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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.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing party:
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4) Date Filed:
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AAON, INC.
2425 South Yukon
Tulsa, Oklahoma 74107
Telephone: (918) 583-2266
Telecopier: (918) 583-6094
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
AAON, Inc. on Tuesday, May 25, 1999, at 10:00 A.M. (Local Time). The meeting
will be held at the Company's offices, 2425 South Yukon, Tulsa, Oklahoma
74107. Your Board of Directors and management look forward to greeting those
stockholders able to attend in person.
At the meeting, you will be asked to consider and elect two Class II
Directors to serve until the Annual Meeting of Stockholders in 2002. Your Board
of Directors has unanimously nominated two incumbents for re-election as
Directors. You are also being asked to consider and approve or ratify (i)
certain amendments to the Company's Stock Option Plan and (ii) a proposed
amendment to the Company's Articles of Incorporation to limit the personal
liability of the Company's directors to the Company and its stockholders in
accordance with Nevada General Corporation Law. The Board of Directors has
unanimously approved each of the proposals set forth above and urges you to vote
in favor of each of the proposals. Information about the business to be
conducted at the meeting is set forth in the accompanying proxy statement, which
you are urged to read carefully. During the meeting, I will review the affairs
and progress of the Company during the fiscal year ended December 31, 1998.
Officers of the Company will be present to respond to questions from
stockholders.
The vote of every stockholder is important. Whether or not you plan to attend
the meeting, please sign, date and return the enclosed white proxy card promptly
in the envelope provided. Your shares will then be presented at the meeting, and
the Company will be able to avoid the expense of further solicitation. If you
attend the meeting, you may, at your discretion, withdraw the proxy and vote in
person.
On behalf of the Board of Directors, thank you for your cooperation and
continued support.
Sincerely,
Norman H. Asbjornson
President
April 14, 1999
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AAON, INC.
2425 South Yukon
Tulsa, Oklahoma 74107
Telephone: (918) 583-2266
Telecopier: (918) 583-6094
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 25, 1999
Notice is hereby given that the Annual Meeting of Stockholders of AAON,
Inc. (the "Company"), will be held at the Company's offices, 2425 South Yukon,
Tulsa, Oklahoma 74107, on Tuesday, May 25, 1999, at 10:00 A.M. (Local Time), for
the following purposes:
1. To elect two Class II Directors for terms ending in 2002;
2. To act upon a proposal to amend the Company's Stock Option
Plan (a) to increase the number of shares covered by the Plan
from 1,000,000 to 1,300,000, (b) to authorize consultants, as
well as employees and directors, to receive options under the
Plan and (c) to extend the term of the Plan with regard to
non-qualified options granted thereunder to March 11, 2012;
3. To act upon a proposal to amend the Company's Articles of
Incorporation to limit the personal liability of directors to
the Company and its stockholders in accordance with the Nevada
General Corporation Law; and
4. To transact such other business as may properly come before
the meeting or any adjournment or postponement thereof.
Only holders of the Company's common stock, par value $.004 per share
(the "Common Stock"), of record on March 29, 1999 are entitled to notice of, and
to vote at, the meeting or any adjournment(s) or postponement(s) thereof. At the
record date for determination of stockholders entitled to vote at the meeting or
any adjournment(s) or postponement(s) thereof, 6,225,449 shares of Common Stock
were issued and outstanding.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED
TO FILL OUT, SIGN AND MAIL PROMPTLY THE ENCLOSED WHITE PROXY CARD IN THE
ACCOMPANYING ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
PROXIES FORWARDED BY OR FOR BROKERS OR FIDUCIARIES SHOULD BE RETURNED AS
REQUESTED BY THEM. THE PROMPT RETURN OF PROXIES WILL SAVE THE EXPENSE INVOLVED
IN FURTHER COMMUNICATION.
By Order of the Board of Directors
John B. Johnson, Jr.
April 14, 1999 Secretary
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AAON, INC.
2425 South Yukon
Tulsa, Oklahoma 74107
Telephone: (918) 583-2266
Telecopier: (918) 583-6094
PROXY STATEMENT
This Proxy Statement is furnished to holders of common stock, par value
$.004 per share (the "Common Stock"), of AAON, Inc., a Nevada corporation (the
"Company"), in connection with the solicitation by the Board of Directors of the
Company of proxies to be used at the Annual Meeting of Stockholders of the
Company to be held on May 25, 1999 (the "Annual Meeting"), at the time and place
set forth in the Notice of Annual Meeting accompanying this Proxy Statement.
This Proxy Statement, Notice of Annual Meeting and accompanying white
proxy card, as well as the Company's 1998 Annual Report (which includes the
Company's Annual Report on Form 10-K for the year ended December 31, 1998), are
first being mailed to stockholders approximately April 16, 1999.
THE BOARD URGES YOU TO COMPLETE, SIGN, DATE AND RETURN THE WHITE PROXY
CARD ENCLOSED IN THE ACCOMPANYING ENVELOPE, WHICH IS POSTAGE-PAID IF MAILED IN
THE UNITED STATES TO 2425 SOUTH YUKON, TULSA, OKLAHOMA 74107, ATTENTION:
CORPORATE SECRETARY.
IF YOUR SHARES ARE HELD IN THE NAME OF A BANK, BROKER OR OTHER NOMINEE,
ONLY YOUR BANK OR BROKER CAN VOTE YOUR SHARES AND ONLY UPON YOUR SPECIFIC
INSTRUCTIONS. PLEASE CONTACT THE PERSON RESPONSIBLE FOR YOUR ACCOUNT AND
INSTRUCT HIM OR HER TO VOTE THE WHITE PROXY CARD AS SOON AS POSSIBLE.
VOTING MATTERS
Only holders of record of Common Stock (the "Stockholders") at the
close of business on March 29, 1999 (the "Record Date") will be entitled to
notice of, and to vote at, the Annual Meeting. On the Record Date, there were
outstanding 6,225,449 shares of Common Stock. Each share of Common Stock is
entitled to one vote for each director to be elected and upon all other matters
to be brought to a vote by the Stockholders at the Annual Meeting.
Shares of Common Stock represented by each proxy, if properly executed
and returned to the Company prior to the Annual Meeting, will be voted as
directed, but if not otherwise specified, will be voted for the election of the
two nominees for Director, for the approval of the amendments to the Stock
Option Plan and for the amendment of the Company's Articles of Incorporation,
all as recommended by the Board of Directors.
On March 12, 1999, the Company received written notice that Bay Harbour
Management, L.C. ("Bay Harbour") intends to nominate two persons for election to
the Company's Board of Directors and to propose certain amendments to the Bylaws
of the Company. See "Stockholder Notice of Intent to Present Proposals" below.
The persons named in the enclosed white proxy will use their discretionary
authority to vote against any proposals properly brought by Bay Harbour or its
affiliates or associates before the Annual Meeting. The Board of Directors knows
of no other business to be presented at the Annual Meeting other
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than as described herein. If any other business is properly presented, the
persons named in the enclosed white proxy have authority to vote on such matters
in accordance with such persons' discretion.
