Document:

Change of Control Agreement

 Exhibit 10.1 
  
 AGREEMENT 
  
 THIS AGREEMENT is entered into this 6th day of September, 2005, between HANDLEMAN COMPANY, a Michigan corporation (the “Company”), and RONNIE
WAYNE LUND (the “Executive”). 
  
 RECITALS

  
 A. The Board of Directors of the Company (the
“Board”) recognizes that merger and acquisition activities have increased in recent years and that the threat of, or occurrence of, a Change in Control (as hereinafter defined) relating to the Company could result in significant
distractions of its key management personnel because of the uncertainties inherent in such a situation. 
  
 B. The Board has determined that it is in the best interests of the Company and its shareholders to retain the services of the Executive in the event of
any threat or occurrence of a Change in Control and to ensure his continued dedication and efforts in such event without undue concern for his personal financial and employment security. 
  
 C. In order to induce the Executive to remain in the employ of the Company, particularly in the event of a threat or the
occurrence of a Change in Control, the Company desires to enter into this Agreement with the Executive to provide the Executive with certain benefits in the event his employment is terminated as a result of, or in connection with, a Change in
Control. 
  
 In consideration of the foregoing Recitals and the
respective agreements contained herein, Company and Executive agree as follows: 
  
 1. Definitions. 
  
 (a) For purposes of this Agreement, a “Change in Control” shall be deemed to occur on the first date (the “Effective Date”) any one or more of the following occurs: 
  
 (1) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), together with all affiliates and associates of such person (as such terms are defined in Rule 12b-2 under the Exchange Act) but excluding all “Excluded
Persons” (as defined in paragraph 1(b)), becomes the direct or indirect beneficial owner (within the meaning of Rule 13d-3 under 

 
the Exchange Act), other than directly from the Company, of securities of the Company representing (A) twenty-five percent (25%) or more of the combined
voting power of all of the Company’s outstanding securities entitled to vote generally in the election of the Company’s directors, or (B) twenty-five percent (25%) or more of the combined shares of the Company’s capital stock then
outstanding, all except in connection with any merger, consolidation, reorganization or share exchange involving the Company; 
  
 (2) the consummation of any merger, consolidation, reorganization or share exchange involving the Company, unless the holders of the
Company’s capital stock outstanding immediately before such transaction own more than fifty percent (50%) of the combined outstanding shares of capital stock and have more than fifty percent (50%) of the combined voting power in the Entity (as
defined in paragraph 1(f)) after such transaction and they own such securities in substantially the same proportions (relative to each other) as they owned the Company’s capital stock immediately before such transaction; 
  
 (3) the consummation of any sale or other disposition (in
one transaction or a series of related transactions) of all, or substantially all, of the Company’s assets to a transferee or transferees (the “Transferee”) other than a transaction or transactions as a result of which the
shareholders of the Company’s capital stock outstanding immediately before such transaction(s) own or receive more than fifty percent (50%) of the capital stock and combined voting power in the Transferee after such transaction(s), at least a
majority of the Board of Directors of the Transferee are “Continuing Directors” (as hereinafter defined), and no person owns twenty-five percent (25%) or more of the capital stock and combined voting power of the Transferee who did not own
such percentage immediately before the transaction(s); 
  
 (4) a complete liquidation or dissolution of the Company; or 
  
 (5) the Continuing Directors cease to be a majority of the Company’s directors. 
  
 A determination by the Company’s Continuing Directors (by resolution of at least a majority of the Continuing Directors) as to
whether a Change in Control has occurred for purposes of this Agreement, or the date on which the Change in Control has occurred (the 

  

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Effective Date), or both, shall be conclusive for purposes of this Agreement if made in good faith. 
  
 (b) The “Excluded Persons” are defined as (1) the
Executive, (2) any “group” (as that term is used in Section 13(d) of the Exchange Act and the rules thereunder) that includes the Executive or in which the Executive is, or has agreed to become, an equity participant, (3) any entity in
which the Executive is, or has agreed to become, an equity participant, (4) the Company, (5) any subsidiary of the Company, (6) any employee benefit plan of the Company or any subsidiary of the Company or the related trust, and (7) any entity to the
extent it is holding capital stock of the Company for or pursuant to the terms of any employee benefit plan of the Company or any subsidiary of the Company. For purposes of this Agreement, Executive shall not be deemed an “equity
participant” in any group or entity (A) in which Executive owns for investment purposes only no more than five percent (5%) of the stock of a publicly-traded entity whose stock is either listed on a national stock exchange or quoted in The
Nasdaq National Market, if Executive is not otherwise affiliated with such group or entity, or (B) if Executive’s participation is fully-disclosed to, and approved by, a majority of the Continuing Directors before the Change in Control occurs.

  
 (c) The “Continuing Directors” are
defined as the directors of the Company as of the date of this Agreement, and any person who subsequently becomes a director if such person is appointed to be a director by a majority of the Continuing Directors or if such person’s initial
nomination for election or initial election as a director is recommended or approved by a majority of the Continuing Directors; provided, however, that no director shall be considered a Continuing Director if such individual initially assumed office
as a director as a result of either an actual or threatened “Election Contest” (as described in Rule 14a-11 of the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the
Board (a “Proxy Contest”), including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest. 
  
 (d) Termination of employment for “Good Reason” means Executive’s voluntary termination of employment with the Entity (as
hereinafter defined) before or after a Change in Control as a result of (1) any change by the Entity (without Executive’s consent) in Executive’s title from Executive’s title immediately before such Change in Control, (2) any decrease
by the Entity (without Executive’s consent) in Executive’s compensation (including base 

  

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salary and bonus arrangements) or incentives from Executive’s compensation or incentives immediately before such Change in Control; provided that
Executive’s bonus shall not be deemed to have decreased if Executive shall have a substantially similar opportunity to earn a bonus as Executive did in the last full fiscal year before such Change in Control, (3) any material decrease by the
Entity (without Executive’s consent) in Executive’s employee benefits from Executive’s employee benefits immediately before such Change in Control unless the substitute or replacement employee benefits are substantially similar to or
uniformly applicable to the employee benefits being provided to all executive employees of the Entity; (4) a substantial change by the Entity (without Executive’s consent) in Executive’s duties or responsibilities (including reporting
responsibilities) from Executive’s duties and responsibilities immediately before such Change in Control, (5) any requirement by the Entity (to which Executive does not consent) that Executive change Executive’s primary place of business
to be outside the metropolitan Detroit area, (6) if such Change in Control results in a new Entity being a successor to the Company’s business, the failure of such Entity to assume expressly in writing the Company’s obligations under this
Agreement or under any written employment agreement between Executive and the Company in effect immediately before such Change in Control, or (7) any material breach by the Entity of any provision of this Agreement. “Good Reason” does not
include Executive’s termination of employment due to Executive’s death, Disability (as defined below) or Retirement (as defined below), or Executive’s resignation other than as provided in the preceding sentence. For purposes of this
Agreement, (A) “Disability” means (i) if Executive is covered by an Entity-provided disability insurance policy, the definition of disability contained in, and entitling Executive to benefits under, that policy, or (ii) if Executive is not
covered by such a policy, Executive’s inability, whether physical or mental, to perform the normal duties of Executive’s position for six (6) consecutive months; and (B) “Retirement” means Executive’s retirement from the
Entity in accordance with the Entity’s normal policies. 
  
