EXHIBIT 4.2


 


THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). THE
SECURITIES EVIDENCED BY THIS CERTIFICATE MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT
IN EFFECT WITH RESPECT TO THE SECURITIES, OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO
THE REASONABLE SATISFACTION OF THE COMPANY.


 


Void after


[February
9, 2009]


 


COMMON STOCK PURCHASE WARRANT

of

VISTA MEDICAL TECHNOLOGIES, INC.


 


Vista
Medical Technologies, Inc., a Delaware corporation (the “Company”), hereby
certifies that, for value received, [Name and
Form of Investor] (the “Holder”), is entitled, subject to the terms
set forth below, to subscribe for and purchase from the Company at any time or
from time to time before the close of business on [February 9, 2009] (the “Expiration Date”) up to such number
of fully paid and nonassessable shares of the Company’s common stock (or such
other securities for which this Warrant becomes exercisable pursuant to Section
5 hereof) (each, a “Share” and, collectively, the “Shares”) as set forth
herein.


 


1.                                       Common Stock and Warrant Purchase
Agreement. This
Common Stock Purchase Warrant (this “Warrant”) is issued pursuant to that
certain Common Stock and Warrant Purchase Agreement dated of even date herewith
(the “Agreement”) by and among the Company and, among others, the Holder. For
purposes hereof, the term “Warrant” shall include any warrant issued pursuant
to Section 3(c) and/or Section 10 below. This Warrant is one of a number of
Common Stock Purchase Warrants issued pursuant to the Agreement (collectively,
the “Warrants”). Capitalized terms used herein not otherwise defined herein
shall have the meanings ascribed to them in the Agreement.


 


2.                                       Exercise of Warrant. The terms and conditions upon
which this Warrant may be exercised, and the Shares covered hereby may be
purchased, are as follows:


 


(a)                                  Term. Subject to the terms hereof, this
Warrant may be exercised at any time, or from time to time, in whole or in
part, on or after the date hereof; provided, however, that in no event
may this Warrant be exercised later than the earlier of (x) the close of business
on [February 9, 2009], or (y)
immediately prior to the closing of a Corporate Transaction (as defined below).
At least twenty (20) days prior to the consummation of a Corporate Transaction,
the Company shall send to the Holder notice of such event. The notice required
by this paragraph may be waived by the holders of a majority of the Common
Stock (not including Common Stock issued or issuable upon exercise of the
Warrants) sold pursuant to the Agreement.


 

















 


(b)                                 Number of Shares. This Warrant shall evidence the
right of the Holder to purchase up to [Number
of Shares] Shares, subject to adjustment as set forth herein.


 


(c)                                  Exercise Price. This Warrant shall be exercisable
for Shares at an initial exercise price of $1.97 per Share (the “Exercise Price”),
subject to adjustment as set forth herein.


 


(d)                                 Corporate Transaction. For purposes of this Warrant, the
term “Corporate Transaction” shall mean (i) a reorganization, consolidation or
merger (or similar transaction or series of similar and related transactions,
but not including any transaction or series of similar and related transactions
involving the issuance by the Company of its equity securities for capital
raising purposes) of the Company with or into any other entity or entities in
which the holders of the Company’s outstanding shares immediately before such
transaction or series of related transactions do not, immediately after such
transaction or series of related transactions and in substantially the same
percentage, hold stock representing a majority of the voting power of the
surviving entity (or its parent entity if the surviving entity is wholly owned
by the parent entity) of such transaction or series of related transactions,
(ii) a sale, lease, exclusive license or other disposition of all or substantially
all of the assets of the Company by means of any transaction or series of
related transactions in which the holders of the Company’s outstanding shares
immediately before such sale, lease license or disposition do not, immediately
after such sale, lease, license or disposition and in substantially the same
percentage, hold stock representing a majority of the voting power of the
surviving entity (or its parent if the surviving entity is wholly owed by the
parent entity) or (iii) a sale or series of related sales of all or
substantially all of the outstanding capital stock of the Company in which the
holders of the Company’s outstanding shares immediately before such sale or
sales do not, immediately after such sale or sales and in substantially the
same percentage, hold stock representing a majority of the voting power of the
surviving entity (or its parent if the surviving entity is wholly owed by the
parent entity).


