UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant
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Check the appropriate box:
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Under Rule 14a-12
BPI ENERGY HOLDINGS, INC.
(Name of Registrant as Specified In Its Certificate)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange
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Check box if any part of the fee is offset as provided by Exchange
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Form, Schedule or Registration Statement No.:
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Notice of
Annual Meeting of Shareholders and
Proxy Statement
TABLE OF CONTENTS
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of BPI Energy Holdings, Inc.
will be held at the Morris University Center, 2nd Floor
(Mississippi/Illinois Room) located at Southern Illinois
University at Edwardsville, Edwardsville, Illinois at
2:00 p.m., Central Time, on Monday, December 17, 2007.
The purposes of the meeting are to:
1. elect Directors; and
2. ratify the appointment of Meaden & Moore, Ltd.
as our independent registered public accounting firm.
Shareholders of record at the close of business on
November 12, 2007 are entitled to notice of and to vote at
the meeting.
For the Board of Directors
James G. Azlein
President and Chief Executive Officer
November 16, 2007
BPI
ENERGY HOLDINGS, INC.
30775 Bainbridge Road, Suite 280
Solon, Ohio 44139
PROXY
STATEMENT/INFORMATION CIRCULAR
Dated November 16, 2007
The Board of Directors of BPI Energy Holdings, Inc. respectfully
requests your proxy for use at the Annual Meeting of
Shareholders to be held at the Morris University Center,
2nd Floor (Mississippi/Illinois Room) located at Southern
Illinois University at Edwardsville, Edwardsville, Illinois at
2:00 p.m., Central Time, on Monday, December 17, 2007,
and at any adjournments of that meeting. This proxy statement is
to inform you about the matters to be acted upon at the meeting.
Our authorized capital consists of 200,000,000 common shares
without par value. As of November 12, 2007, the record date
for determining shareholders entitled to notice of and to vote
at the meeting, we had 74,062,763 common shares issued and
outstanding. Unless otherwise permitted by law, only those
shareholders of record holding common shares on the record date
shall be entitled to vote at the meeting or any adjournment
thereof in person or by proxy. Each shareholder of record
holding common shares on the record date is entitled to one vote
on each matter to be presented at the meeting for each common
share registered in his or her name on the list of shareholders
as of the record date. This list will be available for
inspection during normal business hours at our transfer agent
and at the meeting. Abstentions (including instructions to
withhold authority to vote for one or more Director nominees)
and broker non-votes are counted for purposes of determining a
quorum, but will have no effect on the outcome of any matter
voted upon at the meeting. Shareholders will not be entitled to
dissenters rights with respect to any matter to be
considered at the meeting. Shareholders have no cumulative
voting rights in the election of Directors.
We are mailing this notice of meeting, proxy statement and form
of proxy to shareholders on or about November 20, 2007.
SOLICITATION
OF PROXIES
This proxy statement is furnished in connection with the
solicitation of proxies by the Board of Directors and management
of BPI Energy Holdings, Inc. for use at the Annual Meeting of
Shareholders for the purposes set forth in the accompanying
Notice of Annual Meeting of Shareholders.
Although the solicitation will be made primarily by mail,
proxies may be solicited personally or by telephone or facsimile
by our regular employees at nominal cost. The cost of
solicitation will be borne by us. In addition, we will request
brokers and other custodians, nominees and fiduciaries to
forward proxy-soliciting material to the beneficial owners of
shares held of record by such persons at our expense.
No person is authorized to give any information or make any
representations other than those contained in this proxy
statement and, if given or made, such information or
representations should not be relied upon as having been
authorized.
APPOINTMENT
OF PROXIES
The persons designated as proxies in the enclosed form of proxy
are nominees selected by our management.
A shareholder has
the right to appoint a person to represent and vote for the
shareholder at the meeting other than the persons designated in
the enclosed form of proxy.
To exercise this right, the
shareholder should strike out the names of the persons named in
the enclosed form of proxy and insert the name of the
shareholders nominee in the blank space provided, or
complete another proper instrument of proxy. Such other person
need not be one of our shareholders.
A proxy must be signed by the shareholder or by the
shareholders attorney authorized in writing, or, if the
shareholder is a corporation, it must either be under its common
seal or signed by a duly authorized officer. Evidence of the
authority of such attorney or officer, as applicable, must
accompany the proxy.
The completed proxy must be deposited with our registrar and
transfer agent, Computershare Investor Services Inc., located at
100 University Avenue, 9th Floor, Toronto, Ontario M5J 2Y1,
or with our registered office, located at 609 Granville Street,
Suite 1600, Vancouver, British Columbia, V7Y 1C3, at least
48 hours before the time of the meeting or any adjournment
thereof at which the proxy is to be used, excluding Saturdays,
Sundays and holidays.
1
VOTING
AND EXERCISE OF DISCRETION OF PROXIES
The shares represented by a proxy will be voted or withheld from
voting in accordance with the instructions of the shareholder on
any ballot that may be called for, and if the shareholder
specifies a choice with respect to any matter to be acted upon,
the shares will be voted accordingly. If a proxy is signed
without a preference indicated, those shares will be voted
FOR the election of the six nominees proposed by the
Board of Directors and FOR the ratification of the
appointment of our independent registered public accounting firm.
We know of no other matters that will be presented at the
meeting. However, if other matters do properly come before the
meeting, if permitted by applicable law, the persons named in
the form of proxy will vote on these matters in accordance with
their best judgment.
With respect to Proposal No. 1, the six nominees who
receive the greatest number of votes will be elected.
Proposal No. 2 will be adopted only if it receives
approval of a majority vote of those shares cast at the meeting.
REVOCATION
OF PROXIES
A shareholder may revoke a proxy on any matter on which it has
not been previously exercised:
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by depositing an instrument in writing executed by the
shareholder or the shareholders attorney authorized in
writing, or, if the shareholder is a corporation, it must either
be under its common seal or signed by a duly authorized officer,
with evidence of the authority of such attorney or officer, as
applicable, accompanying the proxy (i) with our transfer
agent or our registered office at any time up to and including
the last business day before the day of the meeting or any
adjournment thereof at which the proxy is to be used, or
(ii) with the chairperson of the meeting at the scheduled
commencement of the meeting or any adjournment thereof at which
the proxy is to be used, or
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in any other manner permitted by law.
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Revocation of proxies may also be done electronically.
Shareholders who wish to revoke proxies electronically are urged
to contact our transfer agent to determine the availability, and
instructions for the use, of this option.
PARTICULARS
OF MATTERS TO BE ACTED UPON
PROPOSAL NO. 1
ELECTION OF DIRECTORS
On November 9, 2007, the Nominating Committee recommended
that the Board of Directors nominate the individuals listed
below to stand for election at this years Annual Meeting
of Shareholders. On that same date, the Board of Directors
unanimously approved this recommendation. The persons identified
below and named as candidates for directorship in the enclosed
proxy are nominees of the Board of Directors. The persons named
in the enclosed proxy intend to vote for the election of these
nominees. The names of further nominees for Director may come
from the floor at the Annual Meeting of Shareholders.
Our Board of Directors currently consists of six Directors. Each
Director serves for a one-year term and until a successor is
duly elected and qualified, subject to the Directors
earlier death, retirement or resignation, or the office is
earlier vacated in accordance with the Business Corporations Act
(British Columbia) and our Articles of Incorporation. The Board
met 10 times during our fiscal year ended July 31, 2007. We
anticipate that each Director will attend the Annual Meeting of
Shareholders. In 2006, all of our Directors attended our Annual
Meeting of Shareholders. After considering all relevant facts
and circumstances, including those described in the section
Certain Relationships and Related Transactions
below, our Board of Directors has reviewed the independence of
its members as required by the listing standards of the American
Stock Exchange and has determined that four of its six
Directors, Dennis Carlton, Joseph P. McCoy, David E. Preng and
Costa Vrisakis, are independent in accordance with those
standards. Mr. Azlein, our Chairman of the Board of
Directors, and Mr. Craddock are our employees and,
therefore, are not considered independent under those standards.
The independent Directors meet regularly in executive sessions.
During our fiscal year ended July 31, 2007, in most
instances this occurred by inviting Mr. Preng to the
regularly scheduled Audit Committee meeting.
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A description of the business experience of each nominee appears
below. The information as to place of residence and present
principal occupation or employment and during the past five
years for each of the nominees has been furnished by the
respective nominees themselves. Each of the nominees is a
current member of the Board. At this time, the Board has
determined to maintain the number of persons comprising the
Board of Directors at six persons.
The Board recommends that
shareholders vote FOR the election of these six
nominees as Directors.
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Name, Age and Place
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Present Principal Occupation or Employment
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of Residence
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and During the Past Five Years
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James G. Azlein
Age - 58
Ohio, USA
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Mr. Azlein has been our President, Chief Executive Officer and a
Director since August 23, 2001. From 1979 to 1998, Mr. Azlein
held positions including President and Chief Financial Officer
and was a principal of Cyrus Eaton Group, a private company that
specialized in project development, including securing
technologies, management, financing and marketing for a variety
of projects, for hotels and resorts, agricultural projects and
manufacturing plants. In early 2000, Mr. Azlein formed Methane
Management, Inc. to acquire the interest of various partners in
a 43,000-acre coalbed methane (CBM) project in southern Illinois
in which we owned a minority interest. In August 2001, we
acquired Methane Management, Inc. and Mr. Azlein became our
President. He has assembled a new management team and is guiding
our transition from a primary focus on property acquisition to
one of CBM development in the Illinois Basin.
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James E. Craddock
Age - 48
Illinois, USA
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Mr. Craddock has been a Director since January 30, 2007 and our
Chief Operating Officer since December 19, 2006. He previously
served as our Senior Vice President of Operations starting in
April 2006. He oversees all of our operational activities,
including engineering, geology and land management activities.
In particular, he is integrally involved in planning and
managing all aspects of our CBM exploration, drilling and
production activities. Mr. Craddock joined us from Houston-based
Burlington Resources Inc. (acquired by ConocoPhillips on
March 31, 2006), where he served as Chief Engineer. In
this, his most recent capacity with Burlington, he was
responsible for reserve estimation, corporate operations,
recruitment and development of the engineering staff and growth
of a technical center. As Director of Strategic Planning at
Burlington, Mr. Craddock was involved in Burlingtons $3
billion acquisition of the Louisiana Land & Exploration
Company. He was also involved in developing Burlingtons
Farmington, New Mexico CBM project. As head of Reservoir
Engineering, and later as Engineering Manager, he was
responsible for leading the technical team that grew the
Fruitland CBM Project to over 400 MMcf per day. During the
plays peak level of activity, this required drilling up to
300 new CBM wells per year, conducting up to 100 recompletions
per year and participating in 100 non-operated wells each year.
