<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ALL SEASON VEHICLES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(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):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] 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:
-------------------------------------------------------------------------
(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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Notes:
<PAGE>
A.S.V., Inc.
----------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held
June 4, 1999
----------
The Annual Meeting of Shareholders of A.S.V., Inc. will be held at the
Myles Reif Performing Art Center, 720 Conifer Drive, Grand Rapids, Minnesota on
Friday, June 4, 1999 at 2:00 p.m., local time, for the following purposes:
1. To elect ten directors to the Board of Directors.
2. To approve the selection of Grant Thornton LLP as independent public
accountants of the Company for the fiscal year ending December 31,
1999.
3. To take action upon any other business that may properly come before
the meeting or any adjournment thereof.
Accompanying this Notice of Annual Meeting is a Proxy Statement, form of
Proxy, the Company's 1998 Annual Report to Shareholders and the Company's
Quarterly Report to Shareholders for the three months ended March 31, 1999,
which are being sent to you by order of the Board of Directors.
Only shareholders of record shown on the books of the Company at the close
of business on April 7, 1999 will be entitled to vote at the meeting or any
adjournment thereof. Each shareholder is entitled to one vote per share on all
matters to be voted on at the meeting.
You are cordially invited to attend the meeting. Whether or not you plan to
attend the meeting, please sign, date and return your Proxy in the return
envelope provided as soon as possible. Your cooperation in promptly signing and
returning the Proxy will help avoid further solicitation expense to the Company.
By Order of the Board of Directors,
/s/ Edgar E. Hetteen
Edgar E. Hetteen
Secretary
Dated: May 3, 1999
Grand Rapids, Minnesota
<PAGE>
[MAP OF GRAND RAPIDS, MINNESOTA AREA
INDICATING LOCATION OF
MYLES REIF PERFORMING ARTS CENTER]
1
<PAGE>
A.S.V., Inc.
840 Lily Lane
Grand Rapids, Minnesota 55744
----------
PROXY STATEMENT
for
Annual Meeting of Shareholders
to be held June 4, 1999
----------
INTRODUCTION
This Proxy Statement is being furnished to the shareholders of A.S.V., Inc.
("ASV" or the "Company"), in connection with the solicitation by the Board of
Directors of ASV of proxies to be voted at the Annual Meeting of Shareholders
(the "Annual Meeting") to be held on Friday, June 4, 1999 at 2:00 p.m., local
time, and at any adjournment thereof, for the purposes set forth in the attached
Notice of Annual Meeting. This Proxy Statement and the accompanying proxy were
first mailed to shareholders on or about May 3, 1999.
The cost of soliciting Proxies, including preparing, assembling and mailing
the Proxies and soliciting material, will be borne by the Company. Directors,
officers and regular employees of the Company may, without compensation other
than their regular compensation, solicit Proxies personally or by letter or
telephone.
Any shareholder giving a Proxy may revoke it at any time prior to its use
at the Annual Meeting by giving written notice of such revocation to the
Secretary or other officer of the Company or by filing a new written Proxy with
an officer of the Company. Personal attendance at the Annual Meeting is not, by
itself, sufficient to revoke a Proxy unless written notice of the revocation or
a subsequent Proxy is delivered to an officer before the revoked or superseded
Proxy is used at the Annual Meeting.
The presence at the Annual Meeting in person or by proxy of the holders of
a majority of the outstanding shares of ASV's Common Stock entitled to vote
shall constitute a quorum for the transaction of business. Proxies not revoked
will be voted in accordance with the instructions specified by shareholders by
means of the ballot provided on the Proxy for that purpose. Proxies which are
signed but which lack any such specific instructions with respect to any
proposal will, subject to the following, be voted in favor of the proposals set
forth in the Notice of Annual Meeting and in favor of the slate of directors
proposed by the Board of Directors as listed herein. If a shareholder abstains
from voting as to any proposal, then the shares held by such shareholder shall
be deemed present at the Annual Meeting for purposes of determining a quorum and
for purposes of calculating the vote with respect to such proposal, but shall
not be deemed to have been voted in favor of such proposal. Abstentions as to
any proposal, therefore, will have the same effect as votes against such
proposal. If a broker returns a "non-vote" proxy, indicating a lack of voting
instruction by the beneficial holder of the shares and a lack of discretionary
authority on the part of the broker to vote on a particular proposal, then the
shares covered by such non-vote proxy shall be deemed present at the Annual
Meeting for purposes of determining a quorum, but shall not be deemed to be
present at the Annual Meeting for purposes of calculating the vote required for
approval of such proposal.
