Exhibit 10.2


 


EXECUTION COPY


 




 





 


SHAREHOLDERS
AGREEMENT


 


 


among


 


 


GAIAM,
INC.,


 


 


JIRKA
RYSAVY,


 


 


REVOLUTION
LIVING LLC


 


 


and


 


 


STEPHEN M.
CASE


 


 


Dated
as of August 4, 2005




 


 





 





















 


TABLE OF
CONTENTS


 


	
  ARTICLE I

  	
  DEFINITIONS; RULES OF
  CONSTRUCTION

  	
   

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Definitions

  	
   

  
	
  1.2

  	
  Rules of Construction

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  GOVERNANCE RIGHTS WITH
  RESPECT TO GAIAM

  	
   

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Election of Gaiam Board
  Members.

  	
   

  
	
  2.2

  	
  Board Meetings

  	
   

  
	
  2.3

  	
  Expenses

  	
   

  
	
  2.4

  	
  Committees

  	
   

  
	
  2.5

  	
  Shareholder Commitments

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  BOARD OF DIRECTORS OF WISDOM

  	
   

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Rights to Select Wisdom
  Board Members.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  TRANSFERS OF COMMON STOCK OF GAIAM

  	
   

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Standstill With Respect to
  Gaiam

  	
   

  
	
  4.2

  	
  Restrictions on Transfers of
  Securities of Gaiam

  	
   

  
	
  4.3

  	
  Rights To Subscribe For
  Securities

  	
   

  
	
  4.4

  	
  Revolution Living Option

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  ADDITIONAL AGREEMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Inconsistent Agreements

  	
   

  
	
  5.2

  	
  Affirmative Covenants

  	
   

  
	
  5.3

  	
  Sale of Gaiam

  	
   

  
	
  5.4

  	
  Buy/Sell

  	
   

  
	
  5.5

  	
  Representations
  and Warranties of Rysavy and Case

  	
   

  
	
  5.6

  	
  Nondisparagement

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  REGISTRATION
  RIGHTS

  	
   

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Required
  Registration

  	
   

  
	
  6.2

  	
  Piggyback
  Registration

  	
   

  
	
  6.3

  	
  Registrations on Form S-3

  	
   

  
	
  6.4

  	
  Preparation and
  Filing

  	
   

  
	
  6.5

  	
  Expenses

  	
   

  
	
  6.6

  	
  Indemnification

  	
   

  
	
  6.7

  	
  Underwriting
  Agreement

  	
   

  
	
  6.8

  	
  Suspension

  	
   

  
	
  6.9

  	
  Information by
  Holder

  	
   

  
	
  6.10

  	
  Exchange Act
  Compliance

  	
   

  
	
  6.11

  	
  No Conflict of
  Rights

  	
   

  



 


i





















 


	
  6.12

  	
  Transfer of
  Registration Rights

  	
   

  
	
  6.13

  	
  Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Amendment

  	
   

  
	
  7.2

  	
  Waivers; Extensions

  	
   

  
	
  7.3

  	
  Termination

  	
   

  
	
  7.4

  	
  Severability

  	
   

  
	
  7.5

  	
  Entire Agreement

  	
   

  
	
  7.6

  	
  Independence
  of Agreements, Covenants, Representations and Warranties

  	
   

  
	
  7.7

  	
  Successors and Assigns

  	
   

  
	
  7.8

  	
  Counterparts;
  Facsimile Signatures

  	
   

  
	
  7.9

  	
  Remedies

  	
   

  
	
  7.10

  	
  Notices

  	
   

  
	
  7.11

  	
  Governing
  Law; Waiver of Jury Trial.

  	
   

  
	
  7.12

  	
  Further Assurances

  	
   

  
	
  7.13

  	
  Conflicting
  Agreements

  	
   

  
	
  7.14

  	
  No Third Party
  Reliance

  	
   

  



 


ii





















 


This
SHAREHOLDERS AGREEMENT is made as of August 4, 2005
among GAIAM, INC., a Colorado
corporation (“Gaiam”), JIRKA RYSAVY, an individual (“Rysavy”), REVOLUTION LIVING LLC, a Delaware limited
liability company (the “Revolution Living”) and STEPHEN M. CASE, an individual (“Case”).  Gaiam, Rysavy, Revolution Living and Case are
collectively referred to as the “Parties.”


 


WHEREAS, Gaiam desires
to issue and sell to Revolution Living, and Revolution Living desires to
purchase from Gaiam, shares of Gaiam’s Class A common stock, par value
$0.0001 per share (“Class A Common Stock”), in such amounts, on
such dates and otherwise on the terms and subject to the conditions set forth
in a Transaction Agreement dated as of the date hereof (the “Transaction
Agreement”) between Gaiam, Revolution Living and Life Balance Media
Holdings LLC, a Delaware limited liability company (“Wisdom”);


 


WHEREAS, Wisdom desires
to sell to Gaiam, and Gaiam desires to purchase from Wisdom units of a newly
created class of preferred interests of Wisdom, in such amounts, on such dates
and otherwise on the terms and subject to the conditions set forth in the
Transaction Agreement and the Wisdom LLC Agreement (as defined in the
Transaction Agreement); and


 


WHEREAS, as a
condition of entering into the Transaction Agreement, Revolution Living, Case,
Gaiam and Rysavy have agreed to certain provisions relating to the Class A
Common Stock and certain other matters.


 


NOW,
THEREFORE, in consideration of the mutual covenants and
agreements contained in this Agreement, the sufficiency of which is hereby
acknowledged, the Parties agree as follows:


 


ARTICLE I




DEFINITIONS; RULES OF CONSTRUCTION


 


1.1          Definitions.


 


The following capitalized
terms used in this Agreement have the meanings ascribed to them below:


 


“Affiliate” means,
with respect to any specified Person, any other Person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, such specified Person.  Any relative or spouse (including any partner
with whom such person resides on a permanent basis) of the specified Person,
any relative of such spouse, any spouse of any such relative or any other
Person who, directly or indirectly, is under common ownership or control with,
or is owned or controlled by such spouse or relative shall be considered an
Affiliate of such Person.  As used in
this definition, the term “control” means the possession, directly or
indirectly, of the power to direct the management and policies of a Person,
whether through the ownership of voting securities, by contract or
otherwise.  As used in this definition,
the term “relative” means any former or current spouse, parent,
grandparent, great-grandparent, great-great-grandparent, child, grandchild,
great-grandchild, great-great-grandchild,


 





















 


sibling, first uncle, first aunt or first cousin (in
each case, whether natural or adoptive). 
The parties agree that the term “Affiliate” as used with respect to Case
and Revolution Living does not include (i) Time Warner Inc., (ii) any
Affiliates of Time Warner Inc. or (iii) any member or investor in any
Affiliate of Revolution Living; provided that, absent such relationship as a
member or investor in any Affiliates of Revolution Living, such member or
investor is not an Affiliate of Case or Revolution Living.


 


“Agreement” means
this Agreement together with all schedules and exhibits hereto, as the same may
from time to time be amended, modified, supplemented or restated in accordance
with the terms hereof.


 


“Applicable Tag Percentage”
has the meaning given it in Section 4.2(d)(ii).


 


“Approved Sale” has
the meaning given to it in Section 5.3.


 


“Bylaws” means the
Bylaws of Gaiam, as amended, modified, supplemented or restated and in effect
from time to time.


 


“Buy/Sell Notice” has
the meaning given to it in Section 5.4(a).


 


“Buy/Sell Price” has
the meaning given to it in Section 5.4(a).


 


“Case” has the
meaning given in the Preamble.


 


“Class A Common
Stock” has the meaning given it in the Recitals.


 


“Class B Common
Stock” means Gaiam’s Class B Common Stock, par value $0.0001 per
share.


 


“Common Stock” means
the Class A Common Stock and the Class B Common Stock.


 


“Common Stock Equivalents”
means all shares of Common Stock outstanding and all shares of Common Stock
issuable (without regard to any present restrictions on such issuance) upon the
conversion, exchange or exercise of all Securities of Gaiam that are
convertible, exchangeable or exercisable for Common Stock.


 


“Company Notice” has
the meaning given to it in Section 4.3(a).


 


“Document(s)” means,
individually or collectively, this Agreement, the Transaction Agreement, the
Cooperation Agreement (as defined in the Transaction Agreement), the Wisdom LLC
Agreement (as defined in the Transaction Agreement) and all other documents
executed in connection with the transactions contemplated by this Agreement.


 


“Equity Incentive Plan”
means Gaiam’s 1999 Long-Term Incentive Plan and Gaiam’s Employee Stock Purchase
Plan, each as amended from time to time.


 


“Fully-Diluted Capital
Stock” means, as of any date, without duplication, (i) the total
number of shares of Common Stock outstanding on such date, plus (ii) the
total number of


 


2





















 


outstanding options, warrants and other
equity-linked securities that are exercisable into Common Stock on or after
such date, plus (iii) the total number of shares of Common Stock reserved
for issuance pursuant to obligations of Gaiam to issue shares of Common Stock,
other than pursuant to obligations of Gaiam to issue shares of Common Stock
under the Transaction Agreement after such date.


 


 “GAAP” means generally accepted
accounting principles in the United States, as in effect from time to time,
consistently applied.


 


“Gaiam” has the
meaning given to it in the Preamble.


 


“Gaiam Appointees”
has the meaning given to it in Section 3.1(a).


 


“Gaiam Board” means
the board of directors of Gaiam.  To the
extent any decision or other action in connection with this Agreement is taken
by the Gaiam Board and such decision or action relates solely to a decision or
other action in which Revolution Living or any of its Affiliates has any
interest (other than indirectly through its or their ownership of Common Stock
of Gaiam), then such decision or other action shall be made or taken by
directors of Gaiam who are not nominees of, or otherwise affiliated or
associated with, Revolution Living.  To
the extent any decision or other action in connection with this Agreement is
taken by the Gaiam Board and such decision or action relates solely to a
decision or other action in which Rysavy or any of its Affiliates has any
interest (other than indirectly through his or their ownership of Common Stock
of Gaiam), then such decision or other action shall be made or taken by
directors of Gaiam who are not nominees of, or otherwise affiliated or
associated with, Rysavy.


 


“Governmental Authority”
means any domestic or foreign government or political subdivision thereof,
whether on a Federal, state or local level and whether executive, legislative
or judicial in nature, including any agency, authority, board, bureau,
commission, court, department or other instrumentality thereof.


 


“Holder Securities”
has the meaning given to it in Section 4.2(a).


 


“Information” has the
meaning given to it in Section 6.4(a)(ix).


 


“Inspectors” has the
meaning given to it in Section 6.4(a)(ix).


 


“Lien” means any
security interest, pledge, lien, claim, proxy, bailment (in the nature of a
pledge or for purposes of security), mortgage, deed of trust, the grant of a
power to confess judgment, conditional sale or title retention agreement
(including any lease in the nature thereof), charge, encumbrance, easement,
reservation, restriction, cloud, right of first refusal or first offer, option,
commitment or other similar arrangement or interest in real or personal
property, whether oral or written.


 


“Material Transaction”
means any material transaction in which Gaiam or any of its Subsidiaries
proposes to engage or is engaged, including a purchase or sale of assets or
securities, financing, merger, consolidation, tender offer or any other
transaction that would require disclosure pursuant to the Exchange Act, and
with respect to which the Gaiam Board has determined in good faith that
compliance with this Agreement may reasonably be expected to


 


3





















 


either materially interfere with the Gaiam’s or such
Subsidiary’s ability to consummate such transaction in a timely fashion or
require Gaiam to disclose material, non-public information prior to such time
as it would otherwise be required to be disclosed.


 


“NASD” has the
meaning given to it in Section 6.4(a)(xiv).


 


“NMS” has the meaning
given to it in Section 6.4(a)(xiv).


 


“Offered Securities”
has the meaning given to it in Section 4.3(a).


