EXHIBIT 3
STOCK PURCHASE AGREEMENT
BY AND AMONG
ASHA CORPORATION,
ALAIN X-X XXXXXX,
AND
GREENMOTORS LLC
STOCK PURCHASE AGREEMENT
------------------------
AGREEMENT, made as of the 8th day of January 1998, by and among ASHA
CORPORATION, a Delaware corporation (the "Company"), ALAIN X-X XXXXXX
("Seller"), and GREENMOTORS LLC, a Delaware limited liability company
("Purchaser").
WHEREAS, Purchaser desires to purchase 1,118,652 shares of the Common
Stock, $.00001 par value per share, of the Company (the "Common Stock") held by
the Seller, and the Seller desires to sell to Purchaser 1,118,652 shares of
Common Stock of the Company, in exchange for the consideration and upon the
terms described herein; and
WHEREAS, the parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with such sale of Common
Stock and also desire to prescribe various conditions precedent to such sale.
NOW, THEREFORE, in consideration of the mutual promises, covenants,
provisions, and representations contained herein, THE PARTIES HERETO AGREE AS
FOLLOWS:
ARTICLE 1
---------
SALE
1.1 Sale and Delivery of Common Stock. Subject to all the terms and
conditions of this Agreement, the Seller shall transfer and convey to Purchaser
at the Closing (as defined in paragraph 1.3 hereof) good, valuable and
marketable title to 1,118,652 shares of Common Stock, free and clear of all
liens, claims and encumbrances (except as described in Sections 1.2 and 2.2
hereof) in exchange for the consideration described in paragraph 1.4 hereof. The
consideration described in paragraph 1.4 hereof shall be wired at the Closing to
whatever account is designated by the Seller in writing to the Purchaser at
least 3 business days prior to the Closing.
1.2 The parties understand and agree that the certificates for the
shares being sold in this transaction are being held in escrow as described in
paragraph 2.2 below, and on the Closing, certificates representing 1,118,652
shares in the name of Seller will be canceled and one new certificate will be
issued in the name of Purchaser in the amount of 1,118,652 shares. The new
certificate for the Purchaser and any certificates for shares of the Seller not
being sold in this transaction will remain in escrow subject to the terms of
separate promotional share escrow agreements.
1.3 Effective Date and Closing. The Closing of the transaction
contemplated herein (the "Closing") shall occur on January 8, 1998, at a
mutually agreeable time and place or as soon
-1-
thereafter as reasonably practicable (the "Closing Date") following the date on
which all of the obligations and conditions precedent contained herein are
complied with.
1.4 Purchase Price. Subject to all of the other terms and conditions
set forth in the Agreement and in reliance on the representations, warranties
and covenants hereinafter set forth, Purchaser shall deliver to Seller cash in
the amount of $3,000,000 ($2.6818 per share) (hereinafter referred to as the
"Purchase Price").
1.5 Termination Date. If this transaction has not closed by January 9,
1998, this Agreement shall be automatically terminated and none of the parties
shall have any obligations hereunder except that such termination shall not
waive any breaches of the terms of this Agreement arising prior thereto.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER
-----------------------------------------
As an inducement to Purchaser to enter into this Agreement, Seller
hereby represents and warrants to Purchaser that:
2.1 Share Ownership. The 1,118,652 shares of Common Stock to be sold
hereunder are owned of record and beneficially by the Seller, and such shares
are not subject to any claim, lien, encumbrance or pledge, except as set forth
in Section 2.2 hereof. Seller has authority to sell and exchange such shares
pursuant to this Agreement. After the Closing and the simultaneous sale of
another 559,326 shares by the Seller to four other parties, Seller will continue
to have record and beneficial ownership of 291,722 shares of the Common Stock
and options to purchase 19,728 shares of the Common Stock.
