UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
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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Filed by a Party other than the Registrant
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Check the
appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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LIVE CURRENT MEDIA,
INC.
(Name of
the Registrant as Specified In Its Charter)
DAVID
JEFFS
JOHN DA
COSTA
CARL
JACKSON
SUSAN
JEFFS
CAMERON
PAN
ADAM
RABINER
AMIR
VAHABZADEH
(Name(s)
of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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fee required.
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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of each class of securities to which transaction applies:
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calculated and state how it was determined):
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Check box if any part of the fee is offset as provided by Exchange Act
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paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its
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David
Jeffs
Wagensteigstrasse
10
79274
Sankt Märgen
Germany
September 24 ,
2010
Dear
Fellow Stockholder:
I am the
beneficial owner of 1,136,866 shares of common stock, par value $0.001 per share
of Live Current Media Inc., a Nevada corporation, representing approximately
3.74% of the outstanding shares of Live Current’s common stock. For the reasons
set forth in the attached Proxy Statement, I believe that the current board of
directors of the company should be replaced. I am therefore seeking your support
at Live Current’s annual meeting of stockholders, including any adjournments or
postponements of it, and any meeting that may be called in lieu of it, scheduled
to be held at the Golden Nugget Hotel, 129, East Fremont Street,, Las Vegas,
Nevada, on October 12, 2010 at 2:00 pm PacificTime, for the following
proposals:
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to
elect seven directors:
David
Jeffs,
Cameron Pan, John Da Costa, Carl Jackson, Susan Jeffs, Adam
Rabiner and Amir Vahabzadeh to Live Current’s board to hold office until
the 2011annual meeting or until their respective successors are duly
elected and qualified
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to
ratify the appointment of Davidson & Company LLP to serve as the
company’s independent public accountants for the fiscal year ending
December 31, 2010
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to
consider such other business as may properly come before the annual
meeting.
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We urge
you to consider carefully the information contained in the attached Proxy
Statement and then support these efforts by signing, dating and returning the
enclosed
WHITE
proxy
card today. The attached Proxy Statement and the enclosed
WHITE
proxy card are first
being furnished to stockholders on or about September 24, 2010.
You may
have received, or may receive in the future, a separate proxy solicitation from
the company. For all of the reasons discussed in the materials included with
this letter, I strongly urge you to REJECT Live Current’s solicitation and NOT
sign any GOLD proxy card that the company sends to you.
If
you have already returned a gold proxy card, you have every right to change your
votes by signing and returning a later-dated
WHITE
proxy card.
It is
important that your shares of Live Current’s common stock be represented and
voted at the annual meeting. Accordingly, even if you plan to attend the annual
meeting in person, please cause your shares to be voted by signing, dating and
mailing the enclosed
WHITE
proxy card. If you have any questions or require any assistance with your
vote, please contact Laurel Hill Advisory Group LLC, which is assisting us, at
their address and toll-free numbers listed on the following page.
Thank you
for your support,
By: /s/ David
Jeffs
David
Jeffs
If you have any questions, require
assistance in voting your
WHITE
proxy
card,
need additional copies of these proxy materials or directions to attend the
annual
meeting,
please call Laurel Hill Advisory Group LLC at the phone numbers listed
below.
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Laurel
Hill Advisory Group LLC
100
Wall Street, 22
nd
Floor
New
York NY 10005
Banks
and brokers call collect:
917-338-3181
All
others call toll free:
1-800-385-3006
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ANNUAL
MEETING OF STOCKHOLDERS
OF
LIVE
CURRENT MEDIA INC.
_________________________
PROXY
STATEMENT
OF
PLEASE
SIGN, DATE AND MAIL THE ENCLOSED
WHITE
PROXY CARD
TODAY.
David
Jeffs is the beneficial owner of 1,136,866 shares of common stock, par value
$0.001 per share of Live Current Media Inc., a Nevada
corporation (the “Company”), representing approximately 3.74% of the
outstanding shares of common stock of the Company. Mr. Jeffs is writing to you
in connection with the election of seven director nominees (the “Nominees”) to
the board of directors of the Company at the annual meeting of stockholders
scheduled to be held at the Golden Nugget Hotel, 129 East Fremont Street, 2:00
Pacific Time, including any adjournments or postponements of it and any meeting
which may be called in lieu of it (the “Annual Meeting”). This proxy statement
(the “Proxy Statement”) and the enclosed
WHITE
proxy card are first
being furnished to stockholders on or about September 24, 2010. This Proxy
Statement and the enclosed
WHITE
proxy card are being
furnished to the Company’s stockholders by Mr. Jeffs and the other participants
in this solicitation as identified in the section entitled “Participants in the
Solicitation,” in connection with the solicitation of proxies from the Company’s
stockholders for the following purposes:
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To
elect seven directors:
David
Jeffs,
John Da Costa, Carl Jackson, Susan Jeffs, Cameron Pan, Adam
Rabiner and Amir Vahabzadeh to the Company’s board to hold office until
the 2011annual meeting or until their respective successors are duly
elected and qualified
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To
ratify the appointment
of
Davidson
&
Company LLP to serve as the Company’s independent public accountants for
the fiscal year ending December 31,
2010
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To
consider such other business as may properly come before the Annual
Meeting
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The
current board of directors of the Company (the “Current Board”) has set the
record date for determining stockholders entitled to notice of and to vote at
the Annual Meeting as September 3, 2010 (the “Record Date”). Stockholders of
record at the close of business on the Record Date will be entitled to vote at
the Annual Meeting. According to the Company’s proxy statement, as of the close
of business on the Record Date, there were 30,392,316 shares of common stock,
outstanding, each share of common stock being entitled to one vote on all
matters presented at the Annual Meeting. The principal executive offices of the
Company, a Nevada corporation, are located at 780 Beatty Street, Suite 307,
Vancouver, BC V6B 2M1 (604) 453-4870. The participants in this solicitation
beneficially own an aggregate of 5,221,811 shares of common stock, representing
approximately 17.11% of the outstanding shares of common stock. Mr. Jeffs
intends to vote his shares, and the other participants in this solicitation have
advised him that they intend to vote their shares, (i) to elect the Nominees,
(ii) to ratify the appointment of Davidson & Company LLP as described
herein, and (iii) in the discretion of the proxies named in the enclosed
WHITE
proxy card on the
consideration of such other business as may properly come before the Annual
Meeting.
Mr. Jeffs
requests that stockholders sign, date and mail promptly the enclosed
WHITE
proxy card in the
postage-paid envelope provided. He urges you not to sign any GOLD proxy card or
other proxy card sent to you by the Company. If you have already done
so, you may revoke your previously signed proxy by delivering a written notice
of revocation or a later-dated
WHITE p
roxy card in the
enclosed envelope. If your shares are held in the name of a brokerage
firm, bank, bank nominee or other institution on the record date, only it can
vote your shares and only upon receipt of your specific instructions.
Accordingly, please contact the person responsible for your account and instruct
that person to execute on your behalf the
WHITE
proxy card as soon as
possible. Any proxy executed by a holder of common stock may be
revoked at any time prior to its exercise by filing a written notice of
revocation with the secretary of the Company or by submitting a duly executed
later-dated proxy or by attending the Annual Meeting and voting
inperson.
Mr. Jeffs
has retained Laurel Hill Advisory Group LLC to assist him in communicating with
stockholders in connection with the proxy solicitation and to assist in his
efforts to obtain proxies. If you have any questions about how to complete or
submit your
WHITE
proxy
card or any other questions, Laurel hill Advisory Group LLC will be pleased to
assist you.
This
solicitation is being made by David Jeffs and not on behalf of the Current Board
or management. Neither Mr. Jeffs nor the other participants in this solicitation
is aware of any other matters to be brought before the Annual Meeting. Should
other matters, of which Mr. Jeffs is not aware within a reasonable time prior to
this solicitation, be brought before the Annual Meeting, the persons named as
proxies in the enclosed
WHITE
proxy card will exercise their discretion to vote on such
matters. Mr. Jeffs and the other participants in this solicitation
urge you to sign, date and return the
WHITE
proxy card in favor of
the election of their Nominees. If you have already sent a proxy card furnished
by the Company, you may revoke that proxy and vote for the election of Mr.
Jeffs’s Nominees by signing, dating and returning the enclosed
WHITE
proxy card. The
latest-dated proxy is the only one that counts. Any proxy may be revoked at any
time prior to the Annual Meeting by delivering a written notice of revocation or
a later-dated proxy for the Annual Meeting to Mr. Jeffs, c/o Laurel Hill
Advisory Group LLC who is assisting in this solicitation, or to the secretary of
the Company, or by voting in person at the Annual Meeting.
IMPORTANT
Your vote
is important, no matter how many or how few shares you own. Mr. Jeffs urges you
to sign, date, and return the enclosed
WHITE
proxy card today to vote
FOR the election of his Nominees.
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If
your shares are registered in your own name, please sign and date the
enclosed
WHITE
proxy card and return it to David Jeffs, c/o Laurel Hill Advisory
Group LLC, in the enclosed envelope
today.
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If
your shares are held in a brokerage account or bank, you are considered
the beneficial owner of the shares, and these proxy materials, together
with a
WHITE
voting form, are being forwarded to you by your broker or bank. As
a beneficial owner, you must instruct your broker, trustee or other
representative on how to vote. Your broker cannot vote your shares on your
behalf without your instructions.
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Depending
upon your broker or custodian, you may be able to provide voting
instructions either through (i) a toll-free telephone number or (ii) the
Internet. Please refer to the enclosed voting form for
instructions on how to provide voting instructions electronically. You may
also provide voting instructions by signing, dating and returning the
enclosed voting form.
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Because
only your latest-dated proxy card will count, we urge you
not
to return any proxy card
you receive from the Company. Even if you return the management proxy card
marked “withhold” as a protest against the incumbent directors, it will revoke
any proxy card you may have previously sent to the Company. Remember, you can
vote for Mr. Jeffs’s Nominees only on the
WHITE
proxy card. So please
make certain that the latest-dated proxy card you return is the
WHITE
proxy card.
If you have any questions, require
assistance in voting your
WHITE
proxy card, or need additional
copies of these proxy materials or directions to attend the Annual Meeting,
please call
Laurel Hill Advisory Group LLC
at the phone numbers listed
below.
|
Laurel
Hill Advisory Group LLC
100
Wall Street, 22
nd
Floor
New
York NY 10005
Banks
and brokers call collect:
917-338-3181
All
others call toll free:
1-800-385-3006
|
BACKGROUND
OF THE SOLICITATION
Mr. Jeffs
was the CEO of the Company from 2002 to May 2007. Under Mr. Jeffs’s
direction, the Company’s sales increased from $3.5 million in 2004 to $5.7
million in 2005 and to $8.4 million in 2006. At the end of 2006, the
Company had $2.4 million in cash and was profitable. Mr. Jeffs then
began searching for a replacement with the experience and the time and ability
to continue to build the Company.
Mr. Jeffs
hired C. Geoffrey Hampson, the Company’s current CEO and chairman of the board,
to replace him as of June 1, 2007, relying on Mr. Hampson’s representions that
he was winding up his other business obligations and would devote all of his
time to the Company. Mr. Jeffs then left the Company at the end of September
2007.
