CP01:617365_2
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the registrant x
Filed by a party other than the registrant o
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
x Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to o Rule 240.14a-11(c)
or o Rule 240.14a-12
(Name of Registrant as Specified in Its Charter)
Ault Incorporated
(Name of Person(s) Filing Proxy Statement, if other than the Reg
istrant)
Payment of Filing Fee (Check the appropriate box):
o $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-
6(i)(1), or 14a-6(i)(2).
o $500 per each part to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
o Fee computed on table below per Exchange Act Rules 14a-
6(i)(1) and 0-11.
(1) Title of each class of securities to which
transaction applies:
(2) Aggregate number of securities to which
transactions applies:
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
0-11. (Set forth the amount on which the filing
fee is calculated and state how it was
determined.)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
o Fee paid previously with preliminary materials.
o Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously.
Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its
filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
AULT INCORPORATED
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
For September 29, 1997 Annual Meeting of Shareholders
The undersigned hereby appoints Frederick M. Green, Edward
C. Lund and Matthew A. Sutton, or any of them, as proxies with
full power of substitution to vote all shares of stock of Ault
Incorporated of record in the name of the undersigned at the
close of business on August 15, 1997 at the Annual Meeting of
Shareholders to be held in Minneapolis, Minnesota on September
29, 1997, or at any adjournment or adjournments, hereby revoking
all former proxies.
1. ELECTION OF DIRECTORS:
o FOR all nominees listed below o WITHHOLD
AUTHORITY
(except as marked to the contrary). to vote
for all nominees listed below
(INSTRUCTIONS: To withhold authority to vote for any individual
nominee, strike a line through the nominee's name
in the list below.)
James M. Duddleston, Frederick M. Green,
Delbert W. Johnson, John G. Kassakian, Edward C. Lund
Eric G. Mitchell, Jr., Matthew A. Sutton
2. PROPOSAL TO RATIFY AND APPROVE THE COMPANY'S 1996 STOCK
PLAN.
o FOR o AGAINST o ABSTAIN
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
ANY OTHER MATTERS COMING BEFORE THE MEETING.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED ON
PROPOSALS (1) AND (2) IN ACCORDANCE WITH THE SPECIFICATIONS MADE
AND "FOR" SUCH PROPOSALS IF THERE IS NO SPECIFICATION.
Dated: , 1997
Signed:
(Signature)
(Signature)
Please sign name(s) exactly as shown at left.
When signing as executor, administrator,
trustee, guardian, etc., give full title as
such; when shares have been issued in the
names of two or more persons, all should
sign.
AULT INCORPORATED
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
September 29, 1997
To the Shareholders of Ault Incorporated:
Notice is hereby given that the Annual Meeting of
Shareholders of Ault Incorporated will be held September 29, 1997
at the Minneapolis Club, 729 Second Avenue South, Minneapolis,
Minnesota 55402. The meeting will convene at 3:00 p.m.,
Minneapolis time, for the following purposes:
1. To elect seven directors to hold office until the next
Annual Meeting of Shareholders or until their
successors are elected.
2. To consider and act upon a proposal to ratify and
approve the Company's 1996 Stock Option Plan.
3. To transact such other business as may properly come
before the meeting or any adjournment or adjournments
thereof.
The Board of Directors has fixed the close of business on
August 15, 1997 as the record date for the determination of
shareholders entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
Richard A. Primuth, Secretary
Minneapolis, Minnesota
August 27, 1997
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN,
DATE AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE, WHETHER
OR NOT YOU EXPECT TO ATTEND IN PERSON. SHAREHOLDERS WHO
ATTEND THE MEETING MAY REVOKE THEIR PROXIES AND VOTE IN
PERSON IF THEY SO DESIRE.
AULT INCORPORATED
PROXY STATEMENT
This Proxy Statement is furnished to the shareholders of
Ault Incorporated (the "Company") in connection with the
solicitation of proxies by the Board of Directors of the Company
to be voted at the Annual Meeting of Shareholders to be held on
September 29, 1997, or any adjournment or adjournments thereof.
The cost of this solicitation will be borne by the Company. In
addition to solicitation by mail, officers, directors and
employees of the Company may solicit proxies by telephone,
telegraph or in person. The Company may also request banks and
brokers to solicit their customers who have a beneficial interest
in the Company's Common Stock registered in the names of nominees
and will reimburse such banks and brokers for their reasonable
out-of-pocket expenses.
Any proxy may be revoked at any time before it is voted by
written notice to the Secretary, by receipt of a proxy properly
signed and dated subsequent to an earlier proxy or by revocation
of a written proxy by request in person at the Annual Meeting;
but if not revoked, the shares represented by such proxy will be
voted. The mailing of this Proxy Statement to shareholders of
the Company commenced on or about August 27, 1997. The Company's
corporate offices are located at 7300 Boone Avenue North,
Minneapolis, Minnesota 55428 and its telephone number is (612)
493-1900.