He began his career in 1981 with Superior Oil (later Mobil) upon
graduating from Texas A&M University with a Bachelor of
Science in Mechanical Engineering.
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Dennis Carlton
Age - 57
Colorado, USA
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Mr. Carlton has been a Director since May 2005. Mr. Carlton has
been involved in CBM since 1989. From 1995 through September
2004, he served as a director and worked in several senior
executive positions with Evergreen Resources, Inc., serving most
recently as Executive Vice President, Exploration and Chief
Operating Officer, as well as President of Evergreen Operating
Corp. His primary responsibilities included management of all
geoscience, engineering, land matters and domestic and
international business development activities. Since October
2004, when Evergreen was acquired by Pioneer Natural Resources,
Inc., Mr. Carlton has served as a technical and business advisor
to Pioneers Western Division. Prior to joining Evergreen,
he held positions in several companies including Mobil Oil
Corporation. Mr. Carltons career and knowledge base in CBM
spans a vast geographic area, including the Rocky Mountain
Basin, Mid-Continent, United Kingdom and Alaska. His efforts in
the Raton Basin with Evergreen were recognized when he was named
the Rocky Mountain Association of Geologists Outstanding
Explorer in 2000.
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Name, Age and Place
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Present Principal Occupation or Employment
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of Residence
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and During the Past Five Years
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Joseph P. McCoy
Age - 56
Texas, USA
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Mr. McCoy has been a Director since October 31, 2007. Mr. McCoy
was most recently employed by Houston-based Burlington Resources
Inc. (acquired by ConocoPhillips on March 31, 2006), where he
was Senior Vice President and Chief Financial Officer from April
2005 to April 2006 and Vice President, Controller and Chief
Accounting Officer between April 2001 and April 2005. At
Burlington, Mr. McCoy was responsible for control,
treasury, tax, audit and planning functions and was involved
with the financial integration of $4 billion in acquisitions.
He previously served as Vice President and Controller of Vastar
Resources, Inc. and Vice President of Finance, Planning and
Control of ARCO Alaska, both oil and gas exploration and
production companies, where he worked for more than
20 years. Mr. McCoy is a member of the board of directors
of Linn Energy, LLC and also serves on the board of Rancher
Energy Corp., where he chairs its Audit Committee. He holds a
Master of Science in Accounting and an MBA from Northeastern
University and a Bachelor of Arts in Economics from College of
the Holy Cross. Mr. McCoy is a Certified Public Accountant.
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David E. Preng
Age - 61
Texas, USA
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Mr. Preng has been a Director since February 2006. Mr. Preng is
the president of Preng & Associates, an executive
recruiting company he founded in 1980. Preng & Associates
focuses exclusively on matching senior-level business executives
seeking board of director, chief executive and other upper-level
assignments with energy and natural resources companies
worldwide. Prior to founding Preng & Associates, he spent
six years in the executive search industry. His industry
background includes financial, managerial and executive
positions with Shell Oil Company, Litton Industries and
Southwest Industries. From 1997 to 2006, he was a director of
Remington Oil and Gas, where, in addition to chairing its
Nomination & Governance Committee, he served as lead
independent director, chairman of the Compensation Committee for
his first six years on the committee and a member of the
Compensation Committee thereafter. During his tenure on
Remingtons board, Remington was acquired by Helix Energy
Solutions Inc. Mr. Preng also serves on the boards of directors
of Cal Dive International, where he chairs the Nominating and
Governance Committee and is a member of the Audit and
Compensation Committees, and Maverick Oil & Gas, Inc.,
where he is chairman and also chairs its Compensation Committee.
He is a director of Community National Bank, the Houston Chapter
of the National Association of Corporate Directors and a member
of Texas A&Ms International Board. Additionally, he
is a fellow of the Institute of Directors in London and has
served three terms as director and two years as president of the
British American Business Council. Mr. Preng earned his Bachelor
of Science from Marquette University and his MBA from DePaul
University.
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Costa Vrisakis
Age - 73
New South Wales, Australia
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Mr. Vrisakis has been a Director since January 2002. Mr.
Vrisakis is a financier and entrepreneur based in Sydney,
Australia. He has been a founder and director of several Sydney
Stock Exchange-listed companies. One of his former ventures
includes a printing company, Snap-Apart Pty. Ltd., which Mr.
Vrisakis founded along with two employees in 1959. In 1985,
Snap-Apart Pty. Ltd. was listed on the Sydney Stock Exchange
under the name Computer Resources Ltd. In 1993, Moore Corp. of
Toronto, Canada acquired Computer Resources. Since 1985, when
Mr. Vrisakis sold his interest in Computer Resources, he
has focused his attention on various real estate projects and
stock market investments. Since 2000, Mr. Vrisakis has devoted
the majority of his time to managing his 50% interest in three
hotels in Sydney, Australia.
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No proposed Director is, at the time of this proxy statement, or
has been, within the 10 years before the date of this proxy
statement, a director or executive officer of any company that,
while the person was acting in that capacity:
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was the subject of a cease trade or similar order that denied
the relevant company access to any exemption under securities
legislation, for a period of more than 30 consecutive days;
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was subject to an event that resulted, after the director or
officer ceased to be a director or officer, in the company being
the subject of a cease trade order or an order that denied the
relevant company access to any exemption under securities
legislation, for a period of more than 30 consecutive
days; or
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within a year of that person ceasing to act in that capacity,
became bankrupt, made a proposal under any legislation relating
to bankruptcy or insolvency, or was subject to or instituted any
proceedings, arrangement or compromise with creditors or had a
receiver, receiver manager or trustee appointed to hold its
assets, or has, within the 10 years before the date of this
proxy statement, become bankrupt, made a proposal under any
legislation relating to bankruptcy or insolvency, or become
subject to or instituted any proceedings, arrangement or
compromise with creditors, or had a receiver, receiver manager
or trustee appointed to hold its assets.
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Committees
of the Board of Directors; Attendance
The Board has an Audit Committee consisting of
Messrs. McCoy, the Chairperson, Carlton and Vrisakis; a
Compensation Committee consisting of Messrs. Preng, the
Chairperson, Carlton and Vrisakis; and a Nominating Committee
consisting of Messrs. Vrisakis, the Chairperson, McCoy and
Preng. Mr. McCoy was appointed to our Board on
October 31, 2007, and became a member and the Chairperson
of our Audit Committee and a member of our Nominating Committee
on that date.
The Audit Committee, which met six times during fiscal 2007,
meets with appropriate financial and legal personnel and our
independent auditors to review our corporate accounting,
internal controls, financial reporting and compliance with legal
and regulatory requirements. The Committee exercises oversight
over our independent auditors, our internal auditors and our
financial management. The Audit Committee appoints the
independent auditors to serve as auditors in examining our
corporate accounts. All members of the Audit Committee have been
determined by our Board to meet the financial literacy and
independence requirements set forth in the American Stock
Exchange listing standards. Mr. McCoy is our audit
committee financial expert, as defined by the Securities
and Exchange Commission (SEC). The Board of
Directors has determined that both Mr. McCoy and
Mr. Vrisakis meet the requirements of an audit
committee financial expert under the SEC rules. On
October 21, 2005, the Board adopted an Audit Committee
charter, which is available to shareholders on our website
located at www.bpi-energy.com.
The Compensation Committee, which met eight times during fiscal
2007, reviews and approves the compensation and benefits
provided to our executive officers and other highly compensated
personnel. The Committee has similar responsibilities with
respect to non-management Directors. The Committee also has
oversight responsibilities for our Amended and Restated 2005
Omnibus Stock Plan and annually evaluates the performance of our
chief executive officer. A description of the Committees
processes and procedures for the consideration and determination
of executive officer compensation is included in the section of
this proxy statement titled Compensation Discussion and
Analysis. All members of the Compensation Committee have
been determined by our Board to be independent as defined by the
American Stock Exchange listing standards. On October 21,
2005, the Board adopted a Compensation Committee charter, which
is available to shareholders on our website.
The Nominating Committee, which met two times during fiscal
2007, recommends to the Board of Directors candidates for
nomination as Directors and advises the Board with respect to
governance issues and directorship practices. All members of the
Nominating Committee have been determined by our Board to be
independent as defined by the American Stock Exchange listing
standards. On October 21, 2005, the Board adopted a
Nominating Committee charter, which is available to shareholders
on our website.
The Nominating Committee utilizes a variety of methods for
identifying and evaluating nominees for Directors, including
third-party search firms, recommendations from current Board
members and recommendations from shareholders. Nominees for
election to the Board of Directors are selected on the basis
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of the following criteria: business experience; financial
literacy; industry experience; independence; perceived needs of
the Board; and a willingness to serve on committees and attend
meetings.
The Committee also considers such other relevant factors as it
deems appropriate, including the current composition of the
Board, the balance of management and independent Directors, the
need for Audit Committee expertise and the evaluation of other
prospective nominees. A nominee for election to the Board who is
suggested by a shareholder will be evaluated by the Committee in
the same manner as any other nominee for election to the Board.
If the Committee determines that a candidate should be nominated
for election to the Board, the Committee will present its
findings and recommendation to the full Board for approval.
During fiscal 2007, each incumbent Director attended at least
85% of the meetings of the Board of Directors and Committees on
which he served.
Communication
with Directors
The Board of Directors has adopted procedures for shareholders
to send written communications to an individual Director or the
Board as a group. Such communications must be clearly addressed
either to the Board of Directors or any or all of the Directors,
at the election of the shareholder, and sent to the following,
who will forward any communications so received: BPI Energy
Holdings, Inc., Attention: Secretary, 30775 Bainbridge Road,
Suite 280, Solon, Ohio 44139.
Director
Compensation
The following table details the compensation earned by our
non-management Directors during the fiscal year ended
July 31, 2007. Our management Directors do not receive
compensation from us for their service as Directors.
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Fees Earned or
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Name
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Paid in Cash ($)(1)
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Dennis Carlton
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$
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53,250
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William J. Centa(2)
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44,000
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David E. Preng
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57,250
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Costa Vrisakis
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46,000
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(1)
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During fiscal year 2007, both Mr. Carlton and
Mr. Preng elected to convert $33,750 of their respective
fees into common shares. Although these common shares vest and
will be issued on January 15, 2008, they were earned for
service as a Director during our 2007 fiscal year.
