SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended July 31, 2000
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-17500
VERSUS TECHNOLOGY, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 22-2283745
(State of Incorporation) (I. R. S. Employer Identification Number)
2600 Miller Creek Road, Traverse City, Michigan 49684
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (231) 946-5868
Check whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past
twelve months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days: Yes ( X ) No ( )
As of August 31, 2000 the issuer had outstanding 39,092,883 shares
of common stock, par value $.01 per share.
Transitional small business disclosure format: Yes ( ) No ( X )
VERSUS TECHNOLOGY, INC.
Index to Form 10-QSB
PAGE
PART I FINANCIAL INFORMATION
Item 1 Financial Statements:
Consolidated Balance Sheets as of July 31, 2000
(Unaudited) and October 31, 1999
Consolidated Statements of Operations for the three
and nine months ended July 31, 2000 and 1999
(Unaudited)
Consolidated Statements of Cash Flows for the nine
months ended July 31, 2000 and 1999 (Unaudited)
Notes to Consolidated Financial Statements
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II OTHER INFORMATION
Item 2 Changes in Securities and Use of Proceeds
Item 6 Exhibits and Reports on Form 8-K
Signatures
VERSUS TECHNOLOGY, INC.
Consolidated Balance Sheets
(Unaudited)
July 31, October 31,
2000 1999
------------ ------------
ASSETS
Current Assets
Cash and cash equivalents $ 891,000 $ 2,395,000
Accounts receivable, net of
allowance for doubtful
accounts of $54,000 and
$28,000 786,000 564,000
Costs and estimated earnings in
excess of billings on
uncompleted contracts (Note 8) 233,000 -
Inventories - purchased parts and
assemblies 278,000 402,000
Prepaid expenses and other
current assets 118,000 98,000
------------ ------------
Total Current Assets 2,306,000 3,459,000
------------ ------------
Property and Equipment, net of
accumulated depreciation of
$331,000 and $259,000 632,000 450,000
Software Development Costs, net
of accumulated amortization of
$294,000 and $238,000 306,000 362,000
Goodwill, net of accumulated
amortization of $611,000 and
$494,000 1,728,000 1,845,000
Patents and Other Intangible
Assets, net of accumulated
amortization of $934,000 and
$769,000 1,056,000 1,221,000
Deferred Financing Costs, net of
accumulated amortization of
$25,000 and $11,000 83,000 97,000
------------ ------------
$ 6,111,000 $ 7,434,000
============ ============
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities
Accounts payable $ 528,000 $ 500,000
Accrued expenses 221,000 204,000
Deferred revenue - customer
advance payments 21,000 49,000
------------ ------------
Total Current Liabilities 770,000 753,000
Long-Term Debt 3,000,000 3,000,000
------------ ------------
Total Liabilities 3,770,000 3,753,000
------------ ------------
Shareholders' Equity
Common stock, $.01 par value;
75,000,000 shares authorized;
39,087,883 and 38,510,671
shares issued and outstanding
(Note 10) 391,000 385,000
Additional paid-in capital 33,365,000 33,367,000
Accumulated deficit (31,370,000) (29,990,000)
Unearned compensation ( 45,000) ( 81,000)
------------ ------------
Total Shareholders' Equity 2,341,000 3,681,000
------------ ------------
$ 6,111,000 $ 7,434,000
============ ============
See accompanying notes to consolidated financial statements.
VERSUS TECHNOLOGY, INC.
Consolidated Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended July 31, Nine Months Ended July 31,
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 1,004,000 $ 859,000 $ 2,749,000 $ 2,665,000
Operating expenses
Cost of revenues 694,000 404,000 1,686,000 1,126,000
Research and
development 160,000 141,000 502,000 473,000
Sales and marketing 370,000 323,000 1,124,000 1,031,000
General and
administrative 277,000 271,000 843,000 905,000
------------ ------------ ------------ ------------
1,501,000 1,139,000 4,155,000 3,535,000
------------ ------------ ------------ ------------
Loss From Operations ( 497,000) ( 280,000) (1,406,000) ( 870,000)
------------ ------------ ------------ ------------
Other Income (Expenses):
Interest income 14,000 15,000 61,000 24,000
Interest expense ( 68,000) ( 21,000) ( 198,000) ( 21,000)
Other (net) - - ( 6,000) -
------------ ------------ ------------ ------------
( 54,000) ( 6,000) ( 143,000) 3,000
------------ ------------ ------------ ------------
Loss before cumulative
effect of change in
accounting principle ( 551,000) ( 286,000) (1,549,000) ( 867,000)
Cumulative effect on
prior years (to
October 31, 1999) of
changing to different
method of accounting
for options issued
to non-employee
directors (Note 5) - - 169,000 -
------------ ------------ ------------ ------------
Net Loss $( 551,000) $( 286,000) $(1,380,000) $( 867,000)
============ ============ ============ ============
Basic and diluted per
share amounts:
Loss before cumulative
effect of change in
accounting principle $( .01 ) $( .01 ) $( .04 ) $( .02 )
Cumulative effect on
prior years (to
October 31, 1999)
of changing to
different method of
accounting for
options issued to
non-employee
directors (Note 5) - - - -
------------ ------------ ------------ ------------
Basic and Diluted Net
Loss Per Share $( .01 ) $( .01 ) $( .04 ) $( .02 )
============ ============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
VERSUS TECHNOLOGY, INC.
Consolidated Statements of Cash Flow
(Unaudited)
Nine Months Ended July 31
2000 1999
------------ ------------
Operating activities:
Net Loss $(1,380,000) $( 867,000)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Cumulative effect of change in
accounting principle ( 169,000) -
Depreciation 72,000 63,000
Amortization of intangibles 352,000 333,000
Amortization of unearned
compensation 28,000 107,000
Directors' compensation - 78,000
Changes in operating assets
and liabilities:
Accounts receivable ( 222,000) ( 96,000)
Cost and estimated earnings
in excess of billings on
uncompleted contracts ( 233,000) -
Inventories 124,000 ( 94,000)
Prepaid expenses and other
current assets 5,000 2,000
Accounts payable 28,000 ( 96,000)
Accrued expenses 17,000 ( 12,000)
Deferred revenues -
customer advance payments ( 28,000) ( 5,000)
------------ ------------
Net cash used in operating
activities (1,406,000) ( 587,000)
------------ ------------
Investing activities:
Additions to property and
Equipment ( 254,000) ( 53,000)
------------ ------------
Net cash used in investing
Activities ( 254,000) ( 53,000)
------------ ------------
Financing activities:
Issuance of long-term debt - 2,000,000
Debt financing costs - ( 110,000)
Payments on notes payable - ( 80,000)
Sale of common stock 156,000 1,000
------------ ------------
Net cash provided by financing
activities 156,000 1,811,000
------------ ------------
Net increase (decrease) in cash
and cash equivalents (1,504,000) 1,171,000
Cash and cash equivalents,
beginning of period 2,395,000 698,000
------------ ------------
Cash and cash equivalents, end of
period $ 891,000 $ 1,869,000
============ ============
Supplemental cash flow
information
Cash paid during the period for
interest $ 192,000 $ -
============ ============
See accompanying notes to consolidated financial statements.
During the first nine months of fiscal 2000:
Versus issued 15,500 shares of additional non-vested Employee
Incentive Restricted Stock and repurchased 35,700 shares of
similar stock from terminated employees, all at par value,
pursuant to the 1996 Incentive Restricted Stock Bonus Plan.
During the same period in fiscal 1999, 162,450 shares were issued
and 30,053 shares were repurchased. Unearned compensation of
$6,400 and $58,000 was recorded for the stock issued and unearned
compensation of $14,200 and $25,000 related to the repurchased
shares was cancelled during the nine months ended July 31, 2000
and 1999 respectively.
On November 4, 1999, Versus issued 50,000 shares of common stock
to an independent sales agent as prepaid commission. The shares
were valued at $0.50 per share for accounting purposes and
$25,000 was recorded as prepaid commission which is being charged
to expense as commissions are earned by this agent.
The following table outlines additional stock transactions during
the first nine months of fiscal 2000:
Exercise
Date Shares Pursuant to Price Purchaser
--------------- ------- ------------- ------- --------------
April 4, 2000 35,000 Stock Option $0.410 Former Employee
April 27, 2000 100,830 Warrant $0.200 Investor
May 10, 2000 25,000 Warrant $0.500 Director
May 10, 2000 120,893 Warrant $0.200 Director
May 10, 2000 46,689 Warrant $0.500 Director
May 10, 2000 73,000 Stock Option $0.515 Director
May 10, 2000 73,000 Stock Option $0.165 Director
May 12, 2000 73,000 Stock Option $0.165 Director
--------
547,412
========
Additional paid-in capital was reduced by $186,000 due to the
effects of the accounting change discussed in Note 5.
VERSUS TECHNOLOGY, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
July 31, 2000 (Unaudited)
Note 1 Basis of Presentation
The accompanying unaudited consolidated financial statements,
which are for interim periods, do not include all disclosures
provided in the annual consolidated financial statements. They
should be read in conjunction with the consolidated financial
statements and the footnotes thereto of Versus Technology, Inc.
and subsidiary (Versus) contained in the Annual Report on Form 10-
KSB for the fiscal year ended October 31, 1999, as filed with the
Securities and Exchange Commission. The October 31, 1999 balance
sheet contained herein was derived from audited consolidated
financial statements, but does not include all disclosures
required by generally accepted accounting principles as found in
Versus' Annual Report on Form 10-KSB referenced above.
In the opinion of management, the accompanying unaudited
consolidated financial statements include all adjustments,
consisting only of normal recurring adjustments, necessary to
present fairly the financial position as of July 31, 2000, the
results of operations for the three and nine months ended July 31,
2000 and 1999 and cash flows for the nine months ended July 31,
2000 and 1999. The results of operations for the three and nine
months ended July 31, 2000 are not necessarily indicative of the
results to be expected for the full year.
Note 2 Principles of Consolidation
The consolidated financial statements include the accounts of
Versus and Olmsted Engineering Co., its wholly owned subsidiary.
Upon consolidation, all significant intercompany accounts and
transactions are eliminated.
Note 3 Basic and Diluted Earnings (Loss) Per Share
Basic earnings (loss) per share is based on the weighted average
number of shares of common stock outstanding. The Company has not
included the effects of options, warrants and the outstanding
shares under its Employee Incentive Restricted Stock Bonus Plan in
its calculation of diluted earnings (loss) per share due to their
anti-dilutive effect. The resulting weighted average shares
outstanding were 39,054,933 and 38,777,263 for the three months
ended July 31, 2000 and 1999, respectively, and 38,722,545 and
38,436,365 for the nine months ended July 31, 2000 and 1999,
respectively.
Note 4 Reclassifications
Certain reclassifications have been made to 1999 balances to
conform with classifications used in 2000.
Note 5 Change in Accounting For Stock Options Issued to Non-
employee Directors
As described in Note 5 to the consolidated financial statements
included in Versus' 1999 Annual Report on Form 10-KSB, Versus has
historically recorded the fair value of stock options issued to
its non-employee directors as compensation expense. This method
of accounting complied with the then existing accounting
pronouncements and guidance provided by the SEC's staff. In March
2000, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 44, "Accounting for Certain Transactions
Involving Stock Compensation, an interpretation of APB Opinion No.
25" (FIN 44). Under FIN 44, stock options issued to Versus' non-
employee directors will receive the same accounting treatment
permitted for employee stock options under APB Opinion No. 25,
"Accounting for Stock Issued to Employees," whereby no
compensation expense is recorded. Versus adopted FIN 44 in July
2000, as required. The $169,000 cumulative effect of the change
in prior years is included in income (reduction of loss) for the
nine months ended July 31, 2000. The adoption had no impact on
the loss for the three months ended July 31, 2000. The effect of
the change for the nine months ended July 31, 2000 was to decrease
the loss before cumulative effect of change in accounting
principle by $17,000 (no effect on basic and diluted per share
amounts) and the net loss by $186,000 (no effect on basic and
diluted per share amounts). The adoption of FIN 44 resulted in
the following adjustments to information that had been previously
reported in fiscal year 2000:
Three Months Ended
January 31, 2000 April 30, 2000
------------ ------------
Net loss as previously reported $( 520,000) $( 495,000)
Effect of change in accounting for
options issued to non-employee
directors 8,000 9,000
Loss before cumulative effect of
change in accounting principle ( 512,000) ( 486,000)
Cumulative effect on prior years
(to October 31, 1999) of changing
to a different method of accounting
for options issued to non-employee
directors 169,000 -
------------ ------------
Net loss as restated $( 343,000) $( 486,000)
============ ============
Basic and diluted per share amounts:
Net loss as previously reported $( .01 ) $( .01 )
Effect of change in accounting for
options issued to non-employee
directors - -
------------ ------------
Loss before cumulative effect of
change in accounting principle ( .01 ) ( .01 )
Cumulative effect on prior years
(to October 31, 1999) of changing
to a different method of accounting
for options issued to non-employee
directors - -
------------ ------------
Net loss as restated $( .01 ) $( .01 )
============ ============
The adoption of FIN 44 also resulted in a $186,000 decrease to
additional paid in capital.
Had Versus previously been permitted to account for stock options
issued to its non-employee directors in accordance with FIN 44,
the pro forma operating results would have been as follows:
Loss from Net Basic & Diluted
Operations Loss Loss Per Share
------------ ------------ ------------
Quarter ended
July 31, 1999 $( 271,000) $( 277,000) $( .01 )
Nine months ended
July 31, 1999 $( 792,000) $( 789,000) $( .02 )
Note 6 Restricted Stock Bonus Plan
During the nine months ended July 31, 2000 the Company issued an
additional 15,500 and re-purchased 35,700 shares of the Company's
common stock issued pursuant to the 1996 Employee Incentive
Restricted Stock Bonus Plan. Net earned compensation for the
three and nine months ended July 31, 2000 amounted to $10,800 and
$28,400 respectively.
Note 7 Related Party Transactions
Versus' and Olmsted's principal operating facilities are leased
from an entity beneficially owned by Versus' President and CEO.
Rent expense for the nine months ended July 31, 2000 and 1999
amounted to $94,000 and $90,000, respectively.
Note 8 Costs and Estimated Earnings on Uncompleted Contracts
As disclosed in the notes to consolidated financial statement
included in Versus' Annual Report on Form 10-KSB, revenue from IR
(infrared technology) sales has historically been recognized when
the related goods are shipped and all significant obligations of
Versus have been satisfied (i.e., completed contract basis). This
method of accounting has been followed because the typical direct
sale arrangement is completed in a short period of time and
financial position and results of operations do not vary
significantly from those which would result from use of the
percentage-of-completion method. Versus departs from the
completed-contract method and recognizes revenues and costs on the
percentage-of-completion method for contracts not having the
features described above. For such contracts, management believes
the percentage-of-completion method recognizes the legal and
economic results of contract performance on a more timely basis.
Under this method, the percent of contract completion is
determined by comparison of costs incurred to date to estimated
total cost for each contract. This method is used because
management considers costs incurred to be the best available
measure of progress on these contracts.
As of July 31, 2000, Versus was in the process of completing
various sales and installation contracts. These contracts are
accounted for on the percentage-of-completion method. The
following represents costs incurred, estimated earnings and
billings to date for the uncompleted contracts at July 31, 2000.
There were no uncompleted contracts at October 31, 1999 or July
31, 1999.
July 31,
2000
------------
Costs incurred on uncompleted contracts $ 573,000
Estimated earnings 351,000
------------
924,000
Less billings to date 691,000
------------
Total $ 233,000
============
The $233,000 net amount is included in the accompanying July 31,
2000 balance sheet under the caption: "Costs and estimated
earnings in excess of billings on uncompleted contracts."
Note 9 Business Segment Information
As disclosed in Versus' Annual Report on Form 10-KSB for the year
ended October 31, 1999, Versus adopted Statement of Financial
Accounting Standards (SFAS) No. 131, "Disclosures about Segments
of an Enterprise and Related Information" during 1999. The
accounting policies of the reportable segments are the same as
those followed for consolidated reporting purposes, except that
only direct costs are included in the computation of segment gross
margin for purposes of evaluating segment performance (i.e.,
indirect costs, such as manufacturing overhead and depreciation
and amortization, are excluded from this segment gross margin
computation).