Only shareholders of record at the close of business on
August 15, 1997 will be entitled to vote at the Annual Meeting.
The Company has outstanding only one class of stock, no par value
Common Shares (herein "Common Stock"), of which 4,089,233 shares
were issued and outstanding and entitled to vote as of August 15,
1997. Each share is entitled to one vote. The presence in
person or by proxy of the holders of a majority of the shares of
Common Stock entitled to vote at the Annual Meeting of
Shareholders constitutes a quorum for the transaction of
business. The shares represented by the enclosed proxy will be
voted if the proxy is properly signed and received prior to the
meeting,
Under Minnesota law, each item of business properly
presented at a meeting of shareholders generally most be approved
by the affirmative vote of the holders of a majority of the
voting power of the shares present, in person or by proxy, and
entitled to vote on that item of business. However, if the
shares present and entitled to vote on that item of business
would not constitute a quorum for the transaction of business at
the meeting, then the item must be approved by a majority of the
voting power of the minimum number of shares that would
constitute such a quorum. Votes cast by proxy or in person at
the Annual Meeting of Shareholders will be tabulated to determine
whether or not a quorum is present. Abstentions will be treated
as shares that are present and entitled to vote for purposes of
determining the presence of a quorum and in tabulating votes cast
on proposals presented to shareholders for a vote, but as unvoted
for purposes of determining the approval of the matter from which
the shareholder abstain. Consequently, an abstention will have
the same effect as a negative vote. If a broker indicates on the
proxy that it does not have discretionary authority as to certain
shares to vote on a particular matter, those shares will not be
considered as present and entitled to vote with respect to that
matter.
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table provides information as of August 1,
1997 concerning the beneficial ownership of the Company's Common
Stock by (i) all persons who are known by the Company to own five
percent or more of the Common Stock of the Company (ii) each of
the directors of the Company and (iii) all directors and
officers of the Company as a group. All shares represent sole
voting and investment power, unless otherwise indicated.
<TABLE>
<CAPTION>
Shares
Beneficially Percent
Beneficial Owner Owned (1) of Class
<S> <C> <C>
Investment Advisors, Inc. 275,000 6.72%
3700 First Bank Place
Minneapolis, MN 55440
Wellington Management
Co. LLP 240,000 5.87%
75 State Street
Boston, MA 02109
Frederick M. Green 122,500 2.87%
7300 Boone Avenue North
Minneapolis, MN 55428
Delbert W. Johnson 6,300 *
John G. Kassakian 9,100 *
Edward C. Lund 7,500 *
Eric G. Mitchell, Jr. 6,400 *
Matthew A. Sutton 15,500 *
James M. Duddleston 11,500 *
All Directors and
Officers as 383,788 9.0%
a Group (10 persons)
<FN>
* Less than 1%
(1) Includes the following numbers of shares of Common Stock
which may be purchased pursuant to stock options which are
exercisable within 60 days of the date hereof: Mr. Green,
52,500 shares; Mr. Johnson, 5,000 shares; Mr. Kassakian,
5,000 shares; Mr. Lund, 5,000 shares; Mr. Mitchell, 5,000
shares; Mr. Sutton, 5,000 shares; Mr. Duddleston, 1,000
shares; Mr. Harris, 42,750 shares; Mr. Choi, 25,500 shares;
Mr. Montague, 24,875 shares; and all directors and officers
as a group, 186,625 shares.
</TABLE>
1. ELECTION OF DIRECTORS
Seven directors will be elected at the Annual Meeting of
Shareholders, each to serve until the next Annual Meeting of
Shareholders or until a successor is elected. The Board of
Directors has nominated for election the seven persons named
below and each has consented to being named as a nominee. All of
the nominees are currently directors of the Company. It is
intended that proxies solicited will be voted for the nominees
named below. The Company believes that each nominee named below
will be able to serve; but in the event any nominee is unable to
serve as a director, the persons named as proxies have advised
that they will vote for the election of such substitute nominee
as the Board of Directors may propose.
The names of the nominees, their principal occupations for
at least the past five years, and other information is set forth
below.
<TABLE>
<CAPTION>
Principal Occupation and Other Director
Name Directorships Since
<S> <C> <S>
James M. Duddleston (75) Self employed consultant and
retired executive 1988
Frederick M. Green (54) President and Chief Executive
Officer of the Company;
Director of Communications Systems,
Inc. 1979
Delbert W. Johnson (58) Chairman and Chief Executive
Officer, Pioneer Metal
Finishing Co., a subsidiary of
Safeguard Scientifics, Inc.
