Exhibit 10.4
Form 8-K
Viking Systems, Inc.
File No. 000-49636
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is made as of March
22, 2005, by and among VIKING SYSTEMS, INC., a Nevada corporation (the
"Company"), ST. CLOUD CAPITAL PARTNERS, L.P., a Delaware limited partnership
("St. Cloud"), the other Investors who have executed this Agreement, and any
other Person who may be added in the future as a party to this Agreement
pursuant to the terms of the Securities Purchase Agreement (as defined below) by
execution of the Joinder to this Agreement substantially in the form set forth
hereto as Exhibit A or who becomes a Selling Securityholder (as defined below)
hereunder. St. Cloud and the other Investors are at times collectively referred
to herein as the "Investors."
RECITALS
Pursuant to that certain Securities Purchase Agreement, dated as of the
date hereof, and each amendment, supplement and addendum thereto, among the
Company, the Lead Lender and Collateral Agent (each as defined therein) and the
Investors (the "Securities Purchase Agreement"), each of the Investors acquired
a Promissory Note and a Warrant to purchase shares of the Company's Common
Stock, subject to the terms and conditions of the Securities Purchase Agreement.
The parties wish to set forth certain rights of the Investors and others in
connection with public offerings and sales of shares of Common Stock underlying
the Promissory Notes and the Warrants.
Pursuant to the Securities Purchase Agreement, the Company has agreed to
register the Note Conversion Shares (as defined below) and the Warrant Shares
(as defined below) under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute as each may be in
effect from time to time (collectively, the "Securities Act"), and applicable
state securities laws.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1 - DEFINITIONS
1.1.Definitions. As used in this Agreement, the following terms shall have
the following meanings:
(a) "Business Day" means any day other than a Saturday, Sunday or
holiday on which banking institutions in California are closed.
(b) "Company" has the meaning set forth in the preamble hereto.
(c) "Company Indemnified Person" is defined in Section 6.2.
(d) "Claims" is defined in Section 6.1.
(e) "Equity Offering(s)" has the meaning set forth in Section 2.2
hereof.
(f) "Exchange Act" means the Securities and Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, or any
similar successor statute, as each may be in effect from time to time.
(g) "Investors" has the meaning set forth in the preamble hereto.
(h) "Investor Indemnified Person" is defined in Section 6.1.
(i) "Legal Counsel" is defined in Section 3.1.
(j) "Note Conversion Shares" means the shares of Common Stock issued
or issuable upon the conversion of the Promissory Notes.
(k) "register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements or similar document in compliance with the Securities Act and
the declaration or ordering of effectiveness of such Registration Statement
or Statements or document by the SEC.
(l) "Registration Period" is defined in Section 3.1.
(m) "Registrable Securities" means (i) the Warrant Shares, (ii) the
Note Conversion Shares, (iii) the Vista Shares, and (iv) any successor
class of common voting equity of the Company or other securities of the
Company issued or issuable in respect of the securities referred to in
clause (i), (ii) and (iii) above upon any stock split, stock dividend,
recapitalization, conversion, merger, consolidation, reorganization or
similar event.
(n) "Registration Statement" and "Resale Registration Statement" are
defined in Section 2.2.
(o) "SEC" means the United States Securities and Exchange Commission.
(p) "Securities Act" means the Securities Act of 1933, as amended.
(q) "Securities Purchase Agreement" has the meaning set forth in the
Recitals hereto.
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(r) "Selling Securityholder" means Vista and any Investor
participating in any registration of Registrable Securities pursuant to
this Agreement or any assignee thereof in accordance with Section 9.1 of
this Agreement.
(s) "Violations" is defined in Section 6.1.
(t) "Vista Shares" means shares of the Company's common stock issued
to Vista Medical Technologies, Inc. ("Vista"), on April 15, 2004 and
re-issued April 18, 2004, some of which shares have been transferred by
Vista.
(u) "Warrant Shares" means the shares of Common Stock issued or
issuable upon exercise or conversion of the Warrants.
1.2. Capitalized Terms. Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings set forth in the Securities
Purchase Agreement.
ARTICLE 2 - REGISTRATION
2.1. Registration. The Company shall register the Registrable Securities
pursuant to this Article 2.
2.2 Proposed Equity Offering and Registration.
(a) The Company intends to raise, prior to March 22, 2006, a minimum
of $4,000,000 (which may be increased) in additional equity capital (the
"Equity Offering"). The Company anticipates that the Equity Offering will
consist of one or more offerings that are exempt from securities
registration requirements of applicable federal and state securities laws.
