AMERICAN
ORIENTAL BIOENGINEERING, INC.
1
Liangshuihe First Avenue, Beijing E-Town Economic and Technology Development
Area, E-Town
Beijing
100176, People’s Republic of China
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
to
be held on December 8, 2009
TO THE
STOCKHOLDERS OF AMERICAN ORIENTAL BIOENGINEERING, INC:
The
Annual Meeting of the Stockholders of American Oriental Bioengineering, Inc., a
Nevada corporation (the “
Company
”, “
AOB
”, “
we
”, “
us
” or “
our
”), will be held
on December 8, 2009, at 9:00 p.m. Beijing Standard Time (local time), which is
equivalent to December 8, 2009 at 8:00 a.m. U.S. Eastern Standard Time (the
“
Annual
Meeting
”), at 1 Liangshuihe First Avenue, Beijing E-Town Economic and
Technology Development Area, E-Town, Beijing 100176, People’s Republic of China,
for the following purposes:
|
1.
|
To
elect nine (9) directors to the Board of Directors of the Company to serve
until the next annual meeting of stockholders and until their successors
are duly elected and qualified;
|
|
2.
|
To
ratify the appointment of Ernst & Young Hua Ming as the Company’s
independent auditors for the 2009 fiscal year;
and
|
|
3.
|
To
transact any other business as may properly be presented at the Annual
Meeting or any adjournment or postponement
thereof.
|
Stockholders
of record of the Company’s common stock and series A preferred stock at the
close of business on October 13, 2009 are entitled to notice of, and to vote at,
the Annual Meeting or any adjournment or postponement thereof.
Your
attention is directed to the Proxy Statement accompanying this Notice for a more
complete statement of matters to be considered at the Annual
Meeting.
All stockholders are cordially invited
to attend the meeting. Whether or not you expect to attend, you are
respectfully requested by the Board of Directors to sign, date and return the
enclosed proxy promptly, or follow the instructions contained in the Notice of
Availability of Proxy Materials to vote on the Internet. Stockholders
who execute proxies retain the right to revoke them at any time prior to the
voting thereof. If you received this proxy statement in the mail, a
return envelope is enclosed for your convenience.
YOUR
VOTE IS IMPORTANT. YOU ARE REQUESTED TO CAREFULLY READ THE PROXY STATEMENT.
PLEASE VOTE ON THE INTERNET. IF THIS PROXY STATEMENT WAS MAILED TO YOU,
COMPLETE, DATE, SIGN AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE. YOU MAY
ALSO ATTEND THE MEETING TO VOTE IN PERSON.
|
By
Order of the Board of Directors,
/s/
Tony Liu
Tony
Liu
Chairman
of the Board and Chief Executive
Officer
|
Dated: October 23,
2009
AMERICAN
ORIENTAL BIOENGINEERING, INC.
1
Liangshuihe First Avenue, Beijing E-Town Economic and Technology Development
Area, E-Town
Beijing
100176, People’s Republic of China
for
Annual
Meeting of Stockholders
to
be held on December 8, 2009
INTRODUCTION
Your
proxy is solicited by the Board of Directors of American Oriental
Bioengineering, Inc., a Nevada corporation (the “
Company
”, “
AOB
”, “
we
”, “
us
” or “
our
”), for
use at the Annual Meeting of Stockholders to be held on December 8, 2009, at
9:00 p.m. Beijing Standard Time (local time), which is the equivalent to
December 8, 2009 at 8:00 a.m. U.S. Eastern Standard Time (the “
Annual Meeting
”), at
1 Liangshuihe First Avenue, Beijing E-Town Economic and Technology Development
Area, E-Town, Beijing 100176, People’s Republic of China for the following
purposes:
|
1.
|
To
elect nine (9) directors to the Board of Directors of the Company to serve
until the next annual meeting of stockholders and until their successors
are duly elected and qualified;
|
|
2.
|
To
ratify the appointment of Ernst & Young Hua Ming as the Company’s
independent auditors for the 2009 fiscal year;
and
|
|
3.
|
To
transact any other business as may properly be presented at the Annual
Meeting or any adjournment or postponement
thereof.
|
The Board
of Directors set October 13, 2009, as the record date (the “
Record Date
”) to
determine those holders of common stock, par value $0.001 per share, of the
Company (the “
Common
Stock
”) and series A preferred stock, par value $0.001 per share, of the
Company (the “
Series A
Preferred Stock
”) who are entitled to notice of, and to vote at, the
Annual Meeting. A list of the stockholders entitled to vote at the
meeting may be examined at the Company’s office at 1 Liangshuihe First Avenue,
Beijing E-Town Economic and Technology Development Area, E-Town, Beijing 100176,
People’s Republic of China during the 10-day period preceding the Annual
Meeting.
On
or about October 29, 2009, the Company shall mail to all stockholders of record,
as of the Record Date, a Notice of Availability of Proxy Materials (the “
Notice
”). Please
carefully review the Notice for information on how to access the Notice of
Annual Meeting, Proxy Statement, proxy card and Annual Report on
www.proxyvote.com
, in
addition to instructions on how you may request to receive a paper or email copy
of these documents. There is no charge to you for requesting a paper copy of
these documents.
GENERAL
INFORMATION ABOUT VOTING
Who
can vote?
You can
vote your shares of Common Stock and Series A Preferred Stock if our records
show that you owned the shares on the Record Date. As of the close of
business on the Record Date, a total of
78,321,439 shares of
Common Stock and 1,000,000 shares of Series A Preferred Stock are entitled to
vote at the Annual Meeting. Each share of Common Stock is entitled to
one vote on matters presented at the Annual Meeting. The holder of
the Series A Preferred Stock is entitled to an aggregate of 26,107,146 votes,
representing 25% of the combined voting power of all of the Company’s issued and
outstanding Common Stock and preferred stock.
How
do I vote by proxy?
If you
have received a printed copy of these materials by mail, you may simply
complete, sign and return your proxy card. If you did not receive a
printed copy of these materials by mail and are accessing them on the Internet,
you may simply follow the instructions below to submit your proxy on the
Internet.
What
if I received a Notice of Availability of proxy materials?
In
accordance with rules and regulations adopted by the Securities and Exchange
Commission (the “
SEC
”), instead of
mailing a printed copy of our proxy materials to each stockholder of record, we
may now furnish proxy materials to our stockholders on the Internet. If you
received a Notice by mail, you will not receive a printed copy of the proxy
materials. Instead, the Notice will instruct you as to how you may access and
review all of the important information contained in the proxy materials. The
Notice also instructs you as to how you may submit your proxy on the Internet.
If you received a Notice by mail and would like to receive a printed copy of our
proxy materials, including a proxy card, you should follow the instructions for
requesting such materials included in the Notice.
If
I am a stockholder of record, how do I cast my vote?
If you
are a stockholder of record, you may vote in person at the Annual Meeting. We
will give you a ballot when you arrive.
If you do
not wish to vote in person or you will not be attending the Annual Meeting, you
may vote by proxy. If you received a printed copy of these proxy materials by
mail, you may vote by proxy using the enclosed proxy card (if you received a
printed copy of these proxy materials by mail), complete, sign and date your
proxy card and return it promptly in the envelope provided.
If you
received a Notice by mail, you may vote by proxy over the Internet by going to
www.proxyvote.com
to
complete an electronic proxy card.
If you
vote by proxy, your vote must be received by 11:59 p.m. U.S. Eastern Standard
Time on December 7, 2009 to be counted.
We
provide Internet proxy voting to allow you to vote your shares on-line, with
procedures designed to ensure the authenticity and correctness of your proxy
vote instructions. However, please be aware that you must bear any costs
associated with your Internet access, such as usage charges from Internet access
providers and telephone companies.
What
if other matters come up at the Annual Meeting?
The
matters described in this proxy statement are the only matters we know of that
will be voted on at the Annual Meeting. If other matters are properly
presented at the meeting, the proxy holders will vote your shares as they see
fit.
Can
I change my vote after I return my proxy card?
Yes. You
can revoke your proxy at any time before it is exercised at the Annual Meeting
in any of three ways:
|
·
|
by
submitting written notice revoking your proxy card to the Secretary of the
Company;
|
|
·
|
by
submitting another proxy via the Internet or by mail that is later dated
and, if by mail, that is properly signed;
or
|
|
·
|
by
voting in person at the Annual
Meeting.
|
Can
I vote in person at the Annual Meeting rather than by completing the proxy
card?
Although
we encourage you to complete and return the proxy card or vote by proxy on the
Internet to ensure that your vote is counted, you can attend the Annual Meeting
and vote your shares in person.
How
are votes counted?
We will
hold the Annual Meeting if holders representing a majority of the shares of
Common Stock and Series A Preferred Stock issued and outstanding and
entitled to vote in person or by proxy either sign and return their proxy cards,
submit their proxy on the Internet, or attend the meeting. If you
sign and return your proxy card, or submit your proxy on the Internet, your
shares will be counted to determine whether we have a quorum even if you abstain
or fail to vote on any of the proposals listed on the proxy card.
The
election of directors under Proposal 1 will be by the affirmative vote of a
plurality of the shares of Common Stock and Series A Preferred Stock,
represented in person or by proxy at the Annual Meeting.
Proposal
2 shall be approved upon the vote of a majority of shares present in person or
represented by proxy at the meeting.
An
abstention with respect to Proposal 2,
will
have the effect of a vote “AGAINST” such proposal.
Unless
otherwise stated, the enclosed proxy will be voted in accordance with the
instructions thereon.
