Document:

Asset Purchase Agreement between Crave Entertainment Group, Inc

 Exhibit 10.1 
 ASSET PURCHASE AGREEMENT 
 BY AND AMONG 
 CRAVE ENTERTAINMENT GROUP, INC., 
 CRAVE ENTERTAINMENT, INC. and SVG DISTRIBUTION, INC.

 and 
 FILLPOINT LLC 

Dated as of February 10, 2009 

 LIST OF EXHIBITS AND SCHEDULES 
  

			
	Exhibits	  	
		
	 Exhibit-Premises-
	  	Real Property Lease
	 Exhibit 3.1(e)
	  	Assumption Agreement
	 Exhibit 3.1(g) -
	  	Certificate of Officer of Purchaser
	 Exhibit 3.2(d)(i)
	  	Certificate of Officer of Sellers
	 Exhibit 3.2(d)(iv)
	  	Trademark and Service Marks Agreement

  

			
	Schedules	  	Referenced in:
		
	 License Schedule
	  	Section 1.1
	 Assumed Contracts Schedule
	  	Section 2.1(a)(xvi)
	 Excluded Assets Schedule
	  	Section 2.1(b)(ix)
	 Assumed Indebtedness Schedule
	  	Section 2.2(a)(i)(B)
	 Schedule 2.3(a)(iv)
	  	Section 2.3(a)(iv)
	 Schedule 2.3(b)(iii)
	  	Section 2.3(b)(iii)
	 Allocation Schedule
	  	Section 2.4
	 Corporate Organization Schedule
	  	Section 4.1
	 Restrictions Schedule
	  	Section 4.3
	 Contracts Schedule
	  	Section 4.6(a)
	 Litigation Schedule
	  	Section 4.7
	 Compliance Schedule
	  	Section 4.8
	 Taxes Schedule
	  	Section 4.9(b)
	 Proprietary Rights Schedule
	  	Section 4.10
	 Brokerage Schedule
	  	Section 4.11
	 Employee Benefit Schedule
	  	Section 4.15
	 Warranty Schedule
	  	Section 4.20
	 Purchaser Disclosure Schedule
	  	Section 5

 ASSET PURCHASE AGREEMENT 
 THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of February 10, 2009 by and among Crave
Entertainment Group, Inc., Crave Entertainment, Inc. and SVG Distribution, Inc., each a California corporation (each a “Seller” and collectively the “Sellers”), and Fillpoint LLC, a Delaware limited
liability company (“Purchaser”). Capitalized terms used in this Agreement without definition shall have the meaning given to such terms in Article 1 hereof. 
 The parties hereto agree as follows: 
 ARTICLE 1 
 DEFINITIONS 
 1.1 When used in this Agreement, the following terms shall have the meanings assigned to them in this Section 1.1, or in the applicable Section of this Agreement to which reference is made in this
Section 1.1. 
 “Affiliate” means, with respect to any specified Person, any other Person directly or indirectly
controlling, controlled by or under common control with such specified Person. 
 “Authorization” means any
authorization, approval, consent, certificate, license, permit or franchise of or from any Governmental Entity or pursuant to any Law. 
 “Best Efforts” means such commercially reasonable efforts that a prudent person desiring to achieve a particular result would use in order to ensure that such result is achieved as expeditiously as possible.

 “Business” means the full-service distribution of video game software, hardware and related accessories, and
specialty video game publishing business of Sellers as currently conducted. 
 “Capital Stock” means (a) in the
case of a corporation, its shares of capital stock, (b) in the case of a partnership or limited liability company, its partnership or membership interests or units (whether general or limited), and (c) any other interest that confers on a
Person the right to receive a share of the profits and losses, or distribution of assets, of the issuing entity. 
 “Charter
Documents” means, with respect to any entity, the certificate of incorporation, the articles of incorporation, by-laws, articles of organization, limited liability company agreement, partnership agreement, formation agreement, joint
venture agreement or other similar organizational documents of such entity (in each case, as amended). 

 “Contract” means any agreement, contract, license, lease, commitment, arrangement
or understanding, written or oral, including any sales order or purchase order. 
 “Environmental Laws” means all foreign,
federal, state and local laws, statutes, codes, regulations, rules, ordinances, orders, standards, permits, licenses, actions, principles of common law and requirements (including consent decrees, judicial decisions, administrative orders and
self-implementing closure requirements) relating to the protection, preservation or conservation of the environment and to public or worker health and safety, all as amended, hereafter amended or reauthorized, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), 42 U.S.C. § 9601 et seq., the Resource Conservation and Recovery Act (“RCRA”), 42 U.S.C. § 6901 et seq., the
Emergency Planning and Community Right to Know Act, 42 U.S.C. § 11001 et seq., the Clean Air Act, 42 U.S.C. § 7401 et seq., the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq., the Toxic Substances
Control Act, 15 U.S.C. § 2601 et seq., the Safe Drinking Water Act, 42 U.S.C. § 300f et seq., and the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq. 
 “GAAP” means generally accepted accounting principles, consistently applied, in the United States as promulgated by all relevant
accounting authorities as of the date of this Agreement. 
 “Governmental Entity” means any entity or body exercising
executive, legislative, judicial, regulatory or administrative functions of or pertaining to United States federal, state, local, or municipal government, including any department, commission, board, agency, bureau, subdivision, instrumentality,
official or other regulatory, administrative or judicial authority thereof, and any non-governmental regulatory body to the extent that the rules and regulations or orders of such body have the force of Law. 
 “Government Licenses” means all permits, licenses, franchises, orders, registrations, certificates, variances, approvals and
other authorizations obtained from federal, state or local governments or governmental agencies or other similar rights, and all data and records pertaining thereto, including, without limitation, those listed on the attached “License
Schedule”, but excluding any such permits or licenses which are specifically identified on the License Schedule as not transferable. 
 “Hazardous Substances” means (a) “hazardous substances,” as defined by CERCLA.; (b) “hazardous wastes,” as defined by RCRA; (c) petroleum or petroleum products, natural gas,
synthetic gas and any mixtures thereof; (d) radioactive material, including, without limitation, any source, special nuclear, or by-product material, as defined in 42 U.S.C. §2011 et seq.; (e) asbestos in any form or condition;
(f) polychlorinated biphenyls; (g) biomedical wastes, mold spores or myotoxins; and (h) any other material, substance or waste regarding which liabilities or standards of conduct may be imposed under any Environmental Law. 

 

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 “Indemnitee” means any Person that is seeking indemnification from an Indemnitor
pursuant to the provisions of this Agreement. 
 “Indemnitor” means any party hereto from which any Indemnitee is
seeking indemnification pursuant to the provisions of this Agreement. 
 “Knowledge” of Sellers or any similar phrase
means, with respect to any fact or matter, the actual Knowledge of any officer or director of any Seller or such knowledge as would be reasonably known after reasonable inquiry. 
 “Law” means any statute, law (including common law), constitution, treaty, ordinance, code, order, decree, judgment, rule,
regulation and any other binding requirement or determination of any Governmental Entity. 
 “Leased Real Property”
means all of Sellers’ right, title and interest under all leases, subleases, licenses, concessions and other agreements (written or oral) (the “Leases”), pursuant to which any Seller holds a leasehold or sub-leasehold estate in, or is
granted the right to use or occupy, any land, buildings, improvements, fixtures or other interest in real property which is used in the operation of the Business. 
 “Leasehold Improvements” means all buildings, improvements and fixtures located on any Leased Real Property which are owned by any Seller, regardless of whether such buildings, improvements or
fixtures are subject to reversion of the landlord or other third parties upon the expiration or termination of the Lease for such Leased Real Property. Leasehold Improvements shall include all leasehold improvements located on the Premises.

 “Lien” means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest,
adverse claim or other encumbrance in respect of such property or asset. 
 “Operating Subsidiaries”
means Crave Entertainment, Inc., (“Crave”) and SVG Distribution, Inc., (“SVG”) 
 “Order” means any award, injunction, judgment, decree, order, ruling, subpoena or verdict or other decision issued, promulgated or entered by or with any Governmental Entity of competent jurisdiction. 
 “Permitted Liens” means (a) Liens for current real or personal property taxes not yet due and payable and with respect to
which Sellers maintain adequate reserves, (b) workers’, carriers’ and mechanics’ or other like liens incurred in the ordinary course of business with respect to which payment is not due and that do not impair the conduct of the
businesses of Sellers or the present or proposed use of the 

  

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affected property and (c) liens that are immaterial in character, amount, and extent and which do not detract from the value or interfere with the
present or proposed use of the properties they affect. 
 “Person” means an individual, a corporation, a partnership,
a limited liability company, a trust, an unincorporated association, a Governmental Entity or any agency, instrumentality or political subdivision of a Governmental Entity, or any other entity or body. 
 “Premises” means that certain parcel of real property which is the subject of the real property lease attached hereto as
Exhibit-Premises. 
 “Proprietary Rights” means all of the following owned by, issued to, or licensed to any Seller,
or used in the Business, along with all associated income, royalties, damages and payments due from or payable by any third party (including, without limitation, damages and payments for past, present or future infringements or misappropriations
thereof), all other associated rights (including, without limitation, the right to sue and recover for past, present or future infringements or misappropriations thereof), and any and all corresponding rights that, now or hereafter, may be secured
throughout the world: (i) patents, patent applications, patent disclosures and inventions (whether or not patentable and whether or not reduced to practice) and any reissues, continuations, continuations-in-part, divisions, extensions or
reexaminations thereof; (ii) trademarks, service marks, trade dress, internet domain names or uniform resource locators, logos, slogans, trade names and corporate names and all registrations and applications for registration thereof, together
with all goodwill associated therewith; (iii) copyrights and works of authorship, and all registrations and applications for registration thereof; (iv) mask works and all registrations and applications for registration thereof;
(v) computer software (including, without limitation, data, data bases, database rights and documentation); (vi) trade secrets, confidential information and proprietary data and information (including, without limitation, compilations of
data (whether or not copyrighted or copyrightable), ideas, formulae, compositions, blends, processes, know-how, manufacturing and production processes and techniques, financial and accounting data, business and marketing plans, and customer and
supplier lists and related information). 
 “Stockholder” means Handleman Company, a Michigan corporation.

 “Subsidiary” or “Subsidiaries” means any Person of which (a) such party or any other
Subsidiary of such party is a general partner (excluding partnerships, the general partnership interests of which held by such party or any Subsidiary of such party do not have a majority of the voting interest in such partnership), or (b) at
least a majority of the securities or other interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions with respect to such Person is directly or indirectly owned or
controlled by such party and/or by any one or more of its Subsidiaries. 
  

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 “Tax” or “Taxes” means any and all federal, state, or
local net or gross income, gross receipts, net proceeds, sales, use, ad valorem, value added, franchise, bank shares, withholding, payroll, employment, excise, property, deed, stamp, alternative or add-on minimum, environmental, profits, windfall
profits, transaction, license, lease, service, service use, occupation, severance, energy, unemployment, social security, workers’ compensation, capital, premium, and other taxes, assessments, customs, duties, fees, levies or other governmental
charges of any nature whatever, whether disputed or not, together with any interest, penalties, additions to tax, or additional amounts with respect thereto. 
 “Tax Returns” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any
amendment thereof. 
 “Taxing Authority” means any Governmental Entity having jurisdiction with respect to any Tax.

 “$” means United States dollars. 
 Certain other terms are defined throughout this Agreement and shall have the meanings set forth by such definitions. 
 ARTICLE 2 
 PURCHASE AND SALE OF ASSETS 
 2.1 Purchase and Sale of Assets. 
 (a) On the terms and subject to the conditions contained in this
Agreement, on the Closing Date, Purchaser shall purchase from Sellers, and Sellers shall sell, convey, assign, transfer and deliver to Purchaser, free and clear of all Liens by appropriate warranty bills of sale, warranty deeds, assignments and
other instruments satisfactory to Purchaser and its counsel, all of the following assets of Sellers (collectively, the “Purchased Assets”): 
 (i) all accounts receivable, including without limitation, all trade accounts receivable, notes receivable from customers, vendor credits
and accounts receivable from employees and all other obligations from customers with respect to sales of goods or services, whether or not evidenced by a note and whether current or non-current (all of the foregoing are collectively referred to
herein as “Accounts Receivable”); 
 (ii) all prepayments and prepaid expenses that are transferable
and related to exclusive distribution or publishing contracts or to inventory; 
  

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 (iii) all inventory, including raw materials, finished goods, and contract rights with
regard to inventory in development or in process, including finished goods returned by customers of Sellers post-Closing (“Inventory”); 
 (iv) all furniture, equipment, office supplies, production supplies, spare parts, other miscellaneous supplies and other tangible property
of any kind wherever located (including all such property located in any building, office, warehouse or other space leased, owned or occupied by any Seller and related to the Business or in any warehouse where any of the properties and assets
related to the Business may be located); 
 (v) the data processing equipment and, to the extent assignable, related software
of the Business; 
 (vi) all lists, records and other information pertaining to customer accounts (whether past or current),
suppliers, personnel and agents and all reports, studies, plans, books, ledgers, files and financial, business and accounting records of every kind (including all financial, business and marketing plans), in each case whether evidenced in writing,
electronic data, computer software or otherwise (provided that Sellers shall be entitled to keep a copy of any such items); 
 (vii) all claims, deposits, prepayments, warranties, guarantees, refunds, causes of action, rights of recovery, rights of setoff and rights of recoupment of every kind and nature, other than those relating exclusively to Excluded Assets or
Excluded Liabilities; 
 (viii) the right to bill and receive payment for products shipped or delivered and/or services
performed but unbilled or unpaid as of the Closing; 
 (ix) all Proprietary Rights; 
 (x) all goodwill as a going concern and all other intangible property, including trademarks, copyrights and corporate names of Sellers,
and all goodwill associated with any of them; 
 (xi) all Government Licenses (but excluding any such permits or licenses
which are specifically identified on the License Schedule as not transferable); 
 (xii) all insurance, warranty and
condemnation proceeds received after the date hereof with respect to damage to, nonconformance of or loss to the Purchased Assets; 
  

