<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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
ADVANCED AERODYNAMICS & STRUCTURES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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ADVANCED AERODYNAMICS & STRUCTURES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held July 19, 1999
TO THE SHAREHOLDERS OF
ADVANCED AERODYNAMICS & STRUCTURES, INC.:
You are cordially invited to attend the Annual Meeting of Shareholders of
Advanced Aerodynamics & Structures, Inc. ("AASI" or the "Company"), which will
be held at the Company's headquarters located at 3205 Lakewood Boulevard, Long
Beach, California 90808, on Monday, July 19, 1999, at 10:00 a.m. Pacific time,
to consider and act upon the following matters:
1. The election of directors;
2. Ratification of the selection of Ernst & Young LLP to serve as auditors
of the Company for the fiscal year ending December 31, 1999; and
3. Such other business as may properly come before the Meeting or any
adjournments of the Meeting.
Only holders of record of Common Stock of the Company at the close of
business on May 31, 1999 will be entitled to notice of and to vote at the Annual
Meeting and any adjournments of the Annual Meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING REGARDLESS
OF THE NUMBER OF SHARES YOU HOLD. YOU ARE INVITED TO ATTEND THE MEETING IN
PERSON, BUT WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE. IF YOU DO ATTEND THE
MEETING, YOU MAY, IF YOU PREFER, REVOKE YOUR PROXY AND VOTE YOUR SHARES IN
PERSON.
By Order of the Board of Directors
Carl Chen, Ph.D.
Chairman of the Board,
President and Chief Executive Officer
3205 Lakewood Boulevard
Long Beach, California 90808
(562) 938-8618
June 14, 1999
<PAGE>
PROXY STATEMENT
ADVANCED AERODYNAMICS & STRUCTURES, INC.
3205 Lakewood Boulevard
LONG BEACH, CALIFORNIA 90808
________________
ANNUAL MEETING OF SHAREHOLDERS
To Be Held July 19, 1999
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Advanced Aerodynamics & Structures, Inc., a
Delaware corporation (the "Company") for use at the Annual Meeting of
Shareholders to be held at the Company's headquarters located at 3205 Lakewood
Boulevard, Long Beach, California 90808, on Monday, July 19, 1999, at 10:00 a.m.
Pacific time, and at any and all adjournments thereof (the "Annual Meeting"),
for the purposes set forth in the accompanying Notice of Annual Meeting of
Shareholders. Accompanying this Proxy Statement is the Board of Directors'
Proxy for the Annual Meeting, which you may use to indicate your vote as to the
proposals described in this Proxy Statement.
All Proxies which are properly completed, signed and returned to the
Company prior to the Annual Meeting, and which have not been revoked, will be
voted as indicated on the completed Proxy. A Shareholder may revoke his or her
Proxy at any time before it is voted either by filing with the Secretary of the
Company, at its principal executive offices, a written notice of revocation or a
duly executed proxy bearing a later date or by attending the Annual Meeting and
expressing a desire to vote his or her shares in person.
The close of business on May 31, 1999 has been fixed as the record date for
the determination of Shareholders entitled to notice of and to vote at the
Annual Meeting or any adjournment of the Annual Meeting. As of the record date,
the Company had outstanding: 6,999,676 shares of Class A Common Stock, par value
$.0001 per share; 1,900,324 shares of Class B Common Stock, par value $.0001 per
share; 4,000,000 shares of Class E-1 Common Stock, par value $.0001 per share;
and 4,000,000 shares of Class E-2 Common Stock, par value $.0001 per share. The
Class A Common Stock, Class B Common Stock, Class E-1 Common Stock and Class E-2
Common Stock are substantially identical, except that the holders of Class A
Common Stock have the right to cast one vote, and the holders of Class B Common
Stock, Class E-1 Common Stock, and Class E-2 Common Stock have the right to cast
five votes, for each share held of record on all matters submitted to a vote of
the holders of Common Stock, including the election of directors. The Class A
Common Stock, Class B Common Stock, Class E-1 Common Stock and Class E-2 Common
Stock vote together as a single class on all matters on which stockholders may
vote, including the election of directors, except when voting by class is
required by applicable law. Holders of the Class A Common Stock, Class B Common
Stock, Class E-1 Common Stock and Class E-2 Common Stock have equal ratable
rights to dividends from funds legally available therefor, when, as and if
declared by the Board of Directors and are entitled to share ratably, as a
single class, in all of the assets of the Company available for distribution to
the holders of shares of Common Stock upon the liquidation, dissolution or
winding up of the affairs of the Company. Except as described herein, no
preemptive, subscription, or conversion rights pertain to the Common Stock and
no redemption or sinking fund provisions exist for the benefit thereof.