Brokers
holding shares of the Common Stock in street name who do not receive
instructions from the beneficial owners of those shares are entitled to vote on
“
routine
”
proposals such as the election of directors and the ratification of the
Company’s independent auditors.
Who
pays for this proxy solicitation?
We
do. In addition to sending you these materials, some of our employees
may contact you by telephone, by mail, by fax, by email, or in
person. None of these employees will receive any extra compensation
for doing this. We may reimburse brokerage firms and other custodians
for their reasonable out-of-pocket costs in forwarding these proxy materials to
stockholders.
Why
are we seeking stockholder approval for these proposals?
Proposal No.
1
: The General Corporations Law of Nevada and The New York
Stock Exchange require corporations to hold elections for directors each
year.
Proposal No.
2
: The Company appointed Ernst & Young Hua Ming to serve
as the Company’s independent auditors for the 2009 fiscal year. The
Company elects to have its stockholders ratify such
appointment.
OUTSTANDING
SHARES AND VOTING RIGHTS
Stockholders
entitled to notice of, and to vote at, the Annual Meeting and any adjournment or
postponement thereof, are stockholders of record at the close of business on the
Record Date. Persons who are not stockholders of record on the Record
Date will not be allowed to vote at the Annual Meeting. At the close
of business on the Record Date there were
78,321,439 shares of
Common Stock and 1,000,000 shares of Series A Preferred Stock issued and
outstanding. We have issued no other voting securities as of the
Record Date. Each share of Common Stock is entitled to one (1) vote
on each matter to be voted upon at the Annual Meeting. The holder of
the Series A Preferred Stock is entitled to an aggregate of 26,107,146 votes,
representing 25% of the combined voting power of all of the Company’s issued and
outstanding Common Stock and preferred stock. Holders of Common Stock
and Series A Preferred Stock are not entitled to cumulate their votes for the
election of directors.
DELIVERY
OF DOCUMENTS TO STOCKHOLDERS SHARING AN ADDRESS
Only one annual report and this proxy
statement will be delivered to multiple stockholders sharing an address, unless
we have received contrary instructions from one or more of the
stockholders. Upon written or oral request the Company will deliver a
separate copy of the annual report and this proxy statement to a stockholder at
a shared address to which a single copy of the annual report and proxy statement
was delivered. If you wish to receive a separate copy of the annual
report or this proxy statement, please notify the Company by calling or sending
a letter to the Secretary of the Company, c/o American Oriental Bioengineering,
Inc., at the Company’s New Jersey office located at 15 Exchange Place, Suite
500, Jersey City, NJ 07302. The Company’s telephone number at the New
Jersey location is (646) 367-1718. Also, stockholders who share an
address and receive multiple copies of the annual report and this proxy
statement can notify the Company in writing or orally at the above provided
address and telephone number and request that the Company delivers a single copy
of these materials.
SECURITY
OWNERSHIP OF MANAGEMENT
AND
CERTAIN BENEFICIAL OWNERS
The
following table sets forth certain information regarding beneficial ownership of
Common Stock and Series A Preferred Stock as of October 13, 2009 by (i) each
person known to us to own beneficially more than 5% of our Common Stock and
Series A Preferred Stock, (ii) each of our directors and each of our named
executive officers; and (iii) all executive officers and directors as a
group. Unless otherwise indicated, the address for all of the
executive officers, directors and stockholders named below is c/o American
Oriental Bioengineering, Inc., 1 Liangshuihe First Avenue, Beijing E-Town
Economic and Technology Development Area, E-Town, Beijing 100176, People’s
Republic of China.
|
|
|
|
Amount
and Nature of
Beneficial
Ownership (1)
|
|
|
Tony
Liu
|
|
Series
A Preferred Stock
|
|
1,000,000(3)
|
|
100.0%
|
Tony
Liu
|
|
Common
Stock
|
|
14,539,134(4)
|
|
18.6%
|
Yanchun
Li
|
|
Common
Stock
|
|
882,025(5)
|
|
1.1%
|
Jun
Min
|
|
Common
Stock
|
|
998,225(6)
|
|
1.3%
|
Binsheng
Li
|
|
Common
Stock
|
|
358,460(7)
|
|
0.5%
|
Cosimo
J. Patti
|
|
Common
Stock
|
|
25,562(8)
|
|
0.0
%
|
Xianmin
Wang
|
|
Common
Stock
|
|
43,367(9)
|
|
0.1%
|
Eileen
Brody
|
|
Common
Stock
|
|
77,816(10)
|
|
0.1%
|
Lawrence
S. Wizel
|
|
Common
Stock
|
|
28,599(11)
|
|
0.0
%
|
Baiqing
Zhang
|
|
Common
Stock
|
|
21,051(12)
|
|
0.0
%
|
Total
Ownership of Common Stock by All Directors and Executive Officers as a
Group
|
|
|
|
16,974,239
|
|
21.7%
|
(1)
|
The
amount of beneficial ownership includes the number of shares of Common
Stock and/or Series A Preferred Stock, plus, in the case of each of the
executive officer and directors and all officers and directors as a group,
all shares issuable upon the exercise of the options held by them, which
were exercisable as of October 13, 2009 or within 60 days thereafter.
Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, and the rules promulgated by the SEC, every person who has or
shares the power to vote or to dispose of shares of common stock are
deemed to be the “beneficial owner” of all the shares of common stock over
which any such sole or shared power
exists.
|
(2)
|
Based
upon 78,321,439 shares outstanding as of October 13,
2009.
|
(3)
|
Through
his Common Stock and Series A Preferred Stock ownership, currently, Mr.
Liu has voting power
equal to approximately 25% of our voting
securities.
|
(4)
|
Includes
101,486 shares of common stock issuable upon the exercise of
options.
|
(5)
|
Includes
86,309 shares of common stock issuable upon the exercise of
options.
|
(6)
|
Includes
64,731 shares of common stock issuable upon the exercise of
options.
|
(7)
|
Includes
49,554 shares of common stock issuable upon the exercise of
options.
|
(8)
|
Includes
9,349 shares of common stock issuable for services rendered in fiscal
2009.
|
(9)
|
Includes
9,349 shares of common stock issuable for services rendered in fiscal
2009.
|
(10)
|
Includes
17,818 shares of common stock issuable for services rendered in fiscal
2009.
|
(11)
|
Includes
10,499 shares of common stock issuable for services rendered in fiscal
2009.
|
(12)
|
Includes
9,349 shares of common stock issuable for services rendered in fiscal
2009.
|
PROPOSAL
1
ELECTION
OF DIRECTORS
The Board
of Directors has nominated nine (9) persons to stand for election. If
elected at the Annual Meeting, each nominee will hold office until the next
Annual Meeting of Stockholders and until their successors are elected and
qualified. Management expects that each of the nominees will be
available for election, but if any of them is not a candidate at the time the
election occurs, it is intended that such proxy will be voted for the election
of another nominee to be designated by the Board of Directors to fill any such
vacancy.
NOMINEES
Set forth
below is the name, age, title and date of initial appointment of each nominee
for director of the Company followed by a summary of each nominee’s background
and principal occupations over the past five years.
|
|
|
|
|
|
Date
of Initial
Appointment
|
Tony
Liu
|
|
56
|
|
Chief
Executive Officer and Chairman of the Board
|
|
December
18, 2001
|
Jun
Min
|
|
50
|
|
Vice
President and Director
|
|
May
8, 2002
|
Yanchun
“Lily” Li
|
|
40
|
|
Chief
Financial Officer, Chief Operations Officer, Secretary and
Director
|
|
May
8, 2002
|
Binsheng
Li
|
|
45
|
|
Chief
Accounting Officer and Director
|
|
May
8, 2002
|
Cosimo
J. Patti (1)(2)(3)
|
|
59
|
|
Independent
Director
|
|
September
27, 2004
|
Xianmin
Wang (1)(2)(3)
|
|
66
|
|
Independent
Director
|
|
January
1, 2005
|
Eileen
Bridget Brody (1)(2)(3)
|
|
47
|
|
Independent
Director
|
|
June
22, 2005
|
Lawrence
S. Wizel (1)(2)(3)
|
|
65
|
|
Independent
Director
|
|
August
21, 2006
|
Baiqing
Zhang (3)
|
|
56
|
|
Independent
Director
|
|
December
15, 2006
|
(1)
|
Serves
as a member of the Audit Committee.
|
(2)
|
Serves
as a member of the Compensation
Committee.
|
(3)
|
Serves
as a member of the Nominating and Corporate Governance
Committee.
|
Executive
officers of the Company are appointed at the discretion of the Board of
Directors with an employment term of one year, which is subject to automatic one
year renewals unless written notice is given by the Company or the executive
officer not to renew. There are no family relationships between or
among any of the executive officers or directors of the Company.
INFORMATION
ABOUT THE NOMINEES
TONY LIU
- CHIEF EXECUTIVE
OFFICER AND CHAIRMAN OF THE BOARD OF DIRECTORS. Tony Liu
is the principal founder of our Company and has served as our Chief Executive
Officer and the Chairman of our Board of Directors since 2001. He served in the
army for over 19 years. After Mr. Liu left the army, he began working for the
government in the Heilongjiang province in northeastern China. In addition to
serving as a representative to the National People’s Congress in China, with his
practical work experience in the Chinese community for many years, Mr. Liu has
witnessed and participated in the massive macro economic changes for the past
thirty years. He has many years of experience in managing the army, government
agencies and pharmaceutical companies. Mr. Liu graduated with a major in
Communications & Commands from Wuhan Communication College in 1986 and
studied Integrated Marketing and Media at the University of Hong Kong in 2004.
