ASV ASV Holdings Inc

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION

This proxy statement, and the documents that we incorporate by reference in this proxy statement, contain certain “forward-looking statements”, as that term is defined by Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act, that do not directly or exclusively relate to historical facts. Forward-looking statements may be identified by words such as “believe”, “expect”, “may”, “will”, “anticipate”, “intend”, “estimate”, “project”, “plan”, “assume”, “seek to” or other similar expressions or the negative of these expressions. Stockholders are cautioned that any such forward-looking statements are not guarantees of future performance and may involve significant risks and uncertainties, and that actual results may vary materially from those in the forward-looking statements. These risks and uncertainties include, but are not limited to, the risks detailed in our filings with the Securities and Exchange Commission (the “SEC”), including in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, factors and matters described or incorporated by reference in this proxy statement, and the following factors:

Consequently, all of the forward-looking statements we make in this proxy statement are qualified by the information contained or incorporated by reference herein, including, but not limited to, (i) the information contained under this heading and (ii) the information contained under the headings “ Risk Factors ” and information in our consolidated financial statements and notes thereto included in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q (see “ Where You Can Find More Information ” on page 81 of this proxy statement). No assurance can be given that these are all of the factors that could cause actual results to vary materially from the forward-looking statements.

Except as required by applicable law, we undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. Our stockholders are advised, however, to consult any future disclosures we make on related subjects as may be detailed in our other filings made from time to time with the SEC.

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THE PARTIES TO THE MERGER

ASV

ASV Holdings, Inc. is a Delaware corporation. ASV, through its approximately 180 employees, designs and manufactures a broad range of high-quality compact track loader and skid steer loader equipment, marketed through a distribution network in North America, Australia and New Zealand under the ASV brand. ASV also serves as a private label original equipment manufacturer for several manufacturers. ASV’s products are used principally in the construction, agricultural and forestry industries. As a full-service manufacturer, ASV provides pre- and post-sale dealer support, after-sale technical support and replacement parts supplied from its dedicated logistics center. ASV common stock is listed on the Nasdaq Capital Market under the symbol “ASV”.

ASV was founded as “A.S.V., Inc.” in 1983 and launched its first CTL machine in 1990. It launched as a publicly-traded company on Nasdaq in 1994 and operated as a public company until it was acquired by Terex Corporation (“Terex”) on March 3, 2008. On December 19, 2014, Manitex International, Inc. purchased 51% of ASV from Terex pursuant to a joint venture arrangement with Terex. On December 23, 2014, A.S.V., Inc. converted to a Minnesota limited liability company and changed its name to A.S.V., LLC. On May 11, 2017, in connection with the Company’s initial public offering, ASV converted from a Minnesota limited liability company into a Delaware corporation and changed its name from A.S.V., LLC to ASV Holdings, Inc.

A detailed description of ASV’s business and background is contained in ASV’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, which is incorporated by referenced into this proxy statement. See “ Where You Can Find More Information ” on page 81 of this proxy statement.

ASV’s executive offices are located at 840 Lily Lane, Grand Rapids, Minnesota, 55744 and its telephone number is (218) 327-3434.

Yanmar

Yanmar America Corporation is a Georgia corporation and a wholly owned subsidiary of Yanmar Co., Ltd. Founded in 1981, Yanmar supplies industrial and marine diesel engines, diesel generators, micro cogeneration and gas heat pump energy system solutions, compact construction equipment and compact utility tractors. Yanmar’s principal executive offices are located at 101 International Parkway, Adairsville, Georgia 30101 and its telephone number is (770) 877-9894.

Merger Sub

Osaka Merger Sub, Inc. is a Delaware corporation and wholly owned subsidiary of Yanmar that was formed solely for the purpose of entering into the Merger Agreement and consummating the transactions contemplated by the Merger Agreement. Merger Sub has not carried on any activities on or prior to the date of this proxy statement except for activities incidental to its formation and activities in connection with facilitating Yanmar’s acquisition of ASV. Upon completion of the Merger, Merger Sub will merge with and into ASV and will cease to exist.

Merger Sub’s principal executive offices are located care of Yanmar America Corporation at 101 International Parkway, Adairsville, Georgia 30101 and its telephone number is (770) 877-9894.

Guarantor

Yanmar Co., Ltd. is a company organized under the laws of Japan. With beginnings in Osaka, Japan, in 1912, Guarantor is an industrial equipment manufacturer that supplies small and large engines. Guarantor’s principal executive offices are located at 530-0013, Yanmar Flying-Y Building, 1-32, Chayamachi, Kita-ku, Osaka, 530-8311, Japan and its telephone number is +81-6-6376-6211.

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THE SPECIAL MEETING OF THE COMPANY’S STOCKHOLDERS

Time, Place and Purpose of the Special Meeting

The special meeting will be held at                 , local time, on                     , 2019, at ASV’s principal executive office located at 840 Lily Lane, Grand Rapids, Minnesota 55744. The purpose of the special meeting is to consider and vote on the proposal to adopt and approve the Merger Agreement and the transactions contemplated by the Merger Agreement, and the adjournment proposal described in this proxy statement. The Board, by unanimous vote, has determined that it is advisable, fair to and in the best interests of ASV and its stockholders to enter into the Merger Agreement and to consummate the Merger and the other transactions contemplated by the Merger Agreement, and unanimously recommends that stockholders vote FOR the proposal to adopt and approve the Merger Agreement and the transactions contemplated by the Merger Agreement and FOR the proposal to adjourn or postpone the special meeting, if necessary or appropriate, to solicit additional proxies.

Who Can Vote at the Special Meeting

Only holders of record of ASV common stock, as of the close of business on                     , 2019, which is the record date for the special meeting, are entitled to receive notice of and to vote at the special meeting. If you own shares that are registered in the name of someone else, such as a broker, you need to direct that person to vote those shares or obtain an authorization from them and vote the shares yourself at the meeting. On the record date, there were               shares of common stock outstanding.

Quorum; Vote Required

For purposes of transacting business at the special meeting, a majority of the voting power of the outstanding shares of common stock represented in person or by proxy will constitute a quorum. Once a share is represented at the special meeting, it will be counted for the purpose of determining a quorum and any adjournment of the special meeting, unless the holder is present solely to object to the special meeting. Votes FOR and AGAINST and abstentions will be counted for purposes of determining the presence of a quorum. However, if a new record date is set for an adjourned meeting, a new quorum will have to be established.

The adoption and approval of the Merger Agreement and the transactions contemplated by the Merger Agreement requires ASV to obtain the ASV stockholder approval. The ASV stockholder approval requires the affirmative vote of a majority of the outstanding shares of common stock. Because the required votes of ASV stockholders are based on the number of outstanding shares of common stock with respect to the ASV stockholder approval of the merger proposal, and not based on the number of shares represented in person or by proxy at the special meeting, failure to submit a proxy or to vote in person will have the same effect as a vote AGAINST the merger proposal, but, assuming a quorum is present, will have no effect on the adjournment proposal. A vote to abstain will have the same effect as voting against the merger proposal, but will have no effect on the adjournment proposal.

Approval of the adjournment proposal will require the affirmative vote of holders of a majority of the votes cast, represented in person or by proxy.

If your shares of common stock are held in “street name” by your broker, bank or other nominee, you should instruct your broker, bank or other nominee how to vote your shares using the instructions provided by your broker, bank or other nominee. Under applicable regulations, brokers, banks or other nominees who hold shares in “street name” for customers may not exercise their voting discretion with respect to “non-routine” matters such as the approval of the merger proposal. A broker non-vote occurs when a meeting includes both “routine” and “non-routine” matters, such that a bank, broker or other nominee has discretionary authority to vote on some proposals but not on other proposals. Both of the proposals in this proxy statement are “non-routine” matters, so

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there can be no broker non-votes at the special meeting. As a result, if you do not instruct your broker, bank, or other nominee to vote your shares of common stock, your shares will not be voted, which will have the same effect as voting against the merger proposal.

Voting by Proxy

This proxy statement is being sent to you on behalf of the Board for the purpose of requesting that you allow your shares of our common stock to be represented at the special meeting by the persons named in the enclosed proxy card. All shares of our common stock represented at the special meeting by properly executed proxy cards, voted over the telephone or voted over the Internet will be voted in accordance with the instructions indicated on those proxies. If you sign and return a proxy card without giving voting instructions, your shares will be voted as recommended by the Board. The Board recommends a vote FOR adoption and approval of the Merger Agreement and the transactions contemplated by the Merger Agreement and FOR the proposal to adjourn or postpone the special meeting, if necessary or appropriate, to solicit additional proxies.

You may revoke your proxy at any time before the vote is taken at the special meeting. To revoke your proxy, you must either advise ASV’s Secretary in writing, deliver a proxy dated after the date of the proxy you wish to revoke or attend the special meeting and vote your shares in person. Attendance at the special meeting will not by itself constitute revocation of a proxy. If you have instructed your broker, bank, or other nominee to vote your shares, you must follow the directions provided by your broker, bank or other nominee to change those instructions.

Householding

Some banks, brokers and other nominees may be participating in the practice of “householding” proxy statements and annual reports. This means that only one copy of our proxy statement for the special meeting may have been sent to multiple stockholders in each household. We will promptly deliver a separate copy of our proxy statement to any stockholder upon written or oral request to ASV Holdings, Inc., 840 Lily Lane, Grand Rapids, Minnesota, 55744, telephone: (218) 327-3434. Any stockholder who wants to receive separate copies of our proxy statement or annual report to stockholders in the future, or any stockholder who is receiving multiple copies and would like to receive only one copy per household, should contact the stockholder’s bank, broker or other nominee, or the stockholder may contact ASV at the above address and phone number.

Solicitation of Proxies

ASV will pay all of the costs of this proxy solicitation. In addition to soliciting proxies by mail, directors, officers and employees of ASV may solicit proxies personally and by telephone, email or otherwise. None of these persons will receive additional or special compensation for soliciting proxies. ASV will, upon request, reimburse brokers, banks and other nominees for their expenses in sending proxy materials to their customers who are beneficial owners and obtaining their voting instructions.

ASV has engaged D.F. King & Co., Inc. (“D.F. King”) to assist in the solicitation of proxies for the special meeting and will pay D.F. King a fee of approximately $7,500, plus reimbursement of out-of-pocket expenses. The address of D.F. King is 48 Wall Street, 22nd Floor, New York, New York 10005. You can call D.F. King toll-free at 1-800-706-3274.

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THE MERGER

The discussion of the Merger in this proxy statement is qualified by reference to the Merger Agreement, which is attached to this proxy statement as Annex A. You should read the Merger Agreement carefully in its entirety.

Background of the Merger

The following chronology summarizes certain key events and contacts that led to the signing of the Merger Agreement. It does not purport to catalogue every conversation among our Board, members of our management, or the Company’s representatives and other parties.

In March 2008, Terex Corporation (“Terex”) acquired the Company. Following its acquisition, Terex operated the Company as a wholly owned subsidiary until December 2014. In December 2014, following an evaluation undertaken by Terex of the strategic alternatives available to the Company, including the sale of the Company, Manitex International, Inc. (“Manitex”) acquired a 51% equity interest in the Company from Terex pursuant to a joint venture arrangement.

On May 17, 2017, following an evaluation of strategic alternatives, including the sale of the Company, we completed an underwritten initial public offering of 3,800,000 shares of our common stock at a price to the public of $7.00 per share. Since the initial public offering, shares of our common stock have been listed for trading on the Nasdaq Capital Market. Immediately after the completion of the initial public offering, Terex held approximately 34% of our outstanding common stock and Manitex held approximately 21% of our outstanding common stock. As of December 31, 2018, Terex held approximately 34% of our outstanding common stock and Manitex held approximately 11% of our outstanding common stock.

Following the initial public offering, the Company and our Board have regularly evaluated different strategies for improving its competitive position and enhancing stockholder value. Shortly after the initial public offering, at the direction of our Board, our management developed a strategic plan for our business through 2022. The key elements of the strategic plan included adding retail distribution locations, expanding penetration of the equipment rental channel, increasing dealer sales, expanding gross and EBITDA margins, introducing new products, expanding aftermarket sales, developing and expanding brand awareness and the implementation of a continuous improvement plan. Under the strategic plan, the Company set aspiration goals for organic growth which would achieve $250 million of annual revenue and $30 million of annual EBITDA by the end of the five-year period covered by the strategic plan. In addition to the strategic plan to facilitate organic growth, management and our Board, from time to time, considered various strategic alternatives in pursuing its business plan, including acquisitions, joint ventures, collaborations and other potential business opportunities.

On December 15, 2017, our Board concluded a regularly scheduled two-day meeting. At this meeting, among other matters, our Board discussed and approved the Company’s strategic plan and a budget for the 2018 fiscal year presented to it by management. The budget included estimates of $141.8 million in sales and $13.9 million in adjusted EBITDA for the fiscal year.

On June 8, 2018, Andrew Rooke, our Chief Executive Officer and the Chairman of our Board, met with Hiroshi Okuyama, Senior Manager of Yanmar Co., Ltd., and Giuliano Parodi, the Chairman of Yanmar Construction Equipment Co., Ltd. The parties discussed the businesses and strategic initiatives of their respective companies and the construction equipment industry generally. In this discussion, the parties expressed a desire to generally explore areas where potential collaboration between the parties might be aligned with their respective strategic objectives. Following this meeting, Mr. Rooke provided a summary to our Board.

On September 13, 2018, our Board held a regularly scheduled meeting. At this meeting, among other matters, management reported its estimates of financial results for the fiscal year to our Board. Management estimated that sales for the fiscal year would be approximately $133.3 million ($8.4 million less than the budget for the fiscal year) and that pre-tax income and EBITDA would also fall meaningfully short of the forecasts for

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the fiscal year included in the strategic plan and the 2018 budget. Management then presented an update to the strategic plan. While several elements of the strategic plan were revised as part of the update, the aspirational objectives of achieving $250 million in annual revenue and $30 million in annual EBITDA by the end of the 2022 fiscal year remained in place.

In early October 2018, a representative of Party A reached out to Mr. Rooke to discuss Party A’s interest in acquiring the Company.

On October 15, 2018, Mr. Rooke received an indication of interest letter from Party A containing Party A’s non-binding offer to acquire the Company for a cash purchase price in a range of $7.00 to $9.00 per share of ASV common stock, in cash. The indication of interest letter requested a 60-day exclusivity period in order to perform due diligence on the Company and negotiate definitive transaction documents. The closing price of ASV common stock on October 15 was $4.56 per share.

On October 22, 2018, our Board held a special, telephonic meeting to discuss the indication of interest letter received from Party A. At this meeting, the our legal counsel, Dorsey & Whitney LLP (“Dorsey”), reviewed with our Board the fiduciary duties owed by directors of a Delaware corporation to its stockholders in connection with a review of an unsolicited offer to acquire the corporation. Following discussion, our Board directed management to engage a financial advisor to assist our Board in evaluating Party A’s proposal and its further evaluation of the strategic plan.