Interim segment information is as follows:
<TABLE>
<CAPTION>
Three Months Ended July 31, Nine Months Ended July 31,
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues
Data collection
and processing $ 844,000 $ 717,000 $ 2,336,000 $ 2,220,000
Systems design and
engineering 160,000 142,000 413,000 445,000
------------ ------------ ------------ ------------
Consolidated total
revenues $ 1,004,000 $ 859,000 $ 2,749,000 $ 2,665,000
------------ ------------ ------------ ------------
Cost of Revenues
Data collection
and processing $( 450,000) $( 230,000) $(1,034,000) $( 583,000)
Systems design and
engineering ( 105,000) ( 85,000) ( 262,000) ( 244,000)
------------ ------------ ------------ ------------
Total segment cost
of revenues ( 555,000) ( 315,000) (1,296,000) ( 827,000)
Indirect costs
Depreciation and
amortization ( 77,000) ( 72,000) ( 229,000) ( 224,000)
Lease expense ( 8,000) ( 8,000) ( 24,000) ( 24,000)
Insurance expense ( 5,000) ( 5,000) ( 16,000) ( 16,000)
Warranty expense ( 7,000) ( 4,000) ( 16,000) ( 14,000)
Other ( 42,000) ( - ) ( 105,000) ( 21,000)
------------ ------------ ------------ ------------
Consolidated total
cost of revenues $( 694,000) $( 404,000) $(1,686,000) $(1,126,000)
============ ============ ============ ============
Segment Gross Margin
Data collection and
Processing $ 394,000 $ 487,000 $ 1,302,000 $ 1,637,000
Systems design and
engineering 55,000 57,000 151,000 201,000
------------ ------------ ------------ ------------
Total segment gross
margin $ 449,000 $ 544,000 $ 1,453,000 $ 1,838,000
============ ============ ============ ============
</TABLE>
Note 10 Subsequent Events
Effective September 1, 2000, Versus entered into a Non-Exclusive
Patent License Agreement, Stock Purchase Agreement, Warrant
Agreement and Registration Rights Agreement with Hillenbrand
Industries, Inc. Versus received $2,325,000 ($1,000,000 for the
License and $1,325,000 for the stock and warrant) as consideration
for this transaction.
Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Company Profile
Versus Technology, Inc. and its wholly owned subsidiary, Olmsted
Engineering Co. operate in two business segments:
* data collection and processing (referred to as the IR
segment)
* systems design and engineering (referred to as the CAD/CAM
segment).
Versus' operations are located in Traverse City, Michigan.
Versus develops innovative products used for process improvement
in the healthcare, security, government and corporate markets.
Versus' core technology makes locating systems more precise,
security systems more intelligent, data collection routines
automatic and asset management systems more efficient. Versus'
products can be integrated into existing control systems such as
nurse call systems and portal detection systems or utilized in
stand alone locating systems such as Versus' own Versus
Information System (VIS(tm)).
Systems currently using Versus' proprietary technology are
installed in hospitals, corporate facilities, government
facilities and other complexes. By monitoring the precise
location of personnel or equipment and automatically recording
events associated with their locations, Versus' technology makes
possible the automatic and accurate collection of essential
management information. Versus' technology provides real-time
asset and staff locating, automatic data collection, access/egress
control and two-way communication capabilities.
Versus' systems and components are distributed primarily through
an expanding international network of resellers who market the
Versus products as enhancements to their existing line of goods.
Versus also integrates its technology with the OEM products of its
resellers. In addition to the reseller network, Versus is also
represented in Canada by an independent sales agent.
The following discussion and analysis focuses on the significant
factors which affected Versus' consolidated financial statements
during the three- and nine-month periods ended July 31, 2000, with
comparisons to 1999 where appropriate. It also discusses Versus'
liquidity and capital resources. The discussion should be read in
conjunction with the consolidated financial statements and related
notes included elsewhere in this Form 10-QSB.
Results of Operations
In fiscal 1999, Versus recorded four consecutive quarters of
revenue decreases. That trend was reversed in the first quarter
of 2000 and continued into the second quarter as revenues
increased 36% over quarter one. Third quarter revenues were
relatively the same as the second quarter but 17% above 1999
levels for the same period.
In May 1998, Versus and Marquette Medical Systems entered into an
Amended Marketing Agreement under which Marquette purchased
$1,750,000 of Versus' IR products over the ensuing year. Revenues
under this contract were high margin sales items that resulted in
low cost of revenues as a percent of revenues. The impact of
these high margin items continued into the first half of fiscal
1999. As a result, comparisons of fiscal 2000 cost of revenues as
a percent of revenues to fiscal 1999 amounts are distorted. The
following table sets forth the cost of revenues as a percent of
revenues for the three and nine month periods ended July 31, 2000
and 1999, respectively, after factoring out the impact of the
Marquette contract.
Three months ended Nine months ended
July 31, July 31,
2000 1999 2000 1999
------------------ ------------------
Cost of revenues as a
percent of revenues 69% 47% 61% 57%
Two factors affected the cost of revenues as a percentage of
revenues in fiscal 2000:
* To facilitate the introduction of our product into a highly
visible reference site, in anticipation of such installation
serving as a marketing tool to increase future revenues, lower
margins than were historically incurred were incorporated on
the installation portion of the project for the Department of
Defense.
* Canadian source revenues involve higher costs due to third
Party components in the projects.
Versus expects the cost of revenues as a percentage of revenues
will decrease in the future with the incorporation of its
Application Specific Integrated Circuit (ASIC) chip benefits
in system components.
During the third quarter of 2000, Versus completed a Department of
Defense installation which Versus believes is the largest infrared
tracking installation in the world to date. Research and
development efforts were targeted primarily at the Eagle Eye(tm)
product line and new generation tags.
Three Months Ended July 31, 2000 and 1999
Revenues for the third quarter of 2000 were $1,004,000 marking the
third time in Versus' history (since focusing on infrared
technology) that quarterly revenues broke through the seven digit
level. Versus had previously recorded revenues of $1,074,000 in
the quarter ended October 31, 1998 and $1,006,000 in the quarter
ended April 30, 2000.
Third quarter revenues were $1,004,000 or 17% above the fiscal
1999 level of $859,000. Infrared sales of $844,000 were 18% above
the same period fiscal 1999 level of $717,000. Reseller revenues
accounted for 44% and 72% of the total IR revenues for the three
months ended July 31, 2000 and 1999 respectively. Fiscal 2000
results include the completed portion of the major direct sale to
the Department of Defense referenced earlier and $383,000 in
Canadian source revenues. Canadian source revenues were $10,000
for the same period in fiscal 1999. The growth in Canadian
revenues reflects the successful introduction of the Company's
Cordless Nurse Call product in Canada. CAD/CAM revenues were
$160,000 or 13% above the $142,000 revenues generated for the same
three-month period in fiscal 1999.
Cost of revenues as a percentage of revenues in the third quarter
of fiscal 2000 increased to 69% from 47% for the same quarter in
fiscal 1999. The increased cost of revenues as a percentage of
revenues is due to higher installation costs (particularly on the
Department of Defense project which was subcontracted to a third
party) and the higher cost of the Canadian source revenues. The
Canadian source revenues represent entire nurse call and tracking
systems and therefore include a larger proportion of higher cost
third party components.
Research and development expenses at $160,000 were $19,000 higher
than the three months ended July 31, 1999. Expenditures in 2000
were related to the development of new generation tags,
Eagle Eye(tm) and the Cordless Nurse Call product.
Sales and marketing expenses for the third quarter of fiscal 2000
increased to $370,000 or 15% higher than the $323,000 for the
three months ended July 31, 1999. Higher costs resulted from the
Company's attendance at a Canadian trade show and increased
advertising efforts.
General and administrative expenses of $277,000 were 2% above the
$271,000 level for the three months ended July 31, 1999.
In the third quarter of fiscal 2000, other income, net decreased
by $48,000 from 1999 levels due to debenture interest expense.
Nine Months Ended July 31, 2000 and 1999
Revenues for the nine months ended July 31, 2000 were $2,749,000
or 3% above the fiscal 1999 level of $2,665,000. Infrared
revenues of $2,336,000 were 5% above the same period fiscal 1999
level of $2,220,000. Reseller revenues accounted for 37% and 87%
of total IR revenues for the nine months ended July 31, 2000 and
1999 respectively. Canadian source revenues for the nine months
ended July 31, 2000 were $462,000, a significant increase over the
$28,000 recorded in the same period for fiscal 1999. Revenues in
1999 included $826,000 on the Marquette contract which expired in
May of 1999. If the revenue attributable to that one-time
contract is factored out, the actual revenue increase in IR
products is 68%. CAD/CAM revenues were $413,000, compared to the
$445,000 revenues generated for the same nine-month period in
fiscal 1999. The largest decrease for CAD/CAM revenues occurred
in third party products.
Cost of revenues as a percentage of revenues in the first nine
months of fiscal 2000 increased to 61% from 42% for the same
period in fiscal 1999. The increased cost of revenues as a
percentage of revenues is due to higher installation costs
on the Department of Defense project, which was
subcontracted to a third party, higher cost of revenues as a
percentage of revenues for Canadian sales and the inclusion of
Marquette high margin sales in the 1999 results. After factoring
out the Marquette revenues and cost of revenues from 1999 results,
the cost of revenues as a percent of revenues would have been 57%.
As indicated above, Versus has completed development of its ASIC
chip and expects to incorporate the chip in system components
beginning in the fourth quarter of fiscal 2000. The ASIC chip is
expected to reduce the cost of system components while providing
greater configuration capabilities in next generation badges. The
resulting benefits will increase margins and facilitate future
sales in existing markets and entries into other markets as
reduced prices will allow lower system costs producing higher
customer returns on investment.
Research and development expenses of $502,000 were $29,000 higher
than the first nine months of fiscal 1999. Expenditures in 2000
were related to the development of new generation tags, the infant
tag, the perimeter alarm sentinel, Eagle Eye(tm) and the Cordless
Nurse Call product.
Sales and marketing expenses for the nine months ended July 31,
2000 increased to $1,124,000 or 9% higher than the same period in
fiscal 1999. The increased expenses were due to higher
advertising expenditures and payments to the independent sales
agent.
General and administrative expenses of $843,000 were 7% lower than
the $905,000 level for the same period in fiscal 1999. The reduced
cost is attributed to lower expense for directors' compensation
due to the impact of adopting FIN 44, as disclosed in Note 5 to
the consolidated Financial Statements.
In the first nine months of fiscal 2000, other income, net
decreased $146,000, from 1999 levels due to debenture interest
expense.
Liquidity and Capital Resources
As of July 31, 2000 cash on hand was $891,000, an increase of
$25,000 over the April 30 level. Increased receivables (accounts
receivable and costs and estimated earnings in excess of
billings), which account for $359,000 of the increase in cash
consumed as compared to the prior year, reflect sales to
government agencies which typically follow a longer payment cycle.
Receivables also increased as a result of special terms allowed
on new product reference sites and major Canadian projects in
process.
During the nine months ended July 31, 2000, Versus relied on cash
proceeds generated from a private placement of Prime Rate Secured
Convertible Debentures completed in 1999. The total decrease in
cash was $1,504,000 compared to $829,000 in the same period in
1999 after adjusting for the 1999 debenture issue proceeds.
Higher cost of revenues and cash paid for interest were
contributing factors in the cash decrease. Versus invested
$254,000 in capital assets during the first nine months of 2000
compared to $54,000 in the prior year. Capital assets acquired
consisted of $180,000 for the development of the ASIC chip,
$30,000 in machinery and equipment, $29,000 in computer equipment,
$11,000 in furniture and fixtures and $4,000 in leasehold
improvements.
Effective September 1, 2000, Versus entered into a Non-Exclusive
Patent License Agreement, Stock Purchase Agreement, Warrant
Agreement and Registration Rights Agreement with Hillenbrand
Industries, Inc. Versus received $2,325,000 ($1,000,000 for the
License and $1,325,000 for 2,500,000 shares of common stock and a
warrant) as consideration for this transaction. The proceeds
from this transaction will be used for working capital.
Versus believes cash balances will be sufficient to meet projected
cash needs for operations and new product developments over the
next twelve months.
Accounting Pronouncement Adopted
In March 2000, the FASB issued FIN 44. Under FIN 44, stock
options issued to Versus' non-employee directors will receive the
same accounting treatment permitted for employee options. Versus
adopted FIN 44 during the quarter ended July 31, 2000, as
required. See Note 5 to the accompany consolidated financial
statements for a summary of the effects of the adoption of FIN 44.
Safe Harbor Provision
This document may contain forward-looking statements relating to
future events, such as the development of new products, the
commencement of production or the future financial performance of
the Company. These statements fall within the meaning of forward
looking information as defined in the Private Securities
Litigation Reform Act of 1995. These statements are subject to a
number of important risks and uncertainties that could cause
actual results to differ materially including, but not limited to,
economic, competitive, governmental and technological factors
affecting the Company's markets and market growth rates, products
and their rate of commercialization, services, prices and adequacy
of financing and other factors described in the Company's most
recent annual report on Form 10-KSB filed with the Securities and
Exchange Commission, which can be reviewed at http://www.sec.gov.
The Company undertakes no obligation to update, amend or clarify
forward-looking statements, whether as a result of new
information, future events or otherwise.
PART II OTHER INFORMATION
Item 2 Changes in Securities and Use of Proceeds
(c) During the three months ended July 31, 2000 Versus issued
shares of its common stock to two directors pursuant to
existing warrants and stock option agreements. The
following table summarizes these transactions.
Exercise
Date Shares Pursuant to Price Purchaser
-------------- --------- ----------- ---------- ----------
May 10, 2000 25,000 Warrant $0.500 Director
May 10, 2000 120,893 Warrant $0.200 Director
May 10, 2000 46,689 Warrant $0.500 Director
May 10, 2000 73,000 Stock Option $0.515 Director
May 10, 2000 73,000 Stock Option $0.165 Director
May 12, 2000 73,000 Stock Option $0.165 Director
---------
411,582
=========
Effective September 1, 2000, Versus entered into a License
Agreement, Stock Purchase Agreement, Warrant Agreement and
Registration Rights Agreement with Hillenbrand Industries, Inc.
(a) The Non-Exclusive Patent License Agreement included a one-
time payment of $1,000,000 to Versus concurrently with the
delivery of the agreement. The non-exclusive agreement
extends until the expiration of the last-to-expire of the
Patent Rights included in the agreement.
(b) Under the Stock Purchase Agreement Hillenbrand purchased
2,500,000 shares of Versus' common stock at $0.53 per share.
(c) The Warrant Agreement provides that at any time or from time
to time on or after September 1, 2000 and on or before
August 31, 2003 Hillenbrand is entitled to purchase
2,500,000 shares of Versus' common stock at $0.88 per share
subject to adjustment if the common stock trades below $0.30
per share for 20 consecutive trading days between September
1, 2000 and March 1, 2001.
(d) The Registration Rights Agreement stipulates that at any
time after one year from the issue date but not later than
five years from the time any stock is issued on exercise,
Versus will affect a registration under the Securities Act,
provided it receives a written request from the Hillenbrand
or the Investors of the Registrable Securities outstanding
at the time. The investor will pay all registration
expenses.
These transactions were effectuated pursuant to the exemptions
afforded by Section 4(2) and Regulation D(506).
Item 6 Exhibits and Reports on Form 8-K
Exhibit 4 (b) Stock Purchase Agreement
Exhibit 4 (c) Warrant Agreement
Exhibit 4 (d) Registration Rights Agreement
Exhibit 10 (o) Non-Exclusive Patent License Agreement
Exhibit 27 Financial Data Schedule
Exhibit 99 (a) Press Release - Canadian Healthcare Facilities
Install Tracking System by Versus Technology
(b) Press Release - Versus Technology Earns ISO9001
Certification
(c) Press Release - Versus Technology Further
Penetrates Canadian Market
(d) Press Release - The United States Army's Newest
Medical Center to use Locating System from Versus
Technology
(e) Press Release - Versus Technology and Hillenbrand
Industries Sign License and Stock Purchase
Agreements
(f) Press Release - Versus Technology Makes Positive
Showing at ISC East
(g) Press Release - Versus Technology Reports Third
Quarter Results
There were no reports on Form 8-K during the nine months ended
July 31, 2000
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
VERSUS TECHNOLOGY, INC.
By: /s/ Robert Butler By: /s/ Gary T. Gaisser
----------------- -------------------
Robert Butler Gary T. Gaisser
Controller and Chief President and Chief
Accounting Officer Executive Officer
(Principal Accounting (Principal Executive
Officer) Officer)
Dated: September 14, 2000
Exhibit 4(b)
Stock Purchase Agreement
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as
of the 1st day of September, 2000, by and between VERSUS
TECHNOLOGY, INC., a Delaware corporation (the "Company"), whose
mailing address is 2600 Miller Creek Road, Traverse City, Michigan
49684, and Hillenbrand Industries, Inc., whose principal place of
business is located at 700 State Route 46 East, Batesville,
Indiana 47006-8835 ("Investor)."
THE COMPANY AND INVESTOR HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock and Warrant.
