EXHIBIT 10.25
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is entered into as of the 11th day of
October, 1996 between General Automation, Inc., a Delaware corporation (the
"Company"), and Sequoia Systems, Inc., a Delaware corporation ("Sequoia").
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PRELIMINARY STATEMENTS
1. The Company and Sequoia are parties to that certain Asset Purchase
Agreement dated as of October 3, 1996 (the "Purchase Agreement"), which
provides, among other things, for the sale by Sequoia to the Company of
certain assets of Sequoia (the "Business"), and the assumption by the
Company of certain liabilities and obligations of Sequoia related to the
Business.
2. Pursuant and subject to the terms of the Purchase Agreement, and in
partial consideration for the sale of the Business by Sequoia to the
Company, the Company is required to issue and deliver to Sequoia (i)
within two business days of the listing thereof on the American Stock
Exchange, 750,000 shares of Common Stock (as hereinafter defined) and
(ii) at the Closing (as hereinafter defined), warrants to purchase
250,000 shares of Common Stock (the "Warrants").
3. Pursuant to the terms of the Purchase Agreement, and in partial
consideration for the sale of the Business by Sequoia to the Company of
the Business, the Company may, from time to time, issue additional shares
of Common Stock to Sequoia in partial payment for the purchase price for
the Business (the "Optional Payment Shares").
4. It is a condition precedent to the obligation of Sequoia to close the
transactions contemplated by the Purchase Agreement that the Company
shall have executed and delivered this Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
contained herein and in the Purchase Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
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Section 1.01. Certain Defined Terms. Capitalized terms used in this
Agreement have the following respective meanings:
"Affiliate" means (i) when used with reference to any partnership, any Person
that, directly or indirectly, owns or controls 10% or more of either the
capital or profit interests of such partnership or is a general partner of
such partnership or is a Person in which such partnership has a 10% or
greater direct or indirect equity interest, and (ii) when used with reference
to any corporation, any Person that, directly or indirectly, owns or controls
10% or more of the outstanding voting securities of such corporation or is a
Person in which such corporation has a 10% or greater direct or indirect
equity interest. In addition, the term "Affiliate," when used with reference
to any Person, means any other Person that, directly or indirectly, through
one or more intermediaries, controls, is controlled by or is under common
control with such Person. The term "control" (including, with correlative
meaning, the terms "controlling", "controlled by" and "under common control
with") means the possession, directly or indirectly, of the power to direct
or cause direction of the management and policies of a Person, whether
through the ownership of voting securities, by Contract or otherwise;
provided, however, that in no event shall the Company be deemed an Affiliate
of any Holder or vice versa.
"Agreement" means this Registration Rights Agreement.
"Business" has the meaning specified in the Preliminary Statements of
this Agreement.
"Claim" means any claim, demand, investigation, cause of action, suit,
default, assessment, litigation, third party action, arbitral proceeding or
proceeding by or before any Governmental Authority or any other Person.
"Closing" has the meaning specified in the Purchase Agreement.
"Closing Date" has the meaning specified in the Purchase Agreement.
"Common Stock" means the common stock, par value $0.10 per share, of the
Company, and any securities issued or issuable with respect to any such
common stock by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise.
"Company" has the meaning specified in the introductory paragraph of this
Agreement.
"Company Indemnified Persons" has the meaning specified in Section 4.02.
"Contract" means any agreement, lease, license, evidence of indebtedness,
mortgage, deed of trust, note, bond, indenture, security agreement,
commitment, instrument, understanding or other contract, obligation or
arrangement of any kind.
"Curative Prospectus" has the meaning specified in Section 2.04(f).
"Eligible Assignee" means any Person to whom rights hereunder have been
assigned in accordance with Section 6.05.
"Exchange Act" means the Securities Exchange Act of 1934 and the rules
and regulations promulgated thereunder.
"Governmental Approval" means any authorization, consent, approval,
license, franchise, lease, ruling, tariff, rate, permit, certificate or
exemption of, or filing or registration with, any Governmental Authority.
"Governmental Authority" means (i) any nation or government, (ii) any
federal, state, county, province, city, town, municipality, local or other
political subdivision thereof or thereto, (iii) any court, tribunal,
department, commission, board, bureau, instrumentality, agency, council,
arbitrator or other entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government and
(iv) any other governmental entity with authority over the applicable Person
or assets and properties.
"Holders" means Sequoia and any Eligible Assignee.
"Holder Indemnified Persons" has the meaning specified in Section 4.01.
"Indemnified Party" has the meaning specified in Section 4.03(a).
"Indemnifying Party" has the meaning specified in Section 4.03(a).
"Laws" means all laws, statutes, rules, regulations, ordinances, orders,
writs, injunctions or decrees and other pronouncements having the effect of
law of any Governmental Authority.
"Liability" means, with respect to any Person, any indebtedness,
obligation and other liability of such Person, whether absolute, accrued,
contingent, fixed or otherwise, or whether due or to become due.
"Losses" means any and all damages (including consequential, punitive and
exemplary), fines, penalties, judgments, deficiencies, losses, costs and
expenses, including court costs, reasonable fees of attorneys, accountants
and other experts and other reasonable expenses of any Claim.
"Other Holder" has the meaning specified in Section 2.09.
"Optional Payment Shares" has the meaning specified in the Preliminary
Statements of this Agreement.
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"Participating Holders" means, with respect to any Piggyback
Registration, Holders that are entitled to participate in, and are
participating in or seeking to participate in, such Registration.
"Participation Notice" means, with respect to any Piggyback Registration,
a written notice from a Holder to the Company pursuant to which such Holder
elects to participate in a Piggyback Registration and specifying the
Registrable Securities intended to be disposed of by such Holder in such
Registration.
"Parties" means the Company and the Holders.
"Permitted Suspension" has the meaning specified in Section 2.02.
"Person" means any individual, firm, corporation, trust, association,
company, limited liability company, joint stock company, partnership, joint
venture, Governmental Authority or other entity or enterprise.
"Piggyback Registration" means any registration of Registrable Securities
under the Securities Act effected in accordance with Section 2.03.
"Piggyback Registration Notice" has the meaning specified in Section
2.03.
"Purchase Agreement" has the meaning specified in the Preliminary
Statements of this Agreement.
