EXHIBIT 5
PROMOTIONAL SHARES ESCROW AGREEMENT
THIS PROMOTIONAL SHARES ESCROW AGREEMENT ("Agreement"), which
was entered into the 8th day of January 1998, by and between ASHA CORPORATION
("Issuer"), whose principal place of business is located at 000 X Xxxx Xxxxx,
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000, and GREENMOTORS LLC (the "Depositor"); and
TRANSECURITIES INTERNATIONAL, INC. (the "Escrow Agent"), whose principal place
of business is located at 0000 Xxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxxx
00000, all of whom are herein collectively referred to as "Signatories"),
witnesses that:
A. The Issuer has filed an application with the Securities Administrator
of the State of Michigan ("Administrator") to register certain of its common
stock for sale to public investors who are residents of that state in connection
with a public offering that was closed on July 3, 1997 (the "Public Offering");
B. The Depositor is in the process of purchasing 1,118,652 number shares
of common stock of Issuer (the "Equity Securities") from Alain X-X Xxxxxx and
such shares are currently being held in escrow with the Escrow Agent pursuant to
a Promotional Shares Escrow Agreement dated June 26, 1997; and
C. As a condition to the purchase of the Equity Securities from Alain X-X
Xxxxxx, the Depositor must enter into this Agreement and agree to deposit the
Equity Securities ("Promotional Shares") with the Escrow Agent; and
D. The Signatories have agreed to be bound by the terms of this Agreement.
THEREFORE, the Signatories agree as follows:
1. DEPOSIT OF PROMOTIONAL SHARES. The Depositor's Promotional Shares have
been deposited into an escrow account (the "Escrow") with the Escrow Agent, and
the Escrow Agent hereby acknowledges the receipt thereof.
2. TERM. The term of this Agreement and the Escrow shall begin on the date
that the Depositor purchases the Promotional Shares from Mr. Alain X-X Xxxxxx.
The Promotional Shares shall be held by the Escrow Agent until they are released
in accordance with Paragraph 3 below.
3. RELEASE OF PROMOTIONAL SHARES.
A. Subject to the documentation requirements set forth in Paragraph
4 below, the Escrow Agent shall release the Promotional Shares in the following
manner:
(1) Beginning July 3, 1998, the Escrow Agent shall release at the
end of each calendar quarter, commencing with the calendar quarter ending
September 30, 1998, 27,966.3
NYFS11...:\92\56392\0003\1915\AGR1168M.530
(two and one-half percent (2-1/2%)) of the Promotional Shares held in escrow.
All remaining Promotional Shares shall be released from escrow on July 3, 1999.
B. In the event of a dissolution, liquidation, merger,
consolidation, reorganization, sale or exchange of the Issuer's assets or
securities (including by way of tender offer), or any other transaction or
proceeding with a person who is not a Promoter (the term "Promoter" shall refer
to the persons identified as Promoters on Exhibit A hereto), which results in
the distribution of the Issuer's assets or securities ("Distribution"), while
this Agreement remains in effect, the Depositor agrees that:
(1) All holders of the Issuer's Equity Securities will
initially share on a pro rata per share basis in the Distribution, in proportion
to the amount of cash or other consideration that they paid per share for their
Equity Securities (provided that the Administrator has accepted the value of the
other consideration), until the shareholders who purchased the Issuer's Equity
Securities pursuant to the Public Offering ("Public Shareholders") have
received, or have had irrevocably set aside for them, an amount that is equal to
one hundred percent (100%) of the public offering's price per share times the
number of shares of Equity Securities that they purchased pursuant to the public
offering and which they still hold at the time of the Distribution, adjusted for
stock splits, stock dividends, recapitalizations and the like; and
(2) All holders of the Issuer's Equity Securities shall
thereafter participate on an equal, per share basis times the number of shares
of Equity Securities they hold at the time of the Distribution, adjusted for
stock splits, stock dividends, recapitalizations and the like.
C. The Distribution may proceed on lesser terms and conditions than
the terms and conditions stated in Paragraph 3(b) above, if a majority of the
Equity Securities that are not held by the Depositor, officers, directors or
Promoters of the Issuer, or their associates or affiliates vote, or consent by
consent procedure, to approve the lesser terms and conditions.