 


“Option” has the
meaning given to it in Section 4.4(a).


 


“Orders” means
judgments, writs, decrees, injunctions, orders, compliance agreements or
settlement agreements of or with any Governmental Authority or arbitrator.


 


“Other Shares” means
at any time those shares of Common Stock that do not constitute Primary Shares
or Registrable Shares.


 


“Permits” means
licenses, certificates and permits from Governmental Authorities.


 


“Permitted Transferee”
means (i) with respect to Rysavy: 
any Affiliate of Rysavy, Revolution Living and any Affiliate of
Revolution Living, (ii) with respect to Revolution Living:   Case and any Affiliate of Revolution Living
and (iii) with respect to Rysavy, Revolution Living and any of their
Affiliates:  any financial institution to
which a Party has pledged his or its Holder Securities as security and
collateral (including if the financial institution exercises its rights under
the pledge agreement to obtain the Holder Securities); provided that (x) with
respect to Rysavy and his Permitted Transferees, any such Person acquiring Class B
Common Stock is entitled to hold Class B Common Stock following the
transfer in accordance with the Restated Articles as in effect as of the date
hereof (i.e., the Class B Common Stock would not convert into Class A
Common Stock), and (y) in each such case other than a Permitted Transferee
under clause (iii), such Person complies with Section 7.7(b).  For the avoidance of doubt, no Person who is
a Permitted Transferee under clause (iii) above shall be obligated to be
bound by this Agreement or any other Document and any such Permitted Transferee
shall, if such Person becomes a shareholder of Gaiam, hold all shares
Transferred to such Person as a Permitted Transferee hereunder free and clear
of any restrictions under this Agreement, except for restrictions arising under
the securities laws.


 


“Person” will be
construed in the broadest sense and will include an individual, a partnership,
a corporation, a limited liability company, an association, a joint stock company,
a trust, a joint venture, an unincorporated organization, and any other entity,
including a Governmental Authority.


 


“Potential Transaction”
has the meaning given to it in Section 4.4(c).


 


“Preemptive Offer
Acceptance Notice” has the meaning given to it in Section 4.3(b).


 


“Preemptive Offer Period”
has the meaning given to it in Section 4.3(b).


 


4





















 


“Primary Shares” means, at any time, the authorized but unissued shares of
Common Stock or Common Stock held by Gaiam in its treasury.


 


“Proposed New Investor”
has the meaning given to it in Section 4.3(a).


 


“Prospectus” means
the prospectus included in a Registration Statement, including any prospectus
subject to completion, and any such prospectus as amended or supplemented by
any prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Shares and, in each case, by all other amendments
and supplements to such prospectus, including post-effective amendments, and in
each case including all material incorporated by reference therein.


 


“Proxy Shares” has
the meaning given to it in Section 2.5(b)(i).


 


“Public Offering”
means the closing of a public offering of Class A Common Stock solely for
cash pursuant to a Registration Statement declared effective under the
Securities Act, except that a Public Offering shall not include an offering of
securities to be issued as consideration in connection with a business
acquisition pursuant to Rule 145 of the Securities Act,  an offering of securities issuable pursuant
to an Equity Incentive Plan, a registration in which the only stock being
registered is Class A Common Stock issuable upon conversion of preferred
stock or debt securities which are also being registered or any registration on
any form which does not include substantially the same information as would be
required to be included in a registration statement covering the sale of
Registrable Securities hereunder.


 


“Public Sale” means
any sale, occurring simultaneously with or after a Public Offering, of
Securities to the public pursuant to an offering registered under the
Securities Act or to the public through a broker, dealer or market maker
(pursuant to the provisions of Rule 144 or otherwise).


 


“Records” has the
meaning given to it in Section 6.4(a)(ix).


 


“Redemption Agreement”
has the meaning given to it in Section 4.4(d).


 


“Registrable Shares”
means, at any time, (a) Class A Common Stock held, or hereafter
acquired, by Revolution Living and its permitted assigns and (b) any Class A
Common Stock issued as (or issuable upon the conversion or exercise of any
warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, such
above-described securities. 
Notwithstanding the foregoing, Registrable Shares shall not include any
Securities sold by a Person to the public pursuant to a Registration Statement
which has been declared effective or Rule 144, or sold in a private
transaction in which the Transferor’s rights under Article VI of
this Agreement are not assigned, in each case where the restrictive legends and
transfer restrictions with respect to Class A Common Stock are removed and
the Class A Common Stock in the hands of the purchaser is freely transferable
without any restriction or registration under the Securities Act in any public
or private transaction.


 


“Registration Statement”
means any registration statement of Gaiam which covers any of the Registrable
Shares, and all amendments and supplements to any such Registration Statement,


 


5





















 


including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.


 


“Remaining Securities”
has the meaning given to it in Section 4.3(c).


 


“Representative” of a
Person shall be construed broadly and shall include such Person’s partners,
officers, directors, employees, agents, counsel, accountants and other
representatives.


 


“Restated Articles”
means the Amended and Restated Articles of Incorporation of Gaiam, Inc.,
as amended and in effect at the time of determination, including any
certificates of designations filed with the Secretary of State of the State of
Colorado pursuant to the terms thereof.


 


“Restricted Holder”
has the meaning given to it in Section 4.1.


 


“Revolution Living”
has the meaning given to it in the Preamble.


 


“Revolution Living
Director” has the meaning given to it in Section 2.1(b).


 


“Revolution Living’s
Counsel” has the meaning given to it in Section 6.4(a)(ii).


 


“Rule 144” means
Rule 144 (including Rule 144(k) and all other subdivisions thereof)
promulgated by the Commission under the Securities Act, as such rule may
be amended from time to time, or any similar or successor rule then in
force.


 


“Rysavy” has the
meaning given in the Preamble.


 


“Sale of the Company” means (i) any sale of all or
substantially all of the assets of Gaiam and its Subsidiaries taken as a whole
or (ii) any plan of reorganization, recapitalization, merger or
consolidation involving Gaiam, except for a reorganization, recapitalization,
merger or consolidation where the holders of the combined voting power and
economics represented by the Common Stock immediately prior to such reorganization,
recapitalization, merger or consolidation own directly or indirectly at least
50% of the combined voting power and economics of the outstanding voting
securities of the company resulting from such reorganization, recapitalization,
merger or consolidation.


 


“Section 2.1 Notice”
has the meaning given to it in Section 2.1(d).


 


“Securities” means,
with respect to any Person, such Person’s “securities” as defined in Section 2(1) of
the Securities Act and includes such Person’s capital stock or other equity
interests or any options, warrants or other securities or rights that are
directly or indirectly convertible into, or exercisable or exchangeable for,
such Person’s capital stock or other equity interests.


 


“Standstill Period”
has the meaning given to it in Section 4.1.


 


“Stock” means the
Common Stock and any and all other capital stock or other equity Securities
(including, without limitation, derivative Securities therefor) of Gaiam.


 


6





















 


“Subsidiary” means,
at any time, with respect to any Person (the “Subject Person”), any
Person of which either (x) more than 50% of the Securities entitled to vote in
the election of directors or comparable Persons performing similar functions
(excluding Securities entitled to vote only upon the failure to pay dividends
thereon or other contingencies) or (y) more than a 50% interest in the profits
or capital of such Person, are at the time owned or controlled directly or
indirectly by the Subject Person or through one or more Subsidiaries of the
Subject Person.


 


“Suspension Period”
has the meaning given to it in Section 6.8.


 


“Swap Transaction”
means, with respect to Holder Securities or other securities, any swap,
participation or other arrangement that transfers to another Person, in whole
or in part, any of the economic consequences of ownership thereof.


 


“Tag-Along Right” has
the meaning given to it in Section 4.2(d)(ii).


 


“Tag-Along Sale” has
the meaning given to it in Section 4.2(d)(i).


 


“Transaction Agreement”
has the meaning given to it in the Recitals.


 


“Transfer” of
Securities shall be construed broadly and shall include any issuance, sale,
assignment, transfer, participation, gift, bequest, distribution, or other
disposition thereof, or any pledge or hypothecation thereof, placement of a
Lien thereon or grant of a security interest therein or other encumbrance
thereon, in each case whether voluntary or involuntary or by operation of law
or otherwise.


 


“Transferor” means a
Person engaging in a Transfer of Securities, and “Transferee” means a
Person acquiring Securities through a Transfer.


 


“Transfer Consent”
has the meaning given to it in Section 4.2(a).


 


“Transfer Notice” has
the meaning given to it in Section 4.2(d)(i).


 


“Trigger Date” has
the meaning given to it in Section 5.4.


 


“Wisdom” has the
meaning given to it in the Recitals.


 


“Wisdom Board” means
the board of directors of Wisdom.


 


1.2          Rules of Construction.


 


The term this “Agreement”
means this agreement together with all schedules and exhibits hereto, as the
same may from time to time be amended, modified, supplemented or restated in
accordance with the terms hereof.  The
use in this Agreement of the term “including” means “including, without
limitation.”  The words “herein,” “hereof,”
“hereunder” and other words of similar import refer to this Agreement as
a whole, including the schedules and exhibits, as the same may from time to
time be amended, modified, supplemented or restated, and not to any particular
section, subsection, paragraph, subparagraph or clause contained in this
Agreement.  All references to sections,
schedules and exhibits mean the sections of this Agreement and the


 


7





















 


schedules and exhibits attached to this Agreement,
except where otherwise stated.  The title
of and the headings of the sections and paragraphs in this Agreement are for
convenience of reference only and shall not govern or affect the interpretation
of any of the terms or provisions of this Agreement.  The use herein of the masculine, feminine or
neuter forms shall also denote the other forms, as in each case the context may
require or permit.  Where specific
language is used to clarify by example a general statement contained herein, such
specific language shall not be deemed to modify, limit or restrict in any
manner the construction of the general statement to which it relates.  The language used in this Agreement has been
chosen by the Parties to express their mutual intent, and no rule of
strict construction shall be applied against any Party.  Unless expressly provided otherwise, the
measure of a period of one month or year for purposes of this Agreement shall
be that date of the following month or year corresponding to the starting date,
provided that if no corresponding date exists, the measure shall be that date
of the following month or year corresponding to the next day following the
starting date.  For example, one month
following February 18 is March 18, and one month following March 31
is May 1.


 


ARTICLE II




GOVERNANCE RIGHTS WITH RESPECT TO GAIAM


 


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.


 


8





















 


(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


 


9





















 


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.


 


2.2          Board Meetings.


 


Gaiam shall convene meetings
of the Gaiam Board at least four times each fiscal year at regular time
intervals.  Gaiam may use video
conferencing capabilities or teleconference facilities for meetings of the
Gaiam Board and any committees thereof .


 


2.3          Expenses.


 


Gaiam shall pay or reimburse
each of the Revolution Living Directors for the reasonable out-of-pocket
expenses incurred by such Revolution Living Director in accordance with
policies relating to payment or reimbursement of expenses applicable generally
to members of the Gaiam Board, including, but not limited to, reasonable travel
and related expenses.


 


2.4          Committees.


 


The Gaiam Board may, from time to time, establish
and maintain certain committees.  To the
extent allowed under Applicable Law and rules or regulations promulgated
by the NASD and


 


10





















 


the NMS, the Gaiam Board
shall, upon the request of the Revolution Living Directors, appoint at least
one Revolution Living Director to serve on each committee formed by the Gaiam
Board.


 


2.5          Shareholder Commitments.


 


(a)           Mutual Commitments.


 


Each of Rysavy and Revolution Living agree to take all
actions reasonably requested by the other Party to cause Gaiam and the Gaiam
Board to comply with its obligations under the Documents so as to give effect
to the intent of the Parties, including all actions reasonably requested in
their respective capacities as a shareholder of Gaiam and, subject to fiduciary
duties, as a member of the Gaiam Board. 
Such actions shall include, without limitation, calling meetings of the
Gaiam Board or any committees thereof, calling meetings of the shareholders of
Gaiam, proposing actions requested by the other Party to be taken at meetings
of the Gaiam Board, committees of the Gaiam Board and/or shareholders of Gaiam,
voting in favor of any such actions, removing directors designated by such
Party on the Gaiam Board who do not vote in favor of any such actions and
proposing and adopting amendments to the Restated Articles and Bylaws of Gaiam.