In March
2010, Mr. Jeffs received from a shareholder of the Company a news release issued
by Corelink Data Centers LLC, a Delaware company that provides data technologies
and web-hosting services on the Internet. The news release described Mr. Hampson
as the CEO and Corelink’s success in establishing data centers in Las Vegas,
Phoenix, Seattle and Chicago. The news release went on to say that, in
conjunction with Corelink’s establishment of its new headquarters in Chicago,
Mr. Hampson would move to Chicago at the end of March 2010. This news release
suggested to Mr. Jeffs that Mr. Hampson was working for another company. He
reviewed Corelink’s website and talked to others familiar with the Company to
find out what he could about Mr. Hampson’s relationship to Corelink. He
discovered that Mr. Hampson formed Corelink in August 2007, fewer than three
months after becoming the Company’s CEO, became Corelink’s CEO in November 2007,
and had established Corelink’s four data centers in the two and a half years
from Corelink’s formation in August 2007 to the date of its news release in
February 2010.
In May
2010, Mr. Jeffs received an email from Mr. Hampson in which Mr. Hampson assured
him that the Company was progressing positively. Mr. Hampson wrote, “We have a
very good strategy and team for both perfume and boxing and have put most of the
necessary elements in place to make the plan happen in the next 90-120 days. We
have enough cash to see us through the execution of the plan and are NOT
planning a highly dilutive [private offering] as some are suggesting. I am
focused on re-creating value for the existing shareholders.” Mr. Hampson
confirmed that he was not planning to issue new shares in a news release dated
May 14, 2010 in which he said that, “The Company has no plans to raise
additional funding through the issuance of shares from Treasury. New funding
will only be required if the operational results exceed projections and more
working capital is required to accelerate growth.”
Despite
Mr. Hampson’s private and public assurances in May 2010 that the Company was not
planning a highly dilutive private placement, and despite the fact that the
Company’s operations were not growing, by August 4, 2010, less than three months
later, the Company issued another 5,950,000 shares at 10¢ per share (and
warrants for another 5,950,000 shares), thus diluting the existing shareholders
by 25%.
REASONS
FOR MR. JEFFS’S SOLICITATION
Mr. Jeffs
owns approximately 3.74% of the outstanding shares of the Company’s capital
stock. As a major stockholder of the Company, he has a vested financial interest
in the maximization of the value of the Company for all
stockholders. He is proposing to elect the Nominees described in this
Proxy Statement because he has significant concerns regarding the overall
composition and effectiveness of the Current Board and senior
management.
The
members of Current Board are affiliated with Mr. Hampson. The other three
members of the Current Board, each of whom is nominated for another term, have
other business relationships with Mr. Hampson. Boris Wertz and Mr. Hampson
together own Techvibes Media Inc., which, according to Techvibe’s website, they
acquired in 2007. According to the Company’s proxy statement, James P. Taylor
was the CFO of Corelink from April 2008 until January 2010, and Mark Benham was
a director of Peer 1 Network Enterprises, Inc, the same company of which Mr.
Hampson was the CEO, president and a director. Mr. Taylor, as CFO of Corelink,
had to know of Mr. Hampson’s involvement with Corelink. One can only assume that
the other directors also knew of Mr. Hampson’s involvement with Corelink and
consented to his spending time developing Corelink’s business while he was the
Company’s CEO.
Under Mr.
Hampson’s management, as disclosed in the Company’s reports on Form 10-K
filed with the SEC or its news releases available from time to time on its
website, the Company:
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Committed
to paying signing and special bonuses of $700,000 and an annual salary of
$275,000 and other benefits to the president hired to replace Mr. Jeffs on
October 1, 2007, who resigned from the Company as of January
31, 2009 after serving only 16 months of his five-year
contract
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Hired
in February 2009, for an undisclosed salary, his common-law spouse—who
appears to have a lot of fashion experience but no Internet retail
experience—to run Perfume.com, an Internet retailer of perfume (not
fashion) and the Company’s primary source of revenue under whose
management the Company’s revenues have declined from $1.75 million in the
first quarter of 2009 to $908,234 in the first quarter of 2010 and to
$696,376 in the second quarter of
2010
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With
the approval of the Current Board, lowered the exercise prices of the
options granted to the members of the Current Board and other employees
from between $2.00 and $2.50 to 65¢
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Filed
unreliable financial statements for the periods ended September 30, 2008,
December 31, 2008 and March 31, 2009 and had to file restated financial
statements
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In
March 2008, acquired an early-stage start-up business for $5 million that
had no revenues and was written off the books by the end of 2009 after the
Company determined by the end of June 2009 that the auction software
acquired through the acquisition was
impaired
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The
Company’s revenues have declined from $3.34 million for the six months ended
June 30, 2007 under Mr. Jeffs’s management to $1.6 million for the six months
ended June 30, 2010. The Company’s stock is presently trading at approximately
10¢ per share. During the last three months of Mr. Jeffs’s tenure,
the Company’s stock traded from $1.60 to $2.60.
For these
and other reasons, Mr. Jeffs believes strongly that the Company needs a whole
new board that will exercise good, independent judgment to guide the
Company.
His
objective in seeking the election of the Nominees is to provide the Company with
a qualified, independent board that includes members with proven capabilities
that he believes are necessary to enhance stockholder value for all stockholders
of the Company and to ensure that the Company is being run in the best interest
of all stockholders. As one of the largest stockholders of the Company, he
believes that his interests are squarely aligned with yours. He is only
commencing this proxy contest as a last resort. He believes that an election
contest is the only means for seeking to improve the overall quality of the
board through the nomination of director candidates who possess extensive
industry experience, contacts and expertise, and who are truly independent of
the Company’s management.
PENDING
LITIGATION
On June
11, 2010 Mr. Jeffs commenced an action against Company in the Second Judicial
District Court of the State of Nevada in and for the County of Washoe in
connection with its failure to hold an annual meeting of stockholders within 18
months of the last annual meeting as required by Nevada Revenue Statute 78.340.
On August 26, 2010, the Court entered an order directing the Company to hold its
annual meeting on October 12, 2010.
On May
14, 2010, David Jeffs and Richard Jeffs (who is David Jeffs’s father) commenced
a shareholders’ derivative action asserting the Company’s claims against Mr.
Hampson for fraud, breach of contract, breach of fiduciary duties and unjust
enrichment, and against Mr. Hampson and the other directors of the Company for
breach of fiduciary duties, all due to alleged gross mismanagement, waste of
corporate assets, and misappropriation of corporate
opportunities.
PROPOSAL
NO. 1
ELECTION
OF DIRECTORS
The Current
Board is presently composed of four directors, all of whose terms will expire at
the Annual Meeting. The Company’s proxy statement states that the Company’s
bylaws fix the number of directors at seven. For the reasons stated above, Mr.
Jeffs is seeking your support at the Annual Meeting to elect the Nominees
identified below. Under the Company’s certificate of incorporation and its
bylaws, the directors elected at the Annual Meeting will serve in such capacity
for a one-year term expiring at the 2011 annual meeting of stockholders or until
their successors have been duly elected and qualified, or until their earlier
resignation or removal. Unless otherwise stated, each Nominee has sole voting
power and sole investment power with respect to the shares of common stock
beneficially owned by the Nominee, if any, and each Nominee is the beneficial
owner of all shares held of record by the Nominee, if any.
Biographical
Information of Nominees
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Name
and Address of Nominee
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Age
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Director
Since
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David
Jeffs
Wagensteigstrasse
10
79274
Sankt Märgen
Germany
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40
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From
July 2002 to
September
2007
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João
(John) da Costa
1100
Melville Street, #610
Vancouver
BC V6E 4A6
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46
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N/A
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Carl
Jackson
22
Clinton Avenue
Westport,
CT 06880
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48
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N/A
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Susan
Jeffs
4
Montpelier Street, #521
London
SW7 1EE
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61
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N/A
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Cameron
Pan
719
West 53
rd
Avenue
Vancouver
BC V6P 1K5
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47
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N/A
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Adam
Rabiner
1100
Melville Street, #610
Vancouver
BC V6E 4A6
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38
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N/A
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Amir
Vahabzadeh
1825
West King Edward Avenue
Vancouver
BC V6J 2W3
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41
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N/A
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The
principal occupations and employment of each Nominee during the past five
years are set forth below:
David Jeffs
was the chief
executive officer of the Company from July 2002 through June 2007. He was also
the president and a director of the Company from July 2002 through September
2007. During the quarter ended June 30, 2002, just before Mr. Jeffs joined the
Company, revenues were $43,227. During Mr. Jeffs’s last quarter at
the Company (ended September 30, 2007), revenues were $1,770,594, an increase of
approximately 4000 percent. Market capitalization rose from less than $1 million
to over $40 million from July 1, 2002 to September 30, 2007. He was a consultant
to the Company’s subsidiary, Domain Holdings Inc., from November 2000 and was
responsible for revenue-generating initiatives. Prior to consulting for Domain
Holdings Inc., Mr. Jeffs was the president and director of a private corporation
trading in consumer goods from 1997 to 2000. Since leaving the Company in 2007,
Mr. Jeffs has been an independent investor. Mr. Jeffs is an under graduate of
University of British Columbia with a BA majoring in economics.
John Da Costa
has more than
twenty years of experience providing bookkeeping and accounting services for
both private and public companies and is the founder and president of Da Costa
Management Corp., a company that has provided management and accounting services
to public and private companies since August 2003. Mr. Da Costa has been
chief financial officer and treasurer of Red Metal Resources Ltd., a reporting
public company, since May 13, 2008. He is also the treasurer of Rock
City Energy Corp., a non-reporting public company, a position he has held since
August 2006, a director and the chief executive officer (since February 2006)
and chief financial officer and secretary (since May 2002) of GlobeTrac Inc.,
also a public company; and a director (from March 2004 to July 2007) and chief
executive officer and president (from July 2006 to July 2007) and the chief
financial officer (from April 2005 to July 2007) of Trilogy Metals Inc. a
resource exploration company listed on the TSX Venture
Exchange.
Carl Jackson
held senior
positions from 1986 to 2006 at various financial institutions in New York City
such as Assured Guaranty, Commerzbank, and Credit Suisse, with a focus on
structured finance and securitization. His last position was director in
the structured finance area at Deutsche Bank. In 2006, Mr. Jackson left
banking to focus on various Internet-related ventures including social media and
starting a local news site. He has been an investor in the Company since
2005. Mr. Jackson holds an M.B.A. in finance from New York
University.
Susan Jeffs
received her
Bachelor of Laws from the University of British Columbia and practised law in
Vancouver until moving to London in 2002. Ms. Jeffs’s area of practice was
primarily securities and finance for clients involved in a variety of
industries. She was a director of Bullion River Gold Corp. from August 2005 to
April 2008, and was in-house legal consultant for Brek Energy Corp., an oil and
gas company, from February 2005 to December 2007, and for Makeup Incorporated,
an Internet retail company, from February 2004 to December 2009.
