corporation shall be entitled to make such irrevocable reduction in the Series D Conversion Price, in addition to the adjustments required by this Section 5(d), as in its discretion it shall determine to be advisable in order to avoid or diminish any income deemed to be received for Federal income tax purposes by any holder of shares of Common Stock, Series D Preferred resulting from any event or occurrence giving rise to an adjustment pursuant to this Section 5(d) or from any similar event or occurrence, and evidence of the determination by the Board of Directors of the Corporation of such adjustment shall be filed with the minutes of the Corporation.

(xiv) Whenever the Series D Conversion Price is adjusted pursuant to this Section 5(d), (A) the Corporation shall promptly file with the minutes of the Corporation a certificate of a firm of nationally recognized independent public accountants or of its chief accounting officer setting forth the Series D Conversion Price (and any change in the kind or amount of consideration to be received by holders of shares of Series D Preferred upon conversion) after such adjustment and setting forth a brief statement of the facts requiring such adjustment and the manner of computing the same and (B) a notice stating that the Series D Conversion Price has been adjusted, stating the effective date of such adjustment and enclosing the certificate referred to in Section 5(d)(xiv)(A)

above shall forthwith be mailed by the Corporation to the holders of shares of Series D Preferred at their addresses as shown on the stock books of the Corporation.

(xv) If as a result of any adjustment pursuant to this Section
5(d), the holder of any share of Series D Preferred surrendered for conversion becomes entitled to receive any consideration other than Common Stock, then (A) the Series D Conversion Price with respect to such other consideration shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to Common Stock contained in this Section 5(d) and (B) in case such consideration shall consist of shares of Common Stock and some other kind of consideration or of two or more kinds of consideration, the Board of Directors of the Corporation shall determine in good faith the fair allocation of the adjusted Series D Conversion Price between or among such types of consideration, and evidence of such determination shall be filed with the minutes of the Corporation.

(e) Specified Events. For purposes of this Section 5(e), a "Specified Event" occurs if (i) the Corporation takes any action that would require any adjustment in the Series D Conversion Price pursuant to Section
5(d)(xi), (ii) the Corporation authorizes the granting to the holders of the Common Stock of any Rights or of any other rights, (iii) there is any capital stock reorganization or reclassification of the Common Stock (other than a subdivision or combination of the outstanding Common Stock and other than a change in the par value of the Common Stock), or any merger, consolidation or other reorganization to which the Corporation is a party, or any statutory exchange of securities with another person and for which approval of any stockholders of the Corporation is required, or any sale or transfer of all or substantially all the assets of the Corporation or (iv) there is a voluntary liquidation, dissolution or winding up of the Corporation. If a Specified Event occurs, the Corporation shall cause to be filed with the minutes of the Corporation, and shall cause to be mailed to the holders of shares of the Series D Preferred, as the case may be, at their addresses as shown on the stock books of the Corporation, at least 10 days prior to the applicable date specified below, a notice stating (A) the date on which a record is to be taken for the purpose of any distribution or Rights relating to such Specified Event or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such distribution or Rights are to be determined, or (B) the date on which the reorganization, reclassification, consolidation, merger, statutory exchange, sale, transfer, dissolution, liquidation or winding-up relating to such Specified Event is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such Specified Event.

(f) Reservation of Common Stock. The Corporation shall at all times reserve and keep available, free from preemptive and subscription rights, out of its authorized but unissued shares of Common Stock, for the purpose of effecting conversions of the Series D Preferred, the full number of shares of Common Stock deliverable upon the conversion of all outstanding shares of Series D Preferred not theretofore converted. For this purpose, the number of shares of Common Stock deliverable upon the conversion of all outstanding shares of Series D Preferred shall be computed as if at the time of computation all such outstanding shares were held by a single holder.

(g) Listing. The Corporation shall use its best efforts to list any securities required to be delivered upon conversion of the Series D Preferred prior to such delivery upon each securities exchange, if any, upon which such securities are listed at the time of such delivery. Prior to the delivery of any such securities, the Corporation shall use its best efforts to comply with all laws and regulations thereunder requiring the registration of such securities with, or any approval of or consent to the delivery thereof by, any governmental authority.

(h) Taxes. The Corporation shall pay all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of securities on conversion of the Series D Preferred; provided, however, that (i) the Corporation shall not be required to pay any tax payable in respect of any transfer involved in the issue or delivery of securities in a name other than that of the holder of the shares of Series D Preferred to be converted and (ii) no such issue or delivery shall be made unless and until such holder has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid or provided for.

(i) Mandatory Conversion. All issued and outstanding shares of Series D Preferred shall be deemed to have been converted into, and shall (without any action of the holder thereof) become, that number of fully paid and nonassessable shares of Common Stock into which such shares of Series D Preferred are then convertible in accordance with the provisions of this
Section 5 immediately upon the consummation of the Corporation's sale of Common Stock in a bona fide public offering on an underwritten firm commitment basis pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission pursuant to the Securities Act of 1933, which public offering results in aggregate gross cash proceeds to the Corporation of at least $7,500,000 at a sale price per share of Common Stock (as adjusted for combinations, stock dividends, subdivisions or split-ups) of at least $3.25.

Section 6. Status of Shares. Upon any conversion or any redemption, repurchase or other acquisition by the Corporation of shares of Series D Preferred, the shares of Series D Preferred so converted, redeemed, repurchased or acquired shall be retired and cancelled and shall not be available for reissuance.

Section 7. Definitions and Construction. As used in this Article 4, (a) "herein," "hereof," "hereunder" and other like words mean or refer to this Article 4; (b) "outstanding," when used with reference to shares of stock, means issued shares, excluding shares held by the Corporation or a subsidiary; (c) "person" means any corporation, partnership, trust, organization, association or other entity or individual; (d) "affiliate" of any person means any other person controlling, controlled by or under common control with such person; (e) headings are for convenience of reference only and shall not define, limit or affect any of the provisions hereof; and (f) references to Sections are to Sections of this Article Four.

Section 8. Residual Rights. All rights accruing to the outstanding shares of the Corporation not expressly provided for or to the contrary herein shall be vested in the Common Stock.

5. The Corporation is to have perpetual existence.

6. In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, alter, amend or repeal the Bylaws of the Corporation.

7. The number of directors which will constitute the whole Board of Directors of the Corporation shall be as specified in the Bylaws of the Corporation.

8. The election of directors need not be by written ballot unless the Bylaws of the Corporation shall so provide.

9. At the election of directors of the Corporation, each holder of stock or of any class or classes or of a series or series thereof shall be entitled to as many votes as shall equal the number of votes which (except for such provision as to cumulative voting) he would be entitled to cast for the election of directors with respect to his shares of stock multiplied by the number of directors to be elected by him, and he may cast all of such votes for a single director or may distribute them among the number to be voted for, or for any two or more of them as he may see fit.

10. Meeting of stockholders may be held within or without the State of Delaware, as the Bylaws may provide. The books of the Corporation may be kept (subject to any provisions contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws of the Corporation.

11. To the fullest extent permitted by the Delaware General Corporation Law as the same exists or as may hereafter be amended, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. Neither any amendment nor repeal of this Article, nor the adoption of any provision of this Restated Certificate of Incorporation inconsistent with this Article, shall eliminate or reduce the effect of this Article in respect of any matter occurring, or any cause of action, suit or claim that, but for this Article, would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision.

12. Advance notice of new business and stockholder nomination for the election of directors shall be given in the manner and to the extent provided in the Bylaws of the Corporation.

13. The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Restated Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation.

EXHIBIT C

SCHEDULE OF EXCEPTIONS

This Schedule of Exceptions, dated as of December 21, 1995 is made and given pursuant to Section 3 of the Integrated Surgical Systems, Inc. Series D Preferred Stock and Warrant Purchase Agreement dated as of December 21, 1995 (the "Agreement"). The section numbers in this Schedule of Exceptions correspond to the section numbers in the Agreement; however, any information disclosed under any section number should be deemed to be disclosed and incorporated into any other section number under the Agreement where such disclosure would be appropriate. Any terms defined in the Agreement shall have the same meaning when used in this Schedule of Exceptions as when used in the Agreement unless the context otherwise requires.

3.2 Capitalization.

(f) Following the First Closing, the Company intends to obtain the approval of the Board of Directors of the termination of its Amended 1991 Incentive Stock Option Plan. The Company intends to obtain the approval of the Board of Directors and the stockholders of a 1995 Stock Plan and the reservation of 1,640,890 shares of Common Stock for issuance thereunder. Following approval of the 1995 Stock Plan, the Company intends to obtain the agreement of all holders of vested options under the Amended 1991 Incentive Stock Option Plan to the cancellation of such vested options in exchange for new options under the 1995 Stock Plan.

(g) (ii) The Loan and Warrant Purchase Agreement dated February 6, 1991 between IBM and the Company ("IBM Loan Agreement"), as amended by the Agreement, grants IBM rights to purchase its pro rata portion of voting securities issued by the Company. The Series B Preferred Stock Purchase Agreement dated April 10, 1992 (together with the Exhibits thereto, the "Series B Purchase Agreement") between the Company and the investors parties thereto (the "Series B Investors") grants to the Series B Investors rights to purchase their pro rata portion of voting securities issued by the Company. The Series C Preferred Stock Purchase Agreement dated November 13, 1992 (together with the Exhibits thereto, the "Series C Purchase Agreement") between the Company and the investors parties thereto (the "Series C Investors") grants to the Series C Investors rights to purchase their pro rata portion of voting securities issued by the Company.

3.9 Patents and Trademarks.

The Company entered into a Robodoc/Orthodoc License Agreement dated February 4, 1991 granting the Company certain non-exclusive and partially exclusive rights and licenses necessary to develop and market robtic surgery software and pre-surgical planning software ("IBM License Agreement Number 1").

The Company entered into a License Agreement dated February 6, 1991 with IBM and obtained certain non-exclusive rights and licenses necessary to develop and market a robotic surgery software application ("IBM License Agreement Number 2").

3.10 Compliance with Other Instruments.

(a) As of the date hereof, the Company is consummating the issuance to IBM of a warrant for the purchase of shares of Common Stock in exchange for the forgiveness and cancellation by IBM of the outstanding principal amount of and accrued interest on the IBM Note.

The Company is currently in default with respect to and under the terms of the Sankyo Note (as defined below).

3.11 Agreements; Action.

(a) The Company has entered into the following agreements with IBM; IBM Loan Agreement, IBM License Agreement No. 1 and IBM License Agreement No. 2. In addition, IBM has provided various services without charge to the Company and has sold equipment to the Company under standard remarketer and/or developer discount programs.

The Company has entered into the following agreements with Sutter Health, a California nonprofit public benefit corporation: Series B Purchase Agreement and Series C Purchase Agreement.

The Company has entered into the following agreements with Wendy Shelton-Paul, a member of the Company's Board of Directors and the Company's former acting Chief Executive Officer: Option Agreement dated April 5, 1995; Proprietary Information and Noncompetition Agreement dated December 29, 1993.

The Company has entered into the following agreements with Michael Tomczak, its Vice President and Chief Financial Officer: Option Agreements dated February 4, 1992, February 2, 1993, January 4, 1994 and April 25, 1995; Proprietary Information and Noncompetition Agreement dated October 25, 1991.

The Company has entered into the following agreements with Ramesh Trivedi, its President and Chief Executive Officer and, effective upon the First Closing, a member of the Company's Board of Directors:
employment agreement dated December 8, 1995, and Proprietary Information and Noncompetition Agreement dated December 8, 1995. In addition, the Company has made a commitment to grant to Mr. Trivedi options to purchase Common Stock representing six percent of the Company, calculated as of immediately following the Second Closing. Such options shall be granted under the Company's 1995 Stock Plan, upon the adoption of such plan.

The Company has entered into an Agreement with the Berufsgenossenschaftliche Unfallklinik (BGU) dated May 3, 1994 (the "BGU Agreement"). The

BGU Agreement provides for the purchase by BGU of a TUV-certified ROBODOC Surgical Assistant System. Under the terms of the BGU Agreement, the Company has installed at BGU a system that is not TUV-certified, pending the installation of a TUV-certified system. BGU has paid the Company $400,000 plus VAT of $69,993 as a deposit on the TUV-certified system. At BGU's sole discretion, BGU may void the BGU Agreement and return the non-TUV-certified system, entitling it to a $469,993 refund from the Company (the "Right of Return"). If the TUV-certified system is delivered to BGU prior to BGU's exercising the Right of Return, BGU will no longer have a right to the $469,993 refund from the Company.

(b) As of October 25, 1995, the Company has the following agreements and accounts payable, all incurred in the ordinary course of business, involving in excess of $25,000;

The Company has a real property lease dated December 3, 1990, as amended, covering its office space located at 829 West Stadium Lane, Sacramento, California. Total monthly rent is approximately $5,260. The current lease expires in June 1996.

The Company has a real property lease dated March 4, 1993, as amended, covering its office and manufacturing space located at 830 West Stadium Lane, Sacramento, California. Total monthly rent is approximately $6,731. The current lease expires in June 1998. The Lease Agreement has a provision which allows the Company to terminate its lease in June 1996 for a fee of approximately $34,000.

The Company has previously described certain license agreements with IBM.

(c) The Company has borrowed a total of $3,000,000 from IBM under the IBM Note. In addition, as of November 30, 1995, there is approximately $1,208,717 of accrued interest owing on the IBM Note. As of the date hereof, the Company is consummating the issuance to IBM of a warrant for the purchase of shares of Common Stock in exchange for the forgiveness and cancellation by IBM of the outstanding principal amount of and accrued interest on the IBM Note.

The Company has issued a Promissory Note in the principal amount of approximately $258,000 to Sankyo Seiki America (the "Sankyo Note"). Such principal amount and accrued and unpaid interest with respect to the Sankyo Note as of November 30, 1995, in the amount of $15,126, was due and payable on September 30, 1995.

(e) See Exception to Section 3.2(g)(ii).

3.22 Insurance.

                                                                                                      TOTAL
   CARRIER                    TYPE OF INSURANCE                  DEDUCTIBLE         COVERAGE         PREMIUM
- --------------       -------------------------------------       ----------        ----------      ----------
Chubb                COMMERCIAL PACKAGE
                     Blanket Business Personal Property           $1,000           $1,600,000      $7,625/yr.
                     Blanket Computer Equipment                    1,000              400,000
                     Extra Expense - Loc. 1 & 2                    1,000               50,000 ea.
                     General Liability                             1,000            1,000,000
                     Employee Benefits                             1,000            1,000,000
                     Non Owned and Hired Auto Liab.                1,000            1,000,000

Chubb                Foreign Property at any Location              1,000              200,000       2,500/yr.

Chubb                DOMESTIC AND FOREIGN TRANSIT
                     Domestic Transit                              1,000              200,000
                     Domestic Exhibition/Trade Shows               1,000              200,000
                     Foreign Transit                               1,000              200,000

National Union       Products Liability                           25,000            4,000,000      50,636/yr.
                                                                 (occur.)
                                                                 125,000
                                                                   (agg.)

Chubb                Umbrella Liability (excludes products)          N/A            4,000,000       4,500/yr.

California           Workers Compensation                            N/A            1,000,000       9,308/yr.
Casualty

FHP Take Care        Medical                                    10 copay                  HMO       4,400/mo.

Fortis               Dental                                           50              50-100%       1,150/mo.

Fortis               Employee Life Insurance                         N/A          80,000/emp.         250/mo.

Fortis               Long-term Disability                            N/A           60% of pay         330/mo.

3.23 Effect of Transaction.

As part of the Recapitalization described in Section 1.2 of the Agreement, the Company will issue to IBM the IBM 1995 Common Warrant in exchange for the cancellation of the outstanding principal amount of and all interest accrued on the IBM Note.

EXHIBIT D

INTEGRATED SURGICAL SYSTEMS, INC.

EMPLOYMENT, CONFIDENTIAL INFORMATION AND
INVENTION ASSIGNMENT AGREEMENT

As a condition of my employment with Integrated Surgical Systems, Inc., its subsidiaries, affiliates, successors or assigns (together the "Company"), and in consideration of my employment with the Company and my receipt of the compensation now and hereafter paid to me by Company, I agree to the following:

1. At-Will Employment. I UNDERSTAND AND ACKNOWLEDGE THAT MY EMPLOYMENT WITH THE COMPANY IS FOR AN UNSPECIFIED DURATION AND CONSTITUTES "AT-WILL" EMPLOYMENT. I ACKNOWLEDGE THAT THIS EMPLOYMENT RELATIONSHIP MAY BE TERMINATED AT ANY TIME, WITH OR WITHOUT GOOD CAUSE OR FOR ANY OR NO CAUSE, AT THE OPTION EITHER OF THE COMPANY OR MYSELF, WITH OR WITHOUT NOTICE.

2. Confidential Information.

(a) Company Information. I agree at all times during the term of my employment and thereafter, to hold in strictest confidence, and not to use, except for the benefit of the Company, or to disclose to any person, firm or corporation without written authorization of the Board of Directors of the Company, any Confidential Information of the Company. I understand that "Confidential Information" means any Company proprietary information, technical data, trade secrets or know-how, including, but not limited to, research, product plans, products, services, customer lists and customers (including, but not limited to, customers of the Company on whom I called or with whom I became acquainted during the term of my employment), markets, software, developments, inventions, processes, formulas, technology, designs, drawings, engineering, hardware configuration information, marketing, finances or other business information disclosed to me by the Company either directly or indirectly in writing, orally or by drawings or observation of parts or equipment. I further understand that Confidential Information does not include any of the foregoing items which has become publicly known and made generally available through no wrongful act of mine or of others who were under confidentiality obligations as to the item or items involved.

(b) Former Employer Information. I agree that I will not, during my employment with the Company, improperly use or disclose any proprietary information or trade secrets of any former or concurrent employer or other person or entity and that I will not bring onto the premises of the Company any unpublished document or proprietary information belonging to any such employer, person or entity unless consented to in writing by such employer, person or entity.

(c) Third Party Information. I recognize that the Company has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Company's part to maintain the confidentiality of such information and to use it only for certain limited purposes. I agree to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person, firm or corporation or to use it except as necessary in carrying out my work for the Company consistent with the Company's agreement with such third party.

3. Inventions.

(a) Inventions Retained and Licensed. I have attached hereto, as Exhibit A, a list describing all inventions, original works of authorship, developments, improvements, and trade secrets which were made by me prior to my employment with the Company (collectively referred to as "Prior Inventions"), which belong to me, which relate to the Company's proposed business, products or research and development, and which are not assigned to the Company hereunder; or, if no such list is attached, I represent that there are no such Prior Inventions. If in the course of my employment with the Company, I incorporate into a Company product, process or machine a Prior Invention owned by me or in which I have an interest, the Company is hereby granted and shall have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license to make, have made, modify, use and sell such Prior Invention as part of or in connection with such product, process or machine.

(b) Assignment of Inventions. I agree that I will promptly make full written disclosure to the Company, will hold in trust for the sole right and benefit of the Company, and hereby assign to the Company, or its designee, all my right, title, and interest in and to any and all inventions, original works of authorship, developments, concepts, improvements or trade secrets, whether or not patentable or registrable under copyright or similar laws, which I may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice, during the period of time I am in the employ of the Company (collectively referred to as "Inventions"), except as provided in Section 3(f) below. I further acknowledge that all original works of authorship which are made by me (solely or jointly with others) within the scope of and during the period of my employment with the Company and which are protectible by copyright are "works made for hire," as that term is defined in the United States Copyright Act.

(c) Inventions Assigned to the United States. I agree to assign to the United States government all my right, title, and interest in and to any and all Inventions whenever such full title is required to be in the United States by a contract between the Company and the United States or any of its agencies.

(d) Maintenance of Records. I agree to keep and maintain adequate and current written records of all Inventions made by me (solely or jointly with others) during the term of my employment with the Company. The records will be in the form of notes, sketches, drawings, and any other format that may be specified by the Company. The records will be available to and remain the sole property of the Company at all times.

(e) Patent and Copyright Registrations. I agree to assist the Company, or its designee, at the Company's expense, in every proper way to secure the Company's rights in the Inventions and any copyrights, patents, mask work rights or other intellectual property rights relating thereto in any and all countries, including the disclosure to the Company of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments and all other instruments which the Company shall deem necessary in order to apply for and obtain such rights and in order to assign and convey to the Company, its successors, assigns, and nominees the sole and exclusive rights, title and interest in and to such Inventions, and any copyrights, patents, mask work rights or other intellectual property rights relating thereto. I further agree that my obligation to execute or cause to be executed, when it is in my power to do so, any such instrument or papers shall continue after the termination of this Agreement. If the Company is unable because of my mental or physical incapacity or for any other reason to secure my signature to apply for or to pursue any application for

any United States or foreign patents or copyright registrations covering Inventions or original works of authorship assigned to the Company as above, then I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as my agent and attorney in fact, to act for and in my behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of letters patent or copyright registrations thereon with the same legal force and effect as if executed by me.

(f) Exception to Assignments. I understand that the provisions of this Agreement requiring assignment of Inventions to the Company do not apply to any invention which qualifies fully under the provisions of California Labor Code Section 2870 (attached hereto as Exhibit B). I will advise the Company promptly in writing of any inventions that I believe meet the criteria in California Labor Code Section 2870 and not otherwise disclosed on Exhibit A.

4. Conflicting Employment. I agree that, during the term of my employment with the Company, I will not engage in any other employment, occupation, consulting or other business activity directly related to the business in which the Company is now involved or becomes involved during the term of my employment, nor will I engage in any other activities that conflict with my obligations to the Company.

5. Returning Company Documents. I agree that, at the time of leaving the employ of the Company, I will deliver to the Company (and will not keep in my possession, recreate or deliver to anyone else) any and all devices, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings blueprints, sketches, materials, equipment, other documents or property, or reproductions of any aforementioned items developed by me pursuant to my employment with the Company or otherwise belonging to the Company, its successors or assigns. In the event of the termination of my employment, I agree to sign and deliver the "Termination Certification" attached hereto as Exhibit C.

6. Notification of New Employer. In the event that I leave the employ of the Company, I hereby grant consent to notification by the Company to my new employer about my rights and obligations under this Agreement.

7. Solicitation of Employees. I agree that for a period of twelve
(12) months immediately following the termination of my relationship with the Company for any reason, whether with or without cause, I shall not either directly or indirectly solicit, induce, recruit or encourage any of the Company's employees to leave their employment, or take away such employees, or attempt to solicit, induce, recruit, encourage or take away employees of the Company, either for myself or for any other person or entity.

8. Conflict of Interest Guidelines. I agree to diligently adhere to the Conflict of Interest Guidelines attached as Exhibit D hereto.

9. Representations. I agree to execute any proper oath or verify any proper document required to carry out the terms of this Agreement. I represent that my performance of all the terms of this Agreement will not breach any agreement to keep in confidence proprietary information acquired by me in confidence or in trust prior to my employment by the Company. I have not entered into, and I agree I will not enter into, any oral or written agreement in conflict herewith.

10. Arbitration and Equitable Relief.

(a) Arbitration. EXCEPT AS PROVIDED IN SECTION 10(b) BELOW, I AGREE THAT ANY DISPUTE OR CONTROVERSY ARISING OUT OF, RELATING TO, OR CONCERNING ANY INTERPRETATION, CONSTRUCTION, PERFORMANCE OR BREACH OF THIS AGREEMENT, SHALL BE SETTLED BY ARBITRATION TO BE HELD IN SACRAMENTO COUNTY, CALIFORNIA, IN ACCORDANCE WITH THE RULES THEN IN EFFECT OF THE AMERICAN ARBITRATION ASSOCIATION. THE ARBITRATOR MAY GRANT INJUNCTIONS OR OTHER RELIEF IN SUCH DISPUTE OR CONTROVERSY. THE DECISION OF THE ARBITRATOR SHALL BE FINAL, CONCLUSIVE AND BINDING ON THE PARTIES TO THE ARBITRATION. JUDGMENT MAY BE ENTERED ON THE ARBITRATOR'S DECISION IN ANY COURT HAVING JURISDICTION. THE COMPANY AND I SHALL EACH PAY ONE-HALF OF THE COSTS AND EXPENSES OF SUCH ARBITRATION, AND EACH OF US SHALL SEPARATELY PAY OUR COUNSEL FEES AND EXPENSES.

THE ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EMPLOYEE'S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP (EXCEPT AS PROVIDED IN SECTION
10(b) BELOW), INCLUDING, BUT NOT LIMITED TO, THE FOLLOWING CLAIMS:

i. ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT; BREACH OF CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL MISREPRESENTATION; NEGLIGENT OR INTENTIONAL INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC ADVANTAGE; AND DEFAMATION;

ii. ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL, STATE OR MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITED TO, TITLE VII OF THE CIVIL RIGHTS OF 1964, THE CIVIL RIGHTS ACT OF 1991, THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE FAIR LABOR STANDARDS ACT, THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, AND LABOR CODE SECTION 201, et seq.;

iii. ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND REGULATIONS RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.

(b) Equitable Remedies. I AGREE THAT IT WOULD BE IMPOSSIBLE
OR INADEQUATE TO MEASURE AND CALCULATE THE COMPANY'S DAMAGES FROM ANY BREACH OF THE COVENANTS SET FORTH IN SECTIONS 2, 3 AND 5 HEREIN. ACCORDINGLY, I AGREE THAT IF I BREACH ANY OF SUCH SECTIONS, THE COMPANY WILL HAVE AVAILABLE, IN ADDITION TO ANY OTHER RIGHT OR REMEDY AVAILABLE, THE RIGHT TO OBTAIN AN INJUNCTION FROM A COURT OF COMPETENT JURISDICTION RESTRAINING SUCH BREACH OR THREATENED BREACH AND TO SPECIFIC PERFORMANCE OF ANY SUCH PROVISION OF THIS AGREEMENT. I FURTHER AGREE THAT NO BOND OR OTHER SECURITY SHALL BE REQUIRED IN OBTAINING SUCH EQUITABLE RELIEF AND I HEREBY CONSENT TO THE ISSUANCE OF SUCH INJUNCTION AND TO THE ORDERING OF SPECIFIC PERFORMANCE.

(c) Consideration. I UNDERSTAND THAT EACH PARTY'S PROMISE TO RESOLVE CLAIMS BY ARBITRATION IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT, RATHER THAN THROUGH THE COURTS, IS CONSIDERATION FOR OTHER PARTY'S LIKE PROMISE. I FURTHER UNDERSTAND THAT I AM OFFERED EMPLOYMENT IN CONSIDERATION OF MY PROMISE TO ARBITRATE CLAIMS.

11. General Provisions.

(a) Governing Law; Consent to Personal Jurisdiction. This Agreement will be governed by the laws of the State of California. I hereby expressly consent to the personal jurisdiction of the state and federal courts located in California for any lawsuit filed there against me by the Company arising from or relating to this Agreement.

(b) Entire Agreement. This Agreement sets forth the entire agreement and understanding between the Company and me relating to the subject matter herein and merges all prior discussions between us. No modification of or amendment to this Agreement, nor any waiver of any rights under this agreement, will be effective unless in writing signed by the party to be charged. Any subsequent change or changes in my duties, salary or compensation will not affect the validity or scope of this Agreement.

(c) Severability. If one or more of the provisions in this Agreement are deemed void by law, then the remaining provisions will continue in full force and effect.

(d) Successors and Assigns. This Agreement will be binding upon my heirs, executors, administrators and other legal representatives and will be for the benefit of the Company, its successors, and its assigns.

                                                        Identifying Number
        Title                   Date                   or Brief Description
- --------------------------------------------------------------------------------

EXHIBIT B

CALIFORNIA LABOR CODE SECTION 2870
EMPLOYMENT AGREEMENTS;
ASSIGNMENT OF RIGHTS

"(a) Any provisions in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer's equipment, supplies, facilities, or trade secret information except for those inventions that either:

(1) Relate at the time of conception or reduction to practice of the invention to the employer's business, or actual or demonstrably anticipated research or development of the employer.

(2) Result from any work performed by the employee for the employer.

(b) To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable."

EXHIBIT C

INTEGRATED SURGICAL SYSTEMS, INC.

TERMINATION CERTIFICATION

This is to certify that I do not have in my possession, nor have I failed to return, any devices, records, data, notes, reports, proposals, lists correspondence, specifications, drawings, blueprints, sketches, materials, equipment, other documents or property, or reproductions of any aforementioned items belonging to Integrated Surgical Systems, Inc., its subsidiaries, affiliates, successors or assigns (together, the "Company").

I further certify that I have complied with all the terms of the Company's Employment Confidential Information and Invention Assignment Agreement signed by me, including the reporting of any inventions and original works of authorship (as defined therein), conceived or made by me (solely or jointly with others) covered by that agreement.

I further agree that, in compliance with the Employment, Confidential Information and Invention Assignment Agreement, I will preserve as confidential all trade secrets, confidential knowledge, data or other proprietary information relating to products, processes, know-how, designs, formulas, developmental or experimental work, computer programs, data bases, other original works of authorship, customer lists, business plans, financial information or other subject matter pertaining to any business of the Company or any of its employees, clients, consultants, or licensees.

I further agree that for twelve (12) months from this date, I will not hire any employees of the Company and I will not solicit, induce, recruit or encourage any of the Company's employees to leave their employment.

EXHIBIT D

INTEGRATED SURGICAL SYSTEMS, INC.

CONFLICT OF INTEREST GUIDELINES

It is the policy of Integrated Surgical Systems, Inc. to conduct its affairs in strict compliance with the letter and spirit of the law and to adhere to the highest principles of business ethics. Accordingly, all officers, employees and independent contractors must avoid activities which are in conflict, or give the appearance of being in conflict, with these principles and with the interests of the Company. The following are potentially compromising situations which must be avoided. Any exceptions must be reported to the President and written approval for continuation must be obtained.

1. Revealing confidential information to outsiders or misusing confidential information. Unauthorized divulging of information is a violation of this policy whether or not for personal gain and whether or not harm to the Company is intended. (The Employment, Confidential Information and Invention Assignment Agreement elaborates on this principle and is a binding agreement.)

2. Accepting or offering substantial gifts, excessive entertainment, favors or payments which may be deemed to constitute undue influence or otherwise be improper or embarrassing to the Company.

3. Participating in civic or professional organizations that might involve divulging confidential information of the Company.

4. Initiating or approving personnel actions affecting reward or punishment of employees or applicants where there is a family relationship or is or appears to be a personal or social involvement.

5. Initiating or approving any form of personal or social harassment of employees.

6. Investing or holding outside directorship in suppliers, customers, or competing companies, including financial speculations, where such investment or directorship might influence in any manner a decision or course of action of the Company.

7. Borrowing from or lending to employees, customers or suppliers.

8. Acquiring real estate of interest to the Company.

9. Improperly using or disclosing to the Company any proprietary information or trade secrets of any former or concurrent employer or other person or entity with whom obligations of confidentiality exist.