 Determination by the Executive of “Good Reason” shall be conclusive for purposes of this Agreement if made in good faith. 
  
 Any event or condition described in paragraph 1(d)(1) through (7) which occurs prior to a Change in Control,
but which the Executive reasonably demonstrates (A) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a Change in Control, or (B) otherwise arose in connection with, or in anticipation
of a 

  

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Change in Control, shall constitute Good Reason for purposes of this Agreement, notwithstanding that it occurred prior to the Change in Control, provided
that any such event or condition described in paragraph 1(d)(1)-(7) shall have occurred within ninety (90) days prior to the Change in Control. 
  
 (e) “Cause” means (1) the willful and continued failure of the Executive to perform his employment duties (unless due to illness
or Disability), (2) the willful engaging by the Executive in illegal, improper or gross misconduct materially injurious to the Entity, or (3) any breach by the Executive of the provisions of paragraph 5 of this Agreement; provided, however, that no
termination of the Executive’s employment shall be for Cause until there shall have been delivered to the Executive a copy of a written notice specifying the particulars of the conduct constituting “Cause” and the Executive shall have
been provided an opportunity to be heard by the Board (and the Board shall have rendered a decision as to whether the Executive’s employment shall have been terminated for Cause in accordance with this Agreement). 
  
 (f) “Entity” shall mean both (1) the Company and
(2) in connection with a Change in Control defined in paragraph 1(a)(2) or paragraph 1(a)(3), the survivor of the merger, consolidation, reorganization or share exchange involving the Company or the Transferee of the Company’s assets.

  
 2. Right to Receive Severance Benefits. Executive shall
receive the severance benefits described in paragraph 3 if (a) a Change in Control occurs during the Period (as defined in paragraph 4), and (b) at any time during the period beginning ninety (90) days before, and ending two (2) years after, the
Effective Date, Executive terminates Executive’s employment with the Entity for Good Reason or the Entity terminates Executive’s employment without Cause. 
  
 Executive shall not be deemed to have terminated Executive’s employment with the Entity for Good Reason, and the Entity
shall not be deemed to have terminated Executive’s employment without Cause, (a) if the Entity has offered to employ Executive on such terms that would not constitute Good Reason for termination of Executive’s employment if imposed by the
Entity, (b) Executive refuses to accept such employment, and (c) the Entity thereupon terminates Executive’s employment. 
  
 For purposes of this Agreement, a “Notice of Termination” shall mean a written notice which indicates the specific termination provision in this
Agreement, if any, relied upon and 

  

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which sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the
provision so indicated. Any purported termination by the Entity or by the Executive shall be communicated by Notice of Termination to the other. For purposes of this Agreement, no purported termination of employment shall be effective without such
Notice of Termination. The “Termination Date” shall be the date of termination of the Executive’s employment specified in the Notice of Termination, provided, however, that if the Executive’s employment is terminated by the
Executive for Good Reason, the Termination Date shall be no more than thirty (30) days from the date the Notice of Termination is delivered to the Entity. 
  
 3. Severance Benefits. If Executive is entitled to severance benefits pursuant to paragraph 2, Executive shall be paid the following by the Entity
(Company): 
  
 (a) All amounts earned or accrued
by Executive through the Termination Date but not paid as of the Termination Date, including base salary or compensation, reimbursement for reasonable and necessary expenses incurred by the Executive on behalf of the Company during the period ending
on the Termination Date, vacation pay and sick leave; and 
  
 (b) A pro rata bonus for the Company’s current fiscal year in an amount equal to (1) the average of the annual bonus accrued on behalf of the Executive during the Company’s three (3) full fiscal years ended
prior to the Effective Date, multiplied by (2) a fraction, the numerator of which is the number of days in the current fiscal year through the Termination Date and the denominator of which is 365; and 
  
 (c) The Entity shall pay the Executive as severance pay and
in lieu of any further compensation for periods subsequent to the Termination Date, in a single payment, an amount (the “Severance Amount”) in cash equal to 2.99 times the sum of (1) the Executive’s base salary at the highest rate in
effect at any time within one hundred eighty (180) days prior to the Effective Date, and (2) the average of the annual bonus accrued on behalf of the Executive during the three (3) full fiscal years ended prior to the Effective Date; and 

 
 (d) For thirty six (36) months following the Termination
Date, the Entity shall at its expense continue on behalf of the Executive and his dependents and beneficiaries the life insurance, disability, medical, prescription, dental and hospitalization benefits provided to the Executive at any time during
the ninety (90) day period prior to the Effective Date. The Entity’s obligation hereunder with respect to the foregoing benefits shall be limited to the extent that the 

  

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Executive obtains any such specified benefits pursuant to a subsequent employer’s benefit plans, in which case the Entity may reduce the coverage of any
such specified benefits it is required to provide the Executive under this subparagraph (d) if the Executive is enrolled in a subsequent employer’s benefit plan for such specified benefit without any pre-existing condition restriction or
limitation; and 
  
 (e) All restrictions on any
outstanding incentive awards (including restricted stock and performance shares) granted to the Executive under the Company’s 1992 Performance Incentive Plan, the 1998 Performance Incentive Plan, the 2001 Stock Option and Incentive Plan or the
2004 Stock Plan, or any other incentive plan or arrangement shall lapse and such incentive award shall become 100% vested, and all stock options and stock appreciation rights granted to the Executive under the Company’s 1992 Performance
Incentive Plan, the 1998 Performance Incentive Plan, the 2001 Stock Option and Incentive Plan or the 2004 Stock Plan, or any other incentive plan or arrangement shall become immediately exercisable and shall become 100% vested. The Executive shall
have the right to require the Company to purchase, for cash, any shares purchased by the Executive upon the exercise of any such stock options, at a price equal to the fair market value of such shares on the date of purchase by the Company.

  
 Notwithstanding the foregoing, the total amount of all
payments of cash or property in the nature of compensation contingent on a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the Company’s assets, including, without limitation, the
benefits provided pursuant to this paragraph 3 and payments relating to any stock options or restricted stock that vest as a result of a Change in Control, shall not exceed the maximum amount that may be paid to Executive and not be deemed a
“parachute payment” resulting in an excise tax to Executive and a loss of compensation deduction to the Company, all within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended, or any successor provision. If the
benefits otherwise provided pursuant to this paragraph 3 or otherwise would result in Executive receiving such a “parachute payment”, they shall be reduced (in the order set forth above) until they are $1.00 less than the amount that would
result in Executive receiving such a “parachute payment”. Notwithstanding the foregoing, in the event that any benefits provided pursuant to paragraph 3 or otherwise are reduced because they are deemed a “parachute payment” which
would have resulted in the excise tax and loss of compensation deduction, and subsequently it is determined that such benefits would not constitute such a 

  

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“parachute payment,” then the Entity shall promptly pay to Executive the amount by which any such benefit had been so previously reduced but as to
which the determination was subsequently made that the amount of such benefit would not constitute such a “parachute payment”. 
  