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 (xiii) all rights to receive mail and other communications addressed to Sellers
including, without limitation, Accounts Receivable payments; 
 (xiv) all telephone numbers (e.g. “800” numbers)
used by Sellers; 
 (xv) all signs and advertising, marketing and promotional materials; 
 (xvi) all web sites and e-mail accounts; 
 (xvii) all Contracts listed on the attached “Assumed Contracts Schedule”; and 
 (xviii) all choses in action, rights and benefits under any warranties, and rights and benefits under any indemnity provision other than those arising under this Agreement. 
 The purchase and sale of the Purchased Assets is referred to in this Agreement as the “Acquisition.” 
 (b) Notwithstanding the foregoing, the following properties, assets, rights and interests of Sellers are expressly excluded from the purchase and sale contemplated hereby (the “Excluded
Assets”) and, as such, are not included in the Purchased Assets: 
 (i) Sellers’ rights under or pursuant to
this Agreement; 
 (ii) Sellers’ general ledger, accounting records, minute books and corporate seal; provided that
Purchaser shall be given copies of the general ledger and accounting records as such documents exist as of the Closing Date; 
 (iii) any right to receive mail and other communications addressed to Sellers relating exclusively to the Excluded Assets or the Excluded Liabilities; 
 (iv) all contracts, agreements and arrangements which are not listed in the Assumed Contracts Schedule; 
 (v) cash, cash equivalents and checks in Sellers’ bank accounts at the effective time of the Closing, all of which shall be
distributed to Sellers in the ordinary course from the bank accounts; 
 (vi) except as provided by Section 2.1(a)(xi),
rights and benefits under all insurance policies; 
 (vii) all interests in real estate (including, without limitation,
fixtures, fittings and improvements thereon, and easements, licenses, rights of way, 

  

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permits, and the other appurtenants thereto, including appurtenant rights in and to public streets, whether or not vacated), whether, owned, leased,
subleased or otherwise; 
 (viii) the rights to that part of the Business which is the subject of the MLA (as hereinafter
defined); and 
 (ix) the properties, assets, rights and interests listed on the attached “Excluded Assets
Schedule.” 
 2.2 Limited Assumption of Liabilities. 
 (a) On the terms and subject to the conditions set forth in this Agreement, in addition to the Purchase Price payable hereunder and as additional consideration for the Purchased Assets, as of the Closing, Purchaser
shall assume and agree to pay, defend, discharge and perform as and when due only the following specific liabilities and obligations of Sellers that relate exclusively to the Business (the “Assumed Liabilities”): 

(i) all obligations relating to any performance obligation due after the Closing or to any fact or circumstance arising after the Closing Date under
the Contracts on the Assumed Contracts Schedule, it being understood that any and all performance obligations due before the Closing Date with respect to the Contracts on the Assumed Contracts Schedule shall remain the obligation of Sellers;

 (ii) such other liabilities as are specifically identified on the “Assumed Indebtedness Schedule.” 
 (b) Notwithstanding anything to the contrary in this Agreement, Purchaser shall not assume or in any way become liable for any of Sellers’ debts,
liabilities or obligations of any nature whatsoever other than the Assumed Liabilities, whether accrued, absolute or contingent, whether known or unknown, whether due or to become due and whether or not related to the Business or the Purchased
Assets, and regardless of when or by whom asserted and whether or not set forth on the Schedules hereto (collectively, the “Excluded Liabilities”). Without limiting the generality of the foregoing, Purchaser shall have no
obligation to accept the return of any inventory sold by any Seller prior to the Closing Date but, if it does so, such inventory shall be credited and paid as provided by Section 2.3. 
 2.3 Purchase Price.  
 (a) In addition to the
assumption of the Assumed Liabilities set forth in Section 2.2(a) above, the purchase price for the Purchased Assets (the “Purchase Price”) shall be equal to the sum of: 
 (i) 95% of the Accounts Receivable aged 90 days or less from the date of the invoice on the Closing Date (excluding such Accounts
Receivable due from Kmart or Sears (“Kmart/Sears Current Accounts Receivable”)) (“Current Accounts Receivable”) collected by Purchaser after the Closing; 
  

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 (ii) Except as set forth in Section 2.3(b)(iii), 50% of the difference between
(x) Accounts Receivable aged over 90 days from the date of the invoice on the Closing Date (“Non-Current Accounts Receivable”) collected by Purchaser after the Closing and (y) reasonable fees, commissions and other
collection costs paid to third-parties, if Sellers consent to the retention of the third party, which consent Sellers shall not unreasonably withhold; 
 (iii) 95% of the Kmart/Sears Current Accounts Receivable if and as collected by Purchaser after closing; 
 (iv) 95% of the Non-Current Accounts Receivable listed on the attached Schedule 2.3(a)(iv) (“Special Non-Current Accounts Receivable”), if collected by Purchaser within 14 days after the date
the customer has committed for payment, as set forth on such Schedule; provided that, if the customer does not pay within such time frame but makes a firm commitment for payment by a new date certain, the parties shall attempt to agree in good faith
(considering, among other factors, the reasons why the original commitment was not met and the anticipated costs of collection) as to whether to keep such receivable as a Special Non-Current Account Receivable, with the prior agreement that the
account shall cease to be a Special Non-Current Account Receivable and will be re-classified as a Non-Current Account Receivable if it is not paid within 3 days after the new commitment date; 
 (v) (X) 75% of the net appraised value of the Inventory at Closing (the “Inventory Value”) plus (Y) 75% of
the net appraised value of re-salable Inventory returned to Purchaser after the Closing, less a 5% restocking fee. On the close of business on the third business day prior to Closing, Sellers shall, at Sellers’ expense, conduct a
physical count of the Inventory. Purchaser and/or its representatives shall have the right to be present and observe the taking of such count. The value of the Inventory shall be based on such physical count (adjusted for transactions
between the date of the count and the Closing Date) and the appraisal by Tiger Valuation Services dated February 9, 2009 provided that, if an item of returned Inventory was not on the appraisal because Sellers did not have any at the time of
the appraisal, then such item shall be valued at 42.675% of Sellers’ cost of such item; and 
 (vi) $100,000. 

 

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 (b) The Purchase Price shall be paid by Purchaser to Sellers as follows: 
 (i) At the Closing, by wire transfer of immediately available funds, the sum of (X) $100,000, (Y) 50% of the Inventory Value,
and (Z) 75% of the Current Accounts Receivable, net of reserves and allowances, as set forth in an Account Receivable Statement prepared by Sellers as of the Closing, which shall be prepared in accordance with GAAP and reasonably acceptable to
Purchaser; plus the amount of pre-paid salary acquired by Purchaser, less a credit for the amount of the accrued vacation assumed by Purchaser; 
 (ii) 12.50% of the Inventory Value at each of April 10, June 10, August 10, and October 10, 2009; 
 (iii) Bi-weekly on the 10th
 and 24th day of each month commencing March 10, 2009, during the remainder of 2009, and
quarterly, on the 10th day of each calendar quarter thereafter commencing with January 10, 2010 and through April 10, 2011, Sellers’
share of the amount by which the aggregate net amount collected by Purchaser from the Closing Date through the end of the immediately preceding calendar month with respect to Accounts Receivable (whether such Accounts Receivable are Current Accounts
Receivable, Non-Current Accounts Receivable, Special Non-Current Accounts Receivable or Kmart/Sears Current Accounts Receivable) exceeds the sum of (X) the amount paid by Purchaser to Sellers pursuant to Section 2.3(b)(i)(Z) and
(Y) Purchaser’s share of the aggregate net amount of the Accounts Receivable collected (examples of the application of this Section 2.3(b)(iii) are set forth on the attached “Schedule 2.3(b)(iii)”); 
 (iv) Bi-weekly, the payment due under Section 2.3(a)(v)(Y); 
 (v) By a credit equal to the full amount of the selling price of any returned Inventory accepted by Purchaser, in its discretion, if such
Inventory was sold by any Seller prior to the Closing Date and the amount of the return exceeds the reserve establish as of the Closing; provided that, if Purchaser has sold the identical item after the Closing to the customer making the return,
returns shall first be applied against Purchaser’s sales and only to the extent of the excess against Sellers. Such credit shall be applied by Purchaser to the next payment(s) due pursuant to this Section 2.3(b); and 
 (vi) Any payment not made when due shall bear interest at a variable the rate of interest equal to two percent (2%) in excess of the
prime rate of interest as set forth in the Wall Street Journal from time to time, from the due date to the payment date. 
 (c) At the
end of four months after the Closing, if the net amount collected with respect to Accounts Receivable has not totaled 105.263% of the amount paid to Sellers at the Closing for Current Accounts Receivable pursuant to Section 2.3(b)(i)(Z) 

  

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less a $250,000 de minimus basket (such deficit, as it may be reduced by future collections of Current Accounts Receivable, the
“Shortfall”), Purchaser may withhold payments due thereafter (but not payments already due) from Purchaser to Sellers relating to all Accounts Receivable, Inventory and Net Publishing and Distribution Profit pursuant to
Section 2.3(b)(ii), (iii) and (iv) and may, to the extent of the then Shortfall, set off against the Shortfall the withheld payments. Whenever the Shortfall has been eliminated (whether by collections or by setoff), Purchaser shall
resume making payments pursuant to Section 2.3(b)(ii), (iii) and (iv), and the amount of the setoff shall be included as a collection of Accounts Receivable in determining the amount payable to Sellers pursuant to Section 2.3(b)(iii).
If the Shortfall is not recouped by Purchaser within two (2) years of the Closing Date then fifty percent (50%) of the Shortfall shall be repaid by Sellers to Purchaser upon demand together with interest from the Closing Date to the
payment date at the rate set forth in Section 2.3(b)(vi). 
 (d) For two years
following the Closing, Purchaser agrees to use its Best Efforts to collect the Accounts Receivable; provided that, (i) Purchaser is not obligated to (X) engage any third party collection agency or engage any attorneys or other third
parties to collect the Accounts Receivable except for the account of Sellers and Purchaser pro rata in proportion to the Purchase Price of an Account Receivable and with Sellers’ express consent, (Y) do business with any particular
customer or (Z) have or attempt to have a given sales volume with any customer and (ii) at any time, Purchaser and Sellers may agree upon an amount to be paid by Purchaser to Sellers in full satisfaction of Sellers’ rights with
respect to the Accounts Receivable. On the 90th and 180th days after the Closing Date Sellers and Purchaser shall meet to review the status of Purchaser’s collection of the Accounts Receivable and, as a result of those meetings or otherwise may agree to transfer any Accounts Receivable to
Sellers with an appropriate adjustment in the Purchase Price. At the end of two years following the Closing, if there has not been an agreement pursuant to the previous sentence, all remaining Accounts Receivable shall be transferred to Sellers. In
addition, at Sellers’ expense, there shall be a monitor at Purchaser’s place of business for six months following the Closing who shall advise Sellers whether Purchaser is adhering to its sales and collections process in order to meet its
obligations to Sellers and whose approval is necessary before Purchaser may authorize the return of any inventory for the account of Sellers, which approval will not be unreasonably withheld or delayed. 
 2.4 Allocation. The parties agree to allocate the aggregate of the Purchase Price as adjusted herein (and all other capitalizable costs) among the
Purchased Assets for all purposes (including financial accounting and tax purposes) in the manner required by Section 1060 of the Internal Revenue Code as shown on the attached “Allocation Schedule”. Purchaser and Sellers agree that
the form of the transactions and the consideration provided for in this Agreement were arrived at on the basis of arm’s length negotiation between Purchaser, on the one hand, and Sellers, on the other hand, and shall be respected by each of
them for federal, state, local and other tax reporting purposes, including filings on Internal Revenue Service Form 8594, and that none of them will assert or maintain a position inconsistent with the foregoing. 
  

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 2.5 Closing and Closing Date. The closing of the Acquisition (the
“Closing”) shall take place at Sellers’ offices at 10:00 a.m. simultaneously with the execution of this Agreement. The date upon which the Closing occurs is herein referred to as the “Closing
Date.” The Closing shall be effective as of 11:59 p.m., Pacific Standard Time, on the Closing Date. 
 2.6 Transactions to be
Effected at the Closing. 
 (a) At the Closing Purchaser shall deliver to Sellers the payment due to Sellers at the Closing pursuant to
Section 2.3(b)(i) in immediately available funds by wire transfer to an account of Sellers designated in writing by Sellers to Purchaser. 
 (b) At the Closing, each Party shall deliver to the other Party all documents, instruments or certificates required to be delivered by it at or prior to the Closing pursuant to this Agreement. 
 ARTICLE 3 
 CONDITIONS TO CLOSING

 3.1 Conditions to Sellers’ Obligations. The obligation of Sellers to consummate the transactions contemplated by this
Agreement is subject to the satisfaction of the following conditions on or before the Closing Date: 
 (a) The representations and warranties
set forth in Article 5 to the extent qualified by materiality shall be true and correct in all respects, and all representations and warranties set forth in Article 5 not so qualified shall be true and correct in all material respects, at and as of
the Closing as though then made and as though the Closing Date were substituted for the date of this Agreement throughout such representations and warranties. 
 (b) Purchaser shall have performed in all material respects all the covenants and agreements required to be performed by it under this Agreement prior to the Closing. 
 (c) All necessary filings with regulatory authorities shall have been made and all waiting periods shall have expired or shall have been terminated,
including all notices and publications. 
 (d) No action or proceeding before any court or government body shall be pending or threatened
which, in the reasonable judgment of Sellers, makes it inadvisable or undesirable to consummate the transactions contemplated by this Agreement by reason of the probability that the action or proceeding will result in a judgment, decree or order
that would prevent the carrying out of this Agreement or any of the transactions contemplated hereby, declare unlawful the transactions contemplated hereby or cause such transactions to be rescinded. 
  

