SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
VERSUS TECHNOLOGY, INC.
(Name of Registrant as Specified In Its Charter)
--
(Name of Person(s) Filing Proxy Statement
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] $125 per Exchange Act Rules 0-11(c)(1)(ii),
14a-6(i)(1), 14a-6(i)(2) or Item 22(a)(2) of
Schedule 14A
[ ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11
1) Title of each class of securities to which
transaction applies:
_______________________________________________________
2) Aggregate number of securities to which transaction
applies:
_______________________________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and
state how it was determined):
_______________________________________________________
4) Proposed maximum aggregate value of transaction:
_______________________________________________________
5) Total fee paid:
_______________________________________________________
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously.
Identify the previous filing by registration statement
number, or the Form or Schedule and the date of filing.
1) Amount Previously Paid:
_______________________________________________________
2) Form, Schedule or Registration Statement No.:
_______________________________________________________
3) Filing Party:
_______________________________________________________
4) Date Filed:
_______________________________________________________
<PAGE>
VERSUS TECHNOLOGY, INC.
A New Jersey Corporation
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on May 10, 1996
TO THE SHAREHOLDERS OF VERSUS TECHNOLOGY, INC.
The Annual Meeting of the Shareholders of VERSUS TECHNOLOGY, INC. (the
"Company") will be held at the Grand Traverse Resort, 6300 U.S. Route 31 North,
Acme, Michigan 49610 on Friday, May 10, 1996 at 10:00 A.M. for the following
purposes:
(1) To elect three (3) directors of the Company to serve
until the next succeeding Annual Meeting of Share
holders and until their successors have been elected
and have qualified.
(2) To approve the 1996 Incentive Stock Option Plan.
(3) To approve an Amendment to the Company's Certificate of
Incorporation.
(4) To transact such other business as may properly come
before the meeting or any adjournments.
Only shareholders of record at the close of business on the 25th day of
March, 1996 are entitled to notice of and to vote at this meeting.
By order of the Board of Directors
DEBRA A. BOYER
Debra A. Boyer, Secretary
April 8, 1996
The Company's 1995 Annual Report to Shareholders is Enclosed.
PLEASE COMPLETE, DATE, SIGN AND RETURN THE ACCOMPANYING PROXY
IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.<PAGE>
VERSUS TECHNOLOGY, INC.
Corporate Headquarters:
2320 Aero Park Court
Traverse City, Michigan 49686
Telephone Number: (616) 946-5868
PROXY STATEMENT
General
This Proxy Statement is furnished to the Stockholders of Versus
Technology, Inc. ("Versus" or the "Company") in connection with the
solicitation of proxies by order of the Board of Directors of the Company for
the Annual Meeting of Stockholders to be held on May 10, 1996 at 10:00 A.M.,
Eastern Standard Time, at the Grand Traverse Resort, 6300 U.S. Route 31 North,
Acme, Michigan 49610, for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders.
The approximate date on which this Proxy Statement, the enclosed Proxy and
the Company's 1995 Annual Report to Shareholders will be first sent or given to
Stockholders is April 8, 1996.
The enclosed Proxy is being solicited on behalf of the Board of Directors
of the Company and all costs of solicitation will be borne by the Company.
Such costs include preparation, printing and mailing of the Notice of Annual
Meeting of Stockholders, Form of Proxy, Proxy Statement and Annual Report on
Form 10-KSB, which are herein enclosed. The solicitation will be conducted
principally by mail, although directors, officers and regular employees of the
Company may solicit proxies personally or by telephone or facsimile. Such
persons will not receive special compensation for such services. Arrangements
will be made with brokerage houses and other custodians, nominees and
fiduciaries for proxy material to be sent to their principals, and the Company
will reimburse such persons for their reasonable expenses in so doing.
You are requested to mark, sign and complete the accompanying Proxy and
return it in the envelope provided. Proxies in such form, if duly signed and
received in time for the voting, will be voted in accordance with the
directions of each Stockholder. The proxy holders identified on the proxy have
been selected by the Board of Directors. The proxy holders shall have the
discretionary authority to vote for the election of Directors and distribute
such votes among the nominees standing for election (except as otherwise
instructed by a stockholder in the accompanying Proxy), for approval of the
1996 Incentive Stock Option Plan and for adoption of the Amendment to the
Company's Certificate of Incorporation described herein and on any other
matters that may properly come before the Annual Meeting of Stockholders.
If the enclosed Proxy is executed and returned, it may, nevertheless, be
revoked at any time before it has been exercised upon written notice to the
Secretary of the Company. The proxy shall also be deemed revoked if a
Stockholder is present at the Meeting and elects to vote in person.
Each holder of the Company's common stock, par value $.01 (the "Common
Stock") at the close of business on March 25, 1996 (the "Record Date") is
entitled to one vote per share on each matter that comes before the meeting.
With respect to each matter to be voted upon, a vote of a majority of the
number of shares voting is required for approval or election. Abstentions will
be counted as votes cast, but proxies submitted by brokers with a "not voted"
direction will not be counted as votes cast with respect to each matter to be
voted upon where such instruction is given.