10. Unlawfully discussing prices, costs, customers, sales or markets with competing companies or their employees.

11. Making any unlawful agreement with distributors with respect to prices.

12. Improperly using or authorizing the use of any inventions which are the subject of patent claims of any other person or entity.

13. Engaging in any conduct which is not in the best interest of the Company.

Each officer, employee and independent contractor must take every necessary action to ensure compliance with these guidelines and to bring problem areas to the attention of higher management for review. Violations of this conflict of interest policy may result in discharge without warning.

EXHIBIT E

December 21, 1995

To the Investors Listed in
Exhibit A to the Integrated
Surgical Systems, Inc.
Series D Preferred Stock and Warrant
Purchase Agreement Dated as of December 21, 1995 Sutter Health, a California nonprofit
public benefit corporation ("Sutter Health") Sutter Health Venture Partners I, L.P.,
a California limited partnership ("Sutter Ventures") Keystone Financial Corporation, a
Pennsylvania Not-For-Profit Corporation ("Keystone")

Ladies and Gentlemen:

Reference is made to the Series D Preferred Stock and Warrant Purchase Agreement, dated as of December 21, 1995, complete with all listed exhibits thereto (the "Agreement"), by and among Integrated Surgical Systems, Inc., a Delaware corporation (the "Company"), and the persons and entities listed in Exhibit A to the Agreement (the "Investors"), which provides for the issuance by the Company to the Investors of shares of Series D Preferred Stock of the Company (the "Shares") and warrants to purchase shares of Series D Preferred Stock of the Company ("Series D warrants"), and for the issuance by the Company to Sutter Health, Sutter Ventures and Keystone (together, the "Warrantholders") of rights to purchase shares of the Company's Common Stock (the "Series C (Investor Common Warrants"). This opinion is rendered to the Investors pursuant to Section 5.7 of the Agreement and to the Warrantholders pursuant to Section 14 of each of the Warrant Agreements of even date herewith between the Company and each of Sutter Health, Sutter Ventures and Keystone (together, the "Warrant Agreements"). All terms used herein have the meanings defined for them in the Agreement and the Warrant Agreements unless otherwise defined herein.

We have acted as counsel for the Company in connection with the negotiation of the Agreement and the Warrant Agreements and the issuance of the Shares and Series D Warrants and Series C Investor Common Warrants. As such counsel, we have made such legal and factual examinations and inquiries as we have deemed advisable or necessary for the purpose of rendering this opinion. In addition, we have examined originals or copies of such corporate records of the Company, certificates of public officials and such other documents which we consider necessary or advisable for the purpose of rendering this opinion. In such examination we have assumed the

genuineness of all signatures on original documents, the authenticity and completeness of all documents submitted to us as originals, the conformity to original documents of all copies submitted to us and the due execution and delivery of all documents (except as to due execution and delivery by the Company) where due execution and delivery are a prerequisite to the effectiveness thereof.

As used in this opinion, the expression "to our knowledge," "known to us" or similar language with reference to matters of fact means that, after an examination of documents made available to us by the Company, and after inquiries of officers of the Company, but without any further independent factual investigation, we find no reason to believe that the opinions expressed herein are factually incorrect. Further, the expression "to our knowledge", "known to us" or similar language with reference to matters of fact refers to the current actual knowledge of the attorneys of this firm who have worked on matters for the Company. Except to the extent expressly set forth herein or as we otherwise believe to be necessary to our opinion, we have not undertaken any independent investigation to determine the existence or absence of any fact, and no inference as to our knowledge of the existence or absence of any fact should be drawn from our representation of the Company or the rendering of the opinion set forth below.

For purposes of this opinion, we are assuming that the Investors and the Warrantholders have all requisite power and authority, and have taken any and all necessary corporate or partnership action, to execute and deliver the Agreement and the Warrant Agreements, respectively, and we are assuming that the representations and warranties made by the Investors in the Agreement and pursuant thereto and by the Warrantholders in the Warrant Agreements and pursuant thereto are true and correct. We are also assuming that the Investors are purchasing the Shares and the Series D Warrants for value, in good faith and without notice of any adverse claims within the meaning of the California Uniform Commercial Code. We are also assuming that, upon the exercise of the Warrants, the Warrantholders will be purchasing the shares of Common Stock to which the Warrants apply for the exercise price set forth in the Warrants, in good faith and without notice of any adverse claims within the meaning of the California Uniform Commercial Code.

The opinions hereinafter expressed are subject to the following qualifications:

(a) We express no opinion as to the effect of applicable bankruptcy, insolvency, reorganization, moratorium or other similar federal or state laws affecting the rights of creditors;

(b) We express no opinion as to the effect of rules of law governing specific performance, injunctive relief or other equitable remedies (regardless of whether any such remedy is considered in a proceeding at law or in equity);

(c) We express no opinion as to compliance with the anti-fraud provisions of applicable securities laws;

(d) We express no opinion as to the enforceability of the indemnification provisions of Sections 4,5,6,7 or 8 of the Registration Rights Agreement to the extent the

provisions thereof may be subject to limitations of public policy and the effect of applicable statutes and judicial decisions;

(e) We are members of the Bar of the State of California and, except as set forth in paragraph 7 below with respect to the securities laws of other states, we express no opinion as to any matter relating to the laws of any jurisdiction other than the federal laws of the United States of America, the laws of the State of California and with respect to paragraphs 1, 2 and 4 only, the General Corporation Law of the State of Delaware. To the extent this opinion addresses applicable securities laws of states other than the State of California, we have not retained nor relied on the opinion of counsel admitted to the bar of such states, but rather have relied on compilations of the securities laws of such states contained in reporting services presently available to us.

(f) We express no opinion as to compliance with Federal and State laws, rules and regulations relating to the manufacture, sale or use of medical devices.

(g) We express no opinion as the enforceability of the Investors Agreement or the November 1992 Stockholders Agreement or Section 4 of the Proprietary Information and Noncompetition Agreement attached to the Agreement as Exhibit D.

(h) We express no opinion as to the organization, standing, qualification or capitalization of Integrated Surgical Systems B.V., the Company's subsidiary.

(i) We express no opinion as to that certain letter agreement dated December 13, 1995, by and among Sutter Health, a California nonprofit public benefit corporation, the Company, International Business Machines Corporation and EJ Financial Investments V, L.P.

(j) The issuance of the Series C Investor Common Warrant to Keystone is subject to the execution by Keystone of the Warrant Agreement between the Company and Keystone, which Warrant Agreement contains certain representations of and transfer restrictions pertaining to Keystone. As of the date hereof, the Warrant Agreement between the Company and Keystone has not been executed by Keystone.

Based upon and subject to the foregoing, and except as set forth in the Schedule of Exceptions to the Agreement, we are of the opinion that:

1. The Company is a corporation duly organized and validly existing under, and by virtue of, the laws of the State of Delaware and is in good standing under such laws. The Company has the requisite corporate power to own and operate its properties and assets, and to carry on its business as presently conducted. The Company is qualified to do business as a foreign corporation in California. The Company is not qualified to do business as a foreign corporation in any other jurisdiction and such qualification is not presently required, except to the extent that the failure to so qualify would not have a material adverse affect on the Company.

2. The Company has all requisite legal and corporate power to execute and deliver the Agreement, the Investors Agreement, the Registration Rights Agreement and the Warrant Agreements, to sell and issue the Shares and the Series D Warrants under the Agreement, to issue the shares of Series D Preferred Stock upon exercise of the Series D Warrants (the "Warrant Shares") and the Common Stock issuable upon conversion of the Shares and of the Warrant Shares and to issue the shares of Common Stock upon exercise of the Series C Investor Common Warrants and to carry out and perform its obligations under the terms of the Agreement, the Registration Rights Agreement, the Restated Certificate of Incorporation and the Warrant Agreements.

3. The authorized capital stock of the Company consists of 15,000,000 shares of Common Stock, 405,313 shares of which are issued and outstanding as of and immediately following the First Closing, and 5,750,000 shares of Preferred Stock, 5,750,000 of which are designated Series D Preferred Stock, none of which was issued and outstanding immediately prior to the First Closing. All such issued and outstanding shares of Common Stock have been duly authorized and validly issued and are fully paid and nonassessable and free of any preemptive or similar rights contained in the Restated Certificate of Incorporation or Bylaws of the Company or, to our knowledge, in any agreement to which the Company is a party, except as specifically provided in the Investors Agreement or the November 1992 Stockholders Agreement or as set forth in the Schedule of Exceptions. The Series D Preferred Stock issuable upon exercise of the Series D Warrants has been duly and validly reserved, and when issued in accordance with the terms of the Series D Warrants will be validly issued, fully paid and nonassessable. The Common Stock issuable upon conversion of the Shares and of the Warrant Shares has been duly and validly reserved, and when issued in accordance with the Company's Restated Certificate of Incorporation will be validly issued, fully paid and nonassessable. The Common Stock issuable upon exercise of the Series C Investor Common Warrants has been duly and validly reserved, and when issued in accordance with the terms of the Series C Investor Common Warrants will be validly issued, fully paid and nonassessable. The Shares and Series D Warrants issued under the Agreement are validly issued, fully paid and nonassessable and free of any liens, encumbrances and preemptive or similar rights contained in the Restated Certificate of Incorporation or Bylaws of the Company, or, to our knowledge, in any agreement to which the Company is a party, except as specifically provided in the Agreement, the Investors Agreement and the November 1992 Stockholders Agreement and as set forth in the Schedule of Exceptions; provided, however, that the Series D Warrants and the Shares and Warrant Shares (and the Common Stock issuable upon conversion thereof) may be subject to restrictions on transfer under state and/or federal securities laws as set forth in the Agreement. To our knowledge, except for rights described in the Agreement, the Schedule of Exceptions, the Restated Certificate of Incorporation and the Warrant Agreements, there are no other options, warrants, conversion privileges or other rights presently outstanding to purchase or otherwise acquire any authorized but unissued shares of capital stock or other securities of the Company, or any other agreements to issue any such securities or rights. The issuance of the Series D Warrants and the Shares as contemplated under the Agreement and the issuance of the Warrant Shares issuable upon exercise of the Series D Warrants and the issuance of the shares of Common Stock issuable upon conversion of the Shares and the Warrant Shares and the issuance of the Series C Investor Common Warrants as contemplated under the Warrant Agreements and the issuance of the shares of Common Stock issuable upon exercise of

the Series C Investor Common Warrants will not result in any adjustment under the antidilution provisions set forth in the Restated Certificate of Incorporation or with regard to any of the outstanding securities referred to in this paragraph 3 which adjustment has not been waived.

4. All corporate action on the part of the Company, its directors, stockholders and noteholder necessary for (a) the authorization, execution and delivery of the Agreement, Investors Agreement, Registration Rights Agreement and Warrant Agreements, (b) the execution and filing of the Restated Certificate of Incorporation by the Company, (c) the authorization, sale (except with respect to the Series C Investor Common Warrants), issuance and delivery of the Series D Warrants (and the Warrant Shares issuable upon exercise thereof) and the Shares (and the Common Stock issuable upon conversion of the Shares and the Warrant Shares) and the Series C Investor Common Warrants (and the shares of Common Stock issuable upon exercise thereof) and (d) the performance of the Company's obligations under the Agreement, the Registration Rights Agreement and the Warrant Agreements have been taken. The Agreement, the Registration Rights Agreement and the Warrant Agreements have been duly and validly executed and delivered by the Company and constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms.

5. The execution, delivery and performance of and compliance with the terms of the Agreement and the Registration Rights Agreement, and the issuance of the Series D Warrants (and the Warrant Shares issuable upon exercise thereof) and the Shares (and the Common Stock issuable upon conversion of the Shares and the Warrant Shares) do not violate any provision of (a) the Restated Certificate of Incorporation or Bylaws, (b) any judgment, order decree, statute, law, ordinance or regulation applicable to the Company or any of its properties or assets, or (c) to our knowledge, any loan or credit agreement, note, bond, mortgage, indenture, deed of trust, license, lease, contract, commitment, agreement, understanding or arrangement to which the Company is a party or by which the Company or any of its properties or assets is bound.

6. To our knowledge, there are no actions, suits, proceedings or investigations pending against the Company or its properties before any court or governmental agency (nor, to our knowledge, has the Company received any written threat thereof), which, either in any case or in the aggregate, are likely to result in any material adverse change in the business or financial condition of the Company or any of its properties, or in any material impairment of the right or ability of the Company to carry on its business as now conducted, or which questions the validity of the Agreement or any action taken or to be taken by the Company in connection therewith.

7. No consent, approval or authorization of or designation, declaration or filing with any governmental authority on the part of the Company is required in connection with the valid execution and delivery of the Agreement, Investors Agreement, Registration Rights Agreement, or the offer, sale or issuance of the Series D Warrants (and the Warrant Shares issuable upon exercise thereof) and the Shares (and the Common Stock issuable upon conversion of the Shares and the Warrant Shares) or the consummation of any other transaction contemplated by the Agreement and the Registration Rights Agreement, except (a) filing of the Restated Certificate of Incorporation in the Office of the

Secretary of State of the State of Delaware, and (b) qualification (or taking such action as may be necessary to secure an exemption from qualification, if available) under the California Corporate Securities Law and other applicable blue sky laws (but excluding jurisdiction outside of the United States) of the offer and sale of the Series D Warrants (and the Warrant Shares issuable upon exercise thereof) and the Shares (and the Common Stock issuable upon conversion of the Shares and the Warrant Shares) and the modification of rights of stockholders contemplated by the Agreement. The filing referred to in clause
(a) above has been accomplished and is effective. Our opinion herein is otherwise subject to the timely and proper completion of all filings and other actions contemplated herein where such filings and actions are to be undertaken on or after the date hereof.

8. Subject to the accuracy of the Investors' representations in
Section 4 of the Agreement and their responses (if any) to the Company's inquiries, we are of the opinion that the offer, sale and issuance of the Shares and the Series D Warrants in conformity with the terms of the Agreement constitute transactions exempt from the registration requirements of Section 5 of the Securities Act of 1933, as amended.

9. To our knowledge, other than the rights granted under the Registration Rights Agreement, there are no outstanding rights which permits the holder hereof to cause the Company to file a registration statement under the Securities Act or which permit the holder thereof to include securities of the Company in a registration statement filed by the Company under the Securities Act, and there are no outstanding agreements or other commitments which otherwise relate to the registration of any securities of the Company under the Securities Act.

This opinion is furnished to the Investors solely for their benefit in connection with the purchase of the Shares and the Series D Warrants, and to the Warrantholders solely for their benefit in connection with the issuance of the Series C Investor Common Warrants, and may not be relied upon by any other person or for any other purpose without our prior written consent.

Very truly yours,

WILSON, SONSINI, GOODRICH & ROSATI
Professional Corporation

J. Casey McGlynn

EXHIBIT F

INVESTORS AGREEMENT

This INVESTORS AGREEMENT is entered into as of December 21, 1995, by and among INTERNATIONAL BUSINESS MACHINES CORPORATION, a New York corporation ("IBM"), the investors in the Company listed on Schedule F-1 hereto as Founders (the "Founders"), the investors in the Company listed on Schedule F-1 hereto as Series B Investors (the "Series B Investors"), the investors in the Company listed on Schedule F-1 hereto as Contracting Series C Investors (the "Contracting Series C Investors"), the investors in the Company listed on Schedule F-1 hereto as Series D Investors (the "Series D Investors") and Integrated Surgical Systems, Inc., a Delaware corporation (the "Company").

IBM previously entered into a loan and warrant purchase agreement dated February 6, 1991 (the "Loan and Warrant Agreement") with the Company pursuant to which IBM (i) granted a loan to the Company in an amount of up to $3,000,000 and received a Convertible Subordinated Loan Note (the "Loan Note") convertible into shares of Series A Preferred Stock, $0.01 par value, of the Company, which is convertible into Common Stock, $0.01 par value ("Common Stock"), of the Company, and (ii) acquired a warrant (the "IBM 1991 Common Warrant") for the purchase of up to 500,000 shares of Common Stock. In connection with the Loan and Warrant Agreement, IBM, the Founders and the Company entered into a Stockholders Agreement dated February 6, 1991 (the "February 1991 Stockholders Agreement").

The Series B Investors consummated their purchase of securities of the Company in accordance with a stock purchase agreement dated as of April 10, 1992 (the "Series B Purchase Agreement"), pursuant to which the Series B Investors purchased an aggregate of 451,000 shares of Series B Preferred Stock, $0.01 par value ("Series B Preferred Stock"), of the Company, which is convertible into Common Stock, for an aggregate purchase price of $4,000,370. In connection with the Series B Purchase Agreement, IBM, the Founders, the Series B Investors and the Company entered into an Amended and Restated Stockholders Agreement dated April 22, 1992 (the "April 1992 Stockholders Agreement"), which amended the February 1991 Stockholders Agreement.

The Contracting Series C Investors and Keystone Financial Corporation, a Pennsylvania Not-For-Profit Corporation ("Keystone") consummated their purchase of securities of the Company in accordance with a stock purchase agreement dated as of November 13, 1992 (the "Series C Purchase Agreement"), pursuant to which the Contracting Series C Investors and Keystone purchased an aggregate of 757,576 shares of Series C Preferred Stock, $0.01 par value ("Series C Preferred Stock"), of the Company, which is convertible into Common Stock, for an aggregate purchase price of $8,000,002.56. In connection with the Series C Purchase Agreement, IBM, the Founders, the Series B Investors, the Contracting Series C Investors and Keystone and the Company entered into an Amended and Restated Stockholders Agreement dated November 13, 1992 (the "November 1992 Stockholders Agreement"), which amended the April 1992 Stockholders Agreement.

Pursuant to and upon the filing of the Company's Restated Certificate of Incorporation with the Delaware Secretary of State, which filing occurred on December 20, 1995, each share of Common Stock, Series B Preferred Stock and Series C Preferred Stock outstanding prior to the filing

of such Restated Certificate was split up and converted into 0.20 shares of Common Stock, and the Series A Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock were eliminated from the authorized capital stock of the corporation. Also pursuant to and upon the filing of such Restated Certificate of Incorporation, each $8.87 of accrued dividends with respect to the Series B Preferred Stock was converted into 0.20 shares of Common Stock and each $10.56 of accrued dividends with respect to the Series C Preferred Stock was converted into 0.20 shares of Common Stock.

As of the date hereof, the Series D Investors are consummating their purchase of shares of Series D Preferred Stock and warrants to purchase shares of Series D Preferred Stock of the Company in accordance with a stock and warrant purchase agreement (the "Series D Purchase Agreement"), pursuant to which the Series D Investors have agreed to purchase an aggregate of 1,025,641 shares of Series D Preferred Stock, $0.01 par value ("Series D Shares") of the Company, which is convertible into Common Stock, and warrants to purchase an aggregate of 2,051,282 shares of Series D Preferred Stock (the "Series D Warrants"), for an aggregate purchase price of $1,999,999.95. Pursuant to the Series D Purchase Agreement, the Series D Investors may, and upon the occurrence of certain events, must purchase an additional 512,820 shares of Series D Preferred Stock and additional 1,025,640 Series D Warrants for an aggregate purchase price of $999,999.00.

As of the date hereof, the Company is consummating the issuance to the Series B Investors and the Contracting Series C Investors and Keystone of an aggregate of 60,054 shares of Common Stock in exchange for the cancellation and forgiveness by the Series B Investors and the Contracting Series C Investors and Keystone of all accumulated and unpaid dividends on the Series B Preferred Stock and the Series C Preferred Stock. As of the date hereof, the Company is consummating the amendment of the IBM 1991 Common Warrant, to adjust the number of shares of Common Stock subject to such warrant and to extend such warrant's term to December 31, 2000. As of the date hereof, the Company is consummating the issuance to IBM of a warrant for the purchase of 187,752 shares of Common Stock (the "IBM 1995 Common Warrant") in exchange for the forgiveness and cancellation by IBM of the outstanding principal amount of and accrued interest on the Loan Note. As of the date hereof, the Company is consummating the issuance of warrants for the purchase of an aggregate of 660,024 shares of Common Stock to the Contracting Series C Investors and Keystone (the "Series C Investor Common Warrants").

In connection with the Series D Purchase Agreement, IBM, the Founders, the Series B Investors, the Contracting Series C Investors, the Series D Investors and the Company desire to enter into this Investors Agreement. The November 1992 Stockholders Agreement shall remain in effect following the date hereof.

Accordingly, the parties hereby agree as follows:

1. Certain Definitions. As used herein, the following terms shall have the following meanings:

"Actual Voting Power of the Company" shall mean the total number of votes that may be cast in the election of directors of the Company at any meeting of stockholders of the Company, assuming

all shares of Common Stock and other securities of the Company entitled to vote generally in the election of directors of the Company were present and voted at such meeting, other than votes that may be cast only by one class or series of stock (other than Common Stock) or upon the happening of a contingency. In determining the percentage of Actual Voting Power of the Company represented by Voting Securities beneficially owned by any Person, any such securities not outstanding which are subject to any rights of conversion (including rights represented by the Series D Preferred Stock) or subject to any options, warrants or rights (including the IBM 1991 Common Warrant, the IBM 1995 Common Warrant, the Series D Warrants and the Series C Investor Common Warrants) shall be deemed to be outstanding for the purpose of computing the percentage of the Actual Voting Power of the Company represented by Voting Securities beneficially owned by such Person but shall not be deemed to be outstanding for the purpose of computing the percentage of the Actual Voting Power of the Company represented by Voting Securities beneficially owned by any other Person.

"Affiliate" shall mean, as to any Person, any other Person which directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with the specified Person. "Series B Affiliate" shall mean any of the following that is not a Competitor: (i) either Series B Investor, (ii) John Kapoor, any entity controlled by John Kapoor and beneficially owned by John Kapoor or members of his immediate family, or a trust established by John Kapoor for the benefit of his immediate family with John Kapoor, Editha Kapoor, an entity controlled by John Kapoor or Editha Kapoor, or a financial institution as trustee (each a "Kapoor Affiliate"), (iii) (A) any nonprofit corporation controlled by Sutter Health and whose sole corporate member is either Sutter Health or another nonprofit corporation whose sole corporate member is Sutter Health; (B) a corporation whose majority of outstanding shares of stock are beneficially owned directly or indirectly by Sutter Health; or (C) a partnership whose sole general partner is Sutter Health or a Sutter Health affiliate described in clause (A) or (B). "Series C Affiliate" shall mean any of the following that is not a Competitor: (i) any Contracting Series C Investor; and (ii) Sutter Health and its affiliates as stated in (iii) of the definition of Series B Affiliate above. "Series D Affiliate" shall mean any of the following that is not a Competitor: (i) any Series D Investor; and (ii) John Kapoor and his affiliates as stated in subpart
(ii) of the definition of Series B Affiliate above.

A Person shall be deemed the "beneficial owner" of, and shall be deemed to "beneficially own", any securities (a) which such Person or any of its Affiliates is deemed to "beneficially own" within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934 or (b) which such Person or any of its Affiliates has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding or upon the exercise of any right of conversion or exchange, warrant, option or otherwise.

"Competitor" shall mean any Person which has for the most recent fiscal year of such Person, together with its Affiliates, (i) gross revenues in excess of $l billion from the development, manufacture, sale, leasing and servicing of information processing hardware or (ii) gross revenues in excess of $200 million from the development, reproduction, licensing, leasing and sale of computer software and information processing related services.

As used in this Agreement, "control" (including, with its correlative meanings, "controlled by" and "under common control with") shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise).

"Person" shall mean any individual, firm, corporation, partnership, trust, joint venture or other entity, and shall include any successor (by merger or otherwise) of such entity.

"Securities Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations thereunder.

"Selling Party" shall mean the Company, any Founder (or any stockholder group of which any Founder is a party), any Series B Investor, any Contracting Series C Investor and any Series D Investor or any Significant Stockholder who may become a party to this Agreement which proposes to sell, assign, pledge or otherwise transfer any Voting Securities.

"Series B Affiliate" and "Series C Affiliate" and "Series D Affiliate" shall have the meanings provided under "Affiliate."

"Significant Stockholders" shall mean all Persons (other than IBM and its subsidiaries) who are or become beneficial owners of Voting Securities representing 5% or more of the Actual Voting Power of the Company.

"Voting Securities" shall mean the shares of Common Stock and any other securities of the Company entitled to vote generally in the election of directors of the Company, and any other securities (including rights, warrants and options) convertible into, exchangeable for or exercisable for any Common Stock or other securities referred to above (whether or not presently convertible, exchangeable or exercisable).

2. Restrictions on Transfers; First Offer Rights on Sale of Voting Securities by a Selling Party.

(a) Subject to Section 2(f), so long as IBM beneficially owns Voting Securities representing at least 25% of the Actual Voting Power of the Company, no Selling Party shall issue, sell, assign, pledge or otherwise dispose of (collectively, "sell") its beneficial interest in any Voting Securities of the Company to a Competitor without the prior written consent of IBM.

(b) Subject to Section 2(f), if at any time a Selling Party desires to sell its beneficial interest in any Voting Securities (the "Offered Securities") the following provisions shall apply:

(i) the Selling Party shall first submit a written offer to sell (the "Offer") the Offered Securities to IBM at a price per share in cash specified by the Selling Party (the "Specified Price"), which offer shall include a representation that the Selling Party intends to sell the

Offered Securities in a bona fide arm's-length sales transaction at such price. Within 30 days after receipt of the Offer, and if no notice of acceptance or rejection is given to the Selling Party within such 30-day period, IBM shall be deemed to have rejected the Offer.

(ii) If the Offer is rejected or deemed rejected, the Selling Party may, subject to the restrictions set forth in Sections 2(a) and 5, if applicable, sell the Offered Securities to any Person or group at a price per share that is not less than the Specified Price (and which does not include any other terms, including financing terms, more favorable than those contained in the Offer) at any time during the six-month period following the date of such rejection. Any Offered Securities not sold within such six-month period shall again be subject to the requirements of first offer to IBM pursuant to this Section. Prior to making any sale or other disposition of the Offered Securities, the Selling Party shall comply with Section 2(e) of this Agreement.

(iii) If IBM accepts the Offer in writing, it shall purchase and the Selling Party shall sell to IBM all the Offered Securities at the Specified Price per share no later than 30 days after receipt of such acceptance. At the closing, the Selling Party shall deliver to IBM a certificate(s) representing the Offered Securities, duly endorsed for transfer or accompanied by duly executed stock powers for transfer to IBM and free and clear of all liens, against payment to the Selling Party of the purchase price therefor by certified check or wire transfer.

(c) If a Selling Party inquires of IBM about a proposed sale to a party that may be a Competitor, IBM shall indicate in writing to such Selling Party whether it deems such party to be a Competitor and such determination shall be binding upon IBM for purposes of the proposed sale.

(d) If any transfer or attempted transfer of Offered Securities is made contrary to the provisions of this Section 2, IBM shall have the right, in addition to any other legal or equitable remedies which it may have, to enforce its rights hereunder by an action for specific performance. The Company, the Founders, the Series B Investors, the Contracting Series C Investors, the Series D Investors and any other Significant Stockholders recognize the rights set forth herein as unique, violations of which cannot be remedied by an award of monetary damage.

(e) Each Selling Party shall deliver to IBM, prior to making any sale of its beneficial interest in Voting Securities to any Person not a party to this Agreement (unless such Person, after giving effect to such transaction, would own Voting Securities representing less than 5% of the Actual Voting Power of the Company) an appropriate document in which such Person agrees that it shall be bound by, and that its beneficial ownership of any Voting Securities shall be subject to, all the terms and conditions provided in this Agreement.

(f) This Section 2 shall not apply to any sale (i) pursuant to a registration statement declared effective under the Securities Act of 1933 (so long as the distribution pursuant to such registration statement represents a bona fide offering to the public), (ii) through a broker (so long as such sale is through an ordinary "broker's transaction" as such term is defined in Rule 144 under the Securities Act of 1933) when the Selling Party does not know the identity of the purchaser and does not direct the purchase, (iii) by the Company to the Series B Investors in accordance with

the preemptive rights set forth in Section 6.7 of the Series B Purchase Agreement, (iv) by the Company to the Contracting Series C Investors or Keystone in accordance with the preemptive rights set forth in Section 6.6 of the Series C Purchase Agreement, (v) by the Company to the Series D Investors in accordance with the preemptive rights set forth in Section 9.6 of the Series D Purchase Agreement or (vi) except for Section 2(e), by a Series B Investor to a Series B Affiliate or by a Contracting Series C Investor to a Series C Affiliate or by a Series D Investor to a Series D Affiliate.

(g) Compliance with the provisions of Section 2 of the November 1992 Stockholders Agreement by any party to this Agreement shall constitute compliance with the provisions of this Section 2.

3. Directors; Observer; Voting.

(a) So long as IBM beneficially owns Voting Securities representing at least 15% of the Actual Voting Power of the Company, IBM shall be entitled to
(i) nominate, at any time, one individual to be a voting director of the Company (the "IBM Director") and (ii) have a nonvoting observer who shall be entitled to attend all Board meetings, and the Company agrees to cause the IBM Director to be proposed for election by its stockholders. So long as John Kapoor or any Kapoor Affiliate (collectively, "Kapoor") beneficially owns Voting Securities representing at least 15% of the Actual Voting Power of the Company, Kapoor shall be entitled to (i) nominate, at any time, one individual to be a voting director of the Company (the "Kapoor Director") and (ii) have a nonvoting observer who shall be entitled to attend all Board meetings, and the Company agrees to cause the Kapoor Director to be proposed for election by its stockholders The IBM Director and the Kapoor Director shall be the two directors to be elected by the holders of the Series D Preferred Stock in accordance with Article 4, Section 4(e) of the Company's Restated Certificate of Incorporation. The Company acknowledges and agrees that such directors and/or observers will be under an obligation to IBM or Kapoor, as the case may be, not to disclose to any person outside of IBM or Kapoor, as the case may be, or use in other than the business of IBM or Kapoor, as the case may be, any confidential information or material relating to the business of IBM or its subsidiaries or Kapoor, as the case may be; and, therefore, the Company acknowledges that there shall be no obligation on the part of such director or observer to disclose any such information or material to the Company, even if such disclosure would be of interest or value to the Company.

(b) Each of the Series D Investors who may become a party to this Agreement agrees to vote its Voting Securities so as to elect the individuals nominated by IBM and Kapoor to be a director. The Company agrees to vote the Voting Securities for which the Company's management or Board of Directors holds proxies granting them voting discretion, or is otherwise entitled to vote, in favor of, and to use its best efforts in all other respects to cause, the election of the individuals nominated by IBM and Kapoor. In the event that a vacancy is created on the Board of Directors of the Company at any time by the death, disability, resignation or removal (with or without cause) of any such individual nominated by IBM or Kapoor, each of the Series D Investors who may become a party to this Agreement shall vote such Person's Voting Securities so as to elect an individual nominated by IBM or Kapoor, as the case may be, to fill such vacancy and serve as a director.