(fabricated metal products);
Director of Safeguard Scientifics,
Inc., Tennant Company, U.S. Bancorp,
Coherent Communication System Corp.
and Compucom Systems, Inc. 1983
John G. Kassakian (54) Professor of Electrical Engineering
and Director Laboratory for
Electromagnetic and Electronic
Systems, Massachusetts Institut of
Technology; Director of Sheldahl,
Inc. 1984
Edward C. Lund (79) Retired executive 1974
Eric G. Mitchell, Jr. (51) President, The Pricing Advisor, Inc.
(business consulting) 1992
Matthew A. Sutton (74) Independent Management Consultant; 1987
former Consultant, Honeywell
Consultants, Ltd.; former Executive
Vice President of Defense and Marine
Systems and Group Vice President of
Aerospace/Avionics of Honerywell,
Inc. (computers and defense systems) 1987
</TABLE>
The Board of Directors met six times during fiscal 1997.
Each director attended more than 75% of the meetings of the Board
of Directors and any committee on which be served, except for Mr.
Johnson and Mr. Mitchell who attended 67% of such meetings
Members of the Board who are not otherwise employed by the
Company were paid an annual fee of $4,000 plus $500 for each
Board meeting or Board committee meeting attended. Each non-
employee member of the Board of Directors also receives at the
time of election or reelection to the Board an option to purchase
1,000 shares of the Company's common stock at a purchase price
equal to the fair market value of the Company's common stock on
the date of such election or reelection. At Ault's 1997 Annual
Meeting of Shareholders, approval will be sought for the 1996
Stock Option Plan which would increase the number of options
granted to directors on an annual basis from 1,000 to 2,000
shares. See "Proposal to Ratify and Approve the Company's 1996
Stock Plan." In addition to the foregoing, during fiscal 1996
Mr. Kassakian received a $600 monthly fee in exchange for certain
consulting services provided to the Company,
The Company has an Audit Committee which met once during
fiscal 1997 and consists of Messrs. Johnson, Duddleston and
Mitchell. The Audit Committee, among other responsibilities,
recommends to the full Board of Directors the selection of
auditors and reviews and evaluates the activities and reports of
the auditors, as well as the internal accounting controls of the
Company.
The Company also has a Compensation Committee which met
twice during fiscal 1997 and consists of Messrs. Lund, Mitchell
and Sutton. The Compensation Committee, among other
responsibilities, recommends to the full Board of Directors
compensation for executive officers and key personnel and reviews
the Company's compensation policies and practices.
The Company does not have a nominating committee.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary of Cash and Certain Other Compensation
The following table shows, for the fiscal years ending June
1, 1997, June 2, 1996, and May 28, 1995, the direct cash
compensation paid by the Company, as well as certain other
compensation paid or accrued for these years, to Frederick M.
Green, the Company's President and Chief Executive Officer, and
to other executive officers of the Company (together with Mr.
Green, the "Named Executives") whose total cash compensation
exceeded $100,000 during fiscal 1997 in all capacities in which
they served:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation
Securities
Name and Fiscal Underlying All Other
Position Year Salary Bonus(1) Options(2) Compensation
<S> <C> <C> <C> <C> <C>
Frederick M. Green 1997 $208,354 $8,814 45,000 $3,506(3)
President and Chief 1996 196,207 7,546 20,000 3,859(3)
Executive Officer 1995 183,500 3,528 15,000 3,753(3)
Gregory L. Harris 1997 $121,765 $4,885 25,000 $1,479(4)
Vice President of 1996 115,880 4,457 10,000 1,412(4)
Sales and Marketing 1995 108,311 2,082 8,000 1,575(4)
Carlos S. Montague 1997 $105,734 $4,208 27,500 $2,962(5)
Vice President,
Chief Financial 1996 100,243 3,856 10,000 2,846(5)
Officer and 1995 93,668 1,801 8,000 2,641(5)
Assistant Secretary
Hokung Choi 1997 $107,541 $4,259 10,000 $2,795(6)
Vice President 1996 102,262 3,933 10,000 2,921(6)
Far East Operations 1995 97,091 1,867 8,000 2,313(6)
<FN>
(1) Represents bonuses earned in the fiscal year shown but which
were paid in the following fiscal year.
(2) Reflects the number of shares purchasable under option
grants.
(3) Reflects 401(k) matching contributions of $2,066, $2,419 and
$2,313 under the Company's Profit Sharing and Retirement
Plan in 1997, 1996 and 1995, respectively, and the payment
of $1,440, $1,440 and $1,440 for life insurance premiums in
1997, 1996 and 1995, respectively.
(4) Reflects 401(k) matching contributions of $1,338, $1,281 and
$1,456 under the Company's Profit Sharing and Retirement
Plan in 1997, 1996 and 1995, respectively and the payment of
$141, $131 and $119 for life insurance premiums in 1997,
1996 and 1995, respectively.
(5) Reflects 401(k) matching contributions of $1,556, $1,530 and
$1,433 under the Company's Profit Sharing and Retirement
Plan in 1997, 1996 and 1995, respectively, and the payment
of $1,406, $1,136 and $1,208 for life insurance premiums in
1997, 1996 and 1995, respectively.