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 (e) Purchaser shall have delivered the portion of the Purchase Price payable at Closing and shall have
assumed the Assumed Liabilities by delivery of an Assumption Agreement, in the form attached hereto as Exhibit 3.1(e) (the “Assumption Agreement”). 
 (f) Purchaser shall have subleased from Sellers the property located at 5000 Birch Street, Suite 6500, Newport Beach, CA 92660, for three months with an
option to extend for up to an additional three months, if notice is given within two months after the Closing, the terms of which shall be Purchaser’s agreement to pay all of Sellers’ verified expenses with respect to such property. At the
end of such sublease, Purchaser shall vacate the subleased premises and shall leave them in broom-clean condition. In addition, Purchaser shall cease using the Canadian facility of Anderson Merchandisers-Canada, Inc. by March 2, 2009, unless
Purchaser and Anderson Merchandisers-Canada otherwise agree. 
 (g) On or prior to the Closing Date, Purchaser shall have delivered to
Sellers each of the following: 
 (i) a certificate from an officer of Purchaser in the form set forth as Exhibit 3.1(g)
attached hereto, dated the Closing Date, stating that the applicable preconditions have been satisfied; 
 (ii) certified
copies of the resolutions duly adopted by Purchaser’s Manager and members authorizing the execution, delivery and performance of this Agreement and the other agreements contemplated hereby, and the consummation of all transactions contemplated
hereby and thereby; 
 (iii) such other documents or instruments as Sellers reasonably request to effect the transactions
contemplated hereby. 
 (h) Any condition specified in this Section 3.1 may be waived by Sellers; provided that no such waiver will be
effective against Sellers unless it is set forth in a writing executed by Sellers. 
 3.2 Conditions to Purchaser’s Obligations.
The obligation of Purchaser to consummate the transactions contemplated by this Agreement is subject to the satisfaction of the following conditions on or before the Closing Date: 
 (a) The representations and warranties set forth in Article 4 to the extent qualified by materiality shall be true and correct in all respects, and all
representations and warranties set forth in Article 4 not so qualified shall be true and correct in all material respects, at and as of the Closing as though then made and as though the Closing Date were substituted for the date of this Agreement
throughout such representations and warranties. 
  

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 (b) Sellers shall have performed in all material respects all of the covenants and agreements required to
be performed by them under this Agreement prior to the Closing. 
 (c) No action or proceeding before any court or government body shall be
pending or threatened which, in the reasonable judgment of Purchaser, makes it inadvisable or undesirable to consummate the transactions contemplated by this Agreement by reason of the probability that the action or proceeding will result in a
judgment decree or order that would prevent the carrying out of this Agreement or any of the transactions contemplated hereby, declare unlawful the transactions contemplated hereby or cause such transactions to be rescinded. 
 (d) On or prior to the Closing Date, Sellers shall have delivered to Purchaser each of the following: 
 (i) a certificate from an officer of Sellers in the form set forth as Exhibit 3.2(d)(i) attached hereto, dated the Closing Date, stating
that the applicable preconditions have been satisfied; 
 (ii) certified copies of the resolutions duly adopted by
Sellers’ boards of directors and stockholders authorizing the execution, delivery and performance of this Agreement and the other agreements contemplated hereby, and the consummation of all transactions contemplated hereby and thereby;

 (iii) copies of all necessary governmental and third party consents, approvals, releases and filings required in order to
effect the transactions contemplated by this Agreement and the other agreements contemplated hereby; 
 (iv) such instruments
of sale, transfer, assignment, conveyance and delivery, in form and substance reasonably satisfactory to counsel for Purchaser, as are required in order to transfer to Purchaser good and marketable title to the Purchased Assets, free and clear of
all Liens, including, without limitation a Trademark and Service Marks Agreement in the form set forth as Exhibit 3.2(d)(iv), collectively, the “Transfer Documents”); 
 (v) such other documents or instruments as Purchaser reasonably requests to effect the transactions contemplated hereby. 
 (e) Sellers shall pay the balance due the lessor pursuant to the Balboa Lease. 
 (f) All proceedings to be taken by Sellers in connection with the consummation of the transactions contemplated hereby and all certificates, instruments
and other documents required to effect the transactions contemplated hereby reasonably requested by Purchaser will be reasonably satisfactory in form and substance to Purchaser and its counsel. 
  

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 (g) Any condition specified in this Section 3.2 may be waived by Purchaser; provided that no such
waiver shall be effective unless it is set forth in a writing executed by Purchaser. 
 3.3 Conditions to Obligations of Purchaser and
Sellers. The obligations of Purchaser and Sellers to consummate the Acquisition are subject to the satisfaction on or prior to the Closing Date of the following conditions: 
 (a) Sellers and Purchaser shall have entered into a mutually acceptable Transition Services Agreement (“TSA”) and a mutually
acceptable Management and License Agreement (“MLA”). 
 (b) No temporary restraining order, preliminary or permanent
injunction or other Order preventing the consummation of the Acquisition shall be in effect. No Action shall be pending or threatened before any court or other Governmental Entity or other Person wherein an unfavorable Order would (i) prevent
consummation of any of the transactions contemplated by this Agreement or (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation. 
 ARTICLE 4 
 REPRESENTATIONS AND WARRANTIES OF SELLERS 
 As an inducement to Purchaser to enter into this Agreement, Sellers and Stockholder, jointly and severally, hereby represent and warrant to Purchaser
that unless otherwise specified, as of the Closing Date: 
 4.1 Organization and Power; Subsidiaries and Investments. Each Seller is a
California corporation duly organized, validly existing and in good standing under the laws of the State of California. Each Seller is qualified to do business as a foreign entity and is in good standing in each jurisdiction listed on the attached
“Corporate Organization Schedule,” which jurisdictions constitute all of the jurisdictions in which the ownership of properties or the conduct of business requires such Seller to be so qualified. Each Seller has all requisite power and
authority and all licenses, permits and authorizations necessary to own and operate its assets and to carry on its business as now conducted and as presently proposed to be conducted. Each Seller has all requisite power and authority to execute and
deliver this Agreement and the other agreements contemplated hereby and to perform its obligations hereunder and thereunder. Except as set forth on the Corporate Organization Schedule, Seller does not own or control (directly or indirectly) any
stock, partnership interest, joint venture interest, equity participation or other security or interest in any other Person. The articles of incorporation of each Seller that have previously been furnished to Purchaser reflects all amendments
thereto and are correct and complete. 
 4.2 Authorization. The execution, delivery and performance by Sellers of this Agreement, the
other agreements contemplated hereby and each of the transactions 

  

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contemplated hereby or thereby have been duly and validly authorized by Sellers and no other act or proceeding on the part of Sellers, their respective board
of directors or the stockholders is necessary to authorize the execution, delivery or performance by Sellers of this Agreement or any other agreement contemplated hereby or the consummation of any of the transactions contemplated hereby or thereby.
No further approval of the shareholders of the Stockholder is necessary to authorize the execution, delivery or performance by Sellers of this Agreement or any other agreement contemplated hereby or the consummation of any of the transactions
contemplated hereby or thereby. This Agreement has been duly executed and delivered by Sellers and this Agreement constitutes, and the other agreements contemplated hereby upon execution and delivery by Sellers will each constitute, a valid and
binding obligation of Sellers, enforceable against each Seller in accordance with its terms. 
 4.3 No Breach. Except as set forth on
the attached “Restrictions Schedule”, the execution, delivery and performance by Sellers of this Agreement and the other agreements contemplated hereby and the consummation of each of the transactions contemplated hereby or thereby do not
and will not (a) violate, conflict with, result in any breach of, constitute a default under, result in the termination or acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice under
any Sellers’ articles of incorporation or bylaws or any contract, agreement, arrangement, indenture, mortgage, loan agreement, lease, sublease, license, sublicense, franchise, permit, obligation or instrument to which any Seller is a party or
by which it is bound or which affect any of the Purchased Assets; (b) result in the creation or imposition of any Lien upon any Purchased Assets; (c) require any authorization, consent, approval, exemption or other action by or notice to
any court, other governmental body or other Person or entity under, the provisions of any law, statute, rule, regulation, judgment, order or decree or any contract, agreement, arrangement, lease, sublease, license, sublicense, franchise, permit,
indenture, mortgage, obligation or instrument to which any Seller is subject, or by which any Seller is bound or affected or to which any Seller or any of the Purchased Assets are bound or affected; or (d) violate or require any consent or
notice under any law, statute, regulation, rule, judgment, decree, order, stipulation, injunction, charge or other restriction of any government, governmental agency or court to which any Seller or any of the Purchased Assets are subject, or by
which any Seller or any of the Purchased Assets is bound or affected. Except as set forth on the Restrictions Schedule, no permit, consent, approval or authorization of, declaration to or filing with, or notice to, any governmental authority or any
third party is required in connection with the execution, delivery or performance by Sellers of this Agreement or the other agreements contemplated hereby, or the consummation by Sellers of any the transactions contemplated hereby or thereby.

 4.4 Account Receivable Statement. The Account Receivable Statement delivered to Purchaser at Closing has been prepared according to
GAAP. 
  

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 4.5 Assumed Contracts. No party (including any Seller) has accelerated, terminated, modified or
canceled any contract, lease, sublease, license, sublicense or other agreement set forth on the attached Assumed Contracts Schedule. 
 4.6
Contracts and Commitments. 
 (a) No Seller is a party to, bound by or subject to any contract, agreement or arrangement, whether
written or oral, except for: 
 (i) this Agreement and the other agreements contemplated hereby; 
 (ii) those contracts, agreements and arrangements described on the attached “Contracts Schedule” which require payments in
excess of $25,000 annually or are otherwise material to the Business; and 
 (iii) contracts, agreement and arrangements which
do not require payments in excess of $25,000 annually or are otherwise not material to the Business. 
 (b) Except as disclosed on the
attached Contracts Schedule: (i) no contract, agreement or arrangement listed in the Contracts Schedule has been breached in any material respect or canceled by the other party that has not been duly cured or reinstated;
(ii) each Seller has performed all of its obligations required to be performed by it under such contracts, agreements and arrangements and such Seller is not in receipt of any written claim of default under any such contract, agreement or
arrangement; and (iii) no event has occurred which with the passage of time or the giving of notice or both would result in a breach or default under any such contract, agreement or arrangement. Each contract, agreement and arrangement required
to be listed on the Contracts Schedule is valid, binding and enforceable. All contracts which are Assumed Contracts are disclosed in the attached Contracts Schedule. 
 (c) The Contracts Schedule sets forth each contract, commitment or obligation of any Seller which is secured by a letter of credit or guarantee (including guarantees by any Seller) and the nature and amount of such
security. 
 (d) Purchaser has been supplied with a true and correct copy of all written contracts, or, where such contracts are oral, true
and complete written summaries of their terms, required to be disclosed on the attached Contracts Schedule, together with all amendments, waivers or other changes thereto. There are no modifications of or additions to any such contract (whether
written or oral) which are not fully described in the attached Contracts Schedule. 
 4.7 Litigation; Proceedings. Except as set forth
in the attached “Litigation Schedule,” there are no actions, suits, proceedings, hearings, orders, investigations, charges, complaints or claims pending or, to Sellers’ Knowledge, threatened against or affecting any Seller or any of
its assets (or, to Sellers’ Knowledge, pending or threatened against or affecting any of the officers, directors, employees or stockholders of any 

  

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Seller, in their capacity as such), or to which any Seller or any of its assets may be bound or affected, at law or in equity, or before or by any federal,
state, municipal, foreign or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, and there is no basis for any of the foregoing; no Seller is subject to any judgment, order or decree of any court
or governmental agency; and since January 1, 2009, no Seller has received any opinion or memorandum or legal advice from legal counsel to the effect that it is exposed, from a legal standpoint, to any liability or disadvantage which may be
material to its business and no Seller has engaged in any legal action to recover monies due it or for damages sustained by it. 
 4.8
Compliance with Laws. Except as set forth in the attached “Compliance Schedule,” to Sellers’ Knowledge, each Seller has complied and is in compliance with, and no Seller has violated any applicable law, ordinance, code, rule,
regulation or requirement of any federal, state, local or foreign government or agency thereof. No notice, claim, charge, complaint, action, suit, proceeding, investigation or hearing has been received by any Seller or filed, commenced or threatened
against any Seller alleging a violation of or liability or potential responsibility under any such law, rule or regulation which has not heretofore been duly cured and for which there is no remaining liability. Each Seller has complied and is in
compliance with all orders, decrees or judgments promulgated or issued by any state, federal, local or foreign regulatory agency. 
 4.9
Tax Matters. 
 (a) Except as set forth in the attached “Taxes Schedule,” each Seller has timely filed all Tax Returns
required to be filed by it, each such Tax Return has been prepared in compliance with all applicable laws and regulations, and all such Tax Returns are true and accurate in all respects. All Taxes due and payable by any Seller have been paid. Each
Seller has delivered to Purchaser correct and complete copies of all federal income Tax Returns filed with respect to such Seller, and all examination reports, and statements of deficiencies assessed against or agreed to by any Seller with respect
to such taxable periods. 
 (b) Except as set forth in the attached Taxes Schedule: 
 (i) with respect to each taxable period of each Seller, either such taxable period has been audited by the relevant Taxing Authority or
the time for assessing or collecting income Tax with respect to each such taxable period has closed and such taxable period is not subject to review by any relevant Taxing Authority; 
 (ii) no deficiency or proposed adjustment which has not been settled or otherwise resolved for any amount of Tax has been proposed,
asserted or assessed by any Taxing Authority against any Seller; 
  

