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 3, 1998
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 3,
1998, 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 seven (7) 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,
1998.
3. The approval of amendments 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 800,000 shares to 1,400,000 shares, to allow non-cash
exercise of options and to allow options to be granted with reload option
provisions.
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 12, 1998, 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
February 16, 1998
<PAGE>
ASHA CORPORATION
600 C WARD DRIVE
SANTA BARBARA, CALIFORNIA 93111
(805) 683-2331
______________________________
PROXY STATEMENT
______________________________
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 3, 1998
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 3,
1998, 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 February 23, 1998.
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 12, 1998, are entitled to notice of and to vote at the Meeting or
any adjournment thereof. On February 12, 1998, the Company had 8,663,158
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.
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 12, 1998, by any person,
who is known
<PAGE>
to the Company to be the beneficial owner of 5% or more of the Company's
Common Stock, and, in addition, by each Director and Executive Officer of the
Company and by all Directors and Executive 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>
Name and Address Amount and Nature of
Of Beneficial Owner Beneficial Ownership Percent of Class
- --------------------------- -------------------- ----------------
<S> <C> <C>
Greenmotors, L.L.C. 1,118,652 12.9%
277 Park Avenue, 27th Floor
New York, NY 10172
John C. McCormack 172,172<FN1> 1.9%
600 C Ward Drive
Santa Barbara, CA 93111
Kenneth R. Black 117,569<FN2> 1.4%
600 C Ward Drive
Santa Barbara, CA 93111
Robert J. Sinclair 63,377<FN3> 0.7%
1025 North Ontare Road
Santa Barbara, CA 93103
Lawrence Cohen 269,406<FN4> 3.1%
3311 NE 26th Avenue
Lighthouse Point, FL 33064
Nick P. Bartolini -0-<FN5> --
1026 Santa Barbara Street
Santa Barbara, CA 93101
Erick A. Reickart -0-<FN5> --
5128 Woodland Drive
Bloomfield Hills, MI 48302
David D. Jones -0- --
100 Seahorse Drive
Waukegan, IL 60085
Steven E. Sanderson 10,000<FN6> 0.1%
600 C Ward Drive
Santa Barbara, CA 93103
Brian Chang 1,217,113 17.2%
1 Chatworth Road, No. 2421
Singapore 1024
All Directors and Executive 1,849,637 20.4%
Officers as a Group (8 persons)
- --------------------
<FN>
<FN1>
Represents shares underlying currently exercisable stock options held by Mr.
McCormack. Does not include shares underlying options granted to Mr.
McCormack
-2-
<PAGE>
in December 1997 which are contingent on shareholder approval of amendments to
the Company's 1994 Stock Option Plan.
<FN2>
Represents shares underlying currently exercisable stock optons held by Mr.
Black. Does not include shares underlying options granted to Mr. Black in
December 1997 which are contingent on shareholder approval of amendments to
the Company's 1994 Stock Option Plan.
<FN3>
Includes 50,000 shares underlying stock options held by Mr. Sinclair. Does
not include shares underlying options granted to Mr. Sinclair in December 1997
which are contingent on shareholder approval of amendments to the Company's
1994 Stock Option Plan.
<FN4>
Represents 219,406 shares held by Mr. Cohen's wife and 50,000 shares
underlying currently exercisable stock options held by Mr. Cohen. Does not
include 225,000 shares underlying stock options granted to Mr. Cohen in July
1997 and December 1997 which are contingent on shareholder approval of
amendments to the Company's 1994 Stock Option Plan.
<FN5>
Does not include stock options granted to these persons in December 1997 which
are contingent on shareholder approval of amendments to the Company's 1994
Stock Option Plan.
<FN6>
Represents shares underlying options held by Mr. Sanderson. Does not include
shares underlying options granted to Mr. Sanderson in December 1997 which are
contingent on shareholder approval of amendments to the Company's 1994 Stock
Option Plan.
