EXHIBIT 10.3
Form of Registration Rights Agreement
with Precision Tracking FM, Inc.
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of this ___ day
of _______, 1997, between VERSUS TECHNOLOGY, INC., a
Delaware corporation (the `Corporation`), and PRECISION
TRACKING FM, Inc., a Texas corporation (`PTFM`).
W I T N E S S E T H
WHEREAS, the Corporation agreed to provide PTFM with
registration rights as set forth herein as further
consideration for the acquisition by PTFM of all shares of
Common Stock of the Corporation closing pursuant to an
agreement of even date (the `Transfer Agreement`)
transferring certain intellectual property from PTFM to the
Corporation.
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,
corporation, 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`)
acquired by PTFM pursuant to the Transfer Agreement.
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 and the expenses of one firm of
attorneys who shall represent PTFM. Registration Expenses
shall not include any underwriter`s discounts, commissions
or transfer taxes paid by PTFM.
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 one time more than six (6) months after the
date hereof, upon the written request of PTFM that the
Corporation effect the registration under the Securities Act
of all or part of PTFM`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
open 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 Registerable Securities may
be sold publicly pursuant to Rule 144 by persons who are not
affiliates of the Company.
(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 PTFM`s
request for such registration.
(c) Expenses. The Corporation will pay all
Registration Expenses in connection with any registration of
the Registrable Securities.
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 to PTFM of its intention to do so. Upon the written
request of PTFM within 30 days after the receipt of any such
notice (which request shall specify the Registrable
Securities intended to be disposed of by PTFM, 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 PTFM 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 Corporation may, at its election, give
written notice of such determination to PTFM, 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
PTFM to request that such registration be effected as a
registration under Section 2.1, and (ii) in the case of a
determination 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 Company of its obligation to effect any
registration upon request under Section 2.1. The
Registration Expenses of PTFM 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 PTFM and any other Person pro rata
on the basis of the aggregate number of shares requested to
be included.
(c) Sales during Registration. PTFM participating in
the incidental registration agree, if requested by the
managing underwriter in an underwritten public offering, not
to effect any public sale or distribution of securities of
the Corporation of the same class as the Registrable
Securities so registered, including a sale pursuant to Rule
144 under the Securities Act (except as part of such
underwritten offering), during the ten-day period prior to,
and during the 90-day period beginning on, the closing date
of the underwritten offering. PTFM agrees that it shall
undertake, in its request to participate in any such
underwritten offering, not to effect any public sale or
distribution of any applicable class of Registrable
Securities during the 90-day period commencing on the date
of sale of such applicable class of Registrable Securities
unless it has provided 90 days prior written notice of such
sale or distribution to 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:
(i) prepare and (within 120 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 effective;
(ii) 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 registration statement effective and to comply
with the provisions of the Securities Act for nine (9)
months if under 2.1 and 90 days if under 2.2;
(iii) furnish to PTFM 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 summary prospectus) 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 PTFM may reasonably request;
(iv) 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 PTFM 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 PTFM to consummate the disposition in such
jurisdictions of the securities owned by them, 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
(v) notify PTFM 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 PTFM promptly prepare
and furnish to PTFM 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.
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.
(b) Time-Outs. The Corporation shall be entitled
to postpone for a period of time (which in the judgment of
the Corporation is reasonable under the circumstances) 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 PTFM
written notice of such determination. Further, the
Corporation shall have the right to require PTFM
participating not to sell securities in a public offering
for a period of up to 90 days during the effectiveness of
any registration statement if the Corporation shall
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. If pursuant to the
preceding sentence the Corporation has required PTFM 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(ii) hereof shall be extended for a period
equal to the length of such discontinuance.
(c) Approval of Underwriters. If PTFM 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
Corporation. In the event of any registration of any
Registrable Securities of the Corporation under the
Securities Act pursuant to Section 2.1 or 2.2, the
Corporation will, and hereby does, indemnify and hold
harmless, PTFM, its directors and officers, any underwriter
and each other Person, if any, who controls PTFM or any such
underwriter, against any losses, claims, damages or
liabilities, to which PTFM or any such director or officer
or underwriter or controlling person 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 of any material fact
contained in any registration statement under which such
securities were registered 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 PTFM, and
each such director, officer, underwriter and controlling
person 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 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 PTFM or underwriter, as
the case may be, 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 PTFM 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
PTFM, or any such director, officer or controlling person
and shall survive the transfer of such securities by PTFM.
(b) Indemnification by PTFM. 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 PTFM
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 control 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 or in
conformity with written information furnished to the
Corporation by PTFM 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 PTFM.
(c) Notices of Claims, etc. Promptly after
receipt by an indemnified party of 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 PTFM 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. Notices. All communication provided for hereunder
shall be sent by first-class mail and, if to PTFM, addressed
to it at 00000 X. Xxxxxxxx Xxxxxxx, Xxxxxx, Xxxxx 00000-0000
or to such other address as PTFM may have designated to the
Corporation in writing, and, if to the Corporation,
addressed to it at c/o Versus Technology, Inc., 0000 Xxxxxx
Xxxxx Xxxx, Xxxxxxxx Xxxx, XX 00000, Attention: President,
or to such other address as the Corporation may have
designated to PTFM in writing.
4. 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.
5. 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.
6. 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.
7. Counterparts. This Agreement may be executed
simultaneously 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:
__________________________
Xxxx X. Xxxxxxx, President
PRECISION TRACKING FM, INC.
By:
_________________________
Xxxx X. Xxxxxx, President