Cameron Pan
was the chief
financial officer and corporate secretary of the Company from August 2002
through January 2008. During this period, revenues at the Company increased more
than 2000% and market capitalization rose by more than 1000%. Since leaving the
Company, Mr. Pan has been an independent investor. He has worked in corporate
finance in both public practice and investment banking, specializing in the
technology industry. Mr. Pan was a vice president of corporate finance of
Marleau, Lemire Securities from 1993 to 1995 and the CFO for Memorex Computers
in the United States from 1995 to 1997. Mr. Pan is a chartered accountant who
worked for Deloitte & Touche from 1998 to 1999 and Coopers & Lybrand
from 1986 to 1993 and is a graduate of Simon Fraser University in British
Columbia in 1992 with bachelor’s degrees in accounting and finance.
Adam Rabiner
has more than 10
years of media, communications and investor relations experience. Since December
2009, he has been director of corporate communications for Red Metal Resources
Ltd., a publicly traded copper-gold exploration company. He joined Red Metal
from Berkshire Hathaway-owned Business Wire, the global market leader in
commercial news distribution for public companies and organizations, where he
was responsible for that company's business development in British Columbia.
Prior to Business Wire, Adam was the director of investor Relations for the
Company from 2003 to 2008. He holds a BA in Political Science from the
University of British Columbia.
Amir Vahabzadeh
has been
involved in the Internet industry as an online business owner and consultant for
over 15 years. He also owns and operates a thoroughbred racing and breeding
facility in British Columbia. He has been a shareholder since 2000 and currently
owns 975,000 shares of the Company’s capital stock. Mr. Vahabzadeh holds a
Bachelor of Arts degree and is a graduate of the University of British
Columbia.
Share
Ownership
The table
below sets forth each Nominee’s beneficial ownership of the Company’s common
stock. Other than common stock, no Nominee beneficially owns any
securities of the Company.
|
Name
of
Beneficial
Owner
|
Shares
of Common Stock
Beneficially
Owned
|
Percentage
of Outstanding
Common
Stock
|
|
David
Jeffs
|
1,136,866
|
3.74
|
|
John
Da Costa
|
14,000
|
0.05
|
|
Carl
Jackson
|
1,374,545
a
|
4.48
|
|
Susan
Jeffs
|
1,405,000
b
|
4.62
|
|
Cameron
Pan
|
–
|
–
|
|
Adam
Rabiner
|
66,400
|
0.22
|
|
Amir
Vahabzadeh
|
1,225,000
c
|
4.00
|
|
a
Owned
jointly with his wife, Jodi Sansone; includes warrants exercisable for
276,922 shares (issued by the Company together with 276,922 shares in
November 2008)
b
1,355,000
shares held by First Bridge Financial SA
c
Includes
warrants exercisable for 250,000 shares (issued by the Company together
with 250,000 shares in July 2010)
|
The
following table describes shares that the Nominees have bought or sold in open
market transactions during the past two years.
|
David
Jeffs
|
Cameron
Pan
|
|
Number
of Shares
|
Date
of Transaction
a
|
Number
of shares
|
Date
of Transaction
b
|
|
63,270
|
11-Jun-09
|
50,000
|
10-Sep-08
|
|
6,250
|
12-Jun-09
|
100,000
|
02-Oct-08
|
|
5,000
|
16-Jun-09
|
15,525
|
06-Oct-08
|
|
18,565
|
17-Jun-09
|
34,400
|
14-Oct-08
|
|
60,000
|
18-Jun-09
|
32,900
|
21-Oct-08
|
|
35,000
|
22-Jun-09
|
74,800
|
24-Oct-08
|
|
16,960
|
23-Jun-09
|
31,655
|
29-Oct-08
|
|
5,000
|
24-Jun-09
|
6,168
|
05-Nov-08
|
|
40,000
|
25-Jun-09
|
4,552
|
10-Nov-08
|
|
20,000
|
29-Jun-09
|
150,000
|
19-Nov-08
|
|
a
All
purchases
|
b
All
sales
|
Each of
the Nominees has consented to be named in this Proxy Statement and to serve as a
director of the Company, if elected. If at the time of the Annual Meeting any
Nominee is unable to serve or for good cause will not serve as a director, the
discretionary authority provided in the proxy will be exercised to vote for a
substitute designated by Mr. Jeffs. Mr. Jeffs has no reason to
believe that any of the Nominees will be unable to serve as a director or will
have good cause for not serving as a director, if elected. In addition, Mr.
Jeffs reserves the right to nominate substitute persons if the Company makes or
announces any changes to its bylaws or takes or announces any other action that
has, or if consummated would have, the effect of disqualifying the Nominees. In
any such case, shares represented by the enclosed
WHITE
proxy card will be voted
for such substitute nominees.
The
Company’s by-laws do not require any advance notice of substitute
nominees.
The
Nominees would not be barred from being considered independent under applicable
NASDAQ rules and the independence standards applicable to the Company under
paragraph (a)(1) of Item 407 of Regulation S-K under the Securities Exchange Act
of 1934, as amended. Mr. Jeffs believes that if the Nominees are elected, there
will be a sufficient number of independent directors to serve on the board’s
audit committee, compensation committee and nominating and governance committee.
He further believes that Mr. Pan qualifies as an “audit committee financial
expert” as defined by the SEC rules.
Other
than as described in this Proxy Statement, none of the seven Nominees for
director named in this Proxy Statement nor any other participants in this
solicitation nor any other person who may solicit proxies on their
behalf:
|
|
·
|
has
purchased or sold any class of securities of the Company within the past
two years;
|
|
|
·
|
has
borrowed funds for the purpose of acquiring or holding any shares of
common stock purchased by such person within the past two
years;
|
|
|
·
|
is
now or within the past year has been a party to any contract, arrangement
or understanding with any person with respect to any securities of the
Company;
|
|
|
·
|
had
or will have a direct or indirect material interest in any transaction, or
series of similar transactions, since the beginning of the Company’s last
fiscal year, or any currently proposed transaction, or series of similar
transactions, to which the Company or any of its subsidiaries was or is to
be a party and in which the amount involved exceeds $120,000;
or
|
|
|
·
|
has
any arrangement or understanding with any person with respect to any
future employment with the Company or its affiliates or any future
transactions to which the Company or any of its affiliates will or may be
a party.
|
There are
no present plans, understandings or arrangements whereby any of the Nominees for
election as directors will acquire any of the Company’s operations or
assets. If elected, the Nominees will appoint a new CEO (as yet
unidentified), assess the financial condition of the Company, review the current
business model to determine if it merits continuation and consider reverting to
the previous business model that the Company employed.
If
elected, the Nominees will appoint a new CEO (as yet unidentified), assess the
financial condition of the Company, review the current business model to
determine if it merits continuation and consider reverting to the previous
business model that the Company employed.
You are
being asked to elect the Nominees. The enclosed
WHITE
proxy card may only be
voted for the Nominees and does not confer voting power with respect to the
Company’s nominees. Accordingly, you will not have the opportunity to vote for
any of the Company’s nominees if you return a
WHITE
proxy card that we
provide to you. You can only vote for the Company’s nominees by executing a
proxy card provided by the Company. The persons named as proxies in the
accompanying
WHITE
proxy
card intend to vote “FOR” the Nominees identified above unless specifically
instructed to the contrary by the person executing the proxy card.
The
Company has nominated five nominees for election to the board. Mr.
Jeffs is nominating seven. Because the size of the board if fixed at
seven, the seven nominees of this aggregate of 12 nominees being proposed who
receive the highest number of votes will be elected to the Company’s board of
directors. The votes cast at the Annual Meeting may result in the
election to the Company’s board of directors of some of the Nominees proposed by
Mr. Jeffs and some persons nominated by the Company. If some of the persons
supported by Mr. Jeffs and some of the Company’s nominees are elected, those
persons who are Mr. Jeffs’s Nominees intend to serve their terms as directors.
Mr. Jeffs is unable to predict whether any nominees of the Company would agree
to serve on a board of directors consisting in part of his Nominees. In the
event that vacancies on the board of directors are created by the refusal of any
of these persons to serve with the Nominees, Mr. Jeffs expects that his Nominees
would propose to the board that it take all actions necessary to fill those
vacancies or reduce the number of directors on the board to eliminate some or
all of the vacancies, subject to the requirements of Nevada law and the
Company’s bylaws. The persons receiving the greatest number of votes for the
number of director positions to be filled at the Annual Meeting will be elected
the directors of the Company.
|
You
are urged to vote FOR the election of the Nominees named above as
directors of the Company by completing, signing, dating and mailing
promptly the enclosed WHITE proxy card in the postage-paid envelope
provided.
|
PROPOSAL
NO. 2
THE
COMPANY’S PROPOSAL TO RATIFY
THE
APPOINTMENT OF INDEPENDENT
PUBLIC
ACCOUNTANTS
The
Company appointed Davidson & Company LLP, as the Company’s independent
public accountants for the fiscal year ending December 31, 2010. The Company is
asking stockholders to ratify the appointment of Davidson & Company LLP as
independent public accountants for the Company’s fiscal year ending December 31,
2010. We do not object to the ratification of the appointment of
Davidson & Company LLP as the Company’s independent public accountants for
the Company’s fiscal year ending December 31, 2010. While this
proposal also appears on the proxy card you may have received from the Company,
you cannot vote for Mr. Jeffs’s nominees on that proxy card, and thus we request
that you use the
WHITE
proxy card to vote on this matter. If you return the
WHITE
proxy card and no
marking is made, you will be deemed to have given a direction to vote all the
shares represented by the
WHITE
proxy card for this Proposal.
VOTING
AND PROXY PROCEDURES
Only
stockholders of record on the Record Date will be entitled to notice of and to
vote at the Annual Meeting. Each share of common stock is entitled to one vote.
Stockholders who sell shares before the Record Date (or acquire them without
voting rights after the Record Date) may not vote those shares. Stockholders of
record on the Record Date will retain their voting rights in connection with the
Annual Meeting even if they sell their shares after the Record Date. Based on
publicly available information, Mr. Jeffs believes that the only outstanding
class of securities of the Company entitled to vote at the Annual Meeting is the
common stock. Shares represented by properly executed
WHITE
proxy cards will be
voted at the Annual Meeting as marked and, in the absence of specific
instructions, will be voted FOR the election of the Nominees to the board, FOR
the ratification of the appointment of Davidson & Company LLP as independent
public accountants for the Company’s fiscal year ending December 31, 2010 and in
the discretion of the persons named as proxies on all other matters as may
properly come before the Annual Meeting. If your shares are held in
“street name,” whether through a broker, bank or other nominee, only such bank,
broker or other nominee can sign the
WHITE
proxy card with respect
to your shares. You are therefore urged to contact the person(s) responsible for
your account and give them instructions for how to complete a
WHITE
proxy card representing
your shares so that a
WHITE
proxy card can be timely returned on your behalf. You also should confirm
in writing your instructions to the person(s) responsible for your account and
provide a copy of those instructions to our proxy solicitor, Laurel Hill
Advisory Group LLC, so that they can attempt to ensure that your instructions
are followed. If you wish instead to vote in person at the Annual Meeting, you
must obtain a valid proxy from your broker, bank or other nominee.
