As filed with the Securities and Exchange Commission on October 16,1997
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
AULT INCORPORATED
(Exact name of registrant as specified in its charter)
Minnesota 41-0842932
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
7300 Boone Avenue North
Minneapolis, Minnesota 55428
(Address of principal executive offices and zip code)
AULT INCORPORATED
1996 STOCK OPTION PLAN
(Full title of the Plan)
Frederick M. Green Copy to:
President and Chief Executive Officer Richard A. Primuth, Esq.
Ault Incorporated Lindquist & Vennum
7300 Boone Avenue North 4200 IDS Center
Minneapolis, Minnesota 55428 80 South Eight Street
(612) 493-1900 Minneapolis, Minnesota 55402
(Name, address and telephone number (612) 371-3211
of agent for service)
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregat Amount of
e
to be to be Price Offering Registration
Registered Registered Per Price(1) Fee
Share(1)
Common Stock, 500,000 $7.75 $3,3875,000 $1,175
no par value
(1) Estimated solely for the purpose of determining the
registration fee pursuant to Rules 457(c) and 457(h)(1) and
based upon the last reported sale price of the Company's
Common Stock on the NASDAQ National Market on October 14,
1997
PART I
Pursuant to the Note to Part I of Form S-8, the information
required by Items 1 and 2 of Form S-8 is not filed as a part of
this Registration Statement.
PART II
Item 3. Incorporation of Documents by Reference.
The following documents filed with the Securities and
Exchange Commission are hereby incorporated by reference herein:
(a) The Annual Report of the Company on Form 10-K for the
fiscal year ended June 1, 1997.
(b) The Quarterly Report of the Company on Form 10-Q for
the period ended August 31, 1997.
(c) The Proxy Statement of the Company dated August 27,
1997 for the Annual Meeting of Shareholders held
September 29, 1997.
(d) The description of the Company's Common Stock as set
forth under "Description of Common Shares" in the
Company's Registration Statement on Form S-1 as filed
with the Securities and Exchange Commission on July 18,
1983 (Registration No. 2-85224), including any
amendment or report filed for the purpose of updating
such description.
All documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange
Act of 1934, prior to the filing of a post-effective amendment
which indicates that all securities offered have been sold or
which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference in this Registration
Statement and to be a part hereof from the date of filing of such
documents.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Article XI of the Registrant's Bylaws provides that the
Registrant shall indemnify any person who at any time shall serve
or shall have served as a director, officer or employee of the
Corporation, or of any other enterprise at the request of the
Corporation, and the heirs, executors and administrators of such
person in accordance with, and to the fullest extent permitted by
the provisions of the Minnesota Business Corporation Act,
Minnesota Statutes, Chapter 302A, as it may be amended from time
to time.
Section 302A.521 of the Minnesota Business Corporation Act
provides that a corporation shall indemnify any person made or
threatened to be made a party to a proceeding by reason of acts
or omissions performed in their official capacity as an officer,
director, employee or agent of the corporation against judgments,
penalties, fines, including without limitation, excise taxes
assessed against such person with respect to an employee benefit
plan, settlements, and reasonable expenses, including attorneys'
fees and disbursements, incurred by such person in connection
with the proceeding if, with respect to the acts or omissions of
such person complained of in the proceeding, such person (i) has
not been indemnified by another organization or employee benefit
plan for the same expenses with respect to the same acts or
omissions; (ii) acted in good faith; (iii) received no improper
personal benefit and Minnesota Statutes, Section 302A.255
(regarding conflicts of interest), if applicable, has been
satisfied; (iv) in the case of a criminal proceeding, has no
reasonable cause to believe the conduct was unlawful; and (v) in
the case of acts or omissions by persons in their official
capacity for the corporation, reasonably believed that the
conduct was in the best interests of the corporation, or in the
case of acts or omissions by persons in their capacity for other
organization, reasonably believed that the conduct was not
opposed to the best interests of the corporation. In addition,
Section 302A.521, subd. 3, of the Minnesota Statutes requires
payment or reimbursement by the corporation, upon written
request, of reasonable expenses (including attorneys' fees)
incurred by a person in advance of the final disposition of a
proceeding in certain instances if a decision as to required
indemnification is made by a disinterested majority of the Board
of Directors present at a meeting at which a disinterested quorum
is present, or by a designated committee of the Board, by special
legal counsel, by the shareholders or by a court.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
Exhibit
4.1 Ault Incorporated 1996 Stock Option Plan
5.1 Opinion of Lindquist & Vennum P.L.L.P.
23.1 Consent of Lindquist & Vennum P.L.L.P. (included in Exhibit 5.1)
23.2 Consent of McGladrey & Pullen, LLP, independent accountants
24.1 Power of Attorney (set forth on the signature page hereof)
Item 9. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represents
a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii)
do not apply if the registration statement is on Form S-3 or Form
S-8 and the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic
reports filed by the registrant pursuant to section 13 or section
15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers,
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a director, officer, or controlling person of the
registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling
person connected with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
S-8 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in
the City of Minneapolis, State of Minnesota, on October 16, 1997.
AULT INCORPORATED
By /s/ Frederick M. Green
Frederick M. Green
President and Chief Executive
Officer
EXHIBIT 4.1
AULT INCORPORATED
1996 STOCK PLAN
SECTION 1. General Purpose of Plan; Definitions.
