Short Form Merger Option Agreement
Short Form Merger Option Agreement
This AGREEMENT, dated as of January 13, 2008 (this “Option Agreement”), among A.S.V., Inc., a
Minnesota corporation (the “Company”), Terex Corporation, a Delaware corporation, (“Parent”), and
Terex Minnesota, Inc., a Minnesota corporation and wholly owned subsidiary of Parent (“Sub”).
WHEREAS, concurrently with the execution of this Option Agreement, the Company, Parent, and
Sub are entering into an Agreement and Plan of Merger (as amended or modified from time to time in
accordance with its terms, the “Merger Agreement”) providing for the making of a tender offer (the
“Offer”) to purchase all of the issued and outstanding shares of the Company’s Common Stock, par
value $.01 per share (the “Shares”), and, following the completion of the Offer, the merger (the
“Merger”) of Sub and the Company, in which each Share not purchased pursuant to the Offer (other
than Shares owned by Parent or any of its wholly owned subsidiaries or any subsidiaries of the
Company and Shares as to which dissenters’ rights are asserted) or not otherwise acquired by Parent
will be converted into the per share consideration paid pursuant to the Offer, in accordance with
the terms of the Merger Agreement; and
WHEREAS, the Company desires to induce Parent and Sub to enter into the Merger Agreement and
to facilitate the prompt completion of the Merger following the purchase of Shares pursuant to the
Offer.
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Option. The Company hereby irrevocably grants to Parent and Sub (or any
permitted assignee under Section 9 hereof) an option (the “Option”) to purchase up to 38,054,100
newly issued Shares (or such lesser number of Shares equal to the number of then authorized and
unissued shares of Company Common Stock after treating shares of Company Common Stock reserved for
issuance under any stock option or similar plan of the Company as issued and outstanding for
purposes of this calculation)
(the “Optioned Shares”) for a consideration per share equal to the price per Share paid in the
Offer, payable at the time of exercise in the form of (i) $0.01 in cash per Optioned Share and
(ii) a promissory note (a “Note”) of Parent in the principal amount of the price per Share paid in
the Offer less $0.01, which Note shall (a) be due and payable 5 years from the date of its issue,
(b) bear interest, at the prime rate in effect from time to time of Citibank N.A., payable annually
on each anniversary of the date of its issue, and (c) be prepayable at any time without penalty at
Parent’s option.
2. Exercise of the Option. The Option may be exercised by either Parent or Sub (or
any permitted assignee) at any time within six business days after the later of (i) the first date
of acceptance for payment by Parent of Shares pursuant to the Offer in accordance with the terms of
the Merger Agreement and (ii) the expiration of any subsequent offer periods under the Offer;
provided that Parent or Sub may only exercise the Option if, and for a number of Shares so
that, after the exercise of the Option, Parent or Sub shall own at least 90% of the outstanding
Shares, after giving effect to the issuance of the Optioned Shares and including any number of
Shares held by Parent or Sub immediately prior to the exercise of the Option. In the event Parent,
Sub or any permitted assignee wishes to exercise the Option, Parent, Sub or any permitted assignee
shall give written notice (the “Notice”) to the Company specifying the total number of Optioned
Shares it will purchase pursuant to the exercise of the Option and a place and a time not less than
one day from the date of the Notice for the closing of such purchase.
3. Payment and Delivery of Certificates. At any closing hereunder: (i) Parent, Sub
or a permitted assignee will make payment to the Company of the aggregate price for the Shares so
purchased by (a) check or wire transfer in the amount of the aggregate cash consideration to be
paid for all such Shares and (b) a Note in the aggregate principal amount of the consideration to
be paid by Note for all such Shares;
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and (ii) the Company will deliver or cause to be delivered to Parent, Sub or the assignee a
certificate or certificates representing the number of Shares so purchased. Each of Parent, Sub
and any assignee of either such party permitted hereunder hereby represents to the Company that
such person will not assign, transfer, offer to sell, sell or otherwise dispose of any Shares
acquired by it pursuant to this Option Agreement, except to a direct or indirect wholly owned
subsidiary of Parent. The Company hereby represents to Parent and Sub that the Company will not
assign, transfer, offer to sell, sell or otherwise dispose of the Note acquired by it pursuant to
this Option Agreement.
4. Covenant. Each of Parent and Sub agrees to consummate the Merger as promptly as
practicable following the closing of the purchase of Optioned Shares in accordance with
Section 302A.621 of the Minnesota Business Corporation Act and the terms and conditions of the
Merger Agreement.