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 (iii) no Seller has consented to extend the time in which any Tax may be assessed or
collected by any Taxing Authority; 
 (iv) no Seller has requested or been granted an extension of the time for filing any Tax
Return to a date later than the Closing Date; 
 (v) there is no action, suit, Taxing Authority proceeding or audit now in
progress, pending or, to Sellers’ Knowledge, threatened against or with respect to any Seller with respect to any Tax; 
 (vi) no Seller is a party to or bound by any Tax allocation or Tax sharing agreement, and no Seller has any current or potential contractual obligation to indemnify any other Person with respect to Taxes; 
 (vii) no Seller reasonably expects any Taxing Authority to claim or assess any additional Taxes for any period; 
 (ix) no claim has ever been made by a Taxing Authority in a jurisdiction where a Seller does not pay Tax or file Tax Returns that such
Seller is or may be subject to Taxes assessed by such jurisdiction; and 
 (x) each Seller has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing to any employee, creditor, independent contractor or other third party. 
 (c) The Taxes Schedule contains a list of states, territories and jurisdictions (whether foreign or domestic) in which any Seller is required to file Tax Returns relating to the Business. 
 4.10 Proprietary Rights. The attached “Proprietary Rights Schedule” sets forth a correct and complete list of all material Proprietary
Rights owned or licensed by any Seller or for which any Seller has a valid right to use. Except as set forth on said Schedule, (i) the applicable Seller owns, or has the right to use pursuant to valid and effective agreements, all
such Proprietary Rights; (ii) the consummation of the transactions contemplated hereby will not alter or impair any such rights; (iii) the applicable Seller has the right to use all material Proprietary Rights owned by third parties
which are used in the Business; (iv) no claims are pending or, to the Knowledge of Sellers, threatened against any Seller by any Person with respect to the use of any material Proprietary Rights or challenging or questioning the validity
or effectiveness of any license or agreement relating to the same, nor is there any Basis therefor; (v) the current use by any Seller of the material Proprietary Rights does not infringe on the rights of any Person nor is there
any basis therefore; (vi) no person is infringing upon or otherwise violating the Proprietary Rights; (vii) there are no pending claims or charges brought by any Seller against any Person with respect to the use of any
Proprietary Rights or the enforcement of any of such Seller’s rights relating to the Proprietary Rights; and (viii) the Sellers own or possess adequate rights in perpetuity to use all Proprietary Rights necessary to conduct the
Business as it is now conducted. 
  

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 4.11 Brokerage. Except as set forth on the attached “Brokerage Schedule,” there are no
claims for brokerage commissions, finders fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement made or alleged to have been made by or on behalf of Sellers or any
stockholder of Sellers. 
 4.12 Names and Locations. During the three-year period prior to the execution and delivery of this
Agreement no Seller has used any name or names (other than the use of any trade names set forth on the Proprietary Rights Schedule) under which it has invoiced account debtors, maintained records concerning its assets or otherwise conducted business
other than the exact name under which it has executed this Agreement, and all of the tangible Purchased Assets are located at the Leased Real Property. 
 4.13 Government Licenses. Each Seller has all authorizations, approvals, Government Licenses and orders of and from all Government Entities necessary to carry on its portion of the Business as it is now being
conducted, to own or hold under lease the properties and assets it owns or holds under lease and to perform all of its obligations under the agreements to which it is a party. Complete and accurate copies of all Government Licenses are attached to
the Government Licenses Schedule. 
 4.14 Environmental Matters. Since January 1, 2006, the ownership, leasing, use, occupancy
and operation of any assets or premises by any Seller, including the Leased Real Property and all other assets or premises currently or formerly owned, leased, used, occupied or operated by any Seller (the “Company and Subsidiary
Properties”) and the conduct of the Business are and at all times have been in compliance in all material respects with all applicable Environmental Laws. There is no material liability pursuant to any Environmental Laws attaching to
any Seller or to the Company and Subsidiary Properties or the ownership, leasing, use, occupancy and operation thereof by any Seller or otherwise in connection with the conduct of the Business. No Hazardous Substances are present at, on, in, or
under, or have been discharged on or released from any Company and Subsidiary Properties, or disposed of on-site or off-site in a manner, quantity or condition that could result in a liability under Environmental Laws. No Seller has received any
communication alleging that such Seller is not or in the past six (6) years was not, in compliance with any applicable Environmental Laws. 
 4.15 Employment Agreements, ERISA, etc.. Except as set forth on the attached “Employee Benefit Schedule” with respect to the Business, (i) no Seller has any employment or other agreement with employees or agents
of, or consultants to, the Business; (ii) no Seller maintains or contributes to any “employee benefit plan” (within the meaning of Section 3 of the Employee Retirement Income Security Act of 1974, as amended, including the
regulations promulgated thereunder (“ERISA”)), including, but 

  

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not limited to, any bonus, percentage compensation, profit sharing, deferred compensation, retirement, pension or union plan, or any other agreement, policy,
or practice providing pension or welfare benefits to current or former employees of the Business; (iii) Each of the employee benefit plans, agreements, policies and practices disclosed on said Schedule (the “Plans”) has
been duly adopted and operated in accordance with its provisions and is in material compliance with all applicable requirements of ERISA and the Code; (iv) none of the Plans is a “multiemployer plan” (within the meaning of Sections 3
or 4001 of ERISA); (v) each of the Plans which is intended to be a qualified plan under Section 401(a) of the Code is so qualified and has received a favorable determination of the Internal Revenue Service to that effect; (vi) each
Seller has timely made all contributions required to be made to each of the Plans by law or by the terms of the Plan, has timely complied with all reporting and disclosure requirements applicable to each of the Plans under ERISA and the Code, and
has not breached any of the fiduciary responsibility provisions of Title I of ERISA nor engaged in any transaction prohibited under Section 406 of ERISA or Section 4975 of the Code; (vii) such Schedule sets forth the unfunded current
liability and unfunded accrued liability of each Plan that is subject to Section 302 of ERISA or Section 412 of the Internal Revenue Code (the “Code”) and no such Plan had an accumulated funding deficiency, whether
or not waived, as of the last day of the most recently ended fiscal year of such Plan. With respect to each Plan subject to the provisions of Title IV of ERISA: except as set forth on said Schedule, (i) no reportable event (within the meaning
of Section 4043(b) of ERISA) has occurred; (ii) there exists no condition or fact which could result in the termination of any such Plan by the Pension Benefit Guaranty Corporation (the “PBGC”) or the appointment of
a trustee to administer any such Plan; and (iii) except for premiums due in the ordinary course, no Seller has incurred and does not expect to incur any liability to the PBGC. To the Knowledge of Sellers, no event has occurred which would cause
any Seller to incur any liability under ERISA or the Code to any person in respect of any employee benefit plan maintained, or to which contributions are or were made, by any trade or business that is under common control with Sellers. There are no
material liabilities, contingent or otherwise, of any Seller under any of the Plans which are not insured by fully paid and non-assessable insurance policies. Other than usual claims for benefits arising under the Plans in the normal course, there
are no, and the transactions contemplated by this Agreement will not give rise to, any claims, suits or proceedings which might cause any Seller to incur any liability to any employee or former employee of the Business, or beneficiary under any
Plan, except for wages and benefits accrued through the Closing and possible severance payments. 
 4.16 Labor Relations. Each Seller
is in compliance in all material respects with all applicable Laws respecting employment and employment practices, terms and conditions of employment, wages and hours, and is not engaged in any unfair labor or unlawful employment practice. There is
no: (a) unlawful employment practice discrimination charge pending before the Equal Employment Opportunity Commission (the “EEOC”) or any EEOC recognized state referral agency or, to the Knowledge of Sellers, threatened,
against or involving or affecting any Seller; (b) unfair labor practice 

  

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charge or complaint against any Seller pending before the National Labor Relations Board (the “NLRB”) or to the Knowledge of Sellers
threatened, against or involving or affecting any Seller; (c) labor strike, dispute, slowdown or stoppage actually pending or, to the Knowledge of Sellers, threatened against or involving or affecting any Seller and no NLRB representation
question exists respecting any of its employees; (d) grievance or arbitration proceeding pending and no written claim therefor exists; and (e) collective bargaining agreement that is binding on any Seller. No organizational efforts
involving any of Sellers’ employees have been made for the past four (4) years, and to the Knowledge of Sellers, no such organizational efforts are presently being made. No union or other collective bargaining unit has been certified or
recognized by any Seller as representing any of such Seller’s employees during the past four (4) years. During the past four (4) years, no union or collective bargaining unit has sought such certification or recognition, and, to the
Knowledge of Sellers, no union or collective bargaining unit is seeking or currently contemplating seeking any such certification or recognition. There has not been any labor strike, slow down, work stoppage, concerted refusal to work overtime or
other similar labor action, and, to the Knowledge of Sellers, no such action has been threatened, against or affecting any Seller. 
 4.17
Title to Assets. Each Seller has good and marketable title to, and are the lawful owners of all of the Purchased Assets free and clear of all Liens except for the Permitted Liens. No unreleased instrument encumbering any of the Purchased
Assets has been recorded, executed or delivered. 
 4.18 Condition of Properties. Except for the representations and warranties
otherwise set forth in this Article 4, the tangible Purchased Assets are being sold “as-is, where-is.” 
 4.19 Inventory.
All of the Inventory is (subject to reserves established by the Sellers pursuant to GAAP for slow-moving, obsolete, outmoded or scrap inventory) current, merchantable, usable and salable in the ordinary course of business, using sales practices
consistent with each Seller’s past practices. With the exception of items of below standard quality which have been written down to their estimated net realizable value, the Inventory is free from defects in materials and workmanship. The
Inventory is valued in accordance with GAAP at the lower of cost or net realizable value, with cost determined using the first in, first out accounting method. No Seller has any outstanding sales on consignment, sales on approval, sales on return or
guaranteed sales. 
 4.20 Warranties. No Seller has made any oral or written warranties with respect to the quality or absence of
defects of the products or services which it has sold or performed which are in force as of the date hereof, except for those warranties which are described in the attached “Warranty Schedule”. There are no claims pending or, to
Sellers’ Knowledge, anticipated or threatened against any Seller with respect to the quality of or absence of defects in such products or services, nor is there any basis therefor. 
  

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 4.21 Disclosure. Neither this Article 4, the Schedules and Exhibits hereto nor any writing
delivered by Sellers to Purchaser in connection with the transactions contemplated hereby contain any untrue statement of a material fact or omits a material fact by Sellers necessary to make the statements contained herein or therein, in light of
the circumstances in which they were made, not misleading. There is no material fact which has not been disclosed to Purchaser which materially adversely affects or could reasonably be anticipated to materially adversely affect Sellers or their
assets. 
 4.22 Closing Date. All of the representations and warranties of Sellers contained in this Article 4 and elsewhere in
this Agreement and all information delivered in any schedule, attachment or exhibit hereto or in any certificate delivered by Sellers to Purchaser are true and correct on date of this Agreement and shall be true and correct on the Closing Date,
except to the extent that Sellers have advised Purchaser otherwise in writing prior to the Closing. 
 ARTICLE 5 
 REPRESENTATIONS AND WARRANTIES OF PURCHASER 
 Purchaser represents and warrants to Sellers that each statement contained in this Article 5 is true and correct in all material respects as of the date hereof, except as set forth in the disclosure schedule dated and delivered as of the
date hereof by Purchaser to Seller (the “Purchaser Disclosure Schedule”), which is attached to this Agreement and is designated therein as being the Purchaser Disclosure Schedule. 
 5.1 Organization and Good Standing. Purchaser is a limited liability company duly organized, validly existing and in good standing under the Laws
of the jurisdiction of its organization, has all requisite corporate power to own, lease and operate its properties and to carry on its business as now being conducted. 
 5.2 Authority and Enforceability. Purchaser has the requisite power and authority to enter into this Agreement and to consummate the Acquisition. The execution and delivery of this Agreement and the
consummation of the Acquisition have been duly authorized by all necessary corporate action on the part of Purchaser. This Agreement has been duly executed and delivered by Purchaser and, assuming due authorization, execution and delivery by
Sellers, constitutes the valid and binding obligation of Purchaser, enforceable against it in accordance with its terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or other similar
Laws affecting or relating to creditors’ rights generally, and (b) the availability of injunctive relief and other equitable remedies. 
 5.3 No Conflicts; Authorizations. 
 (a) The execution and delivery of this Agreement by Purchaser do not, and the
consummation of the Acquisition by Purchaser will not, (i) violate the provisions of any of the Charter Documents of Purchaser, (ii) violate any Contract to which Purchaser 

  

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is a party, (iii) to the Knowledge of Purchaser, violate any Law of any Governmental Entity applicable to Purchaser on the date hereof, or (iv) to
the Knowledge of Purchaser, result in the creation of any Liens upon any of the assets owned or used by Purchaser, except in each such case where such violation or Lien would not reasonably be expected to impair materially the ability of Purchaser
to perform its obligations under this Agreement or consummate the Acquisition. 
 (b) No Authorization or Order of, registration, declaration
or filing with, or notices to any Governmental Entity is required by Purchaser in connection with the execution and delivery of this Agreement and the consummation of the Acquisition, except for (i) such filings as may be required under the HSR
Act, or (ii) such Authorizations, Orders, registrations, declarations, filings and notices the failure to obtain or make which would not reasonably be expected to impair materially the ability of Purchaser to perform its obligations under this
Agreement or consummate the Acquisition. 
 5.4 Availability of Funds. Purchaser has cash available or has existing borrowing
facilities which together are sufficient to enable it to consummate the Acquisition. 
 5.5 Brokers or Finders. Except as set forth on
the Purchaser Disclosure Schedule, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on
behalf of Purchaser or any Affiliate of Purchaser. 
 ARTICLE 6 
 COVENANTS OF SELLERS 
 6.1 Notification of Certain Matters. Sellers shall
give prompt notice to purchaser of (i) any notice or other communication from any third party alleging that the consent of such third party is or may be required in connection with the Acquisition, (ii) any notice or other communication
from any Governmental Entity in connection with the Acquisition. 
 6.2 Restrictive Covenants. 
 (a) Each Seller covenants that, commencing on the Closing Date and ending on the 3 year anniversary of the Closing Date (the “Noncompetition
Period”), such Seller shall not, throughout North America, and it shall cause its Affiliates not to, engage in, directly or indirectly, in any capacity, or have any direct or indirect ownership interest in, or permit such Seller’s
or any such Affiliate’s name to be used in connection with, any business which is engaged, either directly or indirectly, in the Business (the “Restricted Business”). It is recognized that the Restricted Business is
expected to be conducted throughout North America and that more narrow geographical limitations of any nature on this non-competition covenant are therefore not appropriate. Notwithstanding the foregoing, Sellers may conduct the business set forth
in the MLA. 
  