 


(b)           Irrevocable Proxy Upon the Exercise of the Option.


 


(i)    In
furtherance of the agreements contained in this Agreement, effective from and
after the exercise of the Option, Rysavy hereby irrevocably grants to, and
appoints, the Chairman of Revolution Living, in such person’s capacity as an
officer of Revolution Living, and any individual who shall hereafter succeed to
such office of Revolution Living, Rysavy’s proxy and attorney-in-fact (with
full power of substitution), for and in the name, place and stead of Rysavy, to
vote a number the outstanding shares of Class B Common Stock such that
Rysavy and Revolution Living shall each be able to vote the same number of shares
of Stock, at any time and from time to time (such shares, the “Proxy Shares”),
or grant a consent or approval in respect of the Proxy Shares, or execute and
deliver a proxy to vote the Proxy Shares, in any matter on which shareholders
of Gaiam may have a right to vote, grant a consent or approve and/or execute
and deliver a proxy to vote shares, including without limitation the election
of directors.  For the avoidance of
doubt, the proxy granted by Rysavy pursuant to this Section 2.5(b)(i) is
not limited to matters addressed in this Agreement, the Transaction Agreement
or any other Document.


 


(ii)    Rysavy
hereby affirms that the irrevocable proxy set forth in Section 2.5(b)(i) is
given in connection with, and in consideration of, the execution of the Documents
by Revolution Living.  Rysavy hereby
further affirms that such irrevocable proxy is coupled with an interest and may
under no circumstances be revoked, provided, however, that such irrevocable
proxy shall terminate if Case ceases to control Revolution Living. Such
irrevocable proxy is executed and intended to be irrevocable in accordance with
the provisions of the Colorado Business Corporation Act.


 


(iii)    Rysavy
hereby authorizes and agrees to cause Gaiam to (x) identify, as of each
applicable record date, the Proxy Shares which in the absolute discretion of
Gaiam may be selected without regard as to whether Rysavy or one of his
Affiliates owns such shares or


 


11





















 


when such shares were acquired, and (y)
notify Gaiam’s transfer agent, inspector of elections, and other organizations,
persons or officials involved in the administration or processing of proxies
with respect to the subject vote, of the existence of the irrevocable proxy
under Section 2.5(b)(i), the number of shares with respect to the
subject election to which the irrevocable proxy under Section 2.5(b)(i) will
apply, the identity of the Person owning such shares and the record owner of
such Proxy Shares, and all such organizations, persons and officials are
authorized and directed to rely on such notification.  Rysavy further agrees that he shall cause all
of his Affiliates not to acquire any interest in the Stock constituting Proxy
Shares or any security which represents a derivative interest therein unless
prior to such acquisition Revolution Living and Gaiam is each notified of such
intention to acquire and an irrevocable proxy in this form (mutatis mutandis) is executed and delivered to Gaiam and
Revolution Living by such Affiliate.  Rysavy
further agrees not to own, and to cause all of his Affiliates not to own, any
Stock through a record owner other than Rysavy without complying with the
requirements of this Section 2.5(b).  Rysavy agrees to fully cooperate with Gaiam
and Revolution Living to give full effect to the intentions of this Section 2.5(b) by
executing such documents and taking such actions as are reasonably requested by
Gaiam and/or Revolution Living for such purpose.  Rysavy acknowledges that his obligations
under this irrevocable proxy are material inducements to Revolution Living to
perform its obligations under the Documents.


 


(iv)    If for any reason Revolution Living is
denied the right to vote or deliver a written consent with respect to the Proxy
Shares, because of Applicable Law or otherwise, then Rysavy and Gaiam shall
delay the vote or written consent for a reasonable period of time so as to
permit Rysavy the opportunity to vote or deliver a written consent with respect
to the Proxy Shares in such manner as Revolution Living so directs Rysavy in
writing to vote or deliver a written consent with respect to such shares and
Rysavy hereby agrees to vote such shares in accordance with such instructions
by Revolution Living, provided that Revolution Living delivers any such instructions
promptly after becoming aware of any such vote or consent.  If for any reason (A) Revolution Living
is denied the right to vote or deliver a written consent with respect to the
Proxy Shares, because of Applicable Law or otherwise, and (B) Rysavy does
not vote or deliver a written consent with respect to the Proxy Shares as directed
by Revolution Living in accordance with this Section 2.5(b)(iv),
then Rysavy and Gaiam hereby (x) agree to take all actions necessary to convert
the Class B Common Stock into Class A Common Stock including, without
limitation, approving as soon as possible the conversion in accordance with the
Restated Articles, and (y) until such time as such conversion has been effected
under the Restated Articles and any Applicable Law, Rysavy agrees to renounce
his right, except for purposes of satisfying any applicable quorum and voting
requirements under the Restated Articles and the Bylaws of Gaiam, to vote 90%
of the Class B Common Stock such that the total voting power in respect to
all shares of Class B Common Stock held by him is the same as it would be
if all such shares of Class B Common Stock were converted into shares of Class A
Common Stock.


 


12





















 


ARTICLE III




BOARD OF DIRECTORS OF WISDOM


 


3.1          Rights to Select Wisdom Board
Members.


 


Upon the Closing, Revolution Living will cause
Wisdom to increase the number of directors comprising the Wisdom Board from
seven (7) to nine (9).  Revolution
Living will cause two individuals designated by Gaiam to be appointed to the
Wisdom Board (the “Gaiam Appointees”). 
From and after the Closing, the rights of Gaiam will be set forth in the
Wisdom LLC Agreement (as defined in the Transaction Agreement).


 


ARTICLE IV




TRANSFERS OF COMMON STOCK OF GAIAM


 


4.1          Standstill With Respect to Gaiam.


 


For a period from the date
hereof until the earliest of (i) the eighteen month anniversary of the Closing,
if Revolution Living has not exercised the Option, and (ii) the expiration
of, or irrevocable written waiver by Revolution Living delivered no earlier
than fourth anniversary of the Closing, of all of Revolution Living’s rights
under Section 5.4 (such period, the “Standstill Period”),
none of Case, Revolution Living or any of their respective Subsidiaries, on the
one hand, and Rysavy or any of his Subsidiaries, on the other hand (each such
Person, a “Restricted Holder”), will, unless specifically requested or
permitted in writing in advance by Rysavy (if Case, Revolution Living and/or
one or more of their respective Subsidiaries is the Restricted Holder) or
Revolution Living (if Rysavy and/or one or more of his Subsidiaries is the
Restricted Holder) and except as set forth in this Agreement, the Transaction
Agreement or the Redemption Agreement, in any manner, directly or indirectly,
effect or seek, offer, propose (whether publicly or otherwise) or take any
other action to effect, or cause or participate in, or in any way assist,
advise or encourage any other Person to effect, seek or offer or propose (whether
public or otherwise) to effect or participate in any acquisition or agreement
to acquire, directly or indirectly, any securities or assets of Gaiam or any of
its Subsidiaries other than the exercise by Rysavy of his options to acquire up
to 200,000 shares of Class A Common Stock and other than any conversion of
Class B Common Stock into Class A Common Stock, in each case so long
as such Class A Common Stock remains held by Rysavy.


 


4.2          Restrictions on Transfers of
Securities of Gaiam.


 


(a)           General.  Except with
respect to any Transfer effected with the prior written consent of each Party
to this Agreement holding Stock (the “Transfer Consent”), during the
Standstill Period, no Party hereto (other than Gaiam) shall (i) pledge,
hypothecate or otherwise encumber or Transfer (other than to a Permitted
Transferee) any shares of Stock (collectively, “Holder Securities”), or (ii) enter
into any Swap Transaction (other than with a Permitted Transferee) with respect
to any Holder Securities.  Any attempt to
pledge, hypothecate


 


13





















 


or otherwise encumber or
Transfer any Holder Securities to anyone other than a Permitted Transferee or
enter into any Swap Transaction with respect to any Holder Securities not in
compliance with this Agreement shall be null and void and Gaiam shall not, and
shall instruct its transfer agent not to, register upon its books any pledge,
hypothecation or other encumbrance or Transfer of Holder Securities by a Party
hereto (other than Gaiam) to any Person except a Transfer not restricted by,
and in accordance with, this Agreement. 
The foregoing shall not apply to Rysavy’s Transfers of (x) a maximum of
500,000 shares of Common Stock (adjusted from time to time as a result of any
stock split, stock dividend, recapitalization or similar transaction) in the
aggregate, to any charitable or nonprofit entity pursuant to a pledge in
existence on the date hereof or created hereafter, and (y) his options to
acquire 200,000 shares of Common Stock (adjusted from time to time as a result
of any stock split, stock dividend, recapitalization or similar transaction) in
the aggregate, to Lynn Powers pursuant to an assignment agreement in effect on
the date hereof.


 


(b)           Legend.  Each
certificate evidencing shares of Stock and each certificate issued in exchange
for or upon the transfer of any Stock shall be stamped or otherwise imprinted
with a legend in substantially the following form:


 


“THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER AND
OTHER PROVISIONS CONTAINED IN A SHAREHOLDERS AGREEMENT DATED AS OF AUGUST 4,
2005 AMONG THE ISSUER OF SUCH SECURITIES (THE “COMPANY”) AND CERTAIN OF
THE COMPANY’S SHAREHOLDERS AND OTHER PERSONS. 
A COPY OF SUCH SHAREHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE
BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST.”


 


Gaiam shall
imprint such legend on certificates evidencing Stock outstanding prior to the
date hereof.


 


(c)           Permitted Transfers. 
The restrictions set forth in Section 4.2(a) shall not
apply to a Transfer to a Permitted Transferee who agrees to be bound by the
provisions of this Agreement in accordance with Section 7.7(b).


 


(d)           Tag-Along Rights.


 


(i)            If Rysavy proposes to Transfer any
of his shares of Stock in a Transfer to any Person (other than to a Permitted
Transferee and other than the exercise or conversion of any Stock, so long as the
Stock received upon such exercise or conversion remains held by Rysavy) (a “Tag
Along Sale”), Rysavy shall provide written notice of such proposed Transfer
to Revolution Living (the “Transfer Notice”), which notice shall
identify the purchaser, the number and type of Stock proposed to be sold, the
consideration offered for the Stock and any other material terms and conditions
of the proposed Transfer.  If the offer
price consists in part or in whole of consideration other than cash, the Rysavy
will provide such information, to the extent reasonably available to the
Rysavy, relating to such consideration as the


 


14





















 


Revolution Living may
reasonably request in order to evaluate such non-cash consideration.


 


(ii)           Revolution Living shall have the
right (the “Tag-Along Right”), exercisable as set forth below, to sell,
pursuant to the proposed Transfer, up to and including the number of shares of
Stock held by Revolution Living equal to Revolution Living’s Applicable Tag
Percentage of shares of Stock proposed to be Transferred in the Tag-Along Sale,
on the same terms and conditions as Rysavy and if exercising such right shall,
subject to Section 4.2(d)(v), execute and deliver all documents and
instruments which are necessary or reasonably desirable to effectuate such
sale.  For purposes of this Section 4.2(d), ”Applicable
Tag Percentage” means a fraction, the numerator of which is the number of
shares of Common Stock held by Rysavy and Revolution Living (assuming the
exercise or conversion of all Securities exercisable or convertible into Common
Stock), and the denominator of which is the number of shares of Common Stock
held by Rysavy and Revolution Living (assuming the exercise or conversion of
all Securities exercisable or convertible into Common Stock), unless all or
substantially all of the outstanding shares of Stock are being Transferred in
the Tag-Along Sale, in which case the denominator will be all shares of Stock
being sold.  Each such Tag-Along Right
shall be exercisable by delivering written notice to Rysavy within 15 days
after receipt of the Transfer Notice. 
Rysavy will have 180 days from the expiration of such 15-day period to
consummate the proposed Transfer at a price or prices no greater than the price
set forth in the Transfer Notice (provided that the Rysavy may not consummate
the proposed Tag-Along Sale unless the transferee also purchases from the
Revolution Living, assuming the Revolution Living has exercised its Tag-Along
Right in accordance with this Section 4.2(d), the shares of Stock
Revolution Living is entitled to include in such sale at the price and on the
other terms and conditions set forth in the Transfer Notice unless otherwise
agreed by Revolution Living) and on terms and conditions no more favorable to
Rysavy than those stated in the Transfer Notice.  Any shares of Stock that continue to be held
by Rysavy after such 45-day period shall again be subject to the provisions of Section 4.2,
including this Section 4.2(d).


