Partnership Interest Purchase Agreement – Navarre Corp. and FUNimation

PARTNERSHIP INTEREST PURCHASE AGREEMENT

This Agreement is made as of March 31, 2011, by and among FUNimation GP, LLC,
a Texas limited liability company (“Buyer GP“), Anime LP Holdings, LLC, a
Texas limited liability company (“Buyer ALP“), FUNimation LP, LLC, a
Texas limited liability company (“Buyer FLP” and together with Buyer GP
and Buyer ALP, the “Buyers“), Navarre CP, LLC, a Minnesota limited
liability company (“Navarre CP“), Navarre CS, LLC, a Minnesota limited
liability company (“Navarre CS“), Navarre CLP, LLC, a Minnesota limited
liability company (“Navarre CLP” and together with Navarre CP and Navarre
CS, the “Sellers“), and Navarre Corporation, a Minnesota corporation
(“Navarre“).

RECITALS

A. Navarre CP owns all of the general partnership interests in FUNimation
Productions, Ltd., a Texas limited partnership (“Productions Company“);

B. Navarre CLP owns all of the limited partnership interests in Productions
Company;

C. Navarre CS owns all of the general partnership interests in animeOnline,
Ltd., a Texas limited partnership (“Anime Online and together with
Productions Company, the “Companies“);

D. Navarre CLP owns all of the limited partnership interests in Anime Online;

E. Buyers desire to purchase all of the outstanding limited partnership
interests and general partnership interests of Productions Company and Anime
Online (collectively, the “Partnership Interests“), and Sellers desire to
cause the sale of the Partnership Interests to Buyers on the terms and
conditions hereinafter set forth; and

F. Navarre wishes to undertake certain obligations hereunder.

NOW, THEREFORE, in consideration of the foregoing and the mutual promises set
forth below, the parties agree as follows:

ARTICLE 1
DEFINITIONS

The capitalized terms referred to below have the meanings indicated (and
other capitalized terms are defined elsewhere in this Agreement):

“Accounts Payable” means the accrued or outstanding accounts payable
of each of Productions Company and Anime Online, consistent with past practices,
relating to the time period prior to the Closing Date (whether or not invoiced
as of the Closing Date) but in all events exclusive of the payments due to
Geneon Entertainment USA referenced in Section 5.4 hereof.

“Accounts Receivable” means each of Productions Company153s and Anime
Online153s accounts and notes receivable, deferred charges, chattel paper and
other rights to receive payments prior to the Closing Date, consistent with past
practices.

“Agreement” means this Partnership Interest Purchase Agreement and the
schedules and exhibits hereto and the other agreements attached hereto or made a
part of this Agreement.

“Anime Online” has the meaning set forth in the introductory
paragraph.

“Applicable Law” means all laws, statutes, treaties, rules, codes,
ordinances or regulations, of any Governmental Authority.

“Basket” has the meaning set forth in Section 7.1(b).

“Buyer ALP” has the meaning set forth in the introductory paragraph.

“Buyer FLP” has the meaning set forth in the introductory paragraph.

“Buyer GP” has the meaning set forth in the introductory paragraph.

“Buyers” has the meaning set forth in the introductory paragraph.

“Cap” has the meaning set forth in Section 7.1(b).

“Closing” means the actual delivery of the instruments for conveyance
of the Partnership Interests, and the exchange and delivery by the parties of
the other documents and instruments contemplated by this Agreement, which will
take place at the offices of Winthrop & Weinstine, P.A., 225 South Sixth
Street, Suite 3500, Minneapolis, Minnesota, or such other location as the
parties may agree.

“Closing Date” means March 31, 2011.

“Closing Date Debt” means all Indebtedness, if any, existing on the
Funding Date.

“Closing Date Debt Payoff Amount” means the aggregate amount necessary
to fully repay and retire all Closing Date Debt.

“Closing Payments” has the meaning set forth in Section 2.3.

“Code” means the Internal Revenue Code of 1986, as amended.

“Conflict of Interest” has the meaning set forth in Section 7.3(b).

“Companies” has the meaning set forth in the introductory paragraph.

“Distribution Agreement” has the meaning set forth in Section 6.1.

“Effective Time” shall be as of 11:59 p.m. on the Closing Date.

“Employment Agreement” has the meaning set forth in Section 5.8.

“Employee Policies and Procedures” has the meaning set forth in
Section 3.8.

“Employment and Labor Agreements” has the meaning set forth in Section
3.8.

“Encumbrances” means any mortgage, pledge, option, easement, deed of
trust, right-of-way, encroachment, restriction, lien, charge, claim, security
interest, easement or other encumbrances of any kind or nature.

“ERISA” means the Employee Retirement Income Security Act of 1974, as
amended.

“ERISA Affiliate” has the meaning set forth in Section 3.9.

“Fundamental Representations” has the meaning set forth in Section
7.1.

“Funding Date” means April 1, 2011.

“Governmental Authority” means any national, federal, state,
departmental, county, municipal, regional or other governmental authority,
agency, board, body, instrumentality or court in whatever country having
jurisdiction in whole or in part over the Companies.

“Guaranty Agreement” means that certain Guaranty Agreement, dated May
29, 2007, by Navarre in favor of Landlord relating to the Lease.

“Indebtedness” means, with respect to the Companies, any indebtedness
for borrowed money, whether short term or long term and whether interest bearing
or non-interest bearing, including, without limitation, capital or operating
leases, and all interest, fees and other expenses owed with respect to such
indebtedness. Notwithstanding the foregoing and for the avoidance of doubt,
accounts payable incurred in the ordinary course and accrued expenses and
liabilities shall be specifically excluded from the term “Indebtedness” for the
purposes of this Agreement.

“Indemnification Period” has the meaning set forth in Section 7.1(c).

“Indemnified Party” has the meaning set forth in Section 7.3(a).

“Indemnifying Party” has the meaning set forth in Section 7.3(a).

“knowledge of the Companies, the Sellers or Navarre“, or words of
similar import, shall mean the actual knowledge of each of Cary L. Deacon, J.
Reid Porter, Ryan F. Urness, Diane D. Lapp, Linda A. Ruehle, Margo McManus,
Mitchell Miller, Michael Janousek, Kimberly Woebler, Lina Shurslep and Jeffrey
Mehr.

“Landlord” shall mean FMBP Industrial I, LP or its successors and
assigns or any Persons making any claim against Sellers, Navarre or their
lenders relating to the Lease.

“Lease” shall mean the Lease, dated May 29, 2007, between Productions
Company and Landlord, relating to premises leased in Flower Mound, Texas.

“Letter of Credit” means one or more Letter of Credit from Capital One
Leverage Finance Corp. and/or Wells Fargo Foothill, LLC in favor of Landlord,
issued to secure a release or modification of Navarre153s obligations under the
Guaranty Agreement.

“Letter of Undertaking” has the meaning set forth in Section 5.9.

“Logistics Agreement” has the meaning set forth in Section 6.1.

“Loss” or “Losses” means each and all of the following items to
the extent actually paid or incurred: losses, liabilities, damages, judgments,
fines, costs, penalties, amounts paid in settlement and reasonable out-of-pocket
costs and expenses incurred in connection therewith (including, without
limitation, costs and expenses of suits and proceedings, and reasonable fees and
disbursements of counsel), but net of any insurance proceeds actually received
by the Indemnified Party with respect to such Losses.

“material” and “materially“, as used in Article 3, shall refer
to the condition (financial or otherwise), operations as currently conducted,
and properties or liabilities of the Companies, in each case, taken as a whole.

“Navarre” has the meaning set forth in the introductory paragraph.

“Navarre CLP” has the meaning set forth in the introductory paragraph.

“Navarre CLP Anime Online Limited Partnership Interests” has the
meaning set forth in Section 2.1.

“Navarre CLP Productions Company Limited Partnership Interests” has
the meaning set forth in Section 2.1.

“Navarre CS” has the meaning set forth in the introductory paragraph.

“Navarre CS General Partnership Interests” has the meaning set forth
in Section 2.1.