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 (b) Each Seller covenants that, during the Noncompetition Period, such Seller shall not, and it shall
cause their Affiliates not to, directly or indirectly, solicit or entice, or attempt to solicit or entice, any clients or customers of Purchaser or potential clients or customers of Purchaser for purposes of diverting the Restricted Business from
Purchaser. 
 (c) Each Seller covenants that, for a period of 36 months after the Closing Date, such Seller shall not, and it shall cause its
Affiliates not to, solicit the employment of any person who was employed as an employee by Purchaser on the Closing Date. 
 (d) Each Seller
acknowledges that the restrictions contained in this Section 6.2 are reasonable and necessary to protect the legitimate interests of Purchaser and constitute a material inducement to Purchaser to enter into this Agreement and consummate the
Acquisition. Each Seller acknowledges that any violation of this Section 6.2 will result in irreparable injury to Purchaser and agrees that Purchaser shall be entitled to preliminary and permanent injunctive relief, without the necessity of
proving actual damages, as well as an equitable accounting of all earnings, profits and other benefits arising from any violation of this Section 6.2, which rights shall be cumulative and in addition to any other rights or remedies to which
Purchaser may be entitled. 
 (e) In the event that any covenant contained in this Section 6.2 should ever be adjudicated to exceed the
time, geographic, product or service, or other limitations permitted by applicable Law in any jurisdiction, then any court is expressly empowered to reform such covenant, and such covenant shall be deemed reformed, in such jurisdiction to the
maximum time, geographic, product or service, or other limitations permitted by applicable Law. The covenants contained in this Section 6.2 and each provision thereof are severable and distinct covenants and provisions. The invalidity or
unenforceability of any such covenant or provision as written shall not invalidate or render unenforceable the remaining covenants or provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such covenant or provision in any other jurisdiction. 
 6.3 Employees. Purchaser shall have no obligation to offer to
hire any of Sellers’ employees. As set forth in the TSA, Sellers are willing to provide transitional services of its employees, at Purchaser’s expense, through April 30, 2009. If Purchaser desires to obtain transitional services from
any of Sellers’ employees after that date, Purchaser shall hire such employees, and Sellers shall not be responsible for their severance claims. 
 Purchaser may offer employment to such of Sellers’ employees who are employed at the Business as it deems appropriate on such terms and conditions it deems appropriate. Sellers agree to encourage such employees
to whom Purchaser offers employment to accept employment with Purchaser. 
  

 -25- 

 Purchaser shall, as promptly as possible following the Closing Date, notify Sellers of those employees to
whom it will offer employment. Those employees who accept such offers are referred to as “Retained Employees”. Sellers may terminate all other employees. Nothing in this Agreement shall be interpreted to create a contractual
right to continuing employment for any employee of any Seller. 
 Except as provided in the TSA, each Seller shall retain the responsibility
for payment of all pay holdbacks, accrued vacation and sick pay, bonuses, medical, dental, health and disability claims incurred by any Retained Employees prior to the date of hire by Purchaser, and Purchaser shall not assume any liability with
respect to such claims; provided, however, that the TSA may provide for Purchaser to take the prepaid employee advance asset (paying Sellers for such item) and the vacation pay accrual (being paid by Sellers for such item) for the Retained
Employees. 
 Each Seller agrees that it shall retain, consistent with its normal employment practices, all liability and obligation, if any,
(including, without limitation, the liability and obligation for all severance, wages, salary, vacation pay and unemployment, medical, dental, health and disability benefits) for those former employees of any Seller who retired or terminated
employment prior to the Closing Date or otherwise do not become employees of Purchaser. 
 6.4 Assignment of Contracts.
Notwithstanding the foregoing, no Assumed Contract shall be deemed to be assigned to Purchaser to the extent that such assignment is prohibited by Law or by a valid and enforceable prohibition to such an assignment contained in such Contract until
the necessary waiver or consent (whether express or by acquiescence) to such assignment has been obtained or such provision has been rendered ineffective or unenforceable by Law, action of the parties or otherwise, whether before or after the
Closing Date. In any event, however, Sellers shall at the request and under the direction of Purchaser, at Purchaser’s expense, in the name of Sellers or otherwise, attempt to obtain such waivers and consents as soon as possible and, in the
meantime, take such action as shall in the reasonable opinion of Purchaser be necessary or proper (a) in order that the rights, benefits and obligations of Sellers under the Assumed Contracts are preserved for the benefit of Purchaser and
(b) to facilitate the collection of monies due and payable and to become due and payable to Sellers in respect of such Assumed Contracts, and Sellers shall hold all such monies in trust for the benefit of and shall promptly pay such amounts to
Purchaser, less all charges properly allocable thereto incurred by Sellers but which would have been incurred by Purchaser if consent to assignment of such Assumed Contracts had been obtained on or prior to the Closing Date. If and when any such
consents or approvals shall be obtained, then the Sellers shall promptly assign their right and obligations thereunder to the Purchaser without the payment of any consideration therefor. 
  

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 ARTICLE 7 
 COVENANTS OF PURCHASER AND SELLERS 
 7.1 Public Announcements. Neither Purchaser nor Sellers
shall issue any press releases or otherwise make any public statements with respect to the transactions contemplated by this Agreement, except: 
 (a) Purchaser or Sellers may, without such approval, make such press releases or other public announcement as it believes are required pursuant to any listing agreement with any national securities exchange or stock market or applicable
securities Laws, in which case the party required to make the release or announcement shall allow the other party reasonable time to comment on such release or announcement in advance of such issuance; provided, further, that each of the parties may
make internal announcements to their respective employees that are consistent with the parties’ prior public disclosures regarding the Acquisition; 
 (b) After the signing of this Agreement Purchaser may, subject to Sellers’ review and approval, issue a public statement regarding the execution of this Agreement and a general description of the contemplated
transactions. Sellers shall not unreasonably withhold such approval. 
 7.2 Further Assurances. Subject to the terms of this
Agreement, each of Purchaser and Sellers shall execute such documents and other instruments and take such further actions as may be reasonably required to carry out the provisions hereof and consummate the Acquisition. 
 7.3 Name Changes by Sellers. From and after the Closing, Sellers will cease using the names “Crave,” “Crave Entertainment,”
“Star Video Games” or any abbreviations thereof and thereafter will not use any substantially similar or confusingly similar names or include them in any logo. In addition, promptly after the Closing, each Seller will change its corporate
name to a name that does not contain the words “Crave”, “Star” or any substantially similar or confusingly similar name, and will file that name change in all state jurisdictions in which such Seller has presently registered the
name for purposes of maintaining its corporate business and doing business as a foreign corporation. 
 ARTICLE 8 
 ADDITIONAL AGREEMENTS; COVENANTS AFTER CLOSING 
 8.1 Indemnification, 
 (a) Survival. Notwithstanding the right of Purchaser to fully investigate the affairs of
Sellers, and notwithstanding any Knowledge of facts determined or determinable by Purchaser pursuant to such investigation or right of investigation, 

  

 -27- 

 
Purchaser has the right to rely fully upon the representations, warranties, covenants and agreements of Sellers set forth in this Agreement. All
representations, warranties, covenants and agreements set forth in this Agreement or in any Schedule or Exhibit to this Agreement will survive the Closing Date, and the consummation of the transactions contemplated hereby and will not be affected by
any examination made for or on behalf of any of the parties hereto or the Knowledge of any of their officers, directors, stockholders, employees, agents or stockholder or the acceptance of any certificate. Purchaser represents and warrants to
Sellers and Stockholder that it and its shareholders, affiliates and agents do not have any Knowledge of a breach by Sellers or Stockholder of any of its representations and warranties. 
 (b) Sellers’ and Stockholder’s Indemnification. 
 (i) Sellers and Stockholder shall, jointly and severally, indemnify Purchaser and hold it harmless against any loss, liability,
deficiency, diminution in value, damage or expense (including reasonable legal expenses and costs and including interest and penalties) (a “Purchaser Loss”) which Purchaser may suffer, sustain or become subject to, as a
result of or by virtue of (A) the breach by Sellers of any representation or warranty made by Sellers contained in this Agreement or any writing delivered in connection with this Agreement ; (B) any breach by Sellers of any covenant or
agreement (other than the representations and warranties which are covered by the foregoing clause (A)) contained in this Agreement or any writing delivered in connection with this Agreement; (C) any claims of any brokers or finders claiming
by, through or under any Seller; (D) any claims with respect to any Excluded Liability, or (E) any claim or liability (other than an Assumed Liability) arising from the operation of the Business or the ownership or use of the Purchased
Assets prior to the Closing Date. Purchaser may offset any Purchaser Losses against the balance owed by Purchaser to Sellers pursuant to Section 2.3. 
 (ii) With respect to any claim or claims for breaches or alleged breaches of representations and warranties contained in Article 4 hereof, Sellers and Stockholder will not be liable with respect to any breach or
alleged breach of such Article 4 representations and warranties unless written notice of a possible claim for indemnification with respect to such breach or alleged breach is given by the Purchaser to Sellers on or before the Survival Date, it
being understood that so long as such written notice is given on or prior to the Survival Date, such representations and warranties shall continue to survive until such matter is resolved. For purposes of this Agreement, the term
“Survival Date” shall mean the second anniversary of the Closing Date. 
  

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 (iii) The indemnification provided for in Section 8.1(b)(i)(A) above is subject to
each of the following limitations: Sellers and Stockholder shall not be liable to indemnify Purchaser pursuant to Section 8.1(b)(i)(A) unless and until Purchaser has suffered Losses by breaches in excess of $100,000 in the aggregate (the
“Basket”) (at which point Sellers and Stockholder will be obligated to indemnify Purchaser for all Purchaser Losses in excess of the Basket); provided that Purchaser Losses below $10,000, individually, shall be considered de
minimus and not covered by this indemnity provision; and provided further that Sellers’ and Stockholder’s aggregate liability for all Purchaser Losses indemnifiable under Section 8.1(b)(i)(A) shall not exceed the Purchase Price.
Sellers and Stockholder shall be liable for any Purchaser Loss for which Purchaser is entitled to indemnification, regardless of whether Purchaser is entitled to receive reimbursement under any insurance policy. 
 (iv) It is expressly agreed that Sellers’ and Stockholder’s liability to indemnify Purchaser pursuant to Sections 8.1(b)(i)(B),
(C), (D) and (E) are not subject to the limitations of Section 8.1(b)(ii) and (iii). 
 (c) Purchaser’s
Indemnification. 
 (i) Purchaser agrees to indemnify Sellers and hold Sellers harmless against any loss, liability,
deficiency, diminution in value, damage or expense (including reasonable legal expenses and costs and including interest and penalties) (a “Seller Loss”) which Sellers may suffer, sustain or become subject to, as a result of
or by virtue of (A) the breach by Purchaser of any representation or warranty or covenant made by Purchaser contained in this Agreement or any writing delivered in connection with this Agreement; or (B) the conduct of Purchaser’s
operations of the Business or use of the Purchased Asset after the Closing Date, but not to the extent the matter giving rise to such Seller Loss constitutes an Excluded Liability, or constitutes, results from or arises out of any breach of
Sellers’ representations or warranties or covenants contained in this Agreement or any writing delivered in connection with this Agreement or Sellers’ actions or operations prior to the Closing Date. 
 (ii) With respect to any claim or claims for breaches or alleged breaches of representations and warranties contained in Article 5 hereof,
Purchaser will not be liable with respect to any breach or alleged breach of such Article 5 representations and warranties unless written notice of a possible claim for indemnification with respect to such breach or alleged breach is given by the
claiming Seller Indemnity to Purchaser, on or before the first anniversary of the Closing Date, it being understood that so long as such written notice is given on or prior to such anniversary date, 

  