OUTSTANDING SHARES AND VOTING RIGHTS
The Board of Directors of the Company has fixed April 7, 1999 as the record
date (the "Record Date") for determining shareholders entitled to vote at the
Annual Meeting. Persons who were not shareholders on the Record Date will not be
allowed to vote at the Annual Meeting. At the close of business on the Record
Date, 9,639,312 shares of ASV's Common Stock were issued and outstanding. Each
share of Common Stock is entitled to one vote on each matter to be voted upon at
the Annual Meeting. Holders of the Common Stock are not entitled to cumulative
voting rights. Generally, the affirmative vote of a majority of the shares of
Common Stock present and entitled to vote on each matter is required for the
election of each director nominee and the approval of each other matter to be
acted upon. However, if the shares present and entitled to vote on that item of
business would not constitute a quorum for the transaction of business at the
meeting, then the item must be approved by a majority of the voting power of the
minimum number of shares that would constitute such a quorum.
2
<PAGE>
ELECT TEN DIRECTORS TO THE BOARD OF DIRECTORS
(Proposal #1)
The Board of Directors has set the number of directors to be elected for
the ensuing year at ten (10). The Board of Directors has nominated the ten
current directors of the Company: Gary D. Lemke, Edgar E. Hetteen, Philip C.
Smaby, Jerome T. Miner, Leland T. Lynch, Karlin S. Symons, James H. Dahl, R. E.
"Teddy" Turner, IV, Richard A. Benson and Richard A. Cooper (the "Nominees") to
stand for election at the Annual Meeting. The ten current directors of the
Company have consented to stand for reelection.
Vote Required. THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" EACH OF THE NOMINEES.
In the absence of other instructions, the Proxies will be voted for each of
the Nominees. If elected, each Nominee shall serve until the next annual meeting
of shareholders and until his or her successor has been elected and qualified.
If any of the Nominees should be unable to serve as director by reason of death,
incapacity or other unexpected occurrence, the Proxies solicited by Board of
Directors shall be voted by the proxy representatives for such substitute
nominee(s) as is recommended by the Board of Directors, or, in the absence of
such recommendation, for such fewer number of directors as remain willing and
able to serve.
The following provides certain information with respect to the Company's
director nominees and executive officers.
Gary D. Lemke, 58, has been President of A.S.V., Inc. since he co-founded
the Company in 1983. Mr. Lemke has been a director of the Company since 1983.
Edgar E. Hetteen, 78, has been Vice President and Secretary of A.S.V., Inc.
since he co-founded the Company in 1983. Mr. Hetteen has been a director of the
Company since 1983.
Philip C. Smaby, 80, has been Chairman of A.S.V., Inc. since 1987, and is
currently retired. Mr. Smaby has been a director since 1983. Mr. Smaby is a
member of the board of directors of the National Association of Realtors and the
International Real Estate Federation. Mr. Smaby is an uncle to Ms. Symons.
Jerome T. Miner, 63, has been Vice Chairman of A.S.V., Inc. since 1995, has
been President of Jerry Miner Realty, Inc., an owner and operator of various
retail stores in Grand Rapids, Minnesota, since 1984. Mr. Miner has been a
director of the Company since 1991.
Leland T. Lynch, 62, has been Managing Partner, Chairman and Chief
Executive Officer of Carmichael Lynch Inc. since 1962. Mr. Lynch has been a
director of the Company since 1995. Mr. Lynch is the immediate past Chairperson
of the Minneapolis Downtown Council.
Karlin S. Symons, 52, has been an attorney/partner with the law firm of
Kaplan, Strangis and Kaplan of Minneapolis, Minnesota since 1989. Ms. Symons has
been a director of the Company since 1995. Ms. Symons is the immediate past
Chairperson of the Board of Trustees of The William Mitchell College of Law and
is the niece of Mr. Smaby.