</FN>
</TABLE>
ELECTION OF DIRECTORS
The Board of Directors is currently set at seven (7) members. The Board
of Directors recommends the election as Directors of the seven (7) 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,
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
- ---------------- --- -----------------------------------------------
John C. McCormack 66 Chairman of the Board, President, Chief
Executive Officer, Chief Operations
Officer, and Director since January 1998
Kenneth R. Black 51 Vice President of Sales and Marketing and
Director since January 1998
Robert J. Sinclair 65 Director since April 1994
-3-
<PAGE>
Lawrence Cohen 53 Director since January 1995
Nick P. Bartolini 61 Director since October 1997
Erick A. Reickert 62 Director since October 1997
David D. Jones 54 Director since January 1998
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:
JOHN C. McCORMACK. Mr. McCormack has served as President and Chief
Operations Officer of ASHA since February 1, 1995, and as Chairman of the
Board, Chief Executive Officer and a Director since January 8, 1998. He also
served as Secretary and Treasurer from January 1996 to January 1998. Mr.
McCormack helped start American Honda Motor Company in 1959, and served as its
General Manager until 1964. 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.
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. He has been a Director of the Company since
January 1998. 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.
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.
-4-
<PAGE>
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; and a director of
Registry Magic Inc., a company founded by Mr. Cohen which develops voice
recognition equipment, from November 1995 to present.
NICK P. BARTOLINI. Mr. Bartolini has served as a Director of the
Company since October 1997. Since 1994, Mr. Bartolini has been President of
Bartolini Associates with offices in Santa Barbara, California and London,
England. Bartolini Associates provides process re-engineering and sales
consultant services to automotive suppliers in the United States and Europe.
Mr. Bartolini was previously employed by the Ford Motor Company for over 30
years, and served as Vice President of Parts and Service Operations for Ford
of Europe from 1989 to 1994. He received a B.S. Degree from the University of
Notre Dame, and a MBA Degree from the University of Detroit.
ERICK A. REICKERT. Mr. Reickert has served as a Director of the Company
since October 1997. Mr. Reickert is currently retired. From September 1992
to January 1996 he was President and CEO of New Venture Gear, Inc. which is
jointly owned by Chrysler Corp. and General Motors Corp., and is a licensee of
the Company's GERODISC technology. From 1984 to 1992, Mr. Reickert was
employed by Chrysler Corporation, and served as Chairman and Chief Executive
Officer of Chrysler De Mexico from May 1987 to January 1990, and Acustar, Inc.
from May 1990 to April 1991. In addition, he was Vice President of Powertrain
Operations for Chrysler from April 1991 to December 1992 where he was
responsible for 12 manufacturing plants producing engines, transmission and
automotive parts. From 1965 to 1984 Mr. Reickert worked for Ford Motor
Company in various capacities. He received a B.S. Degree in Electrical
Engineering from Northwestern University and a MBA Degree from Harvard
Business School.
DAVID D. JONES. Mr. Jones has been a Director since January 23, 1998.
Since September 1997, Mr. Jones has served as President, Chief Executive
Officer and a Director of Outboard Marine Corp., which manufactures and
markets marine engines, boats, and marine parts with annual sales of
approximately $1 billion. Outboard Marine Corp. is privately owned but has
publicly-held debt and files reports under the Securities Exchange Act of
1934. From 1990 through August 1997, he served as President of the Mercury
Marine Division of the Brunswick Corporation, a manufacturer of boats,
outboard motors, stern drives and other recreational products. Mr. Jones is
also a Director of National Exchange Bank, Fond du Lac, Wisconsin.
STEVEN E. SANDERSON. Mr. Sanderson (age 45) has served as Controller of
the Company since January 1997, as Chief Financial Officer since March 1997,
and as Secretary/Treasurer since January 1998. From 1991 until December 1996,
he served as the President and owner of Sanderson Investments, Inc., a
consulting company which prepared financial analyses encompassing
productivity, variances, standard costs and production bonus plans, time
studies, rate of return, and risk management. From 1985 until 1991, he served
as Controller for the Systems Division of Computer Products Inc., a public
company, where he was responsible for the accounting and management
information systems group for two manufacturing facilities. From 1981 until
1985, he served as Controller of Southeastern Public
-5-
<PAGE>
Service Company, a public company, where he had complete responsibility for
the accounting and management information systems functions for this
multi-state business. From 1977 to 1981, he was employed by the Solid State
Division of RCA where his last position was cost accounting supervisor. Mr.
