Doc# 1154348\2
As filed with the Securities and Exchange Commission on November 19, 1999
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.)
7105 Northland Terrace
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
7105 Northland Terrace 4200 IDS Center
Minneapolis, Minnesota 55428 80 South Eighth Street
(612) 592-1910 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 Aggregate Amount of
to be to be Price Offering Registration
Registered Registered(2) Per Share(1) Price(1) Fee
_________________________________________________________________
Common Stock, 250,000 $6.125 $1,531,250 $425.69
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 SmallCap Market on
November 18, 1999.
(2) 500,000 shares were registered on Form S-8 (File No. 333-38455) on
October 16, 1997 and 250,000 shares are being registered herewith.
INCORPORATION OF CONTENTS OF REGISTRATION STATEMENT
BY REFERENCE
A Registration Statement on Form S-8 (File No. 333-38455)
was filed with the Securities and Exchange Commission on October
16, 1997 covering the registration of 500,000 shares initially
authorized for issuance under the Company's 1996 Stock Incentive
Plan (the "Plan"). A filing fee of $1,175 was paid at the time
the Registration Statement was filed. Pursuant to General
Instruction E of Form S-8 and Rule 429, this Registration
Statement is being filed to register an additional 250,000 shares
authorized under the Plan. An amendment to the Plan to increase
the reserved and authorized number of shares under the Plan by
250,000 was authorized by the Company's Board of Directors on
July 21, 1999 and such amendment was approved by the Company's
shareholders on September 30, 1999. This Registration Statement
should also be considered a post-effective amendment to the prior
Registration Statement. The contents of the prior Registration
Statement are incorporated herein by reference.
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 May 30, 1999.
(b) The Quarterly Report of the Company on Form 10-Q for
the period ended August 29, 1999.
(c) The Proxy Statement of the Company dated August 24,
1999 for the Annual Meeting of Shareholders held
September 30, 1999.
(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.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers and
controlling persons pursuant to the foregoing provisions, or
otherwise, we have been advised that, in the opinion of the SEC,
such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
Exhibit
4.1 Ault Incorporated 1996 Stock Option Plan, as amended
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 auditors
24.1 Power of Attorney (set forth on the signature page hereof)
Item 9. Undertakings.
The Company hereby undertakes:
(a) (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, represent a
fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed
that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) under the Securities Act
of 1933 if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement; and
(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.
(2) That, for determining liability under the Securities
Act, to treat each post-effective amendment as a new registration
statement of the securities offered, and the offering of the
securities at that time to be the initial bona fide offering.
(3) To file a post-effective amendment to remove from
registration any of the securities that remain unsold at the end
of the offering.
(b) The Company hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the Company's annual report pursuant to Section 13(a)
or 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 (the "Act") may be permitted to directors,
officers, and controlling persons of the small business issuer
pursuant to the foregoing provisions, or otherwise, the small
business issuer 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 small
business issuer of expenses incurred or paid by a director,
officer or controlling person of the small business issuer in the
successful defense of any action, suit or proceeding) is asserted
by such director, officer, or controlling person in connection
with the securities being registered, the small business issuer
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 November __,
1999.
AULT INCORPORATED
By /s/ Frederick M. Green
Frederick M. Green
President and Chief Executive
Officer
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 November 19, 1999 in the capacities
indicated.
Signature Title
/s/ Frederick M. Green President, Chief Executive Officer
Frederick M. Green and Chairman of the Board
(Principal Executive Officer)
/s/ James M. Duddleston Director
James M. Duddleston
/s/ Delbert W. Johnson Director
Delbert W. Johnson
/s/ John G. Kassakian Director
John G. Kassakian
/s/ David J. Larkin Director
David J. Larkin
/s/ Frank L. Sims Director
Frank L. Sims
/s/ Matthew A. Sutton Director
Matthew A. Sutton
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 750,000. 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.
Doc# 1154348\2
EXHIBIT 5.1
November 19, 1999
Ault Incorporated
7105 Northland Terrace
Minneapolis, MN 55428-1028
Re: Opinion of Counsel as to Legality of 250,000 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 250,000 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 250,000
Common Shares to be offered 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.
Doc# 1154348\2
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 9, 1999, 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 May 30, 1999.
MCGLADREY & PULLEN LLP
/s/ McGladrey & Pullen LLP
Minneapolis, Minnesota
November 19, 1999
