<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
</TABLE>
GENERAL AUTOMATION, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] Fee not required.
[ ] 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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] 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:
------------------------------------------------------------------------
<PAGE> 2
GENERAL AUTOMATION, INC.
17731 MITCHELL NORTH
IRVINE, CALIFORNIA 92614
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 6, 1998
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 Friday, February 6, 1998 at 10:00 o'clock a.m., Pacific Standard Time, at The
Embassy Suites Hotel, 2120 Main Street, Irvine, 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; and
2. To transact such other business as may properly come before the
meeting or any adjournment or postponement 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 12, 1997 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
January 16, 1998
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 Friday, February 6, 1998 at 10:00
o'clock a.m., Pacific Standard Time, at The Embassy Suites Hotel, 2120 Main
Street, Irvine, California, or at any adjournment or postponement 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 16, 1998.
STOCKHOLDER PROPOSALS
Any stockholder who intends to present a proposal at the Company's next
annual meeting for the 1998 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 17, 1998, 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 12, 1997 will be entitled to notice of and to
vote at the Annual Meeting or any adjournment or postponement thereof. As of
December 12, 1997, 9,252,591 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 transaction of business at the Annual Meeting.
Abstentions and broker non-votes are counted for purposes of determining a
quorum.
<PAGE> 4
Each share is entitled to one vote on all matters voted on at the Annual
Meeting, except that voting for directors may be cumulative. A stockholder
intending to cumulate votes for directors must notify the Company of such
intention prior to commencement of the voting for directors. If any stockholder
has given such notice, every stockholder may cumulate votes for candidates in
nomination and give one candidate a number of votes equal to the number of
directors to be elected multiplied by the number of votes to which that
stockholder's shares are entitled, or distribute the stockholder's votes on the
same principle among two or more candidates.
Discretionary authority to cumulate votes represented by proxies is
solicited by the Board of Directors because, in the event nominations are made
in opposition to the nominees of the Board of Directors, it is the intention of
the persons named in the enclosed proxy to cumulate votes represented by proxies
for individual nominees in accordance with their best judgment in order to
assure the election of as many nominees of the Board of Directors as possible.
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. As to any other matters
which may properly come before the Annual Meeting, the proxy holders will vote
in accordance with their best judgment. 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.
2
<PAGE> 5
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 by the Board.
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 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.
<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 1997 President, Chief Executive Officer, Director
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
Lawrence Michels (65) was elected to the Board of Directors in August
1990, and in August 1993,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.
3
<PAGE> 6
Robert D. Bagby (64) 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 1994 he was appointed President and Chief Operating Officer
and in October 1994 he was appointed Chief Executive Officer. In May 1996, he
was appointed Vice Chairman of the Board of Directors and resigned his position
as President and Chief Executive Officer.
Jane M. Christie (45) 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. In January 1997 Ms. Christie was elected to the Company's Board.
Leonard N. Mackenzie (60) 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 1994 he resigned his position as President and Chief Executive Officer
and in May 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. From November 1996 to April 1997, Mr.
Mackenzie served as Chairman, President and CEO of SunRiver Corporation
(formerly NCR/ADDS), headquartered in Austin, Texas. Mr. Mackenzie is a director
of Vinyard Engine Systems, a major alternative fuel engine conversion business.
Mr. Mackenzie is also Vice Chairman of a private foundation chartered to fund
education for young children.
Philip T. Noden (55) has been a director of the Company since January
1989. Since 1983 he has been a member of the Board of Directors of Sanderson
Group PLC ("Sanderson"), a United Kingdom-based developer and supplier of
applications software.
Paul L. Morigi (77) 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 (62) 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.
EXECUTIVE OFFICERS
For information regarding the Company's executive officers who are also
director nominees, please see "Nominees" above. Information regarding Mr. John
R. Donnelly, who is an executive officer of the Company but not also a director
or director nominee of the Company follows.
4
<PAGE> 7
John R. Donnelly (63) 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.
(1978 - 1980), and GA as Controller and Vice President of Finance (1980 -1982).
From 1982 through 1990, Mr. Donnelly was Vice President, Finance and Chief
Financial Officer of Infodetics Corporation. From 1990 up until the time he
rejoined GA in 1994, Mr. Donnelly ran his own consulting practice.
BOARD MEETINGS AND COMMITTEES
During the fiscal year ended September 30, 1997, the Board of Directors
held a total of four meetings. Each director attended all of the meetings of the
Board and of 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, 1997 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, 1997.
There are no family relationships among the directors or executive
officers of the Company.
