SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
[Amendment No. _________]
Filed by the Registrant _X_
Filed by a Party other than the Registrant ___
Check the appropriate box:
___ Preliminary Proxy Statement
___ Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
_X_ Definitive Proxy Statement
___ Definitive Additional Materials
___ Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
ASHA CORPORATION
(Name of Registrant as Specified in Its Charter)
ASHA CORPORATION
(Name of Person(s) Filing Proxy Statement)
<PAGE>
ASHA CORPORATION
600 C WARD DRIVE
SANTA BARBARA, CALIFORNIA 93111
(805) 683-2331
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 18, 1997
TO THE SHAREHOLDERS OF ASHA CORPORATION:
NOTICE HEREBY IS GIVEN that the Annual Meeting of Shareholders of ASHA
Corporation, a Delaware corporation, will be held at the Four Seasons
Biltmore, 1260 Channel Drive, Santa Barbara, California, on Friday, April 18,
1997, at 2:00 p.m., Pacific Time, and at any and all adjournments thereof, for
the purpose of considering and acting upon the following matters.
1. The election of four (4) Directors of the Company to serve until
the next Annual Meeting of Shareholders and until their successors have been
duly elected and qualified.
2. Ratification of the selection of Arthur Andersen LLP as the
Company's independent accountants for the fiscal year ending September 30,
1996.
3. The approval of an amendment to the Company's 1994 Stock Option
Plan to increase the number of shares issuable upon the exercise of options
granted under the Plan from 750,000 shares to 800,000 shares.
4. The transaction of such other business as may properly come before
the meeting or any adjournment thereof.
Only holders of the $.00001 par value Common Stock of the Company of
record at the close of business on February 28, 1997, will be entitled to
notice of and to vote at the Meeting or at any adjournment or adjournments
thereof. The proxies are being solicited by the Board of Directors of the
Corporation.
All shareholders, whether or not they expect to attend the Annual
Meeting of Shareholders in person, are urged to sign and date the enclosed
Proxy and return it promptly in the enclosed postage-paid envelope which
requires no additional postage if mailed in the United States. The giving of
a proxy will not affect your right to vote in person if you attend the
Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
JOHN C. McCORMACK, PRESIDENT
Santa Barbara, California
March 7, 1997
<PAGE>
ASHA CORPORATION
600 C WARD DRIVE
SANTA BARBARA, CALIFORNIA 93111
(805) 683-2331
______________________________
PROXY STATEMENT
______________________________
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 18, 1997
GENERAL INFORMATION
The enclosed Proxy is solicited by and on behalf of the Board of
Directors of ASHA Corporation, a Delaware corporation (the "Company"), for use
at the Company's Annual Meeting of Shareholders to be held at the Four Seasons
Biltmore, 1260 Channel Drive, Santa Barbara, California, on Friday, April 18,
1997, at 2:00 p.m., Pacific Time, and at any adjournment thereof. It is
anticipated that this Proxy Statement and the accompanying Proxy will be
mailed to the Company's shareholders on or about March 19, 1997.
Any person signing and returning the enclosed Proxy may revoke it at any
time before it is voted by giving written notice of such revocation to the
Company, or by voting in person at the Meeting. The expense of soliciting
proxies, including the cost of preparing, assembling and mailing this proxy
material to shareholders, will be borne by the Company. It is anticipated
that solicitations of proxies for the Meeting will be made only by use of the
mails; however, the Company may use the services of its Directors, Officers
and employees to solicit proxies personally or by telephone, without
additional salary or compensation to them. Brokerage houses, custodians,
nominees and fiduciaries will be requested to forward the proxy soliciting
materials to the beneficial owners of the Company's shares held of record by
such persons, and the Company will reimburse such persons for their reasonable
out-of-pocket expenses incurred by them in that connection.
All shares represented by valid proxies will be voted in accordance
therewith at the Meeting.
The Company's Annual Report on Form 10-KSB is being simultaneously
mailed to the Company's shareholders, but does not constitute part of these
proxy soliciting materials.