 


(iii)          Rysavy may not grant tag-along rights
that conflict with the provisions of this Section 4.2(d) to
any equity holder other than Revolution Living without the prior written
consent of Revolution Living.


 


(iv)         Revolution Living’s rights under this Section 4.2(d) shall
expire upon the exercise of the Option.


 


(v)          In any Tag-Along Sale in which
Revolution Living participates, Revolution Living will make appropriate and
customary representations and warranties as to its title to the Holder
Securities being sold by it and its power, authority, and right to enter into
the pertinent transaction without contravention of law or contract.  Revolution Living will not be required to
make representations and warranties concerning Gaiam, its Subsidiaries or their
respective businesses, but shall be required to participate in any escrow or
indemnity for matters relating to Gaiam,


 


15





















 


its Subsidiaries or their
respective businesses agreed to by Rysavy in connection with the Tag-Along
Sale.


 


4.3          Rights To Subscribe For Securities.


 


(a)           In
the event that Gaiam proposes to issue any of its equity and/or equity-linked
Securities (the “Offered Securities”), other than Excluded Securities,
to any Person (a “Proposed New Investor”), Gaiam will deliver to
Revolution Living a written notice (the “Company Notice”) (which notice
will state the number or amount of the Offered Securities proposed to be
issued, the purchase price or exercise price therefor (to the extent known) and
any other terms or conditions of the proposed issuance) of such issuance at
least 15 days prior to the date of the proposed issuance.  For purposes of this Section 4.3,
“Excluded Securities” means Securities offered or issued (i) to
officers, directors, employees or consultants of or vendors to Gaiam (other
than those offered or issued to Rysavy or his Affiliates, which shall not be
Excluded Securities) pursuant to plans or arrangements the terms of which are
approved by the Gaiam Board, (ii) to financial institutions or lessors in
connection with commercial credit arrangements or equipment financings (so long
as they are offered or issued in transactions with primarily financing
purposes) the terms of which are approved by the Gaiam Board, (iii) pursuant
to the conversion or exercise of convertible or exercisable Securities, (iv) in
connection with bona fide acquisitions by Gaiam or its Subsidiaries, whether by
merger, consolidation, acquisition of assets, acquisition or exchange of
capital stock or otherwise, the terms of which are approved by the Gaiam Board,
(v) pursuant to a pro rata stock split or stock dividend, or (vi) pursuant
to the Transaction Agreement.


 


(b)           Revolution
Living will have the option, exercisable at any time during the 15-day period
(the “Preemptive Offer Period”) after receipt of the Company Notice, by
delivering an irrevocable written notice to Gaiam (a “Preemptive Offer
Acceptance Notice”), to subscribe for up to its pro rata share of such
Offered Securities based upon the number of shares of Stock owned by Revolution
Living at such time and Gaiam’s Fully-Diluted Capital Stock at such time.  In the case of derivative Securities acquired
by Revolution Living as a result of the offer or issuance of any employee stock
options to Rysavy or his Affiliates, Gaiam shall have the option to condition
any exercise or conversion of such Securities sold to Revolution Living on
Rysavy or his Affiliates exercising or converting such Securities.


 


(c)           Gaiam
may issue to the Proposed New Investor all or any part of such Offered
Securities as to which Revolution Living’s Preemptive Offer Acceptance Notice
has not been given by Revolution Living (the “Remaining Securities”)
within 180 days after expiration of the Preemptive Offer Period, on
substantially the same terms set forth in the Company Notice, and at a price no
less than 98% of the price referenced in such notice.  Upon the closing, which will include full payment
to Gaiam, of the sale to the Proposed New Investor of all the Remaining
Securities, Revolution Living will purchase from Gaiam, and Gaiam will sell to
Revolution Living, the Offered Securities with respect to which a Preemptive
Offer Acceptance Notice was delivered by Revolution Living, on the terms
specified in the Preemptive Offer Acceptance Notice.  In each case, any Offered Securities not
purchased by the Proposed New Investor (within such 180 day period) in
accordance with this Section 4.3 may not be sold or otherwise
disposed of until they are again offered to Revolution Living under the
procedures specified in this Section 4.3.


 


16





















 


(d)           Revolution
Living’s rights under this Section 4.3 shall expire upon the eighteen
month anniversary of the Closing if Revolution Living did not exercise the
Option.


 


4.4          Revolution Living Option.


 


(a)           Rysavy
hereby grants to Revolution Living an
option (the “Option”), exercisable at Revolution Living’s sole discretion, to
purchase from Rysavy, at a price equal to $10 per share (as equitably adjusted
for any stock splits, stock dividends or similar transactions), a number of
shares of Common Stock equal to (i) 50% of the sum of (x) all shares of
Common Stock and securities and rights exercisable or convertible into shares
of Common Stock, in each case, held by Rysavy and his Affiliates as of the date
of the exercise of the Option (provided that, for this purpose, Gaiam and its
Subsidiaries will not be considered Affiliates of Rysavy) and (y) the number of
shares of Common Stock and securities and rights exercisable or convertible
into Common Stock, in each case, held by Revolution Living and its Affiliates
as of the date of the exercise of the Option (provided that, for this purpose,
Gaiam and its Subsidiaries will not be considered Affiliates of Revolution
Living), minus (ii) the number of shares of Class A Common
Stock and securities and rights exercisable or convertible into Class A
Common Stock, in each case, held by Revolution Living and its Affiliates as of
the date of the exercise of the Option (provided that, for this purpose, Gaiam
and its Subsidiaries will not be considered Affiliates of Revolution Living)
(it being the intent of the Parties that, upon consummation of the exercise of
the Option Revolution Living (and its Affiliates) and Rysavy (and his
Affiliates) will have an equal amount of Stock).  The Option shall be exercisable first against
shares of Class A Common Stock held by Rysavy and his Affiliates and
thereafter against shares of Class B Common Stock held by Rysavy and his
Affiliates, which shares of Class B Common Stock shall convert
automatically into shares of Class A Common Stock upon transfer as
provided in the Restated Articles.  The
Option shall be exercisable at any time after the first anniversary of the date
of this Agreement and until the close of business on the eighteen month
anniversary of the Closing and shall expire if not exercised on such eighteen
month anniversary.  In order to exercise
the Option, Revolution Living shall deliver a written exercise notice to Rysavy
and to Gaiam.  Such notice shall specify
a closing date for the exercise of the Option and shall be delivered at least
fifteen days prior to such closing date. 
At the closing of the exercise of the Option, Rysavy shall sell to
Revolution Living, and Revolution Living shall purchase from Rysavy, the number
of shares of Class A Common Stock set forth above, and Rysavy shall
deliver, or cause to be delivered, to Revolution Living any applicable stock
certificates, together with such stock powers or other similar documents as are
necessary or advisable to fully and unconditionally transfer such shares of Class A
Common Stock to Revolution Living, and Revolution Living shall deliver to
Rysavy the purchase price for such shares, by wire transfer of immediately
available funds.  The shares acquired by Revolution
Living pursuant to this Section 4.4 shall be free and clear of any Liens,
other than Liens that have been created by Revolution Living and restrictions
on transfer arising under any applicable federal or state securities laws.


 


(b)           Notwithstanding the foregoing, provided
Revolution Living has made all applicable filings required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, at least 30
days prior to the closing date of the exercise of the Option, but Revolution
Living is unable to consummate the exercise of the Option prior to such expiration
date because any required consents, approvals, and authorizations necessary to
consummate the exercise of the


 


17





















 


Option have
not been obtained, then the expiration of the Option shall automatically be
extended to permit Revolution Living to obtain such consents, approvals or
authorizations.


 


(c)           Prior to the earlier of the exercise
and the expiration of the Option, neither Gaiam nor its Affiliates shall enter
into any agreement with any Person, other than Revolution Living or its
Affiliates, relating to any acquisition of or business combination with Gaiam,
whether by way of merger, purchase of capital stock, purchase of assets or
otherwise, pursuant to which all or substantially all of the assets, or all or
substantially all of the capital stock, of Gaiam would be transferred (a “Potential
Transaction”) without the prior consent of Revolution Living, which consent
may be withheld in its sole and absolute discretion, unless (i) Gaiam
delivers written notice of the Potential Transaction at least 45 days prior to
consummating the Potential Transaction, which notice includes all of the
material terms of such proposed agreement, and (ii) Rysavy permits
Revolution Living to exercise the Option prior to Gaiam’s consummation of the
Potential Transaction (even if such exercise would otherwise be prior to the
date the Option may otherwise be exercised).


 


(d)           If Gaiam has
repurchased shares of Stock from Rysavy’s estate pursuant to the Insurance and
Stock Redemption Agreement dated as of August 4, 2005 between Gaiam and
Rysavy (the “Redemption Agreement”), then Gaiam and Revolution Living
agree that any such shares of Stock shall be subject to the Option set forth in
this Section 4.4 and the shares of Stock held by Gaiam shall be
acquired first by Revolution Living upon exercise of the Option.


 


ARTICLE V




ADDITIONAL AGREEMENTS


 


5.1          Inconsistent Agreements.


 


No Party shall enter into
any agreement containing any provision which would (a) be violated or
breached in any material respect by the exercise or performance by any other Party
of any of such other Party’s rights or obligations under any Document, (b) impose
any material impairment on the ability of any Party to comply with the terms of
the Documents, (c) contain any material right of termination, amendment,
cancellation or acceleration of any obligation, if such right would be
triggered by the exercise or performance by any other Party of any of such
other Party’s rights or obligations under any Document, or (d) otherwise
conflict in any material respect with the Documents.


 


5.2          Affirmative Covenants.


 


Gaiam shall observe and
perform the following, except to the extent waived upon the written consent of
Revolution Living:


 


(a)           Transactions with Affiliates.  Gaiam shall conduct all transactions
otherwise permitted under the Documents with any of its Affiliates on terms
that are fair and reasonable and no less favorable to Gaiam than it would
obtain in a comparable arm’s-length transaction with a Person not an Affiliate.


 


18





















 


(b)           D&O Insurance; Indemnification.  Gaiam shall maintain director and officer
liability insurance, with coverage of at least $10 million, from a nationally
recognized insurance company rated “A” or above, which insurance and amount
thereof shall be acceptable to Revolution Living, and shall keep such insurance
in full force and effect.  Except as
prohibited by Applicable Law, Gaiam’s Restated Articles and Bylaws shall at all
times provide for indemnification and exculpation of the Revolution Living
Directors at least as favorable to the directors as that contained Gaiam’s
Restated Articles and Bylaws as of the date of this Agreement.


 


5.3          Sale of Gaiam.  


 


If a the Gaiam
Board approves a Sale of the Company to an independent third party (the “Approved
Sale”), Revolution Living and its Permitted Transferees agree that they
will consent to and will not raise objections to the Approved Sale and will
take all necessary and desirable actions in connection with the consummation of
the Approved Sale including but not limited to the waiver of any dissenters or
appraisal rights.  The obligations of Revolution
Living set forth in this Section 5.3 are subject to the condition
that all holders of Common Stock receive the same form and pro-rata share of
the consideration from the proceeds of any Approved Sale.