 The Severance Amount and other benefits provided in paragraphs 3(a), 3(b), and 3(e) shall be paid to Executive in an undiscounted lump sum within thirty
(30) days after the Termination Date. Within ten (10) days after the Termination Date, Executive may send a written notice to the Entity requesting that, in lieu of payment of the benefits in paragraph 3(d) for the thirty-six (36) month period
following the Termination Date, the Executive would elect to receive (in fulfillment and full satisfaction of the Entity’s obligation to provide the benefits under paragraph 3(d)), a lump sum amount equal to the Entity’s current monthly
cost of providing all such benefits multiplied by thirty-six (36) and discounted to present value based upon a discount rate equal to the then Wall Street Journal prime rate; if Executive sends such notice within the ten (10) day period after the
Termination Date, the discounted lump sum payment for such benefits shall be paid within thirty (30) days after the Termination Date. The Entity may withhold from all payments under this Agreement all federal, state, city and other taxes if such
payments would be taxable income to the Executive and to the extent such taxes are permitted to be withheld by applicable law. 
  
 4. Period. The period (the “Period”) shall begin on the date of this Agreement and end on the first to occur of (a) Retirement or
Executive’s resignation other than for Good Reason, (b) Executive’s death, (c) Executive’s Disability, (d) ninety (90) days after the termination of Executive’s employment (voluntarily or involuntarily and with or without Cause
or Good Reason) if (1) such termination occurs before a Change in Control, and (2) a Change in Control does not occur during such ninety (90) day period, and (e) December 31, 2005, provided that such date of December 31, 2005 shall be automatically
renewed to December 31 of each subsequent year unless and until either the Company or the Executive shall send a written notice of termination of this Agreement to the other party by September 30, 2005 (with respect to December 31, 2005 terminating
the Agreement as of December 31, 2005) or by September 30 of each following applicable year terminating the Agreement as of the December 31 of such year. Notwithstanding the foregoing, if Executive becomes entitled to severance benefits under
paragraph 2, the provisions of paragraph 3 of this Agreement shall continue until Executive’s eligibility to receive severance benefits under this Agreement ceases and such provisions and the 

  

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other provisions of this Agreement not limited by the Period, including, without limitation, paragraphs 5, 7, 8, 11 and 12 shall survive the end of the
Period. 
  
 5. Confidentiality; Non-Solicitation; and
Non-Competition. 
  
 (a) Except as otherwise
required in Executive’s duties to the Company or as authorized in writing by the Company, Executive shall not at any time, either during or after Executive’s employment with the Company, disseminate, disclose, use, communicate or otherwise
appropriate, either directly or indirectly, through any individual, person or entity, any Confidential Information (as defined below), and Executive shall retain all such information in trust in a fiduciary capacity for the sole use and benefit of
the Company. Executive acknowledges that the Confidential Information is valuable, special, proprietary and unique to the Company, that the Company’s business depends on such Confidential Information, and that the Company wishes to protect such
Confidential Information by keeping it secret and for the sole use and benefit of the Company. Executive shall take all steps necessary and all steps reasonably requested by Company to insure that all such Confidential Information is kept secret and
confidential for the sole use and benefit of the Company. All records and other materials pertaining to the Confidential Information, whether or not developed by Executive, shall be and remain the exclusive property of the Company. Upon termination
of Executive’s employment or at any other time that the Company in writing so requests, Executive shall promptly deliver to Company all materials concerning any Confidential Information and all copies of such materials and any other materials
of the Company which are in Executive’s possession or under Executive’s control, and Executive shall not make or retain any copies or extracts of such materials. 
  
 For purposes of this paragraph 5(a), Confidential Information means and includes all information known or
used by the Company in the Company’s business and/or developed by or for the Company by any person, including Executive, which is not otherwise explicitly, consciously, properly, legally and generally known in any industry in which the Company
is or may become engaged. Confidential Information does not include general skills and general knowledge of any industry obtained by reason of Executive’s association with the Company. 
  
 Confidential Information specifically includes, but is not
limited to, such information, whether now possessed or later obtained, concerning plans, marketing, sales and inventory methods, materials, processes, procedures, devices used by the Company, business 

  

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forms, prices, suppliers, retail merchants with which the Company deals, organizations or other entities or persons associated with such retail merchants,
contractors, representatives and customers of the Company, plans for the development of new products and services and expansion into new areas or markets, internal operations and any variations, purchasing policies, bidding practices or procedures,
pricing policies, customer identities and lists, trade secrets, trade names, trademarks, servicemarks, copyrights, and other proprietary or confidential information of any type, together with all written, graphic and other materials relating to all
or any part of the same. 
  
 (b) During the
period of Executive’s employment with the Company and for a period of one (1) year after the termination of Executive’s employment with the Company, for any reason whatsoever, Executive shall not, either directly or indirectly, himself or
through or for any person or entity wherever located: 
  
 (1) Solicit, attempt to hire or hire any person who is then employed by, is a consultant to, or is an agent of, the Company or who was within the prior four (4) months employed by, a consultant to, or an agent of, the Company. 

 
 (2) Encourage, induce or attempt to induce, or aid,
assist or abet any other party or person in encouraging, inducing or attempting to induce, any such employee, consultant or agent to alter or terminate his or her employment, consultation or agency with the Company. 
  
 (3) Solicit any Company Customer (as defined below) to
supply products or perform services for the Company Customer of a similar nature to those products provided or services performed by the Company in the Company’s business during Executive’s employment with the Company. For purposes of this
paragraph 5(b)(3), the term “Company Customer” means any person or entity with whom Executive has been involved or in contact within the prior year and to or for whom the Company, within the prior year: (A) provided products or performed
services, or entered into an agreement for the providing of products or performance of services; or (B) submitted a bid for, or otherwise negotiated for, the providing of products or the performing of services. 
  
 The provisions of this paragraph 5(b) shall not apply to Executive after the termination of
Executive’s employment with the Company if Executive’s employment is terminated by the 

  

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Company without Cause (of which the Board shall be the sole judge) more than ninety (90) days prior to any Change in Control. 
  
 (c) During the period of Executive’s employment with
the Company and for a period of one (1) year after Executive’s termination of employment with the Company, for any reason whatsoever, Executive shall not, either directly or indirectly, himself or through or for any individual, person or entity
wherever located: 
  
 (1) Engage in any
activities, perform any services or conduct any businesses which are competitive with any business of the Company and which are the same or similar to the business of the Company conducted by Executive, at Executive’s direction or under
Executive’s supervision during the term of Executive’s employment with the Company (“Executive’s Company Business”); or 
  
 (2) Be engaged by, employed by, consult with, own any capital stock of, or have any financial interest of any kind in, any individual,
person or entity wherever located, which conducts a business which is competitive with any business of the Company and which is the same as or similar to Executive’s Company Business. Notwithstanding the foregoing, Executive may own, for
investment purposes only, up to 5% of the stock of any publicly-traded entity whose stock is either listed on a national stock exchange quoted in The Nasdaq National Market (if Executive is not otherwise affiliated with such entity). 
  
 The provisions of this paragraph 5(c) shall not apply to Executive after the termination of
Executive’s employment with the Company if Executive’s employment is terminated by the Company without Cause (of which the Board shall be the sole judge) more than ninety (90) days prior to any Change in Control. 
  
 (d) Executive acknowledges and agrees that the covenants and
undertakings contained in this paragraph 5 of this Agreement relate to matters which are of a special, unique and extraordinary character and that a breach of any of the terms of this paragraph 5 constitutes a material breach by Executive under this
Agreement and shall cause substantial injury to the Company and the Company’s business, and that the amount of such injury will be difficult, if not impossible, to estimate or determine and cannot be adequately compensated. Therefore, Executive
acknowledges that in the event of his breach of any of the covenants or undertakings contained in this paragraph 5, the Entity (Company) shall be entitled, in addition to all other 

  

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rights and remedies available under applicable law, to terminate immediately its obligation to pay to Executive the Severance Amount, the other benefits and
payments set forth in paragraphs 3(b) and (d), and the fees, costs and expenses set forth in paragraph 11; and if Executive shall have received any portion of the Severance Amount or such other benefits and payments or such fees, costs and expenses,
Executive shall be obligated and required to forthwith remit the Severance Amount and other benefits or payments or fees, costs and expenses theretofore made to or on behalf of Executive by the Entity (Company). 
  
