SCHEDULE 14A
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant / X /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ X / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Addition Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
AAON, Inc.
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(Name of Registrant as specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ X / No fee required.
/ / Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
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transaction computed pursuant to Exchange Act Rule
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<PAGE>
AAON, INC.
Notice of
Annual Meeting
May 29, 1997
and
Proxy Statement
<PAGE>
"Preliminary Copy"
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 29, 1997
Notice is hereby given that the Annual Meeting of
Stockholders of AAON, Inc. (the "Company"), will be held at 2425
South Yukon, Tulsa, Oklahoma, on Thursday, May 29, 1997, at 10:00
A.M. (Local Time), for the following purposes:
1. To elect seven directors, two for a term ending
in 1998, two for a term ending in 1999 and three
for a term ending in 2000;
2. To act upon a proposal to amend the Company's
Articles of Incorporation to add a new article
that requires the affirmative vote of the holders
of at least two-thirds of the voting power of the
outstanding shares to approve certain fundamental
changes such as mergers, sales of substantially
all of the assets and dissolution of the Company
and amendments or repeal of the new article, if a
majority of the Company's directors in office at
the time the proposed change was first presented
to the Board do not recommend that any such action
be approved by the stockholders;
3. To consider and act upon a proposal to amend the
Company's Stock Option Plan to increase the number
of shares covered by the Plan from 605,000 to
1,000,000; and
4. To transact such other business as may properly
come before the meeting or any adjournment
thereof.
We hope that you will be able to attend this meeting, but if
you do not plan to do so, please date, sign and return the
enclosed Proxy as promptly as possible.
By Order of the Board of Directors
/s/ John B. Johnson, Jr.
-----------------------------
John B. Johnson, Jr.
Secretary
April 16, 1997
<PAGE>
"Preliminary Copy"
AAON, INC.
2425 South Yukon
Tulsa, Oklahoma 74107
PROXY STATEMENT
This statement is furnished in connection with the
solicitation by the Board of Directors of AAON, Inc., for proxies
to be used at the Annual Meeting of Stockholders of the Company
to be held on May 29, 1997, at the time and place set forth in
the Notice of Annual Meeting accompanying this Proxy Statement.
Pursuant to provisions of the Bylaws of the Company and
action of its Board of Directors, the close of business on April
1, 1997, has been established as the time and record date for
determining the stockholders entitled to notice of and to vote at
this annual meeting. The stock transfer books will not be
closed.
A plurality of votes cast at the Annual Meeting is required
for the election of each director. The proposed amendment to the
Company's Articles of Incorporation requires the affirmative vote
of stockholders holding a majority of the shares of Common Stock
entitled to vote at the meeting. Approval of the proposed
amendments of the Company's Stock Option Plan requires the
affirmative vote of stockholders holding a majority of the shares
of Common Stock voted at the Annual Meeting.
Stockholders of record on the record date are entitled to
cast their votes in person or by properly executed proxy at the
Annual Meeting. The presence, in person or by properly executed
proxy, of thirty-three and one-third percent (33-1/3%) of the
Common Stock outstanding on the record date is necessary to
constitute a quorum at the Annual Meeting. If a quorum is not
present at the time the Annual Meeting is convened, the Company
may adjourn or postpone the Annual Meeting.
The enclosed Proxy may be revoked at any time prior to the
voting thereof, either by giving notice to the Secretary of the
Company or by personal attendance at the meeting. All Proxies
received in advance of the meeting may be revoked prior to
exercise.
This Proxy Statement, Notice of Annual Meeting and
accompanying Proxy, as well as the Company's 1996 Annual Report,
will be first mailed to stockholders approximately April 16,
1997.
<PAGE 2>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of April 1, 1997 (the record date), the Company had
issued a total of 6,128,574 shares of $.004 par value Common
Stock, its only class of stock outstanding. Each share is
entitled to one vote on all matters submitted to a vote by
stockholders.
The following table sets forth, as of April 1, 1997, the
aggregate number of shares of Common Stock of the Company owned
of record or beneficially by the only person who owned of record,
or is known by the Company to own beneficially, more than 5% of
the Company's Common Stock [who is also a director and Executive
Officer (as next defined)], each officer whose 1996 salary and
bonus exceeded $100,000 ("Executive Officers"), and the name and
shareholdings of each other director and such officers and all
directors as a group:
<TABLE>
Name and address of the 5% Percent
shareholder and each Executive Officer Number of shares of
and names of other directors owned (1) class
- ---------------------------------------- --------------------- ------------
<CAPTION>
<S> <C> <C>
Norman H. Asbjornson (2) 1,082,087 (4)(5) 17.6
2425 South Yukon
Tulsa, Oklahoma 74107
Robert G. Fergus (3) 109,257 (6) 1.8
2425 South Yukon
Tulsa, Oklahoma 74107
William A. Bowen 163,206 (4)(7) 2.7
John B. Johnson, Jr. 67,200 (4)(8) 1.1
Joseph M. Klein 5,500 (9) (14)
Richard E. Minshall 47,775 (4)(10) (14)
Anthony Pantaleoni 203,369 (4)(11) 3.3
Charles C. Stephenson, Jr. 211,888 (12) 3.4
Executive Officers and all directors
as a group (8 persons) 1,890,282 (6)(13) 30.7
</TABLE>
(1) All shares are held beneficially and of record and the owner
has sole voting and investment power with respect thereto,
except as otherwise noted.
(2) Mr. Asbjornson, the only owner of more than 5% of the
Company's Common Stock, is also a director and Executive
Officer.
(3) Mr. Fergus is an Executive Officer of the Company.
(4) Includes 27,500 shares held under presently exercisable
stock options.