Mr. Liu studied in the Program of Sustainable Growth of Large Corporations
sponsored by the School of Engineering and the School of Business at Stanford
University.
JUN MIN
- VICE PRESIDENT AND
DIRECTOR. Jun Min is one of our founders and has served as our Vice
President and as a member of our Board of Directors since 2002. Mr. Min worked
at the Price Checking Department in Heilongjiang Province from 1987 to 1992.
Subsequently, he worked for Harbin Three-Happiness Bioengineering, Co. Ltd. from
1993. He has over 20 years of experience in operations management and has an
extensive knowledge of the consumer and pharmaceutical products industries in
China. Mr. Min received a BA in Business Management from Harbin Broadcast &
TV University in 1986.
YANCHUN LI
- CHIEF FINANCIAL
OFFICER, CHIEF OPERATIONS OFFICER, SECRETARY AND DIRECTOR. Yanchun Li is one of
our partner founders and has served as Chief Financial Officer since May 2007.
Ms. Li has fifteen years of experience in management in the food industry and
the pharmaceutical industry in China. In particular, she has extensive
experience and innovative insight in marketing, management, brand building,
corporate strategy, human resource and financial capital management. Ms. Li
joined Three-Happiness Bioengineering, Co. Ltd. in 1994 and was in charge of the
marketing and sales. Under her leadership, the functional drink of the
Three-Happiness brand has reached stunning achievement nationwide across China.
The Three-Happiness brand was later awarded the “Top Ten Well-known Brands in
China”. Ms. Li won the China Golden Award in Marketing of Year 2005 and was
elected into the “Who’s Who of Chinese Origin Worldwide”. Ms. Li received her BA
in English from Beijing University of Industry and Commerce in 1993 and
completed the Owner/President Management Program in 2008, an advanced program,
at Harvard Business School.
BINSHENG LI
– CHIEF ACCOUNTING
OFFICER AND DIRECTOR. Binsheng Li is one of our partner founders and has served
as our Chief Accounting Officer and as a member of our Board of Directors since
2002. Mr. Li began his career at Three-Happiness Bioengineering, Co. Ltd. in
1994 in the accounting department. Mr. Li has over 20 years of financial
management and accounting experience. Mr. Li graduated from Dalian Financial
School in 1986 with a major in Finance and Economics.
COSIMO J. PATTI
- INDEPENDENT
DIRECTOR. Cosimo Patti has served on our Board of Directors since
2004. Before joining us, Mr. Patti was an arbitrator for the National
Association of Securities Dealers and the New York Stock Exchange for 18 years.
Since August 1999, Mr. Patti was the President and Chairman of Technology
Integration Group d/b/a FSI Advisors Group from 1998 to 2005. Inc. In June 2007,
Mr. Patti joined the board of directors of Advanced Battery Technologies, Inc.
(NASDAQ:ABAT), a company engaged in the business of designing, manufacturing and
marketing rechargeable polymer lithium-ion batteries. In May 2009, Mr. Patti
joined the board of directors of China XD Plastics Inc., a plastics manufacturer
for the automotive industry in China. From 2002 to 2004, Mr. Patti
was the Senior Director of Applications Planning with iCi/ADP. He was the
Director of Strategic Cross-border Business with Cedel Bank from 1996 to
1999. Mr. Patti attended Brooklyn College.
XIANMIN WANG
- INDEPENDENT
DIRECTOR. Xianmin Wang has served on our Board of Directors since 2005. He was
the Vice Governor of Heilongjiang Province from 1998 to 2003, where he was in
charge of Financial and Economic affairs. Mr. Wang was Secretary of Daqing
Municipal Party Committee from 1996 to 1998, and Vice Secretary of Harbin
Municipal Party Committee from 1991 to 1992. Mr. Wang received a post graduate
degree in Philosophy from Renmin University of China in 1964. He also holds a
bachelor’s degree in Economics from Northeast Forest University and postgraduate
degrees in Philosophy from Heilongjiang University and Renmin University of
China.
EILEEN BRIDGET BRODY
–
INDEPENDENT DIRECTOR. Eileen Brody has served on our Board of Directors since
2005. Since August 2005, Ms. Brody has been President of Dawson-Forte Cashmere,
an apparel trading company. Since June 2007 Ms. Brody has been a member of the
board of directors of Fuqi International, Inc. (NASDAQ:FUQI), a company
specializing in designing, developing, promoting, and selling a range of
precious metal jewelry products in the Chinese luxury goods market. From 1997 to
2004, she was Vice President of Merchandising and Planning for Carter’s Retail
division of The William Carter Company. From 1992 to 1997, she held various
management positions for Melville Corporation, a multi-billion dollar retailer.
From 1983 to 1990, Ms. Brody worked for KPMG Peat Marwick as a Senior Manager.
Ms. Brody is a Certified Public Accountant. She received her Undergraduate and
MBA degrees from Pace University and a second MBA from the Harvard Graduate
School of Business.
LAWRENCE S. WIZEL
– INDEPENDENT DIRECTOR.
Lawrence S.
Wizel has served on our Board of Directors since 2006. Prior to joining our
Board of Directors, he served as Deputy Professional Practice Director at
Deloitte Touche USA LLP, or Deloitte, in Deloitte’s New York office. Mr. Wizel
began his career at Deloitte in 1965 and was a partner from 1980 until he
retired in June 2006. Mr. Wizel was responsible for serving a diverse client
base of publicly held and private companies in a variety of capacities
including, SEC filings, initial public offerings, mergers and acquisition
transactions and periodic reporting. Since September 2006, Mr. Wizel has been a
member of the board of directors of 3SBio Inc. (NASDAQ:SSRX), a biotechnology
company focused on researching, developing, manufacturing and marketing
biopharmaceutical products primarily in China. Since August 2007, Mr. Wizel has
been a member of the board of directors of Puda Coal, Inc. (AMEX:PUDA), a
supplier of metallurgical coking coal to the industrial sector in China. He
received his BA in 1965 in accounting from Michigan State University and is a
Certified Public Accountant.
BAIQING ZHANG
- INDEPENDENT
DIRECTOR. Baiqing Zhang has served on our Board of Directors since 2006. Mr.
Zhang brings to us two decades of experience in the Chinese government’s
regulatory and supervisory divisions. From 1997 until Mr. Zhang retired in 2005,
Mr. Zhang served as Deputy Director, Division Chief of the Heilongjiang
Regulatory Bureau of the China Securities Regulatory Commission, or CSRC, where
he managed and imposed regulatory compliance for all Heilongjiang-based
securities issuances, as well as supervised securities trading, investment funds
and legal affairs. The CSRC is China’s primary regulatory body overseeing the
country’s financial markets. Prior to this, he spent ten years as a member of
the Discipline Inspection Committee in the Department of Supervision of the
Heilongjiang Province, and previously was the Vice Principal of Hebei Institute
of Mechanical and Electrical Technology, where he taught college courses. Since
2005, Mr. Zhang has been a consultant in the fields of law and economics, public
policy, and business strategy. He also consults and lectures about regulatory
issues in the Chinese securities markets, based on his significant experience at
the CSRC. Mr. Zhang received a degree in Management of Economics from the
Tianjin Normal University and a degree in Accounting from the Heilongjiang
Economics Management Academy
.
DIRECTOR
INDEPENDENCE
A
majority of the directors must be independent directors under Section 303A.01 of
the listing standards of the NYSE. Section 303A.02 of the NYSE listing standards
provide that no director can qualify as independent unless the Board
affirmatively determines that the director has no material relationship with the
listed company. The Board has adopted the following standards in determining
whether or not a director has a material relationship with the Company and these
standards are contained in our Corporate Governance Guidelines and can be found
our website at
www.bioaobo.com
and
can be made available in print free of charge to any shareholder who requests
it.
|
·
|
No
director who is an employee or a former employee of the Company can be
independent until three years after termination of such
employment.
|
|
·
|
No
director who is, or in the past three years has been, affiliated with or
employed by the Company’s present or former independent auditor can be
independent until three years after the end of the affiliation, employment
or auditing relationship.
|
|
·
|
No
director can be independent if he or she is, or in the past three years
has been, part of an interlocking directorship in which an executive
officer of the Company serves on the compensation committee of another
company that employs the director.
|
|
·
|
No
director can be independent if he or she is receiving, or in the last
three years has received, more than $120,000 during any 12-month period in
direct compensation from the Company, other than director and committee
fees and pension or other forms of deferred compensation for prior service
(provided such compensation is not contingent in any way on continued
service).
|
|
·
|
Directors
with immediate family members in the foregoing categories are subject to
the same three-year restriction.
|
|
·
|
No
director can be independent if he or she is a current employee, or an
immediate family member is a current executive officer, of a company that
has made payments to, or received payments from, the Company for property
or services in an amount which, in any of the last three fiscal years,
exceeds the greater of $1 million, or 2% of such other company’s
consolidated gross revenues.
|
Based on
these independence standards and all of the relevant facts and circumstances,
the Board determined that none of the following directors had any material
relationship with the Company and, thus, are independent under Section 303A.02
of the listing standards of NYSE: Ms. Brody, and Messrs. Patti, Wang, Wizel and
Zhang. In accordance with New York Stock Exchange rules a majority of our Board
of Directors is independent.
