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EXHIBIT 4.2
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").
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:
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ARTICLE I
DEFINITIONS AND INTERPRETATION
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).
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"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 proposed disposition of such securities by the Holders
will
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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
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, 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
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(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 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
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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
underwriters under such underwriting agreement be conditions precedent to the
obligations of the Participating Holders thereunder.
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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,
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
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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.
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'
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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
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.
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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;
(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;
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(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
(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.
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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, 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
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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 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
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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, 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
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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.
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.
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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.
00000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: President
Facsimile Number: (000) 000-0000
Telephone Number: (000) 000-0000
With a copy to:
Higham, XxXxxxxxx & Xxxxxxx
00000 Xxxxx Xxxx, Xxxxx 000
Xxxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. XxXxxxxxx
Facsimile Number: (000) 000-0000
Telephone Number: (000) 000-0000
(ii) if to Sequoia or the Holders, to:
Sequoia Systems, Inc.
c/o Texas Microsystems, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: President
Facsimile Number: (000) 000-0000
Telephone Number: (000) 000-0000
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With a copy to:
Xxxxxxx & Xxxxx L.L.P.
4200 Texas Commerce Tower
000 Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx
Facsimile Number: (000) 000-0000
Telephone Number: (000) 000-0000
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.
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.
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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, 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.
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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
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
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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.
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
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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.
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.
By: /s/ XXXX XXXXXXXX By: /s/ XXXXXXX XXXXXXX
----------------------------- ------------------------------
Printed Name: Xxxx X. Xxxxxxxx Xxxxxxx Xxxxxxx, President
------------------ and Chief Executive Officer
Title: President and CEO
-------------------------
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