| · | drive achievement of business strategies and conditions hereinafter set forth, the Company hereby agrees to sell, assign, transfer, convey, and deliver to Purchasers, and Purchasers hereby agree to purchase from the Company, shares of the Company’s common stock, US$0.001 par value per share (the “Shares”). The allocation of the commitment to purchase Shares as among Purchasers is set forth on Schedule I attached hereto.1.2 In consideration for the Shares, Purchasers will pay to the Company US$2.45 per share (the “Purchase Price”), which amount will be paid to the Company in cash by wire transfer to an account designated by the Company upon the satisfaction of each of the conditions to Closing (as defined below) set forth herein.
1.3 The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place remotely by the exchange of signature pages on the second business day following the satisfaction or waiver of all conditions to the obligations of the parties to consummate the transactions contemplated hereby or such other date, manner or location as the parties may mutually determine (the “Closing Date”). At the Closing or as promptly thereafter as possible, the Company shall cause to be delivered to Purchasers one or more certificates (as applicable), registered in the name of each applicable Purchaser, representing the Shares purchased by such Purchaser at the Closing against payment of the total Purchase Price per Share.
1.4 Each Purchaser recognizes that the purchase of the Shares entails elements of risk in that (i) it may not be able to readily liquidate its investment; (ii) transferability is restricted as set forth in Section 4.1; (iii) the Company is not assured of maintaining its listing on the NASDAQ Capital Market; and (iv) in the event of a disposition, it could sustain the loss of its entire investment.
1.5 Each Purchaser acknowledges that it has prior investment experience such that it is able to evaluate the merits and risks of an investment in the Company; that it recognizes the speculative nature of this investment; and that it is able to bear the economic risk it hereby assumes. All reports, schedules, forms, statements, and other documents required to be filed by the Company with the United States Securities and Exchange Commission (“SEC”) under the Securities Act of 1933, as amended (the “Securities Act”), the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated under each, including pursuant to Section 13(a) or 15(d) thereof, as well as all amendments to such filings and reports and all exhibits and documents incorporated by reference therein or attached thereto, that have been filed as of the Closing are collectively referred to as the “Disclosure Reports.” Each Purchaser acknowledges that it or its representative(s) have read the Disclosure Reports available as of the Closing. Each Purchaser also acknowledges that it and its representative(s) have been afforded the opportunity to make, and has made, all inquiries as it and its representatives deemed appropriate with respect to the Company’s affairs and prospects.
1.6 Each Purchaser hereby acknowledges that (i) the sale and issuance of the Shares have not been approved by the NASDAQ or registered with the SEC by reason of the Company’s intention that the offer and sale of the Shares be a transaction exempt from the registration and prospectus delivery requirements of the Securities Act pursuant to Section 4(2) thereof; (ii) the issuance of the Shares has not been qualified under any state securities laws on the grounds that the sale of the Shares contemplated hereby are exempt therefrom; and (iii) the foregoing exemptions are predicated on such Purchaser’s representations set forth herein. Each Purchaser represents that the Shares are being purchased for its own account, for investment and not with a view to, or for resale in connection with, any distribution or public offering thereof, within the meaning of the Securities Act or applicable state securities laws. Each Purchaser understands that the Shares, upon their transfer, will not be registered under the Securities Act and may be required to be held indefinitely unless they are subsequently registered under the Securities Act, or an exemption from such registration is available.
1.7 Each Purchaser represents that it is an “accredited investor” as that term is defined in Rule 501 of Regulation D promulgated under the Securities Act.
1.8 Each Purchaser represents that it is not affiliated with, related to, nor is controlled by, controls or has common control with any of the other Purchasers.
1.9 Unless the resale of the Shares is subsequently registered with the SEC, each Purchaser acknowledges that the certificate representing the Shares shall bear a legend in substantially the following form:
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT (I) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND COMPLIANCE WITH SUCH STATE SECURITIES LAWS, (II) IN COMPLIANCE WITH RULE 144 UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, OR (III) UPON THE DELIVERY TO LIVEDEAL, INC. (THE “COMPANY”) OF AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND/ OR COMPLIANCE IS NOT REQUIRED.”
1.10 Each Purchaser represents that it has the full right, power and authority to enter into and perform such Purchaser’s obligations hereunder, and this Agreement constitutes a valid and binding obligation of such Purchaser enforceable in accordance with its terms, except that (i) any enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or similar laws from time to time in effect and affecting the rights of creditors generally and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceedings therefore may be brought.
II. | REPRESENTATION AND WARRANTIES BY THE COMPANY. |
Except as set forth in the Disclosure Reports, the Company represents and warrants to each Purchaser as follows:
2.1 The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada. The Company has the corporate power and authority to own, lease and operate its properties and to conduct the business as described in the Disclosure Reports. The Company is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company.
2.2 The Company’s subsidiaries are set forth in the Disclosure Reports or on the Company’s website (the “Subsidiaries”). Unless the context requires otherwise, all references to the Company include the Subsidiaries. Each Subsidiary is a corporation or a limited liability company (as applicable) duly organized, validly existing and in good standing under the laws of its state of incorporation or organization as set forth in the Disclosure Reports or on the Company’s website, with full power and authority, corporate and other, to own or lease, as the case may be, and operate its properties, whether tangible or intangible, and to conduct its business as currently conducted. Each Subsidiary is duly qualified as a foreign corporation or limited liability company to transact business and is in good standing in each jurisdiction in which the conduct of its business or the ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company and the Subsidiaries taken as a whole. Unless specified to the contrary in the Disclosure Reports, the Company owns all of the issued and outstanding shares of capital stock (or other equity or ownership interests) of each Subsidiary, such ownership is free and clear of any security interests, liens, encumbrances, claims and charges, and all of such shares have been duly authorized and validly issued, and are fully paid and nonassessable. The Company does not presently own, directly or indirectly, an interest in any corporation, association, or other business entity, and is not a party to any joint venture, partnership, or similar arrangement, other than the Subsidiaries.
2.3 This Agreement has been duly authorized, executed and delivered by, and is a valid and binding agreement of, the Company enforceable in accordance with its terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium and similar laws affecting creditors’ rights generally (including, without limitation, statutory or other laws regarding fraudulent preferential transfers) and equitable principles of general applicability.
2.4 The execution and delivery of this Agreement by the Company, and the performance by the Company of its obligations under this Agreement, will not conflict with or contravene in any material respect, cause a breach or violation of or default under, any provision of applicable law or the Articles of Incorporation or by-laws of the Company or any agreement or other instrument binding upon the Company that is material to the Company, or any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Company, and no consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by the Company of its obligations under this Agreement, except as may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Shares and by Federal and state securities laws with respect to the obligations of the Company under this Agreement or the listing of the Shares with NASDAQ as may be required, which have been or will be obtained, or as would not have a material adverse effect on the Company and the Subsidiaries taken as a whole.
2.5 The authorized capital stock of the Company conforms in all material respects to the description thereof contained in the Disclosure Reports and such description conforms in all material respects to the rights in the instruments defining the same. The issued and outstanding capital stock of the Company is as set forth in the Disclosure Reports. The shares of common stock of the Company outstanding prior to the issuance of the Shares have been duly authorized and are validly issued, fully paid and nonassessable.2.6 The Shares have been duly and validly authorized and, when issued, sold and paid for by Purchasers in accordance with the terms of this Agreement, will be duly authorized, validly issued, fully paid and nonassessable, and Purchasers will not be subject to personal liability solely by reason of being such a holder and will not be subject to the preemptive or similar rights of any holders of any security of the Company. The issuance of the Shares will not result in the right of any holder of securities of the Company to adjust the exercise, conversion or exchange price of such securities or otherwise reset the price paid for its securities. No authorization, approval or consent of any court, governmental authority or agency is necessary in connection with the issuance by the Company of the Shares.
2.7 The Disclosure Reports, as of their respective filing dates, complied in all material respects with the requirements of the Exchange Act and the applicable rules and regulations of the SEC thereunder.
2.8 Neither the Company nor any Subsidiary is in violation of its charter or by-laws or in default in the performance of any obligation, agreement, covenant or condition contained in any indenture, loan agreement, mortgage, lease or other agreement or instrument that is material to the Company and the Subsidiaries taken as a whole to which the Company or any Subsidiary is a party or by which the Company, any Subsidiary or any of their properties is bound, except for such defaults that would not, individually or in the aggregate, have a material adverse effect on the Company and the Subsidiaries taken as a whole or as otherwise set forth in the Disclosure Reports.
2.9 There are no legal or governmental proceedings, orders, judgments, writs, injunctions, decrees or demands pending or, to the Company’s knowledge, threatened to which the Company or any Subsidiary is a party or to which any of the properties of the Company or any Subsidiary is subject other than (a) proceedings, orders, judgments, writs, injunctions, decrees or demands described in the Disclosure Reports, or (b) proceedings, orders, judgments, writs, injunctions, decrees or demands that would not be reasonably expected to have a material adverse effect (i) on the Company and the Subsidiaries taken as a whole or (ii) on the power or ability of the Company to perform its obligations under this Agreement or to consummate the transactions contemplated by this Agreement.
2.10 The Company is in compliance with applicable provisions of (a) the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder and (b) the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations promulgated thereunder, in both cases except where any incidence of noncompliance would not, individually or in the aggregate, have a material adverse effect on the Company and the Subsidiaries taken as a whole.
2.11 Other than the transactions contemplated by this Agreement, neither the Company nor any of its affiliates (as defined in Rule 501(b) of Regulation D) has directly, or through any agent, (a) sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any security (as defined in the Securities Act) which is or will be integrated with the sale of the Shares in a manner that would require the registration under the Securities Act of the Shares or (b) offered, solicited offers to buy or sold the Shares by any form of general solicitation or general advertising (as those terms are used in Regulation D) or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act. No registration under the Securities Act of the Shares is required for the sale of the Shares to Purchasers under this Agreement, assuming the accuracy of each Purchaser’s representations and warranties contained in this Agreement.