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(2)
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Mr. Centa resigned from our Board of Directors on
September 13, 2007.
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All non-management Directors are reimbursed for reasonable
expenses incurred in connection with attending meetings. In
fiscal year 2007, we paid our non-management Directors a $30,000
annual retainer, $1,000 for each Committee meeting attended and
an additional $1,000 for serving as the chairperson at a
Committee meeting. Directors may elect to have their cash
compensation converted into our common shares at a rate equal to
150% of the cash compensation amount. If a Director makes this
election, he defers the amounts earned and does not receive the
common shares unless he is still a member of our Board of
Directors on the vesting date. For fees deferred in fiscal 2007,
common shares vest and will be issued on January 15, 2008.
We determine the amount of common shares ultimately received on
the vesting date by taking 150% of the amount of fees for which
the election was made divided by a daily average share price for
the quarter.
In October 2007, our Compensation Committee revised our
compensation arrangements for our non-management Directors. The
annual retainer and per meeting fees remain the same. The
compensation for serving as chairperson of a Committee meeting
has increased to $2,000. Directors may still elect to have their
cash compensation converted into our common shares at a rate
equal to 150% of the cash compensation amount, but the number of
shares will be determined by the closing price of our shares on
the last day of the quarter and the receipt of shares will not
be deferred. In addition, new Directors will receive an initial
grant of restricted common shares with a value equal to
$100,000. The restricted shares will vest one-third each year
over a period of three years.
6
BENEFICIAL
OWNERSHIP OF COMMON SHARES
The following table sets forth information regarding the
beneficial ownership of our common shares as of
November 12, 2007 by (i) each of the executive
officers listed in our Summary Compensation Table below,
(ii) our current Directors, (iii) any Director who
served during our fiscal year ended July 31, 2007, and
(iv) all of our executive officers and Directors as a
group. The table includes shares underlying options and warrants
held by our executive officers and Directors. All of these
options and warrants are currently exercisable. Percentage
ownership is calculated in accordance with
Rule 13d-3
of the U.S. Securities Exchange Act of 1934, as amended
(the U.S. Exchange Act), based on
74,062,763 shares outstanding as of November 12, 2007.
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Number of
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Common
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Percent
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Name
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Shares Owned(1)
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Ownership
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James G. Azlein(2)
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3,505,068
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4.7
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%
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James E. Craddock
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876,375
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1.2
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%
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Randall L. Elkins
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261,110
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*
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George J. Zilich(3)
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0
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0
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%
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Dennis Carlton
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365,000
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William J. Centa(4)
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121,667
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*
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Joseph P. McCoy
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270,270
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*
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David E. Preng
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304,340
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*
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Costa Vrisakis(5)
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2,040,522
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2.8
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%
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All Directors and executive officers as a group (9 persons)
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7,744,352
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10.3
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%
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|
*
|
|
Less than 1%.
|
|
(1)
|
|
Unless otherwise indicated, beneficial ownership of the shares
held by each individual consists of sole voting power and sole
investment power, or voting power and investment power that is
shared with the spouse of the individual.
|
|
(2)
|
|
Includes 1,109,931 shares that Mr. Azlein has the
right to acquire pursuant to outstanding stock options.
|
|
(3)
|
|
Mr. Zilich resigned from his position of Chief Financial
Officer and General Counsel as of October 12, 2006. His
ownership of our common shares is to the best of our knowledge
after reasonable inquiry.
|
|
(4)
|
|
Mr. Centa resigned from our Board of Directors on
September 13, 2007.
|
|
(5)
|
|
Mr. Vrisakis has sole voting power and sole investment
power, or voting power and investment power that is shared with
his spouse, of 1,217,000 common shares. Mr. Vrisakis has
shared voting power and shared investment power of 823,522
common shares. These shares are held by entities affiliated with
Mr. Vrisakis.
|
The following table shows information relating to all persons
who, as of November 12, 2007, were known by our Directors
and executive officers to beneficially own more than 5% of our
outstanding common shares. The table includes shares underlying
warrants that are currently exercisable.
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|
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|
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|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Common
|
|
|
Percent
|
|
Name and Address of Beneficial Owner
|
|
Shares Owned
|
|
|
Ownership
|
|
|
Jennison Associates LLC(1)
466 Lexington Avenue
New York, New York 10017
|
|
|
7,600,000
|
|
|
|
10.3
|
%
|
CFSIL a/c Colonial First State Wholesale Global Resources
Fund(2)
Level 29, 52 Martin Place
Sydney, Australia NSW 2001
|
|
|
5,100,000
|
|
|
|
6.4
|
%
|
|
|
|
(1)
|
|
The common shares listed were reported by Jennison Associates
LLC in a Schedule 13G/A filed with the SEC on
October 10, 2007.
|
|
(2)
|
|
CFSILs ownership amount is based on our knowledge of the
number of warrants held by it as of November 12, 2007.
|
7
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the U.S. Exchange Act requires that
our executive officers and Directors, and persons who own more
than 10% of our common shares, file reports of ownership and
changes in ownership with the SEC. Executive officers, Directors
and greater than 10% shareholders are required by SEC rules to
furnish us with copies of all forms they file. Based solely on
our review of the copies of such forms received by us, we
believe that, during our fiscal year ended July 31, 2007,
all Section 16(a) filing requirements applicable to our
executive officers, Directors and 10% shareholders were
satisfied, except that both Mr. Azlein and Mr. Elkins
inadvertently filed late Forms 4 on January 17, 2007
to report the surrender of common shares in satisfaction of tax
withholding obligations upon the vesting of restricted shares.
COMPENSATION
DISCUSSION AND ANALYSIS
Introduction
The Compensation Committee of our Board of Directors establishes
and implements our compensation policies and programs for our
executive officers. Although this Compensation Discussion and
Analysis focuses on our policies and programs as they relate to
our executive officers, it also provides a general overview of
our compensation strategies for our senior management and all of
our other employees. Our current executive officers are James G.
Azlein President and Chief Executive Officer, James
E. Craddock Chief Operating Officer and Randall L.
Elkins Controller and Acting Chief Financial Officer.
Our Compensation Committee consists of three Directors, David E.
Preng, Dennis Carlton and Costa Vrisakis. Mr. Preng is the
chairperson of the Committee. Each of the members of the
Committee is independent under the American Stock Exchange
listing standards, and each has past experience in serving on
the board of a public company. Mr. Carlton has served in
various management positions in the CBM industry since 1989,
where his responsibilities included compensation policies and
practices. Mr. Preng was asked to serve on our Board and as
chairperson of our Compensation Committee because of his
extensive experience as an executive recruiter in the oil and
gas industry. Mr. Preng is president of Preng &
Associates, an executive recruiting company he founded in 1980
that exclusively serves energy and natural resource companies.
Mr. Preng also has past experience in serving on the
compensation committees of three public companies in the oil and
gas industry, Remington Oil and Gas, Maverick Oil &
Gas and Cal Dive International, and served as chairman of
Remingtons and Mavericks compensation committees.
Mr. Preng brings to our Compensation Committee a wealth of
knowledge regarding recruiting and compensation practices in the
oil and gas industry.
The Committees functions include reviewing and making
recommendations to our Board with respect to our executive
compensation policies and programs. For a more complete
discussion of the Committees responsibilities, see the
section of this proxy statement titled Committees of the
Board of Directors; Attendance. The Committee has the
exclusive authority to establish and adjust the base salaries of
our executive officers, approve cash bonuses and grant awards
under our Amended and Restated 2005 Omnibus Stock Plan (the
Omnibus Stock Plan). Prior to making compensation
decisions with respect to our executive officers, the Committee
takes into account the recommendations of our chief executive
officer (for our executive officers other than himself).
Our
Compensation Philosophy
Our compensation and benefits programs recognize the importance
of our executive officers to our overall success. The objectives
of our compensation program are to:
|
|
|
|
|
attract and retain talented individuals;
|
|
|
|
motivate our executive team to achieve our goals and
objectives; and
|
|
|
|
align the interests of our executives with those of our
shareholders.
|
We believe that executive compensation should be correlated with
the performance of the executive officer and our performance. We
are in the early stages of our development. Therefore, the
performance of our executive officers is not strictly measured
against our reported earnings or other measures of financial
performance. Instead,
8
the performance of our executive officers is measured against
our growth objectives and development plans (including expansion
of our drilling program, expansion of our management and
technical teams, continued expansion of our CBM acreage rights,
and the securing of financing) and the executive officers
expected and actual contribution to the achievement of those
objectives and plans. We also take into consideration the
executive officers compensation history and their past and
expected individual contributions to us. We believe that the
compensation we are paying to our executive officers now
represents an investment that will lead to shareholder value in
the future.
Our compensation program for our executive officers has four
principal components:
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|
|
annual base salary;
|
|
|
|
short-term incentive awards (annual cash bonuses);
|
|
|
|
long-term incentive awards (equity-based awards); and
|
|
|
|
benefits.
|
Each executive officer receives a base salary and is eligible to
receive an annual cash bonus. Our executives are also eligible
to receive an annual grant of restricted shares. Our restricted
share grants have been made under our Omnibus Stock Plan since
that plan was originally approved by our shareholders on
December 13, 2005.
The Committee determines base salaries primarily based on an
analysis of relevant market data, by reference to their
knowledge of the market, and the recommendations of our chief
executive officer (other than for himself). We establish base
salaries to recognize an individual executives regular
commitment to his job and take into consideration the
executives knowledge, skills and experience. We currently
do not have employment agreements setting base salaries with any
of our executive officers, although we did have employment
letters with Mr. Craddock and Mr. Elkins that set
their initial base salaries.
The Committee uses annual cash bonuses to provide motivation and
a short-term incentive to our executives, taking into account
our current stage of development and our need for cash for our
operations.
We also make equity awards under the Omnibus Stock Plan. We
typically make such awards on an annual basis as part of each
executive officers annual bonus, and we often make grants
upon hiring an executive officer. These awards (which currently
take the form of restricted shares) are designed to align the
interests of our executive officers with the interests of our
shareholders. Awards under the Omnibus Stock Plan have the
additional benefit of encouraging an employee to continue his or
her employment relationship with us. Awards under the Omnibus
Stock Plan typically vest over a period of two or three years.