(b) The Company shall, as soon as practicable after such Equity
Offering(s) is completed but in no event later than six (6) months from the
Closing Date, file a registration statement under the Securities Act on SEC
Form S-3, SB-2 or S-1 or any similar or successor form then appropriate for
or applicable to the offer and sale of the Registrable Securities (the
"Resale Registration Statement" or "Registration Statement"). All of the
Registrable Securities will be included in the Resale Registration
Statement.
(c) In the event that Form S-3 is not available for the registration
of the resale of the Registrable Securities hereunder, the Company shall
(i) register the resale of the Registrable Securities on another
appropriate form and (ii) undertake to register the resale of the
Registrable Securities on Form S-3 as soon as such form is available,
provided that the Company shall use its best efforts to maintain the
effectiveness of the Registration Statement then in effect until such time
as a Registration Statement on Form S-3 covering the Registrable Securities
has been declared effective by the SEC.
2.3 Other Registration Rights. Except as provided in this Agreement, the
Company has not and will not file (and will not grant to any Person the right to
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request the Company to register any equity or similar securities of the Company,
or any securities convertible or exchangeable into or exerciseable for such
securities) any registration statement prior to the date the Resale Registration
Statement is declared effective without the prior written consent of the holders
of a majority of the Registrable Securities, including the consent of St. Cloud.
ARTICLE 3 - OBLIGATIONS OF THE COMPANY
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
3.1. Filing of Registration Statement. The Company shall prepare and file
with the SEC the Resale Registration Statement required by Article 2 with
respect to the Registrable Securities, and use commercially reasonable efforts
to cause such Resale Registration Statement relating to the Registrable
Securities to become effective within 120 days after such filing, and shall keep
the Resale Registration Statement continuously effective and available for use
at all times, except as set forth herein, until such date as all of the
Registrable Securities have been sold pursuant to such Resale Registration
Statement (the "Registration Period").
The Selling Securityholders shall have the right to select one legal
counsel (the "Legal Counsel") to review any Resale Registration Statement. The
Company shall cooperate with Legal Counsel in performing the Company's
obligations under the terms of this Agreement. The Company shall permit Legal
Counsel to review and comment upon the Registration Statements and all
amendments and supplements to the Registration Statements (except for Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form
8-K and any similar or successor report and registration statements on Form S-8)
at least five (5) Business Days prior to their filing with the SEC and not file
any document containing information relating to the Selling Securityholders to
which Legal Counsel reasonably objects. The Company shall (i) furnish to Legal
Counsel, without charge, any correspondence from the SEC or the staff of the SEC
to the Company or its representatives relating to any Registration Statement,
(ii) promptly after the same is prepared and filed with the SEC, notify Legal
Counsel of the filing of any Registration Statement and any amendment(s)
thereto, including financial statements and schedules and all exhibits, and
(iii) upon the effectiveness of any Registration Statement, furnish to Legal
Counsel, without charge, one copy of the prospectus included in such
Registration Statement and all amendments and supplements thereto. The Company
shall reasonably cooperate with Legal Counsel in performing the Company's
obligations pursuant to this Section 3.1.
3.2. Amendments to Registration Statement. The Company shall prepare and
file with the SEC such amendments (including post-effective amendments) and
supplements to a Resale Registration Statement and the prospectus used in
connection with the Resale Registration Statement as may be necessary to keep
the Resale Registration Statement effective and such prospectus available for
use at all times during the Registration Period and to comply with the
provisions of the Securities Act with respect to the disposition of the
Registrable Securities. The Company shall cause any such amendment and/or new
Resale Registration Statement to become effective as soon as practicable
following the filing thereof.
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3.3. Information. Upon written request, the Company shall furnish to any
Selling Securityholder and his, her or its legal counsel, promptly after the
same is prepared and publicly distributed, filed with the SEC, or received by
the Company, one copy of the Resale Registration Statement and any amendment
thereto, and such number of copies of each prospectus, including each
preliminary prospectus, and all amendments and supplements thereto, and such
other documents as such Selling Securityholder may reasonably request in order
to facilitate the disposition of the Registrable Securities. The Company shall
promptly notify all Selling Securityholders of the effectiveness of any
Registration Statement or post-effective amendments thereto.
3.4. Blue Sky. The Company shall (a) register and qualify the Registrable
Securities covered by any Registration Statement under the securities laws of
such jurisdictions in the United States as each Selling Securityholder who holds
any such Registrable Securities reasonably requests, (b) prepare and file in
those jurisdictions such amendments (including post-effective amendments) and
supplements to such registrations and qualification as may be necessary to
maintain the effectiveness thereof and availability for use during the
Registration Period, (c) take such other actions as may be reasonably necessary
to maintain such registrations and qualifications in effect at all times during
the Registration Period, and (d) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (i) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3.4, (ii) subject itself to general taxation in any such jurisdiction,
or (iii) file a general consent to service of process in any such jurisdiction.