2.12 The Company and each Subsidiary owns or possesses, or has the right to use, all material patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks and trade names currently employed or required by it in connection with the business currently conducted by it as described in the Disclosure Reports, except such as the failure to so own or possess or have the right to use would not have, individually or in the aggregate, a material adverse effect on the Company and the Subsidiaries taken as a whole. To the Company’s knowledge, there are no valid and enforceable United States patents that are infringed by the business currently conducted by the Company or any Subsidiary, or as currently proposed to be conducted by the Company or any Subsidiary, as described in the Disclosure Reports and which infringement would have a material adverse effect on the Company and the Subsidiaries taken as a whole. The Company is not aware of any basis for a finding that the Company or ay Subsidiary does not have valid title or license rights to the patents and patent applications referenced in the Disclosure Reports as owned or licensed by the Company or any Subsidiary, and, to the Company’s knowledge, neither the Company nor any Subsidiary is subject to any judgment, order, writ, injunction or decree of any court or any Federal, state, local, foreign or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, or any arbitrator, nor has it entered into or is it a party to any contract, which restricts or impairs the use of any of the foregoing which would have a material adverse effect on the Company and the Subsidiaries taken as a whole. Neither the Company nor any Subsidiary has received any written notice of infringement of or conflict with asserted rights of any third party with respect to the business currently conducted by it as described in the Disclosure Reports and which, if determined adversely to the Company or any Subsidiary, would have a material adverse effect on the Company and the Subsidiaries taken as a whole and the Company has no knowledge of any facts or circumstances that would serve as a reasonable basis for any such claims.
2.13 There are no outstanding rights, warrants, options, convertible securities or commitments to sell granted or issued by the Company entitling any person to purchase or otherwise acquire any shares of the capital stock of the Company, except as otherwise disclosed in the Disclosure Reports and except for securities granted to directors and employees of the Company in the ordinary course of business.
2.14 The financial statements included or incorporated by reference in the Disclosure Reports as the same may have been amended prior to the date of the Disclosure Reports, together with related schedules and notes, present fairly in all material respects the financial position, results of operations and changes in financial position of the Company and its consolidated subsidiaries on the basis stated therein at the respective dates or for the respective periods to which they apply; such statements and related schedules and notes have been prepared in accordance with generally accepted accounting principles consistently applied throughout the periods involved, except as disclosed therein.
2.15 There are no existing or, to the Company’s knowledge, threatened labor disputes with the employees of the Company that would have a material adverse effect on the Company and the Subsidiaries taken as a whole.
2.16 The Company has filed all Federal, state, local and foreign tax returns which are required to be filed through the date hereof (except where the failure to so file would not have a material adverse effect on the Company), which returns are true and correct in all material respects, or have received extensions thereof, and have paid all taxes shown on such returns and all assessments received by them to the extent that the same are material and have become due. All tax liabilities are adequately provided for on the books of the Company. To the Company’s knowledge, there are no tax audits or investigations pending, which if adversely determined, would have a material adverse effect on the Company taken as a whole.
2.17 The Company is insured against such losses and risks and in such amounts as are customary in the businesses in which it is engaged, including but not limited to, insurance covering product liability and real or personal property owned or leased against theft, damage, destruction, act of vandalism and all other risks customarily insured against. All policies of insurance and fidelity or surety bonds insuring the Company or the Company's businesses, assets, employees, officers and directors are in full force and effect. The Company is in compliance with the terms of such policies and instruments in all material respects. The Company has no reason to believe that it will not be able to renew their existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business.
2.18 Any real property and buildings held under lease by the Company is held by it under valid, subsisting and enforceable leases with such exceptions as are not material and do not materially interfere with the use made and proposed to be made of such property and buildings by the Company.
2.19 The Company’s direct marketing business was discontinued on or about April 30, 2011 and, as of the date hereof, there are no accounts payable or unpaid expenses in excess of $1,000.00 relating to such business.
2.20 To the best knowledge of the Company, the Company has provided the Purchasers (through their representative) with true and accurate information about the Company’s listing status with the NASDAQ Capital Market as of the date hereof, including information about events that could cause the Company’s common stock to be de-listed from such trading market. Each Purchaser hereby acknowledges receipt of such information.
III. | CONDITIONS TO CLOSING.goals; |
3.1 Conditions to each Purchaser’s Obligations at the Closing. The obligations of each Purchaser to purchase Shares at the Closing are subject to the fulfillment, on or before the Closing, of each of the following conditions, unless otherwise waived by such Purchaser:
(i) Representations and Warranties. The representations and warranties of the Company contained | · | motivate performance in Article II shall be true and correct in all material respects as of the date of the Closing.(ii) Performance. The Company shall have performed and complied with all covenants, agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing.
(iii) Current Disclosure Reports. The Company shall have filed all Disclosure Reports that are required to be filed as of the Closing Date.
(iv) Stockholder Approval. If required by applicable rules and regulations, this Agreement and the transactions contemplated hereby shall have received the affirmative vote of the holders of a majority of the outstanding common stock on the record date for the special meeting of the stockholders.
(v) Certificate. Purchasers shall have received a certificate from a duly authorized officer of the Company certifying that the above conditions have been satisfied and attaching evidence or supporting documentation (to the extent applicable) reasonably satisfactory to Purchasers.(vi) NASDAQ Compliance. The NASDAQ Listing Qualifications Department and/or Hearings Panel shall have granted an extension for the Company to regain compliance with NASDAQ Listing Rule 5550(b)(1), which requires the Company to have stockholders’ equity of at least US$2,500,000, and the Company shall be in compliance (as of the date of the Closing) with all applicable requirements for the continued listing of the common stock on the NASDAQ Capital Market.
(vii) No Material Adverse Change. There shall not have occurred a Material Adverse Change with respect to the Company. For purposes of this Section 3.1(vii), the term “Material Adverse Change” means any circumstance, occurrence, event or change that has a material adverse effect on (a) the Company’s and the Subsidiaries’ property and assets (taken as a whole), (b) the financial condition or results of operations of the Company and the Subsidiaries (taken as a whole), or (c) the ability of the Company to satisfy and perform its obligations under this Agreement or to consummate the transactions contemplated hereby; provided, however, that in no event shall any of the following be deemed to constitute, nor shall any of the following be taken into account in determining whether there has been or shall be, a Material Adverse Change: (1) the effect of any change in the United States or foreign economies or securities or financial markets in general, (2) the effect of any change that generally affects any industry in which the Company or any of its Subsidiaries operates, (3) any effect or result of the Company’s compliance with the terms and conditions of this Agreement, (4) any effect or result of the execution or announcement of this Agreement or the transactions contemplated hereby, (5) any effect or result of a breach of this Agreement by any Purchaser, (6) any effect or result of any changes arising in connection with natural disasters, hostilities, acts of war, sabotage or terrorism or military actions or any escalation or material worsening of any such hostilities, acts of war, sabotage or terrorism or military actions existing or underway as of the date of this Agreement or (7) the effect of any changes in applicable laws, rules, regulations or accounting rules, including United States generally accepted accounting principles.
3.2 Conditions to the Company’s Obligations at the Closing. The obligations of the Company to sell and issue the Shares at the Closing are subject to the fulfillment, on or before the Closing, of each of the following conditions, unless otherwise waived by the Company:
(i) Representations and Warranties. The representations and warranties of Purchasers contained in Article I shall be true and correct in all material respects as of the date of the Closing.
(ii) Performance. Purchasers shall have performed and complied with all covenants, agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by them on or before the Closing.
(iii) Stockholder Approval. If required by applicable rules and regulations, this Agreement and the transactions contemplated hereby shall have received the affirmative vote of the holders of a majority of the outstanding common stock.
(iv) Certificate. The Company shall have received a certificate from a duly authorized officer of each Purchaser certifying that the above conditions have been satisfied and attaching evidence or supporting documentation (to the extent applicable) reasonably satisfactory to the Company.
IV. | COVENANTS AND AGREEMENTS.entrepreneurial, incentive-driven culture; |
4.1 Each Purchaser covenants | · | closely align the interests of executive officers with the interests of the Company’s stockholders; |
| · | promote and agrees that,maintain high ethical standards and business practices; and |
| · | reward results and the creation of stockholder value. |
Factors Considered in Determining Compensation; Components of Compensation
The Compensation Committee makes executive compensation decisions on the basis of total compensation, rather than on individual components of compensation. We attempt to create an integrated total compensation program structured to balance both short and long-term financial and strategic goals. Our compensation should be competitive enough to attract and retain highly skilled individuals. In this regard, we utilize a combination of between two to four of the following types of compensation to compensate our executive officers:
| · | base salary, which typically increases by 10% each year during the period beginningterm of their employment agreement (if applicable); |
| · | performance bonuses, which may be earned annually depending on the Closing Date and ending six months after the Closing Date, such Purchaser will not, directly or indirectly, (a) offer, sell, offer to sell, contract to sell, hedge, pledge, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or sell (or announce any offer, sale, offerCompany’s achievement of sale, contract of sale, hedge, pledge, sale of any option or contract to purchase, purchase of any option or contract of sale, grant of any option, right or warrant to purchase or other sale or disposition), or otherwise transfer or dispose of (or enter into any transaction or device that is designed to, or could be expected to, result in the disposition by any person at any time in the future), the Shares purchased by such Purchaser, or (b) enter into any swap or other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of any Shares, whether any such swap or transaction described in clause (a) or (b) above is to be settled by delivery of any Share.pre-established goals; |
4.2 If required by applicable rules and regulations, the Company covenants and agrees, as soon as practicable following the date of this Agreement, to prepare and file with the SEC a preliminary and, subject to the SEC’s review, definitive proxy statement relating to the Special Meeting of Stockholders and seeking stockholder approval of this Agreement and the transactions contemplated hereby. If required by applicable rules and regulations, the Company shall furnish to Purchasers or their designated representative(s) advance copies of such proxy statements and shall provide a reasonable opportunity to review and comment prior to filing with the SEC.
4.3 The Company’s current Board of Directors shall remain in place and each Purchaser shall be entitled to designate an additional nominee (“Purchaser Nominee”) and the Company shall include that individual in its next slate of directors, which, | · | cash bonuses given at the discretion of the Company’s then existing Nominating CommitteeBoard; and Board of Directors, may include the Company’s current Board members. The number of Purchaser Nominees may not exceed three and no Purchaser shall be entitled to more than one Purchaser Nominee. Any Purchaser Nominee must be in compliance with all applicable SEC and NASDAQ rules and regulations. A Purchaser shall no longer be entitled to designate a nominee for election to the Board of Directors if such Purchaser owns less than two percent (2%) of the outstanding capital stock of the Company.4.4 Use or expenditure of the proceeds of the transactions contemplated by this Agreement shall require the approval of the Company’s Board of Directors, including at least one of director that is nominated by a Purchaser.
