Document:

Exhibit
10.21

 

 

Executive Severance Plan

as amended 

effective April 1, 2004

 

Summary Plan Description
(SPD) for Executives at ATK and its associated companies.  April 2004

 

Alliant Techsystems Inc.
(ATK) provides a severance benefit to eligible Executives who are terminated
for convenience or due to lay off or reduction in workforce. Note that
severance is not available in other types of terminations including voluntary
resignation or termination for cause nor is severance available when a
participant is reassigned to another position or offered other employment by a
successor or acquiring company.

 

This document is the
summary plan description (SPD) and contains all the terms of the ATK Executive
Severance (Plan) for eligible employees adopted by the company effective
April 1, 2004.  A Change of Control
does not trigger any benefits under this Plan.

 

A severance payment is
contingent upon a signed (and unrescinded) general release of all claims
against ATK in a form acceptable to ATK. 
Upon official notification of termination, an individual will have a
period of time to consider whether to accept and sign the general release.  An example of the general release is
attached to this SPD.  Its form may vary
from state to state and it may be changed from time to time.

 

 

Questions

 

Contact Employee
Solutions if you have questions about this Plan.  You may obtain a printed copy of this SPD from Employee
Solutions, or you may print a copy from ATKNET (click on Microsoft Word doc).

 

Reservation
of rights

 

ATK reserves the right to change, amend or terminate this
Plan or to change the severance benefit available under the Plan at any time in
ATK’s sole discretion.

 

1

 

Plan highlights

 

	
  Plan feature

  	
   

  	
  How it works

  
	
   

  	
   

  	
   

  
	
  Plan participation

  	
   

  	
  You automatically become a participant in the Plan
  when you become an Executive employee of ATK or one of its associated
  companies.  If at any time, you are
  demoted or otherwise removed from an Executive position, then you are
  disqualified from participation in this Plan.  Persons in contract or consultant positions are not eligible
  for benefits under this Plan.

  
	
   

  	
   

  	
   

  
	
  Plan cost

  	
   

  	
  ATK will pay the entire cost of severance benefits
  paid under this Plan out of its general funds.

  
	
   

  	
   

  	
   

  
	
  Benefit eligibility

  	
   

  	
  You may be offered a severance benefit if you are
  terminated for convenience or due to layoff or reduction in workforce as
  determined by ATK and all other conditions of the Plan are met.

  
	
   

  	
   

  	
   

  
	
  Form of Benefit

  	
   

  	
  If eligible, you will be provided at least two
  weeks’ notice of your termination date, or pay in lieu of notice, a severance
  benefit that includes a lump-sum severance payment, plus an additional lump-sum payment to offset costs
  to continue health care, and outplacement services.

  
	
   

  	
   

  	
   

  
	
  Benefit amount

  	
   

  	
  For a Tier 1 Executive the amount of severance is
  equal to 12 months of base salary.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  For a Tier 2 Executive the amount of severance is
  based on two weeks of base salary for each full  year of continuous
  service with ATK measured from the most recent hire date
  and calculated  as of the effective date of
  termination.  It includes a minimum
  severance payment of 26 weeks and a maximum severance payment of 39 weeks.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Note that the Plan has a non-duplication of severance benefit
  provision.

  
	
   

  	
   

  	
   

  
	
  General Release

  	
   

  	
  You are required to sign a general release of all
  employment-related claims prior to receiving a severance payment.  This agreement includes post-employment
  restrictions relating to competition and non-solicitation of workforce.

  
	
   

  	
   

  	
   

  
	
  When benefit is payable

  	
   

  	
  Severance is payable after the termination of your
  employment and after the rescission period set in your signed general
  release, if any, has elapsed.

  

 

2

 

Table of
contents

 

	
  Cover note

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Reservation
  of rights

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Plan highlights

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  About this SPD

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Introduction

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Plan eligibility

  	
   

  	
   

  
	
  Benefit eligibility

  	
   

  	
   

  
	
  Coordination
  with Employment Agreements and other separation benefits

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Form of severance benefit

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Notice

  	
   

  	
   

  
	
  Severance
  Payment

  	
   

  	
   

  
	
  Other
  Severance Benefits

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  General
  provisions

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Year of Service

  	
   

  	
   

  
	
  General Release

  	
   

  	
   

  
	
  Post-Employment
  Restrictions

  	
   

  	
   

  
	
  Benefit
  Prorate (RPT)

  	
   

  	
   

  
	
  Non-duplication

  	
   

  	
   

  
	
  Medical / disability leave
  of absence

  	
   

  	
   

  
	
  Change of
  Control

  	
   

  	
   

  
	
  Amendment
  or Termination

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Administration
  (ERISA)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  General Release (example)

  	
   

  	
   

  

 

About this SPD

 

•          This
document is the Summary Plan Description (SPD) of the Executive Severance Plan
(Plan).  It explains who is eligible,
what the benefit is, and how and when the benefit may be distributed.

 

•          See
the Administration section for additional administrative information,
including your rights under the Employee Retirement Income Security Act
(ERISA).

 

•          This
SPD is not meant to cover every detail of the Plan.  Complete details are in the plan document that, in all cases,
governs the interpretation, operation, and administration of the Plan.  In the event of a conflict between this SPD
and the plan document or any terms or conditions, the text of the plan document
will prevail.

 

3

 

Introduction

 

The ATK severance benefit
is designed to provide you with advance notice of termination, a lump sum
severance payment, and other benefits described herein, if you are terminated
for convenience or due to a layoff or reduction in workforce (RIF) from active
regular full-time or regular part-time employment with ATK or any of its
associated companies.

 

For a Tier 1 Executive
the amount of severance is equal to 12 months of base salary.  For a Tier 2 Executive the amount of
severance is based on two weeks of base pay for each full  year of continuous
service with ATK measured from the most recent hire date and calculated  as of the effective date of
termination.  It
may include service with a predecessor company. (See page 9.)  It includes a minimum severance payment of
26 weeks and a maximum severance payment of 39 weeks.

 

Plan eligibility

 

You are eligible to
participate in the Plan if you are an active regular full-time or regular part-time salaried employee
currently in a Tier 1 or Tier 2 Executive position.

 

•                  You
are in a Tier 1
Executive position if you are an officer elected by the ATK
Board of Directors or you are a grade level 22A, 23 or 24.

 

•                  You
are in a Tier 2
Executive position if you are grade level 22B or 22C and are
eligible to participate in the ATK Executive Incentive Program.

 

If you are eligible to
participate in the Plan, you will remain a participant in the Plan until the
earliest of the following events occur:

 

•          You
voluntarily terminate your employment. 
(As used here, this excludes a formal Request for Layoff Consideration,
which may be periodically offered);

 

•          You
are terminated for cause by ATK;

 

•          You
die, retire, or receive all severance benefits provided for under this Plan, or
you no longer qualify to receive benefits under the Plan; or

 

•          ATK
no longer offers the Plan.

 

For
purposes of this Plan, termination for cause shall include termination for (i) any material failure of you to perform
your duties, (ii) gross negligence or willful or intentional wrongdoing or
misconduct, (iii) a material breach by you of any confidentiality agreement
with the Company or duty of loyalty to the Company, (iv) a commission of an act
of personal dishonesty which involved material personal profit in connection
with the Company, or (v) a conviction or guilty plea by you of a felony offense
or a crime involving moral turpitude.  If
ATK so terminates your employment for cause, then you will not be eligible for
severance.  

 

4

 

You are not eligible
to participate in the Plan if:

 

•          You
are classified as other than a regular employee, e.g., temporary status,
independent contractor, temporary agency employee, consultant, etc.; or

 

•          You
are not an Executive of ATK or an associated company.

 

In addition, you are
disqualified from participation in the Plan if you are not actively at work as
of the effective date of your termination. 
Generally, you are not considered actively at work, if you are on a
leave of absence in excess of ninety (90) consecutive calendar days, and you
are not being paid wages or Paid Time Off. 
(Note: Employees on military leave of absence covered by Uniformed
Services Employment and Reemployment Rights Act (USERRA) are not disqualified
from receiving a severance benefit.)

 

Benefit eligibility

 

If you are eligible to
participate in the Plan, you may qualify for a severance benefit when all of
the following conditions are met:

 

•                  You
are terminated for convenience or due to a layoff or RIF, or ATK otherwise
determines, in its sole discretion, that you are entitled to severance
benefits;

 

•                  You
have signed a general release of all employment-related claims or potential
claims against ATK after you are officially notified of termination and
within the consideration period set in your general release; and

 

•                  The
rescission period set in your general release, if any, has elapsed.

 

For
purposes of this plan, termination for convenience shall mean ATK’s termination of your
employment at any time without cause. 
If ATK so terminates your employment, then you may be eligible for
severance.