On November 1, 2018, we announced financial results for the fiscal quarter ended September 30, 2018. Net sales for the fiscal quarter increased 7.2% from the third fiscal quarter of 2017 to $32.8 million. Net income for the fiscal quarter was $0.6 million, compared to net income of $0.5 million for the third fiscal quarter of 2017. Our gross margins were reduced by higher material costs, principally higher steel costs, experienced during the quarter. The closing price of ASV common stock on November 2, the first trading day following the earnings announcement, was $3.23 per share.

On November 5, 2018, our Board held a special, telephonic meeting to further discuss the indication of interest received from Party A. Our Board discussed the terms of the indication of interest, including the proposed price range. Our Board discussed an analysis of the financial terms of the Party A proposal which had been prepared by Donnelly Penman & Partners (“Donnelly Penman”) in advance of the meeting. The financial analysis prepared by Donnelly Penman included discounted cash flow, leveraged buyout, precedent transaction and comparable public company analyses. Our Board also discussed the strategic rationale from Party A’s perspective of an acquisition of the Company. Our Board also discussed the Company’s progress to date in achieving its strategic plan. Following this discussion, our Board concluded that, while it did not believe that Party A’s indication of interest fully valued the Company, it was willing to provide further, non-public information to Party A in order for Party A to improve its valuation. Our Board instructed management to negotiate and execute a confidentiality agreement with Party A, pursuant to which Party A would be provided with the strategic plan and certain other financial information.

On November 13, 2018, the Company entered into a confidentiality agreement with Party A. The confidentiality agreement entered into with Party A does not contain a standstill provision or any other term that would prohibit Party A from making a bona fide, unsolicited, written proposal to acquire the Company.

On November 27, 2018, members of our senior management team, including Mr. Rooke, and representatives of Donnelly Penman met with members of Party A’s management and representatives of Party A’s financial advisor to discuss the Company’s business and strategic plan. Following the November 27 meeting, we provided additional due diligence information to Party A.

On December 6, 2018, our Board held a regularly scheduled meeting. Among other matters, after presentation from management and discussion, our Board adopted a budget for fiscal year 2019. The budget included forecasts of sales of $158.2 million, net income of $4.1 million and EBITDA of $11.9 million.

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On December 17, 2018, a member of Party A’s senior management called Mr. Rooke to inform the Company of Party A’s determination not to further pursue its evaluation of the potential acquisition of the Company. In this conversation, Party A cited its outlook for the economy and the market for our products, concerns about our supply chain and skepticism about our ability to achieve the strategic plan as reasons for is decision. As a result, Party A no longer felt that the valuation range it had proposed in its indication of interest could be supported. Party A followed up with an email to Mr. Rooke the following day confirming its determination. Mr. Rooke update our Board on these developments at a special telephonic meeting held on December 19, 2018.

In January 2019, Mr. Okuyama met with a representative of Manitex. Following this meeting, Mr. Okuyama contacted Brian Henry, a member of our Board and an employee of Terex, to express Yanmar’s interest in discussing ASV and the position in our common stock held by Terex. Mr. Okuyama subsequently expressed an interest in visiting our manufacturing facility. Mr. Henry instructed Mr. Okuyama to direct any inquiries related to ASV to Mr. Rooke so that any discussions or negotiations of a potential transaction would be conducted at the direction of our Board.

On February 7, 2019, Mr. Parodi called Mr. Rooke to discuss Yanmar’s interest in acquiring the Company.

On February 17, 2019, Mr. Rooke received an indication of interest letter from Yanmar containing Yanmar’s non-binding offer to acquire the Company for a cash purchase price of $6.00 per share of ASV common stock, in cash. The indication of interest letter requested a 30-day exclusivity period (with two extension periods, exercisable at Yanmar’s option, of 15-days each) in order to perform due diligence on the Company and negotiate definitive transaction documents. The closing price of ASV common stock on February 15, the last trading day prior to receipt of Yanmar’s proposal, was $3.63 per share.

On February 21, 2019, our Board held a special, telephonic meeting to discuss the Yanmar proposal. Our Board discussed Yanmar’s proposal and the valuation of the Company implied by the proposal. Our Board also discussed the strategic plan and the valuation implied by achieving the strategic plan. Following this discussion, our Board instructed Mr. Rooke to communicate to Yanmar our Board’s view that Yanmar’s proposal did not adequately value the Company and the stockholder value it expected to be realized by execution of the strategic plan.

On February 27, 2019, Mr. Rooke sent Mr. Parodi a letter communicating our Board’s determination that the value reflected in Yanmar’s February 17 non-binding indication of interest letter did not support further discussions regarding a transaction. The letter further described our Board’s conclusion that the Yanmar proposal did not adequately reflect the stockholder value that it expected to be realized by execution of the strategic plan.

Also, on February 27, Mr. Rooke had a call with representatives from ROTH, Yanmar’s financial advisor, to discuss the February 27 letter and our Board’s conclusion that the valuation reflected in Yanmar’s proposal did not adequately reflect the value of the Company.

On March 11, 2019, our Board held a regularly scheduled meeting. At this meeting, among other matters, our Board received a report that our financial results for January and February had been significantly worse than budgeted. Management estimated that sales for the first fiscal quarter would be approximately $24.2 million ($5.8 million less than the budget for the quarter contained in the strategic plan) and EBITDA for the period would be approximately $0.5 million ($1.4 million less than the budget for the quarter contained in the strategic plan).

On March 14, 2019, we announced preliminary financial results for the fiscal quarter and fiscal year ended December 31, 2018. We announced that, while net sales for the fiscal year had increased 3.5% over the prior year to $127.6 million, significant increases in material costs had reduced gross margins to 11.9%, compared to 15.1% in the prior year. We also announced a delay in reporting our final financial results due to an ongoing analysis of whether to record a non-cash impairment charge to the value of the Company’s goodwill and intangible assets as

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a result of our recent financial results, share price performance and market capitalization. The closing price of ASV common stock on March 15, the first trading day following the earnings announcement, was $3.12 per share.

On March 19, 2019, Mr. Rooke met with Mr. Parodi, Mr. Okuyama and representatives of ROTH at the annual conference hosted by ROTH Capital in Laguna Nigel, California. The Company’s chief financial officer, Melissa How, participated by phone. At the meeting, Mr. Rooke and Ms. How provided an overview of the our strategic direction, based on a Company presentation that was publicly available on the Company’s website.

On March 21, 2019, Mr. Rooke received an indication of interest letter from Yanmar containing Yanmar’s non-binding offer to acquire the Company for a cash purchase price in a range of $6.85 to $7.15 per share of ASV common stock, in cash. The indication of interest letter requested a 30-day exclusivity period (with two extension periods, exercisable at Yanmar’s option, of 15-days each) in order to perform due diligence on the Company and negotiate definitive transaction documents. The closing price of ASV common stock on March 22, the first trading day following the earnings announcement, was $2.90 per share.

Following his receipt of Yanmar’s indication of interest on March 21, Mr. Rooke alerted our Board by email. At the time, our management and the audit committee of our Board were focused on completing our financial statements for the fiscal year ended December 31, 2018 and filing our annual report on Form 10-K with the SEC. As a result, our Board determined to consider Yanmar’s proposal following the filing of the Form 10-K at a meeting to be held on April 1, 2019.

On March 29, 2019, we announced final financial results for the fiscal quarter and fiscal year ended December 31, 2018, including net losses of $32.1 million for the year ended December 31, 2018. The net loss included a non-cash impairment charge of $30.6 million to the Company’s goodwill recorded in the fiscal quarter ended December 31, 2018. The closing price of ASV common stock on April 1, the first trading day following the earnings announcement, was $2.62 per share.

Also on March 29, a representative of Donnelly Penman spoke with a representative of Party A’s investment bank to gauge whether Party A’s view of the Company or any of the factors which had led Party A to terminate its consideration of an acquisition of the Company had changed. The representative of Party A’s investment bank confirmed that Party A’s views of the economic and market headwinds facing the Company had not changed and that our earnings announcement had confirmed views Party A had formed during diligence of our likely financial performance for the fourth fiscal quarter and confirmed Party A’s skepticism that the revenue and EBITDA objectives contained in the strategic plan could be achieved.

On April 1, 2019, our Board held a telephonic meeting to discuss the indication of interest received from Yanmar. Our Board discussed the terms of the indication of interest, including the proposed price range. Our Board discussed an analysis of the financial terms of the Yanmar proposal which had been prepared by Donnelly Penman in advance of the meeting. The financial analysis prepared by Donnelly Penman included discounted cash flow, leveraged buyout, precedent transaction and comparable public company analyses. Our Board then discussed the Company’s progress toward achieving its strategic plan and recent developments in our business, including the slowing of activity in the North American and Australian markets and the continuing impact of increased materials costs and constraints on engine supply on our financial performance. Mr. Rooke reviewed with our Board downward adjustments that management had made to the 2019 forecast included in the strategic plan. The adjustments were based on our actual financial performance for the first two months of 2019 and management’s projections for the balance of the year. Our Board then engaged in a discussion of the strategic plan, the Company’s performance toward achieving the strategic plan since its adoption prior to the 2018 fiscal year and the risks associated with executing on the plan in future periods, noting that achieving the revenue and EBITDA objectives for 2019 appeared unlikely and that the headwinds encountered in the second half of 2018 and beginning of 2019 (including increased materials costs, supply chain issues and deceleration in growth of our

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dealer network) posed long-term threats to achievement of the strategic plan by the end of the 2022 fiscal year. Our Board noted that even achieving the revenue and EBITDA growth implied by the moderate growth scenario described in the Donnelly Penman analysis was uncertain and subject to execution risk. Our Board discussed options for responding to Yanmar, including Yanmar’s request that it be granted exclusivity. This discussion included a review of our Board’s fiduciary duties owed to the Company’s stockholders, which was led by Dorsey. Our Board discussed the risks associated with a leak of information that the Company was in discussions regarding an acquisition, including long-term damage to relationships with our dealers, suppliers and employees and the potential that Yanmar could withdraw its consideration of a transaction in the event of a leak. Our Board directed Mr. Rooke to continue discussions with Yanmar with an objective of getting Yanmar to increase the price of its non-binding offer above the current range of $6.85-7.15 per share and indicated that it was prepared to grant Yanmar’s request for an exclusive negotiating period in the event that Yanmar increased its proposed price above the current range.

On April 5, 2019, following Donnelly Penman’s confirmation that it had not provided any services to, or received fees from, Yanmar during the past five years, the Company executed an engagement letter with Donnelly Penman to provide investment banking advisory services to it in connection with its evaluation of a potential acquisition by Yanmar and potential alternatives to a transaction with Yanmar. See “— Opinion of the Company’s Financial Advisor ” beginning on page 37 of this proxy statement.

Also on April 5, Mr. Rooke and a representative of Donnelly Penman had a call with Mr. Parodi, Mr. Okuyama and representatives of ROTH to discuss our Board’s reaction to Yanmar’s March 21 indication of interest letter. Mr. Rooke and the representative of Donnelly Penman communicated our request that Yanmar review a package of non-public financial information, including the detailed strategic plan (reflecting management’s adjustments for the 2019 fiscal year discussed at the April 1 Board meeting) and our preliminary financial results for the first two months of the 2019 fiscal year. They also indicated that if, following Yanmar’s review of this information, Yanmar were to increase its proposed price, which was to be expressed as a single price per share and not as a range, our Board was prepared to grant Yanmar an exclusive negotiating period. Following this call, Mr. Rooke provided Yanmar with a draft confidentiality agreement.

On April 10, 2019, the Company and Yanmar executed a confidentiality agreement for the exchange of non-public information. Following the execution of the confidentiality agreement, we provided Yanmar with a package of non-public financial information and subsequently responded to Yanmar’s questions about the information provided. See “— Company Financial Forecasts ” beginning on page 44 of this proxy statement.

On April 29, 2019, Mr. Rooke received an indication of interest letter from Yanmar containing Yanmar’s non-binding offer to acquire the Company for a cash purchase price of $7.50 per share of ASV common stock, in cash. The indication of interest letter requested a 30-day exclusivity period (with two extension periods, exercisable at Yanmar’s option, of 15-days each) in order to perform due diligence on the Company and negotiate definitive transaction documents. The closing price of ASV common stock on April 29 was $2.46 per share.

Also on April 29, our Board held a special, telephonic meeting to discuss the Yanmar indication of interest to acquire the Company at a price of $7.50 per share of ASV common stock. Our Board reviewed the analyses of the proposed transaction, the valuation of the Company, our prospects and industry conditions that had been the subject of the April 1 meeting to consider Yanmar’s March 21 proposal to acquire the Company. Following this discussion, our Board concluded that the underlying circumstances and market conditions had not changed in any meaningful way and that, as a result of these analyses and the significant price increase reflected in Yanmar’s revised proposal, exploration of a transaction with Yanmar as a potential means of maximizing stockholder value would be in the best interests of the Company and our stockholders. Accordingly, our Board directed Mr. Rooke and our representatives to negotiate the terms of the indication of interest letter providing for an exclusivity period during which Yanmar would conduct due diligence and negotiate transaction terms.

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On April 30, 2019, Mr. Rooke sent Yanmar a revised draft of the indication of interest letter reducing the number of 15-day exclusivity extension periods from two to one.

On May 1, 2019, Yanmar provided a due diligence request list to the Company.

On May 2, 2019, representatives of Dorsey and Donnelly Penman held a call with representatives of Yanmar’s legal counsel, Shearman & Sterling LLP (“Shearman”) and ROTH to negotiate final revisions to the indication of interest letter, which granted Yanmar a 30-day exclusivity period (with a single extension period, exercisable at Yanmar’s option, of 15-days) in order to perform due diligence on the Company and negotiate definitive transaction documents. As a result of this negotiation, we were able to negotiate a carve-out from its obligation to provide to Yanmar communications regarding an alternative transaction received during the exclusivity period to exclude communications received from parties to whom it owed an obligation of confidentiality, including Party A (though Party A was not specifically named in the carve-out language). The parties finalized the indication of interest letter containing the exclusivity agreement on May 4 and it was fully executed by the Company and delivered to Yanmar on May 6.

Also on May 2, we announced financial results for the fiscal quarter ended March 31, 2019. Net sales for the fiscal quarter declined 8.5% from the first fiscal quarter of 2018 to $27.3 million. Gross margin was 12.6% for the fiscal quarter, compared to 13.2% for the first fiscal quarter of 2018. Adjusted net loss for the fiscal quarter was $0.7 million, compared to adjusted net income of $0.2 million for the first fiscal quarter of 2018. Market conditions and engine supply constraints continued to negatively affect our financial performance. The closing price of ASV common stock on May 3, the first trading day following the earnings announcement, was $2.22 per share.