SHARES OUTSTANDING AND VOTING RIGHTS
All voting rights are vested exclusively in the holders of the Company's
$.00001 par value Common Stock. Each share of Common Stock entitles the
holder to one (1) vote. Only shareholders of record at the close of business
on February 28, 1997, are entitled to notice of and to vote at the Meeting or
any adjournment thereof. On February 28, 1997, the Company had 7,142,399
shares of its $.00001 par value Common Stock outstanding. Cumulative voting
in the election of Directors is not permitted.
A majority of the Company's outstanding Common Stock represented in
person or by proxy shall constitute a quorum at the Meeting.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage of shares
entitled to vote owned beneficially, as of February 28, 1997, by any person,
who is known to the Company to be the beneficial owner of 5% or more of the
Company's Common Stock, and, in addition, by each Director of the Company and
by all Directors and Officers of the Company as a group. Information as to
beneficial ownership is based upon statements furnished to the Company by such
persons.
<TABLE>
<CAPTION>
Amount and
Name and Address Nature of Bene-
of Beneficial Owner ficial Ownership Percent of Class
- -------------------------- ---------------- ----------------
<S> <C> <C>
Alain J-M Clenet 2,019,742 <FN1> 28.5%
600 C Ward Drive
Santa Barbara, CA 93111
Sheila R. Ronis 63,596 <FN2> 0.9%
640 Rolling Green Circle
Rochester Hills, MI 48309
Robert J. Sinclair 63,377 <FN2> 0.9%
1025 North Ontare Road
Santa Barbara, CA 93103
Lawrence Cohen 50,000 <FN3> 0.7%
3311 NE 26th Avenue
Lighthouse Point, FL 33064
Brian Chang 1,217,113 17.2%
1 Chatworth Road, No. 2421
Singapore 1024
All Directors and Executive 2,486,456 <FN4> 32.8%
Officers as a Group (6
persons)
- --------------------
<FN>
<FN1>
Includes 8,278 shares underlying stock options held by Mr. Clenet.
<FN2>
Includes 50,000 shares underlying stock options held by such person.
<FN3>
Represents shares underlying stock options held by Mr. Cohen.
<FN4>
Includes shares beneficially owned by the following persons who are Executive
Officers of the Company; 172,172 shares underlying stock options held by John
C. McCormack; and 117,569 shares underlying options held by Kenneth R. Black.
</TABLE>
ELECTION OF DIRECTORS
The Board of Directors is currently set at four (4) members. The Board
of Directors recommends the election as Directors of the four (4) nominees
listed below, to hold office until the next Annual Meeting of Shareholders and
until their successors are elected and qualified or until their earlier death,
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<PAGE>
resignation or removal. Each member of the present Board of Directors has
been nominated for reelection. The persons named as "Proxies" in the enclosed
form of Proxy will vote the shares represented by all valid returned proxies
in accordance with the specifications of the shareholders returning such
proxies. If at the time of the Meeting any of the nominees named below should
be unable to serve, which event is not expected to occur, the discretionary
authority provided in the Proxy will be exercised to vote for such substitute
nominee or nominees, if any, as shall be designated by the Board of Directors.
The following table sets forth the name and age of each nominee for
Director, indicating all positions and offices with the Company presently
held, and the period during which each person has served as a Director:
Positions and Offices Held
Name Age and Term as a Director
- ---------------- --- -----------------------------------------------
Alain J-M Clenet 52 Chairman of the Board, Chief Executive Officer
and Director since August 1996
Sheila R. Ronis 46 Director since September 1993
Robert J. Sinclair 64 Director since April 1994
Lawrence Cohen 51 Director since January 1995
There is no family relationship between any Director or Executive
Officer of the Company.
Set forth below are the names of all Directors, Nominees for Director
and Executive Officers of the Company, all positions and offices with the
Company held by each such person, the period during which he has served as
such, and the principal occupations and employment of such persons during at
least the last five years:
ALAIN J-M CLENET. Mr. Clenet has served as President and a Director of
ASHA Enterprises, Inc. since its inception in June, 1986, and became President
and Chairman of the Board of Directors of ASHA Corporation on the date of the
acquisition of ASHA Enterprises, Inc. He also served as President and a
Director of Stehrenberger/Clenet, Inc. (S/C), an automotive design company,
from its inception in February 1983 until it was liquidated in early 1988 at
the formation of ASHA Corporation. S/C employed approximately 15 people in
design, engineering and fabricating trades.