The name of this plan is the Ault Incorporated 1996 Stock Plan
(the "Plan"). The purpose of the Plan is to enable Ault Incorporated
(the "Company") to retain and attract executives and other key
employees, non-employee directors and consultants who contribute to
the Company's success by their ability, ingenuity and industry, and to
enable such individuals to participate in the long-term success and
growth of the Company by giving them a proprietary interest in the
Company.
For purposes of the Plan, the following terms shall be defined as
set forth below:
a. "Board" means the Board of Directors of the Company as it
may be comprised from time to time.
b. "Cause" means a felony conviction of a participant or the
failure of a participant to contest prosecution for a felony, willful
misconduct, dishonesty or intentional violation of a statute, rule or
regulation, any of which, in the judgment of the Company, is harmful
to the business or reputation of the Company.
c. "Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor statute.
d. "Committee" means the Committee referred to in Section 2 of
the Plan. If at any time no Committee shall be in office, then the
functions of the Committee specified in the Plan shall be exercised by
the Board, unless the Plan specifically states otherwise.
e. "Consultant" means any person, including an advisor, engaged
by the Company, a Parent corporation or a Subsidiary of the Company to
render services and who is compensated for such services and who is
not an employee of the Company or any Parent Corporation or Subsidiary
of the Company. A Non-Employee Director may serve as a Consultant.
f. "Company" means Ault Incorporated, a corporation organized
under the laws of the State of Minnesota (or any successor
corporation).
g. "Deferred Stock" means an award made pursuant to Section 8
below of the right to receive stock at the end of a specified deferral
period.
h. "Disability" means permanent and total disability as
determined by the Committee.
i. "Early Retirement" means retirement, with consent of the
Committee at the time of retirement, from active employment with the
Company and any Subsidiary or Parent Corporation of the Company.
j. "Fair Market Value" of Stock on any given date shall be
determined by the Committee as follows: (a) if the Stock is listed for
trading on one of more national securities exchanges, or is traded on
the NASDAQ Stock Market, the last reported sales price on the
principal such exchange or the NASDAQ Stock Market on the date in
question, or if such Stock shall not have been traded on such
principal exchange on such date, the last reported sales price on such
principal exchange or the NASDAQ Stock Market on the first day prior
thereto on which such Stock was so traded; or (b) if the Stock is not
listed for trading on a national securities exchange or the NASDAQ
Stock Market, but is traded in the over-the-counter market, including
the NASDAQ Small Cap Market, the closing bid price for such Stock on
the date in question, or if there is no such bid price for such Stock
on such date, the closing bid price on the first day prior thereto on
which such price existed; or (c) if neither (a) or (b) is applicable,
by any means fair and reasonable by the Committee, which determination
shall be final and binding on all parties.
k. "Incentive Stock Option" means any Stock Option intended to
be and designated as an "Incentive Stock Option" within the meaning of
Section 422 of the Code.
l. "Non-Employee Director" means a "Non-Employee Director"
within the meaning of Rule 16b-3(b)(3) under the Securities Exchange
Act of 1934.
m. "Non-Qualified Stock Option" means any Stock Option that is
not an Incentive Stock Option, and is intended to be and is designated
as a "Non-Qualified Stock Option."
n. "Normal Retirement" means retirement from active employment
with the Company and any Subsidiary or Parent Corporation of the
Company on or after age 65.
o. "Outside Director" means a Director who: (a) is not a
current employee of the Company or any member of an affiliated group
which includes the Company; (b) is not a former employee of the
Company who receives compensation for prior services (other than
benefits under a tax-qualified retirement plan) during the taxable
year; (c) has not been an officer of the Company; (d) does not receive
remuneration from the Company, either directly or indirectly, in any
capacity other than as a director, except as otherwise permitted under
Code Section 162(m) and regulations thereunder. For this purpose,
remuneration includes any payment in exchange for good or services.
This definition shall be further governed by the provisions of Code
Section 162(m) and regulations promulgated thereunder.
p. "Parent Corporation" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company
if each of the corporations (other than the Company) owns stock
possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain.
q. "Restricted Stock" means an award of shares of Stock that
are subject to restrictions under Section 7 below.
r. "Retirement" means Normal Retirement or Early Retirement.
s. "Stock" means the Common Shares, no par value, of the
Company.
t. "Stock Appreciation Right" means the right pursuant to an
award granted under Section 6 below to surrender to the Company
all or a portion of a Stock Option in exchange for an amount equal
to the difference between (i) Fair Market Value, as of the date
such Stock Option or such portion thereof is surrendered, of the
shares of Stock covered by such Stock Option or such portion
thereof, and (ii) the aggregate exercise price of such Stock
Option or such portion thereof.
u. "Stock Option" means any option to purchase shares of Stock
granted pursuant to Section 5 below.
v. "Subsidiary" means any corporation (other than the Company)
in an unbroken chain of corporations beginning with the Company if
each of the corporations (other than the last corporation in the
unbroken chain) owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other
corporations in the chain.
SECTION 2. Administration.
The Plan shall be administered by the Board of Directors or
by a Committee appointed by the Board of Directors of the Company
consisting of at least two Directors, all of whom shall be Outside
Directors and Non-Employee Directors, who shall serve at the
pleasure of the Board. If the Board has established a Compensation
Committee, the Compensation Committee shall serve as the Committee
for purposes of this Plan.
The Committee shall have the power and authority to grant to
eligible employees or Consultants, pursuant to the terms of the
Plan: (i) Stock Options, (ii) Stock Appreciation Rights, (iii)
Restricted Stock, or (iv) Deferred Stock awards.