(6) Reflects 401(k) matching contributions of $1,358, $1,562 and
$1,484 under the Company's Profit Sharing and Retirement
Plan in 1997, 1996 and 1995, respectively, and the payment
of $1,437, $1,359 and $829 for life insurance premiums in
1997, 1996 and 1995, respectively.
</TABLE>
Option Grants in Fiscal Year 1997
The following table contains information concerning grants
of stock options to the Named Executives during the fiscal year
ending June 1, 1997:
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Number of Annual Rate of
Securities Percent of Total Stock Price
Underlying Options Granted Exercise Appreciation for
Options to All Employees Price Expiration Option Term
Name Granted(1) in Fiscal Year ($Share) Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Frederick M. 20,000(1) 25% $7.75 7-22-06
Green 25,000(2) 6.50 12-12-06 $200,025 $504,825
Gregory L. 10,000(1) 14% 7.75 7-22-06
Harris 15,000(2) 6.50 12-12-06 $110,250 $278,250
Carlos S. 10,000(1) 15% 7.75 7-22-06
Montague 17,500(2) 6.50 12-12-06 $120,488 $304,088
Hokung Choi 10,000(1) 6% 7.75 7-22-06 $ 48,825 $123,225
<FN>
(1) Each option becomes exercisable in equal installments over a
period of four years, commencing January 23, 1997.
(2) Each option becomes exercisable in equal installments over a
period of four years, commencing June 12, 1997.
</TABLE>
Option Exercises in Fiscal Year 1997 and Fiscal Year-End Option
Values
The following table sets forth information with respect to
the Named Executives concerning the exercise of options during
the fiscal year ending June 1, 1997 and unexercised options held
as of June 1, 1997.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised in the Money Options
Options at FY-End at FY-End(1)
Shares
Acquired
on Value Exer- Unexer- Excer- Unexer-
Exercise Realized cisable cisable cisable cisable
<S> <C> <C> <C> <C> <C> <C>
Frederick M. 20,000 $58,750 52,500 32,500 $426,563 $264,063
Green
Gregory L. 15,000 $45,000 43,750 18,750 $347,344 $152,344
Harris
Carlos S. 15,000 $45,000 24,875 20,625 $202,109 $167,578
Montague
Hokung choi 20,000 $55,000 25,500 7,500 $207,188 $60,938
<FN>
(1) Based on closing price of $8.125 per share of the Company's
Common Stock on June 1, 1997.
</TABLE>
COMPENSATION COMMITTEE REPORT
The Compensation Committee (the "Committee") consists of
three non-employee members of the Company's Board of Directors
(the "Board"): Messrs. Edward C. Lund, Eric G. Mitchell, Jr.,
and Matthew A. Sutton. The Committee determines compensation for
the Chief Executive Officer and other executive officers, based
on qualitative and quantitative measures of performance, and
makes recommendations to the Board for approval. Actions by the
Committee relating to awards under the Company's Stock Option
Plan are, however, final in accordance with Rule 16b-3 under the
Securities Exchange Act of 1934.
Executive Officer Compensation Policy. The Committee's
executive compensation policy is designed to provide compensation
that is externally competitive at the various professional
levels. Application of the policy utilizes retrospective
quantitative criteria such as performance to objectives and
strategies, as measured by results of operations and individual
initiatives and achievements. The policy also encourages and
recognizes strategic actions that positions the Company to better
compete in its markets for enhanced operational results in the
longer term. The objective of the policy is to encourage
initiative and to attract and retain qualified executives. As a
result of these factors, the actual change in compensation for
any particular executive officer for a particular year may be
higher than those of competitive sources and may not necessarily
reflect operational results of the preceding year. The Company
utilizes independently conducted market surveys to obtain
comparative compensation data.
Compensation Elements. Compensation currently paid to the
Company's executive officers principally consists of three
elements: base salary, bonus and periodic stock option awards.
Salary. The base salary of the Company's executive officers
are generally established by reference to base salaries paid to
executives in similar positions with similar responsibilities
based on publicly available compensation surveys. Base salaries
are reviewed annually. The base salaries of the Company's
executive officers as a group increased in fiscal 1997 by 5.6%.
By way of comparison, the Company's revenues increased by 18.5%
in fiscal 1997 and the Company achieved net income of
approximately $2, 365,000 versus net income of approximately
$883,000 in fiscal 1996, representing an increase of 168%.
Bonus. In fiscal years 1996 and 1997, each of the Company's
Executive Officers earned a bonus equal to two weeks'
compensation, along with all of the Company's U.S. employees.
These bonuses were earned as a result of the Company reaching
certain operational targets established at the beginning of each
of these fiscal years. The bonuses earned in fiscal 1996 were
paid in fiscal 1997 and the bonuses earned in fiscal 1997 were
paid in fiscal 1998.