The Company's principal executive offices are located 3205 Lakewood
Boulevard, Long Beach, California 90808. This Proxy Statement and the
accompanying proxy will be mailed to Shareholders on or about June 14, 1999.
1
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ELECTION OF DIRECTORS
In accordance with the Certificate of Incorporation and Bylaws of the
Company, the Board of Directors consists of not less than three nor more than
seven members, the exact number to be determined by the Board of Directors. At
each annual meeting of the Shareholders of the Company, directors are elected
for a one year term. The Board of Directors is currently set at six members.
The Board of Directors proposes the election of the nominees named below.
Pursuant to the Certificate of Incorporation of the Company and Delaware
General Corporation Law, the Board of Directors by unanimous written consent
dated July 31, 1997 amended the Bylaws of the Company to eliminate cumulative
voting. There is no cumulative voting for the election of directors.
Unless marked otherwise, proxies received will be voted FOR the election of
the each of the nominees named below, and the votes will be distributed equally
among the nominees. If any such person is unable or unwilling to serve as a
nominee for the office of director at the date of the Annual Meeting or any
postponement or adjournment thereof, the proxies may be voted for a substitute
nominee, designated by the proxy holders or by the present Board of Directors to
fill such vacancy. The Board of Directors has no reason to believe that any
such nominee will be unwilling or unable to serve if elected a director.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE ELECTION OF THE DIRECTORS NOMINATED HEREIN.
The Board of Directors proposes the election of the following nominees as
members of the Board of Directors:
Carl Chen, Ph.D.
Gene Comfort
C.M. Cheng
Steve Gorlin
James A. Lovell
S. B. Lai, Ph.D.
If elected, the nominees are expected to serve until the 2000 Annual
Meeting of Shareholders.
Information with Respect to Each Nominee and Executive Officers.
The following table sets forth certain information with respect to each
nominee and executive officer of the Company as of March 31, 1999.
Name Age Position
---- --- --------
Carl Leei Chen, Ph.D. 52 Chairman of the Board, President, Chief
Executive Officer, Director and Director
Nominee
Gene Comfort 55 Executive Vice President, General Manager,
Director and Director Nominee
C.M. Cheng 52 Consultant to the Company, Director and
Director Nominee
Steve Gorlin 61 Director and Director Nominee
James A. Lovell 70 Director and Director Nominee
S. B. Lai, Ph.D. 47 Director and Director Nominee
2
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Other Officers:
David M. Turner, CPA 63 Vice President Finance and Administration,
Chief Financial Officer
Michael W. Lai 51 Vice President Engineering
James A. Law 66 Manager of Manufacturing
Directors serve until the next annual meeting or until their successors are
elected or appointed. All officers are appointed by and serve at the discretion
of the Board of Directors, other than Dr. Chen, who has an employment agreement
with the Company. (See "Management - Employment Agreement".) There are no
family relationships between any directors or officers of the Company.
Dr. Carl L. Chen is the founder of the Company and has been its President
and a director since the Company's incorporation in January 1990 and the Chief
Executive Officer of the Company since December 1994. From January 1992 to
October 1995, Dr. Chen served as President, and since January 1992 has been a
minority stockholder, of Union China Investment and Development Group, Inc.
(Union China), a company located in Monterey Park, California, which was formed
to invest in commercial real estate. Union China confirmed a plan of
reorganization pursuant to Chapter 11 of the Federal bankruptcy laws in August
1995. The bankruptcy case for Union China was closed in May 1996 pursuant to a
Final Decree and Order Closing Case entered by the Bankruptcy Court for the
Central District of California. Since January 1992, Dr. Chen has served as the
President of California Aerospace Technology, Inc., a consulting company for the
satellite industry, located in Monterey Park, California. Dr. Chen was Chairman
of SIDA Corporation, a high technology trading company located in Monterey Park,
California, from 1989 to May 1996. Prior to founding the Company in 1990, Dr.