In particular, the Committee shall have the authority:
(i) to select the officers and other key employees of
the Company and its Subsidiaries and other eligible persons
to whom Stock Options, Stock Appreciation Rights, Restricted
Stock and Deferred Stock awards may from time to time be
granted hereunder;
(ii) to determine whether and to what extent Incentive
Stock Options, Non-Qualified Stock Options, Stock
Appreciation Rights, Restricted Stock and Deferred Stock
awards, or a combination of the foregoing, are to be granted
hereunder;
(iii) to determine the number of shares to be
covered by each such award granted hereunder;
(iv) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted
hereunder (including, but not limited to, any restriction on
any Stock Option or other award and/or the shares of Stock
relating thereto), which authority shall be exclusively
vested in the Committee (and not the Board) for purposes of
establishing performance criteria used with Restricted Stock
and Deferred Stock awards; provided, however, that in the
event of a merger or asset sale, the applicable provisions of
Sections 5(c) and 7(c) of the Plan shall govern the
acceleration of the vesting of any Stock Option or awards;
(v) to determine whether, to what extent and under what
circumstances Stock and other amounts payable with respect to
an award under this Plan shall be deferred either
automatically or at the election of the participant.
The Committee shall have the authority to adopt, alter and
repeal such administrative rules, guidelines and practices
governing the Plan as it shall, from time to time, deem advisable;
to interpret the terms and provisions of the Plan and any award
issued under the Plan (and any agreements relating thereto); and
to otherwise supervise the administration of the Plan. The
Committee may delegate to executive officers of the Company the
authority to exercise the powers specified in (i), (ii), (iii),
(iv) and (v) above with respect to persons who are not either the
chief executive officer of the Company or the four highest paid
officers of the Company other than the chief executive officer.
All decisions made by the Committee pursuant to the
provisions of the Plan shall be final and binding on all persons,
including the Company and Plan participants.
SECTION 3. Stock Subject to Plan.
The total number of shares of Stock reserved and available
for distribution under the Plan shall be 500,000. Such shares may
consist, in whole or in part, of authorized and unissued shares.
Subject to paragraph (b)(iv) of Section 6 below, if any
shares that have been optioned cease to be subject to Stock
Options, or if any shares subject to any Restricted Stock or
Deferred Stock award granted hereunder are forfeited or such award
otherwise terminates without a payment being made to the
participant, such shares shall again be available for distribution
in connection with future awards under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, other change in corporate
structure affecting the Stock, or spin-off or other distribution
of assets to shareholders, such substitution or adjustment shall
be made in the aggregate number of shares reserved for issuance
under the Plan, in the number and option price of shares subject
to outstanding options granted under the Plan, and in the number
of shares subject to Restricted Stock or Deferred Stock awards
granted under the Plan as may be determined to be appropriate by
the Committee, in its sole discretion, provided that the number of
shares subject to any award shall always be a whole number. Such
adjusted option price shall also be used to determine the amount
payable by the Company upon the exercise of any Stock Appreciation
Right associated with any Option.
SECTION 4. Eligibility.
Officers, other key employees of the Company and
Subsidiaries, members of the Board of Directors, and Consultants
who are responsible for or contribute to the management, growth
and profitability of the business of the Company and its
Subsidiaries are eligible to be granted Stock Options, Stock
Appreciation Rights, Restricted Stock or Deferred Stock awards
under the Plan. The optionees and participants under the Plan
shall be selected from time to time by the Committee, in its sole
discretion, from among those eligible, and the Committee shall
determine, in its sole discretion, the number of shares covered by
each award.
Notwithstanding the foregoing, no person shall receive grants
of Stock Options and Stock Appreciation Rights under this Plan
which exceed 100,000 shares during any fiscal year of the Company.
SECTION 5. Stock Options.
Any Stock Option granted under the Plan shall be in such form
as the Committee may from time to time approve.
The Stock Options granted under the Plan may be of two types:
(i) Incentive Stock Options and (ii) Non-Qualified Stock Options.
No Incentive Stock Options shall be granted under the Plan after
December 11, 2006.
The Committee shall have the authority to grant any optionee
Incentive Stock Options, Non-Qualified Stock Options, or both
types of options (in each case with or without Stock Appreciation
Rights). To the extent that any option does not qualify as an
Incentive Stock Option, it shall constitute a separate Non-
Qualified Stock Option.
Anything in the Plan to the contrary notwithstanding, no term
of this Plan relating to Incentive Stock Options shall be
interpreted, amended or altered, nor shall any discretion or
authority granted under the Plan be so exercised, so as to
disqualify either the Plan or any Incentive Stock Option under
Section 422 of the Code. The preceding sentence shall not
preclude any modification or amendment to an outstanding Incentive
Stock Option, whether or not such modification or amendment
results in disqualification of such Stock Option as an Incentive
Stock Option, provided the optionee consents in writing to the
modification or amendment.
Options granted under the Plan shall be subject to the
following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of the Plan,
as the Committee shall deem desirable.
(a) Option Price. The option price per share of Stock
purchasable under a Stock Option shall be determined by the
Committee at the time of grant. In no event shall the option price
per share of Stock purchasable under an Incentive Stock Option be
less than 100% of Fair Market Value on the date the option is
granted. If an employee owns or is deemed to own (by reason of
the attribution rules applicable under Section 424(d) of the Code)
more than 10% of the combined voting power of all classes of stock
of the Company or any Parent Corporation or Subsidiary and an
Incentive Stock Option is granted to such employee, the option
price shall be no less than 110% of the Fair Market Value of the
Stock on the date the option is granted.