(a) Subject to the terms and conditions of this
Agreement, Investor agrees to purchase at the
Closing and the Company agrees to sell and issue to
Investor at the Closing 2,500,000 shares of the
Company's common voting stock (the "Stock") at a
price of $.53 per share. In addition, for no
additional consideration, Investor shall receive as
part of the purchase of the Stock, as a warrant
attached to such purchase, a Warrant to purchase an
additional 2,500,000 shares of Stock. The form of
the Warrant is attached hereto as Exhibit A. The
Warrant exercise price per share shall be $.88
(subject to adjustment), as stated in said Exhibit
A. (The Stock and/or the Warrant are sometimes
referred to as the "Securities").
(b) The purchase and sale of the Securities shall take
place at the offices of the Company on September 1,
2000, or at such other time and place as the Company
and Investor shall mutually agree (which time and
place are designated as the "Closing"). At the
Closing, Investor shall make payment of the
aggregate purchase price ($1,325,000.00) by check,
wire transfer, or such other form of payment as
shall be mutually agreed upon by Investor and the
Company. As promptly as feasible after Closing, the
Company shall prepare and deliver to Investor a
certificate representing the number of shares of
Stock which Investor has purchased and paid for
pursuant to this Agreement. The Warrant shall be
delivered at Closing. Certificates evidencing the
Securities and delivered to Investor shall be issued
and registered in the name of Investor, with all
requisite stock transfer tax stamps, if any,
affixed; shall be free of any lien or claim of any
third party, and shall vest in Investor good, valid
title to the Securities.
2. Representations and Warranties of the Company. The
Company hereby represents and warrants to Investor that:
2.1 Organization; Good Standing; Qualification. The
Company is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware, has all
requisite corporate power and authority to own and operate its
properties and assets and to carry on its business as now
conducted and as proposed to be conducted, to execute and deliver
this Agreement and issue and sell the Securities, and to carry out
the provisions of the other documents contemplated by this
Agreement. The Company is duly qualified to transact business and
is in good standing in each jurisdiction in which the failure so
to qualify would have a material adverse effect on its business,
properties, prospects or financial condition.
2.2 Authorization. All corporate action on the part of the
Company, its officers, directors, and stockholders necessary for
the authorization, execution and delivery of this Agreement, the
performance of all obligations of the Company hereunder at the
Closing and the authorization, issuance, sale, and delivery of the
Securities being sold hereunder has been taken or will be taken
prior to the Closing, and this Agreement and the Warrant
constitute valid and legally binding obligations of the Company,
enforceable in accordance with its terms except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of
creditors' rights generally (ii) as limited by laws relating to
the availability of specific performance, injunctive relief, or
other equitable remedies, (iii) with respect to foreign laws and
regulations, such representations are made only to the best of the
Company's knowledge and (iv) no representation is made regarding
the effect of laws relating to competition, antitrust or
intellectual property rights.
2.3 Valid Issuance of Securities. The Stock that is being
purchased by Investor hereunder, when issued, sold and delivered
in accordance with the terms of this Agreement and the Warrant for
the consideration expressed, will be duly and validly issued,
fully paid, and non-assessable, and will be free of restrictions
on transfer other than restrictions on transfer under this
Agreement, the Warrant and under applicable State and Federal
securities laws.
2.4 Governmental Consents. No consent, approval,
qualification, order or authorization of, or filing with, any
local, State, or Federal governmental authority is required on the
part of the Company in connection with the Company's valid
execution, delivery or performance of this Agreement or the offer,
sale or issuance of the Stock by the Company, except that any
notice of sale required to be filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended
(the "Securities Act"), or any post-Closing filings as may be
required under applicable State securities laws will be timely
filed within the applicable periods therefor.
2.5 SEC Filings and Available Public Information. The
Company has filed all documents and reports it is presently
required to file with the Securities and Exchange Commission.
Such documents and reports contain no misstatements of any
material fact, and do not omit any material fact which if not
stated would render such reports or documents materially
misleading.
3. Representations and Warranties of the Investor. The
Investor hereby represents and warrants that:
3.1 Authorization. It has full power and authority to
enter into this Agreement and this Agreement constitutes a valid
and legally binding obligation of the Investor.
3.2 Purchase Entirely for Own Account. This Agreement is
made with the Investor in reliance upon the Investor's
representation to the Company, which by the Investor's execution
of this Agreement the Investor hereby confirms, that the
Securities to be purchased by the Investor will be acquired for
investment, for the Investor's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any
part thereof, and the Investor has no present intention of
selling, granting any participation in, or otherwise distributing
the same. By executing this Agreement, the Investor further
represents that it does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or
grant participations to such person or to any third person, with
respect to any of the Securities.
3.3 Reliance Upon Investor's Representation. The Investor
understands that the Securities are not registered under the
Securities Act on the ground that the sale provided for in this
Agreement and the issuance of securities hereunder is exempt from
registration under the Securities Act pursuant to Section 4(2)
thereof, and the Company's reliance on such exemption is
predicated on the Investor's representations set forth herein.
3.4 Receipt of Information. Investor believes it has
received all the information it considers necessary or appropriate
for deciding whether to purchase the Securities. Investor further
represents that it has had an opportunity to ask questions and
receive answers from the Company regarding the terms and
conditions of the offering of the Securities and the business,
properties, prospects and financial conditions of the Company and
to obtain additional information (to the extent the Company is
possessed of such information or could acquire it without
unreasonable effort or expense) necessary to verify the accuracy
of any information furnished to Investor or to which Investor had
access.
3.5 Investment Experience. Investor represents that it is
experienced in evaluating and investing in securities of companies
comparable to the Company and acknowledges that it is able to fend
for itself, can bear the economic risk of its investment, and has
such knowledge and experience in financial or business matters
that it is capable of evaluating the merits and risks of the
investment in the Securities.
3.6 Restricted Securities. Investor understands that the
Stock and Warrant may not be sold, transferred, or otherwise
disposed of without registration under the Securites Act or an
exemption therefrom, and that in the absence of an effective
registration statement covering such stock or an available
exemption from registration under the Securites Act, the stock may
not be sold or transferred.
3.7 Legends. To the extent applicable, each certificate or
other document evidencing any of the Stock shall be endorsed with
the legend set forth below, and Investor covenants that, except to
the extent such restrictions are waived by the Company, Investor
shall not transfer the shares represented by any such certificate
without complying with the restrictions on transfer described in
the Legend endorsed on such certificate. The Legend shall state:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF,
BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF
VERSUS TECHNOLOGY, INC. (THE "COMPANY") THAT THIS
SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY: (1) TO THE COMPANY (UPON REPURCHASE
THEREOF OR OTHERWISE), (2) SO LONG AS THIS SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON
WHOM THE COMPANY REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
UNDER THE SECURITIES ACT, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE
OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH
THE MEANING OF REGULATION S UNDER THE SECURITIES ACT,
AS THE SAME MAY BE AMENDED FROM TIME TO TIME, PROVIDED
THAT THE CONDITIONS OF REGULATION S FOR RESALES HAVE
BEEN SATISFIED, (4) PURSUANT TO AN EXEMPTION FROM
REGISTRATION IN ACCORDANCE WITH RULE 144 (IF AVAILABLE)
UNDER THE SECURITIES ACT, AS THE SAME MAY BE AMENDED
FROM TIME TO TIME, (5) IN RELIANCE ON ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, AND SUBJECT TO THE RECEIPT BY THE COMPANY OF AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO THE
EFFECT THAT SUCH TRANSFER DOES NOT REQUIRE REGISTRATION
UNDER THE SECURITIES ACT, OR (6) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT, IN EACH CASE IN ACCORDANCE WITH APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES."
4. Conditions of Investor's Obligations at Closing. The
obligations of Investor under Section 1 of this Agreement are
subject to the fulfillment on or concurrently with the Closing, of
each of the following conditions:
4.1 Representations and Warranties. The representations
and warranties of the Company contained in Section 2 shall be true
on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the date
of such Closing.
4.2 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated at
the Closing and all documents incident thereto shall be reasonably
satisfactory in form and substance to Investor's counsel, which
shall have received all such counterpart original and certified or
other copies of such documents as it may reasonably request.
4.3 Other Agreements. The Company and the Investor (or
an affiliate) shall have mutually executed and delivered the Non-
Exclusive Patent License Agreement, the Component Sales
Agreement,the Warrant, the Registration Rights Agreement, and such
other documents as are integral to this transaction as the
Investor may determine, the forms of which documents are attached
hereto and incorporated by reference.
5. Conditions of the Company's Obligations at Closing.
The obligations of the Company to Investor under this Agreement
are subject to the fulfillment on or before the Closing of each of
the following conditions by Investor:
5.1 Representations and Warranties. The representations
and warranties of Investor contained in this Agreement shall be
true on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the
Closing.
5.2 Qualifications. All authorizations, approvals, or
permits, if any, of any governmental authority or regulatory body
of the United States or of any state that are required in
connection with the lawful issuance and sale of the Stock pursuant
to this Agreement shall have been duly obtained and effective as
of the Closing.
5.3 Other Agreements. The Company and the Investor (or
an affiliate) shall have mutually executed and delivered the Non-
Exclusive Patent License Agreement, the Registration Rights
Agreement and such other documents as are integral to this
transaction as the Company may determine, the forms of which
documents are attached hereto and incorporated by reference.
6. Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the SEC which may at
any time permit the sale of the shares of the Stock (and any
shares issued upon exercise of the Warrant) to the public without
registration, for so long as the Investor owns any such shares,
the Company agrees to use reasonable efforts to:
(a) Make and keep public information available, as those
terms are understood and defined in Rule 144 under the
Securities Act;
(b) File with the SEC in a timely manner all reports and
other documents required of the Company under the
Securities Act and the Exchange Act.
7. Registration Rights Agreement. The form of Registration
Rights Agreement attached hereto is incorporated herein by
reference. The Investor shall have the rights accorded to it as
stated in said Registration Rights Agreement.
8. Miscellaneous. This Agreement shall inure to the
benefit of and be binding upon the heirs, personal
representatives, successors and assigns of the respective parties
hereto. This Agreement, together with the other formal written
documents executed and delivered concurrently herewith,
constitutes and fully integrates the entire understanding between
the parties hereto, and is intended to supersede and cancel all
prior written or oral understandings between them dealing with the
subject matter hereof. This Agreement may not be changed orally,
but only in writing, signed by the party against whom enforcement
of any waiver, change, amendment, modification, extension or
discharge is sought. No other warranties, representations or
covenants exist that are not herein contained. Any notices or
other communications required or permitted under or in connection
with this Agreement shall be in writing and delivered personally
or sent by telex, telecopy, electronic mail or other wire
transmission (with request for assurance in a manner typical to
communications of that type), federal express or other overnight
air courier (postage prepaid), registered or certified mail
(postage prepaid with return receipt requested), addressed to the
respective parties at the addresses set forth above, unless and
until a different address shall be furnished by a party desiring
to change such address to the other party(ies), or if no such
address is set forth with respect to any such party, then to the
principal office of such party, all as last known to the party
giving such notice; and such notices or other communications shall
be deemed received (a) on the date delivered, if delivered
personally or by wire transmission; (b) on the next business day
after mailing or deposit with an overnight air courier; or (c)
three business days after being sent, if sent by registered or
certified mail. For each term and pronoun used in this Agreement,
the singular number includes the plural number, and vice versa,
and any gender, whether masculine, feminine, or neuter, includes
the other genders, as appropriate and as the context may
reasonably require. The invalidity of any paragraph, provision or
part hereof shall not affect the validity of any other paragraph,
provision or part hereof. This Agreement shall be construed as a
whole and in accordance with its fair meaning. Captions, if any,
and organization are for convenience and shall not be used in
construing its meaning. This Agreement may be executed in one or
more counterparts, all of which shall constitute one and the same
instrument and each one of which shall be deemed an original.
Each party shall, upon reasonable request, execute and deliver
such other and further documents as may be necessary and proper to
effectuate this Agreement. This Agreement shall be interpreted
and enforced in accordance with the laws of the State of Michigan,
excluding any conflicts-of-law rule or law which refers to the
laws of another jurisdiction. This Agreement constitutes the
jointly bargained agreement of the parties, and the construction
of this Agreement shall not be altered or influenced by the fact
or presumption that one party had a greater or lesser hand in
drafting this Agreement. Any Recitals are hereby made a part of
this Agreement and all exhibits, attachments, and schedules, if
any, attached to this Agreement are hereby incorporated herein by
reference for all applicable purposes. If the date for
performance of any act hereunder falls on a Saturday, Sunday, or
legal holiday, then the time for performance thereof shall be
deemed extended to the next successive business day. Whenever it
is provided in this Agreement that days be counted, the first day
to be counted shall be the day following the date on which the
event causing the period to commence occurs. This Agreement is
intended solely for the benefit of the parties hereto and their
successors, heirs and assigns, and may not be relied upon or
enforced by any third party beneficiary.
9. Confidentiality. Except to the extent that either party
may otherwise determine disclosure of all or any part of this
Agreement is required by law, each party agrees to use reasonable
efforts to hold confidential the financial and economic terms of
this Agreement and the Warrant (including all amendments and
modifications of such terms) (the "Confidential Terms"), and not
hereinafter directly or indirectly to divulge, disseminate or
disclose the Confidential Terms. Further, and subject to the
foregoing, each party shall use reasonable efforts to restrict
distribution of copies of any the above-mentioned documents or
other information or documents related thereto or any terms
thereof only to such party's attorneys, senior officers and
members of the board of directors, and to those of its employees
having need to know such Confidential Terms (and only to the
extent of such need). If either party is required by subpoena or
other legal process of law to disclose the Confidential Terms, the
party required to make such a disclosure shall, when feasible,
give notice to and cooperate with the other party to allow the
other party, at its expense, to resist disclosure of, or obtain an
exemption from the requirement to disclosure, the Confidential
Terms. With respect to either party's reporting requirements to
the public and/or the SEC, the parties agree that they shall each
cooperate with one another to exclude from disclosing any of the
Confidential Terms that the other party desires not to be
disclosed for competitive or other privacy reasons. The Licensee
acknowledges that the Licensor may deem it advisable, and shall be
at liberty, to make the unexpurgated entirety of this Agreement,
and the Warrant, publicly available. Both parties agree that
before any written press release is made concerning this Agreement
they shall consult and cooperate with each other concerning the
text of such press release.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
ATTEST: VERSUS TECHNOLOGY, INC.
___________________________ By:____________________
Andrea Beadle, Corporate Secretary Gary T. Gaisser, President
ATTEST: HILLENBRAND INDUSTRIES, INC.:
_____________________________ By:__________________________
Its:_________________________
Exhibit 4(c)
Warrant Agreement
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF
VERSUS TECHNOLOGY, INC. (THE "COMPANY") THAT THIS
SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY: (1) TO THE COMPANY (UPON REPURCHASE
THEREOF OR OTHERWISE), (2) SO LONG AS THIS SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON
WHOM THE COMPANY REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
UNDER THE SECURITIES ACT, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE
OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH
THE MEANING OF REGULATION S UNDER THE SECURITIES ACT,
AS THE SAME MAY BE AMENDED FROM TIME TO TIME, PROVIDED
THAT THE CONDITIONS OF REGULATION S FOR RESALES HAVE
BEEN SATISFIED, (4) PURSUANT TO AN EXEMPTION FROM
REGISTRATION IN ACCORDANCE WITH RULE 144 (IF AVAILABLE)
UNDER THE SECURITIES ACT, AS THE SAME MAY BE AMENDED
FROM TIME TO TIME, (5) IN RELIANCE ON ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, AND SUBJECT TO THE RECEIPT BY THE COMPANY OF AN
OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER
DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT,
OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE
WITH APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES.
Warrant No._____ Number of
Shares: 2,500,000
Exercise Price: $.88
Date of Issuance: September 1, 2000 (subject to adjustment)
VERSUS TECHNOLOGY, INC., a Delaware corporation (the "Com-
pany"), for valuable consideration, the receipt of which is hereby
acknowledged, hereby certifies that Hillenbrand Industries, Inc.,
or its registered assigns (the "Registered Holder"), is entitled,
subject to the terms set forth below, to purchase from the
Company, at any time or from time to time on or after September 1,
2000 and on or before September 1, 2003 at not later than 5:00
p.m. (Traverse City, Michigan time), up to 2,500,000 shares of the
common stock, $.01 par value, of the Company ("Common Stock"), at
a purchase price of $.88 per share, subject to adjustment as
provided herein. The shares purchasable upon exercise of this
Warrant, and the purchase price per share, each as adjusted from
time to time pursuant to the provisions of this Warrant, are
hereinafter referred to as the "Warrant Shares" and the "Purchase
Price," respectively.
