Exhibit 10.1
Form 8-K
Viking Systems, Inc.
File No. 000-49636
Neither this Convertible Promissory Note nor the shares of common stock which
will be issued if this Note is converted into shares of common stock, has been
registered under the Securities Act of 1933 or applicable state securities laws
and may not be sold, transferred, assigned, offered, pledged or otherwise
distributed for value without the express written consent of the Maker and
Maker's receipt of an opinion of counsel acceptable to the Maker that such sale,
transfer, assignment, offer, pledge or other distribution for value is exempt
from the registration and prospectus delivery requirements of such Act and such
laws.
$400,000 December 6, 2004
CONVERTIBLE PROMISSORY NOTE
FOR VALUE RECEIVED, Viking Systems, Inc., a Nevada corporation ("Maker"),
hereby promises to pay to the order of Donald E. Tucker ("Payee"), the principal
sum of FOUR HUNDRED THOUSAND Dollars (U.S. $400,000.00), together with interest
thereon from the date hereof accruing at the rate of ten percent (10%) per
annum. Principal and all accrued interest shall be payable in full on or before
March 31, 2005. This Note is unsecured. This Note supercedes and replaces the
Convertible Promissory Note in the amount of $200,000 of October 26, 2004.
PAYMENT TERMS
Principal and Interest. The principal amount of this Note, together with
all accrued interest, shall be due and payable on or before March 31, 2005.
Manner of Payment. All payments of principal and interest on this Note
shall be made payable to Payee and mailed to 1626 Clemson Circle, La Jolla, CA
93027 or at such other place in the United States of America as Payee shall
designate to Maker in writing. If any payment of principal or interest on this
Note is due on a day which is not a Business Day, such payment shall be due on
the next succeeding Business Day, and such extension of time shall be taken into
account in calculating the amount of interest payable under this Note. "Business
Day" means any day other than a Saturday, Sunday or legal holiday in the State
of Nevada.
Prepayment. Maker may, without premium or penalty, at any time and from
time to time, prepay all or any portion of the outstanding principal balance due
under this Note, provided that each such prepayment is accompanied by accrued
interest on the amount of principal prepaid calculated to the date of such
prepayment.
DEFAULT
The occurrence of any one or more of the following events with respect to
Maker shall constitute an event of default hereunder ("Event of Default"):
(a) If Maker shall fail to pay when due any payment of principal or
interest on this Note and such failure continues for fifteen (15) days
after Payee notifies Maker therein writing;
(b) The Maker shall default in the observance or performance of any
other term, covenant or agreement contained herein and the same shall not
be cured within fifteen (15) days of the occurrence thereof;
(c) If, pursuant to or within the meaning of the United States
Bankruptcy Code or any other federal or state law relating to insolvency or
relief of debtors (a "Bankruptcy Law"), Maker shall (i) commence a
voluntary case or proceeding; (ii) consent to the entry of an order for
relief against it in an involuntary case; (iii) consent to the appointment
of a trustee, receiver, assignee, liquidator or similar official; (iv) make
an assignment for the benefit of its creditors; or (v) admit in writing its
inability to pay its debts as they become due.
(d) If a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that (i) is for relief against Maker in an
involuntary case, (ii) appoints a trustee, receiver, assignee, liquidator
or similar official for Maker or substantially all of Maker's assets, or
(iii) orders the liquidation of Maker, and in each case the order or decree
is not dismissed within 120 days.
REMEDIES
Upon the occurrence of an Event of Default hereunder (unless all Events of
Default have been cured or waived by Payee), Payee may, at its option, (i) by
written notice to Maker, declare the entire unpaid principal balance of this
Note, together with all accrued interest thereon, immediately due and payable
regardless of any prior forbearance and (ii) exercise any and all rights and
remedies available to it under applicable law, including, without limitation,
the right to collect from Maker all sums due under this Note. Maker shall pay
all reasonable costs and expenses incurred by or on behalf of Payee in
connection with Payee's exercise of any or all of its rights and remedies under
this Note, including, without limitation, reasonable attorneys' fees.
CONVERSION INTO COMMON STOCK
The unpaid principal amount of the Note and accrued interest thereon may,
at the election of Payee, be converted in full or part into fully paid and
nonassessable shares of common stock of Maker at a rate of $.50 per share.
Manner Of Conversion. This Note may be converted by Maker by surrender of
this Note, to Maker at its principal office at 7514 Girard Avenue, Suite 1509,
La Jolla, CA 92037 (or at such other office as the Maker shall designate to
Payee from time to time). The conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which the Note shall
have been so surrendered to the Maker.
