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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) March 22, 2005
VIKING SYSTEMS, INC.
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(Exact Name of Registrant as Specified in Its Charter)
Nevada
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(State or Other Jurisdiction of Incorporation)
000-49636 86-0913802
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(Commission File Number) (IRS Employer Identification No.)
7514 Girard Ave., Ste. 1509, La Jolla, CA 92037
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(Address of Principal Executive Offices) (Zip Code)
858-456-6608
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions (see General Instruction A.2. below):
_
|_| Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
_
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12
_
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b))
_
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry Into a Material Definitive Agreement
On March 22, 2005 Viking Systems, Inc. ("Viking") entered into a Securities
Purchase Agreement and related agreements (the "Transaction Documents"), among
(i) Viking, (ii) St. Cloud Capital Partners, L.P., a Delaware limited
partnership ("St. Cloud"), as "Lead Lender" and "Collateral Agent" and (iii) St.
Cloud, Donald Tucker, Brian Miller, and any other person signing the signature
page of the Securities Purchase Agreement as an Investor or that becomes an
Investor after March 22, 2005, (collectively, the "Investors"). Pursuant to the
Securities Purchase Agreement, Viking will sell promissory notes ("Notes") to
Investors in the maximum aggregate amount of $2,750,000. As of March 22, 2004,
Investors have purchased Notes in the aggregate amount of $1,550,000. While
there can be no assurances that Viking will raise the full amount, as of March
22, 2005 Viking had commitments from Investors to purchase the balance of
$1,200,000 of the Notes by March 31, 2005. The material terms of the Securities
Purchase Agreement and other Transaction Documents include, but are not limited
to, the following:
Maturity Date of Notes Twelve Months from the date of issuance
Interest Rate of Notes Ten percent per annum
Security The Notes are secured by all of the assets of
Viking.
Optional Conversion The Notes may, at the option of the Investors, be
converted into shares of Viking common stock at
the price of $.20 per share. The conversion price
is subject to downward adjustment, upon certain
conditions pursuant to the terms of Security
Purchase Agreement and other Transaction
Documents.
Mandatory Conversion Viking shall hav the right to require an Investor
to convert all or a portion of such Investor's
Note at the conversion price in the event that:
(i) no Event of Default exists or is continuing
at the time of such mandatory conversion; and
(ii)Viking has raised a minimum of $3,000,000 in
public and/or private equity offerings on or
prior to the one-year anniversary date of the
initial closing at an average price equal to or
greater than $0.30 per share of common stock.
Warrants As additional consideration for the Investors
purchasing the Notes, Viking has issued the
Investors Warrants to purchase shares of Viking
common stock at the price of $.40 per share. The
exercise price is subject to downward adjustment,
upon certain conditions pursuant to the terms of
Security Purchase Agreement and other Transaction
Documents. The Warrants are exercisable for a
period of 42 months from the date of issuance.
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Registration Rights Viking has agreed to register with the Securities
and Exchange Commission and applicable state
securities agencies, the shares of common stock
that are issuable upon the conversion of the
Notes and the shares of common stock that
underlie the Warrants.
The initial Investors
include: St. Cloud Capital Partners L.P. $750,000
Donald Tucker $500,000 *
Brian Miller $300,000 *
* Donald Tucker and Brian Miller had previously loaned $500,000 and
$300,000 respectively to Viking. Such loans were payable in full March 31,
2005. Each of these loans was converted into Notes pursuant to the
Securities Purchase Agreement. Accordingly, additional cash was not
received by Viking for these amounts.
Pursuant to the Securities Purchase Agreement, Cary Fitchey was appointed
as a director of Viking and Larry Haimovitch was appointed as an Observer to the
Viking Board of Directors. Mr. Fitchey and Mr. Haimovitch are affiliates of St.
Cloud Capital Partners, LP, one of the Investors. St. Cloud Capital Partners,
L.P. was also designated as the Lead Lender and Collateral Agent under the
Securities Purchase Agreement and related transaction documents.
The Securities Purchase Agreement contains various representations and
warranties that are relatively standard for this type of transaction as well as
certain affirmative and negative covenants.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information contained in Item 1.01 in this Current Report on Form 8-K
is hereby incorporated by reference.
Item 5.02 Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers
Pursuant to the Securities Purchase Agreement described in Item 1.01 in
this Current Report on Form 8-K, effective March 22, 2005, Cary Fitchey was
appointed as a member of Viking's Board of Directors. Cary Fitchey is an
affiliate of St. Cloud Capital Partners, L.P. which is an Investor, the Lead
Lender and the Collateral Agent under the Securities Purchase Agreement and
other Transaction Documents. Mr. Fitchey has not yet been appointed to any
committee of the Board of Directors.
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Item 9.01 Financial Statements and Exhibits
C - Exhibits
Exhibit Number Description
10.1 Securities Purchase Agreement
10.2 Form Convertible Promissory Note
10.3 Form Warrant
10.4 Registration Rights Agreement
10.5 Security Agreement
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 23, 2005 VIKING SYSTEMS, INC.
By: /s/ Thomas B. Marsh,
President/Chairman of the Board
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