5
<PAGE> 8
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 12, 1997 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 and nominee for director; (iii) each of the Named Executive
Officers (as defined on page 7 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 1,293,900 14.0%
2501 Monaco Drive
Laguna Beach, CA 92651
Texas Micro Inc. (2) Common 1,000,000 10.5%
5959 Corporate Drive
Houston, TX 77036
Robert D. Bagby (3) Common 549,800 5.6%
John R. Donnelly (3) Common 280,900 3.0%
Jane M. Christie (3) Common 365,050 3.8%
Leonard N. Mackenzie (3) Common 485,000 5.0%
Robert M. McClure (3) Common 100,000 1.1%
Lawrence Michels (3) Common 608,334 6.2%
Paul L. Morigi (3) Common 95,000 1.0%
Philip T. Noden (3) Common 100,000 1.1%
All current executive officers Common 2,584,084 22.1%
and directors as a group
(8 persons) (5)
</TABLE>
6
<PAGE> 9
- --------------------
(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 12,
1997 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.
(2) Includes 250,000 shares that may be acquired through the exercise of
currently exercisable warrants.
(3) Shares listed for Mr. Bagby, Ms. Christie, Mr. Donnelly, Mr. Mackenzie,
Mr. McClure Mr. Morigi, Mr. Michels and Mr. Noden include 535,000,
350,000, 250,000, 485,000, 90,000, 50,000, 585,000 and 100,000 shares,
respectively, that may be acquired through the exercise of stock options
that are currently exercisable or will be exercisable within 60 days
after December 12, 1997.
(4) Excludes 100,000 shares held by Sanderson Technology Limited, a wholly
owned subsidiary of Sanderson Group PLC, of which Mr. Noden is a
director, with respect to which shares Mr. Noden disclaims beneficial
ownership.
(5) Includes 2,445,000 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, 1997 of those persons who at September 30, 1997 were either (i) the
Company's Chief Executive Officer or (ii) one of its most highly compensated
executive officers whose salary and bonus during the fiscal year ended September
30, 1997, exceeded $100,000 (collectively, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation(1) Long Term Compensation (1)
----------------------------- -------------------------------
Awards
-------------------------------
Securities All Other
Name and Underlying Compensation
Principal Position Year Salary($) Bonus($) Options(#) ($)(2)
- ------------------ ---- --------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Robert D. Bagby 1997 188,812(2a) -0- 50,000 $4,000
Vice Chairman of 1996 140,000 -0- -0- 4,200
the Board (3) 1995 140,000 -0- 485,000 3,351
Jane M. Christie 1997 169,400 -0- 200,000 2,029
President and CEO (4) 1996 126,900 -0- 100,000 3,624
1995 100,000 -0- 150,000 --
John R. Donnelly 1997 133,000 -0- 100,000 4,179
Vice President Finance 1996 109,530 -0- 100,000 3,759
Chief Financial Officer, 1995 100,000 -0- 150,000 3,759
Secretary, Treasurer
Leonard N. Mackenzie 1997 75,095(2a) -0- -0- -0-
Director (5) 1996 62,504 -0- -0- -0-
1995 123,565 -0- -0- 485,000
</TABLE>
7
<PAGE> 10
- ---------------------
(1) The Company made no long-term incentive plan payouts to its Named
Executive Officers during the 1995, 1996 and 1997 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.
(2a) Includes debt forgiveness of $43,612 for Mr. Bagby and $39,095 for Mr.
Mackenzie.
(3) Mr. Bagby served as the Company's President and Chief Executive Officer
until May 1996.
(4) Ms. Christie became Senior Vice President of Customer Services, Sales
and Marketing in August 1995, and President and Chief Executive Officer
in May 1996.
(5) Mr. Mackenzie served as President and Chief Executive Officer until
February 1994 and Vice Chairman from February 1994 until May 1996. Does
not include consulting fees paid to Mr. Mackenzie. (See "Compensation of
Directors".)
COMPENSATION OF DIRECTORS
During the fiscal year ended September 30, 1997, 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.
In April 1997, the Company entered into a letter agreement with Leonard
Mackenzie, a director of the Company, in connection with Mr. Mackenzie's
resignation as an employee of the Company. Under the letter agreement, Mr.
Mackenzie agreed to terminate the incentive stock option which had been granted
to Mr. Mackenzie in August 1994, under which Mr. Mackenzie held the right to
purchase 300,000 shares of the Company's common stock at an exercise price of
$0.75 per share. Under the letter agreement, Mr. Mackenzie has also agreed to
provide certain consulting services to the Company. In consideration of the
termination of Mr. Mackenzie's incentive stock option, and the consulting
services to be provided to the Company by Mr. Mackenzie, the Company has agreed
to pay to, or for the benefit of, Mr. Mackenzie, monthly payments of $27,083.