 


5.4          Buy/Sell.


 


(a)           Commencing
on the fourth anniversary of date of this Agreement (the “Trigger Date”),
Revolution Living will have the right, exercisable upon delivery of written
notice to the Rysavy (the “Buy/Sell Notice”) on or prior to 30 days
after the Trigger Date, to invoke the buy/sell procedures set forth in this Section 5.4.  The Buy/Sell Notice shall constitute an offer
by Revolution Living to (x) sell all of Revolution Living’s and its Affiliates’
shares of Common Stock to Rysavy, or (y) purchase from Rysavy all shares of
Common Stock owned by Rysavy and his Affiliates, in each case for cash, at a
per share price not less than the average of the closing sales prices of the Class A
Common Stock during the 90 calendar days prior to the delivery of the Buy/Sell
Notice (the “Buy/Sell Price”). 
The Buy/Sell Notice shall specify a closing date not fewer than 120 days
or more than 150 days from delivery of the Buy/Sell Notice.  This Section 5.4 shall be binding
on Rysavy’s estate.  If Gaiam has
repurchased shares of Stock from Rysavy’s estate pursuant to the Redemption
Agreement, then Gaiam and Revolution Living agree that any such shares of Stock
shall be included in the buy/sell set forth in this Section 5.4, and
any decision by Rysavy’s estate to sell shares pursuant to this Section 5.4
shall be binding on Gaiam.  If Gaiam has
purchased from Rysavy’s estate pursuant to the Redemption Agreement a majority
of the shares of Stock that the estate originally received from Rysavy, then
Gaiam shall make any decision on whether to buy or sell shares pursuant to this
Section 5.4, and any such decision shall be binding on Rysavy’s
estate.


 


(b)           On
or before the date that is 30 days after the date of delivery of the Buy/Sell
Notice, Rysavy shall deliver to Revolution Living a notice either accepting its
offer to purchase all shares of Common Stock owned by Rysavy and his
Affiliates, or accepting the offer of Revolution Living to sell to Rysavy all
shares of Common Stock held by Revolution Living and its Affiliates, in each
case for the Buy/Sell Price.  If Rysavy
fails to respond to the Buy/Sell Notice within such 30-day period, such failure
to respond shall be deemed Rysavy’s election to


 


19





















 


accept the offer of
Revolution Living to sell all of its and its Affiliates’ shares of Common Stock
to Rysavy.


 


(c)           If
a purchase and sale of shares under this Section 5.4 is being
consummated, at the closing date (i) the purchaser will pay, to an account
designated prior to the closing of such purchase by the seller(s), the
applicable purchase price for the shares of Common Stock being purchased by
wire transfer of immediately available funds, and (ii) the seller(s) will
deliver to the purchaser one or more certificates or book entry transfers
evidencing the Common Stock being sold, and all shares sold pursuant to this Section 5.4
shall be delivered to the purchaser free and clear of any Liens (other than
Liens arising under federal and state securities laws and Liens created by the
purchaser).  For purposes of this Section 5.4,
the Buy/Sell Price shall be equitably adjusted to reflect any stock splits,
stock dividends and similar transactions occurring after the date of delivery
of the Buy/Sell Notice.


 


(d)           The
closing of the purchase and sale of shares under this Section 5.4
shall be conditioned upon (i) no Applicable Law shall have been enacted
and no Proceeding shall be pending which prohibits or seeks to prohibit, or
materially restricts or delays, the consummation of the transactions
contemplated by this Section 5.4 or materially restricts or impairs
the ability of the purchaser to own the shares being acquired and (ii) the
purchaser and the seller(s) shall have made and/or obtained all notices,
consents, approvals, and authorizations necessary to consummate the
transactions contemplated by this Section 5.4, including without
limitation all applicable filings under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.  The
failure of any such conditions to be satisfied will delay the closing until
such conditions are satisfied but will not relieve any Party of its obligations
hereunder to consummate the closing.


 


(e)           Both
before and after the closing pursuant to this Section 5.4, each
Party agrees to use all commercially reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other Parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable, the
transactions contemplated by this Section 5.4.


 


5.5          Representations and Warranties of
Rysavy and Case.


 


(a)           Rysavy
hereby represents and warrants to the other Parties as follows: 


 


(i)            Rysavy is a natural person and has
full capacity, right, power and authority to execute and deliver this Agreement
and to perform his obligations under and to consummate the transactions
contemplated by this Agreement.  The
execution, delivery and performance by Rysavy of this Agreement have been duly
authorized by Rysavy and this Agreement has been duly executed and delivered by
Rysavy.  This Agreement constitutes a
legal, valid and binding obligation of Rysavy enforceable against Rysavy in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar Applicable
Laws affecting creditors’ rights and remedies generally, and subject, in the
case of enforceability, to general principles of equity (regardless of whether
enforcement is sought in a Proceeding at law or in equity).


 


20





















 


(ii)           The execution, delivery and
performance by Rysavy of this Agreement and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof and thereof by
Rysavy, does not or will not, as the case may be, (a) violate any
provision of Applicable Law or any Order applicable to Rysavy or any of his
properties or assets, (b) conflict with or result in any breach of any of
the terms, conditions or provisions of, or constitute (with notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration) under, or result in the creation of any Lien upon any of the
properties or assets of Rysavy under any material agreement to which he is a
party or by which Rysavy or his assets or properties are or may be bound or (c) violate
any provision of, or constitute a breach or default (with notice or lapse of
time or both) under the Restated Articles or Bylaws of Gaiam.


 


(iii)          No Permit or Order, authorization,
consent or approval of or by, or any notification of or filing with, any Person
is required in connection with the execution, delivery or performance by Rysavy
of this Agreement.


 


(iv)         Immediately upon consummation of the
Closing, Rysavy owns (A) 2,164,000 shares of Class A Common Stock,
all of which were validly issued and outstanding, fully paid and
non-assessable, (B) 5,400,000 shares of Class B Common Stock, all of
which were validly issued and outstanding, fully paid and nonassessable, and (C) options
to purchase 200,000 shares of Class A Common Stock, which were issued in
accordance with Gaiam’s Equity Incentive Plan, which have been assigned to Lynn
Powers subject to certain conditions. 
Rysavy has good and marketable title to, and sole record and beneficial
ownership of such shares of Class B Common Stock and sole record and beneficial
ownership of such shares of Class A Common Stock, other than shares of Class A
Common Stock held in one or more brokerage accounts in Rysavy’s name and over
which Rysavy exercises exclusive investment authority.  The foregoing shares and options are free and
clear of any Liens and, except as otherwise set forth in this Agreement, with
no restrictions on the voting rights thereof and not subject to any preemptive
rights, rights of first refusal or other similar rights.  Except as set forth in this Section 5.5(a)(iv),
Rysavy does not have record or beneficial ownership over any Stock.


 


(b)           Case
hereby represents and warrants to the other Parties as follows: 


 


(i)            Case is a natural person and has
full capacity, right, power and authority to execute and deliver this Agreement
and to perform his obligations under and to consummate the transactions
contemplated by this Agreement.  The
execution, delivery and performance by Case of this Agreement have been duly
authorized by Case and this Agreement has been duly executed and delivered by
Case.  This Agreement constitutes a
legal, valid and binding obligation of Case enforceable against Case in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar Applicable
Laws affecting creditors’ rights and remedies generally, and subject, in the
case of enforceability, to general principles of equity (regardless of whether
enforcement is sought in a Proceeding at law or in equity).


 


21





















 


(ii)           The execution, delivery and
performance by Case of this Agreement and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof and thereof by
Case, does not or will not, as the case may be, (a) violate any provision
of Applicable Law or any Order applicable to Case or any of his properties or
assets, (b) conflict with or result in any breach of any of the terms,
conditions or provisions of, or constitute (with notice or lapse of time or
both) a default (or give rise to any right of termination, cancellation or
acceleration) under, or result in the creation of any Lien upon any of the
properties or assets of Case under any material agreement to which he is a
party or by which Case or his assets or properties are or may be bound or (c) violate
any provision of, or constitute a breach or default (with notice or lapse of
time or both) under the charter documents or by-laws of Wisdom.


 


(iii)          No Permit or Order, authorization,
consent or approval of or by, or any notification of or filing with, any Person
is required in connection with the execution, delivery or performance by Case
of this Agreement.


 


(iv)         Immediately upon consummation of the
Closing, Revolution Living is a controlled Affiliate of Case.


 


5.6          Nondisparagement.


 


Rysavy agrees that he will not make any disclosure,
issue any public statements or otherwise cause to be disclosed any information
which is designed, intended or might reasonably be anticipated to be derogatory
or damaging to Revolution Living or Case. 
Revolution Living and Case agree that neither will make any disclosure,
issue any public statements or otherwise cause to be disclosed any information
which is designed, intended or might reasonably be anticipated to be derogatory
or damaging to Rysavy.


 


ARTICLE VI




REGISTRATION RIGHTS


 


6.1          Required Registration.


 


(a)           If
at any time from and after the expiration of the Standstill Period, Gaiam shall
be requested by Revolution Living to effect the registration under the
Securities Act of Registrable Shares having an aggregate gross offering price
(before underwriters discounts and commissions) of at least $10,000,000,
Revolution Living shall promptly give written notice to Gaiam of its
requirement to so register such Registrable Shares (which notice shall specify the
number of Registrable Shares proposed to be included in such registration and
the intended method of distribution, but which may not be pursuant to a shelf
registration), Gaiam shall, subject to Section 6.1(b) below,
promptly use its best efforts to effect such registration on an appropriate
form, under the Securities Act of the Registrable Shares which Gaiam has been
so requested to register.


 


22





















 


(b)           Anything
contained in Section 6.1(a) to the contrary notwithstanding,
Gaiam shall not be obligated to effect pursuant to Section 6.1(a) any
registration under the Securities Act except in accordance with the following
provisions:


 


(i)            Gaiam shall not be obligated to use
its best efforts to file and cause to become effective (A) more than two (2) Registration
Statements initiated pursuant to Section 6.1(a), (B) any
Registration Statement during the period starting with the date 60 days prior
to Gaiam’s good faith estimate of the date of filing of, and ending on the date
180 days after the effective date of, any other registration statement (other
than on Form S-4 or Form S-8 promulgated under the Securities Act or
any successor forms thereto) pursuant to which Primary Shares are to be or were
sold; provided, however, that in the case of clause (B) Gaiam
is actively employing in good faith all reasonable efforts to cause such
Registration Statement to become effective and the Investors were offered the
right to have the Registrable Shares included in such registration pursuant to Section 6.2
below, or (C) more than one Registration Statement pursuant to Section 6.1(a) in
any consecutive twelve-month period;


 


(ii)           Gaiam may delay the filing or
effectiveness of any Registration Statement for a period of up to 120 days
after the date of a request for registration pursuant to Section 6.1(a) if
at the time of such request Gaiam is engaged in a Material Transaction; provided,
however, that Gaiam may only so delay the filing or effectiveness of a
registration statement pursuant to this Section 6.1(b)(ii) on
one occasion during any twelve-month period; and


 


(iii)          with respect to any registration
pursuant to Section 6.1(a), Gaiam may include in such registration
any Primary Shares or Other Shares; provided, however, that if the
managing underwriter advises Gaiam that the inclusion of all Registrable
Shares, Primary Shares and Other Shares proposed to be included in such
registration would interfere with the successful marketing (including pricing)
of all such Securities, then the number of Registrable Shares, Primary Shares
and Other Shares proposed to be included in such registration shall be included
in the following order:


 


(A)          first, the Registrable Shares
held by Revolution Living requested by Revolution Living to be included in such
registration pursuant to Section 6.1(a);


 


(B)           second, the Primary Shares and
the Other Shares, as determined by Gaiam and the holders of Other Shares.


