<PAGE> 1
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
GENERAL AUTOMATION, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
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Set forth the amount on which the filing fee is calculated and state how
it was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
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<PAGE> 2
GENERAL AUTOMATION, INC.
17731 MITCHELL NORTH
IRVINE, CALIFORNIA 92614
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 30, 1997
TO THE STOCKHOLDERS OF GENERAL AUTOMATION, INC.:
NOTICE IS HEREBY GIVEN, that the Annual Meeting of Stockholders of
General Automation, Inc., a Delaware corporation (the "Company") will be held on
Thursday, January 30, 1997 at 10:00 o'clock a.m., Pacific Standard Time, at The
Wyndham Garden Hotel, located at 3350 Avenue of the Arts, Costa Mesa,
California, for the following purposes:
1. To elect seven directors to hold office until the next annual
meeting of stockholders and until their successors are elected
and qualified;
2. To approve the proposed amendments to the Company's 1991 Stock
Option Plan.
3. To transact such other business as may properly come before
the meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. The Board of Directors has fixed the close
of business on December 13, 1996 as the record date for the determination of
stockholders entitled to receive notice of and to vote at this Annual Meeting
and any adjournment or postponement thereof.
BY ORDER OF THE BOARD OF DIRECTORS
LAWRENCE MICHELS
CHAIRMAN
Irvine, California
December 23, 1996
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST BRING TO THE MEETING A
LETTER FROM THE BROKER, BANK OR OTHER NOMINEE CONFIRMING YOUR BENEFICIAL
OWNERSHIP OF THE SHARES. ADDITIONALLY, IN ORDER TO VOTE AT THE MEETING, YOU MUST
OBTAIN FROM THE RECORD HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE> 3
GENERAL AUTOMATION, INC.
17731 MITCHELL NORTH
IRVINE, CALIFORNIA 92614
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
General Automation, Inc., a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders to be held on Thursday, January 30, 1997 at 10:00
o'clock a.m., Pacific Standard Time, at The Wyndham Garden Hotel, located at
3350 Avenue of the Arts, Costa Mesa, California, or at any adjournment thereof
(the "Annual Meeting"), for the purposes set forth herein and in the
accompanying Notice of Annual Meeting.
SOLICITATION
The cost of soliciting proxies relating to the Annual Meeting will be
paid by the Company. Directors, officers and employees of the Company may,
without additional compensation, solicit proxies from stockholders, which
solicitation may be made by telephone, telegram or personal interview. Brokerage
houses, other custodians, nominees and fiduciaries will be requested to forward
soliciting materials to the beneficial owners of stock held of record by such
persons and will be reimbursed by the Company for expenses incurred in doing so.
This Proxy Statement and the accompanying Notice of Meeting and proxy
card are first being mailed to stockholders on or about January 7, 1997.
STOCKHOLDER PROPOSALS
Any stockholder who intends to present a proposal at the Company's next
annual meeting for the 1997 fiscal year is advised that, in order for such
proposal to be included in the Board of Directors' proxy materials for such
meeting, the proposal must be received by the Company at its principal executive
office no later than September 5, 1997, directed to the Secretary of the
Company, and the proponent and the proposal must meet certain eligibility
requirements under rules promulgated by the Securities and Exchange Commission.
VOTING RIGHTS AND OUTSTANDING SHARES
Only stockholders of record of shares of the Company's common stock at
the close of business on December 13, 1996 will be entitled to notice of and to
vote at the Annual Meeting or any adjournment thereof. As of December 13, 1996,
8,951,376 shares of the Company's common stock were outstanding.
The presence, either in person or by proxy, of persons entitled to vote
a majority of the outstanding shares of the Company's Common Stock is necessary
to constitute a quorum for the
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transaction of business at the Annual Meeting. Abstentions and broker non-votes
are counted for purposes of determining a quorum.
Each share is entitled to one vote on all matters voted on at the
Annual Meeting and, in the election of directors, each stockholder has the right
to cumulate his votes. Cumulative voting rights entitle a stockholder to give
one nominee as many votes as is equal to the number of directors to be elected
multiplied by the number of shares owned by him or to distribute his votes on
the same principle among two or more nominees as he sees fit. The seven nominees
for director receiving the highest number of votes at the Annual Meeting will be
elected. In order for one or all stockholders to be entitled to cumulate votes,
a stockholder must give notice at the Annual Meeting prior to the voting of his
intention to cumulate his votes. Unless otherwise directed, the shares
represented by the accompanying proxy will be voted in the discretion of the
persons named therein so as to elect the maximum number of the seven director
nominees listed below which may be elected by cumulative voting.
The persons named in the accompanying proxy have advised the Company
that they will vote the shares represented by proxies received by them in
accordance with the stockholders' directions. If the proxy is signed and
returned without direction as to how to vote, the proxy holders will vote "FOR"
the election of the seven director nominees named below, and "FOR" the proposed
amendments to the 1991 Stock Option Plan described below. As to any other
matters which may properly come before the Annual Meeting, the proxy holders
will vote in accordance with their best judgment, although the Company does not
presently know of any other such matters.
REVOCABILITY OF PROXIES
A stockholder giving a proxy pursuant to this solicitation has the
power to revoke it at any time before it is exercised. It may be revoked by
filing with the Secretary of the Company, at the Company's principal executive
office, 17731 Mitchell North, Irvine, California 92614, a written revocation or
a duly executed proxy bearing a later date, or it may be revoked by attending
the Annual Meeting and voting in person. Attendance at the Annual Meeting will
not, by itself, constitute revocation of the proxy.
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PROPOSAL 1
ELECTION OF DIRECTORS
The persons who are elected directors will hold office until the next
annual meeting of stockholders and until their successors are elected and
qualified or until their death, resignation or removal. The Company's By-Laws
authorize a minimum of five and a maximum of eight directors and authorize the
Board of Directors to fix the exact number within that range, which the Board
has fixed at seven. Officers of the Company are appointed annually by the Board.
Unless instructed to the contrary, shares represented by proxies will
be voted FOR the election of the seven nominees named below. If any shares are
voted at the Annual Meeting for the election of any person other than those
nominees named herein, the discretionary authority given to the designated proxy
holders includes the authority to cumulate votes for any one or more of the
nominees listed below in such manner as the proxy holders deem desirable. In
such event, the proxy holders intend to cumulate votes which they are entitled
to cast so as to elect as directors as many of the nominees named herein as
possible.
Each person nominated for election has agreed to serve if elected and
management has no reason to believe that any nominee will be unable to serve. In
the event that any nominee should be unavailable for election as a result of an
unexpected occurrence, shares represented by executed proxies will be voted for
the election of such substitute nominee or nominees as management may propose.
The seven candidates receiving the highest number of affirmative votes
cast at the Annual Meeting will be elected directors of the Company. Abstentions
or broker non-votes as to the election of directors will be not affect the
election of candidates receiving the plurality of votes.
MANAGEMENT RECOMMENDS A VOTE IN FAVOR OF EACH NAMED NOMINEE.