4.5 If, within the six month period following the Closing Date, the Company issues shares of its capital stock in connection with a financing or an acquisition of, or merger or consolidation with, another entity (“New Shares”) at a price that is less than $2.45 per share (“New Price”) then within 10 business days of such issuance each Purchaser shall be issued, without payment of any additional consideration, additional shares of the Company’s common stock so that such new shares when combined with the Shares purchased by the Purchaser in the Investment would equal the number of shares of common stock the Purchaser would have received in the Investment had the Purchase Price been the New Price. Notwithstanding the foregoing, the New Price may not be less than $2.00 per share. Notwithstanding the foregoing or anything in this Agreement to the contrary, “New Securities” shall not include the following:
(i) shares of capital stock issued upon conversion of, or exchange for, any outstanding (a) shares of any preferred stock, (b) options, or (c) securities of the Company convertible into or exercisable for shares of the Company’s, in all cases that are outstanding as of the Closing;
(ii) restricted stock or options issued to directors, officers, employees or consultants of the Company pursuant to the Company’s existing stock incentive plan;(iii) shares of Common Stock issued to officers, directors, employees, consultants, service providers or vendors in lieu of cash payments otherwise due, including payment of any finder’s fee in shares of capital stock in connection with the Investment;
(iv) warrants or convertible securities issued or issuable to banks, equipment lessors, lenders or other financial institutions, or to real property lessors or in connection with a financing;
(v) any securities deemed in writing to not be New Securities by either (a) Purchasers holding at least a majority of the Shares or (ii) at least two directors of the Company nominated by Purchasers.
5.1 Any notice, request, advice, consent | · | equity compensation, consisting of restricted stock and/or other communication given hereunder shall be given in writing and sent by overnight delivery service or registered or certified mail, return receipt requested, and addressed as follows: if to the Company, to it at 2490 E. Sunset Rd., Suite #100, Las Vegas, NV 89120, United States of America, Attention: President; and if to any Purchaser, to it at the address on the records of the Company or the signature page of this Agreement. Notices so given shall be deemed to have been given on the earlier to occur of actual receipt or three business days after the date of such mailing, except for notices of change of address, which shall be deemed to have been given when received.5.2 This Agreement shall not be changed, modified or amended except by a writing signed by the parties hereto.
5.3 This Agreement shall be binding upon and inure to the benefit of the parties hereto and to their respective heirs, legal representatives, successors and assigns. This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter thereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them.
5.4 References herein to a person or entity in either gender include the other gender or no gender, as appropriate.
5.5 This Agreement and its validity, construction and performance shall be governed in all respects by the laws of the State of Nevada.
5.6 After negotiations between the parties, this Agreement was prepared by Snell & Wilmer L.L.P, as legal counsel to the Company. Snell & Wilmer L.L.P. has not acted as legal counsel to any Purchaser, individually or collectively, in connection with the negotiation of or the transactions contemplated by this Agreement. Each Purchaser hereby acknowledges that it has had the opportunity to review this Agreement with its own legal counsel.
5.7 Except as otherwise specified in this Agreement, all costs and expenses, including fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated by this Agreement shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred.
5.8 This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may also be executed and delivered by facsimile or electronic (.pdf) signature and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.[Remainder of Page Intentionally Left Blank; Signature Page Follows]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first set forth above.
stock options. |
COMPANY: | | | | LiveDeal, Inc. | | | | /s/ Kevin Hall | | Name: Kevin Hall | | Title: President and Chief Executive Officer | |
PURCHASERS: | | | | | | NETOMO Co., Ltd. | | Address for Notice: | | | | /s/ Tadatoshi Sato | | Takane Building 302 | Name: Tadatoshi Sato | | Sakamachi 21 Shinjyuku-ku 160-0002, | Title: CEO | | Tokyo Japan | | | | Sharonnette Limited | | Address for Notice: | | | | /s/ Dong Suk Oh | | Unit A, 3F, Queens Centre | Name: Dong Suk Oh | | 58-64, Queens Road East | Title: CEO | | Wanchai, Hongkong | | | | Nihon Material Co,, Ltd. | | Address for Notice: | | | | /s/ Chulsu Kim | | Saha Diamond Building 7F | Name: Chulsu Kim | | 3-12-7 Chitose Sumida-ku 130-0025 | Title: CEO Tokyo, Japan | | |
[Signature Page to Stock Purchase Agreement]
The Compensation Committee periodically reviews each executive officer’s base salary and makes appropriate recommendations to the Board. Salaries are based on the following factors:
SCHEDULE I
Purchasers – Allocation of Shares
| Name of Purchaser | | Shares Purchased | | | Purchase Price | | | | | | | | | | | NETOMO Co., Ltd. | | | 416,832 | | | US$ | 1,021,238 | | | Takane Building 302 Sakamachi | | | | | | | | | | 21 Shinjyuku-ku 160-0002 | | | | | | | | | | Tokyo Japan | | | | | | | | | | CEO: Tadatoshi Sato | | | | | | | | | | | | | | | | | | | | Sharonnette Limited | | | 138,523 | | | US$ | 339,381 | | | Unit A, 3F, Queens Centre | | | | | | | | | | 58-64, Queens Road East | | | | | | | | | | Wanchai, Hongkong | | | | | | | | | | CEO:Dong Suk Oh | | | | | | | | | | | | | | | | | | | | Nihon Material Co,, Ltd. | | | 138,523 | | | US$ | 339,381 | | | Saha Diamond Building 7F | | | | | | | | | | 3-12-7 Chitose Sumida-ku 130-0025 | | | | | | | | | | Tokyo Japan | | | | | | | | | | CEO: Chulsu Kim | | | | | | | | | | | | | | | | | | | | TOTAL | | | 693,878 | | | US$ | 1,700,000 | |
ANNEX A-2
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of September 29, 2011, is by and between LIVEDEAL, INC., a Nevada corporation (the “Company”), and the party listed on the signature page to this Agreement (the “Purchaser”).
The Company and Purchaser are entering into this agreement to memorialize the terms and conditions upon which Purchaser commit to purchase and acquire shares of the Company’s common stock, US$0.001 par value per share (the “Investment”).
NOW THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereby agree as follows:
I. | STOCK PURCHASE COMMITMENT; REPRESENTATIONS BY PURCHASERS. |
1.1 Subject to the terms and conditions hereinafter set forth, the Company hereby agrees to sell, assign, transfer, convey, and deliver to Purchaser, and Purchaser hereby agree to purchase from the Company, shares of the Company’s common stock, US$0.001 par value per share (the “Shares”). The allocation of the commitment to purchase Shares as among Purchaser is set forth on Schedule I attached hereto.
1.2 In consideration for the Shares, Purchaser will pay to the Company US$2.45 per share (the “Purchase Price”), which amount will be paid to the Company in cash by wire transfer to an account designated by the Company upon the satisfaction of each of the conditions to Closing (as defined below) set forth herein.
1.3 The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place remotely by the exchange of signature pages on the second business day following the satisfaction or waiver of all conditions to the obligations of the parties to consummate the transactions contemplated hereby or such other date, manner or location as the parties may mutually determine (the “Closing Date”). At the Closing or as promptly thereafter as possible, the Company shall cause to be delivered to Purchaser one or more certificates (as applicable), registered in the name of each applicable Purchaser, representing the Shares purchased by such Purchaser at the Closing against payment of the total Purchase Price per Share.
1.4 Each Purchaser recognizes that the purchase of the Shares entails elements of risk in that (i) it may not be able to readily liquidate its investment; (ii) transferability is restricted as set forth in Section 4.1; (iii) the Company is not assured of maintaining its listing on the NASDAQ Capital Market; and (iv) in the event of a disposition, it could sustain the loss of its entire investment.
1.5 Each Purchaser acknowledges that it has prior investment experience such that it is able to evaluate the merits and risks of an investment in the Company; that it recognizes the speculative nature of this investment; and that it is able to bear the economic risk it hereby assumes. All reports, schedules, forms, statements, and other documents required to be filed by the Company with the United States Securities and Exchange Commission (“SEC”) under the Securities Act of 1933, as amended (the “Securities Act”), the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated under each, including pursuant to Section 13(a) or 15(d) thereof, as well as all amendments to such filings and reports and all exhibits and documents incorporated by reference therein or attached thereto, that have been filed as of the Closing are collectively referred to as the “Disclosure Reports.” Each Purchaser acknowledges that it or its representative(s) have read the Disclosure Reports available as of the Closing. Each Purchaser also acknowledges that it and its representative(s) have been afforded the opportunity to make, and has made, all inquiries as it and its representatives deemed appropriate with respect to the Company’s affairs and prospects.
1.6 Each Purchaser hereby acknowledges | · | the Company’s performance for the prior fiscal years and subjective evaluation of each executive’s contribution to that (i) performance; |
| · | the sale and issuanceperformance of the Shares haveparticular executive in relation to established goals or strategic plans; and |
| · | competitive levels of compensation for executive positions based on information drawn from compensation surveys and other relevant information. |
Performance bonuses and equity compensation are awarded based upon the recommendation of the Compensation Committee. Restricted stock is granted under the 2003 Stock Plan and is priced at 100% of the closing price of the Company’s common stock on the date of grant. Incentive and/or non-qualified stock options are generally granted under the 2003 Stock Plan, as well, with the exercise price of such options set at 100% of the closing price of the Company’s common stock on the date of grant. These grants are made with a view to linking executives’ compensation to the long-term financial success of the Company.
Use of Benchmarking and Compensation Peer Groups
The Compensation Committee did not utilize any benchmarking measure in fiscal 2011 and traditionally has not tied compensation directly to a specific profitability measurement, market value of the Company’s common stock or benchmark related to any established peer or industry group. Salary increases are based on the terms of the Named Executive Officers’ employment agreements, if applicable, and correlated with the Board’s and the Compensation Committee’s assessment of each Named Executive Officer’s performance. The Company also generally seeks to increase or decrease compensation, as appropriate, based upon changes in an executive officer’s functional responsibilities within the Company. Historically, the Compensation Committee has not used outside consultants in determining the compensation of the Company’s Named Executive Officers, and no such consultants were engaged during fiscal 2011.