(5) Includes 4,917 shares held by Mr. Asbjornson's IRA account
and 1,133 shares under the Company's 401(k) plan.
(6) Includes 22,000 shares held under a presently exercisable
stock option and 827 shares under the Company's 401(k) plan.
(7) Includes 8,525 shares held by Mr. Bowen's IRA account and
357 shares under the Company's 401(k) plan.
<PAGE 3>
(8) Includes 9,900 shares held for the account of Mr. Johnson
under a broker-administered retirement plan.
(9) These shares are held under a presently exercisable stock
option.
(10) Includes 20,275 shares held of record by Capital Advisors,
Inc., of which Mr. Minshall is the President and majority
shareholder.
(11) Includes a total of 40,136 shares held by two trusts for the
benefit of children of Mr. Pantaleoni, of which his wife is
the trustee.
(12) Includes 5,500 shares held under a presently exercisable
stock option.
(13) Includes 148,500 shares held under presently exercisable
stock options by all directors.
(14) Less than 1%.
PROPOSAL 1: ELECTION OF DIRECTORS
A Board of Directors of seven members is to be elected at
the Annual Meeting. The Board of Directors will be divided into
three classes, designated as Class I, Class II and Class III,
with terms expiring on the dates of the 1998, 1999 and 2000
Annual Meetings of Stockholders, respectively, and in each case
when their successors have been elected and qualified. The
nominees for election as Directors have been assigned to the
following classes: Class I, Joseph M. Klein and Richard E.
Minshall; Class II, William A. Bowen and Anthony Pantaleoni; and
Class III, Norman, H. Asbjornson, John B. Johnson, Jr., and
Charles C. Stephenson, Jr.
The nominees for election as directors at the Annual Meeting
set forth in the table below are all incumbent directors. Each
of the nominees has consented to serve as a director if elected.
Unless authority to vote for any of the directors is withheld in
a proxy, it is intended that each proxy will be voted FOR such
nominees. In the event that any of the nominees for director
should, before the Annual Meeting, become unable to serve if
elected, it is intended that shares represented by proxies which
are executed and returned will be voted for such substitute
nominees as may be recommended by the Company's existing Board of
Directors. The accompanying form of Proxy contains a
discretionary grant of authority with respect to this matter. To
the best of the Company's knowledge, all nominees will be
available to serve.
The following information is furnished with respect to each
of the eight nominees for election at the Annual Meeting.
<PAGE 4>
Term Positions
Expiration Director with the
Date Age Since Company
---------- --- ------ -------------
NOMINEES FOR ELECTION AS
CLASS I DIRECTORS
J. M. Klein 1998 65 1996 Director
Richard E. Minshall 1998 58 1989 Director
NOMINEES FOR ELECTION AS
CLASS II DIRECTORS
William A. Bowen 1999 67 1989 Vice
President-
Finance
and Director
Anthony Pantaleoni 1999 57 1989 Director
NOMINEES FOR ELECTION AS
CLASS III DIRECTORS
Norman H. Asbjornson 2000 61 1989 President,
Treasurer and
Director
John B. Johnson, Jr. 2000 63 1989 Secretary
and Director
Charles C. Stephenson, Jr. 2000 60 1996 Director
EXECUTIVE OFFICERS, DIRECTORS AND NOMINEES FOR DIRECTOR
The following additional information is provided with
respect to the executive officers, directors whose term of office
will continue after the Annual Meeting and nominees for directors
of the Company:
Norman H. Asbjornson has been the President and Treasurer
of: the Company since June 16, 1989; AAON-Oklahoma since
September 12, 1988; and CP/AAON since December 17, 1991.
William A. Bowen has been engaged in financial consulting,
in Tulsa, Oklahoma, for more than the past five years. He became
Vice President-Finance of the Company and AAON-Oklahoma on July
27, 1989, and of CP/AAON on December 17, 1991.
Robert G. Fergus, age 56, has been Vice President of: the
Company since June 16, 1989; AAON-Oklahoma since May 8, 1990; and
CP/AAON since December 17, 1991.
John B. Johnson, Jr., has been engaged in the private
practice of law in Tulsa, Oklahoma, since 1961, and is a member
of the firm of Johnson, Allen, Jones & Dornblaser, which serves
as General Counsel to the Company. Mr. Johnson has been the
Secretary of: the Company since June 16, 1989; AAON-Oklahoma
since September 12, 1988; and CP/AAON since December 17, 1991.
Richard E. Minshall has been the President (chief executive
officer) of Capital Advisors, Inc., of Tulsa, Oklahoma, since
1978. He is a director of Westwood Corporation and American
Gilsonite Company, which companies have securities registered
pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended.
Anthony Pantaleoni or his professional corporation has been
a partner of Fulbright & Jaworski L.L.P. or predecessor firm in
New York, New York, for more than the past five years. He is a
director of Universal Health Services, Inc., Faircom, Inc., and
Westwood Corporation, which companies have securities registered
pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended.
<PAGE 5>
J. M. Klein has been President of CCI Corporation in Tulsa,
Oklahoma, for more than the past five years.
Charles C. Stephenson, Jr., has been Chairman of the Board
of Directors of Vintage Petroleum, Inc., in Tulsa, Oklahoma, the
stock of which is traded on the New York Stock Exchange, since
1987.
The Board of Directors of the Company had four meetings
during 1996 and all directors attended each of those meetings
while they were in office (Messrs. Klein and Stephenson became
directors subsequent to the first Board meeting last year),
except for Mr. Klein, who was absent from one meeting.
The Company has an Audit Committee consisting of Messrs.