(b) Option Term. The term of each Stock Option shall be
fixed by the Committee, but no Incentive Stock Option shall be
exercisable more than ten years after the date the option is
granted. If an employee owns or is deemed to own (by reason of
the attribution rules of Section 424(d) of the Code) more than 10%
of the combined voting power of all classes of stock of the
Company or any Parent Corporation or Subsidiary and an Incentive
Stock Option is granted to such employee, the term of such option
shall be no more than five years from the date of grant.
(c) Exercisability. Stock Options shall be exercisable at
such time or times as determined by the Committee at or after
grant, subject to the restrictions stated in Section 5(b) above.
If the Committee provides, in its discretion, that any option is
exercisable only in installments, the Committee may waive such
installment exercise provisions at any time. Notwithstanding
anything contained in the Plan to the contrary, the Committee may,
in its discretion, extend or vary the term of any Stock Option or
any installment thereof, whether or not the optionee is then
employed by the Company, if such action is deemed to be in the
best interests of the Company; provided, however, that in the
event of a merger or sale of assets, the provisions of this
Section 5(c) shall govern vesting acceleration. Notwithstanding
the foregoing, unless the Stock Option provides otherwise, any
Stock Option granted under this Plan shall be exercisable in full,
without regard to any installment exercise provisions, for a
period specified by the Committee, but not to exceed sixty (60)
days, prior to the occurrence of any of the following events: (i)
dissolution or liquidation of the Company other than in
conjunction with a bankruptcy of the Company or any similar
occurrence, (ii) any merger, consolidation, acquisition,
separation, reorganization, or similar occurrence, where the
Company will not be the surviving entity or (iii) the transfer of
substantially all of the assets of the Company or 75% or more of
the outstanding Stock of the Company.
The grant of an option pursuant to the Plan shall not limit
in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or
business structure or to merge, exchange or consolidate or to
dissolve, liquidate, sell or transfer all or any part of its
business or assets.
(d) Method of Exercise. Stock Options may be exercised in
whole or in part at any time during the option period by giving
written notice of exercise to the Company specifying the number of
shares to be purchased. Such notice shall be accompanied by
payment in full of the purchase price, either by check, or by any
other form of legal consideration deemed sufficient by the
Committee and consistent with the Plan's purpose and applicable
law, including promissory notes or a properly executed exercise
notice together with irrevocable instructions to a broker
acceptable to the Company to promptly deliver to the Company the
amount of sale or loan proceeds to pay the exercise price. As
determined by the Committee at the time of grant or exercise, in
its sole discretion, payment in full or in part may also be made
in the form of Stock already owned by the optionee (which in the
case of Stock acquired upon exercise of an option have been owned
for more than six months on the date of surrender) or, in the case
of the exercise of a Non-Qualified Stock Option, Restricted Stock
or Deferred Stock subject to an award hereunder (based, in each
case, on the Fair Market Value of the Stock on the date the option
is exercised, as determined by the Committee), provided, however,
that, in the case of an Incentive Stock Option, the right to make
a payment in the form of already owned shares may be authorized
only at the time the option is granted, and provided further that
in the event payment is made in the form of shares of Restricted
Stock or a Deferred Stock award, the optionee will receive a
portion of the option shares in the form of, and in an amount
equal to, the Restricted Stock or Deferred Stock award tendered as
payment by the optionee. If the terms of an option so permit, an
optionee may elect to pay all or part of the option exercise price
by having the Company withhold from the shares of Stock that would
otherwise be issued upon exercise that number of shares of Stock
having a Fair Market Value equal to the aggregate option exercise
price for the shares with respect to which such election is made.
No shares of Stock shall be issued until full payment therefor has
been made. An optionee shall generally have the rights to
dividends and other rights of a shareholder with respect to shares
subject to the option when the optionee has given written notice
of exercise, has paid in full for such shares, and, if requested,
has given the representation described in paragraph (a) of Section
12.
(e) Non-transferability of Options. No Stock Option shall
be transferable by the optionee otherwise than by will or by the
laws of descent and distribution, and all Stock Options shall be
exercisable, during the optionee's lifetime, only by the optionee.
(f) Termination by Death. If an optionee's employment by
the Company and any Subsidiary or Parent Corporation terminates by
reason of death, any Incentive Stock Option may thereafter be
immediately exercised, to the extent then exercisable, by the
legal representative of the estate or by the legatee of the
optionee under the will of the optionee, for a period of twelve
months from the date of such death or until the expiration of the
stated term of the option, whichever period is shorter. In the
event of termination of employment by reason of death, if any
Stock Option is exercised after the expiration of the exercise
periods that apply for purposes of Section 422 of the Code, the
option will thereafter be treated as a Non-Qualified Stock Option.
(g) Termination by Reason of Disability. If an optionee's
employment by the Company and any Subsidiary or Parent Corporation
terminates by reason of Disability, any Incentive Stock Option
held by such optionee may thereafter be exercised, to the extent
it was exercisable at the time of termination due to Disability,
but may not be exercised after twelve months from the date of such
termination of employment or the expiration of the stated term of
the option, whichever period is the shorter. In the event of
termination of employment by reason of Disability, if any Stock
Option is exercised after the expiration of the exercise periods
that apply for purposes of Section 422 of the Code, the option
will thereafter be treated as a Non-Qualified Stock Option.
