EXHIBIT 4.1


 


AMENDMENT TO
RIGHTS AGREEMENT


 


This
AMENDMENT (this “Amendment”) is being entered into as of December 16, 2005
between Ault Incorporated, a Minnesota corporation (the “Company”), and Wells
Fargo Bank, N.A. a National Association (formerly Norwest Bank Minnesota, N.A.,
a National Association) as rights agent (the “Rights Agent”).


 


The
Company and Rights Agent are parties to a Rights Agreement dated as of February
13, 1996 (the “Rights Agreement”). 
Pursuant to Section 27 of the Rights Agreement, the Company and the
Rights Agent may, prior to the Distribution Date, amend any provision of the
Rights Agreement, which the Board of Directors deems desirable, without the
approval of any holders of Rights Certificates. 
The Board of Directors of the Company has determined that it is
desirable to amend the Rights Agreement as set forth in this Amendment.  Unless otherwise defined herein, capitalized
terms shall have the meanings set forth in the Rights Agreement.


 


NOW
THEREFORE, in consideration of the premises and the mutual agreement herein set
forth, the parties hereby agree as follows:


 


1.            AMENDMENT OF SECTION 1(a).  Section 1(a) of the Rights Agreement is
hereby amended to add the following sentence at the end thereof:


 


“Notwithstanding
anything in this Rights Agreement to the contrary, neither Purchaser nor any of
its existing or future Affiliates or Associates, including, but not limited to
Merger Sub, shall be deemed to be an Acquiring Person by virtue of (i) the
approval, execution or delivery of the Merger Agreement, (ii) the announcement,
commencement or acceptance and payment for shares in the Tender Offer, (iii)
the approval, execution or delivery of the Shareholders Agreement or the Option
Agreement, (iv) the resignation of certain Company directors if requested by
Merger Sub pursuant to the Merger Agreement, (v) the consummation of the
Merger, or (vi) the consummation of the other transactions contemplated by the
Merger Agreement, the Shareholders Agreement or the Option Agreement.”


 


2.             AMENDMENT OF SECTION 1(b).  Section 1(b) of the Rights Agreement is
hereby amended to add the following proviso at the end thereof:


 


“;
provided, however, that no Acquisition Event shall result by virtue of (i) the
approval, execution or delivery of the Merger Agreement, (ii) the announcement,
commencement or acceptance and payment for shares in the Tender Offer, (iii)
the approval, execution or delivery of the Shareholders Agreement or the Option
Agreement, (iv) the resignation of certain Company directors if requested by
Merger Sub pursuant to the Merger Agreement, (v) the consummation of the Merger
or (vi) the consummation of the other transactions contemplated by the Merger
Agreement, the Shareholders Agreement or the Option Agreement.”


 


3.             AMENDMENT OF SECTION 1. 
Section 1 of the Rights Agreement is hereby further amended to add the
following subparagraphs at the end thereof:


 





















 


(q)          “Effective Time of the Merger” shall have the meaning set forth in the
Merger Agreement.


 


(r)    “Merger” shall have the meaning set forth in
the Merger Agreement.


 


(s)    “Merger Agreement” shall have the meaning
set forth in Section 35 hereof.


 


(t)    “Merger Sub” shall have the meaning set
forth in Section 35 hereof.


 


(u)   “Option Agreement” shall have the meaning set
forth in Section 35 hereof.


 


(v)         “Shareholders
Agreement” shall have the meaning set forth in Section 35 hereof.


 


(w)        “Option
Agreement” shall have the meaning set forth in Section 35 hereof.


 


(x)           “Tender Offer” shall have the meaning set forth in Section 35 hereof.


 


4.             AMENDMENT OF SECTION
3(a).  Section 3(a) of the Rights
Agreement is hereby amended to add the following sentence at the end thereof:


 


“Notwithstanding
anything in this Rights Agreement to the contrary, a Distribution Date shall
not be deemed to have occurred by virtue of (i) the approval, execution or
delivery of the Merger Agreement, (ii) the announcement, commencement or
acceptance and payment for shares in the Tender Offer, (iii) the resignation of
certain directors if requested by Merger Sub pursuant to the Merger Agreement,
(iv) the approval, execution or delivery of the Shareholders Agreement or the
Option Agreement, (v) the consummation of the Merger or (vi) the consummation
of the other transactions contemplated by the Merger Agreement, the Shareholders
Agreement or the Option Agreement.”


 


5.             AMENDMENT OF SECTION
7(a).  Section 7(a) of the Rights
Agreement is hereby amended and restated to read in its entirety as follows:


 


“(a)  The registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23(a)
hereof) in whole or in part at any time after the Distribution Date upon surrender
of the Rights Certificate, with the form of election to exercise on the reverse
side thereof duly executed, to the Rights Agent at the office or offices of the
Rights Agent designated for such purpose, together with payment of the Purchase
Price for each one one-hundredth of a share of Preferred Stock (or, if
applicable, such other number of shares or other securities) as to which the
Rights are exercised, at or prior to the earliest of (i) the close of business
on February 14, 2006 (the “Final Expiration Date”), or (ii) the time at which
the Rights are redeemed as provided in Section 23 hereof, or (iii) the
Effective Time of the Merger (such earliest time being herein referred to as
the “Expiration Date”). Any Person who prior to the Distribution Date becomes a
record holder of shares of Common Stock may exercise all of the rights of a
registered holder of a Rights Certificate with respect to the Rights associated
with such shares of Common Stock in accordance with and subject to the
provisions of this Agreement, including the provisions of Section 7(e) hereof,
as of the date such


 


2





















 


Person
becomes a record holder of shares of Common Stock.  Notwithstanding anything in this Rights
Agreement to the contrary, none of (i) the approval, execution or delivery of
the Merger Agreement, (ii) the announcement, commencement or acceptance and
payment for shares in the Tender Offer, (iii) the resignation of certain
directors if requested by Merger Sub pursuant to the Merger Agreement, (iv) the
approval, execution or delivery of the Shareholders Agreement or the Option
Agreement, (v) the consummation of the Merger or (vi) the consummation of the
other transactions contemplated by the Merger Agreement, the Shareholders
Agreement or the Option Agreement shall be deemed to be events that cause the
Rights to become exercisable pursuant to the provisions of this Section 7 or
otherwise.”