MEETINGS
OF THE BOARD OF DIRECTORS
The Board
of Directors held five
meetings during
2008. No director attended less than 75% of the meetings of any
committee of which the director was a member. We do not have a policy with
regard to Board members’ attendance at annual meetings of
stockholders. All of our directors attended our Annual Meeting of
Stockholders in December 2008 by telephone conference call or in
person.
BOARD
COMMITTEES
The Board
of Directors has a Compensation Committee, a Nominating and Corporate Governance
Committee and an Audit Committee.
Compensation
Committee
The Compensation Committee was
established on January 15, 2005. The members of the Compensation
Committee during 2008 were Cosimo J. Patti, Xianmin Wang, Lawrence S. Wizel and
Eileen Brody. Ms. Brody served as the Chairperson of the Compensation
Committee. Each of these members are considered “independent” under
Section 303A.02 of the listing standards of the New York Stock Exchange, as
determined by our Board of Directors. The Compensation Committee
operates under a written charter. The Amended and Restated
Compensation Committee Charter can be found on our website at
www.bioaobo.com
and
can be made available in print free of charge to any shareholder who requests
it.
The
Compensation Committee assists the Board of Directors in determining the
compensation of our Chief Executive Officer and makes recommendations to the
Board with respect to the compensation of the Chief Financial Officer, other
executive officers of the Company and the independent directors. The
Compensation Committee administers our 2006 equity incentive plan, under the
direction of the Board of Directors.
Nominating
And Corporate Governance Committee
The
Nominating and Corporate Governance Committee was established on January 15,
2005. The purpose of the Nominating and Corporate Governance
Committee is to assist the Board of Directors in identifying qualified
individuals to become members of the Board of Directors, in determining the
composition of the Board of Directors and in monitoring the process to assess
the effectiveness of the Board of Directors. The
Nominating and Corporate Governance Committee held one meeting during
2008.
The
members of the Nominating and Corporate Governance Committee during 2008 were
Cosimo J. Patti, Eileen Brody, Baiqing Zhang, Lawrence S. Wizel and Xianmin
Wang. Mr. Wang served as the Chairperson of the Nominating and
Corporate Governance Committee.
Each of the above-listed
Nominating and Corporate Governance Committee members are considered
“independent” under Section 303A.02 of the listing standards of the New York
Stock Exchange, as determined by our Board of Directors.
There have been no changes to the
procedures by which the stockholders of the Company may recommend nominees to
the Board of Directors since the filing of the Company’s Definitive Proxy
Statement on October 17, 2008 for its Annual Meeting of Stockholders, which was
held on December 5, 2008. The Nominating and Corporate Governance Committee
operates under a written charter. The Amended and Restated Nominating
and Corporate Governance Committee Charter can be found on our website at
www.bioaobo.com
and
can be made available in print free of charge to any shareholder who requests
it.
The
Nominating and Corporate Governance Committee will consider director candidates
recommended by security holders. Potential nominees to the Board of
Directors are required to have such experience in business or financial matters
as would make such nominee an asset to the Board of Directors and may, under
certain circumstances, be required to be “independent”, as such term is defined
in the NYSE Rules and applicable SEC regulations. Security holders
wishing to submit the name of a person as a potential nominee to the Board of
Directors must send the name, address, and a brief (no more than 500 words)
biographical description of such potential nominee to the Nominating and
Corporate Governance Committee at the following address: Nominating and
Corporate Governance Committee of the Board of Directors, c/o American Oriental
Bioengineering, Inc., 15 Exchange Place, Suite 500, Jersey City, NJ
07302. Potential director nominees will be evaluated by personal
interview, such interview to be conducted by one or more members of the
Nominating and Corporate Governance Committee, and/or any other method the
Nominating and Corporate Governance Committee deems appropriate, which may, but
need not, include a questionnaire. The Nominating and Corporate
Governance Committee may solicit or receive information concerning potential
nominees from any source it deems appropriate. The Nominating and
Corporate Governance Committee need not engage in an evaluation process unless
(i) there is a vacancy on the Board of Directors, (ii) a director is not
standing for re-election, or (iii) the Nominating and Corporate Governance
Committee does not intend to recommend the nomination of a sitting director for
re-election. A potential director nominee recommended by a security
holder will not be evaluated any differently than any other potential
nominee. Although it has not done so in the past, the
Nominating and Corporate Governance Committee may retain search firms to assist
in identifying suitable director candidates.
Audit
Committee
The Audit Committee operates under a
written charter. The Amended and Restated Audit Committee Charter can
be found on our website at
www.bioaobo.com
and
can be made available in print free of charge to any shareholder who requests
it.
The Audit
Committee’s charter states that the responsibilities of the Audit Committee
shall include, among other things:
|
·
|
reviewing
the Audit Committee’s charter;
|
|
·
|
reviewing
the Company’s annual report to stockholders and reports submitted to the
SEC;
|
|
·
|
naming
the Company’s independent auditors, confirming and reviewing their
independence, and approving their
fees;
|
|
·
|
reviewing
the independent auditors’
performance;
|
|
·
|
considering
the independent auditors’ judgments about the Company’s accounting
principles;
|
|
·
|
considering
and approving major changes to the Company’s auditing and accounting
principles;
|
|
·
|
establishing
reporting systems to the committee by management and the independent
auditors regarding management’s significant judgments in preparing
financial statements;
|
|
·
|
following
an audit, reviewing significant difficulties encountered during the
audit;
|
|
·
|
reviewing
significant disagreements among management and the independent auditors in
the preparation of the Company’s financial
statements;
|
|
·
|
reviewing
the extent to which improvements in financial or accounting practices
approved by the committee have been
implemented;
|
|
·
|
review
with counsel any legal matters that could have a significant impact on the
Company’s financial statements; and
|
|
·
|
review
all Company transactions, in which any related person may have a direct or
indirect material interest.
|
The Audit
Committee met four times during 2008. Pursuant to its charter, the
Audit Committee meets at least quarterly with the Company’s internal
auditors. The Company does not limit the number of audit committees
of other Companies on which its Audit Committee members can serve.
The
members of the Audit Committee during 2008 were Cosimo Patti, Xianmin Wang,
Eileen Brody and Lawrence S. Wizel. Mr. Wizel served as the
Chairperson of the Audit Committee. Each of these members are
considered “independent” under Section 303A.02 of the listing standards of New
York Stock Exchange, as determined by our Board of Directors. The Audit
Committee performs each of its responsibilities as outlined in its
charter.
Our Board
of Directors has determined that we have at least one audit committee financial
expert, as defined in the Exchange Act, serving on our Audit Committee. Lawrence
S. Wizel is the “audit committee financial expert” and is an independent member
of our Board of Directors.
REPORT
OF THE AUDIT COMMITTEE (1)
The role
of the Audit Committee is to assist the Board of Directors in its oversight of
the Company’s financial reporting process. The Board of Directors, in
its business judgment, has determined that all members of the committee are
“independent” as required by applicable listing standards of The New York Stock
Exchange. The Committee operates pursuant to a Charter that was approved by the
Board. As set forth in the Charter, management of the Company is responsible for
the preparation, presentation and integrity of the Company’s financial
statements, accounting and financial reporting principles and internal controls
and procedures designed to assure compliance with accounting standards and
applicable laws and regulations. The independent auditors are responsible for
auditing the Company’s financial statements and expressing an opinion as to
their conformity with generally accepted accounting principles.
In the
performance of the oversight of the Company’s financial reporting process, the
Audit Committee has reviewed and discussed the audited financial statements with
management, the internal auditors and the independent auditors. The Audit
Committee has discussed with the independent auditors the matters required to be
discussed by Statement of Auditing Standards No. 61, Communication with Audit
Committee, as amended, as adopted by the Public Company Accounting Oversight
Board (“PCAOB”) in Rule 3200T. Finally, the Committee has received written
disclosures and the letter from the independent auditors, as required by
applicable requirements of the PCAOB regarding the independent accountant’s
communications with the Audit Committee concerning independence, and
has discussed with the independent accountant the independent accountant’s
independence
The
members of the Audit Committee are not professionally engaged in the practice of
auditing or accounting, are not experts in the fields of accounting or auditing,
including in respect of auditor independence. Members of the Committee rely
without independent verification on the information provided to them and on the
representations made by management and the independent accountants. Accordingly,
the Audit Committee’s oversight does not provide an independent basis to
determine that management has maintained appropriate accounting and financial
reporting principles or appropriate internal control and procedures designed to
assure compliance with accounting standards and applicable laws and regulations.
Furthermore, the Audit Committee’s consideration and discussions referred to
above do not assure that the audit of the Company’s financial statements has
been carried out in accordance with generally accepted accounting principles or
that the Company’s auditors are in fact “independent.”
Based
upon the reports, review and discussions described in this report, and subject
to the limitations on the role and responsibilities of the Committee referred to
above and in the Charter, the Committee recommended to the Board that the
audited financial statements as of and for the year ended December 31, 2008 be
included in the Company’s Annual Report on Form 10-K for the year ended December
31, 2008, as filed with the Securities and Exchange Commission.
THE
AUDIT COMMITTEE
Lawrence
S. Wizel (Chairman)
Eileen
Brody
Cosimo
Patti
Xianmin
Wang
____________
(1)
|
The
material in the Audit Committee report is not soliciting material, is not
deemed filed with the SEC and is not incorporated by reference in any
filing of the Company under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, whether made before or after
the date of this proxy statement and irrespective of any general
incorporation language in such
filing.
|
EXECUTIVE
SESSIONS
Under the NYSE Rules, our
non-management directors are required to hold regular executive sessions. The
chairperson of the executive session will rotate at each session so that each
non-management director shall have an opportunity to serve as chairperson.
