**Exhibit4.2**

 

**REGISTRATIONRIGHTS AGREEMENT**

 

THIS REGISTRATION RIGHTS AGREEMENT, dated as of March3, 2003, by and between Vista Medical Technologies, Inc. (the “Company”) andthe parties listed on Exhibit A hereto (each, a “Purchaser” andcollectively, the “Purchasers”).

 

WHEREAS, simultaneously with the execution anddelivery of this Agreement, pursuant to a Preferred Stock Purchase Agreementdated the date hereof (the “Purchase Agreement”) the Purchasers have committedto purchase up to 1,000,000 shares of the Company’s Series A Preferred Stock(the “Preferred Shares”); and

 

WHEREAS, the Company desires to grant to thePurchasers the registration rights set forth herein with respect to thePreferred Shares.

 

NOW, THEREFORE, the parties hereto mutually agree asfollows:

 

Section 1.                                            RegistrableSecurities.  As used herein the term“Registrable Securities” means the shares of the Company’s Common Stockissuable upon conversion of the Preferred Shares.  Such shares shall be considered Registrable Securities until (i)all such shares have been disposed of pursuant to the Registration Statement,(ii) all such shares have been sold under circumstances under which all of theapplicable conditions of Rule 144 (or any similar provision then in force)(“Rule 144”) under the Securities Act of 1933, as amended (the “SecuritiesAct”) are met, (iii) all such shares have been otherwise transferred to personswho may trade such shares without restriction under the Securities Act, and theCompany has delivered a new certificate or other evidence of ownership for suchshares not bearing a restrictive legend, or (iv) such time as, in the opinionof counsel to the Company, all such shares may be sold without any time, volumeor manner limitations pursuant to Rule 144(k) (or any similar provision then ineffect) under the Securities Act.  Inthe event of any merger, reorganization, consolidation, recapitalization orother change in corporate structure affecting the Company’s Common Stock, suchadjustment shall be deemed to be made in the definition of “RegistrableSecurities” as is appropriate in order to prevent any dilution or enlargementof the rights granted pursuant to this Agreement.

 

Section 2.                                            Restrictionson Transfer.  The Purchasersacknowledge and understand that in the absence of an effective RegistrationStatement authorizing the resale of the Registrable Securities as providedherein, the Registrable Securities are “restricted securities” as defined inRule 144.  The Purchasers understandthat no disposition or transfer of the Registrable Securities may be made by aPurchaser in the absence of (i) an opinion of counsel in form and substancereasonably satisfactory to the Company, that such transfer may be made withoutregistration under the Securities Act or (ii) such registration.

 

With a view to making available to the Purchasers thebenefits of Rule 144, the Company agrees to:

 

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(a)                                  complywith the provisions of paragraph (c)(1) of Rule 144; and

 

(b)                                 filewith the Securities and Exchange Commission (“SEC”) in a timely manner allreports and other documents required to be filed by the Company pursuant toSection 13 or 15(d) under the Securities Exchange Act of 1934, as amended (the“Exchange Act”); and, if at any time it is not required to file such reportsbut in the past had been required to or did file such reports, it will, uponthe request of a Purchaser, make available other information as required by,and so long as necessary to permit sales of, its Registrable Securitiespursuant to Rule 144.

 

Section 3.                                            RegistrationRights With Respect to the Securities.

 

(a)                                  TheCompany agrees that, by the earlier of (i) within thirty (30) days followingreceipt of a Purchaser Request (as defined below) or (ii) within four hundred(400) days after the initial issuance of any Preferred Shares (as applicable,the “Filing Deadline”), it will prepare and file with the SEC, a registrationstatement (on Form S-3 and/or S-1, or other appropriate form of registrationstatement) under the Securities Act (the “Registration Statement”), at the soleexpense of the Company (except as provided in Section 3(d) hereof), in respectof a Purchaser(s), so as to permit a public offering and resale of theRegistrable Securities under the Securities Act by such Purchaser(s).  For purposes hereof, a “Purchaser Request”means a written request to the Company, by Purchasers holding at least 50% ofthe then-outstanding shares of Registrable Securities, requesting that theCompany effect a registration of Registrable Securities pursuant to the termsof this Agreement.  A Purchaser Requestmay only be delivered after September 30, 2003 if at least 36.8% of thePreferred Shares (as adjusted for stock splits, stock dividends,recapitalizations and the like) have been converted to Common Stock of theCompany; provided however, that a Purchaser Request may not be made if theCompany has disposed of its OEM endoscopic and 3D business lines.