James H. Dahl, 45, has been the President of James Dahl & Company, a
private investment company, since 1989 and the Managing General Partner of Rock
Creek Partners, Ltd., a private investment partnership, since 1993. Mr. Dahl has
been a director of the Company since 1996.
R. E. "Teddy" Turner IV, 35, has been the Chairman of the Board of e.TV
Commerce, Inc., a network communications marketing company, since 1998. From
1996 to 1998, Mr. Turner was the President of Turner Telecommunications Co.,
LLC, an advanced video technology company. From 1993 to 1996, Mr. Turner was the
Southeast Regional Sales Manager of Turner Home Entertainment. Mr. Turner is a
Trustee of the Turner Foundation. Mr. Turner has been a director of the Company
since 1997.
Richard A. Benson, 56, has been Vice President of Caterpillar Inc.,
Diversified Products Division since 1992. Mr. Benson has been a director of the
Company since January 1999.
Richard A. Cooper, 48, has been the President of Caterpillar Paving
Products, Inc., a subsidiary of Caterpillar, Inc. since 1996. From 1991-1996,
Mr. Cooper held the position of General Manager, Caterpillar Paving Products,
Inc. Mr. Cooper has been a director of the Company since January 1999.
3
<PAGE>
Thomas R. Karges, 38, has been the Company's Chief Financial Officer since
October 1994. Mr. Karges was previously with the accounting firm of McGladrey &
Pullen since 1983 in Minneapolis, Minnesota and Rapid City, South Dakota.
Board Meetings and Committees
During fiscal 1998, the Board of Directors met five times. In addition to
meetings of the full Board, directors also attended various Board committee
meetings. All directors attended 85% or more of the total number of meetings of
the Board of Directors and Committees of which they were a member, except that
Mr. Miner attended 57% of such meetings.
Directors and Committee members frequently take formal action by written
consent, in accordance with Minnesota law, rather than hold formal Board and
Committee meetings.
The Company's Board of Directors has two standing committees.
The Audit Committee reviews the results and scope of the audit and other
accounting related services. Present members of the Audit Committee are Mr.
Miner, Ms. Symons and Mr. Dahl. The Audit Committee met one time in 1998.
The Compensation and Stock Option Committee provides recommendations
concerning salaries and incentive compensation for officers and employees of the
Company. Present members of the Compensation and Stock Option Committee are Mr.
Miner, Ms. Symons and Mr. Lynch. The Compensation and Stock Option Committee met
one time in 1998.
The Company does not have a nominating committee for Board of Director
nominees.
Compensation of Directors
General Policy. In 1998, the Company discontinued its policy of paying its
non-employee directors a fee of $1,250 per meeting attended. The director fees
were replaced with a Non-Employee Director Stock Option Plan as discussed below.
In addition, the Company reimburses directors for expenses incurred in
connection with attendance at Board meetings.
Stock Options. In June 1998, the Company's shareholders approved the 1998
Non-Employee Director Stock Option Plan (the "Director Plan") which provides for
the automatic grant of an option to purchase 15,000 shares of Common Stock of
the Company to each director who is not an employee of the Company on the first
business day of each calendar year, beginning January 1999. The Director Plan
also provides for the grant of an option to purchase 11,250 shares of Common
Stock to each non-employee director on the date such director is first elected
to the Board. Grants under the Director Plan are intended to replace cash
compensation and discretionary option grants made to directors in the past,
although the Company, in its discretion, may provide additional compensation to
its non-employee directors in the future.
In December 1998, however, the Board of Directors unanimously approved a
resolution reducing the number of shares subject to the options to be granted
under the Director Plan in 1999 from 15,000 shares to 1,000 shares. As a result,
options to purchase 1,000 shares of the Company's Common Stock at $17.88 per
share were granted on January 4, 1999 to Messrs. Smaby, Miner, Lynch, Dahl and
Turner and Ms. Symons.
With their election to the Board of Directors in January 1999, Messrs.
Benson and Cooper were eligible to receive options to purchase 11,250 shares of
the Company's Common Stock at $17.88. However, Messrs. Benson and Cooper
declined the option due to their employment by Caterpillar Inc.
Directors who are also employees of the Company do not receive any
additional compensation for serving on the Board of Directors, but may receive
stock options as part of their compensation as officers of the Company.
