SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): February 13, 1996
AULT INCORPORATED
(Exact name of Registrant as specified in its charter)
Minnesota 0-12611 41-0842932
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
7300 Boone Avenue
Minneapolis, Minnesota 55428-1028
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 493-1900
Item 5. Other Events.
On February 13, 1996, the Board of Directors of Ault
Incorporated (the "Company") declared a dividend of one Right for
each outstanding share of the Company's Common Stock, no par value
(the "Common Stock"), to the stockholders of record at the close of
business on March 4, 1996 (the "Record Date"). Except as set forth
below, each Right entitles the registered holder to purchase from
the Company one one-hundredth (1/100) of a share of Series A Junior
Participating Preferred Stock, no par value (the "Preferred
Stock"), at a price of $36 per one one-hundredth of a share (the
"Purchase Price"). The terms of the Rights are set forth in a
Rights Agreement dated as of February 13, 1996 (the "Rights
Agreement") between the Company and Norwest Bank Minnesota, N.A.,
as Rights Agent.
Initially, the Rights will be attached implicitly to all
Common Stock certificates representing shares then outstanding, and
no separate Right certificates will be distributed. Until the
earlier to occur of ten days following (i) a public announcement
that, without the prior consent of the Board of Directors, a person
or group of affiliated or associated persons (an "Acquiring
Person") has acquired, or obtained the right to acquire, beneficial
ownership of voting securities having 15% or more of the voting
power of the Company (the "Stock Acquisition Date"), or (ii) the
commencement of (or a public announcement of an intention to make)
a tender offer or exchange offer which would result in any person
or group and related persons having beneficial ownership of voting
securities having 15% or more of the voting power of the Company
(the earlier of such dates referred to in (i) and (ii) above being
called the "Distribution Date"), the Rights will be evidenced, with
respect to any of the Common Stock certificates outstanding as of
the Record Date, by such Common Stock certificates.
The Rights Agreement provides that, until the Distribution
Date, the Rights will be transferred with and only with Common
Stock certificates. From as soon as practicable after the Record
Date and until the Distribution Date (or earlier redemption or
expiration of the Rights), new Common Stock certificates issued
after the Record Date upon transfer or new issuance of the Common
Stock will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any
certificates for Common Stock outstanding as of the Record Date
will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates
evidencing the Rights ("Rights Certificates") will be mailed to
holders of record of the Common Stock as of the close of business
on the Distribution Date, and the separate Rights Certificates
alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date.
The Rights will expire on February 13, 2006, unless earlier
redeemed by the Company as described below.
In the event that any person becomes the beneficial owner of
15% or more of the voting power of the Company, ten (10) days
thereafter (the "Flip-In Event") each holder of a Right will
thereafter have the right to receive, upon exercise thereof at the
then current Purchase Price of the Right, Common Stock (or, in
certain circumstances, a combination of cash, other property,
Common Stock or other securities) which has a value of two times
the Purchase Price of the Right (such right being called the
"Flip-In Right"). In the event that the Company is acquired in a
merger or other business combination transaction where the Company
is not the surviving corporation or in the event that 50% or more
of its assets or earning power is sold, proper provision shall be
made so that each holder of a Right will thereafter have the right
to receive, upon the exercise thereof at the then current Purchase
Price of the Right, common stock of the acquiring entity which has
a value of two times the Purchase Price of the Right (such right
being called the "Flip-Over Right"). The holder of a Right will
continue to have the Flip-Over Right whether or not such holder
exercises the Flip-In Right. Upon the occurrence of the Flip-In
Event, any Rights that are or were at any time owned by an
Acquiring Person shall become null and void insofar as they relate
to the Flip-In Right.
For example, at a Purchase Price of $36 per Right, if any
person becomes the beneficial owner of 15% or more of the voting
power of the Company, ten (10) days thereafter each Right other
than a Right owned by such 15% beneficial owner would entitle its
holder to purchase $72 worth of the Company's Common Stock (or
other consideration, as noted above) for $36. Assuming that the
Common Stock had a per share value of $6 at such time, the holder
of each Right would effectively be entitled to purchase 12 shares
of Common Stock for $36.
Similarly, assuming, following the Stock Acquisition Date, the
occurrence of a business combination with another entity in which
the Company's Common Stock is converted or exchanged, or a sale of
50% or more of the Company's assets or earning power, each Right
would entitle its holder to purchase $72 worth of the acquiring
entity's stock for $36.
The Purchase Price payable, and the number of shares of
Preferred Stock or other securities or property issuable, upon
exercise of the Rights are subject to adjustment from time to time
to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of the Preferred
Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for Preferred Stock or
convertible securities at less than the current market price of the
Preferred Stock or (iii) upon the distribution to holders of the
Preferred Stock of evidences of indebtedness or assets (excluding
regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
At any time after the acquisition by a person or group of
affiliated or associated persons of beneficial ownership of 15% or
more of the voting power of the Company and prior to the
acquisition by such person or group of 50% or more of the voting
power of the Company, the Board of Directors of the Company may
exchange the Rights (other than Rights owned by such person or
group which have become void), in whole or in part, at an exchange
ratio of one share of Common Stock, or one one-hundredth of a share
of Preferred Stock (or of a share of a class or series of the
Company's preferred stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment
of at least 1% in the Purchase Price. No fractions of shares will
be issued and, in lieu thereof, an adjustment in cash will be made
based on the market price of the Preferred Stock on the last
trading date prior to the date of exercise.