D. In the event of dissolution, liquidation, merger, consolidation,
reorganization, sale or exchange of the Issuer's assets or securities (including
by way of tender offer), or any other transaction or proceeding with a person
who is a Promoter, which results in a Distribution while this Agreement remains
in effect, the Depositor's Promotional Shares shall remain in escrow subject to
the terms of this Agreement.
E. In the event that Promotional Shares in the Escrow become
"Covered Securities," as such term is defined by the National Securities Markets
Improvement Act of 1996, all Promotional Shares held in the Escrow shall be
released.
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4. DOCUMENTATION REGARDING THE RELEASE OF PROMOTIONAL SHARES.
A. A written request for release of the Promotional Shares (a
"Request for Release"), based upon Paragraph 3 above, shall be forwarded to the
Escrow Agent and the Administrator.
B. The Escrow Agent shall terminate the Agreement and/or release
some or all of the Promotional Shares from Escrow if it has forwarded the proper
documentation as required by Paragraph 4.a above ("proper documentation")
reflecting compliance with the release provisions of Paragraph 3 above to the
Administrator and either it has received the Administrator's consent to do so or
the Administrator has not disallowed the termination of the Agreement and/or the
release of some or all of the Promotional Shares from Escrow within ten (10)
days after the Administrator's receipt of the proper documentation, whichever
occurs first.
5. RESTRICTIONS ON THE TRANSFER, SALE OR DISPOSAL OF
PROMOTIONAL SHARES. While this Agreement is in effect, no Promotional Shares,
any interest therein or any right or title thereto, may be sold, transferred,
hypothecated or otherwise disposed of ("transfer" or "transferred"), except as
noted below, and the Escrow Agent shall not recognize any transfer that violated
the terms of this Agreement. The Promotional Shares may not be transferred until
the Administrator has received a written statement, signed by the proposed
transferee ("transferee"), which states that the transferee has full knowledge
of the terms of this Agreement, the transferee accepts the Promotional Shares
subject to the terms of this Agreement, and the transferee realizes that the
Promotional Shares shall remain subject to the terms of the Agreement until they
are released pursuant to Paragraph 3 above.
A. Promotional Shares may be transferred by will, the laws of
descent and distribution, the operation of law, or by order of any court of
competent jurisdiction and proper venue.
B. Promotional Shares of a deceased Depositor may be hypothecated to
pay the expenses of the deceased Depositor's estate. The hypothecated
Promotional Shares shall remain subject to the terms of this Agreement.
Promotional Shares may not be pledged to secure any other debt.
6. VOTING POWER. With the exception of' Paragraphs 3.b and c above, the
Promotional Shares shall have the same voting rights as similar, non-escrowed
Equity Securities.
7. DIVIDENDS, STOCK SPLITS AND RECAPITALIZATIONS. All certificates
representing stock dividends and shares resulting from stock splits of escrowed
shares, recapitalizations and the like, that are granted to or received by the
Depositor while his Promotional Shares are held in Escrow shall be deposited
with and held by the Escrow Agent subject to the terms of this Agreement. Any
cash dividends that are granted to or received by
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the Depositor while his Promotional Shares are held in the Escrow shall be
promptly deposited with and held by the Escrow Agent subject to the terms of
this Agreement unless such cash dividends are approved by a majority of the
disinterested directors of the Issuer. The Escrow Agent shall invest cash
dividends as directed by the Depositor.
8. RELIANCE BY ESCROW AGENT. The Escrow Agent shall be protected if it
acts in good faith upon any statement, certificate, notice, request, consent,
order or other document which it believes to be genuine, conforms with the
provisions of the Agreement and is signed by the proper party. The Escrow
Agent's sole responsibility shall be to act in accordance with the terms
expressly set forth in this Agreement. The Escrow Agent shall be under no
obligation to institute or defend any action, suit or proceeding in connection
with this Agreement unless it receives reasonable indemnification and
advancement of fees and costs. The Escrow Agent may consult counsel with respect
to any question arising under this Agreement. The Escrow Agent shall not be
liable for any action taken or omitted, in good faith, upon the advice of
counsel in performing its duties hereunder. The Escrow Agent shall not be liable
to anyone for any damage, loss, expenses or liability other than for that which
arises from the Escrow Agent's failure to abide by the terms of this Agreement.
