<PAGE>
<PAGE>
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 / / 240.14a-11(c) or
/ / 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 ] No fee required.
[ ] 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:
_______________________________________________________
<PAGE>
<PAGE> 2
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 its filing.
1) Amount Previously Paid:
_______________________________________________________
2) Form, Schedule or Registration Statement No.:
_______________________________________________________
3) Filing Party:
_______________________________________________________
4) Date Filed:
_______________________________________________________
<PAGE>
<PAGE> 3
VERSUS TECHNOLOGY, INC.
A Delaware Corporation
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on April 24, 1998
TO THE STOCKHOLDERS OF VERSUS TECHNOLOGY, INC.
The Annual Meeting of the Stockholders of VERSUS TECHNOLOGY, INC. (the
"Company") will be held at the corporate headquarters of the Company, 2600
Miller Creek Road, Traverse City, Michigan 49684, on Friday, April 24, 1998,
at 10:00 a.m. E.D.T. for the following purposes:
(1) To elect three (3) directors of the Company to serve until the next
succeeding Annual Meeting of Stockholders and until their successors
have been elected and have qualified.
(2) To consider and act upon a proposal to amend Article 4 of the
Company's Certificate of Incorporation to increase the
number of authorized shares of Common Stock from fifty million
(50,000,000) to seventy-five million (75,000,000).
(3) To consider and act upon a proposal to amend Article 4 of the
Company's Certificate of Incorporation to create and authorize
fifteen million (15,000,000) shares of Preferred Stock.
(4) To transact such other business as may properly come before the
meeting or any adjournments.
Only Stockholders of record at the close of business on the 10th day of
March, 1998, are entitled to notice of and to vote at this meeting.
The Company's 1997 Annual Report to Stockholders 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
Andrea Beadle, Secretary
March 19, 1998
<PAGE>
<PAGE> 4
VERSUS TECHNOLOGY, INC.
Corporate Headquarters:
2600 Miller Creek Road
Traverse City, Michigan 49684
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 April 24, 1998, at 10:00
a.m., Eastern Daylight Time, at the corporate headquarters of the Company,
2600 Miller Creek Road, Traverse City, Michigan 49684, 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 1997 Annual Report to Stockholders will be first sent or
given to Stockholders is March 19, 1998.
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,
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) 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
<PAGE>
<PAGE> 5
Stock") at the close of business on March 10, 1998 (the "Record Date"), is
entitled to one vote per share on each matter that comes before the meeting.
With respect to the election of Directors, a vote of a plurality of the
number of shares voting is required for election. With respect to each
amendment of the Company's Certificate of Incorporation, a majority of
the outstanding shares entitled to vote is required for approval of the
amendment. 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 19, 1998, there were outstanding
38,362,875 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 March 19, 1998, 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 of Beneficial Ownership Class Outstanding
- ------------------- ----------------------- -----------------
Gary T. Gaisser 6,250,123 (1) 16.1%
c/o Versus Technology, Inc.
2600 Miller Creek Road
Traverse City, MI 49684
Anthony Low-Beer 6,261,000 (2) 16.3%
c/o Mitchell Securities
100 Park Avenue
New York, NY 10017
William Harris Investors 3,025,000 (3) 7.9%
2 North LaSalle Street, Suite 400
Chicago, IL 60602
____________________________
(1) This total includes 250,000 shares that became acquirable by Mr. Gaisser
on December 4, 1996, and an additional 250,000 shares that became
acquirable by Mr. Gaisser on December 4, 1997, upon exercise of an
outstanding option issued by the Company. See "Executive Compensation"
and "Certain Relationships and Related Transactions" below.
(2) As reported on Schedule 13D filed November 19, 1997. Of these shares,
2,921,000 are held in managed accounts over which Mr. Low-Beer shares
dispositive power.
(3) As reported on Schedule 13G filed February 3, 1997, as adjusted for a
subsequent acquisition.
