<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
GAIAM, INC.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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[LOGO OF GAIAM]
360 Interlocken Boulevard, Suite 300
Broomfield, Colorado 80021
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON THURSDAY, JUNE 8, 2000
To our shareholders:
The 2000 annual meeting of shareholders of Gaiam, Inc., a Colorado
corporation, will be held on Thursday, June 8, 2000, at 9:30 a.m. M.D.T., at
Hotel Boulderado, 2115 13th Street, Boulder, Colorado 80302, for the following
purposes:
1. to elect all five directors of Gaiam to serve until the next annual
meeting of shareholders or until their successors are duly elected and
qualified; and
2. to transact such other business as may properly come before the annual
meeting, or any adjournment(s) or postponement(s) thereof.
Gaiam's board of directors has fixed the close of business on Monday, May 1,
2000, as the record date for determining the shareholders entitled to notice
of, and to vote at, the annual meeting. A complete list of shareholders
entitled to vote at the annual meeting will be available, upon written
request, for inspection during normal business hours by any shareholder of
Gaiam prior to the annual meeting, for a proper purpose, at Gaiam's
Broomfield, Colorado office. Only shareholders of record on the May 1, 2000
record date are entitled to notice of, and to vote at, the annual meeting and
any adjournments or postponements thereof.
A copy of Gaiam's Annual Report to Shareholders for the fiscal year ended
December 31, 1999, a proxy statement and a proxy card accompany this notice.
These materials are first being sent to shareholders on or about May 5, 2000.
Shareholders are cordially invited to attend the annual meeting in person.
To assure your representation at the annual meeting, please complete and sign
the enclosed proxy card and return it promptly. If you choose, you may still
vote in person at the annual meeting even though you previously submitted a
proxy card.
By Order of the Board of Directors,
/s/ Lynn Powers
Lynn Powers, Secretary
Broomfield, Colorado
May 3, 2000
YOUR VOTE IS IMPORTANT YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN YOUR
PROXY SO THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND THAT
THE PRESENCE OF A QUORUM MAY BE ASSURED. THE PROMPT RETURN OF YOUR SIGNED
PROXY, REGARDLESS OF THE NUMBER OF SHARES YOU HOLD, WILL HELP GAIAM REDUCE THE
EXPENSE OF ADDITIONAL PROXY SOLICITATION. THE GIVING OF YOUR PROXY DOES NOT
AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
<PAGE>
[LOGO OF GAIAM]
Gaiam, Inc.
360 Interlocken Boulevard, Suite 300
Broomfield, Colorado 80021
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 8, 2000
This proxy statement and the accompanying proxy card are being furnished to
the shareholders of Gaiam, Inc. in connection with the solicitation of proxies
by and on behalf of the board of directors of Gaiam for use at its 2000 annual
meeting of shareholders to be held on Thursday, June 8, 2000, starting at 9:30
a.m. (local time), at Hotel Boulderado, 2115 13th Street, Boulder, Colorado
80302, and at any adjournment(s) or postponement(s) thereof. This proxy
statement and the accompanying proxy card are being mailed to shareholders on
or about May 5, 2000.
PURPOSE OF ANNUAL MEETING
At the annual meeting, shareholders will be asked: (i) to elect all five
directors of Gaiam to serve until the next annual meeting of shareholders or
until their successors are duly elected and qualified; and (ii) to transact
such other business as may properly be brought before the annual meeting. Our
board recommends a vote in favor of (i.e., "FOR") the election of the five
nominees for directors of Gaiam listed below.
QUORUM AND VOTING RIGHTS
The presence, in person or by proxy, of the holders of a majority of the
outstanding votes eligible to be cast with respect to Class A and Class B
Common Stock is necessary to constitute a quorum at the annual meeting. Only
shareholders of record at the close of business on the record date, Monday,
May 1, 2000, will be entitled to notice of, and to vote at, the annual
meeting. As of the record date, there were 5,441,537 shares of Class A Common
Stock, par value $.0001, and 5,400,000 shares of Class B Common Stock, par
value $.0001, outstanding and entitled to vote. Holders of Class A Common
Stock as of the record date are entitled to one vote for each share held and
holders of Class B Common Stock as of the record date are entitled to ten
votes for each share held. The holders of the Class A and Class B Common Stock
will vote together. If a quorum is present, the affirmative vote of a majority
of the votes eligible to be cast on the subject matter shall be the act of the
shareholders.
