<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 29, 1999
A.S.V., INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Minnesota 0-25620 41-1459569
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
840 Lily Lane, P.O. Box 5160, Grand Rapids, Minnesota 55744
-----------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (218) 327-3434
Not Applicable
--------------
(Former name or former address, if changed since last report)
<PAGE>
Item 1. CHANGES IN CONTROL OF REGISTRANT.
On January 29, 1999, A.S.V., Inc. (the "Registrant") closed a
transaction (the "Transaction") with Caterpillar Inc. ("Caterpillar") whereby
the following events occurred: (i) Caterpillar purchased 1,000,000 newly issued
shares of the Registrant's Common Stock, par value $.01 per share (the " Common
Stock"); (ii) the Registrant canceled an outstanding option issued to
Caterpillar (the "Option") to purchase 1,579,000 shares of the Registrant's
Common Stock (the "Option Shares") at an exercise price of $18.00 per share;
(iii) the Registrant issued to Caterpillar a warrant (the "Warrant") to purchase
up to 10,267,127 shares of the Registrant's Common Stock (the "Warrant Shares")
at an exercise price of $21.00 per share; (iv) the Board of Directors of the
Registrant increased the number of seats constituting the Board of Directors by
two, fixing the total number of such seats of the Board of Directors at ten, and
appointed, as designated by Caterpillar, Richard A. Benson and Richard A. Cooper
to fill the two newly created vacancies; and (v) Caterpillar delivered to the
Registrant, by wire transfer, consideration for the Transaction of $18,000,000
(the "Cash Consideration").
The Transaction occurred pursuant to a securities purchase agreement
(the "Purchase Agreement") dated October 14, 1998 between the Registrant and
Caterpillar. Under the Purchase Agreement, the Option was granted to Caterpillar
in consideration for Caterpillar's agreement to enter into the Transaction with
the Registrant. In addition, the Registrant agreed, for the Cash Consideration,
to issue the 1,000,000 shares of the Registrant's Common Stock, to issue the
Warrant, and to increase the Board of Directors by two seats and to appoint two
individuals designated by Caterpillar to such seats. The Cash Consideration was
paid by Caterpillar from its generally available cash funds. In connection with
the execution of the Purchase Agreement, the Registrant and Caterpillar also
entered into a Commercial Alliance Agreement which provides the Registrant with
access to Caterpillar's dealer network and various management, financial and
engineering resources.
The Purchase Agreement and the transactions contemplated thereunder,
including the issuance to Caterpillar of the 1,000,000 shares of the
Registrant's Common Stock and the Warrant and the issuance of the Warrant Shares
upon exercise of the Warrant, were approved by the shareholders of the
Registrant at a special meeting of the shareholders of the Registrant held on
January 28, 1999.
Prior to the date of the Purchase Agreement, Caterpillar did not own
any shares of the Registrant's Common Stock. Following the closing of the
Transaction, Caterpillar owns the 1,000,000 shares of Common Stock, representing
approximately 8.8% of the Registrant's outstanding Common Stock (assuming the
exercise of all currently outstanding options and warrants), and has the right
to acquire the Warrant Shares through the exercise of the Warrant. As a result,
Caterpillar has, assuming the Warrant were exercised in full, the sole power to
vote or direct the voting of, and to dispose or to direct the disposition of
11,267,127 shares of Common Stock. Such shares, including the Warrant Shares,
constitute approximately 52% of the
2
<PAGE>
outstanding Common Stock of the Registrant (assuming the exercise of all
currently outstanding options and Warrants).
For additional information regarding the Transaction, see the
Registrant's Definitive Proxy Statement on Schedule 14A filed with the
Commission on December 23, 1998.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) EXHIBITS
Exhibit Description of Exhibit
- ------- ----------------------
2(a) Securities Purchase Agreement dated as of October 14, 1998 between
Caterpillar Inc. and A.S.V., Inc. *
(b) Warrant Certificate issued to Caterpillar as of the closing of the
transactions contemplated by the Purchase Agreement
(c) Option Certificate dated as of October 14, 1998 between Caterpillar Inc.
and A.S.V., Inc. *
(d) Voting Agreement dated as of October 13, 1998 by certain shareholders of
A.S.V., Inc. and Caterpillar Inc. *
(e) Commercial Alliance Agreement dated October 14, 1998 between
Caterpillar Inc. and A.S.V., Inc. *
99 Press release dated January 29, 1999
- ---------
* Incorporated by reference to the like-numbered exhibit in the Registrant's
Current Report on Form 8-K filed with the Commission on October 27, 1998.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: February 10, 1999 A.S.V., INC.
