<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
A.S.V., 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:
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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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Notes:
<PAGE>
[LOGO OF ASV]
A.S.V., Inc.
----------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held
June 2, 2000
----------
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 2, 2000 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,
2000.
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 and the Company's 1999 Annual Report to Shareholders, 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 11, 2000 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.
Please join us for factory tours and product demonstrations from 10 a.m.
to 12 noon on Friday, June 2. A map to our facility is located on the inside
front cover of the proxy statement.
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,
Edgar E. Hetteen
Secretary
Dated: May 1, 2000
Grand Rapids, Minnesota
<PAGE>
A.S.V., Inc.
840 Lily Lane
Grand Rapids, Minnesota 55744
PROXY STATEMENT
for
Annual Meeting of Shareholders
to be held June 2, 2000
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 2, 2000 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 1, 2000.
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 11, 2000 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, 9,692,565 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.
1
<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, 59, 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, 79, 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, 81, 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, 64, 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, 63, 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 past Chairperson of the
Minneapolis Downtown Council.
Karlin S. Symons, 53, 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 past Chairperson of
the Board of Trustees of The William Mitchell College of Law and is the niece of
Mr. Smaby.
James H. Dahl, 46, 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, 36, has been the Chairman of the Board of
MyTurn.com, Inc., a telecommunication company, since 1998. From 1996 to 1998,
Mr. Turner was the President of Turner Telecommunications Co., LLC, an advanced
video technology company. Mr. Turner is a director of MyTurn.com, Inc. and a
Trustee of the Turner Foundation. Mr. Turner has been a director of the Company
since 1997.
Richard A. Benson, 57, 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, 49, has been the President of Caterpillar Paving
Products, Inc., a subsidiary of Caterpillar, Inc. since 1996. From 1991-1995,
Mr. Cooper held the position of General Manager, Caterpillar Paving Products,
Inc. Mr. Cooper has been a director of the Company since January 1999.
2
<PAGE>
Thomas R. Karges, 39, has been the Company's Chief Financial Officer since
October 1994. Mr. Karges was previously with the accounting firm of McGladrey &
Pullen since 1983.
Messrs. Benson and Cooper were appointed to the Board of Directors
pursuant to the terms of the Securities Purchase Agreement dated October 14,
1998 between Caterpillar Inc. and the Company.
Board Meetings and Committees
During fiscal 1999, the Board of Directors revised its meeting schedule.
Prior to 1998, the Board of Directors conducted meetings on approximately a
bi-monthly schedule. In 1999, the meeting schedule was revised to provide for
quarterly meetings, beginning in April 1999. As a result of the revised meeting
schedule format, the Board of Directors met three times in 1999. In addition to
meetings of the full Board, directors also attended various Board committee
meetings. All directors attended 75% or more of the total number of meetings of
the Board of Directors and Committees of which they were members, except Mr.
Cooper who missed one meeting.
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 Messrs.
Dahl (Chair), Miner and Benson.
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 Ms.
Symons (Chair) and Messrs. Turner and Cooper.
With the revised Board of Director meeting schedule format adopted in
1999, the Audit Committee and the Compensation and Stock Option Committee
meetings, which historically had been held in conjunction with the December
Board of Directors meeting, were held in January 2000. Therefore, no Audit
Committee or Compensation and Stock Option Committee meetings were held in 1999.
The Company does not have a nominating committee for Board of Director
nominees.
Compensation of Directors
General Policy. The Company does not pay its directors a fee for
attendance at Board of Director or Committee meetings. Non-employee directors
are eligible for stock option grants under the 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 January 2000, 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 2000 from 15,000 shares to 5,000 shares. As a result,
options to purchase 5,000 shares of the Company's Common Stock at $18.00 per
share were granted on January 18, 2000, the date of the resolution, to Messrs.
Smaby, Miner, Lynch, Dahl and Turner and Ms. Symons. In addition, the Board of
Directors unanimously approved a resolution reducing the number of shares
subject to the options to be granted to existing Board members under the
Director Plan in future years from 15,000 shares to 3,000 shares. The resolution
also reduced the number of shares subject to the options to be granted to new
Board members under the Director Plan from 11,250 shares to 2,250 shares.
Messrs. Benson and Cooper were eligible to receive options to purchase
5,000 shares of the Company's Common Stock at $18.00 per share in January 2000
and 11,250 shares of the Company's Common Stock at $17.88 per share in January
1999. However, Messrs. Benson and Cooper declined the option due to their
employment by Caterpillar Inc.
3
<PAGE>
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.