 

(b)                                 TheCompany shall cause the Registration Statement to become effective within sixty(60) days of the applicable Filing Deadline (as applicable, the “EffectivenessDeadline”).

 

(c)                                  TheCompany will maintain the Registration Statement (or post-effective amendmentfiled under this Section 3) effective under the Securities Act until theearliest of (i) the date that all shares of Registrable Securities registeredon such Registration Statement have been sold or otherwise disposed of pursuantto the Registration Statement, (ii) the date all shares of RegistrableSecurities may be sold under the provisions of Rule 144 without limitation asto volume, (iii) the date all shares of Registrable Securities have beenotherwise transferred to persons who may trade such shares without restrictionunder the Securities Act, and the Company has delivered a new certificate orother evidence of ownership for such securities not bearing a restrictivelegend, or (iv) the date all shares of Registrable Securities may be soldwithout any time, volume or manner limitations pursuant to Rule 144(k) or anysimilar provision then in

 

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effect under theSecurities Act (the “Effectiveness Period”).

 

(d)                                 If(a) any Registration Statement is not filed on or prior to the Filing Deadline,or (b) after a Registration Statement is filed with and declared effective bythe SEC, such Registration Statement ceases to be effective as to allRegistrable Securities to which it is required (pursuant to the provisionshereof) to relate at any time prior to the expiration of the EffectivenessPeriod without being succeeded within fifteen days by an amendment to suchRegistration Statement or by a subsequent Registration Statement filed with anddeclared effective by the SEC, or (c) any Registration Statement is notdeclared effective by the SEC on or prior to the applicable EffectivenessDeadline (any such failure or breach being referred to as a “RegistrationEvent”), then in addition to any other rights available to the Purchasers ofthe Preferred Shares: (x) on the date triggering each such Registration Event,the Company shall pay to each Purchaser an amount in cash, as liquidateddamages and not as a penalty, equal to 1% of the aggregate purchase price paidby such Purchaser for such Purchaser’s Preferred Shares; and (y) on eachmonthly anniversary of the date triggering each such Registration Event (if theRegistration Event shall not have been cured by such date) until the applicableRegistration Event is cured, the Company shall pay to each Purchaser an amountin cash, as liquidated damages and not as a penalty, equal to 1% of theaggregate purchase price paid by such Purchaser for such Purchaser’s PreferredShares.  If the Company fails to pay anyliquidated damages pursuant to this Section in full within seven days after thedate payable, the Company will pay interest thereon at a rate of 7% per annum(or such lesser maximum amount that is permitted to be paid by applicable law)to the Purchaser, accruing daily from the date such liquidated damages are dueuntil such amounts, plus all interest thereon, are paid in full.  The liquidated damages pursuant to the termshereof shall apply on a pro-rata basis for any portion of a month prior to thecure of a Registration Event.

 

(e)                                  Allfees, disbursements and out-of-pocket expenses and costs incurred by theCompany in connection with the preparation and filing of the RegistrationStatement under subparagraph 3(a) and in complying with applicable securitiesand blue sky laws (including, without limitation, all attorneys’ fees of theCompany) shall be borne by the Company. The Purchasers shall bear the cost of underwriting and/or brokeragediscounts, fees and commissions, if any, applicable to the RegistrableSecurities being registered and the fees and expenses of Purchasers’counsel.  The Purchasers and theircounsel shall have a reasonable period, not to exceed three (3) business days,to review the proposed Registration Statement or any amendment thereto, priorto filing with the SEC, and the Company shall provide the Purchasers withcopies of any comment letters received from the SEC with respect thereto withintwo (2) business days of receipt thereof. The Company shall make reasonably available for inspection by Purchasersparticipating in any such registration, any underwriter participating in anydisposition pursuant to the Registration Statement, and any attorney,accountant or other agent retained by the participating Purchasers or any suchunderwriter all relevant financial and other records, pertinent corporatedocuments and properties of the Company and its 

 

