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.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(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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Notes:
A.S.V., INC.
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
JUNE 6, 1997
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The Annual Meeting of Shareholders of A.S.V., Inc. will be held at the
Sawmill Inn, 2301 Pokegama Avenue South, Grand Rapids, Minnesota on Friday, June
6, 1997 at 1:00 p.m., local time, for the following purposes:
1. To elect eight directors to the Board of Directors.
2. To adopt the 1996 Incentive and Stock Option Plan.
3. To approve the selection of Grant Thornton LLP as independent public
accountants of the Company for the fiscal year ending December 31,
1997.
4. 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 1996 Annual Report to Shareholders and the Company's
Quarterly Report to Shareholders for the three months ended March 31, 1997,
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 18, 1997 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,
Edgar E. Hetteen
Secretary
Dated: May 2, 1997
Grand Rapids, Minnesota
A.S.V., INC.
840 LILY LANE
INDUSTRIAL PARK II
GRAND RAPIDS, MINNESOTA 55744
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PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 6, 1997
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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 6, 1997 at 1:00 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 2, 1997.
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 18, 1997 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, 4,829,159 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.
1
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to beneficial
ownership of the Company's Common Stock as of April 11, 1997 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. Unless
otherwise indicated, the business address of the individuals listed below is 840
Lily Lane, Grand Rapids, MN 55744.
SHARES BENEFICIALLY PERCENT OF OUTSTANDING
NAME OWNED (1) SHARES (1)
---- ------------------- ----------------------
Gary D. Lemke...................... 365,070 (2) 7.3%
Edgar E. Hetteen................... 238,650 (3) 4.9%
Philip C. Smaby.................... 324,445 (4) 6.7%
Jerome T. Miner.................... 240,750 (4) 5.0%
Leland T. Lynch (5)................ 15,750 (6) *
Karlin S. Symons (7)............... 7,875 (6) *
James H. Dahl (8).................. 510,009 (9) 10.1
R. E. "Teddy" Turner, IV (10)...... - *
All executive officers and
directors as a group (9 persons).. 1,716,579 (11) 32.4%
- --------------------
* 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, 1997 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) Includes 173,250 shares subject to options exercisable within 60 days,
189,000 shares held jointly with Mr. Lemke's wife and 2,820 shares held in
the Company's 401(k) Plan.
(3) Includes 15,750 shares subject to options exercisable within 60 days and
112,500 shares held by Mr. Hetteen's wife.
(4) Includes 15,750 shares subject to options exercisable within 60 days.
(5) The business address of Mr. Lynch is 800 Hennepin Avenue, Minneapolis, MN
55403.
(6) Includes 3,750 shares subject to options exercisable within 60 days.
(7) The business address of Ms. Symons is 5500 Norwest Center, 90 South Seventh
St., Minneapolis, MN 55402.
(8) The business address of Mr. Dahl is 1200 Riverplace Boulevard, Suite 902,
Jacksonville, FL 32207.
(9) Includes 281,100 shares owned by Rock Creek Partners, Ltd., an investment
partnership, of which Mr. Dahl is the Managing General Partner, 15,000
shares subject to a warrant exercisable within 60 days owned by an IRA
established for the benefit of Mr. Dahl, 120,000 shares subject to a
warrant exercisable within 60 days owned by Rock Creek Partners, Ltd.,
90,909 shares subject to a convertible debenture convertible within 60 days
owned by Rock Creek Partners, Ltd. and 3,000 shares owned by an IRA
established for the benefit of Mr. Dahl's wife.
(10) The business address of Mr. Turner is 2030 Dering Circle, Atlanta, GA
30345.
(11) Includes an aggregate of 235,950 shares of Common Stock that are subject to
options from the Company exercisable within 60 days by executive officers
and directors, 135,000 shares that are subject to warrants from the Company
currently exercisable by a director, 90,909 shares that are subject to a
convertible debenture from the Company currently convertible and 4,100
shares held in the Company's 401(k) Plan.
ELECT EIGHT 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 eight (8). The Board of Directors has nominated the eight
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 and R.
E. "Teddy" Turner IV (the "Nominees") to stand for election at the Annual
Meeting. The eight current directors of the Company have consented to stand for
reelection.