Sanderson received a B.B.A. Degree in Accounting from Florida Atlantic
University in 1977.
The standing committees of the Board of Directors are the Audit Committee
and the Compensation Committee.
The Audit Committee consists of Lawrence Cohen and Nick Bartolini, each
of whom is an independent Director, and John C. McCormack. 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 consists of Robert Sinclair and Lawrence
Cohen. 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 agreed with the Representative of the Underwriters in the
Company's 1997 Public Offering that, for a period of 36 months from the date
of closing of this offering, the Company will allow an observer designated by
the Representative and acceptable to the Company to attend all meetings of the
Board of Directors. Such observer will have no voting rights. He or she will
be reimbursed for out-of-pocket expenses incurred in attending such meetings,
and will be indemnified against any claims arising out of participation at
Board meetings, including claims based on liabilities arising under the
securities laws.
The Company's Board of Directors held three (3) meetings during the year
ended September 30, 1997, the Audit Committee held two (2) meetings, and the
Compensation Committee held one (1) meeting. Each Director attended at least
75% of the aggregate number of meetings held by the Board of Directors and the
Committees thereof during the time each such Director was a member of the
Board or any Committee thereof.
The Company's executive officers hold office until the next annual
meeting of directors of the Company, which currently is scheduled for April 3,
1998. 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
-6-
<PAGE>
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:
Kenneth R. Black and John C. McCormack each filed two Form 4's late
reporting the grant of two stock options; and Alain J-M Clenet (a former
Officer and Director), Sheila R. Ronis (a former Director), Robert J.
Sinclair, and Lawrence Cohen each filed one Form 4 reporting the grant of a
stock option late.
EXECUTIVE COMPENSATION
The following table sets forth information regarding the executive
compensation for the Company's President and each other executive officer who
received compensation in excess of $100,000 for the fiscal years ended
September 30, 1997, 1996 and 1995:
<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, 1997 $152,500 $ -0- -0- -0- 8,278 -0-
$5,953<FN2>
Chief Executive 1996 $152,500 $73,000 -0- -0- -0- -0-
$7,819<FN4>
Officer<FN1> <FN3>
1995 $152,500 -0- -0- -0- -0- -0-
$3,035<FN5>
John C. McCormack, 1997 $ 90,000 $ -0- -0- -0- 106,386 -0-
$ -0-
President 1996 $ 90,000 $10,000 -0- -0- 65,786 -0-
$ 504<FN6>
1995 $ 60,000 -0- -0- -0- -0- -0-
-0-
Kenneth R. Black, 1997 $ 90,000 -0- -0- -0- 104,257 -0-
-0-
Vice President of 1996 $100,592 $10,000 -0- -0- 10,524 -0-
-0-
Sales and Marketing <FN7>
1995 $ 85,000 -0- -0- -0- 2,788 -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<FN8>
- --------------------
<FN>
<FN1>
Mr. Clenet resigned as an Officer and Director of the Company on January 8,
1998.
<FN2>
Represents contractual employment agreement for estate and trust planning for
Mr. Clenet and his family of $2,600, premiums of $371 on a $5 million umbrella
liability insurance policy and $2,982 for additional medical expenses paid on
his behalf.
<FN3>
Of this amount, $88,958 was paid during the fiscal year ended September 30,
1996, and the remainder was deferred until January 1997.
-7-
<PAGE>
<FN4>
Represents medical expense reimbursements for Mr. Clenet and his family.
<FN5>
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.
<FN6>
Represents amounts paid by the Company as a matching amount to a 401(k) plan
contribution.
<FN7>
Includes $15,592 paid to Mr. Black in settlement of unused vacation time.
<FN8>
Mr. Shaffer resigned on October 1, 1996.
