o | Preliminary Proxy Statement |
o |
Confidential,
for Use of the Commission Only (as permitted by
Rule
14a-6(e)(2))
|
x |
Definitive
Proxy Statement
|
o |
Definitive
Additional Materials
|
o | Soliciting Material Pursuant to Section 240.14a-12 |
x | No fee required. |
o |
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
)
|
o | Fee paid previously with preliminary materials. |
Very
truly yours,
|
/s/
Eric A. McAfee
|
Eric
A. McAfee
|
Chief
Executive Officer
|
1)
|
To
elect six (6) members of the Board of Directors to hold office until
the
Annual Meeting of Stockholders in 2009, and until their successors
are
duly elected and qualified;
|
2)
|
To
ratify the appointment of BDO Seidman, LLP as our independent auditors
the
fiscal year ending December 31,
2008;
|
3)
|
To
approve and amend the 2007 Stock Plan;
and
|
4)
|
To
transact such other business as may properly come before the meeting
and
any adjournment or postponement
thereof.
|
BY
ORDER OF THE BOARD OF DIRECTORS
|
/s/
William J. Maender
|
William
J. Maender
|
Corporate
Secretary
|
Page
|
|
General
|
1
|
Questions
and Answers About the Proxy Materials and our Annual
Meeting
|
1
|
Board
of Directors Meetings and Committees
|
6
|
Security
Ownership by Certain Beneficial Owners and Management
|
10
|
Proposal
1: Election of Directors
|
12
|
Proposal
2: Ratification of Auditors
|
13
|
Proposal
3:
Approval
and Amendment of the
2007
Stock Plan
|
15
|
Equity
Compensation Plan Information
|
22
|
Executive
Officers
|
23
|
Executive
Compensation
|
24
|
Employment
Contracts And Termination Of Employment And Change-In-Control
Arrangements
|
25
|
Section
16(a) Beneficial Ownership Reporting Compliance
|
26
|
Certain
Relationships And Related Transactions
|
26
|
Audit
Committee Report
|
27
|
Other
Matters
|
28
|
Householding
|
28
|
Appendix
A
–
Audit
Committee Charter
|
A-1
|
Appendix
B
–
Amended and Restated 2007 Stock Plan
|
B-1
|
Q:
|
What is the purpose of the Annual Meeting? | |
A:
|
To vote on the following proposals: | |
· |
To
elect six (6) members of the Board of Directors to hold office
until the
Annual Meeting of Stockholders in 2009, and until their successors
are
duly elected and qualified; and
|
|
|
·
|
To
ratify the appointment of
BDO
Seidman, LLP as our independent auditors, to audit the financial
statements of the Company and its subsidiaries for the year ending
December 31, 2008
;
|
·
|
To
approve and amend the 2007 Stock Plan; and
|
|
·
|
To
transact such other business that may properly come before the
Annual
Meeting or at any adjournment or postponement thereof.
|
|
Q:
|
What
are the Board of Directors’ recommendations?
|
A:
|
The
Board recommends a vote:
|
·
FOR
the election of the six (6) nominees as directors;
|
|
·
FOR
the ratification of the appointment of
BDO
Seidman, LLP as our independent auditors for the fiscal year ending
December 31, 2008;
|
|
·
FOR
the approval and amendment of the
2007
Stock Plan; and
|
|
·
FOR
or AGAINST other matters that properly come before the Annual Meeting,
as
the proxy holders deem advisable.
|
|
Q:
|
Who
is entitled to vote at the meeting?
|
A:
|
Stockholders
Entitled to Vote.
Stockholders who our records show owned
shares of AE Biofuels, Inc. as of the close of business on March
26, 2008
(the “Record Date”) may vote at the Annual Meeting. On the Record Date, we
had a total of 84,785,920 shares of Common Stock issued and outstanding,
which were held of record by 144 stockholders and 6,270,491 shares
of
Series B Preferred Stock issued and outstanding held of record
by 132
stockholders. The stock transfer books will not be closed between
the
Record Date and the date of the meeting. Each share of AE Biofuels,
Inc.
Common Stock and Series B Preferred Stock is entitled to one
vote.
|
Registered
Stockholders.
