Document:

Exhibit 10.2

 

NEITHER THIS WARRANT
NOR THE SECURITIES UNDERLYING THIS WARRANT HAVE BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION (“COMMISSION”) UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (“ACT”) OR UNDER APPLICABLE STATE SECURITIES
LAWS.  THIS WARRANT AND THE SECURITIES
UNDERLYING THIS WARRANT MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE DISPOSED
OF FOR VALUE WITHOUT REGISTRATION UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS, UNLESS THE HOLDER HEREOF PROVIDES THE COMPANY WITH AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT THE PROPOSED OFFER FOR SALE, SALE OR OTHER
DISPOSITION IS EXEMPT FROM SUCH REGISTRATION REQUIREMENTS.

 

 

SELLING
AGENT’S WARRANT

 

	
  No. SAW-1

  	
   

  	
  Number of Shares of Common

  Stock Purchasable Upon Exercise

  of Warrant:  818,181

  

 

Vista Medical Technologies, Inc., a Delaware
corporation (the “Company”), hereby certifies that for the Exercise Price
stated herein for each share of common stock, $0.01 par value per share, of the
Company (“Common Stock”), issuable upon exercise of this Selling Agent’s
Warrant (“Selling Agent’s Warrant”), Viewtrade Financial or any assignees of
directors or officers of Viewtrade Financial as it may direct in its sole
discretion (the “Selling Agent” ), is entitled, subject to the terms set forth
in this Selling Agent’s Warrant, at any time or from time to time, commencing
on May 26, 2004 (the “Issue Date”), to purchase from the Company Eight Hundred
and Eighteen Thousand One Hundred and Eighty One (818,181) shares of Common
Stock (the “Shares”), of the Company at the exercise price per share as
follows: 545,454 Shares at an exercise price of One Dollar and Two Cents
($1.02) per Share and 272,727 Shares at an exercise price of Ninety five cents
($.95) per Share (collectively each of the exercise prices per Share shall
hereinafter be referred to as the “Exercise Price”), all as more particularly
described in the Company’s Confidential Private Placement Memorandum, dated May
17, 2004, as amended (the “Memorandum”). 
The Shares issuable upon exercise of this Selling Agent’s Warrant have
the same respective terms as the Shares offered pursuant to the Memorandum
except that (i) the holder of this Selling Agent’s Warrant (the “Holder”) shall
have registration rights under the Securities Act of 1933, as amended (the
“Act”), for the Shares as more fully described in Section 8 of this
Selling Agent’s Warrant, and (ii) the securities subject hereof are subject to
adjustment in accordance with Section 5 hereof.  This Selling Agent’s Warrant and all rights hereunder, to the
extent such rights shall not have been exercised, shall terminate and become
null and void to the extent the Holder fails to exercise any portion of this
Selling Agent’s Warrant prior to 5:00 p.m., Eastern Time, on May 26, 2009.

 

 

1.                                      Exercise
of Warrant.

 

(a)                                  All
or any part of this Selling Agent’s Warrant may be exercised by the Holder
hereof by surrendering it, with the form of subscription at the end hereof duly
executed by such Holder, to the Company at its principal executive office or at
the Company’s transfer agent accompanied by payment in full of the Exercise
Price payable in respect of all or part of this Selling Agent’s Warrant being
exercised.  If less than the entire
Selling Agent’s Warrant is exercised, the Company shall, upon such exercise,
execute and deliver to the Holder thereof a new Selling Agent’s Warrant in the
same form as this Selling Agent’s Warrant evidencing the Selling Agent’s
Warrant to the extent not exercised. 
This Selling Agent’s Warrant shall be deemed to have been exercised
prior to the close of business on the date this Selling Agent’s Warrant is
surrendered and payment is made in accordance with the foregoing provisions.

 

(b)                                 Forms of Payment
Authorized.  Payment of the Exercise
Price may be made (i) in cash, by certified or official bank check, or cash
equivalent, (ii) by tender to the Company of shares of the Company’s stock
owned by the Holder having a value, as determined by the Company’s Board of
Directors (but without regard to any restrictions on transferability applicable
to such stock by reason of federal or state securities laws or agreements with
an underwriter for the Company), not less than the Exercise Price, or (iii)
“cashless exercise” by the assignment to a broker-dealer registered under the
Securities Exchange Act of 1934, as amended (“Exchange Act”), of the proceeds
of a sale of some or all of the shares being acquired upon the exercise of this
Selling Agent’s Warrant, provided such assignment complies with Regulation T as
promulgated under the Exchange Act by the Board of Governors of the Federal
Reserve System, (iv) -by tender to the Company of a portion of this Selling
Agent’s Warrant, which portion shall be deemed to have a value equal to the
difference between the exercise price and the fair market value per share of
the Common Stock purchasable upon exercise of the portion of this Selling
Agent’s Warrant tendered (as determined by reference to the closing transaction
price or in the absence thereof, the closing bid price, on the trading date
preceding the date that such tender is made, or if no trading market exists,
then pursuant to section 2(c) below), or (v) by any combination thereof.

 

2.                                      Fractional
Shares.

 

No fractional securities or scrip representing fractional securities
shall be issued upon the exercise of this Selling Agent’s Warrant.  With respect to any fraction of a share of
Common Stock otherwise issuable upon any such exercise hereof, the Company
shall pay to the Holder an amount in cash equal to such fraction multiplied by
the current market value of such fractional securities, determined as follows:

 

(a)                                  If
the security is listed on a national securities exchange or admitted to
unlisted trading privileges on such exchange, the current market value shall be
the last reported sale price of the security on such exchange on the last
business day prior to the date of exercise of this Selling Agent’s Warrant, or
if no such sale is made on such day, the average closing bid and asked prices
for such day on such exchange; or

 

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(b)                                 If the security is not
listed or admitted to unlisted trading privileges, the current value shall be
the last reported sale price on the National Association of Securities Dealers
Automated Quotation (“NASDAQ”) National Market System (“NASDAQ/NMS”) or the
mean of the last reported bid and asked prices reported by the NASDAQ System or
the NASD OTC Bulletin Board (or, if not so quoted, by the National Quotation
Bureau, Inc.) on the last business day prior to the date of the exercise of
this Selling Agent’s Warrant; or

 

(c)                                  If the security is
not so listed or admitted to unlisted trading privileges and prices are not
reported on NASDAQ, or the NASD OTC Bulletin Board (or by the National Quotation
Bureau, Inc.), the current value shall be an amount, not less than the book
value, determined in such reasonable manner as may be prescribed by the Board
of Directors of the Company.

 

3.                                      Exchange,
Assignment or Loss of Warrant.

 

Subject to the transfer limitations contained herein
and to compliance with applicable laws, this Selling Agent’s Warrant is
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company, for other Selling Agent’s Warrants of different
denominations entitling the Holder thereof to purchase in the aggregate the
same number of securities purchasable hereunder.  Any assignment shall be made by surrender of this Selling Agent’s
Warrant to the Company with the Form of Assignment annexed hereto duly executed
and funds sufficient to pay any transfer tax; whereupon the Company shall,
without charge, cause to be executed and delivered a new Selling Agent’s
Warrant in the name of the assignee named in such instrument of assignment and
this Selling Agent’s Warrant shall promptly be cancelled.  This Selling Agent’s Warrant may be divided
or combined with other warrants that carry the same rights upon presentation
hereof to the Company together with a written notice specifying the names and
denominations in which new Selling Agent’s Warrants are to be issued and signed
by the Holder hereof.  The term “Selling
Agent’s Warrant” as used herein includes any warrants issued in substitution
for or replacement of this Selling Agent’s Warrant, or into which this Selling
Agent’s Warrant may be divided or exchanged. 
Upon receipt by the Company of evidence satisfactory to it of the loss,
theft, destruction or mutilation of this Selling Agent’s Warrant, and, in the
case of loss, theft or destruction, of reasonably satisfactory indemnification
including a surety bond, and upon surrender and cancellation of this Selling
Agent’s Warrant, if mutilated, the Company will cause to be executed and
delivered a new Selling Agent’s Warrant of like tenor and date.  Although the Company may require a surety
bond or other indemnity in connection with each new issuance, any such new
Selling Agent’s Warrant executed and delivered shall constitute an additional
contractual obligation on the part of the Company, whether or not this Selling
Agent’s Warrant so lost, stolen, destroyed or mutilated shall be at any time
enforceable by anyone.

 

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4.                                      Rights
of the Holder.

 

The Holder of this Selling Agent’s Warrant shall not, by virtue hereof,
be entitled to any voting or other rights of a stockholder in the Company,
either at law or equity, and the rights of the Holder are limited to those
expressed in this Selling Agent’s Warrant.