Options/Stock Based Compensation. Stock options are awarded
under stock option plans approved by the Company's shareholders.
Options are granted at an exercise price that is equal to the
fair market value of a common share on the date of the grant.
The Committee believes that stock ownership by management derived
from granting of stock options is beneficial because it aligns
the interests of executives with that of shareholders. It serves
to further encourage superior management performance and
specifically motivates executives to remain focused on factors
which enhance the market value of the Company's common stock.
During fiscal 1997, the Committee granted stock options to
purchase 177,500 shares of common stock to officers and key
employees, including options covering 52,500 shares granted in
recognition of extraordinary efforts related to the successful
public offering of the Company's common stock in December, 1996.
Executive officers were granted 60% of the total options granted
to all officers and key employees.
Chief Executive Officer Compensation. Frederick M. Green is
evaluated by the same factors applicable to the evaluation of
other Executive Officers, as described above and participates in
the same executive compensation plans provided by the other
senior executives. Mr. Green's base salary for fiscal 1997
increased approximately 6.2% from the prior year, virtually the
same increase awarded to all Executive Officers. Also Mr. Green
earned an additional two weeks salary under the special bonus
plan described above which was applicable to all employees of the
Company. Mr. Green also was awarded in fiscal 1997 stock options
to acquire 45,000 shares, including options covering 20,000
shares granted in recognition of extraordinary efforts related to
the successful public offering of the Company's common stock in
December, 1996. The Committee regards Mr. Green's cash
compensation and stock option awards in fiscal 1997 as reasonable
in relation to published information on compensation of
executives with similar responsibilities, as well as when
measured against the 18.5% increase in revenues and the 168%
increase in net income in fiscal 1997.
Submitted by the Compensation Committee of the Company's Board
of Directors:
<TABLE>
<S> <C> <C>
Edward C. Lund Eric G. Mitchell, Jr. Matthew A. Sutton
</TABLE>
STOCK PERFORMANCE GRAPH
The table below sets forth a comparison of the cumulative
shareholder return of the Company's Common Stock over the last
five fiscal years with the cumulative total return over the same
periods for the Nasdaq Market Index and the Electronic
Components, N.E.C. (SIC Code 3679, which includes 67 companies).
The graph below compares the cumulative total return of the
Company's Common Stock over the last five fiscal years assuming a
$100 investment on May 29, 1992 and assuming reinvestment of all
dividends.
<TABLE>
<CAPTION>
FISCAL YEARS ENDING
May 31, May 30, May 29, May 28, June 2, June 1,
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
Ault $100.00 $54.89 $47.05 $74.50 $443.07 $254.86
Incorporated
Electronic $100.00 $180.32 $211.15 $360.92 $472.80 $746.50
Components
Index
NASDAQ $100.00 $120.29 $126.64 $150.64 $218.96 $246.49
Market Index
(U.S.)
</TABLE>
2. PROPOSAL TO RATIFY AND APPROVE
THE COMPANY'S 1996 STOCK PLAN
General Information
On December 12, 1996, the Company's Board of Directors
adopted the Ault Incorporated 1996 Stock Plan (the "1996 Plan"),
subject to ratification and approval by the Company's
shareholders. The 1996 Plan is a successor to the Company's 1986
Stock Option Plan (the "1986 Plan") which expired in November,
1996. Consistent with the purposes of the 1986 Plan, the purpose
of the 1996 Plan is to enable the Company and its subsidiaries to
retain and attract key employees, consultants and non-employee
directors who contribute to the Company's success by their
ability, ingenuity and industry, and to enable such key
employees, consultants and non-employee directors to participate
in the long-term success and growth of the Company by giving them
a proprietary interest in the Company. The 1996 Plan authorizes
the granting of awards in any of the following forms: (i) stock
options, (ii) stock appreciation rights, (iii) restricted stock,
and (iv) deferred stock.
The 1996 Plan provides for a total share authorization of
500,000 shares in order to provide an adequate reserve for the
grant of options to key employees in the future and to provide
for ongoing automatic grants of stock options to non-employee
directors. The 1986 Plan was originally adopted with an
authorization of 200,000 shares which was increased pursuant to
several amendments approved by the shareholders to authorize
options to acquire a total of 600,000 shares. As of August 1,
1997 a total of 238,800 shares have been purchased through the
exercise of options under the 1986 Plan; in addition, options to
purchase 361,200 shares were outstanding under the 1986 Plan.
Accordingly, substantially all of the shares authorized for
issuance under the 1986 Plan have been issued or are reserved for
issuance.
When the Board of Directors approved the 1996 Plan, it
considered a variety of factors, including the increase in the
size and scope of the Company's operations during the last
several years; the importance of attracting and retaining
technical and management employees in an increasingly competitive
market; and, the importance of attracting and retaining qualified
non-employee directors.