From 1983 until the sale of the business in November 1986, Mr. Clenet
also served as President and a Director of Wood, Ltd., a Michigan corporation
which manufactures automotive wood components. From July 1976 until September
1981, he served as President and a Director of Clenet Coachworks, Inc., a
company which designed, manufactured and sold approximately 500 Clenet
automobiles. From 1965 until 1975, Mr. Clenet conducted automotive design,
research and development in France and the United States. Mr. Clenet received
a CAFAS Degree from the Ecole des Beaux Arts, Angers, France in 1963 and an
E.N.S.A.D. Degree from the National Superior School of Design of Paris in
1965.
SHEILA R. RONIS, PH.D. Dr. Sheila Ronis has served as a Director of
ASHA since 1989. She has been President of The University Group, Inc., a
technical and managerial services company since 1988. She is also an adjunct
professor at the University of Detroit where she teaches Strategic Management
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<PAGE>
and Business Policy in the M.B.A. program. Dr. Ronis received a B.S. degree
in Physics and Mathematics in 1972 from Ohio State University. She received
M.A. and Ph.D. degrees in Organizational Behavior from Ohio State University
in 1974 and 1976, respectively. Dr. Ronis consults for many organizations as
diverse as General Motors, Amertech, The White House, USCAR and the Center for
Strategic and International Studies in Washington.
ROBERT J. SINCLAIR. Mr. Sinclair has served as a Director of the
Company since April 1994. Mr. Robert J. Sinclair is retired Chairman and
Chief Executive Officer of Saab Cars USA, Inc. Early in his automotive career
he served as advertising manager and public relations manager of Saab, before
joining Volvo North America where he rose to President of Volvo's Western US
organization. He rejoined Saab as President in 1979, retiring as Chairman and
CEO in 1991. Mr. Sinclair consults for many organizations, and serves as a
director of Hansa Reinsurance Co. of America, which is publicly-held.
LAWRENCE COHEN. Mr. Cohen has served as a Director of the Company since
January 20, 1995. Mr. Cohen has served as Vice Chairman of the Board,
Executive Vice President and Treasurer of Bristol Technology Systems, Inc.
("Bristol") since its inception in April 1996. Bristol is in the business of
establishing a national network of full service dealerships of retail
automation equipment such as point of sale systems. From November 1990 to
September 1996, Mr. Cohen served as Chairman of the Board of BioTime, Inc.
("BioTime"), a publicly-held biotechnology company engaged in the artificial
plasma business. Mr. Cohen has also served as a director of Apollo Genetics
Inc., a company founded by Mr. Cohen which is engaged in the genetic
pharmaceutical business, from January 1993 to the present; a director of
Registry Magic Inc., a company founded by Mr. Cohen which develops voice
recognition equipment, from November 1995 to present; and a director of Kaye
Kotts Associates, Inc., a publicly-held company in the management services
business, from April 1995 to the present.
JOHN C. McCORMACK. Mr. McCormack has served as President and Chief
Operations Officer of ASHA since February 1, 1995, and as Secretary and
Treasurer since January 31, 1996. Mr. McCormack helped start American Honda
Motor Company in 1959 and he has been described as the driving force in its
rise to prominence in the U.S. motorcycle market. He was co-founder of U.S.
Suzuki Motor Corporation in 1964, and by 1967 this company was second in the
U.S. market for motorcycles, behind Honda. He served as President and CEO of
McCormack International Motors, Inc. from 1969 until 1975. McCormack
International Motors was the first to bring a wide range of motorized
recreational vehicles under one label, and it established some 925 dealers and
10 overseas distributors. From 1975 until 1980, he was a founder and
President of Jacwall Corporation. Mr. McCormack was a founder and served as
President and COO of Hirsch Electronics Corporation from 1980 to 1985, where
he guided product development to successful completion at less than budgeted
costs. These systems are now in use in the White House, Pentagon, IBM,
General Motors, FBI, British Secret Service, as well as many other secure
government and business installations around the world. He was a co-founder
and he served as President and CEO of the Napa Valley Railroad and the Napa
Valley Wine Train from 1985 until April 1991. From April 1991 until April
1994, he served as Vice President of Marketing and Sales for Mission
Industries, an industrial laundry business, and from April 1994 until January
1995, he was engaged in general business consulting under the name McCormack
and McCormack Consulting. Mr. McCormack is 65 years old.