 6. Other Items. In addition to all other benefits or payments provided
to Executive in this Agreement: 
  
 (a) In the
event Company is then providing a leased automobile to Executive at Company’s expense, the Entity (Company) shall continue to make all payments required under such automobile lease for a period of sixty (60) days following the Termination Date
and Executive may utilize the leased automobile during such sixty (60) day period for purposes substantially similar to which the leased automobile was utilized prior to the Termination Date, and upon completion of such sixty (60) day period
Executive shall return possession of the leased automobile to the Entity. 
  
 (b) Entity shall enter into an arrangement at Entity’s cost to provide so-called “high end” out-placement services for Executive with a quality third-party agency, which services shall be provided, if
required, to Executive for a period of up to one (1) year following the Termination Date. 
  
 7. Benefits Exclusive. The severance benefits (including without limitation the Severance Amount) and all other payments provided in this Agreement are exclusive and in lieu of any other termination or
severance benefits to which Executive may be entitled in the event of Executive’s termination of employment with the Entity (Company). 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 the Executive in any subsequent employment, except as provided in paragraph 3(d). 
  
 8. Employment Status. Nothing in this Agreement changes the present
status of Executive’s continued employment with the Company or otherwise affects Executive’s present employment status with the Company. Executive and Company acknowledge that, except only 

  

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as may otherwise be provided in this Agreement in the event of a Change in Control or under any other written agreement between the Executive and Company,
the employment of the Executive by the Company is “at will”. If Executive’s employment with the Company terminates more than ninety (90) days before the Change in Control, the Executive shall have no rights for payments or benefits
whatsoever under this Agreement, and if the termination of employment occurs during such ninety (90) days before the Change in Control the Executive shall have only such payments and benefits, if any, specifically provided under the provisions of
this Agreement. 
  
 9. Modification. This Agreement is the
complete agreement between the parties and may be modified (or any provision may be waived) only by a written instrument executed by both parties. 
  
 10. Law. This Agreement will be governed by and construed in accordance with the internal laws of the State of Michigan. 
  
 11. Costs of Enforcement. The Company shall pay on demand all of
Executive’s reasonable out-of-pocket fees, costs and expenses (including reasonable attorneys’ fees, court costs and other legal expenses and costs of investigation) incurred by Executive in connection with the enforcement of
Executive’s rights under this Agreement or in connection with any disputes concerning the meaning or interpretation of this Agreement; provided, however, that in the event of Executive’s breach of any of the covenants or undertakings
contained in paragraph 5, the Entity (Company) shall not be obligated or liable in any manner for any payments under this paragraph 11. The obligations contained in this paragraph 11 shall survive the end of the Period. 
  
 12. Arbitration. 
  
 (a) Any disputes between the parties with respect to the
terms and conditions of this Agreement that are not resolved within thirty (30) days after one party notifies the other party in writing of the dispute shall be resolved by and through binding arbitration conducted under the auspices of the American
Arbitration Association (or any like organization successor thereto) in Southfield, Michigan. Both the foregoing agreement of the parties to arbitrate any and all claims, and the results, determination, finding, judgment and/or award rendered
through such arbitration, shall be final and binding on the parties to this Agreement and may be specifically enforced by legal proceedings, and, pursuant to MCLA §600.5001, the parties agree that a judgment of any Michigan circuit court may be
rendered upon any arbitration award 

  

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rendered pursuant to this paragraph 12. The parties agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions
of this arbitration agreement and that any party may, in his or its sole discretion, ask through the arbitration for specific performance and/or injunctive relief in order to enforce or prevent any violations of the provisions of this arbitration
agreement; notwithstanding anything to the contrary, in the event the arbitrator rules that the arbitrator does not have jurisdiction or authority to grant specific performance and/or injunctive relief, the dispute with respect to which such
equitable relief is requested may be brought in a court of appropriate jurisdiction encompassing Oakland County, Michigan. 
  
 (b) Such arbitration shall be initiated by the written notice of the dispute described in paragraph 12(a), and such arbitration shall be a
compulsory and binding proceeding on each party. Such arbitration proceeding shall be conducted under the commercial arbitration rules (formal or informal) of the American Arbitration Association before one arbitrator, and the arbitrator in any such
arbitration shall be such person who is expert in the subject matter of the dispute. The costs of the arbitrator and the arbitration shall be borne by the Company. Each party shall bear separately the cost of its or his respective attorneys,
witnesses and experts in connection with such arbitration, subject to the Company’s obligations under paragraph 11. Time is of the essence of this arbitration procedure, and the arbitrator shall be requested to render his or her decision within
ten (10) days following completion of the arbitration. 
  
 13.
Successor Obligations. This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns, and the Company shall require any successor to, assignee, or transferee of, all or substantially all of its
business or assets to expressly assume and agree to perform all of the Company’s obligations under this Agreement (such successor, transferee or assignee shall be deemed, for purposes of this Agreement, to be the Company). This Agreement shall
be binding upon Executive and shall inure to Executive’s benefit and may be enforceable by the Executive’s legal personal representatives, but Executive may not assign this Agreement without the Company’s prior written consent.

  
 14. Duplicate Copies. This Agreement may be executed in
counterparts, both of which together will be deemed an original of this Agreement. 
  
 15. Severability. The provisions of this Agreement shall be deemed severable, and if any part of any provision is held illegal, void or invalid under applicable law, such provision may 

  

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be changed to the extent reasonably necessary to make the provision, as so changed, legal, valid and binding. If any provision of this Agreement is held
illegal, void or invalid in its entirety, the remaining provisions of this Agreement shall not in any way be affected or impaired but shall remain binding in accordance with their terms. 
  
 DATED as of the day and year first above written. 
  

			
	HANDLEMAN COMPANY,
a Michigan corporation
		
	By:	 	/s/ Stephen Strome
	 	 	Its: CEO and Chairman
	 	 	“Company”
	
	/s/ Ronnie Wayne Lund
	Ronnie Wayne Lund
	 	 	“Executive”

  

 -15-Limited Liability Company Agreement

 Exhibit 10.1 
  
 LIMITED LIABILITY COMPANY AGREEMENT 
 REPUBLIC EXPLORATION LLC 
  
 AGREEMENT dated the 24th day of August, 2000 among (1) Fairfield Industries Incorporated, a Delaware corporation (“Fairfield”), with offices at 14100 Southwest Freeway, Suite 600, Sugar Land, Texas 77478, U.S.A., Fax: (281)
275-7550, (2) Juneau Exploration Company, LLC, a Texas limited liability company (“Juneau”), with offices at 26902 Nichols Sawmill Rd., Magnolia, Texas, 77355-3586, Fax: (281) 356-2666, and (3) REX Offshore Corporation, a Delaware
corporation (“REX”), with offices at 3700 Buffalo Speedway, Suite 960, Houston, Texas 77098, Fax (713) 960-1065. 
  
