Exhibit 10.1

 

AMENDMENT

 

This AMENDMENT (the “Amendment”) is made and entered into as of September 8,
2005 by and among Gaiam, Inc., a Colorado corporation (“Purchaser”), GT Brands
LLC, a Delaware limited liability company (“GT”), GT Merchandising & Licensing
LLC, a Delaware limited liability company (“GT Merchandising”), Gym Time, LLC, a
South Carolina limited liability company (“Gym Time”), BSBP Productions LLC, a
Delaware limited liability company (“BSBP”), and GoodTimes Entertainment LLC, a
Delaware limited liability company (“GoodTimes LLC” and, collectively with GT,
GT Merchandising, Gym Time and BSBP, “Sellers”) and amends the Asset Purchase
Agreement dated as of July 8, 2005 by and among Purchaser and Sellers (the
“Agreement”).  Capitalized terms not otherwise defined herein have the meanings
set forth in the Agreement.

 

WHEREAS, the Purchaser and the Sellers desire to make certain amendments to the
Agreement in order to expedite the Closing under the Agreement;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Amendment, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

 

Section 1.  Working Capital and Net Assets Adjustment.  The parties agree that
(i) the adjustments contemplated by Section 1.04(b) of the Agreement shall be
equal to $5 million, (ii) the Purchase Price (i.e., the Base Price of $40
million less $5 million) shall be $35 million, subject to adjustment as provided
in Section 4(a) and Section 4(b)(vi) below, and (iii) no further adjustments to
the Base Price or Purchase Price shall be made pursuant to Section 1.04(b) of
the Agreement.

 

Section 2.  Closing.  The Closing Date shall be September 13, 2005 and the
Closing shall be effective as of 12:01 a.m., New York City time, on Tuesday,
September 13, 2005, but only in the event that all deliveries (other than those
waived pursuant to Section 4(b) below) required to be delivered on the Closing
Date under the Agreement, including, without limitation, the Purchase Price,
have been delivered on the Closing Date.  In order to ensure an accurate
transfer of the Sale Assets, at 12:01 a.m. on September 12, 2005, Sellers shall
suspend all shipments of retail products to Sellers’ retail customers.

 

Section 3.  Deposits/Letters of Credit.  Notwithstanding Section 1.1(a)(x) and
Section 4.05 of the Agreement, Sellers shall retain the rights to all deposit
monies (up to $1.5 million) outstanding as of the Closing with the following
accounts:  Paymentech, Discover and UPS.  From and after the Closing, if
requested by Sellers, Purchaser shall use commercially reasonable efforts to
cause Paymentech, Discover and UPS to return such deposit monies to Sellers
(provided that Purchaser shall not be required to make any expenditures). 
Sellers have issued Letters of Credit in order to obtain inventory to fulfill
Billy Blanks orders, and Purchaser shall reimburse Sellers the full account (up
to $500 thousand) drawn against such Letters of Credit upon receipt of such
inventory.

 

Section 4.  Waivers.

 

(a)                                  Pursuant to a waiver duly executed and
delivered as of September 2, 2005 (the “Waiver”), Purchaser has waived certain
requirements of Section 4.08 of the Agreement, subject to an adjustment of the
Purchase Price by an amount equal to the amount of the investment shortfall, if
any, with respect to the Section 4.08 Retail Expenditures (as defined in the
Waiver).  The parties acknowledge and agree that the Purchase Price set forth
above shall be reduced by an amount equal to the pro-rated portion (as described
in Schedule 4.08 to the Agreement) of such investment shortfall.  Sellers shall
provide Purchaser with a true and complete calculation of the amount of such
investment shortfall on or before the close of business on September 12, 2005.

 

(b)                                 Purchaser hereby irrevocably waives:

 

(i) any breaches of the Agreement by Sellers that may have occurred prior to the
date of this Amendment, to the extent known to Purchaser (it being agreed that
Sellers do not acknowledge, and refute any contention that, any breach of the
Agreement by Sellers has occurred),

 

(ii) the condition to Purchaser’s obligation to close set forth in Section 6.01,

 

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(iii) the condition to Purchaser’s obligation to close set forth in the first
sentence of Section 6.02 and in paragraphs (a) and (b) of the second sentence of
Section 6.02,

 

(iv) the condition to Purchaser’s obligation to close set forth in Section 6.03
relating to the delivery by Sellers of a certificate executed in the name and on
behalf of Sellers by the President or any Executive Vice President of such
Sellers,

 

(v) the condition to Purchaser’s obligation to close set forth in Section 6.07
relating to the physical count of inventory as of approximately August 31, 2005,

 

(vi) the condition to Purchaser’s obligation to close set forth in Section 6.07
relating to the audited financial statements of Sellers for 2004, provided,
however, that (A) Sellers shall use commercially reasonable efforts to deliver
such audited financial statements to Purchaser not later than September 30, 2005
and (B) in the event Sellers have not delivered such audited financial
statements to Purchaser on or prior to the Closing Date, $5 million of the
Purchase Price shall be delivered into escrow as described in Section 7 below
pending delivery of such audited financial statements.  Within one Business Day
following Sellers’ delivery of such audited financial statements to Purchaser
(if prior to or on September 30, 2005), the escrow agent shall pay to Sellers
such $5 million (plus interest or other earnings accrued thereon) in accordance
with the terms of the escrow agreement, and, if such delivery has not occurred
on or prior to September 30, 2005, then on October 1, 2005 the escrow agent
shall pay to Purchaser such $5 million (plus interest or other earnings accrued
thereon) in accordance with the terms of the escrow agreement.  For purposes of
clarification, Sellers’ right to receive the $5 million from the escrow agent
shall only be dependant on the timing of delivery to Purchaser of the audited
financial statements (and not on the contents of or results set forth in such
financial statements).