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subsidiaries, andcause the Company’s officers, directors and employees to supply all informationreasonably requested by such Purchasers or any such underwriter, attorney,accountant or agent in connection with the Registration Statement, in eachcase, as is customary for similar due diligence examinations; provided, however,that all records, information and documents that are designated in writing bythe Company, in good faith, as confidential, proprietary or containing anymaterial non-public information shall be kept confidential by the Purchasersand any such underwriter, attorney, accountant or agent (pursuant to anappropriate confidentiality agreement in the case of the Purchasers,underwriter, attorney, accountant or agent), unless such disclosure is madepursuant to judicial process in a court proceeding (after first giving theCompany an opportunity promptly to seek a protective order or otherwise limitthe scope of the information sought to be disclosed) or is required by law, orsuch records, information or documents become available to the public generallyor through a third party not in violation of an accompanying obligation ofconfidentiality; and providedfurther that, if the foregoinginspection and information gathering would otherwise disrupt the Company’sconduct of its business, such inspection and information gathering shall, tothe maximum extent possible, be coordinated on behalf of the Purchasers and theother parties entitled thereto by one firm of counsel designed by and on behalfof the majority in interest of Purchasers and other parties.  The Company shall qualify any of theRegistrable Securities for sale in such states as the participating Purchasersreasonably designate and shall furnish indemnification in the manner providedin Section 6 hereof.  However, theCompany shall not be required to qualify in any state which will require anescrow or other restriction relating to the Company and/or the sellers, orwhich will require the Company to qualify to do business in such state.  The Company at its expense will supply theparticipating Purchasers with copies of the Registration Statement and thefinal prospectus included therein (the “Prospectus”) and other relateddocuments in such quantities as may be reasonably requested by such Purchasers.

 

(f)                                    Notwithstandinganything to the contrary contained herein, the Company shall not be required bythis Section 3 to include the Purchasers’ Registrable Securities in anyRegistration Statement if, in the opinion of counsel for both the Purchasersand the Company (or, should they not agree, in the opinion of another counselexperienced in securities law matters acceptable to counsel for the Purchasersand the Company) the proposed offering or other transfer as to which suchregistration is requested is exempt from applicable federal and statesecurities laws and would result in all purchasers or transferees obtainingsecurities which are not “restricted securities”, as defined in Rule 144 underthe Securities Act.

 

If at any time or from time to time after theeffective date of the Registration Statement, the Company notifies thePurchasers in writing of the existence of a Potential Material Event (asdefined in Section 3(g) below), the Purchasers shall not offer or sell anyRegistrable Securities or engage in any other transaction involving or relatingto Registrable Securities, from the time of the giving of notice with respectto a Potential Material Event until the Purchasers receive written notice fromthe Company (to

 

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be delivered by the Company as soon as reasonablypracticable) that such Potential Material Event either has been disclosed tothe public or no longer constitutes a Potential Material Event (a “SuspensionPeriod”).  The Company may invoke aSuspension Period only for a reasonable period of time not to exceed 45 days(or such earlier time as such Potential Material Event is consummated or nolonger proposed or the applicable material information has been madepublic).  There shall not be more thantwo Suspension Periods declared by the Company.

 

(g)                                 “PotentialMaterial Event” means any of the following: (i) the possession by the Companyof material information that is not ripe for disclosure in a registrationstatement, yet would be required to appear in a registration statement, asdetermined in good faith by the Audit Committee of the Company; (ii) thepossession by the Company of material information, disclosure of which informationin the Registration Statement would be detrimental to the business and affairsof the Company; or (iii) any material engagement or activity by the Companywhich would, in the good faith determination of the Audit Committee of theCompany, be adversely affected by disclosure in a registration statement atsuch time, which determination shall be accompanied by a good faithdetermination by the Chief Executive Officer, Chief Financial Officer and theAudit Committee of the Board of Directors of the Company that the RegistrationStatement would be materially misleading absent the inclusion of suchinformation.

 

Section 4.                                            Cooperationwith Company.  The Purchasers willcooperate with the Company in all respects in connection with this Agreement,including timely supplying all information reasonably requested by the Company(which shall include all information regarding the Purchasers and proposedmanner of sale of the Registrable Securities required to be disclosed in theRegistration Statement) and executing and returning all documents reasonablyrequested in connection with the registration and sale of the RegistrableSecurities and entering into and performing its obligations under anyunderwriting agreement, if the offering is an underwritten offering, in usualand customary form, with the managing underwriter or underwriters of suchunderwritten offering. The participating Purchasers shall consent to be namedas an underwriter in the Registration Statement.  The Purchasers acknowledge that in accordance with current SECpolicy, the participating Purchasers will be named as the underwriter of theRegistrable Securities in the Registration Statement.

