Common use of Governance Rights Clause in Contracts

Governance Rights. (1) For a period of three years, the Company shall, acting through the Board, consistent with and subject to its duties under Nevada law, take all actions necessary allow the Purchaser to elect three (3) of the five (5) Board members. If there is an amendment to the Articles of Incorporation or Bylaws of Company to increase the number of board seats greater than 5, the Company will increase the number of Board members to be elected by Purchaser sufficient that the number of directors appointed by Purchaser shall be a majority of Board seats. Of the three members designated by Purchaser for election to the Board of Directors, at least one shall qualify as “independent” in accordance with the applicable listing standards of the NYSE or any other national or regional securities exchange or system of automated dissemination of securities prices in the United States on which the common shares are then traded or quoted, each as amended from time to time at least one of the three directors and will also qualify as a “financial expert” under Section 407 of Sxxxxxxx-Xxxxx and SEC Rules (17 CFR § 229.401). Notwithstanding the foregoing, if after three (3) years after the Effective Date of this Agreement, Purchaser does not hold Convertible Preferred Shares, Series B (or, if converted into common shares common shares from such conversion) as shown below, Purchaser shall obtain the required number of resignations from members of the Board of Directors that Purchaser has elected in accordance with the following: (2) The Purchaser shall provide written notice (the “Designation Notice”) to the Board identifying each Designee. Upon receiving a Designation Notice, the Board shall take such actions as may reasonably be within their power, consistent with and subject to their duties under Nevada law, to cause the Board to nominate for appointment to the Board, the Designee(s), to include the Designee(s) in the Company’s next election for directors to its Board and to recommend that the shareholders of the Company vote for the Designee(s) for election to the Board. (3) To the extent that a Designee is unable to stand for election for any reason, the Purchaser shall promptly provide to the Board a written notice of the name of the person to be designated by them in substitution of such prior Designee. (4) In the event that a Designee ceases to serve as a Board member of the Company due to death, resignation or removal of said director, the Purchaser may submit written notice to the Board designating an individual to replace said Designee. The Board shall, consistent with and subject to their duties under Nevada law, promptly recommend that the Board appoint such replacement designee as a Board member of the Company to fill any vacancy resulting from the death, resignation or removal of the Designee and to include the Designee in the Company’s next election to its Board and recommend that the shareholders of the Company vote for the Designee for election to the Board. If any such Designee is elected at an Annual Meeting of Shareholders of the Company, the Designee will be nominated to the Board as a member of the class of directors whose office have expired in that year. (5) So long as Purchaser retains at least 1,501 of the Convertible Preferred Shares, Series B, the Company shall, acting through the Board, consistent with and subject to their duties under Nevada law, take all actions necessary to cause the nomination and election by the Board of a Chief Executive Officer designated by Purchaser.

Governance Rights. (1a) For So long as Offeror shall have complied with its obligations pursuant to Section 1.03, effective upon the Offer Closing: (i) five incumbent directors on the Company Board identified by the Company Board shall resign from the Company Board effective as of such time; (ii) Offeror shall have the right to designate three directors to the Company Board (the “Offeror Designees”), which Offeror Designees shall include Xxxxxx X. Xxxxxx (as non-executive Chairman of the Company Board); provided that no person may be named as an Offeror Designee who does not meet (x) all legal and regulatory requirements generally applicable to the Company’s directors and director nominees and (y) the Company’s currently in effect internal corporate governance requirements generally applicable to the Company’s directors and director nominees, a period copy of which requirements has been made available to Offeror prior to the date hereof; provided, further that in no event shall any person’s relationship with the Sponsor or Offeror or any of their respective Affiliates be considered to disqualify such person from being a member of the Company Board under this clause (y); (iii) the remaining directors on the Company Board shall appoint two of the Offeror Designees (as selected by Offeror) to fill the vacancies resulting from the foregoing resignations and decrease the size of the Company Board by three yearsdirectors; and (iv) the Company Board shall remove Xxxxx X. Sales from his position as Chief Executive Officer of the Company, effective as of the Offer Closing, and the Company Board shall appoint Xxxxx X. Xxxxxx to serve as Chief Executive Officer (on the terms and conditions of employment set forth in the employment letter between the Company and Xx. Xxxxxx attached as Exhibit B hereto). (b) Subsequent to the appointment of two of the Offeror Designees to the Company Board, the Company shall, acting Board shall initiate a search through the Board, consistent with and subject to its duties under Nevada law, take all actions necessary allow the Purchaser to elect three (3) a nationally recognized search firm for two additional members of the five (5) Company Board. After consideration of the recommendations of such search firm as well as recommendations made by Company Board members. If there is an amendment to the Articles of Incorporation or Bylaws of Company to increase the number of board seats greater than 5, the Company will increase Board shall expand the size of the Company Board by four directors and appoint Xx. Xxxxxx, the Offeror Designee not previously appointed to the Company and two additional members to the Company Board to fill the resulting vacancies on such Company Board (such two additional members, the “Additional Directors” and, together with Xx. Xxxxxx