 

5.                                      Adjustments.

 

(a)                                  The number of
securities purchasable upon exercise of this Selling Agent’s Warrant and the
exercise prices therefor shall be subject to adjustment from time to time in
the event that the Company shall:  (1)
pay a dividend in, or make a distribution of, shares of Common Stock or other
securities, (2) subdivide its outstanding shares of Common Stock into a greater
number of shares, (3) combine its outstanding shares of Common Stock into a
smaller number of shares or (4) spin-off a subsidiary by distributing, as a
dividend or otherwise, shares of the subsidiary to its Common Stock
stockholders.  In any such case, the
total number of securities purchasable upon exercise of this Selling Agent’s
Warrant immediately prior thereto shall be adjusted so that the Holder shall be
entitled to receive, at the same aggregate exercise price, the number of shares
of Common Stock or other securities that the Holder would have owned or would
have been entitled to receive immediately following the occurrence of any of
the events described above had this Selling Agent’s Warrant been exercised in
full immediately prior to the occurrence (or applicable record date) of such
event.  An adjustment made pursuant to
this Section 5(a) shall, in the case of a stock dividend or distribution,
be made as of the record date and, in the case of a subdivision or combination,
be made as of the effective date thereof. 
If, as a result of any adjustment pursuant to this Section 5(a),
the Holder shall become entitled to receive shares of two or more classes or
series of securities of the Company, the Board of Directors of the Company
shall equitably determine the allocation of the adjusted exercise price between
or among shares of the Holder of such allocation.

 

(b)                                 In the event of any
reorganization or recapitalization of the Company or in the event the Company
consolidates with or merges into or with another entity or transfers all or
substantially all of its assets to another entity, then and in each such event,
the Holder, on exercise of this Selling Agent’s Warrant as provided herein, at
any time after the consummation of such reorganization, recapitalization,
consolidation, merger or transfer, shall be entitled, and the documents
executed to effectuate such event shall so provide, to receive the stock or
other securities or property to which the Holder would have been entitled upon
such consummation if the Holder had exercised this Selling Agent’s Warrant
immediately prior thereto.  In such
case, the terms of this Selling Agent’s Warrant shall survive the consummation
of any such reorganization, recapitalization, consolidation, merger or transfer
and shall be applicable to the shares of stock or other securities or property
receivable on the exercise of this Selling Agent’s Warrant after such
consummation.

 

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(c)                                  Whenever a reference
is made in this Section 5 to the issue or sale of shares of Common Stock
the term “Common Stock”  shall mean the
Common Stock of the Company of the class authorized as of the date hereof.

 

(d)                                 Whenever the number of
securities purchasable upon exercise of this Selling Agent’s Warrant or the
exercise prices thereof shall be adjusted as required herein, the Company shall
forthwith file such information with its Secretary at its principal office in
the form of a certificate of an authorized officer of the Company, with the
price determined as herein provided and setting forth in detail the facts
requiring such adjustment.  Each such
officer’s certificate shall be made available at all reasonable times for inspection
by the Holder and the Company shall, forthwith after such adjustment, deliver a
copy of such certificate to the Holder.

 

(e)                                  The Company will not,
by amendment of its certificate of incorporation or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution,
issuance or sale of securities or any other voluntary action, avoid or seek to
avoid the performance of any of the terms of this Selling Agent’s Warrant, but
will at all times in good faith take all necessary action to carry out the
intent of all such terms.  Without
limiting the generality of the foregoing, the Company (1) will not cause the
par value of any securities receivable on exercise of this Selling Agent’s
Warrant to be in excess of the amount payable therefor on such exercise, (2)
will take all action as may be necessary or appropriate so that the Company may
validly and legally issue fully paid and nonassessable shares (or other
securities or property deliverable hereunder) upon the exercise of this Selling
Agent’s Warrant, and (3) will not transfer all or substantially all of its
assets to any other person (corporate or otherwise), or consolidate with or
merge into any other person or permit any such person to consolidate with or
merge with or into the Company (if the Company is not the surviving person),
unless such other person shall be bound by all the terms of this Selling
Agent’s Warrant.  If any event occurs as
to which the other provisions of this Selling Agent’s Warrant are not strictly applicable
or if strictly applicable would not fairly protect the purchase rights of this
Selling Agent’s Warrant in accordance with the essential intent and principles
of such provisions, then the Board of Directors shall make an adjustment in the
application of such provisions, in accordance with such essential intent and
principles, in order to protect such purchase rights.  This Selling Agent’s Warrant shall bind the successors and
assigns of the Company.

 

6.                                      Notices
of Record Dates, Etc.

 

(a)                                  If the Company shall
fix a record date of the holders of the Common Stock (or other securities at
the time deliverable upon exercise of this Selling Agent’s Warrant) for the
purpose of entitling or enabling them to receive any dividends or other
distribution, or to receive any right to subscribe for or purchase any shares
of any class of any securities, or to receive any other right contemplated by
Section 5 or otherwise; or

 

(b)                                 In
the event of any reorganization or recapitalization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the

 

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Company with or into another corporation or any
transfer of all or substantially all of the assets of the Company to another entity;
or

 

(c)                                  In the event of the
voluntary or involuntary dissolution, liquidation or winding up of the Company;

 

then, in any such event, the Company shall mail or cause to be mailed
to the Holder a notice specifying, as the case may be, (1) the date on which a
record is to be taken for the purpose of such dividend, distribution or right
and stating the amount and character of such dividend, distribution or right,
or (2) the date on which a record is to be taken for the purpose of voting on
or approving such reorganization, recapitalization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding up and
the date on which such event is to take place and the time, if any is to be
fixed, as of which the Holder of record of Shares shall be entitled to exchange
its Shares for securities or other property deliverable on such reorganization,
recapitalization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding up. 
Such notice shall be mailed at the same date as the Company shall inform
its stockholders, but in no event less than ten days preceding such record
date.

 

7.                                      Reservation
of Shares.

 

The Company shall at all times reserve, for the purpose of issuance on
exercise of this Selling Agent’s Warrant, such number of Shares or other
securities as shall from time to time be sufficient to comply with this Selling
Agent’s Warrant, and the Company shall take such corporate action as may in the
opinion of its counsel be necessary to increase its authorized and unissued
shares of Common Stock or other securities in such number as shall be
sufficient for such purpose.

 

8.                                      Registration.

 

(a)                                  Definitions.  As used in this Section 8, the
following terms shall have the meanings set forth below:

 

(i)                                     The terms
“register,” “registered” and “registration” shall refer to a registration
effected by preparing and filing a registration statement or similar document
in compliance with the Act, and the declaration or ordering of the
effectiveness of such registration statement or document.

 

(ii)                                  The
term “Registrable Securities” shall mean: 
(A) the Common Stock issued or issuable upon exercise of this Selling
Agent’s Warrant; and (B) Common Stock or other securities of the Company issued
(or issuable upon the conversion or exercise of any warrant, right or other
security which is issued as) as a dividend or other distribution with respect
to, in exchange for or in replacement of such warrant or Common Stock,
referenced in (B) or (C) immediately above, excluding in all cases, however,
any Registrable Securities sold to the public pursuant to a registration under
the Act or an applicable exemption therefrom.

 

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(b)                                 Demand Registration Rights. 
If, at any time during the period commencing on the Issue Date and
ending five (5) years thereafter, the Company shall receive a written request
(a “Request”), from Holders who in the aggregate own (or upon exercise of all
Registrable Securities then outstanding or issuable would own) a majority of
the total number of shares of Common Stock then included (or which upon such
exercise would be included) in the Registrable Securities (the “Majority
Holders”), to register the resale of at least a majority of the Registrable
Securities then outstanding, the Company shall, as promptly as practicable,
prepare and file with the Securities and Exchange Commission (“SEC”) a
registration statement sufficient to permit the public offering and sale of the
Registrable Securities through the facilities of all appropriate securities
exchanges and the over-the-counter market, and will use its best efforts
through its officers, directors, auditors, and counsel to cause such
registration statement to become effective as promptly as practicable; provided
that the Company shall only be obligated to register Registrable Securities on
two (2) occasions (at least 12 months apart) pursuant to this
Section 8(b).  Within five (5)
business days after receiving a Request, the Company shall give written notice
to all the other Holders, advising each of them that the Company is proceeding
with such registration and offering to include therein all or any portion of
any such other Holder’s Registrable Securities, provided that the Company
received a written request to do so from such Holder within thirty (30) days
after receipt by him or it of the Company’s notice.  Notwithstanding anything contained in this Section 8(b) to
the contrary:  (i) no person may make a
Request that the Company file, nor shall the Company be obligated to file, a
registration statement on any date that is within ninety (90) days of the
effective date of any registration statement filed by the Company and pursuant
to which such person was given full “piggyback” registration rights in
accordance with Section 8(c) hereof including without limitation the
ability to include all Registrable Securities requested to be included therein;
and (ii) the Company may delay the registration of the securities to which a
Request relates if upon receipt of such Request (A) the Company notifies the
person making the Request that it is contemplating filing a Registration
Statement within ninety (90) days of such request, or (B) the Company notifies
the person making the request that the Board of Directors of the Company has
determined that a material event has occurred that has not been publicly
disclosed and which if disclosed would have a material adverse effect on the
Company; provided that (x) in the case of clause (ii)(A) of this paragraph, the
Company shall, as soon as practical, upon the first to occur of the abandonment
of such contemplated registration statement or the expiration of such ninety
(90) day period, register the securities to which the Request relates unless
such Request is withdrawn; and (y) in the case of clause (ii)(B) of this
paragraph, the Company may not delay the filing of the registration statement
for more than thirty (30) days from the date of the Request unless such Request
is withdrawn.

