Preview | Partnership Interest Purchase Agreement |

TABLE OF CONTENTS


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Article 1	PURCHASE AND SALE OF PARTNERSHIP INTERESTS		2

1.1	Purchase and Sale		2
1.2	Closing		3
1.3	Deliveries at the Closing		3
1.4	Post-Closing Adjustments		4
1.5	Performance Payments		6

Article 2	REPRESENTATIONS AND WARRANTIES REGARDING THE SELLERS		10

2.1	Organization and Good Standing of Certain Sellers		10
2.2	Authority		10
2.3	Ownership of Partnership Interests		10
2.4	No Conflict		11
2.5	Consents and Approvals		11
2.6	Brokers		11
2.7	Experience; Acquisition of Closing Shares for Investment		11
2.8	Litigation		12
2.9	Disclosure		12

Article 3	REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANIES		12

3.1	Organization and Good Standing of the Companies; Authority of the Companies		12
3.2	Subsidiaries		13
3.3	Capitalization of the Companies		13
3.4	No Conflict; Consents and Approvals		13
3.5	Financial Statements; Undisclosed Liabilities; Information Provided		14
3.6	Business Since September 30, 2004		15
3.7	Compliance with Law		16
3.8	Litigation		16
3.9	Contracts and Agreements; Defaults		16
3.10	Employee Benefit Plans		18
3.11	Employment-Related Matters		20
3.12	Taxes		21
3.13	Permits		23
3.14	Real Property		23
3.15	Title; Condition of Assets		24
3.16	Intellectual Property		24
3.17	Insurance		26
3.18	Environmental Laws		26
3.19	Brokers		27
3.20	Bank Accounts		27
3.21	Affiliate Transactions		27
3.22	Outstanding Borrowings		27
3.23	Operation of the Business		27

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TABLE OF CONTENTS
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3.24	Absence of Certain Business Practices		27
3.25	Books and Records		28
3.26	Disclosure		28

Article 4	REPRESENTATIONS AND WARRANTIES OF BUYERS AND NAVARRE		28

4.1	Organization		28
4.2	Authority		28
4.3	No Conflict		29
4.4	Governmental Consents and Approvals		29
4.5	Experience; Acquisition of Partnership Interests for Investment		29
4.6	Brokers		29
4.7	Closing Shares		30
4.8	Buyers SEC Documents		30
4.9	Disclosure		30

Article 5	COVENANTS		31

5.1	Notice of Changes		31
5.2	Access; Confidentiality		31
5.3	Notice of Proceedings		31
5.4	Consummation of Agreement		32
5.5	Filings and Authorizations		32
5.6	Announcements		33
5.7	Conduct of Business of the Companies Prior to the Closing		33
5.8	Satisfaction of Conditions Precedent		34
5.9	Consents		35
5.10	No Other Negotiations		35
5.11	Insurance		35
5.12	Confidential Information		35
5.13	Accounts Receivable		36
5.14	Related Party Debt; Affiliate Transactions		37
5.15	Financial Statements		37
5.16	Restriction on Transfer of Shares		37
5.17	Cooperation in Financing		38

Article 6	CONDITIONS TO THE OBLIGATIONS OF SELLERS		38

6.1	Sellers Closing Conditions		38

Article 7	CONDITIONS TO THE OBLIGATIONS OF BUYERS AND NAVARRE		40

7.1	Buyers and Navarres Closing Conditions		40

Article 8	SURVIVAL; INDEMNIFICATION		43

8.1	Survival		43

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TABLE OF CONTENTS
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8.2	Indemnification		43
8.3	Set-Off		48
8.4	Exclusive Remedy		49

Article 9	TERMINATION		49

9.1	Termination of Agreement		49

Article 10	CERTAIN TAX MATTERS		50

10.1	Certain Tax Matters		50
10.2	Tax Sharing Agreements		52
10.3	Coordination of Provisions		52

Article 11	MISCELLANEOUS		53

11.1	Expenses		53
11.2	Further Assurances		53
11.3	Notices		53
11.4	Assignment		54
11.5	Construction		54
11.6	Law Governing		55
11.7	Waiver of Provisions		55
11.8	Counterparts		55
11.9	Entire Agreement		55
11.10	Submission to Jurisdiction; Waivers		56
11.11	No Third Party Beneficiary		56
11.12	No Presumption		56
11.13	Severability		57
11.14	Seller Representative		57
11.15	Guaranty		59

