Exhibit 10.1 Loan Agreement


    Exhibit
      10.1

    Form
      8-K

    Viking
      Systems, Inc.

    File
      No.
      000-49636

    


    LOAN
      AGREEMENT

    


    Viking
      Systems, Inc. (“Viking”) and Vision Opportunity Master Fund Ltd. (“VOMF”) have
      entered into this Agreement on April 7, 2006, pursuant to which VOMF has agreed
      to loan (the Loan”) the principal sum of Two Hundred Fifty Thousand Dollars
      ($250,000.00) (the “Principal Amount”) to Viking.

     

    RECITALS

    


    Viking
      intends to offer and sell shares of its Preferred Stock (the “Preferred Stock”)
      in a private financing (the “Subsequent Financing”) in which $5,000,000 or more
      will be raised from the sale of the Preferred Stock.

    


    Viking
      has requested that VOMF provide it with interim financing to fund operations
      prior to the completion of the Subsequent Financing.

    


    VOMF
      has
      agreed to make the Loan to Viking pursuant to the terms and conditions of this
      Agreement.

    


    As
      additional consideration for VOMF making the Loan to Viking, VOMF will be issued
      Warrants to purchase shares of Viking Common Stock. 

    


    NOW,
      THEREFORE, in consideration of the premises and the agreements, provisions
      and
      covenants herein contained, the parties hereto agree as follows:

    


    1. Loan.
      Viking
      agrees to borrow from VOMF, and VOMF agrees to lend to Viking, subject to the
      terms and conditions set forth herein, the sum of Two Hundred Fifty Thousand
      Dollars ($250,000) (the “Principal Amount”). The principal amount shall be
      delivered by VOMF to Viking upon the execution of this Loan Agreement and the
      attached Promissory Agreement.. 

    


    2. Repayment.
      Subject
      to Section 3 of this Agreement, the unpaid Principal Amount, a premium in the
      amount of $12,500 (“Loan Premium”), and accrued interest on the Principal
      Amount, shall be paid by Viking to VOMF not later than May 31, 2006 (the
“Maturity Date”).

    


    3. Acceleration
      of Maturity Date.
      Notwithstanding anything else contained herein to the contrary, in the event
      Viking completes the Subsequent Financing prior to May 31, 2006, the Maturity
      Date shall be the date of the initial closing of the Subsequent
      Financing.

    


    4. Conversion
      Rights.
      At the
      sole option of VOMF, any or all of the amounts due to VOMF by Viking pursuant
      to
      this Agreement, may be converted into either of the following:


    
      
        


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    (i)
      shares of Viking’s common stock at the lower of $.20 per share or the effective
      price per share of common stock provided for in the Subsequent Financing;
      or

    


    (ii)
      the
      Preferred Stock and other securities offered in the Subsequent
      Financing.

    


    5. Use
      of Loan Proceeds.
      The
      Loan proceeds shall be used by Viking as working capital.

    


    6. Promissory
      Note. The
      Loan
      shall be evidenced by a Promissory Note in the form attached
      hereto.


    

      7. Warrants.
        As
        additional consideration for VOMF making the Loan to Viking pursuant to this
        Agreement, Viking shall issue VOMF the following Warrants:

      


      (i) a
        Warrant
        to purchase the greater of (i) 1,250,000 shares of Viking’s Common Stock and
        (ii) the Principal Amount of the Loan ($250,000) divided by the effective
        price
        per share of common stock provided for in the Subsequent Financing exercisable
        at $.50 per share, subject to adjustment pursuant to the terms of such Warrant.
        Such Warrant shall be for a term of five (5) years from the date hereof.
        

      


      (ii) a
        Warrant
        to purchase the greater of (i) 1,250,000 shares of Viking’s Common Stock and
        (ii) the Principal Amount of the Loan ($250,000) divided by the effective
        price
        per share of common stock provided for in the Subsequent Financing exercisable
        at $.75 per share, subject to adjustment pursuant to the terms of such Warrant.
        Such Warrant shall be for a term of five (5) years from the date
        hereof.

      


      The
        form
        of Warrants is attached hereto. 



    8. Registration
      Rights. The
      common stock of Viking issuable upon the conversion of the Promissory Note
      and
      the common stock issuable upon exercise of the Warrants shall have registration
      rights that are substantially equivalent to the registration rights granted
      to
      investors in the Subsequent Financing. 

    


    9. Anti-Dilution
      Rights.
      The
      common stock of Viking issuable upon the conversion of the Promissory Note
      and
      the common stock issuable upon exercise of the Warrants shall have anti-dilution
      rights that are substantially equivalent to the anti-dilution rights granted
      to
      investors in the Subsequent Financing but in no event will shares of common
      stock be issued at less than $.05 per share.

    


    10. Representations
      and Warranties of VOMF.
      VOMF
      represents and warrants to Viking as follows:

    


    (a) VOMF
      is
      an “accredited investor” as such term is defined in Rule 501 of Regulation D
      promulgated by the SEC.


    
      
        


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    (b) VOMF
      has had
      the opportunity to ask questions of and to receive answers from Viking and
      its
      executive officers concerning the affairs and prospects of Viking in general,
      has received and read the SEC filings of Viking, and desires no further
      information pertaining to Viking. VOMF will rely solely upon (i) such
      information and not any other material heretofore received, and (ii)
      investigations made by Investor or Investor’s representatives in making
      Investor’s investment decision.