(c) For so long as IBM has the right to nominate a director, IBM shall have the right to receive reasonable prior notice of (with such notice to be sent to the address provided in Section 10 below if IBM shall have not designated a specific individual), and have its director, nominee or observer, as the case may be, attend, all meetings of the Board of Directors of the Company or any committee thereof and the Company will promptly deliver to IBM copies of all minutes and other records of action by, and all written information furnished to, the Board or such committee. For so long as Kapoor has the right to nominate a director, Kapoor shall have the right to receive reasonable prior notice of (with such notice to be sent to the address provided in Section 10 below if Kapoor shall have not designated a specific individual), and have its director, nominee or observer, as the case may be, attend, all meetings of the Board of Directors of the Company or any committee thereof and the Company will promptly deliver to Kapoor copies of all minutes and other records of action by, and all written information furnished to, the Board or such committee.

(d) If IBM or Kapoor gives notice to any Series D Investor that IBM or Kapoor, as the case may be, desires to remove a director nominated by IBM or Kapoor, as the case may be, each of the Series D Investors agrees to vote its Voting Securities so as to remove such director if a vote of holders of such securities shall be required to remove the director, and the Company agrees to take any action necessary to facilitate such removal.

(e) For so long as Section 8.05 of the Loan and Warrant Agreement shall be in effect, each of the Founders, Series B Investors, Contracting Series C Investors, Series D Investors and other Significant Stockholders who may become party to this Agreement agrees to vote its Voting Securities in such a manner as to cause the Company to comply with such Section. Section 8.05 of the Loan and Warrant Agreement is set forth in its entirety as follows:

SECTION 8.05. Mergers, Consolidations, Sales of Assets and Acquisitions. The Company shall not (i) merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, (ii) dissolve or liquidate, (iii) enter into any transaction or series of related transactions which would result in a Change of Control, or (iv) sell, transfer, license, lease or otherwise dispose of (in one transaction or in a series of transactions) more than 5% of its assets (whether now owned or hereafter acquired) except in the ordinary course of business or purchase, lease or otherwise acquire (in one transaction or in a series of transactions) all or any substantial part of the assets of any other Person.

(f) If any Founder, Series B Investor, Contracting Series C Investor, Series D Investor or other Significant Stockholder fails or refuses to vote its Voting Securities as required by this Section 3, IBM and Kapoor shall have an irrevocable proxy pursuant to the provisions of Section 212 of the Delaware General Corporation Code, coupled with an interest, so as to vote those securities in accordance with this Section 3, and each Founder, Series B Investor, Contracting Series C Investor, Series D Investor and other Significant Stockholder hereby grants to IBM and Kapoor such irrevocable proxy.

(g) The right of IBM contained in this Section 3 to nominate one individual to be a voting director of the Company shall apply only in the event IBM is not entitled to elect a director pursuant to the Restated Certificate of Incorporation of the Company by reason of being the holder of Series D Preferred Stock.

(h) Without the consent of the holders of a majority of the outstanding shares of Series D Preferred Stock, the Founders and any other Significant Stockholders that may become a party to this agreement shall not, subject to the following sentence, vote to elect any director that would result in the Company's Board of Directors having a majority of non-independent directors within the meaning of Schedule D, Part III, section (6), paragraph (c) to the By-Laws of the National Association of Securities Dealers, Inc. The voting restriction set forth in this Section 3(h) shall not apply to the election of the directors nominated by IBM and Kapoor pursuant to Section 3(a) hereof or pursuant to the Company's Restated Certificate of Incorporation.

(i) IBM hereby waives its right to compliance by any of the Contracting Series C Investors with the provisions of Sections 4(b) and 4(d) of the November 1992 Stockholders Agreement.

4. Preemptive Rights; Antidilution Rights. Each of IBM, the Founders, Series B Investors and Contracting Series C Investors hereby waives, with respect to the transactions contemplated by this Agreement, the Loan and Warrant Agreement, the Series B Purchase Agreement, the Series C Purchase Agreement and the Series D Purchase Agreement, including the issuance of the Series C Investor Common Warrants, any preemptive, antidilution or other rights held by such Founder, Series B Investor or Contracting Series C Investor granting the holder of any securities the right to acquire any additional shares or other securities upon the issuance of securities by the Company. IBM hereby waives, with respect to the transactions contemplated by this Agreement, the Loan and Warrant Agreement, the Series B Purchase Agreement, the Series C Purchase Agreement and the Series D Purchase Agreement, its preemptive rights under Section 7.15 of the Loan and Warrant Agreement, its first offer rights under Section 2 of the November 1992 Stockholders Agreement and Section 2 of this Agreement, any antidilution rights under Paragraph 1(b) of the Loan Note and Paragraph 4 of the Common Warrant, and its notice rights under Paragraph 8 of the Common Warrant.

The preemptive rights set forth in Section 6.7 of the Series B Purchase Agreement and in Section 6.6 of the Series C Purchase Agreement shall remain in effect following the date hereof. For purposes of such rights, (i) the term "Investor" as used in such sections shall include Sutter Health Venture Partners I, L.P. (without regard to the limitation in Section 6.6(d) of the Series C Purchase Agreement) and (ii) the term "Voting Securities" shall include the Series C Investor Common Warrants.

5. Restriction on Transfer of Founders Shares.

(a) In addition to the restrictions set forth in Section 2, the Founders shall not sell, assign, pledge or otherwise transfer their beneficial interest in any of the shares of Common Stock

acquired by them at or prior to the date hereof or any Voting Securities hereafter received by the Founders in respect of such shares, whether by stock split, dividend, reclassification or otherwise (such shares listed on Schedule F-2 hereto and such other Voting Securities as may hereafter be received in respect thereof, herein referred to as the "Founders Shares"), unless (i) such shares, if not purchased by IBM in accordance with the provisions of Section 2, are offered to the Series B Investors, Contracting Series C Investors and Keystone substantially in accordance with the same procedure as set forth in
Section 2 (as required by the November 1992 Stockholders Agreement or otherwise), or (ii) if IBM, the Series B Investors, the Contracting Series C Investors and Keystone have rejected the offer to purchase such shares, such shares are offered to the Series D Investors substantially in accordance with the same procedure as set forth in Section 2, or (iii) if IBM, the Series B Investors, the Contracting Series C Investors, Keystone and the Series D Investors have rejected the offer to purchase such shares, such shares are transferred to the Company or to a third party with IBM's prior written approval, or (iv) the Company shall have sold its Common Stock in a bona fide public offering on an underwritten firm commitment basis pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission resulting in $7,500,000 aggregate gross proceeds to the Company (a "Qualified Initial Public Offering"), or (v) the Company shall have been acquired by another entity (whether by merger, acquisition of substantially all the Company's assets, or acquisition of substantially all the Voting Securities of the Company), or (vi) the proposed transfer of Founders Shares shall occur on or after February 6, 1998. The restriction on transfer set forth above shall be in addition to any other applicable restrictions that may be contained in other agreements between the Founders and the Company.

(b) If any Founder dies, or becomes disabled, or ceases to be employed by the Company for any reason (or, in the case of Dr. William Bargar, if the consulting agreement between Dr. William Bargar and the Company is terminated for any reason), any Founders Shares then held by such Founder that have theretofore become vested shall be put into a trust (to be established by the Company and such Founder or his heirs) to be held for the benefit of such Founder or his heirs. Founders Shares held in such trust will be voted in the same proportion as other stockholders vote their shares of stock. Any such trust shall be terminated upon the first to occur of (i) a Qualified Initial Public Offering, (ii) the acquisition of the Company by another entity (whether by merger, acquisition of substantially all the Company's assets, or acquisition of substantially all the Voting Securities of the Company), or (iii) February 6, 1998.

6. Co-Sale Rights.

(a) If a holder or holders (the "Selling Holders") of Voting Securities propose to sell, in one or more related transactions, Voting Securities representing a majority of the Voting Securities of the Company, then such Selling Holders shall notify Sutter Health, a California nonprofit public benefit corporation ("Sutter Health"), and Sutter Health Venture Partners I, L.P. ("SHVP") of the proposed sale at least 45 days prior to the closing of the sale.

(b) Each of Sutter Health and SHVP shall have the right, exercisable upon written notice to the Selling Holders within 15 days after receipt of the Selling Holder's notice pursuant to Section 6(a), to request that shares of Common Stock (including any shares of Common Stock

issuable upon exercise of the Series C Investor Common Warrants) held by Sutter Health and SHVP be included in the Selling Holder's proposed sale of Voting Securities pursuant to the specified terms and conditions of such proposed sale.

(c) The Selling Holders shall make reasonable efforts to include in the proposed sale the shares referenced in Section 6(b) held by Sutter Health and SHVP which Sutter Health and SHVP have requested to be included in the sale.

7. Legend on Certificates for Voting Securities. Each certificate representing Voting Securities beneficially owned by any Founder, Series B Investor, Contracting Series C Investor, Series D Investor, IBM or any Significant Stockholder shall bear the following legend until such time as the Voting Securities represented thereby are no longer subject to this Agreement:

THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS OF AN AMENDED AND RESTATED STOCKHOLDERS AGREEMENT DATED AS OF NOVEMBER 13, 1992, AND OF AN INVESTORS AGREEMENT DATED AS OF DECEMBER 21, 1995, EACH BY AND AMONG INTERNATIONAL BUSINESS MACHINES CORPORATION, INTEGRATED SURGICAL SYSTEMS, INC. (THE "COMPANY"), AND CERTAIN OF THE COMPANY'S STOCKHOLDERS AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN ACCORDANCE THEREWITH. A COPY OF SUCH AGREEMENTS ARE ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY, AND THE COMPANY WILL FURNISH A COPY OF SUCH AGREEMENTS TO THE HOLDER OF THIS CERTIFICATE UPON WRITTEN REQUEST AND WITHOUT CHARGE.

The Company agrees not to register the transfer of any certificate containing such a legend without receiving a certificate from the transferring party stating that such party has complied with the transfer provisions of this Agreement.

8. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of each of the Founders, Series B Investors, Contracting Series C Investors, Series D Investors, Significant Stockholders who may become a party hereto, and IBM and their successors, heirs and legatees and permitted assigns. Except as expressly set forth herein, none of the Founders may assign this Agreement without the prior written consent of IBM, and any such purported assignment shall be void. Subject to the provisions of this Section 8, IBM may assign all or any part of its rights and obligations hereunder to an Affiliate of IBM. A Person to whom all or a part of IBM's rights are assigned shall become a party to this Agreement, entitled to all the rights and benefits hereunder that are so assigned. Each Series B Investor, Contracting Series C Investor and Series D Investor may assign all or any part of its rights and obligations hereunder to its Series B Affiliate, Series C Affiliate or Series D Affiliate, respectively, who shall become a party to this Agreement entitled to all the rights and benefits hereunder that are so assigned.

9. Amendments. No amendment to this Agreement shall be effective unless it shall be in writing and signed by the Company and the holders of a majority of the Voting Securities held by IBM, the Founders, the Series B Investors, the Contracting Series C Investors and the Series D Investors. Furthermore, if such amendment would adversely affect the rights of Sutter Health but would not so affect the rights of the other holders of Voting Securities, then no amendment to this Agreement shall be effective unless it shall be both approved as provided in the preceding sentence and approved in writing and signed by Sutter Health. Sutter Health's signature on this Agreement shall not be deemed a waiver by Sutter Health of any right which Sutter Health may have under applicable law in the event of and with respect to any breach by any other holder of Voting Securities of any fiduciary duty owed by such other holder or holders to Sutter Health.

10. Notices. All notices and other communications hereunder shall be in writing and shall be deemed given when delivered by hand or overnight courier service or five days after being mailed by registered or certified mail (return receipt requested), postage prepaid, to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):

(i) if to IBM, International Business Machines Corporation IBM Research Division T.J. Watson Research Center Yorktown Heights, New York 10598 Attention: Daniel P. McCurdy

(ii) if to the Company, Integrated Surgical Systems, Inc. 829 West Stadium Lane
Sacramento, California 95834 Attention: Ramesh Trivedi

with a copy to:

Wilson, Sonsini, Goodrich & Rosati 650 Page Mill Road
Palo Alto, California 94304-1050 Attention: J. Casey McGlynn

(iii) if to the Series B Investors, Contracting Series C Investors, or Series D Investors,

Sutter Health, a California nonprofit public benefit corporation One Capitol Mall
Sacramento, California 95814 Attention: David Cox

Sutter Health Venture Partners I, L.P. c/o Sutter Ventures, Ltd., as general partner One Capitol Mall
Sacramento, California 95814 Attention: David Cox

EJ Financial Investments V, L.P. John N. Kapoor Trust
c/o EJ Financial Enterprises, Inc. 225 East Deerpath Road, Suite 250 Lake Forest, Illinois 60045 Attention: Robert May

(iv) if to any Founder or Significant Stockholder, to his address as provided in the books of the Company.

11. Interpretation. 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.

12. Counterparts. 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 such counterparts have been signed by each of the parties and delivered to the other parties.

13. Entire Agreement. If compliance with any provision of this Agreement by any of the parties hereto would preclude compliance with any provision of the November 1992 Stockholders Agreement, the parties hereto agree that such conflict between this Agreement and the November 1992 Stockholders Agreement shall be resolved in favor of compliance with the relevant provision of the November 1992 Stockholder Agreement. Except as otherwise provided herein with respect to the November 1992 Stockholders Agreement, this Agreement contains the entire agreement and understanding between the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, written or oral, among the parties with respect to the subject matter hereof.

14. Severability. If any provision of this Agreement or the application of any such provision to any person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof.

15. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York applicable to agreements made and to be performed entirely within such state, without regard to the conflict of law principles of such state.

16. Kapoor Trust Transfer. Notwithstanding anything to the contrary set forth herein, John N. Kapoor Trust dated 9/20/89 shall be entitled to assign any of its rights and benefits hereunder to a person or persons or entity or entities related to or affiliated with John Kapoor or John N. Kapoor Trust dated 9/20/89 or EJ Financial Investments V, L.P. (the "Transferees") in connection with any transfer of shares of the Company's capital stock to the Transferees, and upon any such transfer, each Transferee shall be considered a Kapoor Affiliate and shall be entitled to and shall have all of the rights and benefits hereunder, and shall be subject to all obligations hereunder, with respect to the shares transferred to it, as if it were an original Series B Investor or Series D Investor hereunder.

IN WITNESS WHEREOF, the parties have caused this Investors Agreement to be duly executed as of the date first written above.

INTEGRATED SURGICAL SYSTEMS, INC.

By: ____________________________

Title: ____________________________

INTERNATIONAL BUSINESS MACHINES
CORPORATION

By: ____________________________

Title: ____________________________

(or the entity or entities set forth
below which is affiliated with John N.
Kapoor Trust dated 9/20/89)

Name:    ____________________________

By:      ____________________________

Title:   ____________________________

SUTTER HEALTH, A CALIFORNIA
NONPROFIT PUBLIC BENEFIT
CORPORATION

By: ____________________________

Title: ____________________________

SUTTER HEALTH VENTURE PARTNERS I,
L.P., A CALIFORNIA LIMITED
PARTNERSHIP

By: Sutter Ventures, Ltd., as general partner

By: ____________________________

Title: ____________________________

                                                        Kamala Vati Mehra


                                                        ________________________
                                                        Jagdish Lal Mehra


                                                        ________________________
                                                        Banarsi Das Mehra


                                                        ________________________
                                                        Rani Devi Aneja


                                                        ________________________
                                                        Gopal Mehra

                                  SCHEDULE F-1

Founders
Wendy Shelton-Paul Trust
William Bargar
Brent Mittelstadt
Peter Kazanzides

      Name                                                      No. of Shares*
- ------------------------                                        --------------
Wendy Shelton-Paul Trust                                           57,525

William Bargar                                                     30,975

Brent Mittelstadt                                                   8,050

Peter Kazanzides                                                    3,450

EXHIBIT G

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered into as of December 21, 1995, by and among Integrated Surgical Systems, Inc. a Delaware corporation (the "Company") and the entities listed on the signature pages hereto (the "Holders"). The holders of Registration Rights and the amount of Registrable Securities held by each such individual or entity as of the date of this Agreement are listed on Schedule G-1 attached hereto.

This Agreement amends and restates (i) the Registration Rights Agreement dated November 13, 1992 (the "November 1992 Agreement") and (ii) the provisions of Article X of the Loan and Warrant Purchase Agreement dated as of February 6, 1991, between the Company and IBM (the Loan Agreement") (together, the "Old Agreements"). Such amendment and restatement of the Old Agreements is effective upon the execution of this Agreement by the Company, IBM and holders of more than fifty percent (50%) of the Registrable Securities, as such term is defined under the November 1992 Agreement. As of the date of this Agreement, the registration rights provided in this Agreement are the only registration rights outstanding with respect to the Company's outstanding securities.

Pursuant to the terms of the Series D Preferred Stock and Warrant Purchase Agreement of even date herewith (the "Series D Agreement"), the Series D Investors may, and upon the occurrence of certain events, must purchase an additional 512,820 shares of Series D Preferred Stock and an additional 1,025,640 Series D Warrants for an aggregate purchase price of $999,999.00 (the "Second Closing Shares and Warrants"). Pursuant to the terms of the Warrants to Purchase Common Stock of even date herewith issued to Sutter Health, a California nonprofit public benefit corporation, to Sutter Health Venture Partners I, L.P., and to Keystone Financial Corporation, a Pennsylvania Not-For- Profit Corporation, the Company must issue to the holders of such warrants additional warrants to purchase an aggregate of approximately 205,469 shares of Common Stock (the "Second Closing Common Warrants"). Upon the sale of the Second Closing Shares and Warrants and the issuance of the Second Closing Common Warrants and the closing of the Rights Offering (as defined and described in the Agreement), the Company shall amend Schedule G-1 to reflect the additional Registrable Securities.

1. Definitions. As used in this Agreement, the following terms shall have the following respective meanings:

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

"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, or any similar federal statute with the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.

"Holders" shall mean the entities set forth on Schedule G-1 who hold Registrable Securities or securities convertible into Registrable Securities and any person holding such securities to whom the rights under this Agreement have been transferred pursuant to Section 13 hereof.

"Initiating Holders" shall mean any Holder or Holders who in the aggregate hold at least thirty-five percent (35%) of the aggregate of the Registrable Securities and securities convertible into Registrable Securities.

"NASD" shall mean the National Association of Securities Dealers, Inc.

"NASDAQ" shall mean the National Association of Securities Dealers Automated Quotation System.

"Registrable Securities" shall mean (a) any shares of Common Stock issued upon exercise of the Warrant for the Purchase of Common Stock dated February 6, 1991, as amended on December 21, 1995, issued to International Business Machines Corporation ("IBM"), (b) any shares of Common Stock issued upon exercise of the Warrant for the Purchase of Common Stock, of even date herewith, issued to IBM, (c) any shares of Common Stock issued upon exercise of the Warrant to Purchase Common Stock, of even date herewith, issued to Sutter Health, a California nonprofit public benefit corporation, (d) any shares of Common Stock issued upon exercise of the Warrant to Purchase Common Stock, of even date herewith, issued to Sutter Health Venture Partners I, L.P., (e) any shares of Common Stock issued upon exercise of the Warrant to Purchase Common Stock, of even date herewith, issued to Keystone Financial Corporation, a Pennsylvania Non-Profit Corporation, (f) any shares of Common Stock issued pursuant to the Recapitalization effected by the Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware on December 20, 1995, to the former holders of shares of Series B Preferred Stock which were issued pursuant to the Series B Preferred Stock Purchase Agreement dated as of April 10, 1992, (g) any shares of Common Stock issued issued pursuant to the Recapitalization effected by the Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware on December 20, 1995, to the former holders of shares of Series C Preferred Stock which were issued pursuant to the Series C Preferred Stock Purchase Agreement dated as of November 13, 1992, (h) any shares of Common Stock issued in exchange for the cancellation and forgiveness of all accumulated dividends on the Series B Preferred Stock and the Series C Preferred Stock, (i) any shares of Common Stock issued upon conversion of the shares of Series D Preferred Stock issued pursuant to the Series D Preferred Stock and Warrant Purchase Agreement dated as of December 21, 1995 (the "Series D Purchase Agreement"), (j) any shares of Common Stock issued upon conversion of the shares of Series D Preferred Stock issued upon exercise of the Warrant for the Purchase of Series D Preferred Stock dated December 21, 1995, issued pursuant to the Series D Purchase Agreement, and
(k) any securities issued or issuable with respect to any such Common Stock by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise.

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

2. Demand Registration.

2.1 Registration upon Demand by Initiating Holders. An Initiating Holder or Initiating Holders may make a written request that the Company effect a registration with respect to shares of Registrable Securities at any time after the earlier of (i) December 31, 1996 or (ii) six (6) months after the effective date of the first registration statement for a public offering of securities of the Company (other than in connection with the registration of securities issuable pursuant to an employee stock option, stock purchase or similar plan or pursuant to a merger, exchange offer or a transaction of the type specified in Rule 145(a) under the Securities Act). Within ten (10) days of the receipt of notice from the Initiating Holder or Initiating Holders, the Company will give written notice of such request to all other Holders and shall use its best efforts to effect a registration under the Securities Act and to include therein the Registrable Securities specified in the initial request from the Initiating Holder or Initiating Holders and the Registrable Securities of the Holders specified in written requests received by the Company within twenty
(20) days after the date of written notice from the Company; provided, however, that (a) the Company shall be obligated to effect a total of no more than three registration under this Section 2.1; (b) a registration hereunder shall not count as such (i) until it has become effective, except that if, after it has become effective, the offering of Registrable Securities pursuant to such registration is interfered with by any stop order, injunction or other order or requirement of the Commission or any other governmental authority, such registration shall be deemed not to have been effected unless such stop order, injunction or other order or requirement shall subsequently have been vacated or otherwise removed; (c) the Company shall not be obligated to effect a registration of a number of shares representing less than thirty-five percent (35%) of the total number of shares of the Registrable Securities including securities convertible into Registrable Securities (or a lesser percentage if the anticipated aggregate offering price, net of underwriting discounts and commissions, would exceed $7,500,000); and (d) the Company shall not be required to effect a registration if counsel for the Company shall deliver an opinion reasonably acceptable to counsel for the Holders that, pursuant to Rule 144 under the Securities Act or otherwise, the Holders can sell the Registrable Securities without registration under the Securities Act and without any limitation with respect to offerees or the size of the transaction.

2.2 Inclusion of Other Shares.

(a) If a registration is initiated by Initiating Holder or Initiating Holders, and the Company (or any other stockholder of the Company with registration rights other than a Holder) then wishes to offer any of its securities in connection with the registration, no such securities may be offered by the Company or any other stockholder unless the managing underwriters advise the Holders in writing that in their opinion (a) the number of securities requested to be included in the registration does not exceed the number which can be sold in the offering and (b) the price for Registrable Securities will not be adversely affected.

(b) If a registration is initiated by a Holder or Holders of Registrable Securities and the managing underwriters of a proposed underwritten offering advise the Company in writing that in their opinion, the number of securities requested to be included in the registration by the Holders exceeds the number which can be sold in the offering, then no securities may be offered by the Company or any other stockholder who is not a Holder, and the Holders shall all be entitled to have their securities included in the registration statement in proportion to the aggregate number of the Company's securities having registration rights under this Agreement that each such person holds or is entitled to receive by conversion or exercise of securities of the Company held by such person (such proportion being such person's "Relative Participation");

(c) Upon receipt of the written demand of the Holders, the Company shall expeditiously effect the registration under the Securities Act of the Registrable Securities and use its best efforts to have such registration become and remain effective as provided in Section 10. The Holders shall have the right to select the underwriters for a registration under this Section 2, subject to the approval of such selection by the Company (which approval by the Company shall not be unreasonably withheld).

3. Piggyback Registrations.

3.1 Notice. If the Company proposes to register any of its securities under the Securities Act for sale for cash (otherwise than in connection with the registration of securities issuable pursuant to an employee stock option, stock purchase or similar plan or pursuant to a merger, exchange offer or a transaction of the type specified in Rule 145(a) under the Securities Act), the Company shall give each Holder notice of such proposed registration at least 30 days prior to the filing of a registration statement. At the written request of each Holder delivered to the Company within 25 days after the receipt of the notice from the Company, which request shall state the number of Registrable Securities that each Holder wishes to sell or distribute publicly under the registration statement proposed to be filed by the Company, the Company shall use its best efforts to register under the Securities Act such Registrable Securities, and to cause such registration (a "Piggyback Registration") to become and remain effective as provided in Section 10.

3.2 Primary Registration. If a Piggyback Registration is an underwritten primary registration on behalf of the Company, and the managing underwriters thereof advise the Company in writing that in their opinion the number of securities requested to be included in the registration exceeds the number which can be sold in the offering, the Company shall include in the registration:

(i) first, that portion of the Registrable Securities that each Holder proposes to sell representing an aggregate of twenty-five percent (25%) of such offering (or in the case of an initial public offering, an aggregate of fifteen percent (15%) of such offering);

(ii) second, the securities the Company proposes to sell; and

(iii) third, the remaining Registrable Securities the Registrable Securities each Holder proposes to sell and the securities each other holder of the Company's securities who has registration rights and has exercised such rights proposes to sell in proportion to the number of shares each proposes to sell pursuant to this clause (iii).

3.3 Secondary Registration. If a Piggyback Registration is an underwritten secondary registration on behalf of holders of the Company's securities who have demand registration rights and the managing underwriters thereof advise the Company in writing that in their opinion the number of securities requested to be included in the registration exceeds the number which can be sold in the offering, the Company shall include in the registration:

(i) first, that portion of the Registrable Securities that each Holder proposes to sell representing an aggregate of twenty-five percent (25%) of such offering (or in the case of an initial public offering, an aggregate of fifteen percent (15%) of such offering);

(ii) second, the securities of the holders of the Company's securities who have exercised their demand registration rights;

(iii) third, the securities that the Company proposes to sell, if the Company subsequently elects to participate in the offering; and

(iv) fourth, the remaining Registrable Securities of Registrable Securities each Holder proposes to sell and the securities each other holder of the Company's securities who has registration rights and has exercised such rights proposes to sell in proportion to the number of shares each proposes to sell pursuant to this clause (iv).

4. Indemnification by the Company. In the event of any registration of any Registrable Securities under the Securities Act, the Company shall, and hereby does, indemnify and hold harmless each Holder and its directors and officers, if any, each other entity which participates as an underwriter in the offering or sale of such Registrable Securities and each other person or entity, if any, which controls each Holder or any such underwriter within the meaning of
Section 15 of the Securities Act against any losses, claims, damages or liabilities, joint or several, to which each Holder or any such director or officer or underwriter or controlling person or entity may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which the Registrable Securities were registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein in light of the circumstances in which they were made not misleading, and the Company shall reimburse each Holder and each such director, officer, underwriter and controlling person or entity for any legal or any other expenses reasonably

incurred by them in connection with investigating or defending any such loss, claim, liability, action or proceeding; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, preliminary prospectus, final prospectus, summary prospectus, amendment or supplement in reliance upon and in conformity with written information about each Holder as a stockholder of the Company furnished to the Company through an instrument duly executed by or on behalf of each Holder specifically stating that it is for use in the preparation thereof; and provided further, however, that the Company shall not be liable to any person or entity which participates as an underwriter in the offering or sale of Registrable Securities or any other person or entity, if any, who controls such underwriter within the meaning of the Securities Act, in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of such entity's failure to send or give a copy of the final prospectus, as the same may be then supplemented or amended, to the entity asserting an untrue statement or alleged untrue statement or omission or alleged omission at or prior to the written confirmation of the sale of Registrable Securities to such person or entity if such statement or omission was corrected in such final prospectus. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of each Holder or any such director, officer or controlling person or entity and shall survive the transfer of the Registrable Securities by each Holder.

5. Indemnification by the Holders. The Company may require, as a condition to including any Registrable Securities in any registration statement filed pursuant to Section 2 or 3, that the Company shall have received an undertaking satisfactory to it from each Holder to indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 4) the Company, each director of the Company, each officer of the Company signing such registration statement and each other Person, if any, who controls the Company within the meaning of Section 15 of the Securities Act with respect to any untrue statement or alleged untrue statement in or omission or alleged omission from such registration statement, any preliminary prospectus, final prospectus or summary prospectus contained therein or any amendment or supplement thereto, if such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information about each Holder as a stockholder of the Company furnished to the Company through an instrument duly executed by each Holder specifically stating that it is for use in the preparation of such registration statement, preliminary prospectus, final prospectus, summary prospectus, amendment or supplement. Such indemnity shall remain in full force and effect, regardless of any investigation made by or on behalf of the Company or any such director, officer or controlling Person and shall survive the transfer by the seller of the securities of the Company being registered.

6. Notices of Claims. etc. Promptly after receipt by an indemnified party of notice of the commencement of any action or proceeding involving a claim referred to in Section 4 or 5, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party, give notice to the latter of the commencement of such action; provided, however, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its

obligations under Section 4 or 5, except to the extent that the indemnifying party is actually prejudiced by such failure to give notice. In case any such action is brought against an indemnified party, unless in such indemnified party's reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist or the indemnified party may have defenses not available to the indemnifying party in respect of such claim, the indemnifying party shall be entitled to participate in and to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall be liable for any settlement of any action or proceeding effected without its written consent. No indemnifying party shall, without the consent of the indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.

7. Other Indemnification. Indemnification similar to that specified in this Agreement (with appropriate modifications) shall be given by the Company and each Holder with respect to any required registration or other qualification of Registrable Securities under any Federal or state law or regulation of any governmental authority other than the Securities Act.

8. Indemnification Payments. The indemnification required by this Agreement shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or expense, loss, damage or liability is incurred.

9. Adjustments Affecting Registrable Securities. The Company shall not effect or permit to occur any combination, subdivision or other recapitalization of any of its securities (a) which would materially adversely affect the ability of the Holder to include its Registrable Securities, or which would reduce the number of Registrable Securities each Holder would otherwise be entitled to include pursuant to this Agreement, in any registration of securities of the Company contemplated by this Agreement or (b) which would materially adversely affect the marketability of such Registrable Securities under any such registration.