 

(c)                                  Piggy-back
Registration Rights.  If (but without
any obligation to do so) at any time during the five (5) year period commencing
on the Issue Date, the Company proposes to register (including for this purpose
a registration effected by the Company for securityholders other than the
Holder) any of its securities under the Act in connection with the public
offering of such securities solely for cash (other than a registration on

 

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Form S-4, Form S-8 or any form which does not include substantially the
same information as would be required to be included in a registration
statement covering the sale of the Registrable Securities), the Company shall,
each such time, promptly give the Holder written notice of such registration.  Upon the written request of the Holder given
within twenty (20) days after receipt of such written notice from the Company,
the Company shall, subject to the provisions of this Section 8, cause to
be registered under the Act all of the Registrable Securities that the Holder
has requested to be registered; and provided further, however, that the
Registrable Securities shall be subject to restrictions on transfer for
forty-five (45) days after the effective date of the subject registration
statement.  The inclusion of any of the
Holder’s Registrable Securities in a registration statement filed by the
Company and declared effective by the Securities and Exchange Commission
(“SEC”) shall be deemed to be the exercise by such Holder of the piggy-back
registration rights granted herein to such Holder.

 

(d)                                 Obligations of the
Company.  Whenever required
hereunder to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:

 

(i)                                     Prepare and file
with the SEC a registration statement with respect to such Registrable
Securities and use its best efforts to cause such registration statement to
become effective, and, upon the request of the Holders of a majority of the
Registrable Securities registered thereunder, keep such registration statement effective
for at least twelve (12) months.

 

(ii)                                  Prepare and file with
the SEC such amendments and supplements to such registration statement and the
prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Act with respect to the
disposition of all securities covered by such registration statement.

 

(iii)                               Furnish to the Holders
such numbers of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Act, and such other documents as they
may reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.

 

(iv)                              Use
its best efforts to register and qualify the securities covered by such
registration statement under the securities laws of such jurisdictions as shall
be reasonably requested by the Holders for the distribution of the securities
covered by the registration statement, provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such
jurisdiction.

 

(v)                                 In the event of any
underwritten public offering, enter into and perform its obligations under an
underwriting agreement with terms generally satisfactory to the managing
underwriter of such offering.

 

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(vi)                              Notify the Holders,
promptly after the Company shall have received notice thereof, of the time when
the registration statement becomes effective or any supplement to any
prospectus forming a part of the registration statement has been filed.

 

(vii)                           Notify the Holders of any
stop order suspending the effectiveness of the registration statement and use
its reasonable best efforts to remove such stop order.

 

(e)                                  Furnish
Information.  It shall be a
condition precedent to the obligations of the Company to take any action
pursuant hereto that the Holder, having chosen to have its Registrable
Securities included for registration, shall furnish to the Company such
information regarding the Holder, its Registrable Securities and the intended
method of disposition of such securities as shall be required to effect the
registration thereof.  The Holder shall
be required to represent to the Company that all such information which is
given is complete and accurate in all material respects.  The Holder shall deliver to the Company a
statement in writing from the beneficial owners of such securities that such
beneficial owners bona fide intend to sell, transfer or otherwise dispose of
such securities.

 

(f)                                    Expenses.

 

(i)                                     Registration
Expenses.  All expenses incurred by
the Company in complying with Subsections 8(b), 8(c) and 8(d) hereof, including
without limitation, all registration and filing fees, printing expenses, fees
and disbursements of counsel for the Company, “Blue Sky” fees and expenses, and
the expense of any special audits incident to or required by any such
registration (but excluding the compensation of regular employees of the
Company which shall be paid in any event by the Company) shall be borne by the
Company.

 

(ii)                                  Selling Expenses.  All underwriting discounts, underwriters’
expense allowance, and selling commissions applicable to the sale of
Registrable Securities by the Holders and all fees and disbursements of any
special counsel (other than the Company’s regular counsel) shall be borne by
the Holders of the Registrable Securities so registered pro rata on the basis
of the number of Registrable Securities so registered.

 

(g)                                 Underwriting Requirements.  All Holders proposing to distribute their
Registrable Securities through an underwriting in which the Company has
proposed or is proposing to participate, shall (together with the Company and
any other Holders distributing their securities through such underwriting)
enter into an underwriting agreement in customary form with the underwriter or
underwriters selected for underwriting by the Company and perform their
obligations thereunder.  Notwithstanding
any other subsection of this Section 8, at the request of the
managing underwriter, the Holder shall delay the sale of Registrable Securities
which such Holder has requested be registered hereunder for up to 90 days
following the effective date of the registration statement.  If any Holder disapproves of the terms of
any such underwriting, such Holder

 

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may elect to withdraw therefrom by written notice to the Company and
the managing underwriter.  Any
Registrable Securities excluded or withdrawn from such underwriting shall not
be withdrawn from such registration except at the election of the Holder.

 

(h)                                 Delay of
Registration.  No Holder shall have
any right to obtain or seek an injunction restraining or otherwise delaying any
such registration as the result of any controversy that might arise with
respect to the interpretation or implementation of this section.

 

(i)                                     Indemnification.  In the event that any Registrable Securities
are included in a registration statement pursuant hereto:

 

(i)                                     To the extent
permitted by law, the Company will indemnify and hold harmless each Holder, the
officers, directors, partners and legal counsel of each Holder, any underwriter
(as defined in the Act) for such Holder and each person, if any, who controls
such Holder or underwriter within the meaning of the Act or the Exchange Act,
against any losses, claims, damages or liabilities (joint or several) to which
they may become subject under the Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively, a “Violation”):  (A) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto; (B) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading; or (C) any violation or alleged
violation by the Company of the Act, the Exchange Act, any applicable state
securities law or any rule or regulation promulgated under the Act, the
Exchange Act or any applicable state securities law; and the Company will
reimburse the Holder for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity agreement
contained in this Subsection 8(i)(i) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with information furnished expressly for use in connection with such
registration by any such Holder, underwriter or controlling person; provided,
however, that the Company will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
made in said registration statement, said preliminary prospectus, said final
prospectus or said amendment or supplement in reliance upon and in conformity
with information furnished by such Holder or any other Holder, for use in the
preparation thereof; and further

 

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provided, however, that the foregoing indemnity agreement is subject to
the condition that, insofar as it relates to any untrue statement, alleged
untrue statement, omission or alleged omission made in any preliminary
prospectus but eliminated or remedied in a subsequent or final prospectus, such
indemnity agreement shall not inure to the benefit of any underwriter or
broker, if a copy of such a subsequent or final prospectus was not sent or
given to such person with or prior to the confirmation of the sale of such
securities to such person.

 

(ii)                                  To the extent
permitted by law, each selling Holder will indemnify and hold harmless the
Company, its directors, its officers, its employees, any person who controls
the Company within the meaning of the Act or the Exchange Act, any underwriter
(within the meaning of the Act) for the Company and any person who controls
such underwriter against any losses, claims, damages or liabilities (joint or
several) to which the Company or any such director, officer, employee,
controlling person, or underwriter or controlling person may become subject, under
the Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereto) arise
out of or are based upon any Violation, in each case to the extent (and only to
the extent) that such Violation occurs in reliance upon and in conformity with
information furnished by the Holder expressly for use in connection with such
registration; and the Holder will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer, employee
controlling person, underwriter or controlling person thereof, in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in this Subsection 8(i)(ii)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably withheld.

 

(iii)                               Promptly after receipt
by an indemnified party under this Subsection 8(i) of notice of the
commencement of any action (including any governmental action), such
indemnified party will, if a claim in respect thereof is to be made against any
indemnifying party under this Subsection 8(i), notify the indemnifying
party in writing of the commencement thereof and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly notified, to
assume the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party shall have the right to retain its
own counsel, with the fees and expenses to be paid by the indemnifying party,
if representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by
such counsel in such proceeding.  The
failure to notify an indemnifying party within a reasonable time of the
commencement of any such action, to the extent prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Subsection 8(i), but the omission so to

 

11

 

notify the indemnifying party will not relieve it of
any liability that it may have to any indemnified party otherwise than under
this Subsection 8(i).