 WITNESSETH: 
  
 WHEREAS, Fairfield and Juneau caused Republic Exploration LLC (the “Company”) to be formed under the Limited Liability Company Act of the State
of Delaware (the “Act”, which term will include any future amendments thereto), a copy of the certificate of formation (the “Certificate”) being attached hereto as EXHIBIT A; 
  
 WHEREAS, Fairfield, Juneau and REX wish to provide, among other things, for
membership in and management of the Company, all on the terms hereinafter set forth; 
  
 NOW, THEREFORE, Fairfield, Juneau and REX agree as follows. 
  
 1. Limited Liability Company Agreement. This Agreement is a limited liability company agreement under and as provided in the Act. 
  
 2. Members. Concurrently with the execution of this Agreement, Fairfield, Juneau and REX will become and be the members of the
Company. Fairfield, Juneau and REX and any other individual, corporation or other entity that becomes a member of the Company in accordance with the terms of this Agreement are collectively called “Members”; and any one of them is called a
“Member”. The neuter pronoun will refer to a Member regardless of the Member’s gender. 
  
 3. Duration of the Company. The Company will have perpetual existence. 
  
 4. Business of the Company. The business of the Company will be the identification, recovery and exploitation of hydrocarbon deposits. 
  
 5. Contributions by the Members. 
  
 (a) Fairfield. Fairfield grants the Company, without charge, a non-exclusive, non-transferable license on the terms hereinafter set forth to the
seismic data identified in EXHIBIT 5a-1 hereto and to any reprocessed data that Fairfield makes available to the Company as hereinafter provided (the “Data”, which term will also include any result or product derived from any processing,
interpretation or other use of the Data by the Company). The Company may use the Data solely to identify, recover and exploit hydrocarbon prospects for itself. Neither the Company nor any of the Members may (i) use any of the Data for any other
purpose, or (ii) except as hereinafter provided disclose 

 any of the, Data or make any of the Data available to anyone else (including, without limitation, any parent, subsidiary
or affiliated entity); but these restrictions will not preclude Fairfield from licensing to others Data it has licensed to the Company. 
  
 Fairfield’s capital account will not be credited to any extent for the grant of this license to the Company. 
  
 FAIRFIELD MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND OR DESCRIPTION,
EXPRESS OR IMPLIED, WITH RESPECT TO THE DATA EXCEPT THAT IT MAY LICENSE IT TO THE COMPANY PURSUANT TO THIS AGREEMENT WITHOUT THE CONSENT OR APPROVAL OF ANY THIRD PARTY AND WITHOUT VIOLATING ANY RIGHT OF ANY THIRD PARTY. ANY USE WHICH THE COMPANY
MAKES OF THE DATA AND ANY ACTION WHICH THE COMPANY TAKES BASED ON THE DATA WILL BE AT THE COMPANY’S SOLE RISK, EXPENSE AND LIABILITY, AND THE COMPANY WILL NOT HAVE ANY CLAIM AGAINST FAIRFIELD BY REASON OF ANY SUCH USE OR ACTION. 
  
 Juneau, REX and the Company acknowledge that Fairfield’s business is the
licensing and other exploitation of the very Data licensed to the Company under this Agreement and that the protection of the Data as provided in this Agreement is essential to Fairfield. 
  
 The Company’s right to use the Data will expire on the earlier of the twenty-fifth anniversary of the date of this
Agreement or the dissolution and winding up of the Company. On expiration of its license to the Data, the Company will destroy all of the Data. 
  
 If the Company wishes to disclose any of the Data to a prospective partner or joint venturer in a prospect or to a prospective purchaser or lender, the
Company may do so in accordance with the procedures set forth in EXHIBIT 5a-2, hereto or under other arrangements approved by Fairfield in writing. EXHIBIT 5a-2 also contains other provisions with respect to disclosure of the Data and
additional obligations of the Company, all of which the Company and the Members acknowledge. 
  
 Within ten (10) days after the date of this Agreement, Fairfield will deliver to the Company the Data identified in EXHIBIT 5a-1. 
  
 If Fairfield reprocesses any of the Data other than under a processing contract with a third party, Fairfield will make that
reprocessed Data available to the Company under the terms of the license set forth in this Agreement. 
  
 (b) REX. Concurrently with the execution of this Agreement, REX is contributing Four Million dollars ($4,000,000.00) to the Company for working
capital. 
  
 Of these funds, the Company will deposit up to Two
Hundred Fifty Thousand dollars ($250,000.00) in its general checking account and will maintain the balance in an interest bearing account until it requires them. 
  

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 (c) Juneau. Juneau will provide its know-how and expertise in oil and gas exploration and
development to the Company. 
  
 Prior to the execution of this
Agreement, Juneau acquired for and on behalf of the Company Texas State Lease No. M-101255 covering the N/2 of the NE4 of the area designated as Galveston Block 149L according to the map thereof in the General Land Office of the State of Texas.
Concurrently with the execution of this Agreement, Juneau is transferring that Lease to the Company. As soon as the contribution of REX becomes available funds, the Company will pay Juneau Two Hundred Ten Thousand Two Hundred dollars ($210,200.00)
in reimbursement of its cost in acquiring the Lease. Accordingly, this Lease does not constitute a capital contribution by Juneau to the Company. 
  
 Fairfield consents to the transfer of the aforesaid Lease to the Company and releases all rights it has under a separate agreement with Juneau in respect
of that Lease. 
  
 (d) The Company will not pay interest on
capital contributions. 
  
 (e) Each of the Members confirms to the
Company and to the other Members that it and/or its principal equity owner are experienced in the oil and gas industry and that it is fully aware of the risks involved in the venture set forth in this Agreement. 
  
 6. Management of the Company. 
  
 (a) Juneau will manage the business and affairs of the Company, and, except
as hereinafter provided, Juneau will make all decisions with respect to the business, affairs and operations of the Company. 
  
 (b) As part of its management responsibilities, Juneau will, for and on behalf of the Company, analyze, process, interpret and use the Data to identify
hydrocarbon prospects in which the Company should acquire an interest, and, except as hereinafter provided, Juneau will make all decisions with respect to the acquisition of an interest, the development of the prospect, and the exploitation of the
production from the prospect. 
  
 Juneau will cause its employees
and others who work on the Data to use the Data only for the business of the Company and not to disclose any of the Data to anyone. 
  
 (c) Before the Company acquires an interest in any prospect, Juneau will advise the other Members of (i) the prospect and its potential and risks, (ii)
the terms and other details of the interest to be acquired including whether that interest will be acquired alone or in conjunction with one or more other parties, (iii) the manner in which the Company will develop the prospect, (iv) the estimated
cost to the Company to acquire the interest and develop the prospect, and (v) any other information about venture that a Member requests. 
  
 Notwithstanding the foregoing paragraph, if, under Section 6(d)(i) below, Juneau may cause the Company to acquire an interest in a prospect without the
approval of the other Members, and if Juneau determines that the Company may lose a worthwhile 
  

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 opportunity if Juneau must report about the prospect to the other Members before the acquisition is made, then Juneau may
cause the Company to acquire the interest before making the report; and if Juneau does so, then Juneau will, promptly thereafter, advise the other Members of the information required under the foregoing paragraph. 
  