/s/ Thomas R. Karges
-----------------------------
Thomas R. Karges
Chief Financial Officer
3
<PAGE>
EXHIBIT INDEX
Exhibit Description of Exhibit
- ------- ----------------------
2(a) Securities Purchase Agreement dated as of October 14, 1998 between
Caterpillar Inc. and A.S.V., Inc. *
(b) Warrant Certificate issued to Caterpillar as of the closing of the
transactions contemplated by the Purchase Agreement
(c) Option Certificate dated as of October 14, 1998 between Caterpillar
Inc. and A.S.V., Inc. *
(d) Voting Agreement dated as of October 13, 1998 by certain shareholders
of A.S.V., Inc. and Caterpillar Inc. *
(e) Commercial Alliance Agreement dated October 14, 1998 between
Caterpillar Inc. and A.S.V., Inc. *
99 Press release dated January 29, 1999
- -------------
* Incorporated by reference to the like-numbered exhibit in the Registrant's
Current Report on Form 8-K filed with the Commission on October 27, 1998.
4
<PAGE>
Exhibit 2(b)
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT") OR UNDER ANY APPLICABLE STATE SECURITIES LAW
AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION UNDER THE ACT OR AN OPINION OF COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE ACT AND THE RULES AND REGULATIONS
PROMULGATED THEREUNDER OR UNDER APPLICABLE STATE SECURITIES LAWS.
WARRANT CERTIFICATE
To Purchase 10,267,127 Shares of Common Stock of:
A.S.V., INC.
THIS IS TO CERTIFY THAT CATERILLAR INC. (the "Holder"), or Holder's
registered assigns, is entitled to purchase from A.S.V., INC., a Minnesota
corporation (the "Company"), up to 10,267,127 shares of the Company's common
stock, par value $.01 per share (the "Common Stock"), on the terms and
conditions hereinafter set forth. This warrant is being issued in connection
with a Securities Purchase Agreement between the Company and the Holder dated
October 14, 1998 (the "Purchase Agreement"). Capitalized terms used but not
defined herein shall have the meanings set forth in the Purchase Agreement.
I. GRANT OF WARRANT
1.1 GRANT. The Company hereby grants the Holder a warrant to purchase
10,267,127 shares of Common Stock at a purchase price of $21.00 per share,
exercisable in whole or in part at any time and from time to time from the date
hereof until 6:00 p.m. on the tenth anniversary of the date hereof, subject to
the provisions of Article V hereof (the "Warrant" and the shares to be issued
upon the exercise thereof the "Warrant Shares"). This Warrant is granted this
29th day of January, 1999.
1.2 SHARES TO BE ISSUED; RESERVATION OF SHARES. The Company covenants
and agrees that (1) all Warrant Shares will upon issuance in accordance with the
terms hereof be duly authorized, validly issued and outstanding, fully paid and
non-assessable, and free from all taxes, liens and charges with respect to the
issuance thereof, (2) the Company will from time to time take all actions
necessary to assure that the par value per share of the Common Stock is at all
times equal to or less than the applicable purchase price per Warrant Share, and
(3) the Company will at all times during the exercise period have authorized and
reserved sufficient shares of Common Stock to provide for the exercise of the
Warrant in full.
II. ADJUSTMENTS TO WARRANT RIGHTS
2.1 STOCK SPLITS AND COMBINATIONS. If the Company shall combine all of
the outstanding Common Stock proportionately into a smaller number of shares,
the number of Warrant Shares issuable to the Holder upon exercise of the Warrant
shall be proportionately decreased and
<PAGE>
the purchase price per Warrant Share hereunder in effect immediately prior to
such combination shall be proportionately increased, as of the effective date of
such combination, as follows: (a) the number of Warrant Shares purchasable upon
the exercise of the Warrant immediately prior to the effective date of such
combination shall be adjusted so that the Holder of the Warrant exercised on or
after that date shall be entitled to receive the number and kind of Warrant
Shares which the Holder of the Warrant would have owned and been entitled to
receive as a result of the combination had the Warrant been exercised
immediately prior to that date, and (b) the purchase price per Warrant Share in
effect immediately prior to such adjustment shall be adjusted by multiplying
such purchase price by a fraction, the numerator of which is the aggregate
number of shares of Common Stock purchasable upon exercise of the Warrant
immediately prior to such adjustment, and the denominator of which is the
aggregate number of shares of Common Stock purchasable upon exercise of the
Warrant immediately thereafter. If the Company shall effect a subdivision of the
outstanding Common Stock, the number of Warrant Shares issuable to the Holder
upon exercise of the Warrant shall be proportionally increased and the purchase
price per Warrant Share hereunder in effect prior to such subdivision shall be
proportionately decreased, as of the effective date of such subdivision, as
follows: (a) the number of Warrant Shares purchasable upon the exercise of the
Warrant immediately prior to the effective date of such subdivision, shall be
adjusted so that the Holder of the Warrant exercised on or after that date shall
be entitled to receive the number and kind of Warrant Shares which the Holder of
the Warrant would have owned and been entitled to receive as a result of the
subdivision had the Warrant been exercised immediately prior to that date (pro
rated in the case of any partial exercise), and (b) the purchase price per
Warrant Share in effect immediately prior to such adjustment shall be adjusted
by multiplying the purchase price by a fraction, the numerator of which is the
aggregate number of shares of Common Stock purchasable upon exercise of the
Warrant immediately prior to such adjustment, and the denominator of which is
the aggregate number of shares of Common Stock purchasable upon exercise of the
Warrant immediately thereafter.