2.2 Restriction of Shares. The 1,118,652 shares of Common Stock to be
sold by Seller are presently held in an escrow account with TranSecurities
International, Inc. subject to the terms of a Promotional Shares Escrow
Agreement dated June 26, 1997, true copies of which, and amendments thereto, if
any, are attached hereto as Exhibit A. In addition, the 1,118,652 shares of
Common Stock are subject to a lock-up agreement between the Seller and X.X.
Xxxxxx & Co., Inc., true copies of which, and amendments thereto, if any, are
attached hereto as Exhibit B.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER AND THE COMPANY
--------------------------------------------------------
As an inducement to Purchaser to enter into this Agreement, Seller and
the Company hereby represent and warrant to the Purchaser that:
-2-
3.1 Capitalization. The authorized capital stock of the Company
consists of 20,000,000 shares of Common Stock of which 8,663,158 shares of
Common Stock are currently issued and outstanding, and 10,000,000 shares of
$.001 par value Preferred Stock of which no shares are issued and outstanding.
All of the issued and outstanding shares of Common Stock are duly authorized,
validly issued, fully paid and nonassessable. Other than 1,162,827 shares of
Common Stock underlying options granted under the Company's Stock Option Plan,
125,000 shares of Common Stock underlying warrants issued to X.X. Xxxxxx & Co.,
Inc., 93,100 shares of Common Stock underlying options granted to Xxxxxxx
Xxxxxxxx, and 18,750 shares of Common Stock underlying warrants to Montecito
Bank, there are no outstanding subscriptions, options, rights, warrants,
convertible securities, or other agreements or commitments obligating the
Company to issue or to transfer from treasury any additional shares of its
capital stock of any class.
3.2 SEC Filings. Since January 1, 1995, the Company has filed with the
Securities and Exchange Commission ("SEC") all registration statements,
financial statements, reports, schedules, forms, proxy statements and all other
documents and written information (collectively "SEC filings") required to have
been filed by the Company under the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended. As the date hereof, none of the SEC
filings contains, or, at the Closing Date, will contain any untrue statement of
a material fact or omits or will omit to state a material fact necessary in
order to make the statements contained therein, in light of the circumstances in
which they were made, not misleading.
3.3 Undisclosed Liabilities. Neither the Company nor any of its
properties or assets are subject to any material liabilities or obligations of
any nature, whether absolute, accrued, contingent or otherwise and whether due
or to become due, that are not reflected in the Company's financial statements
included in the Form 10-QSB for the three months ended June 30, 1997, other than
liabilities incurred in the normal course of operations since June 30, 1997.
This Warranty by Seller is to the best of Seller's knowledge.
3.4 Authority. The Company has full corporate power and authority to
enter into this Agreement, the Registration Rights Agreement and any other
agreements, documents or instruments to be executed and delivered by the Company
pursuant to the provisions hereof or thereof (collectively the "Transaction
Documents") and to consummate the transactions contemplated by the Transaction
Documents. The Board of Directors of the Company has taken all action required
to authorize the execution and delivery of the Transaction Documents by or on
behalf of the Company and the performance of the obligations of the Company
under the Transaction Documents. No other corporate proceedings on the part of
the Company are necessary to authorize the execution and delivery of the
Transaction Documents by the Company or the performance of its obligations under
the Transaction Documents. The Transaction Documents are, and when executed and
delivered by the Company will be, valid and binding agreements of the Company,
enforceable against the Company in accordance with their respective
-3-
terms, except as such enforceability may be limited by general principles of
equity, bankruptcy, insolvency, moratorium and similar laws relating to
creditors' rights generally.