10. Registration Covenants of the Company. In the event that any Registrable Securities of the Holders are to be registered pursuant to Section 2 or 3, the Company covenants and agrees that it shall use its best efforts to effect the registration and cooperate in the sale of the Registrable Securities to be registered and shall as expeditiously as possible:

(a) (i) prepare and file with the Commission a registration statement with respect to the Registrable Securities (as well as any necessary amendments or supplements thereto) (a "Registration Statement") and (ii) use its best efforts to cause the Registration Statement to become effective;

(b) prior to the filing described above in Section 10(a), furnish to the Holders copies of drafts of the Registration Statement and any amendments or supplements thereto and any prospectus forming a part thereof, which documents shall be subject to the review of counsel for the Holders (but not approval of such counsel except with respect to any statement in the Registration Statement which relates to the Holders);

(c) notify the Holders promptly after the Company shall receive notice thereof, of the time when the Registration Statement becomes effective or when any amendment or supplement or any prospectus forming a part of the Registration Statement has been filed;

(d) notify the Holders promptly of any request by the Commission for the amending or supplementing of the Registration Statement or prospectus or for additional information;

(e) (i) advise the Holders after the Company shall receive notice or otherwise obtain knowledge of the issuance of any order by the Commission suspending the effectiveness of the Registration Statement or amendment thereto or of the initiation or threatening of any proceeding for that purpose and (ii) promptly use its best efforts to prevent the issuance of any stop order or to obtain its withdrawal promptly if a stop order should be issued;

(f) (i) prepare and file with the Commission such amendments and supplements to the Registration Statement and the prospectus forming a part thereof as may be necessary to keep the Registration Statement effective for the lesser of (A) a period of time necessary to permit the Holders to dispose of all of their Registrable Securities and (B) the maximum period of time permitted by law to keep effective a registration statement without filing an amendment containing new audited financial statements and (ii) comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by the Registration Statement during such period in accordance with the intended methods of disposition by the Holders set forth in the Registration Statement;

(g) furnish to the Holders such number of copies of the Registration Statement, each amendment and supplement thereto, the prospectus included in the Registration Statement (including each preliminary prospectus) and such other documents as the Holders may reasonably request in order to facilitate the disposition of the Registrable Securities owned by the Holders;

(h) use its best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as determined by the underwriters after consultation with the Company and the Holders and do any and all other acts and things which may be reasonably necessary or advisable to enable the Holders to consummate the disposition in such jurisdictions of the Registrable Securities (provided that

the Company shall not be required to (i) qualify generally to do business in any jurisdiction in which it would not otherwise be required to qualify but for this Section 10(h), (ii) subject itself to taxation in any such jurisdiction or (iii) consent to general service of process in any such jurisdiction);

(i) notify the Holders, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the Registration Statement would contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and, prepare a supplement or amendment to the Registration Statement so that the Registration Statement shall not, to the Company's knowledge, contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading;

(j) if the Common Stock is not then listed on a securities exchange, and if the NASD is reasonably likely to permit the reporting of the Common Stock on NASDAQ, use its best efforts to facilitate the reporting of the Common Stock on NASDAQ;

(k) provide a transfer agent and registrar, which may be a single entity, for all the Registrable Securities not later than the effective date of the Registration Statement;

(l) enter into such customary agreements (including an underwriting agreement in customary form) and take all such other action, if any, as the Holders or the underwriters shall reasonably request in order to expedite or facilitate the disposition of the Registrable Securities;

(m) (i) make available for inspection by the Holders, any underwriter participating in any disposition pursuant to the Registration Statement and any attorney, accountant or other agent retained by the Holders or any such underwriter all financial and other records, pertinent corporate documents and properties of the Company and
(ii) cause the Company's officers, directors and employees to supply all information reasonably requested by the Holders or any such underwriter, attorney, accountant or agent in connection with the Registration Statement;

(n) use its best efforts to cause the Registrable Securities covered by the Registration Statement to be registered with or approved by such other Governmental Authorities as may be necessary to enable the Holders to consummate the disposition of such Registrable Securities; and

(o) obtain a comfort letter from the Company's independent public accountants in customary form and covering such matters of the type customarily covered by comfort letters as the Holders may reasonably request.

11. Expenses.

(a) The Company shall pay, on behalf of the Holders of Registrable Securities, all of the expenses in connection with three (3) Demand Registrations and any Piggyback Registration pursuant to Section 2 or 3 hereof, including all registration, filing and NASD fees, all fees and expenses of complying with securities or blue sky laws, all word processing, duplicating and printing expenses, all messenger and delivery expenses, the fees and disbursements of counsel for the Company and of its independent public accountants (including the expenses of comfort letters required by or incident to such performance and compliance), the reasonable fees, not to exceed $25,000, and disbursements of one counsel retained by the Holders of Registrable Securities exercising their Registration Rights, and any fees and disbursements of underwriters customarily paid by issuers or sellers of securities, but excluding any underwriting discounts and commissions and transfer taxes, if any.

(b) In any registration, the Holders shall pay for their own underwriting discounts and commissions and transfer taxes (pro rata if several entities exercise their Registration Rights simultaneously).

(c) If any expenses are to be paid by the Holders, each selling Holder shall bear its proportionate share, based on the number of securities sold.

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

(a) promptly give written notice of the proposed registration, and any related qualification or compliance, to all other Holders of Registrable Securities; and

(b) as soon as practicable, effect such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other Holder joining in such request as are specified in a written request given within 15 days after receipt of such written notice from the Company; provided, however, that the Company shall not be obligated to effect any such registration, qualification or compliance, pursuant to this Section 12: (i) if the Company has already effected two registrations on Form S-3 pursuant to this Section 12 or one in the preceding 12-month period; (ii) if Form S-3 is not available for such offering by the Holders requesting registration pursuant to this Section 12; (iii) if the Holders requesting registration pursuant to this Section 12, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) at an aggregate price to the public (net of any underwriters' discounts or commissions) of less than $1,000,000; (iv) if the Company shall furnish to

the Holders requesting registration pursuant to this Section 12 a certificate signed by the President of the Company stating that in the good faith judgement of the Board of Directors of the Company, it would be seriously detrimental to the Company and its stockholders for such Form S-3 registration to be effected at such time, in which event the Company shall have the right to defer the filing of the Form S-3 Registration Statement for a period of not more than 90 days after receipt of the request of the Holder(s) under this Section 12; provided, however, that the Company shall not utilize this right more than once in any twelve (12) month period; or (v) in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance.

(c) Subject to the foregoing, the Company shall file a registration statement covering the Registrable Securities and other securities so requested to be registered as soon as practicable after receipt of the request or requests of the Holders requesting registration pursuant to this Section 12. All expenses incurred in connection with a registration requested pursuant to this Section 12, including (without limitation) all registration, filing, qualification, printer's and accounting fees, reasonable fees and disbursements of counsel for the Holder(s) and counsel for the Company and any underwriters' discounts or commissions associated with Registrable Securities shall be borne pro rata by the Holder(s) participating in the Form S-3 Registration. Registrations effected pursuant to this Section 12 shall not be counted as demands for registration or registrations effected pursuant to Sections 2 or 3, respectively.

13. Assignment of Registration Rights. The Registration Rights under this Agreement may be assigned by a Holder of Registrable Securities to anyone who acquires at least 500,000 shares of the Registrable Securities (other than pursuant to Rule 144 or a Demand Registration or a Piggyback Registration or a Form S-3 Registration effected pursuant to this Agreement); provided, however, that no assignment shall increase the Company's obligations to effect registrations or pay expenses thereof.

14. No Preferential Registration Rights. Notwithstanding any other provision of this Agreement, if the Company grants registration rights to any other person or entity on terms which are preferential to the terms in this Agreement, then the Holders shall be entitled to registration rights with such preferential terms.

15. Rule 144. After the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, but only for so long as the Company is so subject, the Company shall take all actions reasonably necessary to enable the Holders to sell the Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission, including filing on a timely basis all reports required to be filed by the Exchange Act. Upon the request of a Holder, the Company shall deliver to such Holder a written statement as to whether it has complied with such requirements.

16. Miscellaneous Provisions.

16.1 Notices. All notices and other communications required or permitted hereunder shall be in writing and, except as otherwise noted herein, shall be deemed effectively given upon personal delivery, delivery by nationally recognized courier or upon deposit with the United States Post Office, (by first class mail, postage prepaid) addressed: (a) if to the Company, at 829 West Stadium Lane, Sacramento, CA 95834 (or at such other address as the Company shall have furnished to the Holders in writing) attention of President and (b) if to a Holder, at the latest address of such person shown on the Company's records.

16.2 Descriptive Headings. The descriptive headings herein have been inserted for convenience only and shall not be deemed to limit or otherwise affect the construction of any provisions hereof.

16.3 Governing Law. This Agreement shall be governed by and interpreted under the laws of the State of California as applied to agreements among California residents, made and to be performed entirely within the State of California.

16.4 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original and all of which shall constitute the same instrument, but only one of which need be produced.

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

16.6 Successors and Assigns. Except as otherwise expressly provided in this Agreement, this Agreement shall benefit and bind the successors, assigns, heirs, executors and administrators of the parties to this Agreement.

16.7 Entire Agreement. This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subject matter of this Agreement.

16.8 Separability; Severability. Unless expressly provided in this Agreement, the rights of each Holder under this Agreement are several rights, not rights jointly held with any other Holder. Any invalidity, illegality or limitation on the enforceability of this Agreement with respect to any Holder shall not affect the validity, legality or enforceability of this Agreement with respect to the other Holders. If any provision of this Agreement is judicially determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not be affected or impaired.

16.9 Stock Splits. All references to numbers of shares in this Agreement shall be appropriately adjusted to reflect any stock dividend, split, combination or other recapitalization of shares by the Company occurring after the date of this Agreement.

16.10 Termination. The rights granted under this Agreement shall terminate on the seventh anniversary of the closing date of the initial underwritten public offering of the Company's securities pursuant to a registration statement declared effective under the Securities Act.

16.11 Waivers and Amendments. With the written consent of IBM and the recordholders of more than fifty percent (50%) of the Registrable Securities held by Holders other than IBM (determined assuming conversion or exercise of all instruments convertible into or exercisable for Registrable Securities), the obligations of the Company and the rights of the Holders under this Agreement may be waived (either generally or in a particular instance, either retroactively or prospectively and either for a specified period of time or indefinitely), and with the same consent the Company, when authorized by resolution of its Board of Directors may enter into a supplementary agreement for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement. With the written consent of IBM and the recordholders of more than fifty percent (50%) of the Registrable Securities subject to this Agreement held by Holders other than IBM (determined assuming conversion or exercise of all instruments convertible into or exercisable for such Registrable Securities), the obligations of the Company and the rights of the Holders under this Agreement may be waived and this Agreement may be amended; provided that no such waiver or amendment shall (i) reduce such percentage or (ii) increase any obligations of the Holders under this Agreement without the consent of all Holders. This Agreement may be amended and its provisions waived only by a signed statement in writing.

Furthermore, if such amendment or waiver would adversely affect the rights of Sutter Health, a California nonprofit public benefit corporation ("Sutter Health"), but would not so affect the rights of Holders of Registrable Securities held by Holders other than Sutter Health, then no such amendment or waiver of this Agreement shall be effective unless such amendment or waiver shall be both approved as provided in the preceding paragraph and approved in writing and signed by Sutter Health. Sutter Health's signature on this Agreement shall not be deemed a waiver by Sutter Health of any right which Sutter Health may have under applicable law in the event of and with respect to any breach by any other Holder of Registrable Securities of any fiduciary duty owed by such other Holder or Holders to Sutter Health.

IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first above written.

INTEGRATED SURGICAL SYSTEMS, INC.

By:______________________________

Title:___________________________

EJ FINANCIAL INVESTMENTS V, L.P.

By:_____________________________

Title:__________________________

JOHN N. KAPOOR TRUST DATED 9/20/89
(or the entity or entities set forth below which is affiliated with John N. Kapoor Trust dated 9/20/89)

Name:___________________________

By:_____________________________

Title:__________________________

INTEGRATED SURGICAL SYSTEMS, INC.
REGISTRATION RIGHTS AGREEMENT

SUTTER HEALTH, A CALIFORNIA NONPROFIT
PUBLIC BENEFIT CORPORATION

By:_________________________

Title:______________________

SUTTER HEALTH VENTURE PARTNERS I, L.P.

By: Sutter Ventures, Ltd., as general partner

By:_________________________

Title:______________________

INTEGRATED SURGICAL SYSTEMS, INC.
REGISTRATION RIGHTS AGREEMENT

KEYSTONE FINANCIAL CORPORATION, A
PENNSYLVANIA NOT-FOR-PROFIT CORPORATION

By:_________________________

Title:______________________

INTEGRATED SURGICAL SYSTEMS, INC.
REGISTRATION RIGHTS AGREEMENT

INTERNATIONAL BUSINESS
MACHINES CORPORATION

By:_________________________

Title:______________________

                                  Common          Common        Series D       Series D
                                  Shares         Warrants       Shares(1)     Warrants(1)
                                  ------         --------       ---------     -----------
International Business              --           287,752            --         2,051,282
  Machines Corporation

John N. Kapoor Trust              58,347            --              --              --
(or affiliate(s))

EJ Financial Investments            --              --         1,025,641            --
   V, L.P.

Keystone Financial                23,628          64,065            --              --
  Corporation, a
  Pennsylvania Not-
  For-Profit Corporation

Sutter Health, a                 213,303         578,353            --              --
  California nonprofit
  public benefit
  corporation

Sutter Health Venture              6,493          17,605            --              --
  Partners I, L.P.

(1) Does not include the additional 512,820 shares of Series D Preferred Stock or warrants to purchase 1,025,640 shares of Series D Preferred Stock which the Series D Investors may, and upon the occurrence of certain events, must purchase pursuant to the terms of the Series D Preferred Stock and Warrant Purchase Agreement of even date herewith. Does not include the additional warrants to purchase an aggregate of approximately 205,469 shares of Common Stock, which warrants are issuable to the Keystone Financial Corporation, Sutter Health and Sutter Health Venture Partners I upon the occurrence of certain events. See page 1 of the Registration Rights Agreement to which this Schedule is attached. See also each of the three Warrant Agreements attached as Exhibits K, L and M to the Series D Preferred Stock and Warrant Purchase Agreement dated December 21, 1995.

                                  Common          Common        Series D       Series D
                                  Shares         Warrants        Shares        Warrants
                                  ------         --------       --------       --------
International Business              --           287,752            --         3,076,922
  Machines Corporation

John N. Kapoor Trust              58,347            --              --              --
(or affiliate(s))

EJ Financial Investments            --              --         1,538,461            --
   V, L.P.

Keystone Financial                23,628          84,010            --              --
  Corporation, a
  Pennsylvania Not-
  For-Profit Corporation

Sutter Health, a                 213,303         758,397            --              --
  California nonprofit
  public benefit
  corporation

Sutter Health Venture              6,493          23,086            --              --
  Partners I, L.P.

EXHIBIT H

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN COMPLIANCE WITH THAT ACT. THIS WARRANT IS SUBJECT TO THE PROVISIONS OF A SERIES D PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT DATED AS OF DECEMBER 21, 1995, BETWEEN INTEGRATED SURGICAL SYSTEMS, INC., INTERNATIONAL BUSINESS MACHINES CORPORATION AND CERTAIN OF THE STOCKHOLDERS OF THE COMPANY, COPIES OF WHICH ARE ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY.

WARRANT

FOR THE PURCHASE OF SERIES D PREFERRED STOCK
PAR VALUE $0.01 PER SHARE

OF

INTEGRATED SURGICAL SYSTEMS, INC.

VOID AFTER DECEMBER 31, 2005

THIS CERTIFIES THAT, for $1,333,333.30 received by the Company, INTERNATIONAL BUSINESS MACHINES CORPORATION ("IBM") or assigns (the "Holder") is entitled to purchase from INTEGRATED SURGICAL SYSTEMS, INC., a Delaware corporation (the "Company"), at the price of $0.01 per share (such price as from time to time adjusted as hereinafter provided, the "Warrant Price"), and in accordance with the terms and conditions set forth hereinafter and in the Series D Preferred Stock and Warrant Purchase Agreement dated December 21, 1995, between the Company, and the Investors listed therein (the "Series D Agreement"), at any time on or before December 31, 2005, up to 2,051,282 shares (subject to adjustment as hereinafter provided) of Series D Preferred Stock, par value $0.01 per share, of Company, and to receive a certificate or certificates for the shares of Series D Preferred Stock so purchased, upon presentation and surrender of this Warrant, at the office of the Company, which is at 829 West Stadium Lane, Sacramento, California 95834 as of the date hereof, together with the Warrant Price of the shares so purchased.

1. Reservation of Shares. The Company shall reserve and keep available out of its authorized but unissued Series D Preferred Stock for issuance upon the exercise of this Warrant, free from preemptive rights, such number of shares of Series D Preferred Stock for which this Warrant shall from time to time be exercisable. All shares which may be issued upon the exercise of this Warrant will, upon issuance, be fully paid and nonassessable and be free from all taxes, liens and charges in respect of the issuance thereof. The Company further covenants and agrees that if any shares of Series D Preferred Stock to be reserved for the purpose of the issuance of shares upon the exercise of this Warrant require registration with or approval of any governmental authority under any Federal or State law before such shares may be validly issued or delivered upon exercise of this Warrant, then the Company will in good faith and as expeditiously as possible endeavor to secure such registration or approval, as the case may be, and the right to exercise this Warrant shall be extended until 10 Business Days (as defined below) after the completion of any such registration or approval. "Business Day" shall mean any day (other than a day which is a Saturday, Sunday or legal holiday in the State of New York or California) on which banks are open for business in New York, New York, and San Francisco, California.

2. Term. The purchase rights represented by this Warrant are exercisable at the option of the Holder in whole at any time, or in part from time to time (but not as to a fractional share of Series D Preferred Stock), on or before December 31, 2005. In case of the purchase upon exercise of this Warrant of a number of shares of Series D Preferred Stock less than the total number of shares of Series D Preferred Stock then issuable upon exercise of this Warrant, the Company shall cancel this Warrant upon surrender hereof and shall execute and deliver a new Warrant of like tenor and date for the balance of the shares issuable upon the exercise hereof (except any remaining fractional share).

3. Conversion Price Adjustments. The rate at which the Series D Preferred Stock is convertible into shares of Common Stock of the Company (initially one-for-one) is subject to adjustment as set forth in Article 4,
Section 5 of the Company's Restated Certificate of Incorporation. Any adjustment to the conversion rate of the Series D Preferred Stock of the Company effected prior to any exercise or conversion of this Warrant shall apply to any shares of Series D Preferred Stock thereafter issued pursuant to the terms hereof.

4. Merger, Consolidation or Sale of Assets. If any consolidation or merger of the Company with another corporation, or any statutory exchange of securities with another person, or the sale of all or substantially all of its assets to another corporation, shall be effected, then, as a condition of such consolidation, merger, exchange or sale, lawful and adequate provision shall be made whereby the Holder shall thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions specified in this Warrant and in lieu of the shares of the Series D Preferred Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby, such shares of stock, securities or assets as may be issued or payable with respect to or in exchange for a number of outstanding shares of such Series D Preferred Stock equal to the number of shares of such stock immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby had such consolidation, merger, exchange or sale not taken place, and in any such case appropriate provision shall be made with respect to the rights and interests of the Holder to the end that the provisions hereof (including without limitation

provisions for adjustment for the Warrant Price and of the number of shares purchasable upon the exercise of this Warrant) shall thereafter be applicable, as nearly as may be, in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise hereof. The Company shall not effect any such consolidation, merger, exchange or sale, unless prior to or simultaneously with the consummation thereof the successor corporation (if other than the Company) resulting from such consolidation, merger or exchange or the corporation purchasing such assets shall assume by written instrument executed and delivered to the Holder at the address of the holder appearing in the books of the Company, the obligation to deliver to the Holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, the Holder may be entitled to purchase.

5. Notice of Certain Events. In case at any time:

(a) the Company shall declare or pay any dividend or make any distribution to the holders of its Series D Preferred Stock;

(b) the Company shall offer for subscription pro rata to the holders of its Series D Preferred Stock any additional shares of stock of any class or other rights;

(c) there shall be any capital reorganization or reclassification of the capital stock of the Company or consolidation or merger of the Company with, or any statutory exchange of the Company's securities with the securities of, or sale of all or substantially all of its assets to, another corporation; or

(d) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company;

then, in any one or more of said cases, the Company shall give written notice, by first class mail, postage prepaid, addressed to the Holder at the address of the Holder as shown on the books of the Company, of the date on which (i) the books of the Company shall close or a record shall be taken for such dividend, distribution or subscription rights, or (ii) such reorganization, reclassification, consolidation, merger, exchange, sale, dissolution, liquidation or winding up shall take place, as the case may be. Such notice shall also specify the date as of which the holders of Series D Preferred Stock of record shall participate in said dividend, distribution or subscription rights, or shall be entitled to exchange their Series D Preferred Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, exchange, sale, dissolution, liquidation or winding up, as the case may be. Such written notice shall be given not less than 20 days prior to the record date or the date on which the transfer books of the Company are closed in respect thereto in the case of an action specified in clause (i) and at least 20 days prior to the action in question in the case of an action specified in clause (ii).

6. No Impairment. The Company shall not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company but will at

all times in good faith assist in the carrying out of all the provisions of Sections 3 through 5 and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder.

7. No Voting Rights. This Warrant shall not entitle the Holder to any voting rights or other rights as a stockholder of the Company whatsoever, except the rights expressed herein or in the Series D Agreement, and no dividend or interest shall be payable or accrue in respect of this Warrant or the interest represented hereby or the shares purchasable hereunder until and unless, and except to the extent that, this Warrant shall be exercised.

8. Warrant Unregistered. Neither this Warrant nor any of the shares to be issued upon the exercise hereof have been registered under the Securities Act of 1933, and nothing herein contained shall be deemed to require the Company so to register this Warrant. This Warrant is issued subject to the conditions, and the Holder agrees with the Company,

(a) that this Warrant has been acquired for the purpose of investment and not with a view to or for sale in connection with any distribution thereof, subject to the disposition of the Holder's property being at all times within its control; and

(b) that the Company has the right to demand and receive from the Holder, prior to the purchase of any shares pursuant hereto, assurances satisfactory to it that such shares are being purchased for the purpose of investment and not with a view to or for sale in connection with any distribution thereof, subject to the disposition of the Holder's property being at all times within its control.

9. Exchangeability. This Warrant is exchangeable, upon the surrender hereof by the Holder at said office of the Company, for new Warrants of like tenor and date representing in the aggregate the right to purchase the number of shares of Series D Preferred Stock which may be purchased hereunder, each of such new Warrants to represent the right to purchase such number of shares as shall be designated by the Holder at the time of such surrender.

10. Transferability. This Warrant shall be transferable in whole or in part to one or more transferees.

11. Payment of Purchase Price. The Warrant Price for the shares of Series D Preferred Stock issuable upon the exercise hereof shall be paid be certified check.

12. Stock Certificates. The issuance of stock certificates upon the exercise of this Warrant shall be made without charge to the Holder for any tax (other than taxes attributable to any difference between the fair market value and the exercise price of this Warrant on the date of the exercise of this Warrant) in respect of the issue thereof. The Holder shall for all purposes be deemed to have become the holder of record of the shares issued upon the exercise of this Warrant on the date on which the Warrant was surrendered and payment of the Warrant Price was made, irrespective of the date of delivery of the certificate for such shares, except that, if the date of such surrender and

payment is a date when the stock transfer books of the Company are closed, the Holder shall be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the stock transfer books are open (provided that if such books shall remain closed for five days, the close of business on such fifth day shall be the time the Holder shall be deemed to have become the holder of such shares.)

13. Lost, Stolen, Mutilated or Destroyed Warrant. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, mutilation or destruction of this Warrant and, in case of loss, theft or destruction, upon the agreement of the Holder to indemnify the Company or, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company shall issue a new Warrant of like denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed. Any such new Warrant shall constitute an original contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall be at any time enforceable by anyone.

14. Applicable Law. This Warrant shall be governed by and construed in accordance with the internal laws of the State of New York applicable to agreements made and to be performed entirely within such State, without regard to the conflicts of law principles of such State.

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its proper officers thereunto duly authorized and the Company's corporate seal to be hereunto affixed this 21st day of December, 1995.

INTEGRATED SURGICAL SYSTEMS, INC.

by

Title:

EXHIBIT I

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN COMPLIANCE WITH THAT ACT. THIS WARRANT IS SUBJECT TO THE PROVISIONS OF A SERIES D PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT DATED AS OF DECEMBER 21, 1995, BETWEEN INTEGRATED SURGICAL SYSTEMS, INC., AND INTERNATIONAL BUSINESS MACHINES CORPORATION, COPIES OF WHICH ARE ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY.

WARRANT

FOR THE PURCHASE OF COMMON STOCK
PAR VALUE $0.01 PER SHARE

OF

INTEGRATED SURGICAL SYSTEMS, INC.

VOID AFTER DECEMBER 31, 2005

THIS CERTIFIES THAT, for value received, INTERNATIONAL BUSINESS MACHINES CORPORATION ("IBM") or assigns (the "Holder") is entitled to purchase from INTEGRATED SURGICAL SYSTEMS, INC., a Delaware corporation (the "Company"), at the price of $0.01 per share (such price as from time to time adjusted as hereinafter provided, the "Warrant Price"), and in accordance with the terms and conditions hereinafter set forth, at any time on or before December 31, 2005, up to 187,752 shares (subject to adjustment as hereinafter provided) of Common Stock, par value $0.01 per share, of Company, and to receive a certificate or certificates for the shares of Common Stock so purchased, upon presentation and surrender of this Warrant, at the office of the Company, which is a 829 West Stadium Lane, Sacramento, California 95834 as of the date hereof, together with the Warrant Price of the shares so purchased.

1. Reservation of Shares. The Company shall reserve and keep available out of its authorized but unissued Common Stock for issuance upon the exercise of this Warrant, free from

preemptive rights, such number of shares of Common Stock for which this Warrant shall from time to time be exercisable. All shares which may be issued upon the exercise of this Warrant will, upon issuance, be fully paid and nonassessable and be free from all taxes, liens and charges in respect of the issuance thereof. The Company further covenants and agrees that if any shares of Common Stock to be reserved for the purpose of the issuance of shares upon the exercise of this Warrant require registration with or approval of any governmental authority under any Federal or State law before such shares may be validly issued or delivered upon exercise of this Warrant, then the Company will in good faith and as expeditiously as possible endeavor to secure such registration or approval, as the case may be, and the right to exercise this Warrant shall be extended until 10 Business Days (as defined below) after the completion of any such registration or approval. If and so long as any Common Stock issuable upon the exercise of this Warrant is listed on any national securities exchange, the Company will, if permitted by the rules of such exchange, list and keep listed on such exchange, upon official notice of issuance, all shares of Common Stock issuable upon exercise of this Warrant. "Business Day" shall mean any day (other than a day which is a Saturday, Sunday or legal holiday in the State of New York or California) on which banks are open for business in New York, New York, and San Francisco, California, and, if the Common Stock is then so listed, on which such national securities exchange is open for trading.

2. Term. The purchase rights represented by this Warrant are exercisable at the option of the Holder in whole at any time, or in part from time to time (but not as to a fractional share of Common Stock), on or before December 31, 2005. In case of the purchase upon exercise of this Warrant of a number of shares of Common stock less than the total number of shares of Common Stock then issuable upon exercise of this Warrant, the Company shall cancel this Warrant upon surrender hereof and shall execute and deliver a new Warrant of like tenor and date for the balance of the shares issuable upon the exercise hereof (except any remaining fractional share).

3. Adjustment of Number of Shares. Upon each adjustment of the Warrant Price, as provided in Section 4, the Holder shall thereafter be entitled to purchase, at the Warrant Price resulting form such adjustment, the number of shares (calculated to the nearest tenth of a share) obtained by multiplying the Warrant Price in effect immediately prior to such adjustment by the number of shares purchasable pursuant hereto immediately prior to such adjustment and dividing the product thereof by the Warrant Price resulting form such adjustment.

4. Adjustment of Warrant Price upon Stock Dividends, Stock Splits and Combinations. In case the Company shall at any time make a distribution on the Common Stock or subdivide its outstanding shares of Common Stock into a greater number of shares, the Warrant Price in effect immediately prior to such subdivision shall be proportionally reduced and, conversely, in case the outstanding shares of Common Stock of the Company shall be combined into a smaller number of share, the Warrant Price in effect immediately prior to such combination shall be proportionately increased.

5. Merger, Consolidation or Sale of Assets. If any consolidation or merger of the Company with another corporation, or any statutory exchange of securities with another person, or the sale of all or substantially all of its assets to another corporation, shall be effected, then, as a

condition of such consolidation, merger, exchange or sale, lawful and adequate provision shall be made whereby the Holder shall thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions specified in this Warrant and in lieu of the shares of the Common Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby, such shares of stock, securities or assets as may be issued or payable with respect to or in exchange for a number of outstanding shares of such Common Stock equal to the number of shares of such stock immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby had such consolidation, merger, exchange or sale not taken place, and in any such case appropriate provision shall be made with respect to the rights and interests of the Holder to the end that the provisions hereof (including without limitation provisions for adjustment for the Warrant Price and of the number of shares purchasable upon the exercise of this Warrant) shall thereafter be applicable, as nearly as may be, in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise hereof. The Company shall not effect any such consolidation, merger, exchange or sale, unless prior to or simultaneously with the consummation thereof the successor corporation (if other than the Company) resulting form such consolidation, merger or exchange or the corporation purchasing such assets shall assume by written instrument executed and delivered to the Holder at the address of the holder appearing in the books of the Company, the obligation to deliver to the Holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, the Holder may be entitled to purchase.

6. Notice of Adjustment of Warrant Price. Upon any adjustment of the Warrant Price, then and in each such case the Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the Holder at the address of the Holder as shown on the books of the Company, which notice shall state the Warrant Price resulting form such adjustment an the increase or decrease, if any, int he number of shares purchasable at the Warrant Price upon the exercise of this Warrant, setting forth in reasonable detail the method of calculation is based.

7. Computation of Adjustments. Anything herein to the contrary notwithstanding, upon each computation of an adjustment in the Warrant Price or the number of shares which may be subscribed for and purchased upon exercise of this Warrant, the Warrant Price shall be compute to the nearest one-tenth of a cent (i.e., fractions of less than one twentieth of a cent shall be disregarded and fractions of one twentieth of a cent, or more, shall be treated as being one-tenth of a one cent) and the number of shares which may be subscribed for and purchased upon exercise of this Warrant, shall be calculated to the nearest share (i.e., fractions of less than half of a share shall be disregarded and fractions of half of a share, or more, shall be treated as being one share).