QUORUM
In order
to conduct any business at the Annual Meeting, a quorum must be present in
person or represented by valid proxies. A quorum consists of at least a
majority of the outstanding shares entitled to vote at the meeting. All
shares that are voted “FOR,” “AGAINST” or “ABSTAIN” (or “WITHHOLD” in the case
of election of directors) and broker non-votes on any matter will count for
purposes of establishing a quorum and will be treated as shares entitled to vote
at the
Annual
Meeting.
VOTES
REQUIRED FOR APPROVAL
Election of Directors
. A
plurality of the total votes cast by holders of the shares entitled to vote at
the Annual Meeting for the Nominees is required for the election of directors,
and the seven nominees who receive the most votes will be elected (assuming a
quorum is present). Both a broker non-vote and a vote to “WITHHOLD” for any
nominee for director will be counted for purposes of determining the quorum, but
will have no other effect on the outcome of the vote on the election of
directors. Stockholders do not have the right to cumulate their votes in the
election of directors.
Ratification of Appointment of
Davidson & Company LLP
. The affirmative vote of the holders of stock
having a majority of the votes cast by the holders of all of the shares of stock
present or represented and voting at the Annual Meeting is required to approve
the ratification of the appointment of
Davidson & Company LLP
(assuming a quorum is present). With respect to the ratification of
the appointment of
Davidson
& Company LLP
and any matters other than the election of directors to
be voted on at the Annual Meeting, abstentions and broker non-votes will not be
taken into account and will have no effect on the outcome.
ABSTENTIONS
AND WITHHOLDS
Abstentions
and, in the case of the elections of directors, withholds will count as votes
present for the purpose of determining whether a quorum is present. Abstentions
will have no effect on the proposal to ratify the appointment of
Davidson & Company LLP
,
because abstentions do not count as votes cast and the bylaws provide that any
matter other than the election of directors shall be decided by the affirmative
vote of the holders of stock having a majority of the votes cast by the holders
of all of the shares of stock present or represented and voting on a matter. In
addition, withholds will have no effect on the outcome of the election of
directors because the bylaws provide that the election of directors shall be
determined by a plurality of the total votes cast by holders of the shares
entitled to vote on the election and, therefore, assuming a quorum, only
affirmative votes for the Nominees will determine the outcome of the election at
the Annual Meeting.
DISCRETIONARY
VOTING
If your
shares are held in “street name,” whether through a broker, bank or other
nominee, only such bank, broker or other nominee can sign the
WHITE
proxy card with respect
to your shares. A “broker non-vote” occurs if you do not give specific voting
instructions to your broker, bank or other nominee regarding how to vote your
shares on your behalf with respect to the election of directors at the Annual
Meeting. The election of directors at the Annual Meeting is a “non-routine
matter” and brokers do not have discretionary authority to vote your shares of
common stock on “non-routine matters.” If you fail to provide voting
instructions, your broker will have no discretionary authority to vote your
shares on your behalf with respect to the election of directors and your shares
will not be voted for any of the Nominees. We strongly encourage you to contact
the person(s) responsible for your account and give them instructions for how to
complete a
WHITE
proxy
card representing your shares so that a
WHITE
proxy card can be timely
returned on your behalf.
REVOCATION
OF PROXIES
Stockholders
of the Company may revoke their proxies at any time prior to the Annual Meeting
by attending the Annual Meeting and voting in person (although attendance at the
Annual Meeting will not in and of itself constitute revocation of a proxy) or by
delivering a written notice of revocation. The delivery of a subsequently dated
proxy which is properly completed will also constitute a revocation of any
earlier proxy. The revocation may be delivered
either to
Mr. Jeffs in care of Laurel Hill Advisory Group LLC at the address set forth in
this Proxy Statement or to the corporate secretary of the Company at the address
provided by the Company in the Company’s proxy statement. A revocation is
effective if delivered to the Company. Mr. Jeffs requests that either the
original or photocopies of all revocations be mailed to him in care of Laurel
Hill Advisory Group LLC at the address set forth on the back cover of this Proxy
Statement so that he will be aware of all revocations and can more accurately
determine if and when proxies have been received from the holders of record on
the Record Date of a majority of the outstanding shares. Additionally, Laurel
Hill Advisory Group LLC may use this information to contact stockholders who
have revoked their proxies in order to solicit later-dated proxies for the
election of the Nominees.
If
you wish to vote for the election of the Nominees to the board or for the
ratification of the appointment of Davidson & Company LLP, please sign, date
and return promptly the enclosed WHITE proxy card in the postage-paid envelope
provided.
SOLICITATION
OF PROXIES
The
solicitation of proxies pursuant to this Proxy Statement is being made by Mr.
Jeffs and the other participants in this solicitation. Proxies may be solicited
by mail, fax, telephone, telegraph, email, other Internet media, in person and
by advertisements. The expenses of preparing, printing and distributing this
Proxy Statement and the accompanying form of proxy and the cost of soliciting
proxies will be borne by Mr Jeffs. Such expenses are estimated to be
approximately $140,000, of which approximately $6000 have been incurred to
date.
Copies of
soliciting materials will be furnished to banks, brokerage houses and other
custodians, nominees and fiduciaries for forwarding to the beneficial owners of
shares of common stock for whom they hold shares, and Mr. Jeffs will reimburse
them for their reasonable out-of-pocket expenses in connection therewith. Mr.
Jeffs has also retained Laurel Hill Advisory Group LLC to assist it in the
solicitation of proxies. Laurel Hill Advisory Group LLC will solicit proxies on
behalf of Mr. Jeffs from individuals, brokers, bank nominees and other
institutional holders in the same manner described above. Laurel Hill Advisory
Group LLC will receive a fee not in excess of $70,000 for its services to Mr.
Jeffs for the solicitation of the proxies and will be reimbursed for certain
expenses. Mr. Jeffs has also agreed to indemnify Laurel Hill Advisory Group
LLC against certain claims. Approximately 25 persons will be employed by
Laurel Hill Advisory Group LLC to solicit stockholders.
If this
solicitation is successful, Mr. Jeffs intends to seek, without the vote of the
holders of the common stock, reimbursement from the Company, to the extent
permitted by law, for expenses incurred in connection with this proxy
solicitation.
PARTICIPANTS
IN THE SOLICITATION
Under
applicable regulations of the SEC, each of the Nominees is deemed to be a
“participant” in Mr. Jeffs’s solicitation of proxies. None of the
Nominees or any of their respective “associates” has any arrangement or
understanding with any person with respect to future employment or future
transactions with the Company. There are no arrangements between any Nominee and
any other person, pursuant to which any person is to be selected as such. There
is no family relationship between Nominees, except that Susan Jeffs is the
mother of David Jeffs. No Nominee or other participant has any current plans to
engage in any transactions with the Company beyond the transactions disclosed
above.
SECTION
16(a) BENEFICIAL OWNERSHIP
REPORTING
COMPLIANCE
To Mr.
Jeffs’s knowledge, there was no participant, as described in this Proxy
Statement, who, at any time during the fiscal year ended December 31, 2009,
failed to file on a timely basis the reports required by Section 16(a) of the
Securities Exchange Act of 1934, as amended, with respect to beneficial
ownership of the Company’s securities during the most recent fiscal
year.
ABSENCE
OF APPRAISAL RIGHTS
Under
Nevada law, you do not have appraisal rights in connection with our solicitation
of proxies.
ADDITIONAL
INFORMATION
AND
OTHER MATTERS
Internet
Availability of Proxy Materials
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR
THE SHAREHOLDER MEETING TO BE HELD ON OCTOBER 12, 2010
This
Proxy Statement and a form of the accompanying WHITE proxy card are also
available on the Internet at www.laurelhill.com.
Other
Matters
Other
than those discussed above, Mr. Jeffs is unaware of any other matters to be
considered at the Annual Meeting. However, should other matters, of which he is
not aware within a reasonable time before this solicitation, be brought before
the Annual Meeting, the persons named as proxies on the enclosed
WHITE
proxy card will exercise
their discretion to vote on such matters.
INFORMATION
FROM THE COMPANY’S PROXY
The SEC’s
rules require that we include certain information about the Company and its
officers and directors in the Company’s proxy. Accordingly, we have
copied the information presented below from the Company’s preliminary proxy
filed with the SEC on September 17, 2010. Although we do not have any
knowledge indicating that any statement made by the Company as set forth below
is untrue, we do not take any responsibility for the accuracy or completeness of
statements taken from public documents and records that were not prepared by or
on the Company’s behalf, or for the any failure by the Company to disclose
events that may affect the significance or accuracy of such
information. Because we were not involved in the preparation of the
Company’s proxy statement, we cannot reasonably confirm the accuracy or
completeness of certain information contained in the Company’s proxy
statement.
Disclosure
of Fees Billed by the Company’s Independent Public Accountant
(1)
Audit Fees
The
aggregate fees billed for each of the last two fiscal years for professional
services rendered by the Company’s principal accountant for the audit of annual
financial statements and for review of financial statements included in the
Company’s quarterly reports or for services that are normally provided by the
accountant in connection with statutory and regulatory filings or engagements
for those fiscal years were:
2009: $96,900
– Davidson & Company LLP (“Davidson”)
2009: $64,500
– Ernst & Young (“E&Y)
2008
(restated): $200,400 – E&Y
(2)
Tax Fees
The
aggregate fees billed in each of the last two fiscal years for professional
services rendered by the principal accountant for tax compliance, tax advice,
and tax planning were:
2009: $0
– Davidson
2009: $14,300
– E&Y
2008
(restated): $72,000 – E&Y
(3)
All Other Fees
The
aggregate fees billed in each of the last two fiscal years for the products and
services provided by the principal accountant, other than the services reported
in paragraphs (1) and (2), were:
2009: $0
– Davidson
2009: $37,500
– E&Y
2008
(restated): $3,000 – E&Y
For 2009,
this amount included fees associated with the Company’s repricing of options
outstanding under the Company’s 2007 Stock Incentive Plan and responding to
Securities and Exchange Commission comment letters. For 2008, this
amount represents fees related to the Company’s merger activity.
Pre-Approval
of Non-Audit Services
All
audit, tax and other services performed by the Company’s independent public
accountant are approved in advance by the Company’s Audit
Committee. Specifically defined audit and non-audit services are
pre-approved, and the Company’s Audit Committee must approve any service that
has not been previously pre-approved before the independent public accountant is
engaged to perform it.
CURRENT
DIRECTORS
Information
regarding the business experience of each current director of the Company is
provided below. There are no family relationships among the Company’s
executive officers and directors. There is no arrangement or
understanding between any of the Company’s directors and any other person
pursuant to which any director was or is to be selected as a
director.
C.
Geoffrey Hampson
C.
