8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 19, 2010

Hot Topic, Inc.

(Exact name of registrant as specified in its charter)

California	0-28784	77-0198182
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

18305 E. San Jose Avenue, City of Industry, California	91748
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (626) 839-4681

Not Applicable.

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

On September 19, 2010, Hot Topic, Inc. (the “Company”) entered into an agreement (the “Becker Drapkin Agreement”) with Steven R. Becker (“Becker”), Matthew A. Drapkin (“Drapkin”), Becker Drapkin Management, L.P., Becker Drapkin Partners (QP), L.P., Becker Drapkin Partners, L.P., BD Partners I, L.P. and BC Advisors, LLC (collectively, the “Becker Drapkin Group”) and a separate agreement (the “Carlson Agreement” and, together with the Becker Drapkin Agreement, the “Agreements”) with Clint D. Carlson, Black Diamond Offshore Ltd., Double Black Diamond Offshore Ltd., Carlson Capital L.P. and Asgard Investment Corp. (collectively, the “Carlson Group”).

Under the Agreements, the Company agreed to increase the size of the Company’s board of directors (the “Board”) from seven to nine directors and to appoint Becker and Drapkin as members of the Board effective as of October 1, 2010. Upon their appointments, Becker shall become a member of the Compensation Committee of the Board and Drapkin shall become a member of the Governance and Nominating Committee of the Board. The Company also agreed to nominate Becker and Drapkin for election as directors at the Company’s 2011 Annual Meeting of Shareholders (the “2011 Annual Meeting”). The Company further agreed that it will not, prior to the conclusion of the Company’s 2012 Annual Meeting of Shareholders (the “2012 Annual Meeting”), increase the size of the Board other than with respect to the appointments of Becker and Drapkin.

Under the Agreements, each member of the Becker Drapkin Group and each member of the Carlson Group will cause all shares of the Company’s common stock owned by such member to be present at the 2011 Annual Meeting and to be voted in favor of all directors nominated by the Board (including Becker and Drapkin). The Agreements also contain certain restrictions on the members of the Becker Drapkin Group and the members of the Carlson Group, which generally terminate on September 19, 2012 or, if earlier, the date that the Governance and Nominating Committee notifies Becker or Drapkin that it has resolved not to nominate either of Becker and Drapkin for election to the Board at the 2012 Annual Meeting. During the period for which these restrictions apply, each of the members of the Becker Drapkin Group and each of the members of the Carlson Group is restricted, subject to certain limited exceptions, from: (i) acquiring beneficial ownership of any securities of the Company if, after such acquisition, the member would own more than 14.99% of the Company’s common stock; (ii) engaging in activities to control or influence the governance or policies of the Company, including by submitting shareholder proposals, nominating candidates for election to the Board or opposing candidates nominated by the Board, attempting to call special meetings of the Company’s shareholders or soliciting proxies with respect to voting securities of the Company; (iii) participating in any “group,” within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), with respect to the Company’s common stock; and (iv) publicly disparaging any member of the Board or the Company’s management. The Agreements further provide that the Becker Drapkin Group and the Carlson Group will cease to be a combined “group” within the meaning of Rule 13d-5(b)(1) promulgated under the Exchange Act.

In connection with their appointments as directors pursuant to the Agreements, Becker and Drapkin will receive the same compensation and reimbursement of expenses as are payable to the Company’s other non-employee directors.

The full text of the Becker Drapkin Agreement is attached as Exhibit 10.1 to this current report and is incorporated herein by reference. The full text of the Carlson Agreement is attached as Exhibit 10.2 to this current report and is incorporated herein by reference. The foregoing does not purport to be a complete summary of the Agreements and is qualified in its entirety by reference to Exhibits 10.1 and 10.2.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Becker and Drapkin were appointed to the Board, effective October 1, 2010, pursuant to the Agreements described in Item 1.01 of this current report. Commencing on the effective date of their appointments as directors, Becker will serve on the Compensation Committee of the Board and Drapkin will serve on the Governance and Nominating Committee of the Board.