1. Exercise.
(a) Subject to the requirements of Section 4,
this Warrant may be exercised by the Registered Holder, in whole
or in part, by surrendering this Warrant, with the purchase form
appended hereto as Exhibit I duly executed by such Registered
Holder or by such Registered Holder's duly authorized attorney, at
the principal office of the Company, or at such other office or
agency as the Company may designate, accompanied by payment in
full, in lawful money of the United States, of the Purchase Price
payable in respect of the number of shares of Warrant Shares
purchased upon such exercise.
(b) Each exercise of this Warrant shall be
deemed to have been effected immediately prior to the close of
business on the day on which this Warrant shall have been
surrendered to the Company as provided in subsection 1(a) above.
At such time, the person or persons in whose name or names any
certificates for Warrant Shares shall be issuable upon such
exercise as provided in subsection 1(c) below shall be deemed to
have become the holder or holders of record of the Warrant Shares
represented by such certificates.
(c) As soon as practicable after the exercise of
this Warrant in full or in part, and in any event within 30 days
thereafter, the Company, at its expense, will cause to be issued
in the name of, and delivered to, the Registered Holder, or such
Holder (upon payment by such Holder of any applicable transfer
taxes) as the Holder may direct:
(i) a certificate or certificates for the
number of full Warrant Shares to which such Registered Holder
shall be entitled upon such exercise plus, in lieu of any
fractional share to which such Registered Holder would otherwise
be entitled, cash in an amount determined pursuant to Section 3
hereof; and
(ii) in case such exercise is in part only,
a new warrant or warrants (dated the date hereof) of like tenor,
calling in the aggregate on the face or faces thereof for the
number of Warrant Shares equal (without giving effect to any
adjustment therein) to the number of such shares called for on the
face of this Warrant minus the number of such shares purchased by
the Registered Holder upon such exercise as provided in subsection
1(a) above.
(d) As an alternative to paying the Purchase
Price in cash as contemplated in subsection (a) above, the
Registered Holder may, if then mutually agreeable to both the
Company and the Registered Holder, pay all or part of the Purchase
Price by delivering shares of the Common Stock then-owned by the
Registered Holder having a Market Value (as hereinafter defined)
equal to the Purchase Price. If the Registered Holder and the
Company desire to use such method of payment, they shall
appropriately revise the purchase form delivered as provided in
subsection (a) above. As used herein, the "Market Value" shall
equal the product of (i) the number of shares of Common Stock so
delivered as payment multiplied by (ii) the average of the closing
bid and ask prices of the Common Stock or the last reported sales
price of the Common Stock, or the closing price quoted on the
NASDAQ National Market or on any exchange on which the Common
Stock is listed, whichever is applicable.
2. Adjustments.
(a) Effect of stock changes. If, at any time or
from time to time the Company, by stock dividend, stock split,
subdivision, reverse split, consolidation, reclassification of
shares, or other similar structural change, changes as a whole its
outstanding Common Stock into a different number or class of
shares, then, immediately upon the occurrence of the change:
(i) the class of shares into which the
Common Stock has been changed shall replace the Common Stock, for
the purposes of this Warrant and the terms and conditions hereof,
so that the registered owner or owners of this Warrant shall be
entitled to receive, and shall receive upon exercise of this
Warrant, shares of the class of stock into which the Common Stock
had been changed;
(ii) the number of shares purchasable upon
exercise of this Warrant shall be proportionately adjusted (for
example, if the outstanding Common Stock of the Corporation is
converted into X stock at the rate of one (1) share of Common
Stock into three (3) shares of X stock, and prior to the change
the registered owner or owners of this Warrant were entitled, upon
exercise of this Warrant, to purchase one hundred shares of Common
Stock, then the registered owner or owners shall, after the
change, be entitled to purchase three hundred shares of X stock
for the total same exercise price that the owner or owners had to
pay prior to the change to purchase the one hundred shares of
Common Stock); and
(iii) the purchase price per share shall be
proportionately adjusted. (In the above example, the purchase
price per share would be reduced by two-thirds).
Irrespective of any adjustment or change in the number or
class of shares purchasable under this or any other Warrant of
like tenor, or in the purchase price per share, this Warrant, as
well as any other warrant of like tenor, may continue to express
the purchase price per share and the number and class of shares
purchasable upon exercise of this Warrant as the purchase price
per share and the number and class of shares purchasable were
expressed in this Warrant when it was initially issued.
(b) Effect of Merger. If at any time while this
Warrant is outstanding another corporation merges into the
Company, the registered owner or owners of this Warrant shall be
entitled, immediately after the merger becomes effective and upon
exercise of this Warrant, to obtain the same number of shares of
Common Stock of the Company (or shares into which the Common Stock
has been changed as provided in the paragraph of this Warrant
covering changes) to which the owner or owners were entitled upon
the exercise hereof to obtain immediately before the merger became
effective at the same exercise price. The Company shall take any
and all steps necessary in connection with the merger to assure
that sufficient shares of Common Stock to satisfy all conversion
and purchase rights represented by outstanding convertible secur-
ities, options and warrants, including this Warrant, are available
so that these convertible securities, options and warrants,
including this Warrant, may be exercised.
(c) Effect of Sale or Consolidation. If at any
time while this Warrant is outstanding the Company shall merge
into or consolidate with another corporation or sell or lease all
or substantially all of its assets, the Company or such successor
or purchasing corporation or entity, as the case may be, shall,
without payment of any additional consideration therefor, issue a
new Warrant upon surrender of the old Warrant, providing that the
Registered Holder of this Warrant shall have the right to exercise
such new Warrant and procure upon such exercise in lieu of each
share of Common Stock theretofore issuable upon exercise of this
Warrant, the kind and amount of shares of stock or similar equity
interests, other securities, money and property receivable upon
such consolidation, merger, sale or transfer by Registered Holder
of one share of Common Stock issuable upon exercise of this
Warrant had it been exercised immediately prior to such event.
Such new Warrant shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments
provided for in this Warrant. The provisions of this subsection
(c) shall apply to successive transactions of this type. The
Company shall take any and all steps necessary in connection with
the merger or consolidation to assure that sufficient shares of
the exchange consideration is available to satisfy all conversion
and purchase rights represented by outstanding convertible secur-
ities, options and warrants, including this Warrant, so that these
convertible securities, options and warrants, including this
Warrant, may be exercised and the exchange consideration can be
delivered.
(d) Dissolution. In the event that a voluntary
or involuntary dissolution, liquidation or winding up of the
Company (other than in connection with a merger where the Company
is the surviving corporation as covered in this Warrant, or a
merger or consolidation with or into another corporation, a sale
or lease of all or substantially all of the assets of the Company,
or a sale of a specified portion or percentage of its stock as
covered in this Warrant) is at any time proposed during the term
of this Warrant, the Company shall give written notice to the
registered owner or owners of this Warrant at least thirty (30)
days prior to the record date of the proposed transaction. The
notice must contain:
(i) the date on which the transaction is to
take place;
(ii) the record date (which must be at least
thirty (30) days after the giving of the notice) as of which
holders of the Common Stock entitled to receive distributions as a
result of the transaction shall be determined;
(iii) a brief description of the
transaction;
(iv) a brief description of the
distributions, if any, to be made to holders of the Common Stock
as a result of the transaction; and
(v) an estimate of the fair market value of
the distributions.
On the date of the transaction, if it actually occurs, this
Warrant and all rights existing under this Warrant shall
terminate.
(e) In the event the average daily closing
prices of Common Stock during any twenty (20) consecutive trading
days during the period between September 1, 2000 and March 1, 2001
is less than $0.30 per share, this Warrant shall automatically be
modified to entitle the Registered Holder to purchase from the
Company (i) at any time or from time to time on or after September
1, 2000 and on or before September 1, 2003, up to 1,500,000 shares
of Common Stock, at a purchase price of $.60 per share, and (ii)
at any time or from time to time on or after September 1, 2000 and
on or before September 1, 2005, up to 1,000,000 shares of Common
Stock, at a purchase price of $.88 per share.
3. Fractional Shares. The Company shall not be
required upon the exercise of this Warrant to issue any fractional
shares, but shall pay in cash an amount determined by multiplying
the fraction to which the Holder is entitled by the fair market
value of the Common Stock on the date of exercise. Should the
Common Stock then be traded on an Exchange or quoted on a
quotation system for which a last sale reporting system is in
effect, the reported last sale on the exercise date shall be
deemed to be such fair market value. If the Common Stock is
quoted on a quotation system without last sale reporting, the fair
market value shall be deemed to be the highest bid price of any
broker/dealer regularly making a market in the Common Stock on the
exercise date. In all other cases fair market value shall be as
determined in good faith by the Company.
4. Certain Requirements for Transfer and Exercise.
(a) In the absence of an effective Registration
Statement under the Securities Act of 1933, as amended (the
"Act"), it shall be a condition to any transfer or any exercise of
this Warrant that the Issuer shall have received, at the time of
such transfer or exercise:
(i) A representation in writing from the
proposed transferee that the Warrant is being transferred or the
Common Stock being purchased is being acquired for investment and
not with a view to any sale or distribution thereof which would
constitute or result in a violation of the Act;
(ii) an opinion of counsel, which opinion is
reasonably satisfactory to the Issuer, that the transaction shall
not result in a violation of state or federal securities laws.
(b) In such case, each certificate representing
the Warrant or the Warrant Shares shall bear a legend substan-
tially in the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF
VERSUS TECHNOLOGY, INC. (THE "COMPANY") THAT THIS
SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY: (1) TO THE COMPANY (UPON REPURCHASE
THEREOF OR OTHERWISE), (2) SO LONG AS THIS SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON
WHOM THE COMPANY REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
UNDER THE SECURITIES ACT, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE
OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH
THE MEANING OF REGULATION S UNDER THE SECURITIES ACT,
AS THE SAME MAY BE AMENDED FROM TIME TO TIME, PROVIDED
THAT THE CONDITIONS OF REGULATION S FOR RESALES HAVE
BEEN SATISFIED, (4) PURSUANT TO AN EXEMPTION FROM
REGISTRATION IN ACCORDANCE WITH RULE 144 (IF AVAILABLE)
UNDER THE SECURITIES ACT, AS THE SAME MAY BE AMENDED
FROM TIME TO TIME, (5) IN RELIANCE ON ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, AND SUBJECT TO THE RECEIPT BY THE COMPANY OF AN
OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER
DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT,
OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE
WITH APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES.
5. No Impairment. The Company will not, by amendment
of its charter or through reorganization, consolidation, merger,
dissolution, sale of assets or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the
rights of the holder of this Warrant against impairment.
6. Reservation of Stock. The Company will at all
times reserve and keep available, solely for issuance and delivery
upon the exercise of this Warrant, such number of Warrant Shares
and other stock, securities and property as from time to time
shall be issuable upon the exercise of this Warrant.
7. Exchange of Warrants. Upon the surrender by the
Registered Holder of any Warrant or Warrants, properly endorsed,
to the Company at the principal office of the Company, the Company
will, subject to the provisions of Section 4 hereof, issue and
deliver to or upon the order of such Holder, at the Company's
expense, a new Warrant or Warrants of like tenor, in the name of
such Registered Holder or as such Registered Holder (upon payment
by such Registered Holder of any applicable transfer taxes) may
direct.
8. Replacement of Warrants. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and (in the case of
loss, theft or destruction) upon delivery of an indemnity
agreement (with surety if reasonably required in an amount
reasonably satisfactory to the Company), or in the case of
mutilation upon surrender and cancellation of this Warrant, the
Company will issue, in lieu thereof, a new Warrant of like tenor.
9. Transfers, etc.
(a) The Company will maintain a register
containing the names and addresses of the Registered Holders of
this Warrant. Any Registered Holder may change its or his address
as shown on the warrant register by written notice to the Company
requesting such change.
(b) Subject to the provisions of Section 4
hereof, this Warrant and all rights hereunder are transferable, in
whole or in part, upon surrender of this Warrant with a properly
executed assignment (in the form of Exhibit II hereto) at the
principal office of the Company.
(c) Until any transfer of this Warrant is made
in the warrant register, the Company may treat the Registered
Holder of this Warrant as the absolute owner hereof for all
purposes; provided, however, that if and when this Warrant is
properly assigned in blank, the Company may (but shall not be
obligated to) treat the bearer hereof as the absolute owner hereof
for all purposes, notwithstanding any notice to the contrary.
10. Required Notices. The Company shall give the
Registered Holder such notices as it may, from time to time, be
required to give the holders of the Common Stock, as if the
Registered Holder was a holder of Common Stock at the time such
notices are required to be given. The Company shall also give the
Registered Holder written notice of: (i) each adjustment of the
Purchase Price or other warrant item made pursuant to Section 2
hereof; and (ii) of each dividend and distribution payable with
respect to any security which may be acquired by exercise of the
Warrant, at least ten (10) business days prior to the record date
for such dividend or distribution so that the Registered Holder
may exercise the warrant and participate in the dividend or dis-
tribution.
11. Mailing of Notices, etc. All notices and other
communications from the Company to the Registered Holder of this
Warrant shall be mailed by first-class certified or registered
mail, postage prepaid, to the address furnished to the Company in
writing by the last Registered Holder of this Warrant who shall
have furnished an address to the Company in writing. All notices
and other communications from the Registered Holder of this
Warrant or in connection herewith to the Company shall be mailed
by first-class certified or registered mail, postage prepaid, to
the Company at its principal office set forth below. If the
Company should at any time change the location of its principal
office to a place other than as set forth below, it shall give
prompt written notice to the Registered Holder of this Warrant and
thereafter all references in this Warrant to the location of its
principal office at the particular time shall be as so specified
in such notice.
Versus Technology, Inc.
Attention: Controller
2600 Miller Creek Road
Traverse City, Michigan 49684
12. No Rights as Stockholder. Until the exercise of
this Warrant, the Registered Holder of this Warrant shall not have
or exercise any rights by virtue hereof as a stockholder of the
Company.
13. Change or Waiver. Any term of this Warrant may be
changed or waived only by an instrument in writing signed by the
party against which enforcement of the change or waiver is sought.
14. Headings. The headings in this Warrant are for
purposes of reference only and shall not limit or otherwise affect
the meaning of any provision of this Warrant.
15. Governing Law. This Warrant will be governed by
and construed in accordance with the laws of the State of
Delaware.
VERSUS TECHNOLOGY, INC.
[CORPORATE SEAL] By:_________________________________
Gary T. Gaisser, President
ATTEST:
_____________________________
Andrea Beadle, Secretary
EXHIBIT I
PURCHASE FORM
To: VERSUS TECHNOLOGY, INC. Dated:___________________
The undersigned, pursuant to the provisions set forth
in the attached Warrant (No. ____), hereby irrevocably elects to
purchase _____ shares of the Common Stock, $.01 par value, of
Versus Technology, Inc. covered by such Warrant and herewith makes
payment of $__________, representing the full purchase price for
such shares at the price per share provided for in such Warrant.
Holder:_________________________________
Address:________________________________
________________________________
EXHIBIT II
ASSIGNMENT FORM
FOR VALUE RECEIVED, ____________________________ hereby
sells, assigns and transfers all of the rights of the undersigned
under the attached Warrant (No. ____) with respect to the number
of shares of Versus Technology, Inc. Common Stock, $.01 par value,
covered thereby set forth below, unto:
Name of Assignee Address No. of Shares
Dated:________________
Signature:_________________________
Dated:________________
Witness:___________________________
Exhibit 4(d)
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of September 1, 2000,
between VERSUS TECHNOLOGY, INC., a Delaware corporation whose
principal place of business is located at 2600 Miller Creek Rd.,
Traverse City, Michigan 49684 (the "Corporation"), and Hillenbrand
Industries, Inc., whose principal place of business is located at
700 State Route 46 East, Batesville, Indiana 47006-8835 (the
"Investor").
W I T N E S S E T H
WHEREAS, the Corporation has agreed to provide the Investor
with registration rights as set forth herein in connection with
the purchase by the Investor of 2,500,000 shares of the
Corporation's common voting stock and an attached Warrant to
purchase a like number of shares, as set forth in a Stock Purchase
Agreement of even date herewith (the "Stock Purchase Agreement").
NOW, THEREFORE, in consideration of the foregoing and the
terms and conditions hereof, the parties hereto agree as follows:
1. Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
Affiliate and Associate: Such terms shall have the
respective meanings assigned to them pursuant to Rule 12b-2 under
the Exchange Act.
Commission: The United States Securities and Exchange
Commission and any successor federal agency having similar powers.
Exchange Act: The Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and
regulations thereunder, all as at the time in effect.
Person: An individual, partnership, joint venture, corpora-
tion, trust, unincorporated organization or the government or any
department or agency thereof.
Registrable Securities: All of the Corporation's restricted
Common Stock, $.01 par value ("Common Stock") issuable or issued
by the Corporation to the Investor pursuant to the Stock Purchase
Agreement or the Warrant.