Geoffrey Hampson, 53, has been the Company’s Chief Executive Officer and a
director and Chairman of the Board since June 2007, and the Company’s Principal
Financial Officer and Principal Accounting Officer since January 2008 and the
Company’s Secretary since July 2010. Mr. Hampson has been the
founder, president, and executive officer of many successful, start-up and
operating companies over the last 25 years. He was Chief Executive
Officer, President and a director of Peer 1 Network Enterprises, Inc., a
publicly traded North American provider of internet infrastructure services,
from September 2000 to January 2006. He has been the Chief Executive
Officer of Corelink Data Centers, LLC since November 2007 and the Chief
Executive Officer and a co-owner of Techvibes Media Inc., a local market
technology resource website and blog, since March 2007. Mr. Hampson
has been Chairman and Chief Executive Officer of Fibrox Technology Ltd., a
manufacturer of high quality mineral fibre for the automotive, acoustical and
insulation markets, since 1995. Mr. Hampson sits on the boards of
directors of several companies, including Corelink Data Centers, LLC, a private
company, Cricket Capital Corp., a company listed on the TSX Venture market,
Techvibes Media Inc., a private company, and Stronghold Metals Inc., a company
listed on the TSX Venture market. Mr. Hampson was previously a
director of Pacific Rodera Energy Inc., a company listed on the TSX Venture
market. Until July 29, 2010, Mr. Hampson devoted between 120 and 150
hours per month to the Company’s business. His salary was reduced to
CDN$1 per year effective as of July 23, 2010, and he currently devotes
approximately 40 to 60 hours per month to the Company’s business. Mr.
Hampson has extensive experience with technology-based companies, both as a
founder and operator. He has an in-depth knowledge of the Company’s
business, strategy and management team, all of which qualify him to be a
director.
James
P. Taylor
James P.
Taylor, 54, has been a director since July 2007 and is the Chair of the Audit
Committee. From April 2008 until January 2010, he served as the Chief
Financial Officer of Corelink Data Centers, LLC. From April 2007 to
December 2007, he was the Chief Financial Officer of Lakewood Engineering and
Manufacturing. From May 2006 to April 2007, he was engaged as a
financing and management consultant for various companies. From
February 2002 to April 2006, Mr. Taylor served as the Chief Financial Officer
for Peer 1 Network Enterprises, Inc., a publicly traded North American provider
of internet infrastructure services. While at Peer 1, he was
responsible for financial and administrative operations and led the development
of annual and strategic business plans and financial models. From
2001 to 2002, Mr. Taylor served as Chief Operating Officer and Chief Financial
Officer of Chicago Aerosol, LLC. Mr. Taylor is a member of the
Society of Competitive Intelligence. Mr. Taylor is a graduate of
Indiana University where he obtained a Bachelor of Science degree in Finance and
Accounting. He earned his MBA from DePaul University where he focused
his studies on International Business and Corporate Finance. Mr.
Taylor has over 20 years of experience in corporate management, finance and
planning, as well as in-depth experience with corporate financial and
administrative operations, all of which qualify him to be a
director.
Mark
Benham
Mark
Benham, 59, has been a director since September 2007 and is a member of the
Audit Committee. Mr. Benham has over fifteen years of experience in
private equity and investment banking. Since 1994, Mr. Benham has
been a partner at Celerity Partners, a private equity fund based in
California. Mr. Benham currently sits on the boards of directors of
several private companies, including Oncore Manufacturing Services, Pinnacle
Treatment Centers, Inc., Trigemina, Inc. and Ascension
Insurance. Until resigning in 2009, he sat on the boards of directors
of O Premium Waters, a private company, Portal Group Holdings, Inc., a private
company, Verari Systems, Inc., a private company, and Peer 1 Network
Enterprises, Inc., a publicly traded North American provider of internet
infrastructure services. Mr. Benham holds a B.A. in English from the
University of California, Berkeley, and an M.A. and M.B.A. from the University
of Chicago. Mr. Benham has extensive experience with technology-based
companies in the context of his investment banking experience, which qualifies
him to be a director.
Boris
Wertz
Boris
Wertz, 37, was appointed as a director in March 2008. Dr. Wertz has an
established career of strategic management and operational experience in the
area of consumer internet use. From February 2008 to March 2010, he served
as CEO of Nexopia, a popular social networking utility for Canadian youth.
From November 2007 to the present, he has served as CEO of W Media Ventures, a
Vancouver-based angel fund that focuses on consumer internet investments. From
2003 to 2008, Dr. Wertz was the Chief Operating Officer of AbeBooks.com, an
online marketplace for books, which was sold to Amazon.com in 2008. He
also served as a director of AbeBooks.com from November 2003 to November
2008. He currently serves on the board of directors of a number of
privately held companies, including Yapta Inc., Suite 101, Inc., Indochino.com,
TeamPages, Techvibes Media Inc. and Nexopia.com. Dr. Wertz completed his
Ph. D., as well as his graduate studies, at the Graduate School of Management
(WHU), Koblenz, majoring in Business Economics and Business Management.
Dr. Wertz’s experience in the area of consumer internet use, his experience as a
director of other corporations, and his experience with other online businesses
qualify him to act as a director.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS
AND MANAGEMENT
The
following table sets forth certain information, as of September 3, 2010, with
respect to the holdings of the Company’s current directors and executive
officers as a group. Other than as listed below, the Company
is not aware of any other beneficial owner of more than 5% of the Company’s
common stock.
Beneficial
ownership of the common stock is determined in accordance with the rules of the
Securities and Exchange Commission and includes any shares of common stock over
which a person exercises sole or shared voting or investment powers, or of which
a person has a right to acquire ownership at any time within 60 days of
September 3, 2010. Subject to applicable community property laws, the
Company believes that the persons named in this table have sole voting and
investment power with respect to all shares of common stock held by
them. Applicable percentage ownership is based on 30,392,316
shares of common stock
outstanding as of September 3, 2010 plus, for each individual, any securities
that individual has the right to acquire within 60 days of September 3,
2010.
|
Name
and Address
(1)
|
|
Shares
Owned
|
|
|
Right
to
Acquire
Within
60
Days
|
|
|
Shares
Beneficially
Owned
|
|
|
Percent
of
Class
|
|
|
C.
Geoffrey Hampson, Chairman of the Board, Chief Executive Officer and Chief
Financial Officer
|
|
|
3,074,475
|
|
|
|
2,195,000
|
|
|
|
5,269,475
|
|
|
|
16.2
|
%
|
|
Mark
Benham, Director
|
|
|
50,000
|
|
|
|
100,000
|
|
|
|
150,000
|
|
|
|
*
|
|
|
James
P. Taylor, Director
|
|
|
110,000
|
|
|
|
200,000
|
|
|
|
310,000
|
|
|
|
1.0
|
%
|
|
Boris
Wertz, Director
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
200,000
|
|
|
|
*
|
|
|
Paul
W. Morrison, President and Chief Operating Officer
|
|
|
500,000
|
|
|
|
500,000
|
|
|
|
1,000,000
|
|
|
|
3.2
|
%
|
|
Mark
Melville, Former President and Chief Corporate Development
Officer
|
|
|
469,982
|
|
|
|
53,846
|
|
|
|
523,828
|
|
|
|
1.7
|
%
|
|
Jonathan
Ehrlich, Former President and Chief Operations Officer
|
|
|
268,161
|
|
|
|
38,460
|
|
|
|
306,621
|
|
|
|
1.0
|
%
|
|
All
directors and officers as a group (5 persons)
(2)
|
|
|
3,834,475
|
|
|
|
3,095,000
|
|
|
|
6,929,475
|
|
|
|
20.7
|
%
|
|
(1)
|
The
address of each beneficial owner is c/o Live Current Media Inc., 780
Beatty Street, Suite 307, Vancouver, BC, V6B 2M1,
Canada.
|
|
(2)
|
Includes
all current directors and executive officers as of September 3,
2010.
|
COMPENSATION
OF DIRECTORS
The
Company has granted stock options to the Company’s non-employee directors
pursuant to the Company’s 2007 Stock Incentive Plan. These options
have a term of five years and are subject to vesting as follows: (i) the right
to purchase 33,333 shares vests on the first anniversary of the stock option
agreement and (ii) thereafter the right to purchase 8,333 shares vests after
each successive three-month period. As part of the reduction in the
exercise price of all options granted from the 2007 Stock Incentive Plan, the
exercise price of the options granted to the Company’s non-employee directors
was reduced to $0.65 per share on March 25, 2009. The Company valued
these options using the Black-Scholes option price model using the following
assumptions: no dividend yield; expected volatility rate of 73.39%; risk free
interest rate of 1.65% and an expected life of 3.375 years resulting in a value
of $1.40 per option.
The
following chart reflects all compensation awarded to, earned by or paid to the
Company’s non-employee directors below for the fiscal year ended December 31,
2009. Mr. Hampson does not receive compensation for his service as a
director.
|
Name
|
|
Fees
Earned
or
Paid
in
Cash
|
|
|
Stock
Awards
|
|
|
Option
Awards
(1)
|
|
|
Non-Equity
Incentive
Plan
Compensation
|
|
|
Nonqualified
Deferred
Compensation
Earnings
|
|
|
All
Other
Compen-
sation
|
|
|
Total
|
|
|
James
P. Taylor
|
|
|
–
|
|
|
|
–
|
|
|
$
|
56,890
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
$
|
56,890
|
|
|
Mark
Benham
|
|
|
–
|
|
|
|
–
|
|
|
$
|
55,821
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
$
|
55,821
|
|
|
Boris
Wertz
|
|
|
–
|
|
|
|
–
|
|
|
$
|
49,079
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
$
|
49,079
|
|
|
(1)
|
On
March 25, 2009, the Board of Directors approved a reduction of the
exercise price of stock option grants made prior to this date. As a
result, all grants issued prior to March 25, 2009 currently have an
exercise price of $0.65 per share. The amount in the table is
the fair value of the options as of the repricing date. As of
December 31, 2009, each director had an option to purchase 100,000 shares
of the Company’s common stock. No director had stock awards
outstanding as of that date.
|
BENEFICIAL
OWNERSHIP SECTION 16(a) REPORTING COMPLIANCE
Section
16(a) of the Exchange Act requires the Company’s directors, executive officers
and persons who own more than 10% of the Company’s common stock to file reports
of ownership and changes in ownership of the Company’s common stock with the
Securities and Exchange Commission. Directors, executive officers and
persons who own more than 10% of the Company’s common stock are required by
Securities and Exchange Commission regulations to furnish to the Company copies
of all Section 16(a) forms they file.
To the
Company’s knowledge, based solely upon review of the copies of such reports
received or written representations from the Company’s officers and directors,
it believes that during the Company’s 2009 fiscal year the Company’s directors,
executive officers and persons who own more than 10% of the Company’s common
stock complied with all Section 16(a) filing requirements with the exception of
C. Geoffrey Hampson. Mr. Hampson filed a Form 4 disclosing fthe
Company’s purchase transactions on November 23, 2009 rather than on November 18,
2009 and a Form 4 disclosing fthe Company’s additional purchase transactions on
November 24, 2009 rather than on November 23, 2009.
IDENTIFICATION
OF EXECUTIVE OFFICERS
Mr.
Hampson is the Company’s Chief Executive Officer, Chief Financial Officer and
Secretary. Mr. Morrison is the Company’s President and Chief Operating
Officer. At this time, the Company has no other executive
officers. Mr. Hampson’s experience is discussed above.