In accordance with the Company’s Director Compensation Policy for non-employee directors, upon the effective date of their appointments to the Board, each of Becker and Drapkin will automatically be granted an option to purchase 10,000 shares of the Company’s common stock pursuant to the Company’s Non-Employee Directors’ Stock Option Plan. The options will be non-statutory stock options with exercise prices equal to the fair market value of the Company’s common stock on the grant date. Each option will vest, as to 25% of the shares for which such option is exercisable, on October 1, 2011, and will vest quarterly in equal amounts thereafter such that the options will be 100% vested on October 1, 2014. The options expire 10 years after the date of grant.

Neither Becker nor Drapkin has been a participant in, or is to be a participant in, any related-person transaction or proposed related-person transaction required to be disclosed by Item 404(a) of Regulation S-K under the Exchange Act.

Biographical information for Becker and Drapkin is included in the Company’s September 20, 2010 press release announcing Becker’s and Drapkin’s appointments to the Board, which is attached as Exhibit 99.1 to this current report and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
10.1	Agreement, dated as of September 19, 2010, by and among Hot Topic, Inc., Steven R. Becker, Matthew A. Drapkin, Becker Drapkin Management, L.P., Becker Drapkin Partners (QP), L.P., Becker Drapkin Partners, L.P., BD Partners I, L.P. and BC Advisors, LLC
10.2	Agreement, dated as of September 19, 2010, by and among Hot Topic, Inc., Clint D. Carlson, Black Diamond Offshore Ltd., Double Black Diamond Offshore Ltd., Carlson Capital L.P. and Asgard Investment Corp.
99.1	Press Release dated September 20, 2010

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

HOT TOPIC, INC.
By:	/S/    JAMES MCGINTY
	James McGinty
	Chief Financial Officer

Date: September 20, 2010

INDEX TO EXHIBITS

Exhibit No.	Description
10.1	Agreement, dated as of September 19, 2010, by and among Hot Topic, Inc., Steven R. Becker, Matthew A. Drapkin, Becker Drapkin Management, L.P., Becker Drapkin Partners (QP), L.P., Becker Drapkin Partners, L.P., BD Partners I, L.P. and BC Advisors, LLC
10.2	Agreement, dated as of September 19, 2010, by and among Hot Topic, Inc., Clint D. Carlson, Black Diamond Offshore Ltd., Double Black Diamond Offshore Ltd., Carlson Capital L.P. and Asgard Investment Corp.
99.1	Press Release dated September 20, 2010

EX-10.1

Exhibit 10.1

EXECUTION VERSION

AGREEMENT

This Agreement, dated as of September 19, 2010, is by and among Hot Topic, Inc., a California corporation (the “Company”), Steven R. Becker, an individual resident of Texas (“Becker”) Matthew A. Drapkin, an individual resident of New York (“Drapkin”), and the other individuals and entities that are signatories hereto (collectively with Becker and Drapkin, the “Shareholder Group”).

WHEREAS, the Company and the Shareholder Group have determined that the interests of the Company and its shareholders would be best served by adding Becker and Drapkin to the Company’s Board of Directors on the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the foregoing premises and the respective representations, warranties, covenants, agreements and conditions hereinafter set forth, and intending to be legally bound hereby, the parties hereby agree as follows:

1. Representations and Warranties of the Company. The Company represents and warrants as follows as of the date hereof:

(a) The Company has the corporate power and authority to execute, deliver and carry out the terms and provisions of this Agreement and to consummate the transactions contemplated hereby.

(b) This Agreement has been duly and validly authorized, executed and delivered by the Company, constitutes a valid and binding obligation and agreement of the Company, and is enforceable against the Company in accordance with its terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws affecting the rights of creditors and subject to general equity principles.

(c) The execution, delivery and performance of this Agreement by the Company does not and will not (i) violate or conflict with any law, rule, regulation, order, judgment or decree applicable to it, or (ii) result in any material breach or violation of or constitute a material default (or an event which with notice or lapse of time or both could become a material default) under or pursuant to, or result in the loss of a material benefit under, or give any right of termination, amendment, acceleration or cancellation of, any organizational document, agreement, contract, commitment, understanding or arrangement to which the Company is a party or by which it is bound.