 

Section 5.                                            RegistrationProcedures.  If and whenever theCompany is required by any of the provisions of this Agreement to effect theregistration of any of the Registrable Securities under the Securities Act, theCompany shall (except as otherwise provided in this Agreement), asexpeditiously as possible, subject to the Purchasers’ assistance andcooperation as reasonably required:

 

(a)                                  prepareand file with the SEC such amendments and supplements to the RegistrationStatement and the Prospectus as may be necessary to keep such registrationstatement effective and to comply with the provisions of the Securities Act

 

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with respect tothe sale or other disposition of all securities covered by such registrationstatement whenever the Purchasers of such Registrable Securities shall desireto sell or otherwise dispose of the same (including prospectus supplements withrespect to the sales of securities from time to time in connection with aregistration statement pursuant to Rule 415 promulgated under the SecuritiesAct) and (ii) take all lawful action such that each of (A) the RegistrationStatement and any amendment thereto does not, when it becomes effective,contain an untrue statement of a material fact or omit to state a material factrequired to be stated therein or necessary to make the statements therein notmisleading and (B) the Prospectus, and any amendment or supplement thereto,does not at any time during the Effectiveness Period include an untruestatement of a material fact or omit to state a material fact required to bestated therein or necessary to make the statements therein, in light of thecircumstances under which they were made, not misleading;

 

(b)                                 priorto the filing with the SEC of any Registration Statement (including anyamendments thereto) and the distribution or delivery of the Prospectus (includingany supplements thereto), provide draft copies thereof to the participatingPurchasers and reflect in such documents all such comments as the participatingPurchasers (and their counsel) reasonably may propose and (ii) furnish to thePurchasers such numbers of copies of the Prospectus including a preliminaryprospectus or any amendment or supplement to the Prospectus, as applicable, inconformity with the requirements of the Securities Act, and such otherdocuments, as the Purchaser may reasonably request in order to facilitate thepublic sale or other disposition of the Registrable Securities;

 

(c)                                  registerand qualify the Registrable Securities covered by the Registration Statementunder the applicable blue sky laws (subject to the limitations set forth inSection 3(c) above), and do any and all other acts and things which may bereasonably necessary or advisable to enable the Purchasers to consummate thepublic sale or other disposition in such jurisdiction of the RegistrableSecurities, except that the Company shall not for any such purpose be requiredto qualify to do business as a foreign corporation in any jurisdiction whereinit is not so qualified;

 

(d)                                 listsuch Registrable Securities on the market or exchange on which the Common Stockof the Company is then listed, if the listing of such Registrable Securities isthen permitted under the rules of such market or exchange;

 

(e)                                  notifythe Purchasers at any time when  theProspectus is required to be delivered under the Securities Act, of the happeningof any event of which it has knowledge as a result of which the Prospectus, asthen in effect, includes an untrue statement of a material fact or omits tostate a material fact required to be stated therein or necessary to make thestatements therein not misleading in the light of  the circumstances then existing, and the Company shall prepareand file a curative amendment or curative supplement under Section 5(a) asquickly as commercially possible and the period beginning on the date of noticeuntil the curative amendment is effective or curative

 

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supplement isprovided to the Purchasers shall be deemed a Suspension Period;

 

(f)                                    aspromptly as practicable after becoming aware of such event, notify theparticipating Purchasers who hold Registrable Securities being sold (or, in theevent of an underwritten offering, the managing underwriters) of the issuanceby the SEC or any state authority of any stop order or other suspension of theeffectiveness of the Registration Statement at the earliest possible time andtake all lawful action to effect the withdrawal, rescission or removal of suchstop order or other suspension;

 

(g)                                 takeall such other lawful actions reasonably necessary to expedite and facilitatethe disposition by the Purchasers of their Registrable Securities in accordancewith the intended methods therefor provided in the Prospectus which arecustomary for issuers to perform under the circumstances;

 

(h)                                 inthe event of an underwritten offering, promptly include or incorporate in aprospectus supplement or post-effective amendment to the Registration Statementsuch information as the managing underwriters reasonably agree should beincluded therein and to which the Company does not reasonably object and makeall required filings of such prospectus supplement or post-effective amendmentas soon as practicable after it is notified of the matters to be included orincorporated in such prospectus supplement or post-effective amendment; and

 

(i)                                     maintaina transfer agent for its Common Stock.