<PAGE>
<PAGE> 6
Security Ownership of Management
The following table sets forth as of March 19, 1998 the beneficial
ownership of the Company's Common Stock by all Directors, nominees and named
executive officers of and by all the Directors, nominees and executive
officers
of the Company as a group:
<TABLE>
Approximate Number
Position(s) with the of Common Shares
Name of Beneficial Owner Company (1) Beneficially Owned (1) Percent of Class
- ------------------------ -------------------- ---------------------- ----------------
<S> <C> <C>
Gary T. Gaisser President, 6,250,123 (2) 16.1%
Chief Executive
Officer & Director
Julian C. Schroeder Director 552,582 (3) 1.4%
Elliot G. Eisenberg Director 1,688,192 (4) 4.4%
Samuel Davis Director 480,000 (5) 1.2%
All executive officers 9,157,157 (6) 23.3%
and directors as a
group (7 persons)
- -------------------------
(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, Schroeder, Eisenberg and Davis are all of the Company's
present Directors.
(2) This total includes 250,000 shares that became acquirable by Mr. Gaisser
on December 4, 1996, and an additional 250,000 shares that became acquirable by Mr.
Gaisser on December 4, 1997, upon exercise of an outstanding option issued by the
Company. See "Executive Compensation" and "Certain Relationships and Related
Transactions" below.
(3) This total includes 50,000 shares currently acquirable under the terms of
warrants issued by the Company to Mr. Schroeder and 167,582 shares currently
acquirable under the terms of warrants allocated by BDS Holdings, L.L.C., an
affiliate of BDS Securities, L.L.C., to its members, including Mr. Schroeder.
See "Certain Relationships and Related Transactions" below.
(4) This total includes 100,000 shares currently acquirable under the terms of warrants
issued by the Company to Mr. Eisenberg and 57,464 shares currently acquirable under
terms of warrants allocated by BDS Holdings, L.L.C., an affiliate of BDS Securities,
L.L.C., to its members, including Mr. Eisenberg. See "Certain Relationships and
Related Transactions" below.
(5) This total includes 100,000 shares that become acquirable on May 1, 1998 by Mr. Davis
upon exercise of an outstanding option issued by the Company. See "Executive
Compensation" below.
(6) This total includes 975,046 shares acquirable currently or within sixty days under
outstanding warrants and options.
</TABLE>
<PAGE>
<PAGE> 7
PROPOSAL ONE
ELECTION OF DIRECTORS
General
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 who were elected by the
Stockholders at the previous Annual Meeting of Stockholders, except for
Mr. Davis, who was appointed in August of 1997. 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 Mr. Davis and Mr. Schroeder, which administers the Company's stock
option plans and reviews employee compensation and benefits. The Compensation
Committee met one time during the fiscal year ended October 31, 1997.
The Board also established an Audit Committee, presently consisting of
Mr. Schroeder and Mr. Davis. The Audit Committee meets with the Company's
officers and the independent auditors to review the Company's annual audit and
financial statements. The Audit Committee met one time during the fiscal year
ended October 31, 1997.
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 2600 Miller Creek Road,
Traverse City, Michigan 49684.
The Board of Directors met six times during the fiscal year ended October
31, 1997. 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, Julian C.
Schroeder, Elliot G. Eisenberg and Samuel Davis. The Board has nominated
Messrs. Gaisser, Schroeder and Davis to serve on the Board for a term of one
year or until their successors are elected and shall qualify. Elliot G.
Eisenberg, presently a Director of the Company, is not a nominee for
re-election, as Mr. Eisenberg has requested to retire from the Board of
Directors upon completion of his term on the date of the Annual Meeting of
Stockholders.
The following information is furnished with respect to the nominees for
Directors of the Company:
Management Age Position(s) with the Company
- ---------- --- ----------------------------
Gary T. Gaisser 46 Director, President and Chief Executive Officer
Julian C. Schroeder 50 Director
Samuel Davis 66 Director
<PAGE>
<PAGE> 8
Gary T. Gaisser has served as President and Chief Executive Officer of
the Company since January, 1995, and has served as a Director of the Company
since April, 1995. Prior to that, he was President of Olmsted Engineering Co.