 (d) Juneau may, without the approval of the other Members, cause the Company
to do any of the following and to enter into agreements to accomplish the same: 
  
 (i) acquire an interest in a prospect, either alone or in conjunction with one or more other parties, and make all arrangements with respect to that interest and prospect provided Juneau’s estimated cost for the
Company to acquire the interest and develop the prospect does not exceed Five Hundred Thousand dollars ($500,000.00); 
  
 (ii) borrow up to and including One Million dollars ($1,000,000.00) in connection with any prospect in which the Company has acquired an interest and
grant a security interest in the Company’s interest in that prospect to secure the Company’s obligations in respect of that borrowing; 
  
 (iii) sell, lease or otherwise dispose of any asset of the Company which has a reasonable value not exceeding Five Hundred Thousand dollars ($500,000.00);

  
 (iv) settle any claim for an amount not exceeding One Hundred
Thousand dollars ($100,000.00); 
  
 (v) apart from the costs to
acquire an interest and develop a prospect, budget and incur expenses for the operation of the Company not in excess of Five Hundred Thousand dollars ($500,000.00) per fiscal year of the Company (pro rata thereof for the fiscal year ending
December 31, 2000). Juneau will prepare the budget for each fiscal year with expenses itemized and furnish the Members copies thereof (i) approximately thirty (30) days after the date of this Agreement for the 2000 fiscal year, and (ii)
approximately thirty (30) days prior to the commencement of each fiscal year thereafter. The budgets may include fees for professionals to provide expertise required to conduct the business of the Company effectively and which none of the Members
can provide. 
  
 In making its estimate of the cost to the Company
to acquire an interest and develop a prospect, Juneau may take into account investments by participants to the extent that Juneau reasonably and in good faith determines that it can obtain participations by others in the prospect. 
  
 The amounts set forth in items (i) through (v) above may be reduced according
to the determination of Members owning at least two-thirds (2/3) of the profits of the Company. 
  
 (e) Approval by Members owning at least two-thirds (2/3) of the profits of the Company will be required (i) for any matter described in Section 6(d) above
for which Juneau does not have sole authority, (ii) for the Company to borrow money or enter into 
  

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 any agreement other than for the express purposes in the express situations described in Section 6(d) above, (iii) for
the Company to lend money or issue a guarantee, (iv) except as provided in Section 6(d)(v) above, for the Company to engage the services of anyone, and (v) for the Company to arrange the defense or prosecution of any claim. 
  
 (f) Approval by all of the Members will be required (i) for the Company to
merge, consolidate or otherwise combine with another entity, (ii) for the Company to make an assignment for the benefit of creditors or seek relief under any bankruptcy, insolvency or similar law, and (iii) for the Company to engage in any business
other than that set forth in Section 4 above. 
  
 (g) At the
request of any Member, the Members will meet to discuss the business of the Company. 
  
 (h) The Members will record in writings signed by them their approvals, agreements, determinations and other actions under or in respect of this Agreement. 
  
 7. Compensation; Expenses. 
  
 (a) The Company will grant to Juneau or to those whom Juneau designates in writing, by an instrument substantially in the form of EXHIBIT 7a
hereto, an overriding royalty of three and one-third percent (3 1/3%) of one hundred percent (100%)
[proportionately reducible as provided in EXHIBIT 7a] burdening any oil, gas and/or mineral interest that the Company acquires. 
  
 (b) Except as expressly provided in this Agreement, the Members will not be entitled to compensation or reimbursement for their services to the Company or
for the services of their employees to the Company. Further, the Members will cause their employees not to seek compensation from the Company, and each Member will indemnify the Company against and hold it harmless from (i) any claims for
compensation by any of its employees, and (ii) any expenses (including, without limitation, legal fees) which the Company incurs in connection with any such claim. 
  
 (c) The Members will pay their own expenses (including, without limitation, legal fees) in connection with the preparation
and negotiation of this Agreement; but the Company will reimburse Fairfield for the filing fees and service company fees to establish the Company and qualify it to do business in Texas. 
  
 8. Profits and Losses; Taxation. 
  
 (a) Fairfield and Juneau will each have a forty-five percent (45%) interest in the profits of the Company; REX will have a ten percent (10%) interest in
the profits of the Company. 
  
 The losses of the Company for any
fiscal year will be shared by the Members in proportion to their capital accounts on thee day before the last day of that fiscal year. 
  

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 The capital accounts of the Members will be determined in accordance with the requirements of the
Internal Revenue Code and the rules and regulations thereunder from time to time in effect (collectively called the “Code”). 
  
 (b) The profits and losses of the Company and items of income, gain, loss, deduction, expense, credit and similar items will be determined by the
Company’s accountants in accordance with generally accepted accounting principles. 
  
 (c) REX will have the option to acquire an additional twenty-three and one-third percent (23 1/3%) interest in the profits of the Company in exchange for additional contributions to the Company at the rate of One Hundred Seven Thousand One Hundred Forty-three dollars ($107,143.00) for each one percent (1%) interest acquired
plus the product of (A) Thirty-five and 23/100 dollars ($35.23) for each one percent interest acquired [pro rata for a fraction of one percent (1%)] and (B) the number of days that have elapsed from the date of this Agreement until the date
payment is made. 
  
 The option may be exercised in whole
or in part, at any time and from time to time, on or prior to December 29, 2000, by giving notice of exercise to the Company and to each of the Members of the Company as hereinafter provided on or prior to that date. Each notice of exercise must
specify the additional percentage interest that REX is acquiring, and the notice to the Company must be accompanied by full payment for that interest. The option will be deemed exercised on the day the Company receives such notice and payment of the
required amount, and without precluding other methods of payment, receipt by the Company of a check in the required amount drawn on a bank in Houston, Texas, will constitute payment provided the check clears in the normal course. 
  
 The Company will deposit the payments it receives on exercise of the option
in an interest bearing account until it requires those funds. 
  
 If REX exercises the option, the interest of each other Member in the profits of the Company will be reduced by the product of (A) the amount of the interest acquired by REX, and (B) a fraction the numerator of which is the interest of the
Member in the profits of the Company immediately prior to the exercise of the option and the denominator of which is the aggregate of the interests of all Members other than REX in the profits of the Company immediately prior to the exercise of the
option. 
  
 Further, the interest in the profits of the Company
acquired by REX on exercise of the option will be deemed to have been acquired on the date of this Agreement; and the resulting interests of the other Members in the profits of the Company (after giving effect to REX’s exercise of the option)
will also be deemed to have taken effect on the date of this Agreement. 
  
 (d) The Company will be treated as a partnership for federal income tax purposes and, wherever possible, for state and local income tax purposes. 
  
 The Company will make the following elections for its first and subsequent tax years: 
  
 (i) to deduct currently, in accordance with the Code and the relevant provisions of state law, all intangible drilling and
development costs with respect to drilling productive and non-productive wells and the preparation of wells for the production of hydrocarbons; 
  

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 (ii) to recover the basis of recovery property using the maximum recovery rate permitted by the Code;

  
 (iii) to deduct expenses of organizing the Company ratably
over a sixty-month period in accordance with Section 709 of the Code. 
  
 The Company will make all other elections required or permitted to be made by it under the Code or applicable state law in accordance with the written agreement of all of the Members. 
  