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such representations and warranties shall continue to survive until such matter is resolved. Notwithstanding the foregoing, and subject to the following
sentence, in the case of Seller Losses resulting from a breach set forth in Section 8(c)(i)(A), Purchaser shall not be liable for indemnification hereunder unless and until the aggregate amount of such Seller Losses exceed $100,000 (the
“Purchaser Basket”) (at which point Purchaser shall be obligated to indemnify Sellers for all Seller Losses in excess of the Purchaser Basket); provided that Seller Losses below $10,000, individually, shall be considered de
minimus and not covered by this indemnity provision 
 (d) Indemnification Procedures. 
 (i) Notice of Claim. Any party making a claim for indemnification (an “Indemnitee”) must give the party
from whom indemnification is sought (an “Indemnitor”) written notice of such claim describing such claim and the nature and amount of such Loss, to the extent that the nature and amount thereof are determinable at such time
(a “Claim Notice”) promptly after the Indemnitee receives any written notice of any action, lawsuit, proceeding, investigation or other claim (a “Proceeding”) against or involving the Indemnitee by a
third party or otherwise discovers the liability, obligation or facts giving rise to such claim for indemnification; provided that the failure to notify or delay in notifying an Indemnitor will not relieve the Indemnitor of its obligations,
except to the extent that the Indemnitor is materially prejudiced as a result thereof. 
 (ii) Control of Defense;
Conditions. With respect to the defense of any Proceeding against or involving an Indemnitee in which the claimant seeks only the recovery of a sum of money for which indemnification is provided, at its option the Indemnitor may appoint as lead
counsel of such defense a legal counsel selected by the Indemnitor, reasonably acceptable to the Indemnitee; provided that before the Indemnitor assumes control of such defense it must first: 
 (A) enter into an agreement with the Indemnitee (in form and substance satisfactory to the Indemnitee) pursuant to which the Indemnitor
agrees to be fully responsible (with no reservation of any rights other than the right to be subrogated to the rights of the Indemnitee) for all Losses relating to such Proceeding and unconditionally guarantees the payment and performance of any
liability or obligation which may arise with respect to such Proceeding or the facts giving rise to such claim for indemnification; and 
  

 -30- 

 (B) furnish the Indemnitee with evidence that the Indemnitor, in the Indemnitee’s
sole judgment, is and will be able to satisfy any such liability or obligation. 
 (iii) Control of Defense; Exceptions,
etc. The Indemnitee will be entitled to participate in the defense of such claim and to employ separate counsel of its choice for such purpose at its own expense; provided that notwithstanding the foregoing, the Indemnitor shall bear the fees
and expenses of such separate counsel incurred prior to the date upon which the Indemnitor effectively assumes control of such defense. The Indemnitor shall not be entitled to assume control of the defense of such claim, and shall pay the fees and
expenses of legal counsel retained by the Indemnitee, if: 
 (A) the Indemnitee reasonably believes that a conflict of
interest exists or could arise which, under applicable principles of legal ethics, could prohibit a single legal counsel from representing both the Indemnitee and the Indemnitor in such Proceeding; or 
 (B) a court of competent jurisdiction rules that the Indemnitor has failed or is failing to prosecute or defend such claim. 

(iv) Settlement of Claims. The Indemnitor must obtain the prior written consent of the Indemnitee (which will not be
unreasonably withheld) prior to entering into any settlement of any claim or Proceeding or ceasing to defend any claim or Proceeding. 
 (e)
Payments. Any payment pursuant to a claim for indemnification shall be made not later than thirty (30) days after receipt by the Indemnitor of written notice from the Indemnitee stating the amount of the claim, unless the claim is
subject to defense as provided in Section 8.1, in which case payment shall be made not later than thirty (30) days after the amount of the claim is finally determined. Any payment required under this Section 8.1 which is not made when
due shall bear interest at a variable rate equal to two percent (2%) in excess of the prime rate of interest as set forth in the Wall Street Journal from time to time. 
 8.2 Mutual Assistance. Each of the parties hereto agrees that they will mutually cooperate in the expeditious filing of all notices, reports and
other filings with any governmental authority required to be submitted jointly by any of the parties hereto in connection with the execution and delivery of this Agreement, the other agreements contemplated hereby and the consummation of the
transactions contemplated hereby or thereby. Subsequent to the Closing, each of the parties hereto, at its own cost, will assist each other (including by the retention of records and the provision of access to relevant records) in the preparation of
their respective Tax Returns and the filing and execution of 

  

 -31- 

 
Tax elections, if required, as well as in the defense of any audits or litigation that may ensue as a result of the filing thereof, to the extent that such
assistance is reasonably requested. 
 8.3 Expenses. Except as otherwise set forth in this Agreement, each party hereto shall be
solely responsible for and shall bear all of its own costs and expenses incident to its obligations under and in respect of this Agreement and the transactions contemplated hereby, including, but not limited to, any such costs and expenses incurred
by any party in connection with the negotiation, preparation and performance of and compliance with the terms of this Agreement (including, without limitation, the fees and expenses of legal counsel, accountants, and consultants), whether or not the
transactions contemplated hereby are consummated. 
 8.4 Specific Performance. Each of the parties hereto acknowledges and agrees that
the other would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or are otherwise breached. Accordingly, each of the parties hereto agrees that the other shall be
entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof in any action instituted in any court in the United States or in any
state having jurisdiction over the parties and the matter in addition to any other remedy to which it may be entitled pursuant hereto. 
 8.5
Further Transfers. Each party hereto shall execute and deliver such further instruments and take such additional action as any other party hereto may reasonably request to effect or consummate the transactions contemplated hereby. Each
such party shall, on or prior to the Closing, use commercially reasonable efforts to fulfill or obtain the fulfillment of the conditions precedent to the consummation of the transactions contemplated hereby, including the execution and delivery of
any documents, certificates, instruments or other papers that are reasonably required for the consummation of the transactions contemplated hereby. 
 8.6 Communications. All mail and other communications received by Sellers at any time after the Closing Date related to the Purchased Assets or Assumed Liabilities shall be promptly turned over to Purchaser by the recipient; provided
that the recipient may keep a copy of such communication. All mail and other communications relating exclusively to aspects of Sellers other than the Purchased Assets or Assumed Liabilities received by Purchaser at any time after the Closing shall
be promptly turned over to Sellers by Purchaser. 
 8.7 Sales Taxes. Purchaser shall be responsible for the payment of all sales taxes
assessed on the sale of tangible personal property to the extent such property is taxable, notwithstanding Purchaser’s resale certificate. 
  

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 8.8 Amendment and Waiver. This Agreement may not be amended, altered or modified except by a
written instrument executed by Purchaser and Sellers. No course of dealing between or among any persons having any interest in this Agreement will be deemed effective to modify, amend or discharge any part of this Agreement or any rights or
obligations of any Person under or by reason of this Agreement. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute, a waiver of any other provisions, whether or not similar, nor shall any waiver constitute a
continuing waiver. 
 8.9 Notices. All notices, demands and other communications to be given or delivered to Purchaser or Sellers
under or by reason of the provisions of this Agreement will be in writing and will be deemed to have been given when personally delivered, sent by reputable overnight courier or transmitted by facsimile or telecopy (transmission confirmed), to the
addresses indicated below (unless another address is so specified in writing): 
 If to Sellers: 
 Crave Entertainment Group, Inc. 
 c/o
Handleman Company 
 Attention: Rozanne Kokko 
 500 Kirts 
 Troy, MI 48084 
 Copy to 
 Pepper Hamilton LLP 
 100 Renaissance Center 
 Suite 3600 
 Detroit, MI 48243 
 Attention: Dennis S. Kayes

 If to Purchaser: 
 Fillpoint LLC 
 200 Fillpoint Drive 
 Mechanicville, New York 12118 
 Attention: Glenn Rockwood 
 Copy to: 
 McNamee, Lochner,
Titus & Williams, P.C. 
 677 Broadway 
 P.O. Box 459 
 Albany, New York 12201-0459 
 Attention: Richard A. Langer 
  

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 8.10 Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure
to the benefit of each of the parties hereto and their respective successors and permitted assigns. Neither this Agreement nor any rights, benefits or obligations set forth herein may be assigned by any of the parties hereto, except that
(a) Purchaser may assign this Agreement and any of the provisions hereof without the written consent of the other parties hereto (i) to any of its Affiliates, (ii) in connection with a sale of the Business, and (iii) for
collateral security purposes to any lenders providing financing to Purchaser; provided that Purchaser shall remain liable despite such assignment, and (b) Sellers may assign this Agreement to Handleman Company. 
 8.11 Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement. 
 8.12 No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction will be applied against any person. The use of the word “including” in this Agreement or in any of the agreements
contemplated hereby shall be by way of example rather than by limitation. 
 8.13 Captions. The captions used in this Agreement are
for convenience of reference only and do not constitute a part of this Agreement and shall not be deemed to limit, characterize or in any way affect any provision of this Agreement, and all provisions of this Agreement shall be enforced and
construed as if no caption had been used in this Agreement. 
 8.14 No Third Party Beneficiaries. Except as otherwise expressly set
forth in this Agreement, nothing herein expressed or implied is intended or shall be construed to confer upon or give to any Person, other than the parties hereto and their respective permitted successors and assigns and other than the investors of
Purchaser, any rights or remedies under or by reason of this Agreement, such third parties specifically including, without limitation, employees or creditors of Sellers. 
 8.15 Complete Agreement. This document and the documents referred to herein contain the complete agreement between the parties and supersede any prior understandings, agreements or representations by or between
the parties, written or oral, which may have related to the subject matter hereof in any way. 
  

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 8.16 Counterparts. This Agreement may be executed in one or more counterparts, any one of which
may be by facsimile, all of which taken together shall constitute one and the same instrument. 
 8.17 Governing Law and Jurisdiction.
This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of 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 WITNESS WHEREOF, the
parties hereto have executed this Asset Purchase Agreement as of the date first written above. 
  

			
	SELLERS:
	
	CRAVE ENTERTAINMENT GROUP, INC.
		
	By:	 	 /s/ Rozanne Kokko

	Name:	 	Rozanne Kokko
	Its:	 	Secretary and Chief Financial Officer
	
	CRAVE ENTERTAINMENT, INC.
		
	By:	 	 /s/ Rozanne Kokko

	Name:	 	Rozanne Kokko
	Its:	 	Secretary and Chief Financial Officer
	
	SVG DISTRIBUTION, INC.
		
	By:	 	 /s/ Rozanne Kokko

	Name:	 	Rozanne Kokko
	Its:	 	Secretary and Chief Financial Officer

  

 -35- 

			
	PURCHASER:
	
	FILLPOINT LLC
		
	By:	 	 /s/ Glenn Rockwood

	Name:	 	Glenn Rockwood
	Its:	 	President

  

			
	
	As to Articles 4 and 8, only
	
	STOCKHOLDER:
	
	HANDLEMAN COMPANY
		
	By:	 	 /s/ Rozanne Kokko

	Name:	 	Rozanne Kokko
	Its:	 	Secretary and Chief Financial Officer

  

 -36-EXHIBIT 10.1

 Exhibit 10.1 
 EMPLOYMENT AGREEMENT 
 THIS AGREEMENT (the “Agreement”), was originally entered into
on June 25, 2003, by and among JEFFERSON BANCSHARES, INC. (the “Company”), JEFFERSON FEDERAL BANK (the “Bank”) and ANDERSON L. SMITH (“Executive”) and was subsequently amended on July 1,
2004. The Agreement is now amended and restated in its entirety as of December 18, 2008. 
 WITNESSETH 
 WHEREAS, the Company and the Bank desire to continue to retain the services of the Executive as the President and Chief Executive Officer of the Company
and the Bank; and 
 WHEREAS, the parties to the Agreement desire to amend and restate the Agreement in its entirety for the purpose of
bringing the Agreement into compliance with Section 409A of the Internal Revenue Code of 1986, as amended (the Code”); 
 NOW,
THEREFORE, in consideration of the mutual covenants herein contained, and upon the other terms and conditions hereinafter provided, the parties hereby agree as follows: 
 1. Employment. Executive is employed as the President and Chief Executive Officer and of the Company and the Bank. Executive shall perform all duties and shall have all powers which are commonly incident
to the offices of President and Chief Executive Officer and which, consistent with those offices, are delegated to him by the Chairman of the Board of Directors of the Bank and the Company. 
 2. Location and Facilities. Executive will be furnished with the working facilities and staff customary for executive officers with the
title and duties set forth in Section 1 and as are necessary for him to perform his duties. The location of such facilities and staff shall be at the principal administrative offices of the Company and the Bank, or at such other site or sites
customary for such offices. 
 3. Term. 
  

	 	a.	The term of this Agreement shall be (i) the initial term, consisting of the period commencing on June 25, 2003 (the “Effective Date”) and ending on the third
anniversary of the Effective Date, plus (ii) any and all extensions of the initial term made pursuant to this Section 3. 

  

	 	b.	Commencing on the first year anniversary date of this Agreement, and continuing on each anniversary thereafter, the disinterested members of the boards of directors of the Bank and
the Company may extend the Agreement an additional year such that the remaining term of the Agreement shall be thirty-six (36) months, unless Executive elects not to extend the term of this Agreement by giving written notice in accordance with
Section 19 of this Agreement. The Board of Directors of the Bank (the “Board”) will review the Agreement and Executive’s performance annually for purposes of determining whether to extend the Agreement and the rationale and
results thereof shall be included in the minutes of the Board’s meeting. The Board of Directors of the Bank shall give notice to Executive as soon as possible after such review as to whether the Agreement is to be extended.

  

 1 

 4. Base Compensation. 
  

	 	a.	The Company and the Bank agree to pay the Executive during the term of this Agreement a base salary at the rate of $210,000 per year, payable in accordance with customary payroll
practices. 

  

	 	b.	The Board shall review annually the rate of the Executive’s base salary based upon factors they deem relevant, and may maintain or increase his salary, provided that no such
action shall reduce the rate of salary below the rate in effect on the Effective Date. 

  

	 	c.	In the absence of action by the Board, the Executive shall continue to receive salary at the annual rate specified on the Effective Date or, if another rate has been established
under the provisions of this Section 4, the rate last properly established by action of the Board under the provisions of this Section 4. 

  

	 	d.	The Company and the Bank intend to allocate the compensation expenses associated with Executive’s performance of services under this Agreement in accordance with the terms of
the Expense Allocation Agreement entered into between the Bank and the Company. 

