UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement.
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials.
[ ] Soliciting Material Pursuant to 240.14a-12
PureSpectrum, Inc.
------------------
(Name of Registrant as Specified In Its Charter)
N/A
---
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies: N/A
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
PURESPECTRUM, INC.
(the "Company")
340 Eisenhower Drive
Building 600, Suite 610
Savannah, GA 31401
NOTICE OF THE 2010 ANNUAL MEETING OF STOCKHOLDERS
-------------------------------------------------
DATE: June 8, 2010
TIME: 10:00 a.m.
PLACE: Ralph Mark Gilbert Civil Rights Museum
460 Martin Luther King Jr. Blvd.
Savannah, Georgia 31401
Dear Stockholders:
At the Company's 2010 Annual Stockholders Meeting (the "Annual Meeting"),
we will ask you to:
(1) Elect directors, in the number and for the terms described in the
Proxy Statement;
(2) Ratify the selection of Pender Newkirk & Company LLP, CPAs as the
Company's independent registered public accounting firm for fiscal
year 2010; and
(3) Transact any other business, including stockholder proposals,
that may properly come before the Annual Meeting.
If you were a stockholder of record at the close of business on April 30,
2010, you may vote at the Annual Meeting. In addition to the proxy statement
and the proxy card with voting instructions, a copy of the Company's annual
report on Form 10-K, which is not part of the proxy soliciting material, is
enclosed.
It is important that your shares be represented and voted at the Annual
Meeting. Whether or not you plan to attend, please sign, date and return the
enclosed proxy card promptly in the accompanying postage-paid envelope. You may
revoke any proxy in the manner described in the Proxy Statement at any time
prior to its exercise at the Annual Meeting. If you attend the Annual Meeting
and prefer to vote in person, you may do so.
May 3, 2010
By Order of the Board of Directors,
/S/ Lee L. Vanatta
----------------------------------------
Lee L. Vanatta
President and Chief Executive Officer
PURESPECTRUM, INC.
(the "Company")
340 Eisenhower Drive
Building 600, Suite 610
Savannah, GA 31401
PROXY STATEMENT FOR THE
2010 ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 8, 2010 Beginning at 10:00 a.m.
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
Why did you send me this proxy statement?
We sent you this proxy statement and the enclosed proxy card because the
Board of Directors of PureSpectrum, Inc., a Delaware corporation (the
"Company"), is soliciting your proxy to vote at the Annual Meeting of the
Company's stockholders on June 8, 2010, beginning at 10:00 a.m. (the "Annual
Meeting"). The Annual Meeting will be held at the Ralph Mark Gilbert Civil
Rights Museum, 460 Martin Luther King Jr. Blvd., Savannah, GA 31401. This proxy
statement summarizes the information that you need to know to vote intelligently
at the Annual Meeting. However, you do not need to attend the Annual Meeting to
vote your shares. Instead, you may simply complete, sign and return the
enclosed proxy card. We will begin sending this proxy statement, the attached
Notice of Annual Meeting and the enclosed proxy card on May 7, 2010, to all
stockholders entitled to vote. Copies of the Notice of Annual Meeting, proxy
statement and annual report are also available on the Company's website at
http//www.purespectrumlighting.com. Only stockholders who owned the Company's
common stock at the close of business on April 30, 2010 (the "Record Date") are
entitled to vote. On the Record Date there were 298,730,682 shares of the
Company's common stock, par value $0.0001 per share (the "Common Stock")
outstanding held by 100 stockholders of record. The Common Stock is the
Company's only class of voting stock.
How many votes do I have?
Each share of the Common Stock that you own entitles you to one vote. The
enclosed proxy card indicates the number of shares of the Common Stock that you
own.
How do I vote by proxy?
Whether or not you plan to attend the Annual Meeting, we urge you to
complete, sign and return the enclosed proxy card and return it to us promptly
in the accompanying envelope. Returning the proxy card will not affect your
right to attend and vote at the Annual Meeting.
If you properly complete and sign the proxy card and send it to us in
advance of the Annual Meeting, your Proxy (the individual named on your proxy
card) will vote your shares as you have directed. If you sign the proxy card
but do not make specific choices, your Proxy will vote your shares as
recommended by the Board as follows:
-1-
(1) "FOR" the election of all seven (7) nominees for director;
(2) "FOR" the ratification of the selection of Pender Newkirk and
Company LLP, CPAs, as the Company's independent auditors for fiscal
year 2010; and
(3) "FOR" or "AGAINST," in the Proxy's discretion, with respect to
any other business which may properly come before the Annual Meeting.
May I revoke my proxy?
If you give a proxy, you may revoke it at any time before it is exercised.
You may revoke your proxy in any of three ways:
- You may send in another proxy with a later date, assuming that it
is actually received in advance of the Annual Meeting.
- You may notify the Company's Secretary in writing before the
Annual Meeting that you have revoked your proxy.
- You may vote in person at the Annual Meeting.
How do I vote in person?
If you plan to attend the Annual Meeting and vote in person, we will give
you a ballot when you arrive. However, if your shares are held in the name of
your broker, bank or other nominee, you must bring a letter or proxy from the
nominee indicating that you are the beneficial owner of the shares on the Record
Date in order for you to be able to vote at the meeting.
What constitutes a quorum and what vote is required to approve each proposal?
The presence in person or by proxy of the holders of a majority of the
issued and outstanding shares of Common Stock entitled to vote as of the Record
Date is necessary to constitute a quorum at the Annual Meeting. Abstentions and
broker non-votes are treated as present and are, therefore, counted to determine
a quorum. If a quorum is not present, the stockholders entitled to vote who are
present in person or represented by proxy have the power to adjourn the meeting
from time to time, without notice or other announcement, until a quorum is
present or represented. It is the intention of your Proxy to vote the shares
represented by the proxies held by him for such an adjournment. At any
adjourned meeting at which a quorum is present, any business may be transacted
that might have been transacted at the Annual Meeting as originally notified.
Assuming the presence of a quorum, the affirmative vote of the holders of a
plurality of the shares of Common Stock represented and voting at the Annual
Meeting is required for the election of directors. That is, the nominees
receiving the greatest number of votes will be elected. The affirmative vote of
the holders of a majority of the shares of Common Stock present in person or
represented by proxy at the Annual Meeting and entitled to vote thereon is
required to approve all other business that may properly come before the meeting
or any adjournment thereof.
-2-
Abstentions may be specified on all proposals except the election of
directors. Abstentions, with respect to any proposal, other than the election
of directors, will have the same effect as a vote against such proposal. With
regard to the election of directors, votes may be cast in favor of or withheld
from each nominee; votes that are withheld will be excluded entirely from the
vote and will have no effect of votes against the nominee. Broker non-votes, if
any, will not affect the outcome of the election of directors or the vote on any
other proposal.