On May 8, 2019, we granted Yanmar and its representatives access to a virtual dataroom established to provide due diligence information to Yanmar and its representatives during the exclusivity period. Between the time it first granted access to the virtual dataroom to Yanmar and the execution of the Merger Agreement on June 26, 2019, the Company and its representatives responded to numerous requests from Yanmar and its representatives in connection with the due diligence investigation of the Company undertaken by such parties.

On May 13-14, 2019, representatives of Yanmar met with representatives of the Company to tour our manufacturing and distribution facilities and to discuss the strategic plan.

On May 21, 2019, Shearman delivered to Dorsey an initial draft of the Merger Agreement. The draft Merger Agreement, among other things, included a closing condition that holders of no more the 5% of the outstanding share of ASV common stock exercise statutory appraisal rights, included a superior proposal termination fee equal to 4.75% of equity value, allocated all antitrust regulatory risk to the Company, did not include a customary carve-out from the definition of a material adverse effect (the occurrence of which would permit Yanmar to terminate the Merger Agreement) for any effects resulting from the pendency or public announcement of the transactions contemplated by the Merger Agreement, provided for matching rights with a five-day negotiation period in the event of a superior proposal and provided for an obligation for the Company to reimburse Yanmar for transaction expenses in the event that the Merger Agreement was terminated due to an uncured breach by the Company of its representations and warranties or covenants or as a result of the failure by our stockholder to approve the transaction for reasons other than the existence of a superior proposal.

On May 30, 2019, Dorsey provided a revised draft of the Merger Agreement to Shearman reflecting instructions received from a working group including Mr. Rooke, Ms. How and Donnelly Penman. The Dorsey draft of the Merger Agreement, among other things, deleted the closing condition tied to exercise of appraisal rights, included a superior proposal termination fee equal to 2.75% of equity value, balanced the antitrust risk between the parties, included a carve-out from the definition of a material adverse effect for any effects resulting from the pendency or public announcement of the transactions contemplated by the Merger Agreement, reduced the matching rights negotiation period to three days negotiation period and deleted the obligation for the Company to reimburse Yanmar for transaction expenses.

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Also on May 30, Shearman notified Dorsey of Yanmar’s request that the exclusivity period be extended until July 7, 2019. On May 31, 2019, Dorsey responded on behalf of the Company. While acknowledging Yanmar’s right, pursuant to the terms of the indication of interest letter, to extend exclusivity from the scheduled expiration of June 6 to June 20, the Company considered Yanmar’s request to extend the exclusivity beyond June 20 to be untimely and declined to consider the request. Later on May 31, Shearman sent Yanmar’s written request to extend exclusivity until July 7 to Dorsey.

On June 3-4, 2019, representatives of the Company and Yanmar met in Grand Rapids and Duluth. The meetings included a tour of our test facility in Grand Rapids.

On June 4, 2019, a representative of Dorsey had a telephone conference with representatives of Shearman to discuss certain issues raised by the draft Merger Agreement and Yanmar’s request that exclusivity be extended. In this call, Dorsey requested that Yanmar provide financial information regarding Yanmar America and the proposed guarantor in order for the Company to perform due diligence of the ability of the Yanmar parties to perform their respective obligations under the Merger Agreement, including payment of the proposed cash merger consideration. Dorsey communicated the Company’s view that a request to extend exclusivity was not appropriate at this time, given that Yanmar had the ability to unilaterally extend exclusivity to June 20.

On June 5, 2019, Shearman sent Dorsey written notice of Yanmar’s election to extend exclusivity until June 20, 2019.

On June 6, 2019, Shearman delivered a revised draft of the Merger Agreement to Dorsey. The Shearman draft of the Merger Agreement accepted some of the proposals contained in the May 30 Dorsey draft (including shortening the matching rights negotiation period) but, among other things, restored the superior proposal termination fee at 4.75% of equity value, restored the appraisal termination right at a 10% threshold, restored the antitrust risk allocation, deleted the proposed carve-out from the definition of a material adverse effect for any effects resulting from the pendency or public announcement of the transactions contemplated by the Merger Agreement and restored the obligation for the Company to reimburse Yanmar for transaction expenses in the event that the Merger Agreement was terminated due to an uncured breach by the Company of its representation and warranties or covenants or as a result of the failure by our stockholder to approve the transaction for reasons other than the existence of a superior proposal. The Shearman draft included a new closing condition tied to satisfactory resolution of the on-going NLRB litigation to which we are a party. In connection with its delivery of the revised draft Merger Agreement, Shearman also provided the financial statements for Yanmar Co., Ltd. that we had requested.

On June 11, 2019, Dorsey provided a revised draft of the Merger Agreement to Shearman reflecting the instructions received from our working group. The Dorsey draft of the Merger Agreement, among other things, deleted the closing conditions tied to exercise of appraisal rights and resolution of the NLRB litigation, identified the amount of the superior proposal termination fee as an open point, restored a balance of the antitrust risk between the parties, included a carve-out from the definition of a material adverse effect for any effects resulting from the pendency or public announcement of the transactions contemplated by the Merger Agreement, and consented to the obligation for the Company to reimburse Yanmar for transaction expenses up to $500,000 in the event that the Merger Agreement was terminated due to an uncured breach by the Company of its representations and warranties or covenants (but not as a result of the failure by our stockholders to approve the transaction for reasons other than the existence of a superior proposal).

Also on June 11, Dorsey sent Shearman a draft of the confidential disclosure schedules to the Merger Agreement. Between the delivery of this initial draft of the confidential disclosure schedules and the execution of the Merger Agreement on June 26, 2019, the Company and Dorsey and Yanmar and Shearman exchanged several drafts of the confidential disclosure schedules and held telephonic meetings to negotiate the contents of the confidential disclosure schedules.

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Also on June 11, Shearman provided Dorsey with a draft of the Voting Agreement to be executed by Terex in connection with the execution of the Merger Agreement. The draft Voting Agreement, among other things, provided for a 12-month tail period following termination during which Terex’s obligation to vote against alternative proposals to acquire the Company would survive.

Also on June 11, representatives of the Company and Yanmar met in Grand Rapids to discuss production and quality control matters. the meetings included a tour of our manufacturing facility.

On June 12, 2019, Shearman sent Dorsey a written request from Yanmar that exclusivity be extended until 11:59 p.m., PT, on June 28, 2019.

On June 13, 2019, our Board held a regularly scheduled meeting. Among other matters, our Board discussed the status of discussions with Yanmar. Mr. Rooke noted that Yanmar had significantly advanced its due diligence and that the parties had exchanged drafts of the transaction documentation and engaged in negotiations of the transaction terms but that he expected that Yanmar’s due diligence would not be complete and negotiations of the transaction terms would extend past the scheduled expiration of the exclusivity period on June 20. Our Board discussed the request to extend exclusivity until June 28 that had been received from Yanmar and concluded that granting the extension was in the best interests of the Company and its stockholders. Our Board authorized Mr. Rooke to execute an extension of exclusivity through June 28.

Also on June 13, Dorsey provided Shearman with a revised draft of the Voting Agreement. Among other matters, the revised draft provided for the Voting Agreement to terminate in the event of a change in our Board’s recommendation that the Company’s stockholders vote to approve the transactions contemplated by the Merger Agreement and eliminated the 12-month tail period on the obligation to vote against competing proposals.

On June 14, 2019, Dorsey provided Shearman with a draft letter pursuant to which the Company would extend exclusivity until 11:59 p.m., PT, as requested by Yanmar if Yanmar were to confirm its intent to proceed with the transaction at a price per share of $7.50 or higher.

On June 15, 2019, representatives of ROTH spoke with representatives of Donnelly Penman. ROTH stated that, based on its findings in due diligence, Yanmar was no longer prepared to pay $7.50 per share in the transaction. The items cited by ROTH as leading to Yanmar’s conclusions regarding the Company’s valuation included the potential liability associated with the NLRB litigation, the difficulty and risks associated with achieving the strategic plan, the effect of increased steel prices on the cost of introducing steel undercarriage assemblies, risks associated with changes in our engine supply chain, required future capital expenditures, skepticism with the our plans to expand aftermarket sales and the relationship with one of our key customers. Following this call, the Company and its representatives engaged with Yanmar and its representative on each of the items cited by ROTH as reasons for Yanmar’s reduced valuation of the Company.

On June 18, 2019, representatives of ROTH spoke with representatives of Donnelly Penman and indicated that Yanmar had reduced the price it was willing to pay for Company to $7.00 per share of ASV common stock. The ROTH representatives reiterated the areas of concern expressed in June 15 conversation as justification for Yanmar lowering the price it was prepared to pay for the Company. The closing price of ASV common stock on June 18 was $1.92 per share.

On June 19, 2019, our Board held a special, telephonic meeting to discuss recent developments in the negotiations with Yanmar. Mr. Rooke advised our Board that Yanmar had proposed a price decrease from the $7.50 per share of ASV common stock included in the indication of interest letter to $7.00 per share. Mr. Rooke noted that the parties were still engaged in discussions regarding the items of concern to Yanmar but that diligence on these matters would likely not be completed during the current exclusivity period which was scheduled to expire the following day. After discussion, our Board confirmed its prior authorization to execute an extension of exclusivity to June 28.

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On June 20, 2019, Shearman sent Dorsey a written request from Yanmar that exclusivity be extended until 11:59 p.m., PT, on June 28, 2019. The extension letter communicated Yanmar’s expectation to proceed with the transaction at a price of $7.00 per share of ASV common stock or above. On June 21, 2019, Mr. Rooke countersigned and returned the extension letter.

On June 21, 2019, Shearman provided Dorsey with revised drafts of the Merger Agreement and Voting Agreement. The Shearman draft of the Merger Agreement, among other things, accepted our position on the deletion of closing conditions tied to exercise of appraisal rights and resolution of the NLRB litigation and the inclusion of a carve-out from the definition of a material adverse effect for any effects resulting from the pendency or public announcement of the transactions contemplated by the Merger Agreement. However, Yanmar re-asserted its positions in the draft Merger Agreement on a superior proposal termination fee of 4.75% of equity value, the allocation of antitrust risk to the Company and the obligation for the Company to reimburse Yanmar for transaction expenses up to $500,000 in the event that the Merger Agreement was terminated as a result of the failure by our stockholders to approve the transaction for reasons other than the existence of a superior proposal.

On June 22, 2019, a representative of Donnelly Penman spoke with representatives of ROTH to discuss the open transaction points in advance of an upcoming Yanmar board meeting to consider approval of the transaction. Donnelly Penman told ROTH that it was highly confident that our Board would support the transaction if Yanmar were to increase its price to $7.30, lower the superior proposal termination fee to an amount no greater than 4.00% of equity value and agree to ours positions on a few open points in the Merger Agreement to be discussed among counsel.

On June 23, 2019, representatives of ROTH contacted a representative of Donnelly Penman to communicate Yanmar’s best-and-final price of $7.05 per share of ASV common stock. ROTH also noted that it thought that a superior proposal termination fee of 4.00% of equity value or less would be acceptable to Yanmar.

Also on June 23, representatives of Shearman and representatives of Dorsey negotiated the key open points in the Merger Agreement, with the parties agreeing to, among other matters, an allocation of antitrust regulatory risk and Yanmar agreeing to withdraw its request for expense reimbursement in the event that the Merger Agreement is terminated as a result of the failure by our stockholders to approve the transaction for reasons other than the existence of a superior proposal.

On June 24, 2019, Shearman supplied to Dorsey the financial information the Company had requested on Yanmar America.

On June 25, 2019, representatives of ROTH confirmed to representatives of Donnelly Penman that Yanmar would agree to a superior proposal termination fee of 3.75% of equity value.

In the evening of June 25, 2019, our Board held a special, telephonic meeting to receive an update on negotiations with Yanmar. Prior to the meeting, the members of our Board were provided with materials relating to the proposed acquisition, including, among other things, current drafts of the Merger Agreement and the Voting Agreement, a summary of the material terms of the Merger Agreement and Voting Agreement which had been prepared by Dorsey, Donnelly Penman’s financial analysis and certain financial information regarding Yanmar America and Yanmar Co., Ltd. At the meeting, a representative of Dorsey presented a summary of the material terms of the proposed Merger Agreement and Voting Agreement. Donnelly Penman presented its analysis of the financial terms of the Yanmar proposal. The financial analysis prepared by Donnelly Penman included discounted cash flow, leveraged buyout, precedent transaction and comparable public company analyses. A representative of Dorsey reviewed with our Board their fiduciary duties in connection with evaluating Yanmar’s proposal to acquire the Company and reviewed preliminary drafts of resolutions to be considered by our Board prior to entry into a definitive Merger Agreement. Our Board also reviewed various preliminary communications documents, including a draft press release. Our Board instructed management and the Company’s representatives to finalize the transaction documentation so that our Board could consider approving entry into a definitive merger the following evening.

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On June 26, 2019, representatives of Dorsey and in-house counsel to Terex discussed the open points in the Voting Agreement with representatives of Shearman. As a result of these negotiations, a termination trigger which would allow Terex to terminate the Voting Agreement in event of an amendment to the Merger Agreement which decreased the merger consideration payable to the Company’s stockholders, altered the closing conditions or otherwise modified the material terms of the Merger Agreement in a manner adverse to Terex or in the event of a change in the Company Recommendation resulting from a so-called “intervening event” were included in the final Voting Agreement. Also, during the day on June 26, the Company and its representatives worked with Yanmar and its representatives to finalize the Merger Agreement, the confidential disclosure schedules, the communications materials to be used by the parties and the securities law filings to be made in connection the entry into the Merger Agreement. The closing price of ASV common stock on June 26 was $1.63 per share.

In the late afternoon of June 26, 2019, our Board met telephonically, to consider approval of the Merger Agreement and the transactions contemplated thereby. At the meeting, management and our representatives briefed our Board on developments since the meeting held the previous evening, including the finalization of the transaction terms and documentation. Donnelly Penman delivered an oral opinion, which was subsequently confirmed in writing by delivery of a written opinion dated June 26, 2019, to our Board to the effect that, as of that date and based upon and subject to the assumptions, limitations and qualifications contained in its opinion, the consideration to be received by holders of shares of ASV common stock in the merger, was fair, from a financial point of view, to such holders. Following consideration and discussion of the terms of the proposed Merger Agreement and the transactions contemplated thereby, our Board then unanimously adopted resolutions (i) determining that the Merger Agreement and the transactions contemplated thereby, including the merger are advisable, fair to and in the best interests of our stockholders, (ii) approving and declaring advisable the Merger Agreement and the transactions contemplated thereby, including the merger, in accordance with the requirements of the DGCL, and (iii) recommending that our stockholders vote to approve transactions contemplated by the Merger Agreement, including the Merger, and adopt the Merger Agreement.

The parties executed the Merger Agreement and the Voting Agreement during the evening of June 26, 2019, and each of Yanmar and the Company issued a press release prior to the opening of Nasdaq Capital Market trading on June  27, 2019, announcing the parties’ entry into the Merger Agreement.