 

Even if you are eligible,
you will not qualify for a severance benefit if:

 

•          You
refuse to work during the notice period or fail to satisfactorily perform your
job until your termination date, as determined in the sole discretion of ATK;

 

•          You
refuse to comply with a confidentiality agreement or non-compete agreement or
you disclose ATK trade secrets or confidential or proprietary information;

 

•          You
intentionally damage or refuse to return ATK or customer property;

 

•          You
engage in conduct or behavior that would otherwise lead to termination of your
employment such as disclosing confidential information, disparaging the
company, mistreating or harassing other employees, or violating other workplace
rules or ATK’s Code of Conduct; or

 

•          You
are a participant in the Alliant Techsystems Inc. Income Security Plan and your
termination is a Qualifying Termination as defined under that plan.  Under no circumstances will you receive
benefits under both the Income Security Plan and this Plan as a result of the
termination of your employment.

 

Severance benefits are
not paid under this Plan in the following situations:

 

•          You
are placed on a directed leave of absence or a temporary layoff status, as
determined by the company; or operations have been temporarily interrupted due
to a maintenance or vacation shutdown, material shortage, etc.;

 

5

 

•          Your
location, business unit, or work function is sold, transferred, outsourced, or
merged with a third party and you are offered employment by or you are
transferred to the purchaser or other third party, whether or not you accept
such employment;

 

•          Your
termination is for cause;

 

•          A
Change of Control occurs;

 

•          You
are transferred from one ATK location to a different ATK location;

 

•          Your
position is eliminated and you are offered a comparable position with ATK
within the same geographic area;

 

•          You
voluntarily terminate, resign, abandon your position (e.g., refuse to work until
your termination date), or fail to return from an approved leave of absence; or

 

•          You
are not eligible on the effective date of your termination from employment with
ATK.

 

Even if severance
benefits have commenced, all remaining benefits will be forfeited and your severance benefit
will be terminated automatically if ATK determines in its sole discretion that:

 

•          You
should have been disqualified or ineligible from receiving benefits because of
one of the conditions listed above;

 

•          You
engage in any conduct that damages ATK’s business or defames or slanders ATK’s
name or business reputation; or

 

•          You
violate any provisions of your signed general release.

 

Coordination with Employment
Agreements and other separation benefits

 

ATK retains the right to enter
into side agreements with you that amend your rights under this Plan.  This Plan does not supersede any additional
rights you may have pursuant to an employment agreement, or under federal or
state law.  However, if you are entitled
to any other severance or termination of employment benefits, other than those
provided by this Plan, then your benefits under this Plan will be reduced by
the amounts of such other payments.  The
severance benefits under this Plan are in lieu of any benefits that may be available
under ATK Severance Plan A and/or ATK Severance Plan B; for Executives, this
Plan governs severance benefits.

 

6

 

Forms of severance benefit

 

If you meet the plan
eligibility and benefit eligibility requirements contained in this Plan and you
are eligible for a severance benefit, your severance benefit may include the
following:

 

Notice

 

You will normally be given up to two weeks notice of your termination
date.  Unless otherwise directed by ATK,
you are expected to work through your termination date.  Failure to work during the notice period may
disqualify you from receiving severance benefits.  Layoff notification paperwork will include the length of the
notice period.  ATK retains the right to
offer you two weeks’ pay in lieu of notice.

 

Severance Payment

 

•                  Your
severance payment will be paid in a lump sum and will include:

 

•                  For
a Tier 1 Executive:

 

•                  An
amount equal to 12 months (“Severance Period”) of base salary, regardless of
length of service or time in position,

 

•                  Plus an additional lump sum of $15,000.00 to offset
the cost of continuing health care coverage.

 

•                  For
a Tier 2 Executive:

 

•                  An
amount equal to two weeks of base salary for each full year of continuous
service with a minimum of 26 weeks and a maximum of 39 weeks (“Severance
Period”).  For example, a Tier 2
Executive with one year of service is eligible for 26 weeks of base salary
(minimum); a Tier 2 Executive with 14.5 years of service is eligible for 28
weeks of base salary (full years of service multiplied by two weeks of base
salary); and a Tier 2 executive with 21 years of service is eligible for 39
weeks of base salary (maximum).

 

•                  Plus an additional lump sum of $8,000.00 to offset
the cost of continuing health care coverage.

 

Additional notes:

 

•          Taxes
and other required or authorized payroll deductions will be withheld.

 

•          None
of your severance payment will be considered pensionable earnings (for example,
it is not “Earnings” or “Recognized Compensation”) for purposes of any ATK
qualified or non-qualified plan.

 

•          Severance
payments will be reduced by payments made to you under any other severance
plans or employment agreement.

 

•          Any
money you owe ATK that has not been repaid as of your termination date will be
withheld from your severance payment.

 

7

 

Other Severance Benefits

 

Outplacement
Services:  ATK will provide you with
outplacement services, the scope and provider of which will be determined by
ATK.  You must utilize these
outplacement services within 6 months of your termination date.  You may not receive a cash payment in lieu
of this benefit.

 

Note

 

Stock Options/Restricted
Stock/Performance Shares:  This Plan
does not affect how stock incentives or bonuses such as stock options,
restricted stock, or performance shares are treated at termination of
employment.  The terms of your
individual stock agreements and the plans that govern stock incentives or
bonuses, such as stock options, restricted stock, or performance shares will
govern in the event of the termination of your employment.  Payments for stock options, restricted stock
and performance shares will not be deducted from your severance benefit under
this Plan.

 

8

 

General provisions

 

Year of Service

 

For purposes of this
Plan, a Tier 2 Executive’s severance payment amount is based on full years of service
with ATK.  Service includes continuous
active regular status employment measured from most recent hire date.  It may also include service with a
predecessor company, i.e. a company that is acquired by ATK.  It does not include time worked as a
temporary status employee, independent contractor, temporary agency employee,
consultant, etc. Service is calculated as of the effective date of termination.

 

If you are a Tier 2 Executive, any period of
employment with a predecessor company will only be included in the calculation
of your severance benefit if (1) you were employed by the predecessor company
on the effective date of its acquisition by ATK, (2) you are eligible to
participate in ATK’s Executive Incentive Program, and (3) your service with the
predecessor company is not specifically excluded by this Plan.  This Plan does not recognize previous
service with Olin Corporation.

 

General Release

 

You are required to sign
a general release of all employment-related claims prior to receiving any
severance benefit.  This general release
includes a release of all claims and causes of action, arising, or which may
have arisen, out of or in connection with your employment or termination from
employment with ATK.  If you are
eligible for a severance payment, you will have up to 45 calendar days to consider signing the
general release.  After you sign the
general release, you will have up to 15 calendar days during which to
rescind the general release.  The
specific length of the consideration period and rescission period, if any, will
be set in your individual general release.

 

Post-Employment
Restrictions

 

Competition Restrictions.  In order to protect ATK’s legitimate
interests, including, but not limited to confidential information, trade
secrets, and customer/vendor relationships, you will not, during the Severance
Period, directly or indirectly, personally engage in, nor shall you own,
manage, operate, join, control, consult with, participate in the ownership,
operation or control of, be employed by, or be connected in any manner with any
person or entity that develops, manufactures, distributes, markets or sells
services or products competitive with those that ATK manufactures, markets or
sells to any customer anywhere in the world, during the Severance Period.  If during your Severance Period, you wish to
obtain other non-competitive employment, you agree to meet and confer in good
faith with ATK prior to accepting such employment.  You will provide ATK with the name of any potential future
employer and give ATK the right to provide a copy of this provision to said
potential employer.

 

Non-Solicitation.  During the Severance Period, you will not,
directly or indirectly solicit any of ATK’s employees for the purpose of hiring
them or inducing them to leave their employment with ATK, nor will you own,
manage, operate, join, control, consult with, participate in the ownership, management,
operation or control of, be employed by, or be connected in any manner with any
person or entity that engages in the conduct proscribed by this paragraph
during the Severance Period.

 

Breach.  If in ATK’s sole determination, you breach
any of these Post-Employment Restrictions, ATK will be entitled to injunctive
relief in addition to any other legal or equitable remedies.  At that time, ATK will immediately
discontinue any remaining severance benefits. 
Further, ATK is entitled to repayment of the percentage of your
severance benefits providing consideration for these provisions.  This percentage will be identified in your
General Release of Claims agreement.

 

9

 

Benefit prorate (RPT)

 

If on the date your
employment terminates you are classified as a regular part-time employee, your
severance benefit is pro-rated, based on your current base pay and average
number of hours worked over the past six months.

 

Non-duplication provision

 

Full years of service is
measured from your most recent hire date. 
You will not receive a severance benefit for any previous period of
employment regardless of whether you received severance under this Plan, an
earlier ATK plan, or under the plan of a predecessor or affiliated
company.  If due to a unique
circumstance, you received severance pay or paid leave in lieu of service since
your most recent hire date under this Plan, an earlier ATK plan, or under the
plan of a predecessor or affiliated company, then the years of service used to
calculate the severance benefit amount you received will be subtracted from any
future severance benefit.