 The Company will elect Juneau the “tax matters Member” under and
pursuant to the Code. Juneau will have authority to apply the provisions of this Agreement relating to the maintenance of capital accounts and the allocation of profits and losses and of each item of income, gain, loss and deduction of the Company
so as to comply with Treasury Regulation Sections 1-704-1(b) and 1.704-2 from time to time in effect. In the event that Juneau determines that it is prudent to modify any allocations of profits or losses or items of income, gain, loss or deduction,
or debits or credits, or the manner in which they are computed, in order to comply with said Treasury Regulations, then Juneau may make such modification provided that such modification will not have a material effect on the allocation of profits or
losses or on cash or other property in kind that would otherwise be allocable or distributable to any Member pursuant to this Agreement had no such modification been made. Juneau will promptly notify the other Members of any modification that it
makes under this paragraph and of the nature, extent and effect of the modification. 
  
 (e) If a Member transfers all or a part of its interest in the Company [see Section 13], the Company may — but will not be required to — elect to adjust the basis of the Company’s property in accordance
with the provisions of the Internal Revenue Code from time to time in effect. The Company will make this election only in accordance with the written agreement of all of the Members. 
  
 (f) The Company and its Members will use their best efforts to cause the firm that audits the Company’s financial
statements to sign the Company’s federal income tax return as preparer thereof. The Members will also use their best efforts to cause the Company to furnish the Members, within ninety (90) days after the close of the Company’s fiscal year,
all information reasonably necessary for the Members to prepare their federal income tax returns. 
  
 9. Distributions. 
  
 (a)
Except as provided in Section 15(b), distributions by the Company will be made to the Members in the same percentages as their interests in the profits of the Company. 
  

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 (b) During each of its fiscal years the Company will set aside and maintain in a separate interest
bearing account forty percent (40%) of the revenues it receives, as it receives them (the funds so set aside and the interest thereon are called the “Tax Reserve”). If the Members have taxable income from the Company for a fiscal year, the
Company will distribute to the Members, from and to the extent of the Tax Reserve for that year, an amount equal to forty percent (40%) of the aggregate taxable income of the Members from the Company for that fiscal year. To the extent the Tax
Reserve for any fiscal year is not distributed to the Members, it will be used for the general purposes of the Company. 
  
 (c) Except as provided above, the Company will make distributions to the Members only in accordance with the determination of all of the Members.

  
 (d) The Company will not make distributions to the Members
before 2001. 
  
 10. Bank Accounts. 
  
 (a) The Company will maintain bank accounts at such banks with such
signatories having such authority as Members owning at least two-thirds (2/3) of the profits of the Company determine. 
  
 (b) Initially the Company will maintain its accounts at Bank One Corporation, 910 Travis Street, Sixth Floor, Houston, Texas, with the following
signatories, each with single signature authority for any amount: John B. Juneau, Tony Ping and Kenneth Peak. 
  
 11. Books and Records; Financial Statements. 
  
 (a) Unless Members owning at least two-thirds (2/3) of the profits of the Company decide otherwise, Juneau will, without charge, keep the books and records of the Company and will prepare and furnish to the Members
quarterly and annual balance sheets and profit and loss and cash flow statements and such other reports as Juneau deems appropriate. 
  
 (b) The Company will maintain its books and records on an accrual basis. 
  
 (c) The Company’s fiscal year will end on December 31, and its first fiscal year will end December 31, 2000.

  
 (d) The Company will engage the services of an accounting firm
approved by all of the Members to audit the Company’s annual balance sheet and profit and loss statement. Until the Members decide otherwise, the Company will engage the services of Arthur Anderson, LLP, Houston, Texas, to perform this
function. 
  
 (e) The Members may examine the books and records of
the Company during normal hours. 
  
  

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 12. Restrictions on the Activities of Members. 
  
 (a) While the Company is in existence and for a period of one (1) year thereafter, Juneau and John B. Juneau will not —
and John B. Juneau will cause any entity which he and/or his wife and/or any of his children, either directly or indirectly, control not to — without the approval of the other Members, (i) acquire any interest in any area covered by any of the
Data, or (ii) exploit, participate in the recovery or exploitation of, derive any benefit from, or assist anyone else to recover or exploit or derive any benefit from any area covered by any of the Data. 
  
 (b) While the Company is in existence and for a period of one (1) year
thereafter, REX and Contango Oil & Gas Company, a Nevada corporation (“Contango”), will not — and Contango will cause any entity which it, either directly or indirectly, controls not to — without the approval of the other
Members, (i) acquire any interest in any area covered by any of the Data, or (ii) exploit, participate in the recovery or exploitation of, derive any benefit from, or assist anyone else to recover or exploit or derive any benefit from any area
covered by any of the Data. 
  
 (c) Control means the ability to
control or determine the management of an entity, whether by voting power or other means. 
  
 (d) While the Company is in existence and thereafter, Fairfield may engage in any activities it wishes. 
  
 13. Resignation; Expulsion; Assignment. 
  
 (a) A Member may not resign from the Company prior to its dissolution and winding up. 
  
 (b) A Member may not be expelled from the Company. 
  
 (c) Prior to the dissolution and winding up of the Company, a Member may not assign, transfer, encumber or otherwise dispose
of all or a portion of its interest in the Company (including its interest in profits or losses) except for (i) transfers on the dissolution or death of a Member, but in either of these cases the transfer may only be to the shareholders, members or
heirs, as the case may be, of the Member, and (ii) transfers approved by all of the Members, other than the Member which is transferring its interest. Any assignment, transfer, encumbrance or other disposition of a Member’s interest in the
Company in violation of the provisions of this Agreement will be null and void. 
  
 (d) A transferee (other than the Company) of all or a portion of a Member’s interest in the Company pursuant to the provisions of this Agreement is called a “Transferee”. A Transferee that is not a
Member of the Company at the time of the transfer will, without further act, become and be a Member of the Company. A Transferee will be subject to the terms and provisions of this Agreement, will be entitled to the rights and benefits of the
transferor (a “Transferor”) to the extent of the interest transferred and will be subject to the obligations of the Transferor to the extent of the interest transferred; but a Transferee that is not a signatory to this Agreement at the
time of the transfer will not be entitled to receive any distributions unless and until that Transferee executes this Agreement by signing an instrument in the form of 
  

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 EXHIBIT 13d-1 hereto. In addition, if a Member transfers all or a portion of its interest in the Company, all of
the Members will enter into an amendment to this Agreement substantially in the form of EXHIBIT 13d-2 hereto reflecting the changes in the ownership of the profits and losses of the Company resulting from the transfer and any other matters to
which the Members and the Transferee agree. 
  
 The Transferor and
Transferee will agree between themselves as to the allocation between them of the profits and losses and items of income, gain, loss, deduction, expense, credit and similar items for the fiscal year in which the transfer occurs, and they will
jointly advise the Company in writing of their allocation. 
  
 (e)
The Company may not transfer or assign any of its rights under this Agreement, and any such transfer will be null and void. 
  
 14. Events of Bankruptcy. None of the events listed in Section 18-304 of the Act (EVENTS OF BANKRUPTCY) will result in a Member ceasing to be a member of the
Company. 
  
 15. Dissolution. 
  
 (a) The Company will be dissolved and its affairs will be wound up upon the
occurrence of any of the following: (i) approval by all of the Members, or (ii) the election of any Member (other than Juneau) made by written notice to the Company and the other Members at any time after the dissolution of or cessation of business
by Juneau or after the death of John B. Juneau or John B. Juneau’s ceasing to control Juneau including any incapacity that renders John B. Juneau incapable of controlling Juneau, or (iii) the election of any Member (other than REX) made by
written notice to the Company and the other Members at any time after Contango’s ceasing to control REX, or (iv) the election of any Member (other than a Member in breach or default) made by written notice to the Company and the other Members
within a period of one hundred twenty (120) days after (A) a Member materially breaches this Agreement or materially defaults in any of its obligations under this Agreement, and (B) the Member making the election becomes aware of the breach or
default. The right to elect to dissolve the Company because of a breach or default is in addition to any other rights and remedies each Member has by reason of that breach or default. 
  