 


6.             AMENDMENT OF SECTION
11.  Section 11 of the Rights Agreement
is amended to add the following sentence after the first sentence of said
Section:


 


“Notwithstanding
anything in this Rights Agreement to the contrary, none of (i) the approval,
execution or delivery of the Merger Agreement, (ii) the announcement,
commencement or acceptance and payment for shares in the Tender Offer, (iii)
the resignation of certain directors if requested by Merger Sub pursuant to the
Merger Agreement, (iv) the approval, execution or delivery of the Shareholders
Agreement or the Option Agreement, (v) the consummation of the Merger or (vi)
the consummation of the other transactions contemplated by the Merger
Agreement, the Shareholders Agreement or the Option Agreement shall be deemed
to be events of the type described in this Section 11 or to cause the Rights to
be adjusted or to become exercisable in accordance with this Section 11.”


 


7.             AMENDMENT OF SECTION
13.  Section 13 of the Rights Agreement
is amended to add the following sentence as the first sentence of said Section:


 


“Notwithstanding
anything in this Rights Agreement to the contrary, none of (i) the approval,
execution or delivery of the Merger Agreement, (ii) the announcement,
commencement or acceptance and payment for shares in the Tender Offer, (iii)
the resignation of certain directors if requested by Merger Sub pursuant to the
Merger Agreement, (iv) the approval, execution or delivery of the Shareholders
Agreement or the Option Agreement, (v) the consummation of the Merger or (vi)
the consummation of the other transactions contemplated by the Merger
Agreement, the Shareholders Agreement or the Option Agreement shall be deemed
to be events of the type described in this Section 13 or to cause the Rights to
be adjusted or to become exercisable in accordance with this Section 13.”


 


8.             ADDITION OF SECTION
35.  The Rights Agreement is hereby
modified, supplemented and amended to add the following new Section 35:


 


“Section
35.  Merger With SL Industries, Inc.  The Company, SL Industries, Inc. (“Purchaser”)
and Lakers Acquisition Corp., a Minnesota corporation and a wholly owned
subsidiary of Purchaser (“Merger Sub”), have entered into an Agreement and Plan
of Merger, dated as of December 16,
2005 (such agreement, as it may be amended from time to time, the “Merger
Agreement”), pursuant to which Merger Sub shall merge with and into the
Company.  Pursuant to the Merger
Agreement, within five business days of December
16, 2005, Merger Sub shall commence a tender offer to the Company’s
shareholders to purchase Common Stock and Rights (the “Tender Offer”).  In connection with the Merger Agreement, the
Company’s officers and


 


3





















 


directors
have entered into a Shareholders Agreement dated December 16, 2005 (“the Shareholders Agreement”) requiring the
officers and directors to tender their shares in the Tender Offer.  The Company has also granted Merger Sub an
option to purchase shares of Company common stock, permitting Purchaser to
acquire up to 90% of the Company’s issued and outstanding shares of common
stock pursuant to the terms of a Stock Option Agreement dated as of December 16, 2005 (the “Option Agreement”).  The Merger Agreement also requires certain of
the Company’s directors to resign if requested by Merger Sub in certain
circumstances.  Notwithstanding anything in
this Rights Agreement to the contrary, if the Merger Agreement shall be
terminated for any reason, then (a) the last sentence of Section 1(a) hereof
shall be deemed repealed and deleted without any further action on the part of
the Company or the Rights Agent and (b) the proviso at the end of Section 1(b)
hereof shall be deemed repealed and deleted without any further action on the
part of the Company or the Rights Agent.”


 


9.             EFFECTIVENESS.  This Amendment shall be deemed effective as
of the date first written above, as if executed on such date.  Except as amended hereby, the Rights
Agreement shall remain in full force and effect and shall be otherwise
unaffected hereby.


 


10.           MISCELLANEOUS.  This Amendment shall be deemed to be a
contract made under the laws of the State of Minnesota and for all purposes
shall be governed by and construed in accordance with the laws of the State of
Minnesota applicable to contracts to be made and performed entirely within the
State of Minnesota without giving effect to the principles of conflict of laws
thereof.  This Amendment may be executed
in any number of counterparts, each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument. 
If any provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or other authority to be invalid, illegal or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Amendment shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.


 


EXECUTED
under seal as of the date first set forth above.


 


	
  Attest:

  	
   

  	
  AULT INCORPORATED 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  /s/ Frederick M. Green 

  	
   

  
	
   

  	
   

  	
  By: 

  	
  Frederick M. Green

  	
   

  
	
   

  	
   

  	
   

  	
  Executive Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
  RIGHTS AGENT:

  	
   

  
	
   

  	
   

  	
  WELLS FARGO BANK, N.A.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  /s/ Jennifer L. Leno 

  	
   

  	
   

  	
  /s/ Peggy Sime 

  	
   

  
	
  By: 

  	
  Jennifer L. Leno

  	
   

  	
  By: 

  	
  Peggy Sime

  	
   

  
	
   

  	
  Its:Assistant Secretary

  	
   

  	
   

  	
  Its:Officer

  	
   

  



 


4