8. Notice of Certain Events. In case at any time:

(a) the Company shall declare or pay any dividend or make any distribution to the holders of its Common Stock;

(b) the Company shall offer for subscription pro rata to the holders of its Common Stock any additional shares of stock of any class or other rights;

(c) there shall be any capital reorganization or reclassification of the capital stock of the Company or consolidation or merger of the Company with, or any statutory exchange of the Company's securities with the securities of, or sale of all or substantially all of its assets to, another corporation; or

(d) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company;

then, in any one or more of said cases, the Company shall give written notice, by first class mail, postage prepaid, addressed to the Holder at the address of the Holder as shown on the books of the Company, of the date on which (i) the books of the Company shall close or a record shall be taken for such dividend, distribution or subscription rights, or (ii) such reorganization, reclassification, consolidation, merger, exchange, sale, dissolution, liquidation or winding up shall take place, as the case may be. Such notice shall also specify the date as of which the holders of Common Stock of records shall participate in said dividend, distribution or subscription rights, or shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, exchange, sale, dissolution, liquidation or winding up, as the case may be. Such written notice shall be given not less than 20 days prior to the record date or the date on which the transfer books of the Company are closed in respect thereto in the case of an action specified in clause (i) and at least 20 days prior to the action in question in the case of an action specified in clause (ii).

9. Definition of Common Stock. As used herein, "Common Stock" shall mean the Common Stock, par value $0.01 per share, of the Company as authorized on the date hereof, and also any capital stock of any class of the Company hereafter authorized which shall not be limited to a fixed sum or percentage in respect of the rights of the holders thereof to participate in dividends or in the distribution of assets upon the voluntary or involuntary liquidation, dissolution or winding up of the Company; provided, however, that the shares purchasable pursuant to this Warrant shall be the shares designated as Common Stock, par value $0.01 per share, of the Company on the date hereof, or shares of any class or classes resulting from the reclassification or reclassifications of the Common Stock which are not limited to any such fixed sum or percentage and are not subject to redemption by the Company and in case at any time there shall be more than one such resulting class, the shares of each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications.

10. No Impairment. The Company will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company but will at all times in good faith assist in the carrying out of all the provisions of Sections 3 through 9 and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder.

11. No Voting Rights. This Warrant shall not entitle the Holder to any voting rights or other rights as a stockholder of the Company whatsoever, except the rights expressed herein or in the Loan and Warrant Purchase Agreement dated as of February 6, 1991 (the "Loan and Warrant Agreement"), between the Company and IBM, and no dividend or interest shall be payable or accrue in respect of this Warrant or the interest represented hereby or the shares purchasable hereunder until and unless, and except to the extent that, this Warrant shall be exercised.

12. Warrant Unregistered. Neither this Warrant nor any of the shares to be issued upon the exercise hereof have been registered under the Securities Act of 1933, and nothing herein contained shall be deemed to require the Company so to register this Warrant. This Warrant is issued subject to the conditions, and the Holder agrees with the Company,

(a) that this Warrant has been acquired for the purpose of investment and not with a view to or for sale in connection with any distribution thereof, subject to the disposition of the Holder's property being at all times within its control; and

(b) that the Company has the right to demand and receive from the Holder, prior to the purchase of any shares pursuant hereto, assurances satisfactory to it that such shares are being purchased for the purpose of investment and not with a view to or for sale in connection with any distribution thereof, subject to the disposition of the Holder's property being at all times within its control.

13. Exchangeability. This Warrant is exchangeable, upon the surrender hereof by the Holder at said office of the Company, for new Warrants of like tenor and date representing in the aggregate the right to purchase the number of shares of Common Stock which may be purchased hereunder, each of such new Warrants to represent the right to purchase such number of shares as shall be designated by the Holder at the time of such surrender.

14. Transferability. This Warrant shall be transferable in whole or in part to one or more transferees.

15. Payment of Purchase Price. The Warrant Price for the shares of Common Stock issuable upon the exercise hereof shall be paid be certified check.

16. Stock Certificates. The issue of stock certificates upon the exercise of this Warrant shall be made without charge to the Holder for any tax (other than taxes attributable to any difference between the fair market value and the exercise price of this Warrant on the date of the exercise of this Warrant) in respect of the issue thereof. The Holder shall for all purposes be deemed to have become the holder of record of the shares issued upon the exercise of this Warrant on the date on which the Warrant was surrendered and payment of the Warrant Price was made, irrespective of the date of delivery of the certificate for such shares, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are closed, the Holder shall be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the stock transfer books are open (provided that if such books shall remain closed for five

days, the close of business on such fifth day shall be the time the Holder shall be deemed to have become the holder of such shares.)

17. Lost, Stolen, Mutilated or Destroyed Warrant. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, mutilation or destruction of this Warrant and, in case of loss, theft or destruction, upon the agreement of the Holder to indemnify the Company or, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company shall issue a new Warrant of like denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed. Any such new Warrant shall constitute an original contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall be at any time enforceable by anyone.

18. Applicable Law. This Warrant shall be governed by and construed in accordance with the internal laws of the State of New York applicable to agreements made and to be performed entirely within such State, without regard to the conflicts of law principles of such State.

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its proper officers thereunto duly authorized and the Company's corporate seal to be hereunto affixed this 21st day of December, 1995.

INTEGRATED SURGICAL SYSTEMS, INC.,

by

Title:

EXHIBIT J

IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN COMPLIANCE WITH THAT ACT. THIS WARRANT IS SUBJECT TO THE PROVISIONS OF A LOAN AND WARRANT PURCHASE AGREEMENT DATED AS OF FEBRUARY 6, 1991, BETWEEN INTEGRATED SURGICAL SYSTEMS, INC., AND INTERNATIONAL BUSINESS MACHINES CORPORATION, COPIES OF WHICH ARE ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY.

AMENDED WARRANT

FOR THE PURCHASE OF COMMON STOCK
PAR VALUE $0.01 PER SHARE

OF

INTEGRATED SURGICAL SYSTEMS, INC.

VOID AFTER DECEMBER 31, 2000

THIS CERTIFIES THAT, for value received, INTERNATIONAL BUSINESS MACHINES CORPORATION ("IBM") or assigns (the "Holder") is entitled to purchase from INTEGRATED SURGICAL SYSTEMS, INC., a Delaware corporation (the "Company"), at the price of $0.05 per share (such price as from time to time adjusted as hereinafter provided, the "Warrant Price"), and in accordance with the terms and conditions hereinafter set forth, at any time on or before December 31, 2000, up to 100,000 shares (subject to adjustment as hereinafter provided) of Common Stock, par value $0.01 per share, of Company, and to receive a certificate or certificates for the shares of Common Stock so purchased, upon presentation and surrender of this Warrant, at the office of the Company, which is a 829 West Stadium Lane, Sacramento, California 95834 as of the date hereof, together with the Warrant Price of the shares so purchased.

This Warrant amends and restates in its entirety the Warrant for the Purchase of 500,000 shares of Common Stock dated February 6, 1991, which was issued by the Company to IBM.

1. Reservation of Shares. The Company shall reserve and keep available out of its authorized but unissued Common Stock for issuance upon the exercise of this Warrant, free from preemptive rights, such number of shares of Common Stock for which this Warrant shall from time to time be exercisable. All shares which may be issued upon the exercise of this Warrant will, upon issuance, be fully paid and nonassessable and be free from all taxes, liens and charges in respect of the issuance thereof. The Company further covenants and agrees that if any shares of Common Stock to be reserved for the purpose of the issuance of shares upon the exercise of this Warrant require registration with or approval of any governmental authority under any Federal or State law before such shares may be validly issued or delivered upon exercise of this Warrant, then the Company will in good faith and as expeditiously as possible endeavor to secure such registration or approval, as the case may be, and the right to exercise this Warrant shall be extended until 10 Business Days (as defined below) after the completion of any such registration or approval. If and so long as any Common Stock issuable upon the exercise of this Warrant is listed on any national securities exchange, the Company will, if permitted by the rules of such exchange, list and keep listed on such exchange, upon official notice of issuance, all shares of Common Stock issuable upon exercise of this Warrant. "Business Day" shall mean any day (other than a day which is a Saturday, Sunday or legal holiday in the State of New York or California) on which banks are open for business in New York, New York, and San Francisco, California, and, if the Common Stock is then so listed, on which such national securities exchange is open for trading.

2. Term. The purchase rights represented by this Warrant are exercisable at the option of the Holder in whole at any time, or in part from time to time (but not as to a fractional share of Common Stock), on or before December 31, 2000. In case of the purchase upon exercise of this Warrant of a number of shares of Common stock less than the total number of shares of Common Stock then issuable upon exercise of this Warrant, the Company shall cancel this Warrant upon surrender hereof and shall execute and deliver a new Warrant of like tenor and date for the balance of the shares issuable upon the exercise hereof (except any remaining fractional share).

3. Adjustment of Number of Shares. Upon each adjustment of the Warrant Price, as provided in Section 4, the Holder shall thereafter be entitled to purchase, at the Warrant Price resulting form such adjustment, the number of shares (calculated to the nearest tenth of a share) obtained by multiplying the Warrant Price in effect immediately prior to such adjustment by the number of shares purchasable pursuant hereto immediately prior to such adjustment and dividing the product thereof by the Warrant Price resulting form such adjustment.

4. Adjustment of Warrant Price upon Stock Dividends, Stock Splits and Combinations. In case the Company shall at any time make a distribution on the Common Stock or subdivide its outstanding shares of Common Stock into a greater number of shares, the Warrant Price in effect immediately prior to such subdivision shall be proportionally reduced and, conversely, in case the outstanding shares of Common Stock of the Company shall be combined into a smaller number of share, the Warrant Price in effect immediately prior to such combination shall be proportionately increased.

5. Merger, Consolidation or Sale of Assets. If any consolidation or merger of the Company with another corporation, or any statutory exchange of securities with another person, or the sale of all or substantially all of its assets to another corporation, shall be effected, then, as a condition of such consolidation, merger, exchange or sale, lawful and adequate provision shall be made whereby the Holder shall thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions specified in this Warrant and in lieu of the shares of the Common Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby, such shares of stock, securities or assets as may be issued or payable with respect to or in exchange for a number of outstanding shares of such Common Stock equal to the number of shares of such stock immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby had such consolidation, merger, exchange or sale not taken place, and in any such case appropriate provision shall be made with respect to the rights and interests of the Holder to the end that the provisions hereof (including without limitation provisions for adjustment for the Warrant Price and of the number of shares purchasable upon the exercise of this Warrant) shall thereafter be applicable, as nearly as may be, in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise hereof. The Company shall not effect any such consolidation, merger, exchange or sale, unless prior to or simultaneously with the consummation thereof the successor corporation (if other than the Company) resulting form such consolidation, merger or exchange or the corporation purchasing such assets shall assume by written instrument executed and delivered to the Holder at the address of the holder appearing in the books of the Company, the obligation to deliver to the Holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, the Holder may be entitled to purchase.

6. Notice of Adjustment of Warrant Price. Upon any adjustment of the Warrant Price, then and in each such case the Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the Holder at the address of the Holder as shown on the books of the Company, which notice shall state the Warrant Price resulting form such adjustment an the increase or decrease, if any, int he number of shares purchasable at the Warrant Price upon the exercise of this Warrant, setting forth in reasonable detail the method of calculation is based.

7. Computation of Adjustments. Anything herein to the contrary notwithstanding, upon each computation of an adjustment in the Warrant Price or the number of shares which may be subscribed for and purchased upon exercise of this Warrant, the Warrant Price shall be compute to the nearest one-tenth of a cent (i.e., fractions of less than one twentieth of a cent shall be disregarded and fractions of one twentieth of a cent, or more, shall be treated as being one-tenth of a one cent) and the number of shares which may be subscribed for and purchased upon exercise of this Warrant, shall be calculated to the nearest share (i.e., fractions of less than half of a share shall be disregarded and fractions of half of a share, or more, shall be treated as being one share).

8. Notice of Certain Events. In case at any time:

(a) the Company shall declare or pay any dividend or make any distribution to the holders of its Common Stock;

(b) the Company shall offer for subscription pro rata to the holders of its Common Stock any additional shares of stock of any class or other rights;

(c) there shall be any capital reorganization or reclassification of the capital stock of the Company or consolidation or merger of the Company with, or any statutory exchange of the Company's securities with the securities of, or sale of all or substantially all of its assets to, another corporation; or

(d) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company;

then, in any one or more of said cases, the Company shall give written notice, by first class mail, postage prepaid, addressed to the Holder at the address of the Holder as shown on the books of the Company, of the date on which (i) the books of the Company shall close or a record shall be taken for such dividend, distribution or subscription rights, or (ii) such reorganization, reclassification, consolidation, merger, exchange, sale, dissolution, liquidation or winding up shall take place, as the case may be. Such notice shall also specify the date as of which the holders of Common Stock of records shall participate in said dividend, distribution or subscription rights, or shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, exchange, sale, dissolution, liquidation or winding up, as the case may be. Such written notice shall be given not less than 20 days prior to the record date or the date on which the transfer books of the Company are closed in respect thereto in the case of an action specified in clause (i) and at least 20 days prior to the action in question in the case of an action specified in clause (ii).

9. Definition of Common Stock. As used herein, "Common Stock" shall mean the Common Stock, par value $0.01 per share, of the Company as authorized on the date hereof, and also any capital stock of any class of the Company hereafter authorized which shall not be limited to a fixed sum or percentage in respect of the rights of the holders thereof to participate in dividends or in the distribution of assets upon the voluntary or involuntary liquidation, dissolution or winding up of the Company; provided, however, that the shares purchasable pursuant to this Warrant shall be the shares designated as Common Stock, par value $0.01 per share, of the Company on the date hereof, or shares of any class or classes resulting from the reclassification or reclassifications of the Common Stock which are not limited to any such fixed sum or percentage and are not subject to redemption by the Company and in case at any time there shall be more than one such resulting class, the shares of each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications.

10. No Impairment. The Company will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company but will at all times in good faith assist in the carrying out of all the provisions of Sections 3 through 9 and in the

taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder.

11. No Voting Rights. This Warrant shall not entitle the Holder to any voting rights or other rights as a stockholder of the Company whatsoever, except the rights expressed herein or in the Loan and Warrant Purchase Agreement dated as of February 6, 1991 (the "Loan and Warrant Agreement"), between the Company and IBM, and no dividend or interest shall be payable or accrue in respect of this Warrant or the interest represented hereby or the shares purchasable hereunder until and unless, and except to the extent that, this Warrant shall be exercised.

12. Warrant Unregistered. Neither this Warrant nor any of the shares to be issued upon the exercise hereof have been registered under the Securities Act of 1933, and nothing herein contained shall be deemed to require the Company so to register this Warrant. This Warrant is issued subject to the conditions, and the Holder agrees with the Company,

(a) that this Warrant has been acquired for the purpose of investment and not with a view to or for sale in connection with any distribution thereof, subject to the disposition of the Holder's property being at all times within its control; and

(b) that the Company has the right to demand and receive from the Holder, prior to the purchase of any shares pursuant hereto, assurances satisfactory to it that such shares are being purchased for the purpose of investment and not with a view to or for sale in connection with any distribution thereof, subject to the disposition of the Holder's property being at all times within its control.

13. Exchangeability. This Warrant is exchangeable, upon the surrender hereof by the Holder at said office of the Company, for new Warrants of like tenor and date representing in the aggregate the right to purchase the number of shares of Common Stock which may be purchased hereunder, each of such new Warrants to represent the right to purchase such number of shares as shall be designated by the Holder at the time of such surrender.

14. Transferability. This Warrant shall be transferable in whole or in part to one or more transferees.

15. Payment of Purchase Price. The Warrant Price for the shares of Common Stock issuable upon the exercise hereof shall be paid be certified check.

16. Stock Certificates. The issue of stock certificates upon the exercise of this Warrant shall be made without charge to the Holder for any tax (other than taxes attributable to any difference between the fair market value and the exercise price of this Warrant on the date of the exercise of this Warrant) in respect of the issue thereof. The Holder shall for all purposes be deemed to have become the holder of record of the shares issued upon the exercise of this Warrant on the date on which the Warrant was surrendered and payment of the Warrant Price was made, irrespective of the date of delivery of the certificate for such shares, except that, if the date of such surrender and

payment is a date when the stock transfer books of the Company are closed, the Holder shall be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the stock transfer books are open (provided that if such books shall remain closed for five days, the close of business on such fifth day shall be the time the Holder shall be deemed to have become the holder of such shares.)

17. Lost, Stolen, Mutilated or Destroyed Warrant. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, mutilation or destruction of this Warrant and, in case of loss, theft or destruction, upon the agreement of the Holder to indemnify the Company or, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company shall issue a new Warrant of like denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed. Any such new Warrant shall constitute an original contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall be at any time enforceable by anyone.

18. Applicable Law. This Warrant shall be governed by and construed in accordance with the internal laws of the State of New York applicable to agreements made and to be performed entirely within such State, without regard to the conflicts of law principles of such State.

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its proper officers thereunto duly authorized and the Company's corporate seal to be hereunto affixed this 21st day of December, 1995.

INTEGRATED SURGICAL SYSTEMS, INC.,

by

Title:

EXHIBIT K

THE SECURITIES REPRESENTED BY THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE TRANSFER IS IN ACCORDANCE WITH RULE 144 OR SIMILAR RULE OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.

WARRANT AGREEMENT

To Purchase Shares of Common Stock of

INTEGRATED SURGICAL SYSTEMS, INC.

Dated as of December 21, 1995 (the "Effective Date")

WHEREAS, Integrated Surgical Systems, Inc., a Delaware corporation (the "Company") proposes to effect a series of transactions resulting in the recapitalization of the Company (the "Recapitalization"); and

WHEREAS, in connection with the Recapitalization, the Company wishes to grant to Sutter Health, a California nonprofit public benefit corporation (the "Warrantholder"), the right to purchase shares of the Company's Common Stock (the "Warrants");

NOW, THEREFORE, in consideration of the Warrantholder giving its consent to the Recapitalization and in consideration of the mutual covenants and agreements contained herein, the Company and the Warrantholder agree as follows:

1. Grant of the Right to Purchase Common Stock. The Company hereby grants to the Warrantholder, and the Warrantholder is entitled, upon the terms and subject to the conditions hereinafter set forth, prior to December 31, 2005, to subscribe for and purchase from the Company, 578,353 shares of the Company's Common Stock (the "Shares"). The Company represents and warrants to the Warrantholder that the Shares constitute 9.70% of the Company's fully-diluted shares of Common Stock (or Common Stock equivalents) after giving effect to the Recapitalization (as defined in the Integrated Surgical Systems Series D Preferred Stock and Warrant Purchase Agreement dated December 21, 1995). The purchase price (the "Exercise Price") of one share of Common Stock under the Warrants shall be $0.50. Simultaneously with the date that is the later of the Second Closing and the closing of the Rights Offering (as those terms are defined in the Series D Preferred Stock and Warrant Purchase Agreement of even date herewith by and between the Company and certain Investors), the Company and the Warrantholder shall enter into a second Warrant Agreement containing substantially the same terms and conditions as this Warrant

Agreement, pursuant to which the Company shall grant to the Warrantholder the right and the Warrantholder shall be entitled to subscribe for and purchase from the Company, that number of shares of the Company's Common Stock (the "Additional Warrants") which, when added to the number of Shares covered by this Warrant Agreement, shall equal 9.70% of the number of fully-diluted shares of the Company's Common Stock (or Common Stock equivalents), calculated as of the later of the Second Closing and the closing of the Rights Offering. The purchase price per share of the shares covered by the Additional Warrants shall be $0.50. The Warrants and the Additional Warrants shall be referred to collectively herein as the "Warrants"; the Shares and the shares of Common Stock covered by the Additional Warrants shall be referred to collectively herein as the "Shares."

2. Title to Warrant. Prior to the expiration hereof and subject to compliance with applicable laws, this Warrant Agreement and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company, by the Warrantholder in person or by duly authorized attorney, upon surrender of this Warrant Agreement together with the Assignment Form annexed hereto properly endorsed.

3. Exercise of Warrants. The purchase rights represented by the Warrants are exercisable by the Warrantholder, in whole or in part, upon the occurrence of one of the events described in this Section 2 at any time before the close of business on December 31, 2005, by the surrender of this Warrant Agreement and the Notice of Exercise form annexed hereto duly executed at the office of the Company in Sacramento, California (or such other office or agency of the Company as it may designate by notice in writing to the registered holder hereof at the address of such holder appearing on the books of the Company), and upon payment of the purchase price of the shares thereby purchased (by cash or by check or bank draft payable to the order of the Company); whereupon the Warrantholder shall be entitled to receive a certificate for the number of shares of Common Stock so purchased.

The Warrants shall become exercisable simultaneously with and for a period of thirty days after the notice of the proposed occurrence of one of the following events:

A. The closing of a registered public offering of the Company's Common Stock in which, based on the public offering price, net of underwriting discounts and commissions, the Company would have a pre-money market valuation of at least $10 million ("IPO").

B. The closing of a sale of shares or warrants by a stockholder or stockholders and/or warrantholder or warrantholders (other than Sutter Health, a California nonprofit public benefit corporation or Sutter Health Venture Partners I, L.P.) of the Company in a single transaction in which both (i) the value of the aggregate consideration received by such selling stockholder or stockholders and/or warrantholder or warrantholders is at least equal to $1 million and (ii) the sale price per share (whether an actual share or a share subject to a

warrant) multiplied by the Company's outstanding equity securities results in a market valuation of the Company of at least $10 million ("Share Sale").

C. The closing of a sale by the Company of all or some of the assets of the Company in which the value of the consideration received by the Company is at least equal to $10 million ("Asset Sale").

D. The submission of an appraisal of the Company, undertaken only under the circumstances described in the paragraph below, at a value of at least $10 million ("Appraisal").

The Warrantholder shall be entitled, upon receipt of notice of a Share Sale or Asset Sale that would result in a market valuation of less than $10 million but greater than $5 million, to have an appraisal of the Company conducted, at the Warrantholder's expense, by an appraiser reasonably acceptable to the Company. If such appraisal results in a valuation of the Company of at least $10 million, the Warrantholder shall be entitled to exercise the Warrant pursuant to the terms of this Section 2. Other than as set forth in this Section 3.D., the Warrantholder shall not have any right to exercise the Warrants based on an appraisal.

This Warrant shall expire, if not previously exercised, upon an IPO, Share Sale, Asset Sale or 30 days after an Appraisal. If no IPO, Share Sale, Asset Sale or Appraisal has occurred before January 1, 2005, then the Warrant shall become exercisable on January 1, 2005 and shall remain exercisable until the earlier to occur of (a) an IPO, Share Sale, Asset Sale or Appraisal and (b) December 31, 2005.

The Company shall notify the Warrantholder in writing at least thirty days in advance of the scheduled closing of an IPO, Share Sale or Asset Sale which would result in a market valuation of at least $5 million, and if the Company fails to deliver such written notice, then notwithstanding anything to the contrary contained in this Warrant Agreement, the Warrants shall not expire until the Company complies with such notice provisions and the Warrantholder has a reasonable opportunity thereafter to exercise the Warrants. If such closing does not take place, the Company shall promptly notify the Warrantholder that such proposed IPO, Share Sale or Asset Sale has been terminated, and the Warrantholder shall rescind any exercise of its Warrants promptly after such notice of termination of the proposed IPO, Share Sale or Asset Sale if the exercise of the Warrants occurred after the Company notified the Warrantholder that the IPO, Share Sale or Asset Sale was proposed or if the exercise was otherwise precipitated by such proposed IPO, Share Sale or Asset Sale. In the event of such rescission, the Warrants shall continue to be exercisable on the same terms and conditions contained herein and the Company shall return the purchase price to the Warrantholder.

4. Issuance of Shares; No Fractional Shares or Scrip. The Company covenants that all Shares issued upon the exercise of the Warrants shall, upon exercise of the Warrants, be fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue). The Company further covenants and agrees that if any shares of Common Stock to be reserved for the purpose of the issuance of Shares upon the exercise of the Warrants require registration with or approval of any governmental authority under any Federal or State law before such Shares may be validly issued or delivered upon exercise of the Warrants, then the Company will in good faith and as expeditiously as possible endeavor to secure such registration or approval, as the case may be, and the right to exercise the Warrants shall be extended until 10 days after the completion of any such registration or approval. If and so long as any Common Stock issuable upon the exercise of the Warrants is listed on any national securities exchange (or automated dealer system), the Company will, if permitted by the rules of such exchange (or system), list and keep listed on such exchange, upon official notice of issuance, all shares of Common Stock issuable upon exercise of the Warrants. The Company agrees that, if at the time of the surrender of this Warrant Agreement and exercise of the Warrants, the Warrantholder shall be entitled to exercise such Warrants, the Shares so issued shall be deemed to be issued to the Warrantholder as the record owner of such Shares as of the close of business on the date on which the Warrants shall have been exercised. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of the Warrants. With respect to any fraction of a share called for upon the exercise of the Warrants, an amount equal to such fraction multiplied by the then current Exercise Price shall be paid in cash to the Warrantholder.

5. Charges, Taxes and Expenses. Issuance of certificates for Shares upon the exercise of the Warrants shall be made without charge to the Warrantholder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Warrantholder or in such name or names as may be directed by the Warrantholder; provided, however, that in the event certificates for Shares are to be issued in a name other than the name of the Warrantholder, this Warrant Agreement when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Warrantholder; and provided further, that upon any transfer involved in the issuance or delivery of any certificates for Shares, the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

6. No Rights as Stockholders. This Warrant Agreement does not entitle the Warrantholder to any additional voting rights or other rights as a stockholder of the Company prior to the exercise of the Warrants.

7. Exchange and Registry of Warrant. This Warrant Agreement is exchangeable, upon the surrender hereof by the registered holder at the above-mentioned office or agency of the Company, for a new Warrant Agreement of like tenor and dated as of such exchange.

The Company shall maintain at the above-mentioned office or agency a registry showing the name and address of the registered holder of this Warrant Agreement. This Warrant Agreement may be surrendered for exchange, transfer or exercise, in accordance with its terms, at such office or agency of the Company, and the Company shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry.

8. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant Agreement, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Warrant Agreement, if mutilated, the Company will make and deliver a new Warrant Agreement of like tenor and dated as of such cancellation, in lieu of this Warrant Agreement.

9. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday.

10. Adjustment Rights.

(a) Reclassification, etc. If the Company at any time shall, by subdivision, combination or reclassification of securities or otherwise, change any of the securities to which purchase rights under this Warrant Agreement exist into the same or a different number of securities of any class or classes, this Warrant Agreement shall thereafter be to acquire such number and kind of securities as would have been issuable as the result of such change with respect to the securities which were subject to the purchase rights under this Warrant Agreement immediately prior to such subdivision, combination, reclassification or other change. If shares of the Company's Common Stock are subdivided or combined into a greater or smaller number of shares of Common Stock, the Exercise Price under this Warrant Agreement shall be proportionately reduced in case of subdivision of shares or proportionately increased in the case of combination of shares, in both cases by the ratio which the total number of shares of Common Stock to be outstanding immediately after such event bears to the total number of shares of Common Stock outstanding immediately prior to such event.

(b) Cash Distributions. No adjustment on account of cash dividends will be made to the Exercise Price under this Warrant Agreement.

(c) Authorized Shares. The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Common Stock upon the exercise of any purchase rights under this Warrant Agreement. The Company further covenants that its issuance of this Warrant Agreement shall constitute full authority to its officers who are charged with the duty of

executing stock certificates to execute and issue the necessary certificates for shares of the Company's Common Stock upon the exercise of the purchase rights under this Warrant Agreement.

(d) Exercise Price Adjustments. The Exercise Price of the Warrants is subject to adjustment on the same terms and conditions as those set forth in Article 4, Section 5(d) of the Company's Restated Certificate of Incorporation as accepted by the Delaware Secretary of State on December 20, 1995, a copy of which is attached hereto as Exhibit A (the "Current Certificate of Incorporation") with respect to the conversion of the Company's Preferred Stock into Common Stock. For purposes of applying the provisions of such Article 4,
Section 5(d) to the adjustment of the Exercise Price of the Warrants, any reference in such Article 4, Section 5(d) to the conversion or the Conversion Price of any series of the Company's Preferred Stock shall refer to the exercise and the Exercise Price, respectively, of the Warrants, and all Conversion Price adjustment provisions of such Article 4, Section 5(d) shall be applied to the initial Exercise Price of the Warrants of $0.50. If the Company's Current Certificate of Incorporation is later amended to reduce or eliminate the right of holders of Preferred Stock to adjustment upon the events set forth in Article 4, Section 5 of the Current Certificate of Incorporation, the exercise price of the Warrants shall remain subject to adjustment as provided in the Current Certificate of Incorporation. If the Company's Current Certificate of Incorporation is later amended to increase the right of the holders of Preferred Stock to adjustment upon any event, the exercise price of the Warrants shall be entitled to adjustment on such better terms. At no time shall the exercise price of the Warrants be subject to adjustment on terms less favorable than those set forth in the Current Certificate of Incorporation.

11. Restrictions on Transferability of Securities.

(a) Restrictions on Transferability. This Warrant Agreement and the Shares issuable upon exercise of the Warrants (collectively the "Securities") shall not be sold, assigned, transferred or pledged except upon the conditions specified in this Section 11, which conditions are intended to ensure compliance with the provisions of the Securities Act of 1933, as amended (the "Securities Act"). Each holder of any of the Securities will cause any proposed purchaser, assignee, transferee, or pledgee of the Securities held by such holder to agree to take and hold such Securities subject to the provisions and upon the conditions specified in this Section 11.

(b) Restrictive Legend. Each certificate representing the Securities and any other securities issued in respect of the Securities pursuant to Section 10 shall (unless otherwise permitted by the provisions of Section 11(c) below) be stamped or otherwise imprinted with a legend in the following form (in addition to any legend required under applicable state securities laws):

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE TRANSFER IS IN ACCORDANCE WITH RULE 144 OR SIMILAR RULE OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT

STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.

Each holder of Securities and each subsequent transferee (hereinafter collectively referred to as a "Holder") consents to the Company making a notation on its records and giving instructions to any transfer agent of the Securities in order to implement the restrictions on transfer established in this Section 11.