4
<PAGE>
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Overview
The Company's Compensation and Stock Option Committee (the "Compensation
Committee") is responsible for establishing compensation policies for all
executive officers of the Company, including the Company's President. The
members of the Compensation Committee are Ms. Symons, Mr. Miner and Mr. Lynch.
The Compensation Committee establishes the total compensation for the executives
officers. The Compensation Committee is composed entirely of outside Directors.
The objectives of the Company's executive compensation program are:
1. to attract, retain and motivate superior talent and reward individual
performance;
2. to support the achievement of the Company's strategic goals; and
3. through stock based compensation, align the executive officers'
interests with those of the shareholders of the Company.
The following report addresses the Company's executive compensation
policies and discusses factors considered by the Compensation Committee in
determining the compensation of the Company's President and other executive
officers for the year ended December 31, 1998.
Compensation policies for executive officers
The Compensation Committee's executive compensation policies are designed
to provide competitive levels of compensation that integrate pay with the
Company's annual and long term performance goals, reward the achievement of
corporate goals, recognize individual initiative and achievements, and assist
the Company in attracting and retaining qualified executives. The Company's
executive officers are paid base salaries that are subject to annual
cost-of-living increases, along with periodic adjustments to recognize favorable
corporate and individual performance and also to make such salaries competitive
with other similar sized companies in the manufacturing industry. The Company's
executive officers are also given the opportunity to participate in certain
other broad-based employee benefit plans. The Company's use of stock option
grants as a key component of its executive compensation plans reflects the
Compensation Committee's position that stock ownership by management and stock
based compensation arrangements are beneficial in aligning management's and
shareholders' interests to enhance shareholder value. The Compensation Committee
believes that a greater reliance on stock-based incentives is appropriate for
the Company's current stage of development.
Incentive Compensation
For fiscal year 1998, the Company had no formalized incentive compensation
plan for executive officers or management employees. However, certain executive
officers and management employees were awarded discretionary bonuses totaling
$25,000 in connection with their efforts in the Company's transaction with
Caterpillar Inc. as discussed below.
For fiscal year 1999, the Compensation Committee and the Board of Directors
approved an incentive compensation plan for all salaried employees, including
executive officers. The plan provides for additional compensation up to 25% of
each covered employees' salary in the event certain revenue goals are attained
for fiscal year 1999. Any additional compensation earned during fiscal year 1999
under this plan would be paid in fiscal year 2000.
Stock Options
Stock options awarded under the Company's 1994 Long-Term Incentive and
Stock Option Plan and 1996 Incentive and Stock Option Plan are intended as
incentive compensation and have historically been granted to officers and other
key employees to attract, retain and motivate the talent necessary for the
Company to achieve its objectives. The Company's policy is to grant stock
options annually in connection with a review of each individual's performance of
their job functions, at which point the Compensation Committee may or may not
grant additional options at its discretion. The Company also grants stock
options to newly hired employees as part of their overall compensation package.
5
<PAGE>
The 1996 Incentive and Stock Option Plan provides for the granting of
options to those employees who are not subject to Section 16(b) of the
Securities Exchange Act of 1934 without the approval of the Compensation
Committee. In 1998, stock option grants totaling 9,375 shares were granted to
two employees in this manner.
Stock option grants totaling 49,000 shares were approved by the
Compensation Committee in December 1998 to be granted to 20 employees in January
1999. In consideration of option grants made in prior years, no options were
granted to any executive officer in 1998.
President's compensation
Gary D. Lemke serves as the Company's President and Chief Executive
Officer. Compensation for Mr. Lemke during 1998, as reflected in the Summary
Compensation Table set forth herein, consisted of base compensation only. Mr.
Lemke's base compensation for 1998 was increased 14 percent from his base salary
in 1997 to reflect a cost-of-living increase and to recognize favorable
corporate and individual performance. In consideration of option grants made in
prior years, no stock options were granted to Mr. Lemke in 1998.