If
your shares are registered directly in your name with AE Biofuels
transfer
agent, you are considered, with respect to those shares, the stockholder
of record, and these proxy materials are being sent to you by AE
Biofuels,
Inc. As the stockholder of record, you have the right to grant
your voting
proxy directly to the individuals listed on the proxy card or to
vote in
person at the Annual Meeting.
|
|
Street
Name Stockholders.
If
your shares are held in a stock brokerage account or by a bank
or other
nominee, you are considered the beneficial owner of shares held
in street
name. These proxy materials are being forwarded to you by your
broker or
nominee, who is considered, with respect to those shares, the record
holder. As the beneficial owner, you have the right to direct your
broker
or nominee how to vote, and you are also invited to attend the
Annual
Meeting. However, since you are not the record holder, you may
not vote
these shares in person at the Annual Meeting unless you follow
your
broker’s procedures for obtaining a legal proxy. Your broker or nominee
has enclosed a voting instruction card for you to use.
|
|
Q:
|
Can
I attend the meeting in person?
|
A:
|
You
are invited to attend the Annual Meeting if you are a registered
stockholder or a street name stockholder as of March 26, 2008.
In
addition,
you
will be required to present photo identification,
such
as a driver’s license or passport,
to
gain admission to the Annual Meeting
.
|
Q:
|
How
can I vote my shares?
|
A:
|
Registered
Stockholders:
Registered
stockholders may vote in person at the Annual Meeting or by one
of the
following methods:
|
·
By
Mail.
Complete,
sign and date the enclosed proxy card and return it in the prepaid
envelope provided;
|
|
·
By
Fax.
Complete, sign and date the enclosed proxy card and fax to Corporate
Stock
Transfer at
(303)
282-5800
;
|
|
Please
note that voting facilities for registered stockholders will close
at
12:00 p.m. Pacific Time on Wednesday, May 7,
2008.
|
Street
Name Stockholders:
If
your shares are held by a broker, bank or other nominee, you must
follow
the instructions on the form you receive from your broker, bank
or other
nominee in order for your shares to be voted. Please follow their
instructions carefully. Also, please note that if the holder of
record of
your shares is a broker, bank or other nominee and you wish to
vote at the
Annual Meeting, you must request a legal proxy from the bank, broker
or
other nominee that holds your shares and present that proxy and
proof of
identification at the Annual Meeting to vote your
shares.
|
|
Based
on the instructions provided by the broker, bank or other holder
of record
of their shares, street name stockholders may generally vote by
one of the
following methods:
|
|
·
By
Mail.
You may vote by signing, dating and returning your voting instruction
card
in the enclosed pre-addressed envelope;
|
|
·
By
Methods Listed on Voting Instruction Card.
Please refer to your voting instruction card or other information
forwarded by your bank, broker or other holder of record to determine
whether you may vote by mail or fax, and follow the instructions
on the
voting instruction card or other information provided by the record
holder; or
|
|
·
In
Person with a Proxy from the Record Holder.
A
street name stockholder who wishes to vote at the Annual Meeting
will need
to obtain a legal proxy from his or her bank or brokerage firm.
Please
consult the voting instruction card sent to you by your bank or
broker to
determine how to obtain a legal proxy in order to vote in person
at the
Annual Meeting.
|
|
Q:
|
If
I sign a proxy, how will it be voted?
|
A:
|
When
proxies are properly dated, executed and returned, the shares represented
by such proxies will be voted at the Annual Meeting in accordance
with the
instructions of the stockholder. However, if no specific instructions
are
given, the shares will be voted in accordance with the above
recommendations of our Board of Directors. If any matters not described
in
the Proxy Statement are properly presented at the Annual Meeting,
the
proxy holders will use their own judgment to determine how to vote
your
shares. If the Annual Meeting is adjourned, the proxy holders can
vote
your shares on the new meeting date as well, unless you have revoked
your
proxy instructions, as described below under “Can I change my
vote?”
|
Q:
|
What
should I do if I get more than one proxy or voting instruction
card?
|
A:
|
Stockholders
may receive more than one set of voting materials, including multiple
copies of these proxy materials and multiple proxy cards or voting
instruction cards. For example, stockholders who hold shares in
more than
one brokerage account may receive a separate voting instruction
card for
each brokerage account in which shares are held. Stockholders of
record
whose shares are registered in more than one name will receive
more than
one proxy card. You should sign and return all proxies and voting
instruction cards you receive relating to our Annual Meeting to
ensure
that all of your shares are voted.
|
Q:
|
Can
I change my vote?
|
A:
|
You
may change your vote at any time prior to the vote at the Annual
Meeting.