“Navarre CP” has the meaning set forth in the introductory paragraph.

“Navarre CP General Partnership Interests” has the meaning set forth
in Section 2.1.

“NLRB” has the meaning set forth in Section 3.8.

“Notice of Claim” has the meaning set forth in Section 7.1(c).

“Partnership Interests” has the meaning set forth in the introductory
paragraph.

“Party” means Sellers or Buyers, and “Parties” means all of
them.

“Person” means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, any other business entity or a
Governmental Authority.

“Plans” has the meaning set forth in Section 3.9.

“Pre-Closing Periods” has the meaning set forth in Section 3.12.

“Productions Company” has the meaning set forth in the introductory
paragraph.

“Purchase Price” has the meaning set forth in Section 2.2.

“Records” has the meaning set forth in Section 5.1.

“Returns” has the meaning set forth in Section 3.12.

“Securities Act” has the meaning set forth in Section 4.4.

“Seller Apportioned Taxes” has the meaning set forth in section
2.6(a).

“Seller Taxes” has the meaning set forth in Section 2.6(a).

“Sellers” has the meaning set forth in the introductory paragraph.

“Taxes” means all state, local or foreign taxes, social security
contributions, fees, imposts, levies or other assessments imposed by any taxing
Governmental Authority, including, without limitation, all net income, gross
receipts, sales, use, ad valorem, value added, transfer, recording, franchise,
profits, inventory, capital stock, license, withholding, payroll, stamp,
occupation taxes, real and personal property taxes, customs duties or other
similar fees, assessments and charges, however denominated, together with all
interest, penalties, surcharges, additions to tax or additional amounts imposed
by any taxing Governmental Authority, and any transfer liability in respect of
any of the foregoing taxes.

“Tax Return” means any report, return, statement or other written
information supplied, or required to be supplied, to any taxing Governmental
Authority in connection with or relating to any Taxes.

“Termination” has the meaning set forth in Section 5.8.

“Third Party Claim” has the meaning set forth in Section 7.3(a).

“Transition Services Agreement” has the meaning set forth in Section
6.1.

ARTICLE 2
PURCHASE AND SALE OF PARTNERSHIP INTERESTS

2.1 Transfer of Partnership Interests. Upon the terms and
subject to the conditions of this Agreement, at the Closing and as of the
Effective Time, (i) Navarre CP shall sell to Buyer GP, and Buyer GP shall
purchase from Navarre CP, all of the general partnership interests of
Productions Company held by Navarre CP (the “Navarre CP General Partnership
Interests“), (ii) Navarre CLP shall sell to Buyer FLP, and Buyer FLP shall
purchase from Navarre CLP, all of the limited partnership interests of
Productions Company held by Navarre CLP (the “Navarre CLP Productions
Company Limited Partnership Interests“), (iii) Navarre CS shall sell to
Buyer

GP, and Buyer GP shall purchase from Navarre CS, all of the general
partnership interests of Anime Online held by Navarre CS (the “Navarre CS
General Partnership Interests“), and (iv) Navarre CLP shall sell to Buyer
ALP, and Buyer ALP shall purchase from Navarre CLP, all of the limited
partnership interests of Anime Online held by Navarre CLP (the “Navarre CLP
Anime Online Limited Partnership Interests“), free and clear of all
Encumbrances. In each case, such sales and purchases shall be made pursuant to
an Assignment of Partnership Interest substantially in the form attached hereto
as Exhibit D.

2.2 Purchase Price. Buyers shall pay Sellers the aggregate
amount of $24,000,000.00 as full consideration for the Partnership Interests
(the “Purchase Price“) on the Funding Date.

2.3 Payment Terms. The Purchase Price shall be paid by
Buyers to Sellers as set forth on Schedule 2.3 attached hereto by wire
transfers of immediately available funds on the Funding Date to an account
designated by each Seller in writing not less than five (5) business days prior
to the Funding Date (the “Closing Payments“).

2.4 Closing. The Closing will take place at the offices of
Winthrop & Weinstine, P.A., 225 South Sixth Street, Suite 3500, Minneapolis,
Minnesota, on March 31, 2011, or on such other date and at such other place as
the Parties may agree in writing. At Closing, Sellers will deliver or cause to
be delivered to Buyers the documents identified in Section 6.1 and Buyers will
deliver to Sellers the documents identified in Section 6.2.

2.5 Satisfaction of Indebtedness. On or prior to the Funding
Date, in addition to such other actions as may be provided for herein, each of
the Companies shall have either:

(a) fully and irrevocably paid, satisfied and retired in all respects all
Indebtedness that if not satisfied prior to Funding Date would constitute
Closing Date Debt and obtained all final payoff letters, releases, lien
discharges and other evidences thereof all in form and substance reasonably
satisfactory to Buyers and caused all liens on any of its assets arising
pursuant to such Indebtedness or other collateral with respect thereto, to have
been fully and irrevocably satisfied, removed, released and discharged in all
respects and duly filed and recorded, or caused to have been duly filed and
recorded, such UCC-3 termination statements and other evidences of the
satisfaction, removal and discharge thereof all in form and substance reasonably
satisfactory to Buyers; or

(b) obtained irrevocable payoff letters, releases and lien discharges in
advance executed by the lenders with respect to the Closing Date Debt and all
third parties entitled to enforce the payment of such Closing Date Debt or
secured by any collateral pledged therefor, each in form and substance
reasonably satisfactory to Buyer, that (i) establish the Closing Date Debt
Payoff Amount to be paid on the Funding Date and (ii) provide that upon the
payment of such amount on the Funding Date, all Indebtedness relating
thereto and all liens on any of assets arising pursuant to such Indebtedness or
other collateral with respect thereto, will be automatically, fully and
irrevocably satisfied, removed, released and discharged in all respects and all
UCC-3 termination statements and other evidences of the satisfaction, removal
and discharge thereof, all in form and

substance reasonably satisfactory to Buyer, will be duly filed and recorded
promptly thereafter.

2.6 Taxes.

(a) Sellers shall be responsible for preparing and making proper and timely
filings of all Tax Returns for the Companies for all periods beginning prior to
and ending on or prior to the Closing Date and for paying all Taxes shown on
such Tax Returns (“Seller Taxes“). Buyers shall be responsible for
preparing and making proper and timely filings of all Tax Returns of the
Companies for all periods ending after the Closing Date and for paying all Taxes
shown on such Tax Returns other than the Seller Apportioned Taxes (as determined
in Section 2.6(c)). All Tax Returns prepared by Sellers and Buyers shall be
prepared and filed in a manner consistent with the past practices of the
Companies, except as required by change in Aplicable Law.

(b) Buyers, Sellers and Navarre agree that the transaction contemplated by
this Agreement shall be treated as an asset sale for tax purposes. Each party
hereto agrees (a) that the Purchase Price for the assets of the Companies will
be allocated for all federal and state tax purposes (including but not limited
to, income, excise, sales, use, personal property and transfer taxes, and
otherwise) among the assets of the Companies in accordance with Schedule
2.6(b) hereof which is in accordance with the Code (b) to file separately a
Federal Form 8594 with its Federal Income Tax Return consistent with such
allocation for the tax year in which the Closing Date occurs; provided,
however, that, thirty (30) days of the Closing Date, the Buyers and
Sellers shall, acting reasonably, collectively prepare Schedule 2.6(b)
and Federal Form 8594 to be filed with the IRS and (c) that no party will take a
position on any tax returns or filings with any governmental or regulatory
authority charged with the collection of taxes or having jurisdiction over the
transaction contemplated hereunder or in any judicial proceeding, that is in any
manner inconsistent with the terms of the allocation set forth on Schedule
2.6(b) hereof.

(c) For purposes of this Agreement, in the case of any Taxes that are imposed
on a periodic basis and are payable for a Tax period that begins prior to but
does not end on the Closing Date, the term “Seller Apportioned Taxes”
shall (i) in the case of any Taxes other than Taxes based upon or related to
income or receipts, be the amount of such Tax for the entire Tax period
multiplied by a fraction, the numerator of which is the number of days in the
Tax period through and including the Closing Date and the denominator of which
is the number of days in the entire Tax period, and (ii) in the case of any Tax
based upon or related to income or receipts, be the amount that would be payable
if the relevant Tax period ended on the Closing Date, calculated in accordance
with the closing-of-the-books method.