2. Representations and Warranties of the Shareholder Group. Each of the members of the Shareholder Group severally, and not jointly, represents and warrants with respect to himself or itself as follows as of the date hereof:

(a) Such party has the power and authority to execute, deliver and carry out the terms and provisions of this Agreement and to consummate the transactions contemplated hereby. Such party, if an entity, has the corporate, limited partnership or limited liability company power and authority, as applicable, to execute, deliver and carry out the terms and provisions of this Agreement and to consummate the transactions contemplated hereby.

(b) This Agreement has been duly and validly authorized, executed, and delivered by such party, constitutes a valid and binding obligation and agreement of such party, and is enforceable against such party in accordance with its terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws affecting the rights of creditors and subject to general equity principles.

(c) As of the date thereof, such party was the “beneficial owner” of a number of shares of Common Stock (as defined below) as set forth on the cover page relating to such party in the Schedule 13D filed by Becker Drapkin Management, L.P. with the Securities and Exchange Commission (the “SEC”) on September 2, 2010 (the “Schedule 13D”). As of the date hereof, the members of the Shareholder Group own in the aggregate 2,345,349 shares of Common Stock. Except for those Affiliates and Associates of such member with respect to whom a cover page is included in the Schedule 13D, no other Affiliate or Associate of such member beneficially owns any shares of Common Stock.

(d) The execution, delivery and performance of this Agreement by such party does not and will not (i) violate or conflict with any law, rule, regulation, order, judgment or decree applicable to him or it, or (ii) result in any material breach or violation of or constitute a material default (or an event which with notice or lapse of time or both could become a material default) under or pursuant to, or result in the loss of a material benefit under, or give any right of termination, amendment, acceleration or cancellation of, any organizational document, agreement, contract, commitment, understanding or arrangement to which he or it is a party or by which he or it is bound.

3. Definitions. For purposes of this Agreement:

(a) The terms “Affiliate” and “Associate” have the respective meanings set forth in Rule 12b-2 promulgated by the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), provided that neither “Affiliate” nor “Associate” shall include (i) any person that is a publicly held concern and is otherwise an Affiliate or Associate by reason of the fact that a principal of any member of the Shareholder Group serves as a member of the board of directors or similar governing body of such concern, (ii) such member of the board of directors or other similar governing body of such concern or (iii) any entity which is an Associate solely by reason of clause (1) of the definition of Associate in Rule 12b-2; the terms “beneficial owner” and “beneficial ownership” shall have the respective meanings as set forth in Rule 13d-3 promulgated by the SEC under the Exchange Act; and the terms “person” or “persons” shall mean any individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization or other entity of any kind or nature.

(b) “Board” means the Board of Directors of the Company.

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(c) “Common Stock” means the Common Stock of the Company, with no par value.

(d) “Standstill Period” means the period from the date hereof until the earlier of:

(i) the date on which the Governance and Nominating Committee notifies either Becker or Drapkin pursuant to Section 4(f) below that it has not resolved to nominate either of Becker and Drapkin for election to the Board at Company’s 2012 Annual Meeting of Shareholders (the “2012 Annual Meeting”);

(ii) the two year anniversary of the date hereof; or

(iii) such date, if any, as the Company has materially breached any of its representations, warranties, commitments or obligations set forth in Sections 1, 4(a), 4(b), 4(e), and 4(f) of this Agreement (the “Principal Obligations”).