 


(c)           A
requested registration under Section 6.1(a) may be rescinded
prior to such registration being declared effective by the Commission by
written notice to Gaiam from Revolution Living; provided, however,
that such rescinded registration shall not count as a registration initiated
pursuant to this Section 6.1 for purposes of subclause (A) of
clause (i) of subsection (b) above if (x) Gaiam shall have been
reimbursed for all out-of-pocket expenses incurred by Gaiam in connection with
such rescinded registration, provided that each registration


 


23





















 


that may be requested under
this Section 6.1 may not be rescinded pursuant to clause (x) more
than two times, provided, further that such rescission may not be
made more than once in any 12-month period or (y) (1) Revolution Living
reasonably believed that the registration statement contained an untrue
statement of material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements made therein not misleading,
(2) notified Gaiam of such fact and requested that Gaiam correct such
alleged misstatement or omission and (3) Gaiam has refused to correct such
alleged misstatement or omission.


 


6.2          Piggyback Registration.


 


If at any time from and
after the expiration of the Standstill Period, Gaiam proposes for any reason to
register Primary Shares or Other Shares under the Securities Act (other than on
Form S-4 or Form S-8 promulgated under the Securities Act or any
successor forms thereto), it shall promptly give written notice to Revolution
Living of its intention so to register the Primary Shares or Other Shares and,
upon the written request, given within 15 days after delivery of any such
notice by Gaiam, of Revolution Living to include in such registration
Registrable Shares (which request shall specify the number of Registrable
Shares proposed to be included in such registration), Gaiam shall use its best
efforts to cause all such Registrable Shares to be included in such
registration on the same terms and conditions as the Securities otherwise being
sold in such registration; provided, however, that if the
managing underwriter advises Gaiam that the inclusion of all Registrable Shares
or Other Shares proposed to be included in such registration would interfere
with the successful marketing (including pricing) of Primary Shares proposed to
be registered by Gaiam, then the number of Primary Shares, Registrable Shares
and Other Shares proposed to be included in such registration shall be included
in the following order:


 


(i)            first, the Primary Shares or,
if the registration is a registration on behalf of holders of Other Shares
holding demand registration rights, the Other Shares requested to be included
in such registration;


 


(ii)           second, the Registrable Shares
held by Revolution Living and requested by Revolution Living to be included in
such registration pursuant to the terms of this Section 6.2 and the
Other Shares (if such holders are not exercising demand registration rights),
on a pari passu basis based on the number of
shares sought to be registered; and


 


(iii)          third, the Primary Shares (if
the registration is a registration on behalf of holders of Other Shares holding
demand registration rights).


 


6.3          Registrations on Form S-3.  


 


(a)           If
the number of Registrable Shares proposed to be included in the second registration
by Revolution Living as provided in Section 6.1 is reduced as a result of
advice from the managing underwriter that the inclusion of all Registrable
Shares proposed to be included in such registration would have interfered with
the successful marketing (including pricing) of all such Registrable Shares,
then for so long as Gaiam is qualified for the use of Form S-3 promulgated
under the Securities Act or any successor form thereto, at any time from and
after the expiration of the Standstill Period, Revolution Living shall have the
right to request in


 


24





















 


writing one registration on Form S-3,
or such successor form, of Registrable Shares, which request or requests shall (i) specify
the number of Registrable Shares intended to be sold or disposed of, (ii) state
the intended method of disposition of such Registrable Shares and (iii) relate
to Registrable Shares having an aggregate gross offering price (before
underwriting discounts and commissions) of at least $1,000,000, and upon
receipt of such request, Gaiam shall use its best efforts promptly to effect
the registration under the Securities Act of the Registrable Shares so
requested to be registered.  Whenever
Gaiam is required by this Section 6.3(a) to use its best
efforts to effect the registration of Registrable Shares, each of the
procedures and requirements of Section 6.1 (including but not
limited to the requirement that Gaiam notify all holders of Registrable Shares
from whom notice has not been received and provide them with the opportunity to
participate in the offering) shall apply to such registration.


 


(b)           Anything
contained in Section 6.3(a) to the contrary notwithstanding,
Gaiam shall not be obligated to effect pursuant to Section 6.3(a) any
registration under the Securities Act except in accordance with the following
provisions:


 


(i)            Gaiam shall not be obligated to
effect such registration if it is requested within six (6) months after a
registered offering of Gaiam in which Revolution Living was given the
opportunity to participate; and


 


(ii)           Gaiam may delay the filing or
effectiveness of any Registration Statement on Form S-3 for a period of up
to 90 days after the date of a request for registration pursuant to this Section 6.3
if at the time of such request Gaiam is engaged in a Material Transaction; provided,
however, that Gaiam may only so delay the filing or effectiveness of a
registration statement pursuant to this Section 6.3(b)(ii) on
one occasion during any twelve-month period.


 


6.4          Preparation and Filing.


 


(a)           If
and whenever Gaiam is under an obligation pursuant to the provisions of this Article VI
to use its best efforts to effect the registration of any Registrable Shares,
Gaiam shall, as expeditiously as practicable:


 


(i)            With respect to registrations
pursuant to Sections 6.1 and 6.2, use its best efforts to cause a
Registration Statement that registers such Registrable Shares to become and
remain effective for a period of 90 days (excluding any period during which
such effectiveness is suspended) or until all of such Registrable Shares have
been disposed of (if earlier);


 


(ii)           furnish, at least five Business Days
before filing a Registration Statement that registers such Registrable Shares,
a Prospectus relating thereto and any amendments or supplements relating to
such Registration Statement or Prospectus, to one counsel selected by, in the
case of a Registration initiated pursuant to Section 6.1(a) Revolution
Living (“Revolution Living’s Counsel”), copies of all such documents
proposed to be filed (it being understood that such five Business Day period
need not apply to successive drafts of the same document proposed to be filed
so long as such successive drafts are supplied to Revolution Living’s Counsel
in


 


25





















 


advance of the proposed
filing by a period of time that is customary and reasonable under the
circumstances);


 


(iii)          prepare and file with the Commission
such amendments and supplements to such Registration Statement and the Prospectus
used in connection therewith as may be necessary to keep such Registration
Statement effective for at least the period set forth in Section 6.4(a)(i) or
until all of such Registrable Shares have been disposed of (if earlier) and to
comply with the provisions of the Securities Act with respect to the sale or
other disposition of such Registrable Shares;


 


(iv)         notify Revolution Living’s Counsel
promptly in writing (A) of any comments by the Commission with respect to
such Registration Statement or Prospectus, or any request by the Commission for
the amending or supplementing thereof or for additional information with
respect thereto, (B) of the issuance by the Commission of any stop order
suspending the effectiveness of such Registration Statement or Prospectus or
any amendment or supplement thereto or the initiation of any proceedings for
that purpose (and Gaiam shall use its best efforts to prevent the issuance
thereof or, if issued, to obtain its withdrawal) and (C) of the receipt by
Gaiam of any notification with respect to the suspension of the qualification
of such Registrable Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purposes;


 


(v)          use its best efforts to register or
qualify such Registrable Shares under such other securities or blue sky laws of
such jurisdictions as any seller of Registrable Shares reasonably requests and
do any and all other acts and things which may be reasonably necessary or
advisable to enable such seller of Registrable Shares to consummate the
disposition in such jurisdictions of the Registrable Shares owned by such
seller; provided, however, that Gaiam will not be required to
qualify generally to do business, subject itself to general taxation or consent
to general service of process in any jurisdiction where it would not otherwise
be required so to do but for this clause (v);


 


(vi)         furnish to each seller of such
Registrable Shares such number of copies of a summary Prospectus or other
Prospectus, including a preliminary Prospectus, in conformity with the
requirements of the Securities Act, and such other documents as such seller of
Registrable Shares may reasonably request in order to facilitate the public
sale or other disposition of such Registrable Shares;


 


(vii)        use its best efforts to cause such
Registrable Shares to be registered with or approved by such other Governmental
Authorities as may be necessary by virtue of the business and operations of
Gaiam to enable the seller or sellers thereof to consummate the disposition of
such Registrable Shares;


 


(viii)       notify on a timely basis each seller of
such Registrable Shares at any time when a Prospectus relating to such
Registrable Shares is required to be delivered under the Securities Act within
the appropriate period mentioned in clause (i) of this Section 6.4(a) of
the happening of any event as a result of which the


 


26





















 


Prospectus included in such
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances then existing and, at the request of such seller, prepare and
furnish to such seller a reasonable number of copies of a supplement to or an
amendment of such Prospectus as may be necessary so that, as thereafter
delivered to the offerees of such shares, such Prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances then existing;


 


(ix)          make available for inspection by any
seller of such Registrable Shares, any underwriter participating in any
disposition pursuant to such Registration Statement and any attorney,
accountant or other agent retained by any such seller or underwriter
(collectively, the “Inspectors”), all pertinent financial, business and
other records, pertinent corporate documents and properties of Gaiam
(collectively, the “Records”), as shall be reasonably necessary to
enable them to exercise their due diligence responsibility, and cause Gaiam’s
officers, directors and employees to supply all information (together with the
Records, the “Information”) reasonably requested by any such Inspector
in connection with such Registration Statement (and any of the Information
which Gaiam determines in good faith to be confidential, and of which
determination the Inspectors are so notified, shall not be used by such seller
or such Inspector for any purpose other than exercise of such due diligence
responsibility and shall not be disclosed by the Inspectors unless (A) the
disclosure of such Information is necessary to avoid or correct a material
misstatement or omission in the Registration Statement, (B) the release of
such Information is ordered pursuant to a subpoena or other order from a court
of competent jurisdiction, (C) such Information has been made generally
available to the public or (D) the seller of Registrable Shares agrees
that it will, upon learning that disclosure of such Information is sought in a
court of competent jurisdiction, give notice to Gaiam and allow Gaiam, at Gaiam’s
expense, to undertake appropriate action to prevent disclosure of the
Information deemed confidential);


 


(x)           use its best efforts to obtain from
its independent certified public accountants a “cold comfort” letter in
customary form and covering such matters of the type customarily covered by
cold comfort letters;


 


(xi)          use its best efforts to obtain, from
its counsel, an opinion or opinions in customary form (which shall also be
addressed to Revolution Living if selling Registrable Shares in such
registration);


 


(xii)         provide a transfer agent and registrar
(which may be the same entity and which may be Gaiam) for such Registrable
Shares;


 


(xiii)        issue to any underwriter to which any
seller of Registrable Shares may sell Securities in such offering certificates
evidencing such Registrable Shares;


 


27





















 


(xiv)        list such Registrable Shares on any
national securities exchange on which any shares of the Common Stock are listed
or, if the Common Stock is not listed on a national securities exchange, use
its best efforts to qualify such Registrable Shares for inclusion on the
automated quotation system of the National Association of Securities Dealers, Inc.
(the “NASD”), National Market System (“NMS”), or such other
national securities exchange as Revolution Living shall request if the Common
Stock is not then eligible for trading on the NMS;


 


(xv)         otherwise use its best efforts to
comply with all applicable rules and regulations of the Commission, and
make available to its securityholders, as soon as reasonably practicable,
earnings statements which need not be audited covering a period of 12 months
beginning within three months after the effective date of the Registration
Statement, which earnings statements shall satisfy the provisions of Section 11(a) of
the Securities Act; and


 


(xvi)        use its best efforts to take all other
steps necessary to effect the registration of such Registrable Shares
contemplated hereby.


 


(b)           Each holder of Registrable Shares that sells
Registrable Shares pursuant to a registration under this Agreement agrees that
during such time as such seller may be engaged in a distribution of the
Registrable Shares, such seller shall comply with Regulation M promulgated
under the Exchange Act and pursuant thereto it shall, among other things: (i) not
engage in any stabilization activity in connection with the Securities of Gaiam
in contravention of such rules; (ii) distribute the Registrable Shares
under the Registration Statement solely in the manner described in the
Registration Statement; and (iii) cease distribution of such Registrable
Shares pursuant to such Registration Statement upon receipt of written notice
from Gaiam that the prospectus covering the Registrable Shares contains any
untrue statement of a material fact or omits a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing.