 

Section 6.                                            Indemnification.

 

(a)                                  TheCompany agrees to indemnify and hold harmless the Purchasers and each person,if any, who controls the Purchasers within the meaning of the Securities Act(“Distributing Purchaser”) against any losses, claims, damages or liabilities,joint or several (which shall, for all purposes of this Agreement, include, butnot be limited to, all reasonable costs of defense and investigation and allreasonable attorneys’ fees), to which the Distributing Purchaser may becomesubject, under the Securities Act or otherwise, insofar as such losses, claims,damages or liabilities (or actions in respect thereof) arise out of or arebased upon any untrue statement or alleged untrue statement of any materialfact contained in the Registration Statement, or any related preliminaryprospectus, the Prospectus or amendment or supplement thereto, or arise out ofor are based upon the omission or alleged omission to state therein a materialfact required to be stated therein or necessary to make the statements thereinnot misleading; provided, however, that the Company will not beliable in any such case to the extent that any such loss, claim, damage orliability arises out of or is based upon an untrue statement or alleged untruestatement or omission or alleged omission made in the Registration  Statement, preliminary prospectus, theProspectus or amendment  or supplementthereto in reliance upon, and in conformity with, written information furnishedto the Company by the Distributing Purchaser specifically for use in thepreparation thereof. This Section 6(a) shall not inure to the benefit of anyDistributing Purchaser with respect to any person 

 

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asserting suchloss, claim, damage or liability who purchased the Registrable Securities whichare the subject thereof if the Distributing Purchaser failed to send or give(in violation of the Securities Act or the rules and regulations promulgatedthereunder) a copy of the Prospectus to such person at or prior to the writtenconfirmation to such person of the sale of such Registrable Securities, wherethe Distributing Purchaser was obligated to do so under the Securities Act orthe rules and regulations promulgated thereunder.  This indemnity agreement will be in addition to any liabilitywhich the Company may otherwise have.

 

(b)                                 EachDistributing Purchaser agrees that it will indemnify and hold harmless theCompany, and each officer, director of the Company or person, if any, whocontrols the Company within the meaning of the Securities Act, against anylosses, claims, damages or liabilities (which shall, for all purposes of thisAgreement, include, but not be limited to, all reasonable costs of defense andinvestigation and all reasonable attorneys’ fees) to which the Company or anysuch officer, director or controlling person may become subject under theSecurities Act or otherwise, insofar as such losses, claims, damages orliabilities (or actions in respect thereof) arise out of or are based upon anyuntrue statement or alleged untrue statement of any material fact contained inthe Registration Statement, or any related preliminary prospectus, theProspectus or amendment or supplement thereto, or arise out of or are basedupon the omission or the alleged omission to state therein a material factrequired to be stated therein or necessary to make the statements therein notmisleading, but in each case only to the extent that such untrue statement oralleged untrue statement or omission or alleged omission was made in theRegistration Statement, preliminary prospectus, the Prospectus or amendment orsupplement thereto in reliance upon, and in conformity with, writteninformation furnished to the Company by such Distributing Purchaserspecifically for use in the preparation thereof. This indemnity agreement willbe in addition to any liability which the Distributing Purchaser may otherwisehave.

 

(c)                                  Promptlyafter receipt by an indemnified party under this Section 6 of notice of thecommencement of any action, such indemnified party will, if a claim in respectthereof is to be made against the indemnifying party under this Section 6,notify the indemnifying party of the commencement thereof; but the omission soto notify the indemnifying party will not relieve the indemnifying party fromany liability which it may have to any indemnified party except to the extentof actual prejudice demonstrated by the indemnifying party.  In case any such action is brought againstany indemnified party, and it notifies the indemnifying party of thecommencement thereof, the indemnifying party will be entitled to participatein, and, to the extent that it may wish, jointly with any other indemnifyingparty similarly notified, assume the defense thereof, subject to the provisionsherein stated and after notice from the indemnifying party to such indemnifiedparty of its election so to assume the defense thereof, the indemnifying partywill not be liable to such indemnified party under this Section 6 for any legalor other expenses subsequently incurred by such indemnified party in connectionwith the defense thereof other than reasonable costs of investigation, unlessthe indemnifying party shall not