The granting of restricted share awards is a recent change in
our equity compensation philosophy. Prior to the adoption of our
Omnibus Stock Plan, our equity awards were made in the form of
stock option grants under our former Incentive Stock Option
Plan. In fiscal 2006, the Committee reviewed our equity award
policies and decided to use restricted share grants as our
primary form of equity-based compensation, based in part on the
recommendation of a compensation consultant engaged by the
Committee, as discussed below, and in part on the
Committees belief that restricted share grants provide a
more effective incentive to employees.
In connection with this determination by the Committee, during
fiscal 2006 the Committee also approved an exchange of
restricted shares for a significant portion of the outstanding
stock options held by our executive officers. As part of the
exchange, we cancelled options to acquire common shares that
were granted in 2005 under our former Incentive Stock Option
Plan. In exchange, we issued one restricted share for each
cancelled option. The restricted shares were issued under our
Omnibus Stock Plan. The restrictions on these shares lapse over
a period of approximately three years.
We maintain broad-based benefits that are provided to all of our
employees, including health and dental insurance plans and
short-term and long-term disability plans. Our executive
officers are eligible to participate in these employee benefit
plans on the same basis as our other employees. We do not have a
pension plan. We also currently do not have a 401(k) plan or
similar plan. The Committee expects to explore the adoption of a
401(k) plan as we continue to grow, which may depend on whether
we meet eligibility requirements. The Committee expects to
9
consider making matching contributions under a
401(k) plan at a time when we have reached profitable operations.
Our compensation program does not rely to any significant extent
on perquisites. We believe our executive officers are most
effectively motivated by the more concrete forms of compensation
noted above. We therefore grant minimal perquisites to our
executive officers.
Review of
External Data
In June 2006, the Committee hired Thomas J. Reno &
Associates, Inc. to perform an independent analysis of the
compensation provided to our executive officers and other
members of our senior management. Our consultant reviewed our
entire compensation package, including our base salaries,
short-term incentive compensation and long-term incentive
compensation, and provided the Committee with recommendations in
each of these areas.
As to base salary compensation, our consultant recommended that
we provide compensation at levels at or above market
to ensure that we retain our management team. Our consultant
made this recommendation on the belief that if our management
team is successful in guiding the company, then shareholder
value would be enhanced. Our consultant provided the Committee
with a competitive market analysis for each of our senior
management positions, which was based on surveys of companies of
similar size and revenue in relevant geographic areas in all
industries, including the energy industry. Our consultant
provided recommended base salary ranges for each of
our management positions, which generally were at or slightly
above the 50th percentile, and in one case at the
75th percentile, for the salaries reported in the survey.
As to short-term incentive compensation, our consultant provided
survey data showing that our annual bonuses for fiscal 2005 were
below market averages. Our consultant recommended that we place
greater emphasis on short-term incentive compensation in the
form of cash bonuses based on company and individual performance
results.
As to long-term incentive compensation, our consultant
recommended that we continue equity-based compensation awards,
but that such awards be made in the form of restricted shares
rather than stock options. Our consultant provided this
recommendation on the basis that restricted shares provide a
stronger incentive to employees and more effectively encourage
employees to make decisions from a shareholder perspective. Our
consultant did not provide data showing how our equity-based
awards compared to market averages. However, our consultant
noted that our historical total cash compensation generally was
below market levels and that our equity-based compensation
awards had brought our total compensation packages up to
acceptable market levels.
Specific
Elements of Our Compensation Program
Annual Base Salaries.
In establishing base
salaries for our executive officers, the Committee considers
market forces and other general factors believed to be relevant,
including the executives experience and breadth of
responsibilities and our need for the executives specific
skills and talents. Additionally, the Committee takes into
account the relative salaries of our executive officers and
determines what it believes are appropriate compensation level
distinctions between our executive officers.
The Committee has generally reviewed the salaries of our
executive officers on an annual basis, and more frequently in
the event of changes in responsibilities. In connection with the
Committees salary and bonus review process, our chief
executive officer evaluates the performance and accomplishments
of each of our executive officers (other than himself) during
the year. The Committee then evaluates the performance and
accomplishments of all of our executive officers, including our
chief executive officer. Our chief executive officer makes base
salary and bonus recommendations to the Committee (for all
executive officers other than himself) based on his review of
each executive officer. After receiving the recommendations of
our chief executive officer with respect to the other executive
officers, the Committee deliberates, makes any necessary
adjustments and approves final base salary and annual bonus
figures for all executive officers (including our chief
executive officer).
During fiscal year 2006, Mr. Azleins base salary rate
was increased to $280,000, Mr. Craddocks base salary
rate was maintained at $250,000 (the level at which he was hired
near the end of fiscal 2006), and Mr. Elkins base
salary rate was increased to $126,000. The base salary rates of
Mr. Azlein and Mr. Elkins were increased on two
occasions during fiscal 2006. The first increases reflected
normal annual increases. The second increases occurred
10
in June 2006 and were based on the data provided by Thomas J.
Reno & Associates as part of our effort to increase
the base salary rates of our executive officers to market
levels, as described below. Adding together the two increases to
their base salary rates that occurred during fiscal 2006,
Mr. Azleins base salary rate was increased by an
aggregate of approximately 56% and Mr. Elkins base
salary rate was increased by an aggregate of approximately 58%
during fiscal 2006. The base salary rates of Mr. Azlein,
Mr. Craddock and Mr. Elkins were not changed during
fiscal 2007.
During most of fiscal 2006 and prior years, we generally paid
base salaries to our executive officers that were below market
averages, in an effort to preserve cash for our operations, and
attempted to
make-up
for
the shortfall in compensation through equity-based awards. When
we hired Mr. Craddock and his operating team, we provided
base salaries and other compensation at levels necessary to
recruit these talented and experienced individuals, which
reflected market conditions in the energy industry. The
Committee determined that all of our executive officers should
be afforded this same treatment, and therefore undertook a
review to bring the base salaries of our existing executive
officers up to market levels.
In setting base salaries for fiscal 2007 in June 2006, the
Committee largely followed the data provided by Thomas J.
Reno & Associates. The base salaries for
Mr. Azlein and Mr. Elkins were set at or slightly
above the 50th percentile of base salaries for their
positions that was shown in the data provided by our consultant.
At the time of this adjustment, Mr. Elkins served only as
our Controller and not also as our Acting Chief Financial
Officer. His adjustment was based on market data for his
position as Controller, and the adjustment was not made by the
Committee but by our Chief Financial Officer serving at the
time. Although Mr. Craddocks base salary was
maintained at the level at which he was hired, his salary level
was the highest as compared to the survey data, at the
75th percentile of base salaries for his position. We
recruited Mr. Craddock in a competitive market and believe
that he is a superb fit to fill a critical role in our
development plans. The Committee determined that attracting and
retaining Mr. Craddock warranted a base salary level above
the average in the market for his position.
The Committee expects to continue to establish base salaries for
our executive officers at or above market averages, and plans to
use external data when necessary and the knowledge and
experience of our committee members in making these
determinations.
Short-term Incentive Awards (Annual Cash
Bonuses).
Our executive officers are eligible to
receive short-term incentive compensation in the form of cash
bonuses. In determining the size of an executives bonus,
the Committee considers any written commitments made in an offer
of employment to the executive, but also takes into account:
(i) individual performance; (ii) performance of the
company; and (iii) retention objectives for the specific
executive. Grants are made on the basis of a subjective analysis
of these factors. The Committee also considers our cash
constraints and capital needs.
The Committee sets bonus target levels for each executive
officer as a percentage of the officers base salary. The
initial target levels for Mr. Craddocks bonus were
established in his initial offer letter. Mr. Azleins
and Mr. Elkins target levels were set at the
beginning of our 2007 fiscal year. For our fiscal year 2007,
Mr. Azlein had a target bonus of
75-150%
of
his base salary, Mr. Craddock had a target bonus of
75-150%
of
his base salary, and Mr. Elkins initially had a target
bonus of
25-50%
of
his base salary. Mr. Elkins target bonus was
increased to
50-100%
of
his base salary when he became our Acting Chief Financial
Officer. These target amounts were established at levels the
Committee believed met market standards, which was based on
their knowledge of the market and the analysis provided by
Thomas J. Reno & Associates.
In July 2007, the Committee awarded Mr. Azlein a cash bonus
of 75% of his maximum bonus amount (or $315,000),
Mr. Craddock a cash bonus of 80% of his maximum bonus
amount (or $300,000), and Mr. Elkins a cash bonus of 80% of
his maximum bonus amount (or $100,800). Because of our cash
constraints, the Committee paid one-third of the bonuses of each
of Mr. Azlein and Mr. Craddock in the form of
unrestricted shares. The number of unrestricted shares granted
to Mr. Azlein and Mr. Craddock were calculated using
150% of the portion of their cash bonuses that were converted to
unrestricted shares, resulting in 262,500 unrestricted shares
being issued to Mr. Azlein and 250,000 unrestricted shares
being issued to Mr. Craddock. In addition,
Mr. Craddock and Mr. Azlein were each granted 100,000
restricted shares, as discussed below, for retention and
motivation purposes and in recognition of their willingness to
take part of their bonuses in unrestricted shares.
11
The bonus amounts were awarded based on the Committees
belief that the company had achieved a number of important goals
in our efforts to become a world-class CBM company and that
our executives had been instrumental in these achievements. The
Committee struggled with paying cash bonuses at a time when the
company faced serious cash constraints. The Committee noted
that, although the awards made to our employees as a whole were
substantial, they equated to a small percentage of our annual
capital needs. The Committee determined that its retention and
motivation objectives outweighed this small percentage of our
annual capital needs.
Long-term Incentive Awards (Equity-based
Awards).
Our executive officers are eligible to
receive bonuses in the form of equity compensation under the
Omnibus Stock Plan, at the discretion of the Committee. We
established the Omnibus Stock Plan to provide an incentive for
employees, including our executive officers, to maximize our
long-term performance and align the interests of our executive
officers with those of our shareholders. The Omnibus Stock Plan
permits the Committee to grant unrestricted
and/or
restricted shares to our executive officers on such terms as the
Committee may determine. Because our equity awards are intended
to provide additional compensation and to align the interests of
our employees with those of our shareholders, the vesting
periods for these awards are generally short, usually two or
three years. All grants of restricted shares require an employee
to remain employed by us through the vesting date.