Mr.
Morrison, 44, was appointed President and Chief Operating Officer in July
2010. Previously, he was one of the founders of OmniReliant Holdings
in October 2006 and was later appointed as the Chief Executive Officer and a
director, positions he held until January 2010. OmniReliant Holdings
builds successful brands by leveraging television and multi-channel digital
marketing, media assets and e-commerce properties. From September
2005 to October 2006, Mr. Morrison was the Chief Operating Officer of WG
Products Inc., where he oversaw contract fulfillment operations for companies
such as Liz Claiborne Cosmetics. During that time, he implemented a
warehousing and distribution model and a move into a new facility that resulted
in a doubling of sales and a more sustainable business. From October
2002 to March 2005, Mr. Morrison was the Operational Manager of Wyeth
Pharmaceuticals, where he oversaw production of the Prevnar Vaccine
division. Mr. Morrison graduated from Rutgers University with a
bachelor of science degree in Business Management. He also served in
the United States Air Force.
EXECUTIVE
COMPENSATION
The
following table summarizes all compensation for the 2008 and 2009 fiscal years
received by the Company’s Chief Executive Officer and the Company’s two most
highly compensated executive officers who earned more than $100,000 during
2009. All annual totals have been converted from Canadian dollars to
U.S. dollars at the average 2009 foreign exchange rate of 0.8760 and a 2008
foreign exchange rate of 0.9371.
Summary
Compensation Table
|
Name
and Principal
Position
|
Year
|
|
Salary
|
|
|
Bonus
|
|
|
Stock
Awards
|
|
|
Option
Awards
|
|
|
Non-
Equity
Incentive
Plan
Compen-
sation
|
|
|
Non-
qualified
Deferred
Compen-
sation
Earnings
|
|
|
All
Other
Compen-
sation
|
|
|
Total
|
|
|
C.
Geoffrey Hampson
|
2009
|
|
$
|
112,232
|
|
|
|
–
|
|
|
|
–
|
|
|
$
|
568,906
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
$
|
681,138
|
|
|
Chief
Executive Officer, Chairman of the Board, Principal Financial
Officer, Principal Accounting Officer
(1)
|
2008
|
|
|
285,320
|
|
|
|
–
|
|
|
|
–
|
|
|
|
515,255
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
800,575
|
|
|
Mark
Melville
|
2009
|
|
$
|
220,549
|
|
|
$
|
87,601
|
|
|
|
–
|
|
|
$
|
439,511
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
$
|
747,661
|
|
|
Former
President and Chief Corporate Development Officer
(2)
|
2008
|
|
|
230,276
|
|
|
|
281,130
|
|
|
|
–
|
|
|
|
398,023
|
|
|
|
–
|
|
|
|
–
|
|
|
$
|
35,844
|
|
|
|
945,273
|
|
|
Jonathan
Ehrlich
|
2009
|
|
$
|
235,624
|
|
|
$
|
17,520
|
|
|
|
–
|
|
|
$
|
135,359
|
|
|
|
–
|
|
|
|
–
|
|
|
$
|
91,982
|
|
|
$
|
480,485
|
|
|
Former
Chief Operating Officer and President
(3)
|
2008
|
|
|
258,612
|
|
|
|
–
|
|
|
|
–
|
|
|
|
615,871
|
|
|
|
–
|
|
|
|
–
|
|
|
|
49,198
|
|
|
|
923,681
|
|
|
(1)
|
The
Company valued Mr. Hampson’s options using the Black-Scholes option
pricing model using the following assumptions: no dividend yield; an
expected volatility rate of 118.02%; a risk-free interest rate of 3.97%
and an expected life of 3.375 years, resulting in a value of $1.61 per
option
granted.
|
|
(2)
|
Mr.
Melville ceased to be an executive officer of the Company on July 27,
2010. The Company valued Mr. Melville’s options using the Black-Scholes
option pricing model using the following assumptions: no dividend yield;
an expected volatility rate of 75.66%; a risk-free interest rate of 3.07%
and an expected life of 3.375 years, resulting in a value of $1.26 per
option granted.
|
|
(3)
|
Mr.
Ehrlich ceased to be an executive officer of the Company on January 31,
2009. The Company valued Mr. Ehrlich’s options using the Black-Scholes
option pricing model using the following assumptions: no dividend yield;
an expected volatility rate of 118.02%; a risk-free interest rate of 4.05%
and an expected life of 3.375 years, resulting in a value of $1.45 per
option granted. For 2009, All Other Compensation consisted of
$46,429 of severance in the form of salary continuation and $45,553 in
rent paid on Mr. Ehrlich’s behalf.
|
There are
no plans that provide for the payment of retirement benefits, or benefits that
will be paid primarily following retirement, including but not limited to
tax-qualified defined benefit plans, supplemental executive retirement plans,
tax-qualified defined contribution plans and nonqualified defined contribution
plans.
Other
than as discussed below, there are no contracts, agreements, plans or
arrangements, written or unwritten, that provide for payment to a named
executive officer at, following, or in connection with the resignation,
retirement or other termination of a named executive officer, or a change in
control of the Company’s company or a change in the named executive officer’s
responsibilities following a change in control.
Severance
Agreements
Jonathan
Ehrlich
On
February 4, 2009, Jonathan Ehrlich resigned as the Company’s President and Chief
Operating Officer, effective January 31, 2009. Pursuant to the terms
and conditions of an employment severance agreement dated February 4, 2009
between the Company and Mr. Ehrlich, the company agreed to pay CDN$600,000 to
Mr. Ehrlich, which consists of a severance allowance in the amount of
CDN$298,000 and an accrued special bonus in the amount of CDN$250,000, less any
and all applicable government withholdings and deductions, as well as other
benefits in the amount of CDN$52,000. The severance allowance and
other benefits were to be paid over a period of 12 months. The
accrued special bonus had become due on October 1, 2008 and was expensed in the
fourth quarter of the 2008 fiscal year. The other benefits were owing
to Mr. Ehrlich before his resignation. The payment of the net amount
of the accrued special bonus was to be converted to equity and paid in
restricted shares of the Company’s common stock over a period of 12
months. The number of shares of common stock to be issued for each
payment was to be computed using the closing price of the common stock on the
15th day of each month or, in the event that the 15th day is not a trading day,
on the trading day immediately before the 15th day of the month.
On June
2, 2009, the employment severance agreement with Mr. Ehrlich was amended.
As a result of this amendment, the Company was permitted to pay the remaining
severance amounts owed to Mr. Ehrlich over a period of 10 months rather than 5
months, and Mr. Ehrlich agreed to defer until December 31, 2009 the payment of
the accrued special bonus. As of September 1, 2009, the Company was
relieved from the payment of certain expenses that the Company had
agreed to make on Mr. Ehrlich’s behalf and from the obligation to pay relocation
expenses to Mr. Ehrlich.
On
November 13, 2009, the Company entered into a second amendment to the employment
severance agreement with Mr. Ehrlich. Pursuant to the second amendment,
the severance allowance remaining to be paid and all additional benefits owed to
Mr. Ehrlich as of November 16, 2009 in the gross amount of CDN$109,375 were paid
in a lump sum payment less all applicable withholdings rather than over a period
of 10 months. Furthermore, Mr. Ehrlich agreed to waive all of the net
monthly equity payments that the Company is obliged to pay him under the initial
employment severance agreement and accepted CDN$20,000 cash, less all applicable
withholdings, in lieu thereof.
Mark
Melville
On June
14, 2010, Mr. Mark Melville, the Company’s President and Chief Corporate
Development Officer, tendered a resignation terminating his employment effective
October 1, 2010. Subsequently, Mr. Melville decided to resign from
his position as President and Chief Corporate Development Officer effective July
27, 2010, the date that Mr. Morrison became the Company’s President and Chief
Operating Officer. On June 16, 2010, the Company signed a Settlement
Agreement and Release (the “Melville Agreement”) with
Mr. Melville. Under the Melville Agreement, Mr. Melville’s
employment with the Company was to end on September 30,
2010. Pursuant to the Melville Agreement, in exchange for the sum of
$100 the Company received a release of the Company’s obligations under the
employment agreement dated November 9, 2007 (except as described below) and any
and all claims Mr. Melville may have had related to his
employment. The Company agreed to pay to Mr. Melville the sum of
CDN$200,000 representing bonuses, each in the amount of CDN$100,000, that were
due and payable on January 1, 2009 and January 1, 2010. Of this
amount, CDN$75,000, less statutory deductions, was to be paid
with 416,136 shares of the Company’s restricted common stock, with the
balance paid over a period of six months in equal installments of
CDN$20,833.33. The Company also agreed to pay Mr. Melville’s accrued
vacation pay through September 30, 2010 and to continue the payment of Mr.
Melville’s statutory and discretionary medical and dental
benefits. Statutory benefits will be continued until September 30,
2010. Discretionary benefits will be paid until the earlier of the
date that the Company ceases providing such benefits to all of the Company’s
employees or September 30, 2010. As of the date of the Melville
Agreement, Mr. Melville also relinquished his right to any stock options, vested
or not vested, granted to him through the Company’s 2007 Stock Incentive
Plan.
Employment
Agreements
C.
Geoffrey Hampson
The
Company entered into an employment agreement with C. Geoffrey Hampson on May 31,
2007. Pursuant to the employment agreement, Mr. Hampson is to serve
as the Company’s Chief Executive Officer for a term of five years effective June
1, 2007, subject to certain termination rights on the part of Live Current and
Mr. Hampson. The employment agreement provides that Mr. Hampson will
receive an annual base salary of CDN$300,000, subject to annual review, as well
as a bonus of up to 60% of base salary as determined by the Board
of Directors. The employment agreement also entitles him
to participate in the health, dental and other benefits or policies available to
personnel with commensurate duties. In connection with the employment
agreement, on September 11, 2007 the Company granted to Mr. Hampson a stock
option to purchase up to 1,000,000 shares of the Company’s common stock at an
exercise price of $2.50 per share. The option vests over the term of
the employment agreement as follows: (i) 333,333 shares were exercisable on
September 11, 2008 and (ii) thereafter the right to purchase 83,333 shares
vests after each successive three-month period until the entire option has
vested. Unless earlier terminated, the option will expire on
September 11, 2012. The stock option was granted pursuant to the
Company’s 2007 Stock Incentive Plan. As part of the reduction in the
exercise price of all options granted from the 2007 Stock Incentive Plan, the
exercise price of the option granted to Mr. Hampson was reduced to $0.65 on
March 25, 2009.
On June
1, 2007, the Board of Directors appointed Mr. Hampson as a director and Chairman
of the Board.
On
November 10, 2009, the Company entered into a first amendment with Mr. Hampson
to the employment agreement. The amendment had an effective date of
October 1, 2009. Pursuant to the amendment, Mr. Hampson’s annual
salary was reduced from CDN$300,000 to CDN$120,000 as of February 1,
2009. The portion of Mr. Hampson’s salary that was deferred during
the period beginning on February 1, 2009 and ending on September 30, 2009 in the
amount of CDN$80,000, less any amounts as are required by law to be withheld,
was to be converted to equity and paid in restricted shares of the Company’s
common stock. The number of shares of common stock to be issued was
to be computed using the closing price of the common stock on December 1,
2009.
