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EXHIBIT 10.17
 
Registration Rights Agreement

THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made as of April 2, 2008
(the "Effective Date"), by and among Visual Management Systems, Inc., a Nevada
corporation, with a principal place of business at 1000 Industrial Way North
Suite C, Toms River, NJ 08755 (the "Company"), and Intelligent Digital Systems,
LLC, a Delaware limited liability company (the “Holder”).
 
Recitals
 
WHEREAS, the Company may issue shares of its Common Stock, par value $0.001 per
share (the "Common Stock"), to the Holder pursuant to the terms of the Unsecured
Convertible Promissory Note of even date herewith (the "Note”) issued pursuant
to that certain Asset Purchase Agreement of even date herewith by and among the
Company, the Holder, Jay Russ, an individual, and IDS Patent Holding, LLC, a New
York limited liability company (the "Asset Purchase Agreement");
 
WHEREAS, it is a condition precedent to the consummation of the transaction
contemplated by the Asset Purchase Agreement that the Company provide for the
rights set forth in this Agreement.
 
NOW, THEREFORE, in consideration of the mutual promises and covenants set forth
herein, the parties hereto further agree as follows:
 
1.
Definitions.  For purposes of this Agreement:
     
1.1.
The term "1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
       
1.2.
The term "Act" means the Securities Act of 1933, as amended.
       
1.3.
The term “Registration Statement” means any such form under the Act as in effect
on the date hereof or any registration form under the Act subsequently adopted
by the SEC that functions to register publicly tradable shares of the Common
Stock of the Company
       
1.4.
The terms "Register," "Registered," and "Registration" refer to a registration
effected by preparing and filing a Registration Statement or similar document in
compliance with the Act, and the declaration or ordering of effectiveness of
such Registration Statement or document.
       
1.5.
The term "Registrable Securities" means (a) all shares of  Common Stock,
issuable to the Holder upon conversion of all or any portion of the principal
amount or accrued interest under the Note, and (b) any shares of Common Stock
issued or issuable by the Company in exchange or substitution for or otherwise
in respect of any shares referred to in the foregoing clause (a) by way of stock
dividend or split or in connection with a combination or subdivision of shares,
reclassification, recapitalization, merger, consolidation or other
reorganization of the Company.
       
1.6.
The term "Rule 144" shall mean Rule 144 as promulgated by the SEC under the Act,
as such Rule may be amended from time to time, or any similar successor rule
that may be promulgated by the SEC.
       
1.7.
The term "Rule 145" shall mean Rule 145 as promulgated by the SEC under the Act,
as such Rule may be amended from time to time, or any similar successor rule
that may be promulgated by the SEC.
       
1.8.
The term "SEC" shall mean the Securities and Exchange Commission.

 

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2.
Demand Registration.  At any time after the Note shall have become convertible
into Common Stock in accordance with its terms, if the Company shall receive a
written request from the Holder that the Company file a Registration Statement
under the Securities Act with respect to any or all of the Registrable
Securities, then the Company shall use its best efforts as soon as practicable,
and in any event within ninety (90) days of the receipt of such a request, to
file such Registration Statement and, as expeditiously as reasonably possible,
cause such Registration Statement to become effective under the Act.  The
Company shall be obligated to effect only one (1) registration pursuant to this
Section 2.
   
3.
Piggyback Registration Rights.  If at any time after the Note shall have become
convertible into Common Stock in accordance with its terms (but without any
obligation to do so) the Company proposes to register (including for this
purpose a registration effected by the Company for its shareholders) any of its
stock or other securities under the Act in connection with a public offering of
such securities solely for cash, other than: (i) a registration on Form S-8 or
other similar successor form, relating solely to the sale of securities to
participants in a Company stock plan or to other compensatory arrangements to
the extent includable on Form S-8, or other similar successor form, or (ii) a
registration on Form S-4, or other similar successor form, the Company shall, at
such time, promptly give to the Holder written notice of such
registration.  Upon the written request of the Holder given within twenty (20)
days after receipt by the Holder of such notice by the Company, the Company
shall use its best efforts to cause to be registered under the Act all of the
Registrable Securities that the Holder has requested to be included
and  registered on such Registration Statement.  In the event that in connection
with an underwritten offering the managing underwriter advise the Company that
market factors require a limitation of the number of shares to be underwritten,
then subject to the terms of any other agreements to which the Company is a
party, the Company and its underwriter shall allocate the number of shares
requested to be registered as follows: (i) first, to the Company, and (ii)
second, to the Holder and other security holders requesting registration of
securities pro rata according to the number of shares requested to be registered
by each such security holder.  The Company shall have no obligations under this
Section 3 to make any offering of its securities, or to complete an offering of
its securities that it proposes to make, and shall incur no liability to the
Holder for its failure to do so.  In connection with any offering involving an
underwriting of shares being issued by the Company, the Company shall not be
required to include any of the Registrable Securities in such underwriting
unless the Holder accepts the terms of such underwriting as agreed upon by the
Company and such underwriter(s).
   
