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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 AND STRUCTURES, INC.
(Name of Registrant as Specified in Its Charter)
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(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)(1) 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):
-----------------------------------------------------------------------
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: ____________________________________________
2) Form, Schedule or Registration Statement No.: ______________________
3) Filing Party: ______________________________________________________
4) Date Filed: ________________________________________________________
Notes:
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ADVANCED AERODYNAMICS & STRUCTURES, INC.
----------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held September 25, 2000
TO THE SHAREHOLDERS OF ADVANCED AERODYNAMICS & STRUCTURES, INC.:
You are cordially invited to attend a Special Meeting of Shareholders of
Advanced Aerodynamics & Structures, Inc. ("AASI" or the "Company"), which will
be held in the Multi-Purpose Room, AASI Headquarters, 3205 Lakewood Blvd., Long
Beach, California 90808, on Monday, September 25, 2000, at 10:00 a.m. Pacific
time, to consider and act upon the following matters:
1. The authorization of 25,000,000 additional shares of Class A Common
Stock of the Company;
2. The authorization and ratification of an amendment to the terms of our
Series A 5% Cumulative Convertible Preferred Stock;
3. The authorization and ratification of: (i) the execution, delivery and
performance by the Company of the Private Equity Line of Credit
Agreement; (ii) the issuance and sale of up to 10 million shares of our
Class A Common Stock, $.0001 par value per share (the "Common Stock"),
(iii) the issuance of Common Stock Purchase Warrants to purchase up to
250,000 shares of Common Stock ("Warrants"), and (iv) the issuance of
the maximum number of shares of Common Stock issuable upon exercise of
the Warrants in accordance with their terms, each pursuant to the
Private Equity Line of Credit Agreement dated August 15, 2000;
4. The approval of our 2000 Stock Option Plan; and
5. 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 August 31, 2000 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 Blvd.
Long Beach, California 90808
(562) 938-8618
September 6, 2000
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PROXY STATEMENT
ADVANCED AERODYNAMICS & STRUCTURES, INC.
3205 Lakewood Boulevard
Long Beach, California 90808
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SPECIAL MEETING OF SHAREHOLDERS
To Be Held September 25, 2000
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 Special Meeting of
Shareholders to be held in the Multi-Purpose Room, AASI Headquarters, 3205
Lakewood Blvd., Long Beach, California 90808, on Monday, September 25, 2000, at
10:00 a.m. Pacific time, and at any and all adjournments thereof (the "Special
Meeting"), for the purposes set forth in the accompanying Notice of Special
Meeting of Shareholders. Accompanying this Proxy Statement is the Board of
Directors' Proxy for the Special 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 Special Meeting, and which have not been revoked, will be voted in
favor of the proposals described in this Proxy Statement unless otherwise
directed. 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 Special Meeting and expressing a
desire to vote his or her shares in person.
The close of business on August 31, 2000 has been fixed as the record date
for the determination of Shareholders entitled to notice of and to vote at the
Special Meeting or any adjournment of the Special Meeting. As of the record
date, we had outstanding: 7,240,994 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; 4,000,000 shares of Class E-2 Common Stock, par value $.0001 per share;
and 69,340 shares of Series A Preferred Stock. 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. The Series A Preferred Stock does not vote, except on matters
where a separate vote of the Series A Preferred Stock would be required by the
Delaware General Corporation Law. Subject to the preferential rights of the
holders of the Series A Preferred Stock, 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.
Our principal executive offices are located at 3205 Lakewood Blvd., Long
Beach, California 90808. This Proxy Statement and the accompanying proxy will
be mailed to Shareholders on or about September 6, 2000.
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PROPOSAL 1
AUTHORIZATION OF ADDITIONAL SHARES
Our Certificate of Incorporation currently authorizes 60,000,000 shares of
Class A Common Stock. An additional 25,000,000 common stock shares need to be
authorized by you to enable the Board of Directors to obtain access to
additional equity financing necessary to fund general working capital
requirements and the expansion of business operations.
The Board of Directors has unanimously approved and recommends that the
shareholders authorize an additional 25,000,000 common stock shares.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 1.