A proxy given pursuant to this solicitation may be revoked at any time
before it is voted. Proxies may be revoked (i) by filing with the Company (at
the address indicated above) at or before the Annual Meeting a written notice of
revocation bearing a later date than the proxy, (ii) by duly executing a
subsequent proxy bearing a later date than the proxy relating to the same shares
of Common Stock or (iii) by attending the Annual Meeting and voting in person
(although attendance at the meeting will not in itself constitute such
revocation).
If the Annual Meeting is postponed or adjourned for any reason, at any
subsequent reconvening of the Annual Meeting all proxies will be voted in the
same manner as such proxies would have been voted at the original convening of
the Annual Meeting (except for proxies which have theretofore effectively been
revoked or withdrawn.
Brokers holding shares of record for customers generally are not
entitled to vote on certain matters unless they receive voting instructions from
their customers. As used herein, "broker non-votes" means the votes that could
have been cast on the matter in question by brokers with respect to uninstructed
shares if the brokers had received their customers' instructions. As used
herein, "uninstructed shares" means shares held by a broker who has not received
instructions from its customers on such matters and the broker has so notified
the Company on a proxy form in accordance with industry practice or has
otherwise advised the Company that it lacks voting authority.
The presence at the Annual Meeting, whether in person or by proxy, of
the holders of at least thirty three and one-third percent (33 1/3%) of the
outstanding shares of Common Stock entitled to vote thereat constitutes a quorum
for the transaction of business. For purposes of the quorum, Stockholders of
record who are present at the meeting in person or by proxy and who abstain,
including broker non- votes, are considered Stockholders who are present and
entitled to vote and they count toward the quorum. Directors are elected by a
plurality vote and the two nominees who receive the most votes will be elected.
Therefore, in the election of Directors, abstentions and broker non-votes will
not affect the outcome of the election. Approval of the amendments to the Stock
Option Plan and approval of the amendment to the Articles of Incorporation must
receive the affirmative vote of the majority of the shares entitled to vote.
Uninstructed shares are not entitled to vote on these matters, and therefore
abstentions and broker non- votes have the effect of a negative vote.
The solicitation of proxies in the enclosed form is made on behalf of
the Company's Board of Directors. The Company will bear all costs of this proxy
solicitation. While no precise estimate of the cost can be made at the present
time, the Company currently estimates that it will spend approximately
$________, of which $________ has been incurred to date, for its solicitation of
proxies. In addition to soliciting proxies by mail, directors, executive
officers and employees of the Company, without receiving additional
compensation, may solicit proxies by telephone, by other available media or in
person. Arrangements will also be made with brokerage firms and other
custodians, nominees and fiduciaries to forward solicitation materials to the
beneficial owners of shares of the Common Stock, and the Company will reimburse
such brokerage firms and other custodians, nominees and fiduciaries for
reasonable out-of-pocket expenses incurred by them in connection with forwarding
such materials. The Company has retained the services of Beacon Hill Partners,
Inc., a proxy solicitation firm, for assistance in connection with the Annual
Meeting and other advisory services at a cost of approximately $15,000 plus
reimbursement of reasonable out-of-pocket expenses if no stockholder of the
Company solicits proxies for the Annual Meeting. If a stockholder solicits
proxies for the Annual Meeting, the Company estimates that the assistance of
Beacon Hill Partners, Inc. would cost an additional $17,500 plus reimbursement
of
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reasonable out-of-pocket expenses. The Company also has agreed to indemnify
Beacon Hill Partners, Inc. against certain liabilities and expenses. The Company
estimates that approximately 20 employees of Beacon Hill Partners, Inc. will be
involved in the solicitation of proxies on behalf of the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth as of March 29, 1999, the aggregate
number of shares of Common Stock of the Company owned by each person or group
known by the Company to be the beneficial owner of more than 5% of the Company's
Common Stock:
<TABLE>
<CAPTION>
Percent
Name and Address Number of Shares of
of Beneficial Owner Owned Class
---------------------------------- ---------------------- -----------
<S> <C> <C>
Norman H. Asbjornson 1,125,226 (1) 17.9
2425 South Yukon
Tulsa, Oklahoma 74107
Bay Harbour Management, L.C. 907,390 (2) 14.6
Tower Investment Group, Inc.
Steven A. Van Dyke
777 South Harbour Island Blvd.
Suite 270
Tampa, Florida 33602
and
Douglas P. Teitelbaum
885 Third Avenue
34th Floor
New York, New York 10022
</TABLE>
- ------------
(1) Includes 71,000 shares issuable upon the exercise of stock options that
are exercisable within 60 days. Mr. Asbjornson has sole voting and
investment powers with respect to all shares beneficially owned by him,
except for 4,917 shares held by his IRA account and 1,772 shares under
the Company's 401(k) plan.
(2) Based on the Schedule 13D, as amended, Forms 4 filed with the
Securities and Exchange Commission on March 10, 1999 by these parties
and information obtained from the parties' legal counsel, the four
members of this "group" (as that term is used in Section 13(d)(3) of
the Exchange Act of 1934, as amended) have shared voting and
dispositive powers with respect to all shares beneficially owned by
them.
The following table sets forth as of March 29, 1999, the aggregate
number of shares of Common Stock of the Company owned of record or beneficially
by each director and nominee for director and each officer whose 1998 salary and
bonus exceeded $100,000 ("Executive Officers"), and for all such officers and
directors as a group:
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<TABLE>
<CAPTION>
Percent
Name and Address Number of Shares of
of Beneficial Owner Owned Class
---------------------------------------- ---------------------- -----------
<S> <C> <C>
Norman H. Asbjornson (2) 1,125,226 (4) 17.9
2425 South Yukon
Tulsa, Oklahoma 74107
Robert G. Fergus (3) 108,333 (5) 1.7
2425 South Yukon
Tulsa, Oklahoma 74107
William A. Bowen 186,910 (6)(7) 3.0
John B. Johnson, Jr. 95,000 (6)(8) 1.5
Joseph M. Klein 27,500 (9) (13)
Thomas E. Naugle 47,690 (13)
Anthony Pantaleoni 230,869 (6)(10) 3.7
Charles C. Stephenson, Jr. 233,888 (11) 3.7
Executive Officers and all directors
as a group (8 persons) 2,055,416 (12) 31.4
</TABLE>
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(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 is a director and Executive Officer.
(3) Mr. Fergus is an Executive Officer of the Company.
(4) Includes 71,000 shares issuable upon the exercise of stock options that
are exercisable within 60 days, 4,917 shares held by Mr. Asbjornson's
IRA account and 1,772 shares under the Company's 401(k) plan.
(5) Includes 27,500 shares issuable upon the exercise of stock options that
are exercisable within 60 days and 1,403 shares under the Company's
401(k) plan.
(6) Includes 55,000 shares issuable upon the exercise of stock options that
are exercisable within 60 days.
(7) Includes 10,525 shares held by Mr. Bowen's IRA account and 761 shares
under the Company's 401(k) plan.
