Exhibit 10.4
Form 8-K
Viking Systems, Inc.
File No. 000-49636
VIKING SYSTEMS, INC.
STOCK OPTION AGREEMENT
This Agreement is entered into this 18th day of December 2003, by and
between Viking Systems, Inc., a Nevada corporation ("Corporation") and Daniel F.
Crowley, a Director of the Corporation (" Crowley").
Recitals
In consideration for Crowley agreeing to serve as a director of the
Corporation, the Company has agreed to grant Crowley an option to purchase
shares of the Corporation's common stock.
The purpose of granting this option to Crowley is to promote the success of
the Corporation and to advance the interests of the Corporation by providing an
additional means, through the grant of this stock option, to motivate, retain
and reward Crowley with an incentive for high levels of individual performance
and improved financial performance of the Corporation.
The Board of Directors of the Corporation has granted the option provided
for herein in accordance with Rule 16b-3(d)(1) promulgated under the Securities
Exchange Act of 1934, as amended (the "Act").
The grant of the option provided for herein, and the exercise of such
options, shall be exempt from Section 16(b) of the Act;
NOW THEREFORE, it is agreed as follows:
Agreement
1. Grant of Option. Subject to the terms and conditions of this Agreement,
the Corporation hereby grants to Crowley, the option ("Option") to purchase from
the Corporation up to an aggregate of 200,000 shares of the Corporation's common
stock ("Option Shares"), from time to time, at a price of $.02 per Share
("Exercise Price"). The Option is fully vested and is now exercisable in part or
in full.
2. NSO. The Option granted hereunder shall be deemed to be a Non-Statutory
Stock Option (NSO).
3. Exercise of Option. The Option granted herein expires on December 31,
2008 and must be exercised, if at all, on or before December 31, 2008.
3.1. Manner of Exercise. This Option may be exercised in whole or in
part by delivery to the Corporation, from time to time, of a written notice
signed by Crowley, specifying the number of Option Shares that Crowley then
desires to purchase, together with: (i) cash, certified check, or bank
draft payable to the order of the Corporation or (ii) other form of payment
acceptable to the Corporation's Board of Directors, for an amount equal to
the Exercise Price of such Shares. Crowley may pay all or a portion of the
Exercise Price, and/or the tax withholding liability with respect to the
exercise of the Option either by surrendering shares of stock already owned
by Crowley or by withholding Option Shares, provided that the Board
determines that the fair market value of such surrendered stock or withheld
Option Shares is equal to the corresponding portion of such Exercise Price
and/or tax withholding liability, as the case may be, to be paid for
therewith.
3.2. Certificates. Promptly after any exercise in whole or in part of
the Option by Crowley, the Corporation shall deliver to Crowley a
certificate or certificates for the number of Option Shares with respect to
which the Option was so exercised, registered in Crowley's name.
4. Restriction on Transferability. This Option is not transferable by
Crowley otherwise than by testamentary will or the laws of descent and
distribution and, during Crowley's lifetime, may be exercised only by Crowley or
Crowley's guardian or legal representative. Except as permitted by the preceding
sentence, neither this Option nor any of the rights and privileges conferred
thereby shall be transferred, assigned, pledged, or hypothecated in any way
(whether by operation of law or otherwise), and no such option, right, or
privilege shall be subject to execution, attachment, or similar process. Upon
any attempt to transfer this Option, or of any right or privilege conferred
thereby, contrary to the provisions hereof, or upon the levy of any attachment
or similar process upon such option, right, or privilege, this Option and any
such rights and privileges shall immediately become null and void.
5. Exercise in Event of Death or Disability. Whenever the word "Crowley" is
used in any provision of this Agreement under circumstances when the provision
should logically be construed to apply to Crowley's guardian, legal
representative, executor, administrator, or the person or persons to whom the
Option may be transferred by testamentary will or by the laws of descent and
distribution, the word "Crowley" shall be deemed to include such person or
persons.
6. No Rights As Shareholder Prior To Exercise. Crowley shall not, by virtue
hereof, be entitled to any rights of a shareholder in the Corporation, either at
law or equity. The rights of Crowley are limited to those expressed in this
Option and are not enforceable against the Corporation except to the extent set
forth herein.
7. Registration of Option Shares. The Option Shares have not been
registered with the Securities and Exchange Commission. The Company shall use
its best efforts to register the Options Shares on Form S-8 with the Securities
and Exchange Commission as soon as practical.
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8. Anti-Dilution Provisions. The number and kind of Shares purchasable upon
the exercise of this Option and the exercise price shall be subject to
adjustment from time to time as follows:
8.1. In case the Corporation shall (i) pay a dividend or make a
distribution on the outstanding Shares payable in Shares, (ii) subdivide
the outstanding Shares into a greater number of Shares, (iii) combine the
outstanding Shares into a lesser number of Shares, or (iv) issue by
reclassification of the Shares any Shares of the Corporation, Crowley shall
thereafter be entitled, upon exercise, to receive the number and kind of
shares which, if this Option had been exercised immediately prior to the
happening of such event, Crowley would have owned upon such exercise and
been entitled to receive upon such dividend, distribution, subdivision,
combination, or reclassification.