 

Medical or disability leave

 

Like other employees who
are not actively at work for more than ninety days, employees not at work due to
a medical or disability leave are generally not eligible for severance when
their job position is eliminated.  If
the leave of absence qualifies for Short Term Disability or the employee is in
the first six months of Long Term Disability, and the employee is able to
return to work prior to exhausting Short Term Disability or the first six
months of Long Term Disability, but there is no job position to return to, then
ATK may offer the employee a severance benefit.

 

Change of Control

 

A Change of Control occurs
upon one or more of the following events:

 

•                  Acquisition by an individual, entity or
group of 40 percent or more of ATK’s stock.

 

•                  Consummation of a merger, consolidation
or sale of all or substantially all of ATK’s assets; however, such a transaction
will not be considered a Change of Control if ATK’s shareholders receive 60
percent or more of the new corporation’s stock.

 

•                  A change in the majority of the Board of
Directors.

 

•                  An approval by the shareholders of a
liquidation or dissolution of ATK.

 

•                  Any other circumstances the Board of
Directors deems to be a Change of Control.

 

A Change of Control does
not result from ATK’s insolvency.

 

In the event of a Change
of Control, this Plan may not be amended, changed, or terminated for a period
of one year from the effective date of the acquisition or merger in a manner
that would adversely affect eligible plan participants unless 80 percent of
such participants provide written consent.

 

Plan
may be amended or terminated

 

At any time prior to a
Change of Control, ATK, through the P&C Committee of the Board of
Directors, has the sole discretion to change, amend or terminate this Plan or
to change the severance benefit available under the Plan at any time.

 

10

 

Administration

 

The Employee Retirement
Income Security Act of 1974 (ERISA) requires that you be given certain
information to help you answer administrative questions about the Plan.  Also detailed in this section is the
appeal process if your claim for benefits is denied, as well as your legal
rights under ERISA.

 

	
  Name of Plan

  	
   

  	
  ATK Plan 5A - Non-Health Welfare Benefit Plan for
  Non-Union Employees

  
	
   

  	
   

  	
   

  
	
  Plan Sponsor and Plan Administrator

  	
   

  	
  Alliant Techsystems Inc.

  5050 Lincoln Drive

  Edina, MN 55436-1097

  1-800-877-2072

  
	
   

  	
   

  	
   

  
	
  Administration

  	
   

  	
  Ultimate responsibility for administration of the
  Plan and interpretation of the Plan’s provisions rests with ATK, acting
  through its officers and employees. The PRC has the exclusive right to make
  final determinations regarding Plan eligibility and to provide conclusive
  interpretation of Plan provisions.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The CPO has appointed the Alliant Pension and Retirement Committee (PRC) to decide
  appeals of denied claims.  The PRC has
  final discretionary authority to decide claim appeals under this Plan.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Correspondence regarding the Plan  should be directed to the

  Chief People Officer - MN01-1030

  at the company address shown above.

  
	
   

  	
   

  	
   

  
	
  Employer Identification Number

  	
   

  	
  41-1672694

  
	
   

  	
   

  	
   

  
	
  Plan Number

  	
   

  	
  527 (Non Union)

  
	
   

  	
   

  	
   

  
	
  Type of Plan

  	
   

  	
  Welfare plan, Severance

  
	
   

  	
   

  	
   

  
	
  Plan Eligibility

  	
   

  	
  As defined in Eligibility section

  
	
   

  	
   

  	
   

  
	
  Plan Funding

  	
   

  	
  Unfunded - Benefits are paid from Employer’s general
  assets.

  
	
   

  	
   

  	
   

  
	
  Plan Year

  	
   

  	
  The Plan year begins on January 1 and ends on
  December 31.

  
	
   

  	
   

  	
   

  
	
  Agent for Legal Process

  	
   

  	
  General Counsel—MN01-1080

  at the
  company address shown above  

  -or-

  CT Corporation

  405 Second Ave. So.

  Minneapolis, MN  55401

  Note:  CT Corporation has locations in every
  state.

  

 

11

 

CLAIMS

 

If you believe you may be
entitled to benefits, or you disagree with any decision regarding your benefit,
you should present a written claim / appeal to ATK Employee
Solutions at the following address. (An oral claim or request for review is not
sufficient.)

 

Alliant Techsystems Inc. 

Attn: Chief
People Officer – MN01-1030

5050 Lincoln Drive

Edina,
MN 55436-1097

1-800-277-8072

 

If you do not file a
written claim or follow the claims procedures, you may give up legal rights.

 

A
Claim for Benefits

 

A “claim” for benefits is
a request for benefits under the Plan filed in accordance with the Plan’s
claims procedures. To make a claim or request review of a denied claim, you
must file a written claim with ATK Employee Solutions at the address shown
above.  An oral claim or request for
review is not sufficient.

 

Steps in Filing a Claim

 

Time for
Filing a Claim.  You must
file your written claim with ATK Employee Solutions within 1 year after the
date you knew or reasonably should have known of the facts behind your claim.

 

Filing a
Claim.  You must file your claim with
ATK Employee Solutions at the address noted above.  You must include the facts and arguments that you want considered
during the claims procedure.

 

Response
from ATK Employee Solutions.  Within
90 days of the date ATK Employee Solutions receives your claim, you will
receive a written or electronic notice of the decision or a notice describing
the need for additional time (up to 90 additional days) to reach a
decision.  If ATK Employee Solutions notifies
you that it needs additional time, the notice will describe the special
circumstances requiring the extension and the date by which it expects to reach
a decision.  If ATK Employee Solutions
denies your claim, in whole or in part, you will receive a notice specifying
the reasons, the Plan provisions on which it is based, a description of
additional material (if any) needed to perfect the claim, your right to file a
civil action under section 502(a) of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), if your claim is denied upon
review, and it will also explain your right to request a review.

 

Steps in Filing Request for Review.

 

Time for
Filing a Request for Review.  If ATK Employee Solutions denies your claim, you may request a
review of your claim by the ATK Pension and Retirement Committee (ATK PRC).  ATK Employee Solutions must receive actual
delivery of your written request for review within 60 days after the date you
receive notice that your claim was denied.

 

Filing a Request
for Review of a Denied Claim.  You may file a request for review of a denied claim with ATK
Employee Solutions, which will be
forwarded to the ATK PRC. Your request must include issues that
you want considered in the review.  You
may submit written comments, documents, records, and other information relating
to your claim.  Upon request, you are
entitled to receive free of charge reasonable access to and copies of the
relevant documents, records, and information used in the claims process.

 

12

 

Response
from ATK PRC on Review. Within 60 days after the date ATK Employee
Solutions receives your request, you will receive a written or electronic
notice of the decision or a notice describing the need for
additional time (up to 60 additional days) to reach a decision.  If you are notified that the PRC needs
additional time, the notice will describe the special circumstances requiring
the extension and the date by which it expects to reach a decision.  If the PRC affirms the denial of your claim,
in whole or in part, you will receive a notice specifying the reasons, the Plan
provisions on which it is based, notice that upon request you are entitled to
receive free of charge reasonable access to and copies of the relevant
documents, records, and information used in the claims process, and your right
to file a civil action under section 502(a) of ERISA.

 

If the PRC  Requests Further Information Regarding
Your Claim on Review.  If the
PRC determines it needs further information to complete its review of your
denied claim, you will receive a written notice describing the additional
information necessary to make the decision. 
You will then have 60 days from the date you receive the notice
requesting additional information to provide it to the PRC.  The time between the date the PRC  sends
its request to you and the date it receives the requested additional
information from you shall not count against the 60-day period in which the PRC
has to decide your claim on review.  If
the PRC does not receive a
response, then the period by which the PRC must reach its decision shall be
extended by the 60-day period provided to you to submit the additional
information.  Note:  If special circumstances exist, this period
may be further extended.

 

In General.  The PRC,  or
its designee, will make all decisions on claims and review of claims.  With respect to the review of original and
denied claims, the PRC has the sole discretion, final authority, and
responsibility to decide all factual and legal questions under the Plan.  This includes interpreting and construing
the Plan and any ambiguous or unclear terms, and determining whether a claimant
is eligible for benefits and the amount of the benefits, if any, a claimant is
entitled to receive.  The PRC may hold
hearings and reserves the right to delegate its authority to make decisions.
The PRC may rely on any applicable statute of limitations as a basis to deny a
claim.  The PRC’s decisions are
conclusive and binding on all parties. 
You may, at your own expense, have an attorney or representative act on
your behalf, but the PRC reserves the right to require a written authorization
for a person to act on your behalf.

 

Time Periods.  The time
period for review of your claim begins to run on the date ATK Employee
Solutions receives your written claim. 
Similarly, if you file a timely request for review, the review period
begins to run on the date ATK Employee Solutions receives your written request.  In both cases, the time period begins to run
regardless of whether you submit comments or information that you would like to
be considered on review.