(d) Buyers and Sellers shall cooperate, as and to the extent reasonably
requested, in connection with the preparation and filing of Tax Returns pursuant
to this Section and any audit, investigation, litigation or other action with
respect to Taxes which may be instituted after the Closing.

(e) All transfer, real estate transfer, excise, documentary, sales, use,
stamp, registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with the purchase and sale of the Partnership
Interests shall be paid by Sellers or Navarre when due, and Sellers or Navarre
shall, at their own expense, file all necessary Tax Returns and other
documentation with respect to all such transfer, real estate transfer, excise,
documentary, sales, use, stamp, registration and other such Taxes and fees, and,
if required by applicable law, Buyers shall join in the execution of any such
Tax Returns and other documentation.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLERS

To induce Buyers to enter into this Agreement, Sellers and Navarre, jointly
and severally, represent and warrant that, notwithstanding any investigation
Buyers may undertake, the following are true and correct on the date hereof and
will be true and correct as of the Closing Date:

3.1 Organization and Qualification.

(a) Productions Company is a limited partnership lawfully existing and in
good standing under the laws of the State of Texas with full power and authority
to own or lease its properties and to conduct business in the manner and in the
places where such properties are owned or leased or such business is conducted.
Productions Company is duly qualified to transact business as a foreign limited
partnership and is in good standing under the laws of each state in which it
owns or leases any real estate or maintains any offices, any bank accounts, or
has any employees who reside and/or normally perform their employment services
in such state, and where the character and location of such assets or the nature
of the business transacted by Productions Company makes such qualification
necessary.

(b) Anime Online is a limited partnership lawfully existing and in good
standing under the laws of the State of Texas with full power and authority to
own or lease its properties and to conduct business in the manner and in the
places where such properties are owned or leased or such business is conducted.
Anime Online is duly qualified to transact business as a foreign limited
partnership and is in good standing under the laws of each state in which it
owns or leases any real estate or maintains any offices, any bank accounts, or
has any employees who reside and/or normally perform their employment services
in such state, and where the character and location of such assets or the nature
of the business transacted by Anime Online makes such qualification necessary.

3.2 Authority; Binding Nature of Agreement.

(a) The execution, delivery and performance of this Agreement and all
obligations hereunder by Sellers and Navarre and the consummation of the
transactions contemplated by this Agreement have been duly authorized by all
necessary action on the part of Sellers and Navarre.

(b) Sellers and Navarre have full power and authority to enter into this
Agreement and to carry out the transactions contemplated hereby.

(c) This Agreement has been duly and validly executed and delivered by
Sellers and Navarre and is the legal, valid and binding obligation of Sellers
and Navarre, enforceable in accordance with its respective terms, except as such
may be limited by bankruptcy, insolvency, reorganization or similar laws
affecting creditors153 rights generally, and by general equitable principles.

3.3 No Conflict. Except as set forth on Schedule 3.3
attached hereto, the execution, delivery and performance of this Agreement by
Sellers and Navarre does not and will not conflict with, constitute a default
under (whether after the giving of notice, lapse of time, or both), (i) any
provision of the Certificate of Formation, Articles of Organization, Articles of
Incorporation or other governing documents of either of the Companies or (ii)
any Applicable Law to which either of the Companies may be subject.

3.4 Ownership of Partnership Interests.

(a) Navarre CP is the sole record and beneficial owner of the Navarre CP
General Partnership Interests, free and clear of all Encumbrances.

(b) Navarre CLP is the sole record and beneficial owner of the Navarre CLP
Productions Company Limited Partnership Interests, free and clear of all
Encumbrances.

(c) Navarre CS is the sole record and beneficial owner of the Navarre CS
General Partnership Interests, free and clear of all Encumbrances.

(d) Navarre CLP is the sole record and beneficial owner of the Navarre CLP
Anime Online Limited Partnership Interests, free and clear of all Encumbrances.

(e) Except as set forth on Schedule 3.10, there are no options,
warrants, convertible securities or other rights, agreements, arrangements or
commitments of any character relating to the Partnership Interests of the
Companies, as applicable, or obligating the Companies to issue or sell any
partnership interests, as applicable, of, or any other interest in, the
Companies.

3.5 Subsidiaries. Neither of the Companies has any
subsidiaries.

3.6 Brokers or Agents. Except for Houlihan Lokey (whose fees
shall be borne exclusively by Navarre and the Sellers) neither Navarre nor
Sellers have employed or dealt with any brokers, consultants or investment
bankers in connection with the transactions contemplated hereby.

3.7 Compliance with Law. The Sellers and Navarre, (i) the
operations of the Companies153 respective businesses have been conducted in all
material respects in accordance with all applicable laws, regulations, orders
and other requirements of all courts and other governmental or regulatory
authorities, domestic or foreign, having jurisdiction over the Companies and
their respective assets, properties and operations. Except as set forth on
Schedule

3.7, neither the Sellers or Navarre or the Companies, have received
notice of any violation of any such law, regulation, order or other legal
requirement, or is in default with respect to any order, writ, judgment, award,
injunction or decree of any national, state or local court or governmental or
regulatory authority or arbitrator, domestic or foreign, applicable to the
Companies153 respective businesses.

3.8 Labor Matters. With respect to employees of the
Companies, except as set forth in Schedule 3.8 hereof: (i) the Companies
are not party to any employment agreements with employees that are not
terminable at will, or that provide for the payment of any bonus or commission
upon termination thereof, (ii) the Companies are not party to any agreement,
policy or practice that requires them to pay termination or severance pay to
salaried, non exempt or hourly employees (other than as required by law), (iii)
the Companies are not party to any collective bargaining agreement or other
labor union contract nor do the Companies, the Sellers or Navarre know of any
activities or proceedings of any labor union to organize any such employees, and
(iv) the Companies are not party to or subject to any conciliation agreements,
consent decrees or settlements with respect to their respective businesses or
employees. Sellers have furnished to Buyers complete and correct copies of all
such agreements, if any (the “Employment and Labor Agreements“). The
Companies are not, and were not over the last three (3) years, in material
default or breach under the provisions of the Employment and Labor Agreements
(except for such breaches or defaults that have been cured waived).

Except as set forth in Schedule 3.8 hereof or Section 7.1(f): (i) the
Sellers and Navarre, the Companies are in material compliance with all
applicable laws relating to employment and employment practices, wages, hours,
and terms and conditions of employment, (ii) there is no unfair labor practice
charge or complaint pending before the National Labor Relations Board (the
“NLRB“) relating to either of the Companies, or, to the knowledge of the
Companies, the Sellers or Navarre, threatened against the Companies, (iii) there
is no labor strike, material slowdown or material work stoppage or lockout
pending or, to the knowledge of the Companies, the Sellers or Navarre,
threatened against or affecting the Companies, and the Companies have not
experienced any strike, material slowdown or material work stoppage, lockout or
other collective labor action by or with respect to employees of the Companies,
(iv) there is no representation, claim or petition pending before the NLRB or
any similar foreign agency and no question concerning representation exists
relating to the employees of the Companies, (v) there are no charges with
respect to or relating to the Companies pending before the Equal Employment
Opportunity Commission or any state, local or foreign agency responsible for the
prevention of unlawful employment practices, and (vi) neither the Companies, the
Sellers nor Navarre have received written notice from any national, state, local
or foreign agency responsible for the enforcement of labor or employment laws of
an intention to conduct an investigation of it and, to the knowledge of the
Companies, the Sellers or Navarre, no such investigation is pending.