NOMINEES
Set forth below is information regarding the nominees, including
information furnished by them as to their principal occupations for the last
five years, certain other directorships held by them and their ages as of
December 20, 1996.
<TABLE>
<CAPTION>
Director
Name Since Positions with the Company
- ---- --------- --------------------------
<S> <C> <C>
Lawrence Michels (1) (2) 1990 Chairman of the Board, Director
Robert D. Bagby 1989 Vice Chairman of the Board, Director
Jane M. Christie Nominee President, Chief Executive Officer
Leonard N. Mackenzie 1980 Director
Philip T. Noden (1) (2) 1989 Director
Paul L. Morigi (1) (2) 1990 Director
Robert M. McClure (1) 1994 Director
</TABLE>
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
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Lawrence Michels (64) was elected to the Board of Directors in August
1990 and in August 1993 he was appointed Chairman of the Board of Directors of
the Company. From 1979 until December 1992, Mr. Michels was President and Chief
Executive Officer of The Santa Cruz Operation, Inc., an international leader in
the UNIX and open systems software marketplace. Previously he held the positions
of Vice President at TRW and President of TRW Data Systems. Mr. Michels has been
providing management consulting for various companies since 1992.
Jane M. Christie (44) joined the Company in 1979. In 1987 she was made
responsible for the Company's services division as well as the vertical
solutions group. Over the last twenty years, Ms. Christie has held various
senior executive positions within the Company, Sorbus and First Data Resources.
In August 1995 she became an officer of the Company and Senior Vice President of
Customer Services, Sales and Marketing. In May 1996, Ms. Christie was appointed
President and Chief Executive Officer of the Company, succeeding Robert D.
Bagby.
Leonard N. Mackenzie (59) served as the Company's Chairman, President
and CEO from 1980 to August 1988, at which time he resigned those positions and
was appointed Chairman of the Board. Mr. Mackenzie reassumed the position of
President and Chief Executive Officer of the Company in January 1990. In
February of 1994 he resigned his position as President and in May of 1996 he
resigned his position as Vice Chairman. Mr. Mackenzie is an active member of the
Board and concentrates on growth-oriented opportunities. Mr. Mackenzie is
co-founder, with his wife, of a large natural gas asset management company in
Dallas, Texas., and since November, 1996 has been Chairman, President and CEO of
SunRiver Corporation (formerly NCR/ADDS), headquartered in Austin, Texas. Mr.
Mackenzie is also a director of Vinyard Engine Systems, a major alternative fuel
engine conversion business.
Robert D. Bagby (63) was elected to the Board of Directors in September
1989. Mr. Bagby was the Company's Vice President of Operations from 1987 to
1994. In February of 1994 he was appointed President and Chief Operating Officer
and in October 1994 he was appointed Chief Executive Officer. In May of 1996, he
was appointed Vice Chairman of the Board of Directors and resigned his position
as President and Chief Executive Officer.
Philip T. Noden (54) has been a director of the Company since January
1989. Since 1983 he has been a member of the Board of Directors and Technical
Director of Sanderson Electronics PLC. ("Sanderson"), a United Kingdom-based
developer and supplier of applications software.
Paul L. Morigi (76) was elected to the Board of Directors in August
1990. From 1982 to 1987 he was Senior Vice President and a director of Advest,
Inc., a stock brokerage firm. He is currently Chairman of the Board of Phillips
Screw Corp., and is a consultant to Gintel Equity Management Company. Since 1987
he has been President of Paul Morigi & Company, Inc., a Connecticut investment
company and a member of the American Stock Exchange.
Robert M. McClure (61) was elected to the Board in April 1994. Dr.
McClure is the President of Unidot, Inc., which he founded in 1979 to specialize
in the design of sophisticated computer software and hardware. Dr. McClure also
serves as a director of The Santa Cruz Operation, Inc., and IPT Corporation.
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EXECUTIVE OFFICERS
For information regarding the Company's executive officers who are also
director nominees, please see "Nominees" above. Information regarding executive
officers of the Company who are not also directors or director nominees of the
Company follows.
John R. Donnelly (62) joined the Company in March 1994, as Vice
President Finance, Chief Financial Officer and Secretary. Since graduating from
the University of Notre Dame, Mr. Donnelly has held senior management positions
with a number of firms including Martin Marietta (Denver) as Chief of Long Range
Planning, (1962 - 1968), ITT Cannon as Manager of Resource Planning and
Assistant Controller, (1968 - 1973), Maxwell Laboratories as Vice President of
Finance and Executive Vice President, (1973 - 1978 Science Applications, Inc.
(SAI) (1978 - 1980), from 1980 to 1982 as Controller of General Automation,
Inc., as Vice President of Finance, and Infodetics Corporation as Vice President
of Finance. From 1982 through 1987, Mr. Donnelly ran his own consulting practice
up until the time he rejoined General Automation in 1994.
BOARD MEETINGS AND COMMITTEES
During the fiscal year ended September 30, 1996, the Board of Directors
held a total of 4 meetings. Each director attended all of the meetings of the
Board and the Committees of which he was a member. The Board has a Compensation
Committee and an Audit Committee. The Board has no Nominating Committee.
The Audit Committee meets with the Company's independent accountants at
least annually to review the results of the annual audit and discuss the
financial statements; recommends to the Board the independent accountants to be
retained; and receives and considers the accountants' procedures in connection
with the audit and financial controls. The Audit Committee, which during the
fiscal year ended September 30, 1996 was composed of Messrs. Michels, Morigi,
McClure and Noden, met once at a meeting specially called for the Audit
Committee.
The Compensation Committee has the authority to award stock options to
employees and consultants under the Company's stock option plans and to perform
such other functions regarding compensation as the Board may delegate. The
Compensation Committee, which is composed of Messrs. Michels, Morigi and Noden,
met once during the fiscal year ended September 30, 1996.
There are no family relationships among the directors or executive
officers of the Company.
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PROPOSAL 2
APPROVAL OF AMENDMENTS TO
1991 STOCK OPTION PLAN
GENERAL
At the annual meeting of the Company's stockholders held in February 1991, the
stockholders approved the Company's 1991 Stock Option Plan (the "1991 Plan"),
under which options may be granted to purchase shares of the Company's common
stock. The purpose of the 1991 Plan is to enable the Company to retain the
services of its existing key personnel and to enhance the Company's ability to
attract and retain competent new key personnel, and to provide additional
incentive to all such persons to devote their best efforts and skill to the
advancement of the Company by permitting them to participate in the ownership of
the Company and thereby in the success and increased value of the Company.
PROPOSED AMENDMENTS
The following is a brief description of the proposed amendments to the 1991 Plan
which the stockholders will be asked to approve at the Annual Meeting. A copy of
the 1991 Plan, which sets forth the actual text of the proposed amendments, will
be provided to stockholders without charge upon written request to the Chief
Financial Officer, General Automation, Inc., 17731 Mitchell North, Irvine,
California 92614.