Mr. Jirka Rysavy, our Chairman and Chief Executive Officer, holds all
5,400,000 outstanding shares of Class B Common Stock and 2,686,200 shares of
Class A Common Stock (or approximately 49.4% of the outstanding shares of
Class A Common Stock). These shares are sufficient to elect all Gaiam
directors, and Mr. Rysavy has indicated that he plans to vote in favor of the
directors nominated by the Gaiam Board of Directors.
1
<PAGE>
Pursuant to a voting agreement between Mr. Rysavy and Gaiam, Mr. Rysavy has
agreed to limit the number of shares of Class B Common Stock that he votes to
49% of the combined votes of the Class B Common Stock and Class A Common
Stock. His remaining shares of Class B Common Stock are voted in proportion to
the votes of the Class A Common Stock. Under the voting agreement, Mr. Rysavy
will vote 522,814 shares of Class B Common Stock and the remaining 4,877,186
shares of Class B Common Stock will be voted in proportion to the votes of the
Class A Common Stock.
All shares of Common Stock represented by properly executed proxies will,
unless the proxies have previously been revoked, be voted in accordance with
the instructions indicated in the proxies. Directors will be elected by a
plurality of the votes cast. If no instructions are indicated, the shares will
be voted in favor of (i.e., "FOR") the election of the five nominees for
director of Gaiam listed under "Election of Directors". Abstentions and broker
non-votes will have no effect on the result of the vote, although they will
count towards the presence of a quorum. Any shareholder executing a proxy has
the power to revoke the proxy at any time prior to its exercise. A proxy may
be revoked prior to exercise by (a) filing with Gaiam a written revocation of
the proxy, (b) appearing at the annual meeting and voting in person or (c)
submitting to Gaiam a duly executed proxy bearing a later date.
The cost of preparing, printing, assembling and mailing this Proxy Statement
and other material furnished to shareholders in connection with the
solicitation of proxies will be borne by Gaiam. In addition to the
solicitation of proxies by use of the mails, officers, directors and regular
employees of Gaiam may solicit proxies by written communication, telephone or
telegraph. These persons are to receive no special compensation for any
solicitation activities.
IT IS THE INTENTION OF THE AGENTS DESIGNATED IN THE ENCLOSED PROXY CARD TO
VOTE "FOR" THE ELECTION OF ALL FIVE NOMINEES FOR DIRECTOR IDENTIFIED BELOW
UNLESS AUTHORITY IS WITHHELD BY THE SHAREHOLDER GRANTING THE PROXY. IF ANY
NOMINEE BECOMES UNAVAILABLE TO SERVE FOR ANY REASON, THE PROXY WILL BE VOTED
FOR A SUBSTITUTE NOMINEE OR NOMINEES TO BE SELECTED BY GAIAM'S BOARD, UNLESS
THE SHAREHOLDER WITHHOLDS AUTHORITY TO VOTE FOR THE ELECTION OF DIRECTORS.
JIRKA RYSAVY, WHO HOLDS 49% OF THE OUTSTANDING SHARES CLASS A COMMON STOCK AND
100% OF THE OUTSTANDING SHARES OF CLASS B COMMON STOCK, HAS INFORMED GAIAM
THAT HE INTENDS TO VOTE HIS SHARES IN FAVOR OF THE NOMINEES SET FORTH IN THIS
PROXY STATEMENT.