 5. Bonuses. In lieu of any
bonus normally provided to permanent full-time employees of the Bank, the Bank agrees to provide a bonus program to the Executive which will provide the Executive with the opportunity to earn up to 50% of the Executive’s base salary, on an
annual basis, the amount of which shall be determined by specific performance standards and a formula agreed to by Executive and the Bank annually. Performance standards shall be measured on a fiscal year, and no bonus shall be payable if Executive
is not employed on June 30 of the year in question; provided, however, in the event of death of the Executive, the bonus for the fiscal year of Executive’s death shall be prorated on a quarterly basis, using the information for the
quarter(s) completed prior to Executive’s death. 
 6. Benefit Plans. The Executive shall be entitled to participate in
such life insurance, medical, dental, pension, profit-sharing, retirement and stock-based compensation plans and other programs and arrangements as may be approved from time to time by the Company and the Bank for the benefit of their employees. In
addition, during the term of this Agreement, the Bank shall provide the Executive with a supplemental life insurance policy with a death benefit of not less than $350,000. Notwithstanding the termination of this Agreement for any reason, other than
upon the Executive’s termination for Cause, the Bank further agrees that the Executive shall receive a supplemental retirement benefit of $15,083 per year, beginning during the calendar year in which the Executive attains age 65 and continuing
for a total of fifteen (15) years. 
 7. Vacation and Leave. 
  

	 	a.	The Executive shall be entitled to vacations and other leave in accordance with policy for senior executives, or otherwise as approved by the Board, but, in any event, not less than
four (4) weeks vacation annually. 

  

	 	b.	In addition to paid vacations and other leave, the Executive shall be entitled, without loss of pay, to absent himself voluntarily from the performance of his employment for such
additional periods of time and for such valid and legitimate reasons as the Board may in its discretion determine. Further, the Board may grant to the Executive a leave or leaves of absence, with or without pay, at such time or times and upon such
terms and conditions as the Board in its discretion may determine. 

  

 2 

 8. Expense Payments and Reimbursements. The Executive shall be reimbursed for all
reasonable out-of-pocket business expenses that he shall incur in connection with his services under this Agreement upon substantiation of such expenses in accordance with applicable policies of the Company and the Bank. In addition, Executive shall
receive an allowance of $3,600 per year for dues in professional, social and civic organizations, and miscellaneous expenses, payable in equal monthly installments. 
 9. Automobile Allowance. During the term of this Agreement, the Executive shall be entitled to an annual automobile allowance of $12,000, payable in equal monthly installments. Executive shall comply
with reasonable reporting and expense limitations on the use of such automobile as may be established by the Company or the Bank from time to time, and the Company or the Bank shall annually include on Executive’s Form W-2 any amount of
income attributable to Executive’s personal use of such automobile. 
 10. Loyalty and Confidentiality; Noncompetition.

  

	 	a.	During the term of this Agreement, Executive: (i) shall devote all his time, attention, skill, and efforts to the faithful performance of his duties hereunder; provided,
however, that from time to time, Executive may serve on the boards of directors of, and hold any other offices or positions in, companies or organizations which will not present any conflict of interest with the Company and the Bank or any of their
subsidiaries or affiliates, unfavorably affect the performance of Executive’s duties pursuant to this Agreement, or violate any applicable statute or regulation and (ii) shall not engage in any business or activity contrary to the business
affairs or interests of the Company and the Bank. 

  

	 	b.	Nothing contained in this Agreement shall prevent or limit Executive’s right to invest in the capital stock or other securities of any business dissimilar from that of the
Company and the Bank, or, solely as a passive, minority investor, in any business. 

  

	 	c.	Executive agrees to maintain the confidentiality of any and all information concerning the operation or financial status of the Company and the Bank; the names or addresses of any
of its borrowers, depositors and other customers; any information concerning or obtained from such customers; and any other information concerning the Company and the Bank to which he may be exposed during the course of his employment. The Executive
further agrees that, unless required by law or specifically permitted by the Board in writing, he will not disclose to any person or entity, either during or subsequent to his employment, any of the above-mentioned information which is not generally
known to the public, nor shall he employ such information in any way other than for the benefit of the Company and the Bank. 

  

	 	d.	 Upon the termination of Executive’s employment hereunder for any reason, Executive agrees not to compete with the Bank for a period of two (2) years
following such termination in any city, town or county in which the Executive’s normal business office is located and the Bank has an office or has filed an application for regulatory approval to establish an office (or within a 60-mile radius
of each of such offices), determined as of the effective date of such termination, except as agreed to pursuant to a resolution duly adopted by the Board. Executive agrees that during such period and within said cities, towns and counties, Executive
shall not work for or advise, consult or otherwise serve with, directly or indirectly, any entity whose business materially competes with the depository, lending or other business activities of the Bank. The parties hereto, 

  

 3 

	 	 
recognizing that irreparable injury will result to the Bank, its business and property in the event of Executive’s breach of his obligations under this
paragraph and agree that in the event of any such breach by Executive, the Bank, will be entitled, in addition to any other remedies and damages available, to an injunction to restrain the violation hereof by Executive, Executive’s partners,
agents, servants, employees and all persons acting for or under the direction of Executive. Nothing herein will be construed as prohibiting the Bank from pursuing any other remedies available to the Bank for such breach or threatened breach,
including the recovery of damages from Executive. 

 11. Termination and Termination Pay. Subject to
Section 12 of this Agreement, Executive’s employment under this Agreement may be terminated in the following circumstances: 
  

	 	a.	Death. Executive’s employment under this Agreement shall terminate upon his death during the term of this Agreement, in which event Executive’s estate shall be
entitled to receive the compensation due to the Executive through the last day of the calendar month in which his death occurred. 

  

	 	b.	Retirement. This Agreement shall be terminated upon Executive’s retirement under the retirement benefit plan or plans in which he participates pursuant to Section 6
of this Agreement or otherwise. 

  

	 	c.	Disability. 

  

	 	i.	The Board or Executive may terminate Executive’s employment after having determined Executive has a Disability. For purposes of this Agreement, “Disability” means a
physical or mental infirmity that impairs Executive’s ability to substantially perform his duties under this Agreement and that results in Executive becoming eligible for long-term disability benefits under any long-term disability plans of the
Company and the Bank (or, if there are no such plans in effect, that impairs Executive’s ability to substantially perform his duties under this Agreement for a period of one hundred eighty (180) consecutive days). The Board shall determine
whether or not Executive is and continues to be permanently disabled for purposes of this Agreement in good faith, based upon competent medical advice and other factors that they reasonably believe to be relevant. As a condition to any benefits, the
Board may require Executive to submit to such physical or mental evaluations and tests as it deems reasonably appropriate. 

  

	 	ii.	 In the event of such Disability, Executive’s obligation to perform services under this Agreement will terminate. The Bank will pay Executive, as Disability
pay, an amount equal to seventy-five (75) percent of Executive’s weekly rate of base salary in effect as of the date of his termination of employment due to Disability. Disability payments will be made on a monthly basis and will commence
on the first day of the month following the effective date of Executive’s termination of employment for Disability and end on the earlier of: (A) the date he returns to full-time employment at the Bank in the same capacity as he was
employed prior to his termination for Disability; (B) his death; or (C) the remaining term of the Agreement (if the Agreement had not been earlier terminated by the Executive’s Disability). Such payments shall be reduced by the amount
of any short- or long-term disability benefits payable to the Executive under any other disability programs sponsored by the Company and the Bank. In addition, during any 

  

 4 

	 	 
period of Executive’s Disability, Executive and his dependents shall, to the greatest extent possible, continue to be covered under all benefit plans
(including, without limitation, retirement plans and medical, dental and life insurance plans) of the Company and the Bank, in which Executive participated prior to his Disability on the same terms as if Executive were actively employed by the
Company and the Bank. 

  

	 	d.	Termination for Cause. 

  

	 	i.	The Board may, by written notice to the Executive in the form and manner specified in this paragraph, immediately terminate his employment at any time, for “Cause”. The
Executive shall have no right to receive compensation or other benefits for any period after termination for Cause except for vested benefits. Termination for “Cause” shall mean termination because of, in the good faith determination of
the Board, Executive’s: 

  

	 	(1)	Personal dishonesty; 

  

	 	(2)	Incompetence; 

  

	 	(3)	Willful misconduct; 

  

	 	(4)	Breach of fiduciary duty involving personal profit; 

  

	 	(5)	Intentional failure to perform duties under this Agreement; 

  

	 	(6)	Willful violation of any law, rule or regulation (other than traffic violations or similar offenses), any felony conviction, any violation of law involving moral turpitude, or any
violation of a final cease-and-desist order; or 

  

	 	(7)	Material breach by Executive of any provision of this Agreement. 

  

	 	ii.	Notwithstanding the foregoing, Executive shall not be deemed to have been terminated for Cause by the Company and the Bank unless there shall have been delivered to Executive a copy
of a resolution duly adopted by the affirmative vote of a majority of the entire membership of the Board at a meeting of such Board called and held for the purpose (after reasonable notice to Executive), of finding that in the good faith opinion of
the Board, Executive was guilty of the conduct described above and specifying the particulars thereof. 

  

	 	e.	Voluntary Termination by Executive. In addition to his other rights to terminate under this Agreement, Executive may voluntarily terminate employment during the term of this
Agreement upon at least sixty (60) days prior written notice to the Board, in which case Executive shall receive only his compensation, vested rights and employee benefits up to the date of his termination. 

  

	 	f.	Without Cause or With Good Reason. 

  

	 	i.	 In addition to termination pursuant to Sections 11(a) through 11(e) the Board, may, by written notice to Executive, immediately terminate his employment at 

  

 5 

	 	 
any time for a reason other than Cause (a termination “Without Cause”) and Executive may, by written notice to the Board, terminate his employment
under this Agreement for “Good Reason” as defined below (a termination “With Good Reason”). 

  

	 	ii.	Subject to Section 12 of this Agreement, in the event of termination under this Section 11(f), Executive shall be entitled to receive a payment equal to the base salary
(determined by reference to the Executive’s base salary on the termination date) and bonuses (determined by reference to the Executive’s average bonus over the three (3) years preceding his termination date or such lesser period as he
was employed by the Bank) that would otherwise have been payable over the remaining term of the Agreement. Such amount shall be paid in one lump sum within ten (10) calendar days of such termination. Also, in such event, Executive shall, for
the remaining term of the Agreement, receive the benefits he would have received during the remaining term of the Agreement under any retirement programs (whether tax-qualified or non-qualified) in which Executive participated prior to his
termination (with the amount of the benefits determined by reference to the benefits received by the Executive or accrued on his behalf under such programs during the twelve (12) months preceding his termination) and continue to participate in
any benefit plans of the Company and the Bank that provide health (including medical and dental), life, or similar coverage upon terms no less favorable than the most favorable terms provided to senior executives of the Company and the Bank during
such period. In the event that the Company and the Bank are unable to provide such coverage by reason of Executive no longer being an employee, the Company and the Bank shall provide Executive with comparable coverage on an individual policy basis.

  

	 	iii.	For purposes of this Agreement “Good Reason” shall mean the occurrence of any of the following events without the Executive’s consent: 

  

	 	(1)	A material diminution in Executive’s Base Salary; 

  

	 	(2)	A material diminution of the Executive’s authority, duties, or responsibilities (including reporting requirements); or 

  

	 	(3)	A change in the geographic location at which the Executive must perform services for the Bank outside of the area consisting of a twenty-five (25) mile radius from the current
main office and any branch of the Bank; 

 provided, that within sixty (60) days after the initial existence of such event,
the Bank shall be given notice and an opportunity, not less than thirty (30) days, to effectuate a cure for such asserted “Good Reason” by Executive. Executive’s resignation hereunder for Good Reason shall not occur later than
six (6) months following the initial date on which the event Executive claims constitutes Good Reason occurred. 
  

 6 

 12. Termination in Connection with a Change in Control. 
  

	 	a.	For purposes of this Agreement, a “Change in Control” shall be deemed to occur on the earliest of: 

  

	 	(i)	Merger: The Company merges into or consolidates with another corporation, or merges another corporation into the Company, and as a result less than a majority of the combined
voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders of the Company immediately before the merger or consolidation; 

  

	 	(ii)	Acquisition of Significant Share Ownership: a report on Schedule 13D or another form or schedule (other than Schedule 13G) is filed or is required to be filed under Sections
13(d) or 14(d) of the Securities Exchange Act of 1934, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of the Company’s voting securities, but this
clause (ii) shall not apply to beneficial ownership of Company voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially owns 50% or more of its outstanding voting securities;

  

	 	(iii)	Change in Board Composition: during any period of two consecutive years, individuals who constitute the Company’s Board of Directors at the beginning of the two-year
period cease for any reason to constitute at least a majority of the Company’s Board of Directors; provided, however, that for purposes of this clause (iii) each director who is first elected by the board (or first nominated by the board
for election by stockholders) by a vote of at least two-thirds of the directors who were directors at the beginning of the period shall be deemed to have been a director at the beginning of the two-year period; or 

  

	 	(iv)	Sale of Assets: Company sells to a third party all or substantially all of the Company’s assets. 