At this time the Committee has no formal written plan for Presidential
compensation separate and apart from the Company's general compensation
philosophy. Until a plan specific to the President is developed, Presidential
compensation will be based on corporate and individual performance, consistent
with guidelines applicable to all key employees.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE COMPANY'S BOARD OF DIRECTORS:
Karlin S. Symons Jerome T. Miner Leland T. Lynch
SUMMARY COMPENSATION TABLE
The following table sets forth the total remuneration paid during the
Company's last three fiscal years to the Company's President and Chief Executive
Officer. No other executive officer of the Company earned total annual salary
and bonus in fiscal 1998 in excess of $100,000.
Long-Term
Annual Compensation
Compensation --------------------
Fiscal ---------------- Number of Securities
Name Year Salary Bonus Underlying Options
---- ---- ------ ----- ------------------
Gary D. Lemke.... 1998 $ 125,000 --- ---
1997 110,000 --- 150,000
1996 94,000 --- 461,250
OPTION GRANTS IN LAST FISCAL YEAR
In consideration of option grants made in prior years, there were no grants
of options to purchase Common Stock made during fiscal 1998 to the executive
officer named in the Summary Compensation Table above.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table summarizes information related to options exercised
during fiscal 1998 and the number and value of options held at the end of fiscal
1998 by the executive officer named in the Summary Compensation Table above.
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options at In-the-Money Options
Shares Value December 31, 1998 at December 31, 1998 (2)
Acquired on Realized ---------------------------- ---------------------------
Name Exercise (#) ($) (1) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gary D. Lemke........... 22,500 $334,375 277,126 338,624 $1,486,551 $1,288,490
</TABLE>
- ----------
(1) Market value of underlying securities on date of exercise minus the
exercise price.
(2) Market value of underlying securities at fiscal year end minus the exercise
price.
6
<PAGE>
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total shareholder return on the
Company's Common Stock since the Company's initial public offering on August 11,
1994 with the cumulative total return on the Total Return Index for the Nasdaq
Stock Market (U.S. Companies) and the Total Return Index for Nasdaq
Non-Financial Stocks over the same period (assuming the investment of $100 in
each on August 11, 1994 and the reinvestment of all dividends).
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
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8/11/94 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
A.S.V., Inc. $100.00 $103.85 $196.15 $857.69 $1,338.46 $1,237.50
- ---------------------------------------------------------------------------------------------------------
NASDAQ - U. S. Companies 100.00 103.78 146.79 180.51 221.39 311.95
- ---------------------------------------------------------------------------------------------------------
NASDAQ - Non-Financial Companies 100.00 105.82 147.49 179.19 210.12 307.93
- ---------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of April 7, 1999 by: (i)
each director of the Company, (ii) each executive officer of the Company named
in the Summary Compensation Table, (iii) all directors and executive officers of
the Company as a group and (iv) each person or entity known by the Company to
own beneficially more than five percent of the Company's Common Stock.
<TABLE>
<CAPTION>
Shares Beneficially Percent of Outstanding
Name Owned (1) Shares (1)
---- ----------------------- ----------------------
<S> <C> <C>
Caterpillar Inc. (2)........................... 11,267,127 (3) 56.6%
James H. Dahl (4).............................. 951,163 (5) 9.8%
Gary D. Lemke (6) ............................. 891,506 (7) 8.7%
Philip C. Smaby................................ 384,681 (8) 4.0%
Jerome T. Miner................................ 383,850 (9) 4.0%
Edgar E. Hetteen............................... 306,002 (10) 3.1%
Leland T. Lynch................................ 68,500 (11) *
Karlin S. Symons............................... 39,368 (12) *
R. E. "Teddy" Turner, IV....................... 27,000 (13) *
Richard A. Benson.............................. - *
Richard A. Cooper.............................. - *
All executive officers and
directors as a group (11 persons)............ 3,192,584 (14) 30.1%
</TABLE>
- ----------
* Less than 1%.
(1) Beneficial ownership is determined in accordance with rules of the
Securities and Exchange Commission, and includes generally voting power
and/or investment power with respect to securities. Shares of Common Stock
subject to options or warrants currently exercisable or exercisable within
60 days of April 7, 1999 are deemed outstanding for computing the
beneficial ownership percentage of the person holding such options but are
not deemed outstanding for computing the beneficial ownership percentage of
any other person. Except as indicated by footnote, the persons named in the
table above have the sole voting and investment power with respect to all
shares of Common Stock shown as beneficially owned by them.