-4-
<PAGE>
KENNETH R. BLACK. Mr. Black has served as the Company's Vice President
of Sales and Marketing since July 1992 after having served as the Sales
Director since January 1991. From 1985 until December 1990, he served as
President of Technologies International Ltd., a company he founded and which
was involved in market development and technology licensing for various
domestic and foreign clients. From 1979 until 1985, he served as a Director
of New Business Development for the Paint, Plastics and Vinyl Division of Ford
Motor Company. Mr. Black is 50 years old.
The standing committees of the Board of Directors are the Audit
Committee and the Compensation Committee.
The Audit Committee of the Board of Directors consists of three
directors -- Sheila Ronis, Robert Sinclair and Lawrence Cohen. The Audit
Committee's function is to review and report to the Board of Directors with
respect to the selection and the terms of engagement of the Company's
independent public accountants, and to maintain communications among the Board
of Directors, such independent public accountants, and the Company's internal
accounting staff with respect to accounting and audit procedures, the
implementation of recommendations by such independent public accountants, the
adequacy of the Company's internal controls and related matters. The Audit
Committee also reviews certain related party transactions and any potential
conflict of interest situations involving officers, directors or stockholders
beneficially owning more than 10% of an equity security of the Company.
The Compensation Committee presently consists of Sheila Ronis, Robert
Sinclair and Lawrence Cohen, each of whom is an independent Director. The
Compensation Committee's function is to review and approve annual salaries and
bonuses for all executive officers and review, approve and recommend to the
Board of Directors the terms and conditions of all employee benefit plans or
changes thereto, including the granting of stock options pursuant to the
Company's 1994 Option Plan.
The Company's Board of Directors held five (5) meetings during the year
ended September 30, 1996, and the Compensation Committee held three (3)
meetings. Each Director attended at least 75% of the aggregate number of
meetings held by the Board of Directors and the Compensation Committee during
the time each such Director was a member of the Board or of the Compensation
Committee, except for Neil McCarthy who did not attend two of the three Board
of Directors meetings and one of the two Compensation Committee meetings held
before he resigned as a Director on April 27, 1996.
The Company's executive officers hold office until the next annual
meeting of directors of the Company, which currently is scheduled for April
18, 1997. There are no known arrangements or understandings between any
director or executive officer and any other person pursuant to which any of
the above-named executive officers or directors was selected as an officer or
director of the Company.
SECTION 16(a) BENEFICIAL REPORTING COMPLIANCE
Based solely on a review of Forms 3 and 4 and amendments thereto
furnished to the Company during its most recent fiscal year, and Forms 5 and
amendments thereto furnished to the Company with respect to its most recent
fiscal year and certain written representations, no persons who were either a
director, Officer or beneficial owner of more than 10% of the Company's Common
Stock, failed to file on a timely basis reports required by Section 16(a) of
the Exchange Act during the most recent fiscal year, except as follows:
-5-
<PAGE>
John C. McCormack, Kenneth R. Black, Sheila Ronis and Robert J. Sinclair
each filed one Form 4 reporting the grant of a stock option late; and Brian
Chang filed one Form 4 reporting one purchase late.