 

Limitations Period.  If you file
your claim within the required time, complete the entire claims procedure, and
the PRC denies your claim after you request a review, you may sue over your
claim (unless you have executed a release on your claim).  You must, however, commence that suit within
30 months after you knew or reasonably should have known of the facts behind
your claim or, if earlier, within 6 months after the claims procedure is
completed.

 

Exhaustion of Administrative Remedies. 
Before commencing legal action to recover benefits, or to enforce or
clarify rights, you must completely exhaust the Plan’s claim and review
procedures.

 

Administrative Safeguards.  The Plan
uses the claims procedures outlined herein and the review by the PRC as
administrative processes and safeguards to ensure that the Plan’s provisions
are correctly and consistently applied.

 

13

 

The PRC has the sole discretion, authority, and
responsibility to decide all factual and legal questions under the Plan.  This includes interpreting and construing
the plan document and any ambiguous or unclear terms within the plan document,
and determining whether a claimant is eligible for benefits under the Plan and
the amount of the benefits, if any, a claimant is entitled to receive.  The PRC’s decisions are conclusive and
binding on all parties.

 

Your legal rights.  As a
participant in this Plan, you are entitled to certain rights and protections
under the Employee Retirement Income Security Act of 1974 (ERISA).  ERISA requires that all Plan participants
shall be entitled to:

 

•          Examine
all Plan documents, including insurance contracts and collective bargaining
agreements that govern the Plan, and a copy of the latest annual report (Form
5500) filed by the Plan with the U.S. Department of Labor and available at the
Public Disclosure Room of the Employee Benefits Security Administration (“EBSA”).  These documents are available for inspection
at no charge in the Plan Administrator’s office, and other specified locations,
such as worksites and union halls.

 

•          Obtain,
upon written request to the Plan Administrator, copies of documents governing the
operation of the Plan, including insurance contracts and collective bargaining
agreements, and copies of the latest annual report (Form 5500 Series) and
updated summary plan description.  The
Plan Administrator may charge a reasonable amount for the copies.

 

•          Receive
a summary of the annual financial report for any plan that pertains to
you.  The Plan Administrator is required
to furnish you with financial summaries called Summary Annual Reports (SARs).

 

Prudent Actions By Plan Fiduciaries

 

In addition to creating
certain rights for plan participants, ERISA imposes certain duties on the
people who are responsible for the operation of the employee benefit
plans.  The people who operate your
plan, called “fiduciaries” of the plan, have a duty to do so prudently and in
the interest of you and other plan participants and beneficiaries.

 

No one including your
employer, your union, or and other person, may fire you or otherwise
discriminate against you in any way to prevent you from obtaining a benefit or
exercising your rights under ERISA.

 

Enforce Your Rights

 

If your claim for a
welfare benefit is denied or ignored, in whole or in part, you have a right to
know why this as done, to obtain copies of documents relating to the decision
without charges and to appeal any denial, all within certain time schedules.

 

Under ERISA, there are
steps you can take to enforce the above rights.  For instance, if you request in writing a copy of plan documents
or the latest annual report from the plan and do not receive them within 30
days, you may file suit in Federal court. 
In such a case, the court may require the Plan Administrator to provide
the materials to you and pay you up to $110 a day until you receive the
materials, unless the materials were not sent because of reasons beyond the
control of the Plan Administrator.

 

14

 

If you have a claim for
benefits that is denied or ignored, in whole or in part, you may file suit in a
state or Federal court.  In addition, if
you disagree with the Plan’s decision or lack thereof concerning the qualified
status of a domestic relations order or a medical child support order, you may
file suit in Federal court.  If it
should happen that the Plan fiduciaries misuse the Plan’s money, or if you are
discriminated against for asserting your rights, you may seek assistance from
the U.S. Department of Labor, or you may file suit in Federal court.  The court will decide who should pay court
costs and legal fees.  If you are
successful, the court may order the person or entity you have sued to pay these
costs and fees.  If you lose, the court
may order you to pay these costs and fees (for example, if the court finds your
claim frivolous).

 

Assistance With Your Questions

 

If you have any questions
about your benefits, you should contact the Plan Administrator.  If you have any questions about this
statement or about your rights under ERISA, or if you need assistance in
obtaining documents from the Plan Administrator, you should contact the nearest
area office of the Employee Benefits Security Administration, U.S. Department
of Labor, listed in your telephone directory, or the Division of Technical
Assistance and Inquiries, Employee Benefit Security Administration, U.S.
Department of Labor, 200 Constitution Avenue N.W., Washington DC 20210.  You may also obtain certain publications
about your rights and responsibilities under ERISA by calling the publications
hotline of the Employee Benefits Security Administration.

 

15Exhibit 10.1

 

Vista Medical Technologies Inc

2101 Faraday Avenue

Carlsbad, CA 92008

 

March 30, 2004

 

Dawson James Securities,

A Division of Viewtrade
Financial

c/o Dawson James Securities

6400 NW 6th Way

Suite 310

Ft. Lauderdale, FL 33309

 

Re:  Selling Agreement (the “Agreement”)

 

Gentlemen:

 

Vista Medical
Technologies, Inc., a Delaware corporation (the “Seller”), proposes to offer
and sell (the “Offering”), to selected investors, upon the terms set forth
herein and in the Confidential Private Placement Memorandum and other documents
to be supplied to the investors (which collectively, together with the
attachments and exhibits thereto, is referred to as the “Offering Document”), a
copy of which has been delivered to you, up to 4,000,000 units (the “Units”);
each Unit consisting of 1 share of Common Stock (the “Common Stock”) and a
warrant to purchase 1⁄2 share of Common Stock (the “Warrants”).  The Common Stock and Warrants shall have
those provisions described in Exhibit B hereto, and shall be acceptable to the
Selling Agent.  (The Units are sometimes
referred to hereafter as the “Offered Securities”).  Viewtrade Financial (the “Selling Agent”) agrees to offer and
sell on an exclusive “best efforts, all or none” basis, that number of Units
that results in an aggregate sales price of at least $4,000,000  (the “Minimum Number”), and on a best
efforts basis with respect to additional Units having an aggregate sales price
of no more than $1,000,000, during the offering period described in the
Offering Document (the “Offering Period”). Capitalized terms used and not
otherwise defined herein shall have the respective meanings set forth in the
Offering Document.  It is intended that
the offer, offer for sale and sale of the Offered Securities will be exempt
from the federal registration requirements of the Securities Act of 1933, as
amended (the “1933 Act”), pursuant to Regulation D promulgated under
Section 3(b) and/or Section 4(2), respectively, of the 1933 Act and
will qualify for an exemption from registration, if necessary, under the
applicable state securities laws and regulations.

 

The Seller
hereby confirms its agreement with Selling Agent as follows:

 

1.             Offer and Sale of
Offered Securities by Selling Agent; Compensation; Closing.

 

 

1.1           On the basis of Selling
Agent’s representations, covenants and warranties, the Seller appoints Selling
Agent the agent of the Seller for the period commencing on the date of the
completion of the Offering Document and ending on the date set forth in the
Offering Document, unless extended by the Seller and Selling Agent by their
mutual agreement for a period not to exceed an additional ninety (90) days
(“Offering Termination Date”), to use Selling Agent’s best efforts to offer and
sell, on the terms and conditions set forth in this Agreement and in the
Offering Document, subject only to Selling Agent’s right to engage
participating broker-dealers pursuant to Section 2 hereof.  The Selling Agent hereby accepts such
appointment and agrees pursuant to the terms and conditions set forth herein
and in the Offering Document to use its best efforts to offer and sell the
Offered Securities as agent for the Seller during the period specified above,
and to attempt to find suitable accredited purchasers for the Offered
Securities acceptable to the Seller.

 

1.2           Prior to and subject to
the closing, subscription proceeds from the sale of the Offered Securities will
be deposited in an escrow account at Silicon Valley Bank (the “Escrow
Agent”).  The Seller will be responsible
for setting up the Escrow Account, pursuant to an escrow agreement among the
Seller, the Selling Agent and the Escrow Agent, which escrow agreement will be
approved by the Selling Agent. 
Subscribers will be instructed to make their checks payable to “Silicon
Valley Bank, Escrow Agent for Vista Medical Technologies, Inc.,” or shall cause
the wire transfer of immediately available funds in favor of Silicon Valley
Bank, Escrow Agent for Vista Medical Technologies, Inc., in accordance with
instructions provided by the Selling Agent. 
Unless at least the Minimum Number of Units have been sold during the
Offering Period (as the same may be extended by the mutual agreement of the
Selling Agent and the Seller), the Offering will be terminated at the end of
the Offering Period, no Offered Securities will be sold in the Offering and all
subscription proceeds will be refunded to subscribers by the Escrow Agent,
without interest thereon.  If
subscriptions for at least the Minimum Number of Units are received by the end
of the Offering Period (as the same may be extended by the mutual agreement of
the Selling Agent and the Seller), a closing (the “First Closing”) will occur
as soon as possible after subscriptions for the Minimum Number have been
accepted by the Seller.  After the First
Closing, one or more subsequent closings (the “Additional Closings”) will occur
thereafter on such dates as mutually determined by the Seller and the Selling
Agent, but in no event later than ten (10) days after the end of the Offering
Period.  (The First Closing and any
Additional Closing shall each be referred to herein as a “Closing” and the last
of the Closings shall be referred to as the “Final Closing”).