 


3.                                       Method of Exercise; Payment.


 


(a)                                  Cash Exercise. The purchase rights represented by
this Warrant may be exercised by the Holder in whole or in part, by the
surrender of this Warrant (with the Notice of Exercise form attached hereto as Exhibit
1 completed and duly executed) at the principal office of the Company, and
by payment to the Company, by certified, cashier’s, or other check or means
acceptable to the Company, of an amount equal to the aggregate Exercise Price
of the Shares being purchased as is determined by multiplying the number of
Shares being purchased by the Exercise Price. The exercise of this Warrant
pursuant to this Section 3(a) shall be deemed to have been effected immediately
prior to the close of business on the business day on which this Warrant is
surrendered to the Company as provided in this Section 3(a), and at such time
the person in whose name any certificate for Shares shall be issuable upon such
exercise shall be deemed to be the record holder of such Shares for all
purposes.


 


(b)                                 Net Issue Exercise.


 


(i)                                     Right to Convert. In addition to and without limiting
the rights of the Holder under the terms of this Warrant, if the fair market
value of a Share (as determined below) is greater than the Exercise Price, in
lieu of exercising this Warrant for cash the Holder shall have the right to
convert this Warrant or any portion thereof (the “Conversion Right”) into


 


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Shares equal to the value of this Warrant or the portion thereof being
canceled as provided in this Section 3(b) at any time or from time to time prior
to the Expiration Date. Upon exercise of the Conversion Right with respect to a
particular number of Shares subject to the Warrant (the “Converted Warrant
Shares”), the Company shall deliver to the Holder (without payment by the
Holder of any exercise price or any cash or other consideration) that number of
Shares computed using the following formula:


 


	
   

  	
   

  	
   

  	
  X =

  	
  Y (A-B)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  A

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Where

  	
  X

  	
  =

  	
  the number of Shares to
  be delivered to the Holder

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Y

  	
  =

  	
  the number of Converted
  Warrant Shares

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A

  	
  =

  	
  the fair market value
  of one Share on the Conversion Date (as defined below)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B

  	
  =

  	
  the Exercise Price (as
  adjusted to the Conversion Date).

  



 


A.                                   The
Conversion Right may only be exercised with respect to a whole number of shares
subject to the Warrant. No fractional shares shall be issuable upon exercise of
the Conversion Right, and if the number of shares to be issued determined in
accordance with the foregoing formula is other than a whole number, the Company
shall pay to the Holder an amount in cash equal to the fair market value of the
resulting fractional share on the Conversion Date.


 


B.                                     For
purposes of this Section 3(b), fair market value of a Share on the Conversion
Date shall mean (a) if the Company’s common stock is traded on a national
securities exchange or on the Nasdaq’s National Market System or SmallCap
Market and this Warrant is exercisable for shares of the Company’s common stock
on the Conversion Date, the closing price on the Conversion Date as reported by
such exchange or system or (b) if not so traded and/or exercisable for common
stock, the value as determined by the Board of Directors of the Company in good
faith.


 


(ii)                                  Method of Exercise. The Conversion Right may be
exercised by the Holder by the surrender of this Warrant at the principal
office of the Company together with a written statement specifying that the
Holder thereby intends to exercise the Conversion Right and indicating the
total number of Shares under the Warrant that the Holder is exercising through
the Conversion Right. Such conversion shall be effective upon receipt by the
Company of the Warrant together with the aforesaid written statement, or on
such later date as is specified therein (the “Conversion Date”).


 


(c)                                  Stock Certificates. In the event of any exercise of
the rights represented by this Warrant, certificates for the Shares to be
delivered to the Holder shall be delivered to the Holder as soon as practical,
and, unless this Warrant has been fully exercised or has expired, a new Warrant
representing the Shares with respect to which this Warrant shall not have been
exercised shall also be issued to the Holder within such time.