At the close of business on March 1, 1996, there were outstanding
18,485,697 shares of Common Stock, the only class of stock outstanding.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
The following table sets forth information as to the Common Stock
beneficially owned (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended) by any person who as of February 29, 1996, to
the knowledge of the Board of Directors of the Company, owned beneficially more
than 5% of the outstanding Common Stock of the Company, the only class
authorized:
Name & Address of Amount and Nature Percentage of
Beneficial Owner Beneficially Owned Class Outstanding
________________ ____________________ _________________
William Harris Investors, Inc. 2,175,000(1) 11.8
2 North LaSalle Street, Suite 400
Chicago, IL 60602
Irving B. Harris 1,050,000(2) 5.7
2 North LaSalle Street, Suite 400
Chicago, IL 60602
Jerome Kahn, Jr. 1,325,000(2) 7.2
2 North LaSalle Street, Suite 400
Chicago, IL 60602
Anthony Low-Beer 1,600,000(3) 8.7
c/o Mitchell Securities
100 Park Avenue
New York, NY 10017
Elliot E. Eisenberg 1,602,728(4) 8.6
101 East 52nd Street
New York, NY 10022
BDS Capital Holdings, L.L.C. 1,097,244(5) 5.6
101 East 52nd Street
New York, NY 10022
____________________________________
(1) As reported on Schedule 13G filed October 10, 1995.
(2) As reported on Schedule 13D filed October 10, 1995. The shares reported
beneficially owned by Mr. Harris and the shares reported beneficially owned by
Mr. Kahn are reported as included on the Schedule 13G filed by William Harris
Investors, Inc.
(3) As reported on Schedule 13D filed October 10, 1995 and as supplemented.
(4) As reported on Schedule 13D filed on October 10, 1995 and as supplemented.
Of these shares, 100,000 may be acquired upon the exercise of warrants held.
(5) As reported on Schedule 13D filed October 10, 1995. All of these shares
may be acquired upon the exercise of warrants held.
As of September 29, 1995, the Company closed a private offering of
14,674,917 shares of common stock to various accredited investors, including
certain officers and directors of the Company. By virtue of this sale,
ownership of an aggregate of approximately 77.9% of the Company was sold to
those persons and entities subscribing for shares in the private offering.
Security Ownership of Management
The following table sets forth as of March 1, 1996 the beneficial
ownership of the Company's Common Stock by all directors, nominees and named
executive officers of the Company, and by all the Directors, nominees and
executive officers of the Company as a group:
Approximate No.
of Shares of
Common Stock
Name & Address of Position(s) Beneficially Percent
Beneficial Owner with the Company Owned(1) of class
__________________ ________________ _______________ _________
Gary T. Gaisser President, 574,888(2) 3.1
Chief Executive
Officer & Director
Owen O. Freeman, Jr. Director 136,765(3) 0.7
John G. Ross Director 541,665(4) 2.9
Julian C. Schroeder Director 365,000(5) 2.0
Elliot E. Eisenberg Nominee 1,602,728(6) 8.6
All executive officers, directors and
nominees as a group (5 persons) 3,221,046(7) 17.0
_______________________________
(1) Each director has sole voting and investment power as to all shares
reflected as beneficially owned by him, except as otherwise noted. Messrs.
Gaisser, Freeman, Ross and Schroeder are all of the Company's present
directors. The mailing address of Messrs. Gaisser, Ross, Schroeder and
Eisenberg is 2320 Aero Park Court, Traverse City, Michigan 49686. The mailing
address of Mr. Freeman is c/o Commonwealth State Bank, Route 332, Newtown,
Pennsylvania 18940.
(2) This amount includes 509,888 shares owned by Olmsted and 50,000 shares
currently acquirable by Olmsted upon exercise of an outstanding warrant issued
by the Company in partial consideration for moneys lent by Olmsted to the
Company during the fiscal year ended October 31, 1995. See "Certain
Relationships and Related Transactions" below.
(3) This amount includes 100,000 shares currently acquirable by Mr. Freeman
upon exercise of outstanding options granted pursuant to the Independent
Directors Plan by the Company.
(4) This amount includes 100,000 shares currently acquirable by Mr. Ross upon
exercise of outstanding options granted pursuant to the Independent Directors
Plan by the Company, 30,000 shares currently acquirable upon exercise of an
outstanding warrant issued by the Company in consideration for, in part, moneys
lent by Mr. Ross to the Company during the fiscal year ended October 31, 1994
and 25,000 shares currently acquirable upon exercise of an outstanding warrant
issued by the Company in partial consideration for monies lent by Mr. Ross to
the Company during the fiscal year ended October 31, 1995. See "Certain
Relationships and Related Transactions" below.
(5) This amount includes 25,000 shares currently acquirable by Mr. Schroeder
under the terms of the warrant issued by the Company in consideration for, in
part, monies lent by Mr. Schroeder to the Company during the fiscal year ended
October 31, 1994 and 25,000 shares currently acquirable upon exercise of an
outstanding warrant issued by the Company in partial consideration for monies
lent by Mr. Schroeder to the Company during the fiscal year ended October 31,
1995. See "Certain Relationships and Related Transactions" below.
(6) This amount includes 100,000 shares currently acquirable by Mr. Eisenberg
upon exercise of an outstanding warrant issued by the Company in partial
compensation for monies loaned by Mr. Eisenberg to the Company during the
fiscal year ended October 31, 1995.