EXECUTIVE COMPENSATION
The following table sets forth information regarding the executive
compensation for the Company's Chief Executive Officer and each other
executive officer who received compensation in excess of $100,000 for the
fiscal years ended September 30, 1996, 1995 and 1994:
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
SECURI-
TIES
UNDERLY-
OTHER RE- ING ALL
ANNUAL STRICTED OPTIONS/ OTHER
NAME AND PRINCIPAL COMPEN- STOCK SARs LTIP COMPEN-
POSITION YEAR SALARY BONUS SATION AWARD(S) (NUMBER) PAYOUTS SATION
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alain J-M Clenet, 1996 $152,500 $73,000 -0- -0- -0- -0- $7,819
<FN1> <FN2>
Chief Executive 1995 $152,500 -0- -0- -0- -0- -0- $3,035
Officer <FN3>
1994 $152,500 -0- -0- -0- -0- -0- -0-
John C. McCormack, 1996 $ 90,000 $10,000 -0- -0- 65,786 -0- $ 504
President <FN4>
1995 60,000 -0- -0- -0- -0- -0- -0-
1994 -0- -0- -0- -0- -0- -0- -0-
Theo E. Shaffer, 1996 $ 92,025 $19,373 -0- -0- -0- -0- -0-
Executive Vice 1995 $ 90,000 -0- -0- -0- 3,098 -0- -0-
President<FN5> 1994 $ 90,000 -0- -0- -0- -0- -0- -0-
Kenneth R. Black, 1996 $100,592 $10,000 -0- -0- 10,524 -0- -0-
Vice President of <FN6>
Sales and Market- 1995 $ 85,000 -0- -0- -0- 2,788 -0- -0-
ing 1994 $ 78,000 -0- -0- -0- -0- -0- -0-
- -------------------
<FN>
<FN1>
Of this amount, $88,958 was paid during the fiscal year ended September 30,
1996, and the remainder was deferred until January 1997.
<FN2>
Represents medical expense reimbursements for Mr. Clenet and his family.
<FN3>
Includes $981 in medical expense reimbursements for Mr. Clenet and his family,
$857 paid for premiums on a $5 million umbrella liability insurance policy for
Mr. Clenet, and other expenses paid on his behalf.
<FN4>
Represents amounts paid by the Company as a matching amount to a 401(k) plan
contribution.
<FN5>
Mr. Shaffer resigned on October 1, 1996.
-6-
<PAGE>
<FN6>
Includes $15,592 paid to Mr. Black in settlement of unused vacation time.
</FN>
</TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARs
UNDERLYING GRANTED TO EXERCISE
OPTIONS/SARs EMPLOYEES IN OR BASE EXPIRATION
NAME GRANTED(#) FISCAL YEAR PRICE($/SH) DATE
Alain J-M Clenet -- -- -- --
John C. McCormack 40,786 33.1% $4.625 11/01/98
25,000 20.3% $4.50 9/24/99
Theo E. Shaffer -0- -- -- --
Kenneth R. Black 10,524 8.5% $4.625 11/01/98
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
SECURITIES UNDER- VALUE OF UNEXER-
SHARES LYING UNEXER- CISED-IN-THE
ACQUIRED CISED OPTIONS MONEY\OPTIONS/
ON SARS AT FY-END SARS AT FY-END
EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (NUMBER) REALIZED UNEXERCISABLE UNEXERCISABLE
Alain J-M Clenet -- -- -- --
John C. McCormack -- -- 65,786 / 0 0 / 0
Theo E. Shaffer -- -- -- --
Kenneth R. Black -- -- 13,312 / 0 $ 697 / 0
Subsequent to September 30, 1996, the Company's Board of Directors
granted additional stock options to executive officers under the Company's
1994 Stock Option Plan. In December 1996, the Board of Directors granted
stock options, exercisable at $3.6875 per share, to John C. McCormack to
purchase 6,386 shares of Common Stock, to Kenneth R. Black to purchase 4,257
shares of Common Stock, and to Alain J-M Clenet to purchase 8,278 shares of
Common Stock. Each of the options granted in December 1996 expire on December
17, 1999. In January 1997, the Board of Directors granted stock options,
exercisable at $4.00 per share, to John C. McCormack and Kenneth R. Black each
to purchase 100,000 shares of Common Stock, expiring on January 15, 2002.
EMPLOYMENT AGREEMENTS
In April 1995, the Company entered into an Amended and Restated
Employment Agreement with Alain J-M Clenet, the Company's Chairman of the
Board and Chief Executive Officer, pursuant to which he receives a base annual
salary of $152,500. Mr. Clenet's base salary is subject to cost-of-living
adjustments and may be increased by the Board of Directors. The initial term
is through April 20, 2000, and will be automatically extended for additional
two year terms unless either party notifies the other at least six months in
advance. Mr. Clenet is entitled to participate in all insurance plans and
benefits of the Company and to also be reimbursed for all of his and his
family's medical and dental expenses not paid for under such programs. Mr.