(1) Participation in 1991 Plan by Non-Employee Directors. The proposed
amendments to the 1991 Plan will permit the directors of the Company or
its affiliates, who are not also employees of the Company or its
affiliates ("non-employee directors"), to be granted options under the
1991 Plan. The 1991 Plan currently permits participation in the Plan by
employees, (including officers) of the Company and its affiliates and
by consultants to the Company and its affiliates, but does not
currently permit participation by non-employee directors. The exclusion
of non-employee directors from participation in the 1991 Plan was
previously required under Securities and of Exchange Commission Rule
16b-3 in order to ensure that options granted under the 1991 Plan to
officers of the Company were exempt from the short-swing profit
recapture provisions Section 16(b) of the Securities Exchange Act of
1934. However, effective on August 15, 1996, the Securities and
Exchange Commission revised Rule 16b-3, as a result of which it is no
longer necessary for non-employee directors to be excluded from
participation in the Plan in order for options granted under the 1991
Plan to qualify for exemption under Rule 16b-3.
(2) Increase of Number of Shares Reserved for Issuance Under the 1991
Plan. The proposed amendments to the 1991 Plan will also increase the
total number of shares of common stock which may be issued upon the
exercise of options granted under the 1991 Plan from 1,300,000 shares
to 2,035,000 shares (subject to adjustment in the event of stock
dividends, stock splits, recapitalizations, mergers or other similar
changes in the Company's capital structure). The 1991 Plan, as
originally adopted, authorized the grant of stock options to purchase
up to an aggregate of 900,000 shares of the Company's common stock. At
the annual meeting of the Company's stockholders held in April 1994, an
amendment to the 1991 Plan increasing the number of shares issuable
under the 1991 Plan to a total of 1,300,000 shares was approved. As of
the date hereof, 188,000 shares remained available for the grant of
additional options under the 1991 Plan. However, if any option
currently outstanding under the 1991 Plan should expire, the shares
subject to the unexercised portion thereof would again become
available for the grant of additional options under the 1991 Plan.
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DESCRIPTION OF THE 1991 PLAN
The 1991 Plan is administered by the Compensation Committee of the Board, whose
member are appointed by, and serve at the pleasure of, the Board Directors. The
Compensation Committee has broad discretion, subject to the terms of the 1991
Plan, to determine the persons entitled to receive options under the 1991 Plan,
the terms and conditions on which options are granted, and the number of shares
subject thereto. In selecting persons to be granted options under the 1991 Plan,
the Compensation Committee considers various factors deemed relevant to it, such
as the past and prospective value of such person to the Company, as well as such
person's level of responsibility and the length of his or her relationship with
the Company. Approximately 200,000 employees of the Company (including officers)
are currently eligible to receive stock options under the 1991 Plan. The Company
currently has four non-employee directors who will also be eligible to receive
stock options if the proposed amendments are approved.
The Compensation Committee also has discretion to determine the nature
of the consideration to be paid upon the exercise of an option granted under the
1991 Plan. Such consideration may, at the discretion of the Compensation
Committee, consist of cash, shares of the Company's common stock or any other
form of legal consideration. Accordingly, "pyramiding" in the exercise of
options is available to optionees, who may exercise an option as to a portion of
the shares covered thereby, and then, in one or more subsequent exercises,
immediately utilize the shares so obtained as the purchase price for additional
exercises. An optionee electing to make a series of such exercises may thus,
rather than paying the exercise price of the option and obtaining ownership of
the total number of shares covered thereby, , obtain ownership with little or no
out-of-pocket cost of a number of shares, the fair market value of which is
equal to the difference between the aggregate fair market value of the shares
covered by the option and the aggregate exercise price thereof.
Stock options granted under the 1991 Plan my be either "incentive"
stock options ("incentive options") as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), or options that do not qualify as
incentive options ("supplemental options").
The exercise price of a supplemental option granted under the 1991 Plan
must be equal to at least 85% of the fair market value of the Company's common
stock as of the date of grant of the option. The exercise price of an incentive
option granted under the 1991 Plan must be equal to at least 100% of the fair
market value of the Company's common stock as of the date of the grant of the
option; provided, however, that the exercise price of the common stock covered
by any incentive option granted to any person who, at the time of the grant of
the option, owns stock possessing 10% or more of the total combined voting power
of the Company or any parent or subsidiary of the Company, must not be less than
110% of the fair market value of such shares at the date of grant of the
incentive option. No incentive option may be granted under the 1991 Plan to any
individual if the aggregate fair market value of the shares (determined as of
the time the option is granted) which vest (i.e., first become exercisable)
during any calendar year, under all incentive options held by such optionee,
exceeds $100,000. There is no limitation on the amount of supplemental options
which may be granted to any participant in the 1991 Plan. Options may be granted
under the 1991 Plan for terms of up to 10 years; provided, however, that the
term of any incentive option granted to any person who, at the time of the grant
of the option, owns stock possessing 10% or more of the total combined voting
power of the Company or of any parent or subsidiary of the Company, may not
exceed five years.
Options granted under the 1991 Plan are not assignable, but may be
transferred upon the death of the optionee by will or the laws of descent and
distribution. Options granted under the 1991 Plan terminate three months after
termination of the optionee's employment, unless (a) such termination is due to
such person's permanent to total disability, in which case the option may, but
need not, provide that it may be exercised at any time within one year following
such termination of employment, or (b) the optionee dies
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while an employee of the Company, or within not more than three months after
termination of the optionee's employment, , in which case the option may, but
need not, provide that it may be exercised at any time within eighteen months
following the death of the optionee by the person or persons to whom the
optionee's rights under the option pass by will or by the laws of descent and
distribution, or (c) the option by its terms specifies either (i) that it shall
terminate sooner than three months after termination of the optionee's
employment, or (ii) that it may be exercised more than three months after
termination of the optionee's employment.
In the event of (a) a dissolution or liquidation of the Company, (b) a
merger or consolidation in which the Company is not the surviving corporation,
or (c) a reverse merger in which the Company is the surviving corporation but
the shares of the Company's common stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether in the
form of securities, cash or otherwise, then to the extent permitted by
applicable law (i) any surviving corporation shall assume any options
outstanding under the 1991 Plan or shall substitute similar options for those
outstanding under the 1991 Plan, (ii) the time during which such options may be
exercised shall be accelerated and the options terminated if not exercised prior
to such event, or (iii) such options shall continue in full force and effect, as
determined by the Board of Directors in its discretion, either at the time of
the grant of each option under the 1991 Plan, or at the time of the transaction
in question.
The 1991 Plan provides that the Board of Directors may at any time
amend the Plan; provided, however, that except for amendments relating to
adjustments upon changes in the Company's common stock as described in the
preceding paragraph, no amendment is effective unless approved by the Company's
stockholders within twelve months before or after the adoption of the amendment,
where the amendment will (a) increase the number of shares reserved for options
under the 1991 Plan, or (b) modify the requirements as to eligibility for
participation in the Plan (to the extent such modification requires stockholder
approval in order for the 1991 Plan to satisfy the requirements of Section
422(b) of the Code).
The Board of Directors may suspend or terminate the 1991 Plan at any
time. Unless sooner terminated, the 1991 Plan will terminate on January 1, 2001.