(8) Includes 40,000 shares held for the account of Mr. Johnson under a
broker-administered retirement plan.
(9) These shares are issuable upon the exercise of stock options that are
exercisable within 60 days
(10) 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.
(11) Includes 27,500 shares issuable upon the exercise of stock options that
are exercisable within 60 days.
(12) Includes 318,500 shares issuable upon the exercise of stock options
that are exercisable within 60 days by all Executive Officers and
directors.
(13) Less than 1%.
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PROPOSAL ONE - ELECTION OF DIRECTORS
GENERAL
The Board of Directors of the Company currently has seven members. The
Company's Bylaws, as amended, divide the Board of Directors into three classes
having staggered terms of three years each, with Classes II, III and I having
terms expiring at the Annual Meeting of Stockholders in 1999, 2000 and 2001,
respectively.
It is intended that the names of the nominees listed below will be
placed in nomination and that the persons named in the proxy will vote for their
election. Each nominee has consented to being named in this Proxy Statement and
to serve if elected. If any nominee becomes unavailable for any reason, the
shares represented by the proxies will be voted for such person, if any, as may
be designated by the Board of Directors. However, management has no reason to
believe that any nominee will be unavailable.
NOMINEES
CLASS II - TERM TO EXPIRE IN 2002
<TABLE>
<CAPTION>
NAME AGE CURRENT POSITION
- ---- --- ----------------
<S> <C> <C>
William A. Bowen................... 69 Vice President-Finance and Director
Anthony Pantaleoni................. 59 Director
</TABLE>
DIRECTORS CONTINUING IN OFFICE
CLASS III -- TERM TO EXPIRE IN 2000
<TABLE>
<CAPTION>
NAME AGE CURRENT POSITION
- ---- --- ----------------
<S> <C> <C>
Norman H. Asbjornson............... 63 President, Treasurer and Director
John B. Johnson, Jr................ 65 Secretary and Director
Charles C. Stephenson, Jr.......... 62 Director
</TABLE>
CLASS I -- TERM TO EXPIRE IN 2001
<TABLE>
<CAPTION>
NAME AGE CURRENT POSITION
- ---- --- ----------------
<S> <C> <C>
Joseph M. Klein.................... 67 Director
Thomas E. Naugle................... 60 Director
</TABLE>
BIOGRAPHICAL INFORMATION
Set forth below is a description of the background of each of the
executive officers and directors and nominees for directors of the Company.
Norman H. Asbjornson has served as President and Treasurer of the
Company since June 16, 1989. He has served as a director of the Company since
1989 and currently serves in the class of directors
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whose terms expire at the 2000 annual meeting of stockholders. Mr. Asbjornson
also serves as the President and Treasurer of AAON, Inc., an Oklahoma
corporation and a wholly-owned subsidiary of the Company ("AAON-Oklahoma") and
AAON-Coil Products, Inc., a wholly-owned subsidiary of the Company ("ACP").
William A. Bowen has served as Vice President-Finance of the Company
since July 27, 1989. He has served as a director of the Company since 1989 and
currently serves in the class of directors whose terms expire at the 1999 annual
meeting of stockholders. Mr. Bowen also serves as the Vice President- Finance of
AAON-Oklahoma. From 1987 to 1998, Mr. Bowen also was engaged in financial
consulting in Tulsa, Oklahoma.
Robert G. Fergus has served as Vice President of the Company since June
16, 1989. Mr. Fergus also serves as Vice President of AAON-Oklahoma.
John B. Johnson, Jr. has served as Secretary of the Company since June
16, 1989. He has served as a director of the Company since 1989 and currently
serves in the class of directors whose terms expire at the 2000 annual meeting
of stockholders. Mr. Johnson also serves as the Secretary of AAON-Oklahoma and
ACP. Mr. Johnson 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.
Joseph M. Klein has served as a director of the Company since 1996 and
currently serves in the class of directors whose terms expire at the 2001 annual
meeting of stockholders. Since 1974, Mr. Klein has served as President of CCI
Corporation, the business of which is truck parts and service and OEM heavy duty
trucks.
Thomas E. Naugle has served as a director of the Company since 1998 and
currently serves in the class of directors whose terms expire at the 2001 annual
meeting of stockholders. Since 1984, Mr. Naugle has served as Chairman of the
Board of Directors of Barrett Trailers, Inc., a manufacturer of trailers. From
1985 to present, he has served as Chairman of the Board of Directors and/or
President of Naugle & Co., a company engaged in the business of investments.
From 1986 to 1996, Mr. Naugle was Chairman of the Board of Directors of Tulsa
Winch, Inc., a manufacturer of winches. From 1992 to 1996, he served as
President of Hanner, Inc., an equipment leasing company.
Anthony Pantaleoni has served as a director of the Company since 1989
and currently serves in the class of directors whose terms expire at the 1999
annual meeting of stockholders. Since 1970 Mr. Pantaleoni has been a partner of
Fulbright & Jaworski L.L.P. or a predecessor firm in New York, New York. He also
serves as a member of the Board of Directors of Universal Health Services, Inc.,
a publicly held hospital chain, and Westwood Corporation, a publicly held
defense contractor.
Charles C. Stephenson, Jr. has served as a director of the Company
since 1996 and currently serves in the class of directors whose terms expire at
the 2000 annual meeting of stockholders. Since 1987, Mr. Stephenson has served
as Chairman of the Board of Directors of Vintage Petroleum, Inc., a publicly
held company engaged in oil and gas production and exploration.
The affirmative vote of a plurality of the shares of Common Stock
present in person or represented by proxy at the Annual Meeting is required to
elect the nominees for director named above.
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The Board of Directors recommends that Stockholders vote FOR each of
the Company's nominees for Directors.
PROPOSAL NUMBER TWO - TO APPROVE AMENDMENTS
OF THE COMPANY'S STOCK OPTION PLAN
In 1992, the Company adopted a Stock Option Plan (the "Plan") for
certain of its directors, officers and employees, and the Plan has since been
amended several times. On February 18, 1999, the Company's Board of Directors of
Directors approved, subject to approval by the Stockholders, further amendments
to the Plan, which amendments would, if adopted, (i) increase the number of
shares of Common Stock subject to the Plan from 1,000,000 to 1,300,000; (ii)
authorize consultants, as well as employees and directors, to receive options
under the Plan; and (iii) extend the term of the Plan with regard to
non-qualified options granted thereunder to March 11, 2012.
As of March 29, 1999, outstanding options under the Plan were held by
75 persons, eight of whom are directors and/or officers, 67 of whom are
employees only and one of whom is a non-employee consultant (granted on January
11, 1999, for 20,000 shares at $9.875 per share, subject to Stockholder approval
of the Plan amendment authorizing grants to consultants), for a total of 735,875
total shares, leaving 110,250 shares (410,250 shares if the 300,000 increase is
approved) for options to be granted in the future (153,875 shares having been
issued upon exercise of options).
The affirmative vote of the holders of a majority of the shares of
Common Stock entitled to vote on the matter is required for approval of the
proposed amendments of the Plan.