3.5. Correction of Statements or Omissions. As soon as practicable after
becoming aware of such event, the Company shall publicly announce or notify all
Selling Securityholders of the happening of any event, of which the Company has
actual knowledge, as a result of which the prospectus included in a Resale
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall use
commercially reasonable efforts as soon as possible (but in any event it shall
within three Business Days of the receipt by the Company from its accountants of
financial information required to correct such untrue statement or omission) to
prepare a supplement or amendment to the Resale Registration Statement or a
supplement to the related prospectus or any document incorporated therein by
reference or file any other required document (and make all required filings
with the SEC and all applicable state securities or blue sky commissions) so
that, as thereafter delivered to the purchasers of Registrable Securities being
sold thereunder, such prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. The Company shall
simultaneously (and thereafter as requested) deliver such number of copies of
such supplement or amendment to each Investor (or other applicable document) as
such Investor may request in writing.
3.6. Stop Orders. The Company shall use commercially reasonable efforts to
prevent the issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction, and, if such an order or
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suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest practicable time, and the Company shall immediately notify Legal
Counsel and all Selling Securityholders and, in the event of an underwritten
offering, the managing underwriter(s), of the issuance of such order or
suspension and the resolution thereof.
3.7. Inspection of Records. The Company shall provide each Selling
Securityholder, Legal Counsel and any underwriter who may participate in the
distribution of Registrable Securities, and their respective representatives,
the opportunity to conduct a reasonable inquiry of the Company's financial and
other records during normal business hours and make available its officers,
directors and employees for questions regarding information which the Selling
Securityholders, Legal Counsel and any such underwriter may reasonably request
in connection with the Registration Statement; provided, however, the Selling
Securityholders and any such underwriter shall hold in confidence and shall not
make any disclosure of any record or other information which the Company
determines in good faith to be confidential, and of which determination the
inspectors are so notified in writing, unless (a) the disclosure of such records
is necessary to avoid or correct a misstatement or omission in any Registration
Statement, (b) the release of such records is ordered pursuant to a subpoena or
other order from a court or government body of competent jurisdiction, or is
otherwise required by applicable law or legal process, or (c) the information in
such records has been made generally available to the public other than by
disclosure in violation of this or any other agreement (to the knowledge of the
relevant inspector).
3.8. Compliance with Laws. The Company shall comply with all applicable
laws related to a Registration Statement and offering and sale of securities
covered by the Registration Statement and all applicable rules and regulations
of governmental authorities in connection therewith (including, without
limitation, the Securities Act and the Exchange Act).
3.9. Listing. The Company shall cause all such Registrable Securities
registered pursuant to this Agreement to be listed on each securities exchange
on which similar securities issued by the Company are then listed.
3.10. Transfer Agent and Registrar. The Company shall provide a transfer
agent and registrar for all Registrable Securities registered pursuant to this
Agreement and a CUSIP number for all such Registrable Securities, in each case
not later than the effective date of such registration.
3.11 Underwriting. The Company shall enter into such customary agreements
(including underwriting agreements in customary form) and take all such other
actions reasonably necessary in order to expedite or facilitate the disposition
of such Registrable Securities.
ARTICLE 4 - OBLIGATIONS OF THE INVESTORS
4.1. Obligations of the Investors. Each Investor electing to participate in
any registration of Registrable Securities as a Selling Securityholder generally
agrees as follows:
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(a) Information Concerning Investors; Cooperation. Each Selling
Securityholder agrees to cooperate with the Company in connection with the
preparation and filing of any Registration Statement hereunder, and for so
long as the Company is obligated to keep any such Registration Statement
effective, such Selling Securityholder will provide to the Company, in
writing, for use in the Registration Statement, all information regarding
such Selling Securityholder, the Registrable Securities held by him, her or
it, the intended method of distribution of such Registrable Securities and
such other information as may be reasonably necessary to enable the Company
to prepare the Registration Statement and prospectus covering the
Registrable Securities and to maintain the currency and effectiveness
thereof. At least 30 days prior to the first anticipated filing date of a
Registration Statement, the Company shall notify each Selling
Securityholder of the information the Company so requires from each such
Selling Securityholder and each Selling Securityholder shall deliver to the
Company such requested information within 20 days of request therefor or
shall be excluded from such registration.
(b) SEC. Each Selling Securityholder agrees to use reasonable efforts
to cooperate with the Company (at the Company's expense) in responding to
comments of the staff of the SEC relating to such Selling Securityholder.
