VERSUS TECHNOLOGY, INC.
A Delaware 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
Shareholders 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.
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.
By Order of the Board of Directors
Debra A. Boyer, Secretary
April 8, 1996
<PAGE>
VERSUS TECHNOLOGY, INC.
Corporate Headquarters:
2320 W. 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:
Amount and
Nature Percentage
Name & Address of Beneficially of Class
Beneficial Owner Owned 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 G. 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
Positions(s) Common Stock
Name & Address of with the Beneficially Percent
Beneficial Owner 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 G. 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 W. 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 monies 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 G. 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., John G. Ross, 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., John G. Ross,
and Julian C. Schroeder. 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 W. 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 G. 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, and
Chief Executive Officer
Julian C. Schroeder 48 Director
Elliot G. 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 G. 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 G.
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 $100,000:
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
Name & Principal Fiscal Option
Position Year Salary ($) Bonus($) Other($) Awards
Gary T. Gaisser 1995 52,000 0 0 0
President and CEO 1994 - - - -
1993 - - - -
John Mischak 1995 35,000 0 25,000 100,000
Former CEO 1994 121,154 350 0 0
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
G. 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:
1) The key employees to whom awards hereunder shall
be granted;
2) The time or times at which such awards shall be
granted;
3) The form and amount of the awards; and
4) 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 cancelled, 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):
1) Materially increase the total number of shares of
Common Stock available for grant under the Plan
except as provided in Section 8;
2) Materially modify the class of eligible employees
under the Plan;
3) Materially increase benefits to any key employee
who is subject to the restrictions of Section 16
of the Securities Exchange Act of 1934; or
4) 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 (1) whether any such leave of absence shall
constitute a termination of employment within the meaning of the
Plan, and (2) 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:
1) 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;
2) 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
3) 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.
<PAGE>
PROXY CARD
VERSUS TECHNOLOGY, INC.
2320 Aero Park Court
Traverse City, Michigan 49686
PROXY SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
The undersigned hereby appoints and constitutes Gary T. Gaisser
and Julian C. Schroeder and each of them, attorneys and proxies
for the undersigned, with full power of substitution to vote as
if the undersigned were personally present at the Annual Meeting
of the Shareholders of Versus Technology, Inc. (the "Company") to
be held at the Grand Traverse Resort, 6300 U.S. Route 31 North,
Acme, Michigan 49610 on Friday, May 10, 1996 at 10 o'clock in the
morning and at all adjournments thereof, the shares of stock of
said Company registered in the name of the undersigned. The
undersigned instructs all such proxies to vote such shares as
follows upon the following matters, which are described more
fully in the accompanying proxy statement:
(Continued, and to be signed, on the other side)
<PAGE>
X Please mark your votes as in this example.
1. Election of Directors
_____ VOTE FOR all nominees listed at right; except as
marked to the contrary below.
VOTE FOR all nominees for the company's Board of Directors listed
at right; except that I WITHHOLD AUTHORITY for the following
nominees (if any)____________________________________________.
_____ VOTE WITHHELD from all nominees.
I authorize and instruct my Proxy to:
Nominees: Gary T. Gaisser
Julian C. Schroeder
Elliot G. Eisenberg
2. Approval of the 1996 Incentive Stock Option Plan.
_____ VOTE FOR _____ AGAINST _____ ABSTAIN
3. Approval of the Amendment to the Certificate of
Incorporation of the Company to increase the authorized
shares of Common Stock from 25,000,000 to 50,000,000.
_____ VOTE FOR _____ AGAINST _____ ABSTAIN
4. In their discretion, to vote upon such other business as
may properly come before the meeting and all adjournments
thereof.
This proxy when properly executed will be voted in the manner
directed herein by the undersigned stockholder. If no direction
is made, this proxy will be voted FOR Proposals 1, 2 and 3.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY IN THE
ENCLOSED ENVELOPE.
SIGNATURE________________________________ DATED____________1996
SIGNATURE________________________________ DATED____________1996
IF HELD JOINTLY
Please sign exactly as name appears above. When shares are held
by joint tenants, both should sign. When signing as attorney, as
executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate
name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