4.
Expenses.  All expenses incurred in complying with Sections 2 and 3 hereof,
including without limitation all registration and filing fees, printing
expenses, fees and disbursements of counsel for the Company and independent
public accountants for the Company, any state securities or “blue sky” fees and
expenses, fees of the National Association of Securities Dealers, Inc.,
reasonable fees and disbursements of one (1) counsel to the Holder, fees and
expenses of transfer agents and registrars, but excluding any Selling Expenses
(as  hereinafter defined), are herein called “Registration Expenses”.  All
underwriting discounts and selling commissions applicable to the sale of
Registrable Securities are herein called “Selling Expenses”.  The Holder will
pay all Selling Expenses in connection with each Registration Statement filed
pursuant to Section 2 or Section 3 hereof on a pro rata basis (based on the
number of shares registered) with each other party that registers shares
pursuant to such registration.  The Company will pay all Registration Expenses
in connection with each Registration Statement filed pursuant to Sections 2 and
3 hereof.
   
5.
Obligations of the Parties
     
5.1.
Obligations of the Company.  Whenever required under this Agreement to affect
the registration of any Registrable Securities, the Company shall use its
commercially reasonable efforts to:

 
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5.1.1.
Prepare and file with the SEC a Registration Statement with respect to such
Registrable Securities and use its commercially reasonable efforts to cause such
Registration Statement to become effective, and, upon the request of the Holder,
keep such Registration Statement effective until the earlier of: (x) the date
six months from the date of effectiveness thereof, or (y) the date on which all
of the Registrable Securities are sold;
           
5.1.2.
Prepare and file with the SEC such amendments and supplements to such
Registration Statement and the prospectus used in connection with such
Registration Statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all Registrable Securities covered by
such Registration Statement;
           
5.1.3.
Use commercially reasonable efforts to register and qualify the securities
covered by such Registration Statement under such other securities or blue sky
laws of such jurisdictions as shall be reasonably requested by the Holder,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
           
5.1.4.
Notify Holder at any time when a prospectus relating thereto is required to be
delivered under the Act, of the happening of any event as a result of which the
prospectus included in such Registration Statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of Holder, the Company will prepare a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus will not contain
any untrue statement of a material fact or omit to state any fact necessary to
make the statements therein not misleading;
           
5.1.5.
Provide a transfer agent and registrar for all Registrable Securities registered
pursuant hereunder, not later than the effective date of such Registration
Statement;
           
5.1.6.
Advise the Holder promptly after it shall receive notice or obtain knowledge
thereof, of the issuance of any stop order by the SEC suspending the
effectiveness of such Registration Statement or the initiation or threatening of
any proceeding for such purpose and use commercially reasonable efforts to
prevent the issuance of any stop order or to obtain its withdrawal if such stop
order should be issued.
         
5.2.
Obligations of the Holder.  It shall be a condition precedent to the obligations
of the Company to take any action pursuant to Section 2 or Section 3 with
respect to the Registrable Securities of the Holder, that the Holder shall
furnish to the Company such information regarding itself and the Registrable
Securities held by it to effect the registration of the Holder's Registrable
Securities.  The Holder agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of any
Registration Statements applicable to its Registrable Securities, and agrees
that, upon receipt of any notice from the Company of the happening of any event
of the kind described in Section 5.1.4 above, such Holder will immediately
discontinue disposition of Registrable Securities pursuant the Registration
Statement covering such Registrable Securities until such Holder’s receipt of
the copies of the supplemental or amended prospectus contemplated by Section
5.1.4 and, if so directed by the Company, Holder shall deliver to the Company
(at the expense of the Company) or destroy (and deliver to the Company a
certificate of destruction) all copies in such Holder’s possession of the
prospectus covering such Registrable Securities current at the time of receipt
of such notice.

 
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6.
Delay of Registration.  No Holder shall have any right to obtain or seek an
injunction restraining or otherwise delaying any Registration as the result of
any controversy that might arise with respect to the interpretation or
implementation of this Agreement.
   