Minshall, Pantaleoni and Johnson. They had one meeting during
the past year at which the committee members posed questions to
representatives of Arthur Andersen LLP concerning the Company's
audited financial statements. The Company does not have a
nominating or compensation committee.
EXECUTIVE COMPENSATION
Report of Board of Directors
The entire Board of Directors sets the compensation of both
full-time (Norman H. Asbjornson and Robert G. Fergus) and the
only part-time (William A. Bowen) executive officer/employees of
the Company, except that Messrs. Asbjornson and Bowen abstain
from voting on their compensation. There have been no
"interlocks" or "insider participation" [as those terms are
defined in Item 402(j) of S.E.C. Regulation S-K] in compensation
decisions.
Effective October 1, 1992, Mr. Asbjornson's salary was set
(and remains) at an annual rate of $132,000 and the Board entered
into a $1,000,000 "reverse split dollar" life insurance
arrangement with him, pursuant to which the Company pays the
portion of the premium attributable to the term insurance cost
(determined by Internal Revenue Service "P.S. 58" rates), and is
the beneficiary of the full face amount of the policy, and Mr.
Asbjornson pays the amount of premium in excess of such insurance
cost and is the owner-beneficiary of the cash value thereof.
Performance factors considered in setting Mr. Asbjornson's
current base compensation include having responsibility for
establishing overall corporate philosophy and goals, organizing
and staffing Company personnel, overseeing implementation of
Board directives, financial budgets, marketing strategies,
engineering projects and manufacturing methods. His compensation
is measured both by progress toward long-term goals and current
financial results.
Mr. Fergus' annual rate of salary was increased from
$100,000 to $103,500 effective December 1, 1996. The salary
increase was predicated on Mr. Fergus' efforts in reducing direct
labor by implementation of improved manufacturing methods,
improvements in engineering and manufacturing management through
management training and his overall job performance.
Mr. Bowen's annual rate of salary was increased from $36,000
to $37,260 effective December 1, 1996.
Additionally, Messrs. Asbjornson, Fergus and Bowen
participate in the Company's "profit sharing" plan ($739 each in
1996, a per capita share, the same as all other eligible
employees, of 10% of the pre-tax profit of the Oklahoma
subsidiary). Messrs. Asbjornson and Bowen also received
directors' fees in 1996.
<PAGE 6>
Board of Directors: Norman H. Asbjornson, William A. Bowen,
John B. Johnson, Jr., J. M. Klein,
Richard E. Minshall, Anthony Pantaleoni and
Charles C. Stephenson, Jr.
The following table sets forth information as to the
compensation of the Executive Officers of the Company whose
annual salary and bonus has exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
Long Term Compensation
----------------------
AnnualCompensation Awards Payouts
------------------------ ---------------------- --------
Other Securities
Name and Annual Restricted Underlying All Other
principal Compen- Stock Options/ LTIP Compen-
position Year Salary Bonus sation Awards SARs Payouts sation
- --------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Norman H. 1996 $ 132,000 -0- $ 739(1) N/A N/A N/A $ 1,993(2)
Asbjornson
President
1995 $ 132,000 -0- $2,748(1) N/A N/A N/A $ 2,659(2)
1994 $ 132,000 -0- $3,896(1) N/A N/A N/A $ 2,640(2)
Robert G. 1996 $ 100,292 -0- $ 739(1) N/A N/A N/A $ 1,882(2)
Fergus
Vice
President
1995 $ 92,474 -0- $2,748(1) N/A N/A N/A $ 1,948(2)
1994 $ 89,945 $12,000 $3,896(1) N/A N/A N/A $ 1,779(2)
</TABLE>
(1) A per capita share, the same as all other eligible
employees, of 10% of the pre-tax profit of the Oklahoma
subsidiary of the Company. There are no perquisites or
other benefits provided, the value of which exceeded 10% of
the salary and bonus of either Mr. Asbjornson or Mr. Fergus.
(2) Contribution to the Company's 401(k) plan.
No stock options were granted to or exercised by any
Executive Officer and no stock option was exercised by any
director during 1996, nor were any options held by Executive
Officers or directors "repriced" during that year. In accordance
with the Company's 1992 Stock Option Plan, options for 27,500
shares of the Company's common stock were granted to each of
Messrs. Klein and Stephenson, upon their appointment as new
directors on February 12, 1996. These options become exercisable
at the rate of 20%, cumulative, per year after February 12, 1997
(and until February 12, 2006), at $5.875 per share.
The Company has no Long-Term Incentive Plan ("LTIP") or
"defined benefit" (pension) plan.
The Company has no employment contracts with any of its
officers, directors or employees, nor any compensatory plan or
arrangement concerning any person's termination of employment or
respecting any "change in control".
<PAGE 7>
Compensation of Directors
The Company pays directors' fees of $1,500 per director
(plus reimbursement of expenses) for attendance at each Board
meeting, scheduled to be held on a quarterly basis, but not
limited to four meetings per year.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG
AAON, INC., NASDAQ U.S., AND PEER GROUP*
(GRAPH APPEARS HERE)
- --------------------------------FISCAL YEAR ENDING --------------
DESCRIPTION 1991 1992 1993 1994 1995 1996
AAON, INC. $100 $175.00 $787.50 $1,287.50 $575.00 $487.50
PEER GROUP $100 $114.61 $124.68 $132.94 $155.51 $203.63
NASDAQ MARKET $100 $100.98 $121.13 $127.17 $164.96 $204.98
INDEX
* The peer group consists of American Standard Companies,
Fedders Corp., Inter-City Products Corporation, Mestek, Inc.,
Nortek, Inc., and York International Corp., all of which are in
the business of manufacturing air conditioning and heat exchange
equipment.