ASV Without the Merger

If the Merger Agreement is not approved by our stockholders or if the Merger is not consummated for any other reason, our stockholders will not receive any payment for their shares of our common stock. Instead, ASV will remain a public company, our common stock will continue to be listed and traded on the Nasdaq Capital Market and registered under the Exchange Act and we will continue to file periodic reports with the SEC. In addition, if the Merger is not completed, we expect that management will operate the business in a manner similar to that in which it is being operated today and that our stockholders will continue to be subject to the same risks and opportunities as they currently are, including, among other things, general industry, economic and market conditions. If the Merger is not consummated, there can be no assurance as to the effect of these risks and opportunities on the future value of your shares of our common stock. From time to time, if the Merger is not consummated, the Board will evaluate and review our business operations, properties, capitalization and, among other things, make such changes as are deemed appropriate and continue to seek opportunities to maximize stockholder value. If the Merger Agreement is not approved by our stockholders or if the Merger is not consummated for any other reason, there can be no assurance that any other transaction acceptable to us will be offered or that our business, prospects or results of operations will not be adversely impacted.

If the Merger Agreement is terminated, under specified circumstances, we may be required to pay Yanmar a termination fee, as described under “ The Merger Agreement—Termination Fees and Expenses ” beginning on page 64 of this proxy statement.

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The Recommendation of ASV’s Board and ASV’s Reasons for the Merger

On June 26, 2019, our Board unanimously adopted resolutions (i) determining that the Merger Agreement and the transactions contemplated thereby, including the Merger are advisable, fair to and in the best interests of our stockholders, (ii) approving and declaring advisable the merger agreement and the transactions contemplated thereby, including the merger, in accordance with the requirements of the DGCL and (iii) recommending that our stockholders vote to approve transactions contemplated by the Merger Agreement, including the Merger, and adopt the Merger Agreement.

In evaluating the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement, our Board consulted with our executive management team, outside legal counsel and an outside financial advisor. In recommending that our stockholders vote to approve transactions contemplated by the Merger Agreement, including the Merger, and adopt the Merger Agreement, our Board also considered a number of factors potentially weighing in favor of the Merger, including the following factors (which are not necessarily presented in order of relative importance):

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In its deliberations concerning the Merger and the other transactions contemplated by the Merger Agreement, our Board also considered and balanced against the factors potentially weighing in favor of the Merger a number of uncertainties, risks, restrictions and other factors potentially weighing against the Merger, including the following (which are not necessarily presented in order of relative importance):

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After taking into account all of the factors set forth above, as well as others, our Board concluded that the risks, uncertainties, restrictions and potentially negative factors associated with the Merger were outweighed by the potential benefits of the Merger to our stockholders.

The foregoing discussion of factors considered by our Board is not intended to be exhaustive, but summarizes the material factors considered by our Board. In light of the variety of factors considered in connection with its evaluation of the Merger, our Board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determination and recommendation. Moreover, each member of our Board applied his own personal business judgment to the process and may have given different weight to different factors. Our Board did not undertake to make any specific determination as to whether any factor, or any particular aspect of any factor, supported or did not support its ultimate determination. Our Board based its recommendation on the totality of the information presented, including thorough discussions with, and questioning of, the Company’s executive management, financial advisor and legal counsel. It should be noted that this explanation of the reasoning of our Board and certain information presented in this section is forward-looking in nature and should be read in light of the factors set forth in “ Cautionary Statement Concerning Forward-Looking Information ” beginning on page 15 of this proxy statement.

Interests of the Company’s Directors and Executive Officers in the Merger

When considering the recommendation of the Board that you vote for the merger proposal, you should be aware that certain of our directors and executive officers may have interests in the Merger that may be different from, or

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in addition to, your interests as a stockholder. The Board was also aware of these interests in, among other matters, approving the Merger Agreement and the Merger and in recommending that the Merger Agreement be adopted by the stockholders of ASV. See the sections entitled “ —Background of the Merger ” and “ — The Recommendation of ASV’s Board and ASV’s Reasons for the Merger ” beginning on pages 19 and 29 of this proxy statement, respectively. You should take these interests into account in deciding whether to vote “ FOR ” the adoption of the Merger Agreement.

These interests are described in more detail below, and certain of them, including the compensation that may become payable in connection with the Merger to Messrs. Rooke, Rupar and Foster and Ms. How, who constitute our current executive officers, are quantified in the narrative below. Note that, in accordance with SEC rules we are required to include this information with respect to certain individuals who were executive officers of ASV at any time since January 1, 2018, and therefore include information with respect to Mr. DiBiagio, who is no longer employed by ASV.

In addition, Brian Henry, a member of the Board, is also an employee of Terex, whose relationship with ASV is further described in the section entitled “ The Parties to the Merger—ASV ” on page  16 of this proxy statement.

Consideration Payable for Shares Held Pursuant to the Merger Agreement

The executive officers and directors of ASV who hold our common stock at the closing of the Merger will be eligible to receive the same Merger Consideration as the other ASV stockholders with respect to each outstanding share held. The executive officers and directors ASV held, in the aggregate, 84,943 shares of ASV common stock (which constitutes less than 1% of all outstanding shares) as of April 18, 2019, excluding shares issuable upon vesting of RSUs.

Consideration Payable for Equity Awards Pursuant to the Merger Agreement

As described below under “ The Merger Agreement—Treatment of Restricted Stock Units in the Merger ” on page 51 of this proxy statement, the Merger Agreement provides that, at the effective time, any restricted stock units providing for a right to receive shares of our common stock that are outstanding immediately prior to the effective time shall automatically become fully vested and nonforfeitable and shall be cancelled and converted automatically into the right to receive an amount equal to the product of (i) the Merger Consideration multiplied by (ii) the total number of shares of ASV common stock subject to such restricted stock unit, subject to applicable tax withholding or other authorized deductions.

The following table sets forth for each individual the aggregate number of shares of ASV common stock subject to restricted stock units held as of June 26, 2019 and the corresponding payment to which the holder will be entitled, assuming each such restricted stock unit remains outstanding immediately prior to the effective time. The amounts shown in this table do not include shares of ASV common stock already owned by the executive officer (which shares will be converted into the right to receive the Merger Consideration on the same basis as all other shares of ASV common stock).

Employment and Severance Arrangements

Mr. Rooke, our Chief Executive Officer, and Ms. How, our Chief Financial Officer, are party to arrangements that provide certain payments and other benefits in the event of certain termination events, including upon a

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qualifying termination of employment in connection with a change in control of ASV. Each of Mr. Rooke’s and Ms. How’s employment agreements, entered into on January 9, 2019 and November 29, 2016, respectively, provides for an initial term of three years. Mr. Rooke’s will automatically renew for periods of three years and Ms. How’s for periods of one year, unless either we or the executive notifies the other in writing of a decision not to renew.

If we terminate the employment of Mr. Rooke or Ms. How “without cause”, as defined below, or if either of these individuals terminates his or her employment for “good reason”, as defined below, the terminated executive would be entitled to receive the following:

For purposes of the employment agreements, “good reason” means the occurrence of one or more of the following:

Mr. Rooke or Ms. How, as applicable, will be required to provide written notice of grounds for termination for good reason within 30 days of the existence of such grounds and we will have a period of 60 days after receipt of such notice to cure such circumstances. Any failure to terminate his or her employment within 90 days after the first occurrence of applicable grounds for such termination for good reason will be deemed an affirmative waiver of the executive’s right to terminate for good reason.

For purposes of the employment agreements, “without cause” means:

If we terminate the employment of Mr. Rooke or Ms. How upon his or her permanent disability, the terminated executive will be entitled to receive the following:

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Mr. Rooke or Ms. How, as applicable, will be determined “permanently disabled” for purposes of the employment agreements upon the earlier of (i) the end of a six consecutive month period during which such executive was unable to perform substantially all of his or her duties due to physical or mental injury, impairment or disease, or (ii) the date that a reputable physician selected by our Board (without reasonable objection by the executive) determines in writing that such executive will be unable to perform substantially all of his or her duties for a period of at least six consecutive months due to physical or mental injury, impairment or disease. Receipt of the severance payments above will be subject to the execution and non-revocation by the executive of a general release of claims on terms determined by us.

If Mr. Rooke or Ms. How is terminated for “just cause”, as defined below, then all payments of compensation to the terminated executive immediately terminate and all perquisites and benefits will immediately cease except as required by statute.

For purposes of the employment agreements, “just cause” means:

Each of Mr. Rooke’s and Ms. How’s agreements provides that “just cause” does not include bad judgment or ordinary negligence on the part of the executive, any act or omission believed by the executive in good faith to have been in or not opposed to the interests of the Company, or any act or omission that met the standard of conduct for indemnification or reimbursement under our bylaws or applicable law.

Potential Payments to Executive Officers upon Termination or Change of Control

Each of Mr. Rooke’s and Ms. How’s agreements provides for certain payments to the executive upon termination following a change of control after the effectiveness of the employment agreements. Under the employment agreements, severance payments in connection with a change of control are subject to a “double trigger”, meaning both a change of control and a termination are required.

If Mr. Rooke’s or Ms. How’s employment is terminated by us without cause or for good reason (each as defined in the employment agreements and as summarized above) within 24 months following a “change of control” (as

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defined below), the terminated executive will be entitled to the greater of his or her base salary for the remaining portion of his or her initial term or the then-current renewal term, as applicable, or the sum of the following:

We would pay the executive the above sum in regular installments over a two-year period following termination. In addition, Mr. Rooke is entitled to a lump-sum payment of $50,000 and Ms. How to a lump-sum payment of $25,000, each payable within 60 days following termination.

The terminated executive would also be entitled to a continuation of perquisites, pay for accrued but unused vacation, and reimbursement of unpaid expenses. Receipt of the severance payments upon a change of control is subject to the execution and non-revocation by the executive of a general release of claims on terms determined by us.

For purposes of the employment agreements, a “change of control” means any of the following, but, to the extent required to avoid the adverse tax consequences under Section 409A of the Internal Revenue Code (the “Code”), only to the extent any such event also constitutes a change in control event for purposes of Section 409A of the Code:

Other Executive Officers

We have entered into agreements pursuant to offer letters of employment with Mr. Rupar, our Vice President of Sales and Marketing, and Mr. Foster, our Vice President of Operations and Supply Chain, each of which provides for employment at-will.

Retention Bonus Agreements

On June 26, 2019, the Board adopted retention bonus agreements (the “Retention Agreements”) that apply to the following executive officers of the Company: Melissa How, Chief Financial Officer and Secretary, Justin Rupar,

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Vice President of Sales and Marketing, and Thomas Foster, Vice President of Operations and Supply Chain (collectively, the “Participants”). The purpose of the Retention Agreements is to ensure that the expertise of such Participants is preserved for the benefit of ASV through at least the effective time.

Pursuant to the Retention Agreements, each Participant will receive a retention bonus in the event that such Participant (i) remains employed by ASV and performs his or her duties and responsibilities in a satisfactory manner through the earlier of (i) the closing date of the Merger or (ii) the termination of the Merger Agreement in accordance with its terms. If a Participant is terminated for “cause” (as such term is defined in each Retention Agreement), such Participant shall not be entitled to receive the retention bonus. Pursuant to their respective Retention Agreements, Ms. How will receive $75,000, Mr. Rupar will receive $50,000 and Mr. Foster will receive $50,000.

Compensation and Benefits-Related Arrangements with the Surviving Corporation

See the section entitled “ The Merger Agreement—Employee Matters ” beginning on page 60 of this proxy statement, for a summary of certain post-closing covenants related to compensation and employee benefit arrangements.

ASV Board of Directors Following the Merger

Following the Merger, and pursuant to the terms of the Merger Agreement, the members of the Board will be replaced by the Board of Merger Sub. In connection with the foregoing, the Company’s compensation committee approved the proration of the annual compensation of ASV’s non-employee directors. Each of ASV’s non-employee directors will receive their prorated annual cash retainer and the cash value of their prorated annual equity grant.

Indemnification and Insurance of Directors and Officers

See the section entitled “ The Merger Agreement—Indemnification and Insurance ” beginning on page 60 of this proxy statement, for a summary of the obligations of the surviving corporation with respect to insurance indemnification of directors and executive officers after the effective time.

Opinion of the Company’s Financial Advisor

Donnelly Penman rendered its opinion to the Board that, as of June 26, 2019 and based upon and subject to the factors and assumptions set forth therein, the $7.05 in cash per share of ASV common stock to be paid to the holders of shares of ASV common stock pursuant to the Merger Agreement was fair from a financial point of view to such holders.

The full text of the written opinion of Donnelly Penman, dated June 26, 2019, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex C to this proxy statement. Donnelly Penman provided its opinion for the information and assistance of the Board in connection with its consideration of the Merger. The Donnelly Penman opinion is not a recommendation as to how any holder of ASV common stock should vote with respect to the Merger, or any other matter.

In connection with rendering the opinion described above and performing its related financial analyses, Donnelly Penman reviewed, among other things:

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Donnelly Penman also held discussions with members of ASV’s senior management regarding their assessment of the past and current business operations, financial condition and future prospects of the Company; reviewed the reported price and trading activity for the shares of ASV common stock; compared certain financial and stock market information for ASV with similar information for certain other companies the securities of which are publicly traded; reviewed the financial terms of certain recent business combinations of industrial companies; and performed such other studies and analyses, and considered such other factors, as it deemed appropriate.

For purposes of rendering its opinion, Donnelly Penman, with the Company’s consent, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by it, without assuming any responsibility for independent verification thereof. In that regard, Donnelly Penman assumed with the Company’s consent that the forecasts were reasonably prepared on a basis reflecting the best available estimates and judgments of ASV management at the time they were made. Donnelly Penman did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of ASV, and it was not furnished with any such evaluation or appraisal. Donnelly Penman assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the Merger will be obtained without any adverse effect on the expected benefits of the Merger in any way meaningful to its analysis. Donnelly Penman has also assumed that the Merger will be consummated on the terms set forth in the Merger Agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to its analysis.

Donnelly Penman’s opinion does not address the underlying business decision of the Company to engage in the Merger or the relative merits of the Merger as compared to any strategic alternatives that may be available to the Company; nor does it address any legal, regulatory, tax or accounting matters. Donnelly Penman’s opinion addresses only the fairness from a financial point of view, as of the date of the opinion, of $7.05 in cash per share of common stock to be paid to the holders of shares of common stock pursuant to the Merger Agreement. Donnelly Penman’s opinion does not express any view on, and does not address, any other term or aspect of the Merger Agreement or the Merger or any term or aspect of any other agreement or instrument contemplated by the Merger Agreement or entered into or amended in connection with the Merger, including the fairness of the Merger to, or any consideration received in connection therewith by, the holders of any other class of securities, creditors or other constituencies of the Company; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of ASV, or class of such persons, in connection with the Merger, whether relative to the $7.05 in cash per share of common stock to be paid to the holders of shares of common stock pursuant to the Merger Agreement or otherwise. Donnelly Penman does not express any opinion as to the impact of the Merger on the solvency or viability of ASV or Yanmar or the ability of ASV or Yanmar to pay their respective obligations when they come due. Donnelly Penman’s opinion was necessarily based on economic, monetary, market and other conditions, as in effect on, and the information made available to it as of, the date of the opinion, and Donnelly Penman assumed no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of its opinion. Donnelly Penman’s opinion was approved by a fairness committee of Donnelly Penman.

