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EXHIBIT 10(E)
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of this 26 day of August, 1996,
between VERSUS TECHNOLOGY, INC., a Delaware corporation (the "Corporation"),
and the persons set forth on Schedule A hereto (the "Investors").
W I T N E S S E T H
WHEREAS, the Corporation agreed to provide the Investors with registration
rights as set forth herein as further consideration for the purchase by the
Investors of 10,000,000 shares of Common Stock of the Corporation closing as of
the date of this 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, 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") purchased by the Investors in the aggregate
share amount set forth on Exhibit A.
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 the
Investors. Registration Expenses shall not include any underwriter's
discounts, commissions or transfer taxes paid by the Investors.
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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
two times more than six (6) months after the date hereof, upon the
written request of Investors owning at least 25% of the Registrable Securities
that the Corporation effect the registration under the Securities Act of all or
part of each 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 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 Form S-3B 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(k)
promulgated under the Securities Act 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
the Investors' 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 the Investors of its intention to do
so. Upon the written request of any 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 Corporation may, at its election, give
written notice of such determination to the Investors, 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 Investors 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
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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 the Investors 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 Investors and any other Person pro rata on the basis of the
aggregate number of shares requested to be included.
(c) Sales during Registration. The Investors 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. Each Investor 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 or
until such time as Rule 144(K) is available, as the case may be, if under 2.1
and 90 days if under 2.2;
(iii) furnish to each Investor participating such number of conformed
copies of such registration statement and of each amendment and supplement
thereto (in each
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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 such Investor 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 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 Investors participating 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 each Investor participating, 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 participating Investors promptly
prepare and furnish to the participating Investors 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) 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 the Investor written notice of such determination; provided, however,
that such restriction shall be effective for a period of 30 days and the
Company may only institute such restriction
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twice during any twelve month period. Further, the Corporation shall
have the right to require each Investor 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 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(ii)
hereof shall be extended for a period equal to the length of such
discontinuance.
(b) 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 with such approval not to be unreasonably withheld by the Corporation.
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, each Investor, its directors and
officers, any underwriter and each other Person, if any, who controls any
Investor or any such underwriter, (each, an "Indemnified Party") 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 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 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.
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(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 each Investor
participating, 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 the Investor 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 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.
3. Notices. All communication provided for hereunder shall be sent by
first-class mail and, if to a Investor, addressed to it at the address set
forth on Exhibit A, or to such other address as the Investor may have
designated to the Corporation in writing, and, if to the Corporation, addressed
to it at c/o Versus Technology, Inc., 0000 X. Xxxx Xxxx Xxxxx, Xxxxxxxx Xxxx,
XX 00000, Attention: President, or to such other address as the Corporation may
have designated to the Investor in writing.
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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 New Jersey.
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:_____________________________
Name: Xxxx X. Xxxxxxx
Title: President
The Investors by their Agent-in-Fact
pursuant to Subscription Agreements
signed by them
BDS SECURITIES CORPORATION
By:_____________________________
Name:
Title:
XXXXXXX XXXXX SPECIAL VALUE FUND, INC.
By:____________________________________
Name:
Title:
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Schedule A
[omitted; copies shall be made available to the Securities Exchange Commission
upon request.]
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