 

1.3           For purposes hereof,
the Minimum Number of Units shall not be deemed to have been sold unless (x) subscription
agreements, completed and fully executed by subscribers who are accredited
investors have been received covering the Minimum Number of the Units and (y)
all checks, drafts and wire transfers submitted by such subscribers in payment
of the purchase price of such Units have been received by the Escrow Agent and
have cleared so that there are “good funds” in the Escrow Account at least
equal to the aggregate purchase price of the Minimum Number of Units.

 

 

1.4           As compensation for the
Selling Agent’s services hereunder, the Seller shall pay to Selling Agent in
cash a selling commission (“Commission”) upon each Closing, in an amount equal
to eight percent (8%) of the aggregate offering price of the Offered Securities
sold by the Selling Agent or its authorized agent at such Closing. At each
Closing of the Offering, the Seller shall pay the Selling Agent its Commission
relating to the sale of the Offered Securities that are subject of the Closing
provided that the Seller or counsel for the Seller has received all documents,
including but not limited to, an executed Subscription Agreement for each
investor (“Subscription Documents”) previously furnished to Selling Agent which
the Selling Agent is required to deliver to the Seller or counsel for the Seller
prior to Closing.  All or any portion of
such Commission may be re-allowed to Participating Broker-Dealers (as
hereinafter defined).  No Offered
Securities shall be considered to have been sold by Selling Agent or any
Participating Broker-Dealer selected by Selling Agent unless the purchaser is
acceptable to the Seller, and no compensation will be payable with respect to
any agreement for the purchase of Offered Securities if the Subscription
Agreement therefor is not actually accepted by the Seller.  Anything in this Agreement to the contrary
notwithstanding, the Seller shall not be required to pay a Commission to
Selling Agent and Selling Agent shall not be entitled to a Commission, pursuant
to this Section 1.4 or any other provision, if to do so would cause the
Seller to violate federal or state securities laws, regulations or rules or any
other law applicable to the Offering.

 

1.5           The Seller will pay all
of its costs relating to the Offering contemplated hereby, including, without
limitation, audit expenses, issuance costs and taxes, counsel fees for the
preparation of the Offering Documents, filing fees and disbursements of counsel
relating to the qualification of the Offered Securities under federal
securities laws, and legal fees and expenses of counsel in connection with
qualifying the Offered Securities under the state blue sky laws.  To the extent required by law, the Seller
shall qualify the Offered Securities for offer and sale in those jurisdictions
designated by the Selling Agent.  The
Seller’s counsel shall be responsible for state blue sky securities laws
compliance by the Seller.

 

1.6           The Seller shall pay
the Selling Agent at each Closing a non-accountable expense allowance of 2% of
the aggregate dollar value of Units sold at such Closing, $10,000 of which
shall be advanced to Selling Agent contemporaneous with the execution of this
Agreement.

 

1.7           Once the Offered Securities are sold, or the
Offering Period terminates, the agency between the Seller and the Selling Agent
shall terminate.  The Selling Agent, on
the basis of the representations and warranties herein contained, but subject
to the terms and conditions herein set forth, accepts such appointment as the
limited agent of the Seller and agrees to use its best efforts to find
purchasers for the Offered Securities.

 

1.8           Upon each Closing of
the sale of the Offered Securities offered by the Seller hereunder, the Seller
will issue to the Selling Agent at a purchase price of $.001 per warrant,
warrants to purchase ten percent (10%) of the Units sold in the Offering

 

 

(“Selling Agent’s Warrants”). 
The Selling Agent’s Warrants shall be exercisable at any time during the
five (5) years from the date of First Closing at an exercise price equal to one
hundred and twenty percent (120%) of the offering price. The Selling Agent’s
Warrants shall be in the form and shall contain the provisions set forth in
Exhibit A attached hereto.

 

1.9           As of the effective
date of this Agreement, the Seller grants to the Selling Agent, the exclusive
right to act as the Selling Agent for the Seller, with respect to this
financing and/or any future financing consummated by the Seller during a period
of Twelve (12) months commencing on the Date of the First Closing.

 

1.10         Each Closing shall be held at the offices of the
Selling Agent, 6400 NW 6th Way, Suite 310, Ft. Lauderdale, FL 33309, or in an
alternative location and at such time and date as Selling Agent and the Seller
may mutually agree.

 

2.             Participating
Broker-Dealers.  The Seller hereby
authorizes Selling Agent to engage other qualified broker-dealers (the
“Participating Broker-Dealers”) to assist the Selling Agent in the placement of
the Offered Securities; provided that during all times that each such
Participating Broker-Dealer shall offer and sell the Offered Securities, each
such Participating Broker-Dealer shall be registered as a broker-dealer under
the Securities Exchange Act of 1934 (the “1934 Act”), shall be a member in good
standing of the National Association of Securities Dealers, Inc. (“NASD”), and
shall be authorized to offer and sell the Offered Securities under the laws of
the jurisdictions in which the Offered Securities will be offered and sold by
such Participating Broker-Dealer.  All
Participating Broker-Dealers will be required to execute a Participating
Broker-Dealer Agreement, the form of which is subject to the reasonable
approval of the Seller, with Selling Agent containing substantially the same
terms and conditions as this Agreement, including, without limitation, the
representations and warranties contained in Section 3.2 below and
provisions for indemnification of the Seller to the same extent as your
indemnification provided in Section 7 below.  Any commissions, fees, or expenses payable to such Participating
Broker-Dealers will be paid by the Selling Agent and not by the Seller.

 

3.             Representations,
Warranties and Covenants.

 

3.1           The Seller represents,
warrants and covenants to Selling Agent that, except as set forth in Schedule
3.1 hereof:

 

(a)           The Seller and each
subsidiary is a corporation duly formed and validly existing and in good
standing under the laws of the jurisdiction of its incorporation as in effect
on the date of this Agreement, with adequate power and authority to enter into
and perform this Agreement and to own its property and to conduct its business
as described in the Offering Document; and the Seller and each subsidiary is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which it owns or leases substantial properties
or in which the conduct of its business requires such qualification except for
such jurisdictions in which the

 

 

failure to qualify in the aggregate would not have
material and adverse effect on the earnings, affairs or business prospects of
the Seller or any such subsidiary (a “Material Adverse Effect”) and in which
jurisdictions such failure may be cured without such Material Adverse Effects;
the execution and delivery of this Agreement by the Seller has been duly and
validly authorized and will not result in a breach of its Certificate of
Incorporation or By-laws; and when executed and delivered by both parties
hereto, this Agreement will be a valid and binding obligation of the Seller,
assuming the due execution by the Selling Agent, enforceable in accordance with
its terms (except to the extent that enforceability of the indemnification
provisions may be limited under applicable securities laws and except as
enforcement may be limited by bankruptcy, moratorium or other laws affecting
creditors’ rights or general principles of equity); and the execution and
delivery of this Agreement, the consummation of the transactions herein
contemplated and compliance with the terms of this Agreement by the Seller do
not and will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, any agreement or any applicable
law, rule, regulation, judgment, order or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Seller, to which the Seller is a party or by which it is bound;

 

(b)           The Offering Document
does not contain and will not contain, at any time between the date hereof and
to and including the date of each Closing, any untrue statement of a material
fact and does not omit nor during such period will omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;

 

(c)           Except as is otherwise
disclosed in the Offering Document, there is no litigation or governmental
proceeding pending or, to the best of its knowledge, threatened against or
involving the property or business of the Seller or any subsidiary of the
Seller;

 

(d)           Except as is otherwise
disclosed in the Offering Document, no material defaults exist in the due
performance and observance of any material obligation, term, covenant or
condition of any agreement or instrument to which the Seller or any subsidiary
is a party or by which they are bound;

 

(e)           The offer, offer for
sale, and sale of the Offered Securities have not been and will not be
registered with the Securities and Exchange Commission (the “SEC”) except as
contemplated in the Offering Document. 
The Company’s actions with respect to the offer, offer for sale and sale
of the Offering Securities will be pursuant to the exemptions from the
registration requirements of Section 5 of the 1933 Act provided by
Section 4(2) thereof and/or by Regulation D thereunder;

 

(f)            To the best of its
knowledge and belief, assuming the offer, offer for sale and sale of the
Offered Securities is made in compliance with the terms of the Offering
Document, the applicable filings with the SEC and any applicable Blue Sky

 

 