 

(j)                                     Reports Under
Exchange Act.  Following
registration of the Company’s securities under the Exchange Act and with a view
of making available to the Holders the benefits of Rule 144 promulgated under
the Act and any other rule or regulation of the SEC that may at any time permit
a Holder to sell securities of the Company to the public without registration,
the Company agrees to:

 

(i)                                     use its best
efforts to make and keep public information available, as those terms are
understood and defined in Rule 144, at all times; and

 

(ii)                                  use its best efforts
to file with the SEC in a timely manner all reports and other documents
required of the Company under the Act and the Exchange Act.

 

(k)                                  Termination
of the Company’s Obligations.

 

(i)                                     The Company shall
have no obligations pursuant to Subsections 8(b) or 8(c) with respect to any
request made by the Holder after May 26, 2008.

 

(ii)                                  Notwithstanding any
provision hereof to the contrary, the Company shall not be required to effect
any registration under the Act or under any state securities laws on behalf of
any Holder or Holders if, in the opinion of counsel for the Company, the
offering or transfer by such Holder or Holders in the manner proposed
(including without limitation, the number of shares proposed to be offered or
transferred and the method of offering or transfer) is exempt from the
registration requirements of the Act and the securities or “Blue Sky” laws of
applicable states.

 

(iii)                               The Company’s
obligations under Sections 8(b) and 8(c) shall terminate with respect to a
particular Holder at such time as Rule 144, or another similar exemption, is
available for the sale, without registration, of all of such Holder’s
Registrable Securities in any three (3) month period; provided, however, and
subject to compliance with the requirements of Rule 144, that the Company shall
consent to such Rule 144 sale and provide the appropriate legal opinion to the
transfer agent of the Company so as allow the Rule 144 transfer or legend
removal to occur as may be appropriate.

 

(l)                                     Holder’s
Acceptance of Obligations. 
Acceptance of this Warrant by its Holder(s) shall be deemed to
constitute the unqualified acceptance by the Holder of all of the terms and
conditions set forth herein.

 

12

 

9.                                      Approvals.

 

The Company shall from time to time use its best efforts to obtain and
continue in effect any and all permits, consents, registrations, qualifications
and approvals of governmental agencies and authorities and to make all filings
under applicable securities laws that may be or become necessary in connection
with the issuance, sale, transfer and delivery of this Selling Agent’s Warrant,
the issuance of securities on any exercise hereof, and if any such permits,
consents, qualifications, registrations, approvals or filings are not obtained
or continued in effect as required, the Company shall immediately notify the
Holder hereof.

 

10.                               Survival.

 

All agreements, covenants, representations and warranties herein shall
survive the execution and delivery of this Selling Agent’s Warrant and any
investigation at any time made by or on behalf of any parties hereto and the
exercise, sale and purchase of this Selling Agent’s Warrant for three years.

 

11.                               Remedies.

 

The Company agrees that the remedies at law of the Holder, in the event
of any default or threatened default by the Company in the performance or
compliance with any of the terms of this Selling Agent’s Warrant, may not be
adequate and such terms may, in addition to and not in lieu of any other
remedy, be specifically enforced by a decree of specific performance of any
agreement contained herein or by an injunction against a violation of any of
the terms hereof or otherwise.

 

12.                               Notices.

 

All demands, notices, consents and other communications to be given
hereunder shall be in writing and shall be deemed duly given when delivered
personally or five days after being mailed by first class mail, postage
prepaid, properly addressed, as follows:

 

	
  If to the Company, to:

  	
   

  	
   

  
	
   

  	
   

  	
  Vista Medical Technologies,
  Inc.

  
	
   

  	
   

  	
  2101FaradayAvenue

  
	
   

  	
   

  	
  Carlsbad, CA 92008

  
	
   

  	
   

  	
  Attention:  Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  With a copy by

  	
   

  	
   

  
	
  contemporaneous like means, to:

  	
   

  	
  Heller Ehrman White & McAuliffe, LLP

  
	
   

  	
   

  	
  4350 La Jolla Village Dr., 7th Floor

  
	
   

  	
   

  	
  San Diego, CA 92122

  
	
   

  	
   

  	
  Attention:  Michael S.
  Kagnoff, Esq.

  
	
   

  	
   

  	
   

  
	
  If to the Holder, to:

  	
   

  	
  Dawson James Securities,

  
	
   

  	
   

  	
  A Division of Viewtrade Financial

  

 

13

 

	
   

  	
   

  	
  6400 NW 6 Way

  
	
   

  	
   

  	
  Suite 310

  
	
   

  	
   

  	
  Ft. Lauderdale, FL 33309

  
	
   

  	
   

  	
  Attention:  Robert Keyser

  
	
   

  	
   

  	
   

  
	
  With a copy by

  	
   

  	
   

  
	
   

  	
   

  	
  contemporaneous like means, to:

  
	
   

  	
   

  	
  Blank Rome LLP

  
	
   

  	
   

  	
  1200 North Federal Highway, suite 417

  
	
   

  	
   

  	
  Boca Raton, FL 33432

  
	
   

  	
   

  	
  Attention: Bruce C. Rosetto, Esq.

  

 

The Company and each Holder may change such address at any time or
times by notice hereunder to the other.

 

13.                               Amendments;
Waivers; Terminations; Governing Law; Headings.

 

This Selling Agent’s Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or
termination is sought.  This Selling
Agent’s Warrant shall be governed by and construed and interpreted in
accordance with the laws of the State of Florida.  The headings in this Selling Agent’s Warrant are for convenience
of reference only and are not part of this Selling Agent’s Warrant.

 

DATED: May 26, 2004

 

	
   

  	
  VISTA MEDICAL TECHNOLOGIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael H. Owens

  	
   

  

 

14

 

FORM OF ASSIGNMENT

 

(To be executed upon transfer of Selling
Agent’s Warrant)

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
to
                    
the right represented by the within Selling Agent’s Warrant, No. SAW-1, as such
right may apply to        shares of Common Stock
which are the subject of the within Selling Agent’s Warrant, together with all
rights, title and interest therein, and does hereby irrevocably constitute and
appoint                     
attorney to transfer such Selling Agent’s Warrant on the warrant register of
the within named Company, with full power of substitution.

 

	
  DATED:

  	
   

  	
   , 2004.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Signature must conform in

  all respects to name of

  Holder as specified on the

  face of the Selling Agent’s

  Warrant)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature Guaranteed:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

SUBSCRIPTION

 

(To be completed and signed only upon an exercise of the Selling
Agent’s Warrant in whole or in part)

 

TO:                

 

The undersigned, the Holder of the attached Selling Agent’s Warrant
(“Warrant”), hereby irrevocably elects to exercise the purchase right
represented by the Warrant for, and to purchase thereunder,
           shares of
Common Stock (as such term is defined in the Selling Agent’s Warrant dated
               ,
2004,
from                to
Viewtrade Financial or its assignees (or other securities or property), and
herewith makes payment of $          
therefor in cash, by certified or official bank check or such other form of
payment as may be permitted under the Warrant. 
The undersigned hereby requests that the Certificate(s) for such
securities be issued in the name(s) and delivered to the address(es) as
follows:

 

	
  Name:

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
  Social Security Number:

  	
   

  	
   

  
	
  Deliver to:

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  

 

If the foregoing Subscription evidences- an exercise of the Selling
Agent’s Warrant to purchase fewer than all of the Shares (or other securities
or property) to which the undersigned is entitled under such Selling Agent’s
Warrant, please issue a new Selling Agent’s Warrant, of like date and tenor,
for the remaining portion of the Selling Agent’s Warrant (or other securities
or property) in the name(s), and deliver the same to the address(es), as
follows:

 

	
  Name:

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  

 

DATED:               ,
200 

 

 

	
   

  
	
  (Social Security or Taxpayer Identification  (Name of Holder)

  
	
  (Number of Holder)

  

 

	
   

  	
   

  
	
   

  	
  (Signature of Holder or Authorized

  Signatory)

  
	
   

  	
   

  
	
   

  	
  Signature Guaranteed:Exhibit 10.3

 

Confidential

 

 

 

Vista Medical
Technologies, Inc.

 

SUBSCRIPTION
AGREEMENT

 

Dated as of May         , 2004

 

Name of Subscriber:

 

Address of Subscriber:

 

Facsimile
Number:

 

Telephone
Number:

 

E-Mail
Address:

 

Tax
ID Number of Subscriber:

 

TO:         Vista
Medical Technologies, Inc., a Delaware Corporation
(the “Company”).

 

SUBSCRIPTION TO PURCHASE,
at the closing (the “Closing”), or any subsequent closing (each, an “Additional
Closing”), units (a “Unit” or the “Units”) consisting of
shares of Common Stock, $0.01 par value per share, and warrants (the “Common
Stock Warrants”) exercisable for the purchase of one half shares of Common
Stock of the Company, on the terms and conditions set forth on Exhibit A
hereto.  Each unit consists of one share of Common Stock and a Common
Stock Warrant to purchase one half share of Common Stock of the Company. The
Common Stock and the Common Stock Warrants, and the shares of Common Stock
issuable upon the exercise of the Common Stock Warrants, are collectively
referred to herein as the “Securities”.