(c) Notice of Proposed Transfers. Each Holder of a certificate representing the Securities, by acceptance thereof, agrees to comply in all respects with the provisions of this Section 11(c). Prior to any proposed sale, assignment, transfer or pledge of any Securities (other than (i) a transfer not involving a change in beneficial ownership, (ii) in transactions involving the distribution without consideration of Securities by a Holder to any of its partners, or retired partners, or to the estate of any of its partners or retired partners, (iii) a transfer to an affiliated fund, partner ship or company, which is not a competitor of the Company, subject to compliance with applicable securities laws or (iv) transfers in compliance with Rule 144, so long as the Company is furnished with satisfactory evidence of compliance with such Rule), unless there is in effect a registration statement under the Securities Act covering the proposed transfer, the Holder thereof shall give written notice to the Company of such Holder's intention to effect such transfer, sale, assignment or pledge. Each such notice shall describe the manner and circumstances of the proposed transfer, sale, assignment or pledge in sufficient detail, and shall be accompanied, at such Holder's expense, by either
(i) an opinion of counsel (who shall, and whose opinion shall be, addressed to the Company and reasonably satisfactory to the Company) to the effect that the proposed transfer of the Securities may be effected without registration under the Securities Act or (ii) a "no action" letter from the Securities and Exchange Commission (the "Commission") to the effect that the transfer of such securities without registration will not result in a recommendation by the staff of the Commission that action be taken with respect thereto, whereupon the Holder of such Securities shall be entitled to transfer such Securities in accordance with the terms of the notice delivered by such Holder to the Company. Each certificate evidencing the Securities transferred as above provided shall bear, except if such transfer is made pursuant to Rule 144, the appropriate restrictive legend set forth in Section 11(b) above, except that such certificate shall not bear such restrictive legend if in the opinion of counsel for such Holder and in the opinion of counsel for the Company such legend is not required in order to establish compliance with any provision of the Securities Act.

(d) Removal of Restrictions on Transfer of Securities. Any legend referred to in Section 11(b) hereof stamped on a certificate evidencing the Securities and the stock transfer instructions and record notations with respect to the Securities shall be removed and the Company shall issue a certificate without such legend to the Holder of the Securities if the Securities are registered under the Securities Act, or if such Holder provides the Company with an opinion of counsel (which may be counsel for the Company) reasonably satisfactory to the Company to the effect that a public sale or transfer of such security may be made without registration under the Securities Act or such Holder provides the Company with reasonable assurances, which may, at the option of the Company, include an opinion of counsel (which may be counsel for the Company)

reasonably satisfactory to the Company, that such security can be sold pursuant to paragraph (k) of Rule 144 (or any successor provision) under the Securities Act.

12. Investment Representations of the Warrantholder. With respect to the acquisition of any of the Securities, the Warrantholder hereby represents and warrants to the Company as follows:

(a) Experience. The Warrantholder is an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, and bear the economic risk of its investment and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Securities. If other than an individual, the Warrantholder also represents it has not been organized for the purpose of acquiring the Securities.

(b) Investment. The Warrantholder is acquiring the Securities for investment for its own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Warrantholder has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, each Warrantholder further represents that the Warrantholder does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person or to any third person, with respect to any of the Securities. The Warrantholder understands that the Securities have not been, and will not be, registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Warrantholder's representations as expressed herein.

(c) Rule 144. The Warrantholder understands that the Securities are characterized as "restricted securities" under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act of 1933, as amended (the "Act") only in certain limited circumstances. In this connection, the Warrantholder represents that it is familiar with Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Act.

(d) No Public Market. The Warrantholder understands that no public market now exists for any of the securities issued by the Company and that the Company has made no assurances that a public market will ever exist for the Securities.

(e) Access to Data. The Warrantholder has had an opportunity to discuss the Company's business, management and financial affairs with the Company's management and has also had an opportunity to ask questions of the Company's officers, which questions were answered to its satisfaction.

13. Notice of Record Date. If at any time prior to the exercise of the Warrants in full the Company takes a record of the holders of Common Stock for the purpose of determining the holders

thereof who are entitled to receive any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, the Company will give to the Warrantholder at least thirty (15) days prior to the date specified therein, written notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right.

14. Opinion of Counsel. Counsel to the Company shall deliver to the Warrantholder as of the date hereof an opinion, satisfactory to counsel to the Warrantholder, to the effect that (i) the Warrant Agreement and the Warrants have been authorized by all necessary corporate action, (ii) the Warrant Agreement and the Warrants have been duly executed and delivered and constitute legally binding agreements of the Company, enforceable in accordance with their terms, subject to customary exceptions, (iii) the Company has reserved out of its authorized and unissued shares of Common Stock a number of shares sufficient to provide for the exercise of the rights of purchase represented by the Warrants, and (iv) the shares when issued upon exercise of the Warrants in accordance with the terms of the Warrant Agreement, and against payment of the consideration set forth herein, will be validly issued, fully paid and non-assessable.

15. Miscellaneous.

(a) Issue Date. The provisions of this Warrant Agreement shall be construed and shall be given effect in all respect as if it had been issued and delivered by the Company on the date hereof. This Warrant Agreement shall be binding upon any successors or assigns of the Company. This Warrant Agreement shall constitute a contract under the laws of the State of California and for all purposes shall be construed in accordance with and governed by the laws of said state.

(b) Waivers and Amendments. With the written consent of the Company and the Warrantholder, the obligations of the Company and the right of the Warrantholder may be waived (either generally or in a particular instance, either retroactively or prospectively and either for a specified period of time of indefinitely), and with the same consent the Company and the Warrantholder may enter into a supplementary agreement for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Warrant Agreement.

(c) Notices. All notices and other communications required or permitted to be given under this Warrant Agreement shall be in writing and shall be deemed effectively given upon personal delivery, delivery by nationally recognized courier or upon deposit with the United States Post Office (by first class mail, postage prepaid) addressed as follows: (i) if to the Company, Integrated Surgical Systems, Inc., 829 West Stadium Lane, Sacramento, California 95834, and (ii) if to the Warrantholder, the address as provided in the books of the Company.

(d) Survival and Assumption. The provisions of Section 11 hereof shall survive the exercise of the Warrants and shall remain in effect until such time as the Warrantholder no longer holds Securities. Subject to the provisions of Section 3 hereof, in the event of a merger of the

Company with or into another corporation, or the sale of substantially all of the assets of the Company, or the sale or exchange of substantially all of the shares of the Company for shares of another corporation, the Warrants shall survive such merger or sale or exchange and shall be expressly assumed by the successor corporation or, at the option of the Warrantholder, by the parent or subsidiary of such successor corporation; provided, however, that if the Warrants are not to be so assumed by such proposed successor or parent or subsidiary, then the Company shall not effect such merger or sale or exchange.

IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement to be executed by their officers thereunto duly authorized as of the Effective Date.

INTEGRATED SURGICAL SYSTEMS, INC.
A DELAWARE CORPORATION

By: __________________________

Title: __________________________

SUTTER HEALTH, A CALIFORNIA
NONPROFIT PUBLIC BENEFIT CORPORATION

By: _____________________________

Title: _____________________________

NOTICE OF EXERCISE

To: INTEGRATED SURGICAL SYSTEMS, INC.

(1) The undersigned hereby elects to purchase _______________ shares of Common Stock of Integrated Surgical Systems, Inc. pursuant to the terms of the attached Warrant Agreement, and tenders herewith payment of the purchase price in full, together with all applicable transfer taxes, if any.

(2) Please issue a certificate of certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below:

(3) The undersigned represents that the aforesaid shares of Common Stock are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares.

ASSIGNMENT FORM

(To assign the foregoing Warrant Agreement, execute this form and supply required information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant Agreement and all rights evidenced thereby are hereby assigned to

whose address is

Dated: ______________, ____.

Holder's Signature: ____________________

Holder's Address: ______________________

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant Agreement, without alteration or enlargement or any change whatever. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant Agreement.

THE SECURITIES REPRESENTED BY THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE TRANSFER IS IN ACCORDANCE WITH RULE 144 OR SIMILAR RULE OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.

WARRANT AGREEMENT

To Purchase Shares of Common Stock of

INTEGRATED SURGICAL SYSTEMS, INC.

Dated as of March 7, 1996 (the "Effective Date")

WHEREAS, Integrated Surgical Systems, Inc., a Delaware corporation (the "Company") and Sutter Health, a California nonprofit public benefit corporation (the "Warrantholder"), have entered into that certain Warrant Agreement dated as of December 21, 1995 (the "December 21 Warrant Agreement"), pursuant to which the Company has agreed to grant to the Warrantholder, upon the date that is the later of the Second Closing and the closing of the Rights Offering (as those terms are defined in the Series D Preferred Stock and Warrant Purchase Agreement of even date herewith by and between the Company and certain Investors), warrants to purchase shares of the Company's Common Stock (the "Additional Warrants"), in addition to those warrants (the "Warrants") to purchase shares of the Company's Common Stock (the "Shares") which were granted to the Warrantholder on December 21, 1995, pursuant to the December 21 Warrant Agreement; and

WHEREAS, the date of the Second Closing was February 29, 1996, and the date of the closing of the Rights Offering is the date hereof;

NOW, THEREFORE, in consideration of the Warrantholder giving its consent to the Recapitalization (as that term is defined in the December 21 Warrant Agreement) and in consideration of the mutual covenants and agreements contained herein, the Company and the Warrantholder agree as follows:

1. Grant of the Right to Purchase Common Stock. The Company hereby grants to the Warrantholder, and the Warrantholder is entitled, upon the terms and subject to the conditions hereinafter set forth, prior to December 31, 2005, to subscribe for and purchase from the Company, 180,044 shares of the Company's Common Stock (the "Additional Shares"). The Company represents and warrants to the Warrantholder that the Shares and the Additional Shares together constitute 9.70% of the number of fully-diluted shares of the Company's Common Stock (or Common

Stock equivalents), calculated as of the later of the Second Closing and the closing of the Rights Offering. The purchase price (the "Exercise Price") of one share of Common Stock under the Additional Warrants shall be $0.50. The Warrants and the Additional Warrants shall be referred to collectively herein as the "Warrants"; the Shares and the Additional Shares shall be referred to collectively herein as the "Shares."

2. Title to Warrant. Prior to the expiration hereof and subject to compliance with applicable laws, this Warrant Agreement and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company, by the Warrantholder in person or by duly authorized attorney, upon surrender of this Warrant Agreement together with the Assignment Form annexed hereto properly endorsed.

3. Exercise of Warrants. The purchase rights represented by the Warrants are exercisable by the Warrantholder, in whole or in part, upon the occurrence of one of the events described in this Section 2 at any time before the close of business on December 31, 2005, by the surrender of this Warrant Agreement and the Notice of Exercise form annexed hereto duly executed at the office of the Company in Sacramento, California (or such other office or agency of the Company as it may designate by notice in writing to the registered holder hereof at the address of such holder appearing on the books of the Company), and upon payment of the purchase price of the shares thereby purchased (by cash or by check or bank draft payable to the order of the Company); whereupon the Warrantholder shall be entitled to receive a certificate for the number of shares of Common Stock so purchased.

The Warrants shall become exercisable simultaneously with and for a period of thirty days after the notice of the proposed occurrence of one of the following events:

A. The closing of a registered public offering of the Company's Common Stock in which, based on the public offering price, net of underwriting discounts and commissions, the Company would have a pre-money market valuation of at least $10 million ("IPO").

B. The closing of a sale of shares or warrants by a stockholder or stockholders and/or warrantholder or warrantholders (other than Sutter Health, a California nonprofit public benefit corporation or Sutter Health Venture Partners I, L.P.) of the Company in a single transaction in which both (i) the value of the aggregate consideration received by such selling stockholder or stockholders and/or warrantholder or warrantholders is at least equal to $1 million and (ii) the sale price per share (whether an actual share or a share subject to a warrant) multiplied by the Company's outstanding equity securities results in a market valuation of the Company of at least $10 million ("Share Sale").

C. The closing of a sale by the Company of all or some of the assets of the Company in which the value of the consideration received by the Company is at least equal to $10 million ("Asset Sale").

D. The submission of an appraisal of the Company, undertaken only under the circumstances described in the paragraph below, at a value of at least $10 million ("Appraisal").

The Warrantholder shall be entitled, upon receipt of notice of a Share Sale or Asset Sale that would result in a market valuation of less than $10 million but greater than $5 million, to have an appraisal of the Company conducted, at the Warrantholder's expense, by an appraiser reasonably acceptable to the Company. If such appraisal results in a valuation of the Company of at least $10 million, the Warrantholder shall be entitled to exercise the Warrant pursuant to the terms of this Section 2. Other than as set forth in this Section 3.D., the Warrantholder shall not have any right to exercise the Warrants based on an appraisal.

This Warrant shall expire, if not previously exercised, upon an IPO, Share Sale, Asset Sale or 30 days after an Appraisal. If no IPO, Share Sale, Asset Sale or Appraisal has occurred before January 1, 2005, then the Warrant shall become exercisable on January 1, 2005 and shall remain exercisable until the earlier to occur of (a) an IPO, Share Sale, Asset Sale or Appraisal and (b) December 31, 2005.

The Company shall notify the Warrantholder in writing at least thirty days in advance of the scheduled closing of an IPO, Share Sale or Asset Sale which would result in a market valuation of at least $5 million, and if the Company fails to deliver such written notice, then notwithstanding anything to the contrary contained in this Warrant Agreement, the Warrants shall not expire until the Company complies with such notice provisions and the Warrantholder has a reasonable opportunity thereafter to exercise the Warrants. If such closing does not take place, the Company shall promptly notify the Warrantholder that such proposed IPO, Share Sale or Asset Sale has been terminated, and the Warrantholder shall rescind any exercise of its Warrants promptly after such notice of termination of the proposed IPO, Share Sale or Asset Sale if the exercise of the Warrants occurred after the Company notified the Warrantholder that the IPO, Share Sale or Asset Sale was proposed or if the exercise was otherwise precipitated by such proposed IPO, Share Sale or Asset Sale. In the event of such rescission, the Warrants shall continue to be exercisable on the same terms and conditions contained herein and the Company shall return the purchase price to the Warrantholder.

4. Issuance of Shares; No Fractional Shares or Scrip. The Company covenants that all Shares issued upon the exercise of the Warrants shall, upon exercise of the Warrants, be fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue). The Company further

covenants and agrees that if any shares of Common Stock to be reserved for the purpose of the issuance of Shares upon the exercise of the Warrants require registration with or approval of any governmental authority under any Federal or State law before such Shares may be validly issued or delivered upon exercise of the Warrants, then the Company will in good faith and as expeditiously as possible endeavor to secure such registration or approval, as the case may be, and the right to exercise the Warrants shall be extended until 10 days after the completion of any such registration or approval. If and so long as any Common Stock issuable upon the exercise of the Warrants is listed on any national securities exchange (or automated dealer system), the Company will, if permitted by the rules of such exchange (or system), list and keep listed on such exchange, upon official notice of issuance, all shares of Common Stock issuable upon exercise of the Warrants. The Company agrees that, if at the time of the surrender of this Warrant Agreement and exercise of the Warrants, the Warrantholder shall be entitled to exercise such Warrants, the Shares so issued shall be deemed to be issued to the Warrantholder as the record owner of such Shares as of the close of business on the date on which the Warrants shall have been exercised. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of the Warrants. With respect to any fraction of a share called for upon the exercise of the Warrants, an amount equal to such fraction multiplied by the then current Exercise Price shall be paid in cash to the Warrantholder.

5. Charges, Taxes and Expenses. Issuance of certificates for Shares upon the exercise of the Warrants shall be made without charge to the Warrantholder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Warrantholder or in such name or names as may be directed by the Warrantholder; provided, however, that in the event certificates for Shares are to be issued in a name other than the name of the Warrantholder, this Warrant Agreement when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Warrantholder; and provided further, that upon any transfer involved in the issuance or delivery of any certificates for Shares, the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

6. No Rights as Stockholders. This Warrant Agreement does not entitle the Warrantholder to any additional voting rights or other rights as a stockholder of the Company prior to the exercise of the Warrants.

7. Exchange and Registry of Warrant. This Warrant Agreement is exchangeable, upon the surrender hereof by the registered holder at the above-mentioned office or agency of the Company, for a new Warrant Agreement of like tenor and dated as of such exchange.

The Company shall maintain at the above-mentioned office or agency a registry showing the name and address of the registered holder of this Warrant Agreement. This Warrant Agreement may be surrendered for exchange, transfer or exercise, in accordance with its terms, at such office or agency of the Company, and the Company shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry.

8. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant Agreement, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Warrant Agreement, if mutilated, the Company will make and deliver a new Warrant Agreement of like tenor and dated as of such cancellation, in lieu of this Warrant Agreement.

9. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday.

10. Adjustment Rights.

(a) Reclassification, etc. If the Company at any time shall, by subdivision, combination or reclassification of securities or otherwise, change any of the securities to which purchase rights under this Warrant Agreement exist into the same or a different number of securities of any class or classes, this Warrant Agreement shall thereafter be to acquire such number and kind of securities as would have been issuable as the result of such change with respect to the securities which were subject to the purchase rights under this Warrant Agreement immediately prior to such subdivision, combination, reclassification or other change. If shares of the Company's Common Stock are subdivided or combined into a greater or smaller number of shares of Common Stock, the Exercise Price under this Warrant Agreement shall be proportionately reduced in case of subdivision of shares or proportionately increased in the case of combination of shares, in both cases by the ratio which the total number of shares of Common Stock to be outstanding immediately after such event bears to the total number of shares of Common Stock outstanding immediately prior to such event.

(b) Cash Distributions. No adjustment on account of cash dividends will be made to the Exercise Price under this Warrant Agreement.

(c) Authorized Shares. The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Common Stock upon the exercise of any purchase rights under this Warrant Agreement. The Company further covenants that its issuance of this Warrant Agreement shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of the Company's Common Stock upon the exercise of the purchase rights under this Warrant Agreement.

(d) Exercise Price Adjustments. The Exercise Price of the Warrants is subject to adjustment on the same terms and conditions as those set forth in Article 4, Section 5(d) of the Company's Restated Certificate of Incorporation as accepted by the Delaware Secretary of State on December 20, 1995, a copy of which is attached as Exhibit A to the December 21 Warrant

Agreement (the "Current Certificate of Incorporation") with respect to the conversion of the Company's Preferred Stock into Common Stock. For purposes of applying the provisions of such Article 4, Section 5(d) to the adjustment of the Exercise Price of the Warrants, any reference in such Article 4, Section 5(d) to the conversion or the Conversion Price of any series of the Company's Preferred Stock shall refer to the exercise and the Exercise Price, respectively, of the Warrants, and all Conversion Price adjustment provisions of such Article 4,
Section 5(d) shall be applied to the initial Exercise Price of the Warrants of $0.50. If the Company's Current Certificate of Incorporation is later amended to reduce or eliminate the right of holders of Preferred Stock to adjustment upon the events set forth in Article 4, Section 5 of the Current Certificate of Incorporation, the exercise price of the Warrants shall remain subject to adjustment as provided in the Current Certificate of Incorporation. If the Company's Current Certificate of Incorporation is later amended to increase the right of the holders of Preferred Stock to adjustment upon any event, the exercise price of the Warrants shall be entitled to adjustment on such better terms. At no time shall the exercise price of the Warrants be subject to adjustment on terms less favorable than those set forth in the Current Certificate of Incorporation.

11. Restrictions on Transferability of Securities.

(a) Restrictions on Transferability. This Warrant Agreement and the Shares issuable upon exercise of the Warrants (collectively the "Securities") shall not be sold, assigned, transferred or pledged except upon the conditions specified in this Section 11, which conditions are intended to ensure compliance with the provisions of the Securities Act of 1933, as amended (the "Securities Act"). Each holder of any of the Securities will cause any proposed purchaser, assignee, transferee, or pledgee of the Securities held by such holder to agree to take and hold such Securities subject to the provisions and upon the conditions specified in this Section 11.

(b) Restrictive Legend. Each certificate representing the Securities and any other securities issued in respect of the Securities pursuant to Section 10 shall (unless otherwise permitted by the provisions of Section 11(c) below) be stamped or otherwise imprinted with a legend in the following form (in addition to any legend required under applicable state securities laws):

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE TRANSFER IS IN ACCORDANCE WITH RULE 144 OR SIMILAR RULE OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.

Each holder of Securities and each subsequent transferee (hereinafter collectively referred to as a "Holder") consents to the Company making a notation on its records and giving

instructions to any transfer agent of the Securities in order to implement the restrictions on transfer established in this Section 11.

(c) Notice of Proposed Transfers. Each Holder of a certificate representing the Securities, by acceptance thereof, agrees to comply in all respects with the provisions of this Section 11(c). Prior to any proposed sale, assignment, transfer or pledge of any Securities (other than (i) a transfer not involving a change in beneficial ownership, (ii) in transactions involving the distribution without consideration of Securities by a Holder to any of its partners, or retired partners, or to the estate of any of its partners or retired partners, (iii) a transfer to an affiliated fund, partner ship or company, which is not a competitor of the Company, subject to compliance with applicable securities laws or (iv) transfers in compliance with Rule 144, so long as the Company is furnished with satisfactory evidence of compliance with such Rule), unless there is in effect a registration statement under the Securities Act covering the proposed transfer, the Holder thereof shall give written notice to the Company of such Holder's intention to effect such transfer, sale, assignment or pledge. Each such notice shall describe the manner and circumstances of the proposed transfer, sale, assignment or pledge in sufficient detail, and shall be accompanied, at such Holder's expense, by either
(i) an opinion of counsel (who shall, and whose opinion shall be, addressed to the Company and reasonably satisfactory to the Company) to the effect that the proposed transfer of the Securities may be effected without registration under the Securities Act or (ii) a "no action" letter from the Securities and Exchange Commission (the "Commission") to the effect that the transfer of such securities without registration will not result in a recommendation by the staff of the Commission that action be taken with respect thereto, whereupon the Holder of such Securities shall be entitled to transfer such Securities in accordance with the terms of the notice delivered by such Holder to the Company. Each certificate evidencing the Securities transferred as above provided shall bear, except if such transfer is made pursuant to Rule 144, the appropriate restrictive legend set forth in Section 11(b) above, except that such certificate shall not bear such restrictive legend if in the opinion of counsel for such Holder and in the opinion of counsel for the Company such legend is not required in order to establish compliance with any provision of the Securities Act.

(d) Removal of Restrictions on Transfer of Securities. Any legend referred to in Section 11(b) hereof stamped on a certificate evidencing the Securities and the stock transfer instructions and record notations with respect to the Securities shall be removed and the Company shall issue a certificate without such legend to the Holder of the Securities if the Securities are registered under the Securities Act, or if such Holder provides the Company with an opinion of counsel (which may be counsel for the Company) reasonably satisfactory to the Company to the effect that a public sale or transfer of such security may be made without registration under the Securities Act or such Holder provides the Company with reasonable assurances, which may, at the option of the Company, include an opinion of counsel (which may be counsel for the Company) reasonably satisfactory to the Company, that such security can be sold pursuant to paragraph (k) of Rule 144 (or any successor provision) under the Securities Act.

12. Investment Representations of the Warrantholder. With respect to the acquisition of any of the Securities, the Warrantholder hereby represents and warrants to the Company as follows:

(a) Experience. The Warrantholder is an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, and bear the economic risk of its investment and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Securities. If other than an individual, the Warrantholder also represents it has not been organized for the purpose of acquiring the Securities.

(b) Investment. The Warrantholder is acquiring the Securities for investment for its own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Warrantholder has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, each Warrantholder further represents that the Warrantholder does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person or to any third person, with respect to any of the Securities. The Warrantholder understands that the Securities have not been, and will not be, registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Warrantholder's representations as expressed herein.

(c) Rule 144. The Warrantholder understands that the Securities are characterized as "restricted securities" under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act of 1933, as amended (the "Act") only in certain limited circumstances. In this connection, the Warrantholder represents that it is familiar with Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Act.

(d) No Public Market. The Warrantholder understands that no public market now exists for any of the securities issued by the Company and that the Company has made no assurances that a public market will ever exist for the Securities.

(e) Access to Data. The Warrantholder has had an opportunity to discuss the Company's business, management and financial affairs with the Company's management and has also had an opportunity to ask questions of the Company's officers, which questions were answered to its satisfaction.

13. Notice of Record Date. If at any time prior to the exercise of the Warrants in full the Company takes a record of the holders of Common Stock for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, the Company will give to the Warrantholder at least thirty (15) days prior to the date specified therein, written notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right.

14. Miscellaneous.

(a) Issue Date. The provisions of this Warrant Agreement shall be construed and shall be given effect in all respect as if it had been issued and delivered by the Company on the date hereof. This Warrant Agreement shall be binding upon any successors or assigns of the Company. This Warrant Agreement shall constitute a contract under the laws of the State of California and for all purposes shall be construed in accordance with and governed by the laws of said state.

(b) Waivers and Amendments. With the written consent of the Company and the Warrantholder, the obligations of the Company and the right of the Warrantholder may be waived (either generally or in a particular instance, either retroactively or prospectively and either for a specified period of time of indefinitely), and with the same consent the Company and the Warrantholder may enter into a supplementary agreement for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Warrant Agreement.

(c) Notices. All notices and other communications required or permitted to be given under this Warrant Agreement shall be in writing and shall be deemed effectively given upon personal delivery, delivery by nationally recognized courier or upon deposit with the United States Post Office (by first class mail, postage prepaid) addressed as follows: (i) if to the Company, Integrated Surgical Systems, Inc., 829 West Stadium Lane, Sacramento, California 95834, and (ii) if to the Warrantholder, the address as provided in the books of the Company.

(d) Survival and Assumption. The provisions of Section 11 hereof shall survive the exercise of the Warrants and shall remain in effect until such time as the Warrantholder no longer holds Securities. Subject to the provisions of Section 3 hereof, in the event of a merger of the Company with or into another corporation, or the sale of substantially all of the assets of the Company, or the sale or exchange of substantially all of the shares of the Company for shares of another corporation, the Warrants shall survive such merger or sale or exchange and shall be expressly assumed by the successor corporation or, at the option of the Warrantholder, by the parent or subsidiary of such successor corporation; provided, however, that if the Warrants are not to be so assumed by such proposed successor or parent or subsidiary, then the Company shall not effect such merger or sale or exchange.

IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement to be executed by their officers thereunto duly authorized as of the Effective Date.

INTEGRATED SURGICAL SYSTEMS, INC.
A DELAWARE CORPORATION

By: ___________________________

Title: ___________________________

SUTTER HEALTH, A CALIFORNIA
NONPROFIT PUBLIC BENEFIT CORPORATION

By: _____________________________

Title: _____________________________

NOTICE OF EXERCISE

To: INTEGRATED SURGICAL SYSTEMS, INC.

(1) The undersigned hereby elects to purchase _______________ shares of Common Stock of Integrated Surgical Systems, Inc. pursuant to the terms of the attached Warrant Agreement, and tenders herewith payment of the purchase price in full, together with all applicable transfer taxes, if any.

(2) Please issue a certificate of certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below:

(3) The undersigned represents that the aforesaid shares of Common Stock are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares.

ASSIGNMENT FORM

(To assign the foregoing Warrant Agreement, execute this form and supply required information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant Agreement and all rights evidenced thereby are hereby assigned to

whose address is

Dated: ______________, ____.

Holder's Signature: ____________________

Holder's Address: ______________________

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant Agreement, without alteration or enlargement or any change whatever. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant Agreement.

EXHIBIT L

THE SECURITIES REPRESENTED BY THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE TRANSFER IS IN ACCORDANCE WITH RULE 144 OR SIMILAR RULE OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.

WARRANT AGREEMENT

To Purchase Shares of Common Stock of

INTEGRATED SURGICAL SYSTEMS, INC.

Dated as of December 21, 1995 (the "Effective Date")

WHEREAS, Integrated Surgical Systems, Inc., a Delaware corporation (the "Company") proposes to effect a series of transactions resulting in the recapitalization of the Company (the "Recapitalization"); and

WHEREAS, in connection with the Recapitalization, the Company wishes to grant to Sutter Health Venture Partners I, L.P. (the "Warrantholder"), the right to purchase shares of the Company's Common Stock (the "Warrants").

NOW, THEREFORE, in consideration of the Warrantholder giving its consent to the Recapitalization and in consideration of the mutual covenants and agreements contained herein, the Company and the Warrantholder agree as follows:

1. Grant of the Right to Purchase Common Stock. The Company hereby grants to the Warrantholder, and the Warrantholder is entitled, upon the terms and subject to the conditions hereinafter set forth, prior to December 31, 2005, to subscribe for and purchase from the Company, 17,605 shares of the Company's Common Stock (the "Shares"). The Company represents and warrants to the Warrantholder that the Shares constitute 0.30% of the Company's fully-diluted shares of Common Stock (or Common Stock equivalents) after giving effect to the Recapitalization (as defined in the Integrated Surgical Systems Series D Preferred Stock and Warrant Purchase Agreement dated December 21, 1995). The purchase price (the "Exercise Price") of one share of Common Stock under the Warrants shall be $0.50. Simultaneously with the date that is the later of the Second Closing and the closing of the Rights Offering (as those terms are defined in the Series D Preferred Stock and Warrant Purchase Agreement of even date herewith by and between the Company and certain Investors), the Company and the Warrantholder shall enter into a second Warrant Agreement containing substantially the same terms and conditions as this Warrant

Agreement, pursuant to which the Company shall grant to the Warrantholder the right and the Warrantholder shall be entitled to subscribe for and purchase from the Company, that number of shares of the Company's Common Stock (the "Additional Warrants") which, when added to the number of Shares covered by this Warrant Agreement, shall equal 0.30% of the number of fully-diluted shares of the Company's Common Stock (or Common Stock equivalents), calculated as of the later of the Second Closing and the closing of the Rights Offering. The purchase price per share of the shares covered by the Additional Warrants shall be $0.50. The Warrants and the Additional Warrants shall be referred to collectively herein as the "Warrants"; the Shares and the shares of Common Stock covered by the Additional Warrants shall be referred to collectively herein as the "Shares."

2. Title to Warrant. Prior to the expiration hereof and subject to compliance with applicable laws, this Warrant Agreement and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company, by the Warrantholder in person or by duly authorized attorney, upon surrender of this Warrant Agreement together with the Assignment Form annexed hereto properly endorsed.

3. Exercise of Warrants. The purchase rights represented by the Warrants are exercisable by the Warrantholder, in whole or in part, upon the occurrence of one of the events described in this Section 2 at any time before the close of business on December 31, 2005, by the surrender of this Warrant Agreement and the Notice of Exercise from annexed hereto duly executed at the office of the Company in Sacramento, California (or such other office or agency of the Company as it may designate by notice in writing to the registered holder hereof at the address of such holder appearing on the books of the Company), and upon payment of the purchase price of the shares thereby purchased (by cash or by check or bank draft payable to the order of the Company); whereupon the Warrantholder shall be entitled to receive a certificate for the number of shares of Common Stock so purchased.

The Warrants shall become exercisable simultaneously with and for a period of thirty days after the notice of the proposed occurrence of one of the following events:

A. The closing of a registered public offering of the Company's Common Stock in which, based on the public offering price, net of underwriting discounts and commissions, the Company would have a pre-money market valuation of at least $10 million ("IPO").