States, and subject to the performance of the Selling Agent’s
obligations hereunder, the Seller will have complied in all material respects
with the 1933 Act and with all state securities laws and regulations applicable
to it in connection with the offer, offer for sale, and sale of the Offered
Securities.  The Seller has not taken
and will not take any action in conflict with the 1933 Act or applicable state
or foreign securities or Blue Sky laws, or which would make the exemption, qualification
or registration pursuant to applicable federal or state securities or Blue Sky
laws unavailable with respect to the offer, offer for sale and sale of the
Offered Securities.  The Seller and its
officers, directors or partners are not subject to any disqualification,
including but not limited to any judgment, decree, order or decision issued by
the SEC, any state or foreign securities regulatory authority, any court of
competent jurisdiction or the United States Postal Service.  In offering the Offered Securities, the
Seller will comply with all applicable federal, state or foreign securities
laws, including the rules covering exemptions from registration;

 

(g)           Subject to the
performance of the Selling Agent’s obligations hereunder, the Offered
Securities, upon the payment therefor and issuance thereof, will conform to all
statements and descriptions in relation thereto contained in the Offering
Document and will have the rights set forth in the Seller’s Certificate of
Incorporation;

 

(h)           To the best of the
Seller’s knowledge, the Seller has neither been engaged in, nor been the
subject of, any of the actions or proceedings specified in subsection (a)
of Rule 262 promulgated under Section 3(b) of the 1933 Act, or any
substantially similar provisions under the securities laws of any state in
which the Offered Securities are to be sold, such that no exemption from
registration would be available for the offering of the Offered Securities by
the Seller under applicable federal or state securities laws;

 

(i)            Since the respective
dates as of which information is given in the Offering Document, there has been
no material adverse change in the condition, business, property, capital
commitments, working capital and liabilities or prospects of the Seller or any
subsidiary, financial or otherwise; and the property and business of the Seller
materially conform to the descriptions thereof contained in the Offering
Document; there have been no material liabilities or obligations incurred or
material transactions entered into by the Seller or any subsidiary other than
those in the ordinary course of business; there have been no dividends or
distributions of any kind declared, paid or made by the Seller on its capital
stock; there has not been any change in the capital stock, or any material
increase in the current or long-term debt except as disclosed in the Offering
Document, or any issuance of options, warrants, convertible securities or other
rights to purchase the capital stock of the Seller or any subsidiary; and there
have been no transactions between the Seller, shareholders owning five percent
(5%) or more of its issued and outstanding capital stock, the Seller’s officers
and/or directors, nor have there been any corporate opportunities taken or
assumed by controlling shareholders, officers or directors, that are not fully
disclosed in the Offering Document.

 

 

(j)            The Seller will notify
the Selling Agent immediately and confirm the notice in writing (i) of the
issuance by the SEC or by any state attorney general or securities
administrator of any order enjoining the sale of the Offered Securities or
suspending the effectiveness of any qualification of the Offered Securities for
sale or (ii) of the initiation of any proceedings for that purpose.  The Seller will make every reasonable effort
to prevent the issuance of any such order and, if any such order shall at any
time be issued, to obtain the lifting thereof at the earliest possible moment;

 

(k)           The audited and
unaudited combined financial statements of the Seller (including the related
notes) included in the Offering Document present fairly the financial position
of the Seller and its subsidiaries at the dates indicated; said financial
statements have been prepared in conformity with United States generally
accepted accounting principles applied on a consistent basis, except as
expressly qualified therein, and are in conformity with Regulation S-X
promulgated under the Act;

 

(l)            Except as set forth in
the Offering Document, the Seller does not have any subsidiaries and does not
own any interest in any other corporation, partnership, joint venture or other
entity;

 

(m)          As of the date of this
Agreement, the Seller and its subsidiaries have not agreed, or agreed in
principle, to any merger or acquisition, or combination with, of any other
corporation, partnership, person, party, entity or trust or the sale of its
business or assets to any other corporation, partnership, person, party, entity
or trust;

 

(n)           The Seller and its
subsidiaries have not, directly or indirectly, at any time during their
existence (i) made any unlawful contribution to any candidate for political
office, or failed to disclose fully any contribution in violation of law, or
(ii) made any payment to any federal, state or foreign governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments required or permitted by the laws of the United States or
any jurisdiction thereof;

 

(o)           To the best of Seller’s
knowledge, the Seller and its subsidiaries have filed all necessary federal, state,
local, foreign and other tax returns required to be filed by them and have paid
all taxes shown as due thereon; the Seller and its subsidiaries have not been
notified, either orally or in writing, that any state, local, federal or
foreign taxing authority is conducting or intends to conduct an audit of any
tax return or report filed by the Seller and its subsidiaries or concerning
their business or properties; and the Seller has no knowledge of any tax
deficiency which has been asserted or threatened against the Seller and any
subsidiary which would materially and adversely affect the business,
properties, financial condition, results of operations, liabilities or working
capital of the Seller;

 

(p)           The Seller and its
subsidiaries make and keep accurate books and records and maintain internal
accounting controls which provide reasonable

 

 

assurance that (i) transactions are executed in
accordance with management’s authorization, (ii) transactions are recorded as
necessary to permit preparation of its financial statements and to maintain
accountability for its assets, (iii) access to their assets is permitted only
in accordance with management’s authorization, and (iv) the reported assets are
compared with existing assets at reasonable intervals;

 

(q)           There are no
pre-emptive rights applicable to any of the Seller’s outstanding securities, or
granted by the Seller to any person or party;

 

(r)            The capitalization of
the Seller is as described in the Offering Document and the Seller has
outstanding no more than 5,450,251 shares of its Common Stock as of the date
hereof; all presently outstanding shares of the Seller’s Common Stock are duly
and validly authorized and issued, fully paid and non-assessable and contain no
preemptive rights; the Seller has not contracted for the issuance of any
additional equity securities other than as set forth herein or as contemplated
or described in the Offering Document; and no shares of any other classes of
equity securities are issued and outstanding;

 

(s)           The
Seller agrees that, for a period of twelve (12) months from the date hereof, it
shall not solicit any offer to buy from or offer to sell to any person
introduced to the Seller by the Selling Agent in connection with the Offering,
directly or indirectly, any securities of the Seller or provide the name of any
such person to any other securities broker or dealer or selling agent.  In the event that the Seller or any of its
affiliates, directly or indirectly, solicits, offers to buy from or offers to
sell to any such person any such securities, or provides the name of any such
person to any other securities broker or dealer or selling agent, and such
person purchases such securities or purchases securities from any other
securities broker or dealer or selling agent, the Seller shall pay to the
Selling Agent an amount equal to 8 percent (8%) of the aggregate purchase price
of the securities so purchased by such person; and the Seller is in compliance with all (i) all applicable provisions of the
Sarbanes-Oxley Act of 2002, and the rules and regulations promulgated
thereunder, and (ii) all listing standards and rules promulgated by the NASD.

 

3.2           The Selling Agent
represents and warrants to the Seller as follows:

 

(a)           The Selling Agent is,
has been and will be at all times during the Offering Period, a Delaware
corporation duly organized and validly existing under the laws of the state of
its incorporation, with all requisite power and authority to enter into and
perform this Agreement; the execution and delivery of this Agreement by the
Selling Agent has been duly and validly authorized; and when executed and
delivered by the Seller, this Agreement will be a valid and binding obligation
of the Selling Agent enforceable in accordance with its terms subject to:  (i) due authorization, execution and
delivery hereof by the Seller; (ii) the enforcement of remedies under
applicable bankruptcy, insolvency and other laws affecting creditors’ rights
generally and moratorium laws from time to time in effect; (iii) general
equitable principles which may

 

 

limit the right to obtain the remedy of specific
performance; and (iv) the public policy limitation on indemnification under the
federal securities laws;

 

(b)           The Selling Agent shall
not offer or sell the Offered Securities in any state or states without the
approval of the Seller and completion by the Seller of all, or any, Blue Sky
filings for such states and shall not offer or sell the Offered Securities in
any state or states in which it is not qualified or registered as a broker-dealer
or authorized to engage in the brokerage business; and

 

(c)           The Selling Agent is
(i) a broker-dealer registered with the SEC pursuant to the 1934 Act, and no
proceeding has been initiated to revoke such registration; (ii) a member in
good standing of the NASD; and (iii) a broker-dealer registered with the
securities authorities of each jurisdiction in which it is required to be
registered in connection with the offers or sales of the Offered Securities,
and all such offers or sales will be made only by individuals licensed as
required by all applicable federal and state securities laws.  The Selling Agent agrees to maintain each of
the foregoing memberships and registrations in good standing throughout the
Offering Period.

 

(d)           The Selling Agent has
no material litigation pending against it or its affiliates.

 

(e)           The Selling Agent does
not currently have any material enforcement action or disciplinary procedure
against it or its affiliates.

 

(f)            The Selling Agent will
require that each purchaser of Offered Securities hereunder represent that such
purchaser is an accredited investor and will solicit only accredited investors.