7.
Indemnification.
     
7.1.
To the extent permitted by law, the Company will indemnify and hold harmless the
Holder against any losses, claims, damages, or liabilities to which they may
become subject under the Act, the 1934 Act or other federal or state securities
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or  violations (collectively, a "Violation"):
         
7.1.1.
Any untrue statement or alleged untrue statement of a material fact contained in
a Registration Statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto
(collectively, the "Filings");
           
7.1.2.
The omission or alleged omission to state in the Filings a material fact
required to be stated therein, or necessary to make the statements therein not
misleading; or
           
7.1.3.
Any violation or alleged violation by the Company of the Act, the 1934 Act, any
state securities law or any rule or regulation promulgated under the Act, the
1934 Act or any state securities law; and the Company will pay any legal or
other expenses reasonably incurred by any person to be indemnified pursuant to
this Section in connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the indemnity agreement
contained in this subsection shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability, or action if such settlement is
effected without the consent of the Company (which consent shall not be
unreasonably withheld), nor shall the Company be liable in any such case for any
such loss, claim, damage, liability, or action to the extent that it arises out
of or is based upon a Violation that occurs in reliance upon and in conformity
with written information furnished expressly for use in connection with such
Registration by any such Holder.
         
7.2.
To the extent permitted by law, the Holder, will indemnify and hold harmless the
Company, each of its directors, each of its officers who has signed the
Registration Statement, its legal counsel and accountants, each person, if any,
who controls the Company within the meaning of the Act, any underwriter, any
other holder of securities, selling securities in such Registration Statement
and any controlling person of any such underwriter or other holder of
securities, against any losses, claims, damages, or liabilities (joint or
several) to which any of the foregoing persons may become subject, under the
Act, the 1934 Act or other federal or state securities law insofar as such
losses, claims, damages, or liabilities (or actions in respect thereto) arise
out of or are based upon any violation of the Act, the 1934 Act or other federal
or state securities law, in each case to the extent (and only to the extent)
that such violation occurs in reliance upon and in conformity with written
information furnished by such Holder expressly for use in connection with such
Registration; and each such Holder will pay, as incurred, any legal or other
expenses reasonably incurred by any person intended to be indemnified pursuant
to this subsection 7.2, in connection with defending any such loss, claim,
damage, liability, or action; provided, however, that the indemnity agreement
contained in this subsection 7.2 shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Holder, which consent shall not be
unreasonably withheld; provided, that, in no event shall any indemnity under
this subsection exceed the net proceeds from the offering received by the Holder
less the aggregate amount of any damages which the Holder has otherwise been
required to pay in respect of such loss, claim, damage or liability or any
substantially similar loss, claim, damage or liability arising from the sale of
such Registrable Securities.

 
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7.3.
Promptly after receipt by an indemnified party under this Section 7 of notice of
the commencement of any action (including any governmental action), such
indemnified party will, if a claim in respect thereof is to be made against any
indemnifying party under this Section, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party (together with all other indemnified parties
that may be represented without conflict by one counsel) shall have the right to
retain one separate counsel, with the fees and expenses to be paid by the
indemnifying party, if representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party and any other party
represented by such counsel in such proceeding.  The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, if materially prejudicial to its ability to defend such action,
shall relieve such indemnifying party of any liability to the indemnified party
under this Section, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section.
       
7.4.
If the indemnification provided for in this Section 7 is held by a court of
competent jurisdiction to be unavailable to an indemnified party with respect of
any loss, claim, damage or expense referred to therein, then the indemnifying
party in lieu of indemnifying such indemnified party hereunder, shall contribute
to the amount paid or payable by such indemnified party as a result of such
loss, claim, damage or expense in such proportion as is appropriate to reflect
the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the statements or omissions
that resulted in such loss, liability, claim or expense as well as any other
relevant equitable considerations.  The relative fault of the indemnifying party
and of the indemnified party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.  In no event shall
any Holder be required to contribute an amount in excess of the net proceeds
from the offering received by such Holder less the aggregate amount of any
damages which the Holder has otherwise been required to pay in respect of such
loss, claim, damage or liability or any substantially similar loss, claim,
damage or liability arising from the sale of such Registrable Securities.
       
7.5.
Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions of the underwriting agreement shall
control.
       
7.6.
The obligations of the Company and Holders under this Section 7 shall survive
the completion of any offering of Registrable Securities in a Registration
Statement under this Agreement and/or the termination of this Agreement.

 
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8.
Reports Under Securities Exchange Act of 1934.  With a view to making available
the benefits of certain rules and regulations of the SEC, including Rule 144
that may at any time permit a Holder to sell securities of the Company to the
public without registration or pursuant to a registration on Form S-3, the
Company agrees to:
     
8.1.
Make and keep public information available, as those terms are understood and
defined in Rule 144, at all times after the effective date of the first
Registration Statement filed by the Company for the offering of its securities
to the general public;
       
8.2.
Take such action, including the voluntary registration of its Common Stock under
Section 12 of the 1934 Act, as is necessary to enable the Holders to utilize
Form S-3 for the sale of their Registrable Securities, such action to be taken
as soon as practicable after the end of the fiscal year in which the first
Registration Statement filed by the Company for the offering of its securities
to the general public is declared effective; and
       
8.3.
File with the SEC in a timely manner all reports and other documents required of
the Company under the Act and the 1934 Act.
     