(7) This amount includes 455,000 shares currently acquirable under outstanding
warrants and options.
PROPOSAL NO. 1
______________
Election of Directors
General
The By-Laws of the Company provide that the Board of Directors consist of
one or more Directors. The stockholders are being asked to elect three
directors, who will comprise the entire Board of Directors of the Company, to
serve for the ensuing year and until their successors are duly elected and
qualified. The nominees are all current members of the Board of Directors,
except for Elliot E. Eisenberg, a major shareholder of the Company. In the
event that any nominee for director should become unavailable, which event the
Board of Directors does not anticipate, it is intended that votes will be cast
pursuant to the enclosed Proxy for such substitute nominee as may be nominated
by the Board of Directors, unless otherwise indicated by the Stockholder on the
Proxy.
The Board has established a Compensation Committee, presently consisting
of Owen O. Freeman, Jr. and Julian C. Schroeder, which administers the
Company's stock option plans and reviews employee compensation and benefits.
The Compensation Committee did not meet during the fiscal year ended October
31, 1995.
The Board also established an Audit Committee on April 20, 1995, presently
consisting of Owen O. Freeman, Jr. and John G. Ross. The Audit Committee meets
with the Company officers and the independent auditors to review the Company's
annual audit and financial statements. The Audit Committee did not meet during
the fiscal year ended October 31, 1995.
The Board has not established a separate nominating committee, as
nominations are considered and made by the Board as a whole. The Board will
consider nominees for the Board of Directors recommended by Stockholders.
Stockholders desiring to make such recommendations should write directly to the
Board at the Company's executive offices at 2320 Aero Park Court, Traverse
City, Michigan 49686.
The Board of Directors met nine times during the fiscal year ended October
31, 1995. During that fiscal year, each of the incumbent directors attended at
least 75% of the aggregate of (1) the total number of meetings of the Board of
Directors held during the period for which he has been a director and (2) the
total number of meetings held by all Committees of the Board on which he served
during the period that he served.
Information Concerning Directors and Nominees for Director
The Board of Directors presently consists of Gary T. Gaisser, John G.
Ross, Owen O. Freeman, Jr., and Julian C. Schroeder. The Board has nominated
Gary T. Gaisser, Julian C. Schroeder and Elliot E. Eisenberg, a major
shareholder, to serve on the Board for a term of one year or until their
successors are elected and shall qualify. John G. Ross and Owen O. Freeman,
Jr. have decided not to stand for re-election. H. Terry Snowday, who had been
elected at the last Annual Meeting, resigned early this year.
The following information is furnished with respect to the nominees for
Directors of the Company:
Nominees for Director Age Position(s) with the Company
_____________________ ___ ____________________________
Gary T. Gaisser 44 Director, President
& Chief Executive Officer
Julian C. Schroeder 48 Director
Elliot E. Eisenberg 47 Nominee
Gary T. Gaisser has served as President and Chief Executive Officer of the
Company since January of 1995. He is also currently the Chief Executive
Officer of Olmsted Engineering Co. ("Olmsted"). Mr. Gaisser has been with
Olmsted since 1988. Olmsted performs contract software and hardware
engineering as well as develops and sells software for precision machining
applications.
Julian C. Schroeder has served as a director of the Company since August,
1994. He has served with BDS Securities Corporation (a registered
broker-dealer) since 1989, most recently as President since June of 1995. Mr.
Schroeder is a director of BDS Securities Corporation and of Optical Coating
Laboratories, a manufacturer of thin-film products.
Elliot E. Eisenberg, a major stockholder, has been nominated by the Board
to serve on the Board of Directors. He has served as Vice President of BDS
Securities Corporation (a registered broker-dealer) since 1989.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE ELECTION OF
GARY T. GAISSER, JULIAN C. SCHROEDER, AND ELLIOT E. EISENBERG.
There is no family relationship between any officers or directors nor are
there any understandings among any officers or directors and any other
person(s) pursuant to which any such officer or director was or is to be
selected as such.
Executive Compensation
The following table sets forth the annual compensation paid to persons
serving as Officers of the Corporation during the fiscal year ended October 31,
1995. No executive officer of the Company received cash compensation for the
fiscal year ended October 31, 1995 equalling or exceeding $100,000:
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation(1) Compensation
______________________________ ___________
Name & Principal Fiscal Option
Position Year Salary($) Bonus($) Other($) Awards
________________ ______ _________ ________ ________ ________
Gary T. Gaisser 1995 52,000 0 0 0
President and Chief 1994 - - - -
Executive Officer 1993 - - - -
John Mischak 1995 35,000 0 25,000 100,000
Former Chief 1994 121,154 350 0 0
Executive Officer 1993 100,248 32,250 0 567,000
Options
The only options granted to named executive officers during the year were an
option to purchase 100,000 shares granted to Mr. Mischak exercisable at $.50 a
share. These were the only options outstanding at year end owned by named
executive officers and these options were exercisable. No options were
exercised by named executive officers during the year. No options held by
named executive officers had any value at year end.