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 and Messrs. Turner and
Cooper. The Compensation Committee establishes the total compensation for the
executive 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, 1999.
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.
During 1999, the Compensation Committee commissioned an unrelated third
party to prepare a study of salary information for executive officers for other
publicly-help manufacturing companies in the Midwest United States. The results
of this study indicated the total short-term compensation of executive officers
was below market average, and were taken into consideration in determining to
increase the base salary levels for its executive officers for 2000.
Incentive Compensation
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 were
attained for fiscal year 1999. No bonuses were accrued or paid under this plan
for fiscal year 1999, as the revenue goals were not attained.
For fiscal year 2000, the Company has no formalized incentive compensation
plan for executive officers or management employees.
4
<PAGE>
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 and their current stock option holdings, 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.
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 1999, stock option grants totaling 49,750 shares were granted to
twenty employees in this manner. In consideration of option grants made in prior
years, no options were granted to any executive officer in 1999.
Stock option grants totaling 120,000 shares were approved by the
Compensation Committee in January 2000 to be granted to all full-time employees
in February and March 2000. Included in this figure are stock option grants
totaling 25,000 to be granted to executive officers on February 1, 2000.
President's compensation
Gary D. Lemke serves as the Company's President and Chief Executive
Officer. Compensation for Mr. Lemke during 1999, as reflected in the Summary
Compensation Table set forth herein, consisted of base compensation only. Mr.
Lemke's base compensation for 1999 was increased 20 percent from his base salary
in 1998 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 1999.
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 - Chair R.E. "Teddy" Turner, IV Richard A. Cooper
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 1999 in excess of $100,000.
Annual Long-Term
Compensation Compensation
Fiscal ---------------- Number of Securities
Name Year Salary Bonus Underlying Options
---- ---- ------ ----- ------------------
Gary D. Lemke...... 1999 $ 150,000 $ --- ---
1998 125,000 --- ---
1997 110,000 --- 150,000
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 1999 to the
executive officer named in the Summary Compensation Table above.
5
<PAGE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table summarizes information related to the number and value
of options held at the end of fiscal 1999 by the executive officer named in the
Summary Compensation Table above. No options were exercised during 1999 by this
executive officer.
Number of Unexercised Value of Unexercised
Options at In-the-Money Options
December 31, 1999 at December 31, 1999 (1)
----------------- ------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
Gary D. Lemke... 615,750 --- $ 795,603 $ ---
(1) Market value of underlying securities at fiscal year end ($13.625)
minus the exercise price.
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total shareholder return on the
Company's Common Stock for the five fiscal years ended December 31, 1999 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 December
31, 1994 and the reinvestment of all dividends).
COMPARISON OF CUMULATIVE TOTAL RETURN
[LINE GRAPH OMITTED]
<TABLE>
<CAPTION>
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12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
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<S> <C> <C> <C> <C> <C> <C>
A.S.V., Inc. $100.00 $188.87 $825.93 $1,288.87 $1,191.67 $908.33
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NASDAQ - U. S. Companies 100.00 141.34 173.89 213.07 300.25 542.43
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NASDAQ - Non-Financial Companies 100.00 139.26 169.16 198.09 290.32 559.35
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</TABLE>
6
<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 11, 2000 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) 56.5%
James H. Dahl (4)......................... 951,413 (5) 9.8
Gary D. Lemke (6) ........................ 892,260 (7) 8.7
Jerome T. Miner........................... 381,500 (8) 3.9
Philip C. Smaby........................... 347,541 (9) 3.6
Edgar E. Hetteen.......................... 278,052 (10) 2.9
Leland T. Lynch........................... 93,750 (11) 1.0
Karlin S. Symons.......................... 37,118 (12) *
R. E. "Teddy" Turner, IV.................. 27,250 (13) *
Richard A. Cooper......................... 100 *
Richard A. Benson......................... - *
All executive officers and
directors as a group (11 persons)....... 3,149,889 (14) 29.7
</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 11, 2000 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 26,500 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 6,260 shares held in the Company's 401(k) Plan.
(8) Includes 24,250 shares subject to options exercisable within 60 days.
(9) Includes 24,250 shares subject to options exercisable within 60 days and
41,500 shares held by the Smaby Family Limited Partnership of which Mr.
Smaby is the sole general partner and 36,000 shares held by the Philip
Smaby Charitable Remainder Trust of which Mr. Smaby is the Trustee.
(10) Includes 55,687 shares subject to options exercisable within 60 days and
113,100 shares held by Mr. Hetteen's wife.
(11) Includes 15,250 shares subject to options exercisable within 60 days and
10,000 shares held by Mr. Lynch's wife.