In
addition, the amendment includes a provision that allows any bonus paid to Mr.
Hampson to be paid in common stock, in cash or in a combination of cash and
common stock. The entitlement to, amount and form of bonus
remuneration must be determined and approved by the Board of Directors in its
sole discretion.
The
amendment also added the following language to the definition of “change of
control of the Company”: (a) if the incumbent Board of Directors (the “Incumbent
Board”) ceases to constitute a majority of the Company’s Board of Directors for
any reason(s) other than (i) the voluntary resignation of one or more Board
members; (ii) the refusal by one or more Board members to stand for election to
the Board; and/or (iii) the removal of one or more Board members for good cause;
provided, however, (1)
that if the nomination
or election of any new director of the Company was approved by a vote of at
least a majority of the Incumbent Board, such new director shall be deemed a
member of the Incumbent Board; and (2) that no individual shall be considered a
member of the Incumbent Board if such individual initially assumed office (A) as
a result of either an actual or threatened director election contest wherein a
person or group of persons opposed a solicitation made by the Company with
respect to the election or removal of directors at any annual or special meeting
of the Company’s stockholders, or (B) as a result of a solicitation of proxies
or consents by or on behalf of any person other than the Company or its
designated representatives (a “Proxy Contest”), or (C) as a result of any
agreement intended to avoid or settle any director election contest or Proxy
Contest; (b) any cancellation or nonrenewal of the Company’s directors and
officers insurance coverage without the approval of Mr. Hampson or the majority
of the Incumbent Board; or (c) as a result of a successful tender
offer.
Accordingly,
if a majority of the directors elected at the Annual Meeting are individuals
nominated by Mr. Jeffs, a change of control of the Company under Mr. Hampson’s
employment agreement will occur. Under the terms of the agreement,
Mr. Hampson is entitled to resign within 60 days following a change in control
and will be deemed to have been terminated without cause by the Company,
entitling him to receive: (i) CDN$300,000; (ii) annualized bonus based on prior
three-year average bonus, which would be approximately CDN$60,000 based on
bonuses paid to Mr. Hampson with respect to the 2007, 2008 and 2009 fiscal
years; (iii) outstanding vacation and earned, but unpaid, salary;
and (iv) reimbursement for business expenses incurred by him up to the date
of termination.
On
December 28, 2009, the Company entered into a second amendment to Mr. Hampson’s
employment agreement. Pursuant to the second amendment, the salary
that had been deferred was, instead, reduced by CDN$8,000 and the balance was
paid in cash to Mr. Hampson.
On July
29, 2010, the Company executed the third amendment to the employment agreement
the Company entered into with Mr. Hampson. Pursuant to the third
amendment, Mr. Hampson’s annual salary was reduced from CDN$120,000 per year to
CDN$1 per year as of July 23, 2010.
Paul
W. Morrison
Mr.
Morrison currently has a one-year employment agreement with us that was
effective as of July 23, 2010, but was entered into on July 27, 2010.
Pursuant to that agreement, Mr. Morrison serves as the Company’s President and
Chief Operating Officer and receives an annual salary of $130,000.
Beginning August 1, 2011, Mr. Morrison will receive an annual cost of
living increase, provided the term of the agreement is extended. If
approved by the Board of Directors and in its discretion, Mr. Morrison may also
receive a cash bonus equal to 50% of his annual salary. The Company
granted an option to Mr. Morrison to purchase 1,000,000 shares of the Company’s
common stock. The right to purchase 333,334 shares vests on the first
anniversary of the date of the agreement and thereafter, subject to the renewal
of the agreement at the end of the term, the right to purchase 83,333 shares
will vest on the last day of each successive three-month period.
If Mr.
Morrison is terminated without cause or dies or the agreement is not renewed for
at least one subsequent one-year term, all unexercised options that would have
vested in the twelve-month period immediately following the termination without
cause or non-renewal will become exercisable. The option has a term of
five years. Mr. Morrison will also be granted a number of shares of
common stock in Perfume.com Inc. that on a fully diluted basis will be equal to
5% of the outstanding shares. The Company agreed to provide to Mr.
Morrison benefits comparable to the benefits the Company provides from time to
time to the Company’s management and other employees. The Company has
also agreed to pay the costs of continuing Mr. Morrison’s health insurance
coverage at group rates under COBRA until the Company can provide him with
health insurance coverage.
The
Company has agreed that in the event Mr. Morrison is made a party to any
threatened, pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative (other than an action by us against
Mr. Morrison), by reason of the fact that Mr. Morrison is or was serving at the
Company’s request as a director, officer, employee, or agent or is or was
serving at the Company’s request as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise, the
Company must indemnify Mr. Morrison against expenses (including attorneys’
fees), judgments, fines, and amounts paid in settlement actually and reasonably
incurred by Mr. Morrison in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company, and with respect to any criminal
action or proceeding had no reasonable belief that his conduct was
unlawful.
If the
Company terminates the agreement without cause, it has agreed to pay to Mr.
Morrison the lesser of six months’ salary or the salary payable until the end of
the term of the agreement and, if a bonus has been declared by the Board of
Directors, the bonus amount. In the event of a change of control, Mr.
Morrison may resign his employment by giving the Company written notice within
60 days following the date of occurrence of the change of control. In
that event, Mr. Morrison will be deemed to have been terminated without cause.
A change in the composition of the Company’s Board does not
constitute a change in control under Mr. Morrison’s employment
agreement. Therefore, Mr. Morrison would not be entitled to any
severance payment solely as a result of a majority of the directors elected at
the Annual Meeting being Mr. Jeffs’s nominees. If Mr. Morrison’s
employment is terminated due to his disability, he will also be deemed to be
terminated without cause, although any compensation paid to him will be reduced
by the amount of disability benefits paid to Mr. Morrison through any policy
paid for by the Company.
Mr.
Morrison has agreed, following the termination of his employment, not to accept
employment with a company that sells perfume over the internet for a period of
12 months.
Jonathan
Ehrlich
The
Company entered into an employment agreement with Jonathan Ehrlich on September
11, 2007. Pursuant to the employment agreement, Mr. Ehrlich was to
serve as the Chief Operating Officer and President of Live Current for a term of
five years effective October 1, 2007, subject to certain early termination
rights on the part of Live Current and Mr. Ehrlich. The employment
agreement provided that Mr. Ehrlich was to receive an annual base salary of
CDN$275,000, subject to annual review by the Chief Executive Officer and the
Board, as well as a bonus of up to 50% of his base salary, to be determined by
the Board in its sole discretion. He also was paid a signing bonus of
CDN$200,000 upon his start date and was to be paid bonuses of CDN$250,000 on
October 1, 2009 and October 1, 2010 unless earlier terminated. The
employment agreement also entitled Mr. Ehrlich to participate in the health and
dental and other benefits or policies available to personnel with commensurate
duties. In connection with the employment agreement, on September 8,
2007, Live Current granted a stock option to Mr. Ehrlich to purchase up to
1,500,000 shares of common stock at an exercise price of $2.04 per
share. The option was to vest over the term of the employment
agreement as follows: (i) 500,000 shares were exercisable on October 1, 2008 and
(ii) the right to purchase 125,000 shares vested on the last day of each
successive three-month period thereafter until the entire option
vested. Unless earlier terminated, the option would expire on October
1, 2012. The stock option was granted pursuant to the Company’s 2007
Stock Incentive Plan. Mr. Ehrlich resigned as the Company’s Chief
Operating Officer and President on February 4, 2009.
Mark
Melville
The
Company entered into an employment agreement with Mark Melville on November 9,
2007. Pursuant to the employment agreement, Mr. Melville served as
the Company’s Chief Corporate Development Officer for a term of five years
effective January 1, 2008, subject to certain early termination rights on the
part of Live Current and Mr. Melville. The employment agreement
provided that Mr. Melville would receive an annual base salary of CDN$250,000,
beginning January 1, 2008, subject to annual review by the Chief Executive
Officer and the Board, as well as a bonus of up to 50% of his base salary, to be
determined by the Board in its sole discretion. He also was paid a
signing bonus of CDN$300,000 on his start date and was to be paid two special
bonuses of CDN$100,000 each on each of January 1, 2009 and January 1,
2010. The special bonuses were paid in accordance with the Settlement
Agreement and Release described above. The employment agreement also
entitled Mr. Melville to participate in the health and dental and other benefits
or policies available to personnel with commensurate duties. In
connection with the employment agreement, on January 1, 2008, the Company
granted a stock option to Mr. Melville to purchase up to 1,000,000 shares of the
Company’s common stock at an exercise price of $2.05 per share. The
option was to vest over the term of the employment agreement as follows: (i) the
right to purchase 333,333 shares vested on January 1, 2009 and (ii) the right to
purchase an additional 83,333 shares would vest on the last day of each
successive three-month period thereafter, until the entire option had
vested. Unless earlier terminated, the option was to expire on
January 1, 2013. The stock option was granted pursuant to the
Company’s 2007 Stock Incentive Plan. On February 4, 2009, Mr.
Melville assumed the duties of the office of President. On
June 14, 2010, Mr. Melville tendered a resignation terminating his
employment effective October 1, 2010. Subsequently, Mr. Melville
decided to resign from his position as President and Chief Corporate Development
Officer effective July 27, 2010, the date that Mr. Morrison became the Company’s
President and Chief Operating Officer.
Outstanding
Equity Awards at December 31, 2009
The
following table sets forth certain information concerning unexercised stock
options for each named executive officer listed in the Summary Compensation
Table above. There were no stock awards outstanding as of end of
fiscal year 2009.
|
Name
|
Number
of
Securities
Underlying
Unexercised
Options
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
Unexercisable
|
Option
Exercise
Price
(1)
|
Option
Expiration
Date
|
|
C.
Geoffrey Hampson
(2)
|
750,000
|
250,000
|
$0.65
|
09/11/2012
|
|
Mark
Melville
(3)
|
583,333
|
416,667
|
$0.65
|
01/01/2013
|
|
Jonathan
Ehrlich
(4)
|
–
|
–
|
–
|
–
|
|
(1)
|
On
March 25, 2009, the Company’s Board of Directors reduced the exercise
price of all outstanding stock options granted prior to that date pursuant
to the Live Current Media Inc. 2007 Stock Incentive Plan to $0.65 per
share. These options are held by the Company’s officers,
directors, employees, consultants and agents. The original
exercise prices ranged from a high of $3.30 to a low of
$0.65. As a result of this reduction, the exercise price of the
outstanding stock option granted to Mr. Hampson was reduced from $2.50 per
share, and the exercise price of the outstanding stock option granted to
Mr. Melville was reduced from $2.06 per share. No other terms
or conditions of the stock option grants were
modified.
|
|
(2)
|
The
option became exercisable as to 333,333 shares on September 11, 2008 and
vests as to an additional 83,333 shares on the last day of each successive
three-month period thereafter, until all shares have
vested.
|
|
(3)
|
The
option became exercisable as to 333,333 shares on January 1, 2009 and
vests as to an additional 83,333 shares on the last day of each successive
three-month period thereafter, until all shares have
vested.
|
|
(4)
|
Mr.