To revoke your proxy instructions and change your vote if you are
a
stockholder of record, you must (i) attend the Annual Meeting and
vote your shares in person, (ii) advise
William
Maender
,
the Company’s Corporate Secretary, at our principal executive
office in writing before the proxy holders vote your shares, or
(iii) deliver later dated and signed proxy instructions before the
proxy holders vote your shares.
|
Q:
|
What
happens if I decide to attend the Annual Meeting but I have already
voted
or submitted a proxy covering my shares?
|
A:
|
You
may attend the meeting and vote in person even if you have already
voted
or submitted a proxy. Please be aware that attendance at the Annual
Meeting will not, by itself, revoke a proxy. If a bank, broker
or other
nominee holds your shares and you wish to attend the Annual Meeting
and
vote in person, you must obtain a “legal proxy” from the record holder of
the shares giving you the right to vote the shares.
|
Q:
|
How
are votes counted?
|
A:
|
The
Annual Meeting will be held if a majority of the outstanding shares
of
Common Stock entitled to vote is represented in person or by proxy
at the
meeting. If you have returned valid proxy instructions or attend
the
Annual Meeting in person, your Common Stock will be counted for
the
purpose of determining whether there is a quorum, even if you wish
to
abstain from voting on some or all matters at the
meeting.
|
Shares that are voted “WITHHELD” or “ABSTAIN” are treated as being present for purposes of determining the presence of a quorum and as entitled to vote on a particular subject matter at the Annual Meeting. If you hold shares of AE Biofuels, Inc. common stock in street name through a bank, broker or other nominee holder, the nominee holder may only vote your shares in accordance with your instructions. If you do not give specific instructions to your nominee holder as to how you want your shares voted, your nominee will indicate that it does not have authority to vote on the proposal, which will result in what is called a “broker non-vote.” All shares of AE Biofuels common stock represented at the Annual Meeting, including broker non-votes and abstentions, will be counted for purposes of determining the presence of a quorum. | |
Q:
|
Who
will tabulate the votes?
|
A:
|
AE
Biofuels will designate Corporate Stock Transfer as the Inspector
of
Election who will tabulate the votes.
|
Q:
|
Who
is making this solicitation?
|
|
|
A:
|
This
proxy is being solicited on behalf of AE Biofuels’ Board of
Directors.
|
Q:
|
Who
pays for the proxy solicitation process?
|
A:
|
AE
Biofuels will pay the cost of preparing, assembling, printing,
mailing and
distributing these proxy materials and soliciting votes. We do
not plan to
retain a solicitor to assist with the solicitation. We may, on
request,
reimburse brokerage firms and other nominees for their expenses
in
forwarding proxy materials to beneficial owners. In addition to
soliciting
proxies by mail, we expect that our directors, officers and employees
may
solicit proxies in person or by facsimile. None of these individuals
will
receive any additional or special compensation for doing this,
although we
will reimburse these individuals for their reasonable out-of-pocket
expenses.
|
Q:
|
May
I propose actions for consideration at next year’s annual meeting of
stockholders or nominate individuals to serve as
directors?
|
A:
|
You
may present proposals for action at a future meeting only if you
comply
with the requirements of the proxy rules established by the Securities
and
Exchange Commission (“SEC”) and our bylaws. In order for a stockholder
proposal to be included in our Proxy Statement and form of Proxy
relating
to the meeting for our 2008 Annual Meeting of Stockholders under
rules set
forth in the Securities Exchange Act of 1934, as amended (the “Securities
Exchange Act”), the proposal must be received by us no later than
5:00
p.m. (Pacific Standard Time) not less than the 120th calendar day
prior to the first anniversary of the mailing of the notice for
the
preceding year’s annual meeting. Accordingly, stockholder proposals
intended to be presented in our proxy materials for the 2008 Annual
Meeting must be received by the Company's Corporate Secretary, on
or before December 19, 2008, and must satisfy the requirements of
the
proxy rules promulgated by the Securities and Exchange
Commission.