Chen was a Satellite System Engineering Manager at Hughes Space and
Communications, Inc. for 15 years. Dr. Chen has a Ph.D. in Engineering from the
California Institute of Technology and Masters Degrees in Control Engineering
and Aerospace Engineering from UCLA and West Virginia University, respectively.
Dr. Chen is a graduate of the Owner/President Management program at the Graduate
School of Business Administration of Harvard University.
Gene Comfort has been the Executive Vice President and General Manager of
the Company since September 1995 and a director since May 1996. From July 1993
to September 1995, Mr. Comfort was the Vice President-Marketing of the Company,
and he was the Director of Marketing of the Company from April 1991 to July
1993. Mr. Comfort has been involved in the aircraft industry for over 25 years
in a variety of marketing, sales and management positions. Mr. Comfort is a
single and multi engine rated pilot.
C.M. Cheng is a consultant to the Company and has served as a director of
the Company since June 1996. Since April 1996, Mr. Cheng has been a Vice
President of Eurotai International, Ltd., a private company located in Taipei,
Taiwan, which distributes health food products. From 1984 to April 1996, Mr.
Cheng served as a Vice President, Director of the Office of the President, and
Manager of Corporate Planning with Taiwan Yeu Tyan Machinery, Mfg. Co. Ltd., a
public company located in Taipei, Taiwan, which manufactures automobiles and
heavy equipment. From 1980 to 1983, Mr. Cheng was an Associate Professor of
Economics and Management at Taiwan National Sun-Yet-Sen University. Mr. Cheng
is the director of Harpa Limited, a corporation organized under the laws of the
Cayman Islands (Harpa), a principal stockholder of the Company. See Certain
Relationships and Related Transactions and Principal Shareholders.
Steve Gorlin has served as a director of the Company since July 1996. Over
the past twenty-five years, Mr. Gorlin has founded several biotechnology and
pharmaceutical companies, including Hycor Biomedical, Inc., Theragenics
Corporation, CytRx Corporation, and Medicis Corporation, which are public
companies, and SeaLite Sciences, Inc., which is a private company. Mr. Gorlin
founded, and served as Chairman of the Board of, EntreMed Inc., a public
company, from its inception in 1991 until December 1995 (EntreMed was privately
held during his tenure). He founded, and is a member of the Board of Directors
of, Perma-Fix Environmental Services, Inc., a public company involved in the
disposal of hazardous waste. Mr. Gorlin also established the Touch Foundation,
a non-profit organization for the blind. He is a single and multi-engine pilot.
3
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James A. Lovell Jr. is the former spacecraft commander of the Apollo 13
mission. He currently is the President of Lovell Communications, a business
devoted to disseminating information about the United States Space Program.
Prior to that he was Executive Vice President of Centel Corporation. Mr. Lovell
is a Fellow in the Society of Experimental Test Pilots and a member of the
Golden Eagles. He has been granted many honors and awards, including the
Presidential Medal for Freedom, the French Legion of Honor and the Congressional
Space Medal of Honor. In 1994 he and Jeff Kluger wrote Lost Moon, the story of
the Apollo 13 mission.
S. B. Lai has served as director of the Company since October 1997. Mr.
Lai is currently a Professor with the Graduate School of Business
Administration, National Chengchi University, Republic of China; the Secretary
General, Chinese Management Association, Republic of China; a third term
Republic of China National Assemblyman, Republic of China; and is Judge and
Committeeman of the National Quality Award. Over the past five years, Mr. Lai
has also served as a Director of the Ta-Yeh University, Republic of China;
Secretary General of the Chinese Management Association, Republic of China; and
is a consulting committeeman for the Ministry of Economic Affairs and the
Ministry of Education Affairs of the Republic of China. Mr. Lai received a BSME
and MBA from National Cheng-Kung University and a MSISE and Ph.D. from the
University of Southern California.