2.2 STOCK DIVIDENDS AND DISTRIBUTIONS. If the Company shall make or fix
a record date for the holders of Common Stock entitled to receive a dividend or
other distribution payable in additional shares of Common Stock, then the number
of Warrant Shares issuable to the Holder upon exercise of the Warrant shall be
proportionately increased and the purchase price per Warrant Share hereunder in
effect prior to the time of such issuance or the close of business on such
record date shall be proportionately decreased, as of the time of such issuance,
or in the event such record date is fixed, as of the close of business on such
record date, as follows: (a) the number of Warrant Shares purchasable upon the
exercise of the Warrant immediately prior to the time of such issuance or the
close of business on such record date shall be adjusted so that the Holder of
the Warrant exercised after that date shall be entitled to receive the number
and kind of Warrant Shares which the Holder of the Warrant would have owned and
been entitled to receive as a result of the dividend or distribution had the
Warrant been exercised immediately prior to that date (pro rated in the case of
any partial exercise), and (b) the purchase price in effect immediately prior to
such adjustment shall be adjusted by multiplying such purchase price by a
fraction, the numerator of which is the aggregate number of shares of Common
Stock purchasable upon exercise of the Warrant
2
<PAGE>
immediately prior to such adjustment, and the denominator of which is the
aggregate number of shares of Common Stock purchasable upon exercise of the
Warrant immediately thereafter.
2.3 OTHER DIVIDENDS AND DISTRIBUTIONS. If the Company shall make or fix
a record date for the holders of Common Stock entitled to receive a dividend or
other distribution payable in securities of the Company other than shares of
Common Stock, then lawful and adequate provision shall be made so that the
Holder of the Warrant shall be entitled to receive upon exercise of the Warrant,
for the aggregate purchase price in effect prior thereto, in addition to the
number of Warrant Shares immediately theretofore issuable upon exercise of the
Warrant, the kind and number of securities of the Company which the Holder would
have owned and been entitled to receive had the Warrant been exercised
immediately prior to that date (pro rated in the case of any partial exercise).
2.4 RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. If the Common Stock is
changed into the same or a different number of shares of any class or classes of
stock, whether by recapitalization, reclassification or otherwise (other than a
subdivision or combination of shares or stock dividend or a reorganization,
merger, consolidation or sale of assets, provided for elsewhere in this Article
II), then the Holder of the Warrant shall be entitled to receive upon exercise
of the Warrant, in lieu of the Warrant Shares immediately theretofore issuable
upon exercise of the Warrant, for the aggregate purchase price in effect prior
thereto, the kind and amount of stock and other securities and property
receivable upon such recapitalization, reclassification or other change, by the
holders of the number of shares of Common Stock for which such Warrant could
have been exercised immediately prior to such recapitalization, reclassification
or change (pro rated in the case of any partial exercise).
2.5 REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALES OF ASSETS.
If any of the following transactions (each, a "Special Transaction") shall
become effective: (i) a capital reorganization (other than a recapitalization,
subdivision, combination, reclassification or exchange of shares provided for
elsewhere in this Article II), (ii) a consolidation or merger of the Company
with and into another entity, or (iii) a sale or conveyance of all or
substantially all of the Company's assets, then as a condition of any such
Special Transaction, lawful and adequate provision shall be made so that the
Holder of the Warrant shall thereafter have the right to purchase and receive
upon exercise of the Warrant, in lieu of the Warrant Shares immediately
theretofore issuable upon exercise of the Warrant, for the aggregate purchase
price in effect immediately prior to such consummation, such shares of stock,
other securities, cash or other assets as may be issued or payable in and
pursuant to the terms of such Special Transaction to the holders of shares of
Common Stock for which such Warrant could have been exercised immediately prior
to such Special Transaction (pro rated in the case of any partial exercises). In
connection with any Special Transaction, appropriate provision shall be made
with respect to the rights and interests of the Holder of the Warrant to the end
that the provisions of the Warrant (including without limitation provisions for
adjustment of the purchase price and the number of Warrant Shares issuable upon
the exercise of the Warrant), shall thereafter be applicable, as nearly as may
be practicable, to any shares of stock, other securities, cash or other assets
thereafter deliverable upon the exercise of the Warrant. The
3
<PAGE>
Company shall not effect any Special Transaction unless prior to or
simultaneously with the closing, the successor entity (if other than the
Company), if any, resulting from such consolidation or merger or the entity
acquiring such assets shall assume by a written instrument executed and mailed
by certified mail or delivered to the Holder of the Warrant at the address of
the Holder appearing on the books of the Company, the obligation of the Company
or such successor corporation to deliver to the Holder such shares of stock,
securities, cash or other assets, as in accordance with the foregoing
provisions, which the Holder shall have the right to purchase.