2
Vote Required THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" EACH OF THE NOMINEES LISTED BELOW. The election of each of the Nominees
requires the affirmative vote of a majority of the shares represented in person
or by proxy at the Annual Meeting.
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 table provides certain information with respect to the
Company's executive officers and directors:
NAME AGE POSITION
---- --- --------
Gary D. Lemke 56 President and Director
Edgar E. Hetteen 76 Vice President, Secretary and Director
Philip C. Smaby 78 Chairman of the Board
Jerome T. Miner*# 61 Vice Chairman of the Board
Leland T. Lynch 60 Director
Karlin S. Symons*# 50 Director
James Dahl* 43 Director
R. E. "Teddy" Turner IV 33 Director
Thomas R. Karges 36 Chief Financial Officer
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* Denotes a member of the Audit Committee.
# Denotes a member of the Compensation and Stock Option Committee.
GARY D. LEMKE, the President and a director of the Company, co-founded the
Company in 1983. From 1976 to 1983, Mr. Lemke owned Marcell Manufacturing Co.,
which imported utility snow vehicles for distribution in the United States and
manufactured related specialty items. Mr. Lemke also owned a recreational snow
vehicle dealership in Grand Rapids, Minnesota from 1969 to 1980.
EDGAR E. HETTEEN, the Vice President, Secretary and a director of the
Company, co-founded the Company in 1983. Mr. Hetteen founded Polaris Industries,
Inc. in 1947 and Arctic Enterprises, Inc. in 1961, two principal manufacturers
of snowmobiles.
PHILIP C. SMABY, the Chairman of the Board of Directors of the Company since
1987 and a director since 1983, is currently retired. Mr. Smaby co-founded
Bermel-Smaby Realty, Inc. in 1946 and was its President until it was sold in
1985. Mr. Smaby is a member of the board of directors of the Real Estate Group
Insurance Trust, the National Association of Realtors, and the International
Real Estate Federation. Mr. Smaby is an uncle to Ms. Symons.
JEROME T. MINER, a director since 1991 and Vice Chairman of the Board since
1995, has been the President of Jerry Miner Realty, Inc., an owner and operator
of various retail stores in Grand Rapids, Minnesota, since 1984.
LELAND T. LYNCH, a director since 1995, has been Managing Partner, Chairman
and Chief Executive Officer of Carmichael Lynch Inc. since 1962 and is a
director of Minnesota Public Radio, Planned Parenthood of Minnesota and the
Chair-Elect of the Minneapolis Downtown Council.
KARLIN S. SYMONS, a director since 1995, has been a partner with the law firm
of Kaplan, Strangis and Kaplan of Minneapolis, Minnesota since 1989. Ms. Symons
is the Chairperson of the Board of Trustees of The William Mitchell College of
Law and is the niece of Mr. Smaby.
JAMES H. DAHL, a director since 1996, 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.
3
R. E. "TEDDY" TURNER IV, a director since April 1997, has been the President
of Turner Telecomunications Co., LLC, an advanced video technology company,
since September 1996. From 1993 to 1996, Mr. Turner was the Southeast Regional
Sales Manager of Turner Home Entertainment. From 1990 to 1993, Mr. Turner was
the President of Challenge America, Ltd., a sports marketing company. Mr. Turner
is a Trustee of the Turner Foundation.
THOMAS R. KARGES 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. Mr. Karges
held the positions of general service manager from 1986 to 1992, general service
senior manager from 1992 to 1994 and was promoted to partner in 1994.
COMMITTEE AND BOARD MEETINGS
The Company has an Audit Committee to review the results and scope of the
audit and other accounting related services and a Compensation and Stock Option
Committee to provide recommendations concerning salaries and incentive
compensation for officers and employees of the Company. The Company does not
have a nominating committee for Board of Director nominees.
During fiscal 1996, the Compensation and Stock Option Committee met two
times. The Audit Committee met one time in 1996. The Board of Directors held six
meetings in 1996. Directors and Committee members frequently take formal action
by unanimous written consent, in accordance with Minnesota law, rather than hold
formal Board and Committee meetings. All directors attended 75% or more of the
total number of meetings of the Board of Directors or Committees of which they
were a member.