  

	 	b.	 Termination. If within the period ending two years after a Change in Control, (i) the Company and the Bank shall terminate the Executive’s employment
Without Cause, or (ii) Executive voluntarily terminates his employment With Good Reason, the Company and the Bank shall, within ten calendar days of the termination of Executive’s employment, make a lump-sum cash payment to him equal to
2.99 times the Executive’s average Annual Compensation over the five (5) most recently completed calendar years ending with the year immediately preceding the effective date of the Change in Control (or such lesser number of completed
calendar years as the Executive has been employed by the Company and the Bank). In determining Executive’s average Annual Compensation, Annual Compensation shall include base salary and any other taxable income, including but not limited to
amounts related to the granting, vesting or exercise of restricted stock or stock option awards, commissions, bonuses (whether paid or accrued for the applicable period), as well as, retirement benefits, director or committee fees and fringe
benefits paid or to be paid to Executive or paid for Executive’s benefit during any such year, profit sharing, employee stock ownership plan and other retirement contributions or benefits, including to any tax-qualified plan or arrangement
(whether or not taxable) made or accrued on behalf of Executive of such year. The cash payment made under this Section 12(b) shall be made in lieu of any payment also required under 

  

 7 

	 	 
Section 11(f) of this Agreement because of a termination in such period. Executive’s rights under Section 11(f) are not otherwise affected by
this Section 12. Also, in such event, the Executive shall, for a thirty-six (36) month period following his termination of employment, receive the benefits he would have received over such period under any retirement programs (whether
tax-qualified or nonqualified) in which the Executive participated prior to his termination (with the amount of the benefits determined by reference to the benefits received by the Executive or accrued on his behalf under such programs during the
twelve (12) months preceding the Change in Control) and continue to participate in any benefit plans of the Company and the Bank that provide health (including medical and dental), life, or similar coverage upon terms no less favorable than the
most favorable terms provided to senior executives during such period. In the event that the Company and the Bank are unable to provide such coverage by reason of the Executive no longer being an employee, the Company and the Bank shall provide the
Executive with comparable coverage on an individual policy. 

  

	 	c.	The provisions of Sections 12 and Sections 14 through 25, including the defined terms used is such sections, shall continue in effect until the later of the expiration of this
Agreement or two years following a Change in Control. 

 13. Indemnification and Liability Insurance. 

 

	 	a.	Indemnification. The Company and the Bank agree to indemnify Executive (and his heirs, executors, and administrators), and to advance expenses related thereto, to the fullest
extent permitted under applicable law and regulations against any and all expenses and liabilities reasonably incurred by him in connection with or arising out of any action, suit, or proceeding in which he may be involved by reason of his having
been a director or executive of the Company, the Bank or any of their subsidiaries (whether or not he continues to be a director or executive at the time of incurring any such expenses or liabilities) such expenses and liabilities to include, but
not be limited to, judgments, court costs, and attorneys’ fees and the cost of reasonable settlements, such settlements to be approved by the Board, if such action is brought against Executive in his capacity as an executive or director of the
Company and the Bank or any of their subsidiaries. Indemnification for expense shall not extend to matters for which the Executive has been terminated for Cause. Nothing contained herein shall be deemed to provide indemnification prohibited by
applicable law or regulation. Notwithstanding anything herein to the contrary, the obligations of this Section 13 shall survive the term of this Agreement by a period of six (6) years. 

  

	 	b.	Insurance. During the period in which indemnification of Executive is required under this Section, the Company and the Bank shall provide the Executive (and his heirs,
executors, and administrators) with coverage under a directors’ and Executives’ liability policy at the expense of the Company and the Bank, at least equivalent to such coverage provided to directors and senior Executives of the Company
and the Bank. 

 14. Reimbursement of Executive’s Expenses to Enforce this Agreement. The Company and the
Bank shall reimburse the Executive for all out-of-pocket expenses, including, without limitation, reasonable attorneys’ fees, incurred by the Executive in connection with successful enforcement by the Executive of the obligations of the Company
and the Bank to the Executive under this Agreement. Successful enforcement shall mean the grant of an award of money or the requirement that the Company and the Bank take some action specified by this Agreement (i) as a result of court order;
or (ii) otherwise by the Company and the Bank following an initial failure of the Company and the Bank to pay such money or take such action promptly after written demand therefor from the Executive stating the reason that such money or action
was due under this Agreement at or prior to the time of such demand. 
  

 8 

 15. Limitation of Benefits under Certain Circumstances. If the payments and benefits
pursuant to Section 12 of this Agreement, either alone or together with other payments and benefits which the Executive has the right to receive from the Company and the Bank, would constitute a “parachute payment” under
Section 280G of the Code, the payments and benefits pursuant to Section 12 shall be reduced or revised, in the manner determined by the Executive, by the amount, if any, which is the minimum necessary to result in no portion of the
payments and benefits under Section 12 being non-deductible to the Company and the Bank pursuant to Section 280G of the Code and subject to the excise tax imposed under Section 4999 of the Code. The determination of any reduction in
the payments and benefits to be made pursuant to Section 12 shall be based upon the opinion of the Company and the Bank’s independent public accountants and paid for by the Company and the Bank. In the event that the Company, the Bank
and/or the Executive do not agree with the opinion of such counsel, (i) the Company and the Bank shall pay to the Executive the maximum amount of payments and benefits pursuant to Section 12, as selected by the Executive, which opinion
indicates there is a high probability of such payments and benefits being non-deductible to the Company and the Bank and subject to the imposition of the excise tax imposed under Section 4999 of the Code and (ii) the Company and the Bank
may request, and the Executive shall have the right to demand that they request, a ruling from the IRS as to whether the disputed payments and benefits pursuant to Section 12 have such consequences. Any such request for a ruling from the IRS
shall be promptly prepared and filed by the Company and the Bank, but in no event later than thirty (30) days from the date of the opinion of counsel referred to above, and shall be subject to the Executive’s approval prior to filing,
which shall not be unreasonably withheld. The Company, the Bank and the Executive agree to be bound by any ruling received from the IRS and to make appropriate payments to each other to reflect any such rulings, together with interest at the
applicable federal rate provided for in Section 7872(f)(2) of the Code. Nothing contained herein shall result in a reduction of any payments or benefits to which the Executive may be entitled upon termination of employment other than pursuant
to Section 12 hereof, or a reduction in the payments and benefits specified in Section 12 below zero. 
 16. Injunctive
Relief. If there is a breach or threatened breach of Section 10 of this Agreement, the parties agree that there is no adequate remedy at law for such breach, and that the Company and the Bank shall be entitled to injunctive relief
restraining the Executive from such breach or threatened breach, but such relief shall not be the exclusive remedy hereunder for such breach. The parties hereto likewise agree that the Executive, without limitation, shall be entitled to injunctive
relief to enforce the obligations of the Company and the Bank under this Agreement. 
 17. Successors and Assigns. 

 

	 	a.	This Agreement shall inure to the benefit of and be binding upon any corporate or other successor of the Company and the Bank which shall acquire, directly or indirectly, by merger,
consolidation, purchase or otherwise, all or substantially all of the assets or stock of the Company and the Bank. 

  

	 	b.	Since the Company and the Bank are contracting for the unique and personal skills of Executive, Executive shall be precluded from assigning or delegating his rights or duties
hereunder without first obtaining the written consent of the Company and the Bank. 

 18. No Mitigation.
Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise and no such payment shall be offset or reduced by the amount of any compensation or benefits provided
to Executive in any subsequent employment. 
  

 9 

 19. Notices. All notices, requests, demands and other communications in connection with
this Agreement shall be made in writing and shall be deemed to have been given when delivered by hand or 48 hours after mailing at any general or branch United States Post Office, by registered or certified mail, postage prepaid, addressed to the
Company and/or the Bank at their principal business offices and to Executive at his home address as maintained in the records of the Company and the Bank. 
 20. No Plan Created by this Agreement. Executive, the Company and the Bank expressly declare and agree that this Agreement was negotiated among them and that no provision or provisions of this Agreement
are intended to, or shall be deemed to, create any plan for purposes of the Employee Retirement Income Security Act or any other law or regulation, and each party expressly waives any right to assert the contrary. Any assertion in any judicial or
administrative filing, hearing, or process that such a plan was so created by this Agreement shall be deemed a material breach of this Agreement by the party making such an assertion. 
 21. Amendments. No amendments or additions to this Agreement shall be binding unless made in writing and signed by all of the parties,
except as herein otherwise specifically provided. 
 22. Applicable Law. Except to the extent preempted by Federal law, the
laws of the State of Tennessee shall govern this Agreement in all respects, whether as to its validity, construction, capacity, performance or otherwise. 
 23. Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other
provisions hereof. 
 24. Headings. Headings contained herein are for convenience of reference only. 
 25. Entire Agreement. This Agreement, together with any understanding or modifications thereof as agreed to in writing by the parties,
shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof, other than written agreements with respect to specific plans, programs or arrangements described in Sections 5 and 6. The parties agree that
this Agreement supercedes and replaces in its entirety the Agreement between the Executive, the Bank and the Company dated June 25, 2003. 
 26. Required Provisions. In the event any of the provisions of this Section 26 are in conflict with the terms of this Agreement, this Section 26 shall prevail. 
  

	 	a.	The Bank may terminate Executive’s employment at any time, but any termination by the Bank, other than Termination for Cause, shall not prejudice Executive’s right to
compensation or other benefits under this Agreement. Executive shall not have the right to receive compensation or other benefits for any period after Termination for Cause as defined in Section 7 hereinabove. 

  

	 	b.	 If Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice served under
Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. §1818(e)(3) or (g)(1); the Bank’s obligations under this contract shall be suspended as of the date of service, unless stayed by appropriate proceedings. If
the charges in the notice are dismissed, the Bank may in 

  

 10 

	 	 
its discretion: (i) pay Executive all or part of the compensation withheld while their contract obligations were suspended; and (ii) reinstate (in
whole or in part) any of the obligations which were suspended. 

  

	 	c.	If Executive is removed and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the
Federal Deposit Insurance Act, 12 U.S.C. §1818(e)(4) or (g)(1), all obligations of the Bank under this contract shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected.

  

	 	d.	If the Bank is in default as defined in Section 3(x)(1) of the Federal Deposit Insurance Act, 12 U.S.C. §1813(x)(1) all obligations of the Bank under this contract shall
terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties. 

  

	 	e.	All obligations of the Bank under this contract shall be terminated, except to the extent determined that continuation of the contract is necessary for the continued operation of
the institution: (i) by the Director of the OTS (or his designee), the FDIC or the Resolution Trust Corporation, at the time the FDIC enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in
Section 13(c) of the Federal Deposit Insurance Act, 12 U.S.C. §1823(c); or (ii) by the Director of the OTS (or his designee) at the time the Director (or his designee) approves a supervisory merger to resolve problems related to the
operations of the Bank or when the Bank is determined by the Director to be in an unsafe or unsound condition. Any rights of the parties that have already vested, however, shall not be affected by such action. 

  

	 	f.	Any payments made to Executive pursuant to this Agreement, or otherwise, are subject to and conditioned upon compliance with 12 U.S.C. §1828(k) and 12 C.F.R.
Section 545.121 and any rules and regulations promulgated thereunder. 

 27. Section 409A of the Code. 

  

	 	a.	This Agreement is intended to comply with the requirements of Section 409A of the Code, and specifically, with the “short-term deferral exception” under Treasury
Regulation Section 1.409A-1(b)(4) and the “separation pay exception” under Treasury Regulation Section 1.409A-1(b)(9)(iii), and shall in all respects be administered in accordance with Section 409A of the Code. If any
payment or benefit hereunder cannot be provided or made at the time specified herein without incurring sanctions on Executive under Section 409A of the Code, then such payment or benefit shall be provided in full at the earliest time thereafter
when such sanctions will not be imposed. For purposes of Section 409A of the Code, all payments to be made upon a termination of employment under this Agreement may only be made upon a “separation from service” (within the meaning of
such term under Section 409A of the Code), each payment made under this Agreement shall be treated as a separate payment, the right to a series of installment payments under this Agreement (if any) is to be treated as a right to a series of
separate payments, and if a payment is not made by the designated payment date under this Agreement, the payment shall be made by December 31 of the calendar year in which the designated date occurs. To the extent that any payment provided for
hereunder would be subject to additional tax under Section 409A of the Code, or would cause the administration of this Agreement to fail to satisfy the requirements of Section 409A of the Code, such provision shall be deemed null and void
to the extent permitted by applicable law, and any such amount shall be payable in accordance with b. below. In no event shall Executive, directly or indirectly, designate the calendar year of payment. 

  

 11 

	 	b.	Notwithstanding anything herein to the contrary, if Executive is a “specified employee” (within the meaning of Section 409A of the Code) and it is necessary to
postpone the commencement of any payments or benefits otherwise payable under this Agreement as a result of Executive’ separation from service with the Bank to prevent any accelerated or additional tax under Section 409A of the Code, then
the Bank will postpone the commencement of the payment of any such payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to Executive) that are not otherwise paid with the “short-term
deferral exception” under Treasury Regulations Section 1.409A-1(b)(4) and the “separation pay exception” under Treasury Regulations Section 1.409A-1(b)(9)(iii), until the first payroll date that occurs after the date that is
six months following Executive’s separation of service with the Bank. If any payments are postponed due to such requirements, such postponed amounts will be paid to Executive in a lump sum on the first payroll date that occurs after the date
that is six months following Executive’s separation of service with the Bank. If Executive dies during the postponement period prior to the payment of postponed amount, the amounts withheld on account of Section 409(A) of the Code shall be
paid to the personal representative of Executive’s estate within sixty (60) days after the date of Executive’s death. 

  

 12 

 IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first set forth
above. 
  

							
	Attest:	 		 	JEFFERSON BANCSHARES, INC.
				
	 /s/ Jack E. Campbell
	 		 	By:	 	 /s/ John F. McCrary, Jr.

		 		 		 	Chairman of the Board of Directors
			
	Attest:	 		 	JEFFERSON FEDERAL BANK
				
	 /s/ Jack E. Campbell
	 		 	By:	 	 /s/ John F. McCrary, Jr.

		 		 		 	Chairman of the Board of Directors
			
	Witness:	 		 	EXECUTIVE
			
	 /s/ Jack E. Campbell
	 		 	 /s/ Anderson L. Smith

		 		 	Anderson L. Smith

  

 13

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