ARTICLE 5 - EXPENSES OF REGISTRATION
5.1. Expenses. With respect to each registration of Registrable Securities
hereunder, all expenses incurred in connection with any registration,
qualification or compliance pursuant to the terms of this Agreement (other than
underwriting discounts and commissions and transfer taxes), including, without
limitation, the reasonable fees and disbursements of Legal Counsel, all
registration, listing and qualification fees, printers and accounting fees
(including any special audits), and the fees and disbursements of counsel for
the Company, shall be borne by the Company.
ARTICLE 6 - INDEMNIFICATION
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
6.1. Indemnification by the Company. The Company will indemnify, hold
harmless and defend (a) each Selling Securityholder, (b) each underwriter of
Registrable Securities, and (c) the directors, officers, partners, members,
employees, agents and persons who control each such Selling Securityholder and
any such underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, if any (each, a "Investor Indemnified Person"),
against any losses, claims, damages, liabilities (joint or several) or expenses
(collectively, together with actions, proceedings or inquiries whether or not in
any court, before any administrative body or by any regulatory or
self-regulatory organization, whether commenced or threatened, in respect
thereof, "Claims") to which any of them may become subject insofar as such
Claims arise out of or are based upon:
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(i) any untrue statement or alleged untrue statement of a material
fact in a Registration Statement or the omission or alleged omission to
state therein a material fact required to be stated or necessary to make
the statements therein not misleading;
(ii) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus if used prior to the effective
date of such Registration Statement, or contained in the final prospectus
(as amended or supplemented, if the Company files any amendment thereof or
supplement thereto with the SEC) or the omission or alleged omission to
state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein
were made, not misleading; or
(iii) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any other law, including, without
limitation, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities (the matters in
the foregoing clauses (i) through (iii) being, collectively, "Violations").
The Company shall reimburse each such Investor Indemnified Person, promptly
as such expenses are incurred and are due and payable, for any reasonable legal
fees and other reasonable expenses incurred by them in connection with
investigating or defending any such Claim or Violation. Notwithstanding anything
to the contrary contained herein, the Company shall not be required to indemnify
or hold harmless an Investor Indemnified Person:
(i) with respect to a Claim arising out of or based upon (a) any
violation of federal or state securities laws, rules or regulations
committed by such Investor Indemnified Persons (or any person who controls
any of them or any agent, broker-dealer or underwriter engaged by them), in
the case of a non-underwritten offering, based upon any failure by such
Investor Indemnified Person to give any purchaser of Registrable Securities
at or prior to the written confirmation of such sale, a copy of the most
recent prospectus, (b) an untrue statement or omission contained in any
Registration Statement or prospectus which statement or omission was made
in reliance upon and in conformity with written information provided by or
on behalf of such Investor Indemnified Person specifically for use or
inclusion in the Registration Statement or any prospectus, (c) any
prospectus used after such time as the Company advised such Investor
Indemnified Person in writing that the filing of a post-effective amendment
or supplement thereto was required, except the prospectus as so amended or
supplemented, or (d) any prospectus used after such time as the Company's
obligation to keep the Registration Statement effective and current has
expired or been suspended hereunder, provided, that the Company has so
advised such Investor Indemnified Person in writing;
(ii) shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld; and
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(iii) with respect to any preliminary prospectus, if the untrue
statement or omission of material fact contained in the preliminary
prospectus was corrected on a timely basis in the prospectus, as then
amended or supplemented, if such corrected prospectus was timely made
available by the Company to such Investor Indemnified Person pursuant to
Section 3.5 hereof, and such Investor Indemnified Person was promptly
advised in writing not to use the incorrect prospectus prior to the use
giving rise to a Claim and such Investor Indemnified Person,
notwithstanding such written advice, used it.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Investor Indemnified Person and shall
survive the transfer of the Registrable Securities by an Investor or Selling
Securityholder pursuant to Article 9.
6.2. Indemnification by Investors. To the extent permitted by law, each
Selling Securityholder, severally and not jointly, shall indemnify, hold
harmless and defend, the Company, each of its directors, each of its officers
who signs the Registration Statement, its employees, agents and persons, if any,
who control the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, and any other Selling Securityholder selling
securities pursuant to the Registration Statement and any underwriter of
securities covered by such Registration Statement, together with its directors,
officers and members, and any person who controls such Selling Securityholder or
underwriter within the meaning of the Securities Act or the Exchange Act (each,
a "Company Indemnified Person"), against any Claim to which any of them may
become subject, under the Securities Act, the Exchange Act or otherwise, insofar
as such Claim arises out of or is 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 written information furnished to the Company by such Selling
Securityholder expressly for use in connection with such Registration Statement.