|
Q:
|
How
do I obtain a separate set of proxy materials or request a single
set for
my household?
|
A:
|
If
you share an address with another stockholder and have the same last
name, you will receive only one set of proxy materials (including
our
Annual Report on Form 10-K and proxy statement). If you wish to
receive a
separate proxy statement at this time, please request the additional
copy
by contacting our transfer agent, Corporate Stock Transfer by telephone
at
(303) 282-4800, or by facsimile at
(303)
282-5800
.
You
may also request to receive a separate Annual Report and a separate
proxy
statement by contacting our Corporate Secretary at (408) 213-0940,
by
email at wmaender@aebiofuels.com, or by writing to: AE Biofuels,
Inc.,
20400 Stevens Creek Blvd., Suite 700, Cupertino, CA
95014.
|
Q:
|
What
if I have questions about lost stock certificates or need to change
my
mailing address?
|
A:
|
You
may contact our transfer agent, Corporate
Stock Transfer
,
by telephone
at
(303) 282-4800
or
by facsimile at
(303)
282-5800
,
if you have lost your stock certificate or need to change your
mailing
address.
|
Name
|
Age
|
Position
|
Director
Since*
|
|||
Eric
A. McAfee
|
45
|
Chief
Executive Officer and Chairman
of
the Board
|
2006
|
|||
Surendra
Ajjarapu
|
37
|
President
and Director
|
2007
|
|||
Harold
Sorgenti
|
73
|
Director
|
2007
|
|||
Michael
DeLong
|
63
|
Director
|
2007
|
|||
Laird
Cagan
|
49
|
Director
|
2006
|
|||
Michael
Peterson
|
46
|
Director
|
2006
|
Name
of Director
|
Audit
|
Governance,
Compensation and
Nominating
|
||
Michael
Peterson
|
C
|
M
|
||
Harold
Sorgenti
|
M
|
M
|
||
Michael
DeLong
|
M
|
C
|
||
M
= Member
|
||||
C
= Chair
|
Name
|
Fees
Earned
or
Paid
in Cash
($)*
|
Option
Awards(1)
($)
|
Total
($)
|
|||||||
Laird
Cagan
|
—
|
—
|
—
|
|||||||
Michael
Peterson
(2)
|
119,250
|
44,512
|
163,762
|
|||||||
LtGen
Michael DeLong (3)
|
20,000
|
44,512
|
64,512
|
|||||||
Harold
Sorgenti (4)
|
6,250
|
44,512
|
50,762
|
Common
Shares
|
Series
B Preferred
|
||||||||||||
Name
and Address
|
Amount and
Nature of
Beneficial
Ownership
|
Percentage
of Class
|
Amount and
Nature of
Beneficial
Ownership
|
Percentage
of Class
|
|||||||||
Officers
and Directors
|
|
|
|||||||||||
Eric
A. McAfee
|
13,000,000
|
(1)
|
15.3
|
||||||||||
Surendra
Ajjarapu
|
7,215,000
|
(2)
|
8.5
|
||||||||||
Laird
Q. Cagan
|
14,683,721
|
(3)
|
17.1
|
||||||||||
Michael
L. Peterson
|
1,225,000
|
(4)
|
1.4
|
||||||||||
LtGen
Michael P. DeLong
|
25,000
|
(5)
|
*
|
||||||||||
Harold
Sorgenti
|
25,000
|
(6)
|
*
|
||||||||||
Andrew
Foster
|
365,000
|
(7)
|
*
|
||||||||||
William
J. Maender
|
815,000
|
(8)
|
*
|
||||||||||
All
officers and directors as a group (8) persons
|
37,353,721
|
43.3
|
|||||||||||
|
|
|
|||||||||||
5%
Holders
|
—
|
—
|
|||||||||||
Cagan
McAfee Capital Partners, LLC
10600
N. De Anza Boulevard, Suite 250
Cupertino,
CA 95014
|
(1
|
)
|
(1
|
)
|
|||||||||
Cagan
Capital, LLC
10600
N. De Anza Boulevard, Suite 250
Cupertino,
CA 95014
|
(3
|
)
|
(3
|
)
|
|||||||||
Telecom
Investments Holding Limited
c/o
Mr. Sapan Shirmal
AVL
Ethanol Energy Inc.