and the Offeror Designees, the “New Directors”). (c) The Company agrees that (i) each New Director shall be entitled to the same rights, protections (including regarding indemnification and liability insurance), privileges and compensation as the remaining members of the Company Board, including with respect to reimbursement for Company Board members’ participation and related expenses, and (ii) subject to applicable NYSE regulations, the Offeror Designees shall be appointed to the Finance, Corporate Governance and Nominating and Leadership Development and Compensation Committees of the Company Board such that the total number of Offeror Designees serving on each such committee is substantially equivalent (as close as reasonably practicable, but in no event less than one; provided that such membership would not violate applicable securities laws or stock exchange or stock market rules, and where such membership would violate any such laws or rules, the applicable Offeror Designee shall be entitled to attend all committee meetings (in person or otherwise) in the capacity of a non-voting observer and shall be furnished with notice of such meetings and copies of all materials provided to such meeting members concurrently with the members of such committees) to (x) (A) the then total number of Offeror Designees serving on the Company Board divided by (B) the then total number of Company Board members, multiplied by (y) the then total number of Company Board members serving on such committee. The rights of Offer Designees pursuant to be elected this Section 1.04(c) shall continue until the second anniversary of the Offer Closing Date (or until any earlier material breach by Purchaser sufficient that the number Offeror or its Affiliates of directors appointed by Purchaser their obligations under this Section 2.09 or Section 2.10). The Additional Directors shall be a majority appointed to committees of the Company Board seats. Of the three members designated by Purchaser for election to the Board of Directors, at least one shall qualify as “independent” in accordance with the qualifications and skills of such Additional Directors. (d) The Company and the Company Board shall take all or cause to be taken all lawful action necessary or appropriate to ensure that the terms of this Section 1.04 are implemented to the fullest extent permitted by applicable listing standards Law. (e) None of the NYSE Company or any other national of its Subsidiaries shall engage in any business transaction (or regional securities exchange series of related transactions) involving consideration payable by or system to the Company or any of automated dissemination its subsidiaries in excess of securities prices $120,000 with Offeror, any Offeror Designee, or any Affiliate of the Offeror or any Offeror Designee (an “Interested Transaction”) unless such transaction is approved by a majority of the directors that are not Offeror Designees; it being understood and agreed that the business transactions contemplated by the Transaction Documents and any merchandising, procurement, vendor and services contracts entered into with third parties in the United States on ordinary course under which the common shares Company and Offeror purchase jointly are then traded hereby approved for purposes of this Section 1.04(e). (f) For the avoidance of doubt, the Company shall be deemed to have satisfied its obligations hereunder, and no Offer Condition or quotedother condition herein shall be deemed not to have been satisfied, each if the Company has confirmed in writing that it is ready to appoint the Offeror Designees and Xx. Xxxxxx (on terms and conditions of employment of Xx. Xxxxxx set forth in the employment letter between the Company and Xx. Xxxxxx attached as amended from time to time at least one Exhibit B hereto) and any such proposed persons do not accept such appointment. (g) Each of the three directors Offeror Designees shall hold office until his or her term expires and will also qualify as such Offeror Designee’s successor has been duly elected and qualified or until such Offeror Designee’s earlier death, resignation or removal. Following the Offer Closing until the second anniversary of the Offer Closing Date (the “Required Nomination Period”), in connection with each annual meeting of the Company’s stockholders during the Required Nomination Period and subject to the restrictions in the proviso in clause (ii) of Section 1.04(a) and compliance in all material respects by Offeror or its Affiliates of their obligations under this Section 2.09 or Section 2.10, the Company shall nominate the Offeror Designees for reelection to the Company Board and shall take all reasonable and lawful actions necessary or advisable to cause the Company Board to recommend that the Company’s stockholders vote “FOR” the election of the Offeror Designees. Offeror (and any Affiliates of Offeror to which shares of Company Common Stock are transferred pursuant to Section 2.10(d)(i)) shall vote any and all Company Common Stock entitled to be voted thereat, or to cause such shares to be voted (i) during the Required Nomination Period, in favor of the election of each director (other than the Offeror Designees) recommended by the Company Board and (ii) during the Required Nomination Period and any period in which an Offeror Designee is serving a “financial expert” under term of directorship on the Company Board with respect to which term the Company nominated and recommended such Offeror Designee pursuant to the immediately preceding sentence, otherwise in accordance with the recommendation of the Company Board. During the Required Nomination Period, any vacancy caused by the death, disability, resignation or removal of an Offeror Designee shall be filled by the Company Board with an individual designated by Offeror who, subject to the proviso in Section 407 of Sxxxxxxx-Xxxxx and SEC Rules (17 CFR § 229.401)1.04(a)(ii) above, shall be deemed to be an Offeror Designee. Notwithstanding the foregoing, the Required Nomination Period shall be deemed to immediately expire if after three (3x) years any of the restrictions in Section 2.09(a) cease to apply and (y) at any time after the Effective Date of this Agreementrestrictions in Section 2.09(a) cease to apply, Purchaser does not hold Convertible Preferred Shares, Series B (or, if converted into common shares common shares from such