2.6 SALES BELOW WARRANT EXERCISE PRICE.
(a) In the event the Company shall sell and issue shares of Common
Stock, or rights, options, warrants or convertible or exchangeable securities
containing the right to subscribe for or purchase shares of Common Stock
(excluding (i) shares, rights, options, warrants or convertible or exchangeable
securities issued in any of the transactions described in Sections 2.1, 2.2,
2.3, 2.4 or 2.5 above, (ii) shares issuable upon exercise of currently
outstanding options, warrants and convertible securities and (iii) options
issued to employees or directors of the Company or shares issued upon exercise
thereof provided the exercise price of any such options on the date of grant
shall be equal to or greater than the fair market value as of such date) at a
price per share less than the purchase price per Warrant Share in effect as of
the date the Company fixes the offering price of such shares, rights, options,
warrants or convertible or exchangeable securities, then the purchase price per
Warrant Share shall immediately be reduced to a price determined by multiplying
the then current purchase price per Warrant Share by a fraction (i) the
numerator of which shall be the number of shares of Common Stock outstanding at
the close of business on the date next preceding the date of such issue or sale,
plus the number of shares of Common Stock which the aggregate consideration
received by the Company for the total number of shares of Common Stock, or
rights, options, warrants or convertible or exchangeable securities so issued
would purchase at the then current purchase price per Warrant Share, and (ii)
the denominator of which shall be the number of shares of Common Stock
outstanding at the close of business on the date of such issuance after giving
effect to such issuance.
(b) For the purpose of making any adjustment required under this
Section 2.6, the consideration received by the Company for any issue or sale of
securities shall (A) to the extent it consists of cash be computed at the gross
amount of cash received by the Company before deduction of any expenses payable
by the Company and any underwriting or similar commissions, compensation or
concession in connection with such issue or sale, (B) to the extent it consists
of property other than cash, be computed at the fair value of that property as
determined by the Company's Board of Directors in good faith, (C) if such shares
of Common Stock or rights, options, warrants or convertible securities are
issued or sold together with other stock or securities or other assets of the
Company for a consideration which covers both, be computed as that portion of
the consideration so received that may be reasonably determined by the Board of
Directors of the Company in good faith to be allocated to such shares of Common
Stock, or rights, options, warrants or convertible or exchangeable securities,
and (D) if the issuance shall be of such rights, options, warrants or
convertible or exchangeable securities, be determined by dividing (X) the total
amount
4
<PAGE>
receivable by the Company in consideration of the sale and issuance of such
rights, options, warrants or convertible or exchangeable securities, plus the
total consideration payable to the Company upon exercise, conversion or exchange
thereof by (Y) the total number of shares of Common Stock covered by such
rights, options, warrants or convertible or exchangeable securities.
(c) Upon each adjustment of the purchase price per Warrant Share
pursuant to Section 2.6 hereof, the Warrant shall thereupon evidence the right
to purchase that number of shares of Common Stock (calculated to the nearest
hundredth of a share) obtained by multiplying the number of shares of Common
Stock purchasable upon exercise immediately prior to such adjustment by the
purchase price per Warrant Share in effect immediately prior to such adjustment
and dividing the product so obtained by the purchase price per Warrant Share in
effect immediately after such adjustment. The adjustment pursuant to this
Section 2.6 to the number of shares of Common Stock purchasable upon exercise of
a Warrant shall be made each time an adjustment of the purchase price is made
pursuant to Section 2.6 hereof.
2.7 LIQUIDATION. If the Company shall, at any time prior to the
expiration of this Warrant, dissolve, liquidate or wind up its affairs, the
Holder shall have the right, but not the obligation, to exercise this Warrant.
Upon such exercise, the Holder shall have the right to receive, in lieu of the
shares of Common Stock that the Holder otherwise would have been entitled to
receive upon such exercise, the same kind and amount of assets as would have
been issued, distributed or paid to the Holder upon any such dissolution,
liquidation or winding up with respect to such shares of Common Stock had the
Holder been the holder of record of such shares of Common Stock receivable upon
exercise of this Warrant on the date for determining those entitled to receive
any such distribution. If any such dissolution, liquidation or winding up
results in any cash distribution in excess of the applicable purchase price per
Warrant Share provided for by this Warrant, the Holder may, at the Holder's
option, exercise this Warrant without making payment of the applicable purchase
price per Warrant Share and, in such case, the Company shall, upon distribution
to the Holder, consider the applicable purchase price per Warrant Share to have
been paid in full, and in making settlement to the Holder shall deduct an amount
equal to the applicable purchase price per Warrant Share from the amount payable
to the Holder.