ELECTION OF DIRECTORS
Nominees for Election as Directors
Our board currently consists of five members: Jirka Rysavy, Lynn Powers,
Barnet M. Feinblum, Barbara Mowry, and Paul H. Ray, who are listed below. The
board proposes that the five current directors be elected as directors of
Gaiam to hold office until the next annual meeting of shareholders or until
their successors are duly elected and qualified. Unless contrary instructions
are given, the proxies will be voted for the nominees listed below. Each
nominee has agreed to serve if elected, and management has no reason to
believe that any of the nominees will be unavailable for service. If for any
unforeseen reason any of them should decline or be unable to serve, the
proxies will be voted to fill any vacancy so arising in accordance with the
discretionary authority of the persons named in the proxy, unless contrary
instructions are given.
2
<PAGE>
The names of the nominees, their ages, the years in which they began serving
as directors, and positions are set forth below.
JIRKA RYSAVY--46 Founder, Chairman and Chief Executive Officer of Gaiam. He
has been Chairman since Gaiam's inception and became the full-time Chief
Executive Officer in December 1998. In 1986, Mr. Rysavy founded a corporate
supplier he named Corporate Express, and, as its Chairman and Chief Executive
Officer until September 1998, he grew it to over $4 billion in revenues.
Previously, he founded and served as Chairman and Chief Executive Officer of
Crystal Market, a health food market, which was sold to Michael Gilliland in
1987 to become the first store of Wild Oats Markets. Until January 2000, Mr.
Rysavy was also a director of Whole Foods Markets, Inc.
LYNN POWERS--51 President, Chief Operating Officer and a director of Gaiam
since February 1996. From 1992 to 1996, she was Chief Executive Officer of La
Scelta, an importer of natural fiber clothing products. Before that, Ms.
Powers was Senior Vice President Marketing/Strategic Development and Vice
President Merchandising of Miller's Outpost, a specialty retailer.
BARNET M. FEINBLUM--52 Director since completion of the initial public
offering in October 1999. Mr. Feinblum served as the President and Chief
Executive Officer of Horizon Organic Dairy, a marketer of organic dairy
products, from May 1995 until January 2000, and has served as a director since
May 1995. From July 1993 through March 1995, Mr. Feinblum was the President of
Natural Venture Partners, a private investment company. From August 1976 until
August 1993, Mr. Feinblum held various positions at Celestial Seasonings,
Inc., including President, Chief Executive Officer, and Chairman of the Board.
Mr. Feinblum received a BS degree from Cornell University and a MBA from the
University of Colorado.
BARBARA MOWRY-- 52 Director since completion of the initial public offering
in October 1999. Since November 1997, Ms. Mowry has been the President and
Chief Executive Officer of Requisite Technology, a business-to-business e-
commerce company specializing in the creation and management of electronic
content and catalogs. Prior to joining Requisite Technology, Ms. Mowry had
been an officer of two Fortune 500 companies, Telecommunications, Inc. from
1995 to 1997, and UAL, Inc. from 1983 to 1990. In 1990, Ms. Mowry founded, and
until 1995 served as Chief Executive Officer of, The Mowry Company, a
relationship marketing firm focusing on the development of customer relations
for businesses. She has an MBA from the University of Minnesota and a BA in
Sociology from Miami University.
PAUL H. RAY--60 Director since completion of the initial public offering in
October 1999. Mr. Ray has been Executive Vice President of American LIVES,
Inc., a market research and opinion polling firm since November 1986. Prior to
joining American LIVES, Mr. Ray was Chief of Policy Research on Energy
Conservation at the Department of Energy, Mines and Resources of the
Government of Canada from 1981 to 1983. From 1973 to 1981, Mr. Ray was
Associate Professor of Urban Planning at the University of Michigan. Mr. Ray
holds a B.A. (cum laude) in anthropology from Yale University and a Ph.D. in
sociology from the University of Michigan. He is the author of The Integral
Culture Survey, which first identified the cultural creatives subculture.
Each director serves for a one-year term. Each officer serves at the
discretion of our board of directors. There are no family relationships among
any of the directors or officers of Gaiam.