Is voting confidential?
We keep all the proxies, ballots and voting tabulations private as a matter
of practice. We let only the Company's Inspector of Elections examine these
documents. We will not disclose your vote to management unless it is necessary
to comply with legal requirements. We will, however, forward to management any
written comments that you make,on the proxy card or elsewhere.
What are the costs of soliciting these proxies?
The Company will pay all the costs of soliciting these proxies, estimated
at $7,500. In addition to mailing proxy-soliciting material, the Company's
directors and employees may also solicit proxies in person, by telephone or by
other electronic means of communication. We will ask banks, brokers and other
institutions, nominees and fiduciaries to forward the proxy material to their
principals and to obtain authority to execute proxies. We will then reimburse
them for expenses.
GOVERNANCE OF THE COMPANY
The Board of Directors and Committees
The Company's Board of Directors oversees the business and affairs of the
Company and monitors the performance of its management. In accordance with
corporate governance principles, the Board does not involve itself in the
day-to-day operations of the Company. The directors keep themselves informed
through discussions with key executives and the Company's principle external
advisers, including legal counsel and outside auditors, by reading reports and
other materials that the Company's management sends to them and by participating
in Board and committee meetings.
The Board of Directors of the Company held two (2) meetings during the year
ended December 31, 2009. Each director attended at least 75% of the aggregate of
such meetings. Directors are encouraged to attend the annual meeting of
stockholders. Bill G. Garlen, Robert E. James II, Peter W. Krull and Frank A.
Slotin were and are "independent" as defined in the listing standards of the
NASDAQ Global Market ("NASDAQ").
The Board of Directors has a standing Audit Committee composed of Messrs.
Garlen, James, Krull and Slotin. Mr. Slotin presides as chairman of the Audit
Committee.
The Company does not have a standing nominating committee or a standing
compensation committee. With respect to a nominating committee, the entire
Board of Directors, a majority of which constituted independent directors, has
participated in the consideration of director nominees.
-3-
If the Board identifies a need to replace a current member of the Board, to
fill a vacancy on the Board, or to expand the size of the Board, the Board
considers candidates from a variety of sources. The process followed by the
Board to identify and evaluate candidates includes (a) meetings to evaluate
biographical information and background material relating to candidates and (b)
interviews of selected candidates by members of the Board. Recommendations by
the Board of candidates for inclusion in the Board's slate of nominees are based
upon criteria such as business experience and skills, independence, distinction
in their activities, judgment, integrity, the ability to commit sufficient time
and attention to the Board's activities and the absence of potential conflicts
with the Company's interests. The Board also considers any other relevant
factors that it may from time to time deem 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 all prospective
nominees.
The Board of Directors will consider all candidates recommended by a
stockholder (or group of stockholders) who owns at least 5% of the outstanding
shares of Common Stock and who has held such shares for at least one year as of
the date of the recommendation. A stockholder (or stockholders) meeting these
requirements is known as an "Eligible Stockholder." The Board may also, in its
discretion, consider candidates recommended by a stockholder owning less than 5%
of the outstanding shares of Common Stock. A stockholder wishing to recommend a
candidate must submit the following documents to the Secretary of the Company at
the Company's principal executive offices as shown on the notice for this
meeting not less than 120 calendar days prior to the date the Company's proxy
statement was released to stockholders in connection with the previous year's
annual meeting of stockholders:
- A recommendation that identifies the candidate and provides
contact information for such candidate;
- The written consent of the candidate to serve as a director of
the Company, if elected; and
- Documentation establishing that the stockholder making the
recommendation is an Eligible Stockholder.
Upon timely receipt of the required documents, the Secretary will determine
if the stockholder submitting the recommendation is an Eligible Stockholder
based on such documents. If the stockholder is not an Eligible Stockholder, the
Board may, but is not obligated to, evaluate the candidate and consider such
candidate for nomination to the Board. If the candidate is to be evaluated by
the Board, the Secretary will request a detailed resume, an autobiographical
statement explaining the candidate's interest in serving as a director of the
Company, a completed statement regarding conflicts of interest, and a waiver of
liability for background check from the candidate. Such documents must be
received from the candidate before the first day of February preceding the
annual meeting of stockholders.
-4-
With respect to the compensation committee, independent directors, to the
exclusion of the President and CEO or any other executive officer, have
participated in setting the compensation for the Company's three executive
officers. In each case, the executive's compensation has been fixed on an
annual basis in the executive's employment agreement, where the bonus is within
the discretion of the Board of Directors and any equity-based compensation
occurs sporadically rather than on an annual basis. In other words, thus far
the structure of our executive compensation has been fairly simple. For this
reason, it has been the view of the Board of Directors that, while a standing
compensation committee should be established in the very near future, no
standing compensation committee was appropriate for the Company during the
six-month period since the Company's combination with PureSpectrum, Inc. a
Nevada corporation ("PSPM"), in November 2009.
Compensation of Directors
Each independent director is entitled to receive $2,500 for each calendar
quarter that he or she served on the Board of Directors of the Company, as well
as $750 for each committee meeting attended by the director. Upon initial
election, each independent director is also entitled to be granted stock options
in an amount equal in value to $20,000 based on current market price of the
Company's common stock with an exercise price equal or above the current price
of the Company's common stock.
Communications to the Board of Directors
Stockholders and other interested parties are encouraged to communicate
directly with the Chairman of the Audit Committee by writing to him at the
Company's address. Each letter sent in accordance with the above instructions
will be automatically sent to all of the independent directors. The Company
generally will not forward to the directors a stockholder communication that it
determines to be primarily commercial in nature or relates to an improper or
irrelevant topic, or that requests general information about the Company.
Audit Committee
The Audit Committee assists the Board of Directors in its oversight of the
quality and integrity of the accounting, auditing, and reporting practices of
the Company. The Audit Committee's role includes overseeing the work of the
Company's internal accounting and auditing processes and discussing with
management the Company's processes to manage business and financial risk, and
for compliance with significant applicable legal, ethical, and regulatory
requirements. The functions of the Audit Committee are focused on three areas:
- the adequacy of the Company's internal controls and financial
reporting process and the reliability of the Company's financial
statements;
- the independence and performance of the Company's independent
auditors; and
- the Company's compliance with legal and regulatory requirements
The Audit Committee is responsible for the appointment, compensation,
retention, and oversight of the independent auditor engaged to prepare or issue
audit reports on the financial statements of the Company. The Audit Committee
periodically reviews the independent auditor's performance, fees and
independence from management.