(2) The address of Caterpillar Inc. is 100 Northeast Adams St., Peoria, IL
61629-2495.
(3) Includes 10,267,127 shares subject to a warrant exercisable within 60 days.
(4) The business address of Mr. Dahl is 1200 Riverplace Boulevard, Suite 902,
Jacksonville, FL 32207.
(5) Includes 26,250 shares subject to options exercisable within 60 days,
763,330 shares owned by Rock Creek Partners, Ltd., an investment
partnership, of which Mr. Dahl is the Managing General Partner, 20,883
shares owned by an IRA established for the benefit of Mr. Dahl and 140,700
shares owned by a trust established for the benefit of Mr. Dahl's minor
children.
(6) The business address of Mr. Lemke is 840 Lily Lane, Grand Rapids, MN 55744.
(7) Includes 615,750 shares subject to options exercisable within 60 days,
143,209 shares held jointly with Mr. Lemke's wife, 61,363 shares held by
Mr. Lemke's wife and 5,566 shares held in the Company's 401(k) Plan.
(8) Includes 24,000 shares subject to options exercisable within 60 days and
44,500 shares held by the Smaby Family Limited Partnership of which Mr.
Smaby is the sole general partner.
(9) Includes 24,000 shares subject to options exercisable within 60 days.
(10) Includes 96,187 shares subject to options exercisable within 60 days and
113,100 shares held by Mr. Hetteen's wife.
(11) Includes 15,000 shares subject to options exercisable within 60 days.
(12) Includes 19,500 shares subject to options exercisable within 60 days.
(13) Includes 26,250 shares subject to options exercisable within 60 days.
(14) Includes an aggregate of 976,612 shares of Common Stock that are subject to
options from the Company exercisable within 60 days by executive officers
and directors, 8,828 shares held in the Company's 401(k) Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1986, a patent was issued to the Company with respect to the
Posi-Turn-TM- power steering system. The steering system was invented by Gary
Lemke, President of the Company, and his rights with respect to the invention
were assigned by him to the Company. In connection with the assignment, the
Company did not pay any compensation to Mr. Lemke, but agreed that in the event
the Company licenses any of its rights under the patent to others, Mr. Lemke
will receive 25% of any royalties under such license. This royalty agreement was
terminated in January 1999 with no consideration paid to Mr. Lemke.
8
<PAGE>
In December 1996, the Company entered into a five year consulting agreement
with a private consulting firm which is owned by Mr. Dahl's brother. James Dahl
provides contract services to this consulting firm. In connection with the
consulting agreement, the Company issued a warrant to the consulting firm for
the purchase of 337,500 shares of the Company's Common Stock at $7.33 per share
in exchange for monthly consulting services to be received over the term of the
agreement. The warrant price was the approximate fair market value on the date
the Company and the private consulting firm orally agreed to enter into the
consulting agreement. The warrant became exercisable and transferable in
December 1997. The warrant expires December 2006. Mr. Dahl disclaims any
beneficial ownership in the shares that may be obtained upon exercise of the
warrant by the consulting firm.
On October 14, 1998, the Company entered into a Securities Purchase
Agreement (the "Purchase Agreement") with Caterpillar Inc. ("Caterpillar")
pursuant to which Caterpillar acquired, for an aggregate purchase price of
$18,000,000, one million newly-issued shares of the Company's Common Stock and a
warrant (the "Warrant") to purchase an additional 10,267,127 newly-issued shares
of the Company's Common Stock at an exercise price of $21.00 per share. The
purchase of the Common Stock and the Warrant pursuant to the Purchase Agreement
closed on January 29, 1999 (the "Closing Date"). The Purchase Agreement contains
certain agreements regarding various matters including (i) the conduct of the
Company's business following the Closing Date, (ii) Caterpillar's right to
designate directors of the Company, (iii) Caterpillar's right of first offer
with respect to future stock issuances by the Company and (iv) the issuance of
additional warrants to Caterpillar in the event the Company issues additional
shares of stock (except in certain limited circumstances). The Warrant is
exercisable at any time from the Closing Date until the tenth anniversary of the
Closing Date, except that it may expire with respect to a portion of the shares
in the event the Company meets certain revenue levels and certain other
conditions are met.