The principal features of the 1996 Plan are summarized
below. The text of the Plan follows this Proxy Statement.
Shares Available Under 1996 Plan
The maximum number of common shares reserved and available
under the 1996 Plan for awards is 500,000 (subject to possible
adjustment in the event of stock splits or other similar changes
in outstanding common shares). Common shares covered by expired
or terminated stock options and forfeited shares of restricted
stock or deferred stock may be used for subsequent awards under
the 1996 Plan.
Eligibility and Administration
Officers and other key employees of the Company and its
subsidiaries who are responsible for or contribute to the
management, growth and/or profitability of the business of the
Company and its subsidiaries, as well as consultants and non-
employee directors, are eligible to be granted awards under the
1996 Plan. The 1996 Plan will be administered by the Board or,
in its discretion, by a committee of not less than two non-
employee directors who are "outside directors" as defined in the
1996 Plan (the "Committee") appointed by the Board of Directors.
The term "Board" as used in this section refers to the Board of
Directors or if the Board has delegated its authority, the
Committee. The Board will have the power to make awards (other
than awards to non-employee directors), determine the number of
shares covered by each award and other terms and conditions of
such awards, interpret the 1996 Plan, and adopt rules,
regulations and procedures with respect to the administration of
the 1996 Plan. The Board may delegate its authority to officers
of the Company for the purpose of selecting key employees who are
not officers of the Company to be participants in the 1996 Plan.
Awards Under 1996 Plan
Stock Options.
The Board may grant stock options that either qualify as
"incentive stock options" under the Internal Revenue Code of
1986, as amended ("Code") or are "non-qualified stock options" in
such form and upon such terms as the Board may approve from time
to time. Stock options granted under the 1996 Plan may be
exercised during their respective terms as determined by the
Board. The purchase price may be paid by tendering cash or, in
the Board's discretion, by tendering promissory notes or Company
common stock. The optionee may elect to pay all or part of the
option exercise price by having the Company withhold upon
exercise of the option a number of shares with a fair market
value equal to the aggregate option exercise price for the shares
with respect to which such election is made. No stock option
shall be transferable by the optionee or exercised by anyone else
during the optionee's lifetime.
Stock options may be exercised during varying periods of
time after a participant's termination of employment, dependent
upon the reason for the termination. Following a participant's
death, the participant's stock options may be exercised to the
extent they were exercisable at the time of death by the legal
representative of the estate or the optionee's legatee for a
period of one year or until the expiration of the stated term of
the option, whichever is less. The same time periods apply if
the participant is terminated by reason of disability. If the
participant retires, the participant's stock options may be
exercised to the extent they were exercisable at the time of
retirement or for a period of twelve months from the date of
retirement or until the expiration of the stated term of the
option, whichever is less. If the participant is involuntarily
terminated without cause, the participant's options may be
exercised to the extent they were exercisable at the time of
termination for the lesser of three months or the balance of the
stated term of the option. If the participant's employment is
terminated for cause, the participant's stock options immediately
terminate. The Board may, in its discretion, accelerate the
exercisability of stock options which would not otherwise be
exercisable upon death, disability or retirement.
No incentive stock options shall be granted under the 1996
Plan after December 11, 2006. The term of an incentive stock
option may not exceed 10 years (or 5 years if issued to a
participant who owns or is deemed to own more than 10% of the
combined voting power of all classes of stock of the Company, any
subsidiary or affiliate). The aggregate fair market value of the
common stock with respect to which an incentive stock option is
exercisable for the first time by an optionee during any calendar
year shall not exceed $100,000. The exercise price under an
incentive stock option may not be less than the fair market value
of the common stock on the date the option is granted (or, in the
event the participant owns more than 10% of the combined voting
power of all classes of stock of the Company, the option price
shall be not less than 110% of the fair market value of the stock
on the date the option is granted). The exercise price for non-
qualified options granted under the 1996 Plan may be less than
100% of the fair market value of the common stock on the date of
grant.
Pursuant to a limitation in the 1996 Plan, no eligible
person may be granted any stock options for more than 100,000
shares of common stock in the aggregate during any fiscal year.
This limitation is included pursuant to Section 162(m) of the
Internal Revenue Code, which provides a $1 million limitation on
the compensation of certain executive officers that is deductible
by the Company for federal income tax purposes. The limitation
on stock options granted to an individual during any fiscal year
is intended to preserve the Company's federal tax deduction for
compensation expense related to stock options that may be granted
to executive officers under the 1996 Plan.