 

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pursue the actionto its final conclusion.  Theindemnified party shall have the right to employ separate counsel in any suchaction and to participate in the defense thereof, but the fees and expenses ofsuch counsel shall not be at the expense of the indemnifying party if theindemnifying party has assumed the defense of the action with counselreasonably satisfactory to the indemnified party; provided that if theindemnified party is the Distributing Purchaser, the fees and expenses of suchcounsel shall be at the expense of the indemnifying party if (i) the employmentof such counsel has been specifically authorized in writing by the indemnifyingparty, or (ii) the named parties to any such action (including any impleadedparties) include both the Distributing Purchaser and the indemnifying party andthe Distributing Purchaser shall have been advised by such counsel that theremay be one or more legal defenses available to the indemnifying party differentfrom or in conflict with any legal defenses which may be available to theDistributing Purchaser (in which case the indemnifying party shall not have theright to assume the defense of such action on behalf of the DistributingPurchaser, it being understood, however, that the indemnifying party shall, inconnection with any one such action or separate but substantially similar orrelated actions in the same jurisdiction arising out of the same generalallegations or circumstances, be liable only for the reasonable fees andexpenses of one separate firm of attorneys for the Distributing Purchaser,which firm shall be designated in writing by the Distributing Purchaser and beapproved by the indemnifying party).  Nosettlement of any action against an indemnified party shall be made without theprior written consent of the indemnified party, which consent shall not beunreasonably withheld.

 

All fees and expenses of the indemnified party(including reasonable costs of defense and investigation in a manner notinconsistent with this Section 6 and all reasonable attorneys’ fees andexpenses) shall be paid to the indemnified party, as incurred, within ten (10)business days of written notice thereof to the indemnifying party; provided,that the indemnifying party may require such indemnified party to undertake toreimburse all such fees and expenses to the extent it is finally judiciallydetermined that such indemnified party is not entitled to indemnificationhereunder.

 

Section 7.                                            Contribution.  In order to provide for just and equitablecontribution under the Securities Act in any case in which (i) the indemnifiedparty makes a claim for indemnification pursuant to Section 6 hereof but isjudicially determined (by the entry of a final judgment or decree by a court ofcompetent jurisdiction and the expiration of time to appeal or the denial ofthe last right of appeal) that such indemnification may not be enforced in suchcase notwithstanding the fact that the express provisions of Section 6 hereofprovide for indemnification in such case, or (ii) contribution under theSecurities Act may be required on the part of any indemnified party, then theCompany and the applicable Distributing Purchaser shall contribute to theaggregate losses, claims, damages or liabilities to which they may be subject(which shall, for all purposes of this Agreement, include, but not be limitedto, all reasonable costs of defense and investigation and all reasonableattorneys’ fees), in either such case (after contribution from others) on thebasis of relative fault as well as any other relevant equitableconsiderations.  The relative faultshall be determined by reference to, among other things,

 

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whether the untrueor alleged untrue statement of a material fact or the omission or allegedomission to state a material fact relates to information supplied by theCompany on the one hand or the applicable Distributing Purchaser on the otherhand, and the parties’ relative intent, knowledge, access to information andopportunity to correct or prevent such statement or omission.  The Company and the Distributing Purchaseragree that it would not be just and equitable if contribution pursuant to thisSection 7 were determined by pro rata allocation or by any other method of allocationwhich does not take account of the equitable considerations referred to in thisSection 7.  The amount paid or payableby an indemnified party as a result of the losses, claims, damages orliabilities (or actions in respect thereof) referred to above in this Section 7shall be deemed to include any legal or other expenses reasonably incurred bysuch indemnified party in connection with investigating or defending any suchaction or claim. No person guilty of fraudulent misrepresentation (within themeaning of Section 11(f) of the Securities Act) shall be entitled tocontribution from any person who was not guilty of such fraudulentmisrepresentation.

 

Section 8.                                            Notices.  All notices, demands, requests, consents,approvals, and other communications required or permitted hereunder shall be inwriting and, unless otherwise specified herein, shall be delivered as set forthin the Purchase Agreement.