In connection with entering into the Purchase Agreement, the Company and
Caterpillar entered into a commercial alliance agreement (the "Commercial
Alliance agreement") on October 14, 1998, pursuant to which the Company and
Caterpillar agreed to enter into a number of additional agreements
contemporaneously with or following the closing of the transaction contemplated
by the Purchase Agreement.
On the Closing Date, the Company and Caterpillar entered into a Marketing
Agreement which requires Caterpillar to provide the Company with access to its
worldwide distribution network, in part, by promoting the sale of the Company's
products to Caterpillar's dealers, and requires the Company to pay a commission
to Caterpillar for sales of certain of the Company's products to Caterpillar
dealers plus the cost of certain additional services that may be provided by
Caterpillar under the agreement. Also on the Closing Date, the Company and
Caterpillar entered into a Management Services Agreement pursuant to which
Caterpillar agreed to make available to the Company, for a fee, general
management support in connection with the day-to-day operation of its business,
commercial development and marketing research services, financial planning
services, such other administrative services as the Company and Caterpillar may
agree, and manufacturing and engineering services. Unless otherwise agreed, the
fee to be paid for these services is equal to Caterpillar's cost plus an
administrative surcharge.
The Commercial Alliance Agreement also provides that the Company and
Caterpillar enter into several additional agreements in the future, including
(i) a Trademark and Trade Dress Agreement, to be entered into at such time as
the Company's products have been found to meet Caterpillar's quality and safety
standards, pursuant to which Caterpillar will grant to the Company the right to
use certain trademarks of Caterpillar on the Company's products for a fee equal
to a percentage of the dealer net price for products sold with such trademarks,
(ii) a Services Agreement pursuant to which Caterpillar will offer to the
Company certain financial services, logistics services and services to promote
the Company's products to government bodies, and the Company will agree to use
such services if the prices to be negotiated are competitive, (iii) a Supply
Agreement (Caterpillar to Company) pursuant to which Caterpillar will offer to
supply Caterpillar components to the Company for incorporation into the
Company's products, (iv) a Supply Agreement (Company to Caterpillar) pursuant to
which the Company will offer to supply its components to Caterpillar for
incorporation into Caterpillar's products that do not compete with the Company's
products, (v) a Technology License Agreement (Company to Caterpillar) pursuant
to which the Company will offer to license to Caterpillar the right to use the
Company's proprietary patents and know-how relating to all-terrain rubber track
vehicles in the design, manufacture, use and sale of Caterpillar's products that
do not compete directly with the Company's products and (vi) a Joint Venture
Agreement pursuant to which the Company and Caterpillar will establish a 50-50
joint venture company to design and develop a line of agricultural tractors
utilizing key aspects of the parties' respective technology and know-how.
9
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers and directors of the Company, and persons who beneficially own more
than 10% of the Company's outstanding shares of Common Stock, to file initial
reports of ownership and reports of changes in ownership of securities of the
Company with the Securities and Exchange Commission. Officers, directors and
greater than 10% shareholders are required by the Securities and Exchange
Commission to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on a review of the copies of such reports furnished to or
obtained by the Company, the Company believes during the fiscal year ended
December 31, 1998, all filing requirements applicable to its directors, officers
or beneficial owners of more than 10% of the Company's outstanding shares of
Common Stock were complied with, except Philip C. Smaby filed late one report on
Form 5 relating to one transaction during June 1997.
RATIFY THE APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
(Proposal #2)
The Board of Directors unanimously recommends that the shareholders ratify
the appointment of Grant Thornton LLP, independent public accountants, as the
Company's independent public accountants for the fiscal year ending December 31,
1999. Unless otherwise instructed, the Proxies will be so voted. Representatives
of Grant Thornton LLP are expected to be present at the Annual Meeting, will be
given an opportunity to make a statement regarding financial and accounting
matters of the Company if they so desire, and will be available to respond to
appropriate questions from the Company's shareholders.
