**EXHIBIT 4.2**

 

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

 

Void after

**[February9, 2009]**

 

**COMMON STOCK PURCHASE WARRANTofVISTA MEDICAL TECHNOLOGIES, INC.**

 

VistaMedical Technologies, Inc., a Delaware corporation (the “Company”), herebycertifies that, for value received, **[Name andForm of Investor]** (the “Holder”), is entitled, subject to the termsset forth below, to subscribe for and purchase from the Company at any time orfrom time to time before the close of business on **[February 9, 2009]** (the “Expiration Date”) up to such numberof fully paid and nonassessable shares of the Company’s common stock (or suchother securities for which this Warrant becomes exercisable pursuant to Section5 hereof) (each, a “Share” and, collectively, the “Shares”) as set forthherein.

 

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

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# 2.                                       Exercise of Warrant. The terms and conditions uponwhich this Warrant may be exercised, and the Shares covered hereby may bepurchased, are as follows:

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## (a)                                  Term. Subject to the terms hereof, thisWarrant may be exercised at any time, or from time to time, in whole or inpart, on or after the date hereof; provided, however, that in no eventmay this Warrant be exercised later than the earlier of (x) the close of businesson **[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 requiredby this paragraph may be waived by the holders of a majority of the CommonStock (not including Common Stock issued or issuable upon exercise of theWarrants) sold pursuant to the Agreement.

 

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

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

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## (d)                                 Corporate Transaction. For purposes of this Warrant, theterm “Corporate Transaction” shall mean (i) a reorganization, consolidation ormerger (or similar transaction or series of similar and related transactions,but not including any transaction or series of similar and related transactionsinvolving the issuance by the Company of its equity securities for capitalraising purposes) of the Company with or into any other entity or entities inwhich the holders of the Company’s outstanding shares immediately before suchtransaction or series of related transactions do not, immediately after suchtransaction or series of related transactions and in substantially the samepercentage, hold stock representing a majority of the voting power of thesurviving entity (or its parent entity if the surviving entity is wholly ownedby the parent entity) of such transaction or series of related transactions,(ii) a sale, lease, exclusive license or other disposition of all or substantiallyall of the assets of the Company by means of any transaction or series ofrelated transactions in which the holders of the Company’s outstanding sharesimmediately before such sale, lease license or disposition do not, immediatelyafter such sale, lease, license or disposition and in substantially the samepercentage, hold stock representing a majority of the voting power of thesurviving entity (or its parent if the surviving entity is wholly owed by theparent entity) or (iii) a sale or series of related sales of all orsubstantially all of the outstanding capital stock of the Company in which theholders of the Company’s outstanding shares immediately before such sale orsales do not, immediately after such sale or sales and in substantially thesame percentage, hold stock representing a majority of the voting power of thesurviving entity (or its parent if the surviving entity is wholly owed by theparent entity).

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# 3.                                       Method of Exercise; Payment.

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## (a)                                  Cash Exercise. The purchase rights represented bythis Warrant may be exercised by the Holder in whole or in part, by thesurrender of this Warrant (with the Notice of Exercise form attached hereto as Exhibit1 completed and duly executed) at the principal office of the Company, andby payment to the Company, by certified, cashier’s, or other check or meansacceptable to the Company, of an amount equal to the aggregate Exercise Priceof the Shares being purchased as is determined by multiplying the number ofShares being purchased by the Exercise Price. The exercise of this Warrantpursuant to this Section 3(a) shall be deemed to have been effected immediatelyprior to the close of business on the business day on which this Warrant issurrendered to the Company as provided in this Section 3(a), and at such timethe person in whose name any certificate for Shares shall be issuable upon suchexercise shall be deemed to be the record holder of such Shares for allpurposes.

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## (b)                                 Net Issue Exercise.

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### (i)                                     Right to Convert. In addition to and without limitingthe rights of the Holder under the terms of this Warrant, if the fair marketvalue of a Share (as determined below) is greater than the Exercise Price, inlieu of exercising this Warrant for cash the Holder shall have the right toconvert 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 beingcanceled as provided in this Section 3(b) at any time or from time to time priorto the Expiration Date. Upon exercise of the Conversion Right with respect to aparticular number of Shares subject to the Warrant (the “Converted WarrantShares”), the Company shall deliver to the Holder (without payment by theHolder of any exercise price or any cash or other consideration) that number ofShares computed using the following formula:

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|   |   |   | 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.                                   TheConversion Right may only be exercised with respect to a whole number of sharessubject to the Warrant. No fractional shares shall be issuable upon exercise ofthe Conversion Right, and if the number of shares to be issued determined inaccordance with the foregoing formula is other than a whole number, the Companyshall pay to the Holder an amount in cash equal to the fair market value of theresulting fractional share on the Conversion Date.

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#### B.                                     Forpurposes of this Section 3(b), fair market value of a Share on the ConversionDate shall mean (a) if the Company’s common stock is traded on a nationalsecurities exchange or on the Nasdaq’s National Market System or SmallCapMarket and this Warrant is exercisable for shares of the Company’s common stockon the Conversion Date, the closing price on the Conversion Date as reported bysuch exchange or system or (b) if not so traded and/or exercisable for commonstock, the value as determined by the Board of Directors of the Company in goodfaith.