2.8 NOTICE. Whenever a Warrant or the number of Warrant Shares issuable
hereunder is to be adjusted as provided herein or a dividend or distribution (in
cash, stock or otherwise and including, without limitation, any liquidating
distributions) is to be declared by the Company, or a definitive agreement with
respect to a Special Transaction has been entered into, the Company shall
forthwith cause to be sent to the Holder at the last address of the Holder shown
on the books of the Company, by first-class mail, postage prepaid, at least ten
(10) days prior to the record date specified in (a) below or at least twenty
(20) days before the date specified in (b) below, a notice stating in reasonable
detail the relevant facts and any resulting adjustments and the calculation
thereof, if applicable, and stating (if applicable):
(a) the date to be used to determine (i) which holders of
Common Stock will be entitled to receive notice of such dividend,
distribution, subdivision or combination (the
5
<PAGE>
"Record Date"), and (ii) the date as of which such dividend
distribution, subdivision or combination shall be made; or, if a record
is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution, subdivision or
combination are to be determined (provided, that in the event the
Company institutes a policy of declaring cash dividends on a periodic
basis, the Company need only provide the relevant information called
for in this clause (a) with respect to the first cash dividend payment
to be made pursuant to such policy and thereafter provide only notice
of any changes in the amount or the frequency of any subsequent
dividend payments), or
(b) the date on which a Special Transaction is expected to
become effective, and the date as of which it is expected that holders
of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon
consummation of the Special Transaction (the "Exchange Date").
2.9 FRACTIONAL INTERESTS. The Company shall not be required to issue
fractions of shares of Common Stock on the exercise of the Warrant. If any
fraction of a share of Common Stock would be issuable upon the exercise of the
Warrant, the Company shall, upon such issuance, purchase such fraction for an
amount in cash equal to the current value of such fraction, computed on the
basis of the last reported closing price of the Common Stock on Nasdaq on the
last business day prior to the date of exercise upon which such a sale shall
have been effected, or, if the Common Stock is not so quoted on Nasdaq, as the
Board of Directors of the Company may in good faith determine.
2.10 EFFECT OF ALTERNATE SECURITIES. If at any time, as a result of an
adjustment made pursuant to this Article II, the Holder of the Warrant shall
thereafter become entitled to receive any securities of the Company other than
shares of Common Stock, then the number of such other securities receivable upon
exercise of the Warrant shall be subject to adjustment from time to time on
terms as nearly equivalent as practicable to the provisions with respect to
shares of Common Stock contained in this Article II.
2.11 SUCCESSIVE APPLICATION. The provisions of this Article II shall
similarly apply from time to time to successive events covered by this Article
II.
III. EXERCISE
3.1 EXERCISE OF WARRANT.
(a) The Holder may exercise this Warrant by (i) surrendering this
Warrant Certificate, with the form of exercise notice attached hereto as Exhibit
A duly executed by Holder, and (ii) making payment to the Company of the
aggregate purchase price for the applicable Warrant Shares in cash, by certified
check, bank check or wire transfer to an account designated by the Company. Upon
any partial exercise of the Warrant, the Company, at its expense, shall promptly
issue to the Holder for its surrendered Warrant Certificate a replacement
Warrant Certificate identical in all
6
<PAGE>
respects to this Warrant Certificate, except that the number of Warrant Shares
shall be reduced accordingly.
(b) Each person in whose name any Warrant Share certificate is issued
upon exercise of a Warrant shall for all purposes been deemed to have become the
holder of record of the Warrant Shares for which such Warrant was exercised, and
such Warrant Share certificate shall be dated the date upon which the Warrant
exercise notice was duly surrendered and payment of the purchase price was
tendered to the Company.
3.2 ISSUANCE OF WARRANT SHARES. The Warrant Shares purchased shall be
issued to the Holder exercising this Warrant as of the close of business on the
date on which all actions and payments required to be taken or made by the
Holder, pursuant to Section 3.1, shall have been so taken or made. Certificates
for the Warrant Shares so purchased shall be delivered to the Holder within
three (3) days after a Warrant is surrendered and payment therefore is made.
IV. RIGHTS OF HOLDER
4.1 WARRANTHOLDER RIGHTS. Holder shall not, solely by virtue of the
Warrant and prior to the issuance of the Warrant Shares upon due exercise
thereof, be entitled to any rights of a shareholder in the Company.