 

Price Per Unit:     $0.85

 

Subscription Amount: 
$                         (the
“Subscription Amount”) delivered herewith (as provided by paragraph “A”
below).

 

 

The undersigned
Subscriber hereby irrevocably subscribes  for,
and agrees to purchase, the Securities, at the Subscription Amount (this “Subscription”),
in accordance with and subject to the terms, provisions and conditions set
forth herein and the exhibits hereto. 
When this Subscription Agreement is completed, signed and returned, with
payment, by the undersigned Subscriber, and accepted by the Company, the
Subscriber will become entitled to all of its benefits and subject to all of
the obligations, restrictions and limitations set forth herein and in the
exhibits hereto.

 

The Subscriber
understands that this Subscription is an irrevocable offer to purchase the
Securities and may be accepted or rejected in whole or in part for any reason
whatsoever by the Company, at any time on or prior to May 25, 2004, unless otherwise
extended by the Placement Agent (as defined herein) and the Company (but in no
event later than June 01, 2004).

 

This Subscription is subject to the Company’s receipt, at the Closing,
of executed Subscription Agreements that have been accepted by the Company to
purchase units with aggregate gross proceeds to the Company in an amount equal
to at least $4,000,000 plus any such additional amounts, if any, required by
the Nasdaq Listing Qualifications Panel.

 

This
Subscription is subject to the Company’s execution of a definitive voting
agreement with the holders of more than 50% of the Company’s outstanding shares
of Common Stock and Preferred Stock, providing that such holders shall vote in
favor of approval of the issuance of the shares of Common Stock and the shares
of Common Stock issuable upon the exercise of the Common Stock Warrants.

 

A.            Payment.  In connection with this Subscription
Agreement and subject to acceptance by the Company, the Subscriber hereby
delivers the Subscription Amount.  The
Subscription Amount will be held in a separate escrow fund pending the
Company’s acceptance or rejection of this Subscription.  If the Company rejects this Subscription,
the Subscription Amount shall be returned in full without interest; and the
Subscriber shall have no further rights or obligations under or in respect of
this Subscription.  See Exhibit B for payment instruction.

 

B.            Representations and Warranties.    In connection with this Subscription, the
Subscriber hereby represents and warrants to, agrees with the Company,
acknowledges and confirms as follows:

 

(1)           The Securities being subscribed for
by the Subscriber will be purchased for the account of the Subscriber for
investment only and not with a view to, nor with any intention of, a
distribution or resale thereof, in whole or in part, or the grant of any
participation therein.  The Subscriber
has no agreement or other arrangement with any other person to sell, transfer,
or pledge any part of the Securities or any agreement or arrangement that would
guarantee the Subscriber any profit or against any loss with respect to such
Securities, and the Subscriber has no plans to enter into

 

2

 

any such agreement or arrangement. 
The Subscriber acknowledges and confirms that it understands that the
Securities, and those securities issuable upon exercise or conversion of the
Securities, as the case may be, have not been registered under the Securities
Act of 1933, as amended (the “Securities Act”), and the rules and
regulations promulgated thereunder, or the securities laws of any state or
other jurisdiction, and cannot be disposed of unless subsequently registered
under the Securities Act and any applicable laws of states or other
jurisdictions or an exemption from such registration is available.

 

(2)           The Securities are
being offered and sold by the Company under an exemption from registration
provided by the Securities Act and the rules and regulations promulgated
thereunder in reliance, in good faith, upon the representations and warranties
of the Subscriber contained herein.

 

(3)           The Subscriber:

 

(A) has been furnished a copy of the Company’s confidential offering package dated May 17, 2004 (the “PPM”);
 
(B) has carefully read, has carefully considered and fully understands the provisions of:
 
(i) the PPM (including, without limitation, the terms of this offering and the Securities offered by the Company (including as described in the “OFFERING SUMMARY” section of the PPM) and the materials under the “RISK FACTORS” section of the PPM);
 
(ii) all documents and information included as exhibits, or incorporated in the PPM by reference, including but not limited to the filings and information made under the Exchange Act (as defined in the PPM); and
 
(iii) this Subscription Agreement (and the exhibits and annexes hereto).
 
(C) has been given sufficient access and opportunity to:
 
(i) examine all material books and records, and material contracts and documents of the Company and such other information and documents as the Subscriber has requested; and
 
(ii) ask questions of the Company and its management, and, if the Subscriber asked questions of the Company or its management, has received satisfactory answers.
 
(D) represents and warrants that in making the decision to invest in the Securities, the Subscriber has relied on independent investigations

 

3

 

made by the Subscriber and the Subscriber’s own professional advisors.  The Subscriber acknowledges that no representation has been made by the Company or otherwise by or on behalf of the Company concerning the Securities (including any current value of the Securities or as to any prospective return on investment in the Securities), the Company, its business or prospects, or other matters, except as set forth in the PPM.
 

(4)           The Subscriber is able (i) to bear
the economic risk of the Subscriber’s investment in the Securities; (ii) to
hold the Securities for an indefinite period of time and understands that the
Securities cannot be resold unless subsequently registered under the Securities
Act or unless an exemption from such registration is available, as established
by an opinion of counsel satisfactory to the Company; and (iii) currently, and
based on existing conditions, hereafter will be able to afford a complete loss
of such investment.

 

(5)           The Subscriber understands the
business in which the Company is engaged and has such knowledge and experience
in financial and business matters that the Subscriber is capable of evaluating
the merits and risks of the Subscriber’s investment in the Securities and of
making an informed investment decision with respect thereto.

 

(6)           The Subscriber hereby acknowledges
and confirms that, except as set forth in the PPM, neither the Company nor any
of its officers, directors, affiliates, agents or representatives has made any
representations or warranties (oral or written) concerning (i) the Securities;
(ii) the Subscriber’s investment in the Securities; or (iii) the Company, its
business, prospects, or anticipated financial or other results, or other
matters.

 

(7)           The Subscriber understands that all certificates or other documents evidencing the Securities will bear substantially the following legend:
 
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES OR “BLUE SKY” LAWS, AND MAY NOT BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, OR OTHERWISE DISPOSED OF UNLESS REGISTERED PURSUANT TO THE PROVISIONS OF SUCH ACT AND BLUE SKY LAWS OR AN EXEMPTION THEREFROM IS AVAILABLE AS ESTABLISHED BY A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE CORPORATION.
 
(8)           The Subscriber understands that no federal or state agency has passed on or made any recommendation or endorsement of the Securities.
 

(9)           The Subscriber hereby represents and
warrants that:

 

4

 

(Please check the boxes opposite each of the
items in clauses (a) and (b) below which is true of the Subscriber.  If clause (a) is checked, the Subscriber
need not complete the items under clause (c). 
If clause (a) is not checked, please complete each blank in clause (c)
below.  Please also initial each item
checked or completed.)

 

	
  o

  	
   

  	
  (a)           The Subscriber is
  an “accredited investor” (as such term is defined in Rule 501(a) of
  Regulation D promulgated by the Securities and Exchange Commission under the
  Securities Act) for at least one of the reasons specified below:

  

 

o            The Subscriber’s net worth (together with the net worth
of the Subscriber’s spouse) exceeds $1,000,000.

 

o            The Subscriber’s individual income in each of the two
immediately previous calendar years has been $200,000 or more and his current
year’s income is reasonably expected to be at least equal to that amount; or,
the Subscriber’s joint income with his spouse in each of the two immediately
previous calendar years has been $300,000 or more and the current year’s joint
income is reasonably expected to equal at least that amount.

 

o            The Subscriber, if other than an individual, either (A)
is a corporation, partnership, business trust or 501(c)(3) organization which
has total assets in excess of $5,000,000 and has not been formed for the
specific purpose of purchasing the Securities, or (B) is an entity (other than
a trust) with only accredited investors as its partners, members or
shareholders, or (C) is a trust other than a business trust which has assets in
excess of $5,000,000, has not been organized for the purposes of acquiring the
investment in the Securities and has its investment hereunder directed by a
person described in the first sentence of the following clause (b).  The Subscriber, if other than an individual,
represents that this Subscription has been duly authorized by all necessary
corporate, partnership or other governance action on its part.

 

o            (b)           The
Subscriber has (or, if other than an individual, is directed by a person who
has) such knowledge and experience in financial and business matters that he or
she is capable of evaluating the risks of an investment in the Securities.  The Subscriber has adequate means of
providing for current financial needs and contingencies, has no need for
liquidity in the investment in the Securities, and is able to bear the
substantial economic risks of the investment in the Securities for an
indefinite period.

 

(c)           The Subscriber (if
an individual) hereby represents and warrants that:

 

(If the box opposite Paragraph (9)(a) above
has not been checked, please complete the blanks below in this clause
(c).)