 

4.             Sale and Delivery
of Offered Securities.

 

4.1           No sale of Offered
Securities shall take place or be regarded as effective unless and until
accepted by the Seller, such acceptance to occur at Closing, and the Seller
reserves the right in its sole and absolute discretion to refuse to sell
Offered Securities to any or all persons at any time.  Selling Agent shall send to the Seller and to the Escrow Agent
designated in Section 1.2, with copies to counsel for the Seller, all
acceptable executed Subscription Documents, promptly upon receipt of the same,
subject to any reasonable delay occasioned by further inquiry as to a
prospective purchaser’s qualification or requests by the Seller or Selling
Agent for further information from a prospective purchaser.  The Seller shall notify Selling Agent as to
whom to send the originals of such executed Subscription Documents and to whom
to send copies.  Selling Agent shall
promptly send each such prospective purchaser’s payment for his Offered
Securities to Silicon Valley Bank, the Escrow Agent.  Subject to review by counsel for the Seller, the Seller shall
notify Selling Agent whether such prospective purchaser will be accepted by the
Seller at Closing within ten (10) business days after receipt of the executed
subscription documents for each prospective purchaser of Offered Securities,

 

 

but in no event later than the earlier of (i) the date
the parties have agreed to for Closing or (ii) the Offering Termination
Date.  For every prospective purchaser
of Offered Securities whose subscription is rejected, the Seller will promptly
return all of such prospective purchaser’s executed Subscription Documents to
Selling Agent for return to the prospective purchaser, and will notify the
Escrow Agent to return the funds received to such prospective purchaser without
interest and without deduction.

 

5.             Conditions to the
Obligations of the Seller.

 

The obligations of the
Seller hereunder are subject to the accuracy of Selling Agent’s representations
and warranties, to the observance and performance by Selling Agent of its
obligations hereunder, and to the following further conditions (any of which
may be waived in writing in whole or in part by the Seller):

 

(a)           Selling Agent shall not
have taken or failed to take any action at any time at or prior to Closing,
which, in the opinion of the Seller or counsel for Seller, conflicts or would
conflict with, or otherwise make unavailable, the exemption from registration
requirements for the offer and sale of the Offered Securities under applicable
securities laws and regulations.

 

(b)           If any of the
conditions specified in this Section 5 shall not have been fulfilled when
and as required by this Agreement to be fulfilled, all the obligations of the
Seller under this Agreement may be terminated in writing at any time at or
prior to Closing, and any such termination shall be without liability to the
parties, and further provided that the obligations under Section 7 and
Section 9.1 shall nevertheless survive and continue thereafter.

 

6.             Conditions of the
Obligations of the Selling Agent.

 

The
obligations of the Selling Agent to act as agent hereunder, to find purchasers
for the Offered Securities, and to attend and to deliver documents at Closing
shall be subject to the following conditions:

 

(a)           Between the date hereof
and Closing, the Seller and its subsidiaries shall not have sustained any loss
on account of fire, explosion, flood, accident, calamity or other cause, of
such character as results in a Material Adverse Effect on the Seller and its
subsidiaries, whether or not such loss is covered by insurance.

 

(b)           Between the date hereof
and Closing, there shall be no material litigation instituted or threatened
against the Seller or any subsidiary (other than as set forth in the Offering
Document) and there shall be no material proceeding instituted or threatened
before or by any federal or state commission, regulatory body or administrative
agency or other governmental body, domestic or foreign, wherein an unfavorable
ruling, decision or finding would materially adversely affect the business,
franchises, licenses, permits, operations or financial condition or income of
the Seller.

 

 

(c)           Except as contemplated
herein or as set forth in the Offering Document, during the period subsequent
to the date hereof, and prior to Closing, the Seller and each subsidiary:  (i) shall have conducted its business in the
usual and ordinary manner as the same was being conducted on the date hereof,
and (ii) except in the ordinary course of its business, the Seller and each
subsidiary shall not have incurred any liabilities or obligations (direct or
contingent), or disposed of any assets, or entered into any material
transaction or suffered or experienced any substantially adverse change in its
condition, financial or otherwise, or in its working capital position.  At Closing, the capitalization of the Seller
shall be substantially the same as set forth in the Offering Document.

 

(d)           The authorization for
the issuance and delivery of the Offered Securities and the Offering Document
and related materials, and for the execution and delivery of this Agreement,
and all other legal matters incident thereto, shall be reasonably satisfactory
in all respects to counsel for Selling Agent.

 

(e)           The Seller shall have
furnished to the Selling Agent the opinion, dated the Closing Date, of its
counsel, which opinion shall be acceptable to the Selling Agent, substantially
in the form of attached Exhibit:

 

(f)            The representations
and warranties of the Seller made in this Agreement or in any document or
certificate delivered to the Selling Agent pursuant hereto shall be true and
correct on and as of the Closing with the same force and effect as though such
representations and warranties have been made on and as of the Closing, and the
Selling Agent shall have received a certificate, dated the Closing Date, to
such effect executed by the Chairman of the Board or President of the Seller.

 

(g)           The Seller shall have
performed and complied in all material respects with all covenants, terms and
agreements to be performed and complied with by the Seller on or before the
Closing.

 

(h)           The Seller shall have
provided such certificates as the Selling Agent shall reasonably request.

 

(i)            The Seller and its
President shall provide certificates to the Selling Agent certifying that the
proceeds of the Offering will be used in accordance with the uses designated in
“Use of Proceeds” in the Offering Document.

 

(j)            The Seller shall have
furnished a “Cold Comfort” letter on and as of the Closing, in each case
describing procedures carried out to a date within five (5) days of the date of
the letter, from Ernst & Young LLP, independent public accountants for the
Seller, substantially in the form approved by the Selling Agent.

 

 

7.             Indemnification.

 

7.1           The Seller agrees to
indemnify and hold harmless Selling Agent and each person, if any, who controls
Selling Agent within the meaning of the 1933 Act or the 1934 Act (together, the
“Acts”), the Selling Agent’s affiliated entities, partners, employees, legal
counsel and agents (the “SA Indemnified Parties”) against any losses, claims,
damages, obligations, penalties, judgments, awards, liabilities, costs,
expenses and disbursements (and any and all actions, suits, proceedings and
investigations in respect thereof and any and all legal and other costs,
expenses and disbursements in giving testimony or furnishing documents in
response to a subpoena or otherwise), joint or several, to which Selling Agent
or such person may be subject, under the Acts or otherwise, including, without
limitation, the costs, expenses and disbursements, as and when incurred, of
investigating, preparing or defending any such action, suit, proceeding or
investigation (whether or not in connection with litigation in which the
Selling Agent is a party), directly or indirectly, caused by, relating to,
based upon, arising out of, or in connection with (i) the violation or breach
of any representation, warranty or covenant or agreement of the Seller set
forth in this Agreement or in any instrument, document, agreement or
certificate delivered by the Seller in connection herewith; (ii) any untrue
statement or omission or any alleged untrue statement or omission in the
Offering Document or selling material, excluding information contained in or
omitted from the Offering Document or selling material in reliance upon, and in
conformity with, information furnished to the Seller by Selling Agent or any
Participating Broker-Dealer specifically for use in preparation of the Offering
Document or selling material, as the case may be; (iii) any information
provided by or on behalf of Seller in order to qualify or exempt the Offered
Securities for sale in any jurisdiction; or (iv) the failure of the Seller to
comply with the provisions of the Acts and the regulations thereunder,
including Regulation D; and will reimburse the SA Indemnified Parties for
any legal or other expenses reasonably incurred by the SA Indemnified Parties
in connection with investigation of or defending against any such loss, claim,
expense, damage, liability, (or actions in respect thereof); provided, however,
that the Seller shall not be required to indemnify the SA Indemnified Parties
for any payment made to any claimant in settlement of any suit or claim unless
such payment is agreed to by the Seller (which agreement shall not be
unreasonably withheld) or by a court having jurisdiction of the controversy.  This indemnity agreement shall remain in
full force and effect notwithstanding any investigation made by Selling Agent
or on Selling Agent’s behalf, shall survive consummation of the sale of the
Offered Securities hereunder and shall be in addition to any liability which
the Seller may otherwise have.