B. The closing of a sale of shares or warrants by a stockholder or stockholders and/or warrantholder or warrantholders (other than Sutter Health, a California nonprofit public benefit corporation or Sutter Health Venture Partners I, L.P.) of the Company in a single transaction in which both (i) the value of the aggregate consideration received by such selling stockholder or stockholders and/or warrantholder or warrantholders is at least equal to $1 million and (ii) the sale price per share (whether an actual share or a share subject to a

warrant) multiplied by the Company's outstanding equity securities results in a market valuation of the Company of at least $10 million ("Share Sale").

C. The closing of a sale by the Company of all or some of the assets of the Company in which the value of the consideration received by the Company is at least equal to $10 million ("Asset Sale").

D. The submission of an appraisal of the Company, undertaken only under the circumstances described in the paragraph below, at a value of at least $10 million ("Appraisal").

The Warrantholder shall be entitled, upon receipt of notice of a Share Sale or Asset Sale that would result in a market valuation of less than $10 million but greater than $5 million, to have an appraisal of the Company conducted at the Warrantholder's expense, by an appraiser reasonably acceptable to the Company. If such appraisal results in a valuation of the Company of at least $10 million, the Warrantholder shall be entitled to exercise the Warrant pursuant to the terms of this
Section 2. Other than as set forth in this Section 3.D, the Warrantholder shall not have any right to exercise the Warrants based on an appraisal.

This Warrant shall expire, if not previously exercised, upon an IPO, Share Sale, Asset Sale or 30 days after an Appraisal. If no IPO, Share Sale, Asset Sale or Appraisal has occurred before January 1, 2005, then the Warrant shall become exercisable on January 1, 2005 and shall remain exercisable until the earlier to occur of (a) an IPO, Share Sale, Asset Sale or Appraisal and (b) December 31, 2005.

The Company shall notify the Warrantholder in writing at least thirty days in advance of the scheduled closing of an IPO, Share Sale or Asset Sale which would result in a market valuation of at least $5 million, and if the Company fails to deliver such written notice, then notwithstanding anything to the contrary contained in this Warrant Agreement, the Warrants shall not expire until the Company complies with such notice provisions and the Warrantholder has a reasonable opportunity thereafter to exercise the Warrants. If such closing does not take place, the Company shall promptly notify the Warrantholder that such proposed IPO, Share Sale or Asset Sale has been terminated, and the Warrantholder shall rescind any exercise of its Warrants promptly after such notice of termination of the proposed IPO, Share Sale or Asset Sale if the exercise of the Warrants occurred after the Company notified the Warrantholder that the IPO, Share Sale or Asset Sale was proposed or if the exercise was otherwise precipitated by such proposed IPO, Share Sale or Asset Sale. In the event of such rescission, the Warrants shall continue to be exercisable on the same terms and conditions contained herein and the Company shall return the purchase price to the Warrantholder.

4. Issuance of Shares; No Fractional Shares or Scrip. The Company covenants that all Shares issued upon the exercise of the Warrants shall, upon exercise of the Warrants, be fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue). The Company further covenants and agrees that if any shares of Common Stock to be reserved for the purpose of the issuance of Shares upon the exercise of the Warrants require registration with or approval of any governmental authority under any Federal or State law before such Shares may be validly issued or delivered upon exercise of the Warrants, then the Company will in good faith and as expeditiously as possible endeavor to secure such registration or approval, as the case may be, and the right to exercise the Warrants shall be extended until 10 days after the completion of any such registration or approval. If and so long as any Common Stock issuable upon the exercise of the Warrants is listed on any national securities exchange (or automated dealer system), the Company will, if permitted by the rules of such exchange, list and keep listed on such exchange (or system), upon official notice of issuance, all shares of Common Stock issuable upon exercise of the Warrants. The Company agrees that, if at the time of the surrender of this Warrant Agreement and exercise of the Warrants, the Warrantholder shall be entitled to exercise such Warrants, the Share so issued shall be deemed to be issued to the Warrantholder as the record owner of such Shares as of the close of business on the date on which the Warrants shall have been exercised. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of the Warrants. With respect to any fraction of a share called for upon the exercise of the Warrants, an amount equal to such fraction multiplied by the then current Exercise Price shall be paid in cash to the Warrantholder.

5. Charges, Taxes and Expenses. Issuance of certificates for Shares upon the exercise of the Warrants shall be made without charge to the Warrantholder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Warrantholder or in such name or names as may be directed by the Warrantholder, provided, however, that in the event certificates for Shares are to be issued in a name other than the name of the Warrantholder, this Warrant Agreement when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Warrantholder; and provided further, that upon any transfer involved in the issuance or delivery of any certificates for Shares, the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

6. No Rights as Stockholders. This Warrant Agreement does not entitle the Warrantholder to any additional voting rights or other rights as a stockholder of the Company prior to the exercise of the Warrants.

7. Exchange and Registry of Warrant. This Warrant Agreement is exchangeable, upon the surrender hereof by the registered holder at the above-mentioned office or agency of the Company, for a new Warrant Agreement of like tenor and dated as of such exchange

The Company shall maintain at the above-mentioned office or agency a registry showing the name and address of the registered holder of this Warrant Agreement. This Warrant Agreement may be surrendered for exchange, transfer or exercise, in accordance with its terms, at such office or agency of the Company, and the Company shall be entitled to rely in all respects prior to written notice to the contrary, upon such registry.

8. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant Agreement, and in case of loss, theft or destruction, of indemnity or security reasonably satsifactory to it and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Warrant Agreement, if mutilated the Company will make and deliver a New Warrant Agreement of like tenor, dated as of such cancellation, in lieu of this Warrant Agreement.

9. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any aciton or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday.

10. Adjustments Rights

(a) Reclassification, etc. If the Company at any time shall, by subdivision, combination or reclassification of securities or otherwise, change any of the securities to which purchase rights under this Warrant Agreement exist into the same or a different number of securities of any class or classes, this Warrant Agreement shall thereafter be to acquire such number and kind of securities as would have been issuable as the result of such change with respect to the securities which were subject to the purchase rights under this Warrant Agreement immediately prior to such subdivision, combination, reclassification or other change. If shares of the Company's Common Stock are subdivided or combined into a greater or smaller number of shares of Common Stock, the Exercise Price under this Warrant Agreement shall be proportionately reduced in case of subdivision of shares or proportionately increased in the case of combination of shares, in both cases by the ratio which the total number of shares of Common Stock to be outstanding immediately after such event bears to the total number of shares of Common Stock outstanding immediately prior to such event.

(b) Cash Distributions. No adjustment on account of cash dividends will be made to the Exercise Price under this Warrant Agreement.

(c) Authorized Shares. The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Common Stock upon the exercise of any purchase rights under this Warrant Agreement. The Company further covenants that its issuance of this Warrant Agreement shall constitute full authority to its officers who are charged with the duty of

executing stock certificates to execute and issue the necessary certificates for shares of the Company's Common Stock upon the exercise of the purchase rights under this Warrant Agreement.

(d) Exercise Price Adjustments. The Exercise Price of the Warrants is subject to adjustment on the same terms and conditions as set forth in Article 4, Section 5(d) of the Company's Restated Certificate of Incorporation as accepted by the Delaware Secretary of State on December 20, 1995, a copy of which is attached hereto as Exhibit A (the "Current Certificate of Incorporation") with respect to the conversion of the Company's Preferred Stock into Common Stock. For purposes of applying the provisions of such Article 4,
Section 5(d) to the adjustment of the Exercise Price of the Warrants, any reference in such Article 4, Section 5(d) to the conversion or the Conversion Price of any series of the Company's Preferred Stock shall refer to the exercise and the Exercise Price, respectively, of the Warrants, and all Conversion Price adjustment provisions of such Article 4, Section 5(d) shall be applied to the initial Exercise Price of the Warrants of $0.50. If the Company's Current Certificate of Incorporation is later amended to reduce or eliminate the right of holders of Preferred Stock to adjustment upon the events set forth in Article 4, Section 5 of the Current Certificate of Incorporation, the exercise price of the Warrants shall remain subject to adjustment as provided in the Current Certificate of Incorporation. If the Company's Current Certificate of Incorporation is later amended to increase the right of the holders of Preferred Stock to adjustment upon any event, the exercise price of the Warrants shall be entitled to adjustment on such better terms. At no time shall the exercise price of the Warrants be subject to adjustment on terms less favorable than those set forth in the Current Certificate of Incorporation.

11. Restrictions on Transferability of Securities

(a) Restrictions on Transferability. This Warrant Agreement and the Shares issuable upon exercise of the Warrants (collectively the "Securities") shall not be sold, assigned, transferred or pledged except upon the conditions specified in this Section 11, which conditions are intended to ensure compliance with the provisions of the Securities Act of 1933, as amended (the "Securities Act"). Each holder of any of the Securities will cause any proposed purchaser, assignee, transferee, or pledgee of the Securities held by such holder to agree to take and hold such Securities subject to the provisions and upon the conditions specified in this Section 11.

(b) Restrictive Legend. Each certificate representing the Securities and any other securities issued in respect of the Securities pursuant to Section 10 shall (unless otherwise permitted by the provisions of
Section 11(c) below) be stamped or otherwise imprinted with a legend in the following form (in addition to any legend required under applicable state securities laws).

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE TRANSFER IS IN ACCORDANCE WITH RULE 144 OR SIMILAR RULE OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT

STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT

Each holder of Securities and each subsequent transferee (hereinafter collectively referred to as a "Holder") consents to the Company making a notation on its records and giving instructions to any transfer agent of the Securities in order to implement the restrictions on transfer established in this Section 11.

(c) Notice of Proposed Transfers. Each Holder of a certificate representing the Securities, by acceptance thereof, agrees to comply in all respects with the provisions of this Section 11(c). Prior to any proposed sale, assignment, transfer or pledge of any Securities (other than (i) a transfer not involving a change in beneficial ownership, (ii) in transactions involving the distribution without consideration of Securities by a Holder to any of its partners, or retired partners, or to the estate of any of its partners or retired partners, (iii) a transfer to an affiliated fund, partnership or company, which is not a competitor of the Company, subject to compliance with applicable securities laws or (iv) transfers in compliance with Rule 144, so long as the Company is furnished with satisfactory evidence of compliance with such Rule), unless there is in effect a registration statement under the Securities Act covering the proposed transfer, the Holder thereof shall give written notice to the Company of such Holder's intention to effect such transfer, sale, assignment or pledge. Each such notice shall describe the manner and circumstances of the proposed transfer, sale, assignment or pledge in sufficient detail, and shall be accompanied, at such Holder's expense, by either (i) an opinion of counsel (who shall, and whose opinion shall be, addressed to the Company and reasonably satisfactory to the Company) to the effect that the proposed transfer of the Securities may be effected without registration under the Securities Act or (ii) a "no action" letter from the Securities and Exchange Commission (the "Commission") to the effect that the transfer of such securities without registration will not result in a recommendation by the staff of the Commission that action be taken with respect thereto, whereupon the Holder of such Securities shall be entitled to transfer such Securities in accordance with the terms of the notice delivered by such Holder to the Company. Each certificate evidencing the Securities transferred as above provided shall bear, except if such transfer is made pursuant to Rule 144, the appropriate restrictive legend set forth in Section 11(b) above, except that such certificate shall not bear such restrictive legend if in the opinion of counsel for such Holder and in the opinion of counsel for the Company such legend is not required in order to establish compliance with any provision of the Securities Act.

(d) Removal of Restrictions on Transfer of Securities. Any legend referred to in Section 11(b) hereof stamped on a certificate evidencing the Securities and the stock transfer instructions and record notations with respect to the Securities shall be removed and the Company shall issue a certificate without such legend to the Holder of the Securities if the Securities are registered under the Securities Act, or if such Holder provides the Company with an opinion of counsel (which may be counsel for the Company) reasonably satisfactory to the Company to the effect that a public sale or transfer of such security may be made without registration under the Securities Act or such Holder provides the Company with reasonable assurances, which may, at the option of the Company, include an opinion of counsel (which may be counsel for the Company)

reasonably satisfactory to the Company, that such security can be sold pursuant to paragraph (k) of Rule 144 (or any successor provision) under the Securities Act.

12. Investment Representations of the Warrantholder. With respect to the acquisition of any of the Securities, the Warrantholder hereby represents and warrants to the Company as follows:

(a) Experience. The Warrantholder is an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, and bear the economic risk of its investment and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Securities. If other than an individual, the Warrantholder also represents it has not been organized for the purpose of acquiring the Securities.

(b) Investment. The Warrantholder is acquiring the Securities for investment for its own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Warrantholder has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, each Warrantholder further represents that the Warrantholder does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person or to any third person, with respect to any of the Securities. The Warrantholder understands that the Securities have not been, and will not be, registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Warrantholder's representations as expressed herein.

(c) Rule 144. The Warrantholder understands that the Securities are characterized as "restricted securities" under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act of 1933, as amended (the "Act") only in certain limited circumstances. In this connection, the Warrantholder represents that it is familiar with Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Act.

(d) No Public Market. The Warrantholder understands that no public market now exists for any of the securities issued by the Company and that the Company has made no assurances that a public market will ever exist for the Securities.

(e) Access to Data. The Warrantholder has had an opportunity to discuss the Company's business, management and financial affairs with the Company's management and has also has an opportunity to ask questions of the Company's officers, which questions were answered to its satisfaction.

13. Notice of Record Date. If at any time prior to the exercise of the Warrants in full the Company takes a record of the holders of Common Stock for the purpose of determining the holders

thereof who are entitled to receive any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, the Company will give to the Warrantholder at least thirty (15) days prior to the date specified therein, written notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right.

14. Opinion of Counsel. Counsel to the Company shall deliver to the Warrantholder as of the date hereof an opinion, satisfactory to counsel to the Warrantholder, to the effect that (i) the Warrant Agreement and the Warrants have been authorized by all necessary corporate action, (ii) the Warrant Agreement and the Warrants have been duly executed and delivered and constitute legally binding agreements of the Company, enforceable in accordance with their terms, subject to customary exceptions, (iii) the Company has reserved out of its authorized and unissued shares of Common Stock a number of shares sufficient to provide for the exercise of the rights of purchase represented by the Warrants, and (iv) the shares when issued upon exercise of the Warrants in accordance with the terms of the Warrant Agreement, and against payment of the consideration set forth herein, will be validly issued, fully paid and non-assessable.

15. Miscellaneous

(a) Issue Date. The provisions of this Warrant Agreement shall be construed and shall be given effect in all respect as if it had been issued and delivered by the Company on the date hereof. This Warrant Agreement shall be binding upon any successors or assigns of the Company. This Warrant Agreement shall constitute a contract under the laws of the State of California and for all purposes shall be construed in accordance with and governed by the laws of said state.

(b) Waivers and Amendments. With the written consent of the Company and the Warrantholder, the obligations of the Company and the right of the Warrantholder may be waived (either generally or in a particular instance, either retroactively or prospectively and either for a specified period of time of indefinitely), and with the same consent the Company and the Warrantholder may enter into a supplementary agreement for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Warrant Agreement.

(c) Notices. All notices and other communications required or permitted to be given under this Warrant Agreement shall be in writing and shall be deemed effectively given upon personal delivery, delivery by nationally recognized courier or upon deposit with the United States Post Office (by first class mail, postage prepaid) addressed as follows: (i) if to the Company, Integrated Surgical Systems, Inc., 829 West Stadium Lane, Sacramento, California 95834, and (ii) if to the Warrantholder, the address as provided in the books of the Company.

(d) Survival and Assumption. The provisions of Section 11 hereof shall survive the exercise of the Warrants and shall remain in effect until such time as the Warrantholder no longer holds Securities. Subject to the provisions of Section 3 hereof, in the event of a merger of the

Company with or into another corporation, or the sale of substantially all of the assets of the Company, or the sale or exchange of substantially all of the shares of the Company for shares of another corporation, the Warrants shall survive such merger or sale or exchange and shall be expressly assumed by the successor corporation or, at the option of the Warrantholder, by the parent or subsidiary of such successor corporation; provided, however, that if the Warrants are not to be so assumed by such proposed successor or parent or subsidiary, then the Company shall not effect such merger or sale or exchange.

IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement to be executed by their officers thereunto duly authorized as of the Effective Date.

INTEGRATED SURGICAL SYSTEMS, INC.
A DELAWARE CORPORATION

SUTTER HEALTH VENTURE PARTNERS I, L.P.

NOTICE OF EXERCISE

To: INTEGRATED SURGICAL SYSTEMS, INC.

(1) The undersigned hereby elected to purchase ___________ shares of Common Stock of Integrated Surgical Systems, Inc. pursuant to the terms of the attached Warrant Agreement, and tenders herewith payment of the purchase price in full, together with all applicable transfer taxes, if any.

(2) Please issue a certificate of certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below.

(3) The undersigned represents that the aforesaid shares of Common Stock are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares.

ASSIGNMENT FORM

(To assign the foregoing Warrant Agreement, execute this form and supply required information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant Agreement and all rights evidenced thereby are hereby assigned to

whose address is

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant Agreement, without alteration or enlargement or any change whatever. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant Agreement.

EXHIBIT M

THE SECURITIES REPRESENTED BY THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE TRANSFER IS IN ACCORDANCE WITH RULE 144 OR SIMILAR RULE OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.

WARRANT AGREEMENT

To Purchase Shares of Common Stock of

INTEGRATED SURGICAL SYSTEMS, INC.

Dated as of December 21, 1995 (the "Effective Date")

WHEREAS, Integrated Surgical Systems, Inc., a Delaware corporation (the "Company") proposes to effect a series of transactions resulting in the recapitalization of the Company (the "Recapitalization"); and

WHEREAS, in connection with the Recapitalization, the Company wishes to grant to Keystone Financial Corporation, a Pennsylvania Not-For-Profit Corporation (the "Warrantholder"), the right to purchase shares of the Company's Common Stock (the "Warrants").

NOW, THEREFORE, in consideration of the Warrantholder giving its consent to the Recapitalization and in consideration of the mutual covenants and agreements contained herein, the Company and the Warrantholder agree as follows:

1. Grant of the Right to Purchase Common Stock. The Company hereby grants to the Warrantholder, and the Warrantholder is entitled, upon the terms and subject to the conditions hereinafter set forth, prior to December 31, 2005, to subscribe for and purchase from the Company, 64,065 shares of the Company's Common Stock (the "Shares"). The Company represents and warrants to the Warrantholder that the Shares constitute 1.08% of the Company's fully-diluted shares of Common Stock (or Common Stock equivalents) after giving effect to the Recapitalization (as defined in the Integrated Surgical Systems Series D Preferred Stock and Warrant Purchase Agreement dated December 21, 1995). The purchase price (the "Exercise Price") of one share of Common Stock under the Warrants shall be $0.50. Simultaneously with the date that is the later of the Second Closing and the closing of the Rights Offering (as those terms are defined in the Series D Preferred Stock and Warrant Purchase Agreement of even date herewith by and between the Company and certain Investors), the Company and the Warrantholder shall enter into a second Warrant Agreement containing substantially the same terms and conditions as this Warrant.

Agreement, pursuant to which the Company shall grant to the Warrantholder the right and the Warrantholder shall be entitled to subscribe for and purchase from the Company, that number of shares of the Company's Common Stock (the "Additional Warrants") which, when added to the number of Shares covered by this Warrant Agreement, shall equal 1.08% of the number of fully-diluted shares of the Company's Common Stock (or Common Stock equivalents), calculated as of the later of the Second Closing and the closing of the Rights Offering. The purchase price per share of the shares covered by the Additional Warrants shall be $0.50. The Warrants and the Additional Warrants shall be referred to collectively herein as the "Warrants"; the Shares and the shares of Common Stock covered by the Additional Warrants shall be referred to collectively herein as the "Shares."

2. Title to Warrant. Prior the expiration of hereof and subject to compliance with applicable laws, this Warrant Agreement and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company, by the Warrantholder in person or by duly authorized attorney, upon surrender of this Warrant Agreement together with the Assignment Form annexed hereto properly endorsed.

3. Exercise of Warrants. The purchase rights represented by the Warrants are exercisable by the Warrantholder, in whole or in part, upon the occurrence of one of the vents described in this Section 2 at any time before the close of business on December 31, 2005, by the surrender of this Warrant Agreement and the Notice of Exercise form annexed hereto duly executed at the office of the Company in Sacramento, California (or such other office or agency of the Company as it may designate by notice in writing to the registered holder hereof at the address of such holder appearing on the books of the Company), and upon payment of the purchase price of the shares thereby purchased (by cash or by check or bank draft payable to the order of the Company); whereupon the Warrantholder shall be entitled to receive a certificate for the number of shares of Common Stock so purchased.

The Warrants shall become exercisable simultaneously with and for a period of thirty days after the notice of the proposed occurrence of one of the following events:

A. The closing of a registered public offering of the Company's Common Stock in which, based on the public offering price, net of underwriting discounts and commissions, the Company would have a pre-money market valuation of at least $10 million ("IPO").

B. The closing of a sale of shares or warrants by a stockholder or stockholders and/or warrantholder or warrantholders (other than Sutter Health, a California non-profit public benefit corporation or Sutter Health Venture Partners I, L.P.) of the Company in a single transaction in which both (i) the value of the aggregate consideration received by such selling stockholder or stockholders and/or warrantholder or warrantholders is at least equal to $1 million and (ii) the sale price per share (whether an actual share or a share subject to a

warrant) multiplied by the Company's outstanding equity securities results in a market valuation of the Company of least $10 million ("Share Sale").

C. The closing of a sale by the Company of all or some of the assets of the Company in which the value of the consideration received by the Company is at least equal to $10 million ("Asset Sale").

D. The submission of an appraisal of the Company, undertaken only under the circumstances described in the paragraph below, at a value of at least $10 million ("Appraisal").

The Warrantholder shall be entitled, upon receipt of notice of a Share Sale or Asset Sale that would result in a market valuation of less than $10 million but greater than $5 million, to have an appraisal of the Company conducted, at the Warrantholder's expense, by an appraiser reasonably acceptable to the Company. If such appraisal results in a valuation of the Company of at least $10 million, the Warrantholder shall be entitled to exercise the Warrant pursuant to the terms of this
Section 2. Other than as set forth in this Section 3.D., the Warrantholder shall not have any right to exercise the Warrants based on an appraisal.

This Warrant shall expire, if not previously exercised, upon an IPO, Share Sale, Asset Sale or 30 days after an Appraisal. If no IPO, Share Sale, Asset Sale or Appraisal has occurred before January 1, 2005, then the Warrant shall become exercisable on January 1, 2005 and shall remain exercisable until the earlier to occur of (a) an IPO, Share Sale, Asset Sale or Appraisal and (b) December 31, 2005.

The Company shall notify the Warrantholder in writing at least thirty days in advance of the scheduled closing of an IPO, Share Sale or Asset Sale which would result in a market valuation of at least $5 million, and if the Company fails to deliver such written notice, then notwithstanding anything to the contrary contained in this Warrant Agreement, the Warrants shall not expire until the Company complies with such notice provisions and the Warrantholder has a reasonable opportunity thereafter to exercise the Warrants. If such closing does not take place, the Company shall promptly notify the Warrantholder that such proposed IPO, Share Sale or Asset Sale has been terminated, and the Warrantholder shall rescind any exercise of its Warrants promptly after such notice of termination of the proposed IPO, Share Sale or Asset Sale if the exercise of the Warrants occurred after the Company notified the Warrantholder that the IPO, Share Sale or Asset Sale was proposed or if the exercise was otherwise precipitated by such proposed IPO, Share Sale or Asset Sale. In the event of such rescission, the Warrants shall continue to be exercisable on the same terms and conditions contained herein and the Company shall return the purchase price to the Warrantholder.

4. Issuance of Shares; No Fractional Shares or Scrip. The Company covenants that all Shares issued upon the exercise of the Warrants shall, upon exercise of the Warrants, be fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue). The Company further covenants and agrees that if any shares of Common Stock to be reserved for the purpose of the issuance of Shares upon the exercise of the Warrants require registration with or approval of any governmental authority under any Federal or State law before such Shares may be validly issued or delivered upon exercise of the Warrants, then the Company will in good faith and as expeditiously as possible endeavor to secure such registration or approval, as the case may be, and the right to exercise the Warrants shall be extended until 10 days after the completion of any such registration or approval. If and so long as any Common Stock issuable upon the exercise of the Warrants is listed on any national securities exchange (or automated dealer system), the Company will, if permitted by the rules of such exchange, list and keep listed on such exchange (or system), upon official notice of issuance, all shares of Common Stock issuable upon exercise of the Warrants. The Company agrees that, if at the time of the surrender of this Warrant Agreement and exercise of the Warrants, the Warrantholder shall be entitled to exercise such Warrants, the Shares so issued shall be deemed to be issued to the Warrantholder as the record owner of such Shares as of the close of business on the date on which the Warrants shall have been exercised. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of the Warrants. With respect to any fraction of a share called for upon the exercise of the Warrants, an amount equal to such fraction multiplied by the then current Exercise Price shall be paid in cash to the Warrantholder.

5. Charges, Taxes and Expenses. Issuance of certificates for Shares upon the exercise of the Warrants shall be made without charge to the Warrantholder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Warrantholder or in such name or names as may be directed by the Warrantholder, provided, however, that in the event certificates for Shares are to be issued in a name other than the name of the Warrantholder, this Warrant Agreement when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Warrantholder; and provided further, that upon any transfer involved in the issuance or delivery of any certificates for Shares, the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

6. No Rights as Stockholders. This Warrant Agreement does not entitle the Warrantholder to any additional voting rights or other rights as a stockholder of the Company prior to the exercise of the Warrants.

7. Exchange and Registry of Warrant. This Warrant Agreement is exchangeable, upon the surrender hereof by the registered holder at the above-mentioned office or agency of the Company, for a new Warrant Agreement of like tenor and dated as of such exchange

The Company shall maintain at the above-mentioned office or agency a registry showing the name and address of the registered holder of this Warrant Agreement. This Warrant Agreement may be surrendered for exhcnage, transfer or exercise, in accordance with its terms, at such office or agency of the Company, and the Company shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry.

8. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruciton or mutilation of this Warrant Agreement, and in case of loss, theft or destrucition, of indemnity or security reasonably satsifactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Warrant Agreement, if mutilated, the Company will make and deliver a new Warrant Agreement of like tenor and dates as of such cancellation, in lieu of this Warrant Agreement.

9. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any aciton or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday.

10. Adjustments Rights

(a) Reclassification, etc. If the Company at any time shall, by subdivision, combination or reclassification of securities or otherwise, change any of the securities to which purchase rights under this Warrant Agreement exist into the same of a different number of securities of any class or classes, this Warrant Agreement shall thereafter be to acquire such number and kind of securities as would have been issuable as the result of such change with respect to the securities which were subject to the purchase rights under this Warrant Agreement immediately prior to such subdivision, combination, reclassification or other change. If shares of the Company's Common Stock are subdivided or combined into a greater or smaller number of shares of Common Stock, the Exercise Price under this Warrant Agreement shall be proportionately reduced in case of subdivision of shares or proportionately increased in the case of combination of shares, in both cases by the ratio which the total number of shares of Common Stock to be outstanding immediately after such event bears to the total number of shares of Common Stock outstanding immediately prior to such event.

(b) Cash Distributions. No adjustment on account of cash dividends will be made to the Exercise Price under this Warrant Agreement.

(c) Authorized Shares. The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Common Stock upon the exercise of any purchase rights under this Warrant Agreement. The Company further covenants that its issuance of this Warrant Agreement shall constitute full authority to its officers who are charged with the duty of

executing stock certificates to execute and issue the necessary certificates for shares of the Company's Common Stock upon the exercise of the purchase rights under this Warrant Agreement.

(d) Exercise Price Adjustments. The Exercise Price of the Warrants is subject to adjustment on the same terms and conditions as set forth in Article 4, Section 5(d) of the Company's Restated Certificate of Incorporation as accepted by the Delaware Secretary of State on December 20, 1995, a copy of which is attached hereto as Exhibit A (the "Current Certificate of Incorporation") with respect to the conversion of the Company's Preferred Stock into Common Stock. For purposes of applying the provisions of such Article 4, Section 5(d) to the adjustment of the Exercise Price of the Warrants, any reference in such Article 4. Section 5(d) to the conversion or the Conversion Price of any series of the Company's Preferred Stock shall refer to the exercise and the Exercise Price, respectively, of the Warrants, and all Conversion Price adjustment provisions of such Article 4. Section 5(d) shall be applied to the initial Exercise Price of the Warrants of $0.50. If the Company's Current Certificate of Incorporation is later amended to reduce or eliminate the right of holders of Preferred Stock to adjustment upon the events set forth in Article
4. Section 5 of the Current Certificate of Incorporation, the exercise price of the Warrants shall remain subject to adjustment as provided in the Current Certificate of Incorporation. If the Company's Current Certificate of Incorporation is later amended to increase the right of the holders of Preferred Stock to adjustment upon any event, the exercise price of the Warrants shall be entitled to adjustment on such better terms. At no time shall the exercise price of the Warrants be subject to adjustment on terms less favorable than those set forth in the Current Certificate of Incorporation.

11. Restrictions on Transferability of Securities

(a) Restrictions on Transferability. This Warrant Agreement and the Shares issuable upon exercise of the Warrants (collectively the "Securities") shall not be sold, assigned, transferred or pledged except upon the conditions specified in this Section 11, which conditions are intended to ensure compliance with the provisions of the Securities Act of 1933, as amended (the "Securities Act"). Each holder of any of the Securities will cause any proposed purchaser, assignee, transferee, or pledgee of the Securities held by such holder to agree to take and hold such Securities subject to the provisions and upon the conditions specified in this Section 11.

(b) Restrictive Legend. Each certificate representing the Securities and any other securities issued in respect of the Securities pursuant to Section 10 shall (unless otherwise permitted by the provisions of
Section 11(c) below) be stamped or otherwise imprinted with a legend in the following form (in addition to any legend required under applicable state securities laws).

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE TRANSFER IS IN ACCORDANCE WITH RULE 144 OR SIMILAR RULE OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT

STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT

Each holder of Securities and each subsequent transferee (hereinafter collectively referred to as a "Holder") consents to the Company making a notation on its records and giving instructions to any transfer agent of the Securities in order to implement the restrictions on transfer established in this Section 11.