Sellers have furnished Buyers with a complete and accurate list of all of the
Companies153 respective employee manuals, policies, procedures and work-related
rules affecting employees of the Companies (“Employee Policies and
Procedures“). Sellers have provided Buyers with a copy of all of the
Companies153 respective written Employee Policies and Procedures and a written
description of all unwritten Employee Policies and Procedures. Each of the
Employee Policies and Procedures can be amended or terminated at will by the
Companies.

3.9 Employee Plans. With respect to the respective employees
of the Companies, except as set forth in Schedule 3.9 hereof, the
Companies do not maintain and do not have any obligation to contribute to any
pension, savings, retirement, health, life, disability, other insurance,
severance, bonus, incentive compensation, stock option or other equity-based or
other employee benefit or fringe benefit plans, whether or not “employee benefit
plans” as defined in Section 3(3) of ERISA (collectively referred to herein as
the “Plans“). Each Company or any trade or business (whether or not
incorporated) which is or has ever been treated as a single employer with such
Company under Section 414(b), (c), (m) or (o) of the Code (“ERISA
Affiliate“) has incurred no liability under Title IV of ERISA or Section 412
of the Code, except for any such liability which has been satisfied in full, and
no events have occurred and no circumstances exist that could reasonably be
expected to result in any such liability to either of the Companies or any ERISA
Affiliate.

3.10 Effect of Agreement. The execution and delivery of this
Agreement by each of the Sellers and Navarre does not, and the consummation of
the transactions contemplated hereby by each of the Sellers and Navarre will not
(i) except as set forth on Schedule 3.10 hereof, require the consent,
approval or authorization of, or declaration, filing or registration with, any
governmental or regulatory authority or any third party; or (ii) result in the
breach of any term or provision of, or constitute a default under, or result in
the acceleration of or entitle any party to accelerate (whether after the giving
of notice or the lapse of time or both) any obligation under any Indebtedness,
or result in the creation or imposition of any Encumbrance upon any part of the
property of the Companies, the Sellers or Navarre pursuant to any provision of,
any material Indebtedness, order, judgment, arbitration award, injunction,
decree, indenture, mortgage, lease, license, lien, or other agreement or
instrument to which any of the Companies, the Sellers or Navarre is a party or
by which any of them is bound.

3.11 Litigation. Except as set forth in Schedule 3.11
hereof or Section 7.1(f) there are no claims, actions, suits, proceedings or
investigations pending or, to the knowledge of the Companies, the Sellers or
Navarre, threatened before any federal, state or local court or governmental or
regulatory authority, domestic or foreign, or before any arbitrator of any
nature, brought by or against the Companies or any of its officers, directors,
employees, or agents involving, affecting or relating to any of the Companies153
respective assets or the transactions contemplated by this Agreement. Except as
set forth in Schedule 3.11 hereof, neither the Companies nor any of their
respective assets is subject to any order, writ, judgment, award, injunction or
decree of any federal, state or local court or governmental or regulatory
authority, domestic or foreign, or any arbitrator of any nature, that affects or
might affect such assets, or that would or might interfere with the transactions
contemplated by this Agreement.

3.12 Taxes.

(a) Except as provided in Schedule 3.12 hereof, the Companies and the
Sellers have timely filed all returns and reports required to be filed for Taxes
for all taxable years or periods that end on or before the Closing Date and,
with respect to any taxable year or period beginning before and ending after the
Closing Date, the portion of such taxable year or period ending on and including
the Closing Date (“Pre-Closing Periods“) (collectively, the
“Returns“) and such Returns as filed are accurate and complete in all
material respects.

(b) Except as provided in Schedule 3.12 hereof, the Companies and the
Sellers have timely paid all Taxes (whether or not shown on a Return) and
provided evidence of such, for all Pre-Closing Periods or adequately disclosed
and fully provided for such Taxes on their respective balance sheets.

(c) Except as provided in Schedule 3.12 hereof, there is no action,
suit, proceeding, audit, claim or, to the knowledge of the Companies, the
Sellers or Navarre, investigation, now pending or, to the knowledge of the
Companies, the Sellers or Navarre, threatened by any authority regarding any
Taxes relating to the Companies or the Sellers or their respective assets for
any Pre-Closing Period.

(d) No claim has been made since May 30, 2005, by any taxing authority in a
jurisdiction where the Companies and the Sellers do not file Returns that the
Companies, the Sellers or any of their respective assets are or may be subject
to taxation by that jurisdiction.

(e) There are no liens or security interests on any of the Companies153 or the
Sellers153 respective assets that arose in connection with any failure (or alleged
failure) to pay any Taxes (other than liens relating to Taxes that are not yet
due and payable).

(f) Except as provided in Schedule 3.12 attached hereto, there are no
agreements for the extension or waiver of the time for assessment of any Taxes
relating to the Companies, the Sellers or their respective assets for any
Pre-Closing Period and none of the Companies or the Sellers have been requested
to enter into any such agreement or waiver.

(g) Except as provided in Schedule 3.12 attached hereto, all Taxes
that the Companies or the Sellers are required by law to withhold or collect
have been duly withheld or collected in all material respects, and have been
timely paid over to the proper authorities to the extent due and payable.

(h) Except pursuant to this Agreement, none of the Companies or the Sellers
is now or has been a party to any tax indemnification, tax allocation or tax
sharing agreement that could result in any liability to the Buyers.

3.13 Accounts Receivable. Schedule 3.13 hereof (which
shall be provided as of February 28, 2011 by the Sellers, and subsequently
updated by the Sellers as of the Closing Date and delivered to Buyers after the
Closing Date within 10 business days of Seller153s receipt of such

updated schedule from the Companies) sets forth the Accounts Receivable and
the identity and address of the party from whom such receivable is owing as of
each of February 28, 2011 and the Closing Date, as applicable. To the knowledge
of the Sellers and Navarre, after due inquiry, Schedule 3.13 is a true,
complete and correct list of the Accounts Receivable as of each of February 28,
2011 and the Closing Date, as applicable. The Accounts Receivable arose in the
ordinary course of business, consistent with past practices, represent bona fide
claims against obligors for sales and other charges, and, except for returns and
to the extent included in any applicable reserves (e.g. discounts, doubtful or
uncollectible accounts, marketing development funds and other discount programs
or advertising offered to customers) are collectible in the ordinary course of
business. Except to the extent expressly included in the applicable reserves
(examples of which are described above) none of the Accounts Receivable are
subject to any claim of offset, recoupment, setoff or counter-claim, other than
agreements relating to a right of return. Except as set forth in Schedule
3.13 hereof, no Person has any encumbrance on any of Accounts Receivable and
none of the Accounts Receivable are subject to prior assignment and no agreement
for deduction or discount has been made with respect to any of such Accounts
Receivable, other than agreements relating to a right of return. Notwithstanding
anything contained in this Section 3.13 to the contrary, in recognition of the
fact that neither Navarre nor Sellers directly supervise the salespersons and
other employees of the Sellers, neither Navarre nor Sellers make any
representation or warranty with respect to any covenants, agreements,
commitments or communications, whether written or oral, from any salespersons or
other employees of the Companies to any customer, client or obligor under any
Accounts Receivable concerning such customer153s, client153s or obligor153s
obligations to make any payments to the Companies with respect to such Accounts
Receivable (including, without limitation, any amounts, timing, discounts,
writedowns or the like).

3.14 Disclosure. To the knowledge of Sellers and Navarre, no
representation or warranty by Sellers and Navarre in this Agreement and no
statement contained in this Agreement or in any document delivered or to be
delivered pursuant hereto contains or will contain an untrue statement of
material fact or omits or will omit to state any material fact necessary to make
the statements herein or therein contained, in light of the circumstances under
which made, not misleading; it being understood that as used in this
subparagraph “material” means material to any individual statement or omission
and in the aggregate as to all statements and omissions.

Except as provided in this Agreement Sellers have not made, do not make and
specifically negate and disclaim any representations, warranties, promises,
covenants, agreements or guaranties of any kind or character whatsoever, whether
express or implied, oral or written, past, present or future of, as to,
concerning or with respect to the Companies or their assets, liabilities,
forecasts or projections. Buyers acknowledges and agree that they have or will
be given the opportunity to inspect the businesses and assets of the Companies
and, except for their reliance on the representations and warranties set forth
in this Agreement, Buyers will rely on their own due diligence investigation of
the Companies and their respective businesses. Sellers and Navarre are not
liable or bound in any manner by any oral or written statement, representations
or information pertaining to Companies or their respective businesses furnished
by any other Person.