 

(vii) Purchaser’s right to terminate the Agreement pursuant to Section 10.01(i),
and

 

(viii) any condition to Purchaser’s obligation to close, including, without
limitation, the condition set forth in Section 6.02, if the failure of the
condition to be satisfied is due to Sellers’ compliance with the last sentence
of Section 2 of this Amendment.

 

(c)                                  Sellers hereby irrevocably waive:

 

(i) any breaches of the Agreement by Purchaser that may have occurred prior to
the date of this Amendment, to the extent known to Sellers (it being agreed that
Purchaser does not acknowledge, and refutes any contention that, any breach of
the Agreement by Purchaser has occurred),

 

(ii) the condition to Sellers’ obligation to close set forth in Section 7.01,

 

(iii) the condition to Sellers’ obligation to close set forth in Section 7.02,
and

 

(iv) the condition to Sellers’ obligation to close set forth in Section 7.03
relating to the delivery by Purchaser of a certificate executed in the name and
on behalf of Purchaser by the President or any Executive Vice President of
Purchaser.

 

Section 5.  Effectiveness.  This Amendment (other than the waiver set forth in
Section 4(b)(viii) above) shall not be valid and enforceable, and shall not
become binding on the parties hereto, unless and until the Bankruptcy Court
approves this Amendment.

 

Section 6.  Termination.  In the event the Bankruptcy Court has not approved
this Amendment on or prior to September 12, 2005, this Amendment shall
automatically terminate without any further action required by the parties
hereto, there shall be no liability in respect hereof, and the rights and
obligations of the parties hereto shall continue to be governed by the terms of
the Agreement; provided, however, that the waiver set forth in
Section 4(b)(viii) of this Amendment shall survive the termination of this
Amendment, and shall be deemed to be incorporated into the terms of the
Agreement.  In the event this Amendment is terminated, the amount of the
adjustments referred to in Section 1 of this Amendment shall have no relevance
in determining the adjustments contemplated by Section 1.04(b) of the Agreement,
and no party (including the Independent Accountant) shall be permitted to
utilize this Amendment in any manner whatsoever in reaching a final
determination in respect of the Disputed Items.

 

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Section 7.  Escrow.  In the event that Sellers have failed to deliver to
Purchaser the audited financial statements of Sellers for 2004 on or prior to
the Closing Date, Purchaser shall deliver $5 million of the Purchase Price into
escrow under an escrow agreement reasonably acceptable to Sellers and
Purchaser.  Sellers and Purchasers agree to request that the Escrow Agent (as
defined in the Agreement) serve as escrow agent with respect to such $5 million
and that the Deposit Escrow Agreement be amended to incorporate the escrow of
such $5 million or an agreement substantially similar to the Deposit Escrow
Agreement be entered into with respect to the escrow of such $5 million.

 

Section 8.  Miscellaneous.  Except as modified by this Amendment and the Waiver,
the Agreement remain in full force and effect.  The Agreement, together with
this Amendment and the Waiver, embody the entire agreement and understanding
among the parties to this Amendment, and subject to the approval of this
Amendment by the Bankruptcy Court, supersedes all prior agreements and
understandings among the parties relating to the subject matter of the
Agreement, the Amendment and the Waiver.  This Amendment may be executed in any
number of separate counterparts, each of which, when taken together, shall
constitute one and the same instrument, admissible into evidence,
notwithstanding the fact that all parties have not signed the same counterpart. 
Delivery of an executed counterpart of this Amendment by facsimile shall be
equally as effective as delivery of a manually executed counterpart of this
Amendment.  Any party delivering an executed counterpart of this Amendment by
facsimile shall also deliver a manually executed counterpart of this Amendment,
but the failure to deliver a manually executed counterpart shall not affect the
validity, enforceability, and binding effect of this Amendment.  This Amendment
shall be governed by and construed in accordance with the applicable provisions
of the Bankruptcy Code and the Laws of the State of New York applicable to a
contract executed and performed in such State, without giving effect to the
conflicts of laws principles thereof.

 

IN WITNESS WHEREOF, this Amendment has been duly executed and delivered by the
duly authorized officer of each party as of the date first above written.

 

GAIAM, INC.

 

 

By:

 

 

 

Name:

 

Title:

 

 

 

 

GT BRANDS LLC

 

 

By:

 

 

 

Name:

 

Title:

 

 

 

 

GT MERCHANDISING & LICENSING LLC

 

 

By:

 

 

 

Name:

 

Title:

 

 

 

 

GYM TIME, LLC

 

 

By:

 

 

 

Name:

 

Title:

 

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BSBP PRODUCTIONS LLC

 

 

By:

 

 

 

Name:

 

Title:

 

 

 

 

GOODTIMES ENTERTAINMENT LLC

 

 

By:

 

 

 

Name:

 

Title:

 

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