 Control means the ability to control or determine the management of an entity, whether by voting power or other means.

  
 Except as provided above, the dissolution or death of a Member
or the occurrence of any other event which terminates the membership of a Member in the Company will not result in the dissolution and winding up of the Company. 
  
 (b) On the dissolution and winding up of the Company, after the obligations of the Company have been paid or provided for,
the Company will distribute its remaining assets as follows: 
  
 (i) first, to REX to the extent, if any, that its contributions under Sections 5 and 8 and interest earned by the Company on those contributions as provided in Sections 5(b) and 8(c) exceed the aggregate amount of all expenditures of
the Company after the date of this Agreement; 
  

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 (ii) then, to the Members in the same percentages as their interests in the profits of the
Company. 
  
 If REX’s contributions are commingled with other
funds of the Company in the same interest bearing account, then, to determine the amount of interest earned on REX’s contributions, the funds which the Company withdraws from that account will be deemed to come first from REX’s
contributions. 
  
 16. Indemnity. 
  
 (a) The Company will indemnify each of its Members against any claim,
demand, liability, fine or expense (including, without limitation, reasonable legal fees and disbursements, court costs and the cost of appellate proceedings) arising out of any act or inaction by the Member done in good faith and reasonably
believed by the Member to be in the best interests of the Company and provided, in the case of any fine, that the Member had no reasonable cause to believe its conduct was unlawful. 
  
 (b) The Company will, to the extent approved by all of the Members other than the one seeking indemnity, pay the expenses of
the Member seeking indemnity in advance of the final disposition of the matter upon receipt of an undertaking from that Member satisfactory to those Members to repay the amount advanced if it is ultimately determined that the Member seeking
indemnity is not entitled to indemnification. The Members required to approve the payment of these expenses will grant such approval (i) if they determine that the Member seeking indemnity will, in fact, be entitled to indemnity under Section 16(a),
and (ii) to the extent that they determine that the payment of those expenses will not jeopardize the Company. 
  
 (c) Each Member will indemnify each other Member against any liability and any loss, damage or expense (including, without limitation, reasonable legal
fees and disbursements, court costs and the cost of appellate proceedings) arising out of any claim by a third party against the indemnitee because of any act or inaction by the indemnitee which does not constitute negligence, gross negligence,
willful misconduct, malfeasance, a breach of duty, or other wrongdoing — but only to the extent that the Company does not perform its obligation to the indemnitee under Section 16(a), and then only for a portion of the Company’s
unperformed obligation equal to the product of such unperformed obligation and the indemnitor’s percentage interest in the profits of the Company at the time of the occurrence giving rise to the indemnification. 
  
 (d) No Member will incur liability to any other Member, and no Member will
have a claim against any other Member, because of an error or mistake in judgment made in good faith and in what the Member believed to be in the best interests of the Company. 
  

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 (e) No Member will have any liability to the Company or any other Member with respect to any deficit in
its capital account. 
  
 17. Amendment; Admission of New Members.

  
 (a) This Agreement may be amended only by an instrument in
writing signed by all of the Members. 
  
 (b) The certificate of
formation of the Company may be amended only by an instrument in writing signed by all of the Members. 
  
 (c) Except as provided in Section 13 (transfers of interests in the Company), a person may not become a member in the Company unless that person’s
admission is approved by all of the Members as evidenced by an amendment to this Agreement signed by all of the Members and by that person. 
  
 18. Waiver. The Company and each Member of the Company may not waive any of its rights or any obligation of another or any provision of this Agreement except by an
instrument in writing signed by the party issuing the waiver. 
  
 19.
Severability. If any, provision of this Agreement or the application of any such provision to any individual, corporation or other entity or to any circumstance is held invalid, the remainder of this Agreement, and the application of such
provision other than to the extent it is held invalid, will not be invalidated or affected thereby. 
  
 20. Governing Law; Submission to Jurisdictions. This Agreement and the rights and obligations of the Members of the Company will be governed by and construed in accordance with the law of the State of
Delaware. For purposes of any proceeding involving this Agreement or any of the rights or obligations of any of the Members, each Member hereby submits to the non-exclusive jurisdiction of the courts of the State of Delaware, and agrees not to raise
and waives any objection to or defense based upon the venue of any such court or based upon forum non conveniens. Each Member and the Company agree not to bring any action or other proceeding with respect to this Agreement or the Company or
with respect to any of the rights or obligations of any of the Members of the Company in any other court unless such courts of the State of Delaware determine that they do not have jurisdiction in the matter. 
  
 21. Entire Agreement. This Agreement contains the entire agreement of the parties with
respect to the subject matter hereof, and it supersedes all prior understandings and agreements, whether written or oral, and all prior dealings of the parties with respect to the subject matter hereof. 
  
 22. Execution by the Company. By executing this Agreement, the Company agrees to abide
by and to be bound by all of the terms of this Agreement. 
  
 23. Section
Headings. Section headings are for reference purposes only and will not in any way affect the meaning or interpretation of any provision of this Agreement. 
  

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 IN WITNESS WHEREOF, the Members have executed this Agreement as of the day and year first written above.

  

			
	FAIRFIELD INDUSTRIES INCORPORATED
		
	By:	 	  

	Name:	 	Marc Lawrence
	Title:	 	Sr. Vice President
	
	JUNEAU EXPLORATION COMPANY, LLC
		
	By:	 	  

	Name:	 	John B. Juneau
	Title:	 	Sole Manager
	
	REX OFFSHORE CORPORATION
		
	By:	 	  

	Name:	 	Kenneth R. Peak
	Title:	 	President and CEO

  

			
	ACKNOWLEDGED AND AGREED:
	
	 REPUBLIC EXPLORATION LLC
 By: Fairfield
Industries Incorporated

		
	By:	 	  

	 	 	Marc Lawrence
	 	 	Sr. Vice President

  

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 To induce Fairfield and REX to enter into this Agreement, and in consideration thereof, the undersigned,
John B. Juneau, agrees to the provisions of Section 12 of this Agreement and agrees to abide by and perform those provisions that apply to him. 
  
 John B. Juneau confirms to the Company, Fairfield and REX that he controls Juneau. John B. Juneau will notify the Company and its Members if he ceases to
control Juneau. 
  

	
	  

	 John B. Juneau

  
 To induce
Fairfield and Juneau to enter into this Agreement, and in consideration thereof, the undersigned, Contango Oil & Gas Company, a Nevada corporation (“Contango”), agrees to the provisions of Section 12 of this Agreement and agrees to
abide by and perform those provisions that apply to it. 
  
 Contango confirms to the Company, Fairfield and Juneau that it controls REX. Contango will notify the Company and its Members if it ceases to control REX. 
  

			
	CONTANGO OIL & GAS COMPANY
		
	By:	 	  

	Name:	 	Kenneth R. Peak
	Title:	 	President and CEO

  

 - 14 -

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00090-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00090-of-00352.parquet"}]]