EXHIBIT 10.1
SHAREHOLDERS
AGREEMENT
This Shareholders Agreement (this
“Agreement”), is entered into as of December 16,
2005, by and between SL Industries, Inc., a New Jersey
corporation (“Purchaser”), and Lakers Acquisition
Corp., a Minnesota corporation and wholly-owned subsidiary of
Purchaser (“Merger Sub”), on the one hand, and each of
the shareholders of Ault Incorporated, a Minnesota corporation (the
“Company”) set forth on Schedule 1 hereto (each a
“Shareholder” and collectively, the
“Shareholders”), on the other hand. Capitalized
terms used herein without definition shall have the respective
meanings ascribed to them in the Merger Agreement (as defined
below).
RECITALS
WHEREAS, each Shareholder is, as of
the date hereof, the record and beneficial owner (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)) of (i) the number of
shares of common stock, no par value, of the Company (together with
any associated preferred stock or other rights issued pursuant to
the Rights Agreement, dated as of February 13, 1996, between
the Company and Norwest Bank Minnesota, N.A. as the same has been
amended through the date hereof, the “Common Stock”);
and (ii) the number of options to acquire Common Stock (the
“Company Options”) set forth opposite the name of such
Shareholder on Schedule 1 hereto; and
WHEREAS, Purchaser, Merger Sub and
the Company have entered into an Agreement and Plan of Merger,
dated as of the date hereof (the “Merger Agreement”),
which provides, among other things, for (a) Merger Sub to
commence a tender offer for all of the issued and outstanding
shares of Common Stock (the “Offer”) and (b) the
merger of Merger Sub with and into the Company with the Company
continuing as the surviving corporation (the “Merger”),
in each case upon the terms and subject to the conditions set forth
in the Merger Agreement; and
WHEREAS, as a condition to the
willingness of Purchaser and Merger Sub to enter into the Merger
Agreement and as an inducement and in consideration therefor, the
Shareholders have agreed to enter into this Agreement.
NOW, THEREFORE, in consideration of
the foregoing and the mutual covenants and agreements set forth
herein and in the Merger Agreement, and intending to be legally
bound hereby, the parties hereto agree as follows:
Section 1.
Representations and Warranties of the Shareholders.
Each
Shareholder hereby represents and warrants to Purchaser, severally
and not jointly, as set forth below:
(a)
Such Shareholder is the record and beneficial owner (as defined in
Rule 13d-3 under the Exchange Act) of the shares of Common
Stock set forth opposite his or its name on Schedule 1 to this
Agreement (such shares of Common Stock, together with any Common
Stock acquired by the Shareholder after the date of this
Agreement, whether such Shares are acquired by way of exercise of
Company Options or other rights to purchase Common Stock or by way
of
dividend, distribution,
exchange, merger, consolidation, grant of proxy or otherwise, but
excluding shares owned by other Shareholders, all as may be
adjusted from time to time pursuant to Section 8 hereof, the
“Shares”). Schedule 1 to this Agreement
lists separately all Company Options issued to such
Shareholder. Such Shareholder is the record and beneficial
owner of the Company Options set forth opposite such
Shareholder’s name on Schedule 1 to this
Agreement.
(b)
Such Shareholder has voting power and power to agree to all of the
matters regarding such Shareholder set forth in this Agreement, in
each case with respect to all of the Shares, with no limitations,
qualifications or restrictions on such right. Such
Shareholder is not the record or beneficial owner of any securities
of the Company on the date hereof other than the Shares and the
Company Options set forth on Schedule 1.
(c)
Such Shareholder has the legal capacity to execute and deliver this
Agreement and to consummate the transactions contemplated hereby
regarding such Shareholder.
(d)
This Agreement has been validly executed and delivered by such
Shareholder and, assuming due and valid authorization, execution
and delivery thereof by Purchaser and Merger Sub, constitutes the
legal, valid and binding obligation of such Shareholder,
enforceable against such Shareholder in accordance with its terms,
except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, and
(ii) the availability of the remedy of specific performance or
injunctive or other forms of equitable relief may be subject to
equitable defenses and would be subject to the discretion of the
court before which any proceeding therefor may be
brought.