David M. Turner, CPA joined the Company in January 1997. Prior to that,
from 1994, he served as the Chief Financial Officer of Taitron Incorporated, a
publicly held company that distributes discrete semiconductors. From 1991 to
1994, Mr. Turner was President and sole owner of Maynard Enterprises,
Incorporated, a privately held consulting business working primarily in the
health care industry. From 1988 to 1991, Mr. Turner was the Chief Financial
Officer and Corporate Vice President of Finance of the Greater Southeast
Management Company, a Washington D.C. company that operated an inner city health
care system, which included two hospitals, three nursing homes and several
subsidiary health care companies in the Mid Atlantic area. During the same
period, Mr. Turner was President and a Director of Greater Southeast Asset
Management Company, the asset-holding subsidiary of the Greater Southeast
Healthcare System. Mr. Turner received a Master of Business of Administration
from the University of Cincinnati.
Michael W. Lai joined the Company in May 1, 1998. Mr. Lai is in charge of
Engineering operations for the high performance JETCRUZERtm 500 single engine
propjet aircraft and the long range, STRATOCRUZERtm twin jet aircraft. He brings
a vast and extensive Aerospace, Engineering and Management background to AASI as
Director, President, General Manager and Design Engineer for major aerospace
corporations. Mr. Lai's impressive background includes; Design Engineer for
Volpar Inc., on 707, 727 and DC-9 aircraft, Airframe Designer for Saunders
Aircraft Corp., Ltd. Gimli Canada on ST-27 commuter aircraft and Associate
Engineer for Continental Airlines, on DC-9, DC-10 and Boeing 727 commercial
aircraft. Mr. Lai is a FAA, FAR 23 and 25 Designated Engineering Representative
(DER) in Airframes, Structures, Systems and Equipment. He is a licensed pilot
and has a Masters in Systems Engineering from West Coast University, Los
Angeles, CA, a B. S. in Applied Mathematics (Engineering Option) and an A. A. in
Aircraft Maintenance Technology from Northrop institute of Technology, Inglewood
CA. Mr. Lai also holds FAA, A&P and Transport Canada, Aircraft maintenance
Licenses AML.
James A. Law joined the Company March 1, 1999. Prior to joining the
Company, Mr. Law was in demand as a consultant to Valsan727, where he was
involved in a major upgrade of the Boeing 727. From 1987 to 1991, he was
manufacturing liaison for Lacadre, Inc. Mr. Law was Vice president of OMAC
where he was responsible for the total operation of planning, building and
aircraft certification. He also was manufacturing Manager for LearFan and
Project superintendent for Rohr Corporation. At Rohr he was responsible for
projects such as; Boeing KC135, 727, 737, 747, Douglas DC10, Lockheed C5A,
Grumann F14 and the Gulfstream.
The Board of Directors held three meetings in 1998 and all Directors were
present at each meeting. The Board of Directors has a Compensation Committee,
which makes recommendations to the Board concerning salaries and incentive
compensation for officers and employees of the Company. The members of the
Compensation Committee are Messrs. Lai, Gorlin and Lovell. The Board of
Directors also has an Audit Committee which reviews the results and scope of the
audit and other accounting related matters. The members of the Audit Committee
are currently Messrs. Lai and Lovell. Both committees held three meetings
during 1998.
The Company has agreed to nominate a designee of the Underwriter of its
December 1996 public offering of stock, who is reasonably acceptable to the
Company, for election to the Company's Board of Directors, if so requested by
the Underwriter, for a period of five years from December 6, 1996.
4
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RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has authorized the firm of Ernst & Young LLP,
independent public accountants, to serve as auditors for the fiscal year ending
December 31, 1999. A representative of Ernst & Young LLP will be present at the
Annual Meeting and will have the opportunity to make a statement if he or she
desires to do so. Further, the representative of Ernst & Young LLP will be
available to respond to appropriate questions.
MANAGEMENT
Executive Compensation
The following tables set forth certain information as to the Company's Chief
Executive Officer and each of the Company's four most highly compensated
executive officers whose total annual salary and bonus for the fiscal year
ending December 31, 1998 exceeded $100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation/(1)/
Other
Name and Principal Position Year Salary Bonus Compensation
<S> <C> <C> <C> <C>
Carl L. Chen, Ph.D. 1998 $ 200,000 $ 0 $ 39,248/(5)/
Chairman and Chief Executive 1997 $ 200,000 $ 0 $ 39,248/(5)/
Officer 1996 $ 304,099/(3)/ $ 0 $ 242,000/(2)/
Gene Comfort 1998 $ 160,961 $ 0 $ 0
Executive Vice President 1997 $ 150,000 $ 0
1996 $ 136,276 $ 0 $ 33,000/(4)/
</TABLE>
(1) The compensation described in this table does not include medical
insurance, retirement benefits and other benefits which are available
generally to all employees of the Company and certain perquisites and
other personal benefits, the value of which did not exceed the lesser of
$50,000 or 10% of the executive officer's compensation in the table.