<PAGE 8>
ANTI-TAKEOVER PROVISIONS
There have been a number of cases in which public companies
have been subjected to hostile takeover attempts - offers not
determined to be in the best interests of a targeted company by
its Board of Directors - through purchases of control by means of
tender offers or other purchases of outstanding shares. Such
purchases which result in the acquisition of less than all of the
targeted company's outstanding shares often have been followed by
a non-negotiated merger or other form of complete unilateral
acquisition of the remaining shares by the company. In some
instances, a purchaser has used its controlling interest either
to effect other transactions having an adverse impact on the
company or to direct the company's business without purchasing
the remaining minority interest.
The Board believes that circumstances could exist where a
hostile takeover attempt would be detrimental to the Company's
stockholders and that, to fulfill its fiduciary duty, it needs
adequate time to evaluate the matter. The suddenness and short
time period inherent in hostile takeover attempts may not allow
the Board adequate time to: (i) consider fully the proposal;
(ii) identify other viable alternatives; (iii) compare the
proposal to the possible alternatives; and (iv) make a
determination recommending acceptance or rejection of the
proposal or expressing no opinion and remaining neutral. An
informed decision with respect to a hostile takeover attempt
requires careful assessment and consideration of often complex
issues regarding the proposal's "fairness and adequacy",
including but not limited to its tax implications for
stockholders, all in comparison with other alternatives which are
or may become available.
The Board also believes that holders of shares not purchased
pursuant to the initial takeover offer may be faced with
substantial inequities either because they did not tender their
shares in a timely manner or the offer did not allow all the
Company's shares to be tendered.
While the Board has no knowledge of any specific effort to
accumulate the Company's Common Stock or to obtain control of the
Company by other means, it believes that it is prudent to be
prepared in advance and, for that reason, it has carefully
considered what measures might be taken to protect against
takeover attempts which the Board is unable to recommend as being
in the best interests of the Company and its stockholders.
The principal purpose of Proposal 2, as well as the Bylaw
amendment approved by the Company's Board of Directors on March
6, 1997, to provide for a classified or staggered Board, is to
attempt to influence persons who might wish to make a bona fide
offer for the Company to negotiate in good faith with the Board
and to ensure that any offer is fair to the Company and its
stockholders, and to emphasize that the directors have a
significant degree of authority with respect to the protection of
the Company.
Proposal 2, which requires the affirmative vote of two-
thirds of the outstanding shares entitled to vote to approve
certain transactions if not recommended by a majority of the
Company's directors in office at the time the proposed
transaction was first presented to the Board, is designed to make
it more difficult for a person making a hostile takeover attempt
to obtain shareholder approval of the transactions.
The overall effect of the adoption of Proposal 2 and the new
provision for a classified Board could be, under certain
circumstances, to deter or discourage hostile takeover attempts
by making it more difficult for a person who has gained a
substantial equity interest in the Company to effectively
exercise control. If Proposal 2 is approved, the opportunity for
stockholders to dispose of their shares at the higher prices
generally available in takeover attempts may be limited. In
addition, these provisions may result in the then incumbent
directors of the Company retaining their positions even though a
person holding a majority of shares might desire a change and
also may make the accomplishment of certain corporate
transactions more difficult even if they are desired by a person
holding a majority of the shares.
<PAGE 9>
The Board has concluded unanimously that the potential
benefits of these provisions outweigh the possible disadvantages.
PROPOSAL 2: AMENDMENT TO ARTICLES OF INCORPORATION TO REQUIRE A
TWO-THIRDS VOTE TO APPROVE CERTAIN TRANSACTIONS
The Company's Board of Directors has unanimously approved an
amendment to the Company's Articles of Incorporation (the
"Articles Amendment") and has voted to recommend that the
stockholders approve the Articles Amendment. The proposed
Articles Amendment would require the affirmative vote of holders
of at least two-thirds of the outstanding shares of the Company
entitled to vote for the approval of certain Fundamental Changes
(defined below) in the Company if not recommended by a majority
of the Company's directors in office at the time the proposed
change was first presented to the Board.
Adoption of the Articles Amendment may have significant
effects on the ability of stockholders of the Company to benefit
from certain transactions. Accordingly, stockholders are urged
to read carefully the following sections of this Proxy Statement,
which describe the Articles Amendment and its purpose and
effects, and Exhibit A hereto which sets forth the full text of
the proposed Articles Amendment, before voting on the proposed
Articles Amendment to provide for a super-majority voting
requirement for certain Fundamental Changes.
PURPOSE AND EFFECTS OF THE PROPOSED ARTICLES AMENDMENT
The Board of Directors of the Company is asking stockholders
to consider and adopt the proposed Articles Amendment in order to
discourage certain types of transactions described below, which
involve an actual or threatened change of control of the Company.
The proposed Articles Amendment is designed to make it more
difficult for a person who acquires a substantial portion of the
Company's outstanding shares to effect a merger, sale of assets
or similar transaction with the Company on terms not recommended
by a majority of the Company's directors in office at the time
the proposed transaction was first presented to the Board.
As is the case with the recent Bylaw amendment to provide
for a classified Board of Directors, the proposed Articles
Amendment is intended to encourage persons seeking to acquire
control of the Company to initiate such an acquisition through
arms'-length negotiations with the Company's management and Board
of Directors. The Articles Amendment, if it is adopted, could
also have the effect of discouraging a third party from making a
tender offer or otherwise attempting to obtain control of the
Company, even though such an attempt might be beneficial to the
Company and its stockholders. In addition, since the Articles
Amendment is designed to discourage accumulations of large blocks
of the Company's stock by purchasers whose objective is to have
such stock repurchased by the Company at a premium, adoption of
the Articles Amendment could tend to reduce the temporary
fluctuations in the market price of the Company's stock which are
caused by such accumulations. Accordingly, stockholders could be
deprived of certain opportunities to sell their stock at a
temporarily higher market price.