3
<PAGE>
Committees and Meetings of the Board of Directors
During fiscal 1999, our board held two meetings, including regularly
scheduled and special meetings. Each director attended over 75% of the
aggregate number of meetings of our board and of the committees of our board
on which the directors served during fiscal 1999.
Our board has standing audit and compensation committees. We have adopted
written charters for both committees. Our audit committee charter is attached
to this proxy statement as an appendix.
Audit Committee. Our audit committee was formed after our initial public
offering in October and, during 1999, consisted of Messrs. Rysavy and Feinblum
and Ms. Mowry. Currently, the audit committee consists of Messrs. Feinblum and
Ray and Ms. Mowry, and each member of the committee is independent within the
meaning of applicable NASDAQ rules. Barbara Mowry serves as chairperson of the
audit committee. The audit committee has the authority to recommend the
appointment of Gaiam's independent auditors and review the results and scope
of audits, internal accounting controls, tax and other accounting-related
matters. The audit committee held no meetings during fiscal 1999.
Compensation Committee. The compensation committee consisted of Messrs.
Feinblum and Ray and Ms. Mowry during fiscal 1999. Barnet Feinblum serves as
chairperson of the compensation committee. The compensation committee
establishes compensation amounts and policies applicable to executive officers
and establishes salaries, bonuses and other compensation plans and matters for
executive officers of Gaiam and administers Gaiam's stock option plans and
employee stock purchase plan. The compensation committee held no meetings
during fiscal 1999.
We do not have a nominating committee, and nominations for directors are
made by our board. Our bylaws set forth certain procedures that are required
to be followed by shareholders in nominating persons for election to our
board. Generally, written notice of a proposed nomination must be received by
the Secretary of the Corporation not later than the 45th day nor earlier than
the 70th day prior to the anniversary of the mailing of the preceding year's
proxy materials.
Director Compensation
Directors who are not employees of Gaiam or its affiliates are paid a fee of
$3,000 for each meeting of our board that they attend, and a fee of $1,000 for
each telephonic meeting attended. In addition, non-employee directors are paid
a fee of $500 for attendance at each committee meeting and non-employee
chairpersons of each standing committee are to receive an annual fee of
$1,000. All directors have elected to receieve their compensation in Gaiam
common stock.
During 1999, each non-employee director received a stock option to acquire
10,000 shares of Class A Common Stock at an exercise price of $5, which was
the offering price in our initial public offering.
4
<PAGE>
EXECUTIVE OFFICERS OF GAIAM
Set forth below is certain information regarding Gaiam's executive officers.
Biographical information with respect to Mr. Rysavy and Ms. Powers is set
forth above under "Election of Directors."
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Jirka Rysavy.... 46 Founder, Chairman of the Board and Chief Executive Officer
Lynn Powers..... 51 President, Chief Operating Officer and Director
Pavel Bouska.... 46 Executive Vice President and Chief Information Officer
</TABLE>
PAVEL BOUSKA-- 46 Executive Vice President and Chief Information Officer since
March 1999. He served as a director of Gaiam from 1991 until August 1999.
Prior to joining Gaiam, from June 1988 to March 1999, Mr. Bouska was an
officer and one of the founding members of Corporate Express, serving in
various positions, including Chief Information Officer and Vice President
Information Systems, responsible for system development, information
technology, operations, systems conversions and business consolidations. Prior
to joining Corporate Express, he was project leader for Software Design &
Management, a German software company subsequently acquired by Ernst & Young.
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of the May 1, 2000 record date, certain
information with respect to the beneficial ownership of Common Stock for (i)
each person (or group of affiliated persons) who, insofar as Gaiam has been
able to ascertain, beneficially owned more than 5% of the outstanding shares
of Class A or Class B Common Stock of Gaiam, (ii) each director and nominee
for director, (iii) each named executive officer, and (iv) all current
directors and executive officers as a group. Gaiam has relied on information
received from each of the shareholders as to beneficial ownership, including
information contained on Schedules 13G and Forms 3, 4 and 5.