conversion) as shown below, Purchaser shall obtain the required number of resignations from members any Restricted Offeror Person takes any of the Board of Directors that Purchaser has elected actions specified in accordance with the following: (2) The Purchaser shall provide written notice (the “Designation Notice”) to the Board identifying each Designee. Upon receiving a Designation Notice, the Board shall take such actions as may reasonably be within their power, consistent with Section 2.09(a); it being understood and subject to their duties under Nevada law, to cause the Board to nominate for appointment to the Board, the Designee(s), to include the Designee(s) in the Company’s next election for directors to its Board and to recommend agreed that the shareholders expiration of the Required Nomination Period shall not reduce the term of any Offeror Designee from the Company vote for Board or otherwise require any such Offeror Designee to resign from the Designee(s) for election to the Company Board. (3h) To the extent The Company hereby renounces any interest or expectancy in any business opportunity in which an Offeror Designee or any of its respective Affiliates participates or seeks to participate other than a business opportunity that a is presented to an Offeror Designee is unable to stand for election for any reason, the Purchaser shall promptly provide to the Board a written notice of the name of the person to be designated by them in substitution of such prior Designee. (4) In the event that a Designee ceases to serve person’s capacity as a Board member of the Company due to death, resignation or removal of said director, the Purchaser may submit written notice to the Board designating an individual to replace said Designee. The Board shall, consistent with and subject to their duties under Nevada law, promptly recommend that the Board appoint such replacement designee as a Board member of the Company to fill any vacancy resulting from the death, resignation or removal of the Designee and to include the Designee in the Company’s next election to its Board and recommend that the shareholders of the Company vote for the Designee for election to the Board. If any such Designee is elected at an Annual Meeting of Shareholders director of the Company, the Designee will be nominated to the Board as a member of the class of directors whose office have expired in that year. (5) So long as Purchaser retains at least 1,501 of the Convertible Preferred Shares, Series B, the Company shall, acting through the Board, consistent with and subject to their duties under Nevada law, take all actions necessary to cause the nomination and election by the Board of a Chief Executive Officer designated by Purchaser.

Governance Rights. (1) For a period of three years, the Company shall, acting through the Board, consistent with and subject to its duties under Nevada law, take all actions necessary allow the Purchaser to elect three (3) of the five (5) Board members. The number of seats on the Board shall be five. If there is an amendment to the Articles of Incorporation or Bylaws of Company to increase the number of board seats greater than 5, the Company will increase the number of Board members to be elected by Purchaser sufficient that the number of directors appointed by Purchaser shall be a majority of Board seats. Of the three members designated by Purchaser for election to the Board of Directors, at least one shall qualify as “independent” in accordance with the applicable listing standards of the NYSE or any other national or regional securities exchange or system of automated dissemination of securities prices in the United States on which the common shares are then traded or quoted, each as amended from time to time at least one of the three directors and will also qualify as a “financial expert” under Section 407 of SxxxxxxxXxxxxxxx-Xxxxx and SEC Rules (17 CFR § 229.401). Notwithstanding the foregoing, if after three (3) years after the Effective Date of this Agreement, Purchaser does not hold at least 5,000 Convertible Preferred Shares, Series B (or, if converted into common shares common shares from such conversion) as shown below, Purchaser shall obtain the required number of resignations from members of the Board of Directors that Purchaser has elected in accordance with the following:: 1 — 1,667 1 1,668 — 3,334 2 3,335 — 5,000 3 (2) The Purchaser shall provide written notice (the “Designation Notice”) to the Board identifying each Designee. Upon receiving a Designation Notice, the Board shall take such actions as may reasonably be within their power, consistent with and subject to their duties under Nevada law, to cause the Board to nominate for appointment to the Board, the Designee(s), to include the Designee(s) in the Company’s next election for directors to its Board and to recommend that the shareholders of the Company vote for the Designee(s) for election to the Board. (3) To the extent that a Designee is unable to stand for election for any reason, the Purchaser shall promptly provide to the Board a written notice of the name of the person to be designated by them in substitution of such prior Designee. (4) In the event that a Designee ceases to serve as a Board member of the Company due to death, resignation or removal of said director, the Purchaser may submit written notice to the Board designating an individual to replace said Designee. The Board shall, consistent with and subject to their duties under Nevada law, promptly recommend that the Board appoint such replacement designee as a Board member of the Company to fill any vacancy resulting from the death, resignation or removal of the Designee and to include the Designee in the Company’s next election to its Board and recommend that the shareholders of the Company vote for the Designee for election to the Board. If any such Designee is elected at an Annual Meeting of Shareholders of the Company, the Designee will be nominated to the Board as a member of the class of directors whose office have expired in that year. (5) So long as Purchaser retains at least 1,501 1,260 of the Convertible Preferred Shares, Series B, the Company shall, acting through the Board, consistent with and subject to their duties under Nevada law, take all actions necessary to cause the nomination and election by the Board of a Chief Executive Officer designated by Purchaser.