TAX CONSEQUENCES
Under federal law, there are no tax consequences to either the Company or the
optionee upon the grant or exercise of an incentive option. Further, when the
optionee sells or otherwise disposes of the shares acquired upon the exercise of
an incentive options, the entire gain or loss realized will be treated as
long-term capital gain or loss if the disposition occurs more than one year
after the option was exercised and more than two years after the date of grant
of the option. However, if the disposition occurs before either the one-year or
two-year period has elapsed, any gain realized will be taxed as ordinary income
in an amount equal to the difference between the option price and either fair
market value of the shares at the time of exercise or the sale price, whichever
is less, and the balance, if any, will be treated as capital gain. Any loss
realized will be treated as a capital loss. Special rules may apply in specific
circumstances, such as the use of already-owned stock to exercise an incentive
option, or if the optionee is subject to the shore-swing profit recapture rules
under Section 16(b) of the Securities Exchange Act of 1934. In any event, the
Company will be entitled to a deduction for federal income tax purposes only to
the extent the optionee recognizes ordinary income upon the disposition of the
shares. The difference between the option price and the fair market value of the
shares acquired at the time of exercise of an incentive option will be an item
of tax preference for purposes of computing the alternative minimum tax under
the Code.
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As with incentive options, there are no federal income tax consequences
to either the Company or the optionee upon the grant of a supplemental option.
Upon exercise, however, the optionee will recognize ordinary income in the
amount by which the fair market value of the shares purchased, on the date of
exercise, exceeds the exercise price paid for such shares. (If the optionee is
subject to the short-swing profit recapture rules under Section 16(b) of the
Securities Exchange Act of 1934, special rules may apply to the timing of the
recognition of income resulting from the exercise of the supplemental option.)
The income recognized by the optionee will be subject to income tax withholding
by the Company and, to the extent provided by the terms of the option, may be
satisfied by (a) a cash payment made by the optionee, (b) withholding out of the
optionee's current compensation, (c) withholding from the shares purchased upon
exercise of the option a number of shares having a fair market value equal to
the withholding tax obligation, or (d) delivery by the optionee to the Company
of shares of the Company's common stock already owned by the optionee having a
fair market value equal to the withholding obligation. The Company will be
entitled to a tax deduction equal to the amount of ordinary income recognized by
the optionee, provided the applicable withholding requirements are satisfied.
Upon the sale or disposition of shares acquired pursuant to the
exercise of a supplemental option, the difference between the proceeds realized
and the optionee's basis in the shares will be a capital gain or loss and will
qualify for long-term capital gain or loss treatment if the shares have been
held for more than the applicable statutory holding period.
The Company also maintains its 1991 Directors' Stock Option Plan (the
"Directors' Plan"), which was approved by the Company's stockholders in 1991,
and amended with approval of the Company's stockholders in 1994. The Directors'
Plan provides for an automatic grant of an option to each non-employee director
of the Company on the day he or she first becomes a director. Each option
granted under the Directors' Plan covers 50,000 shares, vests in full six month
after the date of grant, and has an exercise price equal to the market value of
the Company's common stock on the date of grant. Discretionary option grants
cannot be made under the Directors' Plan.
As of the date hereof, 50,000 shares remained available for the grant
of additional options under the Directors' Plan. However, if any option
currently outstanding under the Directors' Plan should expire, the shares
subject to the unexercised portion thereof would again become available for the
grant of additional options under the Directors' Plan.
VOTE REQUIRED FOR APPROVAL AND RECOMMENDATION OF BOARD OF DIRECTORS
The affirmative vote of the holders of a majority of the common stock
present in person or represented by proxy at the meeting will be required to
approve this proposal. The amendment of the 1991 Plan will not be implemented
without stockholder approval. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
THE STOCKHOLDERS VOTE FOR APPROVAL OF THE AMENDMENT OF THE 1991 PLAN. Proxies
solicited by management will be voted FOR the amendment of the 1991 Plan unless
a vote against the proposal or abstention is specifically indicated.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table, based in part upon information supplied by executive
officers, directors and principal stockholders, sets forth certain information
regarding the ownership of the Company's voting securities as of December 13,
1996 by (i) all those known by the Company to be beneficial owners of more than
five percent of any class of the Company's voting securities; (ii) each director
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and nominee for director; (iii) each of the Named Executive Officers (as defined
in page 13 hereof); and (iv) all current executive officers and directors of the
Company as a group. Unless otherwise indicated, the address of each such
shareholder is c/o General Automation, Inc., 17731 Mitchell North, Irvine,
California 92614. Except to the extent indicated in the footnotes, each of the
stockholders listed below has sole voting and investment power with respect to
the shares listed opposite such stockholder's name.
<TABLE>
<CAPTION>
Beneficial Ownership(1)
---------------------------
Name and Address Title of Number of Percent of
of Beneficial Owner Class Shares Class
- ------------------- -------- --------- ----------
<S> <C> <C> <C>
Richard H. Pickup Common 500,000 12%
2501 Monaco Drive
Laguna Beach, CA 92651-1008
Sanderson Technology Limited (2)
Parkway House
Parkway Avenue Common 56,100 2%
Sheffield, S9 4WA
England
Robert D. Bagby (3) Common 497,000 17%
John R. Donnelly (3) Common 130,900 4%
Jane M. Christie (3) Common 165,050 6%
Leonard N. Mackenzie (3) Common 785,433 26%
Robert M. McClure (3) Common 60,000 2%
Lawrence Michels (3) Common 739,833 25%
Paul L. Morigi (3) Common 50,000 *
Philip T. Noden (4) Common -0- *
All current executive officers and
directors as a group Common 2,984,316 81%
(8 persons) (4)
</TABLE>
*Less than 1%
(1) The number and percentage ownership for each beneficial owner is
calculated as if all options or warrants held by such owner that are
currently exercisable or exercisable within 60 days after December 20,
1996 were exercised and such shares ("beneficially owned" shares) were
included in the numerator as shares owned and in the denominator as
shares outstanding for purposes of the calculation for such beneficial
owner only.
11
<PAGE> 13
(2) Includes 56,100 shares held directly. Sanderson Technology Limited
also holds certain rights, commonly referred to as "Mirror Rights," to
acquire additional warrants to acquire Common Stock of the Company in
the event options under the Company's stock option plans or warrants
that were outstanding as of January 6, 1989 and held by parties other
than Sanderson are exercised. As of December 20, 1996, such Mirror
Rights covered 100,000 shares of Common Stock. If issued, warrants
granted pursuant to the Mirror Rights would be exercisable for a
period of ninety days for the number of shares and at the exercise
price of the options or warrants the exercise of which triggered the
issuance of such warrants.
(3) Shares listed for Mr. Bagby, Ms. Christie, Mr. Donnelly, Mr.
Mackenzie, Mr. Michels, and Mr. McClure include 485,000, 150,000,
100,000, 785,000, 50,000, and 40,000 shares, respectively, that may be
acquired through the exercise of stock options.
(4) Includes 1,610,000 shares that may be acquired through the exercise of
stock options.