"Registrable Securities" means (i) the 750,000 shares of Common Stock to
be issued by the Company to Sequoia in connection with the Closing pursuant
to the terms of the Purchase Agreement, the Optional Payment Shares and the
Warrant Shares and (ii) any securities issued or issuable with respect to any
such shares of Common Stock by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise; provided, however, that,
with respect to any particular securities which are issued and outstanding,
such securities shall cease to be Registrable Securities upon the earliest to
occur of (A) the expiration of the Registration Period, (B) the time at which
a Registration Statement with respect to the sale of such securities shall
have become effective under the Securities Act and such securities shall have
been disposed of in accordance with the plan of distribution set forth in
such Registration Statement, (C) the time at which such securities shall have
been distributed in accordance with Rule 144, (D) the time at which the
Company has caused to be delivered to the Holders and each transfer agent for
the Registrable Securities an opinion of counsel from a law firm reasonably
acceptable to the Requisite Holders, and in form and substance reasonably
acceptable to the Requisite Holders and each such transfer agent, for the
purpose of permitting the transfer by the Holders of securities proposed to
be sold without registration under the Securities Act or the legending of
such securities, to the effect that the
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proposed disposition of such securities by the Holders will not require
registration or qualification under the Securities Act and that such
securities are distributable (without volume limitation) in accordance with
Rule 144, or (E) the time at which such securities shall have been otherwise
transferred, new certificates therefor not bearing a legend restricting
further transfer shall have been delivered in exchange therefor by the
Company and subsequent disposition of such securities shall not require
registration or qualification under the Securities Act or any similar state
Law then in effect.
"Registration" means any registration of Registrable Securities under the
Securities Act effected in accordance with Section 2.01 or any Piggyback
Registration.
"Registration Expenses" means all costs, fees or expenses incurred by the
Company or Persons engaged by the Company or acting at the Company's request
or direction incident to the Company's performance of or compliance with this
Agreement, including (i) all registration, filing, securities exchange
listing, rating agency and National Association of Securities Dealers fees,
(ii) all registration, filing, qualification and other fees and expenses of
complying with securities or blue sky Laws of all jurisdictions in which the
securities are to be registered and any legal fees and expenses incurred in
connection with the blue sky qualifications of the Registrable Securities,
(iii) all word processing, duplicating, printing, messenger and delivery
expenses, (iv) the fees and disbursements of counsel for the Company and of
its independent public accountants, including the expenses of any special
audits or "cold comfort" letters required by or incident to such performance
and compliance, (v) premiums and other costs of policies of insurance against
Liabilities arising out of the public offering of the Registrable Securities
being registered to the extent the Company elects to obtain such insurance,
(vi) in connection with any Piggyback Registration, any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities (but excluding underwriting discounts and commissions and transfer
taxes, if any, relating to the sale of the Registrable Securities) and (vii)
fees and expenses of other Persons retained or employed by the Company.
"Registration Period" has the meaning specified in Section 2.02.
"Registration Statement" means a registration statement pursuant to Rule
415 under the Securities Act on Form S-3 or such other form as may be
required by applicable Law covering the resale by the Holders of the
Registrable Securities covered thereby.
"Requisite Holders" means, at the time of determination, Holder(s) owning
of record a majority in interest of the Registrable Securities.
"Requisite Participating Holders" means, with respect to any Piggyback
Registration, Participating Holders owning a majority in interest of the
Registrable Securities to be included in such Registration.
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"Rule 144" means Rule 144 promulgated by the SEC under the Securities
Act, and any successor provision thereto.
"SEC" means the United States Securities and Exchange Commission or any
successor thereof.
"Securities Act" means the Securities Act of 1933 and the rules and
regulations promulgated thereunder.
"Sequoia" has the meaning specified in the introductory paragraph of this
Agreement.
"Suspension Event" has the meaning specified in Section 2.03(f).
"Suspension Notice" has the meaning specified in Section 2.06.
"Suspension Period" has the meaning specified in Section 2.06.
"Termination Date" has the meaning specified in Section 5.01.
"Warrant Shares" means the 250,000 shares of Common Stock to be issued by
the Company to Sequoia upon exercise of the Warrants (as such number of
shares may be adjusted pursuant to the terms thereof).
"Warrants" has the meaning specified in the Preliminary Statements of
this Agreement.
Section 1.02. Interpretation. In this Agreement, unless a clear
contrary intention appears:
(a) the words "hereof," "herein" and "hereunder" and words of similar
import refer to this Agreement as a whole and not to any particular provision
of this Agreement;
(b) reference to any gender includes each other gender and the neuter;
(c) all terms defined in the singular shall have the same meanings in the
plural and vice versa;
(d) reference to any Person includes such Person's heirs, executors,
personal representatives, administrators, successors and assigns; provided,
however, that nothing contained in this clause (d) is intended to authorize
any assignment not otherwise permitted by this Agreement;
(e) reference to a Person in a particular capacity or capacities excludes
such Person in any other capacity;
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(f) reference to any Contract means such Contract as amended,
supplemented or modified from time to time in accordance with the terms
thereof;
(g) all references to Articles and Sections shall be deemed to be
references to the Articles and Sections of this Agreement;
(h) the word "including" (and with correlative meaning "include") means
including, without limiting the generality of any description preceding such
term;
(i) with respect to the determination of any period of time, the word
"from" means "from and including" and the words "to" and "until" each means
"to but excluding";
(j) the captions and headings contained in this Agreement shall not be
considered or given any effect in construing the provisions hereof if any
question of intent should arise;
(k) reference to any Law or any Governmental Approval means such Law or
Governmental Approval as amended, modified, codified, reenacted, supplemented
or superseded in whole or in part, and in effect from time to time;
(l) where any provision of this Agreement refers to action to be taken by
any Person, or which such Person is prohibited from taking, such provision
shall be applicable whether such action is taken directly or indirectly by
such Person; and
(m) no provision of this Agreement shall be interpreted or construed
against either Party solely because that Party or its legal representative
drafted such provision.
ARTICLE II
REGISTRATION OF SECURITIES
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Section 2.01. Registrations. The Company shall use its best efforts to:
(a) with respect to the 750,000 shares of Common Stock to be issued by
the Company to Sequoia in connection with the Closing pursuant to the terms
of the Purchase Agreement, (i) within 90 days after the Closing Date, file a
Registration Statement covering such shares of Common Stock with the SEC, and
(ii) on or before the date which is six months after the Closing Date, have
such Registration Statement declared effective by the SEC;
(b) with respect to the Optional Payment Shares, (i) within 60 days after
the issuance thereof, file a Registration Statement covering the Optional
Payment Shares with the SEC,
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and (ii) on or before the date which is four months after the issuance
thereof, have such Registration Statement declared effective by the SEC; and
(c) with respect to the Warrant Shares, (i) within 60 days after each
exercise by any Holder of any of the Warrants, file a Registration Statement
covering the Warrant Shares issued by the Company as a result of such
exercise with the SEC, and (ii) on or before the date which is five months
after each such exercise, have such Registration Statement declared effective
by the SEC; provided, however, that the Company shall only be obligated to
effect two Registrations in connection with any exercise of the Warrants.