9. ESCROW AGENT'S COMPENSATION. The Escrow Agent shall be entitled to
receive reasonable compensation from the Issuer for its services hereunder.
10. ESCROW AGENT'S INDEMNIFICATION. The Issuer and the Depositor agree to
hold the Escrow Agent harmless from, and indemnify the Escrow Agent for, any
cost or liability regarding any administrative proceeding, investigation,
litigation, interpretation or implementation relating to this Agreement,
including the release of Promotional Shares, the Distribution, and the
disbursement of dividends, interest or proceeds, unless the cost or liability
arises from the Escrow Agent's failure to abide by the terms of this Agreement.
11. INDEPENDENCE OF THE ESCROW AGENT. The Issuer hereby represents
that all of its officers, directors and Promoters are listed on Exhibit A, which
is attached hereto and made a part hereof. The Escrow Agent hereby represents
that it is not affiliated with the Issuer, the Depositor, or the Issuer's
officers, directors or Promoters who are named in Exhibit A. A bank may not be
disallowed as an Escrow Agent merely because the Issuer, its officers,
directors, or Promoters are its customers.
12. SCOPE. This Agreement shall inure to the benefit of and be binding
upon the Depositor, his heirs and assignees. and upon the Issuer, Escrow Agent,
and their successors.
13. SUBSTITUTE ESCROW AGENT. The Escrow Agent may, upon not less than
sixty (60) days prior written notice to the Issuer, the Depositor and the
Administrator, resign as the Escrow Agent. The Issuer and the Depositor shall,
before the effective date of the Escrow Agent's resignation, enter into a new
identical Escrow Agreement with a substitute Escrow Agent. The successor Escrow
Agent must be satisfactory to the Administrator. If the Issuer and the
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Depositor fail to enter into a new Escrow Agreement and appoint a successor
Escrow Agent within sixty (60) days after the Escrow Agent has given notice of
its resignation, the Escrow Agent then serving under this Agreement shall retain
the Promotional Shares in escrow until a new, identical Escrow Agreement has
been executed and a successor Escrow Agent has been appointed. The Escrow Agent
shall not be liable for retaining the Promotional Shares in escrow.
14. TERMINATION. Except for the compensation and indemnification
provisions of Paragraphs 9 and 10 above, which shall survive until they are
satisfied, this Agreement shall terminate in its entirety when all of the
Promotional Shares have been released or the Issuer's Equity Securities and/or
assets have been distributed pursuant to Paragraph 3 above.
Pursuant to the requirements of this Agreement, the Signatories have
entered into this Agreement, which may be written in multiple counterparts and
each of which shall be considered an original. The Signatories have signed the
Agreement in the capacities, and on the dates, indicated.
IN WITNESS WHEREOF, the Signatories have executed this Agreement.
GREENMOTORS LLC
Date: 1/8/98 By /s/Xxxx X. Xxxxxxxxxx
--------------- ---------------------------------------
Xxxx X. Xxxxxxxxxx, Vice President
ASHA CORPORATION
Date: 1/8/98 By: /s/Xxxx X. XxXxxxxxx
--------------- ---------------------------------------
Xxxx X. XxXxxxxxx, President
By: /s/Xxxxxx X. Xxxxxxxxx
---------------------------------------
Xxxxxx X. Xxxxxxxxx, Chief Financial
Officer
TRANSECURITIES INTERNATIONAL, INC.
Date: 1/8/98 By: /s/Xxxxxxx Xxxxxxx,
--------------- ---------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: President
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EXHIBIT A
OFFICERS, DIRECTORS AND PROMOTERS OF
ASHA CORPORATION
Officers and Directors Promoters
---------------------- ---------
Alain X-X Xxxxxx Alain X-X Xxxxxx
Xxxx X. XxXxxxxxx Xxxxx Xxxxx
Xxxxxxx X. Xxxxx
Xxxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxxxxx
Xxxxxxxx Xxxxx