 

5

 

The Subscriber’s higher education consists of the following (include
college or university, any graduate programs and any other specialized
education programs relevant to the Subscriber’s business experience):

 

The Subscriber’s principal business and professional activities during
the last five years are as follows:

 

(10)         The Subscriber hereby represents and
warrants as to the following personal information:

 

(Each Subscriber should furnish all of the
information called for below in this Paragraph (10).)

 

The
Subscriber’s residence address (or, if other than an individual, principal
office address) is as follows:

 

The Subscriber
(if an individual) maintains a house or apartment in the following state(s) in
addition to his or her residence:

 

The Subscriber
(if an individual) pays state income taxes in the following state:

 

The Subscriber
(if an individual) holds a driver’s license in the following state:

 

The Subscriber
(if an individual) is registered to vote in the following state:

 

(11)         This Subscription Agreement and any
other documents executed and delivered by the Subscriber in connection herewith
have been duly executed and delivered by the Subscriber, and are the legal,
valid and binding obligations of the Subscriber enforceable in accordance with
their respective terms.

 

(12)         The execution and delivery of this
Subscription Agreement and any other documents executed and delivered by the
Subscriber in connection herewith do not, and the performance and consummation
of the terms and transactions set forth

 

6

 

or contemplated herein will not, contravene or result in a default
under any provision of existing law or regulations to which the Subscriber is
subject, or any indenture, mortgage or other agreement or instrument to which
the Subscriber is a party or by which he, she or it is bound and does not
require on the part of the Subscriber any approval, authorization, license or
filing from or with any foreign, federal or state or municipal board or agency.

 

(13)         The Subscriber acknowledges that
Silicon Valley Bank is acting only as an escrow agent in connection with the
offering of the Securities described here, and has not endorsed, recommended or
guaranteed the purchase, value or repayment of such Securities.

 

C.            Effectiveness of Subscription.

 

(1)           This Subscription shall be binding
upon the successors and permitted assigns of the Subscriber and, when accepted
by the Company, shall be binding upon the successors and assigns of the
Company.

 

(2)           All of the agreements,
representations and warranties made by the Subscriber in this Subscription
Agreement shall survive the execution and delivery hereof.  The Subscriber shall immediately notify the
Company upon discovering that any of the representations or warranties made
herein were false when made or has, as a result of changes in circumstances,
become false.  Every provision of this
Subscription Agreement is intended to be severable, and if any term or
provision hereof is held to be illegal or invalid for any reason whatsoever,
such illegality or invalidity shall not affect the validity of the remainder
hereof.

 

(3)           The agreements of the Subscriber and
the Company set forth herein shall become effective and binding upon the
undersigned, without right of revocation, upon the Company’s acceptance of this
Subscription.

 

D.            Hedging.                Subscriber
will not engage in any hedging or other transaction which is designed to or
could reasonably be expected to lead to or result in a disposition of the
Securities by the Subscriber or any other person or entity.  Such prohibited hedging or other
transactions include without limitation effecting any short sale or having in
effect any short position (whether or not such sale or position is against the
box and regardless of when such position was entered into) or any purchase,
sale or grant of any right (including without limitation any put or call
option) with respect to the Securities.

 

E.             Shareholder Approval.

 

(1)           Unless previously prepared and filed,
as soon as practicable following the acceptance of this Subscription, the
Company agrees that it shall prepare and file with the SEC a preliminary proxy
statement (as amended and supplemented, the “Proxy Statement”) in connection
with the meeting of its shareholders (the “Shareholders Meeting”).  At the Shareholders Meeting, the Company
will seek to obtain shareholder approval (“Shareholder Approval”) of the
issuance of the shares of

 

7

 

Common Stock and shares of Common Stock upon the exercise of the Common
Stock Warrants. The Company shall use its reasonable best efforts to respond to
any written comments of the SEC or its staff, and, to the extent permitted by
law, to cause the Proxy Statement to be mailed to the Company’s shareholders as
promptly as practicable after responding to all such comments to the
satisfaction of the SEC staff. Subscriber shall cooperate with the Company in
the preparation of the Proxy Statement or any amendment or supplement thereto
and shall furnish the Company with all information required to be included
therein with respect to Subscriber, the Subscription and this offering.

 

(2)           Without limiting the generality of
the foregoing, the Subscriber shall correct promptly any information provided
by it to be used specifically in the Proxy Statement, if required, that shall
have become false or misleading in any material respect and shall take all
reasonable steps necessary to file with the SEC and have declared effective or
cleared by the SEC any amendment or supplement to the Proxy Statement so as to
correct the same and to cause the Proxy Statement as so corrected to be
disseminated to the shareholders of the Company, in each case to the extent
required by applicable law.

 

F.             Brokers or Finders.    The
Subscriber has not engaged any brokers, finders or agents, and the Company has
not, and will not, except with respect to Viewtrade Financial (the “Placement
Agent”), incur, directly or indirectly, as a result of any action taken by
the Subscriber, any liability for brokerage or finders’ fees or agents’
commissions or any similar charges in conjunction with this Subscription
Agreement.  In the event that the
preceding sentence is in any way inaccurate, the Subscriber agrees to indemnify
and hold harmless the Company from any liability for any commission or
compensation in the nature of a finder’s fee (and the costs and expenses of
defending against such liability) for which the Company, or any of its
officers, directors, employees or representatives, is responsible, except such
as related to the Placement Agent for which the Company is solely responsible
in accordance with the terms and provisions of that certain Selling Agreement
dated March 30, 2004 by and between the Company and the Placement Agent.

 

G.            Legal Advice.    The
Subscriber understands that nothing in the Company’s filings under the Exchange
Act, this Subscription Agreement or any other materials presented to the
Subscriber in connection with the purchase and sale of the Securities
constitutes legal, tax or investment advice. 
The Subscriber has consulted such legal, tax and investment advisors as
she, he or it, in her, his or its sole discretion, has deemed necessary or
appropriate in connection with this Subscription Agreement, and his, her or its
subcription for the purchase of the Securities.

 

H.            Miscellaneous.    Unless
otherwise indicated, the address on the front page of this document is the
legal residence of the Subscriber and all offers and communications in
connection with the offering of the Securities subscribed to herein have been
conducted at such address.

 

8

 

I.              Communications.    Any
notice, demand, request or other communication which may be required or
contemplated herein shall be sufficiently given if (i) given either by
facsimile transmission, by reputable overnight delivery service, delivery
charges prepaid, or by registered or certified mail, postage prepaid and return
receipt requested, to the address indicated herein or to such other address as
any party hereto may specify as provided herein, or (ii) delivered personally
at such address.

 

J.             Confidentiality.    The
Subscriber agrees to maintain in strict confidence all non-public information
regarding the Company obtained from the Company or its representatives or
agents during the course of this Subscription. 
The Subscriber also agrees not to trade in the securities of the Company
(other than pursuant to this Subscription Agreement) at any time that the
Subscriber is in possession of any non-public information regarding the Company
obtained from the Company or its agents during the course of this Subscription.

 

K.            Applicable Law.    This
Subscription Agreement and all legal relations, claims or obligations arising
out of this transaction shall be governed by and construed in accordance with
the internal substantive laws of the Commonwealth of Delaware.

 

[signature page follows]

 

9

 

IN WITNESS WHEREOF,
the undersigned has executed this Subscription Agreement this
       day of the month of
              ,
2004.

 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Taxpayer
  Identification No.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Purchase
  Price:

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Number of
  Shares to be acquired:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Underlying
  Shares subject to warrants:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address for
  Notice:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FacsimileNo.:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TelephoneNo.:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attn:

  	
   

  	
   

  
																				

 

Please
indicate below the number and type of Company securities beneficially held (as
determined under Rule 13d-3 under the Securities Exchange Act of 1934) as of
the date hereof, but excluding the Company securities identified above that you
are purchasing.  This information will
be included in the Registration Statement and, by signing above, you
acknowledge that the Company may rely on this information for inclusion in the
Registration Statement.

 

 

(Identify the
number of securities and type (e.g., common stock, warrants, etc.)

 

 

(Identify the extent to which
you may not exercise sole voting and/or dispositive power of such securities
and the reason(s) why)

 

10

 

ACCEPTANCE

 

The foregoing
Subscription is hereby accepted upon the terms and conditions set forth herein.

 

	
   

  	
  VISTA MEDICAL TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
  , 2004

  	
   

  
								

 

11

 

EXHIBIT A

 

This Exhibit A is
qualified in its entirety by Annex A hereto. 
Capitalized terms used in this Exhibit A and not otherwise defined shall
have the meanings set forth in the Subscription Agreement.

 

	
  Securities
  Offered:

  	
   

  	
  Each unit consists of one Share of Common Stock of the Company and a
  Warrant to purchase one-half share of Common Stock of the Company.