-5-
The Directors who serve on the Audit Committee are all "Independent" as
defined in the standards of NASDAQ. That is, the Board of Directors has
determined that no Audit Committee member has a relationship to the Company that
may interfere with his or her independence from the Company and its management.
The Audit Committee relies on the expertise and knowledge of management and
the independent auditor in carrying out its oversight responsibilities. The
Board of Directors has determined that each Audit Committee member has
sufficient knowledge in financial and auditing matters to serve on the Audit and
Compliance Committee. In addition, the Board has determined that Frank A. Slotin
is an "Audit Committee financial expert" as defined by Securities and Exchange
Commission ("SEC") rules. The Board has adopted and annually reviews a written
charter setting out the functions the Audit Committee is to perform. The
current copy of the charter is attached to this Proxy Statement and is available
on the Company's website at http://www.purespectrumlighting.com.
Management has primary responsibility for the Company's financial
statements and the overall reporting process, including the Company's system of
internal controls. The independent auditors audit the annual financial
statements prepared by management, express an opinion as to whether those
financial statements fairly represent the financial position, results of
operations and cash flows of the Company in conformity with accounting
principles generally accepted in the United States of America, and discuss with
us any issues they believe should be raised with us. We monitor these
processes, relying without independent verification, on the information provided
to us and on the representations made by management and the independent
auditors.
This year, we reviewed the Company's audited financial statements as of and
for the fiscal year ended December 31, 2009, and met with both management and
Pender Newkirk & Company, LLP, CPAs, the Company's independent auditors ("PNC"),
to discuss the results of their examinations, the evaluations of the Company's
internal controls and the overall quality of the Company's financial reporting.
Management has represented to us that the financial statements were prepared in
accordance with accounting principles generally accepted in the United States of
America.
We have received from and discussed with PNC the written disclosure and the
letter required by the applicable requirements of the Public Company Accounting
Oversight Board ("PCAOB") regarding PNCs' communications with the Audit and
Compliance Committee concerning independence and have discussed with PNC its
independence. We also discussed with PNC the matters required to be discussed
by the statement on Auditing Standards No. 61, as adopted by the PCAOB in Rule
3200T.
Based on these reviews and discussions, we recommended to the Board of
Directors that the Company's audited financial statements be included in the
Company's annual report on Form 10-K for the fiscal year ended December 31,
2009, to be filed with the SEC. We have also selected PNC, as the Company
independent auditor for fiscal year 2010.
Frank A. Slotin, Chairman
Bill G. Garlen
Robert E. James II
Peter W. Krull
-6-
ITEM 1. - ELECTION OF DIRECTORS
General Information
The Company's Board of Directors is composed of seven members. Directors
are elected by the plurality of the shares of Common Stock entitled to vote and
present in person or by proxy at the Annual Meeting; that is, the nominees
receiving the largest number of votes will be elected. Under both the Company's
Amended and Restated Certificate of Incorporation and Amended and Restated
Bylaws, vacancies occurring on the Board of Directors between Annual Meetings
may be filled by the vote of a majority of the directors then in office to serve
for the unexpired term of the director whose vacancy is being filled.
Each proxy that a stockholder executes and returns will be voted according
to its terms. If a proxy does not otherwise specify, it will be voted for the
election of the nominees named below. Management of the Company has received
the consent of the nominees named in this Proxy Statement and their agreement to
serve as directors if elected.
Information Concerning Current Directors, Executive Officers and Nominees for
Director.
The biography of each nominated director of the Company follows. All seven
directors will be elected to serve a one-year term to expire at the Company's
annual meeting in 2011. Except as otherwise indicated, each nominee has been or
was engaged in his/her present or last principal occupation, in the same or a
similar position, for more than five years.
Lee L. Vanatta 52 Mr. Vanatta has served as the President, CEO and a
Director of the Company since June 3, 2009. He has
served as President, CEO and a director of PSPM
since June 2006 and, during 2006, as the Managing
Director of PureSpectrum, LLC, PSPM's predecessor
in interest. During 2003 - 2005, he served as
President and co-founder of PanaSteel, LLC, a
Savannah-based company engaged in the
manufacturing of pre-engineered, cold-formed
panelized steel forming systems for the commercial
and residential building industries. During 2001 -
2002, he served as President of TransWorld
Lighting, Inc. a Savannah-based producer of high
efficiency lighting products.
David Michael Conner 41 Mr. Conner has served as a Director of the Company
since November 6, 2009, and as a Director of PSPM
since July 2008. He is the principal of The Conner
Group, P.C., a Savannah-based law firm. Mr. Conner
has a broad-ranging litigation and business
development legal practice, with a concentration
on complex commercial matters, torts, business
organization and formation, corporate law and
governance and securities regulation and
litigation. He serves as general counsel to and ex
officio member of the Boards of Directors of
several companies, including Reliance Sleep
Centers of America, Inc., which owns and operates
sleep disorder diagnostic centers throughout the
southeastern United States; Health Care Principals
Group, Inc., which provides home health services
with significant operations in both Georgia and
South Carolina; Southern Media Associates, Inc.,
which owns and operates a variety of different
media outlets in the southeastern United States,
including multiple television stations; and Thakur
Hospitality Inc., which owns or manages hotel and
motel properties in the United States. Mr. Conner
previously practiced law at Bouhan Williams &
Levy, LLP, in Savannah, Georgia, for sixteen
years, where Mr. Conner was a partner. Mr. Conner
received his BBA degree in accounting in 1997 and
his JD degree in 1999, both from the University of
Georgia.
-7-
Bill G. Garlen 64 Mr. Garlen has served as a Director of the Company
since November 6, 2009. Since 1995, he has served
as the principal shareholder, President and CEO of
Southern Media Associates, Inc., a Jesup, Georgia-
based owner of My South Television Network, a
privately-held media company operating several
television stations with a broadcast base of over
two million viewers. Mr. Garlen serves on the Board
of Directors of Federal Bureau of Prisons, Jesup,
Georgia, and the Community Broadcasters
Association. Mr. Garlen received his BA in Business
Administration from Northwood University, Midland,
Michigan. Mr. Garlen serves on the Audit Committee.
Robert E. James II 40 Mr. James has served as a Director of the Company
since November 6, 2009, and as a director of PSPM
since April 2009. He has served as President of
Coastal Legacy Group, LLC, a Savannah, Georgia-
based real estate development firm since 2004.
During 2000 - 2004, Mr. James served as general
counsel of Diversiplex, Inc., an Atlanta-based
management consulting firm and, during 1995 - 2000
he was an attorney with Troutman Sanders, LLP in
Atlanta. He received his BA degree (magna cum
laude) from Howard University and a JD degree from
Harvard Law School. Mr. James serves on the Audit
Committee.