(h) Termination by Reason of Retirement. If an optionee's
employment by the Company and any Subsidiary or Parent Corporation
terminates by reason of Retirement and the terms of the Stock
Option so provide, any Incentive Stock Option held by such
optionee may thereafter be exercised to the extent it was
exercisable at the time of such Retirement, but may not be
exercised after twelve months from the date of such termination of
employment or the expiration of the stated term of the option,
whichever period is the shorter. In the event of termination of
employment by reason of Retirement, if any Stock Option is
exercised after the expiration of the exercise periods that apply
for purposes of Section 422 of the Code, the option will
thereafter be treated as a Non-Qualified Stock Option.
(i) Other Termination. If an optionee's continuous status
as an employee or Consultant terminates (other than upon the
optionee's death , Disability or Retirement), any Incentive Stock
Option held by such optionee may thereafter be exercised to the
extent it was exercisable at the time of such termination, but may
not be exercised after 90 days after such termination, or the
expiration of the stated term of the option, whichever period is
the shorter. In the event of termination of employment by reason
other than death, Disability or Retirement and if pursuant to its
terms any Stock Option is exercised after the expiration of the
exercise periods that apply for purposes of Section 422 of the
Code, the option will thereafter be treated as a Non-Qualified
Stock Option. In the event an Optionee's employment with the
Company is terminated for Cause, all unexercised Options granted
to such Optionee shall immediately terminate.
(j) Annual Limit on Incentive Stock Options. The aggregate
Fair Market Value (determined as of the time the Stock Option is
granted) of the Common Stock with respect to which an Incentive
Stock Option under this Plan or any other plan of the Company and
any Subsidiary or Parent Corporation is exercisable for the first
time by an optionee during any calendar year shall not exceed
$100,000.
(k) Directors Who Are Not Employees. Each person who (i) is
not an employee of the Company, any Parent Corporation or any
Subsidiary and (ii) is elected or re-elected as a Director by the
Board or the shareholders subsequent to December 31, 1996, shall
automatically be granted an Option to purchase 2,000 shares of
Stock as of the date of such election or re-election, at an option
price per share equal to 100% of the Fair Market Value of a share
of Stock on the date of such election or re-election. All such
Options shall be designated as Non-Qualified Stock Options and
shall be subject to the same terms and provisions as are then in
effect with respect to the grant of Non-Qualified Stock Options to
officers and key employees of the Company, except that (1) the
term of each such Option shall be equal to ten years, which term
shall not expire upon the termination of service as a Director and
(2) each Option shall become exercisable in whole or in part
beginning six (6) months after the date the Option is granted.
Subject to the foregoing, all provisions of this Plan not
inconsistent with the foregoing shall apply to Options granted
pursuant to this Section 5(k).
SECTION 6. Stock Appreciation Rights.
(a) Grant and Exercise. Stock Appreciation Rights may be
granted in conjunction with all or part of any Stock Option
granted under the Plan. In the case of a Non-Qualified Stock
Option, such rights may be granted either at or after the time of
the grant of such Option. In the case of an Incentive Stock
Option, such rights may be granted only at the time of the grant
of the option.
A Stock Appreciation Right or applicable portion thereof
granted with respect to a given Stock Option shall terminate and
no longer be exercisable upon the termination or exercise of the
related Stock Option, except that a Stock Appreciation Right
granted with respect to less than the full number of shares
covered by a related Stock Option shall not be reduced until the
exercise or termination of the related Stock Option exceeds the
number of shares not covered by the Stock Appreciation Right.
A Stock Appreciation Right may be exercised by an optionee,
in accordance with paragraph (b) of this Section 6, by
surrendering the applicable portion of the related Stock Option.
Upon such exercise and surrender, the optionee shall be entitled
to receive an amount determined in the manner prescribed in
paragraph (b) of this Section 6. Stock Options which have been so
surrendered, in whole or in part, shall no longer be exercisable
to the extent the related Stock Appreciation Rights have been
exercised.
(b) Terms and Conditions. Stock Appreciation Rights shall
be subject to such terms and conditions, not inconsistent with the
provisions of the Plan, as shall be determined from time to time
by the Committee, including the following:
(i) Stock Appreciation Rights shall be exercisable only
at such time or times and to the extent that the Stock
Options to which they relate shall be exercisable in
accordance with the provisions of Section 5 and this Section
6 of the Plan.
(ii) Upon the exercise of a Stock Appreciation Right, an
optionee shall be entitled to receive up to, but not more
than, an amount in cash or shares of Stock equal in value to
the excess of the Fair Market Value of one share of Stock
over the option price per share specified in the related
option multiplied by the number of shares in respect of which
the Stock Appreciation Right shall have been exercised, with
the Committee having the right to determine the form of
payment.
(iii) Stock Appreciation Rights shall be
transferable only when and to the extent that the underlying
Stock Option would be transferable under Section 5 of the
Plan.
(iv) Upon the exercise of a Stock Appreciation
Right, the Stock Option or part thereof to which such Stock
Appreciation Right is related shall be deemed to have been
exercised for the purpose of the limitation set forth in
Sections 3 and 4 of the Plan on the total number of shares of
Stock to be issued under the Plan and the maximum number of
shares to be awarded to any one person in a fiscal year, but
only to the extent of the number of shares issued or issuable
under the Stock Appreciation Right at the time of exercise
based on the value of the Stock Appreciation Right at such
time.