Compensation of Directors
Each Director of the Company receives a basic fee of 15,000 shares of the
Company's Common Stock annually for service on the Board, plus a $100 per
meeting attendance fee. The Company has no other standard or other arrangement
whereby Directors are compensated for their services to the Company. The
Company's By-Laws provide that Directors may be compensated as the Board of
Directors may from time to time determine, and may be reimbursed for the
reasonable expenses incurred in connection with the performance of their
duties. All Directors receive $100 for attending each committee meeting of the
Board when such meeting is held on a date other than the date of a Board
meeting. In addition, on November 11, 1993, the Company adopted the
Independent Directors Non-Qualified Stock Option Plan, whereby Directors who
are not employees of the Company can be awarded options to purchase up to
1,000,000 shares of the Company's Common Stock. No options were granted
pursuant to this program during the last fiscal year.
Certain Relationships and Related Transactions
Olmsted is the principal consultant to Versus on IR-Tracking. On April
20, 1995, the Corporation entered into a Consulting Agreement with Olmsted,
which is principally owned by the Company's Chief Executive Officer, Gary T.
Gaisser. The Agreement runs for a one-year period, commencing on April 20,
1995. Under this Agreement, the Consultant receives an annual fee of $144,000,
payable monthly. They are further entitled to a fee at the rate of $90.00 an
hour for man-hours in excess of 100 hours each month.
On July 1, 1995, the Company entered into a loan transaction with John G.
Ross, Julian C. Schroeder, H. Terry Snowday, Elliot E. Eisenberg and two
additional individuals who are unrelated to the Company (collectively, the
"1995 Lenders") whereby the 1995 Lenders lent the Company a total of $550,000
cash (the "1995 Loan"). The Company issued promissory notes to each of the
1995 Lenders representing his or its pro rata portion of the 1995 Loan. The
1995 Loan was secured by an assignment of certain patents. As additional
consideration for the 1995 Loan, the Company issued five year warrants to the
Lenders to purchase a total of 275,000 shares of the Company's common stock at
a purchase price of $0.50 per share (of which Olmsted and John G. Ross, Julian
C. Schroeder and H. Terry Snowday are entitled to, collectively, 125,000
shares). The warrants expire on June 30, 2000. The Company has also granted
registration rights to the holders of the warrants, at the Company's expense,
for each share of stock issued pursuant to an exercise of any warrant, subject
to certain limitations, and also in the event the Company registers additional
shares in a secondary offering. The 1995 Loan, together with the interest
thereon, was repaid in full by the Company to the 1995 Lenders as of September
29, 1995. Several of these 1995 Lenders chose to immediately re-invest the
proceeds of such repayment in the Company by purchasing shares of Common Stock
privately offered by the Company at $.20 a share. See "Security Ownership of
Certain Beneficial Owners and Management" above.
Incident to the September 29, 1995 private placement, the Company
negotiated an incentive arrangement with Olmsted, of which Gary T. Gaisser,
President of Versus, is the principal shareholder. Pursuant to this
arrangement, until (i) the Company has both revenues of $1,000,000 or more and
positive net income (excluding non-recurring gains or losses) during the same
quarter or (ii) January 31, 1997 (with an extension to July 31, 1997 under
certain conditions), Olmsted would have the option to merge with Versus at $.25
a share based upon the Olmsted book value, provided the book value shall be no
greater than $1.5 million. The right to merge is further conditioned upon the
receipt of a fairness opinion that the fair market value of Olmsted is greater
than or equal to its book value and the shareholders of Versus approve the
merger.
Julian C. Schroeder is the President and a shareholder of BDS Securities
Corporation, the placement agent for the private placement. In connection with
the private placement, BDS Securities Corporation, received a placement fee of
$205,450 together with five-year Warrants to purchase 1,027,244 shares at $.20
a share.
In January of 1995, John Mischak ceased to be the Chief Executive Officer
and a Director of Versus. In partial consideration of his termination and
waiving all claims under his Employment Agreement, Mr. Mischak received an
option for 100,000 shares of Versus Common Stock at $.50 a share, exercisable
until August 7, 2000. In January of 1996, H. Terry Snowday ceased to be
Chairman of the Board of Directors and a Director of Versus. At the time of
his departure, Mr. Snowday was also granted an option to purchase 100,000
shares of Versus Common Stock at $.50 a share, exercisable until August 7,
2000.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers to file initial reports of
ownership and reports of changes in ownership with the Securities & Exchange
Commission (the "SEC"). Executive officers and directors are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on a review of the copies of Forms 3, 4 and 5 furnished to
the Company and written statements from Directors and Officers that no report
on Form 5 is required, there are no other known failures of directors and
executive officers of the Company to timely file any such form during the
fiscal year ended October 31, 1995.
PROPOSAL NO. 2
______________
Approval of the Stock Option Plan
The Board of Directors has adopted and submitted to shareholders for their
approval the 1996 Incentive Stock Option Plan, which is attached. Pursuant to
this Plan, a Committee of the Board of Directors can determine to grant options
to key employees of the Company for periods up to 10 years from the date of
grant of up to 2,000,000 shares of the Company's Common Stock. The Company has
had, over the years, a number of plans designed to provide incentive to
employees. As a result of the decline in the price of the Common Stock and the
termination of substantially all of the executive officers of the Corporation
during the past three years, there are, at present, no options outstanding
granted pursuant to any of these plans. All of the prior plans have been
terminated by actions of the Board of Directors.