The proposed Articles Amendment is permitted under Nevada
law and is consistent with the rules of the National Association
of Securities Dealers, Inc. As is the case with the recent Bylaw
amendment, the Articles Amendment is not the result of any
specific efforts, of which the Company is aware, to accumulate
the Company's securities or obtain control of the Company.
<PAGE 10>
DESCRIPTION OF THE PROPOSED ARTICLES AMENDMENT
The full text of the proposed Articles Amendment is
contained in Exhibit A attached to this Proxy Statement. The
following description of the Articles Amendment is qualified in
its entirety by reference to Exhibit A.
Nevada law currently requires the affirmative vote of a
majority of the shares of the Company entitled to vote to approve
certain transactions involving fundamental changes of the
Company, including mergers, consolidations, sale by the Company
of all or substantially all of its assets or dissolution of the
Company (each, a "Fundamental Change"). The proposed Articles
Amendment provides that such transactions must be approved by the
holders of at least two-thirds of the shares of the Company
entitled to vote, if the transaction was not recommended by a
majority of the Company's directors in office at the time the
proposed transaction was first presented to the Board. The super-
majority vote requirement will have the effect of making it more
difficult for the Company to engage in a Fundamental Change.
The proposed Articles Amendment also provides that amendment
or repeal of the requirement for two-thirds affirmative vote may
only be amended or repealed by the affirmative vote of holders of
two-thirds of the Company's outstanding shares entitled to vote,
unless similarly recommended by the Board of Directors. Without
this provision, such an amendment or repeal would require the
affirmative vote of holders of only a majority of the shares of
the Company entitled to vote.
PROPOSAL 3: AMENDMENTS OF THE COMPANY'S 1992 STOCK OPTION PLAN
TO INCREASE THE NUMBER OF SHARES COVERED BY THE PLAN FROM 605,000
TO 1,000,0000
In 1992, the Company adopted a Stock Option Plan (the
"Plan") for certain of its directors, officers and employees.
The purpose of the Plan is to enable the Company and its
stockholders to secure the benefits of common stock ownership, or
increased ownership, by key personnel of the Company and its
subsidiaries. The Board believes that the granting of options
under the Plan will foster the Company's ability to attract,
retain and motivate those individuals who will be largely
responsible for the continued profitability and long-term future
growth of the Company.
As originally adopted, the Plan allowed the Company to
issue and sell a total of 1,100,000 shares of its $.001 par value
common stock. In September, 1993, the Company declared a 1-for-4
reverse stock split, thereby resulting in 275,000 shares of the
Company's $.004 par value common stock (the "Common Stock") being
covered by the Plan. In May, 1994, the Plan was amended to
increase to 550,000 the number of shares authorized under the
Plan. In March, 1995, the Company declared a 10% stock dividend,
thereby resulting in the current 605,000 shares of Common Stock
being subject to the Plan. As of March 5, 1997, options had been
granted to 29 persons, eight of whom are directors and/or
officers and 21 of whom are employees only, for a total of
472,875 total shares, leaving 132,125 shares for options to be
granted in the future.
On March 6, 1997, the Company's Board of Directors approved
further amendments to the Plan, which amendments (i) increase the
number of shares of Common Stock subject to the Plan from 605,000
to 1,000,000; and (ii) make the Plan consistent with recently
adopted amendments to Rule 16b-3 issued by the Securities and
Exchange Commission under the Securities Exchange Act of 1934,
resulting in the deletion of any references in the Plan to
distinctions between options previously granted exclusively to
directors (the so-called "Plan A Options") and all other options
(the so-called "Plan B Options"), and granted additional options
effective March 11, 1997 (subject to approval of the Plan
amendments), for 27,500 shares each to Messrs. Asbjornson, Bowen,
Johnson, Minshall and Pantaleoni, whose previously granted
options for a like number of shares became fully vested on that
date.
<PAGE 11>
A summary of the provisions of the Plan is set forth below.
The affirmative vote of the holders of a majority of the shares
of Common Stock entitled to vote on the matter and represented in
person or by proxy at the annual meeting is required for approval
of the proposed amendment of the Plan. The Board of Directors
recommends that stockholders vote FOR approval of the proposed
Plan amendment.
1. Shares Subject to the Plan.
If the proposed amendment is approved by the stockholders,
the Company may issue and sell a total of 1,000,000 shares of its
Common Stock (including the 610,375 shares covered by outstanding
options) pursuant to the Plan. Such shares may be either
authorized and unissued or held by the Company in its treasury.
New options may be granted under the Plan with respect to shares
of Common Stock which are covered by the unexercised portion of
an option which has terminated or expired.
2. Grant of Options.
Options may be granted under the Plan to present or future
key employees of the Company or a subsidiary of the Company (a
"Subsidiary") within the meaning of Section 425(f) of the
Internal Revenue Code of 1986, as amended (the "Code"), and to
directors, including non-employee directors of the Company.
Subject to the provisions of the Plan, the Committee (defined
below) shall from time to time select the key personnel of the
Company and its Subsidiaries to whom options under the Plan will
be granted, and shall fix the number of shares covered by each
such option and establish the terms and conditions thereof
(including, without limitation, exercise price and restrictions
on exercisability of the option or on the shares of Common Stock
issued upon exercise thereof and whether or not the option is to
be treated as an incentive stock option within the meaning of
Section 422 of the Code (an "Incentive Stock Option").