The Board of Directors recommends that Stockholders vote FOR approval of the
proposed Plan amendments.
A summary of the provisions of the Plan, as amended, is set forth
below. The statements herein concerning the terms and provisions of the proposed
amendments are summaries only and are qualified in their entirety by reference
to the full text of the amendments, a copy of which is attached hereto as
Appendix A.
Purpose and Eligibility. The purpose of the Plan is to enable the
Company and the 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 has fostered and
will continue to enhance the Company's ability to attract, retain and motivate
those individuals who will be largely responsible for the ongoing profitability
and long-term future growth of the Company.
Key employees of the Company or its subsidiary corporations (including
officers or directors who are employees), directors (including non-employee
directors) and consultants are eligible to receive grants under the Plan at the
discretion of the Committee (defined below).
Term of the Plan. The Plan became 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, with regard to any Incentive Stock Options (defined below)
granted thereunder, and on March 11, 2012 with regard to non-qualified options
granted thereunder; unless sooner terminated by the Board. The rights of
optionees under the options outstanding at the time of the termination of the
Plan will not be affected solely by reason of the termination and will continue
in accordance with the terms of the option as then in effect or thereafter
amended.
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Grants of Options. Subject to the provisions of the Plan, the Committee
may grant options under the Plan and determine 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 (an "Incentive
Stock Option") within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
Administration. The Plan is administered by a committee of at least two
members of the Board appointed by the Board (the "Committee"). The current
Committee members are John B. Johnson, Jr., Joseph M. Klein and Anthony
Pantaleoni, none of whom is an employee of the Company.
Option Agreements. Each option granted under the Plan is required to be
evidenced by a written agreement in a form approved by the Committee. Each such
option is subject to the terms and conditions set forth in the option agreement
and the Plan.
Option Price. In the case of an option that is not an Incentive Stock
Option, the exercise price must be not less than 85% of the fair market value
(determined under the Plan) of a share of Common Stock on the date of grant. In
the case of an Incentive Stock Option, the exercise price must be not less than
100% (110% for a "ten percent shareholder") of the fair market value of a share
of Common Stock on the date of grant.
Exercises of Options. The period during which an option may be
exercised is fixed by the Committee and may not exceed 10 years from the date of
grant (5 years in the case of an Incentive Stock Option granted to a "ten
percent shareholder"). No option is 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 becomes 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:
<TABLE>
<CAPTION>
Full Incremental Cumulative
Years of Continuous Percentage of Percentage of
Employment Option Option
Service Exercisable Exercisable
------------------- ------------- -------------
<S> <C> <C> <C>
Less than 1 0% 0%
1 20% 20%
2 20% 40%
3 20% 60%
4 20% 80%
5 or more 20% 100%
</TABLE>
All options granted to directors and the option granted to a consultant
on January 11, 1999, become fully exercisable after a one-year waiting period.
An option may be exercised by transmitting to the Company: (i) a
written notice specifying the number of shares to be purchased; and (ii) payment
in full of the purchase price, 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. The purchase price of
shares of Common Stock acquired pursuant to the exercise of an option granted
under the Plan is payable in cash and/or such other form of
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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.
Transferability of Options. No option granted under the Plan is
assignable or transferable except by will and/or by the laws of descent and
distribution; and each such option is exercisable during the optionee's lifetime
only by him or her.
Termination of Employment or Other Service. If an employee ceases to be
employed by the Company for any reason other than death or disability (as
defined in the Plan), then each outstanding option granted to him or her under
the Plan will terminate no later than the date that is three months after the
date of termination of employment. Options granted to directors or consultants
will terminate on the first anniversary of the date on which the director or
consultant, as the case may be, ceases to perform services for the Company. 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 will terminate no later than the date that is one
year after the death of the disabled optionee.
Adjustments. The Plan provides that the maximum number of shares
issuable under the Plan as a whole and to each participant individually, the
number of shares issuable upon exercise of outstanding stock options, and the
exercise prices of such awards are subject to such adjustments as are
appropriate to reflect any stock dividend, stock split, share combination, sale
of assets, merger, consolidation, reorganization or recapitalization. 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 thereunder are changed into or exchanged for
cash or property or securities not of the Company's issue, the Plan will
terminate and all options theretofore granted thereunder will 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, with appropriate adjustments as to the number and kind of shares
and prices. If the unexercised options will terminate pursuant to the foregoing
sentence, all persons entitled to exercise any unexercised portions of options
then outstanding will 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.
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 is 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 with the written consent of the
optionee.
Certain Federal Tax Consequences.
Withholding. Withholding of federal taxes at applicable rates
will be required in connection with any ordinary income realized by optionees by
reason of the exercise of options granted pursuant to the Plan. Optionees must
pay such taxes to the Company in cash or Common Stock prior to the receipt of
any Common Stock certificate.
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Nonqualified Stock Options. The granting of a non-qualified
stock option will not result in federal income tax consequences to either the
Company or the optionee. Upon exercise of a non-qualified stock option, the
optionee will recognize ordinary income in an amount equal to the difference
between the fair market value of the shares on the date of exercise and the
exercise price, and the Company will be entitled to a corresponding deduction.
Any appreciation (or depreciation) after the date of exercise will be treated as
either short-term or long-term capital gain or loss, depending upon the length
of time that the optionee has held the shares.
Incentive Stock Options. In general, no income will be
recognized by an optionee and no deduction will be allowed to the Company at the
time of the grant or exercise of an incentive stock option granted under the
Plan. When the stock received on exercise of the option is sold, provided that
the stock is held for more than two years from the date of grant of the option
and more than one year from the date of exercise, the optionee will recognize
long-term capital gain or loss equal to the difference between the amount
realized and the exercise price of the option related to such stock. If these
holding period requirements under the Code are not satisfied, the sale of stock
received upon exercise of an incentive stock option is treated as a
"disqualifying disposition", and the optionee must notify the Company in writing
of the date and terms of the disqualifying disposition.
In general, the optionee will recognize at the time of a disqualifying
disposition ordinary income in an amount equal to the amount by which the lesser
of (i) the fair market value of the Common Stock on the date the incentive stock
option is exercised or (ii) the amount realized on such disqualifying
disposition, exceeds the exercise price. The optionee will also recognize
capital gain to the extent of any excess of the amount realized on such
disqualifying disposition over the fair market value of the Common Stock on the
date the incentive stock option is exercised (or capital loss to the extent of
any excess of the exercise price over the amount realized on disposition). Any
capital gain or loss recognized by the optionee will be long-term or short-term
depending upon the holding period for the stock sold. The Company may claim a
deduction at the time of the disqualifying disposition equal to the amount of
the ordinary income recognized by the optionee.
Although an optionee will not realize ordinary income upon the exercise
of an incentive stock option, the excess of the fair market value of the shares
acquired at the time of exercise over the option price is included in
"alternative minimum taxable income" for purposes of calculating the optionee's
alternative minimum tax, if any, pursuant to Section 55 of the Code.