4.2 NO IMPAIRMENT. The Company shall not by any action including,
without limitation, amending its articles of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of the Holder against impairment. Without limiting the generality of the
foregoing, the Company will (a) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock upon the exercise of this Warrant and
(b) use its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
necessary to enable the company to perform its obligations under this Warrant.
Upon the request of the Holder, the Company will at any time during the period
this Warrant is outstanding acknowledge in writing, in form satisfactory to the
Holder, the continuing validity of this Warrant and the obligations of the
Company hereunder.
V. PARTIAL ACCELERATION AND TERMINATION OF WARRANT
5.1 ACCELERATION. Notwithstanding the provisions of Section 1.1 with
respect to the term of the Warrant, if and when the Company achieves an
Acceleration Goal (as defined below) and the average closing sale price for a
share of Common Stock on the principal trading market for the Common Stock for
the preceding ten trading days is above the current purchase price per
7
<PAGE>
Warrant Share, the Company shall have the right, by giving of notice to the
Holder (an "Acceleration Notice"), to cause (i) a Reduced Amount (as defined
below) of Warrant Shares to remain subject to the Warrant for the original term
and (ii) the balance of any Warrant Shares then subject to the Warrant to remain
subject to the Warrant only for a period of 75 days from the giving of the
Acceleration Notice. An "Acceleration Goal" shall mean the reporting by the
Company of Qualifying Revenues (as herein defined) for the immediately preceding
four fiscal quarters in the amounts specified in the table below and the
"Reduced Amount" shall mean the number of Warrant Shares specified in the table
below that shall then remain subject to the Warrant in accordance with its
terms:
Amount of Qualifying Revenues Reduced Amount
- ----------------------------- --------------
$100 million 8,727,058
$150 million 6,673,632
$200 million 4,106,851
$250 million Zero
"Qualifying Revenues" for a fiscal period shall mean net sales of the Company
from continuing operations determined in accordance with GAAP consistently
applied throughout the period, and reported in periodic reports filed by the
Company pursuant to the Exchange Act (the "Reports"); provided that the gross
profit (net sales less cost of goods sold) derived from such revenues and
reported by the Company in the Reports, exceeds 20% of such revenues.
If the Company has the right to and does give an Acceleration Notice,
only the associated Reduced Amount of Warrant Shares shall remain subject to the
Warrant for the original term. With respect to all other Warrant Shares then
subject to the Warrant, the Holder shall have a period of 75 days from the date
of such Acceleration Notice to exercise its rights hereunder and if not so
exercised such rights shall elapse and terminate on the 76TH day following the
giving of the Acceleration Notice.
5.2 TERMINATION. Notwithstanding anything contained herein to the
contrary, Issuer shall have the right to terminate this Warrant by giving sixty
(60) days prior written notice to Holder in the event that: (i) Holder has
failed to perform the Marketing Agreement in any material respect and has not
remedied such failure and the Company has terminated the Marketing Agreement
pursuant to Section 4.1 thereof; (ii) Holder and the Company have entered into
the Technology License Agreement contemplated by Section 6 of the Commercial
Alliance Agreement, Holder has materially breached the terms of that Technology
License Agreement and has not remedied such breach and the Company has
terminated the Technology License Agreement pursuant to its terms; or (iii)
Holder and the Company have entered into and Holder has materially breached one
or more of the Trademark and Trade Dress License Agreement, the Management
Services Agreement, the Supply Agreements or the Joint Venture Agreement
contemplated by the Commercial Alliance
8
<PAGE>
Agreement and Holder has not remedied such breach, the Company has terminated
one or more of such agreements pursuant to their terms and the material breach
by Holder, collectively with all other breaches of such agreements by the
Holder, are of sufficient materiality to cause the Company to be materially
unable to realize the benefits provided collectively by those agreements to
Holder; provided, however, that during any such sixty (60) day period of
termination notice, this Warrant shall remain exercisable in accordance with its
terms.
The Reduced Amounts set forth in the table above shall be subject to
adjustment in accordance with the provisions of Article II hereof.
VI. TRANSFERABILITY
The Holder hereby represents and warrants that it is acquiring the
Warrant and, upon the exercise thereof, the Warrant Shares, for investment and
not with a view to resale or distribution thereof. Subject to compliance with
federal and state securities laws, the Holder may sell, assign, transfer or
otherwise dispose of all or any portion of the Warrant or the Warrant Shares
acquired upon any exercise hereof at any time and from time to time; provided
however, that the Warrant may only be transferred to an Affiliate of the Holder.
Upon the sale, assignment, transfer or other disposition of all or any portion
of the Warrant, the Holder shall deliver to Company a written notice of such in
the form attached hereto as Exhibit B duly executed by the Holder which includes
the identity and address of any purchaser, assignor, or transferee.