Such Selling Securityholder will reimburse any legal or other expenses (promptly
as such expenses are incurred and are due and payable) reasonably incurred by
any person intended to be indemnified pursuant to this Section 6.2 in connection
with investigating or defending any such Claim.
Notwithstanding anything else contained herein to the contrary the
indemnity agreement contained in this Section 6.2 shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the prior
written consent of such Selling Securityholder, which consent shall not be
unreasonably withheld; and provided, further, however, that such Selling
Securityholder shall be liable under this Agreement (including this Section 6.2
and Article 7) for only that amount as does not exceed the net proceeds actually
received by such Selling Securityholder as a result of the sale of Registrable
Securities pursuant to such Registration Statement.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such Company Indemnified Person and shall
survive the transfer of the Registrable Securities by such Investor or Selling
Securityholder.
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6.2 with respect to any
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preliminary prospectus shall not inure to the benefit of any Company Indemnified
Person if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented, and the Company Indemnified Person failed to
utilize such corrected prospectus.
6.3. Notices. Promptly after receipt by a Company Indemnified Person or
Investor Indemnified Person under this Article 6 of notice of the commencement
of any action (including any governmental action), such Company Indemnified
Person or Investor Indemnified Person shall, if a Claim in respect thereof is to
be made against any indemnifying party under this Article 6, deliver to the
indemnifying party a written notice of the commencement thereof. In such event
the indemnifying party shall have the right (at its expense) to participate in,
and, to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume and continue control of the
defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party (together with all indemnified parties which
may be represented without conflict by one counsel) shall have the right to
retain one separate counsel, with the reasonable fees and expenses to be paid by
the indemnifying party, if there may be one or more legal defenses available to
such indemnified party or parties that are different from or additional to those
available to the indemnifying party. . Counsel handling such matter shall be
mutually satisfactory to the indemnifying party and the Indemnified Person.
The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person under this Article
6, except to the extent that the indemnifying party is actually materially
prejudiced in its ability to defend such action. The indemnification required by
this Article 6 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as such expense, loss, damage or
liability is incurred and is due and payable.
ARTICLE 7 - CONTRIBUTION
7.1 To provide for just and equitable contribution, if (i) an indemnified
party makes a claim for indemnification pursuant to Section 6.1 or 6.2 (subject
to the limitations thereof) but it is found in a final judicial determination,
not subject to further appeal, that such indemnification may not be enforced in
such case, even though this Agreement expressly provides for indemnification in
such case, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of the losses, liabilities, claims, damages, and
expenses whatsoever to which any of them may be subject in such proportion as is
appropriate on the basis of relevant equitable considerations to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other hand in connection with the facts which resulted in such
losses, liabilities, claims, damages, and expenses; provided that in no event
shall any contribution by any Selling Securityholder under this Section 7.1
exceed the net proceeds from the offering received by such Selling
Securityholder.
7.2 The relative fault of the indemnifying party and of the indemnified
party, in the case of an untrue statement, alleged untrue statement, omission or
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alleged omission shall be determined by, among other things, whether such
statement, alleged statement, omission, or alleged omission relates to
information supplied by the indemnifying party or the indemnified party, and the
parties' relative intent, knowledge, access to information, and opportunity to
correct or prevent such statement, alleged statement, omission, or alleged
omission. The Company and each of the Selling Securityholders agree that it
would be unjust and inequitable if the respective obligations of the Company and
the Selling Securityholders for contribution were determined by pro rata or per
capita allocation of the aggregate losses, liabilities, claims, damages, and
expenses (even if the Selling Securityholders and the other indemnified parties
were treated as one entity for such purpose) or by any other method of
allocation that does not reflect the equitable considerations referred to in
this Article Section 7. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or expenses, joint or
several, in respect thereof, referred to in this paragraph, shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
7.3 In no case shall any Selling Securityholder be responsible for a
portion of the contribution obligation imposed on the Selling Securityholders in
excess of the net proceeds actually received by such Selling Securityholder as a
result of the sale of Registrable Securities pursuant to such Registration
Statement. No person guilty of a fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation.
7.4 For purposes of this Article 7, each person, if any, who controls any
Selling Securityholder within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act and each officer, director, partner, employee,
agent, and counsel of each such Selling Securityholder or control person shall
have the same rights to contribution as such Selling Securityholder or control
person and each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange Act, each
officer of the Company who signs the Registration Statement, each director of
the Company, and its or their respective counsel shall have the same rights to
contribution as the Company, subject in each case to the provisions of this
Article 7. Anything in this Article 7 to the contrary notwithstanding, no party
shall be liable for contribution with respect to the settlement of any claim or
action effected without its written consent. This Article 7 is intended to
supersede any right to contribution under the Securities Act, the Exchange Act
or otherwise.