Interested parties may communicate directly with the presiding director of the
executive session or with the non-management directors as a group, by directing
such written communication to Mr. Larry S. Wizel at c/o American Oriental
Bioengineering, Inc., 15 Exchange Place, Suite 500, Jersey City, NJ
07302.
PROCESS
FOR SENDING COMMUNICATIONS TO THE BOARD OF DIRECTORS
The Board
of Directors maintains a process for stockholders to communicate with the
Board. Stockholders wishing to communicate with the Board or any
individual director must mail a communication addressed to the Secretary of the
Company, c/o American Oriental Bioengineering, Inc., 15 Exchange Place, Suite
500, Jersey City, NJ 07302. Any such communication must state the
number of shares of Common Stock beneficially owned by the stockholder making
the communication. All of such communications will be forwarded to
the full Board of Directors or to any individual director or directors to whom
communication is directed unless the communication is clearly of a marketing
nature or is inappropriate, in which case we have the authority to discard the
communication or take appropriate legal action regarding the
communication.
CODE
OF ETHICS
We
adopted a code of ethics that applies to our directors, officers and employees,
including our Chief Executive Officer and Chief Financial Officer, and other
persons who perform similar functions. A written copy of the code can be found
on our website at
www.bioaobo.com
and
can be made available in print to any shareholder upon request at no charge by
writing to our Secretary, c/o American Oriental Bioengineering, Inc., 15
Exchange Place, Suite 500, Jersey City, NJ 07302. Our Amended and
Restated Code of Ethics is intended to be a codification of the business and
ethical principles which guide us, deter wrongdoing, promote honest
and ethical conduct, avoid conflicts of interest, and foster full, fair,
accurate, timely and understandable disclosures, compliance with applicable
governmental laws, rules and regulations, the prompt internal reporting of
violations and accountability for adherence to this code.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
There are
no transactions, since January 1, 2008, the beginning of the Company’s last
fiscal year, or any currently proposed transactions, in which the Company was or
is to be a participant and in which any related person had or will have a direct
or indirect material interest. It is the Company’s policy that the Company will
not enter into any related party transactions unless the Audit Committee or
another independent body of the Board of Directors first reviews and approves
the transactions.
SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”),
requires the executive officers and directors of the Company and every person
who is directly or indirectly the beneficial owner of more than 10% of any class
of security of the Company to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. Such persons also are
required to furnish our company with copies of all Section 16(a) forms they
file. Based solely on our review of copies of such forms received by
us, we believe that during the fiscal year 2008, all of the executive officers
and directors of the Company and every person who is directly or indirectly the
beneficial owner of more than 10% of any class of security of the Company
complied with the filing requirements of Section 16(a) of the Exchange Act,
except the following individuals who did not timely file Form 4s: Tony Liu,
Yanchun Li, Binsheng Li and Jun Min. Each of these individuals did not timely
file one Form 4 disclosing one reportable transaction, which they later timely
reported on Form 5’s.
EXECUTIVE
COMPENSATION
The
Company’s executive compensation program for the named executive officers (NEOs)
is administered by the Compensation Committee of the Board of
Directors.
Compensation
Objectives
We
believe that the compensation programs for the Company’s NEOs should reflect the
Company’s performance and the value created for the Company’s stockholders. In
addition, the compensation programs should support the short-term and long-term
strategic goals and values of the Company, and should reward individual
contributions to the Company’s success. Our compensation plans are consequently
designed to link individual rewards with Company’s performance by applying
objective, quantitative factors including the Company’s own business performance
and general economic factors. We also rely upon subjective, qualitative factors
such as technical expertise, leadership and management skills, when structuring
executive compensation in a manner consistent with our compensation
philosophy.
Process
for Determining Compensation for Executives
The
Compensation Committee makes independent decisions about all aspects of NEO
compensation, and takes into account (i) recommendations from our Chief
Executive Officer with respect to the compensation of NEOs other than himself,
and (ii) information that our Human Resources department provides regarding
compensation data and benchmarks for comparable positions and companies in
different applicable geographical area.
The
Compensation Committee regularly reviews the design and structure of the
Company’s compensation programs to ensure that management’s interests are
closely aligned with stockholders’ interests and that the compensation programs
are designed to further the Company’s strategic priorities.
Elements
of Compensation
Base Salary
. Base
salaries for the named executive officers are set forth in their respective
employment agreements. Periodically, however, the Compensation Committee
considers proposals from the Company’s management to approve increases to the
base salaries for named executive officers other than our CEO. When considering
whether to approve these adjustments, the Compensation Committee takes into
account a number of factors, including:
|
·
|
the
Company’s performance;
|
|
·
|
the
individual’s current and historical performance and contribution to the
Company;
|
|
·
|
and
the individual’s role and unique
skills.
|
We tried
to set executives’ base salaries near the median of the range of salaries for
executives in similar positions with similar responsibilities at comparable
companies, in line with our compensation philosophy. Base salaries are reviewed
annually, and may be increased to align salaries with market levels after taking
into account the subjective evaluation described previously.
Annual Cash Incentive
Bonuses
. The Company has a cash incentive bonus plans for NEO. The plan
is designed to promote executive decision making and achievement that supports
the realization of key overall Company financial goals. For the year 2008, the
participants in the Company’s cash incentives program consisted of each of the
Company’s five named executive officers.
In 2008,
executives had target bonus opportunities ranging from 0% to 75% of salary
earnings, depending on position level and responsibility, with larger bonus
opportunities provided to those with greater responsibility. The Compensation
Committee establishes the guidelines under which the plan is administered,
including financial performance goals and payout schedules. The goals reflect
the Company’s performance using performance measures of net
income.
The plan
provides payouts based on different levels of achievement:
|
·
|
Threshold
:
the minimum level of performance for which a bonus is paid and set at 90%
of the Target level. No bonuses will be earned if the Threshold level of
the Company’s performance is not
achieved;
|
|
·
|
Minimum
:
70% of bonus is paid for achievement of 90% to 99.9% of financial
goals.
|
|
·
|
Target
:
100% of bonus is paid for achievement of financial
goals.
|
|
·
|
Maximum
:
achievement at a superior level of performance for 300% payout of the
Target bonus.
|
For
achievement between Target and Maximum, bonus payouts are interpolated to
reflect the level of results achieved.
Equity Incentive
Compensation
. We believe that long-term performance is achieved through
an ownership culture participated in by our executive officers through the use
of stock-based awards. Currently, we do not maintain any incentive compensation
plans based on pre-defined performance criteria. The Compensation Committee has
the general authority, however, to award equity incentive compensation, i.e.
stock options, to our executive officers in such amounts and on such terms as
the committee determines in its sole discretion. The Committee does not have a
determined formula for determining the number of options available to be
granted. The Compensation Committee will review each executive’s individual
performance and his or her contribution to our strategic goals periodically.
With the exception of stock options automatically granted at the end of each
fiscal quarter in accordance with the terms of the employment agreement with our
executive officers, our Compensation Committee grants equity incentive
compensation at times when we do not have material non-public information to
avoid timing issues and the appearance that such awards are made based on any
such information.
The
Compensation Committee is carefully monitoring our executive compensation
programs. It is our general objective to provide our NEOs with total annual
compensation near the median of the range of salaries for executives in similar
positions with similar responsibilities at comparable companies. To accomplish
this objective, we anticipate increasing levels of executive compensation over
time. The Compensation Committee has reviewed the Compensation Discussion &
Analysis (“CD & A”) prepared by management and recommended it for inclusion
in this Proxy Statement.
Summary
Compensation Table
The
following table sets forth all cash compensation paid or to be paid by the
Company, as well as certain other compensation paid or accrued, for each of the
last three fiscal years to each named executive officer.
Name
and Principal Position
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
Incentive
Plan Compensation ($)
|
|
Change
in
Pension
Value
and
Nonqualified
Deferred Compensation Earnings ($)
|
|
All
Other Compen
-
sation
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tony
Liu, CEO and Chairman
|
|
2008
|
|
200,000
|
|
40,267
|
|
--
|
|
538,000
|
|
--
|
|
--
|
|
--
|
|
778,267
|
|
|
2007
|
|
200,000
|
|
53,253
|
|
--
|
|
594,000
|
|
--
|
|
--
|
|
--
|
|
847,253
|
|
|
2006
|
|
150,000
|
|
--
|
|
--
|
|
53,923
|
|
--
|
|
--
|
|
--
|
|
203,923
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yanchun
Li, CFO, COO, Director
|
|
2008
|
|
160,000
|
|
30,201
|
|
--
|
|
475,200
|
|
--
|
|
--
|
|
--
|
|
665,401
|
|
|
2007
|
|
160,000
|
|
39,940
|
|
--
|
|
475,200
|
|
--
|
|
--
|
|
--
|
|
675,140
|
|
|
2006
|
|
90,000
|
|
--
|
|
--
|
|
32,355
|
|
--
|
|
--
|
|
--
|
|
122,355
|
Jun
Min, VP, Director
|
|
2008
|
|
120,000
|
|
30,201
|
|
--
|
|
356,400
|
|
--
|
|
--
|
|
--
|
|
506,601
|
|
|
2007
|
|
120,000
|
|
39,940
|
|
--
|
|
356,400
|
|
--
|
|
--
|
|
--
|
|
516,340
|
|
|
2006
|
|
70,000
|
|
--
|
|
--
|
|
32,355
|
|
--
|
|
--
|
|
--
|
|
102,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Binsheng
Li, Chief Accounting Officer, Director
|
|
2008
|
|
80,000
|
|
20,134
|
|
--
|
|
293,600
|
|
--
|
|
--
|
|
--
|
|
393,734
|
|
|
2007
|
|
80,000
|
|
26,626
|
|
--
|
|
237,600
|
|
--
|
|
--
|
|
--
|
|
344,226
|
|
|
2006
|
|
57,000
|
|
--
|
|
--
|
|
19,413
|
|
--
|
|
--
|
|
--
|
|
76,413
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wilfred
Chow, SVP of Finance
|
|
2008
|
|
190,000
|
|
40,267
|
|
--
|
|
327,000
|
|
--
|
|
--
|
|
--
|
|
557,267
|
|
|
2007
|
|
160,000
|
|
53,253
|
|
--
|
|
297,000
|
|
--
|
|
--
|
|
--
|
|
510,253
|
|
|
2006
|
|
100,000
|
|
26,666
|
|
--
|
|
--
|
|
--
|
|
--
|
|
--
|
|
126,666
|
__________
(1)
|
The
amounts reported in this column represent base salaries paid to each of
the named executive officers for
2008 as provided for in their respective
employment agreements.