9.
Assignment of Registration Rights.  The rights to cause the Company to register
Registrable Securities pursuant to this Section may be assigned (but only with
all related obligations) by the Holder to a transferee or assignee of such
securities who acquires:
     
9.1.
All of the Holder's Registrable Securities from such Holder; or
       
9.2.
Is a subsidiary, parent, constituent partner or other affiliate of the Holder;
provided that the Company is, furnished with written notice of the transfer in
accordance with the terms of the Note, such transferee or assignee agrees in
writing to be bound by and subject to the terms and conditions of this
Agreement, and such assignment shall be effective only if immediately following
such transfer the further disposition of such Registrable Securities by
the  transferee or assignee is restricted under the Act.
     
10.
"Market Stand-Off" Agreement.  The Holder hereby agrees that upon receipt by it
of notification of the commencement of a public offering by the Company, it will
not, without the prior written consent of the managing underwriter, during the
period commencing on the date of the final prospectus relating to such public
offering by the Company and ending on the date specified by the Company and the
managing underwriter (such period not to exceed one hundred eighty (l80)
calendar days) do any of the following:
     
10.1.
Lend, offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any securities of the Company, including (without limitation) shares
of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock (whether now owned or hereafter  acquired); or
       
10.2.
Enter into any swap or other arrangement that transfers to another, in whole or
in part, any of the economic consequences of ownership of any securities of the
Company, including (without limitation) shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock (whether now
owned or hereafter acquired), whether any such transaction described in clause
10.1 or 10.2 above is to be settled by delivery of securities, in cash or
otherwise.  The foregoing covenants shall not apply to the sale of any
Registrable Securities pursuant to this Agreement or to an underwriter pursuant
to an underwriting agreement and shall only be applicable to the Holder if all
officers and directors of the Company enter into similar agreements.

 
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11.
Miscellaneous Terms.
     
11.1.
Termination of Registration Rights.  The Holder shall not be entitled to
exercise any right provided for in this Agreement after such time at which all
Registrable Securities held by such Holder can be sold in any three-month period
without registration in compliance with Rule 144 or Rule 145 of the Act.
       
11.2.
Governing Law.  This agreement in all respects shall be governed by the laws of
the state of New York.
       
11.3.
Waivers and Amendments.  Any term of this Agreement may be amended or amended
and restated and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and prospectively but not
retroactively), only with the written consent of the Company and the written
consent of the Holder.
   
 
 
11.4.
Successors and Assigns.  Except as otherwise expressly provided herein, the
provisions of this Agreement shall inure to the benefit of, and be binding upon,
the successors, assigns, heirs, executors and administrators of the parties
hereto
       
11.5.
Entire Agreement.  This Agreement constitutes the full and entire understanding
and agreement between the parties with regard to the subject matter hereof.
       
11.6.
Notices.  All notices and other communications required or permitted hereunder
shall be in writing and may be delivered in person or by facsimile, electronic
mail, courier or U.S. mail, in which event it may be mailed by first-class,
certified or registered, postage prepaid, addressed (a) to the Holder, at the
address set forth in the Company's records or, at such other address as the
Holder shall have furnished to the Company or (b) if to the Company, at its
address set forth in the introductory paragraph of this Agreement, or at such
other address as the Company shall have furnished to the Holder.  All such
notices and other communications shall be deemed given upon personal delivery,
upon confirmation of facsimile transfer, upon confirmation of electronic mail
transmission, upon delivery by courier or three business days after deposit in
the United States mail.
       
11.7.
Titles and Subtitles.  The titles of the paragraphs and subparagraphs of this
Agreement are for convenience of reference only and are not to be considered in
construing this Agreement.
       
11.8.
Severability.  If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be reformed to the
greatest extent possible and limited to any jurisdiction finding such illegality
or, if such reformation is not possible, such provision shall be excluded from
this Agreement, and the balance of the Agreement shall be interpreted as if such
provision were so excluded, and shall be enforceable in accordance with its
terms.

 
 
 
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have set their hands this 2nd day of
April, 2008.
 
 
VISUAL MANAGEMENT SYSTEMS, INC.
 
 
By:___________________________________
Name:  Jason Gonzalez
Title:  President
 
 
INTELLIGENT DIGITAL SYSTEMS, LLC
 
 

 
 
By:___________________________________
Name:  Jay Russ
Title:  Managing Member
 
 
 
 
 
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