263
McLaws Circles Suite 103
Williamsburg,
VA 23185
|
8,100,000
|
9.6
|
|||||||||||
Liviakis
Financial Communications
655
Old Redwood Hwy. #395
Mill
Valley, CA 94941
|
4,400,000
|
5.2
|
|
|
|||||||||
Dalrymple
Global Resources Master Fund, L.P.
3300
Oak Lawn Ave., Suite 650
Dallas,
TX 75219
|
|
|
999,999 |
16.0
|
|
||||||||
Cordillera
Fund LP
810
Preston Road, Suite 400
Dallas, TX 75225 |
|
583,334 |
9.3
|
|
|||||||||
Michael
C Brown Trust dated June 30, 2000
34
Meadowview Drive
Northfield,
IL 60093
|
533,333 | 8.5 |
|
2007
|
2006
|
|||||
Audit
Fees
|
$
|
275,500
|
$
|
100,000
|
|||
Audit-Related
Fees
|
-
|
-
|
|||||
Total
Audit and Audit-Related Fees
|
275,500
|
100,000
|
|||||
Tax
Fees
|
62,000
|
28,750
|
|||||
All
Other Fees
|
-
|
-
|
|||||
|
|
|
|||||
Total
for independent public audit firms
|
$
|
337,500
|
$
|
128,750
|
Name
and Principal Position
|
Number
of Options Granted
|
Average
Per Share Exercise Price of Options
|
Number
of Shares of Restricted Stock Granted
|
Dollar
Value of Restricted Stock Grants
|
|||||||||
Eric
A. McAfee
Chairman
and Chief Executive Officer
|
—
|
—
|
—
|
—
|
|||||||||
Timothy
Morris
Former
Chief Executive Officer
|
—
|
—
|
—
|
—
|
|||||||||
Surendra
Ajjarapu
President
|
390,000
|
3.00
|
—
|
—
|
|||||||||
William
J. Maender
Chief
Financial Officer
|
90,000
|
3.00
|
—
|
—
|
|||||||||
Andrew
Foster
Executive
Vice President, Chief Operating Officer
|
390,000
|
3.00
|
—
|
—
|
|||||||||
Executive
Officer Group
|
870,000
|
3.00
|
—
|
—
|
|||||||||
Non-Employee
Director Group
|
300,000
|
3.00
|
—
|
—
|
|||||||||
Non-Executive
Officer Employee Group
|
197,000
|
3.00
|
—
|
—
|
Plan
Category
|
Number
of securities to be issued upon exercise of outstanding options,
warrants
and rights
(a)
|
Weighted
Average exercise price of outstanding options, warrants and
rights
(b)
|
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(a))
(c)
|
|||||||
Equity
compensation plans approved by security holders
|
||||||||||
Equity
compensation plans not approved by security holders
|
2,224,000
|
2.84
|
2,016,000
|
|||||||
Total
|
2,224,000
|
2.84
|
2,016,000
|
Name
|
Age
|
Position
|
||
Eric
A. McAfee
|
45
|
Chief
Executive Officer
|
||
Surendra
Ajjarapu
|
37
|
President
|
||
William
J. Maender
|
61
|
Chief
Financial Officer and Secretary
|
||
Andrew
Foster
|
42
|
Executive
Vice President and Chief Operating
Officer
|
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Option
Awards(1) ($)
|
Total
Compensation
($)
|
|||||||||||
Eric
McAfee, Chief Executive Officer
|
2007
|
120,000
|
-
|
-
|
120,000
|
|||||||||||
2006
|
-
|
-
|
-
|
-
|
||||||||||||
Timothy
Morris, Chief Executive Officer(2)(3)
|
2007
|
41,023
|
-
|
-
|
41,023
|
|||||||||||
2006
|
191,667
|
125,000
|
(3) |
316,667
|
||||||||||||
Surendra
Ajjarapu, President
|
2007
|
190,000
|
-
|
515,678
|
705,678
|
|||||||||||
2006
|
172,500
|
80,000
|
-
|
252,500
|
||||||||||||
William
J. Maender, Chief Financial Officer and Secretary(3)
|
2007
|
180,000
|
-
|
1,393
|
181,393
|
|||||||||||
2006
|
172,500
|
100,000
|
(3)
|
-
|
272,500
|
|||||||||||
Andrew
Foster, Executive Vice President and Chief Operating
Officer
|
2007
|
180,000
|
50,000
|
320,989
|
550,989
|
|||||||||||
2006
|
150,000
|
50,000
|
-
|
200,000
|
Option
Awards
|
Stock
Awards
|
|||||||||||||||||||||
Name |
No.