 


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4.                                       Stock Fully Paid; Reservation of
Shares; Closing of Books. All of the Shares issuable upon the exercise of the
rights represented by this Warrant will, upon issuance and receipt of the
Exercise Price therefor, be fully paid and nonassessable, and free from all
stock transfer taxes, liens and charges with respect to the issue thereof. During
the period within which the rights represented by this Warrant may be
exercised, the Company shall at all times have authorized and reserved for
issuance sufficient Shares to provide for the exercise of the rights
represented by this Warrant. The Company will at no time close its transfer
books against the transfer of the Shares issued or issuable upon the exercise
of this Warrant in any manner which interferes with the timely exercise of this
Warrant.


 


5.                                       Stock Splits, Combination or
Consolidation.
If at any time the outstanding Shares shall be split, combined or consolidated,
by dividend, reclassification or otherwise, into a greater or lesser number of
Shares or any other class or classes or series or series of stock, as
appropriate, the Exercise Price in effect immediately prior to such split,
combination or consolidation and the number and/or kind of securities
purchasable under this Warrant shall, concurrently with the effectiveness of
such split, combination or consolidation, be proportionately adjusted.


 


6.                                       Notice of Adjustments. Whenever the number and/or kind of
Shares purchasable hereunder or the Exercise Price thereof shall be adjusted
pursuant to Section 5 hereof, the Company shall provide notice by first class
mail to the holder of this Warrant setting forth, in reasonable detail, the
event requiring the adjustment, the amount and/or kind of the adjustment, the
method by which such adjustment was calculated, and the number and/or kind of
Shares which may be purchased and the Exercise Price therefor after giving
effect to such adjustment.


 


7.                                       Fractional Shares. No fractional Shares may be issued
in connection with any exercise hereunder. In lieu of such fractional shares,
the Company shall make a cash payment therefor based upon the fair market value
of the Shares as determined under Section 3(b) hereof.


 


8.                                       Restrictive Legend. The Shares issuable upon exercise
of this Warrant (unless registered under the Securities Act of 1933, as
amended) shall be stamped or imprinted with a legend in substantially the
following form:


 


THE SECURITIES EVIDENCED
BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “ACT”). THE SECURITIES EVIDENCED BY THIS CERTIFICATE MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES, OR
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT, THE AVAILABILITY OF
WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY.


 


9.                                       No Stockholder Rights or Liabilities. This Warrant as such shall not
entitle the Holder hereof to any voting rights or other rights as a stockholder
of the Company. No provision hereof, in the absence of affirmative action by
the Holder hereof to purchase the Shares, and no


 


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mere enumeration herein of the rights or privileges of the Holder
hereof, shall give rise to any liability of such Holder for the Exercise Price
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.


 


10.                                 Lost, Stolen, Mutilated or Destroyed
Warrant. If
this Warrant is lost, stolen, mutilated or destroyed, the Company may, on such
terms as to indemnity or otherwise as it may in its discretion reasonably
impose (which shall, in the case of a mutilated Warrant, include the surrender
thereof), 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.


 


11.                                 Presentment. Prior to due presentment of this
Warrant together with the Assignment form attached hereto as Exhibit 2
completed and duly executed, the Company may deem and treat the Holder as the
absolute owner of the Warrant, notwithstanding any notation of ownership or
other writing thereon, for the purpose of any exercise thereof and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.


 


12.                                 Amendment. This Warrant and any provision
hereof may be amended or waived (either prospectively or retroactively and
either generally or in a particular instance) or terminated only by an
instrument in writing signed by the Company and the holders of a majority of
the Common Stock (not including Common Stock issued or issuable upon exercise
of the Warrants) sold pursuant to the Agreement.


 


13.                                 Notices. All payments, notices, requests,
demands and other communications hereunder shall be in writing and shall be
deemed effectively given:  (i) upon
personal delivery to the party to be notified, (ii) when sent by confirmed
facsimile if sent during the normal business hours of the recipient (if not
sent during the normal business hours of the recipient, then on the next
business day); (iii) five days after having been sent by registered or
certified mail, return receipt requested, postage prepaid; or (iv) one day
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt. All written communications
shall be addressed to the party to be notified at the address or number
applicable to such party appearing on the books of the Company.