Peter W. Krull 40 Mr. Krull has served as a Director of the Company
since March 24, 2010. He has served as the
President of Krull & Company, a member of the
Minerva Planning Group, a Registered Investment
Advisor, a Darien, Georgia-based financial advisory
company, since 2004. Before founding Krull &
Company, Mr. Krull worked as an investment
counselor and financial advisor for BB&T
Investments and Merrill Lynch & Co., Inc. Krull &
Company specializes in providing socially
responsible and environmentally sustainable
financial services. He has been a writer and
frequent speaker on the subject of socially and
environmentally responsible investment strategies.
He serves on the Board of Trustees of the Science
Museum of West Virginia and is active with the
Sierra Club, Altamaha Riverkeeper and the Friends
of the UGA Marine Institute. Mr. Krull serves on
the Company's Audit Committee.
-8-
William R. Norton 66 Mr. Norton has served as Executive Vice
President, Secretary and Director of the Company
since November 6, 2009, and as PSPM's Executive
Vice President since July 1, 2009, as its Vice
President during June 2006 - July 1, 2009, as
its Secretary and a Director since June 2008.
During 2004 - 2006, he was an independent
consultant, advising companies on corporate
organizational matters. During 2003 - 2004, Mr.
Norton served as Vice President and Secretary of
TransWorld Lighting, Inc. During 1997-1999, he
was a member of the corporate acquisitions
department of Brown, Gibbons and Lang, a
Cleveland, Ohio-based investment banking firm.
Mr. Norton served as a member of the law
department of Reliance Electric Company of
Cleveland, Ohio, from 1976 through 1990 and as
its Vice President and General Counsel from 1990
through 1996. He served on Reliance Electric's
Management Committee from 1990 through 1996. Mr.
Norton received his B.A. in History and
Political Science from Hiram College and his
J.D. from Case-Western Reserve University School
of Law.
Frank A. Slotin 46 Mr. Slotin has served as a Director of the
Company since March 31, 2010. He has served as
the Managing Partner of Karp, Ronning & Tindol,
PC, a Savannah-based public accounting firm
since 2009. Mr. Slotin has been a practicing
certified public accountant since 1991. He is a
member of the Savannah Estate Planning Council,
the American Institute of Certified Public
Accountants (AICPA), the Georgia Society of
Certified Public Accountants and the Senior
Partner Network of Accounting Firms. Mr. Slotin
serves as the chairman of the Audit Committee
and serves as the "audit committee financial
expert."
Executive Officers and Employment Agreements
Lee L. Vanatta. Effective November 3, 2009, the Company assumed PSPM's
obligations under a five-year employment agreement, entered into by PSPM on
October 1, 2008, with Mr. Vanatta to serve as its President and CEO. Under the
agreement, he is entitled to an annual base salary of $275,000, four weeks paid
vacation and participation in all employee pension and welfare benefit plans
offered by the Company. Mr. Vanatta's employment may be terminated by the
Company for cause, i.e. (a) in the event of willful misconduct in the
performance of his duties or conviction of a crime involving moral turpitude,
(b) upon ninety days notice if he is prevented from discharging his duties due
to illness, accident or other disability for one or more periods totaling three
months during any consecutive twelve month period or (c) upon not less than
thirty days notice in the event of his material breach of the terms of the
agreement. The agreement prohibits Mr. Vanatta from competing with the Company
for two years after termination of the agreement. The agreement was amended,
effective August 1, 2009, whereby Mr. Vanatta's base salary was reduced to
$217,000 per year.
-9-
William R. Norton. Effective November 3, 2009, the Company assumed PSPM's
obligations under a five-year employment agreement, entered into by PSPM on
October 1, 2008, with Mr. Norton to serve as its Executive Vice President and
Secretary. Under the agreement, he is entitled to an annual base salary of
$225,000, four weeks paid vacation and participation in all employee pension and
welfare benefit plans offered by the Company. The agreement was amended,
effective August 1, 2009, whereby Mr. Norton's base salary was reduced to
$185,000. In all other respects, Mr. Norton's employment agreement is identical
to Mr. Vanatta's.
Susan W. Norton. Effective November 3, 2009, the Company assumed PSPM's
obligations under a five-year employment agreement, entered into by PSPM on July
1, 2009, with Mrs. Norton to serve as its Director of Finance/Controller. Under
the agreement, she is entitled to an annual base salary of $105,000, four weeks
paid vacation and participation in all employee pension and welfare benefit
plans offered by the Company. In all other respects, Mrs. Norton's employment
agreement is identical to Mr. Vanatta's.
Susan W. Norton, age 52, was appointed Acting Chief Financial Officer on
March 24, 2010. She has served as the Company's Vice President of
Administration and Compliance since January 14, 2010. Ms. Norton was formerly
the Company's Director of Accounting and Administration, a position she was
appointed to in November 2009. She joined PSPM in September 2008 as Chief
Financial Officer and held that position until July 2009 when she became PSPM's
Director of Accounting and Administration. Prior to joining PSPM, during 2003 -
2008, Ms. Norton held a number of accounting positions at Armstrong Atlantic
State University (AASU). Her last position with AASU was Director of Accounting
and Fiscal Affairs, where she was responsible for all general accounting
functions, the student accounting office, the preparation of the annual
financial reports and coordination of the financial software system. Ms. Norton
is married to William R. Norton, the Company's Executive Vice President and
Director.
The biographies of Lee L. Vanatta, the Company's President and CEO, and
William R. Norton, the Company's Executive Vice President and Secretary, are
included on pages 9 and 10 above.
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF ALL NOMINEES FOR
DIRECTOR
-10-
BENEFICIAL OWNERSHIP OF THE COMPANY'S COMMON STOCK
Beneficial Owners of More than 5% of the Common Stock:
The following table shows all persons whom we know to be "beneficial
owners" of more than 5% of the outstanding shares of the Common Stock as of
April 15, 2010:
Name and Address
of Beneficial Owner Number of Shares Percent of Class (1)
--------------------------------------------- ------------------------ -------------------------
Caesar Capital Group, LLC
1701 W. Northwest Hwy., Suite 110
Grapevine, Texas 76051 18,571,430(2) 6.32%
* Information relating to beneficial ownership of the Common Stock is based
upon "beneficial ownership" concepts set forth in ruled of the SEC under Section
13(d) of the Securities Exchange Act of 1934, as amended. Under such rules, a
person is deemed to be a "beneficial owner" of a security if that person has or
shares "voting power," which includes the power to vote or direct the voting of
such security, or "investment power," which includes the power to dispose of or
to direct the disposition of such security. A person is also deemed to be a
beneficial owner of any security of which that person has the right o acquire
beneficial ownership within 60 days. Under the rules, more than one person may
be deemed to be a beneficial owner of the same securities, and a person may be
deemed to be a beneficial owner of securities as to which he has no beneficial
interest. For instance, beneficial ownership includes spouses, minor children
and other relatives residing in the same household, and trusts, partnerships,
corporations or deferred compensation plans which are affiliated with the
principal.