Clenet also receives a $5 million umbrella liability insurance policy paid for
by the Company.
-7-
<PAGE>
On March 1, 1997, the Company entered into employment agreements with
Jack McCormack and Ken Black. Each of the Employment Agreements expires as of
February 28, 1999, however, they will be automatically renewed for additional
two year terms unless either the Company or the employee gives to the other
six months notice that the agreement is to be terminated. Pursuant to the
employment agreements, Mr. McCormack and Mr. Black are each entitled to a
salary of $90,000 per year. Both agreements provide for cost of living
adjustments and participation in all fringe benefits available to other
executive officers, in addition to unspecified increases based on performance.
Mr. McCormack's agreement also provides that he is entitled to be granted
options to purchase 25,000 shares of Common Stock annually, in addition to the
option to purchase 100,000 shares which was granted on January 15, 1997.
DIRECTORS COMPENSATION
Effective during the fiscal year ended September 30, 1995, the Company's
Directors do not receive fees for their attendance at Board or committee
meetings, but they have received options under the Company's 1994 Stock Option
Plan. Directors are also reimbursed for their reasonable expenses in
attending meetings of the Board of Directors and any committees thereof.
It has been the Company's policy for the last three years to grant to
the independent members of the Company's Board of Directors options to
purchase 25,000 shares of common stock each year. The most recent options
granted under this policy were granted on December 17, 1996, with an exercise
price of $3.6875, when 25,000 options each were granted to Sheila Ronis,
Robert Sinclair and Lawrence Cohen. The Board of Directors intends to
reconsider this policy at its April 1997 annual meeting, with a view towards
reducing the number of options granted annually.
STOCK OPTION PLANS
1994 STOCK OPTION PLAN
The 1994 Stock Option Plan provides for the grant of options to purchase
up to 750,000 shares of Common Stock to employees, officers, directors and
consultants of the Company. In February 1997, the Board of Directors approved
an increase in the number of shares of Common Stock covered by the plan to
800,000, subject to shareholder approval. The purpose of this plan is
two-fold. First, the plan will further the interests of the Company and its
shareholders by providing incentives in the form of stock options to employees
who contribute materially to the success and profitability of the Company.
Second, the plan will provide the Company flexibility and the means to reward
directors and consultants who render valuable contributions to the Company.
The Board has the power to determine at the time the option is granted whether
the option will be an incentive stock option (an option which qualifies under
Section 422 of the Internal Revenue Code of 1986) or an option which is not an
incentive stock option. However, incentive stock options will only be granted
to persons who are employees of the Company. Vesting provisions are
determined by the Board at the time options are granted. The option price
must be satisfied by the payment of cash. The Board of Directors may amend
the plan at any time, provided that the Board may not amend the plan to
materially increase the number of shares available under the plan to
materially change the eligible class of employees without shareholder
approval.
As of March 7, 1997, there were 656,806 options outstanding under the
plan with exercise prices ranging from $3.6875 to $4.5625 per share.
-8-
<PAGE>
401(K) PLAN
Effective October 1, 1995, the Company implemented a 401(K) Plan
pursuant to which all eligible employees may contribute up to 15% of their
compensation. The Company matches contributions in the amount of 10% of all
elective deferrals, and, at the Company's option, may contribute annually up
to 15% of the total compensation of all eligible employees. Executive
Officers of the Company are eligible to participate in this plan. During the
fiscal year ended September 30, 1996, the Company made $8,047 in matching
contributions under this plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On August 11, 1994, ASHA Corporation entered into a joint venture with
TAISUN Automotive of which Mr. Brian Chang is 85% shareholder. Mr. Chang is a
principal shareholder of the Company. The joint venture was formed as a
Singapore corporation named ASHA/TAISUN PTE LTD. ("ASHA/TAISUN"). The purpose
of this Joint Venture is to exploit the Company's ABC technology in the China
and Southeast Asia markets.
ASHA/TAISUN, through its 85%-owned subsidiary, Jiaxing Independent Auto
Design and Development Co., Ltd., is developing an automobile manufacturing
facility in Jiaxing, China. ASHA/TAISUN has also contracted with the Company
for automobile design work. During the year ended September 30, 1996, the
Company invested $1,540,727 in the joint venture.