Other Compensation Policies and Considerations
The intention of the Company has been to compensate the Named Executive Officers in a manner that maximizes the Company’s ability to deduct such compensation expenses for federal income tax purposes. However, the Compensation Committee has the discretion to provide compensation that is not “performance-based” under Section 162(m) of the Code it determines that such compensation is in the best interests of the Company and its stockholders. For fiscal 2011, the Company deducted all compensation expenses paid to the Named Executive Officers. SUMMARY COMPENSATION TABLE | Name and Principal Position | | Year | | Salary ($) | | | Bonus ($) | | | Stock Awards ($)(1) | | | Option Awards ($)(1) | | | All Other Compensation ($) | | | Total ($) | | | | | | | | | | | | | | | | | | | | | | | | | Kevin A. Hall, President and | | 2011 | | | 230,638 | | | | - | | | | - | | | | 2,581 | | | | 40,868 | (3) | | | 274,087 | | | Chief Executive Officer (2) | | 2010 | | | 195,393 | | | | 12,192 | | | | - | | | | - | | | | 5,975 | (3) | | | 213,560 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Lawrence W. Tomsic, | | 2011 | | | 221,351 | | | | - | | | | - | | | | 12,151 | | | | - | | | | 233,502 | | | Chief Financial Officer (4) | | 2010 | | | 178,947 | | | | - | | | | - | | | | - | | | | - | | | | 178,947 | |
| (1) | The amounts reflect the dollar amount recognized for financial statement reporting purposes in accordance with SFAS No. 123(R) (“SFAS 123(R)”). These amounts reflect LiveDeal’s accounting expense for these awards, and do not been approvedcorrespond to the actual value that may be recognized by the NASDAQ or registeredNamed Executive Officers. |
| (2) | Mr. Hall has served as President and Chief Executive Officer since March 24, 2011. Mr. Hall was terminated as our President and Chief Executive Officer effective January 20, 2012. He has also served as President and Chief Operating Officer of the Company since May 2010. He has also served as the Company’s General Counsel since April 2009, and has previously served as the Company’s Vice President of Human Resources and Business Development. |
| (3) | Mr. Hall was reimbursed for his monthly rent and related living expenses for an amount not to exceed $3,500 per month. |
| (4) | Mr. Tomsic has served as Chief Financial Officer of the Company since January 2, 2010. Prior to the effective date of his appointment, Mr. Tomsic also provided financial and accounting consulting services to the Company. |
EMPLOYMENT AGREEMENTS
On March 24, 2011, Mr. Hall was appointed as our Chief Executive Officer. In connection with his appointment, Mr. Hall entered into an employment agreement which provides for a two-year term of employment, which may be extended upon the parties’ mutual agreement, and an annual base salary of $225,000. Mr. Hall will be entitled to receive an annual performance bonus in the event that the Company reaches certain performance measures as may be established by our Board or our Compensation Committee.
The employment agreement further provides that Mr. Hall is entitled to an option to purchase 13,487 shares of our common stock exercise price of $3.53 per share, which was equal to the closing price of our common stock on the date of grant. The options were granted on March 24, 2011 and pursuant to our 2003 Stock Plan will vest according to the following schedule: 25% on March 24, 2012 (the first anniversary of the grant date) and 1/36 of the remainder each month beginning on April 24, 2012. Notwithstanding the foregoing, all unvested shares will immediately vest and become exercisable upon a change in control.
If the Company terminates Mr. Hall’s employment during the first year of his term of employment without cause (as defined in the agreement) and certain other conditions are met (including that Mr. Hall provide a valid release of claims in favor of the Company), Mr. Hall will be entitled to receive a lump sum severance payment equal to his then current monthly salary for three months. After March 24, 2012 but prior to the end of his term of employment, if the Company terminates Mr. Hall’s employment without cause, Mr. Hall will be entitled to a severance payment equal to his then current monthly salary for six months. The employment agreement also provides that the Company will reimburse Mr. Hall for reasonable business expenses and allows him to participate in its regular benefit programs.
On May 20, 2011, in connection with our continued employment of Mr. Tomsic as its Chief Financial Officer, the Company entered into an employment agreement with Mr. Tomsic. The employment agreement provides for a one-year term of employment, which may be extended upon the parties’ mutual agreement, and an annual base salary of $220,000. Mr. Tomsic will be entitled to receive an annual performance bonus in the event that the Company reaches certain performance measures established by the Chief Executive Officer, the Board or our Compensation Committee. Mr. Tomsic’s target bonus will be equal to $80,000.
Pursuant to the employment agreement, on May 20, 2011, Mr. Tomsic was granted an option to purchase 10,526 shares of our common stock at an exercise price of $3.77 per share, which was equal to the closing price of our common stock on the date of grant. The options will vest and be exercisable according to the following schedule: 3,728 options vesting immediately and the remainder shall vest 1/31 at the end of each month thereafter over the next 31 months so long as Mr. Tomsic continues to provide services to our company. Notwithstanding the foregoing, all unvested shares shall become immediately vested and exercisable upon a change of control.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table sets forth information regarding outstanding equity awards for the Named Executive Officers as of September 30, 2011.
| | | Option Awards | | Stock Awards | | Name and Position | | Number of Securities Underlying Unexercised Options Exercisable (#) | | | Number of Securities Underlying Unexercised Options Unexercisable (#) | | | Option Exercise Price ($) | | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested (#) | | | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | | | Equity Incentive Plan Awards: Number of Unearned Share or Units That Have Not Vested (#) | | | Equity Incentive Plan Awards: Market Value of Unearned Shares or Units That Have Not Vested ($) | | | | | | | | | | | | | | | | | | | | | | | | | | | Kevin A. Hall, President and Chief Executive Officer | | | 13,487 | | | | - | | | | 3.53 | | 3/24/21 | | | 13,487 | (2) | | | 21,579 | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Lawrence W. Tomsic, Chief Financial Officer | | | 10,526 | | | | - | | | | 3.77 | | 5/20/21 | | | 5,921 | (3) | | | 9,474 | | | | - | | | | - | |
(1) Based on the closing price per share ($1.60) of the Company’s common stock, as reported on the NASDAQ Capital Market, on September 30, 2011. | (2) | The options were granted on March 24, 2011. The options will vest and be exercisable according to the following schedule: one quarter (25%) on March 24, 2012, and the remainder shall vest 1/36 at the end of each month thereafter over the next 36 months so long as Mr. Hall continues to provide services to the Company. |
| (3) | The options were granted on May 20, 2011and 3,728 options became immediately exercisable. The remainder shall vest 1/31 at the end of each month thereafter over the next 31 months so long as Mr. Tomsic continues to provide services to the Company. |
DIRECTOR COMPENSATION
Directors who are also employees of the Company do not receive any separate compensation in connection with their Board service. For fiscal 2011, non-employee directors each received a $36,000 annual retainer, as discussed above. Our lead director and committee chairpersons received an additional annual retainer of $10,000. In the event that the Chairman of our Board is a non-employee director, we also pay such person an additional retainer. We reimburse directors for reasonable expenses related to their Board service.
The following table summarizes compensation paid to each of our non-employee directors who served in such capacity during fiscal 2011.
| Name | | Fees Earned or Paid in Cash ($) | | | Stock Awards ($) | | | Total ($) | | | | | | | | | | | | | | Sheryle Bolton | | | 38,334 | (1) | | | 7,666 | (2) | | | 46,000 | | | | | | | | | | | | | | | | | Richard D. Butler, Jr. | | | 38,334 | (3) | | | 7,666 | (4) | | | 46,000 | | | | | | | | | | | | | | | | | Thomas J. Clarke, Jr. | | | 38,334 | (5) | | | 7,666 | (6) | | | 46,000 | | | | | | | | | | | | | | | | | Greg A. LeClaire | | | 38,334 | (7) | | | 7,666 | (8) | | | 46,000 | |
| (1) | Includes $10,000 additional cash retainer paid in connection with the SEC by reasonservice as lead director. |
| (2) | 2,296 performance shares were granted to Ms. Bolton in lieu of paying $3,833 cash director fees for services provided during August 2011 and 2,396 performance shares were granted to Ms. Bolton in lieu of paying $3,833 cash director fees for services provided during September 2011. |
| (3) | Includes $10,000 additional cash retainer paid in connection with service as chairman of the Company’s intention that the offerNominating and saleGovernance Committee. |
| (4) | 2,296 performance shares were granted to Mr. Butler in lieu of the Shares be a transaction exempt from the registrationpaying $3,833 cash director fees for services provided during August 2011 and prospectus delivery requirements2,396 performance shares were granted to Mr. Butler in lieu of the Securities Act pursuant to Section 4(2) thereof; (ii) the issuance of the Shares has not been qualified under any state securities laws on the grounds that the sale of the Shares contemplated hereby are exempt therefrom; and (iii) the foregoing exemptions are predicated on such Purchaser’s representations set forth herein. Each Purchaser represents that the Shares are being purchasedpaying $3,833 cash director fees for its own account, for investment and not with a view to, or for resaleservices provided during September 2011. |
| (5) | Includes $10,000 additional cash retainer paid in connection with any distribution or public offering thereof, within the meaningservice as chairman of the Securities Act or applicable state securities laws. Each Purchaser understandsCompany’s Compensation Committee. |
| (6) | 2,296 performance shares were granted to Mr. Clarke in lieu of paying $3,833 cash director fees for services provided during August 2011 and 2,396 performance shares were granted to Mr. Clarke in lieu of paying $3,833 cash director fees for services provided during September 2011. |
| (7) | Includes $10,000 additional cash retainer paid in connection with service as chairman of the Company’s Audit Committee. |
| (8) | 2,296 performance shares were granted to Mr. LeClaire in lieu of paying $3,833 cash director fees for services provided during August 2011 and 2,396 performance shares were granted to Mr. LeClaire in lieu of paying $3,833 cash director fees for services provided during September 2011. |
EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes securities available for issuance under LiveDeal’s equity compensation plans as of September 30, 2011: | Plan Category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | | | Weighted-average exercise price of outstanding options, warrants and rights (b) | | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | | | | | | | | | | | | | | Equity compensation plans approved by security holders (1) | | | 84,345 | | | | 3.64 | | | | 55,655 | | | | | | | | | | | | | | | | | Equity compensation plans not approved by security holders | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | Total | | | 84,345 | | | | 3.64 | | | | 55,655 | |
_______________ | (1) | Comprised of the LiveDeal, Inc. Amended and Restated 2003 Stock Plan. |
| (2) | This number represents the number of shares of restricted stock, and the number of shares underlying stock options, that have been granted to eligible participants under our Amended and Restated 2003 Stock Plan. As of September 30, 2011, 58,990 shares of common stock were vested, 1,342 shares remained restricted, and 24,013 shares of common stock were issuable upon the Shares, upon their transfer, will not be registered underexercise of stock options 4,605 of which were vested at such date). |
| (3) | Reflects the Securities Act and may be required to be held indefinitely unless they are subsequently registered under the Securities Act, or an exemption from such registration is available.weighted-average exercise price of options outstanding as of September 30, 2011. |
LiveDeal, Inc. Amended and Restated 2003 Stock Plan
During the fiscal year ended September 30, 2002, our stockholders approved the 2002 Employees, Officers & Directors Stock Option Plan (the “2002 Plan”), which was intended to replace our 1998 Stock Option Plan (the “1998 Plan”). The 2002 Plan was never implemented, however, and no options, shares or any other securities were issued or granted under the 2002 Plan. There were 30,000 shares of our common stock authorized for issuance under the 2002 Plan. On June 30, 2003 and July 21, 2003, respectively, our Board and a majority of our stockholders terminated both the 1998 Plan and the 2002 Plan and approved our 2003 Stock Plan. The 30,000 shares of common stock previously allocated to the 2002 Plan were re-allocated to the 2003 Stock Plan.