COMPENSATION OF DIRECTORS
GENERAL POLICY. Prior to 1997, Directors did not receive any compensation
from the Company for attending meetings of the Board of Directors. In 1997, the
Company began paying its non-employee Directors a fee of $1,250 per meeting
attended. In addition, the Company reimburses Directors for expenses incurred in
connection with attendance at meetings of the Board of Directors.
STOCK OPTIONS. The Company's 1994 Long-Term Incentive and Stock Option Plan
and the 1996 Incentive and Stock Option Plan permit the granting of non-
statutory stock options to the Company's outside directors. In April 1996, an
option was granted to purchase 7,500 shares of the Company's Common Stock at
$4.833 per share to Mr. Lemke. In December 1996, options were granted to
purchase 3,000 shares of the Company's Common Stock at $18.333 per share to
Messrs. Smaby, Miner, Lynch and Ms. Symons. In December 1996, an option was
granted to purchase 7,500 shares of the Company's Common Stock at $18.333 per
share to Mr. Dahl. In December 1996, options were granted to purchase 300,000
and 75,000 shares of the Company's Common Stock to Messrs. Lemke and Hetteen,
respectively, at $18.333 per share. The option granted to Mr. Lemke in April
1996 is exercisable in its entirety one year from the date of issuance. All
other options granted to directors in 1996 are exercisable in 25% cumulative
annual installments beginning one year from the date of issuance. All options to
outside directors expire five years from the date of issuance. All options
granted to employee directors expire seven years from the date of issuance.
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.
In 1990, the Company purchased a piece of real estate located in Grand
Rapids, Minnesota from Mr. Lemke pursuant to a contract for deed for a purchase
price of $58,000, $10,000 of which was paid on the date of the purchase and the
remaining principal together with interest at the annual rate of 8% paid in
monthly installments of $1,000. The contract for deed was paid in full in 1995.
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 225,000 shares of the Company's Common Stock at $11.00 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 is non-exercisable and non-transferrable until
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.
4
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION. The following table sets forth the total remuneration
paid during the Company's last three fiscal years to the President of the
Company, who serves in the capacity of the Company's chief executive officer. No
executive officer of the Company earned total annual salary and bonus in fiscal
1996 in excess of $100,000.
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION ------------
FISCAL ------------ NUMBER OF SECURITIES
NAME YEAR SALARY BONUS (1) UNDERLYING OPTIONS
---- ------ ------ --------- --------------------
Gary D. Lemke..... 1996 $94,000 --- 307,500
1995 $90,000 $25,000 3,000
1994 $82,500 --- 15,000
(1) Reflects bonus earned during the fiscal year and paid during the next
fiscal year.
STOCK OPTION GRANTS. The following table sets forth certain information
concerning grants of options to purchase Common Stock made during the 1996
fiscal year to the executive officer named in the Summary Compensation Table
above.
OPTION GRANTS IN LAST FISCAL YEAR
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS GRANTED
UNDERLYING TO EMPLOYEES IN EXERCISE PRICE EXPIRATION
NAME OPTIONS FISCAL YEAR PER SHARE DATE
---- ---------- ---------------- -------------- ----------
Gary D. Lemke..... 7,500 (1) 1.44% $ 4.833 April 17, 2003
300,000 (2) 57.47% $18.333 December 21, 2003
------- -----
Total 307,500 58.91%
======= =====
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(1) Exercisable in its entirety on April 17, 1997.
(2) Twenty-five percent of the options become exercisable on each annual
anniversary date of the option beginning December 21, 1997.
STOCK OPTION VALUES. The following table summarizes the value of the options
held at the end of fiscal 1996 by the executive officer named in the Summary
Compensation Table above.
YEAR END OPTION VALUES
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
DECEMBER 31, 1996 AT DECEMBER 31, 1996 (1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
Gary D. Lemke..... 165,750 309,750 $ 2,742,563 $ 129,562
---------------------
(1) Value of options equal to the difference between $18.083, the closing
bid price of the Company's Common Stock on December 31, 1996 (split-
adjusted), and the option exercise price per share, multiplied by the
number of shares subject to options.
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.
5
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, 1996, 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 two transactions.