ARTICLE 8 - REPORTS UNDER THE EXCHANGE ACT
8.1. Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the SEC which may at any time permit the sale
of the Registrable Securities to the public without registration or pursuant to
a registration on Form S-3, the Company agrees to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times
after the date that the Company becomes subject to the reporting
requirements of the Securities Act or the Exchange Act;
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(b) File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange
Act (at any time after it has become subject to such reporting
requirements); and
(c) So long as any Selling Securityholder owns any Registrable
Securities, to furnish to such Selling Securityholder forthwith upon
written request (i) a written statement by the Company as to its compliance
with the reporting requirements of said Rule 144 (at any time after 90 days
after the effective date of the first registration statement filed by the
Company for an offering of its securities to the general public), and of
the Securities Act and the Exchange Act (at any time after it has become
subject to such reporting requirements), or that it qualifies as a
registrant whose securities may be resold pursuant to Form S-3 (at any time
after it so qualifies), (ii) a copy of the most recent annual or quarterly
report of the Company, and (iii) such other reports and documents of the
Company and other information in the possession of or reasonably obtainable
by the Company as any such Selling Securityholder may reasonably request in
availing itself of any rule or regulation of the SEC allowing such Selling
Securityholder to sell any such securities without registration.
ARTICLE 9 - AMENDMENT AND ASSIGNMENT OF REGISTRATION RIGHTS
9.1. Assignment of Registration Rights. The rights of any Investor
hereunder as to Registrable Securities transferred by such Investor, including
the right to have the Company register Registrable Securities pursuant to this
Agreement, shall be automatically assigned by the Investor to any transferee of
all or any portion of the Registrable Securities, whether such transfer occurs
before or after the Registration Statement becomes effective, if: (a) the
Company is, within 10 Business Days after such transfer or assignment, furnished
with written notice of (i) the name and address of such transferee or assignee,
and (ii) the securities with respect to which such registration rights are being
transferred or assigned, (b) following such transfer or assignment, the further
disposition of such securities by the transferee or assignee is restricted under
the Securities Act or applicable state securities laws, and (c) at or before the
time the Company receives the written notice contemplated by clause (a) of this
sentence, the transferee or assignee agrees in writing for the benefit of the
Company to be bound by all of the provisions contained herein. The rights of any
Investor hereunder with respect to any Registrable Securities retained by such
Investor shall not be assigned by virtue of the transfer of other Registrable
Securities.
9.2. Amendment of Registration Rights. Except as expressly provided in this
Agreement, neither this Agreement nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by the party
against whom enforcement of any such amendment, waiver, discharge or termination
is sought; provided, however, that holders of more than 50% of the Registrable
Securities, including St. Cloud, may, with the written consent of the Company,
waive, modify or amend on behalf of all holders, any provisions hereof
benefiting such holders, so long as the effect thereof will be that all such
holders will be treated equally.
12
ARTICLE 10 - MISCELLANEOUS
10.1. Registered Holders. A person or entity is deemed to be a holder (or a
holder-in-interest) of Registrable Securities whenever such person or entity
owns of record such Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more persons or entities with
respect to the same Registrable Securities, the Company shall act upon the basis
of instructions, notice or election received from the registered owner of such
Registrable Securities.
10.2. Notices, etc. All notices and other communications required or
permitted under this Agreement shall be sent by registered or certified mail,
postage prepaid, overnight courier, confirmed facsimile or other electronic
transmission or otherwise delivered by hand or by messenger, addressed (a) if to
an Investor, at such Investor's address set forth on the signature page hereto
or at such other address as such Investor shall have furnished to the Company in
writing, (b) if to the Company at its offices at 7514 Girard Avenue, Suite 1509,
La Jolla, California 92037, to the attention of the President or at such other
address as the Company shall have furnished to the Investors in writing, or (c)
if any transferee or assignee of an Investor pursuant to Section 9.1, at such
address as such transferee or assignee shall have furnished to the Company in
writing. Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been received or given, as
applicable, (i) when delivered if delivered personally, (ii) if sent by mail, at
the earlier of its receipt or three Business Days after the registration or
certification thereof, (iii) if sent by overnight courier, one Business Day
after the same has been deposited with a nationally recognized courier service,
or (iv) when sent by confirmed facsimile or other electronic transmission, on
the day sent (if a Business Day) if sent during normal business hours of the
recipient, and if not, then on the next Business Day (provided, that such
facsimile or other electronic transmission is followed by delivery via another
method permitted by this Section 10.2).