3. Administration.
The Plan will be administered by a committee (the
"Committee") consisting of at least two directors appointed by
and serving at the pleasure of the Board. The Committee members
appointed effective March 6, 1997, are Richard E. Minshall,
Anthony Pantaleoni and John B. Johnson, Jr., none of whom is an
employee of the Company.
Subject to the provisions of the Plan, the Committee, acting
in its sole and absolute discretion, shall have full power and
authority to grant options under the Plan, to interpret the
provisions of the Plan and option agreements made under the Plan,
to supervise the administration of the Plan, and to take such
other action as may be necessary or desirable in order to carry
out the provisions of the Plan. A majority of the members of the
Committee shall constitute a quorum. The Committee may act by
the vote of a majority of its members present at a meeting at
which there is a quorum or by unanimous written consent. The
decision of the Committee as to any disputed question, including
questions of construction, interpretation and administration,
shall be final and conclusive on all persons. The Committee
shall keep a record of its proceedings and acts and shall keep or
cause to be kept such books and records as may be necessary in
connection with the proper administration of the Plan.
<PAGE 12>
No member of the Committee shall be personally liable by
reason of any contract or other instrument executed by him or on
his behalf in his capacity as a member of the Committee or for
any mistake of judgment made in good faith, and the Company shall
indemnify and hold harmless each member of the Committee and each
other officer, employee or director of the Company to whom any
duty or power relating to the administration or interpretation of
the Plan has been delegated, against any cost or expense
(including reasonable counsel fees) or liability (including any
sum paid in settlement of a claim with the approval of the
Committee) arising out of any act or failure to act in connection
with the Plan, unless arising out of such person's own fraud or
bad faith.
The Committee may seek and rely on the advice of
accountants, legal counsel and other professionals as it deems
necessary or advisable for the operation and administration of
the Plan. The fees of any such professionals shall be borne by
the Company.
Notwithstanding the authority delegated above to the
Committee, any action which may be taken by the Committee with
respect to the administration of the Plan, including the granting
of any option thereunder, may also be taken by the Board of
Directors, and each reference to actions taken or authority
exercised by the Committee hereunder shall be deemed to include
actions which may be taken or authority which may be exercised by
the Board.
4. Terms and Conditions of Options.
Each option granted under the Plan shall be evidenced by a
written agreement in a form approved by the Committee. Each such
option shall be subject to the terms and conditions set forth in
this paragraph and such additional terms and conditions not
inconsistent with the Plan (and, in the case of an Incentive
Stock Option, not inconsistent with the provisions of the Code
applicable thereto) as the Committee deems appropriate.
a. Option Price. In the case of an option which is not
treated as an Incentive Stock Option, the purchase
price per share shall not be less than 85% of the fair
market value of a share of Common Stock on the date the
option is granted; and, in the case of an Incentive
Stock Option, the purchase price per share shall not be
less than 100% of the fair market value of a share of
Common Stock on the date the option is granted [110% in
the case of an optionee who, at the time the option is
granted, owns stock possessing more than 10% of the
total combined voting power of all classes of stock of
the Company or a Subsidiary (a "ten percent
shareholder")]. For purposes hereof, the fair market
value of a share of Common Stock on any date shall be
equal to the closing sale price per share as published
by a national securities exchange on which shares of
the Common Stock are traded on such date or, if there
is no sale of Common Stock on such date, the average of
the bid and asked prices on such exchange at the
closing of trading on such date or, if shares of the
Common Stock are not listed on a national securities
exchange on such date, the average of the bid and asked
prices in the over the counter market at the close of
trading on such date, or, if the Common Stock is not
traded on a national securities exchange or the over
the counter market, the fair market value of a share of
the Common Stock on such date as determined in good
faith by the Committee.
b. Option Period. The period during which an option may
be exercised shall be fixed by the Committee and shall
not exceed ten years from the date the option is
granted (five years in the case of an Incentive Stock
Option granted to a "ten percent shareholder").
<PAGE 13>
c. Exercise of Options. No option shall be exercisable
unless the person to whom the option was granted
remains in the continuous employ or service of the
Company or a Subsidiary for at least one year from the
date the option is granted. Subject to earlier
termination of the option as provided herein, unless
the Committee determines otherwise, the option will
become exercisable in accordance with the following
schedule based upon the number of full years of the
optionee's continuous employment or service with the
Company or a Subsidiary following the date of grant:
Full Incremental Cumulative
Years of Continuous Percentage of Percentage of
Employment Option Option
Service Exercisable Exercisable
---------------------- -------------- ---------------
Less than 1 0% 0%
1 20% 20%
2 20% 40%
3 20% 60%
4 20% 80%
5 or more 20% 100%
All or part of the exercisable portion of an option may
be exercised at any time during the option period,
except that, without the consent of the Committee, no
partial exercise of an option shall be for less than
100 shares. An option may be exercised by transmitting
to the Company: (1) a written notice specifying the
number of shares to be purchased; and (2) payment in
full of the purchase price (or, if applicable, delivery
of a secured obligation therefor), together with the
amount, if any, deemed necessary by the Committee to
enable the Company to satisfy its income tax
withholding obligations with respect to such exercise
(unless other arrangements acceptable to the Committee
are made with respect to the satisfaction of such
withholding obligations).
d. Payment of Option Price. The purchase price of
shares of Common Stock acquired pursuant to the
exercise of an option granted under the Plan shall be
payable in cash and/or such other form of payment as
may be permitted under the option agreement, including,
without limitation, previously-owned shares of Common
Stock. The Committee may permit the payment of all or
a portion of the purchase price in installments
(together with interest) over a period of not more than
five years.
e. Rights as a Stockholder. No shares of Common Stock
shall be issued in respect of the exercise of an option
granted under the Plan until full payment therefor has
been made (and/or provided for where all or a portion
of the purchase price is being paid in installments).