 


14.                                 Severability. Should any part but not the whole
of this Warrant for any reason be declared invalid, such decision shall not
affect the validity of any remaining portion, which remaining portion shall
remain in force and effect as if this Warrant had been executed with the
invalid portion thereof eliminated, and it is hereby declared the intention of
the parties hereto that they would have executed the remaining portion of this
Warrant without including therein any such part which may, for any reason, be
hereafter declared invalid.


 


15.                                 Governing Law, Headings. This Warrant is being delivered in
the State of California and shall be construed and enforced in accordance with
and governed by the laws of such state as applied to agreements among
California residents entered into and to be performed entirely within such
state. The headings in this Warrant are for purposes of reference only, and
shall not limit or otherwise affect any of the terms hereof.


 


5

















 


16.                                 Transfer of Warrant. Subject to applicable laws, rules
and regulations and the restriction on transfer set forth herein and in the
Agreement (including, without limitation, any market-standoff provision), this
Warrant and all rights hereunder are transferable, by the Holder in person or
by a duly authorized attorney-in-fact to any transferee designated by Holder. The
transferee shall sign an investment letter in form and substance satisfactory
to the Company.


 


 


[Signature pages follow]


 


6

















 


IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed and
delivered on and as of [February 9, 2004]
by one of its officers thereunto duly authorized.


 


 


	
  COMPANY:

  	
  VISTA MEDICAL TECHNOLOGIES, INC.,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
    John R. Lyons, President and Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  2101 Faraday Ave.

  
	
   

  	
   

  	
  Carlsbad, CA 92008

  
	
   

  	
   

  	
   

  
	
   

  	
  Fax:

  	
  (760) 603-9170

  
	
   

  	
   

  
	
  ACKNOWLEDGED AND AGREED:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  HOLDER:

  	
  [Name of Holder]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Fax:

  	
   

  	
   

  
								



 


 


[COUNTERPART SIGNATURE
PAGE TO COMMON STOCK PURCHASE WARRANT OF VISTA MEDICAL TECHNOLOGIES, INC.]


 

















 


Exhibit 1


 


NOTICE OF EXERCISE FORM


 


[To be executed by
the Holder if such Holder desires to exercise the Warrant in whole or in part]


 


To:  Vista Medical Technologies, Inc. (the “Company”)


 


The
undersigned, whose Social Security or other identifying number is
____________________________________, hereby irrevocably elects the right of purchase
represented by the enclosed Warrant for, and to purchase thereunder,
____________________________________ Shares (initially shares of the Company’s
common stock) provided for therein and tenders payment herewith to the order
of:


 


Vista Medical Technologies,
Inc.

in the amount of


 


$___________________.


 


The undersigned requests that certificates for such
shares be issued as follows:


 


	
  Name:

  	
   

  
	
  Address:

  	
   

  
	
  Deliver to:

  	
   

  
	
  Address:

  	
   

  
				



 


and, if such number of Shares shall not be all the
Shares purchasable under the enclosed Warrant, that a new warrant for the
balance remaining of the Shares purchasable under the enclosed Warrant be
registered in the name of, and delivered to, the undersigned at the address
stated below:


 


	
  Address:

  	
   

  



 


	
  Dated:
  ________________, 200___

  	
  Signature:

  	
   

  
	
   

  	
   

  
	
   

  	
  (Signature must conform
  in all respects to the name of the Holder as specified on the face of the
  enclosed Warrant, without alteration, enlargement or any change whatsoever.)

  



 


1

















 


Exhibit 2


 


ASSIGNMENT FORM


 


[To be executed by the Holder if such Holder desires
to effect a transfer of the Warrant]


 


FOR
VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________, whose Social Security or other identification
number is ________________________________ [residing/located] at
________________________________________________________________ the enclosed
Warrant, and appoints ________________________________residing at
________________________________________________________________ the
undersigned’s attorney-in-fact to transfer such Warrant on the books of Vista
Medical Technologies, Inc., with full power of substitution in the premises.


 


Dated: ________________, 200___


 


In the presence of:


 


 


	
   

  	
   

  	
  Signature:

  	
   

  
	
   

  	
   

  
	
   

  	
  (Signature must conform
  in all respects to the name of the Holder as specified on the face of the
  enclosed Warrant, without alteration, enlargement or any change whatsoever.)

  



 


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