VII. LEGEND ON WARRANT SHARES
Certificates evidencing the Warrant Shares shall bear the following
legend:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR UNDER ANY APPLICABLE
STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION UNDER THE ACT
OR AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE ACT AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER OR SUCH
STATE SECURITIES LAWS.
VIII. MISCELLANEOUS
8.1 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by certified
or registered mail (first class postage pre-paid), or guaranteed overnight
delivery, to the Company at the address at which its principal business office
is located from time to time, and the Holder at the address it advises the
Company of.
9
<PAGE>
8.2 EXPENSES; TAXES. Any sales tax, stamp duty, deed transfer or other
tax (except only taxes based on the income of Holder) arising out of the
issuance and sale of the Warrant or the Warrant Shares issuable upon exercise of
the Warrant and consummation of the transactions contemplated by this Warrant
Certificate shall be paid by the Company.
8.3 AMENDMENT; WAIVER. This Warrant Certificate may not be modified,
amended, supplemented, canceled or discharged, except by written instrument
executed by the Company and the Holder. No failure to exercise, and no delay in
exercising, any right, power or privilege under this Warrant Certificate shall
operate as a waiver, nor shall any single or partial exercise of any right,
power or privilege hereunder preclude the exercise of any other right, power or
privilege. No waiver of any breach of any provision shall be deemed to be a
waiver of any preceding or succeeding breach of the same or any other provision,
nor shall any waiver be implied from any course of dealing between the Company
and the Holder. No extension of time for performance of any obligations or other
acts hereunder or under any other agreement shall be deemed to be an extension
of the time for performance of any other obligations or any other acts.
8.4 HEADINGS. The headings contained in this Warrant Certificate are
for convenience of reference only and are not to be given any legal effect and
shall not affect the meaning or interpretation of this Warrant Certificate.
8.5 GOVERNING LAW; INTERPRETATION. This Warrant Certificate shall be
construed in accordance with and governed for all purposes by the laws of the
State of Minnesota.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed and delivered as of the day and year first above written.
A.S.V., INC.
By: /s/ Gary Lemke
------------------------
Name: Gary Lemke
----------------------
Title: President
---------------------
10
<PAGE>
EXHIBIT A
EXERCISE NOTICE
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for the purchase of the number of shares of Common Stock of A.S.V.,
Inc. as is set forth below, and herewith makes payment therefor, all at the
price and on the terms and conditions specified in the attached Warrant
Certificate and requests that certificates for the shares of Common Stock hereby
purchased (and any securities or other property issuable upon such exercise) be
issued in the name of and delivered to the person specified below whose address
is set forth below, and, if such shares of Common Stock shall not include all of
the shares of Common Stock now and hereafter issuable as provided in the
attached Warrant Certificate, then A.S.V., Inc. shall, at its own expense,
promptly issue to the undersigned a new Warrant Certificate of like tenor and
date for the balance of the shares of Common Stock issuable thereunder.
Date: ____________________
Amount of Shares Purchased: ______________
Aggregate Purchase Price: $_____________
Printed Name of Registered Holder: ________________________________
Signature of Registered Holder: ________________________________
NOTICE: The signature on this Exercise Notice must correspond with the name as
written upon the face of the attached Warrant Certificate in every particular,
without alteration or enlargement or any change whatsoever.
Stock Certificates to be issued and registered in the following name, and
delivered to the following address:
---------------------------------------------
(Name)
---------------------------------------------
(Street Address)
---------------------------------------------
(City) (State) (Zip Code)
---------------------------------------------
(Tax Identification or Social Security Number)
11
<PAGE>
EXHIBIT B
ASSIGNMENT NOTICE
[To be executed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto the person named below, whose address is set forth below, the rights
represented by the attached Warrant Certificate to purchase the number of shares
of the Common Stock of A.S.V., Inc. ("ASV") as is set forth below, to which the
attached Warrant Certificate relates, and appoints ____________________________
attorney to transfer such rights on the books of ASV with full power of
substitution in the premises. If such shares of Common Stock of ASV shall not
include all of the shares of Common Stock now and hereafter issuable as provided
in the attached Warrant Certificate, then ASV, at its own expense, shall
promptly issue to the undersigned a new Warrant of like tenor and date for the
balance of the Common Stock issuable thereunder.
Date: ____________________
Amount of Warrant Transferred: ______________
Printed Name of Registered Holder: ________________________________
Signature of Registered Holder: ________________________________
NOTICE: The signature on this Assignment Notice must correspond with the name as
written upon the face of the attached Warrant Certificate in every particular,
without alteration or enlargement or any change whatsoever.