If, on the date by which any such Registration Statement is required to have
been declared effective by the SEC, the effectiveness of such Registration
Statement has been suspended or such Registration Statement is otherwise not
effective, the Company shall use its best efforts to cause such Registration
Statement to be effective as soon thereafter as practicable.
Section 2.02. Maintenance of Effectiveness During Registration Period.
With respect to each Registration Statement (other than any Piggyback
Registration), once such Registration Statement is declared effective pursuant
to Section 2.01, the Company shall use its best efforts to cause such
Registration Statement to remain continuously effective until the earliest to
occur of (a) the date on which none of the Holders holds any Registrable
Securities covered by such Registration Statement or all of the Registrable
Securities covered by such Registration Statement cease to be Registrable
Securities, as the case may be, (b) the date on which all of the securities
covered by such Registration Statement have been sold, but in no event prior to
the expiration of the applicable period referred to in Section 4(3) of the
Securities Act and Rule 174 thereunder, (c) the date which is four years after
such Registration Statement shall have been declared effective by the SEC, or
(d) with respect to Warrant Shares, the date which is two years after such
Registration Statement shall have been declared effective (such period, as the
same pertains to such Registration Statement and as the same may be extended
pursuant to Section 2.07, being herein referred to as its "Registration
Period"); provided, however, that (i) the Company may suspend the use of such
Registration Statement at any time (but no more than once in any 12-month period
and for a period not to exceed 60 days) if the continued effectiveness thereof
would require the Company to disclose a material financing, acquisition or other
corporate transaction, which disclosure the Board of Directors of the Company
shall have determined in good faith to not be in the best interests of the
Company and its stockholders and (ii) the Company may suspend the use of such
Registration Statement during the period starting with the date 30 days prior to
the Company's good faith estimate of the date of filing of, and ending on a date
90 days after the effective date of, a Piggyback Registration, provided that the
Company is actively employing in good faith its best efforts to cause such
Piggyback Registration to become effective (a "Permitted Suspension").
Section 2.03. Piggyback Registrations. In the event that the Company,
at any time during the period commencing on the date hereof and ending on the
Termination Date, proposes to register any of its equity securities under the
Securities Act (other than by a registration on
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Form S-8), in an underwritten offering, whether for sale for the account of the
Company or any other Person, the Company will provide notice at least 30 days
prior to the proposed date of filing the registration statement relating thereto
to each Holder (a "Piggyback Registration Notice"), such Piggyback Registration
Notice to include a statement of the intention of the Company to register such
securities and of the Holders' rights under this Section 2.03. Each Holder shall
have 15 days after receipt of such Piggyback Registration Notice within which to
elect to request inclusion of such Holder's Registrable Securities in the
registration contemplated by such Piggyback Registration Notice, such election
to be made by providing the Company with a Participation Notice. The Company
shall use its best efforts to cause to be included in the Piggyback Registration
all Registrable Securities which the Participating Holders have requested the
Company to register pursuant to the Participation Notices, to the extent
required to permit the distribution (in accordance with the intended method or
methods thereof) of the Registrable Securities to be registered; provided,
however, that the Company may, in its sole discretion, determine to not file
such registration statement or withdraw such registration statement (if filed)
and abandon any proposed offering by giving notice of such intention to each
Participating Holder, in which event the Company shall be relieved of its
obligation to register any Registrable Securities pursuant to such Participation
Notices (but not from its obligation to pay Registration Expenses in connection
therewith). Notwithstanding any other provision of this Section 2.03 to the
contrary, if the representative of the underwriters in such Piggyback
Registration advises the Company in writing that marketing factors require a
limitation on the number of shares to be underwritten, the representative may
(subject to the limitations set forth below) limit the number of Registrable
Securities to be included in the registration and underwriting. The Company
shall so advise the holders of all securities requesting registration and the
amount of securities that are entitled to be included in the registration and
underwriting shall be allocated among the Company, the Holders and the Other
Holders requesting inclusion of shares pro rata: (a) as between the Company and
the Holders and the Other Holders, on the basis of the number of securities
contemplated to be included in such registration by the Company, on the one
hand, and the number of securities requested to be included by Holders and the
Other Holders, on the other hand; and (b) as between the Holders and the Other
Holders, on the basis of the number of securities held by the Holders and the
Other Holders for which piggyback registration rights are available; provided,
however, that in no event shall the Company limit the number of Registrable
Securities to be included in any registration by any Holder in order to include
securities held by Other Holders with no piggyback or demand registration
rights. The Registrable Securities to be registered under any registration
statement pursuant to the Participation Notices shall be offered for sale upon
the same terms as any similar securities offered for sale by the Company in such
registration. The right of any Holder to participate in any Piggyback
Registration shall be conditioned on the inclusion in the underwriting of those
of the Holder's Registrable Securities to be included in the underwriting. The
Company shall (together with all participating Holders) enter into an
underwriting agreement in customary form with the representative of the
underwriters. However, the Requisite Participating Holders may, at their option,
require that any or all of the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters be also made to and for the benefit of the Participating Holders
and that any or all of the conditions precedent to the obligations of such
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underwriters under such underwriting agreement be conditions precedent to the
obligations of the Participating Holders thereunder.