("Olmsted"), now a wholly owned subsidiary of the Company. Mr. Gaisser had
been with Olmsted since 1988.
Julian C. Schroeder has served as a Director of the Company since August,
1994. As of March, 1997, Mr. Schroeder became a financial analyst with
Schroders. He previously served with BDS Securities, L.L.C. (a registered
broker-dealer) and its predecessor, BDS Securities Corporation, since 1989,
and from 1995 to March, 1997, served as its President. Mr. Schroeder is also
a Director of Optical Coating Laboratories, a manufacturer of thin-film
products.
Samuel Davis has served as a Director of the Company since August, 1997.
He is a Senior Director of Delta Consulting Group, Inc. specializing in the
management of strategic organizational change and has served in this position
since 1990. Mr. Davis is a Clinical Professor at the School of Public Health
at Columbia University and is a distinguished Service Professor at Mount Sinai
School of Medicine. Mr. Davis is the former President and CEO of the Mount
Sinai Hospital in New York City.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE ELECTION OF
GARY T. GAISSER, JULIAN C. SCHROEDER AND SAMUEL DAVIS.
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 the Chief
Executive Officer of the Company during the fiscal years ended October 31,
1997, 1996 and 1995. There were no other executive officers of the Company
who received combined salary and bonuses for the periods presented equaling
or exceeding $100,000.
<TABLE>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
------------------- ------------
Name & Principal Position Fiscal Year Salary Bonus Other Option
Awards
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gary T. Gaisser 1997 $ 134,500 $ - $ 200 (1) -
President, Chief Executive Officer 1996 78,000 $ - 400 (2) 1,000,000
and Director 1995 52,000 - - -
(1) Represents two meetings of Directors at $100 per meeting during fiscal
1997. The Directors voted to forego the fee for the October 31, 1997
meeting and all future meetings.
(2) Represents $100 per meeting of Directors held during fiscal 1996.
</TABLE>
<PAGE>
<PAGE> 9
Option Awards
The options to purchase 1,000,000 shares, granted to Mr. Gaisser in 1996,
are exercisable at $.375 a share, the fair value of the stock at grant date.
Twenty-five percent of these options became exercisable on December 4, 1996,
and an additional twenty-five percent become exercisable on each subsequent
anniversary thereof. The options expire on June 4, 2001. Mr. Gaisser has
exercised no options. These options had an estimated value of $656,000 at
October 31, 1997, based upon the difference between the option exercise price
and the fair market value of the Company's Common Stock at October 31, 1997.
No options were exercised by any Executive Officer in fiscal 1997.
Employment Agreement
As of July 1, 1996, the Company and Mr. Gaisser entered into an
Employment Agreement for a term of six years. Mr. Gaisser is employed at an
initial base salary of $130,000 per year and receives a 10% annual increase
during the term of the Employment Agreement. Mr. Gaisser is entitled to such
further increases as shall be determined by the Board of Directors and is
entitled to participate in other compensation and benefit plans of the
Company.
This Employment Agreement may be terminated by the Company for "just
cause," which is defined as "willful misconduct, embezzlement, conviction of a
felony, habitual drunkenness or excessive absenteeism not related to illness."
The Employment Agreement provides that if Mr. Gaisser is not elected or
appointed as President and Chief Executive Officer or as a member of the Board
of Directors, is removed from any such office, the ownership and control of
the Company changes, or if the principal place of the business is changed to a
location more than 20 miles from Traverse City, Michigan without Mr. Gaisser's
consent, then Mr. Gaisser may give notice of termination, effective at the end
of the month in which notice is given. In addition, if Mr. Gaisser concludes
that because of changes in the composition in the Board of Directors or
material changes in its policies because of other events or occurrences of
material fact, he feels he can no longer properly and effectively discharge
his responsibilities, then Mr. Gaisser may resign from his position upon the
giving of sixty (60) days' prior written notice. In each case, such
resignation shall be deemed constructive termination of Mr. Gaisser's
employment by the Company, and Mr. Gaisser shall be entitled to payment of the
remaining amounts payable to him under the Employment Agreement without any
requirement of mitigation of damages.