APPROVE THE 1996 INCENTIVE AND STOCK OPTION PLAN
(PROPOSAL #2)
On December 21, 1996, the Board of Directors adopted, subject to shareholder
approval, the A.S.V., Inc. 1996 Incentive and Stock Option Plan (the "1996
Plan"). The purpose of the 1996 Plan is to promote the interests of the Company
and its shareholders by aiding the Company in attracting and retaining employees
and directors capable of contributing to the growth and success of, and
providing strategic direction to, the Company, and by offering such employees
and directors an opportunity to acquire a proprietary interest in the Company,
thereby providing them with incentives to put forth maximum efforts for the
success of the Company's business and aligning the interests of such employees
and directors with those of the Company's shareholders. The following is a
description of the material terms and conditions of the 1996 Plan.
The 1996 Plan will be administered by a committee of the Board of Directors
(the "Committee"). A total of 750,000 shares of Common Stock are available and
reserved for issuance upon the exercise of options or pursuant to restricted
stock or other awards granted under the 1996 Plan. Full and part-time
employees, members of the Board of Directors, consultants or independent
contractors providing valuable services to the Company or any eligible affiliate
of the Company are eligible to receive awards under the 1996 Plan. Awards may
be in the form of options to purchase Common Stock, grants of restricted Common
Stock or grants of unrestricted Common Stock. Options may be in the form of
incentive stock options ("ISO"), which comply with Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), or nonqualified stock options;
provided, however, that ISOs may only be granted to employees and may not have a
term greater than 10 years.
The committee will have the power to determine the number of shares to be
covered by awards under the 1996 Plan, determine the terms and conditions of an
award, amend the terms of an award, interpret and administer the 1996 Plan and
establish rules under the 1996 Plan. The Committee may delegate to one or more
officers the right to grant awards to participants who are not subject to
Section 16(b) of the Securities Exchange Act of 1934. The exercise price of
each option granted under the 1996 Plan shall not be less than the fair market
value of the Common Stock on the date the option is granted. Under the 1996
Plan, the Committee may permit participants receiving or exercising options,
subject to the discretion of the Committee and upon such terms and conditions as
it may impose, to surrender shares of Common Stock (either shares received upon
the receipt or exercise of the option or shares previously owned by the
optionee) to the Company in payment of the exercise price thereunder or to
satisfy federal or state tax obligations. In the event any dividend,
distribution, recapitalization, stock split, merger, consolidation, or other
event occurs that affects the Company's Common Stock such that an adjustment is
determined by the Committee to be appropriate to prevent dilution or enlargement
of benefits under the 1996 Plan, the Committee may make such adjustments to
awards under the 1996 Plan as it deems necessary to preserve the benefits
intended under the 1996 Plan and such awards. Awards granted under the 1996
Plan are awarded for no cash consideration and are not transferable other than
by will or the laws of descent and distribution. The Board of Directors may
amend, alter or discontinue the 1996 Plan at any time provided that shareholder
approval must be obtained for any change that would, absent shareholder
approval, violate the rules or regulations of Nasdaq or prevent the Company from
issuing ISO's.
The grant of an option will result in no tax consequences for the recipient
or the Company or any subsidiary employing such individual (the "employer").
The holder of an ISO generally will have no taxable income upon exercising the
ISO (except that the alternative minimum tax may apply), and the employer
generally will receive no tax deduction when an ISO is exercised. Upon exercise
of a stock option other than an ISO, the optionee must recognize ordinary income
equal to the excess of the fair market value of the shares acquired on the date
of exercise over the option price, and the employer will then be entitled to a
tax deduction for the same amount. The tax consequences to an optionee of a
disposition of shares acquired through the exercise of an option will depend on
how long the shares have been held and upon whether such shares were acquired by
exercising an ISO or stock option other than an ISO. Generally, there will be
no tax consequence to the employer in connection with a disposition of shares
acquired under an option except that the employer may be entitled to a tax
deduction in the case of a disposition of shares acquired under an ISO before
the applicable ISO holding period has been satisfied.