(2) Represents the approximate fair market value of 135,416 shares of Class B
Common Stock, 270,832 shares of Class E-1 Common Stock, and 270,832
shares of Class E-2 Common Stock issued to Dr. Chen in June 1996 and
earned by him under the New Management Agreement during 1995. See Certain
Relationships and Related Transactions.
(3) Pursuant to the New Management Agreement which became effective on
January 29, 1995 (the "New Management Agreement"), Dr. Chen was entitled
to receive a salary of $323,000 in 1995. This amount was accrued and
unpaid as of December 31, 1995. In May 1996, Dr. Chen agreed to convert
$300,000 of such accrued amount into 16,724 shares of Class B Common
Stock, 33,448 shares of Class E-1 Common Stock and 33,448 shares of Class
E-2 Common Stock and to receive the remainder in cash. See Certain
Transactions and Note 8 of Notes to Financial Statements. $30,000 of the
amount stated reflects the approximate fair value of such shares. In May
1996, the New Management Agreement was terminated, and Dr. Chen's annual
salary was changed to $200,000 per year. (See "Management - Employment
Agreement").
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(4) Represents the approximate fair market value of 17,460 shares of Class B
Common Stock, 34,919 shares of Class E-1 Common Stock, and 34,919 shares
of Class E-2 Common Stock issued to Mr. Comfort in May 1996 in exchange
for services rendered.
(5) Represents premium for life insurance paid by the Company on behalf of
Dr. Chen.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Percentage of Total
Options Granted to
Number of Shares Employees and
Underlying Options Directors in Fiscal Exercise or Base
Name Granted Year Price Per Share Expiration Date
<S> <C> <C> <C> <C>
C.M. Cheng 10,000 3.66 $ 5.00 May 3, 2008
Steve Gorlin 10,000 3.66 $ 5.00 May 3, 2008
James A. Lovell, Jr. 10,000 3.66 $ 5.00 May 3, 2008
S. B. Lai 10,000 3.66 $ 5.00 May 3, 2008
Gene Comfort 10,000 3.66 $ 5.00 May 3, 2008
</TABLE>
(1) None of the reported options were in-the-money at the end of the fiscal
year as a result of the closing price of the Common Stock as reported on
the NASDAQ System on December 31, 1998 ($2.875/share) being less than the
exercise price of those options ($5.00/share).
Employment Agreement
The Company entered into an eight-year employment agreement (the "Chen
Employment Agreement") with Dr. Carl Chen, the Company's, Chairman, Chief
Executive Officer and President, commencing in May 1996. The Chen Employment
Agreement provides that, in consideration for Dr. Chen's services, he is to be
paid an annual salary of $200,000. He will receive increases in salary and
bonuses as deemed appropriate by the Board of Directors. The Company will
maintain life insurance coverage on Dr. Chen, and Dr. Chen may name the
beneficiary of such policy. The Chen Employment Agreement also provides that he
will not compete with the Company during the term of the Agreement and for
eighteen months thereafter and that, if Dr. Chen's employment is terminated by
the Company without cause (as defined therein), he will receive up to eighteen
months' salary as severance, payable monthly commencing on the thirtieth day
following such termination without cause.
Compensation of Directors
Non-employee directors receive $1,000 for each Board of Directors meeting
attended. The Company pays all out-of-pocket expenses of attendance.
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PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of March 31, 1999 by (i) each person
who is known by the Company to own beneficially more than 5% of any class of the
Company's outstanding voting securities, (ii) each of the Company's directors
and executive officers, and (iii) all officers and directors of the Company as a
group.