(12) Includes 19,750 shares subject to options exercisable within 60 days.
(13) Includes 26,500 shares subject to options exercisable within 60 days.
(14) Includes an aggregate of 918,187 shares of Common Stock that are subject
to options exercisable within 60 days by executive officers and directors
and 10,215 shares held in the Company's 401(k) Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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.
7
<PAGE>
The Company uses a public relations firm that is affiliated with Mr.
Lynch. Total fees paid to the public relations firm in 1999 were approximately
$229,000.
Affiliation with Caterpillar Inc.
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 occurred pursuant to the Purchase
Agreement which 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.
During 1999, the Company purchased parts used in its products from
Caterpillar. The Company also reimburses Caterpillar for the salary related
costs of two Caterpillar employees that work on the Company's behalf. In
addition, the Company utilizes Caterpillar's warranty processing system to
handle warranty claims on its machines and reimburses Caterpillar for the
warranty expense incurred by Caterpillar dealers.
During 1999, total parts purchases and salary and warranty reimbursements
were approximately $2,459,000. Also, at December 31, 1999, accounts payable to
Caterpillar was $614,500.
8
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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, 1999, 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 and Richard A. Cooper
each filed late one report on Form 4 relating to one transaction each during May
1999 and August 1999, respectively.
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,
2000. Unless otherwise instructed, the Proxies will be so voted. Grant Thornton
LLP has been the Company's independent public accountant since 1994.
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 1, 2001. Pursuant to the Company's Bylaws, in order for business to be
properly brought before the next annual meeting by a shareholder, the
shareholder must give written notice of such shareholder's intent to bring a
matter before the annual meeting no later January 1, 2001. Each such notice
should be sent to the Secretary, and must set forth certain information with
respect to the shareholder who intends to bring such matter before the meeting
and the business desired to be conducted, as set forth in greater detail in the
Company's Bylaws. Any such proposal will be subject to the requirements of the
proxy rules adopted by the Securities Act of 1934.
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 January 1, 2001; 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, 2000, were to be presented at the
Annual Meeting of Shareholders.
9
<PAGE>
ANNUAL REPORT
A copy of the Company's Annual Report to Shareholders for the fiscal year
ended December 31, 1999, including financial statements, 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, 1999, 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 1, 2000
Grand Rapids, Minnesota
10
<PAGE>
A.S.V., INC.
ANNUAL MEETING OF SHAREHOLDERS
Friday, June 2, 2000
2:00 p.m.
Myles Reif Performing Arts Center
720 Conifer Drive
Grand Rapids, MN 55744
A.S.V., Inc.
[LOGO OF ASV] 840 Lily Lane, Grand Rapids, MN 55744 proxy
- --------------------------------------------------------------------------------
This proxy is solicited by the Board of Directors for use at the Annual Meeting
on June 2, 2000.
The shares of stock you hold in your account will be voted as you specify on the
reverse side.
If no choice is specified, the proxy will be voted "FOR" Items 1 and 2.
By signing the proxy, you revoke all prior proxies and appoint Gary D. Lemke and
Thomas R. Karges, and each of them, with full power of substitution, to vote
your shares on the matters shown on the reverse side and any other matters which
may come before the Annual Meeting and all adjournments.
See reverse for voting instructions.
<PAGE>
\|/ Please detach here \|/
- --------------------------------------------------------------------------------
The Board of Directors Recommends a Vote FOR Items 1, 2 and 3.
1. Election of Directors: 01 Gary D. Lemke 02 Edgar E. Hetteen
03 Philip C. Smaby 04 Jerome T. Miner
05 Leland T. Lynch 06 Karlin S. Symons
07 James H. Dahl 08 R. E. "Teddy" Turner, IV
09 Richard A. Benson 10 Richard A. Cooper
[ ] Vote FOR [ ] Vote WITHHELD
all nominees from all nominees
(except as marked)
(Instructions: To withhold authority to vote for --------------------------
any indicated nominee, write the number(s) of the
nominee(s) in the box provided to the right.) --------------------------
2. Ratify appointment of Grant Thornton LLP [ ] For [ ] Against [ ] Abstain
as independent public accountants for the
fiscal year ending December 31, 2000.
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 AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL
Address Change? Mark Box [ ] Indicate changes below:
Date
----------------------------
---------------------------------
---------------------------------
Signature(s) in Box
Please sign exactly as your
name(s) appear on Proxy. If held
in joint tenancy, all person must
sign. Trustees, administrators,
etc., should include title and
authority. Corporations should
provide full name of corporation
and title of authorized officer
signing the proxy.