(c) Notice of Proposed Transfers. Each Holder of a certificate representing the Securities by acceptance thereof, agrees to comply in all respects with the provisions of this Section 11(c). Prior to any proposed sale, assignment, transfer or pledge of any Securities (other than (i) a transfer not involving a change in beneficial ownership, (ii) in transactions involving the distribution without consideration of Securities by a Holder to any of its partners, or retired partners, or to the estate of any of its partners or retired partners, (iii) a transfer to an affiliated fund, partnership or company, which is not a competitor of the Company, subject to compliance with applicable securities laws or (iv) transfers in compliance with Rule 144, so long as the Company is furnished with satisfactory evidence of compliance with such Rule), unless there is in effect a registration statement under the Securities Act covering the proposed transfer, the Holder thereof shall give written notice to the Company of such Holder's intention to effect such transfer, sale, assignment or pledge. Each such notice shall describe the manner and circumstances of the proposed transfer, sale, assignment or pledge in sufficient detail, and shall be accompanied, at such Holder's expense, by either (i) an opinion of counsel (who shall, and whose opinion shall be, addressed to the Company and reasonably satisfactory to the Company) to the effect that the proposed transfer of the Securities may be effected without registration under the Securities Act or (ii) a "no action" letter from the Securities and Exchange Commission (the "Commission") to the effect that the transfer of such securities without registration will not result in a recommendation by the staff of the Commission that action be taken with respect thereto, whereupon the Holder of such Securities shall be entitled to transfer such Securities in accordance with the terms of the notice delivered by such Holder to the Company. Each certificate evidencing the Securities transferred as above provided shall bear, except if such transfer is made pursuant to Rule 144, the appropriate restrictive legend set forth in Section 11(b) above, except that such certificate shall not bear such restrictive legend if in the opinion of counsel for such Holder and in the opinion of counsel for the Company such legend is not required in order to establish compliance with any provision of the Securities Act.

(d) Removal of Restrictions on Transfer of Securities. Any legend referred to in Section 11(b) hereof stamped on a certificate evidencing the Securities and the stock transfer instructions and record notations with respect to the Securities shall be removed and the Company shall issue a certificate without such legend to the Holder of the Securities if the Securities are registered under the Securities Act, or if such Holder provides the Company with an opinion of counsel (which may be counsel for the Company) reasonably satisfactory to the Company to the effect that a public sale or transfer of such security may be made without registration under the Securities Act or such Holder provides the Company with reasonable assurances, which may, at the option of the Company, include an opinion of counsel (which may be counsel for the Company)

reasonably satisfactory to the Company, that such security can be sold pursuant to paragraph (k) of Rule 144 (or any successor provision) under the Securities Act.

12. Investment Representations of the Warrantholder. With respect to the acquisition of any of the Securities, the Warrantholder hereby represents and warrants to the Company as follows:

(a) Experience. The Warrantholder is an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, and bear the economic risk of its investment and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Securities. If other than an individual, the Warrantholder also represents it has not been organized for the purpose of acquiring the Securities.

(b) Investment. The Warrantholder is acquiring the Securities for investment for its own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Warrantholder has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, each Warrantholder further represents that the Warrantholder does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person or to any third person, with respect to any of the Securities. The Warrantholder understands that the Securities have not been, and will not be, registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Warrantholder's representations as expressed herein.

(c) Rule 144. The Warrantholder understands that the Securities are characterized as "restricted securities" under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act of 1933, as amended (the "Act") only in certain limited circumstances. In this connection, the Warrantholder represents that it is familiar with Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Act.

(d) No Public Market. The Warrantholder understands that no public market now exists for any of the securities issued by the Company and that the Company has made no assurances that a public market will ever exist for the Securities.

(e) Access to Data. The Warrantholder has had an opportunity to discuss the Company's business, management and financial affairs with the Company's management and has also had an opportunity to ask questions of the Company's officers, which questions were answered to its satisfaction.

13. Notice of Record Date. If at any time prior to the exercise of the Warrants in full the Company takes a record of the holders of Common Stock for the purpose of determining the holders

thereof who are entitled to receive any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, the Company will give to the Warrantholder at least thirty (15) days prior to the date specified therein, written notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right.

14. Opinion of Counsel. Counsel to the Company shall deliver to the Warrantholder as of the date hereof an opinion, satisfactory to counsel to the Warrantholder, to the effect that (i) the Warrant Agreement and the Warrants have been authorized by all necessary corporate action, (ii) the Warrant Agreement and the Warrants have been duly executed and delivered and constitute legally binding agreements of the Company, enforceable in accordance with their terms, subject to customary exceptions, (iii) the Company has reserved out of its authorized and unissued shares of Common Stock a number of shares sufficient to provide for the exercise of the rights of purchase represented by the Warrants, and (iv) the shares when issued upon exercise of the Warrants in accordance with the terms of the Warrant Agreement, and against payment of the consideration set forth herein, will be validly issued, fully paid and non-assessable.

15. Miscellaneous

(a) Issue Date. The provisions of this Warrant Agreement shall be construed and shall be given effect in all respect as if it had been issued and delivered by the Company on the date hereof. This Warrant Agreement shall be binding upon any successors or assigns of the Company. This Warrant Agreement shall constitute a contract under the laws of the State of California and for all purposes shall be construed in accordance with and governed by the laws of said state.

(b) Waivers and Amendments. With the written consent of the Company and the Warrantholder, the obligations of the Company and the right of the Warrantholder may be waived (either generally or in a particular instance, either retroactively or prospectively and either for a specified period of time of indefinitely), and with the same consent the Company and the Warrantholder may enter into a supplementary agreement for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Warrant Agreement.

(c) Notices. All notices and other communications required or permitted to be given under this Warrant Agreement shall be in writing and shall be deemed effectively given upon personal delivery, delivery by nationally recognized courier or upon deposit with the United States Post Office (by first class mail, postage prepaid) addressed as follows: (i) if to the Company, Integrated Surgical Systems, Inc., 829 West Stadium Lane, Sacramento, California 95834, and (ii) if to the Warrantholder, the address as provided in the books of the Company.

(d) Survival and Assumption. The provisions of Section 11 hereof shall survive the exercise of the Warrants and shall remain in effect until such time as the Warrantholder no longer holds Securities. Subject to the provisions of Section 3 hereof, in the event of a merger of the

Company with or into another corporation, or the sale of substantially all of the assets of the Company, or the sale or exchange of substantially all of the shares of the Company for shares of another corporation, the Warrants shall survive such merger or sale or exchange and shall be expressly assumed by the successor corporation or, at the option of the Warrantholder, by the parent or subsidiary of such successor corporation; provided, however, that if the Warrants are not to be so assumed by such proposed successor or parent or subsidiary, then the Company shall not effect such merger or sale or exchange.

IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement to be executed by their officers thereunto duly authorized as of the Effective Date

INTEGRATED SURGICAL SYSTEMS, INC.
A DELAWARE CORPORATION

KEYSTONE FINANCIAL CORPORATION,
A PENNSYLVANIA NOT-FOR PROFIT CORPORATION

NOTICE OF EXERCISE

To: INTEGRATED SURGICAL SYSTEMS, INC.

(1) The undersigned hereby elected to purchase ___________ shares of Common Stock of Integrated Surgical Systems, Inc. pursuant to the terms of the attached Warrant Agreement, and tenders herewith payment of the purchase price in full, together with all applicable transfer taxes, if any.

(2) Please issue a certificate representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below:

(3) The undersigned represents that the aforesaid shares of Common Stock are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares.

ASSIGNMENT FORM

(To assign the foregoing Warrant Agreement, execute this form and supply required information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant Agreement and all rights evidenced thereby are hereby assigned to

whose address is

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant Agreement, without alteration or enlargement or any change whatever. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant Agreement.

THE SECURITIES REPRESENTED BY THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE TRANSFER IS IN ACCORDANCE WITH RULE 144 OR SIMILAR RULE OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.

WARRANT AGREEMENT

To Purchase Share of Common Stock of

INTEGRATED SURGICAL SYSTEMS, INC.

Dated as of March 7, 1996 (the "Effective Date")

WHEREAS, Integrated Surgical Systems, Inc., a Delaware corporation (the "Company") and Keystone Financial Corporation, a Pennsylvania Not-For-Profit Corporation (the "Warrantholder"), have entered into that certain Warrant Agreement dated as of December 21, 1995 (the "December 21 Warrant Agreement"), pursuant to which the Company has agreed to grant to the Warrantholder, upon the date that is the later of the Second Closing and the closing of the Rights Offering (as those terms are defined in the Series D Preferred Stock and Warrant Purchase Agreement of even date herewith by and between the Company and certain Investors), warrants to purchase shares of the Company's Common Stock (the "Additional Warrants"), in addition to those warrants (the "Warrants") to purchase shares of the Company's Common Stock (the "Shares") which were granted to the Warrantholder on December 21, 1995, pursuant to the December 21 Warrant Agreement; and

WHEREAS, the date of the Second Closing was February 29, 1996, and the date of the closing of the Rights Offering is the date hereof;

NOW, THEREFORE, in consideration of the Warrantholder giving its consent to the Recapitalization (as that term is defined in the December 21 Warrant Agreement) and in consideration of the mutual covenants and agreements contained herein, the Company and the Warrantholder agree as follows:

1. Grant of the Rights to Purchase Common Stock. The Company hereby grants to the Warrantholder, and the Warrantholder is entitled, upon the terms and subject to the conditions hereinafter set forth, prior to December 31, 2005, to subscribe for and purchase from the Company, 19,945 shares of the Company's Common Stock (the "Additional Shares"). The Company represents and warrants to the Warrantholder that the Shares and the Additional Shares together constitute 1.08% of the number of fully-diluted shares of the Company's Common Stock (or Common Stock

equivalents), calculated as of the later of the Second Closing and the closing of the Rights Offering. The purchase price (the "Exercise Price") of one share of Common Stock under the Additional Warrants shall be $0.50. The Warrants and the Additional Warrants shall be referred to collectively herein as the "Warrants", the Shares and the Additional Shares shall be referred to collectively herein as the "Shares."

2. Title to Warrant. Prior to the expiration hereof and subject to compliance with applicable laws, this Warrant Agreement and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company, by the Warrantholders in person or by duly authorized attorney, upon surrender of this Warrant Agreement together with the Assignment Form annexed hereto properly endorsed.

3. Exercise of Warrants. The purchase rights represented by the Warrants are exercisable by the Warrantholder, in whole or in part, upon the occurrence of one of the events described in this Section 2 at any time before the close of business on December 31, 2005, by the surrender of this Warrant Agreement and the Notice of Exercise form annexed hereto duly executed at the office of the Company in Sacramento, California (or such other office or agency of the Company as it may designate by notice in writing to the registered holder hereof at the address of such holder appearing on the books of the Company), and upon payment of the purchase price of the shares thereby purchased (by cash or by check or bank draft payable to the order of the Company); whereupon the Warrantholder shall be entitled to receive a certificate for the number of shares of Common Stock so purchased.

The Warrants shall become exercisable simultaneously with and for a period of thirty days after the notice of the proposed occurrence of one of the following events:

A. The closing of a registered public offering of the Company's Common Stock in which, based on the public offering price, net of underwriting discounts and commissions, the Company would have a pre-money market valuation of at least $10 million ("IPO").

B. The closing of a sale or shares or warrants by a stockholder or stockholders and/or warrantholder or warrantholders (other than Sutter Health, a California nonprofit public benefit corporation or Sutter Health Venture Partners I, L.P.) of the Company in a single transaction in which both (i) the value of the aggregate consideration received by such selling stockholder or stockholders and/or warrantholder or warrantholder is at least equal to $1 million and (ii) the sale price per share
(whether an actual share or a share subject to a warrant) multiplied by the Company's outstanding equity securities results in a market valuation of the Company of at least $10 million ("Share Sale").

C. The closing of a sale by the Company of all or some of the assets of the Company in which the value of the consideration received by the Company is at least equal to $10 million ("Asset Sale").

D. The submission of an appraisal of the Company, undertaken only under the circumstances described in the paragraph below, at a value of at least $10 million ("Appraisal").

The Warrantholder shall be entitled, upon receipt of notice of a Share or Asset Sale that would result in a market valuation of less than $10 million but greater than $5 million, to have an appraisal of the Company conducted, at the Warrantholder's expense, by an appraiser reasonably acceptable to the Company. If such appraisal results in a valuation of the Company of at least $10 million, the Warrantholder shall be entitled to exercise the Warrant pursuant to the terms of this Section 2. Other than as set forth in this Section 3.D., the Warrantholder shall not have any right to exercise the Warrants based on an appraisal.

This Warrant shall expire, if not previously exercised, upon an IPO, Share Sale, Asset Sale or 30 days after an Appraisal. If no IPO, Share Sale, Asset Sale or Appraisal has occurred before January 1, 2005, then the Warrant shall become exercisable on January 1, 2005 and shall remain exercisable until the earlier to occur or (a) an IPO, Share Sale, Asset Sale or Appraisal and (b) December 31, 2005.

The Company shall notify the Warrantholder in writing at least thirty days in advance of the scheduled closing of an IPO, Share Sale or Asset Sale which would result in a market valuation of at least $5 million, and if the Company fails to deliver such written notice, then notwithstanding anything to the contrary contained in this Warrant Agreement, the Warrants shall not expire until the Company complies with such notice provisions and the Warrantholder has a reasonable opportunity thereafter to exercise the Warrants. If such closing does not take place, the Company shall promptly notify the Warrantholder that such proposed IPO, Share Sale or Asset Sale has been terminated, and the Warrantholder shall rescind any exercise of its Warrants promptly after such notice of termination of the proposed IPO, Share Sale or Asset Sale if the exercise of the Warrants occurred after the Company notified the Warrantholder that the IPO, Share Sale or Asset Sale was proposed or if the exercise was otherwise precipitated by such proposed IPO, Share Sale or Asset Sale. In the event of such rescission, the Warrants shall continue to be exercisable on the same terms and conditions contained herein and the Company shall return the purchase price to the Warrantholder.

4. ISSUANCE OF SHARES: NO FRACTIONAL SHARES OR SCRIP. The Company covenants that all Shares issued upon the exercise of the Warrants shall, upon exercise of the Warrants, be fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue). The Company further

covenants and agrees that if any shares of Common Stock to be reserved for the purpose of the issuance of Shares upon the exercise of the Warrants require registration with or approval of any governmental authority under any Federal or State law before such Shares may be validly issued or delivered upon exercise of the Warrants, then the Company will in good faith and as expeditiously as possible endeavor to secure such registration or approval, as the case may be, and the right to exercise the Warrants shall be extended until 10 days after the completion of any such registration or approval. If and so long as any Common Stock issuable upon the exercise of the Warrants is listed on any national securities exchange (or automated dealer system), the Company will, if permitted by the rules of such exchange, list and keep listed on such exchange (or system), upon official notice of issuance, all shares of Common Stock issuable upon exercise of the Warrants. The company agrees that, if at the time of the surrender of this Warrant Agreement and exercise of the Warrants, the Warrantholder shall be entitled to exercise such Warrants, the Shares so issued shall be deemed to be issued to the Warrantholder as the record owner of such Shares as of the close of business on the date on which the Warrants shall have been exercised. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of the Warrants. With respect to any fraction of a share called for upon exercise of the Warrants, an amount equal to such fraction multiplied by the then current Exercise Price shall be paid in cash to the Warrantholder.

5. Charges, Taxes and Expenses. Issuance of certificates for Shares upon the exercise of the Warrants shall be made without charge to the Warrantholder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Warrantholder or in such name or names as may be directed by the Warrantholder, provided however, that in the event certificates for Shares are to be issued in a name other than the name of the Warrantholder, this Warrant Agreement when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Warrantholder, and provided further, that upon any transfer involved in the issuance or delivery of any certificates for Shares, the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

6. No Rights as Stockholders. This Warrant Agreement does not entitle the Warrantholder to any additional voting rights or other rights as a stockholder of the Company prior to the exercise of the Warrants.

7. Exchange and Registry of Warrant. This Warrant Agreement is exchangeable, upon the surrender hereof by the registered holder at the above-mentioned office or agency of the Company, for a new Warrant Agreement of like tenor and dated as of such exchange.

The Company shall maintain at the above-mentioned office or agency a registry showing the name and address of the registered holder of this Warrant Agreement. This Warrant Agreement may be surrendered for exchange, transfer or exercise, in accordance with its terms, at such office or agency of the Company, and the Company shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry.

8. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant Agreement, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Warrant Agreement, if mutilated, the Company will make and deliver a new Warrant Agreement of like tenor and dated as of such cancellation, in lieu of this Warrant Agreement.

9. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday.

10. Adjustment Rights.

(a) Reclassification, etc. If the Company at any time shall, by subdivision, combination or reclassification of securities or otherwise, change any of the securities to which purchase rights under this Warrant Agreement exist into the same or a different number of securities of any class or classes, this Warrant Agreement shall thereafter be to acquire such number and kind of securities as would have been issuable as the result of such changes with respect to the securities which were subject to the purchase rights under this Warrant Agreement immediately prior to such subdivision, combination, reclassification or other change. If shares of the Company's Common Stock are subdivided or combined into a greater or smaller number of shares of Common Stock, the Exercise Price under this Warrant Agreement shall be proportionately reduced in case of subdivision of shares or proportionately increased in the case of combination of shares, in both cases by the ratio which the total number of shares of Common Stock to be outstanding immediately after such event bears to the total number of shares of Common Stock outstanding immediately prior to such event.

(b) Cash Distributions. No adjustment on account of cash dividends will be made to the Exercise Price under this Warrant Agreement.

(c) Authorized Shares. The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Common Stock upon the exercise of any purchase rights under this Warrant Agreement. The Company further covenants that its issuance of this Warrant Agreement shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of the Company's Common Stock upon the exercise of the purchase rights under this Warrant Agreement.

(d) Exercise Price Adjustments. The Exercise Price of the Warrants is subject to adjustment on the same terms and conditions as set forth in Article 4, Section 5(d) of the Company's Restated Certificate of Incorporation as accepted by the Delaware Secretary of State on December 20, 1995, a copy of which is attached as Exhibit A to the December 21 Warrant Agreement (the

"Current Certificate of Incorporation") with respect to the conversion of the Company's Preferred Stock into Common Stock. For purposes of applying the provisions of such Article 4, Section 5(d) to the adjustment of the Exercise Price of the Warrants, any reference in such Article 4, Section 5(d) to the conversion or the Conversion Price of any series of the Company's Preferred Stock shall refer to the exercise and the Exercise Price, respectively, of the Warrants, and all Conversion Price adjustment provisions of such Article 4,
Section 5(d) shall be applied to the initial Exercise Price of the Warrants of $0.50. If the Company's Current Certificate of Incorporation is later amended to reduce or eliminate the right of holders of Preferred Stock to adjustment upon the events set forth in Article 4, Section 5 of the Current Certificate of Incorporation, the exercise price of the Warrants shall remain subject to adjustment as provided in the Current Certificate of Incorporation. If the Company's Current Certificate of Incorporation is later amended to increase the right of the holders of Preferred Stock to adjustment upon any event, the exercise price of the Warrants shall be entitled to adjustment on such better terms. At no time shall the exercise price of the Warrants be subject to adjustment on terms less favorable than those set forth in the Current Certificate of Incorporation.

11. Restrictions on Transferability of Securities.

(a) Restrictions on Transferability. This Warrant Agreement and the Shares issuable upon exercise of the Warrants (collectively the "Securities") shall not be sold, assigned, transferred or pledged except upon the conditions specified in this Section 11, which conditions are intended to ensure compliance with the provisions of the Securities Act of 1933, as amended (the "Securities Act"). Each holder of any of the Securities will cause any proposed purchaser, assignee, transferee, or pledgee of the Securities held by such holder to agree to take and hold such Securities subject to the provisions and upon the conditions specified in this Section 11.

(b) Restrictive Legend. Each certificate representing the Securities and any other securities issued in respect of the Securities pursuant to Section 10 shall (unless otherwise permitted by the provisions of
Section 11(c) below) be stamped or otherwise imprinted with a legend in the following form (in addition to any legend required under applicable state securities laws):

THE SECURITIES REPRESENTED BY THE CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE TRANSFER IS IN ACCORDANCE WITH RULE 144 OR SIMILAR RULE OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.

Each holder of Securities and each subsequent transferee (hereinafter collectively referred to as a "Holder") consents to the Company making a notation on its records and giving instructions to any transfer agent of the Securities in order to implement the restrictions on transfer established in this Section 11.

(c) Notice of Proposed Transfers. Each Holder of a certificate representing the Securities, by acceptance thereof, agrees to comply in all respects with the provisions of this Section 11(c). Prior to any proposed sale, assignment, transfer or pledge of any Securities (other than
(i) a transfer not involving a change in beneficial ownership, (ii) in transactions involving the distribution without consideration of Securities by a Holder to any of its partners, or retired partners, or to the estate of any of its partners or retired partners, (iii) a transfer to an affiliated fund, partnership or company, which is not a competitor of the Company, subject to compliance with applicable securities laws or (iv) transfers in compliance with Rule 144, so long as the Company is furnished with satisfactory evidence of compliance with such Rule), unless there is in effect a registration statement under the Securities Act covering the proposed transfer, the Holder thereof shall give written notice to the Company of such Holder's intention to effect such transfer, sale, assignment or pledge. Each such notice shall describe the manner and circumstances of the proposed transfer, sale, assignment or pledge in sufficient detail, and shall be accompanied, at such Holder's expense, by either (i) an opinion of counsel (who shall, and whose opinion shall be, addressed to the Company and reasonably satisfactory to the Company) to the effect that the proposed transfer of the Securities may be effected without registration under the Securities Act or (ii) a "no action" letter from the Securities and Exchange Commission (the "Commission") to the effect that the transfer of such securities without registration will not result in a recommendation by the staff of the Commission that action be taken with respect thereto, whereupon the Holder of such Securities shall be entitled to transfer such Securities in accordance with the terms of the notice delivered by such Holder to the Company. Each certificate evidencing the Securities transferred as above provided shall bear, except if such transfer is made pursuant to Rule 144, the appropriate restrictive legend set forth in Section 11(b) above, except that such certificate shall not bear such restrictive legend if in the opinion of counsel for such Holder and in the opinion of counsel for the Company such legend is not required in order to establish compliance with any provision of the Securities Act.

(d) Removal of Restrictions on Transfer of Securities. Any legend referred to in Section 11(b) hereof stamped on a certificate evidencing the Securities and the stock transfer instructions and record notations with respect to the Securities shall be removed and the Company shall issue a certificate without such legend to the Holder of the Securities if the Securities are registered under the Securities Act, or if such Holder provides the Company with an opinion of counsel (which may be counsel for the Company) reasonably satisfactory to the Company to the effect that a public sale or transfer of such security may be made without registration under the Securities Act or such Holder provides the Company with reasonable assurances, which may, at the option of the Company, include an opinion of counsel (which may be counsel for the Company) reasonably satisfactory to the Company, that such security can be sold pursuant to paragraph (k) of Rule 144 (or any successor provision) under the Securities Act.

12. Investment Representations of the Warrantholder. With respect to the acquisition of any of the Securities, the Warrantholder hereby represents and warrants to the Company as follows:

(a) Experience. The Warrantholder is an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, and bear the economic risk of its

investment and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Securities. If other than an individual, the Warrantholder also represents it has not been organized for the purpose of acquiring the Securities.

(b) INVESTMENT. The Warrantholder is acquiring the Securities for investment for its own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Warrantholder has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, each Warrantholder further represents that the Warrantholder does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person or to any third person, with respect to any of the Securities. The Warrantholder understands that the Securities have not been, and will not be, registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Warrantholder's representations as expressed herein.

(c) RULE 144. The Warrantholder understands that the Securities are characterized as "restricted securities" under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act of 1933, as amended (the "Act") only in certain limited circumstances. In this connection, the Warrantholder represents that it is familiar with Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Act.

(d) NO PUBLIC MARKET. The Warrantholder understands that no public market now exists for any of the securities issued by the Company and that the Company has made no assurances that a public market will ever exist for the Securities.

(e) ACCESS TO DATA. The Warrantholder has had an opportunity to discuss the Company's business, management and financial affairs with the Company's management and has also had an opportunity to ask questions of the Company's officers, which questions were answered to its satisfaction.

13. NOTICE OF RECORD DATE. If at any time prior to the exercise of the Warrants in full the Company takes a record of the holders of Common Stock for the purpose of determining the holders purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, the Company will give to the Warrantholder at least thirty (15) days prior to the date specified therein, written notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right.

14. Miscellaneous.

(a) Issue Date. The provisions of this Warrant Agreement shall be construed and shall be given effect in all respect as if it had been issued and delivered by the Company on the date hereof. This Warrant Agreement shall be binding upon any successors or assigns of the Company. This Warrant Agreement shall constitute a contract under the laws of the State of California and for all purposes shall be construed in accordance with and governed by the laws of said state.

(b) Waivers and Amendments. With the written consent of the Company and the Warrantholder, the obligations of the Company and the right of the Warrantholder may be waived (either generally or in a particular instance, either retroactively or prospectively and either for a specified period of time of indefinitely), and with the same consent the Company and the Warrantholder may enter into a supplementary agreement for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Warrant Agreement.

(c) Notices. All notices and other communications required or permitted to be given under this Warrant Agreement shall be in writing and shall be deemed effectively given upon personal delivery, delivery by nationally recognized courier or upon deposit with the United States Post Office (by first class mail, postage prepaid) addressed as follows: (i) if to the Company, Integrated Surgical Systems, Inc., 829 West Stadium Lane, Sacramento, California 95834, and (ii) if to the Warrantholder, the address as provided in the books of the Company.

(d) Survival and Assumption. The provisions of Section 11 hereof shall survive the exercise of the Warrants and shall remain in effect until such time as the Warrantholder no longer holds Securities. Subject to the provisions of Section 3 hereof, in the event of a merger of the Company with or into another corporation, or the sale of substantially all of the assets of the Company, or the sale or exchange of substantially all of the shares of the Company for shares of another corporation, the Warrants shall survive such merger or sale or exchange and shall be expressly assumed by the successor corporation or, at the option of the Warrantholder, by the parent or subsidiary of such successor corporation; provided, however, that if the Warrants are not to be so assumed by such proposed successor or parent or subsidiary, then the Company shall not effect such merger or sale or exchange.

IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement to be executed by their officers thereunto duly authorized as of the Effective Date.

INTEGRATED SURGICAL SYSTEMS, INC.
A DELAWARE CORPORATION

KEYSTONE FINANCIAL CORPORATION,
A PENNSYLVANIA NOT-FOR PROFIT CORPORATION

NOTICE OF EXERCISE

To: INTEGRATED SURGICAL SYSTEMS, INC.

(1) The undersigned hereby elects to purchase ______________ shares of Common Stock of Integrated Surgical Systems, Inc. pursuant to the terms of the attached Warrant Agreement, and tenders herewith payment of the purchase price in full, together with all applicable transfer taxes, if any.

(2) Please issue a certificate of certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below:

(3) The undersigned represents that the aforesaid shares of Common Stock are being acquired for the account of the undersigned for investment and not, with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares.

ASSIGNMENT FORM

(To assign the foregoing Warrant Agreement, execute this form and supply required information. Do not use this to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant Agreement and all rights evidenced thereby are hereby assigned to

whose address is

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant Agreement, without alteration or enlargement or any change whatever. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant Agreement.

EXHIBIT 10.7

December 8, 1995

Dr. Ramesh Trivedi
California Biomedical Consultants
964 Edmonds Way
Sunnyvale, California 94087

Dear Ramesh:

This letter agreement is intended to set forth the terms of your employment with Integrated Surgical Systems, Inc. (the "Company").

You will be the President and Chief Executive Officer (CEO) of the Company beginning effective November 14, 1995. In this capacity you will report directly to the Board of Directors.

Your compensation for this position will include an annual salary of $264,000 (based on a monthly salary of $22,000), paid semi-monthly in accordance with the Company's normal payroll practices. In addition, you will be reimbursed for reasonable out-of -pocket expenses incurred by you.

Following the First Closing (as that term is defined in the Company's Series D Preferred Stock and Warrant Purchase Agreement), you will be granted an option to purchase that number of shares of the Company's Common Stock which is equal to six percent of the fully diluted capitalization of the Company calculated immediately following the Second Closing, as that term is defined in the Company's Series D Preferred Stock and Warrant Purchase Agreement.

The option will be evidenced by an Option Agreement that will state the exercise price, vesting schedule, and other terms of the option, including acceleration of vesting upon a merger. The exercise price of such option will be determined following the commencement of your employment, and will be equal to the then Fair Market Value of such stock as determined by the Board of Directors. The exercise price of such option is expected to be $0.325 per share. One third of the shares subject to the option will vest immediately, with the remaining two-thirds of the shares subject to the option vesting monthly over three years.

The exercise price of the option will be subject to antidilution adjustment provisions similar to the antidilution adjustment provisions applicable to the conversion price of the Series D Preferred Stock, as set forth in the Company's Restated Certificate of Incorporation to be filed prior to the First Closing and as subsequently amended. However, such antidilution adjustment provisions shall not apply to the option with respect to any particular dilutive issuance if the antidilution adjustment provisions applicable to the conversion price of the Series D Preferred Stock are waived with respect to such dilutive issuance.

DR. RAMESH TRIVEDI
December 8, 1995

As an employee of the Company, you will also be eligible for Company benefits such as medical insurance and other programs which are generally made available to other employees of the Company.

I have enclosed the Company's standard Proprietary Information and Noncompetition Agreement (the "Proprietary Information Agreement"). Please return to me a signed copy of such document.

You should be aware that your employment with the Company is for no specified period and constitutes at-will employment. As a result, you are free to resign at any time, for any reason or for no reason. Similarly, the Company is free to conclude its employment relationship with you at any time, with or without cause; however, upon a termination without cause, you will be entitled to receive severance pay in the form of salary continuation for nine months. In addition, you will be entitled to receive payment for approximately three months of consulting services which you will provide to the Company within twelve months following the date of such termination. The number of days of consulting services to be provided by you will be determined by dividing three months' worth of compensation by your then-prevailing daily rate for consulting services. In addition, upon a termination without cause, the vesting of your option will accelerate so that it is exercisable with respect to all the shares subject to the option at the time of such termination. For purposes of this agreement, the term "cause" means the commission of a crime involving moral turpitude, a pattern of unexcused absences from work, or repeated willful violations of lawful policies of the Company's Board of Directors. This letter and the enclosed Confidentiality Agreement constitute the entire agreement between you and the Company regarding your employment, and may be modified only in writing.

Terms of this offer are considered confidential information to the Company and we trust that you will treat it as such between you and the Company's Board of Directors.

By signing this letter, you are representing to us that (i) you are not a party to any employment agreement or other contract arrangement which prohibits your full-time employment with the Company, (ii) you do not know of any conflicts which would restrict your employment with the Company, and (iii) you have not and will not bring with you to your employment with the Company any documents, records or other confidential information belonging to former employers.

Please return to me a signed copy of this letter, together with the Proprietary Information Agreement. You may keep copies of the documents for your file.

DR. RAMESH TRIVEDI
December 8, 1995

Ramesh, we look forward to working together at Integrated Surgical Systems. We think this is a wonderful opportunity for both you and the Company, and we look forward to receiving your acceptance.

Sincerely,

John N. Kapoor

I hereby agree to the foregoing terms and conditions:

Date:__________________________