In April 2004, our stockholders and our Board approved an amendment to the 2003 Stock Plan to increase the aggregate number of shares available thereunder by 20,000 shares in order to have an adequate number of shares available for future grants. At our 2007 Annual Meeting, our stockholders approved an amendment that increased the aggregate number of shares available for issuance under the 2003 Stock Plan to 80,000 shares. At our 2008 Annual Meeting, our stockholders rejected an amendment that would have increased the number of shares available for issuance from 80,000 shares to 110,000 shares. At our 2009 Annual Meeting, our stockholders approved an amendment that increased the aggregate number of shares available for issuance under the 2003 Stock Plan by 60,000 shares, to 140,000 shares in the aggregate.
The following Compensation Committee report does not constitute soliciting material and should not be deemed filed or incorporated by reference into any Company filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), except to the extent the intention to do so is expressed indicated. COMPENSATION COMMITTEE REPORT The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement. 1.7 Each Purchaser represents that it is an “accredited investor” as that term is defined in Rule 501 of Regulation D promulgated under the Securities Act. | The Compensation Committee | | Thomas J. Clarke, Jr. | | Greg A. LeClaire |
AUDIT COMMITTEE REPORT The SEC rules require us to include in our Proxy Statement a report from the Audit Committee of our Board. The following report concerns the Audit Committee’s activities regarding oversight of our financial reporting and auditing process and does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other filing that we make under the Securities Act of 1933 or the Exchange Act, except to the extent we specifically incorporate this report in such filings. It is the duty of the Audit Committee to provide independent, objective oversight of our accounting functions and internal controls. The Audit Committee acts under a written charter that sets forth the audit-related functions we are expected to perform. Our functions are to: 1.8 Each Purchaser represents that it is not affiliated with, related | · | serve as an independent and objective party to nor is controlled by, controls or has commonmonitor LiveDeal, Inc.’s financial reporting process and system of internal control structure; |
| · | review and appraise the audit efforts of LiveDeal, Inc.’s independent registered public accounting firm; and |
| · | provide an open avenue of communication among the independent auditors, financial and senior management, and the Board. |
We meet with management periodically to consider the adequacy of the Company’s internal controls and the objectivity of its financial reporting. We discuss these matters with the Company’s independent auditors and with appropriate financial personnel. We regularly meet privately with the independent auditors, who have unrestricted access to the Audit Committee. We also recommend to the Board the appointment of the independent auditors and review periodically their performance and independence from management. Toward that end, we have considered whether the non-audit related services provided by LiveDeal, Inc.’s independent auditors are compatible with their independence. In addition, we review our financing plans and report recommendations to the full Board for approval and to authorize action. Management of LiveDeal, Inc. has primary responsibility for the Company’s financial statements and the overall reporting process, including its system of internal control structure. The independent auditors (a) audit the annual financial statements prepared by management, (b) express an opinion as to whether those financial statements fairly present LiveDeal, Inc.’s financial position, results of operations, and cash flows in conformity with generally accepted accounting principles, and (c) discuss with the Company any issues they believe should be raised. Our responsibility is to monitor and review these processes. It is not our duty or responsibility to conduct auditing or accounting reviews or procedures. We are not employees of LiveDeal, Inc. while serving on the Audit Committee. We are not and we may not represent ourselves to be or to serve as accountants or auditors by profession or experts in the fields of accounting and auditing. Therefore, we have relied, without independent verification; on management’s representation that the financial statements have been prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the United States of America and on the representations of the independent auditors included in their report on LiveDeal, Inc.’s consolidated financial statements. Our oversight does not provide us with an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or policies, or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, our considerations and discussions with management and the independent auditors do not assure that the Company’s consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America, that the audit of the Company’s consolidated financial statements has been carried out in accordance with generally accepted auditing standards or that LiveDeal, Inc.’s independent accountants are, in fact, “independent.” This year, we reviewed LiveDeal, Inc.’s audited consolidated financial statements and met with both management and Mayer Hoffman McCann P.C., LiveDeal, Inc.’s independent auditors, to discuss those consolidated financial statements. Management has represented to us that the consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America. We have received from and discussed with Mayer Hoffman McCann P.C. the written disclosure and the letter required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees). These items relate to that firm’s independence from LiveDeal, Inc. We also discussed with Mayer Hoffman McCann P.C. any matters required to be discussed by Statement on Auditing Standards No. 61, as amended (Communication with Audit Committees). In reliance on the reviews and discussions referred to above, we recommended to the Board that LiveDeal, Inc.’s audited consolidated financial statements should be included in LiveDeal, Inc.’s Annual Report on Form 10-K for the fiscal year ended September 30, 2011. | The Audit Committee | | Greg A. LeClaire, Chairman | | Richard D. Butler, Jr. | | Dennis Gao |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial ownership of our common stock as of January 18, 2012 of (i) each Named Executive Officer and each director of our Company; (ii) all Named Executive Officers and directors of our Company as a group; and (iii) each person known to the Company to be the beneficial owner of more than five percent of our common stock. We deem shares of our common stock that may be acquired by an individual or group within 60 days of January 18, 2012, pursuant to the exercise of options or warrants or conversion of convertible securities, to be outstanding for the purpose of computing the percentage ownership of such individual or group, but these shares are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table. Percentage of ownership is based on 2,342,901 shares of common stock outstanding on January 18, 2012. The information as to beneficial ownership was either (i) furnished to us by or on behalf of the persons named or (ii) determined based on a review of the beneficial owners’ Schedules 13D/G and Section 16 filings with respect to our common stock. Unless otherwise indicated, the business address of each person listed is 2490 East Sunset Road, Suite 100, Las Vegas, Nevada 89120. Name of Beneficial Owner | | Amount and Nature of Beneficial Ownership | | | Percentage of Class | | Named Executive Officers and Directors: | | | | | | | | Sheryle Bolton (1) | | | 5,692 | | | | * | | | Richard D. Butler, Jr. (2) | | | 5,692 | | | | * | | | Thomas J. Clarke, Jr. (3) | | | 5,692 | | | | * | | | Kevin A. Hall (4) | | | - | | | | - | | | Greg A. LeClaire (5) | | | 5,692 | | | | * | | | Lawrence W. Tomsic | | | - | | | | - | | | Jon Isaac(6) | | | 403,225 | | | | 17.2 | % | | John Kocmur(7) | | | 403,225 | | | | 17.2 | % | | Dennis Gao(8) | | | - | | | | - | | | Tony Isaac(9) | | | - | | | | - | | | | | | | | | | | | | All Named Executive Officers and directors as a group (10 persons) | | | 829,218 | | | | 35.4 | % | | | | | | | | | | | Other 5% Stockholders: | | | | | | | | | Kingston Diversified Holdings LLC(10) 535 Burleigh Private Ottawa, Ontario K1J 1J9 | | | 403,225 | | | | 17.2 | % | Lausanne LLC(11) 9595 Wilshire Blvd, Suite 801 Beverly Hills, California 90210 | | | 201,612 | | | | 8.6 | % | Augustus Gardini LLC (12) 233 Wilshire Blvd, Suite 830 Santa Monica, California 90401 | | | 201,612 | | | | 8.6 | % |
*Represents less than one percent of our issued and outstanding common stock.
| (1) | Ms. Bolton was a director of the other Purchaser.1.9 Unless the resaleCompany for fiscal year 2011. In connection with her service as a director, Ms. Bolton was granted 1,000 shares of restricted common stock of the SharesCompany and such shares fully vested on October 1, 2011. 2,296 performance shares were granted to Ms. Bolton in lieu of paying $3,833 cash director fees for services provided during August 2011 and 2,396 performance shares were granted to Ms. Bolton in lieu of paying $3,833 cash director fees for services provided during September 2011.
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| (2) | Mr. Butler is subsequently registereda director of the Company. 2,296 performance shares were granted to Mr. Butler in lieu of paying $3,833 cash director fees for services provided during August 2011 and 2,396 performance shares were granted to Mr. Butler in lieu of paying $3,833 cash director fees for services provided during September 2011. | | (3) | Mr. Clarke is a director of the Company. 2,296 performance shares were granted to Mr. Clarke in lieu of paying $3,833 cash director fees for services provided during August 2011 and 2,396 performance shares were granted to Mr. Clarke in lieu of paying $3,833 cash director fees for services provided during September 2011. |
| (4) | Mr. Hall has served as our President and Chief Executive Officer since March 24, 2011 and became a director of the Company in December 2011. In January 2012, Mr. Hall was terminated as the Company’s President and Chief Executive Officer. He has also served as the Company’s President and Chief Operating Officer since May 2010, as the Company’s General Counsel since April 2009, and has previously served as the Company’s Vice President of Human Resources and Business Development. | | (5) | Mr. LeClaire is a director of the Company. In connection with his service as a director, Mr. LeClaire was granted 1,000 shares of restricted common stock of the SEC,Company and such shares fully vested on May 22, 2011. 2,296 performance shares were granted to Mr. LeClaire in lieu of paying $3,833 cash director fees for services provided during August 2011 and 2,396 performance shares were granted to Mr. LeClaire in lieu of paying $3,833 cash director fees for services provided during September 2011. |
| (6) | Mr. Isaac became a director of the Purchaser acknowledges thatCompany in December 2011and President and Chief Executive Officer of the certificate representing the Shares shall bearCompany in January 2012. Jon Isaac and Isaac Capital Group LLC, a legend in substantially the following form:“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT (I) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND COMPLIANCE WITH SUCH STATE SECURITIES LAWS, (II) IN COMPLIANCE WITH RULE 144 UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, OR (III) UPON THE DELIVERY TO LIVEDEAL, INC. (THE “COMPANY”) OF AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND/ OR COMPLIANCE IS NOT REQUIRED.”