(v) A Stock Appreciation Right granted in connection
with an Incentive Stock Option may be exercised only if and
when the market price of the Stock subject to the Incentive
Stock Option exceeds the exercise price of such Option.
SECTION 7. Restricted Stock.
(a) Administration. Shares of Restricted Stock may be
issued either alone or in addition to other awards granted under
the Plan. The Committee shall determine the officers, key
employees and Consultants of the Company and Subsidiaries to whom,
and the time or times at which, grants of Restricted Stock will be
made, the number of shares to be awarded, the time or times within
which such awards may be subject to forfeiture, and all other
conditions of the awards. The Committee may also condition the
grant of Restricted Stock upon the attainment of specified
performance goals. The provisions of Restricted Stock awards need
not be the same with respect to each recipient.
(b) Awards and Certificates. The prospective recipient of
an award of shares of Restricted Stock shall not have any rights
with respect to such award, unless and until such recipient has
executed an agreement evidencing the award and has delivered a
fully executed copy thereof to the Company, and has otherwise
complied with the then applicable terms and conditions.
(i) Each participant shall be issued a stock
certificate in respect of shares of Restricted Stock awarded
under the Plan. Such certificate shall be registered in the
name of the participant, and shall bear an appropriate legend
referring to the terms, conditions, and restrictions
applicable to such award, substantially in the following
form:
"The transferability of this certificate and the shares
of stock represented hereby are subject to the terms and
conditions (including forfeiture) of the Ault
Incorporated 1996 Stock Plan and an Agreement entered
into between the registered owner and Ault Incorporated.
Copies of such Plan and Agreement are on file in the
offices of Ault Incorporated."
(ii) The Committee shall require that the stock
certificates evidencing such shares be held in custody by the
Company until the restrictions thereon shall have lapsed, and
that, as a condition of any Restricted Stock award, the
participant shall have delivered a stock power, endorsed in
blank, relating to the Stock covered by such award.
(c) Restrictions and Conditions. The shares of Restricted
Stock awarded pursuant to the Plan shall be subject to the
following restrictions and conditions:
(i) Subject to the provisions of this Plan and the
award agreement, during a period set by the Committee
commencing with the date of such award (the "Restriction
Period"), the participant shall not be permitted to sell,
transfer, pledge or assign shares of Restricted Stock awarded
under the Plan. Within these limits, the Committee may
provide for the lapse of such restrictions in installments
where deemed appropriate.
(ii) Except as provided in paragraph (c)(i) of this
Section 7, the participant shall have, with respect to the
shares of Restricted Stock, all of the rights of a
shareholder of the Company, including the right to vote the
shares and the right to receive any cash dividends. The
Committee, in its sole discretion, may permit or require the
payment of cash dividends to be deferred and, if the
Committee so determines, reinvested in additional shares of
Restricted Stock (to the extent shares are available under
Section 3 and subject to paragraph (f) of Section 12).
Certificates for shares of unrestricted Stock shall be
delivered to the grantee promptly after, and only after, the
period of forfeiture shall have expired without forfeiture in
respect of such shares of Restricted Stock.
(iii) Subject to the provisions of the award
agreement and paragraph (c)(iv) of this Section 7, upon
termination of employment for any reason during the
Restriction Period, all shares still subject to restriction
shall be forfeited by the participant.
(iv) In the event of special hardship circumstances of a
participant whose employment is terminated (other than for
Cause), including death, Disability or Retirement, or in the
event of an unforeseeable emergency of a participant still in
service, the Committee may, in its sole discretion, when it
finds that a waiver would be in the best interest of the
Company, waive in whole or in part any or all remaining
restrictions with respect to such participant's shares of
Restricted Stock.
(v) Notwithstanding the foregoing, all
restrictions with respect to any participant's shares of
Restricted Stock shall lapse, on the date determined by the
Committee, prior to, but in no event more than sixty (60)
days prior to, the occurrence of any of the following events:
(i) dissolution or liquidation of the Company, other than in
conjunction with a bankruptcy of the Company or any similar
occurrence, (ii) any merger, consolidation, acquisition,
separation, reorganization, or similar occurrence, where the
Company will not be the surviving entity or (iii) the
transfer of substantially all of the assets of the Company or
75% or more of the outstanding Stock of the Company.
SECTION 8. Deferred Stock Awards.
(a) Administration. Deferred Stock may be awarded either
alone or in addition to other awards granted under the Plan. The
Committee shall determine the officers, key employees and
Consultants of the Company and Subsidiaries to whom and the time
or times at which Deferred Stock shall be awarded, the number of
Shares of Deferred Stock to be awarded to any participant or group
of participants, the duration of the period (the "Deferral
Period") during which, and the conditions under which, receipt of
the Stock will be deferred, and the terms and conditions of the
award in addition to those contained in paragraph (b) of this
Section 8. The Committee may also condition the grant of Deferred
Stock upon the attainment of specified performance goals. The
provisions of Deferred Stock awards need not be the same with
respect to each recipient.
(b) Terms and Conditions.
(i) Subject to the provisions of this Plan and the
award agreement, Deferred Stock awards may not be sold,
assigned, transferred, pledged or otherwise encumbered during
the Deferral Period. At the expiration of the Deferral
Period (or Elective Deferral Period, where applicable), share
certificates shall be delivered to the participant, or his
legal representative, in a number equal to the shares covered
by the Deferred Stock award.