Of the 2,000,000 shares made available for option grant under the Plan,
approximately 1,000,000 shares are expected to be granted to the Company's
President and Chief Executive Officer, Gary T. Gaisser.
If all of the options and warrants presently outstanding were exercised by
their holders, the shares made available for option grant under this Plan would
constitute approximately 10% of the Company's outstanding common shares.
The Plan would become effective on the date of adoption by shareholders
and will continue for ten (10) years. Each option granted under the plan will
have a duration of up to ten years from the date of the grant of the option.
Options granted under the Plan must be granted at a price no lower than the
current fair market value of the Common Stock on the date of grant. In the
event an employee should, for any reason, terminate or be terminated as an
employee of the Corporation, the option expires on the date of termination, but
the Board in its sole discretion may extend this period for up to three months.
If an employee should die while in the employment of the Company or become
disabled, the option would be exercisable for a period of one year from the
date of death. Neither of the above extension periods shall extend the option
beyond its initial 10-year term.
The tax consequences associated with the grant and exercise of incentive
stock options depend upon the provisions of Internal Revenue Code, which may be
changed during the course of the Plan. As of the date of adoption of the Plan,
the grant of an incentive stock option does not constitute a taxable event. If
the employee exercises an incentive stock option within one year of the date of
grant, or if within one year of the date of exercise the employee sells the
shares acquired upon exercise of the option (a "disqualifying disposition"),
the difference between the purchase price and the current value of the Common
Stock on the date of exercise will be taxable to the employee as ordinary
income and the Company will receive a corresponding tax deduction as a business
expense. Should the employee exercise the incentive stock option without
making a disqualifying disposition, then the exercise of the incentive stock
option will not normally constitute a taxable event to the employee, nor will
the Company receive a corresponding deduction. However, the difference between
the fair market value of the Common Stock on the date of exercise and the
exercise price of the option may constitute a tax preference item, and effect
the employee's computation of any alternative minimum tax which may be due. If
the employee shall sell his shares more than one year after the date of
exercise, then upon ultimate sale of the stock, the employee would incur
capital gain tax on the difference between the sale price and the exercise
price. Should, however, the employee have made a disqualifying disposition,
the transaction will be taxed as a capital gain on the difference between the
price of the stock at the time of exercise and the proceeds received from the
sale of the stock.
In the event an employee shall exercise an option at a time when there is
no currently effective registration statement covering the shares, the
Company's obligation to deliver shares pursuant to the option is subject to the
employee providing an approved representation of investment intent, and the
shares delivered by the Company may be restricted as to transfer in accordance
with applicable securities laws. However, it is anticipated that the Company
will file a registration statement on Form S-8 to permit delivery of
unrestricted stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 1996
INCENTIVE STOCK OPTION PLAN.
PROPOSAL NO. 3
______________
Amendment of Certificate of Incorporation of the Company
The Board of Directors has approved and submitted to shareholders for
their approval an amendment to the Company's Certificate of Incorporation to
increase the number of its authorized shares. The number of authorized shares
of the Company's Common Stock would be increased from 25,000,000 shares to
50,000,000 shares. Currently, of the 25,000,000 shares of Common Stock
outstanding, 18,485,697 are issued and outstanding and an additional 2,680,912
shares are reserved for issuance in connection with currently outstanding
options and warrants.
Under Delaware corporate law, shares of stock of a corporation may
not be issued unless authorized for issuance under the corporation's
certificate of incorporation, which can only be amended by vote of the
stockholders. The certificate of incorporation amendment authorizing an
increased number of shares is necessary in order to allow the Company to issue
further shares of Common Stock, including shares to be issued in connection
with the 1996 Incentive Stock Option Plan. The Company believes that an
increase in authorized stock to 50,000,000 shares will allow the Company a
flexibility to issue shares of Common Stock in the future in connection with
future financing or otherwise commensurate with that enjoyed by other
corporations.
Although the Company currently has no plans to publicly or privately
offer its common stock in the near future (except pursuant to employee benefit
plans), any additional shares of Common Stock issued would reduce ratably the
percentage of total ownership interest and voting power represented by each
share of Common Stock currently outstanding. The holders of the Company's
Common Stock do not enjoy preemptive rights.
THE BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT AND RESTATEMENT OF
THE CERTIFICATE OF INCORPORATION.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP served as the Company's independent certified public
accountants for the fiscal year ended October 31, 1995 and is expected to be so
engaged for the present fiscal year at year end. A representative of KPMG is
expected to be present at the Annual Meeting of Stockholders and will be
provided with the opportunity to make a statement if he or she desires to do so
and to respond to appropriate questions.
OTHER MATTERS
The Board of Directors is not aware at present of any other matters which
will or may come before the Annual Meeting of Stockholders and which will
require a vote of the Stockholders. However, if any additional matters are
properly presented at the meeting, it is the intention of the persons named in
the accompanying proxy to vote in accordance with their judgment on such
matters.
DEADLINE FOR FILING STOCKHOLDER PROPOSALS FOR THE 1997 ANNUAL MEETING
The date by which proposals of Stockholders intended to be presented at
the Company's 1997 Annual Meeting (and in the Proxy Statement and Proxy
relating to that meeting) must be presented to the Company is December 9, 1996.