(1) The percentage is based on 293,730,682 shares of Common Stock outstanding as
of April 15, 2010, plus shares of Common Stock that may be acquired by the
beneficial owner within 60 days of April 15, 2010, by exercise of options and/or
warrants.
(2) Michael Woloshin holds voting and dispositive power for Caesar Capital
Group, LLC. Mr. Woloshin is the Managing Member of Caesar Capital Group, LLC.
-11-
Stock Ownership of Directors and Executive Officers
The following chart shows the number of shares of the Common Stock that
each executive officer, director and nominee for director of the Company
beneficially owned as of April 15, 2010, and the total Common Stock that such
persons own as a group*:
Name and Address
of Beneficial Owner Number of Shares Percent of Class (1)
--------------------------------------------- ------------------------ -------------------------
Lee L. Vanatta 9,399,062 3.20%
David Michael Conner 306,667(2) --**
Bill G. Garlen 285,714(3) --**
Robert E. James, II 28,571(4) --**
Peter W. Krull 220,000(5) --**
Susan W. Norton 1,592,209 --**
William R. Norton 8,136,050 2.77%
Frank A. Slotin 449,700(6) --**
------------------------
Total as a group 20,417,973 6.94%
* Information relating to beneficial ownership of the Common Stock is based
upon "beneficial ownership" concepts set forth in ruled of the SEC under
Section 13(d) of the Securities Exchange Act of 1934, ad amended. Under
such rules, a person is deemed to be a "beneficial owner" of a security if
that person has or shares "voting power," which includes the power to vote
or direct the voting of such security, or "investment power," which
includes the power to dispose of or to direct the disposition of such
security. A person is also deemed to be a beneficial owner of any security
of which that person has the right o acquire beneficial ownership within 60
days. Under the rules, more than one person may be deemed to be a
beneficial owner of the same securities, and a person may be deemed to be a
beneficial owner of securities as to which he has no beneficial interest.
For instance, beneficial ownership includes spouses, minor children and
other relatives residing in the same household, and trusts, partnerships,
corporations or deferred compensation plans which are affiliated with the
principal.
** Less than 1%.
(1) The percentages are based on 293,730,682 shares of Common Stock outstanding
on April 15, 2010, plus shares of Common Stock that may be acquired by the
beneficial owner within 60 days of April 15, 2010, by exercise of options
and/or warrants.
(2) Includes 200,000 options to purchase Common Stock.
(3) Includes 285,714 options to purchase Common Stock.
(4) Includes 28,571 options to purchase Common Stock.
(5) Includes 15,000 shares owned by Mr, Krull's spouse as to which he disclaims
beneficial ownership.
(6) Includes 124,500 shares owned by Mr. Slotin's children as to which he
disclaims beneficial ownership.
-12-
EXECUTIVE COMPENSATION
Compensation of Executive Officers
The following table sets forth the compensation and bonus paid to named
executive officers of the Company for the last two fiscal years.
Summary Compensation Table
--------------------------
Change in
Pension
Value and
Nonquali-
Non-Equity fied
Incentive Deferred All
Plan Compensa- Other
Name and Principal Stock Option Compen- tion Compen-
Position Year Salary Bonus Awards Awards sation Earnings sation Total
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)
Lee L. Vanatta, President 2009 $237,335 $0 $0 $ 0 $0 $0 $0 $237,335
and CEO of the Company 2008 $139,925 $0 $0 $495,694(1) $0 $0 $0 $635,619
Aaron Fishl Paluch,
Former President and CEO 2009 $0 $0 $0 $0 $0 $0 $0 $0
of the Company 2008 $0 $0 $0 $0 $0 $0 $0 $0
William R. Norton,
Executive Vice president
and Secretary of the 2009 $182,885 $0 $0 $ 0 $0 $0 $0 $182,885
Company 2008 $199,515 $0 $0 $401,139(1) $0 $0 $0 $600,654
Gregory J. McClean
Former Chief Financial 2009 $95,517 $0 $0 $127,870(1) $0 $0 $0 $223,387
Officer of the Company 2008 $ 0 $0 $0 $ 0 $0 $0 $0 $0
(1) The values were derived based on assumptions discussed in Note 1 to the
Company's financial statements for the years ended December 31, 2009 and 2008.
-13-
Outstanding Equity Awards at Fiscal Year-End
--------------------------------------------
Option Awards Stock Awards
Equity
Incentive
Equity Plan
Incentive Awards:
Plan Market or
Equity Awards: Payout
Incentive Number Number of Value of
Plan of Shares Market Unearned Unearned
Awards: or Units Value of Shares, Shares,
Number of Number of Number of of Shares or Units or Units or
Securities Securities Securities Stock Units of Other Other
Underlying Underlying Underlying Option That Have Stock Rights Rights
Unexercised Unexercised Unexercised Exercise Option Not That Have That Have That Have
Options(#) Options (#) Unearned Price Expiration Vested Not Not Not
Name Exercisable Unexercisable Options (#) ($) Date (#) Vested ($) Vested (#) Vested ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)
Lee L. Vanatta 500,000 -0- -0- $0.250 212/2010 -0- -0- -0- -0-
William R. Norton 300,000 $0.250 2/1/2010
1,500,00 0.015 9/1/2012
450,000 0.015 1/15/2013
2,500,000 -0- --0- 0.015 3/3/2013 -0- -0- -0- -0-
Gregory J. McLean 300,000 $0.690 5/1/2013
200,000 -0- --0- $0.350 9/1/2013 -0- -0- -0- -0-
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's officers and
directors and persons who beneficially own 10% or more of the outstanding shares
of Common Stock (the "Reporting Persons") to file reports of ownership and
changes of ownership with the SEC and to furnish the Company with copies of
Section 16(a) forms so filed. Based solely on a review of copies of such forms
received, the Company believes that all of the Reporting Persons timely met
their filing obligations for the fiscal year ended December 31, 2009, except as
follows: each of Messrs. Norton, Conner and James filed his Form 3 on March 24,
2010, Mr. Garlen filed his Form 3 on March 29, 2010, and each of Messrs. Lee and
Norton filed his Form 4 on March 29, 2010.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company subleased office space on a month to month basis from and paid
for marketing expenses incurred on behalf of the Company by United Marketing
Company, a related party owned by an officer of the Company. The rent and
marketing expenses for 2009 were $1500 and $726, respectively.