|
(2)
|
The
named executive officers did not receive any discretionary bonuses,
sign-on bonuses, or other annual
bonus payments that are not contingent on
the achievement of stipulated performance goals. Cash bonus payments that
are contingent on achieving pre-established and communicated
goals.
|
(3)
|
Option
award amounts in this table relate to the accounting expense for options
granted in accordance with
Statement of Financial Accounting
Standards No. 123 (revised 2004), Share-Based Payment, (SFAS 123(R)),
which requires the expensing of equity stock
awards.
|
Employment
Agreements
In April
20, 2008, we entered into employment agreements with Tony Liu, our Chairman and
Chief Executive Officer, Yanchun Li, our Chief Financial Officer and Chief
Operations Officer, Jun Min, our Vice President, and Binsheng Li, our Chief
Accounting Officer, all of whom are also directors of the Company. We also
entered into employment agreement with Wilfred Chow, our Senior Vice President
of Finance.
Tony
Liu’s employment agreement has a term of one year, effective as of April 20,
2008, and provides for an annual base salary of $200,000, subject to subsequent
annual review by the Company’s Compensation Committee. The term of his agreement
shall be automatically renewed for another year, unless a written notice is
given by either party of an intention not to renew the agreement no later than
90 days prior to the expiration of the term. The agreement also provides for the
grant of options to purchase 307,428 shares of common stock with an exercise
price of $8.35 per share. The stock options are granted under the Company’s 2006
Equity Incentive Plan and will vest ratably over a five year period, subject to
Mr. Liu’s continued employment with the Company on each vesting date. Mr. Liu is
also entitled to an annual performance based bonus of up to US$40,000 based upon
the Company’s performance. Such amount may be increased if the Company exceeds
certain net income targets for the year, or may be decreased if the net income
targets are not met. We can terminate Mr. Liu’s employment with cause or without
cause pursuant to a decision by our board of directors. In the event Mr. Liu’s
employment is terminated without cause, he will be eligible to receive monthly
payments at his then applicable monthly base salary for the rest of his term
from the date of termination of the employment.
Lily Li’s
employment agreement has a term of one year, effective as of April 20, 2008, and
provides for an annual base salary of $160,000, subject to subsequent annual
review by the Company’s Compensation Committee. The term of her agreement shall
be automatically renewed for another year, unless a written notice is given by
either party of an intention not to renew the agreement no later than 90 days
prior to the expiration of the term. The agreement also provides for the grant
of options to purchase 271,543 shares of common stock with an exercise price of
$8.35 per share. The stock options are granted under the Company’s 2006 Equity
Incentive Plan and will vest ratably over a five year period, subject to Ms.
Li’s continued employment with the Company on each vesting date. Ms. Li is also
entitled to an annual performance based bonus of up to US$30,000 based upon the
Company’s performance and such amount may be increased if the Company exceeds
certain net income targets for the year, or may be decreased if the net income
targets are not met. We can terminate Ms. Li’s employment with cause or without
cause pursuant to a decision by our board of directors. In the event Ms. Li’s
employment is terminated without cause, she will be eligible to receive monthly
payments at her then applicable monthly base salary for the rest of her term
from the date of termination of her employment.
Jun Min’s
employment agreement has a term of one year, effective as of April 20, 2008, and
provides for an annual base salary of $120,000, subject to subsequent annual
review by our board of directors. The term of his agreement shall be
automatically renewed for another year, unless a written notice is given by
either party of an intention not to renew the agreement no later than 90 days
prior to the expiration of the term. The agreement also provides for the grant
of options to purchase 203,657 shares of common stock with an exercise price of
$8.35 per share. The stock options are granted under the Company’s 2006 Equity
Incentive Plan and will vest ratably over a five year period, subject to Mr.
Min’s continued employment with the Company on each vesting date. Mr. Min is
also entitled to an annual performance based bonus of up to US$30,000 based upon
the Company’s performance and such amount may be increased if the Company
exceeds certain net income targets for the year, or may be decreased if the net
income targets are not met. We can terminate Mr. Min’s employment with cause or
without cause pursuant to a decision by our Chief Executive Officer. In the
event Mr. Min’s employment is terminated without cause, he will be eligible to
receive monthly payments at his then applicable monthly base salary for the rest
of his term from the date of termination of the employment.
Binsheng
Li’s employment agreement has a term of one year, effective as of April 20,
2008, and provides for an annual base salary of $80,000, subject to subsequent
annual review by our board of directors. The term of his agreement shall be
automatically renewed for another year, unless a written notice is given by
either party of an intention not to renew the agreement no later than 90 days
prior to the expiration of the term. The agreement also provides for the grant
of options to purchase 167,771 shares of common stock with an exercise price of
$8.35 per share. The stock options are granted under the Company’s 2006 Equity
Incentive Plan and will vest ratably over a five year period, subject to Mr.
Li’s continued employment with the Company on each vesting date. Mr. Li is also
entitled to an annual performance based bonus of up to US$20,000 based upon the
Company’s performance and such amount may be increased if the Company exceeds
certain net income targets for the year, or may be decreased if the net income
targets are not met. We can terminate Mr. Li’s employment with cause or without
cause pursuant to a decision by our Chief Executive Officer. In the event Mr.
Li’s employment is terminated without cause, he will be eligible to receive
monthly payments at his then applicable monthly base salary for the rest of his
term from the date of termination of the employment.
Wilfred
Chow’s employment agreement has a term of one year, effective as of April 20,
2008, and provides for an annual base salary of $190,000, subject to subsequent
annual review by our board of directors. The term of his agreement shall be
automatically renewed for another year, unless a written notice is given by
either party of an intention not to renew the agreement no later than 90 days
prior to the expiration of the term. The agreement also provides for the grant
of options to purchase 186,857 shares of common stock with an exercise price of
$8.35 per share. The stock options are granted under the Company’s 2006 Equity
Incentive Plan and will vest ratably over a five year period, subject to Mr.
Chow’s continued employment with the Company on each vesting date. Mr. Chow is
also entitled to an annual performance based bonus of up to US$40,000 based upon
the Company’s performance and such amount may be increased if the Company
exceeds certain net income targets for the year, or may be decreased if the net
income targets are not met. We can terminate Mr. Chow’s employment with cause or
without cause pursuant to a decision by our Chief Executive Officer. In the
event Mr. Chow’s employment is terminated without cause, he will be eligible to
receive monthly payments at his then applicable monthly base salary for the rest
of his term from the date of termination of the employment.
Potential
Payments Upon Termination or Change in Control
Assuming the employment of our NEOs
were to be terminated without cause or for good reason, as of December 31, 2008,
the following individuals would have been entitled to payments in the amounts
set forth opposite to their name in the below table through April 20,
2009:
|
Cash
Payments
|
Tony
Liu
|
$66,667
|
Yanchun
Li
|
53,333
|
Jun
Min
|
4
0,000
|
Binsheng
Li
|
26,667
|
Wilfred
Chow
|
63,333
|
Employee
Stock Option Plan
In March
2004, our Board of Directors formally adopted a Stock Option Plan (the “
2004 Plan
”). Under
the 2004 Plan, we were authorized to grant non-qualified options to purchase up
to 2,900,000 shares of our common stock to our employees, officers, directors
and consultants. The 2004 Plan was administered directly by our Compensation
Committee. Subject to the provisions of the 2004 Plan, the Compensation
Committee determined who would receive stock options, the number of shares of
common stock that may be covered by the option grants, the time and manner of
exercise of options and exercise prices, as well as any other pertinent terms of
the options. The Company replaced the 2004 Plan with a new Equity Incentive Plan
that was adopted by the Board and approved by the stockholders in 2006 (the
“
2006 Plan
”).
The 2006 Plan provides a maximum of 5,000,000 shares for future grants. The
Company will not grant any additional awards under the 2004 Plan. All awards,
starting from 2007, have been granted under the 2006 Plan. Those individuals
with awards outstanding under the 2004 Plan will continue to hold such awards in
accordance with the terms of their respective grant agreements.