Other Tax Matters. If unmatured installments of options are
accelerated as a result of a change of control (see "Adjustments" above), any
amounts received from the exercise of a stock option may be included in
determining whether or not an optionee has received an "excess parachute payment
under Section 280G of the Code, which could result in (i) the imposition of a
20% Federal excise tax (in addition to Federal income tax) payable by the
optionee on the cash resulting from such exercise and (ii) the loss by the
Company of a compensation deduction.
PROPOSAL NUMBER THREE - AMENDMENT TO
THE ARTICLES OF INCORPORATION
On February 18, 1999, the Board of Directors unanimously approved,
subject to the approval of the Stockholders, a proposed amendment to the
Company's Articles of Incorporation (the "Proposed Amendment"), and recommended
that the Proposed Amendment be submitted to the Stockholders for their approval
at the Annual Meeting. The Proposed Amendment would limit the personal liability
of the
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Company's directors to the fullest extent permitted by the Nevada General
Corporation Law (the "NGCL").
The Proposed Amendment is consistent with the NGCL which is designed,
among other things, to encourage qualified individuals to serve as directors of
Nevada corporations by permitting such corporations to include in their articles
of incorporation a provision limiting or eliminating directors' personal
liability for damages for breach of certain duties as a director or an officer.
An amendment to the articles of incorporation approved by stockholders is
required in order for a corporation to effectuate this limitation of liability.
The affirmative vote of a majority of the Company's outstanding shares entitled
to vote will be required for adoption of the Proposed Amendment. The text of the
Proposed Amendment is attached hereto as Appendix B. If approved by the
Stockholders, the Amendment will be filed with the Secretary of State of the
State of Nevada.
In performing their duties, directors of a Nevada corporation are
obligated to exercise their business judgment and to act in good faith and with
the degree of care which an ordinarily prudent person in a like position would
apply under similar circumstances. Decisions by directors made on an informed
basis, in good faith and in the belief that the action taken is in the best
interest of the corporation and its stockholders are generally protected by the
so-called "business judgment rule," which is to the effect that courts should
not question the propriety of such decisions. However, because of the expense of
defending lawsuits, the frequency with which unwarranted litigation is brought
against directors and officers and the inevitable uncertainties as to the
application of the business judgment rule to particular facts and circumstances,
directors and officers of a corporation, as a practical matter, rely on
indemnity from, and insurance procured by, the corporation they serve for the
payment of any such expenses or unforeseen liability. Moreover, it is common
practice for corporations to include the limitation of director liability in
their articles of incorporation in accordance with the NGCL.
The NGCL permits Nevada corporations, with stockholder approval, to
amend their articles of incorporation in order to eliminate or limit the
personal liability of directors to a corporation and stockholders for damages
arising for breaches of the director's duty as a director or an officer.
However, the NGCL does not permit elimination or limitation of the liability of
any director for (i) acts or omissions which involve intentional misconduct,
fraud or a knowing violation of law or (ii) the payment of distributions in
violation of the NGCL.
The Proposed Amendment to the Company's Articles of Incorporation does
not reduce the fiduciary duty of a director; it eliminates monetary damage
awards to the Company and the Stockholders arising from certain breaches of that
duty. It does not affect the availability of equitable remedies, such as the
right to enjoin or rescind a transaction based upon a director's breach of
fiduciary duty. Adoption of the amendment would not affect a director's
liabilities for acts or failures to act prior to the time when the Proposed
Amendment becomes effective. The liability protection afforded by the Proposed
Amendment would affect only actions brought by the Company or the Stockholders
and would not preclude or limit recovery of damages by third parties.
The Company's present directors are personally interested in, and will
personally benefit from, adoption of the Proposed Amendment, and such interest
may conflict with the interest of Stockholders. However, the Company's Board of
Directors believes that, by reducing the potential risks of personal liability
to directors, the Proposed Amendment will enhance the Company's ability to
continue to attract and retain highly qualified directors. The Board of
Directors believes that the diligence and care exercised by directors stems
primarily from their desire to act in the best interest of the Company and not
from a
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fear of damage awards. Therefore, the Board of Directors believes that the level
of care and diligence exercised by the directors will not be lessened by
adoption of the Proposed Amendment.
If, after approval by the Stockholders of the Proposed Amendment, the
NGCL is amended to authorize corporate action further limiting the personal
liability of directors, then the liability of a director of the Company would be
eliminated or limited to the fullest extent permitted by the NGCL, as so
amended, without further amendment of the Proposed Amendment.
The Board of Directors recommends that Stockholders vote FOR approval
of the Proposed Amendment.
MEETINGS OF DIRECTORS AND AUDIT COMMITTEE
The business of the Company is managed under the direction of the Board
of Directors. The Board meets to review significant developments affecting the
Company and to act on matters requiring Board approval. It also holds special
meetings when an important matter requires Board action between scheduled
meetings. The Board of Directors met four times during 1998 and each Director
participated in at least 75% of all Board and applicable committee meetings held
during the period, except for Mr. Stephenson.
The Board of Directors has established an audit committee to devote
attention to specific subjects and to assist it in the discharge of its
responsibilities. The functions of the audit committee, its current members and
the number of meetings held during 1998 are described below. The Board of
Directors does not have a standing nominating or compensation committee.
The Audit Committee provides the opportunity for direct communications
between the independent public accountants and the Board of Directors. The Audit
Committee meets with the certified public accountants to review their
effectiveness during the annual audit program and to discuss the Company's
internal control policies and procedures. The members of the Audit Committee are
currently Messrs. Johnson, Klein and Pantaleoni. The Audit Committee met once
during fiscal year 1998.
EXECUTIVE COMPENSATION
Compensation. 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>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------------------------------ ------------
Other Securities
Name and Annual Underlying All Other
Principal Position Year Salary Bonus Compensation Options/SARs Compensation
- ------------------------ -------- -------- ----- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Norman H. Asbjornson 1998 $132,000 $ 100 $ 1,729 (1) 70,000 (2) $ 5,067 (3)
President
1997 $132,000 -0- $ 1,413 (1) -0- $ 4,002 (3)
1996 $132,000 -0- $ 739 (1) -0- $ 1,993 (3)
Robert G. Fergus 1998 $104,898 $ 100 $ 1,729 (1) -0- $ 4,254 (3)
Vice President
1997 $103,500 -0- $ 1,413 (1) -0- $ 3,182 (3)
1996 $100,292 -0- $ 739 (1) -0- $ 1,882 (3)
</TABLE>
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- ------------
(1) A per capita share, the same as all other eligible employees, of 10% of
the pre-tax profit of AAON-Oklahoma.
(2) Granted under the Company's Stock Option Plan.
(3) Contribution to the Company's 401(k) plan by the Company.
Stock Options. The following table sets forth information concerning
stock options granted during 1998 by the Company to the Executive Officers. No
stock options were exercised by any Executive Officer, nor were any options held
by Executive Officers or directors "repriced" during the past year.