  
	
   

  	
   

  	
   

  
	
  Offering Amount:

  	
   

  	
  Minimum of $4 million/maximum of $4,636,363 million.

  
	
   

  	
   

  	
   

  
	
  Closings:

  	
   

  	
  The initial closing of the offering will occur after we have received
  subscriptions for at least $4.0 million of Units plus such additional
  amounts, if any required by the Nasdaq delisting panel as a condition to our
  remaining listed on the Nasdaq SmallCap Market.  See “Risk Factors– Nasdaq Delisting Notice” in the PPM.  It is contemplated that there may be
  subsequent closings, each of which would be on the same terms (including but
  not limited to Per Unit Price, Common Stock and Common Stock Warrants, and
  forced conversion) as those of the initial Closing.

  
	
   

  	
   

  	
   

  
	
  Per Unit Price:

  	
   

  	
  $0.85

  
	
   

  	
   

  	
   

  
	
  Warrants:

  	
   

  	
  The Warrants have an exercise price of  75% of the average of the closing bid prices of the Company’s
  common stock over the 15 trading days ending three days prior to the closing
  of the sale of Units and shall be exercisable for Common Stock of the Company
  upon the payment of cash and have a five-year term, subject to the forced
  exercise provision below. 
  NOTWITHSTANDING THE FOREGOING, THE WARRANTS SHALL NOT BE EXERCISABLE
  UNLESS AND UNTIL STOCKHOLDER APPROVAL OF THE ISSUANCE OF SHARES OF COMMON
  STOCK UPON CONVERSION OF THE SHARES AND UPON THE EXERCISE OF THE WARRANTS IS
  OBTAINED.  See “Stockholder Approval”
  below.

  
	
   

  	
   

  	
   

  
	
  Forced Exercise:

  	
   

  	
  The Company can require holders of Warrants to exercise their
  Warrants upon 30 days prior notice (or forfeit such Warrants) when the price
  of the Company’s common stock closes at $3.40 per share or greater for 20
  consecutive trading days subsequent to the effectiveness of the registration
  statement pertaining to the resale of the Common Stock underlying the
  Securities; provided that the registration statement described below shall be
  effective at all times during such 30-day notice period.  The payment of the exercise price under a
  Forced Exercise may be made in cash, check, wire

  

 

12

 

	
   

  	
   

  	
  transfer or by cashless exercise pursuant to paragragh 1(a) of the
  Common Stock Purchase Warrant.

  
	
   

  	
   

  	
   

  
	
  Registration
  Rights:

  	
   

  	
  The Company has agreed with the Placement Agent to file a
  registration statement within 30 days of Closing covering the resale of the
  Common Stock and the Common Stock underlying the Warrants offered
  herein.  The Company has also agreed
  to use its best efforts to cause such registration statement to become
  effective as promptly as practicable and to remain effective until the first
  anniversary of the Closing (except as otherwise set forth above). Without
  limiting the foregoing, the Company will promptly respond to all SEC
  comments, inquiries and requests, and shall request acceleration of
  effectiveness at the earliest possible date. 
  In the event a registration statement is not filed with the SEC within
  30 days or is not declared effective within 90 days from the date of filing,
  then in such event a fee of 1% per month (or portion thereof) shall be
  assessed against the Company as a Default Payment and in favor of the holders
  of the Common Stock and Warrants for each such 30 day period until such time
  as the registration statement is declared effective.

  
	
   

  	
   

  	
   

  
	
  Transfer
  Restrictions:

  	
   

  	
  The Shares will initially be unregistered and may not be transferred
  absent registration under the Securities Act of 1933 (the “Securities Act”)
  or the availability of an exemption therefrom.

  
	
   

  	
   

  	
   

  
	
  Use of Proceeds:

  	
   

  	
  The Company intends that the net proceeds of the Private Placement
  and, if any, the additional proceeds to be received upon exercise of
  Warrants, will be used for development and expansion of the Company’s Obesity
  Surgery Management Services business, including working capital, funding of
  anticipated operating losses, infrastructure development, expenses associated
  with marketing efforts and payment of corporate overhead.  In addition, we intend to use a portion of
  the proceeds from this offering (along with certain other of our assets) to
  redeem some of our outstanding shares of Series A Preferred Stock (the
  “Preferred Shares”) and to obtain the rights to (i) redeem additional
  Preferred Shares in the future and (ii) cause the conversion of Preferred
  Shares to common stock in the future.  Specifically, we currently
  contemplate using approximately $200,000 to redeem 85,000 of our 1,000,000
  outstanding Preferred Shares.  We also intend to transfer to the holders
  of our Series A Preferred Stock a total of 1,400,000 shares of Viking
  Systems, Inc. which we hold.  In exchange, we anticipate gaining the
  following rights: (i) the holders of Series A Preferred Stock will consent
  (which consent we are required to obtain) to the completion of the Offering
  described in this Memorandum, (ii) at any time on or prior to January 15,
  2006, we will have the right (at our option) to redeem an additional 300,000
  Preferred Shares for $500,000, and (iii) upon

  

 

13

 

	
   

  	
   

  	
  completion of the redemption described in (ii), the remaining
  outstanding Preferred Shares will convert into common stock on a 1:1
  basis.  The terms described in this paragraph are based on current
  negotiations and are subject to change. 
  We could also use a portion of the net proceeds to invest in joint
  ventures or other collaborative arrangements, or to invest in or acquire
  products or services.

  
	
   

  	
   

  	
   

  
	
  Stockholder
  Approval:

  	
   

  	
  The Company shall at its annual meeting of stockholders seek
  stockholder approval of the issuance of the shares of common stock and upon
  the exercise of the Warrants no later than May 24, 2004.  IT SHALL BE A CONDITION TO CLOSING THAT
  THE COMPANY SHALL HAVE ENTERED INTO A VOTING AGREEMENT WITH THE HOLDERS OF
  MORE THAN 50% OF THE COMPANY’S OUTSTANDING SHARES OF COMMON STOCK AND
  PREFERRED STOCK PROVIDING THAT SUCH HOLDERS SHALL VOTE IN FAVOR OF SUCH
  APPROVAL.

  
	
   

  	
   

  	
   

  
	
  Risk Factors:

  	
   

  	
  The Securities offered hereby involve a high degree of risk.  See Risk Factors in the PPM.

  
	
   

  	
   

  	
   

  
	
  Placement Agent:

  	
   

  	
  Viewtrade Financial (“Viewtrade”).

  
	
   

  	
   

  	
   

  
	
  Confidential
  Information:

  	
   

  	
  The recipient of this Memorandum and the materials attached hereto
  agrees with the Company to maintain in confidence this disclosed information,
  together with any other non-public information regarding the Company obtained
  from the Company or their agents during the course of the proposed
  Offering.  The recipient also agrees
  not to trade in the securities of the Company (other than pursuant to this
  Offering) at any time that the recipient is in possession of any non-public
  information regarding the Company obtained from the Company or its agents
  during the course of this Offering. 
  The Company has caused these materials to be delivered to you in
  reliance upon such agreement and upon Rule 100(b)(2)(ii) of Regulation FD as
  promulgated by the Securities and Exchange Commission.

  

 

14

 

EXHIBIT B

 

Payment Instructions

 

Remittance Via Check:

 

	
  Payable To:

  	
   

  	
  Vista Medical Technologies, Inc. Escrow
  Account

  
	
   

  	
   

  	
   

  
	
  Account #:

  	
   

  	
  3300410793

  
	
   

  	
   

  	
   

  
	
  Mailed To:

  	
   

  	
  Deposit Escrow Services

  
	
   

  	
   

  	
  Mail Sort HG180

  
	
   

  	
   

  	
  Silicon Valley Bank

  
	
   

  	
   

  	
  3003 Tasman Drive

  
	
   

  	
   

  	
  Santa Clara, CA 95054

  

 

Remittance Via Wire
Transfer:

 

	
  Account Name:

  	
   

  	
  Vista Medical Technologies, Inc. Escrow
  Account

  
	
   

  	
   

  	
   

  
	
  Bank:

  	
   

  	
  Silicon Valley Bank

  
	
   

  	
   

  	
   

  
	
  Account #:

  	
   

  	
  3300410793

  
	
   

  	
   

  	
   

  
	
  ABA #:

  	
   

  	
  121140399

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  Silicon Valley Bank

  
	
   

  	
   

  	
  3003 Tasman Drive

  
	
   

  	
   

  	
  Santa Clara, CA 95054

  

 

15

 

Annex A

 

Registration Rights

 