3.15 Payment of Accounts Payable. Schedule 3.15
hereof (which shall be provided as of February 28, 2011 by the Sellers, and
subsequently updated by the Sellers as of the Closing Date and delivered to
Buyers after the Closing Date within 10 business days of Seller153s receipt of
such updated schedule from the Companies) sets forth the Accounts Payable and
the identity and address of the party to whom such payable is owed as each of
February 28, 2011 and the Closing Date, as applicable. To the knowledge of the
Sellers and Navarre, after due inquiry, Schedule 3.15 is a true, complete
and correct list of the Accounts Payable as of each of February 28, 2011 and the
Closing Date, as applicable. Since January 1, 2011, neither Sellers nor Navarre
have delayed or postponed the payment of such Accounts Payable, other than in
the ordinary course of business consistent with past practices;
provided, however, that except as set forth in Section 5.4 hereof,
neither the Sellers nor Navarre make any representation or warranty with respect
to Geneon Entertainment USA.

3.16 Title Advances. Between March 1, 2011 and March 31,
2011, Sellers and Navarre have paid the title advances described in Schedule
3.16 attached hereto, in the amounts set forth thereon.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER

To induce Sellers to enter into this Agreement, Buyers, jointly and
severally, represent and warrant to Sellers that the following are true and
correct on the date hereof and will be true and correct as of the Closing Date:

4.1 Organization. Each of Buyer GP, Buyer ALP and Buyer FLP
is a limited liability company validly existing and in good standing under the
laws of Texas.

4.2 Authority; Binding Nature of Agreement.

(a) The execution, delivery and performance of this Agreement by Buyers and
the consummation of the transactions contemplated by this Agreement have been
duly authorized by all necessary action on the part of Buyers.

(b) Buyers have full power and authority to enter into this Agreement and to
carry out the transactions contemplated hereby.

(c) This Agreement has been duly and validly executed and delivered by Buyers
and is the legal, valid and binding obligation of Buyers, enforceable in
accordance with its respective terms, except as such may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors153
rights generally, and by general equitable principles.

4.3 No Conflict. The execution, delivery and performance of
this Agreement by Buyers does not and will not conflict with, constitute a
default under, or create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under, (i) any provision of the
Certificate of Formation or other governing documents of either of any the
Buyers or (ii) any Applicable Law to which any of the Buyers may be subject.

4.4 Compliance with Securities Laws. Each Buyer is an
“accredited investor” as that term is defined in Regulation D under the
Securities Act of 1933, as amended (the “Securities Act“), and is
acquiring the Partnership Interests only for such Buyer153s own account, for
investment purposes only and not with a view to the distribution thereof. Buyers
will not sell, offer for sale, pledge, transfer or otherwise dispose of the
Partnership Interests or any interest therein except in compliance with the
Securities Act and any other applicable Laws. Buyers acknowledge that the
Partnership Interests have not been registered under the Securities Act or the
blue sky laws of any state. Buyers have been given access to information
regarding the Companies (including the opportunity to meet with management and
other representatives of the Companies) and have utilized such access to the
Buyers153 satisfaction. Buyers are experienced and knowledgeable in financial and
business matters, capable of evaluating the merits and risks of purchasing the
Partnership Interests and do not need or desire the assistance of a
knowledgeable representative to aid in the evaluation of such risks (or, in the
alternative, the Buyers have used a knowledgeable representative in connection
with the Buyers153 decision to purchase the Partnership Interests).

4.5 Brokers or Agents. Buyers have not employed or dealt
with any brokers, consultants or investment bankers in connection with the
transactions contemplated hereby for which Sellers or Navarre will have any
liability.

4.6 Disclosure. To the knowledge of Buyers, no
representation or warranty by Buyers in this Agreement and no statement
contained in this Agreement or in any document delivered or to be delivered
pursuant hereto contains or will contain an untrue statement of material fact or
omits or will omit to state any material fact necessary to make the statements
herein or therein contained, in light of the circumstances under which made, not
misleading; it being understood that as used in this subparagraph “material”
means material to any individual statement or omission and in the aggregate as
to all statements and omissions.

ARTICLE 5
COVENANTS

5.1 Books and Records. From and after the Closing, Buyers
will, and will cause the Companies to, provide Sellers and their representatives
with reasonable access and assistance, upon prior notice and at reasonably
acceptable times, for any reasonable purpose, including but not limited to (a)
the preparation or filing of any Tax Returns or filings required by or advisable
with the U.S. Securities and Exchange Commission, or (b) defending any claim in
respect of which a Notice of Claim has been served, during normal business
hours, to all books and records of the Companies, including, but not limited to,
accounting and Tax records, sales and purchase documents, notes, memoranda, and
any other electronic or written data (“Records“) pertaining or relating
to the period prior to or after the Effective Time, provided that Buyers shall
have the right to cause a representative of Buyers to be present during the time
in which Sellers and their representatives have access to such Records. To the
extent deemed necessary by Sellers with respect to their affairs, Sellers may
retain copies of such Records prior to returning the originals to Buyers, or, as
soon as practicable after Closing, Buyers will provide to Sellers, at Sellers153
expense, copies of all or any portion of such Records as reasonably requested by
Navarre. Unless otherwise consented to in writing by the other party, no party
will, for a period of seven (7) years following the date hereof or such longer
period as retention thereof is required by

applicable Law, destroy, alter or otherwise dispose of (or allow the
destruction, alteration or disposal of) any of the Records without first
offering to surrender to the other party such Records.

5.2 Announcements. The Parties agree that no press release
or other public statement concerning the negotiation, execution and delivery of
this Agreement or the transactions contemplated hereby will be issued or made
without the prior written approval of the Navarre and Buyers (which approval
will not be unreasonably withheld), except as required by any applicable law or
regulation.

5.3 Filings; Cooperation.

(a) Buyers and Sellers will use their commercially reasonable efforts to
obtain any authorizations, consents, approvals of governments and governmental
agencies in order to consummate and make effective the transactions contemplated
by this Agreement. Prior to the Closing, the Parties will proceed in good faith
to make such filings and take such other actions as may be commercially
reasonable to satisfy the conditions to Closing set forth in Sections 6.1 and
6.2.

(b) The Parties will, on request, cooperate with one another by furnishing
any additional information, executing and delivering any additional documents
and instruments, including contract assignments, and doing any and all such
other things as may be reasonably required by the Parties or their counsel (i)
to consummate or otherwise implement the transactions contemplated by this
Agreement or (ii) make any filings required by or advisable with the U.S.
Securities and Exchange Commission.

5.4 Payments to Geneon Entertainment USA. Navarre shall be
solely responsible for any payments due to Geneon Entertainment USA for final
reconciliation of amounts due under the Distribution Agreement, dated April 18,
2008, by and between Productions Company and Geneon Entertainment USA (as
amended), including the excess of returns holdback against actual returns and
the net adjustment of actual versus reported sales, the aggregate of which is
currently $1,083,059 and such amounts shall not be included in the Accounts
Payable.

5.5 Third Party Consents. Any transfer or assignment of a
contract to Buyers as a result of the transactions contemplated under this
Agreement that requires the consent or approval of a third party shall be made
subject to such consent or approval being obtained. In the event any such
consent or approval is not obtained on or prior to the Closing Date, each of
Sellers and Navarre shall continue to use all reasonable efforts to obtain any
such consent or approval after the Closing Date until such time as such consent
or approval has been obtained, and each of Sellers and Navarre will cooperate
with Buyers in any lawful and economically feasible arrangement to provide that
Buyers shall receive the interest of Sellers in all benefits under any such
contract, including without limitation performance by Sellers or Navarre, as
applicable, as agent if economically feasible; provided, however,
that Buyers shall undertake to pay or satisfy the corresponding liabilities for
the enjoyment of such benefit to the extent Buyers would have been responsible
therefor hereunder if such consent or approval had been obtained as of the
Closing Date.