3.5 Ability to Carry Out Obligations. Neither the execution and
delivery of the Transaction Documents, the performance by the Company of its
obligations under the Transaction Documents, nor the consummation of the
transactions contemplated under the Transaction Documents will, to the best of
the Company's knowledge: (a) violate any provision of the Company's articles of
incorporation or bylaws; (b) with or without the giving of notice or the passage
of time, or both, violate, or be in conflict with, or constitute a default
under, or cause or permit the termination or the acceleration of the maturity
of, any debt, contract, agreement or obligation of the Company, or require the
payment of any prepayment or other penalties; (c) other than the consent of the
Securities Examination Division of the State of Michigan (the "Division") and
the consent of X.X. Xxxxxx & Co., Inc., true and correct copies of which are
attached hereto as Exhibits C and D, respectively, and the waiver by the parties
to the Promotional Shares Escrow Agreement dated June 26, 1997, of the
conditions to the transfer of the Common Stock pursuant to this Agreement, all
of which have been obtained, require notice to, or the consent of, any party to
any agreement or commitment, lease or license, to which the Company is bound;
(d) result in the creation or imposition of any security interest, lien or other
encumbrance upon any property or assets of the Company; or (e) violate any
statute or law or any judgment, decree, order, regulation or rule of any court
or governmental authority to which the Company is bound or subject.
3.6 Consents and Approvals. Other than the consent of the Division, the
consent of X.X. Xxxxxx & Co., Inc., and the consent of the Seller's spouse, all
of which have been obtained and the entering into of new Promotional Share
Escrow Agreements by the Seller and the Purchaser in the forms of Exhibits G and
J, respectively, no consent, approval or authorization of, or declaration,
filing or registration with, any governmental or regulatory authority or any
other person is required to be made or obtained by the Company and the Seller in
connection with: (a) the execution and delivery by the Company and the Seller of
the Transaction Documents; (b) the performance by the Company and the Seller of
their obligations under the Transaction Documents; or (c) the consummation by
the Company and the Seller of the transactions contemplated by the Transaction
Documents.
3.7 Status of Shares. Upon the sale and transfer of the shares being
sold hereunder, the Purchaser will be the record and beneficial owner of
1,118,652 shares of the Common Stock, and such shares will be fully paid and
non-assessable, free and clear of all mortgages, pledges, liens, security
interests, encumbrances, and, except as set forth in Exhibits G and I hereto,
restrictions of every nature.
-4-
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
As an inducement to the Company and the Seller to enter into this
Agreement, the Purchaser represents and warrants to the Company and Seller that:
4.1 Purchaser's Status. Purchaser represents that it is a sophisticated
investor with experience in making investments of this type and is an Accredited
Investor as that term is defined in Rule 501(a) under the Securities Act of
1933, as amended.
4.2 Investment Intent. Purchaser is purchasing the Common Stock for its
own account for investment purposes and not with a view to public distribution.
Purchaser has the capacity to evaluate the merits and risks of the acquisition
of the Common Stock and understands that the Common Stock is subject to resale
restrictions under various state and federal securities laws.
4.3 Information Provided. Purchaser represents that it has not been
provided any information concerning the Company by the Seller, except for
information set forth or referred to in this Agreement, and Purchaser is not
relying on any representations or warranties of the Seller except for those set
forth in this Agreement.
ARTICLE 5
COVENANTS
---------
5.1 Investigative Rights. From the date of this Agreement until the
Closing Date, the Company shall provide to Purchaser, and its counsel,
accountants, auditors, and other authorized representatives, reasonable access
to all of the Company's properties, books, contracts, commitments, and records
for the purpose of examining the same. The Company shall furnish Purchaser with
all information concerning its affairs as Purchaser may reasonably request.
Without in any manner reducing or otherwise mitigating the representations
contained herein, Purchaser and/or its representatives shall have the
opportunity to meet with accountants and attorneys to discuss the financial
condition of the Company. If the transaction contemplated hereby is not
completed, all documents received by Purchaser and/or its attorneys and
accountants shall be returned to the Company upon request.