<TABLE>
<CAPTION>
Common Stock
Name and Address of Beneficially Percent of
Title of Class Beneficial Owner/(1)/ Owned/(2)/ Ownership
<S> <C> <C> <C>
Class A Common Stock Dr. Carl L. Chen/(3)/ 50,000 .35%
Class B Common Stock 826,751 43.5%
Class E-1 Common Stock 1,653,503 41.34%
Class E-2 Common Stock 1,653,503 41.34%
Class A Common Stock Gene Comfort/(4)/ 10,000 0%
Class B Common Stock 60,001 3.15%
Class E-1 Common Stock 120,000 3.00%
Class E-2 Common Stock 120,000 3.00%
Class A Common Stock C.M. Cheng/(4)/(5)/ 10,000 0%
Class B Common Stock 1,013,572 53.33%
Class E-1 Common Stock 2,027,144 50.67%
Class E-2 Common Stock 2,027,144 50.67%
Class A Common Stock Steve Gorlin/(6)/ 25,000 .28%
Class A Common Stock James A. Lovell Jr./(4)/ 11,000 0%
Class A Common Stock S.B. Lai, Ph.D./(8)/ 5,000 0%
Class A Common Stock David Turner/(9)/ 12,100 0%
Class A Common Stock All executive officers 67,100 .95%
Class B Common Stock and directors as a group 1,900,324 100%
Class E-1 Common Stock (6 persons) 3,800,647 95.02%
Class E-2 Common Stock 3,800,647 95.02%
Class B Common Stock Harpa Limited/(7)/ 1,013,572 53.33%
Class E-1 Common Stock 2,027,144 50.67%
Class E-2 Common Stock 2,027,144 50.67%
Class B Common Stock Shih Jen Yeh/(7)/ 1,013,572 53.33%
Class E-1 Common Stock 2,027,144 50.67%
Class E-2 Common Stock 2,027,144 50.67%
Class B Common Stock Chyao Chi Yeh/(7)/ 1,013,572 53.33%
Class E-1 Common Stock 2,027,144 50.67%
Class E-2 Common Stock 2,027,144 50.67%
Class A Common Stock Fidelity Management 513,000 7.28%
Research Company/(10)/
</TABLE>
_____________________
(1) Except as otherwise indicated, the address of each principal stockholder
is c/o the Company at 3205 Lakewood Boulevard, Long Beach, California
90808. The Company believes that all persons named have sole voting power
and sole investment power, subject to community property laws where
applicable.
(2) The Common Stock of the Company is divided into four classes. Each share
of Class B Common Stock, Class E-1 Common Stock and Class E-2 Common
Stock is entitled to five votes per share, and Class A
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Common Stock is entitled to one vote per share. The shares of Class E
Common Stock are subject to redemption by the Company if the Company does
not achieve certain income or market price levels.
(3) Includes 200,000 shares of Class E-2 Common Stock held by Julie C. Chen,
as trustee of the Eric F. Chen Trust under Declaration of Trust dated
August 31, 1996, for the benefit of Eric F. Chen, Dr. Chen's son. Julie
Chen is Dr. Chen's sister-in-law. Dr. Chen disclaims beneficial ownership
of the 200,000 shares held by the Trust for the benefit of his son.
Excludes 75,000 shares of Class A Common Stock issuable upon the exercise
of options not exercisable within 60 days and includes options for 25,000
shares of Class A Common Stock which are currently exercisable.
(4) Excludes 20,000 shares of Class A Common Stock issuable upon the exercise
of options which are not exercisable within 60 days and includes options
for 10,000 shares of Class A Common Stock which are currently
exercisable.
(5) Includes 5,217,860 shares of Common Stock held by Harpa Limited, a Cayman
Island corporation (Harpa). C.M. Cheng is a director of Harpa and has
sole voting and investment control over the shares of Common Stock held
by Harpa and thus may be deemed to beneficially own such shares. Mr.
Cheng disclaims beneficial ownership of such shares. The address of Harpa
is c/o Coutts Co. (Cayman) Ltd., Coutts House, P.O. Box 707, West Bay
Road, Grand Cayman, Cayman Islands.
(6) Common Stock beneficially owned is Class A Common Stock, which was
contained in 15,000 Units purchased by Mr. Gorlin in March and April
1997. Excludes 20,000 shares of Class A Common Stock issuable upon the
exercise of options not exercisable within 60 days and includes options
for 10,000 shares of Class A Common Stock issuable upon the exercise of
options which are currently exercisable.