Section 2.04. Registration Procedures. Whenever required under this
Article II to use its best efforts to effect the registration of any Registrable
Securities, the Company shall use its best efforts to, as expeditiously as
reasonably possible:
(a) prepare and file with the SEC a registration statement with respect
to such Registrable Securities and cause such registration statement to
become and remain effective (i) with respect to any Registration other than a
Piggyback Registration, for the applicable Registration Period, or (ii) with
respect to any Piggyback Registration, for the period necessary for the
distribution of such Registrable Securities in accordance with the intended
plan of distribution thereof;
(b) prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may
be necessary to keep such registration statement effective (i) with respect
to respect to any Registration other than a Piggyback Registration, for the
applicable Registration Period, or (ii) with respect to any Piggyback
Registration, for the period necessary for the distribution of the
Registrable Securities covered thereby in accordance with the intended plan
of distribution thereof;
(c) furnish to each Holder (and, in the case of any Piggyback
Registration, each underwriter or agent) participating in the disposition of
securities under such registration statement, such numbers of copies of the
registration statement and the prospectus, including any preliminary or
summary prospectus, and each amendment or supplement thereto, in conformity
with the requirements of the Securities Act, and such other documents as any
Holder (or, with respect to any Piggyback Registration, any such underwriter
or agent) may reasonably request to facilitate the disposition of Registrable
Securities owned by the Holders;
(d) with respect to any Piggyback Registration, furnish to each Holder a
signed counterpart, addressed to such Holder (and each underwriter and agent,
if any), of:
(i) an opinion of counsel to the Company, dated the effective date of
such registration statement and the date of the closing under the
underwriting agreement; and
(ii) unless otherwise precluded under applicable accounting rules, a
"comfort" letter, dated the effective date of such registration
statement and the date of the closing under the underwriting
agreement, signed by the independent public accountants who have
certified the Company's financial statements included in such
registration statement,
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in each case, in form and substance reasonably satisfactory to the
underwriter;
(e) promptly notify each Holder (and, with respect to any Piggyback
Registration, each underwriter and agent, if any, participating in the
disposition of Registrable Securities covered by such registration
statement), at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, upon discovery that, or upon the
happening of any event known to the Company as a result of which, the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under which
they were made (a "Suspension Event"), and promptly prepare and furnish
to each Holder (and, with respect to any Piggyback Registration, each
underwriter and agent, if any) a reasonable number of copies of a supplement
to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under which
they were made (a "Curative Prospectus");
(f) provide and cause to be maintained a transfer agent and registrar for
all Registrable Securities covered by such registration statement from and
after a date not later than the effective date of such registration
statement;
(g) list, on or prior to the effective date of such registration
statement, all Registrable Securities covered by such registration statement
on the principal national securities exchange on which any securities of the
Company are then listed or, if not listed on a national securities exchange,
on The Nasdaq Stock Market;
(h) cooperate with each Holder (and, with respect to any Piggyback
Registration, each underwriter and agent, if any) participating in the
distribution of such Registrable Securities to facilitate the timely
preparation and delivery of certificates (which shall not bear any
restrictive legends, other than as required by applicable Law) representing
securities sold under such registration statement, and enable such securities
to be in such denominations and registered in such names as each Holder (and,
with respect to any Piggyback Registration, each underwriter or agent) may
reasonably request and keep available and make available to the Company's
transfer agent, prior to the effectiveness of such registration statement, an
adequate supply of such certificates;
(i) not later than the effective date of such registration statement,
provide a CUSIP number for all Registrable Securities covered by such
registration statement; and
(j) in connection with any Piggyback Registration, participate, to the
extent reasonably requested by the managing underwriter for the offering (if
any), in customary efforts to sell the securities under the offering,
including road shows and similar activities.
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Section 2.05. Registration Expenses. The Company shall pay all
Registration Expenses incurred in connection with each Registration,
irrespective of whether any such Registration is ever effected or deemed
effected. Each Holder shall pay the brokers' commissions (and, with respect to
any Piggyback Registration, the underwriters' discounts and commissions) and any
transfer taxes applicable to the Registrable Securities sold by such Holder in
any such offering.
Section 2.06. Withdrawal. Each Holder shall be permitted to withdraw
all or part of his or its Registrable Securities from any Registration at any
time prior to the effective date thereof.
Section 2.07. Agreements of Certain Holders. Each Holder shall promptly
furnish to the Company such information regarding such Holder, the Registrable
Securities held by such Holder and the intended plan of distribution of such
Registrable Securities as the Company may from time to time reasonably request
in writing in connection with any Registration, and the provision of such
information shall be a condition precedent to the Company's obligations to
include such Holder's Registrable Securities in such Registration. If any
Registration Statement refers to a Holder or any of its Affiliates by name or
otherwise as the holder of any securities of the Company, then such Holder shall
have the right to require (a) that such reference be in form and substance
reasonably satisfactory to such Holder and (b) in the event that such reference
is not required by the Securities Act or any similar federal or state blue sky
Laws then in force, that such reference be deleted. Each Holder agrees that,
upon receipt of a notice (a "Suspension Notice") from the Company of the
happening of any Suspension Event or any Permitted Suspension, such Holder will
not dispose of any Registrable Securities pursuant to such Registration
Statement during the period (the "Suspension Period") commencing on receipt by
such Holder of such Suspension Notice from the Company and continuing thereafter
until (i) in the case of a Suspension Event, receipt by such Holder of a
Curative Prospectus, or (ii) in the case of a Permitted Suspension, until the
earlier to occur of (A) the receipt of written notice from the Company that such
Permitted Suspension has terminated or (B) the expiration of 60 days from the
receipt of such Suspension Notice from the Company; provided, however, that the
Registration Period applicable to the Registration Statement covering any such
Registrable Securities shall automatically be extended for a period equal to the
Suspension Period. The Company shall take such actions as are necessary to end
any Suspension Period as promptly as practicable.
Section 2.08. Registration Rights of Others. The Company shall not,
during the period commencing on the date hereof and ending on the Termination
Date, without the prior written consent of the Requisite Holders, enter into any
agreement with any holder or prospective holder of any securities of the Company
(an "Other Holder") which limits or restricts in any manner the performance of
the Company's obligations under this Agreement.
Section 2.09. Relationships and Rights of the Holders. The Holders
agree that, notwithstanding that certain rights of each Holder hereunder may be
affected by similar rights of other Holders, the Holders shall, in respect of
the ownership of the Registrable Securities, not be
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related as, or deemed to be, a partnership, joint venture or other "group" for
the purpose of acquiring, holding, voting or disposing of securities of the
Company.
Section 2.10. Reports under the Exchange Act. The Company shall, for
the period commencing on the date hereof and ending on the Termination Date, use
its best efforts to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act; and
(c) furnish to any Holder, upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
Securities Act and the Exchange Act, (ii) a copy of the most recent annual or
quarterly report of the Company and (iii) such other reports and documents
filed by the Company with the SEC.