5.2 Seller's Cooperation After the Closing; Further Action. At any time
and from time to time after the Closing, the Seller shall execute and deliver to
Purchaser such other instruments and take such other actions as the Purchaser
may reasonably request to more effectively vest title to the Common Stock in the
Purchaser. Each of the parties hereto shall use all reasonable efforts
-5-
to take, or cause to be taken, all appropriate action, do or cause to be done
all things necessary, proper or advisable under applicable laws, and execute and
deliver such documents and other papers, as may be required to carry out the
provisions of this Agreement and to consummate and make effective the
transactions contemplated hereby.
5.3 Undertaking Regarding Becoming "Covered Securities." The Company
undertakes and agrees that, as soon as the Company meets the requirements, it
will take all reasonable steps necessary to have the Common Stock being
purchased by the Purchaser pursuant to this Agreement become "Covered
Securities" as such term is defined by the National Securities Markets
Improvement Act of 1996.
ARTICLE 6
CONDITIONS PRECEDENT TO PURCHASER'S PERFORMANCE
-----------------------------------------------
6.1 Conditions. Purchaser's obligations hereunder shall be subject to
the satisfaction, at or before the Closing, of all the conditions set forth in
this Article 6. Purchaser may waive any or all of these conditions in whole or
in part without prior notice, so long as such waiver is in writing; and
provided, however, that no such waiver of a condition shall constitute a waiver
by Purchaser of any other condition or any of Purchaser's other rights or
remedies, at law or in equity, if the Company and/or Seller shall be in default
of any of their representations, warranties, or covenants under this Agreement.
6.2 Accuracy of Representations. Except as otherwise permitted by this
Agreement, all representations and warranties by the Company and Seller in this
Agreement or in any written statement that shall be delivered to Purchaser by
the Seller or the Company under this Agreement shall be true and accurate when
made and on and as of the Closing Date with the same force and affect as if made
at the Closing. The Company and the Seller shall deliver a certificate to such
effect dated the Closing Date.
6.3 Performance. The Company and Seller shall have performed,
satisfied, and complied with all covenants, agreements, and conditions required
by this Agreement to be performed or complied with by them, on or before the
Closing Date.
6.4 Absence of Litigation. No action, suit, or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened against any party hereto on or before the Closing Date.
6.5 Closing Documents. The Company and the Seller shall deliver the
closing documents to be delivered by them as set forth in Article 9 of this
Agreement.
-6-
6.6 Separation Agreement. The Company and the Seller shall have entered
into the Separation Agreement substantially in the form attached hereto as
Exhibit E.
6.7 Due Diligence. The Purchaser shall be satisfied in its reasonable
discretion with the results of its due diligence investigation of the Company.
6.8 Legal Opinion. Purchaser shall have received the written opinion of
Xxxx Xxxxx Xxxxxxxx & Xxxxxx, P.C., counsel for the Company, dated the Closing
Date, substantially in the form attached hereto as Exhibit F.
6.9 Promotional Shares Escrow Agreement. All actions required by the
December 12, 1997, letter from Xxxxxx X. Xxxxx, the Director of the Division,
shall have been taken and all documents required thereby shall have been
executed and delivered to the Division pursuant to such letter, except that the
new escrow agreements, in the form attached hereto as Exhibit G, may be provided
to the Division within three (3) business days after the Closing.
6.10 X.X. Xxxxxx Consent. The Company shall have provided a letter from
X.X. Xxxxxx & Co., Inc., pursuant to which X.X. Xxxxxx & Co., Inc. consents to
the sale of a total of 1,677,978 shares of Common Stock which includes the
1,118,652 shares of Common Stock being sold by Seller to Purchaser pursuant to
this Agreement. A true copy of that letter is attached hereto as Exhibit D.
6.11 Registration Rights Agreement. The Company shall have executed and
delivered the Registration Rights Agreement attached hereto as Exhibit H.