Registration Expenses: Except as otherwise specifically
provided herein, all of the Corporation's out-of-pocket expenses,
without limitation as to amount, incident to the Corporation's
performance of or compliance with Section 2 herein, including,
without limitation, all fees and expenses, outside messenger and
delivery expenses, the fees and disbursements of counsel for the
Corporation and of its independent public accountant, and any fees
and disbursements of underwriters customarily paid by issuers or
sellers of securities. Registration Expenses shall not include
any underwriter's discounts, commissions or transfer taxes paid by
the Investor.
Securities Act: The Securities Act of 1933, as
amended, or any similar federal statute, and the rules and
regulations thereunder, all as at the time in effect.
2. Registration
2.1 Registration on Request (Demand Registration).
(a) Request. At any time more than one year after the date
hereof and no later than five (5) years from the time any shares
of Common Stock are issued upon the exercise of stock purchase
rights under the Warrant, upon the written request of Investor
that the Corporation effect the registration under the Securities
Act of all Investor's Registrable Securities specifying the
intended method or methods of disposition thereof, the Corporation
will use its best efforts to effect the registration under the
Securities Act of such securities to permit their disposition (in
accordance with the intended methods thereof as aforesaid) and
keep such registration effective for a period of not less than
nine (9) months, provided that if such registration may then be
effected by the Corporation on Form S-3 or any successor Form of
registration, then the Corporation shall keep such registration
effective until the later of nine months or until the Registrable
Securities may be sold publicly pursuant to Rule 144(k)
promulgated under the Securities Act by persons who are not
affiliates of the Corporation. The Corporation shall be obligated
to effect only one registration under this Section 2.1 on Forms S-
1 or S-2 (or their equivalent successor forms) and no more than
one registration statement on Form S-3 (or its equivalent
successor forms). If a registration fails to become or remain
effective for any reason then such registration shall not be
counted as a demand registration under this Section 2.1
(b) Registration Statement Form. Registrations under this
Section 2.1 shall be on an appropriate registration form of the
Commission as determined by the Corporation and shall permit the
disposition of the Registrable Securities in accordance with the
intended method or methods of disposition specified in the
Investors' request for such registration.
(c) Expenses. The Investor will pay all Registration
Expenses in connection with any Demand Registration of the
Registrable Securities. Registration Expenses in connection with
a Piggy Back Registration shall be borne pro rata with other
owners of the total securities being registered.
2.2 Incidental Registration (Piggyback Registration). (a)
Notice and Request. If the Corporation at any time proposes to
register any of its securities under the Securities Act (except
registrations solely for registration of shares in connection with
an employee benefit plan or a merger or consolidation), whether or
not for sale for its own account, it will each such time give
prompt written notice, making reference to this Section of this
Registration Rights Agreement, to the Investors of its intention
to do so. Upon the written request of Investor within 30 days
after the receipt of any such notice (which request shall specify
the Registrable Securities intended to be disposed of by the
Investor, the Corporation will use its best efforts to effect the
registration under the Securities Act of all Registrable
Securities which the Corporation has been so requested to register
by the Investor as part of the incidental registration, provided
that if the Corporation shall determine for any reason not to
register or to delay registration of such securities the Corpora-
tion may, at its election, give written notice of such determina-
tion to the Investor, and, thereupon, (i) in the case of a
determination not to register, shall be relieved of its obligation
to register any Registrable Securities in connection with such
registration, without prejudice, however, to the rights of the
Investor to request that such registration be effected as a
registration under Section 2.1, and (ii) in the case of a deter-
mination to delay registering, shall be permitted to delay
registering any Registrable Securities for the same period as the
delay in registering such other securities. No registration
effected under this Section 2.2 shall relieve the Corporation of
its obligation to effect any registration upon request under
Section 2.1. The Registration Expenses of the Investor shall be
paid by the Corporation.
(b) Underwriters Cutback. If, in any incidental
registration referred to in Section 2.2(a) above, the managing
underwriter or underwriters thereof shall advise the Corporation
in writing that in its or their reasonable opinion the number of
securities proposed to be sold in such registration exceeds the
number that can be sold in such offering without having a material
effect on the success of the offering (including, without
limitation, an impact on the selling price or the number of shares
that any participant may sell), the Corporation will include in
such registration only the number of securities that, in the
reasonable opinion of such underwriter or underwriters can be sold
without having a material adverse effect on the success of the
offering as follows: (i) first, all of the shares to be issued
and sold by the Corporation and (ii) second, the Registrable
Securities requested to be included in such registration by the
Investor and any other Person pro rata on the basis of the
aggregate number of shares requested to be included.
(c) Purchases and Sales of Shares of Common Stock during
Registration Process. The Investor participating in any
incidental registration of Registrable Securities agree to execute
and deliver in connection with any such registration an agreement
in form and substance reasonably satisfactory to the Corporation
and the Investor prohibiting the Investor from effecting purchases
and/or sales or distributions of securities of the Corporation of
the same class as the Registrable Securities so registered,
including but not limited to a sale pursuant to Rule 144 under the
Securities Act (except as part of such underwritten offering),
during such periods, if any, as are required under Regulation M
promulgated under the Exchange Act and such other customary
periods as are reasonably requested by the Corporation and/or the
underwriter(s).
2.3 Registration Procedures. Whenever the Corporation is
required to effect the registration of any Registrable Securities
under the Securities Act as provided in Sections 2.1 and 2.2, it
shall, as expeditiously as possible:
(a) prepare and (within 90 days after a request for registration
is given to the Corporation or as soon thereafter as possible)
file with the Commission a registration statement with respect
to such Registrable Securities and use its best efforts to
cause such registration statement to become and remain effective;
(b) prepare and file with the Commission such amendments
and supplements to the registration statement and prospectus used
in connection therewith as may be necessary to keep such registra-
tion statement effective and to comply with the provisions of the
Securities Act for at least nine (9) months if under 2.1 and at
least 90 days if under 2.2;
(c) promptly furnish to the Investor such number of
conformed copies of such registration statement and of each
amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus contained in
such registration statement (including each preliminary prospectus
and any prospectus supplement) and any other prospectus filed
under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, as
the Investor may reasonably request;
(d) use its best efforts to register or qualify all
Registrable Securities and other securities covered by such
registration statements under such other securities or blue sky
laws of such jurisdictions where an exemption is not available and
as the Investors participating shall reasonably request, to keep
such registration or qualification in effect for so long as such
registration statement remains in effect, and take any other
action which may be reasonably necessary or advisable to enable
the Investor to consummate the disposition in such jurisdictions
of the securities owned by Investor, except that the Corporation
shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein
it would not, but for the requirements of this subdivision (iv) be
obligated to be so qualified or to consent to general service of
process in any such jurisdiction; and
e) promptly notify Investor, at any time when a prospectus
forming a part of such registration statement is required to be
delivered under the Securities Act, upon discovery that, or upon
the happening of any event as a result of which, the prospectus
included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances under which they were made, and at the request of
the Investor promptly prepare and furnish to the Investor a
reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus
shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the
light of the circumstances under which they are made.
(f) Promptly notify Investor in writing of a requested
registration request under Section 2.1 and promptly notify
Investor after it shall receive notice thereof of the time when
any registration statement has become effective, or a supplement
to any prospectus forming a part of such registration statement
has been filed.
2.4 Limitations, Conditions and Qualifications to
Obligations under Registration Covenants. The obligations of the
Corporation to use its reasonable efforts to cause the Registrable
Securities to be registered under the Securities Act are subject
to each of the following limitations, conditions and
qualifications.
(a) Year End Financials. The Corporation shall not be
obligated to file any registration statement pursuant to Section
2.1 hereof at any time if the Corporation would be required to
include financial statements audited as of any date other than the
end of its fiscal year unless the reason for such audit is due to
the Corporation's failure or refusal to properly comply with
Section 3.
(b) The Corporation shall be entitled to postpone for
a reasonable period of time the filing of any registration
statement otherwise required to be prepared and filed by it
pursuant to Section 2.1 if the Corporation determines, in its
reasonable judgment, that such registration and offering would
interfere with any financing, acquisition, corporate
reorganization or other proposed material transaction involving
the Corporation or any of its Affiliates or that it would require
the Corporation to disclose material non-public information that
it deems advisable not to disclose and promptly gives the Investor
written notice of and the bases for such determination; provided,
however, that such restriction shall be effective for a period not
to exceed 30 days and the Corporation may only institute such
restriction once during any twelve month period. Further, the
Corporation shall have the right to require Investor, if
participating in a registration under Section 2.1, to refrain from
selling securities in a public offering for a period of up to 90
days during the effectiveness of any registration statement if the
Corporation shall reasonably determine that such sale would
interfere with any transaction involving the Corporation as
described above or that such registration would require disclosure
of such material non-public information; provided that Investor
shall not be restricted from effecting transactions to a greater
degree than any similar restriction to which any other holder of
shares of the Corporation's Common Stock are subject. If pursuant
to the preceding sentence the Corporation has required the
Investor to discontinue the sale of securities during the
effectiveness of a registration statement, then the period of time
any such registration statement must be kept effective pursuant to
Section 2.3(b) hereof shall be extended for a period equal to the
length of such discontinuance.
(c) If the Investor proposes that the sale of
Registrable Securities pursuant to Section 2.1 hereof be an
underwritten offering, the Corporation shall have the right to
approve the choice of underwriters who undertake such offering.
2.5 Indemnification. (a) Indemnification by the Corpora-
tion. The Corporation will, and hereby does, indemnify and hold
harmless, Investor, its directors and officers, any underwriter
and each other Person, if any, who controls Investor or any such
underwriter, (each, an "Indemnified Party") from and against any
losses, claims, damages or liabilities, to which any Indemnified
Party may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities arise out
of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any registration
statement filed under the Securities Act or any prospectus
contained therein, or any omission or alleged omissions to state
therein a material fact required to be stated therein or necessary
to make the statements therein in light of the circumstances in
which they were made not misleading, and the Corporation will
reimburse each Indemnified Party for any legal or any other
expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim or liability or
action or proceeding in respect thereof; provided that the
Corporation shall not be liable in any such case to an Indemnified
Party to the extent that any such loss, claim, damage, liability
or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in
such registration statement or any such prospectus, in reliance
upon and in conformity with written information furnished to the
Corporation by or on behalf of such Indemnified Party,
specifically stating that it is for use in the preparation
thereof; and provided, further, that the Corporation shall not be
liable in any case to the extent that such loss, claim, damage,
liability or expense arises out of an untrue or alleged untrue
statement or omission or alleged omission in a prospectus, if such
statement or omission is corrected in an amendment or supplement
to the prospectus and the Investor thereafter fails to deliver
such prospectus as amended or supplemented prior to or
concurrently with the sale of the Registrable Securities. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of any Indemnified Party and
shall survive the transfer of such securities by the Investor.
(b) Indemnification by the Investors. The Corporation
may require, as a condition to including any Registrable
Securities in any registration statement filed pursuant to Section
2.1 or 2.2, that the Corporation shall have received an
undertaking satisfactory in all respects to it from Investor to
indemnify and hold harmless (in the same manner and to the same
extent as set forth in subdivision (a) of this Section 2.5) the
Corporation, each director of the Corporation, each officer of the
Corporation and each other Person, if any, who controls the
Corporation within the meaning of the Securities Act, with respect
to any statement or alleged statement in or omission or alleged
omission from such registration statement or any prospectus
contained therein, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in
strict conformity with written information furnished to the
Corporation by the Investor specifically for use in the
preparation of such registration statement or prospectus. Such
indemnity shall remain in full force and effect, regardless of any
investigation made by or on behalf of the Corporation or any such
director, officer or controlling person and shall survive the
transfer of such securities by the Investor.
(c) Notices of Claims, etc. Promptly after receipt by
an indemnified party of actual notice of the commencement of any
action or proceeding involving a claim referred to in the
preceding subdivisions of this Section 2.5, such indemnified party
will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the
commencement of such action, provided that the failure of any
indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the
preceding subdivisions of this Section 3.6, except to the extent
that the indemnifying party is actually prejudiced by such failure
to give notice. In case any such action is brought against an
indemnified party, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to
assume the defense thereof, jointly with any other indemnifying
party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall be liable for any
settlement of any action or proceeding effected without its
written consent. No indemnifying party shall, without the consent
of the indemnified party, consent to entry of any judgment or
enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in
respect to such claim or litigation.
(d) Other Indemnification. Indemnification similar to
that specified in the preceding subdivisions of this Section 2.5
(with appropriate modifications) shall be given by the Corporation
and the Investor with respect to any required registration or
other qualification of securities under any Federal or state law
or regulation of any governmental authority other than the
Securities Act.
3. Reporting Requirements Under the Exchange Act. The
Corporation shall timely file such information, documents and
reports as the Commission may require or prescribe under either
Section 13 or 15(d) (whichever is applicable) of the Exchange Act.
The Corporation shall thereafter, whenever reasonably requested
by Investor, notify Investor in writing whether the Corporation
has, as of the date specified by Investor, complied with the
Exchange Act reporting requirements to which it is subject for a
period prior to such date as shall be specified by Investor. The
Corporation acknowledges and agrees that the purposes of the
requirements contained in this Section 3 are: (i) to enable
Investor to comply with the current public information requirement
contained in Paragraph (b) of Rule 144 under the Securities Act
should Investor ever wish to dispose of any of the securities of
the Corporation acquired by it without registration under the
Securities Act in reliance upon Rule 144 (or any equivalent
successor provision); and (ii) to qualify the Corporation for the
use of registration statements on Form S-3, or its equivalent
successor form, with respect to secondary distributions. In
addition, the Corporation shall take such other reasonable
measures and file such other information, documents and reports as
shall hereafter be required by the Commission as a condition to
the availability of Rule 144 under the Securities Act (or any
equivalent successor provision).
4. Limitations On Subsequent Registration Rights. From
and after the date hereof, the Corporation shall not, without the
prior written consent of Investor enter into any agreement with
any holder or prospective holder of any securities of the
Corporation that would allow such holder or prospective holder of
any securities of the Corporation to include such securities in
any registration filed under Section 2 hereof on a basis
preferential to the Registrable Securities in which case such
shares and the Registrable Securities shall participate in the
offering pro rata.
5. Notices. All communication provided for hereunder
shall be sent by first-class mail and, if to Investor, addressed
to it at the address set forth above, or to such other address as
the Investor may have designated to the Corporation in writing for
such specific purpose, and, if to the Corporation, addressed to it
at c/o Versus Technology, Inc., 2600 Miller Creek Road, Traverse
City, MI 49684, Attention: President, or to such other address as
the Corporation may have designated to the Investor for such
purpose, in writing.
6. Assignment. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto
and their respective successors and assigns including, without
limitation, transferees or assignees of Registrable Shares.
7. Descriptive Headings. The descriptive headings of the
several sections and paragraphs of this Agreement are inserted for
reference only and shall not limit or otherwise affect the meaning
hereof.
8. Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of Michigan, without regard
to principles of conflicts of law.
9. Counterparts. This Agreement may be executed simulta-
neously in any number of counterparts, each of which shall be
deemed an original, but all such counterparts shall together
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their respective officers thereunto
duly authorized as of the date first above written.
VERSUS TECHNOLOGY, INC.
By:_______________________________
Name: Gary T. Gaisser
Title: President
HILLENBRAND INDUSTRIES, INC.
By: _______________________________
Its:
Exhibit 10(o)
NON-EXCLUSIVE PATENT LICENSE AGREEMENT
THIS AGREEMENT is made effective as of the ____ day of ________,
2000 (the "Effective Date") by and between Hill-Rom
Services, Inc., an Indiana corporation having a mailing address at
1069 State Route 46 East, Batesville, Indiana 47006 (hereinafter
"Licensee") and Versus Technology, Inc., a Delaware corporation
having a mailing address at 2600 Miller Creek Road, Traverse City,
Michigan 49684 (hereinafter "Licensor").
RECITALS
Licensor owns or is the licensee of the U.S. and foreign
patent applications and patents shown on Exhibit A, attached hereto
and made a part hereof (the "Licensed Patents"), and Licensee is
interested in acquiring a non-exclusive license under the Licensed
Patents to make, have made for it, use, sell, and import Licensed
Product (defined herein) in the Healthcare Field (defined herein).
NOW THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and other good and valuable
consideration, the parties hereto mutually agree as follows:
1. DEFINITIONS
1.1 "Licensed Product" shall mean any product: (i) the
manufacture, use, sale, or import of which infringes one or more
claims of at least one of the Patent Rights; and (ii) is sold
directly from Licensee to an end user customer, without a view
toward resale by such customer; and (iii) is sold for use by the
end user customer exclusively within the Healthcare Field (defined
herein); and (iv) is not used as part of a Hand Wash Compliance
System (defined herein), or as part of an Infant or Patient
Security System (defined herein), or as part of a Building
Security System (defined herein), or as part of a Wireless Nurse
Call System (defined herein). With respect to any goods supplied
to Licensee by Licensor, Licensee may use or sell the purchased
products in the Healthcare Field as part of a Hand Wash Compliance
System, an Infant or Patient Security System, a Building Security
System, a Wireless Nurse Call System, or for any other purpose in
the Healthcare Field not otherwise prohibited.