4. Election of Becker and Drapkin; Related Matters.

(a) As soon as reasonably practicable but in any event within ten business days from the date hereof (the “Appointment Date”):

(i) In accordance with the Company’s Amended and Restated Articles of Incorporation and Amended and Restated Bylaws, the Board shall have, if required to meet its other obligations pursuant to this Agreement, adopted a resolution increasing the size of the Board by two directors, to a total of nine directors, effective as of the Appointment Date;

(ii) In accordance with the Company’s Amended and Restated Articles of Incorporation and Amended and Restated Bylaws, the Board shall have appointed Becker and Drapkin as directors of the Company, effective as of the Appointment Date, to serve as members of the Board until the Company’s 2011 Annual Meeting of Shareholders (the “2011 Annual Meeting”) and until their successors are duly elected and qualified; and

(iii) The Board shall adopt a resolution appointing one of Becker or Drapkin to serve as a member of the Compensation Committee and appoint the other of Becker or Drapkin to serve as a member of the Governance and Nominating Committee, effective as of the Appointment Date, and each of Becker and Drapkin shall continue to serve on the applicable Committee so long as he continues to be a member of the Board.

(b) The Board and the Governance and Nominating Committee shall nominate Becker and Drapkin for election as directors at the 2011 Annual Meeting. The Company agrees to recommend that the Company’s shareholders vote, and shall solicit proxies, in favor of the election of each of Becker and Drapkin at such meeting and otherwise support Becker and Drapkin for election in a manner no less rigorous and favorable than the manner in which the Company supports its other nominees.

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(c) The members of the Shareholder Group shall promptly file an amendment to the Schedule 13D reporting the entry into this agreement, amending applicable items to conform to their obligations hereunder and appending or incorporating by reference this Agreement as an exhibit thereto. Such amendment shall also reflect the termination of the “group” pursuant to Rule 13d–5(b)(1) promulgated under the Exchange Act, consisting of Becker Drapkin Management, L.P. and certain of its affiliates and Carlson Capital, L.P. and certain of its affiliates. Such members of the Shareholder Group shall provide to the Company a reasonable opportunity to review and comment on such amendments in advance of filing, and shall consider in good faith the reasonable and timely comments of the Company. The Company, Becker and Drapkin shall discuss in good faith whether or not the Company shall issue a press release with respect to the execution and delivery of this Agreement by the parties hereto and the material provisions hereof, which press release, if issued, will be subject to the mutual agreement of the parties; if the Company files a Form 8-K in lieu of a press release, the Company shall provide to Becker and Drapkin a reasonable opportunity to review and comment on such Form 8-K in advance of its filing, and shall consider in good faith the reasonable and timely comments of Becker and Drapkin.

(d) So long as the Company has complied and is complying with the Principal Obligations, each member of the Shareholder Group shall cause all shares of Common Stock owned of record and shall instruct the record owner, in case of all shares of Common Stock beneficially owned but not of record, by it and their respective Affiliates, as of the record date for the 2011 Annual Meeting, to be present for quorum purposes and to be voted, and shall cause all shares of Common Stock held by their respective Associates to be present for quorum purposes and to be voted, in favor of all directors nominated by the Board for election at the 2011 Annual Meeting; provided such directors nominated by the Board are either current members of the Board or otherwise reasonably acceptable to the Shareholder Group.

(e) The Company agrees that the Board shall only be increased at any time prior to the conclusion of the 2012 Annual Meeting in connection with the appointment of Becker and Drapkin.

(f) At least 60 days prior to the last date upon which a notice to the Secretary of the Company of nominations of persons for election to the Board or the proposal of business at the 2012 Annual Meeting would be considered timely under the Company’s Amended and Restated Bylaws, the Governance and Nominating Committee will notify each of Becker and Drapkin whether it has resolved to recommend them for re-election to the Board at the 2012 Annual Meeting. If the Governance and Nominating Committee has resolved to so recommend each of Becker and Drapkin, (i) the Board and the Governance and Nominating Committee shall nominate Becker and Drapkin for election as directors at the 2012 Annual Meeting, (ii) the Company shall recommend that the Company’s shareholders vote, and shall solicit proxies, in favor of the election of each of Becker and Drapkin at such meeting and otherwise support Becker and Drapkin for election in a manner no less rigorous and favorable than the manner in which the Company supports its other nominees and (iii) so long as the Company has complied and is complying with the Principal Obligations, each member of the Shareholder Group shall cause all shares of Common Stock owned of record and shall instruct the record owner, in case of all shares of Common Stock beneficially owned but not of record, by it and their respective Affiliates, as of the record date for the 2012 Annual Meeting, to be present for quorum purposes and to be voted, and shall cause all shares of Common Stock held by their respective Associates to be present for quorum purposes and to be voted, in favor of all directors nominated by the Board for election at the 2012 Annual Meeting; provided such directors nominated by the Board are either current members of the Board or otherwise reasonably acceptable to the Shareholder Group.