ARTICLE 7
CONDITIONS PRECEDENT TO THE
SELLER'S PERFORMANCE
----------------------------
7.1 Conditions. The Seller's obligations hereunder shall be subject to
the satisfaction, at or before the Closing, of all the conditions set forth in
this Article 7. The Seller may waive any or all of these conditions in whole or
in part without prior notice; so long as such waiver is in writing; and
provided, however, that no such waiver of a condition shall constitute a waiver
by the Seller of any other condition of or any of the Seller's rights or
remedies, at law or in equity, if Purchaser shall be in default of any of its
representations, warranties, or covenants under this Agreement.
7.2 Accuracy of Representations. Except as otherwise permitted by this
Agreement, all representations and warranties by Purchaser in this Agreement or
in any written statement that
-7-
shall be delivered to the Seller by Purchaser under this Agreement shall be true
and accurate on and as of the Closing Date as through made at that time.
7.3 Performance. Purchaser shall have performed, satisfied, and
complied with all covenants, agreements, and conditions required by this
Agreement to be performed or complied with by it, on or before the Closing Date.
7.4 The conditions set forth in Sections 6.9 and 6.10 shall have been
met.
ARTICLE 8
BOARD SEAT FOR PURCHASER
------------------------
8.1 Immediately after the Closing, Purchaser shall have the right to
select one member of the Company's Board of Directors. The director to be
selected by Purchaser shall serve until the next annual meeting of the Company's
shareholders. Thereafter, the Company will have such member renominated for an
additional three terms of office, and the Company's officers and directors will
agree to vote their shares to re-elect such member. If such person is unable to
continue serving on the Board for any reason during this period, Purchaser shall
be entitled to select a substitute and the Company will use its best efforts to
add the substitute to the Board, and the Company's officers and directors will
agree to vote their shares to re-elect such member during the period described
in the sentence above. If for any reason during this period a person selected by
Purchaser is not then serving, Purchaser shall have the right to designate one
representative to be a non-voting observer to receive notice of and to attend
all meetings of the Company's Board of Directors, and to receive copies of any
written consents or minutes. Such individual shall be reimbursed by the Company
for all out-of-pocket expenses incurred in connection with attending such
meetings.
ARTICLE 9
CLOSING
-------
9.1 Closing. The Closing of this transaction shall be held at the
offices of Xxxxxx, Sheffield & Xxxxxx, Santa Barbara, California, or such other
place as shall be mutually agreed upon, and on such date as shall be mutually
agreed upon by the parties. At the Closing:
(a) Purchaser shall deliver wired funds for the Purchase
Price.
(b) Seller shall deliver to TranSecurities International,
Inc., the Company's transfer agent a medallion guaranteed stock power
authorizing the transfer of 1,118,652 shares of the Common Stock to
Purchaser.
-8-
(c) The Company and Seller shall deliver an executed copy of
the Separation Agreement between the Seller and the Company.
(d) Xxxx Xxxxx Xxxxxxxx & Xxxxxx, P.C. shall deliver to
Purchaser the legal opinion referred to in paragraph 6.8 hereof.
(e) The Company shall provide the written consent from X.X.
Xxxxxx & Co., Inc. required in Seller's lock-up letter, a true and
correct copy of which, together with all amendments, if any, is
attached hereto as Exhibit D.
(f) Purchaser shall deliver an executed copy of a new
Promotional Shares Escrow Agreement, a copy of which is attached hereto
as Exhibit G.
(g) Purchaser shall deliver an executed lock-up letter
addressed to X.X. Xxxxxx & Co., Inc. in the form attached hereto as
Exhibit I.
(h) Each party shall deliver such other documents or
information required to be furnished by Closing pursuant to this
Agreement.
(i) The Company shall deliver an executed copy of the
Registration Rights Agreement which is attached hereto as Exhibit H.
(j) The Company and the Seller shall each deliver a
certificate, as described in Section 6.2 hereof, dated the Closing
Date, that all representations and warranties by the Company and the
Seller set forth in this Agreement or in any written statement that
shall be delivered to Purchaser by the Seller or the Company under this
Agreement are true and accurate when made and on the Closing Date with
the same force and effect as if made at the Closing.