Upon receipt of full payment, the Company shall notify
its Transfer Agent and the Transfer Agent shall, on
behalf of the Company, prepare a certificate or
certificates representing such shares acquired pursuant
to exercise of the option, shall register the holder of
the option as the owner of such shares on the books of
the Company and shall cause the fully executed
certificate(s) representing such shares to be delivered
to the holder as soon as practicable after payment of
the option price in full. The holder of an option
shall have no rights as a stockholder with respect to
any shares covered by an option until the date a stock
certificate for such shares is issued to him or her.
Except as otherwise provided herein, no adjustments
shall be made for dividends or distributions of other
rights for which the record date is prior to the date
such stock certificate is issued.
<PAGE 14>
f. Transferability of Options. No option granted under
the Plan shall be assignable or transferable except by
will and/or by the laws of descent and distribution;
and each such option shall be exercisable during the
optionee's lifetime only by him or her.
g. Termination of Employment or Other Service. If an
optionee ceases to be employed by or to perform
services for the Company or any Subsidiary for any
reason other than death or disability (defined below),
then each outstanding option granted to him or her
under the Plan shall terminate on the date three months
after the date of such termination of service (or, if
earlier, the date specified in the option agreement).
If an optionee's employment or service is terminated by
reason of the optionee's death or disability (or if the
optionee's employment or service is terminated by
reason of his or her disability and the optionee dies
within one year after such termination of employment or
service), then each outstanding option granted to the
optionee under the Plan shall terminate on the date one
year after the date of such termination of employment
or service (or one year after the later death of a
disabled optionee) or, if earlier, the date specified
in the option agreement. For purposes hereof, the term
"disability" shall mean the inability of an optionee to
perform the customary duties of his or her employment
or other service for the Company or a Subsidiary by
reason of a physical or mental incapacity which is
expected to result in death or be of indefinite
duration.
h. Incentive Stock Options. In the case of an Incentive
Stock Option granted under the Plan, at the time the
option is granted, the aggregate fair market value
(determined at the time of grant) of the shares of
Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by the
optionee during any calendar year shall not exceed
$100,000.
i. Changes in Capital Stock. In the event of a stock
dividend or in the event that the outstanding shares of
the Common Stock shall be changed into or exchanged for
a different number or kind of shares of stock or other
securities of the Company or of another corporation,
whether through reorganization, recapitalization, stock
split-up, combination of shares, sale of assets, merger
or consolidation in which the Company is the surviving
corporation, then appropriate adjustments will be made
to the number, nature and/or purchase price of the
shares which may be issued under the Plan or purchased
under an outstanding option. Upon the dissolution or
liquidation of the Company, or upon a reorganization,
merger or consolidation of the Company as a result of
which the outstanding securities of the class then
subject to options hereunder are changed into or
exchanged for cash or property or securities not of the
Company's issue, the Plan shall terminate and all
options theretofore granted hereunder shall terminate,
unless provision is made for the assumption of such
options or the substitution for such options with
options covering the stock of a successor employer
corporation, or a parent or a subsidiary thereof, with
appropriate adjustments as to the number and kind of
shares and prices. If the unexercised options shall
terminate pursuant to the foregoing sentence, all
persons entitled to exercise any unexercised portions
of options then outstanding shall have the right,
within a reasonable period of time prior to the
consummation of the transaction causing such
termination, to exercise (or, in the sole discretion of
the Board, to receive other consideration for) the
unexercised portions of their options, including, if
the Board so determines, the portions thereof which
would, but for this paragraph, not yet be exercisable.
<PAGE 15>
j. Other Provisions. The Board may impose such other
conditions with respect to the exercise of options,
including, without limitation, any condition relating
to the application of federal or state securities laws,
as it may deem necessary or advisable.
k. Legend on Certificates. The certificates
representing shares acquired upon exercise of options
shall carry such appropriate legend, and such written
instructions shall be given to the Company's Transfer
Agent, as may be deemed necessary or advisable by
counsel to the Company in order to comply with the
federal or any state securities laws.
5. Amendment and Termination of the Plan.
The Board may amend or terminate the Plan. Except as
otherwise provided in the Plan with respect to equity changes,
any amendment which would increase the aggregate number of shares
of Common Stock as to which options may be granted under the
Plan, materially increase the benefits under the Plan, or modify
the class of persons eligible to receive options under the Plan
shall be subject to the approval of the holders of a majority of
the Common Stock issued and outstanding. No amendment or
termination may adversely affect any outstanding option without
the written consent of the optionee.
6. No Rights Conferred.
Nothing contained herein will be deemed to give any
individual any right to receive an option under the Plan or to be
retained in the employ or service of the Company or any
Subsidiary.
7. Governing Law.
The Plan and each option agreement shall be governed by the
laws of the State of Nevada.
8. Term of the Plan.
The Plan shall be effective as of March 11, 1992, the date
on which it was originally adopted by the Board. The Plan will
terminate on March 11, 2002, unless sooner terminated by the
Board. The rights of optionees under the options outstanding at
the time of the termination of the Plan shall not be affected
solely by reason of the termination and shall continue in
accordance with the terms of the option as then in effect or
thereafter amended.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of Forms 4 furnished to the
Company during its most recent fiscal year, the Company knows of
no director, officer or beneficial owner of more than ten percent
of the Company's Common Stock who has failed to file on a timely
basis reports of beneficial ownership of the Company's Common
Stock as required by Section 16(a) of the Securities Exchange Act
of 1934, as amended, except for a 2,000 share sale by Richard E.