5.6 Employee Bonuses. In the event that Navarre pays its
employees a bonus for fiscal 2011 pursuant to its published company-wide bonus
plan, Navarre shall pay the employees of the Companies that were (i) employees
of the Companies as of the Closing Date and (ii) still employed by the Companies
as of the date Navarre pays such bonus to its employees, a bonus that such
employees would have received under its published company-wide bonus plan as if
the Companies were still owned by the Sellers and Navarre; provided,
however, such bonus shall be pro rated based upon the number of months
that the Sellers and Navarre owned the Companies during fiscal 2011. For the
avoidance of doubt, the foregoing clause shall not be deemed to include any spot
bonuses, special individual achievement bonuses or any other like individual
bonuses that could have been awarded outside of Navarre153s published company-wide
bonus plan.

5.7 Fukunaga Bonus; Employment Agreement. On the Funding
Date, Navarre and the Sellers shall pay to Gen Fukunaga a cash bonus of $250,000
(subject to all applicable withholding taxes) pursuant to the terms of Section 5
of that certain Amended and Restated Employment Agreement, among Mr. Fukunaga,
the Companies and Navarre, dated May 27, 2010 (the “Employment
Agreement“). In addition to the foregoing, Buyers shall deliver a
termination of the Employment Agreement (a “Termination“), pursuant to
which Mr. Fukunaga releases the Companies and Navarre and Navarre and the
Sellers release Mr. Fukunaga from any obligations thereunder as of the Closing
Date.

5.8 Release of Guaranty; Lease. Following the Closing Date,
Buyers and the Companies shall use their commercially reasonable efforts to
secure a release of the Letter of Credit and/or any remaining obligations of
Navarre under the Guaranty Agreement. For the avoidance of doubt, commercially
reasonable efforts by the Buyers and the Companies in the foregoing sentence
shall under no circumstance mean that the Buyers or the Companies shall be
required to make any kind of payment to the Landlord or any of its affiliates
other than as set forth in the Lease. In addition, for as long as the Letter of
Credit and/or Guaranty Agreement, or any modification, amendment or replacement
thereof, remain outstanding, or Navarre has any obligations thereunder, (a)
neither Buyers nor the Companies shall effect any material modification of the
Lease without the prior written consent of Navarre; and (b) Buyers and the
Companies shall provide to Navarre copies of (i) year-end audited balance
sheets, statements of income and cash flow, and statements of member153s equity
within 120 days of the last business day of each fiscal year, and (ii) quarterly
unaudited balance sheets, statements of income and cash flow, and statements of
member153s equity, for such quarter and year-to-date, within 45 days of the last
business day of each quarter.

5.9 Potential Independent Contractor Liability. Following
the Closing Date, Buyers and the Company shall fulfill their obligations set
forth in the Letter of Undertaking, attached hereto as Exhibit E (the
“Letter of Undertaking“) and use commercially reasonable efforts to
cooperate with Sellers and Navarre to mitigate any such liability. In connection
with any claims, settlements, statements, communications, or negotiations with
the Internal Revenue Service or any state revenue agency relating to the
incorrect classification of any Person designated as an independent contractor
rather than an employee prior to the Closing Date, at the option of Navarre, the
provisions of Section 7.3 shall apply as if the Buyers and Companies were the
“Indemnified Party” and Navarre and the Sellers were the “Indemnifying Party” in
so far as Navarre and the Sellers shall control of the defense and investigation
and employ and engage

attorneys of its own choice to handle, defend and settle such matters,
subject to the rights of the Indemnified Party thereunder.

ARTICLE 6
CLOSING DOCUMENTS

6.1 Deliveries of Sellers. Sellers shall deliver, or cause
to be delivered, to Buyer on the Closing Date all of the following, executed as
appropriate:

(a) An assignment separate from certificate, in form and substance reasonable
acceptable to Buyers, duly executed by each Seller, so as to transfer to Buyers
all right, title and interest in and to the Partnership Interests of such Seller
free and clear of all Encumbrances.

(b) Certificates of Existence and Account Status for each of the Companies
from the State of Texas, dated no more than ten (10) days prior to the Closing
Date;

(c) Documentation confirming the release of liens, including such termination
statements or satisfactions, as appropriate;

(d) The Exclusive Logistics Services Agreement by and among Navarre
Logistical Services, Inc. and the Companies in the form attached hereto as
Exhibit A (the “Logistics Agreement“);

(e) The Distribution Agreement by and among Navarre Distribution Services,
Inc. and the Companies in the form attached hereto as Exhibit B (the
“Distribution Agreement“);

(f) The Transition Services Agreement by and between Navarre Corporation and
Productions Company in the form attached hereto as Exhibit C (the
“Transition Services Agreement“);

(g) A termination of the Collateral Access Agreement dated November
20^th, 2009, by and among Landlord, Productions Company and Wells
Fargo Foothill, LLC; and

(h) The Letter of Undertaking.

6.2 Deliveries of Buyers. Buyers shall deliver, or cause to
be delivered, to Sellers on the Closing Date all of the following, executed as
appropriate:

(a) Certificates of Existence and Account Status for each of the Buyers from
the Texas Secretary of State, dated no more than ten (10) days prior to the
Closing Date;

(b) The Logistics Agreement;

(d) The Transition Services Agreement;

(e) The Termination from Mr. Fukunaga;

(f) An extension to the Lease, in a form mutually acceptable to the Landlord
and Productions Company; and

(g) The Letter of Undertaking.

ARTICLE 7
INDEMNIFICATION

7.1 Indemnification by Sellers and Navarre.

(a) Subject to the limitations set forth in this Section 7.1, Sellers and
Navarre will, jointly and severally, indemnify, defend and hold Buyers harmless
against and in respect of any and all Losses arising from:

(i) any breach or violation of the covenants made in this Agreement by any
Seller and Navarre (which will not include the representations and warranties
set forth in Article 3, which are covered by Section 7.1(a)(ii) below);

(ii) any breach of any of the representations and warranties made in this
Agreement by either Seller or Navarre;

(iii) Gaimz Candies, L.L.C. v. FUNimation Productions, Ltd., FUNimation
Productions Management, L.L.C., and Navarre CP, L.L.C;

(iv) FUNimation Productions, Ltd. v. Gaimz Candies, L.L.C., Gaimz Inc., Gaimz
Foods, Inc., New Tech Foods, Ltd., Larry A. Cress, David D. Cudd, and Robert
Frank Schmidt;

(v) Any amounts paid by or on behalf of the Companies to the Internal Revenue
Service or any state revenue agency relating to the incorrect classification of
any Person designated as an independent contractor rather than an employee prior
to the Closing Date; and

(vi) Telea Stafford v. Navarre Corporation and FUNimation Productions, Ltd.
(Charge filed with the U.S. Equal Employment Opportunity Commission).

(b) (i) Buyer will not be entitled to indemnification and Sellers and Navarre
shall have no liability pursuant to Section 7.1(a)(ii) until such time as the
total amount of all Losses under Section 7.1(a)(ii) exceeds $500,000 (the
“Basket“), and then for all Losses, including those that comprise the
Basket. (ii) The aggregate maximum liability of Sellers and Navarre with respect
to indemnification provided under Section 7.1(a)(ii)

shall not exceed an amount equal to $5,000,000 (the “Cap“). (iii)
Notwithstanding the foregoing, Sections 7.1(b)(i) and 7.1(b)(ii) shall not apply
to any claim for indemnification with respect to:

(A) any of the matters described in Sections 7.1(a)(i) through 7.1(a)(vi);
provided that the aggregate liability of the Sellers and Navarre under Section
7.1(a)(v) shall not exceed $250,000. Notwithstanding the foregoing, such
$250,000 limitation with respect to the aggregate liability of the Sellers and
Navarre under Section 7.1(a)(v) shall be exclusive of any fees or costs incurred
by Navarre or the Sellers in defending any investigation or audit relating to
the Companies in connection therewith;

(B) any breach of any of the representations and warranties made in Sections
3.1, 3.2, 3.4, 3.5, 3.9 and 3.12 of this Agreement by any Seller or Navarre (the
“Fundamental Representations“); or

(D) any fraud on the part of any Seller or Navarre.