Section 2.11. Lock-up Agreement. Each Holder agrees to not sell, make
any short sale of, loan, or grant any option for the purchase of any Registrable
Securities without the prior written consent of the Company, (a) during the
period commencing on the date hereof and continuing thereafter until the first
anniversary of the Closing Date, with respect to any shares of Common Stock
(excluding the Warrant Shares and any Optional Payment Shares) in excess of
400,000 shares; and (b) during the period commencing on the date hereof and
continuing thereafter until the second anniversary of the Closing Date, with
respect to any shares of Common Stock (excluding the Warrant Shares and any
Optional Payment Shares), in excess of 600,000 shares; provided, however, that
the number of shares specified in each such limitation shall be appropriately
adjusted in connection with any stock dividend, stock-split, reclassification of
shares, combination of shares, recapitalization, merger, consolidation,
reorganization or other similar action or event.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
Except as provided in the Company SEC Documents (as defined in the
Purchase Agreement), the Company hereby represents and warrants to each Holder
that:
(a) the Company is a corporation duly organized, validly existing and in
good standing under the Laws of the State of Delaware and has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby;
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(b) the execution and delivery by the Company of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by the Board of Directors of the Company and no other corporate
proceedings or approvals on the part of the Company are necessary to
authorize this Agreement;
(c) this Agreement has been duly executed and delivered by the Company
and constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar Laws affecting creditors' rights
generally and general equitable principles;
(d) except as provided herein, no Governmental Approvals and no
notifications, filings or registrations to or with any Governmental Authority
or any other Person is or will be necessary for the valid execution and
delivery by the Company of this Agreement, or the enforceability hereof,
other than those which have been obtained or made and are in full force and
effect;
(e) the Company is qualified to register the Registrable Securities for
sale by the Holders under the Securities Act on Form S-3 and has the
financial capability to perform its obligations under this Agreement;
(f) the execution and delivery by the Company of this Agreement and the
consummation of the transactions contemplated hereby do not and shall not, by
the lapse of time, the giving of notice or otherwise, (i) constitute a
violation of any Law, (ii) constitute a breach or violation of any provision
contained in its Certificate of Incorporation or Bylaws, (iii) constitute a
breach of any provision contained in, or a default under, any Governmental
Approval, any writ, injunction, order, judgment or decree of any Governmental
Authority or any Contract to which the Company is a party or by which the
Company or its assets and properties is bound or affected or (iv) result in
or require the creation of any lien, charge or encumbrance upon any of the
assets and properties of the Company;
(g) there are no Claims pending or, to the knowledge of the Company,
threatened, and the Company has no knowledge of the basis for any Claim,
which either alone or in the aggregate, seeks to restrain or enjoin the
execution and delivery of this Agreement or the consummation of any of the
transactions contemplated hereby;
(h) there are no judgments or outstanding orders, injunctions, decrees,
stipulations or awards (whether rendered by a Governmental Authority or by an
arbitrator) against the Company which prohibit or restrict, or could
reasonably be expected to result in any delay of, the consummation of the
transactions contemplated by this Agreement; and
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(i) except for this Agreement, there are no Contracts between the Company
and any Person providing for registration rights with respect to any
securities of the Company.
ARTICLE IV
INDEMNIFICATION
---------------
Section 4.01. Indemnification by the Company. Subject to the terms and
conditions of this Article IV, the Company agrees to indemnify, defend and hold
harmless, to the fullest extent permitted by Law, each Holder, his or its
Affiliates, their respective directors, officers, shareholders, employees,
investment advisers and agents and their respective heirs, executors, personal
representatives, administrators, successors and assigns (the "Holder Indemnified
------------------
Persons"), from and against any and all Claims, Liabilities and Losses which may
-------
be imposed on, incurred by or asserted against any Holder Indemnified Person,
under the Securities Act or otherwise, arising out of or resulting from,
directly or indirectly:
(a) any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such securities were
registered under the Securities Act (including all documents incorporated
therein by reference), any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement thereto;
or
(b) any omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
provided, however, that the Company shall not be liable to any particular Holder
Indemnified Person for any portion of any Claims, Liabilities or Losses to the
extent that it is determined by a court of competent jurisdiction, arbitration
pursuant to Section 6.11 or agreement of the Parties affected thereby that such
Claims, Liabilities and Losses arose out of or resulted from (i) any untrue
statement or alleged untrue statement of any material fact contained in such
registration statement, prospectus, amendment or supplement, (ii) any omission
or alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, which statement or
omission was contained in or omitted from such registration statement,
prospectus, amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by any Holder Indemnified Person
specifically for inclusion therein, (iii) the failure of such Holder to use a
Curative Prospectus after delivery of the same by the Company to such Holder or
(iv) the sale or distribution of Registrable Securities by such Holder during
any Suspension Period.
Section 4.02. Indemnification by the Holders. Subject to the terms and
conditions of this Article IV, each Holder, severally and not jointly, agrees to
indemnify, defend and hold harmless, to the fullest extent permitted by Law, (i)
each other Holder and his or its heirs,
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executors, personal representatives, administrators, successors and assigns and
(ii) the Company, its Affiliates and their respective directors, officers,
shareholders, employees, investment advisers and agents and their respective
heirs, executors, personal representatives, administrators, successors and
assigns (the "Company Indemnified Persons"), from and against any and all
Claims, Liabilities and Losses which may be imposed on, incurred by or asserted
against such other Holder or his or its heirs, executors, personal
representatives, administrators, successors and assigns or any Company
Indemnified Person, under the Securities Act or otherwise, to the extent that it
is determined by a court of competent jurisdiction, arbitration pursuant to
Section 6.11 or agreement of the Parties affected thereby that such Claims,
Liabilities and Losses arose out of or resulted from, directly or indirectly:
(a) any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such securities were
registered under the Securities Act (including all documents incorporated
therein by reference), any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement thereto;
or
(b) any omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
which statement or omission was contained in or omitted from such registration
statement, prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by such Holder
specifically for inclusion therein; provided, however, that such Holder shall
not be liable to, and shall not be obligated to provide such indemnity to, any
other Holder, any Company Indemnified Person or any other Person for any portion
of any Claims, Liabilities or Losses to the extent that such Claims, Liabilities
and Losses arose out of or resulted from the failure of the Company to promptly
amend or take action to correct or supplement any such registration statement,
prospectus, amendment or supplement based on corrected or supplemental
information provided in writing by such Holder to the Company expressly for such
purpose. The Liability of each Holder pursuant to this Section 4.02 shall be
several, and not joint and several, among all indemnifying parties.
Notwithstanding anything contained in this Agreement to the contrary, in no
event shall the aggregate Liability of any Holder under this Section 4.02 exceed
an amount equal to the amount of the proceeds received by such Holder upon the
sale of his or its Registrable Securities in the offering to which the Claims,
Liabilities or Losses relate.