The following is a summary of the material financial analyses delivered by Donnelly Penman to the Board in connection with rendering the opinion described above. The following summary, however, does not purport to be

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a complete description of the financial analyses performed by Donnelly Penman, nor does the order of analyses described represent relative importance or weight given to those analyses by Donnelly Penman. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Donnelly Penman’s financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before June 26, 2019, the last trading day before ASV’s and Yanmar’s public announcement of the Merger Agreement, and is not necessarily indicative of current market conditions.

Selected Companies Analysis.     Donnelly Penman reviewed and compared certain financial information for the Company to corresponding financial information, ratios and public market multiples for the publicly traded corporations, summarized in the table below, that participate in the industrial machinery manufacturing industry (collectively referred to as the selected companies).

Although none of the selected companies is directly comparable to ASV, the companies included were chosen because they are publicly traded companies with operations that for purposes of analysis may be considered similar to certain operations of ASV.

For each company, Donnelly Penman calculated the “equity market value” (defined as the market price per share of each company’s common stock multiplied by the total number of common shares outstanding of such company. In addition, Donnelly Penman calculated the “enterprise value” (EV) (defined as the equity market value plus the book value of each company’s total debt, preferred stock and minority interests, less cash, cash equivalents and marketable securities). Donnelly Penman calculated the multiples of each company’s total enterprise value to its last twelve months’ (LTM) earnings before interest, tax and depreciation (EBITDA), based on publicly announced results for the most recent fiscal quarter, as well as to each company’s projected EBITDA for its next fiscal year end. Stock market and historical financial information for the selected companies was based on publicly available information as of June 26, 2019, and projected financial information was based on publicly available research reports (consensus estimates obtained from Capital IQ) as of such date.

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A summary of the selected companies and the implied multiples is provided in the table below.

Donnelly Penman then applied an illustrative range of multiples of 9.0x to 10.5x, representing a range of LTM multiples between the median and upper quartile of the selected companies, to the Company’s Adjusted EBITDA for the last twelve months ended May 31, 2019; Adjusted EBITDA excluded certain operating expenses that management believed non-recurring in nature, amounting to $1.1 million. Donnelly Penman also applied an illustrative range of multiples of 6.5x to 7.5x, representing a range of projected multiples between the lower quartile and the median for the selected companies, to the Company’s forecasted EBITDA for the year ending December 31, 2019, as per its Strategic Plan. Donnelly Penman derived an implied enterprise value range of $62.5 million to $72.4 million, as summarized in the table below.

Based on these analyses, Donnelly Penman then subtracted, from the range of illustrative enterprise values it derived for the Company, the amount of the Company’s estimated net debt exclusive of cash as of May 31, 2019 of $31.7 million (as provided by the Company), to derive a range of illustrative equity values for the Company. Donnelly Penman then divided the range of illustrative equity values it derived by the number of fully diluted outstanding shares of the Company, as provided by management of the Company, to derive a range of illustrative present values per share ranging from $3.07 to $4.06.

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Selected Transactions Analysis.     Donnelly Penman analyzed certain information relating to the following selected transactions in the industrial manufacturing industry since December 2015:

While none of the target companies that were included in the selected transactions are directly comparable to ASV, the target companies that participated in the selected transactions are companies with operations that, for the purposes of analysis, may be considered similar to certain operations of the Company.

For the selected transactions for which financial information was publicly available, Donnelly Penman calculated and compared Enterprise Value, or EV as a multiple of the estimated EBITDA, using publicly available information, for the year in which the transaction occurred, resulting in a range of EV / EBITDA multiple of 3.7x to 13.2x and a median of 8.6x. Donnelly Penman identified an illustrative range of EV / EBITDA multiples of 9.0x – 10.5x which it applied to the Company’s Adjusted EBITDA for the last twelve months ended May 31, 2019; Adjusted EBITDA excluded certain operating expenses that management believed non-recurring in nature, amounting to $1.1 million. Donnelly Penman applied an illustrative range of multiples of 7.5x – 8.5x which it applied to Company’s forecasted EBITDA for the year ending December 31, 2019, as per its Strategic Plan. This

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resulted in a range of illustrative enterprise value of $67.4 million to $77.4 million (equity value per share of $3.56 to $4.56).

Illustrative Discounted Cash Flow Analysis.     ASV provided financial forecasts for 2019 through 2022 that were included in its strategic plan prepared in September 2018. In April 2019, ASV updated its forecast based on actual results realized in the first quarter 2019 and its updated outlook for the second quarter 2019, which were both below the original forecast, but ASV did not at that time update the forecast for the balance of 2019 nor for 2020 through 2022. This forecast is referred to as the Strategic Plan. The financial forecast contemplated in the Strategic Plan contemplated compounded annual sales growth from 2018 to 2022 of 18.5% and an improvement from 2018 Adjusted EBITDA of $7.7 million to forecasted EBITDA of $27.3 million in 2022 (compounded annual improvement of 37.3%). Based on changing economic conditions, ASV’s financial performance subsequent to the preparation of the Strategic Plan, and recognition that execution of the Strategic Plan could take longer than originally estimated, an updated set of financial projections was prepared for purposes of analyzing and valuing ASV, referred to as the Moderate Growth forecast. Key assumptions utilized in Moderate Growth forecast include:

In preparing its financial analysis, Donnelly Penman assumed that the Moderate Growth forecast was the most reliable forecast available at the time of the fairness opinion.

Using the financial statement forecasts included in Moderate Growth forecast, Donnelly Penman performed an illustrative discounted cash flow analysis on the Company. Using discount rates ranging from 13.0% to 15.0%, reflecting estimates of the Company’s weighted average cost of capital (derived by utilizing the capital asset pricing model, which requires certain company-specific inputs, including the Company’s target capital structure weightings, the cost of long-term debt, future applicable marginal tax rate and a beta for the Company, as well as certain financial metrics for the United States financial markets generally), Donnelly Penman discounted to present value as of June 30, 2019 (i) estimates of unlevered free cash flow for the Company for the last six months of 2019 and for the years 2020 through 2023 as reflected in the Moderate Growth forecasts and (ii) a range of illustrative terminal values for the Company, which were calculated utilizing both a perpetuity growth model and an exit multiple model. For the perpetuity growth model, Donnelly Penman applied perpetuity growth rates ranging from 2.0% to 3.0%, to a terminal year estimate of the free cash flow to be generated by the Company, as reflected in the Moderate Growth forecasts. The range of perpetuity growth rates was estimated by Donnelly Penman utilizing its professional judgment and experience, taking into account the forecasts, the Company’s historical and market expectations regarding long-term real growth of gross domestic product and inflation. For the exit multiple method, Donnelly Penman estimated an implied terminal value based on a range of exit multiples between 7.0x and 8.0x, based upon Donnelly Penman’s professional judgment and experience given the nature of the Company’s business and the industry in which it operates, including relevant precedent transactions and public company trading multiples. Donnelly Penman derived ranges of illustrative enterprise values for the Company by adding the ranges of present values it derived in (i) and (ii) above. From these amounts, Donnelly Penman estimated the range of illustrative enterprise values to be between $72.2 million and $84.8 million (equity value per share ranging from $4.04 to $5.29).

Although the Strategic Plan forecast was subject to greater market uncertainties and operational risks than when it was originally prepared, resulting in the preparation of the Moderate Growth forecast, Donnelly Penman also

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performed an illustrative discounted cash flow analysis on the Company using the Strategic Plan forecast. Donnelly Penman discounted to present value as of June 30, 2019 (i) estimates of unlevered free cash flow for the Company for the last six months of 2019 and for the years 2020 through 2023 as reflected in the Strategic Plan forecasts and (ii) a range of illustrative terminal values for the Company, which were calculated utilizing a perpetuity growth model. Consistent with the Moderate Growth scenario and for comparative purposes, Donnelly Penman utilized discount rates ranging between 13.0% and 15.0% and applied perpetuity growth rates of 2.0% to 3.0%. From these analyses, Donnelly Penman estimated the range of enterprise value to be between $115.9 million and $127.7 million and the derived range of illustrative equity value per share ranges from $8.39 to $9.57.

Donnelly Penman further performed a sensitivity analysis on the illustrative discounted cash flow analysis of the Strategic Plan forecast using discount rates ranging between 16.0% and 17.0%, taking into consideration the increased risk inherent in achieving the Strategic Plan forecast. Using perpetuity growth rates ranging between 2.0% and 3.0%, Donnelly Penman estimated the range of enterprise value between $92.9 million and $105.9 million (prices per share of Company stock of $6.10 to $7.40).

Leveraged Buyout Analysis.     Utilizing the forecasts from the Moderate Growth scenario, Donnelly Penman performed a leveraged buyout analysis and projected illustrative implied purchase prices as which a leveraged buyout of the Company could occur and yield for a potential investor. In this analysis, Donnelly Penman estimated annual net reduction in expenses of $1 million associated with no longer having public company reporting requirements. Donnelly Penman estimated the terminal value by utilizing a range of FY 2023F EBITDA multiples of 6.5x to 7.5x and assumed internal rate of returns ranging from 19.0% to 22.0%. The exit multiple range was selected based upon Donnelly Penman’s professional judgment and experience given the nature of the Company’s business and the industry in which it operates, including relevant precedent transactions and public company trading multiples. The internal rate of return was derived by Donnelly Penman utilizing its professional judgment and experience. This analysis resulted in a range of implied enterprise value between $61.0 million and $73.5 million or equity value per share of $2.92 to $4.17.

Transaction Premia Analysis.     Using publicly available information, Donnelly Penman reviewed premia data for publicly disclosed mergers & acquisitions from June 22, 2016 through June 21, 2019 that resulted in a sale of control of a publicly traded target company based in the U.S. or Canada that had a transaction value greater than $7 million. Donnelly Penman calculated the premia represented by the prices per share paid in these transactions relative to the targets’ closing share prices (i) one day, (ii) one week and (iii) one month prior to announcement. Using such data, Donnelly Penman calculated median acquisition premia for these transactions as 31% for one day prior, 34% one week prior, and 23% one month prior to announcement. Donnelly Penman then applied an illustrative range of acquisition premia using the lower quartile premia data as the low end of the range and the upper quartile of the premia data at the upper end of the range, to the relevant trading price per share of ASV common stock, to derive a range of illustrative equity value per share of $2.03 to $2.92. Although the Transaction Premia Analysis was reviewed as part of the overall valuation analysis, it was not a major component of Donnelly Penman’s valuation conclusions.

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Donnelly Penman’s opinion. In arriving at its fairness determination, Donnelly Penman considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Donnelly Penman made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the above analyses as a comparison is directly comparable to ASV or the contemplated Merger.

Donnelly Penman prepared these analyses for purposes of Donnelly Penman’s providing its opinion to the Board as to the fairness from a financial point of view of the $7.05 in cash per share of ASV common stock to be paid

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to the holders of shares of ASV common stock pursuant to the Merger Agreement. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of ASV, Donnelly Penman or any other person assumes responsibility if future results are materially different from those forecast.

The $7.05 per share Merger Consideration was determined through arm’s-length negotiations between ASV and Yanmar and was approved by the Board. Donnelly Penman provided advice to ASV during these negotiations. Donnelly Penman did not, however, recommend any specific amount of consideration to ASV or the Board or that any specific amount of consideration constituted the only appropriate consideration for the Merger.

As described above, Donnelly Penman’s opinion to the Board was one of many factors taken into consideration by the Board in making its determination to approve the Merger Agreement. The foregoing summary does not purport to be a complete description of the analyses performed by Donnelly Penman in connection with the fairness opinion and is qualified in its entirety by reference to the written opinion of Donnelly Penman attached as Annex C to this proxy statement.

Donnelly Penman has previously been engaged by ASV within the last two years to provide advisory services. Donnelly Penman was engaged by ASV on November 6, 2017, April 23, 2018, on October 12, 2018 and on November 12, 2018, for each of which it received a fee. Donnelly Penman has not been engaged by Yanmar for any purpose.

The Board selected Donnelly Penman as its financial advisor because it is a recognized investment banking firm that has substantial experience in transactions similar to the Merger. Pursuant to a letter agreement dated April 5, 2019, the Company engaged Donnelly Penman to act as its financial advisor in connection with the contemplated Merger. The engagement letter between ASV and Donnelly Penman provides for advisory fees of $20,000 upon the execution of the engagement letter between ASV and Donnelly Penman, $15,000 monthly beginning May 1, 2019 and ending at merger consummation, $25,000 upon signing of the indication of interest, and $90,000 upon delivery of the fairness opinion (collectively “Advisory Fees”). If the Merger is consummated, Donnelly Penman will be owed a transaction fee of 0.85% of total consideration up to $97 million plus 2% of total consideration in excess of $97 million less any Advisory Fees paid; total consideration defined to include assumed debt. Using net debt of $31.7 million as of May 21, 2019 as an estimate of the closing net debt balance, estimated transaction fees would be $933,000 less any Advisory Fees previously paid. In addition, the Company has agreed to reimburse Donnelly Penman for certain of its expenses, including attorneys’ fees and disbursements, and to indemnify Donnelly Penman and related persons against various liabilities, including certain liabilities under the federal securities laws.

Company Financial Forecasts

Shortly after our initial public offering, at the direction of our Board, our management developed a strategic plan for ASV’s business through 2022. Our Board approved an updated version of the strategic plan in September 2018. In connection with the updated strategic plan, our management prepared forecasts of certain non-public unaudited prospective financial information assuming execution of the strategic plan. Following the completion of the first fiscal quarter of 2019, management revised the forecasts to reflect the Company’s actual financial performance for the first fiscal quarter of 2019 and an updated outlook for the second fiscal quarter of 2019. The forecasts for the second half of 2019 and the 2020 through 2022 fiscal years remained unchanged from those included in the updated strategic plan approved by our Board in September 2018. We refer to the forecasts described above as the Strategic Plan Forecasts. See “— Background of the Merger ” beginning on page 19 of this proxy statement. We provided the Strategic Plan Forecasts to Yanmar in April 2019 in connection with its due diligence review of a possible transaction. We also provided the Strategic Plan Forecasts to Donnelly Penman for use in performing its financial analyses presented by Donnelly Penman to our Board. See “— Opinion of the Company’s Financial Advisor ” beginning on page 37 of this proxy statement.