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the annual and
long-term compensation for each of the three fiscal years ended September 30,
1996 of those persons who at September 30, 1996 were either (i) the Company's
Chief Executive Officer or (ii) one of its four most highly compensated
executive officers whose salary and bonus during the fiscal year ended September
30, 1996, exceeded $100,000 (collectively, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation(1) Compensation (1)
-------------------------- ------------------
Awards
-----------------
Securities All Other
Name and Underlying Compensation
Principal Position Year Salary($) Bonus($) Options(#) ($) (2)
------------------ ---- --------- --------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
Robert D. Bagby 1996 140,000 -0- -0- 4,200
Vice Chairman of 1995 140,000 -0- 485,000 4,200
the Board 1994 129,368 -0- -0- 3,351
Jane M. Christie 1996 126,900 -0- -0- 3,624
President and CEO 1995 100,000 -0- -0-
1994 50,000 -0- -0-
John R. Donnelly 1996 109,530 -0- -0- 3,759
Vice President Finance 1995 100,000 -0- -0- 3,759
Chief Financial Officer, 1994 50,000 -0- -0-
Secretary, Treasurer
Leonard N. Mackenzie 1996 62,504 -0- -0-
Director 1995 123,565 -0- 485,000
1994 171,965 -0- -0-
</TABLE>
12
<PAGE> 14
(1) The Company made no long-term incentive plan payouts to its Named
Executive Officers during the 1994, 1995 and 1996 fiscal years.
(2) Includes contributions to the Company's Employee Savings Plan on behalf
of the Named Executive Officers to match contributions (included under
Salary) made by each to such plan.
COMPENSATION OF DIRECTORS
During the fiscal year ended September 1996, directors who were not
employees of the Company each received a monthly retainer of $1,200 and the
Chairman received a monthly retainer of $3,500. Directors who were also
employees of the Company received no additional remuneration for serving as a
director.
STOCK OPTION GRANTS
During the year, no stock options were granted to any of the named
Executive Officers.
OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table sets forth the number of shares of common stock
issuable upon the exercise of outstanding stock options held by each of the
Named Executive Officers at September 30, 1996. The exercise price of each
option was higher than the closing price of the Company's common stock at
year-end and thus none of these options were "in-the-money" as of such date. The
table also shows each Named Executive Officer who exercised stock options during
the fiscal year ended September 30, 1996.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised
Options/SARs at FY-End (#) Shares
---------------------------------- Acquired on 5/96 Value
Name Exercisable Unexercisable Exercise Realized
- -------------------- ----------- ------------- -------- --------
<S> <C> <C> <C> <C>
Jane M. Christie 250,000 0 100,000 $324,325
John R. Donnelly 250,000 0 150,000 $581,250
Leonard N. Mackenzie 885,000 0 100,000 $381,250
Robert D. Bagby 585,000 0 100,000 $359,375
</TABLE>
13
<PAGE> 15
The following Compensation Committee Report and Performance Graph are not to be
deemed to be"soliciting material" or "filed" with the Commission or incorporated
by reference to any filing by the Company under the Securities Act of 1933 or
the Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates it by reference.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The role of the Compensation Committee is to carry out the compensation
responsibilities of the Board of Directors, which involve the discussion,
research and approval of the recommendations of management with regard to the
compensation (including cash and non-cash) of the executive officers of the
Company. This report sets forth the major components of executive compensation
and the basis by which fiscal year 1996 compensation determinations were made
with respect to the executive officers of the Company, including those named in
the Summary Compensation Table.
Compensation Policy and Guidelines
The goals of the Company's compensation policy are to align executive
compensation with the Company's long-term business objectives and performance,
to enable the Company to attract and retain high-quality executive officers and
employees who will contribute to the long-term success of the Company and to
reward such executive officers and employees for their successful efforts in
attaining objectives beneficial to the growth and profitability of the Company.
In order to achieve the Company's goals, executive officers are
compensated at base salary levels which are generally competitive with
prevailing industry standards, and are provided with incentive bonus awards
based upon profitability. Another long-term goal of the compensation program is
to align the financial interests of the Company's executive officers with those
of the Company's stockholders. Compensation has been based upon the following
factors: The strengths and weaknesses of the individual executive officers, and
the Board's perception of such individual's historical performance and expected
future contributions to the success of the Company.
Compensation Program Elements
The Company's compensation levels and benefits are reviewed on an
annual basis to determine whether they are competitive and reasonable in light
of the overall performance of the Company and the Company's ability to attract
and retain talented executives. The particular elements of the compensation
programs for the executive officers are explained in more detail below.
Salary. Salary levels are primarily determined by the Compensation
Committee in consideration of the performance of the individual
executive, the financial performance of the Company and the prevailing
industry standards for similar executives of similar companies. The
Board of Directors believes that the base salary levels for the
Company's executive officers in 1996 were competitive within a range
considered to be reasonable and necessary.
SUBMITTED BY THE COMPENSATION COMMITTEE
Lawrence Michels
Paul Morigi
Philip Noden
14
<PAGE> 16
PERFORMANCE GRAPH
The following graph compares the cumulative, five-year shareholder
returns on the Company's common stock with the shareholder returns of the AMEX
Computer Technology Index and a peer group index comprised of the common stock
of the companies listed below, excluding the Company. The peer group index is
based on a selection of companies operating in the same industry and whose
common stock is traded on the NYSE or NASDAQ. The graph assumes that the value
of the investment in the Company's common stock and each index was $100 on
September 30, 1991.
<TABLE>
<CAPTION>
Year End
Company 1991 1992 1993 1994 1995 1996
- ------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
General Automation Inc. 0.6250 1.0000 0.6875 0.5000 0.7500 2.9375
Peer Group Companies
Allenon, Inc. 26.7442 11.6279 30.2326 0 0
Alpha Microsystems (ALMI) 33.9623 15.0943 28.3019 1.94 1.969
Delphi Information Systems (DLPH) 72.9730 70.2703 62.1622 2.13 1.125
Auto Trol Technology (ATTC) 36.8421 31.5790 7.8947 0.75 5.75
Softech Inc. (SOFT) 61.7647 57.3529 91.1765 4.5 2.5
Total 232.2862 185.9244 219.7678 0.0000 9.3200 11.3440
Average 46.45725 37.184882 43.953563 34.80321 1.864 2.2688
AMEX Computer Technology Index 110.3125 116 126.03125 149.58 242.98 300.57
(XCI)
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
General Automation Inc. 100 160.00000 110.00000 80.00000 120.00000 470.00000
Peer Group 100 80.04108 94.61076 74.91449 4.01229 4.88363
AMEX Computer Technology Index 100 105.15581 114.24929 135.59660 220.26516 272.47139
</TABLE>
15
<PAGE> 17
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In November 1996, Mr. Leonard M. Mackenzie, a director of the Company,
became Chairman of the Board, President and Chief Executive Officer of SunRiver
Corporation ("SunRiver"). Previously, in May 1995, the Company and SunRiver
formed a limited liability company ("GAL"), with the Company owning 51% and
SunRiver 49%. GAL was formed to allow the Company to acquire the former ADDS
Pick based business owned by SunRiver.
