SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
March 31, 2004
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Date of Report (Date of earliest event reported)
VIKING SYSTEMS, INC.
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(Name of Small Business Issuer as specified in its charter)
Nevada 86-0913802
(State or other jurisdiction of (I.R.S. employer
incorporation or organization identification No.)
SEC File Number 000-49636
7514 Girard Ave, Suite 1509, La Jolla, CA 92037
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(Address of principal executive offices)
Registrant's telephone no., including area code: (858) 456-6608
_________________________NA_________________________
(Former name or former address)
In this current report references to "Viking," "we," "us," and "our" refer to
Viking Systems, Inc.
FORWARD LOOKING STATEMENTS
This current report contains certain forward-looking statements and any
statements contained in this current report that are not statements of
historical fact may be deemed to be forward-looking statements. Without limiting
the foregoing, words such as "may," "will," "expect," "believe," "anticipate,"
"estimate" or "continue" or comparable terminology are intended to identify
forward-looking statements. These statements by their nature involve substantial
risks and uncertainties, and actual results may differ materially depending on a
variety of factors, many of which are not within Viking's control. These factors
include, but are not limited to, economic conditions generally and in the
markets in which Viking may participate, competition within Viking's markets and
failure by Viking to successfully develop business relationships.
ITEM 5: OTHER EVENTS AND REGULATION FD DISCLOSURE
On March 31, 2004, Viking's Board of Directors adopted (i) a Stock
Incentive Plan; and (ii) a Non-Employee Directors' Stock Ownership Plan.
Stock Incentive Plan. The following is a summary of material terms of the
Stock Incentive plan:
Participants and Awards. All key employees of Viking (and its subsidiaries
and affiliates in which Viking has a significant equity interest) are eligible
to receive awards under the Plan. The Plan permits the granting of:
o stock options, including "incentive stock options" meeting the
requirements of Section 422 of the Internal Revenue Code and stock
options that do not meet these requirements (options that do not meet
these requirements are called "nonqualified stock options");
o stock appreciation rights, or "SARs";
o restricted stock; and
o performance awards payable in stock.
A total of 7,500,000 shares of Viking common stock were available for
granting future awards under the Plan.
Administration. The Plan is administered by the Compensation Committee of
Viking Board of Directors. The Committee has the authority to:
o establish rules for the administration of the Plan;
o select the participants to whom awards are granted;
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o determine the types of awards to be granted and the number of shares
of Viking common stock covered by the awards; and
o set the terms and conditions of the awards.
The Committee also may determine whether the payment of any amounts
received under any award shall or may be deferred and may authorize payments
representing cash dividends in connection with any deferred award of shares of
Viking common stock. Determinations and interpretations with respect to the Plan
are in the sole discretion of the Committee, whose determinations and
interpretations are binding on all interested parties. The Committee may
delegate to one or more officers the right to grant awards with respect to
individuals who are not executive officers subject to Section 16(b) of the
Securities Exchange Act of 1934. Unless otherwise determined by the Committee,
awards are granted for no cash consideration or for such minimal cash
consideration as may be required by applicable law. Awards may provide that,
upon the grant or exercise of the award, the holder will receive shares of
Viking common stock, cash or any combination thereof, as the Committee
determines.
Term of Awards and Termination. Unless otherwise expressly provided in the
Plan or an applicable award agreement, any award granted may extend beyond the
termination date of the Plan. The Plan is scheduled to terminate on March 31,
2014.
Non-Employee Directors' Stock Ownership Plan. The following is a summary of
material terms of the Non-Employee Director Stock Incentive Plan:
General. The purpose of the 2004 Non-Employee Director Stock Ownership Plan
(the "2004 Director Plan") is to promote the long-term growth and financial
success of the Company by attracting and retaining non-employee directors of
outstanding ability and assisting the Company in promoting a greater identity of
interest between the Company's non-employee directors and its shareholders. The
following is a summary description of the 2004 Director Plan.
Administration. Each non-employee director is automatically entitled, as
described below, to receive grants of specified awards under the 2004 Director
Plan. The Board of Directors may designate a committee of the Board to
administer the 2004 Director Plan. Any such committee must consist of at least
two directors, each of whom must qualify as a "non-employee director" within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended. If
at any time no such committee exists, the 2004 Director Plan will be
administered by the members of the Board of Directors who do qualify as
non-employee directors, outside directors and independent directors. The Board
of Directors has designated the Compensation Committee to administer the 2004
Director Plan.