10.3. Delays or Omissions. Except as expressly provided in this Agreement,
no delay or omission to exercise any right, power or remedy accruing to any
Investor upon any breach or default of the Company under this Agreement shall
impair any such right, power or remedy of such Investor nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any Investor of any
breach or default under this Agreement, or any waiver on the part of any
Investor of any provisions or conditions of this Agreement, must be in writing
and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement or by law or otherwise
afforded to any Investor shall be cumulative and not alternative.
10.4. Remedies. Any Person having rights under any provision of this
Agreement will be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
13
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance or for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.
10.5. Governing Law; Jurisdiction. This Agreement shall be governed in all
respects by the laws of the State of California without giving effect to the
conflicts of laws and principles thereof. All suits, actions or proceedings
arising out of, or in connection with, this Agreement or the transactions
contemplated by this Agreement shall be brought in any federal or state court of
competent subject matter jurisdiction sitting in California. Each of the parties
hereto by execution and delivery of this Agreement, expressly and irrevocably
(i) consents and submits to the personal jurisdiction of any such courts in any
such action or proceeding; (ii) consents to the service of any complaint,
summons, notice or other process relating to any such action or proceeding by
delivery thereof to such party as set forth in Section 10.2 hereof; and (iii)
waives any claim or defense in any such action or proceeding based on any
alleged lack of personal jurisdiction, improper venue, forum non conveniens or
any similar basis.
10.6. Entire Agreement; Amendment. This Agreement and the other documents
delivered pursuant to this Agreement at the Closing constitute the full and
entire understanding and agreement between the parties with regard to the
subject matter hereof and thereof and supersede all prior agreements and merge
all prior discussions, negotiations, proposals and offers (written or oral)
between them, and no party shall be liable or bound to any other party in any
manner by any representations, warranties, covenants or agreements except as
specifically set forth herein or therein. Except as expressly provided in this
Agreement, neither this Agreement nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by the party
against whom enforcement of any such amendment, waiver, discharge or termination
is sought.
10.7. Successors and Assigns. Subject to Article 9 hereof, the provisions
of this Agreement shall inure to the benefit of, and be binding upon, the
permitted successors, assigns, heirs, executors and administrators of the
parties to this Agreement, except that the Company may not assign this Agreement
without the written consent of the Holders of at least 50% of the then
outstanding Registrable Securities.
10.8. Titles and Subtitles. The headings in this Agreement are used for
convenience of reference only and shall not be considered in construing or
interpreting this Agreement.
10.9. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument. This Agreement may be delivered by facsimile, and facsimile
signatures shall be treated as original signatures for all applicable purposes.
10.10. Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
14
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
10.11. Consents. Unless otherwise provided herein, all consents and other
determinations to be made pursuant to this Agreement shall be made on the basis
of a majority in interest (determined by number of securities) with respect to
the Registrable Securities.
10.12. Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision.
10.13. No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person other than the parties hereto, each investor,
their permitted successors and assigns and parties eligible for indemnification
under Article 6, and only in accordance with the express terms of this
Agreement.
10.14. Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder and any applicable common law, unless the
context requires otherwise. The word "including" shall mean including without
limitation and is used in an illustrative sense rather than a limiting sense.
Terms used with initial capital letters will have the meanings specified,
applicable to singular and plural forms, for all purposes of this Agreement.
Reference to any gender will be deemed to include all genders and the neutral
form.
[SIGNATURE PAGES FOLLOW]
15
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the date first above written.
VIKING SYSTEMS, INC.
By:/s/ Thomas B. Marsh
Name: Thomas B. Marsh
Title: President/CEO
INVESTORS:
ST. CLOUD CAPITAL PARTNERS, L.P.
By: SCGP, LLC
Its: General Partner
By: /s/ Cary S. Fitchey
Cary S. Fitchey
Senior Managing Member
Address:
10866 Wilshire Boulevard, Suite 1450
Los Angeles, CA 90024
16
SIGNATURE PAGE TO
REGISTRATION RIGHTS AGREEMENT
DATED AS OF MARCH 22, 2005
BY AND AMONG
VIKING SYSTEMS, INC.,
ST. CLOUD CAPITAL PARTNERS, L.P.,
AND EACH INVESTOR SIGNATORY THERETO
The undersigned hereby executes and delivers the Registration Agreement
(the "Registration Agreement") to which this Signature Page is attached
effective as of the date of the Agreement, which Registration Agreement and
Signature Page, together with all counterparts of such Agreement and signature
pages of the other Investors party to such Registration Agreement, shall
constitute one and the same document in accordance with the terms of such
Registration Agreement.