As of
December 31, 2008, the Company granted an aggregate of 2,421,257 options under
the 2006 Plan. For the year ended December 31, 2008, options to purchase a total
of 1,137,257 shares of common stock were granted to the executive officers. In
2008, the Company granted the following options to the NEO’s pursuant to the
2006 Plan:
2008
Grants Of Plan-Based Awards Table
Name
|
Grant
Date
|
Estimated
Future Payouts
Under
Equity Incentive
Plan
Awards (Target) (#)(1
)
|
Exercise
or
Base
Price of
Option
Awards
($
/ Sh) (2)
|
Closing
Price
on
Grant
Date
($
/ Sh)
|
Grant
Date
Fair
Value
of
Option
Awards
($
/ Sh)
|
Tony
Liu
|
4/20/08
|
307,428
|
8.35
|
8.35
|
538,000
|
Yanchun
Li
|
4/20/08
|
271,543
|
8.35
|
8.35
|
475,200
|
Jun
Min
|
4/20/08
|
203,657
|
8.35
|
8.35
|
356,400
|
Binsheng
Li
|
4/20/08
|
167,771
|
8.35
|
8.35
|
293,600
|
Wilfred
Chow
|
4/20/08
|
186,857
|
8.35
|
8.35
|
327,000
|
(1)
|
Represents
the number of stock options granted in 2008 under the Company’s 2006 Plan.
These options vest and become exercisable ratably in five equal annual
installments beginning one year after the grant
date.
|
(2)
|
Represents
the exercise price for the stock options granted, which was the five days
average closing stock prices on the NYSE of the Company’s Common Stock
preceding the grant date.
|
2008
Outstanding Equity Awards at Fiscal Year-End
|
Number
of Securities
Underlying
Unexercised
Options
(#)
|
|
Number
of Securities
Underlying
Unexercised
Options
(#)
|
Equity
Incentive
Plan Awards:
Number
of Securities
Underlying
Unexercised
Unearned
Options
|
|
Option
Exercise
Price
|
|
Option
Expiration
Date
|
|
|
|
|
|
|
|
|
|
Tony
Liu
|
40,000
|
|
160,000
|
200,000
|
|
10.74
|
|
4/20/2017
|
|
—
|
|
307,428
|
307,428
|
|
8.35
|
|
4/20/2018
|
Yanchun
Li
|
32,000
|
|
128,000
|
160,000
|
|
10.74
|
|
4/20/2017
|
|
—
|
|
271,543
|
271,543
|
|
8.35
|
|
4/20/2018
|
Jun
Min
|
24,000
|
|
96,000
|
120,000
|
|
10.74
|
|
4/20/2017
|
|
—
|
|
203,657
|
203,657
|
|
8.35
|
|
4/20/2018
|
Binsheng
Li
|
16,000
|
|
64,000
|
80,000
|
|
10.74
|
|
4/20/2017
|
|
—
|
|
167,771
|
167,771
|
|
8.35
|
|
4/20/2018
|
Wilfred
Chow
|
20,000
|
|
80,000
|
100,000
|
|
10.74
|
|
4/20/2017
|
|
—
|
|
186,857
|
186,857
|
|
8.35
|
|
4/20/2018
|
Option
Exercises and Stock Vested During 2008 Fiscal Year
|
|
|
|
|
|
Number
of Shares Acquired on Exercise (#)
|
|
|
Value
Realized on Exercise ($)
|
|
Tony
Liu
|
|
|
—
|
|
|
|
—
|
|
Yanchun
Li
|
|
|
—
|
|
|
|
—
|
|
Jun
Min
|
|
|
—
|
|
|
|
—
|
|
Binsheng
Li
|
|
|
—
|
|
|
|
—
|
|
Wilfred
Chow
|
|
|
—
|
|
|
|
—
|
|
Compensation
of Independent Directors for the 2008 Fiscal Year
On April
9, 2008, the Compensation Committee of the Company, after the annual
compensation review meeting, approved changes to the annual compensation
provided to independent directors. The changes were made upon the ratification
by the Board of Directors. The fee changes for annual retainers and the changes
for annual equity awards became effective as of April 20, 2008. The changes in
compensation for independent directors are as follows:
|
·
|
the
annual retainer fee was increased for each independent director from
$40,000 to $50,000;
|
|
·
|
the
annual stock award was increased for each independent director from
$60,000 to $65,000; and
|
|
·
|
an
additional annual stock award of $5,000 for Compensation Committee Chair
and $8,000 for Audit Committee Chair was
granted.
|
The
annual retainer is paid to the independent directors in monthly installments in
arrears. Independent directors are be entitled to receive each year shares of
common stock of the Company with an aggregate value range from $65,000 to
$73,000 per annum, calculated based on the average closing price per share for
the five (5) trading days preceding and including the date of the signing of
each such independent director’s service agreement. The equity award to
independent directors is awarded at the beginning of each year for service
rendered for the preceding year. The Company reimburses its independent
directors for reasonable travel expenses to attend Board and Committee
meetings.
The
following table sets forth all compensation paid or to be paid by AOB, as well
as certain other compensation paid or accrued, for each of the independent
directors for the year 2008.
|
|
Fees
Earned
or
Paid
in
Cash ($)
|
|
|
|
|
|
Non-Equity
Incentive
Plan Compensation
($)
|
|
Change
in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
All
Other
Compensation
($)
|
|
|
Cosimo
J. Patti
|
|
46,667
|
|
63,333(1)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
110,000
|
Xianmin
Wang
|
|
46,667
|
|
63,333(1)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
110,000
|
Eileen
Brody
|
|
—
|
|
115,000(2)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
115,000
|
Lawrence
S Wizel
|
|
46,667
|
|
71,333(3)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
118,000
|
Baiqing
Zhang
|
|
46,667
|
|
63,333(1)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
110,000
|
(1)
|
7,085
shares of common stock to be issued were outstanding for each of the
independent directors as of
January 1,
2009.
|
(2)
|
13,239
shares of common stock to be issued were outstanding as of January 1,
2009.
|
(3)
|
7,977
shares of common stock to be issued were outstanding as of January 1,
2009.
|
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Members
of our Compensation Committee of the Board of Directors during 2008 were Ms.
Brody and Messrs. Patti, Wizel and Wang. No member of our
Compensation Committee was, or has been, an officer or employee of the Company
or any of our subsidiaries. No member of the Compensation Committee
has a relationship that would constitute an interlocking relationship with
executive officers or directors of the Company or another
entity.
COMPENSATION COMMITTEE REPORT
1
The
Compensation Committee has reviewed and discussed the discussion and analysis of
the Company’s compensation which appears above with management, and, based on
such review and discussion, the Compensation Committee recommended to the
Company’s Board of Directors that the above disclosure be included in this Proxy
Statement.
The
members of the Compensation Committee are: Eileen Brody (Chair); Cosimo J.Patti,
Xianmin Wang and Lawrence S. Wizel.
REQUIRED
VOTE
Election
of the directors requires a plurality vote of the shares present in person or
represented by proxy at the Annual Meeting, provided a quorum
exists.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “
FOR
” THE ELECTION
OF
THE
NINE NOMINEES FOR DIRECTOR SET FORTH HEREIN.
____________________
1
The material in the Compensation
Committee report is not soliciting material, is not deemed filed with the SEC
and is not incorporated by reference in any filing of the Company under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, whether made before or after the date of this proxy statement and
irrespective of any general incorporation language in such
filing.
PROPOSAL
2
RATIFICATION
OF THE APPOINTMENT OF THE
INDEPENDENT
PUBLIC ACCOUNTANTS
On August
7, 2009, the Audit Committee of the Board of Directors of the Company approved
the engagement of Ernst & Young Hua Ming (“EY”) as the Company’s independent
registered public accounting firm for the year ending December 31,
2009. On August 10, 2009, the Board of Directors of the Company
terminated the engagement of Weinberg & Company, P.A. (“Weinberg”) as the
independent registered public accounting firm of the Company, effective
immediately. Weinberg had served as our independent auditors since
February 16, 2004.
A
representative from EY
is expected to be
present at the Annual Meeting by telephone conference call to respond to
appropriate questions from stockholders and to make a statement if such
representative desires to do so. No representative from Weinberg is expected to
be present at the Annual Meeting.
During
the years ended December 31, 2006, 2007 and 2008 and through August 10, 2009,
there were no disagreements with Weinberg on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure,
which disagreements, if not resolved to the satisfaction of Weinberg, would have
caused Weinberg to make reference to the subject matter of the disagreements in
its reports on the consolidated financial statements for such
years.
The
reports of Weinberg on the Company’s consolidated financial statements for the
years ended December 31, 2006, 2007 and 2008 did not contain an adverse opinion
or a disclaimer of an opinion, and were not qualified or modified as to
uncertainty, audit scope or accounting principles.
During
the years ended December 31, 2006, 2007 and 2008 and through August 10, 2009,
there were no reportable events (as defined in Item 304(a)(1)(v) of Regulation
S-K).
During
the years ended December 31, 2006, 2007 and 2008 and through August 10, 2009,
neither the Company nor anyone on its behalf had consulted with EY with respect
to either (i) the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Company’s consolidated financial statements, and
neither a written report nor oral advice was provided to the Company that EY
concluded was an important factor considered by the Company in reaching a
decision as to any accounting , auditing or financial reporting issue; or (ii)
any matter that was either the subject of a disagreement (as defined in Item
304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of
Regulation S-K) or a reportable event (as defined in Item 304(a)(1)(v) of
Regulation S-K).