In March 1994, Brian Chang purchased 235,924 shares of the Company's
Common Stock for $1,000,000 in cash. On November 2, 1995, Mr. Chang purchased
an additional 181,818 shares of ASHA Common Stock from the Company for
$750,000 in cash.
AMENDMENT TO 1994 STOCK OPTION PLAN
DESCRIPTION OF THE PLAN
In December 1994, the Company's Board of Directors approved the
establishment of a Stock Option Plan (the "1994 Plan") and the Company's
shareholders approved the 1994 Plan in April 1995. The Board of Directors
believes that the 1994 Plan advances the interests of the Company by
encouraging and providing for the acquisition of an equity interest in the
success of the Company by employees, officers, directors and consultants, and
by providing additional incentives and motivation toward superior Company
performance. The Board believes it also enables the Company to attract and
retain the services of key employees, officers, directors and consultants, and
by providing additional incentives and motivation toward superior Company
performance. The Board believes it also enables the Company to attract and
retain the services of key employees, officers, directors and consultants upon
whose judgment, interest and special effort the successful conduct of its
operations is largely dependent.
The 1994 Plan allows the Board to grant stock options from time to time
to employees, officers and directors of the Company and consultants to the
Company. The Board has the power to determine at the time the option is
granted whether the option will be an Incentive Stock Option (an option which
qualifies under Section 422 of the Internal Revenue Code of 1986) or an option
which is not an Incentive Stock Option. However, Incentive Stock Options may
only be granted to persons who are key employees of the Company. Vesting
provisions are determined by the Board at the time options are granted. Prior
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<PAGE>
to the proposed amendment, the total number of shares of Common Stock subject
to options under the 1994 Plan may not exceed 750,000, subject to adjustment
in the event of certain recapitalizations, reorganizations and similar
transactions. The option price must be satisfied by the payment of cash.
The Board of Directors may amend the 1994 Plan at any time, provided
that the Board may not amend the 1994 Plan to materially increase the number
of shares available under the 1994 Plan, materially increase the benefits
accruing to Participants under the 1994 Plan, or materially change the
eligible class of employees without shareholder approval.
PROPOSED AMENDMENT
In February 1997, the Board of Directors voted, subject to shareholder
approval, to increase the number of shares of Common Stock subject to options
under the 1994 Plan from 750,000 to 800,000. The Board of Directors believes
that the proposed increase is necessary in order for the Company to have
sufficient flexibility to provide the amounts and types of incentives to its
officers, employees, directors and consultants which are deemed necessary to
encourage the Company's success.
There are currently stock options granted under the 1994 Plan to
purchase up to 656,806 shares of Common Stock, and options to purchase 18,687
shares of Common Stock under the 1994 Plan have been exercised to date.
Approval of the amendment to the 1994 Plan requires the affirmative vote
of a majority of the shares of Common Stock represented at the meeting. The
Board of Directors recommends a vote FOR approval of the amendment to the 1994
Plan.
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The independent accounting firm of Arthur Andersen LLP audited the
financial statements of the Company for the year ended September 30, 1996, and
has been selected in such capacity for the current fiscal year. At the
direction of the Board of Directors, this appointment is being presented to
the shareholders for ratification or rejection at the Annual Meeting of
Shareholders. If the shareholders do not ratify the appointment of Arthur
Andersen LLP, the appointment of auditors will be reconsidered by the Board of
Directors.
It is expected that representatives of Arthur Andersen LLP will be
present at the meeting and will be given an opportunity to make a statement if
they desire to do so. It is also expected that the representatives will be
available to respond to appropriate questions from shareholders.
On April 26, 1996, the Company engaged Arthur Andersen LLP as its
independent accountants for the year ended September 30, 1996. Also on April
26, 1996, McDirmid, Mikkelsen & Secrest, P.S. was dismissed as the Company's
independent accountants.
McDirmid, Mikkelsen & Secrest, P.S.'s reports on the Company's financial
statements for the fiscal years ended September 30, 1995 and 1994 contained no
adverse opinion or disclaimer of opinion nor were they qualified as to
uncertainty, audit scope or accounting principles, except that McDirmid,
Mikkelsen & Secrest, P.S.'s report on the Registrant's financial statements
for the fiscal year ended September 30, 1994, contained a qualification
concerning the Company's ability to continue as a going concern. The
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<PAGE>
Company's Board of Directors made the decision to engage Arthur Andersen LLP.