With respect to an award of common stock granted under the 1996 Plan that is
either transferable or not subject to a substantial risk of forfeiture, the
holder of an award must recognize ordinary income equal to the excess of (a) the
fair market value of the shares received (determined as of the date of such
settlement) over (b) the amount (if any) paid for such shares by the holder of
the award, and the employer will then be entitled to a deduction for the same
amount. With respect to awards that are restricted as to transferability and
subject to a substantial risk of forfeiture, unless a special tax election is
made to recognize
6
ordinary income upon receipt of the awards, the holder of the award must
recognize ordinary income equal to the excess of (i) the fair market value of
the shares received (determined as of the first time the shares become
transferable or not subject to a substantial risk of forfeiture, whichever
occurs earlier) over (ii) the amount (if any) paid by the participant for such
shares, and the employer will then be entitled to a deduction for the same
amount.
Special rules apply in the case of individuals subject to Section 16(b) of
the Securities Exchange Act of 1934. In particular, under current law, shares
received pursuant to the exercise of a stock option may be treated as restricted
as to transferability and subject to a substantial risk of forfeiture for a
period of up to six months after the date of exercise. Accordingly, unless a
special tax election is made the amount of ordinary income recognized, and the
amount of employer's deduction, may be determined as of such date.
The 1996 Plan will be effective immediately upon its approval by the
requisite vote of the shareholders. As of December 31, 1996, options to
purchase 442,500 shares had been granted, subject to shareholder approval, to
three officers and one employee at an exercise price of $18.333, none of which
were exercisable as of such date.
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock represented at the meeting is required to approve the 1996
Incentive and Stock Option Plan. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
APPROVAL OF THE 1996 PLAN.
RATIFY THE APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
(PROPOSAL #3)
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,
1997. Unless otherwise instructed, the Proxies will be so voted. Grant Thornton
LLP has served as the Company's independent public accountants since June 16,
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.
SHAREHOLDER PROPOSALS
Any appropriate proposal submitted by a shareholder of the Company and
intended to be presented at the 1998 Annual Meeting must be received by the
Company at its offices by January 1, 1998, to be considered for inclusion in the
Company's proxy statement and related proxy for the 1998 Annual Meeting.
OTHER BUSINESS
The Board of Directors knows of no other matters to be presented at the
meeting. If any other matter does properly come before the meeting, the
appointees named in the Proxies will vote the Proxies in accordance with their
best judgement.
ANNUAL AND QUARTERLY REPORT
A copy of the Company's Annual Report to Shareholders for the fiscal year
ended December 31, 1996, including financial statements, and a copy of the
Company's Quarterly Report to Shareholders for the three months ended March 31,
1997, 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-KSB FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996, 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 2, 1997
Grand Rapids, Minnesota
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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 hereby appoints GARY LEMKE and THOMAS R. KARGES, or either of
them acting alone, with full power of substitution, its proxies to represent and
vote, as designated below, all shares of Common Stock of A.S.V., Inc. registered
in the name of the undersigned, at the Annual Meeting of Shareholders to be held
on Friday, June 6, 1997, at 1:00 p.m., local time, at the Sawmill Inn, 2301
Pokegama Avenue South, Grand Rapids, Minnesota 55744, and at all adjournments of
such meeting. The undersigned hereby revokes all proxies previously granted with
respect to such meeting.
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. Symon, James H. Dahl and R. E. "Teddy" Turner IV.
[_] FOR all nominees listed above
(except those whose names have been written on the line below)
[_] WITHHOLD AUTHORITY
to vote for all nominees listed above
(To withhold authority to vote for any nominee, write that
nominee's name on the line below)
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(Continued, and to be signed, on the reverse side)
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(Continued from other side)
(2) PROPOSAL TO ADOPT THE 1996 INCENTIVE AND STOCK OPTION PLAN.
[_] FOR [_] AGAINST [_] ABSTAIN
(3) PROPOSAL TO RATIFY APPOINTMENT OF GRANT THORNTON LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1997.
[_] FOR [_] AGAINST [_] ABSTAIN
(4) 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 FOR A PARTICULAR PROPOSAL, WILL BE VOTED FOR SUCH PROPOSAL.
Dated: ______________________________, 1997
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PLEASE DATE AND SIGN ABOVE exactly as name
appears at the left, indicating, where
appropriate, official position or
representative capacity. If stock is held
in joint tenancy, each joint owner should
sign.
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