of Securities underlying unexercised options (#)
exercisable
|
No.
of securities underlying unexercised options (#)
unexercisable
|
Equity
incentive plan awards: # of securities underlying unexercised unearned
options (#)
|
Option
exercise price ($)
|
|
Option
expiration date
|
Number
of shares or units of stock that have not vested
(#)
|
Market
value of shares or units of stock that have not vested ($)
(1)
|
||||||||||||||
Surendra Ajjarapu | 300,000 |
(2)
|
- | - | 3.00 |
7/16/17
|
- | - | ||||||||||||||
15,000 |
(3)
|
75,000 | - | 3.00 |
11/26/12
|
|||||||||||||||||
Andy Foster | 150,000 |
(4)
|
150,000 | - | 3.00 |
7/16/17
|
||||||||||||||||
15,000 |
(5)
|
75,000 | - | 3.00 |
11/26/12
|
100,000 |
(6)
|
$ | 1,250,000 |
CERTAIN
RELATIONSHIPS AND RELATED
TRANSACTIONS
|
AE
BIOFUELS, INC.
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Proxy
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·
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Complete,
sign and date the enclosed proxy card and fax front and back to Corporate
Stock Transfer at
(303)
282-5800
;
|
·
|
Mark,
sign and date your Proxy Card and return it in the postage-paid envelope
provided or return it to AE Biofuels, Inc., c/o Corporate Stock Transfer
3200 Cherry Creek Dr. South, Suite 430, Denver, CO
80209.
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1.
Election of Directors
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01Eric
A. McAfee
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__
FOR the nominees (except as marked below)
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02
Surendra
Ajjarapu
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03
Harold
Sorgenti
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__
WITHHOLD AUTHORITY to vote for the
|
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04
Michael
DeLong
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Nominees
|
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05
Laird
Cagan
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||
06
Michael
Peterson
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(Instruction:
To withhold authority to vote
for
any individual nominee, print the
name(s)
or number(s) of the nominee(s) on
the
line provided to the right.
If
this Proxy
is
executed in such a manner as not to
withhold
authority to vote for the
election
of any nominee, this Proxy shall
be
deemed to grant such authority
.)
|
|
2.
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Ratification
of BDO Seidman, LLP, independent auditors.
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3.
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To
approve the 2007 Stock Plan.
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4.
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Upon
such other matters as may come before said meeting or any adjournments
thereof, in the discretion of the Proxy
holders.
|
|
This
Proxy, when properly executed, will be voted in the manner
directed
by
the undersigned stockholder(s).
If
no direction
is
made, this Proxy
will
be voted “FOR” each proposal.
|
|
|
|
|
|
Date: |
|
|
|
|
|
Signature
|
|
Signature
|
|
|
Please
sign exactly as name(s) appear on this Proxy. Joint owners should
each
sign personally. Corporation Proxies should be signed by authorized
officer.
When signing as executors, administrators, trustees, etc., give full
title.
|
1. |
Assist
Board oversight of (i) the integrity of the Company’s financial
statements, (ii) the
Company’s
compliance with legal and regulatory requirements, (iii) the
independent
auditors’ qualifications and independence, and (iv) the performance of
the
independent auditors and the Company’s internal audit function; and
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2.