(ii) Amounts equal to any dividends declared during
the Deferral Period with respect to the number of shares
covered by a Deferred Stock award will be paid to the
participant currently or deferred and deemed to be reinvested
in additional Deferred Stock or otherwise reinvested, all as
determined at the time of the award by the Committee, in its
sole discretion.
(iii) Subject to the provisions of the award
agreement and paragraph (b)(iv) of this Section 8, upon
termination of employment for any reason during the Deferral
Period for a given award, the Deferred Stock in question
shall be forfeited by the participant.
(iv) In the event of special hardship circumstances
of a participant whose employment is terminated (other than
for Cause) including death, Disability or Retirement, or in
the event of an unforeseeable emergency of a participant
still in service, the Committee may, in its sole discretion,
when it finds that a waiver would be in the best interest of
the Company, waive in whole or in part any or all of the
remaining deferral limitations imposed hereunder with respect
to any or all of the participant's Deferred Stock.
(v) A participant may elect to further defer receipt of
the award for a specified period or until a specified event
(the "Elective Deferral Period"), subject in each case to the
Committee's approval and to such terms as are determined by
the Committee, all in its sole discretion. Subject to any
exceptions adopted by the Committee, such election must
generally be made prior to completion of one half of the
Deferral Period for a Deferred Stock award (or for an
installment of such an award).
(vi) Each award shall be confirmed by, and subject
to the terms of, a Deferred Stock agreement executed by the
Company and the participant.
SECTION 9. Transfer, Leave of Absence, etc.
For purposes of the Plan, the following events shall not be
deemed a termination of employment:
(a) a transfer of an employee from the Company to a Parent
Corporation or Subsidiary, or from a Parent Corporation or
Subsidiary to the Company, or from one Subsidiary to another;
(b) a leave of absence, approved in writing by the
Committee, for military service or sickness, or for any other
purpose approved by the Company if the period of such leave does
not exceed ninety (90) days (or such longer period as the
Committee may approve, in its sole discretion); and
(c) a leave of absence in excess of ninety (90) days,
approved in writing by the Committee, but only if the employee's
right to reemployment is guaranteed either by a statute or by
contract, and provided that, in the case of any leave of absence,
the employee returns to work within 30 days after the end of such
leave.
SECTION 10. Amendments and Termination.
The Board may amend, alter, or discontinue the Plan, but no
amendment, alteration, or discontinuation shall be made (i) which
would impair the rights of an optionee or participant under a
Stock Option, Restricted Stock or other Stock-based award
theretofore granted, without the optionee's or participant's
consent, or (ii) which without the approval of the stockholders of
the Company would cause the Plan to no longer comply with Rule 16b-
3 under the Securities Exchange Act of 1934, Section 422 of the
Code or any other regulatory requirements.
The Committee may amend the terms of any award or option
theretofore granted, prospectively or retroactively to the extent
such amendment is consistent with the terms of this Plan, but no
such amendment shall impair the rights of any holder without his
or her consent except to the extent authorized under the Plan.
The Committee may also substitute new Stock Options for previously
granted options, including previously granted options having
higher option prices.
SECTION 11. Unfunded Status of Plan.
The Plan is intended to constitute an "unfunded" plan for
incentive and deferred compensation. With respect to any payments
not yet made to a participant or optionee by the Company, nothing
contained herein shall give any such participant or optionee any
rights that are greater than those of a general creditor of the
Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations
created under the Plan to deliver Stock or payments in lieu of or
with respect to awards hereunder, provided, however, that the
existence of such trusts or other arrangements is consistent with
the unfunded status of the Plan.
SECTION 12. General Provisions.
(a) The Committee may require each person purchasing shares
pursuant to a Stock Option under the Plan to represent to and
agree with the Company in writing that the optionee is acquiring
the shares without a view to distribution thereof. The
certificates for such shares may include any legend which the
Committee deems appropriate to reflect any restrictions on
transfer.
All certificates for shares of Stock delivered under the Plan
pursuant to any Restricted Stock, Deferred Stock or other Stock-
based awards shall be subject to such stock-transfer orders and
other restrictions as the Committee may deem advisable under the
rules, regulations, and other requirements of the Securities and
Exchange Commission, any stock exchange upon which the Stock is
then listed, and any applicable Federal or state securities laws,
and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such
restrictions.
(b) Subject to paragraph (d) below, recipients of Restricted
Stock, Deferred Stock and other Stock-based awards under the Plan
(other than Stock Options) are not required to make any payment or
provide consideration other than the rendering of services.
(c) Nothing contained in this Plan shall prevent the Board
of Directors from adopting other or additional compensation
arrangements, subject to stockholder approval if such approval is
required; and such arrangements may be either generally applicable
or applicable only in specific cases. The adoption of the Plan
shall not confer upon any employee of the Company or any
Subsidiary any right to continued employment with the Company or a
Subsidiary, as the case may be, nor shall it interfere in any way
with the right of the Company or a Subsidiary to terminate the
employment of any of its employees at any time.