(7) The voting stock of Harpa is currently held equally by Shih Jen Yeh and
Chyao Chi Yeh, who are children of Song Gen Yeh, the former Chairman and
principal stockholder of the Company. See Certain Transactions. The
address of Mr. Shih Jen Yeh and Mr. Chyao Chi Yeh is 14th Floor, No. 55,
Section 2, Chung-Cheng Road, Shih-Lin District, Taipei, Taiwan.
(8) Excludes 25,000 shares of Class A Common Stock issuable upon the exercise
of options which are not exercisable within 60 days and includes options
for 5,000 shares of Class A Common Stock issuable upon the exercise of
options which are currently exercisable.
(9) Excludes 18,000 shares of Class A Common Stock issuable upon the exercise
of options which are not exercisable within 60 days and includes 12,000
shares of Class A Common Stock issuable upon the exercise of options.
(10) The address for Fidelity Management Research Company is 82 Devonshire
Street, Boston, Massachusetts 02109.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
All Form 3 and Form 4 reports required to be filed pursuant to Rule 16(a)
of the Securities Exchange Act of 1934, as amended during fiscal 1998 had been
filed, and the Company is not aware of any failures to file a required form.
8
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From January 1990 through December 1993, Mr. Song Gen Yeh, who was at that
time a principal stockholder and director of the Company, advanced funds to the
Company in the aggregate amount of $10,478,000. In December 1993, the Company
entered into an agreement with Mr. Yeh to repay such advances through the
issuance of 584,074 shares of Class B Common Stock, 1,168,148 shares of Class E-
1 Common Stock, and 1,168,148 shares of Class E-2 Common Stock of the Company.
Such shares were issued to Mr. Yeh in June 1996. From 1994 through 1995, Mr.
Yeh provided additional advances to the Company aggregating $250,000. In June
1996, such advances were repaid by the Company through the issuance of 13,937
shares of Class B Common Stock, 27,873 shares of Class E-1 Common Stock, and
27,873 shares of Class E-2 Common Stock. Such shares were subsequently
transferred to Harpa Limited (Harpa), a Cayman Islands corporation the voting
stock of which is controlled by two of Mr. Yeh's children. C.M. Cheng, a
director of the Company, is the Director of Harpa and, as such, has the power to
vote the shares of the Company's Common Stock held by Harpa. (See "Principal
Stockholders".)
In January 1990, the Company entered into a five-year agreement (the
"Management Agreement") with SIDA Corporation (SIDA). Dr. Carl L. Chen, the
Chairman, Chief Executive Officer and President of the Company, was, at that
time, a principal stockholder of SIDA, and the other two stockholders of SIDA
were also, at that time, stockholders of the Company. The Management Agreement
provided for annual payments to SIDA of $140,000 for management services
consisting essentially of those customarily performed by the President of a
company. The SIDA agreement expired by its terms in January 1995. As of June
30, 1996, SIDA was owed $259,000 of unpaid management fees. This amount,
together with accrued interest of $64,000 through August 30, 1996, was paid from
the proceeds of a bridge financing in September 1996. In October 1993 and
February 1994, the Company obtained loans from SIDA in the aggregate principal
amount of $110,000, bearing interest at 12%. These loans, together with accrued
interest of $31,000, were repaid from the proceeds of a bridge financing in
September 1996.
In February and July 1994, the Company received loans in an aggregate
principal amount of $565,000, bearing interest at a rate of 12%, from four
individuals who were at the time not affiliated with the Company. One of such
persons, C.M. Cheng, became a director of the Company in June 1996. These
loans, together with accrued interest of $161,000, were repaid with the proceeds
of the bridge financing in September 1996.
In December 1994, the Company entered into a New Management Agreement (the
"New Management Agreement") with Dr. Chen which took effect in January 1995.