 

7.2           Selling Agent agrees to
indemnify and hold harmless the Seller and each person, if any, who controls
the Seller within the meaning of the Acts, Seller’s affiliated entities,
partners, employees, legal counsel and agents (the “Seller Indemnified
Parties”) against any losses, claims, expenses, damages or liabilities (or
actions in respect thereof), joint or several, to which the Seller Indemnified
Parties or any such controlling person may become subject, under the Acts or
otherwise, insofar as such losses, claims, expenses, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or omission or any alleged untrue statement or omission in the Offering
Document contained in or omitted from the Offering Document in reliance upon,
and in conformity with, information furnished to the Seller by Selling Agent or
any

 

 

Participating Broker-Dealer or either of them
specifically for use in preparation of the Offering Document or selling
material, as the case may be; and will reimburse the Seller Indemnified Parties
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending against any such loss, claim, expense, damage,
liability, (or actions in respect thereof); provided, however, that Selling
Agent shall not be required to indemnify the Seller Indemnified Parties for any
payment made to any claimant in settlement of any suit or claim unless such
payment is approved by a court having jurisdiction over the controversy or
Selling Agent agrees to such settlement (which agreement shall not be
unreasonably withheld); and provided further that Selling Agent shall not be
liable under this Section 7.2 for any losses, claims, expenses, damages or
liabilities arising out of any act or failure to act on the part of any other
person except Selling Agent, its partners, employees and agents (including
registered representatives) or any Participating Broker-Dealer.  This indemnity agreement shall remain in
full force and effect notwithstanding any investigation made by or on behalf of
the Seller and shall survive consummation of the sale of the Offered Securities
hereunder and the termination of this Agreement, and shall be in addition to
any liability which Selling Agent may otherwise have.  Notwithstanding the foregoing, in no event shall the amount that
the Selling Agent is required to indemnify the Seller Indemnified Parties,
exceed in the aggregate the compensation received by the Selling Agent hereunder,
except in the case of fraud on the part of the Selling Agent.

 

7.3           The indemnified party
shall notify the indemnifying party in writing promptly after the summons or
other first legal process giving information of the nature of any and all claims
which have been served upon the indemnified party.  In case any action is brought against any indemnified party upon
any such claim, the indemnifying party shall be entitled to participate at its
own expense in the defense, or if it so elects, in accordance with arrangements
satisfactory to any other indemnifying party or parties similarly notified, to
assume the defense thereof, with counsel who shall be satisfactory to such
indemnified party and other indemnified parties who are defendants in such action;
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof and the retaining of such counsel by
the indemnifying party, the indemnifying party shall not be liable to such
indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof, other than the reasonable costs of investigation, unless the
indemnified party shall have reasonably concluded that there are or may be
defenses available to it which are different from or in addition to those
available to the indemnifying party (in which case the indemnifying party shall
not have the right to direct the defense of such action on behalf of the
indemnified party), in any of which circumstances such expenses shall be borne
by the indemnifying party.

 

 

8.             Termination of
Agreement.

 

8.1           This Agreement shall
terminate:

 

(a)           If at any time after
commencement of the Offering, any material condition of Selling Agent’s
obligations hereunder shall not have been met or shall cease to be met and
Selling Agent shall have given to the Seller notice of Selling Agent’s desire
to terminate this Agreement on account of the nonfulfillment of such condition;
or

 

(b)           If the Seller, at any
time, gives notice to Selling Agent to terminate the Offering; or

 

(c)           At such time as all of
the Offered Securities shall have been sold and the subscriptions therefor have
been accepted or the Offering Termination Date has been reached, whichever
shall first occur.

 

Notwithstanding
the termination of this Agreement in accordance with the foregoing provisions
of this Section 8, the respective indemnities, covenants, agreements,
representations, warranties and other statements of the Seller and Selling
Agent set forth in or made pursuant to this Agreement will remain operative and
in full force and effect.

 

8.2           If this Agreement is
terminated pursuant to Section 8.1(a) above, the Selling Agent shall have
no liability to the Seller, and if this Agreement is terminated pursuant to
Section 8.1(b) above, the Seller shall have no liability to the Selling
Agent.

 

9.             Miscellaneous.

 

9.1           Except as otherwise
specifically provided in this Agreement or as may be otherwise agreed between
the parties hereto, Selling Agent, on the one hand, and the Seller, on the
other, shall each pay their respective expenses incident to this Agreement and
the transactions contemplated hereby (including, without limitation, the fees
and disbursements of their respective counsel), and no party to the Agreement
shall have any liability for such expenses incurred by any other party.

 

9.2           It is understood and
agreed that Selling Agent’s relationship to the Seller is that of an
independent contractor and that nothing herein shall be construed to create a
relationship of partners, affiliates, joint venturers or employer and employee
between Selling Agent or either of them and the Seller.

 

9.3           No rights or interests
arising hereunder may be assigned except with the prior written consent of both
the Seller and the Selling Agent. 
Subject to this limitation, this Agreement shall inure to the benefit
and be binding upon Selling Agent and the Seller and their respective
successors and assigns.  This Agreement
is intended to be and is for the sole and exclusive benefit of the parties
hereto, and their respective

 

 

successors and assigns and for the benefit of no other
person.  Except as provided in this
Agreement, nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, other than the parties to it and their
respective successors and assigns, any legal or equitable right, remedy or
claim under or with respect to this Agreement or any of its provisions.  No purchaser of Offered Securities shall be
construed as a successor or assign merely by reason of such purchase.

 

9.4           If any portion of this
Agreement shall be held invalid or inoperative, then so far as is reasonable
and possible:

 

(a)           the remainder of this
Agreement shall be considered valid and operative; and

 

(b)           to the extent possible
under applicable law, effect shall be given to the intent manifest by the
portion held invalid or inoperative.

 

9.5           This Agreement may be
executed in a number of identical counterparts and by facsimile, each of which
shall be deemed to be an original, but all of which constitute, collectively,
one and the same Agreement; but, in making proof of this Agreement, it shall
not be necessary to produce or account for more than one counterpart.

 

9.6           This Agreement may not
be modified or amended except by written agreement executed by each of the
parties to this Agreement.

 

9.7           Whenever the context so
requires, the masculine shall include the feminine and neuter, and the singular
shall include the plural, and conversely. 
The words “shall” and “will” and “agrees” are mandatory, “may” is
permissive.

 

9.8           The parties to this
Agreement covenant and agree that they will execute any other and further
instruments and documents which reasonably are or may become necessary or convenient
to effectuate and carry out this Agreement.

 

9.9           This Agreement (and the
other documents and agreements referenced herein) contains the entire
understanding between the parties and supersedes prior understandings or
written or oral agreements between the parties with respect to the subject
matter of this Agreement.

 

9.10         This Agreement shall be
construed and governed by the laws of the State of Florida.  Any terms and conditions of this Agreement
which are inconsistent with the terms and conditions of the Offering Document,
shall be modified to conform to the terms and conditions set forth in the
Offering Document.

 

9.11         All notices or
communications, except as otherwise specifically provided, shall be in writing,
and, if sent to any party, shall be mailed, delivered or telegraphed and
confirmed to that party at the address set forth below:

 

 

	
  If to the
  Seller:

  	
  Vista Medical Technologies, Inc.

  
	
   

  	
  2101 Faraday
  Avenue

  
	
   

  	
  Carlsbad,
  CA 92008

  
	
   

  	
  Attention:
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  With a copy
  contemporaneously

  by like means:

  	
  Heller Ehrman
  White & McAuliffe, LLP

  
	
   

  	
  4350 La
  Jolla Village Dr. 7th Floor

  
	
   

  	
  San Diego,
  CA 92122

  
	
   

  	
  Attention:
  Michael S. Kagnoff, Esq.

  
	
   

  	
   

  
	
  If to Selling
  Agent, to:

  	
  Dawson James
  Securities,

  
	
   

  	
  A Division
  of Viewtrade Financial

  
	
   

  	
  6400 NW 6th
  Way

  
	
   

  	
  Suite 310

  
	
   

  	
  Ft.
  Lauderdale, FL 33309

  
	
   

  	
  Attention:
  Robert Keyser

  
	
   

  	
   

  
	
  With a copy
  contemporaneously

  	
   

  
	
   

  	
  by like
  means:

  
	
   

  	
  Blank Rome
  LLP

  
	
   

  	
  1200 North
  Federal Highway, Suite 417

  
	
   

  	
  Boca Raton,
  FL 33432

  
	
   

  	
  Attention:
  Bruce C. Rosetto, Esq.

  

 

9.12         All of the terms of this
Agreement, including all representations, warranties, covenants and agreements
of Selling Agent and the Seller, shall survive completion of the Offering for
three years.

 

9.13         Section titles or
captions contained in this Agreement are inserted only as a matter of
convenience and for reference.  Those
titles in no way define, limit, extend or describe the scope of this Agreement,
or the intent of any provision of this Agreement.

 

 

If the
foregoing correctly sets forth the understanding between us, please indicate
acceptance by signing in the space provided below for that purpose and return
to us a counterpart hereof so signed, whereupon this letter and Selling Agent’s
acceptance shall constitute a binding agreement between us.

 

	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Stephen A.
  Gorgol

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen
  A. Gorgol

  	
   

  
	
   

  	
   

  	
  (Authorized
  Officer)

  	
   

  
					

 

The foregoing
Selling Agreement for Vista Medical Technologies, Inc. is hereby accepted and
agreed to as of the date first above written.

 

	
   DAWSON JAMES SECURITIES,

  A DIVISION OF VIEWTRADE FINANCIAL

  As Selling Agent 

  
	
   

  
	
  By:

  	
  /s/ Robert
  D. Keyser

  	
   

  
	
   

  	
  (Authorized
  Officer)

  	
   

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  (Authorized
  Officer)

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