5. Representations and Warranties of the Company. The Company hereby represents and
warrants to Parent and Sub that, except as set forth in Schedule I hereto:
5.1. The Company has all requisite corporate power and authority to enter into and perform all
of its obligations under this Option Agreement. The execution, delivery and performance of this
Option Agreement and all of the transactions, contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company. This Option Agreement has been duly
executed and delivered by the Company.
5.2. The Company has taken all necessary corporate action to authorize and reserve for
issuance the Optioned Shares upon exercise of the Option.
5.3. The Shares to be issued upon due exercise, in whole or in part, of the Option, when paid
for as provided herein, will be duly authorized, validly issued, fully paid and non-assessable.
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5.4. The execution and delivery of this Option Agreement do not, and the performance of this
Option Agreement will not, (i) conflict with any provision of the Company’s Articles of
Incorporation or By-Laws, or (ii) violate any law, rule or regulation, or any judgment, decree or
order of any court or governmental agency or instrumentality, to which the Company or any of its
subsidiaries is subject, or (iii) conflict with, or result in a breach or violation of, or
accelerate the performance required by, or result in early termination under, or result in any loss
of benefits under, the terms of any agreement, indenture, mortgage or other instrument to which the
Company or any of its subsidiaries is a party or to which any of its or their property is subject,
or constitute a default thereunder or an event which, with the lapse of time or action by a third
party, could result in a default thereunder or the creation of any lien, charge or encumbrance upon
any of the assets or properties of the Company or any of its subsidiaries, except if the effect of
any of the foregoing contained in subsections (ii) or (iii) above, singly or in the aggregate,
would not have a Material Adverse Effect (as such term is defined in the Merger Agreement).
6. Representations and Warranties of Parent and Sub. Each of Parent and Sub hereby
represents and warrants to the Company that (i) it has all requisite power and authority to enter
into and perform all of its obligations under this Option Agreement, (ii) the execution, delivery
and performance (it being understood that Parent and Sub will have no obligations under this
Agreement unless and until the Option is exercised) of this Option Agreement and all of the
transactions contemplated hereby have been duly authorized by all necessary action on the part of
Parent and Sub and (iii) this Option Agreement has been duly executed and delivered by Parent and
Sub.
7. Adjustment Upon Changes in Capitalization. In the event of any change in the
Shares by reason of stock dividends, split-ups, recapitalizations, combinations,
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exchanges of shares or the like, the number of Optioned Shares and/or the purchase price per
Optioned Share shall be adjusted appropriately.
8. Termination. This Option Agreement will terminate upon termination of the Merger
Agreement.
9. Assignment. Without the prior written consent of the Company, the right to
exercise the Option granted pursuant to this Option Agreement shall not be assigned by Parent or
Sub except to any direct or indirect wholly-owned subsidiary of Parent. Any attempted assignment
in violation of this Section 9 shall be null and void.
10. Notices. All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given (and shall be deemed to have been duly received if so
given) delivered by the means and to the addresses specified in the Merger Agreement.
11. Specific Performance. The Company agrees that damages would be an inadequate
remedy for a breach of the provisions of this Option Agreement and that Parent and Sub shall be
entitled to specific performance of the terms hereof in addition to any other remedies at law or in
equity.
12. Governing Law. This Option Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the conflict of laws
provisions thereof.
13. Counterparts. This Option Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall constitute one and the
same agreement.
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IN WITNESS WHEREOF, this Option Agreement has been executed by duly authorized officers of
each of the parties hereto all as of the date first above written.
| TEREX CORPORATION | ||||||
| By: | /s/ Xxxx X. Xxxxx | |||||
| Title: Senior Vice President | ||||||
| TEREX MINNESOTA, INC. | ||||||
| By: | /s/ Xxxx X. Xxxxx | |||||
| Title: Senior Vice President | ||||||
| A.S.V., INC. | ||||||
| By: | /s/ Xxxxxxx X. Xxxxxx | |||||
| Title: Chairman and CEO | ||||||
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Schedule I
Any approvals by the holders of Shares that may be required by the rules and regulations of
the NASD for (i) the entry into the Option Agreement or (ii) the issuance of Optioned Shares upon
exercise of the Option, and any filing, notice, approval or other requirements of the NASD required
in connection with obtaining such approvals.
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