In fiscal year 2007, the Committee granted Mr. Azlein
100,000 restricted shares, Mr. Craddock
100,000 restricted shares, and Mr. Elkins 75,000
restricted shares, all of which vest on the second anniversary
of the grant date. These restricted shares were granted as part
of our ongoing program for the purposes of retaining and
motivating our employees and aligning their interests with those
of our shareholders. In the case of Mr. Azlein and
Mr. Craddock, these awards were also made in recognition of
their willingness to take part of their cash bonuses in
unrestricted shares, as discussed above. The Committee believes
that these awards were at the appropriate level to provide our
executive officers with an overall compensation package at or
above market levels, with each component appropriately balanced
at or around markets levels.
Mr. Craddock also received a grant of 600,000 restricted
shares in fiscal 2006 as part of his initial employment package,
one-half of which vested immediately and the remainder of which
vest over a three-year period. The Committee believes that this
grant of restricted shares was a necessary investment by the
company to recruit a talented individual like Mr. Craddock
and compensate him for assuming the risk of accepting employment
with a company in its early stages of development.
Benefits and Other Compensation.
As discussed
above, our executive officers are eligible to participate in all
of our employee benefit plans, including our health and dental
insurance plans and short-term and long-term disability plans,
in each case on the same basis as our other employees.
Tax,
Accounting and Other Considerations
The Committee considers the potential tax implications before
making decisions regarding compensation. Cash compensation, such
as base salary and cash bonuses, is taxable as ordinary income
to our executive officers when earned. Restricted share awards
are taxable to our executive officers when the applicable
vesting restrictions lapse. Unrestricted share awards are
taxable to our executive officers when granted.
When reviewing preliminary recommendations, and in connection
with approving the terms of an award under the Omnibus Stock
Plan, the Committee considers the accounting implications of a
given award, including the estimated expense, and carefully
considers the dilution that will occur to our shareholders. The
Committee and our Board recognize that our equity-based awards
are dilutive to our existing shareholders, but believe that
these awards are necessary to attract and retain the talent that
we need to become a world-class CBM company.
Change in
Control Payments
In order to provide protection to our executive officers, we
have severance plans that provide payments and benefits to our
executive officers in connection with their termination of
employment, including enhanced payments and benefits after the
occurrence of a change in control. In addition, the Omnibus
Stock Plan provides for the acceleration of benefits in the
event of a change in control.
12
Severance Plans.
On June 7, 2007, the
Board of Directors approved and adopted the BPI Energy Holdings,
Inc. Senior Executive Severance Plan. Mr. Azlein and
Mr. Craddock are participants in this plan. Under this
plan, the payments and benefits described in the section of this
proxy statement titled Executive Compensation
Potential Payments upon Termination or Change in Control
are payable to Mr. Azlein and Mr. Craddock upon their
death or disability or termination by us without cause or by the
executive for good reason, with enhanced payments and benefits
becoming payable if the termination occurs after a change in
control of the company. Generally, a change in control will be
deemed to have occurred if someone acquires 30% or more of our
common shares, someone acquires control of our Board, or we
effect a merger, liquidation or a sale of all or substantially
all of our assets.
On June 7, 2007, the Board of Directors also approved and
adopted the BPI Energy Holdings, Inc. Key Employee Severance
Plan. Mr. Elkins is a participant in this plan. Under this
plan, the payments and benefits described in the section of this
proxy statement titled Executive Compensation
Potential Payments upon Termination or Change in Control
are payable to Mr. Elkins upon his death or disability or
termination by us without cause or by him for good reason after
a change in control of the company. A change in control would
occur under the Key Employee Severance Plan in the same
circumstances as under the Senior Executive Severance Plan.
The Committee believes that the compensation provided under
these severance plans is appropriate to compensate our executive
officers for the risk that they have assumed in working for a
company in the early stages of its development.
Omnibus Stock Plan.
Under the Omnibus Stock
Plan, in the event of a change in control, unless our Board
determines otherwise, all restrictions and conditions applicable
to our outstanding restricted shares will be deemed to have been
satisfied. Generally, a change in control will be deemed to have
occurred if someone acquires 40% or more of our common shares,
someone acquires control of our Board, or we effect a merger,
dissolution or a sale of all or substantially all of our assets.
The Committee believes that this provision in our Omnibus Stock
Plan is appropriate on the basis that our executive officers
should receive the full benefit of restricted share grants in
the event that the company is sold or comes under the control of
an outside party. The Omnibus Stock Plan gives our Board the
ability to prevent the acceleration of our unvested restricted
share awards in appropriate circumstances, such as a negotiated
sale of the company when the continued retention of our
executive officers may be necessary or appropriate to consummate
the transaction.
Separation
Agreement
On October 12, 2006, George Zilich, our Chief Financial
Officer and General Counsel, resigned. On that date, we entered
into a Separation Agreement and Waiver and Release (the
Separation Agreement) with Mr. Zilich. Under
the Separation Agreement, Mr. Zilich received a lump sum
payment of $250,000, 250,000 unrestricted common shares, $50,000
paid in bi-monthly equal installments from October 15, 2006
through December 31, 2006, $100,000 paid on each of three
dates from January 2, 2007 through January 2, 2008,
immediate vesting of 380,720 restricted shares and medical and
dental insurance coverage for two years. As part of the
Separation Agreement, Mr. Zilich agreed not to compete with
us or solicit any of our employees for a period of two years.
Mr. Zilich also agreed to be available to provide
consulting and transition services to us through January 2,
2008. We agreed to provide this compensation in connection with
Mr. Zilichs resignation based on the rights contained
in his employment agreement with us and as consideration for his
agreement not to compete, to provide consulting services to us,
and to assist us with an orderly transition of his duties.
13
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The table below shows individual compensation information for
our executive officers for the fiscal year ended July 31,
2007.
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|
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|
|
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|
Fiscal
|
|
|
Base
|
|
|
Cash
|
|
|
Common Share
|
|
|
All Other
|
|
|
|
|
Name and Principal Position
|
|
Year
|
|
|
Salary ($)
|
|
|
Bonus ($)
|
|
|
Awards ($)(1)
|
|
|
Compensation ($)(2)
|
|
|
Total ($)
|
|
|
James G. Azlein,
|
|
|
2007
|
|
|
$
|
280,000
|
|
|
$
|
215,000
|
|
|
$
|
162,750
|
|
|
$
|
26,923
|
|
|
$
|
684,673
|
|
Chief Executive Officer and President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James E. Craddock,
|
|
|
2007
|
|
|
|
250,000
|
|
|
|
200,000
|
|
|
|
155,000
|
|
|
|
0
|
|
|
|
605,000
|
|
Chief Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Randall L. Elkins,
|
|
|
2007
|
|
|
|
126,000
|
|
|
|
100,800
|
|
|
|
0
|
|
|
|
0
|
|
|
|
226,800
|
|
Controller and Acting Chief Financial Officer
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George J. Zilich,
|
|
|
2007
|
|
|
|
33,333
|
|
|
|
0
|
|
|
|
0
|
|
|
|
885,652
|
|
|
|
918,985
|
|
Former Chief Financial Officer and General Counsel
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Common share awards include all compensation cost recognized in
our financial statements in accordance with Statement of
Financial Accounting Standards No. 123 (Revised 2004),
Share-Based Payment for shares granted during the
fiscal year ended July 31, 2007. No compensation expense is
recognized until a grant of restricted shares vests. Each of
these executive officers received the following grants during
the fiscal year ended July 31, 2007:
Mr. Azlein 262,500 fully vested shares and
100,000 restricted shares; Mr. Craddock 250,000
fully vested shares and 100,000 restricted shares; and
Mr. Elkins 75,000 restricted shares.
Mr. Zilich received a grant of unrestricted shares as part
of his severance arrangement, which is included under All
Other Compensation.
|
|
(2)
|
|
Represents amounts paid to Mr. Azlein for unused vacation
and to Mr. Zilich as part of his severance arrangement
($250,000 lump sum cash payment, $50,000 cash payment paid
equally over six payments from October 15, 2006 through
December 31, 2006, $100,000 cash payment on each of
January 1, 2007 and July 31, 2007, a grant of 250,000
unrestricted common shares valued at $150,000, accelerated
vesting of 380,720 restricted shares ($228,432) and medical and
dental insurance expenses of $7,220), as more fully described
under Compensation Discussion and Analysis
Separation Agreement.
|
|
(3)
|
|
Mr. Zilich resigned from his position of Chief Financial
Officer and General Counsel as of October 12, 2006.
Mr. Elkins has served as our Acting Chief Financial Officer
since that date.
|
Grants of
Plan-Based Awards
The following table provides information relating to common
share awards granted to our executive officers during fiscal
2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value of
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Common Share
|
|
Name
|
|
Grant Date
|
|
|
Approval Date
|
|
|
Common Shares
|
|
|
Awards ($)(1)
|
|
|
James G. Azlein
|
|
|
08/03/2007
|
|
|
|
07/22/2007
|
|
|
|
362,500
|
|
|
$
|
224,750
|
|
James E. Craddock
|
|
|
08/03/2007
|
|
|
|
07/22/2007
|
|
|
|
350,000
|
|
|
|
217,000
|
|
Randall L. Elkins
|
|
|
08/03/2007
|
|
|
|
07/22/2007
|
|
|
|
75,000
|
|
|
|
46,500
|
|
George J. Zilich(2)
|
|
|
10/12/2006
|
|
|
|
10/12/2006
|
|
|
|
250,000
|
(3)
|
|
|
150,000
|
|
|
|
|
(1)
|
|
See footnote (1) to the Summary Compensation Table above.
|
|
(2)
|
|
Mr. Zilich resigned from his position of Chief Financial
Officer and General Counsel as of October 12, 2006.
|
|
(3)
|
|
Mr. Zilich received 250,000 unrestricted common shares
pursuant to his Separation Agreement, as more fully described
under Compensation Discussion and Analysis
Separation Agreement.