A member of the Board of Directors is also a partner in the Company's
primary outside legal counsel. During 2009, the firm billed PSPM and the Company
$288,899 in legal fees and forgave past due invoices in the amount of $149,339.
In January 2009, the Company's President and CEO signed a personal
guarantee for the $250,000 convertible debt issued by PSPM on January 27, 2009.
During 2009, an officer of the Company loaned PSPM a total of $53,800 of which
$18,400 was repaid on August 28, 2009. The loan is payable upon demand and
accrues interest at 5% per annum. On November 23, 2009, an officer of the
Company loaned $18,867 to the Company for working capital purposes. The loan is
payable on demand and bears an interest rate of 12% per annum; at December 31,
2009, its outstanding balance together with accrued interest was $29,942. In
December 2009, an officer provided $205,111 in loans to the Company. The loans
are payable upon demand and accrue interest at 5% per annum payable quarterly.
-14-
On December 22, 2009, in connection with a refinancing transaction with
holders of two $125,000 convertible promissory notes, the Company's President
and CEO and certain other officers of the Company assigned, receiving no
consideration or any other compensation, a total of 15,000,000 warrants to such
noteholders in a private transaction. The exercise price of these warrants was
reset and the warrants were immediately exercised, yielding $380,000 in proceeds
to the Company during December 2009 and January 2010.
ITEM 2. - RATIFICATION OF SELECTION OF INDEPENDENT AUDITOR
You are asked to ratify the Audit Committee's selection of Pender Newkirk &
Company LLP, CPAs ("PNC"), as the Company's independent registered public
accounting firm for 2010. PNC has audited the accounts of the Company for the
year ended December 31, 2009. The Board of Directors considers it desirable to
continue the services of PNC.
On January 18, 2010, the Company engaged PNC as its new independent
accountants, commencing with the audit for the fiscal year ended December 31,
2009, and thereby dismissed Davis Accounting Group, PC. The decision to change
independent accountants was approved by the Company's Board of Directors.
The reports of Davis Accounting Group PC for the year ended December 31,
2008 contained no adverse opinion or disclaimer of opinion, and was not
qualified or modified as to uncertainty, audit scope or accounting principle.
The report of Davis Accounting Group PC on the Company's financial statements
for the year ended December 31, 2008 did however contain explanatory paragraphs
describing an uncertainty about the Company's ability to continue as a going
concern.
In connection with the audit for the fiscal year ended December 31, 2008
and all interim periods preceding the dismissal, there have been no
disagreements with Davis Accounting Group, PC, on any matter of accounting
principles or practice, financial statement disclosure, or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of Davis
Accounting Group, PC, would have caused them to make reference thereto in their
report on the financial statements for such year.
During the fiscal year ended December 31, 2007 and to January 14, 2010, the
Company had not consulted with PNC on any items concerning the application of
accounting principles to a specified transaction, the type of audit opinion that
might be rendered on the Company's financial statements, or the subject matter
of a disagreement or reportable event with the former auditor.
Although current law, rules, and regulations, as well as the charter of the
Audit Committee, require the Company's independent registered public accounting
firm to be engaged, retained, and supervised by the Audit Committee, the Board
considers the selection of the independent registered public accounting firm to
be an important matter of stockholder concern and is submitting the selection of
PNC for ratification by stockholders as a matter of good corporate practice.
The affirmative vote of holders of a majority of the shares of common stock
represented at the meeting is required to approve the ratification of the
selection of PNC as the Company's independent registered public accounting firm
for the current fiscal year.
-15-
Fees Paid to the Independent Registered Public Accounting Firm
The fees billed by PNC for professional services rendered to the Company
during 2009 are set forth below. The Audit Committee has concluded that the
provision of non-audit services by the independent registered public accounting
firm to the Company did not and does not impair or compromise the auditors'
independence.
2009
--------------
Audit Fees $113,174
Audit-Related Fees -0-
Tax fees 7,564
All Other Fees -0-
--------------
Total $120,738
Pre-Approval of Services Provided By the Independent Registered Public
Accounting Firm.
The Audit Committee has responsibility for appointing, setting compensation
for and overseeing the work of the Company's independent registered public
accounting firm and has established a policy concerning the pre-approval of
services performed by the Company's independent registered public accounting
firm. Each proposed engagement not specifically identified by the SEC as
impairing independence is evaluated for independence implications prior to
entering into a contract with the independent registered public accounting firm
for such services. The Audit Committee has approved in advance certain
permitted services whose scope is consistent with auditor independence. These
services are (i) services associated with SEC registration statements, other
documents filed with the SEC or other documents issued in connection with
securities offerings (for example, comfort letters or consents), (ii)
consultations related to adoption of new accounting or auditing pronouncements,
disclosure requirements or other accounting related regulations and (ii) audits
of employee benefit plans, if any. If the project is in a permitted category;
it is considered pre-approved by the Audit Committee. All other services
require specific pre-approval by the Audit Committee. On a quarterly basis, the
Audit Committee reviews a summary listing all service fees, along with a
reasonably detailed description of the nature of the engagement.
All audit services performed by PNC in fiscal year 2009 were pre-approved
by the Audit Committee.
Representatives of PNC intend to be present at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE
SELECTION OF PENDER NEWKIRK & COMPANY LLP, CPAS, AS THE COMPANY'S INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM.
-16-
OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING
Management of the Company knows of no matters other than those above that
are to be brought before the 2010 Annual Meeting. However, if any other matter
should be presented for consideration and voting at the Annual Meeting or any
adjournment thereof, it is the intention of the proxy holder to vote the Proxy
in accordance with his judgment of what is in the best interest of the Company.
INFORMATION ABOUT STOCKHOLDER PROPOSALS
Under the rules of the SEC, if a stockholder wishes the Company to include
a proposal in the proxy statement and form of proxy for presentation at the 2011
Annual Meeting of Stockholders, the proposal must be received by the Company at
its principal executive offices by not less than 120 calendar days in advance of
May 1, 2011, or not later than December 1, 2010. The proposal should be sent to
the attention of the Secretary of the Company.
Under the Company's Bylaws, if you wish to nominate directors or bring
other business before the 2011 Annual Meeting without such item being included
in the Company's 2011 Proxy:
- You must notify the Secretary in writing not less than 30 days
before the Annual Meeting.
- If the Company gives you fewer than 40 days' notice or prior
public disclosure of the meeting date, however, you must notify the
Secretary of the Company within 10 days after the notice of the
meeting date was mailed or publicly disclosed.