The letter agreement may be terminated by the Company at any time after the
second anniversary of the date of the letter agreement, in which event the
monthly payment obligations of the Company will terminate. Upon termination of
the letter agreement for any other reason, including Mr. Mackenzie's death (but
excluding termination following breach of the letter agreement by Mr.
Mackenzie), the Company is obligated to continue making payments under the
letter agreement at the rate of $27,083 per month until the second anniversary
of the date of the letter agreement, and thereafter at the rate of $20,083 per
month until the third anniversary of the date of the letter agreement. In
addition, upon the expiration or termination of the letter agreement for any
reason (excluding termination following breach of the letter agreement by Mr.
Mackenzie), the Company is obligated to issue to Mr. Mackenzie a warrant to
purchase shares of the Company's common stock (the "Warrant"). The Warrant will
have a two year term commencing on the date of expiration or termination of the
letter agreement and an exercise price equal to the fair market value per share
of the Company's common stock on the date of expiration or termination of the
letter agreement. The number of shares purchasable upon exercise of the Warrant
will be the quotient obtained by dividing (A) the difference, if any, between
(i) $899,988, and (ii) the sum of the aggregate compensation paid to Mr.
Mackenzie
8
<PAGE> 11
under the severance provisions of the letter agreement described above, by (B)
the fair market value per share of the Company's common stock on the date of
expiration or termination of the letter agreement.
STOCK OPTION GRANTS
The following table sets forth certain information regarding options
granted to the Named Executive Officers during the fiscal year ended September
30, 1997:
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential
Percent of Realizable Value
Number of Total at Assumed Annual
Securities Options/SAR's Rates of Stock Price
Underlying Granted to Exercise Appreciation
Options/SARs Employees or Base for Option Term
Granted in Fiscal Price Expiration ----------------------
Name (#) Year ($/Sh) Date 5%($) 10%($)
---- ----------- ---------- --------- --------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Robert D. Bagby 50,000 4.9% $1.94 01/30/02 26,799 59,219
Jane M. Christie 200,000 $1.95 12/21/01 107,750 238,099
John R. Donnelly 100,000 $1.95 11/21/01 53,875 119,049
</TABLE>
OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table sets forth the number of shares of common stock
issuable upon the exercise of outstanding stock options held by each of the
Named Executive Officers at September 30, 1997. None of the named Executive
Officers exercised stock options during the fiscal year ended September 30,
1997.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/SARs
Options/SARs at FY-End (#) at FY-End ($)
----------------------------- ---------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Jane M. Christie 350,000 100,000 231,250 -0-
John R. Donnelly 250,000 50,000 175,000 -0-
Leonard N. Mackenzie 485,000 -0- 492,275 -0-
Robert D. Bagby 535,000 -0- 517,275 -0-
</TABLE>
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.
9
<PAGE> 12
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 1997 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 1997 were competitive within a range
considered to be reasonable and necessary.
Bonuses and Stock Options. In addition to the base salary, the
Committee evaluates the appropriate level, if any, of executive
performance bonuses and new stock option grants. Options are viewed as
a valuable instrument in maintaining the continuity of its senior
executives and a definite aid in securing new executives to the Company.
SUBMITTED BY THE COMPENSATION COMMITTEE
Lawrence Michels
Paul Morigi
Philip Noden
10
<PAGE> 13
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, 1992.
<TABLE>
<CAPTION>
PERFORMANCE GRAPH
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
General Automation Inc. 100 69 50 75 294 188
Peer Group 100 118 94 5 6 6
AMEX Computer Technology Index 100 109 129 209 259 433
</TABLE>
The Peer Group consists of Allerion, Inc., Alpha Microsystems, Delphi
Information Systems, Auto Trol Technology, & Softec, Inc. The performance curve
depicting the "Peer Group" appears to be zero. The year 1995 is 5, 1996 is 6,
and 1997 is 6. The scale employed limits the portrayal of this Group.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From November 1996, until April 1997, Mr. Leonard N. Mackenzie, a
director of the Company, served as Chairman of the Board, President and Chief
Executive Officer of Boundless Technologies ("Boundless"). Previously, in May
1995, the Company and Boundless formed a limited liability company ("GAL"), with
the Company owning 51% and Boundless 49%.
Under the terms of the Operating Agreement which governs the conduct of
GAL's operations (the "Operating Agreement"), GAL operates and manages the
Company's Pick business and Boundless' Pick business. Under the Operating
Agreement, Boundless 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 Boundless 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. Subsequent
to the fifth year of the Operating Agreement, the percentage of net revenue to
be paid to Boundless is to be determined by negotiations between the Company and
Boundless. The Company is entitled to retain all cash generated by GAL, if any,
after the payment to Boundless of the net revenue percentage described above.