By Order of the Board of Directors
Debra A. Boyer, Secretary
<PAGE>
VERSUS TECHNOLOGY, INC.
EMPLOYEE INCENTIVE STOCK OPTION PLAN
1. Purpose.
The purpose of this Employee Incentive Stock Option Plan (the "Plan") is
to give officers and executive personnel ("key employees") of Versus
Technology, Inc., a Delaware corporation (the "Company"), and corporations with
respect to which the Company directly or indirectly controls 50% or more of the
combined voting power ("subsidiaries") an opportunity to acquire shares of the
common stock of the Company ("Common Stock"), to provide an incentive for key
employees to continue to promote the best interests of the Company and enhance
its long-term performance, and to provide an incentive for key employees to
join or remain with the Company and its subsidiaries.
2. Administration.
(a) Board of Directors. The Plan shall be administered by the Board of
Directors of the Company (the "Board"), which, to the extent it shall
determine, may delegate its powers with respect to the administration of the
Plan (except its powers under Section 11(c)) to a committee (the "Committee")
appointed by the Board and composed of not less than three members of the
Board. If the Board chooses to appoint a Committee, references hereinafter to
the Board (except in Section 11(c)) shall be deemed to refer to the Committee.
Notwithstanding the preceding provisions of this Section, no member of the
Board may exercise discretion with respect to, or participate in, the
administration of the Plan if, at any time within one year prior to such
exercise or participation, he or she has received stock, stock options, stock
appreciation rights or any other derivative security pursuant to the Plan or
any other plan of the Company or any affiliate thereof as to which any
discretion is exercised.
(b) Powers. Within the limits of the express provisions of the Plan, the
Board shall determine:
(i) the key employees to whom awards hereunder shall be granted,
(ii) the time or times at which such awards shall be granted,
(iii) the form and amount of the awards, and
(iv) the limitations, restrictions and conditions applicable to any such
award.
In making such determinations, the Board may take into account the nature of
the services rendered by such employees, or classes of employees, their present
and potential contributions to the Company's success and such other factors as
the Board in its discretion shall deem relevant.
(c) Interpretations. Subject to the express provisions of the Plan, the
Board may interpret the Plan, prescribe, amend and rescind rules and
regulations relating to it, determine the terms and provisions of the
respective awards and make all other determinations it deems necessary or
advisable for the administration of the Plan.
(d) Determinations. The determinations of the Board on all matters
regarding the Plan shall be conclusive. A member of the Board shall only be
liable for any action taken or determination made in bad faith.
(e) Nonuniform Determinations. The Board's determinations under the
Plan, including without limitation, determinations as to the persons to receive
awards, the terms and provisions of such awards and the agreements evidencing
the same, need not be uniform and may be made by it selectively among persons
who receive or are eligible to receive awards under the Plan, whether or not
such persons are similarly situated.
3. Awards Under the Plan.
(a) Form. Awards under the Plan shall be Incentive Stock Options.
(b) Maximum Limitations. The aggregate number of shares of Common Stock
available for grant under the Plan is 2,000,000, subject to adjustment pursuant
to Section 7. Shares of Common Stock issued pursuant to the Plan may be either
authorized but unissued shares or shares now or hereafter held in the treasury
of the Company. In the event that, prior to the end of the period during which
Incentive Stock Options may be granted under the Plan, any Incentive Stock
Option under the Plan expires unexercised or is terminated, surrendered or can-
celled, without being exercised, in whole or in part, for any reason, the
number of shares theretofore subject to such Incentive Stock Option, or the
unexercised, terminated, forfeited or unearned portion thereof, shall be added
to the remaining number of shares of Common Stock available for grant as an
Incentive Stock Option under the Plan, including a grant to a former holder of
such Incentive Stock Option, upon such terms and conditions as the Board shall
determine, which terms may be more or less favorable than those applicable to
such former Incentive Stock Option.
(c) Ten Percent Shareholder. Notwithstanding any other provision herein
contained, no key employee may receive an Incentive Stock Option under the Plan
if such employee, at the time the award is granted, owns (as defined in Section
424(d) of the Internal Revenue Code, as amended (the "Code")) stock possessing
more than 10% of the total combined voting power of all classes of stock of the
Company, its parent or any subsidiary, unless the option price for such
Incentive Stock Option is at least 110% of the fair market value of the Common
Stock subject to such Incentive Stock Option on the date of grant and such
Option is not exercisable after the date five years from the date such Option
is granted.
4. Incentive Stock Options.
It is intended that Incentive Stock Options granted under the Plan shall
constitute Incentive Stock Options within the meaning of Section 422 of the
Code. Incentive Stock Options may be granted under the Plan for the purchase
of shares of Common Stock. Incentive Stock Options shall be in such form and
upon such conditions as the Board shall from time to time determine, subject to
the following:
(a) Option Prices. The option price of each Incentive Stock Option shall
be at least 100% of the fair market value of the Common Stock subject to such
Incentive Stock Option on the date of grant.
(b) Terms of Options. No Incentive Stock Option shall be exercisable
prior to the date one year, or after the date ten years, from the date such
Incentive Stock Option is granted.