Except in the event of constructive termination, Mr. Gaisser has agreed
that during the term of the Employment Agreement and for two years thereafter,
he is not to compete with the Company. Upon any termination, Mr. Gaisser has
agreed not to disclose the Company's confidential information or to solicit
any employee of the Company for a two-year period.
Compensation of Directors
Previously, each Director of the Company received 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's by-laws provide that
Directors may be compensated as the Board of Directors may from time to time
determine, and be reimbursed for the reasonable expenses incurred in
connection with the performance of their duties. At its October 31, 1997
meeting, the Board unanimously agreed to alter the compensation arrangements.
The $100 per meeting attendance fee was eliminated and each outside Director
was awarded 30,000 shares of the Company's Common Stock annually for service
on the Board. Inside Directors (i.e., those employed by the Company) continue
to receive 15,000 shares annually. Also at its October 31, 1997 meeting, the
Board awarded Samuel Davis a five-year option to purchase 100,000 shares of
the Company's Common Stock at $1.031 per share, the market value at the date
of the grant.
<PAGE>
<PAGE> 10
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On August 26, 1996, Olmsted was acquired by the Company in exchange for
6,379,889 shares of the Company's Common Stock and cash of $65,000. Pursuant
to the acquisition, Gary T. Gaisser, the President, Chief Executive Officer
and a Director of the Company, and the controlling stockholder of Olmsted,
received 5,705,123 shares of the Company's Common Stock in exchange for his
ownership interest in Olmsted.
Olmsted had been the principal consultant to the Company in relation to
the IR Locating System. On April 20, 1995, the Company entered into a
Consulting Agreement with Olmsted. The Agreement was for a one-year period
from April 20, 1995 to April 20, 1996. Effective November 1, 1995, the
Agreement was amended. Under the Agreement and until the consummation of the
acquisition, Olmsted received an annual fee of $144,000 payable monthly as
well as a fee at an hourly rate for man-hours in excess of a fixed number of
hours each month.
In addition to programming and engineering services and related
materials, Olmsted provided business planning services and related materials,
and operating facilities for a period of time in fiscal 1996, until the
Company moved to new facilities in December, 1996. The total Olmsted billings
to Versus during 1996 for these services prior to the acquisition totaled
$755,000.
The Company believes that services provided by Olmsted were negotiated at
arms length at the fair market value of goods and services received.
As of August 26, 1996, the Company completed a private placement of
11,335,000 shares of its Common Stock at $.50 per share. At that time Julian
C. Schroeder was the President, and Elliot G. Eisenberg was Vice President, of
BDS Securities, L.L.C., the placement agent for this private placement. In
connection with this private placement, BDS Securities, L.L.C. received a
placement fee of $396,725 together with five-year warrants to purchase 396,725
shares of the Company's Common Stock at $.50 per share. A portion of these
warrants were allocated to Messrs. Schroeder and Eisenberg as of July 21,
1997.
As of September 29, 1995, the Company completed a private placement for
14,674,917 shares of its Common Stock at $.20 per share. At that time, Julian
C. Schroeder was the President, and Elliot G. Eisenberg was Vice President, of
BDS Securities, L.L.C., the placement agent for this private placement. In
connection with this private placement, BDS Securities, L.L.C. received a
placement fee of $205,449 together with five-year warrants to purchase
1,027,244 shares of the Company's Common Stock at $.20 per share. A portion
of these warrants were allocated to Messrs. Schroeder and Eisenberg as of July
21, 1997.
In December, 1996, the Company moved its principal operating facilities
to a building that is owned by Traverse Software Investment, LLC ("TSI"), a
limited liability company controlled by Gary T. Gaisser, the President, Chief
Executive Officer and a Director, of the Company. Versus and Olmsted are
obligated under two separate five-year lease agreements, which initially
required aggregate total annual rents of $111,000, increasing 4% annually
after the first year.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Based solely upon a review of Forms 3 and 4 furnished to the Company
pursuant to Rule 16a-3(e) and written statements from Directors and Executive
Officers that no report on Form 5 is due, no reporting person failed to file
reports required under Section 16(a) of the Securities and Exchange Act of
1934 with respect to the Company's securities, except that a Form 3 was filed
late with respect to Mr. Davis' initial ownership of shares.