|
14
Outstanding
Equity Awards at Fiscal Year-End
The following table sets forth information relating to all of
our executive officers outstanding equity-based awards as
of the end of fiscal 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Restricted Common Share Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Restricted
|
|
|
|
Number of Common
|
|
|
|
|
|
|
|
|
Restricted
|
|
|
Common
|
|
|
|
Shares Underlying
|
|
|
Option
|
|
|
Option
|
|
|
Common Shares
|
|
|
Shares
|
|
|
|
Unexercised Options
|
|
|
Exercise
|
|
|
Expiration
|
|
|
That Have Not
|
|
|
That Have
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Price ($)
|
|
|
Date
|
|
|
Vested(1)
|
|
|
Not Vested ($)(2)
|
|
|
James G. Azlein
|
|
|
320,000
|
|
|
|
0
|
|
|
$
|
0.49
|
|
|
|
11/03/08
|
|
|
|
|
|
|
|
|
|
|
|
|
456,666
|
|
|
|
0
|
|
|
|
1.26
|
|
|
|
11/29/09
|
|
|
|
|
|
|
|
|
|
|
|
|
333,265
|
|
|
|
0
|
|
|
|
1.95
|
|
|
|
01/20/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
315,000
|
|
|
$
|
198,450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
83,334
|
|
|
|
52,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
63,000
|
|
James E. Craddock
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
200,000
|
|
|
|
126,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
63,000
|
|
Randall L. Elkins
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
115,000
|
|
|
|
72,450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,667
|
|
|
|
10,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,000
|
|
|
|
47,250
|
|
George J. Zilich(3)
|
|
|
0
|
|
|
|
0
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
(1)
|
|
These restricted common shares vest according to the following
schedule: Mr. Azlein 160,000 shares on
January 1, 2008, 155,000 shares on January 1,
2009, 41,667 shares on November 6, 2007,
41,667 shares on November 6, 2008, and
100,000 shares on August 1, 2009;
Mr. Craddock 100,000 shares on
April 12, 2008, 100,000 shares on April 12, 2009,
and 100,000 shares on August 1, 2009; and
Mr. Elkins 60,000 shares on
January 1, 2008, 55,000 shares on January 1,
2009, 8,333 shares on November 6, 2007,
8,334 shares on November 6, 2008, and
75,000 shares on August 1, 2009.
|
|
(2)
|
|
The market value of the restricted common shares that have not
vested is calculated by multiplying the number of restricted
common shares that have not vested by $0.63, the closing market
price of our common shares on July 31, 2007.
|
|
(3)
|
|
Mr. Zilich resigned from his position of Chief Financial
Officer and General Counsel as of October 12, 2006.
|
Option
Exercises and Common Shares Vested
The following table provides information relating to aggregate
common share awards that vested, including the value realized
upon vesting, during fiscal 2007 for our executive officers.
|
|
|
|
|
|
|
|
|
|
|
Restricted Common Share Awards
|
|
|
|
Number of
|
|
|
|
|
|
|
Common
|
|
|
|
|
|
|
Shares Acquired
|
|
|
Value Realized
|
|
Name
|
|
on Vesting
|
|
|
on Vesting ($)(1)
|
|
|
James G. Azlein
|
|
|
160,000
|
|
|
$
|
83,200
|
|
James E. Craddock
|
|
|
100,000
|
|
|
|
111,000
|
|
Randall L. Elkins
|
|
|
60,000
|
|
|
|
31,200
|
|
George J. Zilich(2)
|
|
|
380,720
|
|
|
|
228,432
|
|
|
|
|
(1)
|
|
The value realized is calculated by multiplying the number of
common shares acquired on vesting by the average of the high and
low trading prices of our common shares on the vesting date.
|
|
(2)
|
|
Mr. Zilich resigned from his position of Chief Financial
Officer and General Counsel as of October 12, 2006. As part
of Mr. Zilichs Separation Agreement, these restricted
common shares vested immediately upon his resignation.
|
15
Potential
Payments upon Termination or Change in Control
Our executive officers employment may be terminated under
several possible scenarios. In certain of these scenarios, our
plans provide severance benefits in varying amounts to the
executive officer. Our Omnibus Stock Plan provides for the
acceleration of awards upon a change in control. Our Senior
Executive Severance Plan and Key Employee Severance Plan provide
for benefits and payments to be made to a plan participant upon
termination of the participants employment with us,
including enhanced benefits in the event of a termination in
connection with a change in control.
The following narrative discussion summarizes the various
arrangements that could provide benefits to one of our executive
officers upon a termination or change in control.
Omnibus
Stock Plan
Our Omnibus Stock Plan provides for the acceleration of vesting
of restricted common share awards upon a change in control. The
change in control triggers are described in the Change in
Control Payments section of our Compensation
Discussion and Analysis. All three of our executive
officers own restricted common shares. In addition, our
Compensation Committee adopted rules relating to our Omnibus
Stock Plan that provide for the lapse of the restrictions
applicable to restricted common share awards in the event of the
death, disability or retirement of the holder of the award. The
restrictions lapse on a pro rata portion of the shares of the
next tranche scheduled to vest, if the shares were scheduled to
vest on two or more lapse dates, or a pro rata portion of the
entire award if the shares were scheduled to vest on a single
date. The remaining shares are forfeited.
Severance
Plans
As described in our Compensation Discussion and
Analysis above, Mr. Azlein and Mr. Craddock are
participants in our Senior Executive Severance Plan and
Mr. Elkins is a participant in our Key Employee Severance
Plan. Both severance plans provide payments and benefits to
participants in the event of death or disability and under
several scenarios involving a change in control. The change in
control triggers are described in the Change in Control
Payments section of our Compensation Discussion and
Analysis. In addition, both severance plans obligate a
participant who receives payments or benefits under one of the
plans to adhere to a two-year confidentiality provision and a
one-year non-solicitation and non-competition covenant.
Under both severance plans, in the event of a participants
death or disability, we will pay any accrued base salary through
the termination date, any unpaid cash bonus from a completed
year and a pro rated current year bonus.
In addition, under both severance plans, upon any termination
following a change in control, all restrictions on restricted
shares held by a participant will lapse.
Senior Executive Severance Plan.
Under our
Senior Executive Severance Plan, if we terminate a
participants employment without cause or the participant
resigns for good reason before a change in control, we will
provide (i) any accrued base salary through the termination
date, (ii) any unpaid cash bonus from a completed year,
(iii) a pro rated current year bonus, (iv) a lump sum
cash payment equal to two times the sum of the
participants base salary and target (i.e., minimum) annual
bonus, (v) reimbursement for the cost of continued group
medical and dental insurance coverage for the participant and
his immediate family for the lesser of two years or until the
participant becomes eligible for similar coverage through
subsequent employment, and (vi) reimbursement of up to
$20,000 for outplacement services utilized within a year of
termination.
If we terminate a participants employment without cause
within two years after a change in control, or the participant
resigns (a) for good reason at any time within two years
after a change in control or (b) without good reason during
the
60-day
period that begins exactly six months after a change in control,
we will provide the same benefits as upon termination before a
change in control except that the lump sum cash payment will
equal three times (rather than two times) the sum of the
participants base salary and maximum (rather than target)
annual bonus. In addition, we will provide reimbursement for the
cost of continued medical and dental insurance coverage for the
lesser of three, rather than two, years following the
termination date or until the participant becomes eligible for
similar coverage through subsequent employment. Under these
circumstances, the participant is not subject to
16
the one-year non-competition covenant, but is still subject to
the two-year confidentiality and one-year non-solicitation
provisions.
Key Employee Severance Plan.
Under the Key
Employee Severance Plan, if we terminate a participant without
cause or the participant resigns for good reason at any time
within two years after a change in control, we will provide
(i) any accrued base salary through the termination date,
(ii) any unpaid cash bonus from a completed year,
(iii) a pro rated current year bonus, (iv) a lump sum
cash payment equal to one and one-half times the sum of the
employees base salary and maximum annual bonus,
(v) reimbursement for the cost of continued group medical
and dental insurance coverage for the employee and his immediate
family for the lesser of two years or until the employee becomes
eligible for similar coverage through subsequent employment, and
(vi) reimbursement of up to $5,000 for outplacement
services utilized within a year of termination.
The following table summarizes the amounts payable by us to our
executive officers upon termination in the circumstances
described above under our Omnibus Stock Plan, our Senior
Executive Severance Plan and our Key Employee Severance Plan.
The data in the table assumes that each triggering event listed
in the table occurred on July 31, 2007 and that the price
for our common shares is $0.63, the closing market price of our
common shares on July 31, 2007. Mr. Zilich was no
longer employed by us on July 31, 2007, and therefore is
not included in this table. The payments and benefits he
received upon his resignation are more fully described in our
Compensation Discussion and Analysis under the
section titled Separation Agreement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Azlein
|
|
|
J. Craddock
|
|
|
R. Elkins
|
|
Omnibus Stock Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in control
:
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted common shares lapse of restrictions
|
|
$
|
250,950
|
|
|
$
|
126,000
|
|
|
$
|
82,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
250,950
|
|
|
$
|
126,000
|
|
|
$
|
82,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death, disability or retirement:
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted common shares lapse of restrictions(1)
|
|
$
|
77,473
|
|
|
$
|
18,934
|
|
|
$
|
25,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
77,473
|
|
|
$
|
18,934
|
|
|
$
|
25,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Executive Severance Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
Death or disability
:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued base salary(2)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
Unpaid cash bonus from a completed year
|
|
|
215,000
|
|
|
|
200,000
|
|
|
|
|
|
Pro rated current year bonus(2)
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
215,000
|
|
|
$
|
200,000
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination following a change in control
:
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted common shares lapse of restrictions
|
|
$
|
250,950
|
|
|
$
|
126,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
250,950
|
|
|
$
|
126,000
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by us without cause or by the participant for
good reason before a change in control
:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued base salary(2)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
Unpaid cash bonus from a completed year
|
|
|
215,000
|
|
|
|
200,000
|
|
|
|
|
|
Pro rated current year bonus(2)
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Lump sum cash payment equal to two times the sum of base salary
and target annual bonus
|
|
|
980,000
|
|
|
|
875,000
|
|
|
|
|
|
Medical and dental insurance coverage
|
|
|
22,320
|
|
|
|
22,320
|
|
|
|
|
|
Reimbursement for outplacement services
|
|
|
20,000
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,237,320
|
|
|
$
|
1,117,320
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by us without cause within two years after a
change in control or by the participant for good reason within
two years after a change in control or without good reason
during
60-day
period that begins six months after a change in control
:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued base salary(2)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
Unpaid cash bonus from a completed year
|
|
|
215,000
|
|
|
|
200,000
|
|
|
|
|
|
Pro rated current year bonus(2)
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Lump sum cash payment equal to three times the sum of base
salary and maximum annual bonus
|
|
|
2,100,000
|
|
|
|
1,875,000
|
|
|
|
|
|
Medical and dental insurance coverage
|
|
|
33,480
|
|
|
|
33,480
|
|
|
|
|
|
Reimbursement for outplacement services
|
|
|
20,000
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,368,480
|
|
|
$
|
2,128,480
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Azlein
|
|
|
J. Craddock
|
|
|
R. Elkins
|
|
Key Employee Severance Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
Death or disability
:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued base salary(2)
|
|
|
|
|
|
|
|
|
|
$
|
0
|
|
Unpaid cash bonus from a completed year
|
|
|
|
|
|
|
|
|
|
|
100,800
|
|
Pro rated current year bonus(2)
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
100,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination following a change in control
:
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted shares lapse of restrictions
|
|
|
|
|
|
|
|
|
|
$
|
82,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
82,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by us without cause or by the participant for
good reason within two years after a change in control:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued base salary(2)
|
|
|
|
|
|
|
|
|
|
$
|
0
|
|
Unpaid cash bonus from a completed year
|
|
|
|
|
|
|
|
|
|
|
100,800
|
|
Pro rated current year bonus(2)
|
|
|
|
|
|
|
|
|
|
|
0
|
|
Lump sum cash payment equal to one and one-half times the sum of
base salary and maximum annual bonus
|
|
|
|
|
|
|
|
|
|
|
378,000
|
|
Medical and dental insurance coverage
|
|
|
|
|
|
|
|
|
|
|
22,320
|
|
Reimbursement for outplacement services
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
506,120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
At July 31, 2007, each
executive officer held restricted common shares that were
scheduled to vest on two or more dates. The amount provided is a
pro rata portion of the next tranche scheduled to vest,
multiplied by $0.63, the closing market price of our common
shares on July 31, 2007.