(k) Seller shall deliver an executed copy of a new Promotional
Shares Escrow Agreement, a copy of which is attached hereto as Exhibit
J.
(l) Seller shall deliver a document executed by the Seller's
spouse in form satisfactory to Purchaser in which Seller's spouse
consents to this transaction.
(m) Xxxxxx, Sheffield & Xxxxxx shall deliver to Purchaser a
legal opinion in the form attached hereto as Exhibit K.
-9-
ARTICLE 10
MISCELLANEOUS
-------------
10.1 Captions and Headings. The Article and paragraph/section headings
through this Agreement are for convenience and reference only, and shall in no
way be deemed to define, limit, or add to the meaning of any provision of this
Agreement.
10.2 No Oral Change. This Agreement and any provision hereof, may not
be waived, changed modified, or discharged orally, but it can be changed by an
agreement in writing signed by the parties hereto.
10.3 Entire Agreement. This Agreement contains the entire Agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings of the parties relating to the subject matter hereof.
10.4 Choice of Law. This Agreement and its application shall be
governed by the laws of the State of Delaware.
10.5 Counterparts. This Agreement may be executed simultaneously in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
10.6 Notices. All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of receipt if served personally on the party to whom notice is
to be given, by telecopy or telegram, or mailing if mailed to the party to whom
notice is to be given, by first class mail, registered or certified, postage
prepaid, and properly addressed as follows:
PURCHASER:
Greenmotors LLC
c/o Greenway Partners
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President and Chief Executive Officer
-10-
THE COMPANY:
ASHA Corporation
000 X Xxxx Xxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx XxXxxxxxx
SELLER:
Alain X-X Xxxxxx
0000 Xxxxx Xxxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
10.7 Binding Effect. This Agreement shall inure to and be binding upon
the heirs, executors, personal representatives, successors and assigns of each
of the parties to this Agreement.
10.8 Brokers. The parties hereto represent that no broker has brought
about this transaction. Each of the parties hereto shall indemnify and hold the
other harmless against any and all claims, losses, liabilities or expenses which
may be asserted against it as a result of its dealings, arrangements or
agreements with any broker, finder or person.
10.9 Announcements. Purchaser, Seller and the Company will consult and
cooperate with each other as to the timing and content of any announcements of
the transactions contemplated hereby to the general public or to employees,
customers or suppliers.
10.10 Survival of Representations and Warranties. The representations,
warranties, covenants and agreements of the parties set forth in this Agreement
or in any instrument, certificate, opinion, or other writing providing for in
it, shall survive the Closing for a period of five years irrespective of any
investigation made by or on behalf of any party.
10.11 Assignment. This Agreement may not be assigned by operation of
law or otherwise by the Seller, the Company or the Purchaser.
10.12 No Third Party Beneficiaries. This Agreement shall be binding
upon and inure solely to the benefit of the parties hereto and their permitted
assigns and nothing herein, express or implied, is intended to or shall confer
upon any other person, including, without limitation, any employee or former
employee of the Company, any legal or equitable right, benefit or remedy of any
nature whatsoever.
10.13 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in
-11-
addition to any other remedy at law or equity without the necessity of
demonstrating the inadequacy of monetary damages.
AGREED TO AND ACCEPTED as of the date first above written.
THE COMPANY: THE SELLER:
ASHA CORPORATION
By/s/Xxxx X. XxXxxxxxx /s/Alain X-X Xxxxxx
-------------------------------------- ---------------------------
Xxxx X. XxXxxxxxx, President Alain X-X Xxxxxx
PURCHASER:
GREENMOTORS LLC
By: /s/Xxxx X. Xxxxxxxxxx
-------------------------------------
Xxxx X. Xxxxxxxxxx, Vice President
NYFS11...:\92\56392\0003\1915\AGR1158R.240
-12-