Section 4.03. Indemnification Procedures. The Liabilities of any party
to indemnify any other party pursuant to this Article IV shall be subject to the
following terms and conditions:
(a) Notice and Defense. Within a reasonable period of time after a
Person to be indemnified (whether one or more, the "Indemnified Party")
receives actual notice of any Claim covered by Section 4.01 or 4.02, as the
case may be, the Indemnified Party shall, if a Claim in respect thereof is to
be made pursuant to Section 4.01 or 4.02, as the case may
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be, notify the Person from whom indemnification is sought (the "Indemnifying
Party") in writing of such Claim; provided however, that the failure to so
notify the Indemnifying Party shall not relieve the Indemnifying Party from
any Liability which it may have to the Indemnified Party, except to the
extent of material detriment suffered by the Indemnifying Party as a result
of such failure. In the event that a Claim, Liability or Loss arises out of
or results from matters with respect to third parties, the Indemnifying Party
will undertake the defense thereof by representatives chosen by it which are
reasonably acceptable to the Indemnified Party; provided, however, that if,
in the Indemnified Party's reasonable judgment, a conflict of interest exists
between such Indemnified Party and such Indemnifying Party in respect of such
Claim, such Indemnified Party shall be entitled to separate counsel at the
expense of the Indemnifying Party. So long as the Indemnifying Party is
defending any such Claim actively and in good faith, the Indemnified Party
shall not settle such Claim. Each of the Indemnifying Party and the
Indemnified Party shall be entitled to consult with each other, to the extent
he or it reasonably requests, in respect of the defense of such Claim and
shall cooperate in the defense of any such Claim, including making his or its
officers, directors, employees and books and records available for use in
such Claim, and shall take those actions reasonably within his or its power
which are reasonably necessary to preserve any legal defenses to such
matters.
(b) Failure to Defend. If the Indemnifying Party, within a reasonable
time after notice of any such Claim, fails to defend such Claim actively and
in good faith, the Indemnified Party will (upon further notice) have the
right to undertake the defense, compromise or settlement of such Claim or
consent to the entry of a judgment with respect to such Claim, on behalf of
and for the account and risk of the Indemnifying Party, and the Indemnifying
Party shall thereafter have no right to challenge the Indemnified Party's
defense, compromise, settlement or consent to judgment; provided, however,
that the provisions of this Section 4.03(b) shall not be deemed to restrict
the ability of the Indemnifying Party to contest any such Indemnified Party's
right to indemnification from the Indemnifying Party under this Article IV.
(c) Indemnified Party's Rights. Notwithstanding anything contained in
this Article IV to the contrary, (i) if there is a reasonable probability
that a Claim will materially and adversely affect any Indemnified Party other
than as a result of money damages or other money payments, such Indemnified
Party shall have the right to defend, compromise or settle such Claim to the
extent such Claim relates to the Indemnified Party (subject, in the case of
defense, to the approval of counsel selected by it by the Indemnifying Party,
and, in the case of compromises and settlements, to the consent of the
Indemnifying Party, which approval or consent shall not, in any case, be
unreasonably withheld, delayed or conditioned), and (ii) no consent order
shall be entered into or Claim settled with respect to an Indemnified Party
unless the Indemnified Party has given its prior written consent thereto;
provided, however, that the Indemnified Party shall consent to any
settlement, compromise or discharge of such Claim that the Indemnifying Party
may recommend that by its terms unconditionally and fully releases the
Indemnified Party from all Claims,
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Liabilities and Losses with respect to the matters giving rise to such Claim
and which does not impose any form of injunctive relief on such Indemnified
Party.
(d) Expenses of Counsel. In the event that any Indemnified Party is
entitled to assume the defense of any Claim, the Indemnifying Party shall not
be obligated to pay the fees and expenses of more than one counsel or firm of
counsel for all Persons indemnified by such Indemnifying Party in respect of
such Claim, unless in the reasonable judgment of any Indemnified Party a
conflict of interest exists between such Indemnified Party and any other
Indemnified Party in respect of such Claim, in which event the Indemnifying
Party shall be obligated to pay the fees and expenses of one additional
counsel or firm of counsel for such Indemnified Parties.
Section 4.04. Payment. The Indemnifying Party shall promptly pay the
Indemnified Party any amount due under this Article IV. Upon judgment,
determination, settlement or compromise of any third party Claim, the
Indemnifying Party shall promptly pay on behalf of the Indemnified Party, and/or
to the Indemnified Party in reimbursement of any amount theretofore required to
be paid by him or it, the amount of the Indemnified Party's Liability so
determined by such judgment, determination, settlement or compromise and all
other Losses and Claims of the Indemnified Party with respect thereto for which
the Indemnified Party is entitled to indemnification pursuant to this Agreement,
unless in the case of a judgment or determination an appeal is made from such
judgment or determination; provided, however, that if the Indemnifying Party
desires to appeal from an adverse judgment or determination, then the
Indemnifying Party shall post and pay the cost of the security or bond to stay
execution of the judgment or determination pending appeal. Upon the payment in
full by the Indemnifying Party of all of such amounts, the Indemnifying Party
shall succeed to the rights of the Indemnified Party, to the extent such rights
are not waived in settlement, against the third party who made such third party
Claim.
Section 4.05. Survival of Representations, Warranties and Covenants.
Except as otherwise provided herein, all representations, warranties, covenants
and agreements made by the Company and the Holders in this Agreement or in any
certificate, document or other instrument delivered by the Company or any Holder
pursuant to this Agreement shall survive the execution and delivery of this
Agreement and any transfer of any Registrable Securities, regardless of any
investigation made by or on behalf of any Person.
Section 4.06. Other Indemnification. The provisions of this Article IV
shall be in addition to any other rights to indemnification or contribution
which an Indemnified Party may have pursuant to any Contract, at law or in
equity or otherwise.
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ARTICLE V
TERM AND TERMINATION
--------------------
Section 5.01. Termination. The rights and obligations under this
Agreement of each Holder shall terminate with respect to such Holder at such
time as (a) such Holder ceases to hold any Registrable Securities and (b) the
Company has no obligation to issue any further Registrable Securities to such
Holder pursuant to the Purchase Agreement or the Warrants. The rights and
obligations of the Company under this Agreement shall terminate at such time
(the "Termination Date") as the rights of all Holders have terminated.
Section 5.02. Effect of Termination. Upon the termination of a Party's
rights and obligations under this Agreement pursuant to Section 5.01, this
Agreement shall terminate and have no further effect with respect to such Party;
provided, however, that the provisions of Article IV, the rights and obligations
of the Parties with respect to the breach of any provision hereof prior to such
termination and any and all accrued rights and obligations as of the date of
such termination shall survive the termination of this Agreement with respect to
any Party.