8.2. In case the Corporation shall consolidate or merge into or with
another corporation, or in case the Corporation shall sell or convey to any
other person or persons all or substantially all the property of the
Corporation, Crowley shall thereafter be entitled, upon exercise, to
receive the kind and amount of shares, other securities, cash, and property
receivable upon such consolidation, merger, sale, or conveyance by a holder
of the number of Shares which might have been purchased upon exercise of
this Option immediately prior to such consolidation, merger, sale, or
conveyance, and shall have no other conversion rights. In any such event,
effective provision shall be made, in the certificate or articles of
incorporation of the resulting or surviving corporation, in any contracts
of sale and conveyance, or otherwise so that, so far as appropriate and as
nearly as reasonably may be, the provisions set forth herein for the
protection of the rights of Crowley shall thereafter be made applicable.
8.3. Whenever the number of Shares purchasable upon exercise of this
Option is adjusted pursuant to this Section, the exercise price per Share
shall be adjusted simultaneously by multiplying that exercise price per
Share in effect immediately prior to such adjustment by a fraction, of
which the numerator shall be the number of Shares purchasable upon exercise
of this Option immediately prior to such adjustment, and of which the
denominator shall be the number of Shares so purchasable immediately after
such adjustment, so that the aggregate exercise price of this Option
remains the same.
8.4. The existence of the Option shall not affect in any way the right
or power of the Corporation or its shareholders to make or authorize any
adjustments, recapitalization, reorganization, or other changes in the
Corporation's capital structure or its business, or any merger or
consolidation of the Corporation, or any issue of bonds, debentures,
preferred shares with rights greater than or affecting the Shares, or the
dissolution or liquidation of the Corporation, or any sale or transfer of
all or any part of its assets or business, or any other corporate act or
proceeding, whether of a similar character or otherwise.
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9. Termination of Status as Director. If Crowley's services as a director
of the Corporation shall terminate by reason of death or disability, or if he is
not reelected or reappointed to the Board of Directors, the Option granted
hereby shall remain exercisable for six months after the date of such
termination but not later than December 31, 2008. If Crowley shall resign from
the Board of Directors, this option shall immediately terminate and no longer be
exercisable.
10. Notices. Any notices permitted or required under this Agreement shall
be deemed given upon the date of personal delivery or 48 hours after deposit in
the United States mail, postage fully prepaid, return receipt requested,
addressed to the Corporation at its principal placement of business and to
Crowley at his residence.
11. Miscellaneous
11.1. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.
11.2. Titles and Captions. All section titles or captions contained in
this Agreement are for convenience only and shall not be deemed part of the
context nor effect the interpretation of this Agreement.
11.3. Entire Agreement. This Agreement contains the entire
understanding between and among the parties and supersedes any prior
understandings and agreements among them respecting the subject matter of
this Agreement.
11.4. Binding Agreement. This Agreement shall be binding upon the
heirs, executors, administrators, successors and assigns of the parties
hereto.
11.5. Computation of Time. In computing any period of time pursuant to
this Agreement, the day of the act, event or default from which the
designated period of time begins to run shall be included, unless it is a
Saturday, Sunday, or a legal holiday, in which event the period shall begin
to run on the next day which is not a Saturday, Sunday, or legal holiday.
In the event that the last day of any period falls on a Saturday, Sunday or
legal holiday, such period shall run until the end of the next day
thereafter which is not a Saturday, Sunday, or legal holiday.
11.6. Pronouns and Plurals. All pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine, neuter, singular, or
plural as the identity of the person or persons may require.
11.7. Arbitration. If at any time during the term of this Agreement
any dispute, difference, or disagreement shall arise upon or in respect of
the Agreement, and the meaning and construction hereof, every such dispute,
difference, and disagreement shall be referred to a single arbiter agreed
upon by the parties, or if no single arbiter can be agreed upon, an arbiter
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or arbiters shall be selected in accordance with the rules of the American
Arbitration Association and such dispute, difference, or disagreement shall
be settled by arbitration in accordance with the then prevailing commercial
rules of the American Arbitration Association, and judgment upon the award
rendered by the arbiter may be entered in any court having jurisdiction
thereof.
11.8. Presumption. This Agreement or any section thereof shall not be
construed against any party due to the fact that said Agreement or any
section thereof was drafted by said party.
11.9. Further Action. The parties hereto shall execute and deliver all
documents, provide all information and take or forbear from all such action
as may be necessary or appropriate to achieve the purposes of the
Agreement.
11.10. Parties in Interest. Nothing herein shall be construed to be to
the benefit of any third party, nor is it intended that any provision shall
be for the benefit of any third party.
11.11. Savings Clause. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such
provision to persons or circumstances other than those as to which it is
held invalid, shall not be affected thereby.
11.12. Representation by Counsel. Crowley represents that he/she has
been advised that he is not being represented in this transaction by the
corporation's attorneys and that Marsh has been advised to seek separate
legal counsel for advice in this matter.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above-written.
Viking Systems, Inc. Crowley
By /s/ Thomas B. Marsh Daniel F. Crowley
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Thomas B. Marsh, President Daniel F. Crowley
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