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.
(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
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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.
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
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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 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
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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 Stock of which such Shareholder is the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act) after the date
hereof, if and to the extent that such Shares are not validly
tendered in the Offer pursuant to the terms of Section 3 hereof, at
a price per share equal to the Offer Price (as defined in the
Merger Agreement) (the “ Option ”). With respect
to any Shareholder, the Option may be exercised after Merger Sub
shall purchase and pay for Shares (as defined in the Merger
Agreement) pursuant to the Offer following satisfaction of the
Minimum Condition and until the earlier of (a) immediately
preceding the Effective Time (as defined in the M