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A summary of the Strategic Plan Forecasts is set forth below:

Based on changing economic conditions, ASV’s financial performance subsequent to the preparation of the strategic plan, and recognition that execution of the strategic plan could take longer than originally estimated, Donnelly Penman also prepared an alternative set of financial forecasts of certain non-public unaudited prospective financial information, as approved by the Company, for use in financial analyses presented to our Board. We refer to these forecasts as the Moderate Growth Forecasts. The Moderate Growth Forecast assumed annual sales growth of 5% from 2018 to 2023, an incremental improvement in adjusted EBITDA margins from 5.3% at May 31, 2019 to 8.8% in 2023 and capital expenditures of 0.8% to 0.9% of sales. See “— Opinion of the Company’s Financial Advisor ” beginning on page 37 of this proxy statement.

A summary of the Moderate Growth Forecasts is set forth below:

We refer to the Strategic Plan Forecasts and the Moderate Growth Forecasts, collectively, as the Forecasts. The Forecasts were not prepared with a view to public disclosure. The Strategic Plan Forecasts are included in this proxy statement because such information was supplied to Yanmar and was part of the basis for the opinion of Donnelly Penman and the Moderate Growth Forecasts are included in this proxy statement because such information was part of the basis for the opinion of Donnelly Penman. The Forecasts were not prepared with a view to compliance with generally accepted accounting principles as applied in the United States, which we refer to as “GAAP”, the published guidelines of the SEC regarding projections and forward-looking statements or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. Furthermore, our independent auditor, has not examined, reviewed, compiled or otherwise applied procedures to, the Forecasts and, accordingly, assumes no responsibility for, and expresses no opinion on, them.

Although a summary of the Forecasts is presented with numerical specificity, the Forecasts reflect numerous assumptions and estimates as to future events made by our management that our management believed were reasonable at the time the projections were prepared, taking into account the relevant information available to

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management at the time. However, this information is not fact and should not be relied upon as being necessarily indicative of actual future results. Important factors that may affect actual results and cause the projections not to be achieved include general economic conditions, accuracy of certain accounting assumptions, changes in actual or projected cash flows, competitive pressures, and changes in tax laws. In addition, the Forecasts do not take into account any circumstances or events occurring after the date that they were prepared and do not give effect to the Merger. As a result, there can be no assurance that the projections will be realized, and actual results may be materially better or worse than those contained in the Forecasts. The inclusion of this information should not be regarded as an indication that the our Board, our management, our financial advisor or any other recipient of this information considered, or now considers, the projections to be material information of ASV or predictive of actual future results nor should it be construed as financial guidance, and it should not be relied upon as such. The summary of the Forecasts is not included in this proxy statement in order to induce any shareholder to vote in favor of the proposal to adopt the Merger Agreement or any of the other proposals to be voted on at the special meeting or to influence any shareholder to make any investment decision with respect to the Merger, including whether or not to seek appraisal rights with respect to shares of our common stock, but solely because the Forecasts were used by Donnelly Penman in connection with the rendering of its fairness opinion to our Board and performing its related financial analyses, as described in the section entitled “ Opinion of the Company’s Financial Advisor ”, were provided to our Board and, in the case of the Strategic Plan Forecasts, were supplied to Yanmar. ASV has made no representation to Yanmar or Merger Sub, in the Merger Agreement or otherwise, concerning the Forecasts.

The Forecasts should be evaluated, if at all, in conjunction with the historical financial statements and other information regarding ASV contained in our public filings with the SEC. The Forecasts were reviewed by our management with, and considered by, our Board in connection with their evaluation and approval of the Merger. The Forecasts are forward-looking statements. For information on factors that may cause our future results to materially vary, see “ Cautionary Statement Concerning Forward-Looking Information ” on page 15 of this proxy statement.

Except to the extent required by applicable federal securities laws, we do not intend, and expressly disclaim any responsibility, to update or otherwise revise the projections to reflect circumstances existing after the date when ASV prepared the Forecasts or to reflect the occurrence of future events or changes in general economic or industry conditions, even in the event that any of the assumptions underlying the projections are shown to be in error. In light of the foregoing factors and the uncertainties inherent in the projections, stockholders are cautioned not to rely on the Forecasts included in this proxy statement.

Certain of the measures included in the Forecasts may be considered non-GAAP financial measures, as noted below. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by ASV may not be comparable to similarly titled amounts used by other companies. These non-GAAP measures are included because they were used by Donnelly Penman in the preparation of its opinion, as described under “— Opinion of the Company’s Financial Advisor ” beginning on page 37 of this proxy statement, were supplied to our Board and, in the case of the Strategic Plan Forecasts, were supplied to Yanmar.

Voting Agreement

A key stockholder, who beneficially owns approximately 34% of ASV’s outstanding shares, has entered into an agreement to vote the shares it beneficially owns in favor of the Merger Agreement and the transactions contemplated thereby, subject to the terms and conditions of such Voting Agreement. See the section entitled “ Voting Agreement ” on page 67 of this proxy statement and the Voting Agreement attached as Annex B to this proxy statement.

Material U.S. Federal Income Tax Consequences of the Merger

The following are the material U.S. federal income tax consequences of the Merger to holders of ASV common stock. This discussion applies only to holders that hold their ASV common stock as capital assets within the

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meaning of Section 1221 of the Code. This discussion does not address the consequences of the Merger to holders who receive cash pursuant to the exercise of appraisal rights. This discussion does not describe all of the tax consequences that may be relevant to a holder in light of the holder’s particular circumstances or to holders subject to special rules, such as:

If an entity that is classified as a partnership for U.S. federal income tax purposes holds ASV common stock, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Partnerships holding ASV common stock and partners in such partnerships should consult their tax advisers as to the particular U.S. federal income tax consequences of the Merger to them.

This discussion is based on the Code, administrative pronouncements, judicial decisions and final and temporary Treasury regulations, all as of the date hereof, any of which is subject to change, possibly with retroactive effect. Tax considerations under other federal tax laws or state, local and foreign tax laws are not addressed.

U.S. Holders

For purposes of this discussion, the term “U.S. holder” means a beneficial owner of ASV common stock that is:

The exchange of ASV common stock for cash in the Merger will be a taxable transaction for U.S. federal income tax purposes. In general, a U.S. holder whose shares of ASV common stock are converted into the right to receive cash in the Merger will recognize capital gain or loss for U.S. federal income tax purposes in an amount

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equal to the difference, if any, between the amount of cash received with respect to such shares and the U.S. holder’s tax basis in such shares. Gain or loss will be determined separately for each block of shares of ASV common stock (i.e., shares of ASV common stock acquired at the same cost in a single transaction). Such gain or loss generally will be treated as long-term capital gain or loss if the U.S. holder’s holding period in the shares of ASV common stock exceeds one year at the time of the completion of the Merger. Long-term capital gains of non-corporate U.S. holders generally are subject to U.S. federal income tax at preferential rates. The deductibility of capital losses is subject to limitations. Capital gains recognized by individuals, trusts and estates also may be subject to a 3.8% federal Medicare contribution tax.

Non-U.S. Holders

For purposes of this discussion, the term “Non-U.S. holder” means a beneficial owner of ASV common stock that is not a U.S. holder or partnership for U.S. federal income tax purposes.

Special rules not discussed below may apply to certain Non-U.S. holders subject to special tax treatment such as “controlled foreign corporations” or “passive foreign investment companies.” Non-U.S. holders should consult their own tax advisors to determine the U.S. federal, state, local and other tax consequences that may be relevant to them in light of their particular circumstances.

Any gain realized by a Non-U.S. holder pursuant to the Merger generally will not be subject to U.S. federal income tax unless:

Under FIRPTA, dispositions of a USRPI by a foreign person are generally subject to U.S. federal income taxation. Shares in a USRPHC with at least one class of stock that is regularly traded on an established securities market generally will be considered a USRPI with respect to a foreign person only if such foreign person holds more than 5% of the total voting power or value of the regularly traded class of stock.

We believe that we have not been a USRPHC during the applicable statutory period. Therefore, the sale of any shares of ASV common stock held by a Non-U.S. holder should not be subject to U.S. taxation under the FIRPTA rules.

Information Reporting and Backup Withholding

Backup withholding may apply if the holder fails to provide certification of exempt status or a correct U.S. taxpayer identification number and otherwise comply with the applicable backup withholding requirements. Generally, a holder will not be subject to backup withholding if it provides a properly completed and executed IRS Form W-9 or appropriate IRS Form W-8, as applicable. Backup withholding is not an additional tax. Amounts withheld under the backup withholding rules may be refunded or credited against the holder’s U.S. federal income tax liability, if any, provided certain information is timely filed with the IRS.

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You are urged to consult your tax adviser with respect to the application of U.S. federal income tax laws to your particular circumstances as well as any tax consequences arising under the U.S. federal estate or gift tax rules, or under any state, local or foreign tax laws.

Required Regulatory Approvals

The transactions contemplated by the Merger Agreement may require the approval of governmental authorities under applicable law, including foreign regulatory laws. However, neither ASV nor Yanmar is currently aware of any material governmental approvals or actions that are required for completion of the transactions contemplated by the Merger Agreement. It is currently contemplated that if any such additional material governmental approvals or actions are required, those approvals or actions will be sought. While ASV has no reason to believe it will not be possible to obtain any required regulatory approvals in a timely manner, there is no certainty that these approvals would be obtained within the period of time contemplated by the Merger Agreement.

Under the Merger Agreement, ASV and Yanmar have each agreed to use their reasonable best efforts to take or cause to be taken all actions to obtain all regulatory and governmental approvals necessary, proper or advisable to complete the Merger. This includes obtaining required permits, consents, approvals, authorizations, qualifications and orders of all governmental authorities in connection with the Merger. Notwithstanding the foregoing, neither Yanmar nor Merger Sub will be obligated to take any action—and ASV is not permitted—in order to resolve any objections asserted by a governmental authority with respect to the Merger, that (i) requires the divestiture of any assets of any of ASV, Yanmar or Merger Sub or any of their respective subsidiaries, (ii) limits Yanmar’s freedom of action with respect to, or its ability to retain, ASV and its subsidiaries or any portion thereof or any of Yanmar’s or its affiliates’ other assets or (iii) in Yanmar’s reasonable judgment, would be expected to have a material adverse impact on any of its businesses, or the businesses to be acquired by it pursuant to the Merger Agreement.

Deregistration and Delisting of Shares

Upon completion of the Merger, the ASV common stock currently listed on the Nasdaq Capital Market will cease to be listed on the Nasdaq Capital Market and will be deregistered under the Exchange Act.

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THE MERGER AGREEMENT

The following discussion sets forth the principal terms of the Merger Agreement, a copy of which is attached as Annex A to this proxy statement and is incorporated by reference herein. The rights and obligations of the parties to the Merger Agreement are governed by the express terms and conditions of the Merger Agreement, and not by this summary. This summary is not complete and is qualified in its entirety by reference to the complete text of the Merger Agreement. Forward-looking statements contained in this summary describe events prescribed by the Merger Agreement, each of which may be subject to various conditions and exceptions; therefore, such statements do not necessarily constitute a prediction that such events will actually occur. ASV urges you to read the Merger Agreement and this proxy statement carefully in their entireties before making any decisions regarding the Merger.

The Merger

Subject to the terms and conditions of the Merger Agreement, and in accordance with the DGCL, Merger Sub, a Delaware corporation and wholly owned subsidiary of Yanmar, will merge with and into ASV, and ASV will survive the Merger as a wholly owned subsidiary of Yanmar.

Closing and Effective Time of the Merger

The closing of the Merger will occur no later than five business days after the date the conditions to the parties’ respective obligations to consummate the Merger have been satisfied or waived (where permissible). The merger will become effective at such time as the parties file a certificate of merger with the Secretary of State of the State of Delaware (or at such later time as is agreed to in writing by ASV and Yanmar and specified in the certificate of merger) (the actual time of effectiveness of the Merger, the “effective time”).

Treatment of Common Stock in the Merger

At the effective time, except as summarized in the subsequent paragraphs of this subsection, each share of common stock issued and outstanding immediately prior to the effective time will be converted into the right to receive $7.05 in cash, without interest and subject to any applicable tax withholding (the “Merger Consideration”). As a result of this conversion, from and after the effective time, each holder of a certificate or certificates which immediately prior to the effective time represented any common stock (“Certificates”) or book-entry shares which immediately prior to the effective time represented any common stock (“Book-Entry Shares”) will thereafter cease to have any rights with respect thereto except (i) the right to receive the Merger Consideration, to be paid, without interest, upon surrender of such Certificate or transfer of the Book-Entry Shares or (ii) as provided by law.

By virtue of the Merger and without any action on the part of Yanmar, Merger Sub or ASV, at the effective time each share of common stock held in ASV’s treasury and each share of common stock owned by Yanmar or any direct or indirect subsidiary of Yanmar (including Merger Sub) immediately prior to the effective time will automatically be cancelled, will not be converted, and no payment or distribution will be made with respect to such shares of common stock.

Any shares of common stock held immediately prior to the effective time by a stockholder who did not vote in favor of the Merger (or consent thereto in writing) and who is entitled to demand and properly demands appraisal for such shares in accordance with, and who complies in all respects with, Section 262 of the DGCL (which is attached to this proxy statement as Annex D) will not be converted into the right to receive the Merger Consideration at the effective time. Those shares will instead be automatically cancelled and cease to exist at the effective time, and such holder shall cease to have any rights thereto except the right to receive only the payment of the appraised value of such shares under Section 262 of the DGCL. If, after the effective time, any such holder fails to perfect, effectively withdraws or otherwise loses such right to appraisal, such holder’s shares of common stock will be treated as if they had been converted as of the effective time into the right to receive the Merger Consideration.

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Procedure for Receiving Merger Consideration in Respect of Common Stock

Prior to the effective time, Yanmar will appoint a nationally recognized commercial bank or trust company reasonably acceptable to ASV to act as a paying agent (the “paying agent”) for the payment of the applicable Merger Consideration in exchange for shares of common stock. Promptly after the effective time, Yanmar will deposit or cause to be deposited with the paying agent an amount sufficient to pay the aggregate Merger Consideration to which holders of shares of common stock will become entitled as a result of the conversion of such shares into the right to receive Merger Consideration. As promptly as practicable after the effective time, Yanmar will cause the paying agent to mail to each holder of record of common stock a letter of transmittal and instructions for effecting the surrender of Certificates or Book-Entry Shares in exchange for the payment of any Merger Consideration to which the holder of such Certificates or Book-Entry Shares is entitled. Following surrender of a Certificate representing shares of common stock that were converted into the right to receive Merger Consideration in the Merger to the paying agent (together with a properly completed letter of transmittal and such other customary documents as the paying agent may reasonably require), or, in the case of Book-Entry Shares, receipt of an “agent’s message” by the paying agent evidencing such shares (or such other evidence, if any, of transfer as the paying agent may reasonably request), the paying agent will pay or cause to be paid the Merger Consideration with respect to such shares to such holder and the shares represented by such surrendered Certificates or Book-Entry Shares will be cancelled. No interest shall be paid or accrued on any Merger Consideration.