 


6.5          Expenses.


 


All expenses incurred by
Gaiam in complying with Section 6.4, including, without limitation,
all registration and filing fees (including all expenses incident to filing
with the NASD), fees and expenses of complying with securities and blue sky
laws, printing expenses, fees and expenses of Gaiam’s counsel and accountants
and reasonable fees and expenses of Revolution Living’s Counsel, shall be paid
by Gaiam; provided, however, that all underwriting discounts and
selling commissions applicable to the Registrable Shares and all fees and
expenses of counsel for the seller or sellers (other than reasonable fees and expenses
of Revolution Living’s Counsel), shall not be borne by Gaiam but shall be borne
by the seller or sellers thereof, in proportion to the number of Registrable
Shares sold by such seller or sellers.


 


6.6          Indemnification.


 


(a)           To
the maximum extent permitted by law, in connection with any registration of any
Registrable Shares under the Securities Act pursuant to this Article VI,
Gaiam shall indemnify and hold harmless the seller of such Registrable Shares,
each underwriter, broker


 


28





















 


or any other Person acting
on behalf of such seller, each other Person, if any, who controls any of the
foregoing Persons within the meaning of the Securities Act and each
Representative of any of the foregoing Persons, against any losses, claims,
damages or liabilities, joint or several, to which any of the foregoing Persons
may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement under which such
Registrable Shares were registered, any preliminary Prospectus or final
Prospectus contained therein, any amendment or supplement thereto or any
document incident to registration or qualification of any Registrable Shares,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading or, with respect to any Prospectus, necessary
to make the statements therein in light of the circumstances under which they
were made not misleading, or any violation by Gaiam of the Securities Act or
state securities or blue sky laws applicable to Gaiam and relating to action or
inaction required of Gaiam in connection with such registration or
qualification under such state securities or blue sky laws, and Gaiam shall
promptly reimburse such seller, such underwriter, such broker, such controlling
Person or such Representatives for any legal or other expenses incurred by any
of them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that Gaiam shall
not be liable to any such Person to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in said
Registration Statement, preliminary Prospectus, amendment, supplement or
document incident to registration or qualification of any Registrable Shares in
reliance upon and in conformity with written information furnished to Gaiam
through an instrument duly executed by such Person, or a Person duly acting on
their behalf, specifically for use in the preparation thereof; provided  further,
however, that the foregoing indemnity agreement is subject to the
condition that, insofar as it relates to any untrue statement, allegedly untrue
statement, omission or alleged omission made in any preliminary Prospectus but
eliminated or remedied in the final Prospectus (filed pursuant to Rule 424
of the Securities Act), such indemnity agreement shall not inure to the benefit
of any indemnified party from whom the Person asserting any loss, claim,
damage, liability or expense purchased the Registrable Shares which are the
subject thereof, if a copy of such final Prospectus had been timely made
available to such Indemnified Person and such final Prospectus was not
delivered to such Person with or prior to the written confirmation of the sale
of such Registrable Shares to such Person.


 


(b)           To
the maximum extent permitted by law, in connection with any registration of
Registrable Shares under the Securities Act pursuant to this Article VI,
each seller of Registrable Shares shall indemnify and hold harmless (in the
same manner and to the same extent as set forth in the paragraph (a) of
this Section 6.6) Gaiam, each underwriter or broker involved in
such offering, each other seller of Registrable Shares under such Registration
Statement, each Person who controls any of the foregoing Persons within the
meaning of the Securities Act and any Representative of the foregoing Persons
with respect to any statement or omission from such Registration Statement, any
preliminary Prospectus or final Prospectus contained therein, any amendment or
supplement thereto or any document incident to registration or qualification of
any Registrable Shares, if such statement or omission was made in reliance upon
and in conformity with written information furnished to Gaiam or such
underwriter through an instrument duly executed by such seller or a Person duly
acting on their behalf


 


29





















 


specifically for use in
connection with the preparation of such Registration Statement, preliminary
Prospectus, final Prospectus, amendment or supplement; provided, however,
that the obligation to indemnify will be several, not joint and several, among
the sellers of Registrable Shares, and the maximum amount of liability in
respect of such indemnification shall be in proportion to and limited, in the
case of each seller of Registrable Shares, to an amount equal to the proceeds
actually received by such seller from the sale of Registrable Shares effected
pursuant to such registration.


 


(c)           Promptly
after receipt by an indemnified party of notice of the commencement of any
action involving a claim referred to in the preceding paragraphs of this Section 6.6,
such indemnified party will, if a claim in respect thereof is made against an
indemnifying party, give written notice to the latter of the commencement of
such action (provided, however, that an indemnified party’s
failure to give such notice in a timely manner shall only relieve the
indemnification obligations of an indemnifying party to the extent such
indemnifying party is prejudiced by such failure).  In case any such action is brought against an
indemnified party, the indemnifying party will be entitled to participate in
and to assume the defense thereof, jointly with any other indemnifying party
similarly notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be responsible for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof; provided, however, that if any indemnified party
shall have reasonably concluded that there may be one or more legal or
equitable defenses available to such indemnified party which are in addition to
or conflict with those available to the indemnifying party, or that such claim
or litigation involves or could have an effect upon matters beyond the scope of
the indemnity agreement provided in this Section 6.6, the
indemnifying party shall not have the right to assume the defense of such
action on behalf of such indemnified party and such indemnifying party shall
reimburse such indemnified party and any Person controlling such indemnified
party for that portion of the reasonable fees and expenses of any counsel (plus
appropriate special and local counsel) retained by the indemnified party which
are reasonably related to the matters covered by the indemnity agreement
provided in this Section 6.6. 
Notwithstanding the foregoing, the indemnity agreement set forth in Section 6.6(a) shall
not apply to amounts paid in settlement if such settlement is effected without
the written consent of Gaiam (which consent shall not be unreasonably
withheld).


 


(d)           If
the indemnification provided for in this Section 6.6 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, claim, damage or liability referred to herein, then the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall contribute to the amounts paid or payable by such indemnified party as a
result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other hand in connection with the
statements or omissions which resulted in such loss, claim, damage or liability
as well as any other relevant equitable considerations; provided, however,
that the maximum amount of liability in respect of such contribution shall be
limited, in the case of each seller of Registrable Shares, to an amount equal
to the proceeds actually received by such seller from the sale of Registrable
Shares effected pursuant to such registration. 
The relative fault of the indemnifying party and of the indemnified


 


30





















 


party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates
to information supplied by the indemnifying party or by the indemnified party
and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.


 


(e)           The
indemnification and contribution provided for under this Article VI
will remain in full force and effect regardless of any investigation made by or
on behalf of the indemnified party and will survive the transfer of Securities.


 


(f)            The
indemnification required by this Section 6.6 will be made by
periodic payments during the course of the investigation or defense, as and
when bills are received or expenses incurred, subject to prompt refund in the
event any such payments are determined not to have been due and owing
hereunder.


 


6.7          Underwriting Agreement.


 


(a)           Notwithstanding
the provisions of Sections 6.4 and 6.6, to the extent that the
sellers of Registrable Shares in a proposed registration shall enter into an
underwriting or similar agreement, which agreement contains provisions covering
one or more issues addressed in such sections of this Article VI,
the provisions contained in such sections of this Article VI addressing
such issue or issues shall be of no force or effect with respect to such
registration, but this provision shall not apply to Gaiam if Gaiam is not a
party to the underwriting or similar agreement.


 


(b)           If
any registration pursuant to Section 6.1 or Section 6.3
is requested to be an underwritten offering, Gaiam shall negotiate in good
faith to enter into a reasonable and customary underwriting agreement with the
underwriters thereof.  Gaiam shall be
entitled to receive indemnities from lead institutions, underwriters, selling
brokers, dealer managers and similar securities industry professionals
participating in the distribution, to the same extent as provided above with
respect to information so furnished in writing by such Persons specifically for
inclusion in any Prospectus or Registration Statement and to the extent
customary given their role in such distribution.


 


(c)           No
holder of Registrable Shares may participate in any registration hereunder that
is underwritten unless such holder agrees (i) to sell such holder’s
Registrable Shares proposed to be included therein on the basis provided in any
underwriting arrangements acceptable to Gaiam and Revolution Living and (ii) as
expeditiously as possible, notify Gaiam of the occurrence of any event
concerning such holder as a result of which the Prospectus relating to such
registration contains an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.


 


6.8          Suspension.


 


Anything contained in this Article VI
to the contrary notwithstanding, Gaiam may (not more than once with respect to
each registration), by notice in writing to each holder of Registrable Shares
to which a Prospectus relates, require such holder to suspend, for up to 90


 


31





















 


days (the “Suspension Period”), the use of
any Prospectus included in a Registration Statement filed under Section 6.1
, 6.2 or 6.3 if a Material Transaction exists that would require
an amendment to such Registration Statement or supplement to such Prospectus
(including any such amendment or supplement made through incorporation by
reference to a report filed under Section 13 of the Exchange Act).  The period during which such Prospectus must
remain effective shall be extended by a period equal to the Suspension
Period.  Gaiam may (but shall not be
obligated to) withdraw the effectiveness of any Registration Statement subject
to this provision.


 


6.9          Information by Holder.


 


Each holder of Registrable
Shares to be included in any registration shall furnish to Gaiam and the
managing underwriter such written information regarding such holder and the
distribution proposed by such holder as Gaiam or the managing underwriter may
reasonably request in writing and as shall be reasonably required in connection
with any registration, qualification or compliance referred to in this Article VI.


 


6.10        Exchange Act Compliance.


 


So long as the Class A
Common Stock is registered pursuant to the Exchange Act, Gaiam shall comply
with all of the reporting requirements of the Exchange Act (whether or not it
shall be required to do so) and shall comply with all other public information
reporting requirements of the Commission, which are conditions to the
availability of Rule 144 for the sale of the Common Stock, and Gaiam shall
cooperate with each holder of Registrable Shares in supplying such information
as may be reasonably necessary for such holder to complete and file any
information reporting forms presently or hereafter required by the Commission
as a condition to the availability of Rule 144.


 


6.11        No Conflict of Rights.


 


Gaiam represents and
warrants to Revolution Living that the registration rights granted to
Revolution Living hereby do not conflict with any other registration rights
granted by Gaiam.  Gaiam shall not, after
the date hereof, grant any registration rights which conflict with or impair,
or have any priority over, the registration rights granted hereby, without the
prior consent of Revolution Living (provided that this Section 6.11
shall not prohibit the grant of pari-passu
rights).  In any underwritten public
offering, the managing underwriter shall be a nationally recognized investment
banking firm selected by Gaiam.


 


6.12        Transfer of Registration Rights.


 


The registration rights
provided in this Article VII may be Transferred by Revolution
Living to any Permitted Transferee of Revolution Living that acquires at least
twenty-five percent (25%) of (x) all of the shares of Common Stock held by
Revolution Living at the time of the Transfer and (y) any rights to acquire
shares under the Transaction Agreement (so long as such Transfer does not
violate any provision of this Agreement), in each case so long as Gaiam is,
within a reasonable time after such transfer, furnished with written notice of
the name and address of such Transferee and the securities with respect to which
such registration rights are being assigned.


 


32





















 


6.13        Termination.


 


This Article VI
shall terminate and be of no further force or effect, as to Revolution Living,
upon such time as Rule 144 or another
similar exemption under the Securities Act is available for the sale of all of
Revolution Living’s Registrable Shares in a single transaction without regard
to volume limitations; provided, however, that Sections
6.5 and 6.6 shall survive the termination of this Article VI
to the extent they continue to apply to a prior registration of Registrable
Securities.