Minshall in June, 1996, which was reported on a Form 4 mailed for
filing on August 8, 1996.
<PAGE 16>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANT
Arthur Andersen LLP has been selected as the principal
accountant of the Company for the current year. Representatives
of Arthur Andersen LLP are expected to be present at the 1997
Annual Meeting of Stockholders with the opportunity to make a
statement if they desire to do so and to respond to appropriate
questions.
DATE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1998
Annual Meeting must be received at the Company's executive
offices, 2425 South Yukon, Tulsa, Oklahoma 74107, no later than
December 19, 1997, for inclusion in the Company's Proxy Statement
and form of Proxy relating to that meeting.
OTHER MATTERS
Management knows of no business which will be presented at
the 1997 Annual Meeting other than to elect directors for the
ensuing year and to vote on the proposed amendment of the
Company's Articles of Incorporation and amendments of the Stock
Option Plan.
The cost of preparing, assembling and mailing all proxy
solicitation materials will be paid by the Company. It is
contemplated that the solicitation will be conducted only by use
of the mails. The Company will, upon request, reimburse brokers
for the costs incurred by them in forwarding solicitation
materials to such of their customers as are the beneficial
holders of Common Stock of the Company registered in the names of
such brokers.
By Order of the Board of Directors
/s/ Norman H. Asbjornson
---------------------------
Norman H. Asbjornson
President
April 16, 1997
<PAGE 17>
EXHIBIT A
PROPOSAL 2 - Proposed addition of a new Article XIII to
the Company's Articles of Incorporation to require the
affirmative vote of not less than two-thirds of the
shares entitled to vote to approve certain fundamental
changes of the Company, to read as follows:
ARTICLE XIII
SUPER MAJORITY STOCKHOLDERS' VOTE REQUIREMENT
The affirmative vote of not less than
two-thirds (2/3's) of the shares entitled to
vote shall be required to approve any
proposal: (a) to merge or consolidate the
Corporation with or into any other
corporation, partnership or entity; (b) to
sell, exchange, transfer or otherwise dispose
of all or substantially all of the
Corporation's property and assets; (c) to
dissolve or liquidate the Corporation; or (d)
to amend, alter or delete from the Articles
of Incorporation this Article XIII, unless:
(1) the proposal for an action specified in
(a) - (d) above was recommended by a majority
vote of the directors of the Corporation in
office at the time the proposal was first
presented to the Board; or (2) the business
combination specified in (a) or (b) above is
solely between the Corporation and another
corporation, partnership or entity, a
majority of the voting stock or other equity
interests of which is owned by the
Corporation; provided that each stockholder
of the Corporation receives the same type of
consideration in such transaction in
proportion to such stockholder's ownership.
<PAGE 18>
<TABLE>
AAON, Inc.
2425 South Yukon Ave.
Tulsa, Oklahoma 74107
"Preliminary Copy"
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned stockholder of AAON, Inc., a Nevada
corporation, hereby constitutes and appoints William A.
Bowen and John B. Johnson, Jr., and each of them, with full
power of substitution, as attorneys and proxies to appear
and vote all shares of stock of the Company standing in the
name of the undersigned, at the Annual Meeting of
Stockholders of the Company to be held at 2425 South Yukon
Avenue., Tulsa, Oklahoma, on Thursday, May 29, 1997, at
10:00 a.m. (Local Time), and at any adjournment thereof,
with all powers that the undersigned would possess if
personally present, hereby revoking all previous proxies.
<CAPTION>
<S> <C> <C>
1. ELECTION OF
DIRECTORS: FOR all nominees listed below WITHHOLD AUTHORITY
(except as shown to the to vote for all nominees
contrary below) ________ listed below _______
Norman H. Asbjornson, William A. Bowen, John B. Johnson,
Jr., Joseph M. Klein, Richard E. Minshall, Anthony
Pantaleoni, Charles C. Stephenson, Jr.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
<S> <C> <C> <C>
2. PROPOSAL TO AMEND ARTICLES OF
INCORPORATION TO REQUIRE A _____FOR _____AGAINST _____ABSTAIN
TWO-THIRDS STOCKHOLDER VOTE
TO APPROVE CERTAIN TRANSACTIONS:
3. PROPOSAL TO AMEND THE COMPANY'S
1992 STOCK OPTION PLAN TO INCREASE _____FOR _____AGAINST _____ABSTAIN
THE NUMBER OF SHARES COVERED BY
THE PLAN FROM 605,000 TO 1,000,000:
4. In their discretion, upon any other matters as may properly come before the meeting.
(over)
This proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. If no direction is made, this proxy will be voted
FOR all nominees for director, FOR approval of the amendment of the Company's
Articles of Incorporation and FOR approval of the amendments of the Company's
Stock Option Plan.
The undersigned hereby acknowledge(s) receipt of the Notice of the
aforesaid Annual Meeting and the Proxy Statement accompanying the same, both
dated April 16th, 1997.
Dated: _____________________________, 1997 _______________________________________
_______________________________________
(Please sign exactly as your name
appears at left. When shares are
held in the names of two or more
persons, all should sign
individually. Executors,
administrators, trustees, etc.,
should so indicate when signing.
When shares are held in the name of
a corporation, the name of the
corporation should be written first
and then an authorized officer
should sign on behalf of the
corporation, showing the office
held.)
PLEASE COMPLETE, SIGN, DATE AND
RETURN THIS PROXY CARD PROMPTLY,
USING THE ENCLOSED ENVELOPE.
(over)
</TABLE>