The 1996 Plan provides for the automatic granting of options
to non-employee directors. Such options are granted to each
person who (i) is not an employee of the Company, any parent
corporation or subsidiary and (ii) is elected or re-elected as a
director by vote of the Board or the shareholders subsequent to
December 31, 1996. Each such person automatically receives, as
of the date of each such election or re-election, a non-qualified
option to purchase 2,000 shares of common stock with an option
price equal to the fair market value of the Company's common
stock on the date the option is granted. The options have ten-
year terms and are exercisable beginning six months after the
date of option grant. These options will not expire upon
termination of service as a director. Non-employee directors are
also eligible to receive additional grants of non-qualified stock
options under the 1996 Plan.
The automatic grant program under the 1996 Plan replaces a
similar formula grant program under the 1986 Plan, with each
option granted under the 1986 Plan covering 1,000 shares.
Stock Appreciation Rights.
The Board may grant stock appreciation rights ("SARs") in
connection with all or part of any stock option (with the
exception of options granted to non-employee directors), either
at the time of the stock option grant, or, in the case of non-
qualified options, later during the term of the stock option.
SARs entitle the participant to receive from the Company the same
economic value that would have been derived from the exercise of
an underlying stock option and the immediate sale of the shares
of common stock. Such value is paid by the Company in cash,
shares of common stock or a combination of both, in the
discretion of the Board. SARs are exercisable or transferable
only at such times and to the extent stock options to which they
relate are exercisable or transferable. If an SAR is exercised,
the underlying stock option is terminated as to the number of
shares covered by the SAR exercise.
Restricted Stock.
The Board may grant restricted stock awards that result in
shares of common stock being issued to a participant subject to
restrictions against disposition during a restricted period
established by the Board. The Board may condition the grant of
restricted stock upon the attainment of specified performance
goals or service requirements. The provisions of restricted
stock awards need not be the same with respect to each recipient.
The restricted stock will be held in custody by the Company until
the restrictions thereon have lapsed. During the period of the
restrictions, a participant has the right to vote the shares of
restricted stock and to receive dividends and distributions
unless the Board requires such dividends and distributions to be
held by the Company subject to the same restrictions as the
restricted stock. Notwithstanding the foregoing, all
restrictions with respect to restricted stock lapse 60 days (or
less as determined by the Board) prior to the occurrence of a
merger or other significant corporate change, as provided in the
1996 Plan.
If a participant terminates employment during the period of
the restrictions, all shares still subject to restrictions will
be forfeited and returned to the Company, subject to the right of
the Board to waive such restrictions in the event of a
participant's death, total disability, retirement or under
special circumstances approved by the Board.
Deferred Stock.
The Board may grant deferred stock awards that result in
shares of common stock being issued to a participant or group of
participants upon the expiration of a deferral period. The Board
may 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.
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, subject to the Board's
ability to waive any remaining deferral limitations with respect
to a participant's deferred stock. During the deferral period,
deferred stock awards may not be sold, assigned, transferred,
pledged or otherwise encumbered and any dividends declared with
respect to the number of shares covered by a deferred stock award
will either be immediately paid to the participant or deferred
and deemed to be reinvested in additional deferred stock, as
determined by the Board. The Board may allow a participant to
elect to further defer receipt of a deferred stock award for a
specified period or until a specified event.
Federal Income Tax Consequences
Stock Options. An optionee will not realize taxable
compensation income upon the grant of an incentive stock option.
In addition, an optionee generally will not realize taxable
compensation income upon the exercise of an incentive stock
option if he or she exercises it as an employee or within three
months after termination of employment (or within one year after
termination if the termination results from a permanent and total
disability). The amount by which the fair market value of the
shares purchased exceeds the aggregate option price at the time
of exercise will be alternative minimum taxable income for
purposes of applying the alternative minimum tax. If stock
acquired pursuant to an incentive stock option is not disposed of
prior to the date two years from the option grant date or prior
to one year from the option exercise date (the "Applicable
Holding Periods"), any gain or loss realized upon the sale of
such shares will be characterized as capital gain or loss. If
the Applicable Holding Periods are not satisfied, then any gain
realized in connection with the disposition of such stock will
generally be taxable as ordinary compensation income in the year
in which the disposition occurred, to the extent of the
difference between the fair market value of such stock on the
date of exercise and the option exercise price. The Company is
entitled to a tax deduction to the extent, and at the time, the
participant realizes compensation income. The balance of any
gain will be characterized as a capital gain. Under current law,
net capital gains are taxed at a maximum federal rate of 28%
while compensation income may be taxed at higher federal rates.
An optionee generally will not realize taxable compensation
income upon the grant of a non-qualified stock option. As a
general matter, when an optionee exercises a non-qualified stock
option, he or she will realize taxable compensation income at
that time equal to the difference between the aggregate option
price and the fair market value of the stock on the date of
exercise. The Company is entitled to a tax deduction to the
extent, and at the time, the participant realizes compensation
income.
SARs. The grant of an SAR would not result in income for
the participant or in a deduction for the Company. Upon receipt
of shares or cash from exercise of an SAR, the participant would
generally recognize compensation income, measured by the fair
market value of the shares plus any cash received, and the
Company would be entitled to a corresponding deduction.