Options/SARs Granted in Last Fiscal Year
<TABLE>
<CAPTION>
% of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base-Price per Grant Date
Name Granted Fiscal-Year Share Expiration Date Present-Value-(3)
- ---------------------- -------------- -------------- -------------- ----------------- -------------------
<S> <C> <C> <C> <C> <C>
Norman H. Abjornson 20,000 $7.625 (1)
Norman H. Abjornson 50,000 $9.00 (2)
</TABLE>
(1) Exercisable at the rate of 20%, cumulative, per year after January 16,
1999 (and until January 16, 2008).
(2) Exercisable at the rate of 20%, cumulative, per year after December 28,
1999 (and until December 28, 2008).
(3) We calculated this amount using the Black-Scholes option pricing model,
a complex mathematical formula that uses six different market-related
factors to estimate the value of stock options. The factors are the
fair market value of the stock at date of grant, option exercise price,
option term, risk-free rate of return, stock volatility and dividend
yield. The Black-Scholes model generates an estimate of the value of
the right to purchase a share of stock at a fixed price over a fixed
period. The actual value, if any, an executive realizes will depend on
whether the stock price at exercise is greater than the grant price, as
well as the executive's continued employment through the vesting period
and the option term.
The following table provides information on the value of each Executive
Officer's unexercised in-the-money options to acquire Common Stock at
December 31, 1998.
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End
Option/SAR Values
<TABLE>
<CAPTION>
Value of Unexercised
Number of Securities In-the-Money
Underlying Options/SARs at
Unexercised Options/ FY-End ($)
SARs at FY-End (#)
Shares Acquired On Exercisable/ Exercisable/
Name Exercise (#) Value Realized ($) Unexercisable Unexercisable (1)
- ------------------------- ---------------------- ---------------------- ----------------------- ----------------------
<S> <C> <C> <C> <C>
Norman H.
Asbjornson -- -- 71,000 / 84,000 $338,717 / $115,792
</TABLE>
- ----------------
(1) Based on the Nasdaq Stock Market closing price of Common Stock on
December 31, 1998 of $9.313.
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Compensation of Directors. Directors of the Company are paid a fee of
$1,500 per board meeting attended and they are reimbursed for out-of-pocket
expenses incurred for attendance at such meetings. In addition, the Company has
granted persons who are newly elected Directors of the Company an option to
purchase 27,500 shares of the Company's Common Stock.
REPORT ON EXECUTIVE COMPENSATION
General. The entire Board of Directors is responsible for (i) oversight
and administration of executive compensation, (ii) review of the Company's
overall compensation program and (iii) administering the Company's Stock Option
Plan. However, Messrs. Asbjornson and Bowen abstain from voting on their
compensation.
Compensation Process and Philosophy. There are two major components to
the Company's executive officer compensation: (i) base salary and (ii) option
grants. The process used by the Board of Directors in determining executive
compensation levels for these components has been based upon the Board of
Directors' subjective judgment of qualitative and quantitative factors. No
specific weights have been previously assigned to the qualitative and
quantitative factors in determining the compensation levels for these
components, and grants of options are not issued each year. The Board of
Directors considers the recommendation of the Company's President with respect
to the compensation level of the Company's executive officers, including the
President. The Board of Directors ultimately determines the level of
compensation for each of the Company's executive officers. The Board of
Directors believes that compensation for the Company's employees, including the
executive officers, must be in amounts sufficient to attract, retain and
motivate key employees, while at the same time maintaining a close relationship
to the Company's financial performance. The Board of Directors believes
compensation decisions should be tied to individual performance and designed to
encourage and reward employees for creating stockholder value. In addition,
executive officers should have a significant portion of their total
compensation opportunity at risk, i.e., stock options. The Company's
compensation philosophy is based on the following general principles: (i)
employee compensation should reflect the financial success of the overall
Company and individual performance and (ii) encourage all employees to invest
in the Company's common stock to align their interests with the stockholders'
interests in maximizing value.
Salary. 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 greater of the cash value thereof or the amount of all premiums paid by
him. 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 $103,500 to
$106,605 effective December 1, 1998. The salary increase was predicated on Mr.
Fergus' efforts in reducing direct labor by implementation of improved
manufacturing methods and his overall job performance.
Mr. Bowen's annual rate of salary has been $38,564 since December 1,
1997. Additionally, the Company made 401(k) plan contributions to Mr. Bowen's
account totaling $2,264.
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Messrs. Asbjornson, Fergus and Bowen also participate in the Company's
"profit sharing" plan ($1,729 each in 1998, a per capita share, the same as all
other eligible employees, of 10% of the pre-tax profit of AAON-Oklahoma).
Messrs. Asbjornson and Bowen also received directors' fees in 1998.
<TABLE>
<S> <C>
Board of Directors: Norman H. Asbjornson, William A. Bowen, John B. Johnson, Jr., J. M. Klein,
Thomas E. Naugle, Anthony Pantaleoni and Charles C. Stephenson, Jr.
</TABLE>
BOARD OF DIRECTORS INTERLOCKS AND INSIDER
PARTICIPATION IN COMPENSATION DECISIONS
There were no reportable business relationships between the Company or
any other corporation that requires specific disclosure under this heading and
the members of the Board of Directors in 1998.
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COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG AAON, INC., NASDAQ U.S., AND PEER GROUP*
[CHART]
*TOTAL RETURN BASED ON $100 TOTAL INVESTMENT & REINVESTMENT OF DIVIDENDS
<TABLE>
<CAPTION>
AAON, INC. PEER GROUP NASDAQ
---------- ---------- ------
<S> <C> <C> <C>
1993 100.00
1994 163.50 109.82 97.76
1995 80.32 138.29 138.26
1996 68.10 180.02 170.02
1997 105.63 168.81 208.58
1998 130.07 165.55 293.20
</TABLE>
ASSUMES $100 INVESTED ON JANUARY 1, 1993
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DECEMBER 31, 1998
* The peer group consists of American Standard Companies, Fedders Corp.,
International Comfort Products Corporation (former, 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.
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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 1,000 share purchase by Norman H. Asbjornson on December
30, 1998, which was reported on a Form 4 mailed for filing on January 26, 1999.
RELATIONSHIP WITH AUDITORS
The Board of Directors has selected Arthur Andersen LLP as the independent
auditors of the Company for the fiscal year ending December 31, 1999.
Representatives of Arthur Andersen LLP are expected to be present at the Annual
Meeting with the opportunity to make a statement if they so desire and to be
available to respond to appropriate questions.
STOCKHOLDER NOTICE OF INTENT TO PRESENT PROPOSALS
Bay Harbour, a stockholder of the Company, delivered notice to the Company
on March 12, 1999 (the "Notice") of its intention to nominate two nominees for
election to the Board of Directors at the Annual Meeting and to propose the
following amendments to the Company's Bylaws, as amended (the "Bylaws") and made
the following statements in support of such proposed amendments.