PROPOSAL 2
APPROVAL OF AN AMENDMENT TO THE
SERIES A 5% CUMULATIVE CONVERTIBLE PREFERRED STOCK
At the Annual Meeting of Shareholders held on June 2, 2000, AASI
shareholders approved the issuance and sale in private placements of up to
100,000 shares of our Series A 5% Cumulative Convertible Preferred Stock, par
value $.0001 per share ("Series A Preferred Stock"), as governed by the
Certificate of Determination filed with the Delaware Secretary of State on
March 2, 2000. However, a Nasdaq Listing Qualifications Panel has determined
that the Certificate of Determination must be amended to eliminate certain
redemption provisions so that the Series A Preferred Stock can receive specific
accounting treatment that is relevant to Nasdaq listing requirements. All
holders of the Series A Preferred Stock waived the relevant redemption
provisions in a Waiver Agreement dated May 25, 2000, and also amended the
conversion provision of Article II, Section 4(b), of the Certificate of
Determination governing the Series A Preferred Stock so as to comply with the
Nasdaq requirements. Your authorization to amend the Certificate of
Determination to eliminate the following redemption provisions and to amend the
conversion feature of Article II, Section 4(b), as described in detail below,
is needed to ensure that the Company continues to be listed for trading on the
Nasdaq National Market.
The following is a summary of the redemption provisions of the Certificate
of Designation for the Series A Preferred Stock which will be eliminated upon
your authorization and a description of the amendment to the conversion feature
which is proposed.
Redemption Features to be Eliminated
Under the original Certificate of Determination, the Company was required to
redeem Series A Preferred Stock after the occurrence of certain triggering
events:
. As set forth in Section 8 of the Certificate of Determination, if a
receiver or trustee is appointed for the Company or a substantial part
of its property or business other than pursuant to the application or
consent of the Company;
. If a money judgment, writ, or similar process is entered against the
Company and not vacated, satisfied, bonded, or stayed within 45 days;
. If a bankruptcy, insolvency, reorganization or liquidation proceeding or
other proceedings for relief under any bankruptcy law or any law for the
relief of debtors is instituted against the Company or any of its
subsidiaries;
. If an order is entered by a court of competent jurisdiction, or by the
Securities and Exchange Commission, or by the National Association of
Securities Dealers, preventing purchase and sale transactions in our
Class A Common Stock as a consequence of unusual trading in such Common
Stock or any other reason beyond the control of the Company; and
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. If our Class A Common Stock is delisted from the Nasdaq National Market
or such other principal exchange on which the Common Stock is listed for
trading or upon notification that the Company is not in compliance with
the conditions for such continued listing.
Upon your approval, the Certificate of Determination will be amended to
eliminate the foregoing mandatory redemption features.
Amendment to Conversion Feature
The Company also wishes to amend Article II, Section 4(b), of the
Certificate of Designation to read in full as follows:
(b) The number of shares of Common Stock issuable upon conversion of
each share of Series A Preferred Stock shall equal (i) the sum of (A) the
Stated Value per share and (B) at the Holder's election accrued and unpaid
dividends on such share, divided by (ii) the Conversion Price. The
Conversion Price shall be, at the election of the Holder, (x) 100% of the
average of the Closing Bid Prices for the three (3) trading days
immediately preceding the issue date of the Series A Preferred Stock to the
Holders who receive Series A Preferred Stock in the Corporation's initial
offering of Series A Preferred Stock ("Initial Closing Date") or (y) 88% of
the average of the eight (8) lowest Closing Bid Prices for the one hundred
and eighty (180) days immediately preceding the conversion of the
respective shares of Series A Preferred Stock or such shorter period
commencing on the Initial Closing Date ("Lookback Period"). The Closing Bid
Price shall mean the closing bid price of the Corporation's Common Stock as
reported by the NASDAQ National Market or the principal exchange or market
where traded.
The Board of Directors has unanimously approved and recommends that the
shareholders authorize and ratify the amendment of the Certificate of
Designation as described above.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2.
PROPOSAL 3
APPROVAL OF ISSUANCE AND SALE OF CLASS A COMMON STOCK,
WARRANTS TO PURCHASE COMMON STOCK,
AND COMMON STOCK ISSUABLE UPON EXERCISE OF WARRANTS
UNDER THE AUGUST 15, 2000, PRIVATE EQUITY LINE OF CREDIT AGREEMENT
On August 15, 2000, we entered into a Private Equity Line of Credit
Agreement to issue and sell our Class A Common Stock for up to an aggregate of
$20 million from time to time during a three-year period following the
effective date of a Form SB-2 Registration Statement to be filed with the SEC
in the near future. This is also referred to as a put right or "put". Warrants
to purchase 250,000 shares of the Company's Class A Common Stock have been
issued to certain finders in connection with the Private Equity Line of Credit
Agreement.