Under the terms of the Operating Agreement which governs the operation
of GAL (the "Operating Agreement"), GAL operates and manages the Company's Pick
business and SunRiver's Pick business. Under the Operating Agreement, SunRiver
is entitled to receive cash distributions from GAL in an amount equal to a
percentage of GAL's revenues, which is payable whether or not GAL is profitable
or generating positive cash flow. The percentage of the net revenues to which
SunRiver is entitled was 12% for the first year of the Operating Agreement
(subject to a minimum of $2,900,000) and will decline annually thereafter in
steps until it reaches 7% in the fifth year. However, the percentage of net
revenues payable to SunRiver subject to adjustment (upward or downward) under
certain circumstances. Subsequent to the fifth year of the Operating Agreement,
the percentage of net revenue to be paid to SunRiver is to be determined by
negotiations between the Company and SunRiver. The Company is entitled to retain
all cash generated by GAL, if any, after the payment to SunRiver of the net
revenue percentage described above.
Under the Operating Agreement, the business and affairs of GAL are
managed exclusively by the Company. However, in the event GAL fails to achieve
agreed upon revenue or profit projections, SunRiver has the right to thereafter
jointly manage GAL with the Company. Further, upon the occurrence of certain
other events, including the failure of GAL to pay to SunRiver the percentage of
net revenues of which SunRiver is entitled, SunRiver has the right to thereafter
replace the Company as the sole manger of GAL. During the first year of the
Operating Agreement, the Company received a management fee in connection with
its duties as manager of GAL. However, subsequent to the first year of the
Operating Agreement, the Company will not be entitled to any compensation for
acting as manager of GAL.
In May 2000 the Company will have the right to purchase SunRiver's
entire interest in GAL for a number of shares of the Company's common stock
equal to 9% of each class of the Company's then outstanding capital stock. If
the Company exercises this right of purchase, it is obligated, immediately
following the issuance of stock to SunRiver, to register the shares so issued
under the Securities Act of 1933.
Mr. Philip Noden, a director of the Company, is a member of the Board
of Directors and Technical Director of Sanderson Electronics PLC, of which
Sanderson Technology Limited is a wholly owned subsidiary. Sanderson Technology
Limited and its affiliates acquire the Company's products in significant
quantities, with which aggregate purchases in fiscal 1996 of approximately
$589,000. As of September 30, 1996, the Company had trade accounts receivable of
approximately $319,08 due from Sanderson.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers, directors and persons who own more than 10% of a
registered class of the Company's equity securities to file reports of ownership
and changes in ownership with the Securities and Exchange Commission and the
American Stock Exchange. Such persons are also required by SEC regulations to
furnish the Company with copies of the Section 16(a) forms which they file.
16
<PAGE> 18
Based solely on its review of the copies of such reports furnished to
the Company and written representations that no other reports were required,
during the fiscal year beginning October 1, 1995 and ending September 30, 1996,
the Company believes that all such Section 16(a) filing requirements were
complied with on a timely basis.
FINANCIAL REPORTS
The Company's Annual Report for the year ended September 30, 1996 is
being mailed together with this Proxy Statement.
THE COMPANY WILL PROVIDE, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT
ON FORM 10-K, INCLUDING FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES AND
A LIST OF EXHIBITS, UPON WRITTEN REQUEST, TO ANY PERSON WHO WAS THE BENEFICIAL
OWNER OF THE COMPANY'S VOTING SECURITIES AS OF THE RECORD DATE. REQUESTS SHOULD
BE DIRECTED TO THE COMPANY AT 17731 MITCHELL NORTH, IRVINE, CALIFORNIA 92614,
ATTENTION SECRETARY. EXHIBITS TO THE FORM 10-K WILL BE MADE AVAILABLE UPON A
REASONABLE CHARGE.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Price Waterhouse, the Company's independent accountant for the fiscal
year ended September 30, 1996, has been selected by the Board of Directors, upon
recommendation of the Audit Committee, to act in the same capacity for the
fiscal year ending September 30, 1997.
Representatives of Price Waterhouse are expected to be present at the
Annual Meeting, and will be given an opportunity to make a statement if they
desire to do so and are expected to be available to respond to appropriate
questions from stockholders.
OTHER MATTERS
Management knows of no other matters to be presented for consideration
at the Annual Meeting. If, however, any other matters should properly come
before the Annual Meeting, it is the intention of the persons named in the
accompanying proxy to vote such proxy in accordance with their best judgment on
such matters.
FOR THE BOARD OF DIRECTORS
Lawrence Michels
Chairman
December 23, 1996
17
<PAGE> 19
GENERAL AUTOMATION, INC.
1991 STOCK OPTION PLAN
Adopted January 17, 1991
Approved by Stockholders on February 20, 1991
As amended by an Amendment Approved by the Board
on March 7, 1994 and by Stockholders on April 7, 1994
1. PURPOSE.
(a) The purpose of the 1991 Stock Option Plan (the "Plan") is to
provide a means by which selected employees and consultants to GENERAL
AUTOMATION, INC., a Delaware corporation (the "Company"), and its Affiliates, as
defined in subparagraph 1(b), may be given an opportunity to purchase stock of
the Company.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company other, as those terms are
defined in Sections 425(e) and (f), respectively, of the Internal Revenue Code
of 1986, as amended from time to time (the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of
persons now employed by or serving as directors of or consultants to the
Company, to secure and retain the services of persons capable of filling such
positions, and to provide incentives for such persons to exert maximum efforts
for the success of the Company.
(d) The Company intends that the options issued under the Plan shall,
in the discretion of the Board of Directors of the Company (the "Board") or any
committee to which responsibility for administration of the Plan has been
delegated pursuant to subparagraph 2(c), be either
1
<PAGE> 20
incentive stock options as that term is used in Section 422 of the Code
("Incentive Stock Options"), or options which do not qualify as incentive stock
options ("Supplemental Stock Options"). All options shall be separately
designated Incentive Stock Options or Supplemental Stock Options at the time of
grant, and in such form as issued pursuant to paragraph 5, and a separate
certificate or certificates shall be issued for shares purchased on exercise of
each type of option. An option designated as a Supplemental Stock Option will
not be treated as an incentive stock option.
2. ADMINISTRATION
(a) The Plan shall be administered by the Board unless and until the
Board delegates administration to a committee, as provided in subparagraph 2(c).
Whether or not the Board has delegated administration, the Board shall have the
final power to determine all questions of policy and expediency that may arise
in the administration of the Plan.
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the persons
eligible under the Plan shall be granted options; when and how the option shall
be granted, whether the option will be an Incentive Stock Option or a
Supplemental Stock Option; the provisions of each option granted (which need not
be identical), including the time or times during the term of each option within
which all or portions of such option may be exercised; and the number of shares
for which an option shall be granted to each such person.
(2) To construe and interpret the Plan and options grated
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the
2
<PAGE> 21
exercise of this power, may correct any defect, omission or inconsistency in the
Plan or in any option agreement, in a manner and to the extent it shall deem
necessary or expedient to make the Plan fully effective.
(3) To amend the Plan as provided in paragraph 10.
(4) Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best interests of
the Company.