ARTICLE VI
MISCELLANEOUS
-------------
Section 6.01. Notices. Any and all notices, requests or other
communications hereunder shall be given in writing and delivered by (a) regular,
overnight or registered or certified mail (return receipt requested), with first
class postage prepaid, (b) hand delivery, (c) facsimile transmission or (d)
overnight courier service, to the Parties at the following addresses or
facsimile numbers:
(i) if to the Company, to:
General Automation, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to:
Higham, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to Sequoia or the Holders, to:
Sequoia Systems, Inc.
c/o Texas Microsystems, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P.
4200 Texas Commerce Tower
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address or number as shall be designated by any Party in a
notice to the other Parties given in accordance with this Section 6.01. Except
as otherwise provided in this Agreement, all such communications shall be deemed
to have been duly given, (i) in the case of a notice sent by regular mail, on
the date actually received by the addressee, (ii) in the case of a notice sent
by registered or certified mail, on the date receipted for (or refused) on the
return receipt, (iii) in the case of a notice delivered by hand, when personally
delivered, (iv) in the case of a notice sent by facsimile, upon transmission
subject to telephone confirmation of receipt, and (v) in the case of a notice
sent by overnight mail or overnight courier service, the date delivered at the
designated address, in each case given or addressed as aforesaid.
Section 6.02. Benefit and Burden. This Agreement shall inure to the
benefit of, and shall be binding upon, the Parties and their respective heirs,
executors, personal representatives, administrators, successors and permitted
assigns.
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Section 6.03. No Third Party Rights. Nothing in this Agreement shall be
deemed to create any right in any creditor or other Person other than the
Parties and the Indemnified Parties, and this Agreement shall not be construed
in any respect to be a Contract in whole or in part for the benefit of any third
party (other than the Indemnified Parties).
Section 6.04. Amendments and Waiver. No amendment, modification,
restatement or supplement of this Agreement shall be valid unless the same is in
writing and signed by the Company and the Requisite Holders; provided, however,
that no amendment, modification, restatement or supplement providing one or more
Holders priority in registering Registrable Securities or providing for the
elimination of registration rights shall be valid unless the same is signed by
all Holders. No waiver of any provision of this Agreement shall be valid unless
in writing and signed by the Party against whom that waiver is sought to be
enforced. No failure or delay on the part of any Party in exercising any right,
power or privilege hereunder and no course of dealing between or among any of
the Parties shall operate as a waiver of any right, power or privilege
hereunder. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege hereunder. No notice to or demand on any
Party in any case shall entitle such Party to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the rights of
any Party to any other or further action in any circumstances without notice or
demand.
Section 6.05. Assignments. Any Holder may assign, in whole or in part,
his or its rights under this Agreement in connection with the transfer by such
Holder of any Registrable Securities covered hereby; provided, however, that the
Company is given written notice by the Holder at the time of such assignment or
within a reasonable time thereafter, such notice to include the name and address
of such assignee and to identify the Registrable Securities with respect to
which the rights under this Agreement have been assigned and, provided further,
that there shall not, at any one time, be more than ten such assignees in
existence. The rights so assigned shall apply only to the Registrable
Securities received from a Holder and only upon execution of an agreement by the
assignee binding such assignee to the obligations of a Holder hereunder, insofar
as such obligations pertain to such Registrable Securities. Except as otherwise
provided in this Section 6.05, neither this Agreement nor any right, interest or
obligation hereunder may be assigned by any Party and any attempt to do so shall
be null and void.
Section 6.06. Counterparts. This Agreement may be executed in
counterparts and by the different Parties in separate counterparts, each of
which when so executed shall be deemed an original and all of which taken
together shall constitute one and the same agreement. It shall not be necessary
in making proof of this Agreement to produce or account for more than one
counterpart signed by the Party to be charged thereby.
Section 6.07. Severability. Should any clause, sentence, paragraph,
subsection, Section or Article of this Agreement be judicially declared to be
invalid, unenforceable or void, such decision will not have the effect of
invalidating or voiding the remainder of this Agreement,
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and the Parties agree that the part or parts of this Agreement so held to be
invalid, unenforceable or void will be deemed to have been stricken herefrom by
the Parties, and the remainder will have the same force and effectiveness as if
such stricken part or parts had never been included herein, and, in lieu of such
invalid, unenforceable or void clause, sentence, paragraph, subsection, Section
or Article, there will be added automatically as a part of this Agreement a
valid and enforceable provision as similar in terms to such invalid,
unenforceable or void clause, sentence, paragraph, subsection, Section or
Article as may be possible which preserves the economic benefits to the Parties.
Section 6.08. Remedies. The Parties agree that the covenants and
obligations contained in this Agreement relate to special, unique and
extraordinary matters and that a violation of any of the terms hereof or thereof
would cause irreparable injury in an amount which would be impossible to
estimate or determine and for which any remedy at law would be inadequate. As
such, the Parties agree that if any Party fails or refuses to fulfill any of his
or its obligations under this Agreement or to make any payment or deliver any
instrument required hereunder or thereunder, then any other Party shall have the
remedy of specific performance, which remedy shall be cumulative and
nonexclusive and shall be in addition to any other rights and remedies otherwise
available under any other Contract or at law or in equity and to which such
Party might be entitled.
Section 6.09. Applicable Law. This Agreement and the Rights And
Obligations of the Parties Hereunder Shall be Governed by and Construed in
Accordance With the Laws of the State of Delaware, Without Giving Effect to the
Conflict of Law Principles Thereof.
Section 6.10. Submission to Jurisdiction. The Company hereby (a)
irrevocably submits to the non-exclusive personal jurisdiction of any Delaware
state or federal court sitting in Delaware (the "Delaware Courts") over any
Claim arising out of or relating to this Agreement and irrevocably agrees that
all such Claims may be heard and determined in such Delaware Court and (b)
irrevocably waives, to the fullest extent permitted by applicable Law, any
objection it may now or hereafter have to the laying of venue in any proceeding
brought in any Delaware Court and any Claim that any such proceeding brought in
a Delaware Court has been brought in an inconvenient forum; provided, however,
that nothing in this Section 6.10 is intended to waive the right of the Company
or any Holder to remove any such action or proceeding commenced in any Delaware
Court to another Delaware Court to the extent the basis for such removal exists
under applicable Law. The Company hereby irrevocably (i) appoints its then
current designated agent for service of process in the State of Delaware (the
"Process Agent"), as its agent to receive on behalf of it and its properties
service of copies of the summons and complaint and any other process which may
be served in any such action or proceeding, (ii) agrees that service of process
may be made on the Company by mailing, by certified mail, a copy of such process
to the Company in care of the Process Agent at the Process Agent's above
address, with a copy to the Company at its address for notices specified herein,
and (iii) authorizes and directs the Process Agent to accept such service on its
behalf. Each of the Holders hereby irrevocably agrees that
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service of process may be made on him or it by mailing, by certified mail, a
copy of such process to him or it at his or its address for notices specified
herein. As an alternative method of service, the Company also irrevocably
consents to the service of any and all process in any such action or proceeding
by the mailing by certified mail of copies of such process to it at its address
for notices specified herein. Each of the Parties agrees that a final judgment
in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
Law. Nothing in this Section 6.10 shall affect the right of any of the Parties
to serve legal process in any other manner permitted by Law or affect the right
of any of the Parties to bring any action or proceeding in the courts of any
other jurisdictions, domestic or foreign.