Any funds made available to the paying agent (and any interest or other income earned thereon) that remain unclaimed by the holders of shares of common stock 12 months after the effective time will be returned to Yanmar upon demand, and any such holder who has not exchanged Certificates or an “agent’s message” evidencing their shares of common stock for the applicable Merger Consideration prior to that time may thereafter look only to Yanmar (subject to abandoned property, escheat or other similar laws) as a general creditor for payment of the Merger Consideration in respect of such shares. Notwithstanding the foregoing, Yanmar will not be liable to any holder of shares of common stock for any amounts paid to a public official pursuant to applicable abandoned property, escheat or similar laws.

Stockholders should not return their Certificates with the enclosed proxy card and should not forward Certificates or any “agent’s message” to the paying agent prior to the Merger. When forwarding any Certificates or any “agent’s message” to the paying agent after the Merger, stockholders should include a properly completed letter of transmittal, which stockholders of record should receive after the Merger as described above.

Treatment of Restricted Stock Units in the Merger

The Merger Agreement provides for the treatment in the Merger of outstanding restricted stock units that have been granted by ASV and remain outstanding immediately prior to the effective time, as summarized below.

At the effective time, any restricted stock units providing for a right to receive shares of our common stock that are outstanding immediately prior to the effective time shall automatically become fully vested and nonforfeitable and shall be cancelled and converted automatically into the right to receive an amount equal to the product of (i) the Merger Consideration multiplied by (ii) the total number of shares of ASV common stock subject to such restricted stock unit, subject to applicable tax withholding or other authorized deductions. Payment shall be provided by Yanmar as soon as practicable following the closing date, but in no event later than five business days following the closing date.

Representations and Warranties

The Merger Agreement contains representations and warranties made by ASV to Yanmar and Merger Sub and representations and warranties made by Yanmar and Merger Sub to ASV. The assertions embodied in those

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representations and warranties were made solely for purposes of the Merger Agreement, were made only as of specific dates and may be subject to important qualifications and limitations agreed to by the parties in connection with negotiating the terms of the Merger Agreement. The assertions embodied in each party’s representations and warranties are qualified by information contained in confidential disclosure schedules that each party provided to the other in connection with the Merger Agreement, were made for the purpose of allocating contractual risk between the parties instead of establishing matters of fact and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors or security holders. Accordingly, ASV stockholders and other investors should not rely on representations and warranties as characterizations of the actual state of facts or circumstances. Moreover, information concerning the subject matter of such representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be reflected in ASV’s public disclosures. For the foregoing reasons, you should not rely on the representations and warranties contained in the Merger Agreement as statements of factual information. This description of the representations and warranties is included to provide ASV’s stockholders with information regarding the terms of the Merger Agreement. The representations and warranties in the Merger Agreement and the description of them in this proxy statement should be read in conjunction with the other information contained in the reports, statements and filings that ASV publicly files with the SEC. See the section entitled “ Where You Can Find More Information ” on page 81 of this proxy statement.

In the Merger Agreement, ASV, on the one hand, and Yanmar and Merger Sub, on the other hand, made a number of representations and warranties to each other. The parties’ reciprocal representations and warranties relate to, among other things:

In addition to the foregoing, the Merger Agreement contains representations and warranties made by ASV to Yanmar and Merger Sub, subject to certain qualifications or exceptions in the Merger Agreement and the disclosure schedule delivered in connection with the Merger Agreement, as to, among other things:

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The Merger Agreement also contains representations and warranties made by Yanmar and Merger Sub to ASV, including regarding:

Conduct of Business Pending the Merger

Subject to certain exceptions set forth in the Merger Agreement or disclosure schedules thereto, from the date of the Merger Agreement until the earlier of the effective time or the termination of the Merger Agreement, ASV has agreed to, and has agreed to cause each of its subsidiaries to, conduct its business in the ordinary course consistent with past practice and use reasonable best efforts to (i) preserve substantially intact its existing assets, (ii) preserve substantially intact its business organization, (iii) keep available the services of its current officers, employees and consultants, (iv) maintain and preserve intact its current relationships with significant customers, suppliers, distributors, creditors and other persons with which ASV or any of its subsidiaries has significant business relations and (v) comply in all material respects with applicable law.

The Merger Agreement further provides that ASV will not, and will cause each of its subsidiaries not to, directly or indirectly, except (i) as set forth in the disclosure schedules delivered by ASV in connection with the Merger Agreement, (ii) as expressly contemplated by any other provision of the Merger Agreement, (iii) as required by applicable law or (iv) as approved by Yanmar (which approval will not be unreasonably withheld, delayed or conditioned), during the period from the date of the Merger Agreement to the effective time:

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No Solicitation; Changes in Recommendations

In the Merger Agreement, ASV was required, and was required to cause its representatives, to immediately cease and cause to be terminated any solicitation, discussions, communications or negotiations with any person that may be ongoing with respect to an acquisition proposal (as defined below), or any inquiry, proposal or offer that would reasonably be expected to lead to an acquisition proposal. ASV was also required to request the prompt return or destruction of all confidential information previously furnished to any person in connection with an acquisition proposal and immediately terminate all physical and electronic dataroom access previously granted to any such person, its affiliates, representatives or financing sources. Under the Merger Agreement, ASV may not terminate, waive, amend or modify any provision of any existing standstill or confidentiality agreement to which it is a party, and ASV is required to enforce the provisions of any such agreement; provided, however, that ASV may grant a waiver of, and shall not be obligated to enforce, any such provision (i) solely to the extent necessary to permit a party to submit a confidential acquisition proposal to the Board, (ii) if the Board has determined in good faith, after consultation with outside legal counsel, that the failure to grant such waiver or to decide not to so enforce would be inconsistent with its fiduciary duties under applicable law and (iii) if ASV promptly (and, in any event, within 48 hours) notifies Yanmar of any such waiver or decision not to enforce.

Except as expressly permitted by the Merger Agreement, prior to the earlier of the effective time of the Merger or the termination of the Merger Agreement, ASV may not and will cause its representatives not to, directly or indirectly, (i) solicit, initiate, knowingly facilitate, knowingly induce or knowingly encourage any inquiries with respect to or the implementation or submission of any acquisition proposal, or any inquiries, proposals or offers that would be reasonably expected to lead to, an acquisition proposal, (ii) engage in, continue or otherwise participate in any discussions, communications or negotiations regarding, or furnish to any person any non-public information in connection with, or for the purpose of facilitating or encouraging, any inquiries, proposals or offers that constitute, or would be reasonably expected to lead to, an acquisition proposal, except to notify such

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person of the existence ASV’s obligations under the Merger Agreement to not solicit acquisitions proposals or (iii) execute or enter into any agreement related to or intended to result in an acquisition proposal; provided that, notwithstanding the foregoing, ASV may grant a waiver, amendment or release under any confidentiality or standstill agreement, solely to the extent necessary to allow a confidential acquisition proposal to be made to ASV or the Board so long as (x) the Board has determined in good faith, after consultation with outside legal counsel, that the failure to grant such waiver, amendment or release would be inconsistent with its fiduciary duties under applicable law and (y) ASV promptly (and, in any event, within 24 hours) notifies Yanmar of any such waiver, amendment or release; provided, however, that, prior to the receipt of the ASV stockholder approval, ASV or the Board may furnish information to, or engage in discussions, communications or negotiations with, any person that has made a bona fide acquisition proposal, which acquisition proposal did not result from a breach (or deemed breach) of the restriction on solicitations, if, and only if, prior to taking such action referred to in clauses (ii) and (iii) above, (A) the Board (1) determines in good faith (after consultation with its outside advisors) that such acquisition proposal is, or would reasonably be expected to result in, a superior proposal (as defined below), and (2) determines in good faith (after consultation with its outside legal counsel) that its failure to take such actions would be inconsistent with its fiduciary duties under applicable law, (B) ASV provides written notice to Yanmar such determinations promptly (and, in any event, within 24 hours of such determinations) and (C) ASV receives from such person an executed confidentiality agreement with terms no less favorable, in the aggregate, to ASV than those contained in the confidentiality agreement with Yanmar; provided, however, that such confidentiality agreement (a) shall include a “standstill” restriction that is similar in scope to the “standstill” restrictions in the confidentiality agreement with Yanmar, without application of any “fall-away” provisions contained therein, but such restrictions need not prohibit the making of any confidential acquisition proposal to ASV or the Board and (b) shall not prohibit ASV from providing to Yanmar any of the information required to be provided to Yanmar under the Merger Agreement. ASV is required to deliver to Yanmar a copy of any such executed confidentiality agreement promptly (and, in any event, within 24 hours) following its execution. ASV is required to provide to Yanmar any non-public information concerning ASV provided by ASV to any person entering into a confidentiality agreement that has not been previously provided to Yanmar prior to or substantially concurrently with the time it is provided to such person.

ASV will promptly (and, in any event, within 48 hours) (i) provide Yanmar written notice of (A) the receipt of any acquisition proposal or (B) any inquiries, proposals or offers received by ASV or any of ASV’s representatives concerning an acquisition proposal and (ii) disclose to Yanmar the identity of such person making, and an unredacted copy of, any such acquisition proposal or any such inquiry, proposal or offer made in writing (or, if made orally, a reasonably detailed description of such acquisition proposal, inquiry, proposal or offer). ASV will, promptly upon receipt or delivery thereof (and, in any event, within 48 hours), provide Yanmar with copies of all drafts and final versions of definitive or other agreements including schedules and exhibits thereto (which may be redacted to the extent necessary to protect confidential information of the person making such acquisition proposal) relating to such acquisition proposal, in each case exchanged between ASV or any of its representatives, on the one hand, and the person making such acquisition proposal or any of its representatives, on the other hand. ASV will keep Yanmar reasonably informed on a reasonably prompt basis (and, in any event, within 48 hours of any material development) of the status and details (including with respect to any change in price or other material amendments) of any such acquisition proposal or other inquiry, proposal or offer concerning an acquisition proposal. ASV will promptly (and, in any event, within 48 hours) following a determination by the Board that an acquisition proposal is a superior proposal, notify Yanmar of such determination.

Except as expressly set forth in the Merger Agreement, neither ASV nor the Board, as applicable, may, and neither may resolve, agree or publicly propose to: (i) fail to make or include in the proxy statement, withhold, withdraw, amend, qualify or modify, in a manner adverse to Yanmar or Merger Sub, the Company Recommendation; (ii) endorse, approve or recommend any acquisition proposal; (iii) enter into any acquisition agreement or (iv) refrain from recommending against (and reaffirming the Company Recommendation) any acquisition proposal that is a tender offer or exchange offer within 10 business days after the commencement thereof.

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Notwithstanding the foregoing, prior to the receipt of the ASV stockholder approval of the Merger and so long as ASV is not then in breach (or deemed breach) of the restrictions on solicitation, (i) if ASV receives an unsolicited, written acquisition proposal that the Board determines in good faith (after consultation with its outside advisors) is a superior proposal and determines in good faith (after consultation with its outside legal counsel) that its failure to effect an adverse recommendation change would be inconsistent with its fiduciary duties under applicable law, ASV may terminate the Merger Agreement to enter into a definitive agreement with respect to such superior proposal or (ii) the Board may effect an adverse recommendation change if an intervening event occurs and as a result thereof the Board determines in good faith (after consultation with its outside legal counsel) that the failure to effect an adverse recommendation change would be inconsistent with its fiduciary duties under applicable law; provided that:

Nothing contained in the Merger Agreement will prevent ASV or the Board from issuing a “stop, look and listen” communication pursuant to Rule 14d-9(f) under the Exchange Act or complying with Rule 14d-9 and Rule 14e-2 under the Exchange Act with respect to an acquisition proposal or from making any disclosure to ASV’s stockholders if the Board determines (after consultation with its outside legal counsel) that its failure to do so would be inconsistent with its fiduciary duties under applicable law; provided that any adverse recommendation change may only be made in accordance with the Merger Agreement.

An “acquisition agreement” means any written letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement or option agreement (other than an acceptable confidentiality agreement entered into in accordance with the Merger Agreement) regarding, or that is intended to result in, any acquisition proposal.

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An “acquisition proposal” means any proposal, offer or indication of interest from any person or group (other than Yanmar or Merger Sub) relating to, in a single transaction or series of related transactions, (i) any direct or indirect acquisition of (a) more than 15% of the assets (whether based on the fair market value, revenue generation or net income) of ASV, taken as a whole, or (b) more than 15% of any class of equity securities, or securities convertible into or exchangeable for equity securities, of ASV; (ii) any tender offer or exchange offer, as defined pursuant to the Exchange Act, that if consummated would result, directly or indirectly, in any or group (or the shareholders of any person or group) beneficially owning 15% or more of any class of equity securities, or securities convertible into or exchangeable for equity securities, of ASV or (iii) any merger, consolidation, business combination, share exchange, recapitalization, liquidation, dissolution or other similar transaction involving ASV that would result in any person or group (or the shareholders of any person or group) beneficially owning, directly or indirectly, more than 15% of any class of equity securities, or securities convertible into or exchangeable for equity securities, of ASV or 15% of the voting power of the surviving entity in a merger involving ASV or the resulting direct or indirect parent of ASV or such surviving entity (or any securities convertible into, or exchangeable for, securities representing such voting power).

An “adverse recommendation change” means an action by ASV or the Board to (i) fail to make or include in this proxy statement, withhold, withdraw, amend, qualify or modify, in a manner adverse to Yanmar or Merger Sub, the Company Recommendation; (ii) endorse, approve or recommend any acquisition proposal; (iii) enter into any acquisition agreement or (iv) refrain from recommending against (and reaffirming the Company Recommendation) any acquisition proposal that is a tender offer or exchange offer within 10 business days after the commencement thereof.

A “superior proposal” means any bona fide written acquisition proposal (with all references to 15% in the definition of acquisition proposal being treated as references to 50% for purposes of this definition) made by any person or group (other than Yanmar or any of its subsidiaries) after the date of the Merger Agreement, which acquisition proposal did not result from a breach (or deemed breach) of the solicitation restrictions on ASV, that (i) is on terms that the Board determines in good faith (after receiving the advice of its financial advisor and outside legal counsel and after taking into account all the terms and conditions of the acquisition proposal) are more favorable to ASV’s stockholders from a financial point of view than the Merger and the transactions contemplated thereby (taking into account any proposed amendment or modification proposed by Yanmar) and (ii) the Board determines (after receiving the advice of its financial advisor and outside legal counsel) is reasonably capable of being consummated in accordance with its terms in a reasonable period of time (as compared to the Merger), taking into account all financial, regulatory, legal and other aspects (including certainty of closing, certainty of financing and the identity of the person making the acquisition proposal) of such proposal.