(e)
Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will result in
a violation of, or constitute (with or without due notice or lapse
of time or both) a default under, or conflict with, or give rise to
any right of termination, cancellation or acceleration under any
contract, trust, note, bond, mortgage, indenture, license,
agreement, or material contractual restriction or obligation of any
kind to which such Shareholder is a party or by which such
Shareholder or his or its Shares are bound, which singularly or in
the aggregate, would prevent or adversely affect the ability of
such Shareholder to perform his or its obligations under this
Agreement. The consummation of the transactions contemplated
hereby will not violate, or require any consent, approval or notice
(except those required under applicable securities laws) under, any
provision of any judgment, order, injunction, decree, statute, law,
rule or regulation applicable to such Shareholder which,
singularly or in the aggregate, would prevent or adversely affect
the ability of such Shareholder to perform his or its obligations
under this Agreement.
(f) The
Shares owned by such Shareholder are now, and at all times during
the term hereof will be, held by such Shareholder or by a nominee
or custodian for the benefit of such Shareholder, free and clear of
all liens, claims, security interests, proxies, voting trusts,
agreements, options, rights, understandings or arrangements or any
other encumbrances whatsoever on title, transfer or exercise of any
rights of a Shareholder in respect of such Shares (collectively,
“Encumbrances”), except for any such Encumbrances
arising hereunder, and the transfer of the Shares held by such
Shareholder hereunder will effectively vest in Merger Sub valid and
marketable title to such Shares, free and clear of any
Encumbrances.
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(g)
If Shareholder’s Shares are subject to community property
interests under the laws of any jurisdiction, such Shareholder has
agreed to have executed and delivered to Purchaser such consents,
waivers and approvals as are necessary for the execution of this
Agreement and the approval and consummation of the transactions
contemplated hereby regarding such Shareholder.
(h)
Such Shareholder understands and acknowledges that Purchaser and
Merger Sub are entering into the Merger Agreement in reliance upon
such Shareholder’s execution and delivery of this
Agreement.
Section 2.
Representations and Warranties of Purchaser and Merger Sub.
Each of
Purchaser and Merger Sub hereby represents and warrants to the
Shareholders, jointly and severally, as follows:
(a)
Each of Purchaser and Merger Sub is a corporation duly organized
and validly existing under the laws of the State of New Jersey and
the State of Minnesota, respectively, has all requisite corporate
power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby and has taken all
necessary corporate action to authorize the execution, delivery and
performance of this Agreement.
(b)
This Agreement has been duly authorized, executed and delivered by
each of Purchaser and Merger Sub and, assuming due and valid
authorization, execution and delivery thereof by a Shareholder,
constitutes the legal, valid and binding obligation of each of
Purchaser and Merger Sub, enforceable by such Shareholder against
each of them in accordance with its terms, except (i) as
limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting
enforcement of creditors’ rights generally and (ii) the
availability of the remedy of specific performance or injunctive or
other forms of equitable relief may be subject to equitable
defenses and would be subject to the discretion of the court before
which any proceeding therefor may be brought.
(c)
Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will result in
a violation of, or constitute (with or without due notice or lapse
of time or both) a default under, or conflict with, or give rise to
any right of termination, cancellation or acceleration under any
material contract, trust, note, bond, mortgage, indenture, license,
agreement or contractual restriction or obligation of any kind to
which Purchaser and Merger Sub is a party which, singularly or in
the aggregate, would prevent or adversely affect the ability of
Purchaser and Merger Sub to perform its obligations under this
Agreement. The consummation of the transactions contemplated
hereby will not violate, or require any consent, approval or notice
(except those required under applicable securities laws) under, any
provision of any judgment, order, injunction, decree, statute, law,
rule or regulation applicable to Purchaser and Merger Sub
which, singularly or in the aggregate, would prevent or materially
adversely affect the ability of Purchaser and Merger Sub to perform
its obligations under this Agreement.
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Section 3. Tender of the
Shares.