Awards Under the 2004 Director Plan; Available Stock. The 2004 Director
Plan provides for the grant to non-employee directors of non-qualified stock
options and restricted stock. The 2004 Director Plan provides that up to a total
of 500,000 shares of Common Stock (subject to adjustment as described below)
will be available for the granting of awards thereunder. If any shares subject
to awards granted under the 2004 Director Plan, or to which any award relates,
are forfeited or if an award otherwise terminates, expires or is cancelled prior
to the delivery of all of the shares issuable pursuant to the award, such shares
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(assuming the holder of the award did not receive dividends on the shares or
exercise other indicia of ownership) will be available for the granting of new
awards under the 2004 Director Plan.
Terms of Awards. The 2004 Director Plan provides that, on April 30th of
each year, commencing April 30, 2004, each non-employee director of the Company
automatically receives a combined stock option and restricted stock award. The
award is intended to deliver a greater portion of director compensation in the
form of equity, with the aggregate award providing an annual economic value of
$20,000 or such other amount as the committee administering the plan may
determine. Generally, the annual economic value is equally divided between
restricted stock awards and stock options, with the basis for the division as
follows: the restricted stock shares at the fair market value on date of award,
and the stock options valued as of the date of the grant using the Black-Scholes
Model.
Stock Options. On April 30th of each year during the Plan, each
non-employee director of the Company will automatically be granted stock options
having a fair value of $10,000 (valued as of the date of the grant using the
Black-Scholes Model), or such other amount as the appropriate committee may
determine. If a non-employee director is first elected or appointed as a
director of the Company following April 30th of a Plan year, such non-employee
director will automatically receive, as an initial grant, stock options having a
fair value of $10,000 (or such other amount as the committee may determine), as
if such director had been a director on April 30th of such Plan year. The
exercise price for such options will be the fair market value of a share of
Common Stock on the date of grant. Options will have a term of ten years and
become fully exercisable one year after the date of grant.
If for any reason other than death a non-employee director ceases to be a
director of the Company one year or more after his or her initial election or
appointment to the Board of Directors while holding a vested option granted
under the 2004 Director Plan, such option shall continue to be exercisable for a
period of three years after such termination or the remainder of the option
term, whichever is shorter. Any unvested options will be cancelled as of the
date of such termination. If for any reason other than death a non-employee
director ceases to be a director of the Company within one year of the
director's initial election or appointment to the Board of Directors, any option
granted under the 2004 Director Plan and held by the director will be cancelled
as of the date of such termination. In the event a non-employee director dies,
any unvested option granted under the 2004 Director Plan to such director will
immediately vest and be exercisable by the director's designated beneficiary,
or, in the absence of a designated beneficiary, by will or in accordance with
the laws of descent and distribution for a period of three years following the
date of death.
Options will be exercised by payment in full of the exercise price either
in cash, previously acquired shares of Common Stock, or such other forms or
combinations of forms of consideration as the committee administering the plan
may approve. Options may not be sold, assigned, transferred or disposed of in
any manner other than by will or the laws of descent and distribution, except as
otherwise provided by the appropriate committee.
Restricted Stock Awards. On April 30th of each year during the Plan, each
non-employee director of the Company will automatically be granted shares of
Common Stock having a fair market value of $10,000 (calculated as of the date of
such award), or such other amount as the appropriate committee may determine. If
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a non-employee director is first elected or appointed as a director of the
Company following April 30th of a Plan year, such non-employee director will
automatically receive as an initial award shares of Common Stock having a fair
market value of $10,000 (or such other amount as the committee may determine),
as if such director had been a director on April 30th of such Plan year. Shares
of Common Stock granted to a non-employee director will not be eligible to be
sold or otherwise transferred while the non-employee director remains a director
of the Company and thereafter the restrictions will lapse. However, a
non-employee director will be able to transfer the shares to any trust or other
estate in which the director has a substantial interest or a trust of which the
director serves as trustee and to his or her spouse and certain other related
persons, provided the shares will continue to be subject to the transfer
restrictions described above.
ITEM 7: FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements: N/A
(b) Proforma Financial Statements: N/A
(c) Exhibits.
Exhibit No. Title
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10.1 Stock Incentive Plan
10.2 Non-Employee Director Stock Ownership Plan
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Dated: March 31, 2004 VIKING SYSTEMS, INC.
By /s/ Thomas B. Marsh
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Thomas B. Marsh,
President/Chairman of the Board
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