"1. To assure that shareholders have an opportunity to elect a new board
majority at the 1999 and 2000 Annual Meetings, and to prevent the board from
unduly delaying the 2000 annual meeting, the undersigned intends to propose a
bylaw amendment that will require that the Company must hold the 2000 annual
meeting by May 30, 2000 and must set a meeting date for the 2000 annual meeting
by January 31, 2000. Specifically, the undersigned intends to propose that the
period be removed from the end of the first sentence of Article II, Section II
of the Bylaws and that the following language be inserted immediately after such
first sentence:
'; provided that the annual meeting of stockholders for 2000 shall be held
not later than May 30, 2000 and the Board of Directors shall set the date
for the 2000 annual meeting and shall give public notice of such date, in
each case, on or before January 31, 2000.'
2. To assure that shareholders have an opportunity to elect a new board
majority at the 1999 and 2000 Annual Meetings, the undersigned intends to
propose a bylaw amendment to ensure that at least one third of the directors
will be elected at the 2000 annual meeting. Specifically, the undersigned
intends to propose that the following language be inserted at the end of the
existing Article III, Section IA of the Bylaws:
'If the Board of Directors changes the total number of directors, the Board
of Directors shall classify the directors in accordance with the first
sentence of this Section 1A; provided that not less than one-third of the
number of the whole Board of Directors shall be elected at the annual
meeting for the year 2000.'
3. To allow shareholders more flexibility in exercising their powers in
corporate governance matters, the undersigned intends to propose a bylaw
amendment to reinstate shareholders' ability to act by written consent.
Specifically, the undersigned intends to propose that Article II, Section 10 of
the Bylaws be replaced in its entirety with the following language:
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'Any action required or permitted to be taken at a meeting of stockholders
of the Corporation may be taken without a meeting, without prior notice and
without a vote, if a consent or consents in writing, setting forth the
action so taken, shall be signed by stockholders holding the voting power
required by law.'
4. To prevent the Board from interfering with the implementation of the
proposals being voted upon by the shareholders at the Annual Meeting, the
undersigned plans to introduce a proposal to repeal any bylaws adopted by the
Board since March 12, 1999 and a proposal to prevent the Board from making
amendments to the bylaws amended by the shareholders by passage of the proposals
described in this notice. Specifically, the undersigned intends to propose that
a new Section 2 be added to Article VIII of the Bylaws, which would read as
follows:
'Section 2. Any bylaws adopted by the Board of Directors between March 12,
1999 and the date of the adoption of this Section 2 are repealed and are of
no force and effect as of the date of the adoption of this Section 2.'
In addition, the undersigned intends to propose that Article VIII, Section
1 of the Bylaws be amended by removing the period at the end thereof and
inserting the following language at the end thereof:
'; provided, however, that without the approval of stockholders no
amendment shall be made to these Bylaws that would have the effect of
altering, amending or repealing any of the following sections of these
Bylaws: Article II, Section 2; Article III, Section 1A; Article II, Section
10; Article VIII, Section 1; and Article VIII, Section 2.'"
In accordance with Rule 14a-4(c)(2), the persons named in the enclosed
proxy will use their discretionary authority to vote against these proposals if
properly presented at the Annual Meeting.
It is the Company's view that the Notice is part of a plan of Bay Harbour
to facilitate its efforts to gain control of the Company. The Board of
Directors does not believe that Bay Harbour's attempt to obtain control of the
Company is in the best interests of the Stockholders at this time. The Board of
Directors believes that it has been managing the affairs of the Company in a
prudent manner and that the Company is in good financial condition. Bay Harbour
has not provided the Company with any specific plans with respect to how Bay
Harbour could operate the Company more profitably or otherwise maximize
Stockholder value. Bay Harbour has not provided the Company with any information
that demonstrates that Bay Harbour's nominees have experience in the Company's
industry, whereas the Board of Directors' two nominees have more than a decade
of experience in managing the Company. Therefore, the Board of Directors has no
information to indicate that Bay Harbour or its nominees could contribute to the
value of the Company in any meaningful way.
Moreover, although the proposed amendment set forth in paragraph 4 above
would not cause the repeal of any Bylaws of the Company existing at this time,
the effect of this proposed bylaw would be to prevent the Company from amending
the Bylaws in any way prior to the Annual Meeting, irrespective of whether such
change might be desirable. The Board believes that this limitation on its
discretion would be unwise and potentially damaging to your interest as a
Stockholder. The Board also believes that the proposed Bylaw amendment may be
invalid as a matter of law because it does not specify precisely which Bylaws
are being repealed and, in effect, strips the Board of its power to amend the
Bylaws. If the proposed Bylaw is approved, the existing directors, if still in
office, will consider taking appropriate action to determine the validity of the
proposal.
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STOCKHOLDER PROPOSALS FOR ANNUAL MEETING 2000
Stockholder proposals intended to be presented at the 2000 Annual Meeting
and to be included in the Company's Proxy Statement must be received at the
Company's executive offices, 2425 South Yukon, Tulsa, Oklahoma 74107, no later
than December __, 1999.
However, a stockholder who otherwise intends to present business at the
2000 annual meeting of stockholders, including nominations of persons to the
Company's Board of Directors, must also comply with the requirements set forth
in the Company's Bylaws. The Bylaws state, among other things, that to bring
business before an annual meeting or to nominate a person for the Company's
Board of Directors, a stockholder must give written notice that complies with
the Bylaws to the Secretary of the Company not less than 60 days nor more than
90 days in advance of the anniversary date of the immediately preceding annual
meeting. Thus, a notice of a stockholder proposal or nomination for the 2000
annual meeting of stockholders, submitted other than pursuant to Rule 14a-8,
will be untimely if given before February 25, 2000 or after March 26, 2000. As
to any such proposals, the proxies named in management's proxy for that meeting
will be entitled to exercise their discretionary authority on that proposal
unless the Company receives notice of the matter to be proposed between February
25, 2000 and March 26, 2000. Even if proper notice is received on a timely
basis, the proxies named in management's proxy for that meeting may nevertheless
exercise their discretionary authority with respect to such matter by advising
stockholders of such proposal and how they intend to exercise their discretion
to vote on such matter to the extent permitted under Rule 14a-4(c)(2) of the
Securities Exchange Act of 1934, as amended.
CERTAIN INFORMATION REGARDING PARTICIPANTS
The Company and its directors may be deemed to be "participants" as such
term is defined by regulations promulgated by the Securities and Exchange
Commission. Certain additional information with respect to the Company and its
directors is set forth in Appendix C to this Proxy Statement.
By Order of the Board of Directors
Norman H. Asbjornson
President
April 14, 1999
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APPENDIX A
AMENDMENT TO THE
AAON, INC.
1992 STOCK OPTION PLAN
I. Paragraph 2 of the AAON, Inc. 1992 Stock Option Plan (the "Plan") is hereby
amended to read as follows:
"2. SHARES SUBJECT TO THE PLAN.
The Company may issue and sell a total of 1,300,000 shares of
its Common Stock 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."
II. Paragraph 3 of the Plan is hereby amended to read as follows:
"3. 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"), to directors, including
non-employee directors of the Company, and to consultants to the
Company. Subject to the provisions of the Plan, the Committee (defined
in paragraph 4 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")."
III. Paragraph 9 of the Plan is hereby amended to read as follows:
"9. TERM OF 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, as to Incentive Stock Options granted thereunder and
on March 11, 2012, as to non-qualified stock options granted
thereunder, 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 after amended."