1.2 "Hand Wash Compliance System" shall mean a product which uses
location or event information to verify, in whole or in part,
compliance with hand washing policies, procedures, rules or
regulations.
1.3 "Infant Or Patient Security System" shall mean a product
which uses location or event information to provide an alarm when
a patient has approached an area which is designated within the
system as being unauthorized, or that the integrity of the
attachment of a locating device to the patient has been
compromised.
1.4 "Building Security System" shall mean a product which uses
location or event information to permit or deny ingress to or
egress from a building or any part thereof.
1.5 "Wireless Nurse Call System" shall mean a product which uses
location or event information to give notice of a patient call or
the calling patient's location through use of a feature that
provides for sending a signal outside the infrared spectrum in
response to a manual operation performed on equipment forming a
part of the system (such as, for example, a badge) such that the
equipment communicates with other portions of the system by means
other than through a wired connection.
1.6 "Healthcare Field" shall mean healthcare services, including
but not limited to, services provided by caregivers, doctors,
nurses, and other healthcare workers in either homes, hospitals,
medical clinics or centers, rehabilitation centers, acute
healthcare facilities, sub-acute healthcare facilities, outpatient
care facilities, long-term healthcare facilities, nursing homes,
freestanding medical facilities, surgical centers, or other
patient care provider facilities, and all related facilities,
equipment, and activities.
1.7 "Heller Agreements" shall mean: an Agreement dated effective
as of January 31, 1997 between Precision Tracking FM, Inc., Alan
C. "Rik" Heller (hereinafter "Heller"), and Licensor, a true copy
of which is shown in Exhibit B, attached hereto and made a part
hereof; a Notice of License Grant including in Schedule B thereof
a Grant of License prepared for recordation at the US Patent and
Trademark Office and signed by Heller in July 1997 a true copy of
which is shown in Exhibit B, attached hereto and made a part
hereof; and a Release and Settlement Agreement in connection with
American Arbitration Association Case No. 71-133-00186-98 entitled
Service ID, Inc. v. Versus Technology, Inc. (and including
exhibits thereto) a true copy of which is shown in Exhibit B,
attached hereto and made a part hereof.
1.8 "Heller Entities" shall mean Heller, Precision Tracking FM,
Inc., Service ID, Inc., The NewID Company, Freshloc, Inc., and all
other entities owned by or controlled by Heller or with which
Heller is affiliated.
2. PATENT RIGHTS
The term "Patent Rights" as used herein means the Licensed
Patents including all reissues, divisions, continuations,
continuations-in-part, reexaminations, substitutes, or extensions
thereof and also including any corresponding foreign patents and
foreign patent applications.
3. GRANT
Subject to the terms and conditions hereinafter set forth,
Licensor hereby grants to Licensee a non-transferable or assignable
world wide, non-exclusive, irrevocable, fully paid-up and royalty
free perpetual right and license under the Patent Rights to make,
have made for it, import, use, sell, have sold, lease or otherwise
dispose of Licensed Products in the Healthcare Field, covering a
period from the issue date of each of the Patent Rights to the
expiration date of the last to expire of the Patent Rights, as
limited only by the limitations to rights granted to Licensor to
certain of the Patent Rights licensed to Licensor under the Heller
Agreements. The licenses granted hereunder include the right of
Licensee to: (i) freely sublicense the licenses granted under this
Agreement to any business entity a majority of the voting control
of which is owned directly or indirectly by Hillenbrand Industries,
Inc. ("Affiliate"), without the consent of Licensor, provided that
the term of any such sublicense shall end immediately in the event
such sublicensee ceases to remain as an Affiliate of Hillenbrand
Industries, Inc., and provided further that any such Affiliate
shall agree in a writing to be bound by all the terms and
conditions of this Agreement; and (ii) make a one time assignment
of all of Licensee's rights under this Agreement in connection with
the sale or other disposition of all or substantially all of the
business and assets of Licensee and its Affiliates (to which the
subject matter of this Agreement relates) to a third party entity
which is not, after giving effect to the sale or other disposition,
an Affiliate ("Permitted Assignee"), provided, that any such
Permitted Assignee shall agree in a writing to be bound by all the
terms and conditions of this Agreement. In addition to the
foregoing sentence, the Licensee shall have the right to sublicense
or assign its rights under this Agreement at any time with
Licensor's consent, which consent shall not be unreasonably
withheld. Except as permitted in the foregoing two sentences, the
Licensee shall have no right to sublicense or assign its rights
under this Agreement. The license granted under this Agreement
shall not include the right to make any use of any intellectual
property of Licensor other than that which is disclosed and
claimed in the Patent Rights.
4. PAYMENTS
In consideration of the grant of non-exclusive license,
Licensee paid to Licensor, concurrently with the mutual execution
and delivery of this Agreement, a one-time lump sum payment of one
million dollars ($1,000,000) by wire transfer of immediately
available funds. Such payment represents payment in full for
Licensee's past, present, and future rights under this Agreement.
5. DURATION AND TERMINATION
The term of this Agreement shall extend until the expiration
of the last-to-expire of the Patent Rights.
6. NOTICE
Unless otherwise provided herein, all notices, demands,
consents, waivers and other communications required or permitted
under this Agreement must be in writing and will be deemed to have
been properly received (a) if delivered by hand, effective upon
receipt, (b) if sent by certified or registered mail, postage
prepaid, return receipt requested, effective three (3) days after
mailing, or (c) if sent by a nationally recognized overnight
delivery service, effective upon receipt, in each case to the
appropriate addresses set forth below, or to such other addresses
as a party may designate by written notice to the other parties:
To Licensee: with a required copy to:
Hill-Rom Services, Inc. Hillenbrand Industries, Inc.
1069 State Route 46 East 700 State Route 46 East
Batesville, Indiana 47006 Batesville, Indiana 47006
Attention: President Attention: General Counsel
Hill-Rom, Inc.
1069 State Route 46 East
Batesville, Indiana 47006
Attention: Vice President,
Business Development
To Licensor: with a required copy to:
Versus Technology, Inc. Rollert and MacNeal
2600 Miller Creek Road Attorneys at Law
Traverse City, Michigan 49684 P.O. Box 466
Attention: President Traverse City, Michigan
49685-0466
Attention: John A. MacNeal
7. REPRESENTATIONS AND WARRANTIES
7.1 Licensee represents and warrants to Licensor that it is
lawfully free to make this Agreement and that Licensee is a
corporation in good standing; that the execution and delivery of
this Agreement and the performance hereunder by Licensee has been
approved in writing by all appropriate and necessary corporate
action; and that the execution, delivery, or performance by
Licensee of this Agreement (a) requires no consent of any third
party, and (b) does not and will not (i) contravene or conflict
with the articles of incorporation, by-laws or other
organizational documents of Licensee, (ii) contravene or conflict
with or constitute a violation of any provision of any law,
regulation, judgment, injunction, order or decree binding upon or
applicable to Licensee or any of it assets or properties, (iii)
constitute a default under or give rise to any right of
termination, cancellation or acceleration of any right or
obligation of Licensee, (iv) result in the creation or imposition
of any security interest or lien on any assets or properties of
Licensee, or (v) contravene, conflict, interfere with or
constitute a violation or breach of any provision of or obligation
under any agreement with any third party entered into by Licensee.
7.2 Licensor represents and warrants to Licensee that it is
lawfully free to make this Agreement and that Licensor is a
corporation in good standing; that the execution and delivery of
this Agreement and the performance hereunder by Licensor has been
approved in writing by all appropriate and necessary corporate
action; and that the execution, delivery, or performance by
Licensor of this Agreement (a) requires no consent of any third
party, and (b) does not and will not (i) contravene or conflict
with the articles of incorporation, by-laws or other
organizational documents of Licensor, (ii) contravene or conflict
with or constitute a violation of any provision of any law,
regulation, judgment, injunction, order or decree binding upon or
applicable to Licensor or any of it assets or properties, (iii)
constitute a default under or give rise to any right of
termination, cancellation or acceleration of any right or
obligation of Licensor (including, without limitation, pursuant to
the Heller Agreements), (iv) result in the creation or imposition
of any security interest or lien on any assets or properties of
Licensor, or (v) contravene, conflict, interfere with or
constitute a violation or breach of any provision of or obligation
under any agreement with any third party entered into by Licensor.
7.3 Licensor represents and warrants to Licensee that it has the
right to license or sublicense the Patent Rights and to grant the
rights and licenses specified in this Agreement to any third
party, including Licensee, without any permission of anyone.
Furthermore, Licensor represents and warrants to Licensee that it
is under no obligation and there are no limitations to Licensor's
right to grant the licenses granted hereunder to the Patent
Rights.
7.4 Licensor represents and warrants to Licensee that it
has completed all of its obligations under the Heller Agreements.
Licensor also represents and warrants that there are no other
agreements between Licensor and the Heller Entities, other than
the Heller Agreements, relating to or affecting the Patent Rights,
nor are there any decisions or adjudications of any court or panel
having jurisdiction over any dispute or litigation to which
Licensor is or was a party relating to or affecting the Patent
Rights. Furthermore, Licensor represents and warrants to Licensee
that all maintenance fees, annuities, filing fees, and any other
fees and taxes required to obtain and maintain in force the
Licensed Patents in the United States have been paid by Licensor
or by Licensor's licensor.
7.5 Licensor represents and warrants to Licensee that the
Licensed Patents listed on Exhibit A include all of the infrared
technology based or dual use infrared/radio frequency patent
applications and patents owned by Licensor and all Patent Rights
of Licensor under the Heller Agreements. Licensor represents and
warrants to Licensee that there is no person or entity who has
notified Licensor that such person or entity claims ownership of,
or in any way challenges the interests of Licensor in, the Patent
Rights.
8. MISCELLANEOUS
This Agreement shall not result in or permit either party to
become the legal representative or agent of the other. Neither
party has the right or authority to assume, create, or incur any
liability or any obligation of any kind, express or implied,
against or in the name of, or on behalf of the other party. Each
party's responsibilities hereunder are strictly those of an
independent contractor. Nothing herein shall cause the parties to
become principal and agent, nor shall any relationship arise other
than that of an independent contractor. The terms of this
Agreement may be modified only by subsequent written agreement
between both parties. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof or thereof or affecting the validity or enforceability of
such provision in any other jurisdiction. This Agreement embodies
the entire agreement and understanding between the parties hereto
as to the subject matter of this Agreement and supersedes all
prior agreements and understandings, oral or written, between
them, relating to the granting of a license to Licensee under the
Patent Rights, which is the subject matter of this Agreement. The
captions in this Agreement are for convenience of reference only
and shall not define or limit any of the terms or provisions
hereof. This Agreement may be executed in any number of
counterparts, and by each party on separate counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument. All references in this
Agreement to Sections are to Sections contained in this Agreement
unless a different document is expressly specified. This
Agreement will apply to, be binding in all respects upon, and
inure to the benefit of any legal representatives, successors and
permitted assigns of the parties. Nothing expressed or referred
to in this Agreement will be construed to give any person or
entity other than the parties to this Agreement any legal or
equitable right, remedy, or claim under or with respect to this
Agreement or any provision of this Agreement. This Agreement and
all of its provisions and conditions are for the sole and
exclusive benefit of the parties to this Agreement and their
successors and permitted assigns.
9. THIRD PARTY INFRINGEMENT
Nothing in this Agreement shall obligate Licensor to bring or
prosecute actions or suits against third parties for patent
infringement. Licensor does not warrant the validity, scope or
enforceability of the Patent Rights.
10. DISCLAIMERS, LIMITATIONS OF LIABILITY, AND THE LIKE
10.1 Nothing in this Agreement shall make either Licensor or
persons acting on its behalf responsible for any injury to or
death of persons or other living things or damage to or
destruction of property or for any other loss, damage, or injury
of any kind whatsoever resulting from Licensee's (or those
claiming rights by or through Licensee) manufacture, use, or sale
of Licensed Products or use of Patent Rights.
10.2 NEITHER LICENSOR NOR PERSONS ACTING ON LICENSOR'S BEHALF MAKE
IN THIS AGREEMENT ANY WARRANTY, EXPRESS OR IMPLIED: (1) WITH
RESPECT TO THE MERCHANTABILITY, FITNESS, ACCURACY, COMPLETENESS OR
USEFULNESS OF ANY SERVICES, MATERIALS OR INFORMATION FURNISHED BY
LICENSOR; (2) THAT THE USE OF ANY SUCH SERVICES, MATERIALS OR
INFORMATION WILL NOT INFRINGE PRIVATELY OR PUBLICALLY OWNED
PATENTS; (3) THAT ANY SERVICES, MATERIALS OR INFORMATION FURNISHED
BY LICENSOR UNDER THIS AGREEMENT WILL NOT RESULT IN INJURY OR
DAMAGE WHEN USED FOR ANY PURPOSE; (4) THAT THE SERVICES, MATERIALS
OR INFORMATION FURNISHED HEREUNDER, IF ANY, WILL ACCOMPLISH THE
INTENDED RESULTS OR ARE SAFE FOR ANY PURPOSE, INCLUDING THE
INTENDED OR PARTICULAR PURPOSE. FURTHERMORE, IN NO EVENT SHALL
LICENSOR BE LIABLE UNDER THIS AGREEMENT FOR CONSEQUENTIAL OR
INCIDENTAL DAMAGES IN ANY EVENT OR UNDER ANY CONCEIVABLE
CIRCUMSTANCES IN THE ABSENCE OF WILLFUL MISCONDUCT ON THE PART OF
LICENSOR.
10.3 Licensee, and any Affiliate or Permitted Assignee claiming
rights under this Agreement, agrees to indemnify and hold
harmless Licensor and persons acting on its behalf from all
liability, costs and expenses incurred (including attorney
fees), and all liability to any person, including Licensee, any
Affiliate or Permitted Assignee, or its personnel for injury to
or death of persons or other living things, or injury to or
destruction of property, resulting from Licensee's or
Affiliate's or Permitted Assignee's manufacture, use, or sale
of Licensed Products, in whatever form.
11. CONFIDENTIALITY. Except to the extent that either party
may otherwise determine disclosure of all or any part of this
Agreement is required by law, each party agrees to use reasonable
efforts to hold confidential the financial and economic terms of
this Agreement (including all amendments and modifications of such
terms) (the "Confidential Terms"), and not hereinafter directly or
indirectly to divulge, disseminate or disclose the Confidential
Terms. Further, and subject to the foregoing, each party shall
use reasonable efforts to restrict distribution of copies of any
the above-mentioned documents or other information or documents
related thereto or any terms thereof only to such party's
attorneys, senior officers and members of the board of directors,
and to those of its employees having need to know such
Confidential Terms (and only to the extent of such need). If
either party is required by subpoena or other legal process of law
to disclose the Confidential Terms, the party required to make
such a disclosure shall, when feasible, give notice to and
cooperate with the other party to allow the other party, at its
expense, to resist disclosure of, or obtain an exemption from the
requirement to disclosure, the Confidential Terms. With respect
to either party's reporting requirements to the public and/or the
SEC, the parties agree that they shall each cooperate with one
another to exclude from disclosing any of the Confidential Terms
that the other party desires not to be disclosed for competitive
or other privacy reasons. The Licensee acknowledges that the
Licensor may deem it advisable, and shall be at liberty, to make
the unexpurgated entirety of this Agreement publicly available.
Both parties agree that before any written press release is made
concerning this Agreement they shall consult and cooperate with
each other concerning the text of such press release.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement in duplicate as of the day and year first above.
VERSUS TECHNOLOGY, INC. HILL-ROM SERVICES, INC.
(Licensor) (Licensee)
By:___________________________ By:________________________
Authorized Signature Authorized Signature
___________________________ ________________________
Printed Name Printed Name
___________________________ ________________________
Title Title
EXHIBIT A
(Non-Exclusive Patent License Agreement Dated _________________)
Licensed Patents
=================================================================
Country Patent no. or Title Date Issued
application
serial no.