<TABLE>
<CAPTION>
Class of
Common Name and Address Amount and Nature of Percent of
Stock of Beneficial Owner Beneficial Ownership(1) Class
-------- ------------------- ----------------------- ----------
<C> <S> <C> <C>
Class A Jirka Rysavy.................... 8,094,200(2)(3) 74.6%
Lynn Powers..................... 76,400(3) 1.4%
Pavel Bouska.................... 93,200(3) 1.7%
Barnet Feinblum................. 2,000(4) .04%
Barbara Mowry................... -0- --
Paul Ray........................ -0- --
All directors and officers as a
group (6 persons)............... 8,265,800 76.1%
Class B Jirka Rysavy.................... 5,400,000 100%
All directors and officers as a
group (6 persons)............... 5,400,000 100%
</TABLE>
- --------
(1) All beneficial ownership is direct.
(2) Includes 5,400,000 shares of Class A Common Stock obtainable upon
conversion of Class B Common Stock.
(3) Includes the following shares of Class A Common Stock obtainable upon the
exercise of stock options which can be exercised within 60 days of May 1,
2000: Mr. Rysavy: 8,000; Ms. Powers: 6,400; and Mr. Bouska: 3,200.
(4) Excludes 1,000, shares of Class A Common Stock held by Mr. Feinblum's
wife, as to which Mr. Feinblum disclaims beneficial ownership.
5
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth individual compensation (cash and non-cash,
plan and non-plan) paid to the Chief Executive Officer and to certain other
officers (other than the Chief Executive Officer) of Gaiam (the "named
officers") for all services rendered in all capacities to Gaiam and its
subsidiaries for fiscal 1999 and fiscal 1998:
<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation Awards
------------------ -------------------
Securities
Name and Underlying
Principal Position Year Salary($) Bonus($) Options(#)
------------------ ---- --------- -------- -------------------
<S> <C> <C> <C> <C>
Jirka Rysavy....................... 1999 125,000 -0- 200,000
Chairman and Chief 1998 -0- -0- -0-
Executive Officer(4)
Lynn Powers........................ 1999 125,000 -0- 160,000
President and Chief 1998 110,009 -0- -0-
Operating Officer
Pavel Bouska....................... 1999 100,632 -0- 80,000
Executive Vice President 1998 -0- -0- -0-
and Chief Information Officer
Mark Lipien........................ 1999 75,801 -0- 22,000
Vice President--Operations 1998 70,802 10,000 -0-
Linda West......................... 1999 88,077 -0- 20,000
Vice President-- 1998 83,076 10,000 -0-
Merchandising
</TABLE>
Stock Option Grants
The following table provides information with respect to the individual
stock option grants to the named officers under the 1999 Long-Term Incentive
Plan during fiscal year 1999. Options under the plan vest at 2% per month
during the 11th through the 60th month after the grant.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Number of Percent of Rates of Stock
Securities Total Options Appreciation for
Underlying Granted to Exercise or Option Term(1)
Options Employees in Base Price Expiration ---------------------
Name Granted(#) Fiscal Year ($/Share) Date 5%($) 10%($)
- ---- ---------- ------------- ----------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Jirka Rysavy............ 200,000 22.5% $ 4.375 June 1, 2006 356,213 830,127
Lynn Powers............. 160,000 18.0% $ 4.375 June 1, 2006 284,970 664,102
Pavel Bouska............ 80,000 9.0% $ 4.375 June 1, 2006 142,485 332,051
Mark Lipien............. 12,000 2.5% $ 4.375 June 1, 2006 21,373 49,808
10,000 $ 5.00 Oct 18, 2006 20,355 47,436
Linda West.............. 10,000 2.2% $ 4.375 June 1, 2006 17,811 41,506
10,000 $ 5.00 Oct 18, 2006 20,355 47,436
</TABLE>
(1) The 5% and 10% assumed annual rates of compound stock price appreciation
over the term of the options are computed in accordance with the rules and
regulations of the Securities and Exchange Commission and do not represent
Gaiam's estimate of stock price appreciation or a projection by Gaiam of
future stock prices.