1.10 Each Purchaser represents that it has the full right, powerDelaware limited liability company Schedule 13D filing, dated January 12, 2012, reports beneficial ownership collectively of 403,225 shares of common stock, with sole voting and authority to enter into and perform such Purchaser’s obligations hereunder, and this Agreement constitutes a valid and binding obligation of such Purchaser enforceable in accordance with its terms, except that (i) any enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or similar laws from time to time in effect and affecting the rights of creditors generally and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses anddispositive power. Mr. Isaac obtained these shares pursuant to the discretionPurchase Agreement.
| | (7) | Mr. Kocmur became a director of the court before which any proceedings therefore may be brought.Company in December 2011. Mr. Kocmur obtained these shares pursuant to the Purchase Agreement. | | (8) | Mr. Gao became a director of the Company in January 2012. |
| (9) | Tony Isaac became a director of the Company in December 2011. | | (10) | Kingston Diversified Holdings LLC obtained these shares pursuant to the Purchase Agreement. Kingston Diversified Holdings LLC has beneficial ownership collectively of 403,225 shares of common stock, with sole voting and dispositive power. | | (11) | Lausanne LLC obtained these shares pursuant to the Purchase Agreement. Lausanne LLC has beneficial ownership collectively of 201,612 shares of common stock, with sole voting and dispositive power. |
| (12) | Augustus Gardini, L.P. obtained these shares pursuant to the Purchase Agreement. Augustus Gardini, L.P. has beneficial ownership collectively of 201,612 shares of common stock, with sole voting and dispositive power. |
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our executive officers, directors, and persons who own more than ten percent of a registered class of our equity securities to file reports of ownership and changes in ownership with the SEC.
Based solely on our review of the copies of such forms filed with the SEC and on written representations that no other reports were required, all Section 16(a) filing requirements applicable to our directors, executive officers and our ten percent or greater stockholders were complied with during the fiscal year that ended September 30, 2011, with the exception of the following reports:
| Name | | Form | | Transaction Date | | Due Date | | Actual Filing Date | | Sheryle Bolton | | 4 | | 9/1/2011 | | 9/6/2011 | | 10/12/2011 | | Richard Butler | | 4 | | 9/1/2011 | | 9/6/2011 | | 10/12/2011 | | Thomas J. Clarke, Jr. | | 4 | | 9/1/2011 | | 9/6/2011 | | 10/12/2011 | | Greg A. LeClaire | | 4 | | 9/1/2011 | | 9/6/2011 | | 10/12/2011 |
RELATED PARTY TRANSACTIONS
In accordance with its charter, the Audit Committee of the Company’s Board reviews and recommends for approval all related party transactions (as such term is defined for purposes of Item 404 of Regulation S-K). During fiscal 2011, the Company did not enter into or otherwise participate in any related party transactions requiring disclosure under Item 404 of Regulation S-K. STOCKHOLDER NOMINATIONS AND OTHER PROPOSALS
To be considered for inclusion in our proxy materials relating to our 2013 Annual Meeting, stockholder nominations or other proposals must be received at our principal executive offices by October 13, 2012, which is 120 calendar days prior to the anniversary of the mailing date of the Company’s 2012 Proxy Statement. All stockholder proposals must be in compliance with applicable laws and regulations, including the provisions of Rule 14a-8 of the Exchange Act, in order to be considered for possible inclusion in the proxy statement and form of proxy for the 2013 Annual Meeting.
Pursuant to Section 2.7 of the Company’s Amended and Restated Bylaws, any notice of a stockholder nomination or other proposal submitted outside of the process prescribed by Rule 14a-8 of the Exchange Act (i.e., proposals that are not to be included in the Company’s proxy statement and form of proxy) received after October 13, 2012 will be considered untimely. To be in proper written form, a stockholder’s notice must set forth, as to each matter such stockholder proposes to bring before the annual meeting, (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of such stockholder, (iii) the class or series and number of shares of capital stock of the Company that are owned beneficially or of record by such stockholder, (iv) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business and (v) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.
OTHER MATTERS
As of the date of this Proxy Statement, our Board does not intend to present at the Annual Meeting any matters other than those described herein and does not presently know of any matters that will be presented by other parties. If any other matter is properly brought before the meeting for action by stockholders, proxies in the enclosed form returned to us will be voted in accordance with the recommendation of the Board or, in the absence of such a recommendation, in accordance with the judgment of the proxy holder. ELECTRONIC DELIVERY OF FUTURE ANNUAL MEETING MATERIALS
We are offering our stockholders the opportunity to consent to receive our future proxy materials and annual reports electronically by providing the appropriate information when voting via the Internet. Electronic delivery could save us a significant portion of the costs associated with printing and mailing annual meeting materials, and we hope that our stockholders find this service convenient and useful. If you consent and we elect to deliver future proxy materials and/or annual reports to you electronically, then we will send you a notice (either by electronic mail or regular mail) explaining how to access these materials but will not send you paper copies of these materials unless you request them. We may also choose to send one or more items to you in paper form despite your consent to receive them electronically. Your consent will be effective until you revoke it by terminating your registration at the website www.investordelivery.com if you hold shares at a brokerage firm or bank participating in the ADP program, or by contacting our transfer agent, Registrar and Transfer Company, if you hold shares in your own name. By consenting to electronic delivery, you are stating to us that you currently have access to the Internet and expect to have access in the future. If you do not have access to the Internet, or do not expect to have access in the future, please do not consent to electronic delivery because we may rely on your consent and not deliver paper copies of future annual meeting materials. In addition, if you consent to electronic delivery, you will be responsible for your usual Internet charges (e.g., online fees) in connection with the electronic delivery of the proxy materials and annual report. WHERE YOU CAN FIND MORE INFORMATION
The Company is subject to the informational requirements of the Exchange Act. The Company files reports, proxy statements and other information with the SEC. The public may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling 1-800-SEC-0330. The statements and forms we file with the SEC have been filed electronically and are available for viewing or copy on the SEC maintained Internet site that contains reports, proxy, and information statements, and other information regarding issuers that file electronically with the SEC. The Internet address for this site can be found at:www.sec.gov. A copy of our Annual Report on Form 10-K for the fiscal year ended September 30, 2011 has been mailed to you with this Proxy Statement. The Annual Report is not incorporated into this Proxy Statement and is not to be considered a part of these proxy soliciting materials or subject to Regulations 14A or 14C or to the liabilities of Section 18 of the Exchange Act. The information contained in the “Audit Committee Report,” “Compensation Committee Report,” and “Performance Graph” shall not be deemed “filed” with the SEC or subject to Regulations 14A or 14C or to the liabilities of Section 18 of the Exchange Act. We will provide upon written request, without charge to each stockholder of record as of the record date, a copy of our Annual Report on Form 10-K for the fiscal year ended September 30, 2011, as filed with the SEC. Any exhibits listed in the Form 10-K report also will be furnished upon request at the actual expense incurred by us in furnishing such exhibits. Any such requests should be directed to our Corporate Secretary at our principal executive offices at 2490 East Sunset Road, Suite 100, Las Vegas, Nevada 89120.
STOCKHOLDERS ARE URGED TO IMMEDIATELY MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY VIA FACSIMILE TO THE ATTENTION OF LARRY TOMSIC, CHIEF FINANCIAL OFFICER, AT (702) 939-0244 OR IN THE ENCLOSED POSTAGE-PAID ENVELOPE. YOUR VOTE IS IMPORTANT. LiveDeal, Inc.
Jon Isaac President and Chief Executive Officer January 27, 2012 APPENDIX A SECOND AMENDMENT TO THE LIVEDEAL, INC. AMENDED AND RESTATED 2003 STOCK PLAN LiveDeal, Inc. (the “Company”) hereby amends the LiveDeal, Inc. Amended and Restated 2003 Stock Plan (the “Plan”), pursuant to Section 12.1 of the Plan, as follows:
1. Section 5.1 of the Plan is hereby amended in its entirety to read as follows, which amendment shall be effective as of the date hereof, subject to approval by the Company’s stockholders:
5.1 NUMBER OF SHARES. Subject to adjustment provided in Section 11.1, the aggregate number of shares of Stock reserved and available for grant under the Plan shall be 340,000. 2. This Second Amendment shall amend only the provisions of the Plan as set forth herein, and those provisions not expressly amended hereby shall be considered in full force and effect. IN WITNESS WHEREOF, the Company has caused this Second Amendment to be executed by its duly authorized representative on this __ day of _________, 2012.
| LiveDeal, Inc. | | | By: | | | Name: | | | Its: | |
II. | REPRESENTATION AND WARRANTIES BY THE COMPANY. |
Except as set forth in the Disclosure Reports, the Company represents and warrants to the Purchaser as follows:
2.1 The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada. The Company has the corporate power and authority to own, lease and operate its properties and to conduct the business as described in the Disclosure Reports. The Company is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company.
2.2 The Company’s subsidiaries are set forth in the Disclosure Reports or on the Company’s website (the “Subsidiaries”). Unless the context requires otherwise, all references to the Company include the Subsidiaries. Each Subsidiary is a corporation or a limited liability company (as applicable) duly organized, validly existing and in good standing under the laws of its state of incorporation or organization as set forth in the Disclosure Reports or on the Company’s website, with full power and authority, corporate and other, to own or lease, as the case may be, and operate its properties, whether tangible or intangible, and to conduct its business as currently conducted. Each Subsidiary is duly qualified as a foreign corporation or limited liability company to transact business and is in good standing in each jurisdiction in which the conduct of its business or the ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company and the Subsidiaries taken as a whole. Unless specified to the contrary in the Disclosure Reports, the Company owns all of the issued and outstanding shares of capital stock (or other equity or ownership interests) of each Subsidiary, such ownership is free and clear of any security interests, liens, encumbrances, claims and charges, and all of such shares have been duly authorized and validly issued, and are fully paid and nonassessable. The Company does not presently own, directly or indirectly, an interest in any corporation, association, or other business entity, and is not a party to any joint venture, partnership, or similar arrangement, other than the Subsidiaries.
2.3 This Agreement has been duly authorized, executed and delivered by, and is a valid and binding agreement of, the Company enforceable in accordance with its terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium and similar laws affecting creditors’ rights generally (including, without limitation, statutory or other laws regarding fraudulent preferential transfers) and equitable principles of general applicability.
2.4 The execution and delivery of this Agreement by the Company, and the performance by the Company of its obligations under this Agreement, will not conflict with or contravene in any material respect, cause a breach or violation of or default under, any provision of applicable law or the Articles of Incorporation or by-laws of the Company or any agreement or other instrument binding upon the Company that is material to the Company, or any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Company, and no consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by the Company of its obligations under this Agreement, except as may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Shares and by Federal and state securities laws with respect to the obligations of the Company under this Agreement or the listing of the Shares with NASDAQ as may be required, which have been or will be obtained, or as would not have a material adverse effect on the Company and the Subsidiaries taken as a whole.
2.5 The authorized capital stock of the Company conforms in all material respects to the description thereof contained in the Disclosure Reports and such description conforms in all material respects to the rights in the instruments defining the same. The issued and outstanding capital stock of the Company is as set forth in the Disclosure Reports. The shares of common stock of the Company outstanding prior to the issuance of the Shares have been duly authorized and are validly issued, fully paid and nonassessable.