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Prepare
the report required to be prepared by the Audit Committee pursuant
to the
rules of the SEC for inclusion in the Company’s annual proxy
statement.
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3.
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Review
and approve merger and acquisition transactions and investment
transactions proposed by the Company's management. The Audit
Committee is
authorized to approve merger and acquisition transactions and
investment
transactions by the Company valued in an amount not to exceed,
for any
particular acquisition or investment, $150 million in cash, stock
or a
combination thereof.
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1. |
With
respect to the independent auditors,
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i. |
to
be directly responsible for the appointment, compensation, retention
and
oversight of the work of the independent auditors (including the
resolution of disagreements between management and the independent
auditors regarding financial reporting), who shall report directly
to the
Audit Committee;
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ii. |
to
pre-approve, or to adopt appropriate procedures to pre-approve,
all audit
and non-audit services to be provided by the independent auditors;
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iii. |
to
ensure that the independent auditors prepare and deliver annually
an
Auditors’ Statement (it being understood that the independent auditors are
responsible for the accuracy and completeness of this Statement),
and to
discuss with the independent auditors any relationships or services
disclosed in this Statement that may impact the quality of audit
services
or the objectivity and independence of the Company’s independent auditors;
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iv. |
to
obtain from the independent auditors a timely report relating to
the
Company’s annual audited and unaudited quarterly financial statements
describing all critical accounting policies and practices used,
all
alternative treatments of financial information within generally
accepted
accounting principles that have been discussed with management,
ramifications of the use of such alternative disclosures and treatments,
and the treatment preferred by the independent auditors, and any
material
written communications between the independent auditors and management,
such as any “management” letter or schedule of unadjusted differences;
and
|
v. |
to
take into account the opinions of management and the Company’s director of
internal audit in assessing the independent auditors’ qualifications,
performance and independence.
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2. |
With
respect to financial reporting principles and policies and internal
controls and procedures:
|
i. |
to
advise management, the director of internal audit and the independent
auditors that
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they
are expected to provide to the Audit Committee a timely analysis
of
significant financial reporting issues and practices;
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ii. |
to
consider any reports or communications (and management’s and/or internal
audit’s responses thereto) submitted to the Audit Committee by the
independent auditors required by or referred to in SAS 61 (as codified
by
AU Section 380), as it may be modified or supplemented, including
reports
and communications related to:
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· |
deficiencies
noted in the audit in the design or operation of internal
controls;
|
· |
consideration
of fraud in a financial statement audit; detection of illegal
acts;
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· |
the
independent auditors’ responsibility under generally accepted auditing
standards;
|
· |
any
restriction on audit scope;
|
· |
significant
accounting policies;
|
· |
significant
issues discussed with the national office respecting auditing or
accounting issues presented by the engagement;
|
· |
management
judgments and accounting estimates;
|
· |
any
accounting adjustments arising from the audit that were noted or
proposed
|
· |
by
the auditors but were passed (as immaterial or otherwise);
|
· |
disagreements
with management;
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· |
consultation
by management with other accountants;
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· |
difficulties
encountered with management in performing the audit;
|
· |
the
independent auditors’ judgments about the quality of the entity’s
accounting principles; and
|
· |
reviews
of interim financial information conducted by the independent auditors;
and
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iii. |
to
meet with the management, and the independent auditors:
|
· |
to
discuss the annual audited financial statements and quarterly financial
statements, including the Company’s disclosures under “Management’s
Discussion and Analysis of Financial Condition and Results of Operations”;
|
· |
to
discuss the scope of the annual audit;
|
· |
to
discuss any significant matters arising from any audit, including
any
audit problems or difficulties, whether raised by management or
the
independent auditors, relating to the Company’s financial statements;
|
· |
to
discuss any difficulties the independent auditors encountered in
the
course of the audit, including any restrictions on their activities
or
access to requested information and any significant disagreements
with
management;
|
· |
to