Employment Contracts and Termination of Employment and Change-In-Control
Arrangements
Gaiam does not have any employment agreements with any of its executive
officers and does not typically enter into written employment agreements with
any employees. However, Gaiam's directors, officers and managers are required
to sign a confidentiality agreement and, upon receiving a stock option grant,
a two-year non-compete agreement commencing with the date they leave Gaiam.
6
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Prior to Gaiam's initial public offering, compensation of Gaiam's executive
officers was determined by Gaiam's full Board of Directors. As a result, all
decisions relating to compensation of Gaiam's executive officers during 1999
was made by the full Board of Directors.
Commencing in November 1999, following Gaiam's initial public offering,
Gaiam's Board of Directors appointed a compensation committee to administer
Gaiam's compensation program for its executive officers. The compensation
committee of the Board of Directors currently consists of Messrs. Feinblum and
Ray and Ms. Mowry, each of whom qualifies as a non-employee director under
Rule 16b-3 under the Exchange Act. The compensation committee sets
compensation policies applicable to executive officers, has the authority to
approve salaries and bonuses and other compensation matters for these
executive officers and administers Gaiam's stock option plan.
Executive Compensation Philosophy
Gaiam's executive compensation policy is designed with the goals of ensuring
that an appropriate relationship exists between executive pay and corporate
performance, while at the same time motivating and retaining highly qualified
executive officers, and providing total compensation that is competitive with
companies in comparable industries or other companies of comparable size,
growth and performance. Gaiam's policies emphasize compensation through long-
term equity participation.
Executive Compensation Components
The key components of Gaiam's compensation program are base salary,
eligibility for annual incentive bonus awards and equity participation in the
form of stock options. Executive officers are also entitled to customary
benefits generally available to all employees of Gaiam, including group
medical, dental and life and disability insurance and 401(k) and employee
stock purchase plans.
Chief Executive Officer Compensation
Gaiam began compensating Mr. Rysavy in January 1999, when he began to work
full-time at Gaiam. During 1999, Mr. Rysavy's annual salary was $125,000,
which the Board of Directors believed to be modest salary level given the
importance of Mr. Rysavy to the future of Gaiam. Mr. Rysavy was granted stock
options by the Board of Directors to acquire 200,000 shares of Class A Common
Stock in 1999. This grant was made to further align Mr. Rysavy's interests
with those of Gaiam's shareholders, and to provide an incentive to build Gaiam
and increase shareholder value.
Compensation Committee
Barnet Feinblum
Barbara Mowry
Paul Ray
This report of the compensation committee shall not be deemed incorporated
by reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, or under the
Securities Exchange Act of 1934, except to the extent that Gaiam specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under the Securities Act and the Exchange Act and shall not be deemed to
be soliciting material.
7
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the percentage change in cumulative total
shareholder return on the Common Stock since October 28, 1999, the date of
Gaiam's initial public offering, with the cumulative total return on the NASDAQ
Composite Index and in a Peer Group index. The comparison assumes $100 was
invested on October 29, 1999 in Common Stock at the initial public offering
price and in each of the indices and assumes reinvestment of dividends, if any,
since that date. Gaiam has not paid cash dividends on the Common Stock.
Historic stock price is not indicative of future stock price performance.
Comparative Stock Performance
As required by applicable rules of the Commission, set forth below is a
performance graph prepared based upon the folowing assumptions:
1. $100 was invested on October 29, 1999 in the initial public offering, in the
Company's Common Stock and a peer group of other likestyle companies,
selected in good faith, comprised of Harley-Davidson, Inc.; Martha Stewart
Living Omnimedia, Inc.; and Starbucks Corporation.