Warrant Certificate for transferred Warrant to be issued and registered in the
following name, and delivered to the following address:
-----------------------------------
(Name)
-----------------------------------
(Street Address)
-----------------------------------
(City) (State) (Zip Code)
12
<PAGE>
Exhibit 99
ASV and Cat Close Stock Transaction
Transaction Provides ASV Access to Cat Dealer Network
GRAND RAPIDS, Minn., Jan. 29/PRNewswire/ - - With an overwhelming vote
of approval, ASV Inc. (Nasdaq: ASVI) shareholders have ratified an October 1998
agreement between Caterpillar Inc. (NYSE: CAT) and ASV that provides the
northern Minnesota firm access to a broad range of Caterpillar's manufacturing,
financial and dealer resources.
Under the agreement, Caterpillar has acquired, for a total of $18
million, one million shares of newly-issued ASV stock and a warrant for
approximately 10.3 million shares. The warrant shares, exercisable at $21 a
share, would allow Caterpillar to acquire a majority ownership in ASV if fully
exercised.
The one million shares provides Caterpillar an 8.8 percent ownership in
ASV, assuming the exercise of all outstanding options and warrants. ASV
shareholders approved the agreement by a 99-to-1 margin.
"It's gratifying to know that our shareholders not only understand the
value of this agreement for ASV, but heartily endorse it," said ASV President
Gary Lemke.
With the alliance in place, ASV products, including its Posi-Track(TM)
all-purpose crawlers, will gradually become available to the Caterpillar
worldwide dealer network in nearly 200 countries. With its rubber tracks and low
ground pressure, the Posi-Track traverses nearly any terrain with minimal damage
to the ground, making it effective in applications and industries such as
construction, landscaping and agriculture.
Following shareholder approval, ASV's board of directors voted to add
Caterpillar Vice President Dick Benson and Richard Cooper, president of
Caterpillar Paving Products, a division of Benson's Diversified Products
organization, to the board, for a total of 10 members.
"A solid foundation has now been set for the continued growth of ASV,"
said Lemke. "With Cat dealers starting to represent ASV's products, the addition
of Caterpillar's expertise, and the cash flow necessary to meet growing demand,
we believe we are well prepared to move into the 21st century."
He added that ASV will use the $18 million from Caterpillar for capital
equipment, research and development and working capital.
Since the October 1998 agreement, Caterpillar dealers in the United
States, Canada and Australia are in the process of being trained to sell and
service ASV's Posi-Tracks. ASV and Caterpillar will continue to introduce the
Posi-Track to North American Cat dealers throughout 1999, with additional
overseas dealers to follow.
According to Benson, Caterpillar dealers have been enthusiastic about
the Posi-Track line because of the machine's unique undercarriage design.
"Cat dealers are becoming aware that the Posi-Track's technology is
really unlike anything on the market," he said. "Because of its high flotation
and low ground pressure, the Posi-Track is a great opportunity for Caterpillar,
and its dealer organization. It complements our existing product line as we move
to serve an even wider range of customers."
The two companies also will move forward on plans to develop new
products together utilizing ASV's patent-pending Maximum Traction and Support
System(TM) undercarriage technology.
(more)
<PAGE>
ASV, which had record sales of approximately $31 million for the nine
months ended Sept. 30, 1998, was founded in 1983 by Lemke and Edgar Hetteen in
the small village of Marcell, Minn. It moved to its current facility in Grand
Rapids in 1995. Hetteen, now 78, also founded both Polaris Industries and Arctic
Enterprises, the two largest snowmobile companies in the U.S.
With its Maximum Traction and Support System(TM), ASV leads all
rubber-tracked, all purpose crawlers in technology and innovation. ASV is
dedicated to quality, reliability and total customer satisfaction. More
information on ASV can be found on its Web site at http://www.asvi.com.
Caterpillar is the world's largest manufacturer of construction and
mining equipment, diesel and natural gas engines, and industrial gas turbines.
Caterpillar posted record sales and revenues in 1998 of $20.98 billion.
The statements regarding ASV Inc. contained in this release that are
not historical in nature, particularly those that utilize terminology such as
"may," "will," "expects," "anticipates," "believes," "could," or "plans," are
forward-looking statements based on current expectations and assumptions, and
entail various risks and uncertainties that could cause actual results to differ
materially from those expressed in such forward-looking statements. Important
factors known to ASV that could cause such material differences are discussed on
pages 4 through 6 in the Management's Discussion and Analysis section of ASV's
1997 Annual Report to Stockholders, and ASV's 10-Q for the quarter ended Sept.
30, 1998 under the caption Management's Discussion and Analysis.
SOURCE ASV INC.
- -0- 1/29/99
/CONTACT: Jay Lemke of Carmichael Lynch Spong, 612-334-6029, [email protected],
for ASV/
/Web site: http://www.asvi.com/
(ASVI CAT)