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### (ii)                                  Method of Exercise. The Conversion Right may beexercised by the Holder by the surrender of this Warrant at the principaloffice of the Company together with a written statement specifying that theHolder thereby intends to exercise the Conversion Right and indicating thetotal number of Shares under the Warrant that the Holder is exercising throughthe Conversion Right. Such conversion shall be effective upon receipt by theCompany of the Warrant together with the aforesaid written statement, or onsuch later date as is specified therein (the “Conversion Date”).

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## (c)                                  Stock Certificates. In the event of any exercise ofthe rights represented by this Warrant, certificates for the Shares to bedelivered 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 Warrantrepresenting the Shares with respect to which this Warrant shall not have beenexercised shall also be issued to the Holder within such time.

 

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

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

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# 6.                                       Notice of Adjustments. Whenever the number and/or kind ofShares purchasable hereunder or the Exercise Price thereof shall be adjustedpursuant to Section 5 hereof, the Company shall provide notice by first classmail to the holder of this Warrant setting forth, in reasonable detail, theevent requiring the adjustment, the amount and/or kind of the adjustment, themethod by which such adjustment was calculated, and the number and/or kind ofShares which may be purchased and the Exercise Price therefor after givingeffect to such adjustment.

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

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

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

 

# 9.                                       No Stockholder Rights or Liabilities. This Warrant as such shall notentitle the Holder hereof to any voting rights or other rights as a stockholderof the Company. No provision hereof, in the absence of affirmative action bythe Holder hereof to purchase the Shares, and no

 

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

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# 10.                                 Lost, Stolen, Mutilated or DestroyedWarrant. Ifthis Warrant is lost, stolen, mutilated or destroyed, the Company may, on suchterms as to indemnity or otherwise as it may in its discretion reasonablyimpose (which shall, in the case of a mutilated Warrant, include the surrenderthereof), issue a new warrant of like denomination and tenor as the Warrant solost, stolen, mutilated or destroyed. Any such new Warrant shall constitute anoriginal contractual obligation of the Company, whether or not the allegedlylost, stolen, mutilated or destroyed Warrant shall be at any time enforceableby anyone.

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# 11.                                 Presentment. Prior to due presentment of thisWarrant together with the Assignment form attached hereto as Exhibit 2completed and duly executed, the Company may deem and treat the Holder as theabsolute owner of the Warrant, notwithstanding any notation of ownership orother writing thereon, for the purpose of any exercise thereof and for allother purposes, and the Company shall not be affected by any notice to thecontrary.

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

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# 13.                                 Notices. All payments, notices, requests,demands and other communications hereunder shall be in writing and shall bedeemed effectively given:  (i) uponpersonal delivery to the party to be notified, (ii) when sent by confirmedfacsimile if sent during the normal business hours of the recipient (if notsent during the normal business hours of the recipient, then on the nextbusiness day); (iii) five days after having been sent by registered orcertified mail, return receipt requested, postage prepaid; or (iv) one dayafter deposit with a nationally recognized overnight courier, specifying nextday delivery, with written verification of receipt. All written communicationsshall be addressed to the party to be notified at the address or numberapplicable to such party appearing on the books of the Company.

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

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

 

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

 

 

[Signature pages follow]

 

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INWITNESS WHEREOF, the Company has caused this Warrant to be duly executed anddelivered 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 SIGNATUREPAGE TO COMMON STOCK PURCHASE WARRANT OF VISTA MEDICAL TECHNOLOGIES, INC.]

 

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**Exhibit 1**

 

**NOTICE OF EXERCISE FORM**

 

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

 

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

 

Theundersigned, whose Social Security or other identifying number is____________________________________, hereby irrevocably elects the right of purchaserepresented by the enclosed Warrant for, and to purchase thereunder,____________________________________ Shares (initially shares of the Company’scommon stock) provided for therein and tenders payment herewith to the orderof:

 

Vista Medical Technologies,Inc.in the amount of

 

$___________________.

 

The undersigned requests that certificates for suchshares be issued as follows:

 
| Name:       |   |
|-------------|--------|
| Address:    |   |
| Deliver to: |   |
| Address:    |   |
|             |        |  |  |

 

and, if such number of Shares shall not be all theShares purchasable under the enclosed Warrant, that a new warrant for thebalance remaining of the Shares purchasable under the enclosed Warrant beregistered in the name of, and delivered to, the undersigned at the addressstated 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.) |

 

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**Exhibit 2**

 

**ASSIGNMENT FORM**

 

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

 

FORVALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto________________________________, whose Social Security or other identificationnumber is ________________________________ [residing/located] at________________________________________________________________ the enclosedWarrant, and appoints ________________________________residing at________________________________________________________________ theundersigned’s attorney-in-fact to transfer such Warrant on the books of VistaMedical 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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