2. Reinvestment of dividends, if any.
[PERFORMANCE GRAPH APPEARS HERE]
Cumulative Total Return
10/29/1999 12/31/1999
Gaiam, Inc. $100.00 $317.50
Peer Group $100.00 $100.08
Nasdaq Stock Market (U.S.) $100.00 $136.69
This Stock Performance Graph shall not be deemed incorporated by reference by
any general statement incorporating by reference this proxy statement into any
filing under the Securities Act or under the Exchange Act, except to the extent
that Gaiam specifically incorporates this information by reference, and shall
not otherwise be deemed filed under the Securities Act or the Exchange Act and
are not to be deemed to be soliciting material.
8
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On October 1, 1998, Mr. Rysavy sold InnerBalance to Gaiam for a $531,000
note carrying interest at 8% per annum, due June 30, 2001. A portion of the
note was repaid in 1998. On January 1, 1999, Gaiam issued a $289,000 8%
debenture to Mr. Rysavy for the balance. This debenture was repaid in full on
June 30, 1999.
On December 7, 1998, Ms. Powers exercised warrants she received in 1996 to
purchase 40,000 shares at $1.25 per share and also purchased $50,000 in
debentures issued by Gaiam. The debenture was mandatorily convertible into
shares simultaneous with the closing of Gaiam's initial public offering at the
initial offering price and bears interest at 8% per annum. Simultaneous with
the closing of Gaiam's initial public offering in October 1999, Ms. Powers'
debentures were automatically converted into 10,000 shares, which are
"restricted securities" as that term is defined in Rule 144 under the
Securities Act. Accrued and unpaid interest was paid in cash.
Certain sales of securities available for resale made by Gaiam in 1999 were
made to a company wholly owned by Mr. Rysavy at prevailing market prices based
on NASDAQ quotations. The proceeds of these sales were $538,750 in 1999. Gaiam
obtained the securities by exercising options granted by Mr. Rysavy to Gaiam
in 1993.
During 1999 and until April 2000, Gaiam subleased its fulfillment center in
Cincinnati, Ohio from a subsidiary of Corporate Express, Inc. at an annual
rental rate of approximately $205,200, which was the same rate as paid by
Corporate Express, Inc. under its lease. During 1999, Mr. Rysavy was a
director of Corporate Express and beneficially owned approximately 4.9% of the
stock of Corporate Express, but did not control Corporate Express. The lease
was terminated in April 2000 in connection with Gaiam's lease of a new 208,000
sq. ft. distribution center.
Until October 1999, Mr. Rysavy guaranteed Gaiam's line of credit with
Norwest Bank. Gaiam is party to revolving line of credit agreements with
Norwest Bank, which extend through December 31, 2001. The credit agreements
permit borrowings up to $3 million (of which $1.9 million was outstanding at
December 31, 1999) based upon the collateral value of Gaiam's accounts
receivable and inventory held for resale. These borrowings are secured by a
pledge of Gaiam's assets. Principal repayment of amounts borrowed under these
line of credit agreements are due either when the collateral value of Gaiam's
accounts receivable and inventory drops below prescribed levels or upon
maturity of the agreements, whichever occurs first. Borrowings under the
Norwest credit agreements bear interest at the prime rate plus 1% which was
9.50% at December 31, 1999.
9
<PAGE>
AUDITORS
A representative of Ernst & Young LLP, Gaiam's auditors for the 1999 fiscal
year, is expected to be present at the annual meeting and will be available to
respond to appropriate questions.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires Gaiam's directors, officers
(including a person performing a principal policy-making function) and persons
who own more than 10% of a registered class of Gaiam's equity securities to
file with the Securities and Exchange Commission initial reports of ownership
and reports of changes in ownership of Class A Common Stock and other equity
securities of Gaiam. Directors, officers and 10% holders are required by
Securities and Exchange Commission regulations to furnish Gaiam with copies of
all of the Section 16(a) reports they file. Based solely upon a review of the
copies of the forms furnished to Gaiam and the representations made by the
reporting persons to Gaiam, Gaiam believes that during fiscal 1998 its
directors, officers and 10% holders complied with all filing requirements
under Section 16(a) of the Exchange Act.