At any time prior to the earlier to occur of (i) the tenth day
after the Stock Acquisition Date, or (ii) the expiration of the
Rights, the Company may redeem the Rights in whole, but not in
part, at a price of $.001 per Right (the "Redemption Price"), which
redemption shall be effective at such time as the Board of
Directors shall establish. Additionally, the Continuing Directors
may, following the Stock Acquisition Date, redeem the then
outstanding Rights in whole, but not in part, at the Redemption
Price provided that either (a) the Acquiring Person reduces his
beneficial ownership to less than 15% of the voting power of the
Company in a manner which is satisfactory to the Continuing
Directors and there are no other Acquiring Persons, or (b) such
redemption is incidental to a merger or other business combination
transaction or series of transactions involving the Company but not
involving an Acquiring Person or any person who was an Acquiring
Person. The redemption of Rights described in the preceding
sentence shall be effective only after ten (10) business days prior
notice. Upon the effective date of the redemption of the Rights,
the right to exercise the Rights will terminate and the only right
of the holders of Rights will be to receive the Redemption Price.
The Preferred Stock purchasable upon exercise of the Rights
will be nonredeemable. Each share of Preferred Stock will have a
preferential quarterly dividend in an amount equal to 100 times the
dividend declared on each share of Common Stock. In the event of
liquidation, the holders of Preferred Stock will receive a
preferred liquidation payment of $100 per whole share of Preferred
Stock. Each whole share of Preferred Stock will have 100 votes,
voting together with the Common Stock. In the event of any merger,
consolidation or other transaction in which Common Stock are
exchanged, each share of Preferred Stock will be entitled to
receive 100 times the amount and type of consideration received per
share of Common Stock. The rights of the Preferred Stock as to
dividends and liquidations, and in the event of mergers and
consolidations, are protected by customary anti-dilution
provisions. Fractional shares of Preferred Stock in integral
multiples of one one-hundredth of a share of Preferred Stock will
be issued unless the Company elects to distribute depositary
receipts in lieu of such fractional shares. In lieu of fractional
shares other than fractions that are multiples of one one-hundredth
of a share, an adjustment in cash will be made based on the market
price of the Preferred Stock on the last trading date prior to the
date of exercise.
Until a Right is exercised, it will not entitle the holder to
any rights as a stockholder of the Company (other than those as an
existing stockholder), including, without limitation, the right to
vote or to receive dividends.
The terms of the Rights may be amended by the Board of
Directors of the Company (i) prior to the Distribution Date in any
manner, and (ii) on or after the Distribution Date to cure any
ambiguity, to correct or supplement any provision of the Rights
Agreement which may be defective or inconsistent with any other
provisions, or in any manner not adversely affecting the interests
of the holders of the Rights.
As of February 13, 1996, there were 2,094,276 shares of Common
Stock issued and outstanding and 368,750 shares reserved for
issuance pursuant to the exercise of outstanding stock options and
warrants. Each outstanding share of Common Stock on March 4, 1996
will receive one Right. As long as the Rights are attached to the
Common Stock, the Company will issue one Right for each share of
Common Stock issued between the Record Date and the Distribution
Date so that all such shares will have attached Rights. There will
be 50,000 shares of Preferred Stock reserved for issuance upon
exercise of the Rights.
The Rights Agreement is designed to protect shareholders in
the event of an unsolicited attempt to acquire the Company for an
inadequate price and to protect against abusive practices that do
not treat all shareholders equally, including partial and two-tier
tender offers, coercive offers, and creeping stock accumulation
programs. Such practices can pressure shareholders into tendering
their investments prior to realizing the full value or total
potential of such investments. The Rights Agreement is intended to
make the cost of such abusive practices prohibitive and create an
incentive for a potential acquiror to negotiate in good faith with
the Board. The Rights Agreement is not intended to, and will not,
prevent all unsolicited offers to acquire the Company. If an
unsolicited offer is made, and the Board determines that it is fair
and in the best interests of the Company and its shareholders,
then, pursuant to the terms of the Rights Agreement, the Board has
the authority to redeem the Rights and permit the offer to proceed.
Essentially, the Rights Agreement will provide the Board with
sufficient opportunity to evaluate the fairness of any unsolicited
offer and the credibility of the bidder, and will therefore enable
the Board to represent the interests of all shareholders more
effectively. Of course, in deciding whether to redeem the Rights
in connection with any unsolicited offer, the Board will be bound
by its fiduciary obligations to act in the best interests of the
Company and its shareholders.
The form of Rights Agreement between the Company and the
Rights Agent specifying the terms of the Rights, which includes as
Exhibit B the form of Rights Certificate, is incorporated herein by
reference as Exhibit 1 hereto. The foregoing description of the
Rights does not purport to be complete and is qualified in its
entirety by reference to such Exhibit.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
Exhibit 1. Form of Rights Agreement, dated as of February
13, 1996, between the Company and Norwest Bank
Minnesota, National Association, is
incorporated by reference to Exhibit 1 to the
Company's Form 8-A dated February 16, 1996.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
AULT INCORPORATED
/s/Frederick M. Green
Frederick M. Green,
Chief Executive Officer
Dated: March 1, 1996