=================================================================
US 09/063,715 Method and system for
locating subjects within a
tracking environment
WO 9907804 Method and System For
Locating Subjects Within a
Tracking Environment
US 6,104,295 Electronic band tag and
method of storing ID
information therein 15 August 2000
US 5,572,195 Sensory and control system
for local area networks 5 November 1996
US 5,548,637 Method and apparatus for
locating personnel and
objects in response to
telephone inquiries 20 August 1996
US 5,387,993 Method for receiving and
transmitting optical data
and control information to
and from remotely located
receivers and transmitters
in an optical locator
system 07 February 1995
US RE 36,530 Method for receiving and
transmitting optical data
and control information to
and from remotely located
receivers and transmitters
in an optical locator
system 25 January 2000
WO 9501014 A method for receiving and
transmitting optical data
and control information in
an optical locator
system 05 January 1995
AU 7,250,594 A method for receiving and
transmitting optical data
and control information in
an optical locator
system 17 January 1995
US 5,355,222 Optical receiver for an area
location system 11 October 1994
WO 9323719 Optical receiver for an area
location system 25 November 1993
EP 9323719W1 Optical receiver for an area
location system 01 March 1995
EP 640206A4 Optical receiver for an area
location system 30 October 1996
EP 640206A1 Optical receiver for an area
location system 01 March 1995
US 5,276,496 Optical receiver for an area
location system 04 January 1994
US 5,119,104 Location system adapted for
use in multipath
environments 02 June 1992
US RE 36,791 Location system adapted for
use in multipath
environments 25 July 2000
JP 6,186,316 08 July 1994
US 5,027,314 Apparatus and Method for
Position Reporting 25 June 1991
EP 333459A2 Apparatus and Method for
Position Reporting 20 September 1989
EP 333459A3 Apparatus and Method for
Position Reporting 18 July 1990
GB 333459R2 Apparatus and Method for
Position Reporting 20 September 1989
GB 333459R3 Apparatus and Method for
Position Reporting 18 July 1990
JP 2028581A2 Position Reporting Apparatus
and Method 30 January 1990
US 5,017,794 Apparatus and method for
varying the timing of a
control signal 21 May 1991
US 4,906,853 Apparatus and Method for
varying the timing of a
control signal 06 March 1990
VERSUS TECHNOLOGY, INC. HILL-ROM SERVICES, INC.
(Licensor) (Licensee)
By:_________________________ By:________________________
Authorized Signature Authorized Signature
_________________________ ________________________
Printed Name Printed Name
________________________ ________________________
Title Title
EXHIBIT B
(License Agreement Dated ____________________ )
Heller Agreements
VERSUS TECHNOLOGY, INC. HILL-ROM SERVICES, INC.
(Licensor) (Licensee)
By:__________________________ By:________________________
Authorized Signature Authorized Signature
__________________________ ________________________
Printed Name Printed Name
__________________________ ________________________
Title Title
Exhibit 99(a)
Press Release
Canadian Healthcare Facilities Install Tracking System
by Versus Technology, Inc.
VIS(tm) Locating System To Enhance Operational Efficiency and
Patient Care
Traverse City, Michigan, June 15, 2000: Versus Technology, Inc.
(OTC BB: VSTI) continues to expand its installation base of its
patented locating systems in Canada with installations at Le Foyer
du Bonheur nursing home and CHVO hospital in Hull, Quebec. Sales
of the Versus Information System, VIS(tm), were handled by Sololabe,
an independent sales agent for Versus in Canada. The VIS(tm) system
was integrated into the existing nurse call system at the Foyer du
Bonheur facility to expand its usefulness and reporting
capabilities. A Wireless Call System (WCS) was installed in the
Intensive Coronary Care unit of the CHVO facility.
"The advantage of the new locating system is that it is much more
useful and greatly reduces the amount of noise pollution that
overhead paging produces," stated Jean Pierre Allard, Director
General at Le Foyer. "Before, we had to page many times over the
speaker in order to locate an employee, now with the Versus system
we can find them immediately by viewing their location on the
computer screen." CHVO is using the newest addition to the VIS(tm)
product line, the Wireless Call System (WCS). WCS software acts
as a traditional nurse call system but gives the patient the
freedom to call for assistance from anywhere in the unit rather
than restricting call origination to the traditional pull cord.
When a patient places a call, a light is turned on in the hallway.
As a caregiver enters a patient's room, the corresponding nurse
call light associated with his/her skill level is automatically
turned on and the patient call is cancelled. The patient may also
call for assistance from areas outside their room in which case
the caregiver would utilize a computer screen floor plan to locate
the individual. "The Wireless Call System gives us the
flexibility of locating the staff during the night, without using
the paging system," stated Allard. Increasing the quality of care
while increasing efficiency are two of the main benefits provided
by the Versus product line.
"We believe by giving customers the most robust, multi-functioning
locating and call system possible, the VIS(tm) and WCS systems will
quickly become very popular," stated Robert Butler, Director of
International Sales and CAO, Versus Technology, Inc. "Not only
can VIS(tm) operate as a stand-alone locating system, it also
integrates into a variety of other clinical software programs such
as emergency tracking, asset management, and security systems to
enhance their efficiency." "By working closely with facilities in
field testing new applications, Versus not only develops a high-
quality product, but also develops committed partners like CHVO
and Foyer du Bonheur," stated Butler. "We appreciate their
assistance and feedback as we strive to bring more functionality
to locating and call systems." Versus has presented its VIS(tm)
product line to the Quebec Ministry of Health and the Ministry
agreed that Versus offers major advantages. The Ministry, whose
budget is over 15 billion Canadian dollars, oversees over 500
facilities.
To continue promotion of the VIS? product line in Canada, Versus
along with two of its resellers, Health Inventory Management
(Winnipeg, Manitoba) and Healthcare I.T. (Matthews, North
Carolina), will be demonstrating the VIS solutions and integration
capabilities at the National Healthcare Leadership Conference in
Ottawa, Ontario June 18-20, 2000.
Versus Technology, Inc. (http://www.versustech.com) (Versus) is a
developer of leading-edge technology used for process improvement
in the healthcare, security, government and corporate markets.
Versus' core technology makes locating systems more precise,
security systems more intelligent, data collection routines
automatic and asset management systems more efficient. Versus'
systems, which are currently installed in hospitals, corporate
facilities, government facilities and other complexes, permit the
automatic and accurate registry of essential management and
business information. By monitoring the precise location of
personnel or equipment and automatically recording events
associated with their locations, the systems offer real-time asset
and staff locating, automatic data collection, access/egress
control and two-way communication capabilities. Versus'
proprietary locating systems are sold primarily through an
expanding international network of resellers who market Versus'
products as enhancements to their existing product lines. In
addition to the reseller network, Versus is also represented in
Canada by an independent sales agent.
Safe Harbor Provision
This document may contain forward-looking statements relating to
future events, such as the development of new products, the
commencement of production or the future financial performance of
the Company. These statements fall within the meaning of forward-
looking information as defined in the Private Securities
Litigation Reform Act of 1995. These statements are subject to a
number of important risks and uncertainties that could cause
actual results to differ materially including, but not limited to,
economic, competitive, governmental and technological factors
affecting the Company's markets and market growth rates, products
and their rate of commercialization, services, prices and adequacy
of financing and other factors described in the Company's most
recent annual report on Form 10-KSB filed with the Securities and
Exchange Commission, which can be reviewed at http://www.sec.gov.
The Company undertakes no obligation to update, amend or clarify
forward-looking statements, whether because of new information,
future events or otherwise.
Exhibit 99 (b)
Press Release
VERSUS TECHNOLOGY EARNS
ISO 9001 CERTIFICATION
Traverse City, Mich., August 9, 2000 - Versus Technology, Inc.(OTC
BB: VSTI) announced it has achieved certification for ISO 9001.
"This achievement is a key step in our long-range plans of Versus
Technology, Inc. becoming the leader in the design and manufacture
of locating technologies," stated Gary Gaisser, President and CEO.
International Standards Organization (ISO) is a worldwide
recognized set of business standards that enhances an
organization's utilization of resources and promotes more
consistent and quality internal processes while increasing
communication with customers.
"The ISO certification involved training of a core ISO management
team to oversee the process, creation of an Internal Audit Team to
monitor procedures and 100% dedication of all employees to
maintain compliance to established procedures," stated Dan
Sensenbaugh, Quality Assurance Manager. The elements in the 9001
quality standard include areas in quality system set-up, design
control, document and data control, and inspection and testing
procedures necessary to become a critical component supplier to
Versus' current and planned business partners. "Being recognized
as an ISO-compliant designer and manufacturer is an important step
in Versus' business plan," stated Henry Tenarvitz, Chief Operating
Officer. "This certification advances our efforts to become an
integral supplier to very large organizations such as HID
Corporation and other substantial businesses. Knowing that a
company has well-documented procedures and processes in place
ensures consistent products to the user, resulting in customer
satisfaction - one of the key drivers for repeat business."
The ISO certification is the first international standard approval
for Versus and sets the stage for additional approval from other
industry standard organizations. Versus Technology, Inc.'s ISO
achievement is quite remarkable since less than 1% of all U.S.
businesses have attained ISO accreditation.
Versus Technology, Inc. (http://www.versustech.com) (Versus) is a
developer of leading-edge technology used for process improvement
in the healthcare, security, government and corporate markets.
Versus' core technology makes locating systems more precise,
security systems more intelligent, data collection routines
automatic and asset management systems more efficient. Versus'
systems, which are currently installed in hospitals, corporate
facilities, government facilities and other complexes, permit the
automatic and accurate registry of essential management and
business information. By monitoring the precise location of
personnel or equipment and automatically recording events
associated with their locations, the systems offer real-time asset
and staff locating, automatic data collection, access/egress
control and two-way communication capabilities. Versus'
proprietary locating systems are sold primarily through an
expanding international network of resellers who market Versus'
products as enhancements to their existing product lines. In
addition to the reseller network, Versus is also represented in
Canada by an independent sales agent.
Safe Harbor Provision
This document may contain forward-looking statements relating to
future events, such as the development of new products, the
commencement of production or the future financial performance of
the Company. These statements fall within the meaning of forward-
looking information as defined in the Private Securities
Litigation Reform Act of 1995. These statements are subject to a
number of important risks and uncertainties that could cause
actual results to differ materially including, but not limited to,
economic, competitive, governmental and technological factors
affecting the Company's markets and market growth rates, products
and their rate of commercialization, services, prices and adequacy
of financing and other factors described in the Company's most
recent annual report on Form 10-KSB filed with the Securities and
Exchange Commission, which can be reviewed at http://www.sec.gov.
The Company undertakes no obligation to update, amend or clarify
forward-looking statements, whether because of new information,
future events or otherwise.
Exhibit 99 (c)
Press Release
VERSUS TECHNOLOGY FURTHER PENETRATES CANADIAN MARKET
Three contracts recently awarded.
Traverse City, Michigan, August 25, 2000 -- Traverse City based
Versus Technology, Inc. (OTC BB: VSTI) announced three contract
awards resulting form its Canadian marketing efforts. "Our third
quarter performance is very encouraging," said Robert Butler,
Director of International Sales for Versus. "We are very
satisfied with these results and feel the market is accepting our
technology faster than we had originally expected. We will
concentrate near-term energies on concluding these projects and
building the necessary infrastructure to support the growth we
expect to be forthcoming." The contracts awarded were to install
or supply product for the following facilities:
C.H.S.L.D. Ste-Anne-de-Beaupre and C.L.S.C. Orleans (Ste-Anne)
Versus was awarded the contract to supply and install its Wireless
Nurse Call (WNC) system in the newly constructed Ste-Anne-de-
Beaupre facility located approximately 30 miles north of Quebec
City, Quebec. The 200-bed long-term care facility, scheduled to
open in mid-September, is believed to be the first completely WNC
installation in the world. "The Versus installation at Ste-Anne
is a significant step in our market penetration efforts in
Canada," said Louis Beriault, President of Sololabe - Versus'
Independent Sales Agent in Canada. "To our knowledge it is the
first ever installation of a completely wireless nurse call
system. Previous Canadian installations have been retrofits to
existing nurse call systems or stand-alone tracking systems."
Versus' WNC system allows patients to call care givers from
virtually anywhere in the hospital, unlike traditional nurse call
systems which limit the patient's mobility due to the cord
required to activate the call system. The patient's call is
forwarded to staff pocket pagers and central nursing stations
providing efficient and reliable responses to patients' needs.
"The Ste-Anne project is our first totally wireless install," said
Mr. Butler. "We expect its success to fuel further growth in the
Canadian market and provide the necessary exposure to make other
market entries much easier."
Maison Accueil Sagesse (Sisters)
Les Filles de la Sagesse d'Ontario (Sisters of Wisdom for Ontario)
are renovating and expanding their 110-room Provincial House
located in Ottawa, Ontario, converting it into a care facility for
the members of their order. Versus was awarded the contract to
supply and install the call system which, like the WNC system at
Ste-Anne-de-Beaupre, will be tied to staff pocket pagers, but will
also be integrated with the building's intercom and facility-wide
paging system via the phone switch. "The Sisters' installation
demonstrates the flexibility of the Versus system," said Mr.
Beriault. "Not only is it capable of person-to-person calls, such
as patient to pagers, but it can also initiate a system-wide alarm
if one is needed."
Hopital General du Lakeshore (Lakeshore General Hospital)
Lakeshore General Hospital is a 250-bed facility located in
Montreal, Quebec currently building a $34CD million ambulatory
care center, the first of three such centers announced by the
Quebec Ministry of Health for the Montreal area. Once this
expansion is completed (scheduled for August 2001), a full
renovation of the existing Lakeshore facility estimated to cost
over $30CD million, will commence. Versus will supply and install
its WNC system under a teaming agreement with Bell Canada. Bell
was awarded the contract using Versus' components for the WNC
installation on Phase 1 of the project after a public tender
process. "We are pleased to work with Bell on this project and
hope this installation in one of Canada's largest cities will lead
to future business," said Mr. Butler. "Versus will now have
installations in three major population centers of Canada, all of
which are within easy travelling from the country's other large
cities. We hope to gain further market share by using these
prominent facilities as reference sites for future customers."
Versus Technology, Inc. (http://www.versustech.com) (Versus) is a
developer of leading-edge technology used for process improvement
in the healthcare, security, government and corporate markets.
Versus' core technology makes locating systems more precise,
security systems more intelligent, data collection routines
automatic and asset management systems more efficient. Versus'
systems, which are currently installed in hospitals, corporate
facilities, government facilities and other complexes, permit the
automatic and accurate registry of essential management and
business information. By monitoring the precise location of
personnel or equipment and automatically recording events
associated with their locations, the systems offer real-time asset
and staff locating, automatic data collection, access/egress
control and two-way communication capabilities. Versus'
proprietary locating systems are sold primarily through an
expanding international network of resellers who market Versus'
products as enhancements to their existing product lines. In
addition to the reseller network, Versus is also represented in
Canada by an independent sales agent.
Safe Harbor Provision
This document may contain forward-looking statements relating to
future events, such as the development of new products, the
commencement of production or the future financial performance of
the Company. These statements fall within the meaning of forward-
looking information as defined in the Private Securities
Litigation Reform Act of 1995. These statements are subject to a
number of important risks and uncertainties that could cause
actual results to differ materially including, but not limited to,
economic, competitive, governmental and technological factors
affecting the Company's markets and market growth rates, products
and their rate of commercialization, services, prices and adequacy
of financing and other factors described in the Company's most
recent annual report on Form 10-KSB filed with the Securities and
Exchange Commission, which can be reviewed at http://www.sec.gov.
The Company undertakes no obligation to update, amend or clarify
forward-looking statements, whether because of new information,
future events or otherwise.
Exhibit 99(d)
Press Release
The United States Army's Newest Medical Center To Use
Locating System from Versus Technology
VIS(tm) Locating System To Enhance Operational
Efficiency and Patient Care
Traverse City, Michigan, August 30, 2000: Womack Army Medical
Center, Fort Bragg, NC, and Versus Technology (OTC BB: VSTI)
announced the medical center has installed the Versus Information
System (VIS(tm)) for locating patients and equipment throughout
their new 155 bed facility encompassing over one million square
feet making it truly a state-of-the-art facility. This
application allows staff to quickly locate patients in over
2,300 locations within the facility.
"The VIS(tm) system provides an integral part in the patient care
formula we strive to achieve here at the new Womack Medical
Center," stated Major Rebecca Kitzmiller, Chief of Automation
Planning, Womack Medical Center (WAMC). "Immediate knowledge of
the location of high-risk patients and equipment is vitally
important for safety and security reasons." A VIS(tm) locating
system was installed on only the Cardiac floors in November of
1999 to track telemetry patients, but the value of the Versus
locating system on a larger scale became immediately apparent to
the staff at WAMC which led to the decision to install a facility-
wide system. "The ability to be able to leverage one system into
many different applications such as automatic nurse call,
emergency room tracking and asset tracking, coupled with the ease
of integration with other clinical software applications makes the
VIS(tm) locating system more valuable to the hospital," stated
Kitzmiller.