(c) Limitation on Amounts. The aggregate fair market value (determined
with respect to each Incentive Stock Option as of the time such Incentive Stock
Option is granted) of the capital stock with respect to which Incentive Stock
Options are exercisable for the first time by a key employee during any
calendar year (under this Plan or any other plan of the Company or the parent
or any subsidiary of the Company) shall not exceed $100,000.
5. Exercise.
(a) Exercise. Incentive Stock Options shall be subject to such terms and
conditions, shall be exercisable at such time or times, and shall be evidenced
by such form of written incentive stock option agreement between the optionee
and the Company, as the Board shall determine; provided, that such
determinations are not inconsistent with the other provisions of the Plan, and
with Section 422 of the Code or regulations thereunder.
(b) Manner of Exercise of Options and Payment for Common Stock.
Incentive Stock Options may be exercised by an optionee by giving written
notice to the Secretary of the Company stating the number of shares of Common
Stock with respect to which the Incentive Stock Option is being exercised and
tendering payment therefor. At the time that an Incentive Stock Option granted
under the Plan, or any part thereof, is exercised, payment for the Common Stock
issuable thereupon shall be made in full in cash or by certified check or, if
the Board in its discretion agrees to accept, in shares of Common Stock of the
Company (the number of such shares paid for each share subject to the Incentive
Stock Option, or part thereof, being exercised shall be determined by dividing
the option price by the fair market value per share of the Common Stock on the
date of exercise). As soon as reasonably possible following such exercise, a
certificate representing shares of Common Stock purchased, registered in the
name of the optionee shall be delivered to the optionee.
6. Transferability.
No Incentive Stock Option may be transferred, assigned, pledged or
hypothecated (whether by operation of law or otherwise), except as provided by
will or the applicable laws of descent or distribution, and no Incentive Stock
Option shall be subject to execution, attachment or similar process. Any
attempted assignment, transfer, pledge, hypothecation or other disposition of
an Incentive Stock Option or levy of attachment or similar process upon the
Incentive Stock Option not specifically permitted herein shall be null and void
and without effect. An Incentive Stock Option may be exercised only by a key
employee during his or her lifetime, or pursuant to Section 10(c), by his or
her estate or the person who acquires the right to exercise such Incentive
Stock Option upon his or her death by bequest or inheritance.
7. Adjustment Provisions.
The aggregate number of shares of Common Stock with respect to which
Incentive Stock Options may be granted, the aggregate number of shares of
Common Stock subject to each outstanding Incentive Stock Option, and the option
price per share of each such Incentive Stock Option, may all be appropriately
adjusted as the Board may determine for any increase or decrease in the number
of shares of issued Common Stock resulting from a subdivision or consolidation
of shares, whether through reorganization, recapitalization, stock split-up,
stock distribution or combination of shares, or the payment of a share dividend
or other increase or decrease in the number of such shares outstanding effected
without receipt of consideration by the Company. Adjustments under this
Section 8 shall be made according to the sole discretion of the Board, and its
decisions shall be binding and conclusive.
8. Dissolution, Merger and Consolidation.
Upon the dissolution or liquidation of the Company, or upon a merger or
consolidation of the Company in which the Company is not the surviving
corporation, each Incentive Stock Option granted hereunder shall expire as of
the effective date of such transaction; provided, however, that the Board shall
give at least 30 days' prior written notice of such event to each optionee
during which time he or she shall have a right to exercise his or her wholly or
partially unexercised Incentive Stock Option (without regard to installment
exercise limitations, if any) and, subject to prior expiration pursuant to
Section 10(b) or (c), each Incentive Stock Option shall be exercisable after
receipt of such written notice and prior to the effective date of such
transaction.
9. Effective Date and Conditions Subsequent to Effective Date.
The Plan shall become effective on the date of the approval of the Plan by
the holders of a majority of the shares of Common Stock of the Company;
provided, however, that the adoption of the Plan is subject to such shareholder
approval within twelve (12) months before or after the date of adoption of the
Plan by the Board. The Plan shall be null and void and of no effect if the
foregoing condition is not fulfilled, and in such event each Incentive Stock
Option granted hereunder shall, notwithstanding any of the preceding provisions
of the Plan, be null and void and of no effect.
No grant or award shall be made under the Plan more than 10 years from the
earlier of the date of adoption of the Plan by the Board and shareholder
approval hereof; provided, however, that the Plan and all Incentive Stock
Options granted under the Plan prior to such date shall remain in effect and
subject to adjustment and amendment as herein provided until they have been
satisfied or terminated in accordance with the terms of the respective grants
or awards and the related agreements.
10. Termination of Employment.
(a) Each Incentive Stock Option shall, unless sooner expired pursuant to
Section 11(b) or (c) below, expire on the first to occur of the tenth
anniversary of the date of grant thereof and the expiration date set forth in
the applicable option agreement.
(b) An Incentive Stock Option shall expire on the first to occur of the
applicable date set forth in paragraph (a) next above and the date that the
employment of the key employee with the Company terminates for any reason other
than death or disability. Notwithstanding the preceding provisions of this
paragraph, the Board, in its sole discretion, may, by written notice given to
an ex-employee, permit the ex-employee to exercise Incentive Stock Options
during a period following his or her termination of employment, which period
shall not exceed three months. In no event, however, may the Board permit an
ex-employee to exercise an Incentive Stock Option after the expiration date
contained in the agreement evidencing such Incentive Stock Option.
