GAIA » Topics » 2.1 Election of Gaiam Board Members.

This excerpt taken from the GAIA 8-K filed Aug 9, 2005.
2.1          Election of Gaiam Board Members.

 

(a)           Size of Board.  On the date of the Closing (as such term is defined in the Transaction Agreement), the number of directors constituting the Gaiam Board, as fixed from time to time by the Gaiam Board in accordance with the Bylaws, shall have been increased from seven (7) to nine (9), an increase of two directors.  Thereafter, the size of the Gaiam Board will be increased or decreased only in a manner consistent with the terms of this Agreement.

 

(b)           Directors from and after Closing.  As soon as practicable after Revolution Living notifies Gaiam of its designees as provided below, the Gaiam Board will fill the vacancy created by increasing the size of the board to nine (9) with (i) an individual designated by Revolution Living (a “Revolution Living Director”), who shall not be an officer, director or employee of Revolution Living and (ii) an independent director designated after consultation with Revolution Living.  Revolution Living shall consult with Rysavy in advance of making the appointment of the Revolution Living Director.  From and after the Closing, at each annual meeting of the holders of any class of Stock, and at each special meeting of the holders of any class of Stock called for the purpose of electing directors of Gaiam, and at any time at which holders of any class of Stock shall have the right to, or shall, vote for or consent in writing to the election of directors of Gaiam, then, and in each such event, Rysavy shall vote all of the shares of Stock owned by him and his Affiliates for, or consent in writing with respect to such shares in favor of, the election of the Revolution Living Director to serve as a director to the Gaiam Board.  Gaiam shall nominate for election to the Gaiam Board as the Revolution Living Director, or for the filling of any vacancies on the Gaiam Board created by such nominees, the person designated by Revolution Living pursuant to this Section 2.1(b).  The initial Revolution Living Director shall be designated by Revolution Living within 60 days of the Closing.

 

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(c)           Directors from and after Exercise of the Option.  On the date of the exercise of the Option, if it occurs, Gaiam will cause two members of the Gaiam Board (who shall not be the incumbent Revolution Living Director) to resign and will cause the remaining members of the Gaiam Board to appoint two additional individuals designated by Revolution Living to fill the two remaining vacancies, such that there will be three Revolution Living Directors of the nine directors on the Gaiam Board.  From and after the exercise of the Option, at each annual meeting of the holders of any class of Stock, and at each special meeting of the holders of any class of Stock called for the purpose of electing directors of Gaiam, and at any time at which holders of any class of Stock shall have the right to, or shall, vote for or consent in writing to the election of directors of Gaiam, then, and in each such event, Rysavy shall vote all of the shares of Stock owned by him or his Affiliates (other than shares covered by an irrevocable proxy created pursuant to this Agreement), or consent in writing with respect to such shares in favor of, the election of the three Revolution Living Directors to serve as directors to the Gaiam Board.  Gaiam agrees to nominate for election to the Gaiam Board as the Revolution Living Directors, or for the filling of any vacancies on the Gaiam Board created by such nominees, the persons designated by Revolution Living pursuant to this Section 2.1(c).  Revolution Living shall have the right pursuant to this Section 2.1(c) to designate three directors, one of whom shall initially be Case.  Rysavy shall have the right pursuant to this Section 2.1(c) to designate three directors, one of whom shall be Rysavy, who will also serve as Chairman of the Board.  From and after the exercise of the Option, at each annual meeting of the holders of any class of Stock, and at each special meeting of the holders of any class of Stock called for the purpose of electing directors of Gaiam, and at any time at which holders of any class of Stock shall have the right to, or shall, vote for or consent in writing to the election of directors of Gaiam, then, and in each such event, Revolution Living shall vote all of the shares of Stock owned by it or its Affiliates (and any shares covered by an irrevocable proxy created pursuant to this Agreement), or consent in writing with respect to such shares in favor of, the election of the three directors designated by Rysavy to serve as directors to the Gaiam Board. In addition, Revolution Living shall cause the three Revolution Living Directors to vote in favor of Rysavy’s election as Chairman of the Gaiam Board and Rysavy’s election as chief executive officer of Gaiam.  The remaining three directors shall be independent directors nominated by the Gaiam Board in satisfaction of any applicable listing standards or other Applicable Law.  Revolution Living’s rights pursuant to this Section 2.1(c), but not its rights to designate a director under Section 2.1(b), shall terminate in the event that: (x) Revolution Living and its Affiliates beneficially own in the aggregate less than 20% of the Fully-Diluted Common Stock and (y) Revolution Living and its Affiliates beneficially own in the aggregate less than 80% of the Stock owned in the aggregate by Revolution Living and its Affiliates upon the exercise of the Option.

 

(d)           Notice of Proxy Mailing.  Gaiam shall give at least 30 days prior written notice of the date of the earliest estimated proposed mailing of proxy materials for election of directors of Gaiam.  Revolution Living shall, within 10 Business Days of receipt of such notice from Gaiam, give written notice (a “Section 2.1 Notice”) to Gaiam of the name of each individual that Revolution Living intends to nominate for election or reelection to the Gaiam Board and all information relating to each such individual that is required to be disclosed in any solicitation of proxies for election of directors, or as otherwise required, in each case pursuant to Regulation 14A under the Exchange Act (including such individual’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected).  At the request

 

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of the Gaiam Board, any individual so nominated for election as a director shall furnish to the Secretary of Gaiam that information required to be set forth in the Section 2.1 Notice.

 

(e)           Removal; Approval by Gaiam Board.  Subject to the next sentence, the Parties agree that they shall vote, and shall cause their respective Affiliates to vote, any shares of Stock over which they have voting authority, and take any other action reasonably requested by any other Party so that (i) any director whose removal is requested by the Party or Parties with the power to designate such director shall be removed and (ii) any vacancy created by the removal, resignation or death of a director shall be filled by a nominee of the Party or Parties having the right to fill such vacancy in accordance with the provisions of this Section 2.1.  Each of the Revolution Living Directors shall be removed only if requested by Revolution Living and each of the directors designated by Rysavy shall be removed only if requested by Rysavy.  Vacancies on the Gaiam Board shall be filled within 30 days of the date a replacement director is named by the Party with the right to fill such vacancy or immediately before the first action to be taken by the Gaiam Board after the date such replacement director is named.  Notwithstanding anything in this Agreement to the contrary, the appointment of any director designated by Revolution Living or Rysavy is conditioned upon such designee meeting qualifications typically set for directors of public companies and shall be subject to the consent of the Gaiam Board, not to be unreasonably withheld.

 

(f)            Term.  The directors to be elected pursuant to this Section 2.1 shall serve for terms extending from the date of their election and qualification until their successors shall have been elected and qualified in accordance with this Section 2.1.

 

(g)           Information Regarding Revolution Living Directors.  Revolution Living agrees to use reasonable efforts to cause each individual serving as a Revolution Living Director to provide Gaiam, on a timely basis, with any information relating to such individual that Gaiam may be required to disclose pursuant to Applicable Law, including without limitation those rules or regulations promulgated by the NASD and the NMS.

 

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