PROPOSALS FOR THE NEXT ANNUAL MEETING
In order to be eligible for inclusion in the Company's proxy solicitation
materials for its next annual meeting of shareholders, any shareholder proposal
to be considered at such meeting must be received at the Company's principal
executive offices, P.O. Box 5160, Grand Rapids, Minnesota 55744, not later than
January 3, 2000. Management may use discretionary authority to vote against any
shareholder proposal presented at the 2000 annual meeting if: (1) such proposal
has been properly omitted from the Company's proxy materials under federal
securities law; (2) notice of such proposal was not submitted to the Secretary
of the Company at the address listed above by March 19, 2000; or (3) the
proponent has not solicited proxies in compliance with federal securities laws
from the holders of at least the percentage of the Company's voting shares
required to carry the proposal.
ADDITIONAL MATTERS
The Board of Directors of the Company do not presently know of any matters
to be presented for consideration at the Annual Meeting of Shareholders other
than the matters described in the Notice of Annual Meeting of Shareholders
mailed together with this Proxy Statement, but if other matters are presented it
is the intention of the persons named in the accompanying proxy to vote on such
matters in accordance with their best judgment. The proxy confers discretionary
authority to vote only with respect to matters that the Board of Directors of
the Company did not know, prior to March 19, 1999, were to be presented at the
Annual Meeting of Shareholders.
ANNUAL AND QUARTERLY REPORT
A copy of the Company's Annual Report to Shareholders for the fiscal year
ended December 31, 1998, including financial statements, and a copy of the
Company's Quarterly Report to Shareholders for the three months ended March 31,
1999, accompany this Notice of Annual Meeting and Proxy Statement. No portion of
the Annual Report is incorporated herein or is to be considered proxy soliciting
material.
THE COMPANY WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT ON
FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998, TO ANY SHAREHOLDER OF THE
COMPANY UPON WRITTEN REQUEST. REQUESTS SHOULD BE SENT TO THOMAS R. KARGES, CHIEF
FINANCIAL OFFICER, A.S.V., INC., P.O. BOX 5160, GRAND RAPIDS, MINNESOTA 55744.
Dated: May 3, 1999
Grand Rapids, Minnesota
10
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A.S.V., Inc.
Proxy for Annual Meeting of Shareholders
This proxy is solicited on behalf of the Board of Directors
The undersigned appoints Gary D. Lemke and Thomas R. Karges, and each of them,
with power to act without the other and with all the right of substitution in
each, the proxies of the undersigned to vote all shares of A.S.V., Inc. (the
"Company") held by the undersigned on Wednesday, April 7, 1999, at the Annual
Meeting of Shareholders of the Company, to be held on Friday, June 4, 1999, at
2:00 p.m., local time, at the Myles Reif Performing Arts Center, 720 Conifer
Drive, Grand Rapids, Minnesota 55744, and all adjournments thereof, with all
powers the undersigned would possess if present in person. All proxies given
with respect to the meeting are revoked.
The Board of Directors recommends that you vote "FOR" the following proposals:
(1) ELECTION OF THE FOLLOWING NOMINEES FOR DIRECTORS:
Gary D. Lemke, Edgar E. Hetteen, Philip C. Smaby, Jerome T. Miner,
Leland T. Lynch, Karlin S. Symons, James H. Dahl,
R. E. "Teddy" Turner, IV, Richard A. Benson and Richard A. Cooper.
[ ] FOR all nominees listed above [ ] WITHHOLD AUTHORITY
(except those whose names have to vote for all nominees
been written on the line below) listed above
(To withhold authority to vote for any nominee,
write that nominee's name on the line below)
- --------------------------------------------------------------------------------
(Continued, and to be signed, on the reverse side)
(Continued from other side)
(2) PROPOSAL TO RATIFY APPOINTMENT OF GRANT THORNTON LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) OTHER MATTERS. In their discretion, the appointed proxies are authorized to
vote upon such other business as may properly come before the Meeting or
any adjournment.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS PROVIDED BY THE UNDERSIGNED
SHAREHOLDER, THIS PROXY WILL BE VOTED "FOR" THE ITEMS LISTED HEREIN, AND UPON
ALL OTHER MATTERS, THE PROXIES SHALL VOTE AS THEY DEEM IN THE BEST INTERESTS OF
THE COMPANY.
Please sign exactly as your name
appears hereon. Jointly owned
shares will be voted as directed if
one owner signs unless another
owner instructs to the contrary, in
which case the shares will not be
voted. If signing in a
representative capacity, please
indicate title and authority.
Dated: ____________________, 1999
_________________________________
Signature