1.             Registration of Shares.  The Company will (i) use best efforts to
prepare and file, within 30 days after the Closing, a Registration Statement
(the “Registration Statement”) with the SEC to register resales under
the Securities Act of the Common Stock and Common Stock issuable upon the
exercise of the Common Stock Warrants by the Subscriber, (ii) use its
reasonable best efforts to cause the Registration Statement to become effective
as soon as practicable after such filing, (iii) use its reasonable best efforts
to cause such registration statement to become effective as promptly as
practicable and to remain effective until the first anniversary of the Closing
(except as otherwise set forth above); provided  that the Company
may suspend sales at any time under the Registration Statement immediately upon
notice to the Subscriber, for a period or periods of time not to exceed 90 days
in the aggregate during any 12-month period, if there then exists material,
non-public information relating to the Company, which in the reasonable opinion
of the Company, would not be appropriate for disclosure during that time, and
(iv) prepare and file with the SEC such amendments and supplements to the
Registration Statement and the prospectus used in connection therewith as may
be necessary to keep such Registration Statement effective for the period
specified in this sentence above. 
Without limiting the foregoing, the Company will promptly respond to all
SEC comments, inquiries and requests, and shall request acceleration of
effectiveness at the earliest possible date. 
In the event a registration statement is not filed with the SEC within
30 days or is not declared effective within 90 days from the date of filing,
then in such event a fee of 1% per month (or portion thereof) shall be assessed
against the Company as a Default Payment and in favor of the holders of the
Common Stock and Warrants for each such 30 day period until such time as the
registration statement is declared effective. 
The Subscriber shall provide all information and materials, including,
without limitation, all information requested in a questionnaire to be provided
to the Subscriber by the Company, and take all such action as may be required
in order to permit the Company to comply with all applicable requirements of
the Securities Act and the Exchange Act and to obtain any desired acceleration
of the effective date of the Registration Statement, such provision of
information and materials to be a condition precedent to the obligations of the
Company hereunder to register the Common Stock issued or issuable upon the
exercise of the Common Stock Warrants. 
The offerings made pursuant to the Registration Statement shall not be
underwritten.

 

2.             Registration Procedures.  With respect to the registration of Common
Stock under this Annex A, the Company will: (i) furnish to the
Subscriber such number of copies of the Registration Statement, each amendment
and supplement thereto, the prospectus included in such Registration Statement
(including each preliminary prospectus) and such other documents as the
Subscriber may reasonably request in order to facilitate the disposition of the
Common Stock and the Common Stock acquired by the Subscriber upon the exercise
of Common Stock Warrants and owned by the Subscriber; (ii) use its best efforts
to register or qualify the Common

 

16

 

Stock included in such registration under such other securities or blue
sky laws of such jurisdictions as the Subscriber reasonably requests and do any
and all other acts and things which may be reasonably necessary or advisable to
enable the Subscriber to consummate the disposition in such jurisdictions of
the shares of Common Stock to be sold by the Subscriber (provided  that
the Company will not be required to qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
subparagraph, subject itself to taxation in any such jurisdiction, or consent
to general service of process in any such jurisdiction); (iii) notify the
Subscriber at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, upon discovery that, or upon the discovery
of the happening of any event as a result of which, the prospectus included in
such registration statement contains an untrue statement of a material fact or
omits any fact necessary to make the statements therein not misleading in the
light of the circumstances under which they were made, and the Company will
promptly prepare and file with the SEC and, at the request of any the
Subscriber, furnish to the Subscriber a reasonable number of copies of, a
supplement or amendment to such prospectus so that, as thereafter delivered to
the Subscriber, such prospectus will not contain an untrue statement of a
material fact or omit to state any fact necessary to make the statements
therein not misleading in light of the circumstances under which they were
made; and (iv) promptly reissue, or promptly authorize and instruct its
transfer agent to reissue, unlegended certificates at the request of the
Subscriber upon such Subscriber’s delivery of original certificates
representing the shares of Common Stock tendered for sale pursuant to the
effective Registration Statement, and to promptly respond to broker’s inquiries
made of the Company in connection with such sales, in each case with a view to
reasonably assisting the Subscriber to complete such sale during such period of
effectiveness.

 

3.             Registration Expenses. All of
the out-of-pocket expenses incurred by the Company in complying with its
obligations under this Annex A in connection with the registration of
the Common Stock and the Common Stock issuable upon the exercise of the Common
Stock Warrants, including, without limitation, all SEC, Nasdaq SmallCap Market
and blue sky registration and filing fees, printing expenses, transfer agents’
and registrars’ fees, and the fees and disbursements of the Company’s outside
counsel and independent accountants shall be paid by the Company.  The Company shall not be responsible to pay
any legal fees for any Subscriber or any selling expenses of any Subscriber
(including, without limitation, any broker’s fees or commissions, including underwriter
commissions).

 

4.             Indemnification.

 

(a)           The Company agrees to indemnify and
hold harmless, to the extent permitted by law, the Subscriber, its officers,
directors, employees and agents and each Person who controls such Subscriber
(within the meaning of the Securities Act), if applicable, against any losses,
claims, damages or liabilities, joint or several, to which such the Subscriber
or any such director, officer, employee, agent or controlling Person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings, whether

 

17

 

commenced or threatened, in respect thereof) arise out of or are based
upon (i) any untrue or alleged untrue statement of a material fact contained
(A) in the Registration Statement or prospectus or preliminary prospectus or
any amendment thereof or supplement thereto used in connection with this Annex
A or (B) in any application or other document or communication (in this Annex
A collectively called an “application”) executed by or on behalf of the
Company or based upon written information furnished by or on behalf of the
Company filed in any jurisdiction in order to qualify any securities covered by
such Registration Statement under the “blue sky” or securities laws thereof,
(ii) any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading or (iii) any
violation by the Company of the Securities Act or any state securities law, or
any rule or regulation promulgated under the Securities Act or any state
securities law, or any other law applicable to the Company relating to any such
registration or qualification, and the Company will reimburse the Subscriber
and each such director, officer and controlling Person for any legal or any
other expenses incurred by them in connection with investigating or defending
any such loss, claim liability, action or proceeding; provided  that
the Company shall not be liable in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding with respect thereof)
or expense arises out of or is based upon an untrue statement, any such
prospectus or preliminary prospectus or any amendment or supplement thereto, or
in any application, in reliance upon and in conformity with written information
prepared and furnished to the Company by the Subscriber or any other subscriber
expressly for use therein or by the Subscriber’s failure to deliver a copy of
the prospectus or any amendments or supplements thereto after the Company has
furnished the Subscriber with a sufficient number of copies of the same.

 

(b)           In connection with the Registration
Statement, the Subscriber will furnish to the Company in writing such information
and documents concerning the Subscriber as the Company reasonably requests for
use in connection with the Registration Statement or prospectus and, to the
extent permitted by law, will indemnify and hold harmless the Company and its
directors and officers and each other Person who controls or is controlled by
the Company and the directors and officers of each such Person controlling or
controlled by the Company and the directors and officers of each such
controlling or controlled Person (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities, joint or several, to which
the Company or any such director or officer or controlling or controlled Person
may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon (i)
any untrue or alleged untrue statement of a material fact contained in the
Registration Statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or in, any application or (ii) any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but only to the extent that such
untrue statement or omission or alleged omission is made in such Registration
Statement, any such prospectus or preliminary prospectus or any amendment or
supplement thereto, or in any application, in reliance upon and in conformity
with written information concerning

 

18

 

the Subscriber prepared and furnished to the Company by or on behalf of
the Subscriber in writing expressly for use therein, and the Subscriber will
reimburse the Company and each such director, officer and controlling or
controlled Person for any legal or any other expenses incurred by them in
connection with investigating or defending any such loss, claim, liability,
action or proceeding.

 

(c)           Any person entitled to
indemnification hereunder will (i) give prompt written notice to the Company of
any claim with respect to which it seeks indemnification and (ii) unless in
such indemnified party’s reasonable judgment a conflict of interest between
such indemnified parties and the Company may exist with respect to such claim,
permit the Company to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided, however, that
the failure of any indemnified party to give notice as provided herein shall
not relieve the indemnifying party of its obligations hereunder unless the
failure to give such notice is materially prejudicial to an indemnifying
party’s ability to defend such action. 
If such defense is assumed, the indemnified party will not be subject to
any liability for any settlement made by the Company without its consent (but
such consent will not be unreasonably withheld).  Anything to the contrary appearing in this Annex A
notwithstanding, the Company will not be obligated to pay the fees and expenses
of more than one counsel for all parties indemnified hereunder with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim.  If the Company assumes the defense, the indemnified party may
engage its own counsel at its own sole cost and expense.  All fees and expenses of counsel to any
indemnified party required to be paid by the Company shall be paid by the
Company as incurred by such indemnified party.

 

(d)           The indemnification provided for
herein will remain in full force and effect regardless of any investigation
made by or on behalf of the indemnified party or any officer, director,
employee, agent or controlling or controlled Person of such indemnified party
and will survive the transfer of securities issued hereunder by the
Subscriber.  If the indemnification
provided for herein is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
the Company, in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative fault of the Company, on the one hand, and
the indemnified party or parties, on the other hand, in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations.

 

19

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