2.6 The Shares have been duly and validly authorized and, when issued, sold and paid for by Purchaser in accordance with the terms of this Agreement, will be duly authorized, validly issued, fully paid and nonassessable, and Purchaser will not be subject to personal liability solely by reason of being such a holder and will not be subject to the preemptive or similar rights of any holders of any security of the Company. The issuance of the Shares will not result in the right of any holder of securities of the Company to adjust the exercise, conversion or exchange price of such securities or otherwise reset the price paid for its securities. No authorization, approval or consent of any court, governmental authority or agency is necessary in connection with the issuance by the Company of the Shares.
2.7 The Disclosure Reports, as of their respective filing dates, complied in all material respects with the requirements of the Exchange Act and the applicable rules and regulations of the SEC thereunder.
2.8 Neither the Company nor any Subsidiary is in violation of its charter or by-laws or in default in the performance of any obligation, agreement, covenant or condition contained in any indenture, loan agreement, mortgage, lease or other agreement or instrument that is material to the Company and the Subsidiaries taken as a whole to which the Company or any Subsidiary is a party or by which the Company, any Subsidiary or any of their properties is bound, except for such defaults that would not, individually or in the aggregate, have a material adverse effect on the Company and the Subsidiaries taken as a whole or as otherwise set forth in the Disclosure Reports.
2.9 There are no legal or governmental proceedings, orders, judgments, writs, injunctions, decrees or demands pending or, to the Company’s knowledge, threatened to which the Company or any Subsidiary is a party or to which any of the properties of the Company or any Subsidiary is subject other than (a) proceedings, orders, judgments, writs, injunctions, decrees or demands described in the Disclosure Reports, or (b) proceedings, orders, judgments, writs, injunctions, decrees or demands that would not be reasonably expected to have a material adverse effect (i) on the Company and the Subsidiaries taken as a whole or (ii) on the power or ability of the Company to perform its obligations under this Agreement or to consummate the transactions contemplated by this Agreement.
2.10 The Company is in compliance with applicable provisions of (a) the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder and (b) the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations promulgated thereunder, in both cases except where any incidence of noncompliance would not, individually or in the aggregate, have a material adverse effect on the Company and the Subsidiaries taken as a whole.
2.11 Other than the transactions contemplated by this Agreement, neither the Company nor any of its affiliates (as defined in Rule 501(b) of Regulation D) has directly, or through any agent, (a) sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any security (as defined in the Securities Act) which is or will be integrated with the sale of the Shares in a manner that would require the registration under the Securities Act of the Shares or (b) offered, solicited offers to buy or sold the Shares by any form of general solicitation or general advertising (as those terms are used in Regulation D) or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act. No registration under the Securities Act of the Shares is required for the sale of the Shares to Purchaser under this Agreement, assuming the accuracy of the Purchaser’s representations and warranties contained in this Agreement.
2.12 The Company and each Subsidiary owns or possesses, or has the right to use, all material patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks and trade names currently employed or required by it in connection with the business currently conducted by it as described in the Disclosure Reports, except such as the failure to so own or possess or have the right to use would not have, individually or in the aggregate, a material adverse effect on the Company and the Subsidiaries taken as a whole. To the Company’s knowledge, there are no valid and enforceable United States patents that are infringed by the business currently conducted by the Company or any Subsidiary, or as currently proposed to be conducted by the Company or any Subsidiary, as described in the Disclosure Reports and which infringement would have a material adverse effect on the Company and the Subsidiaries taken as a whole. The Company is not aware of any basis for a finding that the Company or ay Subsidiary does not have valid title or license rights to the patents and patent applications referenced in the Disclosure Reports as owned or licensed by the Company or any Subsidiary, and, to the Company’s knowledge, neither the Company nor any Subsidiary is subject to any judgment, order, writ, injunction or decree of any court or any Federal, state, local, foreign or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, or any arbitrator, nor has it entered into or is it a party to any contract, which restricts or impairs the use of any of the foregoing which would have a material adverse effect on the Company and the Subsidiaries taken as a whole. Neither the Company nor any Subsidiary has received any written notice of infringement of or conflict with asserted rights of any third party with respect to the business currently conducted by it as described in the Disclosure Reports and which, if determined adversely to the Company or any Subsidiary, would have a material adverse effect on the Company and the Subsidiaries taken as a whole and the Company has no knowledge of any facts or circumstances that would serve as a reasonable basis for any such claims.
2.13 There are no outstanding rights, warrants, options, convertible securities or commitments to sell granted or issued by the Company entitling any person to purchase or otherwise acquire any shares of the capital stock of the Company, except as otherwise disclosed in the Disclosure Reports and except for securities granted to directors and employees of the Company in the ordinary course of business.
2.14 The financial statements included or incorporated by reference in the Disclosure Reports as the same may have been amended prior to the date of the Disclosure Reports, together with related schedules and notes, present fairly in all material respects the financial position, results of operations and changes in financial position of the Company and its consolidated subsidiaries on the basis stated therein at the respective dates or for the respective periods to which they apply; such statements and related schedules and notes have been prepared in accordance with generally accepted accounting principles consistently applied throughout the periods involved, except as disclosed therein.
2.15 There are no existing or, to the Company’s knowledge, threatened labor disputes with the employees of the Company that would have a material adverse effect on the Company and the Subsidiaries taken as a whole.
2.16 The Company has filed all Federal, state, local and foreign tax returns which are required to be filed through the date hereof (except where the failure to so file would not have a material adverse effect on the Company), which returns are true and correct in all material respects, or have received extensions thereof, and have paid all taxes shown on such returns and all assessments received by them to the extent that the same are material and have become due. All tax liabilities are adequately provided for on the books of the Company. To the Company’s knowledge, there are no tax audits or investigations pending, which if adversely determined, would have a material adverse effect on the Company taken as a whole.
2.17 The Company is insured against such losses and risks and in such amounts as are customary in the businesses in which it is engaged, including but not limited to, insurance covering product liability and real or personal property owned or leased against theft, damage, destruction, act of vandalism and all other risks customarily insured against. All policies of insurance and fidelity or surety bonds insuring the Company or the Company's businesses, assets, employees, officers and directors are in full force and effect. The Company is in compliance with the terms of such policies and instruments in all material respects. The Company has no reason to believe that it will not be able to renew their existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business.
2.18 Any real property and buildings held under lease by the Company is held by it under valid, subsisting and enforceable leases with such exceptions as are not material and do not materially interfere with the use made and proposed to be made of such property and buildings by the Company.
2.19 The Company’s direct marketing business was discontinued on or about April 30, 2011 and, as of the date hereof, there are no accounts payable or unpaid expenses in excess of $1,000.00 relating to such business.
2.20 To the best knowledge of the Company, the Company has provided the Purchaser (through their representative) with true and accurate information about the Company’s listing status with the NASDAQ Capital Market as of the date hereof, including information about events that could cause the Company’s common stock to be de-listed from such trading market. Each Purchaser hereby acknowledges receipt of such information.
III. | CONDITIONS TO CLOSING. |
3.1 Conditions to the Purchaser’s Obligations at the Closing. The obligations of the Purchaser to purchase Shares at the Closing are subject to the fulfillment, on or before the Closing, of each of the following conditions, unless otherwise waived by such Purchaser:
(i) Representations and Warranties. The representations and warranties of the Company contained in Article II shall be true and correct in all material respects as of the date of the Closing.
(ii) Performance. The Company shall have performed and complied with all covenants, agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing.
(iii) Current Disclosure Reports. The Company shall have filed all Disclosure Reports that are required to be filed as of the Closing Date.
(iv) Stockholder Approval. If required by applicable rules and regulations, this Agreement and the transactions contemplated hereby shall have received the affirmative vote of the holders of a majority of the outstanding common stock on the record date for the special meeting of the stockholders.
(v) Certificate. Purchaser shall have received a certificate from a duly authorized officer of the Company certifying that the above conditions have been satisfied and attaching evidence or supporting documentation (to the extent applicable) reasonably satisfactory to Purchaser.
(vi) NASDAQ Compliance. The NASDAQ Listing Qualifications Department and/or Hearings Panel shall have granted an extension for the Company to regain compliance with NASDAQ Listing Rule 5550(b)(1), which requires the Company to have stockholders’ equity of at least US$2,500,000, and the Company shall be in compliance (as of the date of the Closing) with all applicable requirements for the continued listing of the common stock on the NASDAQ Capital Market.
(vii) No Material Adverse Change. There shall not have occurred a Material Adverse Change with respect to the Company. For purposes of this Section 3.1(vii), the term “Material Adverse Change” means any circumstance, occurrence, event or change that has a material adverse effect on (a) the Company’s and the Subsidiaries’ property and assets (taken as a whole), (b) the financial condition or results of operations of the Company and the Subsidiaries (taken as a whole), or (c) the ability of the Company to satisfy and perform its obligations under this Agreement or to consummate the transactions contemplated hereby; provided, however, that in no event shall any of the following be deemed to constitute, nor shall any of the following be taken into account in determining whether there has been or shall be, a Material Adverse Change: (1) the effect of any change in the United States or foreign economies or securities or financial markets in general, (2) the effect of any change that generally affects any industry in which the Company or any of its Subsidiaries operates, (3) any effect or result of the Company’s compliance with the terms and conditions of this Agreement, (4) any effect or result of the execution or announcement of this Agreement or the transactions contemplated hereby, (5) any effect or result of a breach of this Agreement by any Purchaser, (6) any effect or result of any changes arising in connection with natural disasters, hostilities, acts of war, sabotage or terrorism or military actions or any escalation or material worsening of any such hostilities, acts of war, sabotage or terrorism or military actions existing or underway as of the date of this Agreement or (7) the effect of any changes in applicable laws, rules, regulations or accounting rules, including United States generally accepted accounting principles.
3.2 Conditions to the Company’s Obligations at the Closing. The obligations of the Company to sell and issue the Shares at the Closing are subject to the fulfillment, on or before the Closing, of each of the following conditions, unless otherwise waived by the Company:
(i) Representations and Warranties. The representations and warranties of Purchaser contained in Article I shall be true and correct in all material respects as of the date of the Closing.
(ii) Performance. Purchaser shall have performed and complied with all covenants, agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by them on or before the Closing.
(iii) Stockholder Approval. If required by applicable rules and regulations, this Agreement and the transactions contemplated hereby shall have received the affirmative vote of the holders of a majority of the outstanding common stock.
(iv) Certificate. The Company shall have received a certificate from a duly authorized officer of the Purchaser certifying that the above conditions have been satisfied and attaching evidence or supporting documentation (to the extent applicable) reasonably satisfactory to the Company.