At that time the Company had no audit or similar committee.
In connection with the prior audits for the fiscal years ended September
30, 1995 and 1994, and during the interim period from September 30, 1995, to
April 19, 1996, there have been no disagreements with McDirmid, Mikkelsen &
Secrest, P.S. on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure. The Company did not
consult with Arthur Andersen LLP with regard to any matter concerning the
application of accounting principles to any specific transactions, either
completed or proposed, or the type of audit opinion that might be rendered
with respect to the Company's financial statements.
OTHER BUSINESS
As of the date of this Proxy Statement, management of the Company was
not aware of any other matter to be presented at the Meeting other than as set
forth herein. However, if any other matters are properly brought before the
Meeting, the shares represented by valid proxies will be voted with respect to
such matters in accordance with the judgment of the persons voting them. A
majority vote of the shares represented at the meeting is necessary to approve
any such matters.
ANNUAL REPORT
The Company's Annual Report on Form 10-KSB for the year ending September
30, 1996, accompanies this Proxy Statement. The Annual Report is not
incorporated into this Proxy Statement and is not to be considered part of the
solicitation material.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
FOR THE ANNUAL MEETING TO BE HELD IN APRIL 1998
Any proposal by a shareholder intended to be presented at the Company's
Annual Meeting of Shareholders to be held in April 1996 must be received at
the offices of the Company, 600 C Ward Drive, Santa Barbara, California 93111,
on or before November 8, 1997, in order to be included in the Company's proxy
statement and proxy relating to that meeting.
JOHN C. McCORMACK, PRESIDENT
Santa Barbara, California
March 7, 1997
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P R O X Y
ASHA CORPORATION
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Alain J-M Clenet with the power to
appoint his substitute, and hereby authorizes him to represent and to vote as
designated below, all the shares of common stock of ASHA Corporation held of
record by the undersigned on February 28, 1997, at the Annual Meeting of
Shareholders to be held on April 18, 1997, or any adjournment thereof.
1. The election of four (4) Directors of the Company to serve until
the next Annual Meeting of Shareholders and until their successors
have been duly elected and qualified:
___ FOR all nominees listed below (except as marked to the
contrary).
___ WITHHOLD authority to vote for all the nominees listed
below:
Alain J-M Clenet Robert J. Sinclair
Sheila R. Ronis Lawrence Cohen
[INSTRUCTION: To withhold authority to vote for any individual nominee,
cross out that nominee's name above.]
2. The ratification of the appointment of Arthur Andersen LLP as the
Company's independent accountants for the fiscal year ending
September 30, 1997;
___ FOR ___ AGAINST ___ ABSTAIN
3. The approval of an amendment to the Company's 1994 Stock Option
Plan to increase the number of shares issuable upon the exercise
of options granted under the plan from 750,000 shares to 800,000
shares.
___ FOR ___ AGAINST ___ ABSTAIN
4. The transaction of such other business as may properly come before
the meeting or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ASHA
CORPORATION. PLEASE SIGN AND RETURN THIS PROXY IN THE ENCLOSED PRE-ADDRESSED
ENVELOPE. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON
IF YOU ATTEND THE MEETING.
(To be signed on the other side)
<PAGE>
ASHA CORPORATION
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2 AND 3.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING IN ACCORDANCE
WITH THE SHAREHOLDER'S SPECIFICATIONS ABOVE. THIS PROXY CONFERS DISCRETIONARY
AUTHORITY IN RESPECT TO MATTERS NOT KNOWN OR DETERMINED AT THE TIME OF THE
MAILING OF THE NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS TO THE
UNDERSIGNED.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders, Proxy Statement and Annual Report.
Dated: ______________, 1997 _______________________________________
Signature(s) of Shareholder(s)
_______________________________________
Signature(s) of Shareholder(s)
Signature(s) should agree with the name(s) stenciled hereon. Executors,
administrators, trustees, guardians and attorneys should indicate when
signing. Attorneys should submit powers of attorney.