Exhibits:


Exhibit A		Definitions
Exhibit B		Form of Assignment and Assumption
Exhibit C		Form of Employment Agreement
Exhibit D		Form of Escrow Agreement
Exhibit E		Form of Non-Competition Agreement
Exhibit F		Form of Registration Rights Agreement
Exhibit G		Form of Release

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PARTNERSHIP INTEREST PURCHASE AGREEMENT

PARTNERSHIP INTEREST PURCHASE AGREEMENT (this Agreement), dated as of January 10, 2005, among FUNimation Productions Management, LLC, a limited liability company organized and existing under the laws of Texas (FUN Seller), FUNimation General Partnership, a Texas general partnership organized and existing under the laws of Texas (GP Seller), FUNimation Management Company, LLC, a limited liability company organized and existing under the laws of Texas (Management Seller), each individual (Individual) signatory hereto, (each of FUN Seller, GP Seller, Management Seller, and each Individual a Seller and collectively, the Sellers), FUNimation Productions, Ltd., a limited partnership organized and existing under the laws of Texas, The FUNimation Store, Ltd., a limited partnership organized and existing under the laws of Texas (respectively, Productions Company and Store Company each a Company and collectively, the Companies), and Daniel Cocanougher as the representative of all Sellers (the Seller Representative), and Navarre CP, LLC, a limited liability company organized and existing under the laws of Minnesota (Navarre CP), Navarre CS, LLC, a limited liability company organized and existing under the laws of Minnesota (Navarre CS), and Navarre CLP, LLC, a limited liability company organized and existing under the laws of Minnesota (Navarre CLP and collectively with Navarre CP and Navarre CS, the Buyers), and Navarre Corporation, a corporation organized and existing under the laws of Minnesota (Navarre), in its own capacity as provided herein and its capacity as guarantor of Buyers obligations hereunder pursuant to Section 11.15 herein.

WHEREAS, FUN Seller owns all of the general partnership interests in Productions Company;

WHEREAS, GP Seller owns all of the limited partnership interests in Productions Company;

WHEREAS, Management Seller owns all of the general partnership interests in Store Company;

WHEREAS, the Individuals collectively own all of the limited partnership interests in Store Company;

WHEREAS, Buyers desire to purchase all of the outstanding limited partnership interests and general partnership interests of each Company (collectively, the Partnership Interests), and Sellers severally desire to cause the sale of the Partnership Interests to Buyers on the terms and conditions hereinafter set forth;

WHEREAS, Navarre wishes to undertake certain obligations hereunder and to guaranty the obligations, duties and undertakings of Buyers under this Agreement; and

WHEREAS, the definitions of certain defined terms used herein are set forth in Exhibit A hereto.

NOW, THEREFORE, in consideration of the premises and of the respective covenants and agreements contained herein, the parties hereto hereby agree as follows:

ARTICLE 1

PURCHASE AND SALE OF PARTNERSHIP INTERESTS

1.1 Purchase and Sale.

(a) Partnership Interests. Upon the terms and subject to the conditions set forth in this Agreement, (i) FUN Seller shall sell to Navarre CP, and Navarre CP shall purchase from FUN Seller, all of the general partnership interests of Productions Company held by FUN Seller (FUN Seller General Partnership Interests), free and clear of all Liens, (ii) GP Seller shall sell to Navarre CLP, and Navarre CLP shall purchase from GP Seller, all of the limited partnership interests of Productions Company held by GP Seller (GP Seller Limited Partnership Interests), free and clear of all Liens, (iii) Management Seller shall sell to Navarre CS, and Navarre CS shall purchase from Management Seller, all of the general partnership interests of Store Company held by Management Seller (Management Seller General Partnership Interests), free and clear of all Liens, and (iv) each Individual shall sell to Navarre CLP, and Navarre CLP shall purchase from such Individual, all of the limited partnership interests of Store Company held by such Individual (collectively, Individual Limited Partnership Interests), free and clear of all Liens, for the consideration set forth below.

(b) Purchase Price. The purchase price (the Purchase Price) payable to Sellers in consideration of the transfer to Buyers of the Partnership Interests shall be:

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