 

Section 9.                                            Assignment.  Neither this Agreement nor any rights of thePurchasers or the Company hereunder may be assigned by either party to anyother person.

 

Section 10.                                      Counterparts/Facsimile.  This Agreement may be executed in two ormore counterparts, each of which shall constitute an original, but all ofwhich, when together shall constitute but one and the same instrument, andshall become effective when one or more counterparts have been signed by eachparty hereto and delivered to the other party. In lieu of the original, a facsimile transmission or copy of theoriginal shall be as effective and enforceable as the original.

 

Section 11.                                      Remedies andSeverability.  The remedies providedin this Agreement are cumulative and not exclusive of any remedies provided bylaw.  If any term, provision, covenantor restriction of this Agreement is held by a court of competent jurisdictionto be invalid, illegal, void or unenforceable, the remainder of the terms,provisions, covenants and restrictions set forth herein shall remain in fullforce and effect and shall in no way be affected, impaired or invalidated, andthe parties hereto shall use their best efforts to find and employ analternative means to achieve the same or substantially the same result as thatcontemplated by such term, provision, covenant or restriction.  It is hereby stipulated and declared to bethe intention of the parties that they would have executed the remaining terms,provisions, covenants and restrictions without including any of those that maybe hereafter declared invalid, illegal, void or unenforceable.

 

Section 12.                                      ConflictingAgreements.  The Company shall notenter into any agreement with respect to its securities that is inconsistentwith the rights granted to the Purchasers in this Agreement or otherwiseprevents the Company from complying with all of its

 

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obligationshereunder.

 

Section 13.                                      Headings.  The headings in this Agreement are forreference purposes only and shall not affect in any way the meaning orinterpretation of this Agreement.

 

Section 14.                                      Governing Law.  This Agreement shall be governed by andconstrued in accordance with the laws of the State of California applicable tocontracts made in California by persons domiciled in California and withoutregard to its principles of conflicts of laws. The Company and the Purchaser agree to submit themselves to the *in personam*jurisdiction of the state and federal courts situated within the County of SanDiego, California with regard to any controversy arising out of or relating tothis Agreement. Any party shall have the right to seek injunctive relief fromany court of competent jurisdiction in any case where such relief isavailable.  Any party shall have theright to seek injunctive relief from any court of competent jurisdiction in anycase where such relief is available. The prevailing party in such injunctive action shall be awarded itscosts, including attorney’s fees, from the non-prevailing party.

 

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**[REGISTRATION RIGHTS AGREEMENT SIGNATUREPAGE]**

 

IN WITNESS WHEREOF, the parties hereto have causedthis Registration Rights Agreement to be duly executed as of the date set forthabove.

 
|   | **VISTA MEDICAL TECHNOLOGIES, INC.**           |
|--------|------------------------------------------------|
|   |                                           |   |
|   |                                           |   |
|   | By:                                            | /s/ John R. Lyon |   |
|   |   John  R. Lyon, President & CEO |   |
|   |                                           |   |
|   |                                           |   |
|   | **VECTRA PARTNERS, LLC**                       |   |
|   | P.O. Box 675161                                |   |
|   | Rancho Santa Fe, CA 92067                      |   |
|   |                                           |   |
|   |                                           |   |
|   | By:                                            | /s/ Scott  Pancoast |   |
|   |   Name:                              | Scott Pancoast |   |
|   |   Title:                             | Manager |   |
|   |                                           |   |
|   |                                           |   |
|   | **SBIC PARTNERS, L.P.**                        |   |
|   | 201 Main Street                                |   |
|   | Suite 2700                                     |   |
|   | Fort Worth, Texas  76102                  |   |
|   |                                           |   |
|   | By:                                            | Forrest Binkley & Brown L.P., |   |
|   |                                           | General Partner |   |
|   |                                           |   |
|   |                                           | By: Forrest Binkley & Brown Venture Co., |
|   |                                           | General Partner |   |
|   |                                           |   |
|   |                                           |   |
|   | By:                                            | /s/ Nicholas B. Binkley |   |
|   |                                           | Nicholas B. Binkley |   |
|   |                                           | Office of the President |   |
|        |                                                |  |  |  |  |  |  |

 

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**EXHIBITA**

 

**SCHEDULEOF PURCHASERS**

 

Vectra Partners,LLC

 

SBIC Partners,L.P.

 

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