Ehrlich’s options were terminated upon his resignation on February 4,
2009.
|
Compensation
and Risk
The
Company believes that the Company’s compensation programs and policies are not
designed to encourage the Company’s executives or employees to take unnecessary
or excessive risks that could harm the long-term value of Live
Current.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
On March
1, 2009, a company of which C. Geoffrey Hampson, the Company’s Chief Executive
Officer and a director, is a major shareholder, began paying the Company $6,000
a month for IT, administrative, and marketing support. Effective
January 1, 2010, the Company no longer provided marketing support and therefore
the arrangement was modified to $3,500 per month. Effective July
2010, the arrangement was further reduced to $1,500 per month and effective
August 31, 2010 the arrangement was terminated.
On May
31, 2010 the Company entered into a Settlement Agreement and Release with Amy
Frankel, the Company’s former Vice President and Corporate
Counsel. Pursuant to the Settlement Agreement and Release, the
Company agreed to pay Ms. Frankel CDN$75,000 at the rate of CDN$12,500 per month
in exchange for a release of any claims that Ms. Frankel may have had relating
to her employment.
On June
16, 2010 the Company signed a Settlement Agreement and Release with Ms. Chantal
Iorio, the Company’s Vice President, Finance (the “Iorio
Agreement”). Ms. Iorio’s employment with the Company ended on August
15, 2010, although she has agreed to render consulting services to the Company
after that date. Pursuant to the Iorio Agreement, in exchange for a
release of the Company’s obligations under the employment agreement dated
December 12, 2007 and any and all claims Ms. Iorio may have related to her
employment, the Company has agreed to pay her the sum of CDN$75,000 (the
“Severance Payment”). The Severance Payment will be made over a
period of six months in equal installments of CDN$12,500. The Company
has also agreed to pay Ms. Iorio’s accrued vacation pay through August 15, 2010
and to continue the payment of Ms. Iorio’s statutory and discretionary medical
and dental benefits. Statutory benefits will be continued until the
Severance Payment is paid in full. Discretionary benefits will be
paid until the earlier of the date that the Company ceases providing such
benefits to all of the Company’s employees or the date that the Severance
Payment is paid in full.
On July
23, 2010, the Company issued in a private offering units consisting of 50,000
shares of common stock and a 2-year warrant for the purchase of 50,000 shares of
the Company’s common stock at an exercise price of $0.15 per
share. Certain of the Company’s officers and directors purchased
units in the offering as follows: Mr. Hampson, through Hampson
Equities Ltd. (a company owned and controlled by Mr. Hampson), 20 units for
$100,000; Mr. Morrison, 10 units for $50,000; Mr. Taylor, 2 units for $10,000
and Dr. Wertz, 2 units for $10,000.
Pursuant
to the terms of the Melville Agreement discussed above, on June 25, 2010, the
Company issued 416,136 shares of the Company’s common stock to Mr.
Melville.
Certain
of the Company’s current named executive officers have employment agreements
with the Company, and the Company entered into employment severance
agreements with certain of the Company’s former named executive
officers. See above for a discussion of these
agreements.
POLICIES
AND PROCEDURES FOR REVIEW OF RELATED-PARTY TRANSACTIONS
The
Company’s Board of Directors approves all related-party
transactions. It is management’s responsibility to bring
related-party transactions to the attention of the members of the
Board.
Each of
the Company’s officers and directors is knowledgeable regarding the requirements
of obtaining approval of related-party transactions and is responsible for
identifying any related-party transaction involving the officer or director or
his affiliates (including immediate family members) and seeking approval from
the Company’s Board of Directors before he or his affiliates may engage in the
transaction.
STOCKHOLDER
PROPOSALS FOR 2011 ANNUAL MEETING
Stockholder
proposals submitted pursuant to Rule 14a-8 under the Exchange Act and intended
to be presented at the Annual Meeting of the Company’s stockholders to be held
in 2011, in order to be considered for inclusion in the proxy materials for that
meeting, must be received by the Company no later than 120 days before the date
the Company sends this year’s proxy materials to the Company’s stockholders. If,
however, the Company changes next year’s Annual Meeting date more than 30 days
from the date of this year’s Annual Meeting (which it expects will be the case),
it will provide in an annual, quarterly or current report the deadline for
submissions of stockholder proposals to be considered for inclusion in the
Company’s proxy materials, so as to provide notice of the submission deadline to
the Company’s stockholders. This date must be a reasonable time before the
Company prints and sends the Company’s proxy materials.
Pursuant
to Rule 14a-4 under the Exchange Act, the proxies to be solicited by the
Company’s Board of Directors for the 2011 Annual Meeting will confer
discretionary authority on the proxy holders to vote on any stockholder proposal
presented at the Annual Meeting if the Company fails to receive notice of such
proposal by a date at least 45 days before the date on which it first sends
its proxy materials for the 2010 meeting. Notwithstanding the
foregoing, in the event that the Company changes next year’s Annual Meeting date
more than 30 days from the date of this year’s Annual Meeting (which it expects
will be the case), the Company will provide in an annual, quarterly or current
report the date before which stockholder proposals must be submitted so as to
provide notice of the submission deadline to stockholders. This date
must be a reasonable time before the Company sends the its proxy materials for
2011.
IMPORTANT
|
|
·
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Be
sure to vote on the
WHITE
proxy card. We urge you not to sign any proxy card that is sent to
you by the Company.
|
|
|
·
|
If
any of your shares are held in the name of a bank, broker or other
nominee, please contact the person responsible for your account and direct
him or her to vote on the
WHITE
proxy “FOR” Mr.
Jeffs’s nominees.
|
If you have any questions, require
assistance in voting your
WHITE
proxy card, need additional copies
of these proxy materials or directions to attend the Annual Meeting, please call
Laurel Hill Advisory Group LLC
at the phone numbers listed
below.
|
Laurel
Hill Advisory Group LLC
100
Wall Street, 22
nd
Floor
New
York NY 10005
Banks
and brokers call collect:
917-338-3181
All
others call toll free:
1-800-385-3006
|
Please
complete, sign, date and mail the enclosed white proxy card promptly in the
enclosed envelope. No postage is required if mailed within the united states. By
completing, signing, dating and returning the enclosed white proxy card, any
proxy previously given by you will be automatically revoked. Only the
latest-dated proxy will count at the annual meeting.
September
24, 2010
|
PLEASE
DETACH PROXY CARD HERE
|
6
|
WHITE
PROXY CARD
LIVE
CURRENT MEDIA, INC
2010
ANNUAL MEETING OF STOCKHOLDERS
THIS
PROXY IS SOLICITED ON BEHALF
OF
DAVID JEFFS
PROXY
David
Jeffs is the beneficial owner of 1,136,866 shares of common stock, par value
$0.001 per share of Live Current Media, Inc. (the “Company”), representing
approximately 3.74% of the outstanding common stock of the Company.
The
undersigned acknowledges receipt of Mr. Jeffs’s proxy materials and hereby
appoints David Jeffs and Amir Vahabzadeh, as attorneys and agents with full
power of substitution to vote all shares of common stock of the Company which
the undersigned would be entitled to vote if personally present at the annual
meeting of stockholders of the Company scheduled to be held at The Golden Nugget
Hotel, 129 East Fremont Street, Las Vegas, Nevada, on October 12, 2010 at 2:00
pm Pacific Time including any adjournments or postponements thereof and at
any meeting called in lieu thereof (the “Annual Meeting”).
The
undersigned hereby revokes any other proxy or proxies heretofore given to vote
or act with respect to the shares of common stock of the Company held by the
undersigned, and hereby ratifies and confirms all action the herein named
attorneys and proxies, their substitutes, or any of them may lawfully take by
virtue hereof. If properly executed, this Proxy will be voted as directed on the
reverse side and in the discretion of the herein named attorneys and proxies or
their substitutes with respect to any other matters as may properly come before
the Annual Meeting which Mr. Jeffs is not aware of a reasonable time before this
solicitation.
Unless otherwise specified in the
squares or spaces provided in this proxy, this proxy will be voted for each of
Mr. Jeffs’s nominees for director and for the ratification of the appointment of
Davidson & Company LLP as the Company’s independent public accountants.
Should other matters, which Mr. Jeffs is not aware of a reasonable time before
this solicitation, be brought before the Annual Meeting, the persons named as
proxies will exercise their discretion to vote on such
matters.
This
Proxy will be valid until the sooner of one year from the date indicated on the
reverse side and the completion of the Annual Meeting.
IMPORTANT:
PLEASE SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY!
CONTINUED
AND TO BE SIGNED ON REVERSE SIDE
|
TO
DELIVER YOUR PROXY BY MAIL, PLEASE DETACH PROXY CARD HERE
|
6
|
WHITE
PROXY CARD
|
1.
Election of Directors.
|
x
Please mark votes as in this
example
|
APPROVAL
OF MR. JEFFS’S PROPOSAL TO ELECT DIRECTORS:
MR.
JEFFS RECOMMENDS A VOTE “FOR” THE NOMINEES LISTED BELOW IN PROPOSAL NO.
1
|
Nominees
|
|
For
All Nominees
|
|
Withhold
Authority
to
Vote For All
Nominees
|
|
For
All Except the
Nominees
Written
Below*
|
|
David
Jeffs
|
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John
Da Costa
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Carl
Jackson
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Susan
Jeffs
|
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|
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|
o
|
|
o
|
|
o
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Cameron
Pan
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Adam
Rabiner
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Amir
Vahabzadeh
|
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Mr.
Jeffs intends to use this proxy to vote “for” himself, Mr. Da Costa, Mr.
Jackson, Ms. Jeffs, Mr. Pan, Mr. Rabiner and Mr. Vahabzadeh.
Note:
If you do not wish for your shares to be voted “for” a particular nominee, mark
the “for all except the nominee(s) written below” box and write the name(s) of
the nominee(s) you do not support on the line below. Your shares will be voted
for the remaining nominee(s).
*Name of
excepted Nominee(s):
2.
Approval of the Company’s proposal to
ratify the appointment of Davidson & Company LLP as independent public
accountants for the Company’s fiscal year ending December 31,
2010.
|
FOR
|
|
AGAINST
|
|
ABSTAIN
|
|
|
|
|
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|
|
¨
|
|
¨
|
|
¨
|
|
DATED:
|
,
2010
|
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|
(Signature)
|
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|
(Signature,
if held jointly)
|
|
|
|
|
|
(Title*)
|
IF
YOUR SHARES ARE HELD JOINTLY, EACH OF YOU SHOULD SIGN.
*IF
YOU ARE AN EXECUTOR, ADMINISTRATOR, TRUSTEE, CORPORATE OFFICER, ETC., YOU SHOULD
INDICATE THE CAPACITY IN WHICH YOU ARE SIGNING.
PLEASE
SIGN EXACTLY AS YOUR NAME APPEARS ON THIS PROXY.
PLEASE
MARK, SIGN, DATE AND RETURN THIS PROXY CARD USING THE ENCLOSED
ENVELOPE.
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