 


ARTICLE VII




MISCELLANEOUS


 


7.1          Amendment.


 


This Agreement may not be
modified or amended, or any of the provisions hereof waived, except by written
agreement of each of the Parties.


 


7.2          Waivers; Extensions.


 


No course of dealing between
or among any Parties or any delay in exercising any rights hereunder will
operate as a waiver of any rights of any Party. 
The failure of any Party to enforce any of the provisions of this
Agreement will in no way be construed as a waiver of such provisions and will
not affect the right of such Party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.


 


7.3          Termination.


 


The provisions of this
Agreement, except as otherwise expressly provided in this Agreement (such as Section 6.13
hereof), shall terminate upon the first to occur of (a) the consummation
of any liquidation or dissolution of Gaiam approved by each Party (other than Gaiam),
(b) the approval in writing of such termination by each Party (including
Gaiam), (c) Revolution Living and its Permitted Transferees beneficially
owning, at any time from and after the Closing, in the aggregate fewer than
five percent (5%) of the Fully-Diluted Common Stock, (d) Rysavy and his
Permitted Transferees beneficially owning in the aggregate fewer than five
percent (5%) of the Fully-Diluted Common Stock, (e) the eighteen month
anniversary of the Closing, if Revolution Living has not exercised the Option,
and (f) the termination of the Transaction Agreement pursuant to Section 9.1
thereof.  Notwithstanding the foregoing,
a termination of this Agreement under clause (e) above shall not terminate
the provisions of Article VI.


 


7.4          Severability.


 


It is the desire and intent
of the Parties that the provisions of this Agreement be enforced to the fullest
extent permissible under the law and public policies applied in each
jurisdiction in which enforcement is sought. 
Accordingly, in the event that any provision of this Agreement would be
held in any jurisdiction to be invalid, prohibited or unenforceable for any
reason, such


 


33





















 


provision, as to such jurisdiction, shall be
ineffective, without invalidating the remaining provisions of this Agreement or
affecting the validity or enforceability of this Agreement or such provision in
any other jurisdiction.  Notwithstanding
the foregoing, if such provision could be more narrowly drawn so as not be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of
such provision in any other jurisdiction.


 


7.5          Entire Agreement.


 


This Agreement and the other
agreements referred to herein and to be executed and delivered in connection
herewith embody the entire agreement and understanding among the Parties with
respect to the subject matter hereof and thereof and supersede and preempt any
and all prior and contemporaneous understandings, agreements, arrangements or
representations by or among the Parties, written or oral, which may relate to
the subject matter hereof or thereof in any way.  Other than this Agreement, the other
Documents and the other agreements referred to herein and therein to be
executed and delivered in connection herewith and therewith, there are no other
agreements continuing in effect relating to the subject matter hereof.


 


7.6          Independence of Agreements,
Covenants, Representations and Warranties.  


 


All agreements and covenants
hereunder shall be given independent effect so that if a certain action or
condition constitutes a default under a certain agreement or covenant, the fact
that such action or condition is permitted by another agreement or covenant
shall not affect the occurrence of such default, unless expressly permitted
under an exception to such initial covenant. 
In addition, all representations and warranties hereunder shall be given
independent effect so that if a particular representation or warranty proves to
be incorrect or is breached, the fact that another representation or warranty
concerning the same or similar subject matter is correct or is not breached
will not affect the incorrectness of or a breach of a representation and
warranty hereunder.  The exhibits and
schedules attached hereto are hereby made part of this Agreement in all
respects.


 


7.7          Successors and Assigns.


 


(a)           Except
as otherwise provided herein, including Section 7.7(c) below,
this Agreement will bind and inure to the benefit of and be enforceable by
Gaiam and its successors and assigns and Rysavy and Revolution Living and any
subsequent holders of Registrable Shares and the respective successors and
assigns of each of them, so long as they hold Registrable Shares.  None of the provisions hereof shall create,
or be construed or deemed to create, any right to employment in favor of any
Person by Gaiam or any of its Subsidiaries. 
This Agreement is not intended to create any third party beneficiaries.


 


(b)           Without
limiting the generality of Section 7.7(a), any Permitted
Transferee, other than a Permitted Transferee under clause (iii) of the
definition of “Permitted Transferee,” shall (i) execute and deliver to
Gaiam an agreement to be bound by this Agreement reasonably satisfactory in
form and substance to Gaiam, Revolution Living and Rysavy and


 


34





















 


(ii) have all of the
rights and be bound by all of the obligations hereunder of the Transferring
Party for all purposes hereunder.


 


(c)           Notwithstanding
anything to the contrary contained herein, a Transferee in a Public Sale shall
not have any rights or obligations under this Agreement with respect to the
Holder Securities Transferred to it.


 


(d)           In
the event additional Holder Securities are issued by Gaiam to a Party at any
time during the term of this Agreement, either directly or upon the exercise or
exchange of any Securities convertible of exercisable into Common Stock, such
additional Holder Securities shall, as a condition to such issuance, become
subject to the terms and provisions of this Agreement.


 


7.8          Counterparts; Facsimile Signatures.


 


This Agreement may be
executed in any number of counterparts, and each such counterpart hereof shall
be deemed to be an original instrument, but all such counterparts together
shall constitute but one agreement. 
Facsimile counterpart signatures to this Agreement shall be acceptable
and binding.


 


7.9          Remedies.


 


(a)           Each
Party shall have all rights and remedies reserved for such Person pursuant to
this Agreement and all of the rights that such holder has under any law or
equity.  Any Person having any rights
under any provision of this Agreement will be entitled to enforce such rights
specifically, to recover damages by reason of any breach of any provision of
this Agreement and to exercise all other rights granted by law or equity.


 


(b)           The
Parties agree that if any Party seeks to resolve any dispute arising under this
Agreement pursuant to a legal proceeding.


 


(c)           It
is acknowledged that it will be impossible to measure in money the damages that
would be suffered by any Party if any other Party fails to comply with any of
the obligations imposed on it upon them in this Agreement or in the Restated
Articles or Bylaws and that in the event of any such failure, the aggrieved
Party will be irreparably damaged and will not have an adequate remedy at
law.  Any such aggrieved Party shall, therefore,
be entitled to equitable relief, including specific performance, to enforce
such obligations, and if any action should be brought in equity to enforce any
of the provisions of this Agreement, none of the Parties shall raise the
defense that there is an adequate remedy at law.


 


7.10        Notices.


 


All notices or other
communications which are required or otherwise delivered hereunder shall be
deemed to be sufficient and duly given if contained in a written instrument (a) personally
delivered or sent by telecopier, (b) sent by nationally-recognized
overnight courier guaranteeing next Business Day delivery or (c) sent by
first class registered or certified mail, postage prepaid, return receipt
requested, addressed as follows:


 


35





















 


if to Gaiam, to:


 


Gaiam, Inc.


360 Interlocken Blvd.

Broomfield, Colorado 80021


Telephone:            303-222-3645


Telecopy:              303-222-3609


Attention:              Jirka
Rysavy


 


With a copy to:


 


Bartlit Beck Herman Palenchar & Scott LLP


1899 Wynkoop, Suite 800


Denver, Colorado 80202


Telephone:            303-592-3100


Telecopy:              303-592-3140


Attention:              Thomas
R. Stephens


 


if to Rysavy, to:


 


Jirka Rysavy


c/o Gaiam, Inc.


360 Interlocken Blvd.

Broomfield, Colorado 80021


Telephone:            303-222-3645


Telecopy:              303-222-3609


 


With a copy to:


 


Bartlit Beck Herman Palenchar & Scott LLP


1899 Wynkoop, Suite 800


Denver, Colorado 80202


Telephone:            303-592-3100


Telecopy:              303-592-3140


Attention:              Thomas
R. Stephens


 


if to the Purchaser, to:


 


Revolution Living LLC


1717 Rhode Island Avenue, N.W.


Washington, D.C. 20036


Telephone:            (202)
776-1405


Telecopier:            (202)
776-1499


Attention:              Ronald
A. Klain


 


36





















 


With a copy to:


 


O’Melveny & Myers LLP

1625 Eye Street, N.W. 

Washington, D.C. 20006


Telephone:            (202) 383-5110

Telecopier:            (202) 383-5414

Attention:              David G. Pommerening


 


or to such other address as the Party to whom notice is to be given may
have furnished to each other Party in writing in accordance herewith.  Any such notice or communication shall be
deemed to have been received (i) when delivered, if personally delivered, (ii) when
sent, if sent by telecopy on a Business Day (or, if not sent on a Business Day,
on the next Business Day after the date sent by telecopy), (iii) on the
first Business Day after dispatch, if sent by nationally recognized, overnight
courier guaranteeing next Business Day delivery and (iv) on the fifth
Business Day following the date on which the piece of mail containing such
communication is posted, if sent by mail.


 


7.11        Governing Law; Waiver of Jury Trial. 


 


(a)           All
questions concerning the construction, interpretation and validity of this
Agreement shall be governed by and construed and enforced in accordance with
the domestic laws of the State of Delaware, without giving effect to any choice
or conflict of law provision or rule (whether in the State of Delaware or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware. 
In furtherance of the foregoing, the internal law of the State of
Delaware will control the interpretation and construction of this Agreement,
even if under such jurisdiction’s choice of law or conflict of law analysis,
the substantive law of some other jurisdiction would ordinarily apply.  Notwithstanding the foregoing provisions of this
Section 7.11, those provisions of this Agreement that relate to the
internal governance of Gaiam, and are required by Colorado corporate law to be
governed by such, shall be governed by and construed and enforced in accordance
with the internal laws of the State of Colorado.


 


(b)           BECAUSE
DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST
QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE
PARTIES WISH APPLICABLE LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE
PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS.  THEREFORE, TO ACHIEVE
THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION,
THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS
AGREEMENT OR ANY DOCUMENTS RELATED HERETO.


 


37





















 


7.12        Further Assurances.


 


Each Party shall do and
perform or cause to be done and performed all such further acts and things and
shall execute and deliver all such other agreements, certificates, instruments,
and documents as any other Party reasonably may request in order to carry out
the provisions of this Agreement and the consummation of the transactions
contemplated hereby.


 


7.13        Conflicting Agreements.


 


No Party shall enter into
any shareholders agreements or arrangements of any kind with any Person with
respect to any Securities on terms inconsistent with the provisions of this
Agreement (whether or not such agreements or arrangements are with Persons that
are not Parties to this Agreement), including agreements or arrangements with
respect to the acquisition or disposition of Securities in a manner which is
inconsistent with this Agreement.


 


7.14        No Third Party Reliance.


 


Anything contained herein to
the contrary notwithstanding, the representations and warranties of Gaiam
contained in this Agreement (a) are being given by Gaiam as an inducement
to the other Parties to enter into this Agreement and the other Documents (and
Gaiam acknowledges that such other Parties have expressly relied thereon) and (b) are
solely for the benefit of such Parties. 
Accordingly, no third party (including, without limitation, any other
holder of capital stock of Gaiam) or anyone acting on behalf of any thereof
other than the Parties (other than Gaiam), shall be a third party or other
beneficiary of such representations and warranties and no such third party
shall have any rights of contribution against the Parties with respect to such
representations or warranties or any matter subject to or resulting in
indemnification under this Agreement or otherwise.


 


*  
*   *   *   *


 


38





















 


IN WITNESS
WHEREOF, the undersigned have duly executed this Shareholders Agreement as of
the date first written above.


 


	
   

  	
  GAIAM:

  
	
   

  	
   

  
	
   

  	
  GAIAM, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RYSAVY:

  
	
   

  	
   

  
	
   

  	
  JIRKA RYSAVY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  REVOLUTION LIVING:

  
	
   

  	
   

  
	
   

  	
  REVOLUTION LIVING LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CASE:

  
	
   

  	
   

  
	
   

  	
  STEPHEN M. CASE

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
				



 


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