(c) All representations and warranties made by Sellers, Navarre, or Buyers in
this Agreement or any other document, certificate, schedule or instrument
delivered or executed in connection herewith will survive the Closing and will
expire at 11:59 p.m. (Central Standard Time) eighteen (18) months after the
Effective Time (“Indemnification Period“); provided,
however, that the Fundamental Representations shall remain in effect
indefinitely notwithstanding the expiration of the Indemnification Period and
the representations in Section 3.12 shall survive for a period beginning as of
the date hereof and continuing until 90 days after the expiration of the
applicable statute of limitations; provided, further, that
Sellers153 and Navarre153s obligations under Section 7.1(a)(v) will expire at 11:59
p.m. (Central Standard Time) twenty four (24) months after the Effective Time.
Neither Sellers nor Buyers will have any liability to the other (for
indemnification or otherwise) with respect to any representation or warranty,
unless, on or before the expiration of the Indemnification Period (solely in the
case of representations or warranties other than Fundamental Representations) or
the time periods set forth in the provisos in the foregoing sentences with
respect to such matters, Buyers deliver to Navarre, or Navarre delivers to
Buyers, as applicable, a written notice of claim specifying the factual basis
and amount of such claim of Loss in reasonable detail to the extent then known
(“Notice of Claim“). The expiration of the Indemnification Period shall
not affect any Notice of Claim which was given in a timely manner if the
underlying claim of Loss asserted in such notice has not been fully and finally
resolved as of the end of the Indemnification Period. For the avoidance of
doubt, the failure of Buyers to deliver a Notice of Claim with respect to any of
the Fundamental Representations on or before the expiration of the
Indemnification Period shall not render such Notice of Claim ineffective
provided that Buyers otherwise deliver such Notice of Claim to Navarre pursuant
to this Section 7.1(c).

(d) In the absence of fraud, the indemnification provisions set forth in this
Section 7.1 will provide the exclusive remedy for Buyers for breach of any
covenant, agreement, representation or warranty of Sellers set forth in this
Agreement or any other agreement ancillary hereto executed pursuant to this
Agreement.

(e) Notwithstanding anything in this Agreement to the contrary, no liability,
obligation, contract or other fact or circumstance will constitute a breach of
any representation or warranty of Sellers or entitle Buyers to indemnification
hereunder if the liability, obligation, contract or fact or circumstance was
actually known to any of the Buyers as of the date of this Agreement.

(f) Notwithstanding any provision of Article 3 to the contrary (including,
without limitation, Sections 3.7, 3.8, 3.12 and 3.13), except for the
indemnification obligations in Section 7.1(a)(v), neither the Sellers nor
Navarre make any representation or warranty concerning whether any of the
independent contractors or consultants to or any employee of either Company has
been correctly classified as an independent contractor rather than an employee
prior to the closing of the transactions contemplated hereby or afterward and,
except for the indemnification obligations in Section 7.1(a)(v), neither the
Sellers nor Navarre shall have any liability to the Buyers or either Company for
any claimed, alleged or demonstrated failure to correctly classify such Persons
or withhold any amounts from such Person153s compensation. To be eligible for
indemnification under Section 7.1(a)(v), Buyers and the Companies must fulfill
the obligations set forth in the Letter of Undertaking and must have used
commercially reasonable efforts to cooperate with Sellers and Navarre to
mitigate any such liability.

7.2 Indemnification by Buyers.

(a) Buyers will, jointly and severally, indemnify, defend and hold Sellers
and Navarre harmless against and in respect of any and all Losses during the
Indemnification Period arising from:

(i) any breach or violation of the covenants made in this Agreement by any
Buyer;

(ii) any breach of any of the representations or warranties made in this
Agreement by any Buyer; or

(iii) any Losses incurred by Sellers or Navarre related, whether directly or
indirectly, to the Lease, any guaranty(ies) or surety provided by Navarre
relating to the Lease, and/or the aggregate amount drawn against the Letter of
Credit to be provided by Navarre to Landlord to secure a release or modification
of the Guaranty Agreement.

(b) Seller will not be entitled to indemnification and Buyers shall have no
liability pursuant to Section 7.2(a)(ii) until such time as the total amount of
all Losses exceeds the Basket, and then for all Losses, including those that
comprise the Basket. Further, the aggregate maximum liability of Buyers with
respect to indemnification provided under Section 7.2(a)(ii) shall not exceed an
amount equal to the Cap.

Notwithstanding the foregoing, this Section 7.2(b) shall not apply to any
claim for indemnification with respect to any fraud on the part of the Buyers.

(c) In the absence of fraud, the indemnification provisions set forth in this
Section 7.2 will provide the exclusive remedy for Sellers and Navarre for breach
of any covenant, agreement, representation or warranty of Buyers set forth in
this Agreement or any other agreement ancillary hereto executed pursuant to this
Agreement.

(d) Upon written notice to Buyers and the Companies specifying in reasonable
detail the basis therefor, and upon providing a fifteen (15) day period to cure
any liability, Sellers and/or Navarre may set off any amount which it is
actually entitled to under this Section 7.2 against amounts otherwise
payable to Buyers and/or the Companies. The exercise of such right of setoff by
Sellers and/or Navarre in good faith, whether or not ultimately determined to be
justified, will not constitute default or breach of any of this Agreement, the
Logistics Agreement, the Distribution Agreement, the Transition Services
Agreement or any other agreement between or among Navarre and one or both of the
Companies.

7.3 Procedure for Indemnification of Third Party Claims.

(a) Notice of Third Party Claims. If any action, claim, suit,
proceeding, arbitration, order, or governmental investigation or audit is filed
or initiated by any third party (a “Third Party Claim“) against any party
entitled to the benefit of indemnity under this Agreement (an “Indemnified
Party“), written notice of such Third Party Claim will be given to the party
owing indemnity (an “Indemnifying Party“) as promptly as reasonably
practicable (and in any event within ten (10) days after the service of the
citation or summons); provided, however, that the failure of any
Indemnified Party to give timely notice will not affect any rights to
indemnification hereunder except to the extent that the Indemnifying Party is
prejudiced or damaged by such failure to receive notice.

(b) Defense and Settlement by Indemnifying Party.

(i) After notice of a Third Party Claim is given under Section 7.3(a) and in
the absence of a Conflict of Interest (as defined below), the Indemnifying Party
may (A) take control of the defense and investigation of the Third Party Claim,
(B) employ and engage attorneys of its own choice to handle and defend the Third
Party Claim at the Indemnifying Party153s cost, risk and expense, which attorneys
must be reasonably satisfactory to the Indemnified Party, and (C) subject to
Section 7.3(b)(ii) below, compromise or settle the Third Party Claim.

(ii) Notwithstanding Section 7.3(b)(i)(C) above, no such compromise or
settlement of the Third Party Claim may be made without the written consent of
the Indemnified Party, which consent will not be unreasonably withheld,
conditioned, or delayed. The Indemnified Party may withhold such consent if such
compromise or settlement would materially and adversely affect the conduct

of Business or requires less than an unconditional release with respect to
the Third Party Claim.

(iii) The Indemnifying Party will provide the Indemnified Party access to all
records, documents and personnel of the Indemnifying Party and keep the
Indemnified Party informed relating to any Third Party Claim under this Section
7.3.

(iv) The term “Conflict of Interest” means that the named parties to a
Third Party Claim include both of the Indemnifying Party and the Indemnified
Party and the Indemnified Party has been advised in writing by counsel that
there exist one or more legal defenses available to the Indemnified Party that
are different from or additional to those available to the Indemnifying Party,
and which, if asserted, would create a conflict of interest with the
Indemnifying Party.