Put Rights. In order to invoke a put right, we must have an effective
registration statement on file with the SEC registering the resale of the
common shares which may be issued as a consequence of the invocation of that
put right. Additionally, we must provide the purchasers with an Optional
Purchase Notice, which must set forth the Investment Amount which we intend to
sell to them. The Investment Amount sold to the purchasers in a put may not
exceed a limit based on the price of the Class A Common Stock and the average
daily reported trading volume during the twenty calendar days preceding the
delivery of the Optional Purchase Notice. The Investment Amount specified in an
Optional Purchase Notice may not be less than $200,000.
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The purchasers will purchase stock from us at 92% or 93% of the market
price. Market price is defined as the daily volume weighted average price of
the Class A Common Stock during the fourteen business-day period following the
date of the Optional Purchase Notice.
Limitations and Conditions Precedent to our Put Rights. The purchasers'
obligation to acquire and pay for any common shares with respect to any
particular put is subject to certain conditions precedent, including:
. The Form SB-2 Registration Statement must be effective;
. Trading of our Class A Common Stock must not have been suspended, and
our Class A Common Stock must continue to be listed on its principal
market;
. Until our shareholders vote to approve the Private Equity Line of Credit
Agreement, no more than 3,200,000 shares of Class A Common Stock may be
issued; and
. The average trading volume for our Class A Common Stock over the
previous thirty trading days must equal or exceed 20,000 shares per
trading day.
Short Sales. The purchasers and their affiliates are prohibited from
engaging in short sales of our common stock at a per share price of less than
ten dollars per share unless they have received a put notice and the amount of
shares involved in a short sale does not exceed the number of shares specified
in the put notice.
Purchase Warrants. The Company issued warrants to purchase 250,000 shares of
its Class A Common Stock to persons associated with the placement of the
Private Equity Line of Credit. The warrants have an exercise price of $3.15 per
share and a term of 3 years.
Reason for Shareholder Approval
Pursuant to the terms of the Private Equity Line of Credit Agreement (the
"Agreement") governing the sale and issuance of the Class A Common Stock and
the Purchase Warrants, we covenanted to obtain shareholder approval of the
Agreement (the "Approval"). Until such Approval is obtained, the maximum number
of shares of Common Stock that can be issued under our put rights and the
exercise of the Purchase Warrants is limited to 3,200,000 Class A Common
Shares.
Our right to exercise puts for more than 3,200,000 shares in aggregate is
contingent upon obtaining shareholder approval of the Agreement. We will use
the proceeds that we expect to receive from the sale of the Put Shares for
general business purposes and the expansion of our manufacturing operations. We
have determined that the sale of the Put Shares is the most expedient method by
which we can raise capital for these purposes, as compared to other sources of
debt and equity financing.
Given the current absence of other sources of equity financing on terms as
favorable as the Agreement, we are presently relying on the proceeds that we
expect to receive from the sale of the Put Shares in order to meet our
anticipated working capital needs. Failure to obtain the Approval would delay
expansion of our manufacturing operations.
The Board of Directors has unanimously approved and recommends that the
shareholders authorize and ratify: (i) the execution, delivery and performance
by the Company of the Private Equity Line of Credit Agreement; (ii) the
issuance and sale of up to 10 million shares of our Class A Common Stock,
$.0001 par value per share (the "Common Stock"), (iii) the issuance of Common
Stock Purchase Warrants to purchase up to 250,000 shares of Common Stock
("Warrants"), and (iv) the issuance of the maximum number of shares of Common
Stock issuable upon exercise of the Warrants in accordance with their terms,
each pursuant to the Private Equity Line of Credit Agreement dated August 15,
2000.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 3.
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OTHER MATTERS
Applicable tax law requires that the 2000 Stock Option Plan be approved by
the shareholders of the Company within twelve months of its adoption by the
Board.
PROPOSAL 4
APPROVAL OF THE COMPANY'S
2000 STOCK OPTION PLAN
On June 2, 2000, the Board of Directors authorized the adoption of the 2000
Stock Option Plan. The proposal to ratify the 2000 Stock Option Plan is
recommended by the Board of Directors because it considers it to be in the best
interests of the Company and its stockholders. The Stock Option Plan is
designed to serve as an incentive to directors, officers, and key employees and
contractors to focus their services on achieving superior earnings performance
and increasing the value of the stockholders' proprietary interest in the
Company. A maximum of 1,500,000 aggregate shares are reserved for issuance
under the Stock Option Plan. The Stock Option Plan vests broad discretionary
power in the Plan Committee, including the power to (i) select eligible
optionees to be granted stock options, (ii) set the option exercise price
(subject to certain restrictions), (iii) establish the duration of each option
(not to exceed ten years), (iv) specify the method of exercise, and (v)
designate the medium and time of payment. The Stock Option Plan will terminate
on May 31, 2010, unless sooner terminated by the Board. No options may be
granted after termination of the Stock Option Plan, although Options
outstanding at the time of termination will continue to be exercisable in
accordance with their terms. The issuance of shares of Common Stock upon the
exercise of options granted under the Stock Option Plan will dilute the voting
power of current stockholders. The extent of dilution will depend on the number
of options exercised and difference between the option exercise price and the
market price for the Common Stock at the time of exercise.