(d) Each participant shall, no later than the date as of
which any part of the value of an award first becomes includible
as compensation in the gross income of the participant for Federal
income tax purposes, pay to the Company, or make arrangements
satisfactory to the Committee regarding payment of, any Federal,
state, or local taxes of any kind required by law to be withheld
with respect to the award. The obligations of the Company under
the Plan shall be conditional on such payment or arrangements and
the Company and Subsidiaries shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment of
any kind otherwise due to the participant. With respect to any
award under the Plan, if the terms of such award so permit, a
participant may elect by written notice to the Company to satisfy
part or all of the withholding tax requirements associated with
the award by (i) authorizing the Company to retain from the number
of shares of Stock that would otherwise be deliverable to the
participant, or (ii) delivering to the Company from shares of
Stock already owned by the participant, that number of shares
having an aggregate Fair Market Value equal to part or all of the
tax payable by the participant under this Section 12(d). Any such
election shall be in accordance with, and subject to, applicable
tax and securities laws, regulations and rulings.
(e) At the time of grant, the Committee may provide in
connection with any grant made under this Plan that the shares of
Stock received as a result of such grant shall be subject to a
repurchase right in favor of the Company, pursuant to which the
participant shall be required to offer to the Company upon
termination of employment for any reason any shares that the
participant acquired under the Plan, with the price being the then
Fair Market Value of the Stock or, in the case of a termination
for Cause, an amount equal to the cash consideration paid for the
Stock, subject to such other terms and conditions as the Committee
may specify at the time of grant. The Committee may, at the time
of the grant of an award under the Plan, provide the Company with
the right to repurchase, or require the forfeiture of, shares of
Stock acquired pursuant to the Plan by any participant who, at any
time within two years after termination of employment with the
Company, directly or indirectly competes with, or is employed by a
competitor of, the Company.
(f) The reinvestment of dividends in additional Restricted
Stock (or in Deferred Stock or other types of Plan awards) at the
time of any dividend payment shall only be permissible if the
Committee (or the Company's chief financial officer) certifies in
writing that under Section 3 sufficient shares are available for
such reinvestment (taking into account then outstanding Stock
Options and other Plan awards).
(g) The Plan is expressly made subject to the approval by
shareholders of the Company. If the Plan is not so approved by
the shareholders on or before one year after this Plan's adoption
by the Board of Directors, this Plan shall not come into effect.
The offering of the shares hereunder shall be also subject to the
effecting by the Company of any registration or qualification of
the shares under any federal or state law or the obtaining of the
consent or approval of any governmental regulatory body which the
Company shall determine, in its sole discretion, is necessary or
desirable as a condition to or in connection with, the offering or
the issue or purchase of the shares covered thereby. The Company
shall make every reasonable effort to effect such registration or
qualification or to obtain such consent or approval.
EXHIBIT 5.1
October 16, 1997
Ault Incorporated
7300 Boone Avenue North
Minneapolis, MN 55428-1028
Re: Opinion of Counsel as to Legality of 500,000 Common Shares to be
Registered under the Securities Act of 1933
Ladies and Gentlemen:
This opinion is furnished in connection with the registration
under the Securities Act of 1933 on Form S-8 of 500,000 Common Shares,
no par value, of Ault Incorporated (the "Company") offered to
employees of the Company pursuant to the Ault Incorporated 1996 Stock
Option Plan (the "Plan").
As general counsel for the Company, we advise you that it is our
opinion, based on our familiarity with the affairs of the Company and
upon our examination of pertinent documents, that the 100,000 Common
Shares to be offered to employees by the Company under the Plan will,
when paid for and issued, be validly issued and lawfully outstanding,
fully paid and nonassessable shares of Common Stock of the Company.
The undersigned hereby consent to the filing of this opinion with
the Securities and Exchange Commission as an Exhibit to the
Registration Statement with respect to said Common Shares under the
Securities Act of 1933.
Very truly yours,
LINDQUIST & VENNUM P.L.L.P.
/s/ Lindquist & Vennum P.L.L.P.
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement
on Form S-8 of our report, dated July 15, 1997, relating to the
consolidated financial statements of Ault Incorporated and
Subsidiary, which appears in the annual report on Form 10-K for
the year ended June 1, 1997.
MCGLADREY & PULLEN, LLP
/s/ McGladrey & Pullen, LLP
Minneapolis, Minnesota
October 16, 1997
POWER OF ATTORNEY
The undersigned officers and directors of Ault Incorporated
hereby constitute and appoint Frederick M. Green and Carlos S.
Montague, or either of them, with power to act one without the
other, our true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for us and in our
stead, in any and all capacities to sign any and all amendments
(including post-effective amendments) to this Registration
Statement and all documents relating thereto, and to file the
same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent, full
power and authority to do and perform each and every act and
thing necessary or advisable to be done in and about the
premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitutes, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
as amended, this registration statement has been signed below by
the following persons on October 16, 1997 in the capacities
indicated.
<TABLE>
<CAPTION>
Signature Title
<S> <S>
/s/ Frederick M. Green President, chief Executive and
Frederick M. Green Director
/s/ Carlos S. Montague Vice President, Treasurer, Chief
Carlos S. Montague Financial Officer, Assistant Secretary
and
Director (Principal Financial Officer
and
Accounting Officer)
/s/ Matthew A. Sutton Director
Matthew A. Sutton
/s/ Eric G. Mitchell, Jr. Director
Eric G. Mitchell, Jr.
/s/ Delbert W. Johnson Director
Delbert W. Johnson
/s/ John G. Kassakian Director
John G. Kassakian
/s/ Edward C. Lund Director
Edward C. Lund
/s/ James M. Duddleston Director
James M. Duddleston
</TABLE>