IV. | COVENANTS AND AGREEMENTS. |
4.1 Each Purchaser covenants and agrees that, during the period beginning on the Closing Date and ending six months after the Closing Date, such Purchaser will not, directly or indirectly, (a) offer, sell, offer to sell, contract to sell, hedge, pledge, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or sell (or announce any offer, sale, offer of sale, contract of sale, hedge, pledge, sale of any option or contract to purchase, purchase of any option or contract of sale, grant of any option, right or warrant to purchase or other sale or disposition), or otherwise transfer or dispose of (or enter into any transaction or device that is designed to, or could be expected to, result in the disposition by any person at any time in the future), the Shares purchased by such Purchaser, or (b) enter into any swap or other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of any Shares, whether any such swap or transaction described in clause (a) or (b) above is to be settled by delivery of any Share.
4.2 If required by applicable rules and regulations, the Company covenants and agrees, as soon as practicable following the date of this Agreement, to prepare and file with the SEC a preliminary and, subject to the SEC’s review, definitive proxy statement relating to the Special Meeting of Stockholders and seeking stockholder approval of this Agreement and the transactions contemplated hereby. If required by applicable rules and regulations, the Company shall furnish to Purchaser or their designated representative(s) advance copies of such proxy statements and shall provide a reasonable opportunity to review and comment prior to filing with the SEC.
4.3 Use or expenditure of the proceeds of the transactions contemplated by this Agreement shall require the approval of the Company’s Board of Directors, including at least one of director that is nominated by a Purchaser.
4.4 If, within the six month period following the Closing Date, the Company issues shares of its capital stock in connection with a financing or an acquisition of, or merger or consolidation with, another entity (“New Shares”) at a price that is less than $2.45 per share (“New Price”) then within 10 business days of such issuance the Purchaser shall be issued, without payment of any additional consideration, additional shares of the Company’s common stock so that such new shares when combined with the Shares purchased by the Purchaser in the Investment would equal the number of shares of common stock the Purchaser would have received in the Investment had the Purchase Price been the New Price. Notwithstanding the foregoing, the New Price may not be less than $2.00 per share. Notwithstanding the foregoing or anything in this Agreement to the contrary, “New Securities” shall not include the following:
(i) shares of capital stock issued upon conversion of, or exchange for, any outstanding (a) shares of any preferred stock, (b) options, or (c) securities of the Company convertible into or exercisable for shares of the Company’s, in all cases that are outstanding as of the Closing;
(ii) restricted stock or options issued to directors, officers, employees or consultants of the Company pursuant to the Company’s existing stock incentive plan;
(iii) shares of Common Stock issued to officers, directors, employees, consultants, service providers or vendors in lieu of cash payments otherwise due, including payment of any finder’s fee in shares of capital stock in connection with the Investment;
(iv) warrants or convertible securities issued or issuable to banks, equipment lessors, lenders or other financial institutions, or to real property lessors or in connection with a financing;
(v) any securities deemed in writing to not be New Securities by either (a) Purchaser holding at least a majority of the Shares or (ii) at least two directors of the Company nominated by Purchaser.
5.1 Any notice, request, advice, consent or other communication given hereunder shall be given in writing and sent by overnight delivery service or registered or certified mail, return receipt requested, and addressed as follows: if to the Company, to it at 2490 E. Sunset Rd., Suite #100, Las Vegas, NV 89120, United States of America, Attention: President; and if to any Purchaser, to it at the address on the records of the Company or the signature page of this Agreement. Notices so given shall be deemed to have been given on the earlier to occur of actual receipt or three business days after the date of such mailing, except for notices of change of address, which shall be deemed to have been given when received.
5.2 This Agreement shall not be changed, modified or amended except by a writing signed by the parties hereto.
5.3 This Agreement shall be binding upon and inure to the benefit of the parties hereto and to their respective heirs, legal representatives, successors and assigns. This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter thereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them.
5.4 References herein to a person or entity in either gender include the other gender or no gender, as appropriate.
5.5 This Agreement and its validity, construction and performance shall be governed in all respects by the laws of the State of Nevada.
5.6 After negotiations between the parties, this Agreement was prepared by Snell & Wilmer L.L.P, as legal counsel to the Company. Snell & Wilmer L.L.P. has not acted as legal counsel to any Purchaser, individually or collectively, in connection with the negotiation of or the transactions contemplated by this Agreement. Each Purchaser hereby acknowledges that it has had the opportunity to review this Agreement with its own legal counsel.
5.7 Except as otherwise specified in this Agreement, all costs and expenses, including fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated by this Agreement shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred.
5.8 This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may also be executed and delivered by facsimile or electronic (.pdf) signature and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
[Remainder of Page Intentionally Left Blank; Signature Page Follows]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first set forth above.
COMPANY: | | | | LiveDeal, Inc. | | | | /s/ Kevin Hall | | Name: Kevin Hall | | Title: President and Chief Executive Officer | |
PURCHASER: | | | | | | Amerigent Capital Inc. | | Address for Notice: | | | | /s/ Myong H. Choi | | 210-A Sylvan Avenue | Name: Myong H. Choi | | Englewood Cliffs, New Jersey 07632 | Title: CEO | | |
[Signature Page to Stock Purchase Agreement]
SCHEDULE I
Purchaser – Allocation of Shares
| Name of Purchaser | | Shares Purchased | | Purchase Price | | | | | | | | Amerigent Capital Inc.* 210-A Sylvan Avenue Englewood Cliffs, New Jersey 07632 CEO: Myong H. Choi | | | 122,449 | | US$ | 300,000 | | | | | | | | | | SUB-TOTAL | | | 122,449 | | US$ | 300,000 | | | | | | | | | | TOTAL* | | | 816,327 | | US$ | 2,000,000 |
*Includes all other investors in the contemplated financing.
REVOCABLE PROXY
LIVEDEAL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS IN CONNECTION WITH THE SPECIALANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON NOVEMBER 24, 2011FEBRUARY 23, 2012
The undersigned revokes all previous proxies, acknowledges receipt of the Notice of Specialthe Annual Meeting of Stockholders to be held on November 24, 2011February 23, 2012 and the Proxy Statement and appoints Kevin A. HallJon Isaac and Lawrence W. Tomsic (or either of them), the proxy of the undersigned, with full power of substitution to vote all shares of common stock of LiveDeal, Inc. (the “Company”) that the undersigned is entitled to vote, either on his or her own behalf of any entity or entities, at the SpecialAnnual Meeting of Stockholders of the Company to be held on Thursday, November 24, 2011February 23, 2012 at 8:00 a.m. local time, at LiveDeal’s corporate offices, which are located at 2490 East Sunset Road, Suite 100, Las Vegas, Nevada 89120, and at any adjournment or postponement thereof, with the same force and effect as the undersigned might or could do if personally present thereat. The shares represented by this proxy shall be voted in the manner set forth on the reverse side.
Please be sure to sign and date this Proxy in the box below.
Date __________________________
Date | | | | | | | | | | | | Stockholder (sign above) | | Co-holder (if any) (sign above) |
PLEASE MARK VOTES AS IN THIS EXAMPLE: þ
PROPOSAL NO. 1 – APPROVALELECTION OF PROPOSED INVESTMENT TRANSACTIONDIRECTORS | For | Withhold | | Richard D. Butler, Jr. | ¨ | ¨ | | Thomas J. Clarke, Jr. | ¨ | ¨ | | Dennis Gao | o | o | | Jon Isaac | ¨ | ¨ | | Tony Isaac | ¨ | ¨ | | John Kocmur | ¨ | ¨ | | Greg A. LeClaire | ¨ | ¨ |
PROPOSAL NO. 2 – AMENDMENTTO AMENDED AND RESTATED 2003 STOCK PLAN
| | | For | | Against | | Abstain | To approveamend the following resolution: “RESOLVED, that those certainLiveDeal, Inc. Amended and Restated 2003 Stock Purchase Agreements entered into on August 29, 2011 and September 29, 2011, respectively, by and among LiveDeal and those certain investors listed therein, providingPlan to increase the number of shares available for such investors’ purchase of 816,327issuance under the plan from 140,000 shares of LiveDeal’s common stock for an aggregate purchase price of $2.0 million (i.e., $2.45 per share), are hereby adopted, and the transactions contemplated by such Stock Purchase Agreements are hereby approved in all respects.”
| to 340,000 shares | ¨ | ¨ | ¨ |
PROPOSAL NO. 3 – RATIFICATION OF AUDITORS | For | Against | Abstain | | To ratify the appointment of Kabani & Company, Inc. as LiveDeal’s independent registered public accounting firm for the fiscal year ending September 30, 2012 | ¨ | ¨ | ¨ |
OTHER MATTERS | | | | | | | OTHER MATTERS | | | | | | | | | Yes | | No | | | | In his discretion, the Proxy is authorized to vote upon such other matters as may properly come before the meeting. | ¨ | ¨ | | ¨ | | |
Please disregard the following if you have previously provided your consent decision:
¨ By checking the box to the left, I consent to future delivery of annual reports, proxy statements, prospectuses, other materials, and stockholder communications electronically via the Internet at a website that will be disclosed to me. I understand that the Company may no longer distribute printed materials to me regarding any future stockholder meeting until such consent is revoked. I understand that I may revoke my consent at any time by contacting the Company’s transfer agent, Registrar and Trust Company, 10 Commerce Drive, Cranford, New Jersey 07016, and that costs normally associated with electronic delivery, such as usage and telephone charges as well as any costs I may incur in printing documents, will be my responsibility.
IF YOU RETURN YOUR PROPERLY EXECUTED PROXY, WE WILL VOTE YOUR SHARES AS YOU DIRECT. IF YOU DO NOT SPECIFY ON YOUR PROXY HOW YOU WANT TO VOTE YOUR SHARES, WE WILL VOTE THEM FOR PROPOSALPROPOSALS 1, 2, AND 4, AND IN THE DISCRETION OF THE PROXY ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF.THEREOF; HOWEVER, IN SUCH INSTANCE, NO VOTE WILL BE CAST ON PROPOSAL 3.
^ Detach above card, sign, date and mail in postage paid envelope provided. ^
LIVEDEAL, INC.
| Please sign EXACTLY as your name appears hereon. When signing as attorney, executor, administrator, trustee or guardian, please give your full title as such. If more than one trustee, all should sign. If shares are held jointly, both owners must sign. | | | | | | | THIS PROXY CARD IS VALID WHEN SIGNED AND DATED. | | | MAIL YOUR PROXY CARD TODAY. | | | | |
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
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