<PAGE>
<PAGE> 11
PROPOSAL TWO
AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO INCREASE
THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
Description of the Amendment
At the Annual Meeting the Stockholders of the Company are being asked to
consider and act upon a proposal to approve an amendment (the "Common
Stock Amendment") to Article 4 of the Company's Certificate of
Incorporation which would increase the number of authorized shares of Common
Stock from fifty million (50,000,000) to seventy-five million (75,000,000).
If the Common Stock Amendment is adopted by the Stockholders, the Board
intends to prepare and file a Certificate of Amendment to the Certificate of
Incorporation of the Company. The Common Stock Amendment will be effective
immediately upon acceptance of filing by the Secretary of State of Delaware.
Although the Board presently intends to file the Certificate of Amendment if
the Common Stock Amendment is approved by the Stockholders, the resolution of
Stockholders will reserve to the Board the right to defer or abandon the
Common Stock Amendment and not file such Certificate of Amendment even if the
Common Stock Amendment is approved by the Stockholders.
Reasons for the Common Stock Amendment
In reviewing the Company's capital structure and possible alternatives
for the future, management, after consultation with the Company's financial
and outside legal advisors, determined that the number of shares of the
Company's Common Stock should be increased to provide the Company with
additional capital-raising flexibility and to meet general corporate needs,
and management determined to present to the Board of Directors a proposal to
increase the number of authorized shares of Common Stock.
At its regular meeting on December 15, 1997, the Board of Directors
considered the proposal to increase the number of authorized shares of Common
Stock. After discussion of the Common Stock Amendment's likely benefits and
possible disadvantages, the Board authorized adoption of the Common Stock
Amendment and authorized management to file with the SEC preliminary proxy
materials describing the Common Stock Amendment.
The Company's Certificate of Incorporation, as amended, presently
authorizes 50,000,000 shares of Common Stock. As of March 19, 1998,
38,362,875 shares of Common Stock were issued and outstanding and an
additional 4,473,075 shares are reserved for issuance under outstanding
options and warrants and the 1996 Incentive Restricted Stock Bonus Plan. The
Common Stock Amendment would increase the total authorized number of shares of
Common Stock from 50,000,000 to 75,000,000. Thus, upon implementation of the
Common Stock Amendment, 32,164,050 shares of Common Stock would be available
for issuance from time to time for any proper corporate purpose, including
stock splits, stock dividends, acquisitions, stock option plans, funding of
employee benefit plans and public and private equity offerings. No further
action or authorization by the Stockholders would be necessary prior to
issuance of the additional shares of Common Stock authorized pursuant to the
Common Stock Amendment unless applicable laws or regulations would require
such approval in a given instance.
The Board of Directors of the Company believes that it is desirable to
have the additional authorized shares of Common Stock available for possible
future financing and acquisition transactions and other general corporate
purposes. Having additional authorized shares of Common Stock available for
issuance in the future will give the Company greater flexibility and may allow
such shares to be issued without the expense and delay of a Special
Stockholders' Meeting. The Company does not presently have any agreement,<PAGE>
<PAGE> 12
understanding, arrangement or plans that would result in the issuance of any
of the additional shares of Common Stock to be authorized. The Company's
Certificate of Incorporation, as amended, presently permits the holders of a
majority of the outstanding shares of Common Stock to amend the Certificate of
Incorporation to increase the number of authorized shares of Common Stock.
The authorization of additional shares of Common Stock would also allow
the Company to issue Common Stock or rights to purchase Common Stock on an
expedited basis, thus diluting the stock ownership of any person or persons
seeking to obtain control of the Company. Therefore, although the Company
is not currently aware of any specific effort or intention to accumulate the
Company's Common Stock or to obtain control of the Company, the authorization
of additional shares of Common Stock may make a takeover of the Company more
difficult.