11
<PAGE> 14
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, Boundless has the right thereafter to
jointly manage GAL with the Company. Further, upon the occurrence of certain
other events, including the failure of GAL to pay to Boundless the percentage of
net revenues of which Boundless is entitled, Boundless has the right to
thereafter replace the Company as the sole manager 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 Boundless'
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 Boundless, 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 of Sanderson Group PLC. Sanderson and its affiliates acquire the
Company's products in significant quantities, with aggregate purchases in fiscal
1997 of approximately $313,446. As of September 30, 1997, the Company had trade
accounts receivable of approximately $80,489 due from Sanderson and its
affiliates.
In January 1997, the Company borrowed $500,000 from five individuals,
and issued a $500,000 Subordinated Note to Morgan Stanley Company, Inc. (the
"Note") to evidence the loan. The Note bears interest at the rate of 15% per
annum and is payable in twenty-four equal monthly installments. The Company's
indebtedness under the Note is subordinated to all indebtedness of the Company
to banks and other financial institutions, whether existing at the time of the
issuance of the Note or thereafter incurred. Paul Morigi, a director of the
Company, is the beneficial holder of the Note with respect to $200,000 of the
principal amount thereof.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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.
During the fiscal year ending September 30, 1997, Mr. Mackenzie, a
director of the Company, was not timely with respect to the filing of a report
relating to one transaction involving the purchase of shares of the Company's
common stock by Mr. Mackenzie. Also, during the fiscal year ended September 30,
1997, Mr. Noden, a director of the Company, was not timely with respect to the
filing of one report relating to the grant of stock options by the Company to
Mr. Noden.
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<PAGE> 15
FINANCIAL REPORTS
The Company's Annual Report for the year ended September 30, 1997 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
PAYMENT OF A REASONABLE CHARGE.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
McGladrey & Pullen, the Company's independent accountant for the fiscal
year ended September 30, 1997, 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, 1998.
Representatives of McGladrey & Pullen 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.
The Company engaged McGladrey & Pullen as its new independent accounting
firm as of October 7, 1997 to replace Price Waterhouse LLP, the Company's
previous independent accounting firm, which was dismissed as of September 11,
1997. The Company's decision to change independent accountants was approved by
the Audit Committee of the Company's Board of Directors. Neither of the reports
of Price Waterhouse LLP on the Company's financial statements for the two most
recent fiscal years preceding its dismissal contained an adverse opinion or a
disclaimer of opinion, nor was either such report qualified or modified as to
uncertainty, audit scope or accounting principles. During the Company's two most
recent fiscal years preceding the dismissal, and through September 11, 1997,
there were (a) no disagreements with Price Waterhouse LLP on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedures, which disagreement, if not resolved to the satisfaction of
Price Waterhouse LLP, would have caused them to make a reference thereto in
their report on the financial statements for such years, and (b) no reportable
events (as defined in SEC Regulation S-K Item 304(a)(1)(v)). During the
Company's two most recent fiscal years preceding the dismissal of Price
Waterhouse LLP, and through October 7, 1997, neither the Company nor anyone on
its behalf consulted with McGladrey & Pullen regarding either (I) the
application of accounting principles to a specified transaction, either
completed or proposed; or the type of audit opinion that might be rendered on
the Company's financial statements; or (ii) any matter that was either a subject
of disagreement (as defined in Item 304(a)(1)(iv) of SEC Regulation S-K and the
related instructions to that Item) or a reportable event (as described in Item
304(a)(1)(v)) of Regulation S-K).
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<PAGE> 16
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
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<PAGE> 17
GENERAL AUTOMATION, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 6, 1998
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 Friday, February 6,
1998 at 10:00 o'clock a.m., Pacific Standard Time, at The Embassy Suites
Hotel, located at 2120 Main Street, Irvine, California 92614, and at any and
all adjournments and postponements thereof, as follows:
IMPORTANT -- PLEASE SIGN OTHER SIDE
FOLD AND DETACH HERE
<PAGE> 18
MANAGEMENT RECOMMENDS A VOTE FOR THE
NOMINEES FOR DIRECTOR LISTED BELOW.
FOR WITHHOLD
all nominees listed below AUTHORITY
(except as marked to the to vote for all
contrary below). nominees listed below.
[ ] [ ]
(1) ELECTION OF DIRECTORS
---------------------
NOMINEES: Robert D. Bagby, Jane M. Christie, Leonard N. Mackenzie,
Lawrence Michels, Paul L. Morigi, Robert M. McClure,
Philip T. Noden
To withhold authority to vote for any nominee(s), write such nominee(s)'
name(s) below:
------------------------------------------------------------------------
(2) 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 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 MATTER
WHICH MAY PROPERLY COME BEFORE THE MEETING.
PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED POSTPAID
ENVELOPE.
SIGNATURE(S) DATED , 1998
----------------------------------------- ----------
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