(a)
Each Shareholder hereby agrees that, subject to the terms and
conditions of Section 10 hereof, (a) such Shareholder
shall validly tender, or cause to be validly tendered, pursuant to
and in accordance with the terms of the Offer, his or its Shares
into the Offer as promptly as practicable, and in any event no
later than the fifth business day following the commencement of the
Offer pursuant to Section 1.1 of the Merger Agreement and
receipt of the applicable tender offer documentation and
(b) such Shareholder shall not withdraw any Shares so tendered
unless this Agreement is terminated or otherwise terminates in
accordance with its terms under Section 10 hereof or otherwise
or the Offer is terminated or has expired without Merger Sub
purchasing all Shares validly tendered in the Offer and not
withdrawn. Notwithstanding the foregoing, each Shareholder
may decline to tender, or may withdraw, any and all of such
Shareholder’s Shares if, without the consent of such
Shareholder, Merger Sub amends the Offer to (i) reduce the
Offer Price, (ii) reduce the number of Shares subject to the
Offer, (iii) change the form of consideration payable in the
Offer or (iv) amend or modify any term or condition of the
Offer in a manner adverse to the Shareholders of the Company (other
than insignificant changes or amendments or other than to waive any
condition other than the Minimum Condition which the parties agree
cannot be waived or reduced). Each Shareholder shall give
Merger Sub at least two (2) business days’ prior notice
of any withdrawal of its Shares pursuant to the immediately
preceding proviso.
(b)
Notwithstanding the foregoing, at no time and in no event shall the
total number of shares restricted pursuant to
Section 3(a) hereof exceed nineteen and nine-tenths
percent (19.9%) of the outstanding capital stock of the Company,
including but not limited to the Shares (the “Maximum
Restricted Amount”). In the event that the total number
of Shares exceeds the Maximum Restricted Amount, Merger Sub may, in
its sole and absolute discretion determine which Shares shall be
restricted pursuant to Section 3(a). Merger Sub, in its
sole and absolute discretion, shall make the determination of
whether Shares subject to restriction pursuant to this
Section 3 have equaled or exceeded the Maximum Restricted
Amount.
Section 4. Transfer of
the Shares.
(a)
Prior to the termination of this Agreement and except as otherwise
provided herein, each of the Shareholders agrees that it shall not:
(i) transfer, assign, sell, gift-over, pledge, hypothecate,
encumber or otherwise dispose of, or consent to any of the
foregoing (“Transfer”), any or all of the Shares,
Company Options or other rights to acquire Common Stock or any
right or interest therein; (ii) enter into any contract,
option or other agreement, arrangement or understanding with
respect to any Transfer; (iii) grant any proxy,
power-of-attorney or other authorization or consent with respect to
any of the Shares; (iv) deposit any of the Shares into a
voting trust, or enter into a voting agreement or arrangement with
respect to any of the Shares or (v) take any other action that
would in any way restrict, limit or interfere with the performance
of such Shareholder’s obligations hereunder or the
transactions contemplated hereby or make any representation or
warranty of such Shareholder untrue or incorrect.
(b)
Notwithstanding the foregoing, at no time and in no event shall the
total number of shares restricted pursuant to
Section 4(a) hereof exceed the Maximum Restricted
Amount. In the event that the total number of Shares exceeds
the Maximum Restricted Amount, Merger Sub
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may, in its sole and
absolute discretion, determine which Shares shall be restricted
pursuant to Section 4(a). Prior to any proposed Transfer
restricted by Section 4(a) hereof, each Shareholder shall
provide written notice to Merger Sub at least forty-eight (48)
hours prior to the proposed Transfer. Such notice shall
include the number and class of Shares (including Company Options)
to be transferred, the price per Share, and the proposed
transferee. If the Shares so restricted have not yet exceeded
the Maximum Restricted Amount, then Merger Sub may restrict such
proposed Transfer as provided herein. If Shares upon which
such restrictions have already been imposed equal or exceed the
Maximum Restricted Amount, then Merger Sub may not enforce the
restrictions on Transfer imposed by this Agreement. Merger
Sub, in its sole and absolute discretion, shall make the
determination of whether Shares subject to restriction pursuant to
this Section 4 have equaled or exceeded the Maximum Restricted
Amount. Regardless of whether the Maximum Restricted Amount
has been reached, the notice provision of this
Section 4(b) shall apply until termination of this
Agreement.
Section 5.
Option.
(a)
On the terms and subject to the conditions set forth herein, each
Shareholder hereby grants to each of Purchaser and Merger Sub an
irrevocable option to purchase all of the right, title and interest
of such Shareholder in and to the Shares owned by such Shareholder,
as well as any other Shares of Common
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