Vote Required For Approval
The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock is required for approval of the Common Stock Amendment.
Abstentions and Broker Non-Votes will have the effect of votes against the
Common Stock Amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE COMMON STOCK AMENDMENT.
PROPOSAL THREE
AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO AUTHORIZE
15,000,000 SHARES OF PREFERRED STOCK
Description of the Amendment
At the Annual Meeting the Stockholders of the Company are being asked to
consider and act upon a proposal to approve an amendment (the "Preferred
Stock Amendment") to Article 4 of the Company's Certificate of Incorporation
which would create and authorize 15,000,000 shares of Preferred Stock, $.01
par value ("Preferred Stock") of the Company.
If the Preferred Stock Amendment is adopted by the Stockholders, the
Board intends to prepare and file a Certificate of Amendment to the
Certificate of Incorporation of the Company. The Preferred Stock Amendment
will be effective immediately upon acceptance of filing by the Secretary of
State of Delaware. Although the Board presently intends to file the
Certificate of Amendment if the Preferred Stock Amendment is approved by the
Stockholders, the resolution of Stockholders will reserve to the Board the
right to defer or abandon the Preferred Stock Amendment and not file such
Certificate of Amendment even if the Preferred Stock Amendment is approved by
the Stockholders.
Reasons for the Preferred Stock Amendment
The Company's Certificate of Incorporation, as amended, does not
currently authorize the issuance by the Company of any shares of Preferred
Stock. In reviewing the Company's capital structure and possible alternatives
for the future, management, after consultation with the Company's financial
and outside legal advisors, determined that the Company should authorize
Preferred Stock for future issuance in order to provide the Company with
additional capital-raising flexibility and to meet general corporate needs,
and management determined to present to the Board of Directors a proposal to
create and authorize Preferred Stock.
By unanimous resolution dated February 10, 1998, the Board of Directors
authorized adoption of the Preferred Stock Amendment and authorized management
to file with the SEC preliminary proxy materials describing the Preferred
Stock Amendment. <PAGE>
<PAGE> 13
Upon implementation of the Preferred Stock Amendment, 15,000,000 shares
of Preferred Stock would be available for issuance from time to time for any
proper corporate purpose, including stock splits, stock dividends,
acquisitions, stock option plans, funding of employee benefit plans and public
and private equity offerings. No further action or authorization by the
Stockholders would be necessary prior to issuance of the Preferred Stock
authorized pursuant to the Preferred Stock Amendment unless applicable
laws or regulations would require such approval in a given instance. The
Board of Directors would be authorized to issue Preferred Stock from time to
time in one or more series or classes, and to fix by resolution the
designations, relative rights, preferences and limitations of each such series
or class. Each series or class of Preferred Stock could, as determined by the
Board at the time of issuance, rank, with respect to dividends, sinking fund
provisions and conversion, voting, redemption and liquidation rights, senior
to the Common Stock.
The Board of Directors of the Company believes that it is desirable to
have authorized shares of Preferred Stock available for possible future
financing and acquisition transactions and other general corporate purposes.
Having authorized shares of Preferred Stock available for issuance in the
future will give the Company greater flexibility and may allow such shares to
be issued without the expense and delay of a Special Stockholders' Meeting.
The Company does not presently have any agreement, understanding, arrangement
or plans that would result in the issuance of any shares of Preferred Stock to
be authorized. The Company's Certificate of Incorporation, as amended,
presently permits the holders of a majority of the outstanding shares of
Common Stock to amend the Certificate of Incorporation to create authorized
shares of Preferred Stock.
It is not possible to state the precise effects of the authorization of
shares of Preferred Stock upon the rights of the holders of the Company's
Common Stock until the Board determines the respective preferences,
limitations and relative rights of the holders of each class or series of the
Preferred Stock. However, such effects might include: (a) reduction of the
amount otherwise available for payment of dividends on the Common Stock; (b)
restrictions on dividends on the Common Stock; (c) dilution of the voting
power of the Common Stock to the extent that the Preferred Stock had voting
rights; (d) conversion of the Preferred Stock into Common Stock at such prices
as the Board determines, which could include issuance at below the fair market
value or original issue price of the Common Stock; and (e) the holders of the
Common Stock not being entitled to share in the Company's assets upon
liquidation until satisfaction of any liquidation preference granted to
holders of the Preferred Stock.