Notwithstanding the preceding provisions of this paragraph, if the Board
permits an ex-employee to exercise Incentive Stock Options during a period
following his or her termination of employment pursuant to such preceding
provisions, such Incentive Stock Options shall, to the extent unexercised,
expire on the date that such ex-employee violates (as determined by the Board)
any covenant not to compete in effect between the Company and the ex-employee.
(c) If the employment of a key employee with the Company terminates by
reason of disability (as defined in Section 422(c)(9) of the Code and as
determined by the Board) or by reason of death, his or her Incentive Stock
Options shall expire on the first to occur of the date set forth in paragraph
(a) of this Section 10 and the first anniversary of such termination of
employment.
11. Miscellaneous.
(a) Legal and Other Requirements. The obligation of the Company to sell
and deliver Common Stock under the Plan shall be subject to all applicable
laws, regulations, rules and approvals, including, but not by way of
limitation, the effectiveness of a registration statement under the Securities
Act of 1933 if deemed necessary or appropriate by the Company. Certificates
for shares of Common Stock issued hereunder may be legended as the Board shall
deem appropriate.
(b) No Obligation To Exercise Options. The granting of an Incentive
Stock Option shall impose no obligation upon an optionee to exercise such
Incentive Stock Option.
(c) Termination and Amendment of Plan. The Board, without further action
on the part of the shareholders of the Company, may from time to time alter,
amend or suspend the Plan or any Incentive Stock Option granted hereunder or
may at any time terminate the Plan, except that it may not, without the
approval of the shareholders of the Company (except to the extent provided in
Section 8 hereof):
(i) Materially increase the total number of shares of Common Stock
available for grant under the Plan except as provided in Section 8;
(ii) Materially modify the class of eligible employees under the
Plan;
(iii) Materially increase benefits to any key employee who is subject
to the restrictions of Section 16 of the Securities Exchange Act of 1934;
or
(iv) Effect a change relating to Incentive Stock Options granted
hereunder which is inconsistent with Section 422 of the Code or
regulations issued thereunder.
No action taken by the Board under this Section, either with or without the
approval of the shareholders of the Company, may materially and adversely
affect any outstanding Incentive Stock Option without the consent of the holder
thereof.
(d) Application of Funds. The proceeds received by the Company from the
sale of Common Stock pursuant to Incentive Stock Options will be used for
general corporate purposes.
(e) Right To Terminate Employment. Nothing in the Plan or any agreement
entered into pursuant to the Plan shall confer upon any key employee or other
optionee the right to continue in the employment of the Company or any
subsidiary or affect any right which the Company or any subsidiary may have to
terminate the employment of such key employee or other optionee.
(f) Rights as a Shareholder. No optionee shall have any right as a
shareholder unless and until certificates for shares of Common Stock are issued
to him or her.
(g) Leaves of Absence and Disability. The Board shall be entitled to
make such rules, regulations and determinations as it deems appropriate under
the Plan in respect of any leave of absence taken by or disability of any key
employee. Without limiting the generality of the foregoing, the Board shall be
entitled to determine (i) whether any such leave of absence shall constitute a
termination of employment within the meaning of the Plan, and (ii) the impact,
if any, of any such leave of absence on awards under the Plan theretofore made
to any key employee who takes such leave of absence.
(h) Fair Market Value. Whenever the fair market value of Common Stock is
to be determined under the Plan as of a given date, such fair market value
shall be:
(i) If the Common Stock is traded on the over-the-counter market,
the average of the mean between the bid and the asked price for the Common
Stock at the close of trading for the 10 consecutive trading days
immediately preceding such given date;
(ii) If the Common Stock is listed on a national securities
exchange, the average of the closing prices of the Common Stock on the
Composite Tape for the 10 consecutive trading days immediately preceding
such given date; and
(iii) If the Common Stock is neither traded on the over-the-counter
market nor listed on a national securities exchange, such value as the
Board, in good faith, shall determine.
Notwithstanding any provision of the Plan to the contrary, no determination
made with respect to the fair market value of Common Stock shall be
inconsistent with Section 422 of the Code or regulations thereunder.
(i) Notices. Every direction, revocation or notice authorized or
required by the Plan shall be deemed delivered to the Company (1) on the date
it is personally delivered to the Secretary of the Company at its principal
executive offices or (2) three business days after it is sent by registered or
certified mail, postage prepaid, addressed to the Secretary at such offices,
and shall be deemed delivered to an optionee (1) on the date it is personally
delivered to him or her or (2) three business days after it is sent by
registered or certified mail, postage prepaid, addressed to him or her at the
last address shown for him or her on the records of the Company.
(j) Applicable Law. All questions pertaining to the validity,
construction and administration of the Plan and Stock Options granted hereunder
shall be determined in conformity with the laws of the State of New Jersey, to
the extent not inconsistent with Section 422 of the Code and regulations
thereunder.
(k) Elimination of Fractional Shares. If under any provision of the Plan
which requires a computation of the number of shares of Common Stock subject to
an Incentive Stock Option, the number so computed is not a whole number of
shares of Common Stock, such number of shares of Common Stock shall be rounded
down to the next whole number.