|
|
(2)
|
|
These amounts are zero since as of
the last day of our fiscal year all accrued base salary has been
paid in full and a full fiscal year bonus period has been
completed.
|
Management
Contracts
Our management functions and those of any subsidiary thereof are
not, to any substantial degree, performed other than by our
Directors or executive officers or the directors or executive
officers of any of our subsidiaries.
Report of
the Compensation Committee on Executive Compensation
The Compensation Committee has reviewed and discussed with
management the Compensation Discussion and Analysis
that appears in this proxy statement. Based on such review and
discussions, the Compensation Committee recommended to the Board
of Directors that the Compensation Discussion and
Analysis be included in this proxy statement.
Members of the Compensation Committee:
David E. Preng
Dennis Carlton
Costa Vrisakis
Interest
of Informed Persons in Material Transactions
For purposes of the following discussion, Informed
Person means (a) one of our Directors or executive
officers; (b) a director or executive officer of a person
or company that is itself an Informed Person or one of our
subsidiaries; (c) any person or company who beneficially
owns, directly or indirectly, our voting securities or who
exercises control or direction over our voting securities or a
combination of both carrying more than 10% of the voting rights
attached to all of our outstanding voting securities, other than
the voting securities held by the person or company as
underwriter in the course of a distribution; and (d) BPI
itself if it has purchased, redeemed or otherwise acquired any
of its securities, for so long as it holds any of its securities.
18
Except as disclosed below, elsewhere herein or in the Notes (in
particular, Note 18) to our financial statements for
the fiscal year ended July 31, 2007, none of:
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|
|
|
|
the Informed Persons of BPI,
|
|
|
|
the proposed nominees for election as a Director, or
|
|
|
|
any associate or affiliate of the foregoing persons,
|
has any material interest, direct or indirect, in any
transaction since the commencement of our last fiscal year or in
a proposed transaction that has materially affected or would
materially affect us or any of our subsidiaries.
Interest
of Certain Persons in Matters to be Acted Upon
Except for the election of Directors or as otherwise disclosed
herein, none of our Directors or executive officers who have
served at any time since the beginning of our last fiscal year,
the proposed nominees for election as a Director or any
associate or affiliate of the foregoing persons has any material
interest, direct or indirect, by way of beneficial ownership of
securities or otherwise, in any matters to be acted upon at the
meeting.
Indebtedness
of Directors and Executive Officers
As of the date hereof, other than indebtedness that has been
entirely repaid on or before the date of this proxy statement or
routine indebtedness, as defined in Canadian
Form 51-102F5
Information Circular of NI
51-102,
none
of the individuals who are, or at any time since the beginning
of the last fiscal year were, a Director or executive officer,
the proposed nominees for election as a Director or any
associates of the foregoing persons is, or at any time since the
beginning of the most recently completed fiscal year has been,
indebted to us or any of our subsidiaries, or is a person whose
indebtedness to another entity is, or at any time since the
beginning of the most recently completed financial year has
been, the subject of a guarantee support agreement, letter of
credit or other similar arrangement or understanding provided by
us or any of our subsidiaries.
Certain
Relationships and Related Transactions
Randy Oestreich, our Vice President of Field Operations, owns
and operates A-Strike Consulting, a consulting company that
provides, among other things, laboratory testing related to CBM.
We own and maintain a lab testing facility and allow A-Strike
Consulting to operate the facility. We pay all expenses related
to the facility and, in return, receive 80% of the revenue
generated from the operations of the facility as reimbursement
of our expenses. We received approximately $12,000 in expense
reimbursement related to this arrangement during the fiscal year
ended July 31, 2007.
David E. Preng, one of our Directors, is an owner of
Preng & Associates, an executive search firm
specializing in the energy and natural resources industries. We
paid Preng & Associates approximately $15,000 for
executive placement services during the fiscal year ended
July 31, 2007.
We review transactions between us and our Directors and
executive officers, their immediate family members and entities
with which they have a position or relationship. This review
helps us evaluate whether any related person transaction could
impair the independence of a Director or presents a conflict of
interest on the part of the Director or executive officer. The
related party transaction is generally first presented to our
executive management. Our executive management discusses the
transaction with our outside counsel or our independent
registered public accountants, if appropriate. The members of
our Board of Directors who do not have an interest in the
transaction then review the transaction and, if they approve,
pass a resolution authorizing the transaction.
Code of
Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics that
applies to our executive officers, as well as all other
employees. A copy can be found on our website at
www.bpi-energy.com.
19
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Shareholders are being asked to ratify the appointment of
Meaden & Moore, Ltd., Certified Public Accountants,
located at 1100 Superior Avenue, Suite 1100, Cleveland,
Ohio 44114, as our independent registered public accounting firm
for the fiscal year ending July 31, 2008 at a remuneration
to be fixed by the Audit Committee.
The Board of Directors recommends that the shareholders vote
FOR the ratification of the appointment of
Meaden & Moore, Ltd. as our independent registered
public accounting firm for our fiscal year 2008.
Audit
Fees and Non-Audit Fees
The following table presents fees for professional audit
services paid to Meaden & Moore, Ltd. for the audit of
our financial statements for the years ended July 31, 2007
and July 31, 2006, and fees billed by Meaden & Moore,
Ltd. for other services rendered during these time periods.
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
Audit fees(1)
|
|
$
|
135,000
|
|
|
$
|
138,200
|
|
Audit-related fees(2)
|
|
|
3,413
|
|
|
|
12,550
|
|
Tax fees
|
|
|
0
|
|
|
|
0
|
|
All other fees
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
138,413
|
|
|
$
|
150,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Fees related to audits of our financial statements and review of
our quarterly reports.
|
|
(2)
|
|
Fees related to our
Form S-1
and
Form S-8
registration statements, our 2006 annual meeting and due
diligence responses related to potential financing.
|
A representative of Meaden & Moore, Ltd. is expected
to be at the annual meeting and will be given an opportunity to
make a statement if he or she desires to do so. The
representative will also be available to respond to appropriate
questions from shareholders.
Audit
Committee Pre-Approval Policies
The Audit Committee has adopted policies that require its
approval for any audit or non-audit services to be provided to
us by our independent registered public accounting firm. The
Audit Committee delegated authority to its Chairperson to
approve certain non-audit services. Pursuant to these procedures
and delegation of authority, the Audit Committee was informed of
and approved all of the audit and other services described
above. No services were provided pursuant to the de minimus
waiver process provided by the rules of the SEC.
Change of
Auditor
Effective August 15, 2005, De Visser Gray, Chartered
Accountants, resigned as our auditor by mutual agreement between
us and De Visser.
The audit report issued by De Visser dated October 12, 2004
was qualified as to uncertainty with regard to our ability to
continue as a going concern due to our (1) lack of revenue
and (2) dependence on our ability to raise funds via equity
financings.
The decision to change auditors was considered and approved by
the Audit Committee of our Board of Directors.
During our two most recent fiscal years and all subsequent
interim periods preceding De Vissers resignation there
were no disagreements with De Visser concerning accounting
principles or practices, financial statement disclosure, or
auditing scope or procedure.
20
During our two most recent fiscal years and all subsequent
interim periods preceding De Vissers resignation De Visser
did not advise us of any of the following:
|
|
|
|
|
that the internal controls necessary for us to develop reliable
financial statements do not exist;
|
|
|
|
that information came to De Vissers attention that led it
to no longer be able to rely on managements
representations, or that made it unwilling to be associated with
the financial statements prepared by management;
|
|
|
|
(1) the need for De Visser to expand significantly the
scope of its audit, or that information came to its attention
during our two most recent fiscal years or any subsequent
interim period preceding De Vissers resignation, that if
further investigated may have: (i) materially impacted the
fairness or reliability of either: a previously issued audit
report or the underlying financial statements; or the financial
statements issued or to be issued covering the fiscal period(s)
subsequent to the date of the most recent financial statements
covered by an audit report (including information that may have
prevented it from rendering an unqualified audit report on those
financial statements), or (ii) caused De Visser to be
unwilling to rely on managements representations or be
associated with our financial statements, and (2) that, due
to their resignation, or for any other reason, De Visser did not
so expand the scope of its audit or conduct such further
investigation; or
|
|
|
|
(1) that information has come to their attention that it
has concluded materially impacts the fairness or reliability of
either (i) a previously issued audit report or the
underlying financial statements, or (ii) the financial
statements issued or to be issued covering the fiscal period(s)
subsequent to the date of the most recent financial statements
covered by an audit report (including information that, unless
resolved to De Vissers satisfaction, would prevent it from
rendering an unqualified audit report on those financial
statements), and (2) that, due to their resignation, or for
any other reason, the issue has not been resolved to De
Vissers satisfaction prior to its resignation.
|
Effective August 15, 2005, we engaged a new independent
accountant, Meaden & Moore, Ltd., Certified Public
Accountants, to audit our financial statements. In addition,
during our two most recent fiscal years, and subsequent interim
periods prior to engaging Meaden & Moore, neither BPI
nor someone on our behalf consulted Meaden & Moore
regarding: (i) the application of accounting principles to
a specified transaction, either completed or proposed;
(ii) the type of audit opinion that might be rendered on
our financial statements; or (iii) any matter that was
either the subject of a disagreement (as defined in paragraph
(a)(1)(iv) of Item 304 of
Regulation S-K)
or a reportable event (as described in paragraph (a)(1)(v) of
Item 304 of
Regulation S-K).