</FN>
</TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARs
UNDERLYING GRANTED TO EXERCISE
OPTIONS/SARs EMPLOYEES IN OR BASE EXPIRATION
NAME GRANTED(#) FISCAL YEAR PRICE($/SH) DATE
- ----------------- ------------ ------------ ---------- ----------
Alain J-M Clenet 8,278 2.4% $3.6875 12/17/99
John C. McCormack 100,000 29.5% 4.00 1/15/02
6,386 1.9% 3.6875 12/17/99
Kenneth R. Black 100,000 29.5% 4.00 1/15/02
4,257 1.3% 3.6875 12/17/99
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 -- - 8,278 / 0 $ 20,178 / 0
John C. McCormack -- - 172,172 / 0 $332,419 / 0
Kenneth R. Black -- 117,569 / 0 $245,245 / 0
Employment Agreements
In April 1995, the Company entered into an Amended and Restated
Employment Agreement with Alain J-M Clenet, who was then the Company's
Chairman of the Board and Chief Executive Officer, pursuant to which he
received a base annual salary of $152,500. Mr. Clenet was 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 received a $5 million umbrella
liability insurance policy paid for by the Company. On January 8, 1998, Mr.
Clenet resigned as an officer and Director of the Company, and this employment
agreement was terminated by mutual agreement.
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
-8-
<PAGE>
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. Black is entitled to a salary of $90,000 per year and Mr.
McCormack is 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. Mr. McCormack's agreement also
provides that he is to be granted options to purchase 25,000 shares annually,
in addition to the 100,000 options he was granted on January 15, 1997.
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.
Directors' Compensation
During the fiscal year ended September 30, 1998, the Company will begin
paying independent members of the Board of Directors $1,250 per meeting
attended.
During the last three years the Company has granted to the independent
members of the Company's Board of Directors options to purchase 25,000 shares
of common stock each year. The options granted under this policy during the
fiscal year ended September 30, 1997 were granted on December 17, 1996, when
25,000 options were granted to each of Sheila Ronis, Robert Sinclair and
Lawrence Cohen with an exercise price of $3.6875.
In addition, in July 1997, Lawrence Cohen was granted a stock option to
purchase 200,000 shares of Common Stock at $4.375 per share. This option is
contingent on shareholder approval of certain amendments to the Company's 1994
Stock Option Plan described below.
In December 1997, the Company's Directors were granted options as
follows: Sheila Ronis, Robert Sinclair and Lawrence Cohen each received
options to purchase 25,000 shares of Common Stock; Nick Bartolini received
options to purchase 12,500 shares; and Erick Reickert received options to
purchase 6,250 shares. These options are exercisable at $5.4375 per share,
but are contingent on shareholder approval of the amendments to the Company's
1994 Stock Option Plan.
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. 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
-9-
<PAGE>
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.
On July 1, 1997, the Company's Board of Directors adopted amendments to
the 1994 Stock Option Plan to increase the number of shares of Common Stock
which may be subject to options granted under the plan to 1,000,000; to allow
the exercise price of options to be paid by means other than cash; and to
allow options to be granted with reload option provisions. These amendments
are contingent on the approval of the Company's shareholders prior to July 1,
1998. On December 16, 1997, the Company's Board of Directors adopted an
additional amendment to increase the number of shares of Common Stock which
may be subject to options granted under the plan to 1,400,000. This amendment
is also subject to shareholder approval.
As of September 30, 1997, there were 623,677 options outstanding under
the plan with exercise prices ranging from $3.6875 to $5.125. This does not
include options which are contingent on shareholder approval of the amendments
to the 1994 Stock Option Plan described above.
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 and 1997, the Company made $8,047 and
$5,030, respectively, in matching contributions under this plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 8, 1998, the Company was a party to two agreements in which
Alain Clenet, who was the Company's Chairman of the Board and Chief Executive
Officer, sold a total of 1,677,978 shares of the Company's common stock. In
one agreement Mr. Clenet sold 1,118,652 shares to Greenmotors LLC, which as a
result of this purchase, now owns 12.9% of the Company's shares outstanding.
In the other agreement, Mr. Clenet sold a total of 559,326 to four investors,
including the wife of Lawrence Cohen, one of the Company's Directors, who
purchased 219,406 shares. Simultaneously with the closing of these two
transactions, the Company and Mr. Clenet entered into a Separation Agreement
pursuant to which Mr. Clenet agreed to resign as an Officer and Director of
the Company, effective immediately.