(c) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members (the "Committee"). If administration
is delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board,
subject, however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board. The Board may
abolish the Committee at any time and revest in the Board the administration of
the Plan.
3
<PAGE> 22
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 9 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to options granted
under the Plan shall not exceed in the aggregate two million thirty-five
thousand (2,035,000) shares of the Company's common stock. If any option granted
under the Plan shall for any reason expire or otherwise terminate without having
been exercised in full, the stock not purchased under such option shall again
become available for the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
(c) An Incentive Stock Option may be granted to an eligible person
under the Plan only if the aggregate fair market value (determined at the time
the option is granted) of the stock with respect to which incentive stock
options (as defined in the Code) granted after 1986 are exercisable for the
first time by such optionee during any calendar year under all incentive stock
option plans of the Company and its Affiliates does not exceed one hundred
thousand dollars ($100,000). Should it be determined that an option granted
under the Plan exceeds such maximum for any reason other than the failure of a
good faith attempt to value the stock subject to the option, such option shall
be considered a Supplemental Stock Option to the extent, but only to the extent,
of such excess; provided, however, that should it be determined that an entire
option or any portion thereof does not qualify for treatment as an incentive
stock option by reason
4
<PAGE> 23
of exceeding such maximum, such option or the applicable portion shall be
considered a Supplemental Stock Option.
4. ELIGIBILITY.
(a) Incentive Stock Options may be granted only to employees (including
officers) of the Company or its Affiliates. A director of the Company shall not
be eligible to receive Incentive Stock Options unless such director is also an
employee (including an officer) of the Company or any Affiliate. Supplemental
Stock Options may be granted only to employees (including officers) of the
Company or its Affiliates, directors of the Company or its Affiliates, or
consultants to the Company or its Affiliates.
(b) No person shall be eligible for the grant of an Incentive Stock
Option under the Plan if, at the time of grant, such person owns (or if deemed
to own pursuant to Section 425(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of any of its Affiliates unless the exercise price of such option is
at least one hundred ten percent (110%) of the fair market value of such stock
at the date of grant and the term of the option doe not exceed five (5) years
from the date of grant.
5. OPTION PROVISIONS.
Each option shall be in such form and shall contain such terms and
conditions as the Board or the Committee shall deem appropriate. The provisions
of separate options need not be identical, but each option shall include
(through incorporation of provisions hereof by reference in the option or
otherwise) the substance of each of the following provisions:
5
<PAGE> 24
(a) The option shall not be exercisable after the expiration of ten
(10) years from the date it was granted.
(b) The exercise price of each Incentive Stock Option shall be not less
than one hundred percent (100%) of the fair market value of the stock subject to
the option on the date the option is granted. The exercise price of each
Supplemental Stock Option shall be not less than eighty-five percent (85%) of
the fair market value of the stock subject to the option on the date the option
is granted.
(c) The purchase price of stock acquired pursuant to an option shall be
paid, to the extent permitted by applicable statutes and regulations, either (1)
in cash at the time the option is exercised, or (2) at the discretion of the
Board of the Committee, either at the time of the grant or exercise of the
option, (i) by delivery to the Company of other common stock of the Company,
(ii) according to a deferred payment or other arrangement (which may include,
without limiting the generality of the foregoing, the use of other common stock
of the Company) with the person to whom the option is transferred pursuant to
subparagraph 5(d), or (iii) in any other form of legal consideration that may be
acceptable to the Board or the Committee.
(d) An option shall not be transferable except by will or by the laws
of descent and distribution, and shall be exercisable during the lifetime of the
person to whom the option is granted only by such person.
(e) The total number of shares of stock subject to an option may, but
need not, be allotted in periodic installments (which may, but need not, be
equal). From time to time during each of such installment periods, the option
may become exercisable ("vest") with respect to some or all of the
6
<PAGE> 25
shares allotted to that period, and may be exercised with respect to some or all
of the shares allotted to such period and/or any prior period as to which the
option was not fully exercised. During the remainder of the term of the option
(if its term extends beyond the end of the installment periods), the option may
be exercised from time to time with respect to any shares then remaining subject
to the option. The provisions of this subparagraph 5(e) are subject to any
option provisions governing the minimum number of shares as to which an option
may be exercised.
(f) The Company may require any optionee, or any person to whom an
option is transferred under subparagraph 5(d), as a condition of exercising any
such option, (1) to give written assurances satisfactory to the Company as to
the optionee's knowledge and experience in financial and business matters and/or
to employ a purchaser representative reasonably satisfactory to the Company who
is knowledgeable and experienced in financial and business matters, and that he
or she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the option; and (2) to give
written assurances satisfactory to the Company stating that such person is
acquiring the stock subject to the option for such person's own account and not
with any present intention of selling or otherwise distributing the stock. These
requirements, and any assurances given pursuant to such requirements, shall be
inoperative if (1) the issuance of the shares upon the exercise of the option
has been registered under a then currently effective registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), or (2) as
to any particular requirement, a determination is made by counsel for
circumstances under the then applicable securities laws.
(g) An option shall terminate three (3) months after termination of the
optionee's employment or relationship as a director of or consultant with the
Company or an Affiliate, unless
7
<PAGE> 26
(1) such termination is due to such person's permanent and total disability,
within the meaning of section 422(c)(7) of the Code, in which case the option
may, but need not, provide that it may be exercised at any time within one (1)
year following such termination of employment or relationship as a director or
consultant; or (2) the optionee dies while in the employ of or while serving as
a director of or consultant to the Company or affiliate, or within not more than
three (3) months after termination of such relationship, in which case the
option may, but need not, provide that it may be exercised at any time within
eighteen (18) months following the death of the optionee by the person or
persons to whom the optionee's rights under such option pass by will or by the
laws of descent and distribution; or (3) the option by its terms specified
either (i) that it shall terminate sooner than three (3) months after
termination of the optionee's employment or relationship as a director or
consultant or (ii) that it may be exercised more than three (3) months after
termination of such relationship with the Company or an Affiliate. This
subparagraph 5(g) shall not be construed to extend the term of any option or to
permit anyone to exercise the option after expiration of its term, nor shall it
be construed to increase the number of shares as to which any option is
exercisable from the amount exercisable on the date of termination of the
optionee's employment or relationship as a director or consultant.
(h) The option may, but need not, include a provision whereby the
optionee may elect at any time during the term of his or her employment or
relationship as a director or consultant with the Company or any Affiliate to
exercise the option as to any part or all of the shares subject to the option
prior to the stated vesting date of the option or of any installment or
installments specified in the option. Any shares so purchased from any unvested
installment or option may be
8
<PAGE> 27
subject to a repurchase right in favor of the company or to any other
restriction the Board or the Committee determines to be appropriate.
(i) To the extent provided by the terms of an option, the optionee may
satisfy any federal, state or local tax withholding obligation relating to the
exercise of such option by any of the following means or by a combination of
such means: (1) tendering a cash payment; (2) authorizing the Company to
withhold from the shares of the common stock otherwise issuable to the
participant as a result of the exercise of the stock option a number of shares
having a fair market value less than or equal number of amount of the
withholding tax obligation; or (3) delivering to the Company owned and
unencumbered shares of the common stock having a fair market value less than or
equal to the amount of the withholding tax obligation.