    


    11. Right
      of First Refusal.
      Subject
      to the closing of the Loan VOMF will have the right to purchase its pro rata
      portion of any subsequent offering of debt or equity securities by Viking for
      a
      period of one
      year
      from the effective date of the registration statement filed pursuant to Section
      8 above.

    


    12. Execution
      of Waiver and Consent. VOMF
      and/or its affiliates acquired a promissory note from Viking in December 2005
      pursuant to a Securities Purchase Agreement. A total of $3,000,000 was raised
      by
      Viking from the sale of promissory notes to several investors pursuant to such
      Securities Purchase Agreement. Viking has requested, and in the future will
      request that the holders of the promissory notes sold pursuant to such
      Securities Purchase Agreement waive certain payment dates, default dates and
      other provisions in order to provide Viking with sufficient additional time
      to
      complete the Subsequent Financing. In consideration of Viking’s agreements under
      this Loan Agreement, VOMF and/or its affiliates agrees to execute such waivers
      and consents relating to the promissory note and Securities Purchase Agreement.
      

    


    13. General
      Provisions.

     

    13.1. Expenses.
      Viking
      agrees to pay VOMF’s expenses incurred in connection with the Loan up to a
      maximum amount of $5,000.

    


    13.2 Notice.
      Any
      notice required or desired to be given by the parties hereto shall be in writing
      and may be personally delivered; mailed by regular mail or certified mail,
      return receipt requested; sent by telephone facsimile with a hard copy sent
      by
      regular mail; or sent by a nationally recognized receipted overnight delivery
      service, including, by example and not limita-tion, United Parcel Service,
      Federal Express, or Airborne Express. Any such notice shall be deemed given when
      personally delivered; if mailed by regular mail, three (3) days after deposit
      in
      the United States mail, postage prepaid; if mailed by certified mail, return
      receipt requested, three (3) days after deposit in the United States mail,
      postage prepaid, or on the day of receipt by the recipient, whichever is sooner;
      if sent by telephone facsimile, on the day sent if sent on a business day during
      normal business hours of the recipient or on the next business day if sent
      at
      any other time; or if sent by overnight delivery service, one (1) business
      day
      after deposit in the custody of the delivery service. The addresses and
      telephone numbers for the mailing, transmitting, or delivering of notices shall
      be as follows:

    


    
      	
              If
                to Lead Lender and Collateral Agent, to:

            	
              Vision
                Opportunity Master Fund Ltd

            
	 	
              317
                Madison Avenue, Suite 1220

            
	 	
              New
                York, NY

            
	 	
              Facsimile:
                (212) 849-8225

            
	 	
              Attn:
                Adam Benowtiz

            


    


    
      
        


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              If
                to Viking, to:

            	
              Viking
                Systems, Inc.

            
	 	
              4350
                La Jolla Village Drive, Suite 900

            
	 	
              La
                Jolla, CA 92122

            
	 	
              Facsimile:
                858-225-0467

            
	 	
              Attn:
                Thomas Marsh or Nathan Harrison

            
	 	 
	
              With
                copies to:

            	
              Cohne,
                Rappaport & Segal

            
	 	
              257
                East 200 South, Suite 700

            
	 	
              Salt
                Lake City, UT 84111

            
	 	
              Facsimile:
                801-355-1813

            
	 	
              Attn:
                A. O. Headman, Jr.

            


    

    


    Notices
      of a change of address of a party shall be given in the same manner as all
      other
      notices as hereinabove provided.

    


    13.3. Governing
      Law.
      This
      Agreement and the Loan Documents shall be governed by and construed in
      accordance with the laws of the State of New York.

    


    13.4. Jurisdiction.
      The
      Parties agree and consent that the courts of the State of New York shall have
      jurisdiction with respect to enforcement of this Agreement or any Loan Documents
      executed in connection herewith and shall have jurisdic-tion with respect to
      any
      disputes or with respect to any legal proceedings involving claims arising
      out
      of this Agreement or the Loan Documents. 

    


    13.5. Amendments.
      No
      provision or term of this Agreement may be amended, modified, revoked,
      supplemented, waived, or otherwise changed, except by a written instrument
      duly
      executed by Viking and VOMF. 

    


    13.6. Headings.
      The
      article and section headings herein are for convenience only and shall not
      affect the construction hereof.

    


    13.7. Entire
      Agreement.
      This
      Agreement, the Promissory Note and the Warrants constitute the final expression
      of the agreement and understanding of the parties with respect to the general
      subject matter hereof and supersede any previous understanding, negotia-tions,
      or discussions, whether written or oral. This Agreement, the Promissory Notes
      and the Warrant may not be contradicted by evidence of any alleged oral
      agreement.

    



    
      
        


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    IN
      WITNESS WHEREOF, each of the parties to this Agreement has executed this
      Agreement on the day and year above written.

    


    
      	 	
              VIKING:

            
	 	 
	 	
              Viking
                Systems, Inc.,

            
	 	
              a
                Nevada corporation

            
	 	 
	 	
              By: /s/
                Thomas B. Marsh

            
	 	
              Thomas
                B. Marsh, President

            
	 	 
	 	
              VOMF
                

            
	 	 
	 	
              Vision
                Opportunity Master Fund Ltd

            
	 	 
	 	
              By:
                 /s/

            
	 	
              Name:

            
	 	
              Title:

            


    

    


    


     

    
      
         

      

      
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