Restricted Stock and Deferred Stock. The grant of
restricted stock and deferred stock should not result in
immediate income for the participant or in a deduction for the
Company for federal income tax purposes, assuming the shares are
nontransferable and subject to restrictions or to a deferral
period which would result in a "substantial risk of forfeiture"
as intended by the Company and as defined in applicable Treasury
regulations. If the shares are transferable or there are no such
restrictions or significant deferral periods, the participant
will realize compensation income upon receipt of the award.
Otherwise, a participant generally will realize taxable
compensation when any such restrictions or deferral period
lapses. The amount of such income will be the value of the
common stock on that date less any amount paid for the shares.
Dividends paid on the common stock and received by the
participant during the restricted period or deferral period also
will be taxable compensation income to the participant. In any
event, the Company will be entitled to a tax deduction to the
extent, and at the time, the participant realizes compensation
income. A participant may elect, under Section 83(b) of the
Code, to be taxed on the value of the stock at the time of award.
If the election is made, the fair market value of the stock at
the time of the award is taxable to the participant as
compensation income and the Company is entitled to a
corresponding deduction.
Withholding. The 1996 Plan requires each participant, 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, to pay to the Company any federal, state or
local taxes required by law to be withheld with respect to the
award. The Company shall, to the extent permitted by law, have
the right to deduct any such taxes from any payment otherwise due
to the participant. With respect to any award under the 1996
Plan, if the terms of the award so permit, a participant may
elect 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 Company common stock which
would otherwise be deliverable to the participant, or (ii)
delivering to the Company from shares of Company common 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. In that case, the Company would pay
the tax liability from its own funds.
Registration with SEC
The Company intends to file a Registration Statement
covering the issuance of shares issuable under the Stock Plan
with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, amended.
Additional Information
A copy of the 1996 Plan can be obtained by writing to: Vice
President and Chief Financial Officer Ault Incorporated, 7300
Boone Avenue North, Minneapolis, Minnesota 55428.
Shareholder Approval
The affirmative vote of a majority of the outstanding shares
of the Company's Common Stock voting at the meeting in person or
by proxy is required for ratification and approval of the
Company's 1996 Stock Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION
AND APPROVAL OF THE 1996 STOCK PLAN.
THE COMPANY'S AUDITORS
McGladrey & Pullen, LLP, independent public accountants,
have served as the auditors of the Company since 1974. A
representative of McGladrey & Pullen, LLP is expected to be
present at the Annual Meeting of Shareholders, will have an
opportunity to make a statement if he or she desires to do so and
will be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS
The proxy rules of the Securities and Exchange Commission
permit shareholders of a company, after timely notice to the
company, to present proposals for shareholder action in the
company's proxy statements where such proposals are consistent
with applicable law, pertain to matters appropriate for
stockholder action and are not property omitted by company action
in accordance with the proxy rules. The Ault Incorporated 1998
Annual Meeting of Shareholders is expected to be held on or about
September 30, 1998 and proxy materials in connection with that
meeting are expected to be mailed on or about August 25, 1998.
Shareholder proposals prepared in accordance with the proxy rules
must be received by the Company on or before May 30, 1998.
GENERAL
Compliance with Section 16(a) of the Securities Exchange Act of
1934.
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's directors and executive officers, and
persons who own more than 10% of a registered class of the
Company's equity securities, to file with the Securities and
Exchange Commission initial reports of ownership and reports of
changes in ownership of common stock and other equity securities
of the Company. These insiders are required by Securities and
Exchange Commission regulations to furnish the Company with
copies of all Section 16(a) forms they file, including Forms 3, 4
and 5.
To the Company's knowledge, based solely on review of the
copies of such reports furnished to the Company and written
representations that no other reports were required, the
Company's insiders complied with all Section 16(a) finding
requirements applicable to them during the fiscal year ended June
1, 1997.
Other Matters
Management knows of no other matters that will be presented
at the Annual Meeting of Shareholders. However, the enclosed
proxy gives discretionary authority in the event that any
additional matters should be presented.
The Annual Report of the Company for the past fiscal year is
enclosed herewith and contains the Company's financial statements
for the fiscal year ended June 1, 1997. Shareholders may receive
without charge a copy of the Company's Annual Report on Form 10-
K, including financial statements and schedules thereto, as filed
with the Securities and Exchange Commission, by writing to: Vice
President and Chief Financial Officer,Ault Incorporated, 7300
Boone Avenue North, Minneapolis, Minnesota 55428.
By Order of the Board of Directors,
Richard A. Primuth, Secretary
THE FOLLOWING TEXT OF THE AULT INCORPORATED 1996 STOCK PLAN IS
FURNISHED SUPPLEMENTLY AS PART OF THIS FILING PURSUANT TO
REGULATION 14A:
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.