INVESTORS:
By: /s/ Donald Tucker
Name: Donald Tucker
(Print)
Title: ----
(If applicable)
Address 1626 Clemson Circle
La Jolla, California 92037
Facsimile
SIGNATURE PAGE TO
REGISTRATION RIGHTS AGREEMENT
DATED AS OF MARCH 22, 2005
BY AND AMONG
VIKING SYSTEMS, INC.,
ST. CLOUD CAPITAL PARTNERS, L.P.,
AND EACH INVESTOR SIGNATORY THERETO
The undersigned hereby executes and delivers the Registration Agreement
(the "Registration Agreement") to which this Signature Page is attached
effective as of the date of the Agreement, which Registration Agreement and
Signature Page, together with all counterparts of such Agreement and signature
pages of the other Investors party to such Registration Agreement, shall
constitute one and the same document in accordance with the terms of such
Registration Agreement.
INVESTORS:
By: /s/ Brian Miller
Name: Brian Miller
(Print)
Title: ----
(If applicable)
Address c/o EVP Strategic Alliances
One Market Plaza Spear Tower
Suite 700
San Francisco, California 94105
Facsimile
EXHIBIT A
JOINDER TO
REGISTRATION RIGHTS AGREEMENT
THIS JOINDER to the Registration Rights Agreement, dated as of March 22,
2005 by and among Viking Systems, Inc., a Nevada corporation (the "Company"),
and certain Investors party thereto, as such agreement may have been or may be
amended from time to time (the "Agreement"), is made and entered into as of
_______ ___, 2005 by and between the Company and the individuals and entities
listed on the signature page hereto (each, an "Investor"). Capitalized terms
used herein but not otherwise defined shall have the meanings set forth in the
Agreement.
WHEREAS, pursuant to that certain Securities Purchase Agreement, dated as
of the Agreement, and each amendment, supplement and addendum thereto, among the
Company, the Lead Lender and Collateral Agent (each as defined therein) and the
Investors (the "Securities Purchase Agreement"), each of the Investors acquired
a Promissory Note and a Warrant to purchase shares of the Company's Common
Stock, subject to the terms and conditions of the Securities Purchase Agreement.
WHEREAS, the Securities Purchase Agreement requires the Company and
Investor to become a party to the Agreement, and the Company and Investor agree
to do so in accordance with the terms hereof.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties to this Joinder hereby agree as follows:
1. Agreement to be Bound. Investor hereby agrees that upon execution of
this Joinder, he, she or it shall become a party to the Agreement and shall be
fully bound by, and subject to, all of the covenants, terms and conditions of
the Agreement as though an original party thereto and shall be deemed a
"Investor" for all purposes thereof.
2. Counterparts. This Joinder may be executed in separate counterparts each
of which shall be an original and all of which taken together shall constitute
one and the same agreement.
3. Notices. For purposes of Section 10.2 of the Agreement, all notices,
demands or other communications to each of the Investors hereunder shall be
directed to the applicable Investor's address as listed on the signature page
hereto.
5. Governing Law. This Joinder shall be governed in all respects by the
laws of the State of California without giving effect to the conflicts of laws
and principles thereof. All suits, actions or proceedings arising out of, or in
connection with, this Joinder or the transactions contemplated by this Joinder
shall be brought in any federal or state court of competent subject matter
jurisdiction sitting in California. Each of the parties hereto by execution and
delivery of this Joinder, expressly and irrevocably (i) consents and submits to
the personal jurisdiction of any such courts in any such action or proceeding;
(ii) consents to the service of any complaint, summons, notice or other process
relating to any such action or proceeding by delivery thereof to such party as
set forth in Section 10.2 of the Agreement; and (iii) waives any claim or
defense in any such action or proceeding based on any alleged lack of personal
jurisdiction, improper venue, forum non conveniens or any similar basis.
6. Descriptive Headings. The descriptive headings of this Joinder are
inserted for convenience only and do not constitute a part of this Joinder.
[Signature Page Follows]
2
The parties hereto have executed this Joinder to the Registration Rights
Agreement as of the date first set forth above.
VIKING SYSTEMS, INC.
By:___________________________________
Name:
Title:
Address:
S-1
The parties hereto have executed this Joinder to the Registration
Rights Agreement as of the date first set forth above.
INVESTORS:
By:________________________________________
Name:______________________________________
(Print)
Title:_____________________________________
(If applicable)
Address ___________________________________
___________________________________________
Facsimile _________________________________