An “intervening event” means any material event, circumstance, change, effect, development, occurrence or condition relating to ASV (other than an acquisition proposal or any inquiry, offer or proposal that would reasonably be expected to lead to an acquisition proposal) first occurring or arising after the date of the Merger Agreement that (i) was not known to, or reasonably foreseeable by, the Board as of the date of the Merger Agreement or (ii) if known, the magnitude or material consequences of which were not known to, or reasonably foreseeable by, the Board as of the date of the Merger Agreement); provided that in no event shall (a) the receipt, existence or terms of an acquisition proposal, (b) the status of the Merger under applicable antitrust, competition or fair trade laws, (c) any changes in ASV’s stock price or the trading volume of ASV’s stock, or ASV meeting or exceeding public estimates or expectations of ASV’s revenue, earnings or other financial performance or results of operations for any period, or any success by ASV in meeting or exceeding any internal budgets, plans or forecasts of its revenues, earnings or other financial performance or results of operations (but not, in each case, the underlying cause of such changes or successes), or (d) any event, circumstance, change, effect, development, occurrence or condition that, in the aggregate, has had or would reasonably be expected to have an adverse effect on the assets, liabilities, business, condition (financial or otherwise) or results of operations of Yanmar and its subsidiaries (including, following the closing of the Merger, ASV), or the market price of the securities of Yanmar or any of its subsidiaries (including, following the closing of the Merger, ASV).

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Indemnification and Insurance

From and after the effective time, the provisions in the surviving corporation’s certificate of incorporation and bylaws with respect to indemnification of individuals who at or prior to the effective time were ASV’s directors, officers, employees, fiduciaries or agents (“indemnitees”) will be no less favorable than such provisions contained in ASV’s certificate of incorporation and bylaws in effect as of the date of the Merger Agreement, which provisions may not be amended, repealed or otherwise modified for six years from the effective time in any manner that would affect adversely the rights of the indemnitees.

For six years from the effective time, the surviving corporation must use its reasonable best efforts to maintain the current directors’ and officers’ liability policies (except that similar policies with the same coverage containing terms and conditions that are not materially less favorable to the indemnitees may be substituted) with respect to actions or omissions occurring prior to the effective time; provided, however, that the surviving corporation will not be required to expend in excess of 300% of the annual premiums currently paid by ASV (the “maximum premium”) and provided further, that if the amount of the annual premiums necessary to maintain such insurance coverage exceeds the maximum premium, the surviving corporation will maintain the most advantageous policies obtainable for the maximum premium.

The Merger Agreement further provides that the surviving corporation’s indemnitee obligations may be satisfied instead by ASV’s purchase, for an aggregate amount not to exceed the maximum premium, of a six-year “tail” officers’ and directors’ liability insurance policy providing coverage for the indemnitees on terms and conditions no less favorable than those provided by the current policies maintained by ASV with respect to actions or omissions occurring prior to the effective time; provided, however, that the amount paid by ASV shall not be in excess of the maximum premium. If such “tail” prepaid policies have been obtained by ASV prior to the effective time, the surviving corporation shall maintain such policies in full force and effect, for their full respective terms, and continue to honor its respective obligations thereunder.

In the event that Yanmar or the surviving corporation consolidates with or merges with any other person and is not the continuing or surviving entity or transfers all or substantially all of its properties and assets to any other person, then proper provision shall be made so that the successors and assigns of Yanmar or the surviving corporation, as the case may be, shall assume the above-described indemnification obligations.

Employee Matters

From and after the effective time, Yanmar shall cause the surviving corporation and its subsidiaries to honor in accordance with their terms, all contracts, agreements and plans of ASV and its subsidiaries in effect immediately prior to the effective time that are applicable to any current or former employees or directors of ASV or any of its subsidiaries.

ASV employees shall receive credit for purposes of eligibility to participate and vesting (but not for benefit accruals) under any employee benefit plan, program or arrangement established or maintained by the surviving corporation or any of its subsidiaries for service accrued prior to the effective time with ASV or any of its subsidiaries; provided, however, that such crediting of service shall not operate to duplicate any benefit or the funding of any such benefit. In addition, Yanmar shall waive, or cause to be waived, any limitations on benefits relating to any pre-existing conditions to the extent such conditions are covered immediately prior to the effective time under the applicable company plans (as described above in “ —Representations and Warranties ” beginning on page 51 of this proxy statement) and to the same extent such limitations are waived under any comparable plan of Yanmar or its subsidiaries and use reasonable best efforts to recognize, for purposes of annual deductible and out-of-pocket limits under its medical and dental plans, deductible and out-of-pocket expenses paid by employees of ASV and its subsidiaries in the calendar year in which the effective time occurs.

Notwithstanding the provisions summarized above, nothing in the Merger Agreement shall: (i) create any obligation of Yanmar or any of its affiliates to employ any person for any period of time following the effective

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time, (ii) prevent Yanmar or any of its affiliates from revising, amending or terminating any company plan or any other employee benefit plan, program or policy in effect from time to time, (iii) be construed as an amendment of any company plan or (iv) create any third-party beneficiary rights in any director, officer, employee or individual person, including any present or former employee, officer, director or individual independent contractor of ASV or any of its subsidiaries (including any beneficiary or dependent of such individual).

Reasonable Best Efforts; Other Agreements

Required Regulatory Approvals

The transactions contemplated by the Merger Agreement may require the approval of governmental authorities under applicable law, including foreign regulatory laws. However, neither ASV nor Yanmar is currently aware of any material governmental approvals or actions that are required for completion of the transactions contemplated by the Merger Agreement. It is currently contemplated that if any such additional material governmental approvals or actions are required, those approvals or actions will be sought. While ASV has no reason to believe it will not be possible to obtain any required regulatory approvals in a timely manner, there is no certainty that these approvals would be obtained within the period of time contemplated by the Merger Agreement.

Under the Merger Agreement, both ASV and Yanmar have each agreed to use their reasonable best efforts to take or cause to be taken all actions to obtain all regulatory and governmental approvals necessary, proper or advisable to complete the Merger. This includes obtaining required permits, consents, approvals, authorizations, qualifications and orders of all governmental authorities in connection with the Merger. Notwithstanding the foregoing, neither Yanmar nor Merger Sub will be obligated to take any action—and ASV is not permitted—in order to resolve any objections asserted by a governmental authority with respect to the Merger, that (i) requires the divestiture of any assets of any of ASV, Yanmar or Merger Sub or any of their respective subsidiaries, (ii) limits Yanmar’s freedom of action with respect to, or its ability to retain, ASV and its subsidiaries or any portion thereof or any of Yanmar’s or its affiliates’ other assets or (iii) in Yanmar’s reasonable judgment, would be expected to have a material adverse impact on any of its businesses, or the businesses to be acquired by it pursuant to the Merger Agreement.

Proxy Statement

As promptly as practicable after the date of the Merger Agreement ASV agreed to prepare and file with the SEC this proxy statement within 10 business days of the date of the Merger Agreement and cause this proxy statement to be distributed to the ASV stockholders. Yanmar agreed to furnish certain information and otherwise assist with the preparation of this proxy statement pursuant to the terms of the Merger Agreement.

Other Agreements

The Merger Agreement contains certain other agreements, including agreements relating to notifications of certain events, actions that could implicate state anti-takeover laws, public announcements and confidentiality.

Conditions to the Merger

The obligations of ASV, Yanmar and Merger Sub to consummate the Merger are subject to the satisfaction or written waiver of certain customary conditions on or prior to the effective time, including the following:

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Yanmar’s and Merger Sub’s obligations to consummate the Merger are subject to the satisfaction or written waiver of additional conditions, which include the following:

ASV’s obligations to complete the Merger are subject to the satisfaction or waiver of additional conditions, which include the following additional conditions:

For purposes of the Merger Agreement, a “material adverse effect” with respect to ASV means any event, circumstance, change, effect, development, occurrence or condition that, individually or in the aggregate with any other event, circumstance, change, effect, development, occurrence or condition, (a) has had, or would reasonably be expected to have, a material adverse effect on the assets, liabilities, business, condition (financial or otherwise) or results of operations of ASV and its subsidiaries, taken as a whole, or (b) would reasonably be expected to prevent, or materially impair or delay, the ability of ASV to consummate the transactions; provided, however, that in the case of clause (a), in no event shall any of the following, alone or in combination, be deemed to constitute, nor shall any of the following be taken into account in determining whether there has been, a material adverse effect:

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For purposes of the Merger Agreement, a “material adverse effect” with respect to Yanmar means any event, circumstance, change, effect, development, occurrence or condition that, individually or in the aggregate with any other event, circumstance, change, effect, development, occurrence or condition would reasonably be expected to prevent, or materially impair or delay, the ability of Yanmar to consummate the transactions.

Termination of the Merger Agreement

The Merger Agreement may be terminated and the transactions may be abandoned at any time prior to the effective time:

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Effect of Termination

If the Merger Agreement is terminated as described in “ —Termination of the Merger Agreement ” beginning on page 63 of this proxy statement, the Merger Agreement will become void and without liability of any party, except that:

Amendment and Waivers

Any provision of the Merger Agreement may be amended prior to the effective time by action taken by or on behalf of the parties’ respective boards of directors. However, after the stockholder approval has been obtained, no amendment may be made that would reduce the amount or change the type of Merger Consideration or that would otherwise require ASV stockholders’ approval under applicable law or in accordance with the Nasdaq rules without such approval having been obtained. Any amendment must be made by an instrument in writing signed by each of the parties.

At any time prior to the effective time, any party may in an instrument in writing signed by the affected parties and subject to applicable law, waive certain provisions of the Merger Agreement or extend the time for performance of any obligation thereunder. However, no failure or delay by any of the parties to the Merger Agreement in exercising any right thereunder will operate as a waiver thereof, nor will any single or partial exercise thereof preclude any other or future exercise of any other right thereunder.

Termination Fees and Expenses

ASV will pay Yanmar a fee of $2,650,000, if:

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If Yanmar terminates the Merger Agreement because ASV breaches any of its representations, warranties, covenants or agreements in the Merger Agreement and such breach cannot be or has not been cured by (i) the Outside Date or (ii) within 20 calendar days of the receipt by ASV of written notice thereof from Yanmar, ASV shall reimburse Yanmar and Merger Sub for all of their expenses, up to a maximum of $500,000, in the aggregate. In the event Yanmar becomes entitled to receive a termination fee after the payment to Yanmar or Merger Sub of any expenses, the amount of the termination fee payable shall be reduced by any expenses previously reimbursed pursuant to the preceding sentence.

If ASV terminates the Merger Agreement because (i) Yanmar or Merger Sub breaches any of their representations, warranties, covenants or agreements in the Merger Agreement and such breach cannot be or has not been cured by (A) the Outside Date or (B) within 20 calendar days of the receipt by Yanmar of written notice thereof from ASV) or (ii) (A) all of the mutual conditions precedent to the Merger and the conditions to Yanmar’s and Merger Sub’s obligations to effect the Merger (other than those conditions that by their nature are to be satisfied at the closing) have been satisfied; (B) ASV irrevocably confirms in writing that all of the conditions to its obligations to consummate the Merger have been satisfied or waived and that it is ready, willing and able to effect the closing and (C) Yanmar and Merger Sub fail to fulfill their obligation to effect the closing within three business days following the later to occur of the date of the closing, as scheduled pursuant to the Merger Agreement, and the delivery of ASV’s written notice of confirmation, Yanmar shall reimburse ASV for all of its expenses, up to a maximum of $500,000, in the aggregate.

Except as set forth above, all expenses incurred in connection with the Merger Agreement will be paid by the party incurring such expenses, whether or not the Merger is consummated, except that ASV and Yanmar shall each pay one half of all expenses relating to (i) printing, filing and mailing this proxy statement and all SEC and other regulatory filing fees incurred in connection with this proxy statement and (ii) any filing fees for filings under applicable foreign, federal or state antitrust, competition or fair trade laws.

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Governing Law

The Merger Agreement is governed by and will be construed in accordance with the laws of the State of Delaware.

Limitation of Remedies

Payment of the termination fees shall constitute the sole and exclusive remedy of Yanmar and Merger Sub in connection with any termination of the Merger Agreement in the circumstances in which such fees became payable. In the event that Yanmar shall receive the termination fee, the receipt of such fee shall be deemed to be liquidated damages for any and all losses or damages suffered or incurred by Yanmar, Merger Sub, any of their respective Affiliates or any other person in connection with the Merger Agreement (and the termination thereof), the transactions contemplated thereby (and the abandonment thereof) or any matter forming the basis for such termination, and none of Yanmar, Merger Sub, any of their respective affiliates or any other person shall be entitled to bring or maintain any other claim, action or proceeding against ASV or any of its affiliates or its or their representatives arising out of the Merger Agreement, any of the transactions contemplated hereby or any matters forming the basis for such termination.

Specific Performance

The parties to the Merger Agreement are entitled (in addition to any other remedy to which they may be entitled in law or equity) to an injunction, specific performance or other equitable relief to prevent breaches or threatened breaches of the Merger Agreement and to enforce specifically the terms and provisions of the Merger Agreement.

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VOTING AGREEMENT

The following is a summary of certain material terms of the Voting Agreement. The summary is not complete and must be read together with the actual form of Voting Agreement, a copy of which is attached as Annex B to this proxy statement. We encourage you to read the Voting Agreement carefully and in its entirety because the rights and obligations of the parties are governed by the express terms of the Voting Agreement and not by this summary or any other information contained in this proxy statement. This summary may not contain all the information about the Voting Agreement that is important to you.

Please note that the representations, warranties, covenants and agreements in the Voting Agreement were made only for purposes of the Merger Agreement and may not represent the actual state of facts.

Parties and Background to the Voting Agreement

A.S.V. Holding, LLC, a wholly owned subsidiary of Terex, that beneficially owned approximately 34% of the outstanding common stock of ASV as of June 26, 2019 (the “key stockholder”) has entered into a Voting Agreement with ASV dated as of the date of the Merger Agreement.

Voting

Pursuant to the Voting Agreement, the key stockholder has agreed to vote all shares of ASV common stock it beneficially owns (i) in favor of the Merger and the Merger Agreement, (ii) against the approval of any competing proposal, (iii) against any action, proposal, transaction or agreement which could reasonably be expected to impede, interfere with, delay, discourage, adversely affect or inhibit the timely consummation of the Merger or the fulfillment of Yanmar’s, ASV’s or Merger Sub’s conditions under the Merger Agreement or change in any manner the voting rights of any of ASV’s securities.

Waiver of Appraisal Rights

The key stockholder has waived, and agreed not to assert or perfect, any rights of appraisal or rights to dissent from the Merger that the key stockholder would otherwise have had by virtue of its ownership of common stock.

Proxy

The key stockholder has agreed to waive its appraisal rights and provided an irrevocable proxy to Yanmar to vote in favor of the Merger, including voting for the adoption of the Merger Agreement

Termination

This Voting Agreement automatically terminates upon the earliest to occur of (i) the effective time, (ii) a change in the Company Recommendation that results from an intervening event, (iii) the termination of the Merger Agreement, (iv) the election of the key stockholder upon any amendment or modification to the Merger Agreement or (v) the written agreement of the parties to the Voting Agreement.

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