- Your notice must contain the specific information that the
Company's Bylaws require.
Please note that these requirements relate only to matters that you wish to
bring before your fellow stockholders at an Annual Meeting. They are separate
from the SEC's requirements to have your proposal included in the Company's
proxy statement.
If you would like a copy of the Company's Bylaws, the Company will send you
one without charge at your request.
BY ORDER OF THE BOARD OF DIRECTORS
/S/ Lee L. Vanatta
----------------------------------------
Lee L. Vanatta
President and Chief Executive Officer
-17-
PROXY
PURESPECTRUM, INC. THIS PROXY IS SOLICITED ON BEHALF OF THE
340 Eisenhower Drive BOARD OF DIRECTORS. The undersigned hereby
Building 600, Suite 610 appoints Lee L. Vanatta, as Proxy with the
Savannah, GA 31406 power to appoint his substitute, and
hereby authorizes him to represent and to
vote as designated below all the shares of
the common stock of PureSpectrum, Inc.
held of record by the undersigned on April
30, 2010, at the Annual Meeting of
Stockholders to be held on June 8, 2010,
or any adjournment thereof.
A. ELECTION OF DIRECTORS (The Board of Directors recommends a vote "FOR" all
nominees listed below.)
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY [ ] ABSTAIN
(except as marked to the contrary for all nominees listed
below) below.
Lee L. Vanatta Robert E. James, II
David Michael Conner William R. Norton
Bill G. Garlen Frank A. Slotin
Peter W. Krull
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
--------------------------------------------------------------------------------
B. RATIFICATION OF PENDER NEWKIRK & COMPANY LLP, CPAS, (The Board of Directors
recommends a vote "FOR" ratification of Pender Newkirk & Company LLP, CPAs
as the Company's independent registered public accounting firm for the year
2010.
[ ] FOR ratification of Pender [ ] AGAINST [ ] ABSTAIN
Newkirk & Company, LLP, CPAs
as the Company's independent
registered public accounting
firm for the fiscal year 2010.
C. IN HIS DISCRETION, THE PROXY IS AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING. [ ] YES [ ] NO
This Proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. If no direction is made, this Proxy will be voted
FOR the election of all listed nominees and, at the Proxy's direction, on any
other matter that may properly come before the Annual Meeting. Please sign
exactly as name appears below. When joint tenants hold shares, both should
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign in full corporate
name by President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE __________________________________, 2010
PROXY CARD PROMPTLY USING THE ENCLOSED Date
ENVELOPE. _______________________________________
Signature
_______________________________________
Signature if held jointly
ADDENDUM 1
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS OF
PURESPECTRUM, INC.
I. PURPOSE AND AUTHORITY
The Audit Committee (the "Committee") is designated by the Board of
Directors (the "Board") of PureSpectrum, Inc. (the "Company") for the purposes
of:
1. assisting the Board in fulfilling its responsibilities for
general oversight of (i) the accounting and financial reporting
processes of the Company and audits of its financial statements,
including the integrity of the Company's financial statements,
financial reporting process and systems of internal controls; (ii)
compliance with the Company's policies and procedures and with legal
and regulatory requirements applicable to the Company; (iii) the
outside auditor's qualifications and independence; and (iv) the
performance of the Company's internal audit function and outside
auditors;
2. providing an avenue of communication among the outside auditors,
management, the internal auditing department and the Board;
3. reviewing areas of potential significant financial risk to the
Company; and
4. preparing a report as required by the proxy rules of the
Securities and Exchange Commission (the "SEC") to be included in the
Company's annual proxy statement.
The Committee has the authority to conduct any investigations or inquiries
it deems appropriate to fulfilling its responsibilities, and has direct access
to the outside auditor as well as the internal audit department and any
employees of the Company. The Committee also has the authority to engage
independent counsel, accountants and such other advisors as it deems necessary
to carry out its duties. The Company must provide appropriate funding, as
determined by the Committee, for the payment of: (i) compensation to any outside
auditor engaged for the purpose of preparing or issuing an audit report or
performing other audit, review or attest services for the Company, (ii)
compensation to any independent counsel, accountants or other advisors engaged
by the Committee, and (iii) ordinary administrative expenses of the Committee
that are necessary or appropriate in carrying out its duties.
The Committee may (i) adopt policies and procedures for the pre-approval,
as required by Section 10A(i) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), of audit and non-audit services to be provided to the
Company by the outside auditor, provided the policies and procedures are
detailed as to the particular service and the Committee is informed of such
service and that such policies and procedures do not include the delegation of
the Committee's responsibilities to management; and (ii) delegate to a
designated Member or Members of the Committee (the "Members") the authority to
pre-approve any such audit and non-audit services, so long as any such approvals
by such Member or Members are disclosed to the Committee at its next scheduled
meeting.
II. COMPOSITION AND MEETINGS
The Committee shall have at least three (3) Members and shall be composed
entirely of independent directors within the meaning of Section 10A(m) of the
Exchange Act, Rule 10A-3(b)(1) of the SEC and the applicable rules of any market
on which securities of the Company may be listed for trading. All Members shall
be financially literate, as interpreted by the Board, and, not later than
February 28, 2011, at least one Member shall be an "audit committee financial
expert" as defined in the rules and regulations of the SEC. In addition, a
Member may not serve on more than two other public company audit committees
unless the Board determines that such simultaneous service would not impair the
ability of the Member to serve effectively on the Committee.
Members shall be appointed by, and serve at the pleasure of, the Board. The
Board may designate one Member to serve as the Committee chair (the "Chair"). If
no such person is so designated, the Committee may designate the Chair.
The Committee shall meet as frequently as circumstances dictate. In advance
of any meeting, the Chair shall approve and cause to be distributed an agenda,
which shall be developed in consultation with management, the director of the
internal audit department, the outside auditor, the independent counsel, if any,
and the Members. A majority of the Members shall constitute a quorum, and the
action of a majority of the Members at a meeting at which a quorum is present
will be the action of the Committee.
The Committee shall meet in separate executive sessions and also
periodically in private sessions with management, the director of the internal
auditing department and the outside auditor. The Committee may ask members of
management or others to attend its meetings and provide pertinent information as
necessary.
III. RESPONSIBILITIES AND DUTIES
A. Review Procedures
1. The Committee shall review and reassess the adequacy of this
Charter at least annually. Also, the Committee shall submit this
Charter and any changes to the Board for approval.