Fees
of Independent Auditor
Aggregate
fees billed to us by Weinberg during the fiscal years ended December 31, 2008
and 2007 were:
|
|
2008
|
|
|
2007
|
|
Audit
Fees
|
|
$
|
1,581,498
|
|
|
$
|
1,241,000
|
|
Audit
Related Fees
|
|
|
0
|
|
|
|
0
|
|
Tax
Fees
|
|
$
|
4,500
|
|
|
$
|
4,500
|
|
All
Other Fees
|
|
$
|
85,811
|
|
|
$
|
162,700
|
|
Total
|
|
$
|
1,671,809
|
|
|
$
|
1,408,200
|
|
Audit
Fees
This
category includes aggregate fees billed by our independent auditors for the
audit of our annual financial statements, audit of management’s assessment and
effectiveness of internal controls over financial reporting, review of financial
statements included in our quarterly reports on Form 10-Q and services that are
normally provided by the auditor in connection with statutory and regulatory
filings for those fiscal years.
Audit-Related
Fees
This
category consists of services by our independent auditors that, including
accounting consultations on transaction related matters, are reasonably related
to the performance of the audit or review of our financial statements and are
not reported above under Audit Fees.
Tax Fees
This
category consists of professional services rendered for tax compliance and
preparation of our corporate tax returns and other tax advice.
All Other
Fees
This
category consists of professional services rendered for products and services
provided, other than the services reported above under Audit Fees, Audit-Related
Fees and Tax Fees.
The Audit
Committee reviewed and approved all audit and non-audit services provided by
Weinberg and concluded that these services were compatible with maintaining its
independence. The Audit Committee approved the provision of all non-audit
services by Weinberg.
Pre-Approval
Policies and Procedures
In
accordance with the SEC’s auditor independence rules, the Audit Committee has
established the following policies and procedures by which it approves in
advance any audit or permissible non-audit services to be provided to AOB by its
independent auditor.
Prior to
the engagement of the independent auditor for any fiscal year’s audit,
management submits to the Audit Committee for approval lists of recurring audit,
audit-related, tax and other services expected to be provided by the auditor
during that fiscal year. The Audit Committee adopts pre-approval schedules
describing the recurring services that it has pre-approved, and is informed on a
timely basis, and in any event by the next scheduled meeting, of any such
services rendered by the independent auditor and the related fees.
The fees
for any services listed in a pre-approval schedule are budgeted, and the Audit
Committee requires the independent auditor and management to report actual fees
versus the budget periodically throughout the year. The Audit Committee will
require additional pre-approval if circumstances arise where it becomes
necessary to engage the independent auditor for additional services above the
amount of fees originally pre-approved. Any audit or non-audit service not
listed in a pre-approval schedule must be separately pre-approved by the Audit
Committee on a case-by-case basis.
Every
request to adopt or amend a pre-approval schedule or to provide services that
are not listed in a pre-approval schedule must include a statement by the
independent auditors as to whether, in their view, the request is consistent
with the SEC’s rules on auditor independence.
The Audit
Committee will not grant approval for:
|
·
|
any
services prohibited by applicable law or by any rule or regulation of the
SEC or other regulatory body applicable to
AOB;
|
|
·
|
provision
by the independent auditor to AOB of strategic consulting services of the
type typically provided by management consulting firms;
or
|
|
·
|
the
retention of the independent auditor in connection with a transaction
initially recommended by the independent auditor, the tax treatment of
which may not be clear under the Internal Revenue Code and related
regulations and which it is reasonable to conclude will be subject to
audit procedures during an audit of AOB’s financial
statements.
|
Tax
services proposed to be provided by the auditor to any director, officer or
employee of AOB who is in an accounting role or financial reporting oversight
role must be approved by the Audit Committee on a case-by-case basis where such
services are to be paid for by AOB, and the Audit Committee will be informed of
any services to be provided to such individuals that are not to be paid for by
AOB.
In
determining whether to grant pre-approval of any non-audit services in the “all
other” category, the Audit Committee will consider all relevant facts and
circumstances, including the following four basic guidelines:
|
·
|
whether
the service creates a mutual or conflicting interest between the auditor
and the Company;
|
|
·
|
whether
the service places the auditor in the position of auditing his or her own
work;
|
|
·
|
whether
the service results in the auditor acting as management or an employee of
the Company; and
|
|
·
|
whether
the service places the auditor in a position of being an advocate for the
Company.
|
REQUIRED
VOTE
Ratification
of the appointment of the independent public accounts requires affirmative vote
of a majority of the shares present or represented by proxy at the Annual
Meeting, provided a quorum exists.
THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “
FOR
” RATIFICATION
OF
THE
APPOINTMENT OF THE INDEPENDENT PUBLIC ACCOUNTANTS.
MISCELLANEOUS
STOCKHOLDER
PROPOSALS
A
stockholder who wishes to make a proposal pursuant to Rule 14a-8 of the Exchange
Act for our Annual Meeting of Stockholders that will be held in 2010, for
inclusion in the Company’s proxy statement and form of proxy for such meeting
must notify the Company no later than June 30, 2010.
Rule
14a-4 of the SEC proxy rules allows the Company to use discretionary voting
authority to vote on matters coming before an annual meeting of stockholders if
the Company does not have notice of the matter at least 45 days before the date
corresponding to the date on which the Company first mailed its proxy materials
for the prior year’s annual meeting of stockholders or the date specified by an
overriding advance notice provision in the Company’s bylaws. The
Company’s bylaws do not contain such an advance notice provision.
GENERAL
Management
is not aware of any matters to be presented for action at the Annual Meeting,
except matters discussed in this proxy statement. If any other
matters properly come before the meeting, it is intended that the shares
represented by proxies will be voted in accordance with the judgment of the
persons voting the proxies.
WHERE
YOU CAN FIND MORE INFORMATION
We file
annual and quarterly reports, proxy statements and other information with the
SEC. Stockholders may read and copy any reports, statements or other
information that we file at the SEC’s public reference rooms in Washington,
D.C., New York, New York, and Chicago, Illinois. Please call the SEC
at 1-800-SEC-0330 for further information about the public reference
rooms. Our public filings are also available from commercial document
retrieval services and at the Internet Web site maintained by the SEC at
www.sec.gov
. The
Company’s Annual Report on Form 10-K is available on our website at
www.bioaobo.com
.
STOCKHOLDERS
SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROXY STATEMENT TO VOTE
THEIR SHARES AT THE ANNUAL MEETING. NO ONE HAS BEEN AUTHORIZED TO
PROVIDE ANY INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS PROXY
STATEMENT. THIS PROXY STATEMENT IS DATED OCTOBER [__],
2009. STOCKHOLDERS SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED
IN THIS PROXY STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THAT DATE, UNLESS
OTHERWISE DISCLOSED.
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By
Order of the Board of Directors
/s/
Tony Liu
Tony
Liu
Chairman,
and Chief Executive Officer
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October
23, 2009
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AMERICAN
ORIENTAL BIOENGINEERING, INC.
INVESTOR
RELATIONS
15 Exchange
Place, Suite
Jersey City,
NJ 07302
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VOTE
BY INTERNET - www.proxyvote.com
Use
the Internet to transmit your voting instructions and for electronic
delivery of information up until 11:59 P.M. Eastern Time the day before
the cut-off date or meeting date. Have your proxy card in hand when you
access the
web
site and follow the
instructions to obtain your records and to create an electronic voting
instruction form.
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Electronic
Delivery of Future PROXY MATERIAS
If
you would like to reduce the costs incurred by our company in mailing
proxy materials, you can consent to receiving all future proxy statements,
proxy cards and annual reports electronically via e-mail or the Internet.
To sign up for electronic delivery, please follow the instructions above
to vote using the Internet and, when prompted, indicate that you agree to
receive or access proxy materials electronically in future
years.
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VOTE
BY PHONE - 1-800-690-6903
Use
any touch-tone telephone to transmit your voting instructions up until
11:59 P.M. Eastern Time the day before the cut-off date or meeting date.
Have your proxy card in hand when you call and then follow the
instructions.
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VOTE
BY MAIL
Mark,
sign and date your proxy card and return it in the postage-paid envelope
we have provided or return it to Vote Processing, c/o Broadridge, 51
Mercedes Way, Edgewood, NY
11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE
OR BLACK INK AS FOLLOWS:
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KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND
RETURN THIS PORTION ONLY
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THIS PROXY CARD IS VALID ONLY WHEN
SIGNED AND DATED.
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For
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Withhold
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For All
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To withhold
authority to vote for any individual nominee(s), mark “For All Except” and
write the number(s) of the nominee(s) on the line below.
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The Board of Directors recommends that
you
vote FOR each proposal.
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All
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All
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Except
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1. Election
of Directors
Nominees:
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¨
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¨
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¨
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________________________________________
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01) Tony Liu
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02) Jun Min
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03) Yanchun Li
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04) Binsheng Li
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05) Cosimo J.
Patti
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06)
Xianmin Wang
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07) Eileen Bridget Brody
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08) Lawrence S. Wizel
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09) Baiqing Zhang
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The
Board of Directors recommends you vote FOR the following
proposal(s):
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For
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Against
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Abstain
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2.
Proposal
to ratify the appointment of Ernst & Young Hua Ming as the Company's
independent auditors for the 2009 fiscal year.
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¨
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¨
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¨
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NOTE:
Such other business as may properly come before the meeting or any
adjournment thereof.
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Please
sign exactly as your name(s) appear(s) hereon. When signing as attorney,
executor, administrator, or other fiduciary, please give full title as
such. Joint owners should each sign personally. All holders must sign. If
a corporation or partnership, please sign in full corporate or partnership
name, by authorized officer.
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature
(Joint Owners)
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Date
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