6. COVENANTS OF THE COMPANY.
(a) During the terms of the options granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such options.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the options granted under the
Plan; provided, however, that this undertaking shall not require the Company to
register under the Securities Act either the Plan, any option granted under the
Plan or any stock issued or issuable pursuant to any such option. If, after
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company deems necessary
for the lawful issuance and sale of stock under the Plan, the Company shall be
relieved from any liability for failure to issue and sell stock upon exercise of
such options unless and until such authority is obtained.
9
<PAGE> 28
7. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to options granted under the
Plan shall constitute general funds of the Company.
8. MISCELLANEOUS.
(a) The Board or the Committee shall have the power to accelerate the
time at which an option may first be exercise or the time during which an option
or any part thereof will vest pursuant to subparagraph 5(e), notwithstanding the
provisions in the option stating the time at which it may first be exercised or
the time during which it will vest.
(b) Neither an optionee nor any person to whom an option is transferred
under subparagraph 5(d) shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to such option unless
and until such person has satisfied all requirements for exercise of the option
pursuant to its terms.
(c) Throughout the term of any option granted pursuant to the Plan, the
Company shall make available to the holder of such option, not later than one
hundred twenty (120) days after the close of each of the Company's fiscal years
during the option term, upon, request, such financial and other information
regarding the Company as comprises the annual report to the stockholders of the
Company provided for in the by-laws of the Company.
(d) Nothing in the Plan or any instrument executed or option granted
pursuant thereto shall confer upon any eligible employee or any Affiliate (or to
continue acting as a director or consultant) or shall affect the right of the
Company or any Affiliate to terminate the employment or director or consulting
relationship of any eligible employee or optionee with or without cause. In the
event that an optionee is permitted or otherwise entitled to take a leave of
absence, the
10
<PAGE> 29
Company shall have the unilateral right to (1) determine whether
such leave of absence will be treated as a termination of employment for
purposes of paragraph 5(g) hereof and corresponding provisions of any
outstanding options, and (2) suspend or otherwise delay the time or times at
which the shares subject to the option would otherwise vest.
9. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject
to any option granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), the Plan and outstanding
options will be appropriately adjusted in the class(es) and maximum number of
shares subject to the plan and the class(es) and number of shares and price per
share of stock subject to outstanding options.
(b) In the event of: (1) a dissolution or liquidation of the Company;
(2) a merger or consolidation in which the Company is not the surviving
corporation; or (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's common stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise then to the extent
permitted by applicable law: (i) any surviving corporation shall assume any
options outstanding under the Plan or shall substitute similar options for those
outstanding under the Plan, (ii) the time during which such options may be
exercised shall be accelerated and the options terminated if not exercised prior
to such event, or (iii) such options shall continue in full force and effect, as
determined by
11
<PAGE> 30
the Board in its discretion, either at the time of the grant of each option
under the Plan or at the time of the transaction in question.
10. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 9 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the stockholders of
the Company within twelve (12) months before or after the adoption of the
amendment, where the amendment will:
(1) Increase the number of shares reserved for options under
the Plan;
(2) Modify the requirements as to eligibility for
participation in the Plan (to the extent such modification requires stockholder
approval in order for the Plan to satisfy the requirements of Section 422(b) of
the Code); or
(3) Modify the Plan in any other way if such modification
requires stockholder approval in order for the Plan to satisfy the requirements
of Section 422(b) of the Code.
(b) It is expressly contemplated that the Board may amend the Plan in
any respect with the maximum benefits provided or to be provided under the
provisions of the Code and the regulations promulgated thereunder relating to
employee incentive stock options and/or to bring the Plan and/or incentive stock
options granted under it into compliance therewith.
(c) Rights and obligations under any option granted before amendment of
the Plan shall not be altered or impaired by any amendment of the Plan unless
(1) the Company requests
12
<PAGE> 31
the consent of the person to whom the option was granted and (2) such person
consents in writing.
11. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate on January 1, 2001. No options may
be granted under the Plan while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any option granted while the Plan is
in effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the person to whom the option was granted.
12. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no
options granted under the Plan shall be exercised unless and until the Plan has
been approved by the stockholders of the Company, and, if required, an
appropriate permit has been issued by the Commissioner of Corporations of the
State of California.
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<PAGE> 32
PROXY
GENERAL AUTOMATION, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 30, 1997
The undersigned hereby appoints Robert D. Bagby and Jane M. Christie, and each
of them, as attorneys and proxies of the undersigned, with full power of
substitution, to vote all of the shares of stock of General Automation, Inc.
which the undersigned may be entitled to vote at the Annual Meeting of
Stockholders of General Automation, Inc. to be held on Thursday, January 30th,
1997 at 10:00 o'clock a.m., Pacific Standard Time, at The Wyndham Garden Hotel
located at 3350 Avenue of the Arts, Costa Mesa, California 92626, and at any and
all adjournments and postponements thereof, as follows:
IMPORTANT - PLEASE SIGN OTHER SIDE
- --------------------------------------------------------------------------------
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<PAGE> 33
Please mark [ X ]
your votes as
indicated in
this example.
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR LISTED BELOW.
<TABLE>
<CAPTION>
<S> <C> <C>
1. ELECTION OF DIRECTORS FOR WITHHOLD
Nominees: Robert D. Bagby, Jane M. Christie, all nominees AUTHORITY
Leonard N. Mackenzie, listed (except as to vote for
Lawrence Michels, Paul L. Morigi, marked to the nominees listed
Robert M. McClure, Philip T. Noden contrary below). below.
[ ] [ ]
</TABLE>
TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S), WRITE SUCH NOMINEE(S)' NAME(S)
BELOW:
- ------------------
2. To approve the proposed amendments to the FOR AGAINST ABSTAIN
Company's 1991 Stock Option Plan. [ ] [ ] [ ]
3. OTHER MATTERS In their discretion, the proxies named herein are authorized
to vote upon such other business as may properly come before the meeting or
any adjournment or postponement thereof, including procedural and other
matters relating to the conduct of the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS SPECIFIED HEREIN. IF NO
CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR THE AMENDMENTS TO THE
COMPANY'S 1991 STOCK OPTION PLAN, AND FOR THE ELECTION OF ALL NOMINEES NAMED
ABOVE, AND IN ACCORDANCE WITH THE BEST JUDGMENT OF THE PROXY HOLDERS WITH
RESPECT TO MATTERS INCIDENT TO THE CONDUCT OF THE MEETING AND ANY OTHER
MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING.
PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED
POSTPAID ENVELOPE.
Signature(s):__________________________________________Dated:_____________, 199_
Please sign exactly as your name appears hereon. If the stock is registered
in the names of two or more persons, each should sign. Executors,
administrators, trustees, guardians and attorneys-in-fact should add their
titles. If signer is a corporation, please give full corporate name and have a
duly authorized officer sign, stating title. If signer is a partnership, please
sign in partnership name by authorized person.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