SHAREHOLDER PROPOSALS
Shareholders may submit proposals on matters appropriate for shareholder
action at Gaiam's annual meetings consistent with regulations adopted by the
Securities and Exchange Commission. For shareholder proposals to be considered
for inclusion in Gaiam's proxy statement and form of proxy relating to the
2001 annual meeting of shareholders, they must be received by Gaiam not later
than January 5, 2001, unless the date of the 2001 meeting of shareholders is
changed by more than 30 days from June 8, 2001.
In addition, under the terms of Gaiam's Bylaws, unless the date of the 2001
meeting of shareholders is changed by more than 30 days from June 8, 2001,
shareholders who intend to present an item of business or nomination at the
2001 annual meeting of shareholders (other than a proposal submitted for
inclusion in Gaiam's proxy material(s)) must provide notice in writing of such
business or nomination to Gaiam no earlier than February 25, 2001 and no later
than March 21, 2001.
Such written notice must contain specified information, including, among
other things, information as would be required to be included in a proxy
statement under Securities and Exchange Commission rules, as set forth more
fully in our Bylaws. All proposals or other notices should be addressed to
Gaiam at 360 Interlocken Boulevard, Suite 300, Broomfield, Colorado 80021,
Attention: Secretary.
10
<PAGE>
OTHER MATTERS
Management does not intend to present, and has no information as of the date
of preparation of this proxy statement that others will present, any business
at the annual meeting, other than business pertaining to matters required to
be set forth in the Notice of annual meeting and proxy statement. However, if
other matters requiring the vote of the shareholders properly come before the
annual meeting, it is the intention of the persons named in the enclosed proxy
to vote the proxies held by them in accordance with their best judgment on
such matters.
Your Vote Is Important
You Are Urged To Date, Sign And Promptly Return Your Proxy So That Your
Shares May Be Voted In Accordance With Your Wishes And That The Presence Of A
Quorum May Be Assured. The Prompt Return Of Your Signed Proxy, Regardless Of
The Number Of Shares You Hold, Will Aid Gaiam In Reducing The Expense Of
Additional Proxy Solicitation. The Giving Of Your Proxy Does Not Affect Your
Right To Vote In Person If You Attend The Meeting.
11
<PAGE>
GAIAM, INC.
Proxy for Annual Meeting of Shareholders
June 8, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF GAIAM, INC.
The undersigned hereby appoints Jirka Rysavy, Lynn Powers and Pavel Bouska
as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all the shares
of Class A Common Stock of Gaiam, Inc. held of record by the undersigned on May
1, 2000, at the annual meeting of shareholders of Gaiam, Inc. and any
adjournment or postponement thereof, as follows:
1. ELECTION OF DIRECTORS
[_] FOR all nominees listed below, except as marked to the contrary below
[_] WITHHOLD AUTHORITY to vote for nominees as instructed below
Jirka Rysavy
Lynn Powers
Barnet M. Feinblum
Barbara Mowry
Paul H. Ray
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME ABOVE.
<PAGE>
In their discretion, the Proxies are authorized to vote upon such other
matters as may properly come before the meeting. Management is not presently
aware of any such matters to be presented for action.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE DIRECTORS INDICATED.
The undersigned has received the Notice of Meeting, the proxy statement
relating to the annual meeting of shareholders to be held June 8, 2000, and
Gaiam's Annual Report for its fiscal year ended December 31, 1999, and hereby
ratifies and confirms all that the Proxies shall lawfully do or cause to be
done by virtue hereof and hereby revokes all proxies heretofore given to vote
such shares.
PLEASE SIGN AND RETURN PROMPTLY.
------------------------
Signature
------------------------
Signature, if held
jointly
Dated: , 2000
(Please date this
proxy)
(Please sign exactly as your
name or names appear to the
left. When shares are held by
joint tenants, both should
sign. When signing as
executor, administrator,
attorney, trustee or guardian,
please give full title as
such, and where more than one
executor, etc., is named, a
majority must sign. If a
corporation, please sign full
corporate name by president or
other authorized officer. If a
partnership, please sign full
partnership name by an
authorized person.)