We provided De Visser a copy of the disclosure set forth in this
section prior to the date on which we filed the registration
statement that originally contained this disclosure. We also
filed De Vissers letter to the SEC responding to this
disclosure, which is required by Item 304(a) of
Regulation S-K,
as an exhibit to that registration statement.
21
Audit
Committee Report
The Audit Committee has met and held discussions with management
and the independent accountants. Management represented to the
Audit Committee that BPIs consolidated financial
statements were prepared in accordance with U.S. generally
accepted accounting principles, and the Audit Committee has
reviewed and discussed the consolidated financial statements
with management and our independent accountants. The Audit
Committee discussed the matters required by Statement on
Auditing Standards No. 61, Communications with Audit
Committees with our independent accountants.
BPIs independent accountants also provided to the Audit
Committee the written disclosures and the letter required by
Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, and
the Audit Committee discussed with the independent accountants
the firms independence. As part of its discussions, the
Audit Committee determined that Meaden & Moore, Ltd.
is independent of BPI.
Based on the Audit Committees review of the consolidated
financial statements, its discussions with management and the
independent accountants, and its review of the representation of
management and the report of the independent auditors to the
Audit Committee, the Audit Committee recommended to the Board of
Directors that the audited consolidated financial statements be
included in BPIs annual report to shareholders for the
fiscal year ended July 31, 2007.
Members of the Audit Committee as of October 29, 2007:
Dennis Carlton
Costa Vrisakis
SHAREHOLDER
PROPOSALS
Any shareholder who wishes to submit a proposal to be considered
for inclusion in next years proxy statement should send
the proposal to BPI Energy Holdings, Inc., addressed to the
Secretary, so that it is received on or before July 22,
2008. We suggest that all proposals be sent via certified mail,
return receipt requested.
Pursuant to the Business Corporations Act (British Columbia), a
qualified shareholder, being either a registered or beneficial
shareholder holding voting securities who has held those voting
securities for a period not less than the two years predating
the signing of the proposal, may submit a written proposal, no
longer than 1,000 words, for consideration at our next annual
general meeting. The proposal must be signed by the submitter
and a sufficient number of shareholders representing no less
than 1% of our issued and outstanding voting securities, and
received at our registered and records office no later than
three months prior to the anniversary of the date of our annual
meeting for the prior year (September 17, 2008). The
proposal must be accompanied by a declaration from the submitter
and each co-signatory containing the name and address of that
signatory, the number and class of voting securities owned, and,
if applicable, the name of the registered shareholder for those
shares.
If we have received a valid proposal, we must send to all
persons entitled to receive notice of our next annual meeting,
in accordance with the same time limits for sending the notice
of meeting, the text of the proposal, the names and mailing
addresses of the submitter and supporters, and the text of any
statement accompanying the proposal. Unless we receive more than
one proposal pertaining to substantially the same matter, we
must allow the submitter to present the proposal, in person or
by proxy, at the relevant annual meeting. If we receive more
than one proposal pertaining to substantially the same matter,
we must only comply with these provisions with respect to the
first proposal received by us.
If we do not intend to process a proposal because of a statutory
exemption from compliance with these provisions, we must, within
21 days after the proposal is received by our registered
and records office, send to the submitter a written notice of
our decision as well as the reason(s) why we believe we do not
have to process the proposal. The submitter has recourse to a
court of competent jurisdiction to review our decision.
22
ADDITIONAL
COPIES OF MEETING MATERIALS
Additional copies of the materials for the meeting, comprising
the notice of meeting, this proxy statement, our audited
financial statements for the fiscal year ended July 31,
2007, together with the Report of Independent Registered Public
Accounting Firm thereon, our Annual Report to Shareholders, and
the form of proxy, will be available at our transfer agent and
our registered office during normal business hours.
PRESENTATION
OF FINANCIAL STATEMENTS AND REPORT TO SHAREHOLDERS
Our audited financial statements for the fiscal year ended
July 31, 2007, together with our auditors report
thereon, and our Annual Report to Shareholders, are being mailed
to the shareholders of record together with this notice of
meeting and proxy statement and the form of proxy, on or about
November 20, 2007 and will be presented to the shareholders
at the meeting.
Additional information about us is available on the SECs
website located at www.sec.gov and on SEDAR at www.sedar.com.
Financial information is provided in our financial statements
and Managements Discussion and Analysis for our most
recently completed fiscal year, copies of which are available on
the SECs website and on SEDAR and are enclosed with the
mailing of this proxy statement.
APPROVAL
The contents and distribution to shareholders of this proxy
statement have been approved by our Board of Directors.
By Order of the Board of Directors
BPI ENERGY HOLDINGS, INC.
James G. Azlein
Director, President and Chief Executive Officer
November 16, 2007
23
BPI ENERGY HOLDINGS, INC.
9th Floor, 100 University Avenue
Toronto, Ontario M5J 2Y1
www.computershare.com
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Security Class
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Holder Account Number
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Form
of Proxy - Annual General Meeting to be held on December 17, 2007
This Form of Proxy is solicited by and on behalf of the Board of Directors and Management.
Notes to proxy
1.
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Every holder has the right to appoint some other person or company of their choice, who need
not be a holder, to attend and act on their behalf at the meeting. If you wish to appoint a
person or company other than the persons whose names are printed herein, please insert the
name of your chosen proxyholder in the space provided (see reverse).
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2.
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If the securities are registered in the name of more than one owner (for example, joint
ownership, trustees, executors, etc.), then all those registered should sign this proxy. If
you are voting on behalf of a corporation or another individual you may be required to provide
documentation evidencing your power to sign this proxy with signing capacity stated.
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3.
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This proxy should be signed in the exact manner as the name appears on the proxy.
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4.
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If this proxy is not dated, it will be deemed to bear the date on which it is mailed by
the Board of Directors and Management to the holder.
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5.
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The securities represented by this proxy will be voted as directed by the holder; however, if
such a direction is not made in respect of any matter, this proxy will be voted as recommended
by the Board of Directors and Management.
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6.
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The securities represented by this proxy will be voted or withheld from voting, in accordance
with the instructions of the holder, on any ballot that may be called for and, if the holder
has specified a choice with respect to any matter to be acted on, the securities will be voted
accordingly.
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7.
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This proxy confers discretionary authority in respect of amendments to matters identified in
the Notice of Meeting or other matters that may properly come before the meeting.
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8.
|
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This proxy should be read in conjunction with the accompanying documentation provided by
the Board of Directors and Management.
|
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Proxies submitted must be received by 2:00 pm, Central Time, on December 13, 2007.
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Fold
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VOTE USING THE TELEPHONE OR INTERNET 24 HOURS A DAY, 7 DAYS A WEEK!
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Call the number listed BELOW from a touch tone
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Go to the following web site:
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telephone.
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www.investorvote.com
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1-866-732-VOTE (8683) Toll Free
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If you vote by telephone or the Internet, DO NOT mail back this proxy.
Voting by mail
may be the only method for securities held in the name of a corporation or
securities being voted on behalf of another individual.
Voting by mail or by Internet
are the only methods by which a holder may appoint a person as
proxyholder other than the Board of Directors and Management nominees named on the reverse of this proxy. Instead of
mailing this proxy, you may choose one of the two voting methods outlined above to vote this proxy.
To vote by telephone or the Internet, you will need to provide your CONTROL NUMBER, HOLDER ACCOUNT
NUMBER and ACCESS NUMBER listed below.
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CONTROL NUMBER
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HOLDER ACCOUNT NUMBER
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ACCESS NUMBER
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10OC07054.E.SEDAR/000001/000001/i
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Appointment
of Proxyholder
The undersigned shareholder (Registered Shareholder) of BPI Energy
Holdings, Inc. (the Company) hereby appoints: James G. Azlein, a Director of
the Company, or failing this person,
Randall L. Elkins
, the Controller of the
Company,
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OR
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Print the name of the person you are
appointing if this person is someone
other than the Board of Directors Management
Nominees listed herein.
|
as my/our proxyholder with full power of substitution and to vote in accordance with the following
direction (or if no directions have been given, as the proxyholder sees fit) and all other matters
that may properly come before the
Annual General Meeting of Shareholders of BPI Energy Holdings,
Inc. to be held at the Morris University Center, 2nd Floor (Mississippi/Illinois Room), located at
Southern Illinois University at Edwardsville, Edwardsville, Illinois 62026 on Monday, December 17,
2007, at 2:00 P.M., Central Time
and at any adjournment thereof.
VOTING RECOMMENDATIONS ARE INDICATED BY
HIGHLIGHTED TEXT
OVER THE BOXES.
1. Election of Directors
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For
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Withhold
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For
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Withhold
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For
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Withhold
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01.
James G. Azlein
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o
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o
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02.
James E. Craddock
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o
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o
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03.
Dennis Carlton
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o
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o
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Fold
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04.
Joseph P. McCoy
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o
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o
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05.
David E. Preng
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o
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o
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06.
Costa Vrisakis
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o
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o
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For
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Against
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2. Appointment of Auditor
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Ratification
of appointment of Meaden & Moore, Ltd. as independent registered
public accounting firm of the Company.
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o
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o
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For
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Against
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3. Grant Proxyholder Authority
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To
grant the proxyholder authority to vote at his/her discretion on any
other business or amendment or variation to the previous
resolutions.
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o
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o
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Fold
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Authorized Signature(s) This section must be completed
for your instructions to be executed.
I/We authorize you to act in accordance with my/our instructions set out above. I/We hereby
revoke any proxy previously given with respect to the Meeting. If no voting instructions are
indicated above, this Proxy will be voted as recommended by the Board of Directors Management.
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Signature(s)
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Date
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MM/DD/YY
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Interim Financial Statements
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Annual Report
|
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Mark this box if you would like to receive interim financial statements and accompanying
Managements Discussion and Analysis by mail.
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o
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Mark this box if you would like to receive the Annual Report and
accompanying Managements Discussion and Analysis by mail.
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o
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If you are not mailing back your proxy, you may register online to receive the above financial
report(s) by mail at www.computershare.com/mailinglist.
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g
0 3 3 2 4 3
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A R 1
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B P P Q
+
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