The hospital moved quickly to adopt a facility-wide application
covering over a million square feet of rooms and corridors. "To
my knowledge, this is the largest infrared tracking application,"
stated Gary Gaisser, President and CEO of Versus Technology, Inc.
"This installation demonstrates our technical ability to track
people and items on a large-scale platform." WAMC can accurately
locate patients and equipment facility-wide using over 2,300
sensors after it goes online in late summer of 2000.
In addition to real-time location information, the VIS(tm) system
provides several other benefits. Womack is exploring the option
to integrate the VIS(tm) with its nurse call system to provide
automatic Nurse Registry as well as with other hospital
information systems, including Emergency Department tracking
software to provide better scheduling and patient control.
One application unique to military hospitals is that they must be
able to handle mass casualties in both peace and war time. VIS(tm)
provides historical data for process analysis, allowing the
hospital to view time-motion data dynamically. Improved analysis
will lead to better process flow in mass casualty exercises, which
in turn will better prepare the staff and facility for real life
mass traumas.
Versus' government installations include such agencies as the
Department of Veteran Affairs, Los Alamos National Laboratories,
and a pilot program with the Naval Air Warfare Center. Womack
Medical Center, which is Versus' first project with the U.S. Army,
serves over 160,000 beneficiaries per year. The facility is
located at Fort Bragg, North Carolina home of the Airborne and
Special Operations Command. The installation is also home to the
following units: XVIII Airborne Corps, 82nd Airborne Division,
United States Army Special Operations Command (USASOC), and the 1st
Corps Support Command (COSCOM).
Separately, on August 25, the Company announced three contract
awards resulting from its Canadian marketing efforts. The first
was to supply and install its Wireless Nurse Call (WNC) system in
the newly constructed Ste-Anne-de-Beaupre facility located
approximately 30 miles north of Quebec City, Quebec. The 200-bed,
long-term care facility, scheduled to open in mid-September and is
believed to be the first completely WNC installation in the world.
The second contract, with Les Filles de la Sagesse d'Ontario
(Sisters of Wisdom for Ontario) to supply and install a call
system like the WNC system at Ste-Anne-de-Beaupre, for their 110-
room Provincial House located in Ottawa, Ontario, which they are
converting it into a care facility for the members of their order.
The final contract was to supply and install a WNC system under
an agreement with Bell Canada in Lakeshore General Hospital, a new
250-bed facility being built in Montreal, Quebec.
Versus Technology, Inc. (http://www.versustech.com) (Versus) is a
developer of leading-edge technology used for process improvement
in the healthcare, security, government and corporate markets.
Versus' core technology makes locating systems more precise,
security systems more intelligent, data collection routines
automatic and asset management systems more efficient. Versus'
systems, which are currently installed in hospitals, corporate
facilities, government facilities and other complexes, permit the
automatic and accurate registry of essential management and
business information. By monitoring the precise location of
personnel or equipment and automatically recording events
associated with their locations, the systems offer real-time asset
and staff locating, automatic data collection, access/egress
control and two-way communication capabilities. Versus'
proprietary locating systems are sold primarily through an
expanding international network of resellers who market Versus'
products as enhancements to their existing product lines. In
addition to the reseller network, Versus is also represented in
Canada by an independent sales agent.
Safe Harbor Provision
This document may contain forward-looking statements relating to
future events, such as the development of new products, the
commencement of production or the future financial performance of
the Company. These statements fall within the meaning of forward-
looking information as defined in the Private Securities
Litigation Reform Act of 1995. These statements are subject to a
number of important risks and uncertainties that could cause
actual results to differ materially including, but not limited to,
economic, competitive, governmental and technological factors
affecting the Company's markets and market growth rates, products
and their rate of commercialization, services, prices and adequacy
of financing and other factors described in the Company's most
recent annual report on Form 10-KSB filed with the Securities and
Exchange Commission, which can be reviewed at http://www.sec.gov.
The Company undertakes no obligation to update, amend or clarify
forward-looking statements, whether because of new information,
future events or otherwise.
Exhibit 99(e)
Press Release
VERSUS TECHNOLOGY AND HILLENBRAND INDUSTRIES SIGN
LICENSE AND STOCK PURCHASE AGREEMENTS
Negotiations underway on supply and engineering
services agreements
Traverse City, Mich., September 7, 2000 - Versus Technology, Inc.
(OTC BB: VSTI) announced today it has entered into a non-exclusive
Patent License Agreement with Hill-Rom Company, Inc., a subsidiary
of Hillenbrand Industries, Inc., (NYSE: HB) under which Hill-Rom
has been granted a limited license under certain of Versus' patent
rights. Concurrently with the signing of the license agreement,
Hillenbrand and Versus entered a Stock Purchase Agreement, under
which Hillenbrand purchased 2,500,000 shares of Versus' common
stock, coupled with a three year warrant to purchase an additional
2,500,000 shares of Versus stock, and a registration rights
agreement. Total consideration paid to Versus under the license
agreement and stock purchase agreement was $2,325,000.
"I am very pleased to enter an alliance with a company of
Hillenbrand's stature," said Gary Gaisser, CEO of Versus
Technology. "We feel our technology will add value to their
existing products and allow Hill-Rom to further expand their
product line as Versus introduces new applications for its
cutting-edge locating technology. Simultaneously, the transaction
provides Versus with an enhanced working capital position to
support aggressive business development activities. Versus will
continue to meet the ongoing needs of its existing family of
resellers and other Versus customers, who will also benefit from
its ongoing research and development activities. It's a win-win
for both companies."
"The possibilities for using Versus' technology to enhance Hill-
Rom's healthcare product line are significant," commented Henry
Tenarvitz, Chief Operating Officer for Versus. "While the details
of related agreements for engineering, development, and supply to
Hill-Rom of products employing Versus' technology are still being
worked out, initial discussions have already revealed several
areas where Hill-Rom can benefit from the advanced stage of our
technology's development."
"We believe this is the first step in a long-term relationship
that will benefit both parties," observed Mr. Gaisser. "We feel
Hillenbrand's investment in Versus adds to our credibility as the
leading developer of IR and IR/RF technology based tracking and
information system products. With their market presence and our
advanced technology, our combined futures should be prosperous."
Versus Technology, Inc. (http://www.versustech.com) (Versus) is a
developer of leading-edge technology used for process improvement
in the healthcare, security, government and corporate markets.
Versus' core technology makes locating systems more precise,
security systems more intelligent, data collection routines
automatic and asset management systems more efficient. Versus'
systems, which are currently installed in hospitals, corporate
facilities, government facilities and other complexes, permit the
automatic and accurate registry of essential management and
business information. By monitoring the precise location of
personnel or equipment and automatically recording events
associated with their locations, the systems offer real-time asset
and staff locating, automatic data collection, access/egress
control and two-way communication capabilities. Versus'
proprietary locating systems are sold primarily through an
expanding international network of resellers who market Versus'
products as enhancements to their existing product lines. In
addition to the reseller network, Versus is also represented in
Canada by an independent sales agent.
Safe Harbor Provision
This document may contain forward-looking statements relating to
future events, such as the development of new products, the
commencement of production or the future financial performance of
the Company. These statements fall within the meaning of forward-
looking information as defined in the Private Securities Litigation
Reform Act of 1995. These statements are subject to a number of
important risks and uncertainties that could cause actual results
to differ materially including, but not limited to, economic,
competitive, governmental and technological factors affecting the
Company's markets and market growth rates, products and their rate
of commercialization, services, prices and adequacy of financing
and other factors described in the Company's most recent annual
report on Form 10-KSB filed with the Securities and Exchange
Commission, which can be reviewed at http://www.sec.gov. The
Company undertakes no obligation to update, amend or clarify
forward-looking statements, whether because of new information,
future events or otherwise.
Exhibit 99(f)
Press Release
VERSUS TECHNOLOGY MAKES POSITIVE SHOWING AT ISC EAST
Eagle Eye(tm) Direct held high interest with
security show attendees.
Traverse City, Michigan September 8, 2000 -- Versus Technology,
Inc. (OTC BB: VSTI) successfully introduced the Eagle Eye(tm)
Direct and Eagle Eye(tm) Network along with the current
Eagle Eye(tm) Asset Control solution at the International
Security Conference (ISC) in New York, which was attended by
over 10,000 security industry professionals. Eagle Eye(tm)
Asset Control was also one of only 53 products featured in the
New Product Showcase sponsored by the Security Industry
Association for new technology in access control.
"We have spent several months developing a three-tiered approach
that will provide a distribution path for Versus products into the
security market," stated John Hunepohl, Director of Sales for the
Security Products Division of Versus. Eagle Eye(tm) Direct allows
a customer to take an active data tag, such as the Versus Infrared
locator tag, and connect it directly to an existing access control
panel. A controller board converts the Versus protocol to
security industry standard Wiegand data that the access control
panel can understand. In addition, the controller board tells the
access control system when the tag enters an area and again when
the tag exits an area.
"Eagle Eye(tm) Direct is the simplest, easiest, and most cost-
effective method for a company to begin asset tracking and
locating," stated Hunepohl. "This method requires no additional
software and minimal training of an operator by using the existing
access control system as the head end. This will allow a company
to begin using the Versus tag technology for a minimal cost before
investing thousands of dollars in a full-featured system." Versus
expects to begin shipping the first units in mid-October.
In conjunction with Eagle Eye(tm) Direct, Versus introduced the
Eagle Eye(tm) Network program to a number of access control
manufacturers. Eagle Eye(tm) Network will allow customers with an
existing access control system to integrate the entire Versus
tag, reader, collector, and concentrator data collection network
into their systems. "This is the same successful method we used
in integrating with our nurse call vendors," stated Henry
Tenarvitz, Chief Operating Officer.
"Overall, this show was validation that we are on the right
track," stated Gary Gaisser, President and CEO. "We generated the
type of interest we expected and now have solid commitments for
our products. While it will take a few months of development with
third party vendors, we should see the results of our efforts
early next year and immediate results with Eagle Eye(tm) Direct as
the controller board enters the market in October."
Versus Technology, Inc. (http://www.versustech.com) (Versus) is a
developer of leading-edge technology used for process improvement
in the healthcare, security, government and corporate markets.
Versus' core technology makes locating systems more precise,
security systems more intelligent, data collection routines
automatic and asset management systems more efficient. Versus'
systems, which are currently installed in hospitals, corporate
facilities, government facilities and other complexes, permit the
automatic and accurate registry of essential management and
business information. By monitoring the precise location of
personnel or equipment and automatically recording events
associated with their locations, the systems offer real-time asset
and staff locating, automatic data collection, access/egress
control and two-way communication capabilities. Versus'
proprietary locating systems are sold primarily through an
expanding international network of resellers who market Versus'
products as enhancements to their existing product lines. In
addition to the reseller network, Versus is also represented in
Canada by an independent sales agent.
Safe Harbor Provision
This document may contain forward-looking statements relating to
future events, such as the development of new products, the
commencement of production or the future financial performance of
the Company. These statements fall within the meaning of forward-
looking information as defined in the Private Securities
Litigation Reform Act of 1995. These statements are subject to a
number of important risks and uncertainties that could cause
actual results to differ materially including, but not limited to,
economic, competitive, governmental and technological factors
affecting the Company's markets and market growth rates, products
and their rate of commercialization, services, prices and adequacy
of financing and other factors described in the Company's most
recent annual report on Form 10-KSB filed with the Securities and
Exchange Commission, which can be reviewed at http://www.sec.gov.
The Company undertakes no obligation to update, amend or clarify
forward-looking statements, whether because of new information,
future events or otherwise.
Exhibit 99(g)
Press Release
VERSUS TECHNOLOGY REPORTS THIRD QUARTER RESULTS
Revenues top $1,000,000 again.
Traverse City, Mich., September 14, 2000 - Versus Technology,
Inc. (OTC BB: VSTI) announced revenues of $1,004,000 for the
third quarter, up 17% from revenues of $859,000 for the same
period in 1999. The Company also reported a net loss of $551,000
or $0.01 per share compared to $286,000 or $0.01 per share in
1999.
"Third quarter results were again encouraging as we topped
$1 million for the second quarter in a row and the third time
in recent history," said Gary Gaisser, President and CEO.
"Revenues for the quarter included $383,000 from Canadian sources.
Our Cordless Nurse Call product has been very successful since
it's launch earlier this year." On August 25, 2000, Versus
announced three contract awards resulting from its Canadian
marketing efforts.
Versus attributed the increased loss over the same three months in
the prior year to higher interest expense, increased R & D costs,
and increased costs of revenues. "Our Canadian revenues represent
full system installations which incorporate higher-priced third-
party components," said Henry Tenarvitz, Chief Operating Officer.
"We also incorporated lower margins into a Department of Defense
project to provide a highly visible reference site to aid in
future revenue-generating activities."
For the nine months ended July 31, 2000, revenues were up 3% from
$2,665,000 in 1999 to $2,749,000 in 2000. The net loss for the
first nine months of fiscal 2000 increased to $1,380,000 from
$867,000 for the same period in 1999. Interest expense and
increased cost of revenues again accounted for the majority of
the increased loss. "Working capital was increased earlier this
month with the Hillenbrand transaction which we announced on
September 7," said Mr. Gaisser. "When you remove the Marquette
contract from 1999 results, the actual growth in revenues this year
is 53%. We are very pleased with this trend as strategic
initiatives set in motion earlier this year are starting to show
results."
Versus Technology, Inc. (http://www.versustech.com) (Versus) is
a developer of leading-edge technology used for process improvement
in the healthcare, security, government and corporate markets.
Versus' core technology makes locating systems more precise,
security systems more intelligent, data collection routines
automatic and asset management systems more efficient. Versus'
systems, which are currently installed in hospitals, corporate
facilities, government facilities and other complexes, permit the
automatic and accurate registry of essential management and
business information. By monitoring the precise location of
personnel or equipment and automatically recording events
associated with their locations, the systems offer real-time asset
and staff locating, automatic data collection, access/egress
control and two-way communication capabilities. Versus'
proprietary locating systems are sold primarily through an
expanding international network of resellers who market Versus'
products as enhancements to their existing product lines. In
addition to the reseller network, Versus is also represented in
Canada by an independent sales agent.
Safe Harbor Provision
This document may contain forward-looking statements relating to
future events, such as the development of new products, the
commencement of production or the future financial performance of
the Company. These statements fall within the meaning of
forward-looking information as defined in the Private Securities
Litigation Reform Act of 1995. These statements are subject to a
number of important risks and uncertainties that could cause
actual results to differ materially including, but not limited to,
economic, competitive, governmental and technological factors
affecting the Company's markets and market growth rates, products
and their rate of commercialization, services, prices and adequacy
of financing and other factors described in the Company's most
recent annual report on Form 10-KSB filed with the Securities and
Exchange Commission, which can be reviewed at http://www.sec.gov.
The Company undertakes no obligation to update, amend or clarify
forward-looking statements, whether because of new information,
future events or otherwise.
VERSUS TECHNOLOGY, INC.
Consolidated Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended July 31, Nine Months Ended July 31,
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 1,004,000 $ 859,000 $ 2,749,000 $ 2,665,000
Operating expenses
Cost of revenues 694,000 404,000 1,686,000 1,126,000
Research and
development 160,000 141,000 502,000 473,000
Sales and marketing 370,000 323,000 1,124,000 1,031,000
General and
administrative 277,000 271,000 843,000 905,000
------------ ------------ ------------ ------------
1,501,000 1,139,000 4,155,000 3,535,000
------------ ------------ ------------ ------------
Loss From Operations ( 497,000) ( 280,000) (1,406,000) ( 870,000)
------------ ------------ ------------ ------------
Other Income (Expenses):
Interest income 14,000 15,000 61,000 24,000
Interest expense ( 68,000) ( 21,000) ( 198,000) ( 21,000)
Other (net) - - ( 6,000) -
------------ ------------ ------------ ------------
( 54,000) ( 6,000) ( 143,000) 3,000
------------ ------------ ------------ ------------
Loss before cumulative
effect of change in
accounting principle ( 551,000) ( 286,000) (1,549,000) ( 867,000)
Cumulative effect on
prior years (to
October 31, 1999) of
changing to different
method of accounting
for options issued
to non-employee
directors (Note 5) - - 169,000 -
------------ ------------ ------------ ------------
Net Loss $( 551,000) $( 286,000) $(1,380,000) $( 867,000)
============ ============ ============ ============
Basic and diluted per
share amounts:
Loss before cumulative
effect of change in
accounting principle $( .01 ) $( .01 ) $( .04 ) $( .02 )
Cumulative effect on
prior years (to
October 31, 1999)
of changing to
different method of
accounting for
options issued to
non-employee
directors (Note 5) - - - -
------------ ------------ ------------ ------------
Basic and Diluted Net
Loss Per Share $( .01 ) $( .01 ) $( .04 ) $( .02 )
============ ============ ============ ============
</TABLE>