(i) If the Indemnifying Party fails to assume the defense of such Third Party
Claim within fifteen (15) days after receipt of notice thereof pursuant to this
Section 7.3 or there is a Conflict of Interest, the Indemnified Party may (A)
take control of the defense and investigation of the Third Party Claim, (B)
employ and engage attorneys of its own choice to handle and defend the Third
Party Claim at the Indemnifying Party153s cost, risk and expense, which attorneys
must be reasonably satisfactory to the Indemnifying Party, and (C) subject to
Section 7.3(c)(ii) below, compromise or settle the Third Party Claim.

(ii) Notwithstanding Section 7.3(c)(i)(C) above but also subject to Section
7.3(e), no such compromise or settlement of the Third Party Claim may be made
without the written consent of the Indemnifying Party, which consent will not be
unreasonably withheld, conditioned, or delayed.

(iii) The Indemnified Party will provide the Indemnifying Party access to all
records, documents and personnel of the Indemnified Party that are reasonably
necessary with respect to the investigation, trial, or defense of the Third
Party Claim and keep the Indemnifying Party informed relating to any Third Party
Claim under this Section 7.3.

(d) Liability, Costs and Expenses. The Indemnifying Party will be
liable for any settlement of any action effected pursuant to and in accordance
with this Section 7.3 and for any final judgment (subject to any right of
appeal), and the Indemnifying Party agrees to indemnify and hold harmless the
Indemnified Party from and against any damages by reason of such settlement or
judgment. Regardless of whether the Indemnifying Party or the Indemnified Party
takes up the defense, the Indemnifying Party will pay the costs and expenses in
connection with the defense, compromise or settlement for any Third Party Claim
under this Section 7.3.

(e) Insurance; Subrogation.

(i) With respect to any claim, all parties agree to use commercially
reasonable efforts to maximize insurance recoveries.

(ii) With respect to any claim for which the Indemnifying Party is obligated
to indemnify the Indemnified Party, the Indemnifying Party shall be subrogated
to all rights and claims of the Indemnified Party with respect to such Loss.

(f) Participation and Payment Obligations. The Indemnified Party may,
at its own cost, participate in the investigation, trial and defense of any
Third Party Claim and any appeal arising therefrom, the investigation, trial and
defense of which is being handled by the Indemnifying Party pursuant to Section
7.3(b).

(g) Limitation of Special Damages. Notwithstanding anything in this
Agreement to the contrary, neither the Sellers or Navarre nor Buyers shall be
entitled to indemnification for consequential, indirect or punitive damages
regardless of the form of the claim or action, except to the extent such damages
are payable by an Indemnifying Party in respect of third party claims.

ARTICLE 8
MISCELLANEOUS

8.1 Expenses. Each party to this Agreement will pay all
expenses incurred by it relating to the transactions contemplated by this
Agreement, including without limitation, the fees and expenses of its legal,
accounting and financial advisors. For the avoidance of doubt, all fees due to
Houlihan Lokey as a result of the transactions contemplated hereunder shall be
borne exclusively by Navarre and the Sellers.

8.2 Governing Law and Venue. This Agreement shall be deemed
to be a contract made under the laws of the State of Texas and for all purposes
it, and any related or supplemental documents and notices, shall be construed in
accordance with and governed by the laws of such state. In respect of any action
or claim arising out of or relating to this Agreement (x) the parties hereby
irrevocably submit to the jurisdiction of the United States District Court,
Northern District of Texas (Fort Worth Division) and/or in the Texas state
courts located within Tarrant County, Texas, over any action or proceeding
arising out of or related to this Agreement and the documents related hereto or
executed in connection herewith, (y) the parties hereby irrevocably agree that
all claims in respect of such actions or proceedings may be heard and determined
in the courts referenced in the foregoing clause (x), and (z) the parties hereto
hereby irrevocably waive, to the fullest extent they may effectively do so, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in Texas.

8.3 Notices. All notices required or permitted to be given
under this Agreement will be in writing and will be deemed given (i) when
delivered in person, (ii) three (3) business days after being deposited in the
United States mail, postage prepaid, registered or certified mail addressed as
set forth below, (iii) on the next business day after being deposited with a
nationally recognized overnight courier service addressed as set forth below or
(iv) upon dispatch if sent by

facsimile with telephonic confirmation of receipt from the intended recipient
to the facsimile number set forth below:

(a) If to Sellers and Navarre:

Navarre Corporation

7400 49th Avenue North

New Hope, MN 55428

Attn: Ryan F. Urness, General Counsel

Tel. No.: (763) 971-2770

Fax No.: (763) 504-1107

with copies (which will not constitute notice) to:

Winthrop & Weinstine, P.A.

225 South Sixth Street, Suite 3500

Minneapolis, MN 55402

Attn: Scott J. Dongoske

Tel. No.: (612) 604-6565

Fax No.: (612) 604-6800

(b) If to Buyers:

FUNimation Entertainment

1200 Lakeside Parkway, Building 1

Flower Mound, Texas 75028

Attention: Gen Fukunaga

Tel. No.: (972) 355-7300 x4832

Fax No.: (972) 335-1382

with copies (which will not constitute notice) to:

Kelly Hart & Hallman LLP

201 Main St., Suite 2500

Fort Worth, TX 76102

Attention: S. Benton Cantey V, Esq.

Tel. No.: (817) 878-3559

Fax No.: (817) 878-9759

or to such other respective addresses as may be designated by notice given in
accordance with the provisions of this Section, except that any notice of change
of address will not be deemed given until actually received by the party to whom
directed.

8.4 Entire Agreement; Amendment. This Agreement, including
the schedules and exhibits, constitutes the entire agreement between the parties
and supersedes all prior discussions, negotiations and understandings relating
to the subject matter hereof, whether written or oral. This Agreement may not be
amended, altered, enlarged, supplemented, abridged,

modified, or any provisions waived, except by a writing duly signed by all of
the parties to this Agreement.

8.5 Benefit; Assignability. Subject to the last sentence of
this Section, this Agreement is enforceable by, and inures to the benefit of,
the parties to this Agreement and their respective heirs, personal
representatives, successors and assigns. Neither this Agreement nor any right,
interest or obligation under this Agreement may be assigned by the Buyers
without the prior written consent of Navarre and any attempt to do so will be
void; provided, however, that Buyers may assign this Agreement,
and any of their rights, interests or obligations hereunder, to any affiliate of
the Buyers without obtaining such consent of Sellers or Navarre.

8.6 Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original and all of
which, taken together, will constitute one and the same agreement.

8.7 No Third-Party Rights. Nothing expressed or implied in
this Agreement is intended, nor may be construed, to confer upon or give any
Person, other than the parties hereto, any rights or remedies under or by reason
of this Agreement.

8.8 Headings. The descriptive headings of the Articles and
Sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.

8.9 Remedies. The rights, remedies, powers and privileges
provided in this Agreement are cumulative and not exclusive and are in addition
to any and all rights, remedies, powers and privileges granted by law, rule,
regulation or instrument. The parties agree that, in addition to any other
relief afforded under the terms of this Agreement or by Applicable Law, the
parties may enforce this Agreement by injunctive or mandatory relief to be
issued by or against the other parties, it being understood that both damages
and specific performance will be proper modes of relief and are not to be
understood as alternative remedies.

[Signature page to follow]

[Signature page to Partnership Interest Purchase
Agreement]

IN WITNESS WHEREOF, this Partnership Interest Purchase Agreement is executed
as of the date set forth above.



BUYERS:		SELLERS:

FUNIMATION GP, LLC		NAVARRE CS, LLC

Signed:		Signed:

	By:		By:

	Its:		Its:


ANIME LP HOLDINGS, LLC		NAVARRE CP, LLC

Signed:		Signed:

	By:		By:

	Its:		Its:


FUNIMATION LP, LLC		NAVARRE CLP, LLC

Signed:		Signed:

	By:		By:

	Its:		Its:


		NAVARRE:

		NAVARRE CORPORATION

		Signed:

			By:

			Its:

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