Pursuant to the New Management Agreement, Dr. Chen agreed to serve as the
Company's President and Chief Executive Officer. The New Management Agreement
had a term of 10 years and provided that Dr. Chen was to receive a signing bonus
of 139,365 shares of Class B Common Stock, 278,730 shares of Class E-1 Common
Stock, and 278,730 shares of Class E-2 Common Stock, an annual salary of
$350,000, and additional annual compensation payable in 147,727 shares of Class
B Common Stock, 295,454 shares of Class E-1 Common Stock, and 295,454 shares of
Class E-2 Common Stock. In May 1996, Dr. Chen agreed to terminate the New
Management Agreement. Pursuant to the New Management Agreement and in
connection with its termination, the Company issued a total of 577,823 shares of
Class B Common Stock, 1,155,647 shares of Class E-1 Common Stock, and 1,155,647
shares of Class E-2 Common Stock to Dr. Chen. At June 30, 1996, $144,000
remained accrued and unpaid under the New Management Agreement. This amount was
paid to Dr. Chen with the proceeds of the bridge financing in September 1996.
In May 1996 the Company entered into an Employment Agreement with Dr. Chen
pursuant to which he agreed to serve as its Chairman, Chief Executive Officer
and President. (See "Management-Employment Agreement"). As of August 31, 1996,
compensation of $69,000 was accrued and unpaid under this Agreement. This
amount was paid from the proceeds of the bridge financing in September 1996.
From September 1995 through August 1996, Dr. Chen made loans bearing interest at
a rate of 12% to the Company in the aggregate principal amount of $562,000. In
May 1996, Dr. Chen agreed to convert $336,000 of these loans into 187,118 shares
of Class B Common Stock, 374,236 shares of Class E-1 Common Stock, and 374,236
shares of Class E-2 Common Stock. The remaining $226,000 principal amount of
these loans, together with $36,000 of accrued interest, was repaid with the
proceeds of the bridge financing in September 1996.
In 1994 and 1995, the Company obtained loans from General Bank in the
aggregate principal amount of $900,000. This loan bore interest at the prime
rate plus 1.5% and had a maturity date of October 1996. Repayment
9
<PAGE>
of the loan was guaranteed by the Small Business Administration, the California
Export Finance Office and Dr. Chen and was secured by substantially all the
assets of the Company. The total outstanding balance of the loan of
approximately $915,000 (including accrued interest) was repaid from the proceeds
of the bridge financing.
ANNUAL REPORT TO SHAREHOLDERS
The Company's Annual Report for the fiscal year ended December 31, 1998 is
being mailed to Shareholders along with this Proxy Statement. The Annual Report
is not to be considered part of the soliciting material.
10
<PAGE>
PROXY
ADVANCED AERODYNAMICS & STRUCTURES, INC.
Proxy Solicited By The Board Of Directors For The
Annual Meeting Of Shareholders To Be Held On
July 19, 1999
The undersigned hereby appoints Dr. Carl Chen and Gene Comfort, and each of
them, as Proxies, each with full power of substitution, and hereby authorizes
each of them to represent and to vote as designated below, all the shares of
Common Stock of Advanced Aerodynamics & Structures, Inc., a Delaware corporation
(the "Company"), held of record by the undersigned on May 31, 1999 at the Annual
Meeting of Shareholders to be held on July 19, 1999, and any adjournments
thereof.
1. Election of Directors.
Nominees: Carl Leei Chen, Ph.D., Gene Comfort, C.M. Cheng, Steve Gorlin,
James Lovell and S.B. Lai, Ph.D.
[_] For All Nominees [_] Withhold All Nominees [_] For All Nominees
Except As Noted
Below
---------------------
2. Proposal to ratify the selection of Ernst & Young LLP to serve as auditors of
the Company for the fiscal year ending December 31, 1999.
[_] FOR [_] AGAINST [_] ABSTAIN
Unless otherwise specified, each Proxy will be voted FOR ratification
and approval of the above proposals.
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting. This Proxy when
properly executed will be voted in the manner directed herein by the
undersigned shareholder. Stockholders who are present at the meeting may
withdraw their proxy and vote in person if they so desire.
<PAGE>
Please sign exactly as your name appears on your stock certificates.
When shares are held by joint tenants, both should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by
president or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Dated: ______________________________, 1999
_______________________________________________
Signature
_______________________________________________
Signature if held jointly
NO POSTAGE IS REQUIRED IF THIS PROXY IS RETURNED IN THE ENCLOSED ENVELOPE AND
MAILED IN THE UNITED STATES.
2