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APPENDIX B
AMENDMENT TO
ARTICLES OF INCORPORATION
PROPOSED ADDITION OF A NEW ARTICLE XIV TO THE COMPANY'S ARTICLES OF
INCORPORATION.
ARTICLE XIV
No director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director or
officer, except for liability (i) for acts or omissions that involve intentional
misconduct, fraud or a knowing violation of law or (ii) for the payment of
distributions in violation of Section 78.300 of the Nevada General Corporation
Law. If the Nevada General Corporation Law hereafter is amended to authorize the
further elimination or limitation of the liability of directors or officers,
then the liability of a director or officer of the Corporation, in addition to
the limitation on personal liability provided herein, shall be limited to the
fullest extent permitted by the amended Nevada General Corporation Law. Any
repeal or modification of this Section by the stockholders of the Corporation
shall be prospective only and shall not adversely affect any limitation on the
personal liability of a director or officer of the Corporation existing at the
time of such repeal or modification.
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APPENDIX C
ADDITIONAL INFORMATION CONCERNING
PARTICIPANTS IN THE PROXY SOLICITATION
Set forth below are the name and business address of each of the
participants and their associates (except the Company) in the solicitation made
pursuant to this Proxy Statement.
Norman H. Asbjornson
AAON, Inc.
2425 South Yukon
Tulsa, Oklahoma 74107
William A. Bowen
1484 Wallace Pate Drive
Georgetown, South Carolina 29440
John B. Johnson, Jr.
Johnson, Allen, Jones & Dornsblaser
900 Petroleum Club Building
601 South Boulder
Tulsa, Oklahoma 74119
Joseph M. Klein
CCI Corporation
P.O. Box 582800
Tulsa, Oklahoma 74158
Thomas E. Naugle
2739 East 69th Place
Tulsa, Oklahoma 74136
Anthony Pantaleoni
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
Charles C. Stephenson, Jr.
Vintage Petroleum, Inc.
4200 One William Center
Tulsa, Oklahoma 74172
Except as set forth in this Proxy Statement or in the Appendices hereto, to
the best knowledge of the Company, none of the persons participating in this
solicitation on behalf of the Company nor any associates of the Company (i) owns
beneficially, directly or indirectly, or has the right to acquire, any
securities of the Company or any parent or subsidiary of the Company, (ii) owns
any securities of the Company of record but not beneficially, (iii) has
purchased or sold any securities of the Company within the past two years, (iv)
has incurred indebtedness for the purpose of acquiring or holding securities of
the
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Company, (v) is or has been a party to any contract, arrangement of
understanding with respect to any securities of the Company within the past
year, (vi) has been indebted to the Company or any of its subsidiaries since the
beginning of the Company's last fiscal year or (vii) has any arrangement or
understanding with respect to future employment by the Company or with respect
to any future transactions to which the Company or any of its affiliates will or
may be a party. In addition, except as set forth in this Proxy Statement or in
the Appendices hereto, to the best knowledge of the Company, none of the persons
participating in this solicitation on behalf of the Company, management's
nominees, nor any associate or immediate family member of any of the foregoing
persons has had or is to have a direct or indirect material interest in any
transaction with the Company since the beginning of the Company's last fiscal
year, or any proposed transaction, to which the Company or any of its affiliates
was or is a party.
TRANSACTIONS IN SHARES OF AAON, INC.
The following table sets forth information with respect to all
purchases and sales of shares of Common Stock of the Company by the participants
during the past two years. No part of the purchase price of any of the shares
purchased by the participants as reflected below was represented by borrowed
funds or otherwise obtained for the purpose of acquiring or holding such
securities.
I. Transactions in shares of Common Stock by Norman H. Asbjornson.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
DATE COMMON STOCK PURCHASED
---- ----------------------
<S> <C> <C>
December 30, 1998 1,000
January 11, 1999 3,000
</TABLE>
In addition, on July 8, 1998 he disposed of 5,000 shares by gift.
II. Transactions in shares of Common Stock by John B. Johnson, Jr.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF NUMBER OF SHARES OF
DATE COMMON STOCK PURCHASED COMMON STOCK SOLD
---- ------------------------- -------------------
<S> <C> <C>
September 2, 1997 19,800
October 27, 1997 5,610
(purchased through profit
sharing plan)
October 31, 1997 4,390
(purchased through profit
sharing plan)
December 9, 1997 5,000
(purchased through profit
sharing plan)
December 10, 1997 5,100
(purchased through 401(k)
plan)
</TABLE>
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III. Transactions in shares of Common Stock by Willaim A. Bowen
<TABLE>
<CAPTION>
NUMBER OF SHARES OF NUMBER OF SHARES OF
DATE COMMON STOCK PURCHASED COMMON STOCK SOLD
---- ---------------------- -----------------
<S> <C> <C> <C>
March 24, 1999 3,000 (through the exercise of 3,000
an option)
</TABLE>
IV. Transactions in shares of Common Stock by Thomas E. Naugle.
On October 19, 1997, Mr. Naugle disposed of 1,300 shares by gift.
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APPENDIX D
FORM OF PROXY
<TABLE>
<CAPTION>
AAON, INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
<S> <C> <C>
2425 South Yukon
Tulsa, Oklahoma 74107 The undersigned stockholder of AAON, Inc., a Nevada corporation, (the "Company") hereby
constitutes and appoints John B. Johnson, Jr., and Joseph M. Klein, 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 Tuesday, May 25, 1999, at
10:00 a.m. (Local Time), and at any adjournment or postponement thereof, with all powers that
the undersigned would possess if personally present, hereby revoking all previous proxies.
1. ELECTION OF DIRECTORS: FOR both nominees listed below WITHHOLD AUTHORITY
(except as shown to the contrary below) [ ] to vote for both nominees listed below [ ]
William A. Bowen and Anthony Pantaleoni for terms ending in 2002
(INSTRUCTION: To withhold authority to vote for either nominee, write that nominee's name on the space provided below.)
- ------------------------------------------------------------------------------------------------------------------------------------
2. PROPOSAL TO APPROVE AMENDMENTS TO STOCK OPTION PLAN [ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO APPROVE AMENDMENT OF ARTICLES OF INCORPORATION [ ] FOR [ ] AGAINST [ ] ABSTAIN
4. IN THEIR DISCRETION, UPON ANY OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
(over)
</TABLE>
25
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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 BOTH NOMINEES FOR DIRECTOR, FOR APPROVAL OF
THE AMENDMENTS TO THE COMPANY'S STOCK OPTION PLAN AND FOR APPROVAL OF
THE AMENDMENT OF THE COMPANY'S ARTICLES OF INCORPORATION.
The undersigned hereby acknowledge(s) receipt of the Notice of
the aforesaid Annual Meeting and the Proxy Statement accompanying the
same, both dated April ___, 1999.
<TABLE>
<S> <C>
Dated: , 1999
------------------------------- -------------------------------------------------
-------------------------------------------------
(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>
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