On August 11, 1994, the Company 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
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automobile design work. During the years ended September 30, 1996 and 1997,
the Company invested $1,057,381 and $870,323, respectively, in the joint
venture.
In March 1994, Brian Chang purchased 235,294 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.
AMENDMENTS 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
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 AMENDMENTS
On July 1, 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 800,000 to 1,000,000; to allow the exercise price of
options to be paid by means other than cash; and to allow options to be
granted with reload option provisions. On December 16, 1997, the Board of
Directors voted, subject to shareholder approval, to increase the number of
shares of Common Stock subject to options under the Plan to 1,400,000. The
Board of Directors believes that the proposed amendments are 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.
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The amendment to allow options to be exercised by means other than cash
would allow the Board of Directors, in its sole discretion and where permitted
by law, to allow options to be exercised (a) by cancellation of indebtedness
of the Company to the Holder; (b) by the surrender of shares of Common Stock
of the Company having a fair market vale equal to the exercise price of the
option under certain conditions; (c) by waiver of compensation due or accrued
to the holder for services rendered; (d) provided that a public market for the
Company's stock exists, through a "same day sale" commitment from the holder
and a broker-dealer whereby the holder irrevocably elects to exercise the
option and to sell a portion of the shares so purchased to pay for the
exercise price and whereby the broker-dealer irrevocably commits upon receipt
of such shares to forward the exercise price directly to the Company; (e)
provided that a public market for the Company's stock exists, through a
"margin" commitment from the holer and a broker-dealer whereby holder
irrevocably elects to exercise the option and to pledge the shares so
purchased to the broker-dealer in a margin account as security for a loan in
the amount of the exercise price, and whereby the broker-dealer irrevocably
commits upon receipt of such shares to forward the exercise price directly to
the Company; (f) by surrendering shares of common stock of the Company for
which the option is being exercised having a fair market value equal to the
exercise price of the option; or (g) by any combination of the foregoing.
The amendment to allow options to be granted with reload option
provisions would allow the Board of Directors to include a provision that if a
holder pays the exercise price of shares of stock to be purchased by the
exercise of an option by delivering to the Company shares of stock already
owned by the holder or to be acquired on the exercise of the option, the
holder shall receive a reload option which would be a new option to purchase
shares of stock equal in number to the tendered shares. The terms of any
reload option would be determined by the Board of Directors consistent with
the provisions of the 1994 Plan.
There are currently stock options granted under the 1994 Plan to
purchase up to 1,190,889 shares of Common Stock, including 560,029 options
which are contingent on shareholder approval of the amendments to the 1994
Plan. Options to purchase 87,703 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, 1997, 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.
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<PAGE>
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 Registrant's ability to continue as a going concern. The
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, 1997, 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 1999
Any proposal by a shareholder intended to be presented at the Company's
Annual Meeting of Shareholders to be held in April 1999 must be received at
the offices of the Company, 600 C Ward Drive, Santa Barbara, California 93111,
on or before October 19, 1998, in order to be included in the Company's proxy
statement and proxy relating to that meeting.
JOHN C. McCORMACK, PRESIDENT
Santa Barbara, California
February 16, 1998
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P R O X Y
ASHA CORPORATION
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John C. McCormack 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 12, 1998, at the Annual Meeting of
Shareholders to be held on April 3, 1998, or any adjournment thereof.
1. The election of seven (7) 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:
John C. McCormack Kenneth R. Black
Robert J. Sinclair Lawrence Cohen
Nick P. Bartolini Erick A. Reickert
David D. Jones
[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,
1998;
___ FOR ___ AGAINST ___ ABSTAIN
3. The approval of amendments 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 800,000 shares to 1,400,000 shares, to allow non-cash
exercise of options and to allow options to be granted with reload option
provisions.
___ 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)
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.
<PAGE>
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders, Proxy Statement and Annual Report.
Dated: ______________, 1998 _______________________________________
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.