Delivery of Stock Certificates. As promptly as practicable after the
conversion of this Note, and in any event within thirty days thereafter, the
Maker at its expense will issue, authenticate and deliver to the converting
Lender the certificate or certificates for the number of shares of common stock
issuable upon such conversion. All shares of the common stock which shall be so
deliverable shall be duly and validly issued and fully paid and nonassessable.
Each certificate shall bear the following legend: THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
APPLICABLE STATE SECURITIES LAWS, AND ACCORDINGLY, MAY NOT BE SOLD, TRANSFERRED,
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PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION
UNDER SUCH ACT AND SUCH LAWS OR PURSUANT TO AN EXEMPTION THEREFROM.
Covenant to Reserve Shares for Conversion. Maker covenants that it will at
all times reserve and keep available, out of its authorized common stock, solely
for the purpose of delivery upon conversion of this Note, such number of shares
of common stock as shall then be deliverable upon the conversion of this Note.
No Dilution. If the Maker:
(i) (A) makes a distribution in respect of the common stock in shares
of common stock, (B) subdivides the outstanding shares of common stock or
(C) combines the outstanding shares of common stock into a smaller number
of shares, in each case whether by reclassification or recapitalization
(including reclassification or recapitalization by way of merger or
consolidation); or
(ii) issues to holders of shares of common stock as a dividend or
distribution, (including by way of reclassification or recapitalization),
any right or warrant to purchase shares of common stock, or any other
security convertible into shares of common stock; or
(iii) issues, sells or exchanges shares of common stock for a cash
price less than the fair market value of such common stock on the date of
such issuance, sale or exchange other than pursuant to options or
commitments to issue securities outstanding on the date of the Note; or
(iv) makes a distribution in respect of the common stock by way of
dividend, distribution reclassification or recapitalization (including by
way of merger or consolidation), or redeems or repurchases any common
stock;
then the Maker shall promptly adjust the number of shares of common stock to be
received upon conversion hereunder so that the fair market value of the shares
to be received by Payee following any of the events described in (i)-(iv) and
the adjustment is equal to the fair market value of the shares that would have
been received by Purchaser if conversion had taken place immediately prior to
such event and adjustment.
Disclosures. Payee understands and acknowledges that the there is no active
market for the Maker's common stock, and Maker will likely operate at a loss
during the year ended December 31, 2004. Payee understands that an investment in
Maker is a high risk investment. Payee understands that the $.50 conversion
price has been arbitrarily determined and does not indicate that the shares of
Maker's common stock's are worth, or have a value of, $.50 per share under any
criteria of valuation.
Availability of Information. The Maker undertakes to make available to
Payee in connection with Payee's decision as to whether Payee will convert this
Note, any reasonable and relevant information requested, and undertakes to give
the Payee an opportunity to ask questions of, and receive answers from, Maker
concerning any financial or other matter relating to the Maker.
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WAIVER
The rights and remedies of Payee under this Note shall be cumulative and
not alternative. No waiver by Payee of any right or remedy under this Note shall
be effective unless in writing signed by Payee. Neither the failure nor any
delay in exercising any right, power or privilege under this Note will operate
as a waiver of such right, power or privilege and no single or partial exercise
of any such right, power or privilege by Payee will preclude any other or
further exercise of such right, power or privilege or the exercise of any other
right, power or privilege. To the maximum extent permitted by applicable law,
(a) no claim or right of Payee arising out of this Note can be discharged by
Payee, in whole or in part, by a waiver or renunciation of the claim or right
unless in a writing, signed by Payee; (b) no waiver that may be given by Payee
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on Maker will be deemed to be a waiver of any
obligation of Maker or of the right of Payee to take further action without
notice or demand as provided in this Note. Maker hereby waives presentment,
demand, protest and notice of dishonor and protest.
OTHER PROVISIONS
This Note shall be construed according to, and shall be governed by, the
laws of the State of Nevada. The provisions of this Note shall be deemed
severable, so that if any provision hereof is declared invalid under the laws of
any state where it is in effect, or of the United States, all other provisions
of this Note shall continue in full force and effect. This Note may be amended
only by a writing signed on behalf of each party.
Any suit filed to enforce this Note or collect the money owed hereunder
shall be filed in any state or federal court having subject matter jurisdiction
and located in San Diego County, California. In any action or proceeding
instituted with respect to any such claim, Maker irrevocably submits to the
jurisdiction of such courts.
This Note shall be binding upon the successors and assigns of Maker, and
shall inure to the benefit of and be enforceable by the heirs, personal
representatives, successors and assigns of Payee or any other holder hereof.
IN WITNESS WHEREOF, the undersigned has duly executed, sealed and delivered
this Promissory Note the day and year first above written.
VIKING SYSTEMS, INC.,
a Nevada corporation
By: /s/ Thomas B. Marsh
Thomas B. Marsh, President
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