Although the Board would authorize the issuance of Preferred Stock based
on its judgment as to the best interests of the Company and its Stockholders,
the issuance of authorized Preferred Stock could have the effect of diluting
the voting power per share and could have the effect of diluting the book
value per share of the outstanding Common Stock. In addition, the issuance of
shares of Preferred Stock could, in certain instances, render more difficult
or discourage a merger, tender offer or proxy contest and thus potentially
have an "anti-takeover" effect, especially if Preferred Stock were issued in
response to a potential takeover by diluting the stock ownership of persons
seeking to obtain control of the Company. In addition, additional issuances
of authorized Preferred Stock can be implemented, and have been implemented
by some companies in recent years, with voting or conversion privileges
intended to make acquisition of the Company more difficult or more costly.
Such an issuance could deter the types of transactions that may be proposed or
could discourage or limit the Stockholders' participation in certain types of
transactions that might be proposed (such as a tender offer), whether or not
such transactions were favored by the majority of the Stockholders, and could
enhance the ability of officers and Directors to retain their positions. <PAGE>
<PAGE> 14
Although the Company is not currently aware of any specific effort or
intention to accumulate the Company's Common Stock or to obtain control of the
Company, the authorization of Preferred Stock may make a takeover of the
Company more difficult.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has selected BDO Seidman, LLP as the independent
certified public accountants to the Company for the fiscal year ending October
31, 1998. The Company has been informed that neither BDO Seidman, LLP, nor
any of its partners, has any direct financial interest or any material
indirect financial interest in the Company or its subsidiary, nor has any of
its partners acted in the capacity of promoter, underwriter, voting trustee,
director, officer or employee of the Company.
The Company has been advised by BDO Seidman, LLP that representatives of
that firm are expected to be present at the Annual Meeting of Stockholders.
These representatives will have the opportunity to make a statement, if they
so desire, and will also be available to respond to appropriate questions from
Stockholders.
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 1999 ANNUAL MEETING
The date by which proposals of Stockholders intended to be presented at
the Company's 1999 Annual Meeting (and in the Proxy Statement and Proxy
relating to that meeting) must be presented to the Company is November 8,
1998.
By Order of the Board of Directors
Andrea Beadle, Secretary
<PAGE>
<PAGE>
VERSUS TECHNOLOGY, INC.
2600 Miller Creek Road
Traverse City, Michigan 49684
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
Stockholders of Versus Technology, Inc. (the "Company") to be held at
the corporate headquarters of the Company, 2600 Miller Creek Road,
Traverse City, Michigan 49684, on Friday, April 24, 1998, at 10:00 a.m.,
Eastern Daylight Time, 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)
(see other side)
I authorize and instruct my Proxy to:
1. [ ] VOTE FOR all nominees for the Company's Board of Directors
listed below; except that I WITHHOLD AUTHORITY for the
following nominees (if any) ________________________________
_____________________________________________________________
Gary T. Gaisser Julian C. Schroeder Samuel Davis
[ ] VOTE WITHHELD from all nominees [ ] NON VOTE
2. VOTE with respect to the approval of an amendment to the Company's
Certificate of Incorporation to increase the number of authorized shares
of Common Stock from 50,000,000 to 75,000,000 as follows:
[ ] FOR [ ] AGAINST [ ] ABSTAIN [ ] NON VOTE
3. VOTE with respect to the approval of an amendment to the Company's
Certificate of Incorporation to create and authorize 15,000,000 shares
of Preferred Stock:
[ ] FOR [ ] AGAINST [ ] ABSTAIN [ ] NON VOTE
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 sign exactly as name appears below. 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.
______________________________________
Signature
______________________________________
Signature if held jointly
Dated_____________________, 1998
PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