Section 6.11. Arbitration. (a) All disputes and disagreements among the
Parties (each, a "Dispute") arising in connection with this Agreement shall be
resolved by binding arbitration administered by the American Arbitration
Association (the "AAA") in accordance with, and in the following order of
priority, (i) the terms of these arbitration provisions, (ii) the Commercial
Arbitration Rules of the AAA, (iii) the Federal Arbitration Act (Title 9 of the
United States Code) and (iv) to the extent the foregoing are inapplicable,
unenforceable or invalid, the Laws of the State of Delaware. The validity and
enforceability of these arbitration provisions shall be determined in accordance
with this same order of priority. In the event of any inconsistency between
these arbitration provisions and such rules and statutes, these arbitration
provisions shall control. Each of the Parties may, by summary proceedings (e.g.,
a plea in abatement or motion to stay further proceedings) bring any action in
any court of competent jurisdiction to (A) compel arbitration of any Dispute,
(B) obtain interim measures of protection pending arbitration of any Dispute
and/or (C) enforce any decision of the arbitrators, including the final award.
If any of the Parties fails or refuses to submit to binding arbitration
following a lawful demand by any other Party, the Party so failing or refusing
shall bear all costs and expenses incurred by any other Party in compelling
arbitration of such Dispute.
(b) All statutes of limitation applicable to any Dispute shall apply to
any proceeding in accordance with these arbitration provisions.
(c) Arbitrators are empowered to resolve Disputes by summary rulings
substantially similar to summary judgments and motions to dismiss. Arbitrators
shall resolve all Disputes in accordance with the applicable substantive Law.
Any arbitrator selected shall be required to be experienced and knowledgeable in
the substantive Laws applicable to the subject matter of the Dispute. With
respect to a Dispute in which the claims or amounts in controversy do not exceed
$100,000, a single arbitrator shall be chosen and shall resolve the Dispute. In
such case, the arbitrator shall have authority to render an award up to but not
to exceed $100,000, including all amounts properly payable and costs, fees and
expenses. A Dispute involving claims or amounts in controversy exceeding
$100,000, shall be decided by a majority vote of a panel of three arbitrators
(an "Arbitration Panel"), the determination of any two of the three arbitrators
constituting the determination of the Arbitration Panel; provided, however, that
all three arbitrators on the Arbitration Panel must actively participate in all
hearings and deliberations.
-23-
Any award of the arbitrators shall be final and binding and the Parties hereby
waive any right to appeal the arbitral award, to the extent that a right to
appeal may be lawfully waived. Arbitrators, including any Arbitration Panel, may
grant any remedy or relief deemed just and equitable and within the scope of
these arbitration provisions and may also grant such ancillary relief as is
necessary to make effective any award.
(d) To the maximum extent practicable, the AAA, the arbitrator (or the
Arbitration Panel, as appropriate) and the Parties shall take any action
necessary to require that an arbitration proceeding hereunder shall be concluded
within 180 days of the filing of the Dispute with the AAA. Unless the parties
shall agree otherwise, arbitration proceedings hereunder shall be conducted in
Delaware. Arbitrators shall be empowered to impose sanctions, permit or order
depositions and discovery and to take such other actions as they deem necessary
to the same extent a judge could pursuant to the Federal Rules of Civil
Procedure and applicable Law. With respect to any Dispute, each of the Parties
agrees that all discovery activities shall be expressly limited to matters
directly relevant to such Dispute and any arbitrator, any Arbitration Panel and
the AAA shall be required to fully enforce this requirement. The provisions of
these arbitration provisions shall survive any termination, amendment or
expiration of this Agreement, unless the Parties otherwise expressly agree in
writing. To the extent permitted by applicable Law, arbitrators, including any
Arbitration Panel, shall have the power to award recovery of all costs and fees
(including attorneys' fees, administrative fees and arbitrators' fees) to the
prevailing Party or, if no clear prevailing Party, as the arbitrator (or
Arbitration Panel, if applicable) shall deem just and equitable. Each of the
Parties agrees to keep all Disputes and arbitration proceedings strictly
confidential, except for disclosures of information required by applicable Law.
Section 6.12. Expenses. Except as otherwise expressly provided for in
this Agreement, each of the Parties shall pay his or its own expenses incident
to this Agreement and the transactions contemplated hereby, including legal and
accounting fees and disbursements.
Section 6.13. Prevailing Party Costs. Notwithstanding anything
contained in this Agreement to the contrary (except as expressly provided in
Section 6.11), if any Party commences an action against another Party to enforce
any of the terms, covenants, conditions or provisions of this Agreement, or
because of a breach by a Party of its obligations under this Agreement, the
prevailing Party in any such action shall be entitled to recover its Losses,
including reasonable attorneys' fees, incurred in connection with the
prosecution or defense of such action, from the losing Party.
Section 6.14. No Inconsistent Actions. The Company will not undertake
any course of action inconsistent with the provisions or intent of this
Agreement. Without limitation of the foregoing, the Company will not enter
into, modify, amend or waive any Contract with respect to its securities if such
Contract, modification, amendment or waiver would conflict with the rights
granted to the Holders (or any of them) pursuant to this Agreement.
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Section 6.15. Entire Agreement. This Agreement sets forth all of the
promises, agreements, conditions, understandings, warranties and representations
among the Parties with respect to the transactions contemplated hereby, and
supersedes all prior agreements, arrangements and understandings among the
Parties, whether written, oral or otherwise. There are no promises, agreements,
conditions, understandings, warranties or representations, oral or written,
express or implied, among the Parties concerning the subject matter hereof
except as set forth herein.
IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of
the day and year first above written.
GENERAL AUTOMATION, INC. SEQUOIA SYSTEMS, INC.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
By: _______________________________ By: _______________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
Printed Name: _____________________ and Chief Executive Officer
President and Chief
Executive Officer
Title: ____________________________
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