The foregoing summary of the Stock Option Plan is qualified in its entirety
by the terms of the plan, which is available for review at the principal office
of the Company. The Board of Directors believes that any effect the Stock
Option Plan will have in diluting the voting power of current stockholders will
be exceeded by the effect of the plan to attract and retain the services of
experienced and knowledgeable directors, officers, employees and other eligible
service-providers who will contribute to the profitability and value of the
current stockholders' holdings in the Company.
The Board of Directors has unanimously approved and recommends that the
shareholders authorize and ratify the 2000 Stock Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 4.
The Board of Directors does not know of any other matters which may come
before the Special Meeting. However, if any other matter shall properly come
before the Special Meeting, the proxy holders named in the proxy accompanying
this statement will have discretionary authority to vote all proxies in
accordance with their best judgment.
SHAREHOLDER PROPOSALS
Any shareholder who intends to present a proposal at the Company's 2001
Annual Meeting of Shareholders must deliver the proposal to the Company no
later than December 31, 2000, and must otherwise comply with Rule 14a-8 under
the Securities Exchange Act of 1934 in order to have the proposal included in
the proxy materials for that meeting. Any shareholder proposal submitted other
than for inclusion in the Company's proxy materials for that meeting must be
delivered to the Company no later than December 31, 2000, or such proposal will
be considered untimely. If a shareholder proposal is received after December
31, 2000, the Company may vote in its discretion as to that proposal all of the
shares for which it has received proxies for the 2001 Annual Meeting of
Shareholders.
By Order of the Board of Directors
Long Beach, California
September 6, 2000
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PROXY
ADVANCED AERODYNAMICS AND STRUCTURES, INC.
3205 LAKEWOOD BLVD.
LONG BEACH, CALIFORNIA 90808
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned, as owner of ________ shares of Common Stock of Advanced
Aerodynamics and Structures, Inc., a Delaware corporation (the "Company"),
hereby acknowledges receipt of the Proxy Statement and the notice of the
special meeting of shareholders to be held on September 25, 2000, at 10:00 a.m.
Pacific time, at 3205 Lakewood Blvd., Long Beach, California 92808, and hereby
further revokes all previous proxies and appoints Dr. Carl Chen or David Turner
as proxy of the undersigned at said meeting and any adjournments thereof with
the same effect as if the undersigned were present and voting the shares.
(1) The authorization of 25,000,000 additional shares of Class A Common Stock
of the Company.
[_] FOR [_] AGAINST [_] ABSTAIN
(2) The authorization and ratification of an amendment to the terms of our
Series A 5% Cumulative Convertible Preferred Stock.
[_] FOR [_] AGAINST [_] ABSTAIN
(3) The authorization and ratification of: (i) the execution, delivery and
performance by the Company of the Private Equity Line of Credit Agreement; (ii)
the issuance and sale of up to 10 million shares of our Class A Common Stock,
$.0001 par value per share (the "Common Stock"), (iii) the issuance of Common
Stock Purchase Warrants to purchase up to 250,000 shares of Common Stock
("Warrants"), and (iv) the issuance of the maximum number of shares of Common
Stock issuable upon exercise of the Warrants in accordance with their terms,
each pursuant to the Private Equity Line of Credit Agreement dated August 15,
2000.
[_] FOR [_] AGAINST [_] ABSTAIN
(4) The approval of our 2000 Stock Option Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
(5) In their discretion upon such other matters as may properly come before
the meeting and any adjournments thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS YOU HAVE INDICATED ON
THE REVERSE. IF NO INDICATION HAS BEEN MADE, THE SHARES REPRESENTED BY THIS
PROXY WILL BE VOTED IN FAVOR OF SUCH PROPOSALS, AND AS SAID PROXY DEEMS
ADVISABLE ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
Dated: _________, 2000
----------------------
(Signature)
----------------------
(Signature)
Sign exactly as your name
appears on your share
certificate. When signing as
attorney, executor,
administrator, trustee or
guardian, please give full title.
If more than one trustee, all
should sign. All joint owners
should sign. If a corporation,
sign in full corporation name by
president or other authorized
officer. If a partnership, sign
in partnership name by authorized
person. Persons signing in a
fiduciary capacity should
indicate their full title in such
capacity.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