discuss any “management” or “internal control” letter issued, or proposed
to be issued, by the independent auditors to the Company; to review
the
form of opinion the independent auditors propose to render to the
Board
and shareholders; and
|
· |
to
discuss, as appropriate: (a) any major issues regarding accounting
principles and financial statement presentations, including any
significant changes in the Company’s selection or application of
accounting principles, and major issues as to the adequacy of the
Company’s internal controls and any special audit steps adopted in light
of material control deficiencies; (b) analyses prepared by management
and/or the independent auditors setting forth significant financial
reporting issues and judgments made in connection with the preparation
of
the financial statements, including analyses of the effects of
alternative
GAAP methods on the financial statements; and (c) the effect of
regulatory
and accounting initiatives, as well as off- balance sheet structures,
on
the financial statements of the Company;
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iv. |
to
inquire of the Company’s chief executive officer and chief financial
officer as to the existence of any significant deficiencies and
material
weaknesses in the design or operation of internal control over
financial
reporting which are reasonably likely to adversely affect the Company’s
ability to record, process, summarize and report financial information
and
any fraud, whether or not material, that involves management or
other
employees who have a significant role in the Company’s internal control
over financial reporting;
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v. |
to
discuss guidelines and policies governing the process by which
senior
management of the Company and its subsidiaries assess and manage
the
Company’s exposure to risk, and to discuss the Company’s major financial
risk exposures and the steps management has taken to monitor and
control
such exposures;
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vi. |
to
discuss with senior management of the Company any significant legal,
compliance or regulatory matters that may have a material effect
on the
financial statements or the Company’s business, financial statements or
compliance policies, including material notices to or inquiries
received
from governmental agencies;
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vii. |
to
discuss the type and presentation of information to be included
in
earnings press releases:
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viii. |
to
establish procedures for the receipt, retention and treatment of
complaint
received by the Company regarding accounting, internal accounting
controls
or auditing matters, and for the confidential, anonymous submission
by
Company employees of concerns regarding questionable accounting
or
auditing matters;
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ix. |
to
review and discuss any reports concerning material violations submitted
to
it by Company attorneys or outside counsel pursuant to the SEC
attorney
professional responsibility rules (17 C.F.R. Part 205), or otherwise;
and
|
x. |
to
establish hiring policies for employees or former employees of
the
independent auditors;
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3. |
With
respect to Merger and Acquisition
activities,
|
i. |
to
review acquisition strategies with the Company's management and
investigate acquisition candidates on behalf of the
Company.
|
ii. |
to
recommend acquisition strategies and candidates to the Company's
Board, as
appropriate.
|
iii. |
to
authorize and approve acquisitions and investments by the Company
valued
in an amount not to exceed, for any particular acquisition or investment,
$150 million in cash, stock or a combination
thereof.
|
iv. |
to
have full access to the Company's management and other Company
executives
as necessary to carry out its
responsibilities.
|
v. |
to
have all such other rights and powers as may be lawfully delegated
to it
by the Board, not in conflict with specific powers conferred by
the Board
upon any other committee appointed by it.
|
vi. |
to
review this Committee Charter from time to time for adequacy and
recommend
any changes to the Board.
|
vii. |
to
perform any other activities consistent with this Charter, the
Company's
Bylaws and governing law as the Committee or the Board deems necessary
or
appropriate.
|
viii. |
to
report all of its actions to the Board and keep the Board apprised
of its
proposed investments
|
4. |
With
respect to reporting and recommendations,
|
i. |
to
prepare any report or other disclosures, including any recommendation
of
the Audit Committee, required by the rules of the SEC to be included
in
the Company’s annual proxy statement;
|
ii. |
to
prepare and issue the evaluation required under “Performance Evaluation”
below; and
|
iii. |
to
report its activities to the full Board on a regular basis and
to make
such recommendations with respect to the above and other matters
as the
Audit Committee may deem necessary or
appropriate.
|
1. |
Compensation
to the independent auditors and any other public accounting firm
engaged
for the purpose of preparing or issuing an audit report or performing
other audit, review or attest services for the Company;
|
2. |
Compensation
of any advisers employed by the Audit Committee; and
|
3. |
Ordinary
administrative expenses of the Audit Committee necessary or appropriate
in
carrying out its duties.
|
Submitted by:
PARTICIPANT
|
Accepted by:
AE BIOFUELS, INC.
|
|
Signature | By | |
Print Name | Title | |
Address : | Address : | |
Date Received |