2. The Committee shall meet with management and the outside
auditor to discuss the Company's annual financial statements and
the report of the outside auditor thereon to be included in the
Company's Annual Report on Form 10-K, including the Company's
disclosures under "Management's Discussion and Analysis of
Financial Condition and Results of Operations." The Committee
shall review and consider with the outside auditors the matters
required to be discussed by Statement of Auditing Standards No.
61 ("SAS No. 61") and any significant issues encountered in the
course of the audit work, including: (a) any restrictions on the
scope of activities or on access to required information; (b) the
adequacy of internal controls; (c) any significant disagreements
with management; and (d) any audit problems or difficulties with
management's response. Following such review and discussions, if
so determined by the Committee, it shall recommend to the Board
that the annual financial statements be included in the Company's
annual report.
3. The Committee shall meet with management and the outside
auditor to discuss the Company's interim financial results to be
included in each of the Company's Quarterly Reports on Form 10-Q,
including the Company's disclosures under "Management's
Discussion and Analysis of Financial Condition and Results of
Operations." Each such review shall include any matters required
to be discussed by SAS No. 61 and any significant changes to the
Company's accounting principles, and shall occur prior to the
filing of each Quarterly Report on Form 10-Q.
4. The Committee shall review the types and presentations of
information to be included in the Company's earnings press
releases (paying particular attention to any use of "proforma" or
"adjusted" non-GAAP information) and other public dissemination,
discuss the earnings press releases and review any financial
information and earnings guidance provided by the Company to
analysts and rating agencies.
5. The Committee shall also review: (a) major issues regarding
accounting principles and financial statement presentations,
including any significant changes in the Company's selection or
application of accounting principles, and major issues as to the
adequacy of the Company's internal controls and any special audit
steps adopted in light of material control deficiencies; (b)
analyses prepared by management and/or the outside auditor
setting forth significant financial reporting issues and
judgments made in connection with the preparation of the
financial statements, including analyses of the effects of
alternative GAAP methods on the financial statements; and (c) the
effect of regulatory and accounting initiatives, as well as
off-balance sheet structures, on the financial statements of the
Company.
-2-
6. The Committee shall instruct the outside auditor to report
to the Committee on all critical accounting policies and
practices of the Company, all alternative treatments of financial
information within generally accepted accounting principles that
have been discussed with management, ramifications of the use of
such alternative disclosures and treatments and the treatment
preferred by the outside auditor, and other material written
communications between the outside auditor and management, such
as any management letter or schedule of unadjusted differences,
and shall discuss the same with the outside auditors and
management.
7. The Committee shall discuss guidelines and policies of the
Company with respect to risk assessment and risk management.
8. The Committee shall review all related-party transactions
and potential conflict of interest situations where appropriate.
9. The Committee shall conduct an annual self-evaluation of its
performance.
B. Outside Auditor
1. The Committee shall appoint the outside auditor, recommend
(if appropriate) ratification of that appointment by the
Company's shareholders, approve all audit fees and terms, oversee
the work of any outside auditor appointed by the Company
(including resolution of any disagreements between management and
the outside auditor regarding financial reporting) for the
purpose of preparing or issuing an audit report or performing
other audit, review or attest services for the Company, evaluate
the performance of the outside auditor and, if so determined by
the Committee, replace the outside auditor; it being acknowledged
that the outside auditor is accountable and must report directly
to the Committee and ultimately to the Board, as representatives
of the stockholders.
2. At least annually, if required under applicable law, the
Committee shall obtain and review a report by the outside auditor
describing: (a) the firm's internal quality-control procedures;
(b) any material issues raised by the most recent internal
quality-control review, or peer review, of the firm, or by any
inquiry or investigation by governmental or professional
authorities, within the preceding five years, respecting one or
more independent audits carried out by the firm, and any steps
taken to deal with any such issues; and (c) all relationships
between the outside auditor and the Company in order to assess
the auditor's independence.
3. The Committee shall receive and evaluate the written
disclosures and the letters that the outside auditor is required,
under the applicable requirements of the Public Company
Accounting Oversight Board to deliver to the Committee regarding
its independence, discuss with the outside auditor any disclosed
relationships or services that may impact its objectivity and
independence and, if so determined by the Committee as part of
its evaluation, take, or recommend that the Board take,
appropriate action concerning independence of the outside
auditor.
4. The Committee shall approve, in advance of their
performance, all audit services (which may entail providing
comfort letters in connection with securities underwritings) and
non-audit services (including tax services) to be provided to the
Company by its outside auditor; provided, however, that the
Committee shall not approve any of the following non-audit
services proscribed by Section 10A(g) of the Exchange Act in the
absence of an applicable exemption or except as otherwise
permitted by the rules and regulations of the SEC: (a)
bookkeeping or other services related to the accounting records
or financial statements of the Company;
-3-
(b) financial information systems design and implementation;
(c) appraisal or valuation services, fairness opinions, or
contribution-in-kind reports;
(d) actuarial services;
(e) internal audit outsourcing services;
(f) management functions or human resources;
(g) broker or dealer, investment adviser, or investment banking
services;
(h) legal services and expert services unrelated to the audit;
and
(i) any other service that the Public Company Accounting
Oversight Board determines, by regulation, is impermissible.
5. The Committee shall set clear hiring policies for employees
or former employees of the outside auditor.
C. Internal Audit Function
1. The Committee shall review the budget, plans, organizational
structure and qualifications of the internal audit function, as
needed.
2. The Committee shall review significant reports prepared by
the internal audit function, together with management's response
thereto and follow-up to these reports. In the event that such
reports concern any significant exposures, fraud or regulatory
noncompliance, this review should include consideration of the
internal controls that should be strengthened to reduce the risk
of a similar event in the future.
3. The Committee shall appoint the leadership of the internal
audit function, approve all compensation and evaluate its
performance.
D. Other Responsibilities
1. The Committee shall establish procedures for the receipt,
retention and treatment of complaints received by the Company
regarding accounting, internal accounting controls or auditing
matters, and confidential and anonymous submission by employees
of the Company of concerns regarding questionable accounting or
auditing matters.
2. The Committee shall oversee the development of, and
recommend for adoption by the Board, a code of business conduct
and ethics for employees, officers and directors as required by
the applicable rules of any market on which securities of the
Company may be listed for trading, periodically review and assess
the code of business conduct and ethics and recommend
modifications to the Board as appropriate.
-4-
3. The Committee shall maintain minutes of its meetings and
report to the Board regularly on the activities of the Committee.
4. The Committee shall provide for the education and training
of the Members, as needed.
5. The Committee shall perform all such other duties and
responsibilities as it deems necessary and appropriate to
accomplish the foregoing or as may be assigned from time to time
by the Board.
Approved by the Board of Directors
Date: March 24, 2010
-5-