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(g) If at any time prior to the termination of the Standstill Period, either of Becker or Drapkin is unable or unwilling to serve (or continue to serve) as a director of the Company for any reason, then the Shareholder Group and the Company shall agree on a replacement for such director(s), and for all purposes the provisions of this Agreement with respect to either Becker’s or Drapkin’s rights and obligations as a director (and not as a member of the Shareholder Group) shall apply to such replacement director.

5. Standstill.

Each of the members of the Shareholder Group agrees that, during the Standstill Period, he or it will not, and he or it will cause each of such person’s Affiliates or agents or other persons acting on his or its behalf not to, and will cause his or its respective Associates not to:

(a) acquire, offer to acquire or agree to acquire, alone or in concert with any other individual or entity, by purchase, tender offer, exchange offer, agreement or business combination or any other manner, beneficial ownership of any securities of the Company or any securities of any Affiliate of the Company, if, after completion of such acquisition or proposed acquisition, such party would beneficially own more than 14.99% of the outstanding shares of Common Stock, provided, however, that this restriction shall not apply to any securities received by Becker or Drapkin pursuant to Section 8 of this Agreement;

(b) submit any shareholder proposal (pursuant to Rule 14a-8 promulgated by the SEC under the Exchange Act or otherwise) or any notice of nomination or other business for consideration, or nominate any candidate for election to the Board or oppose the directors nominated by the Board, other than as expressly permitted by this Agreement;

(c) form, join in or in any other way participate in a “partnership, limited partnership, syndicate or other group” within the meaning of Section 13(d)(3) of the Exchange Act with respect to the Common Stock or deposit any shares of Common Stock in a voting trust or similar arrangement or subject any shares of Common Stock to any voting agreement or pooling arrangement, other than solely with other members of the Shareholder Group or one or more Affiliates of a member of the Shareholder Group with respect to the Common Stock currently owned as set forth in Section 2(c) of this Agreement or acquired in the future subject to the limitations set forth in Section 5(a) or to the extent such a group may be deemed to result with the Company or any of its Affiliates as a result of this Agreement;

(d) solicit proxies or written consents of shareholders, or otherwise conduct any nonbinding referendum with respect to Common Stock, or make, or in any way participate in, any “solicitation” of any “proxy” within the meaning of Rule 14a-1 promulgated by the SEC under the Exchange Act to vote, or advise, encourage or influence any person with respect to voting, any shares of Common Stock with respect to any matter, or become a “participant” in any contested “solicitation” for the election of directors with respect to the Company (as such terms are defined or used under the Exchange Act and the rules promulgated by the SEC thereunder), other than a “solicitation” or acting as a “participant” in support of all of the nominees of the Board at the 2011 Annual Meeting or 2012 Annual Meeting as set forth in this Agreement;

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(e) seek, in any capacity other than as a member of the Board, to call, or to request the calling of, a special meeting of the shareholders of the Company, or seek to make, or make, a shareholder proposal at any meeting of the shareholders of the Company or make a request for a list of the Company’s shareholders (or otherwise induce, encourage or assist any other person to initiate or pursue such a proposal or request) or otherwise acting alone, or in concert with others, seek to control or influence the governance or policies of the Company, except as expressly permitted by this Agreement;

(f) effect or seek to effect, in any capacity other than as a member of the Board (including, without limitation, by entering into any discussions, negotiations, agreements or understandings with any third person), offer or propose (whether publicly or otherwise) to effect, or cause or participate in, or in any way assist or facilitate any other person to effect or seek, offer or propose (whether publicly or otherwise) to effect or cause or participate in (i) any acquisition of any material assets or businesses of the Company or any of its subsidiaries, (ii) any tender offer or exchange offer, merger, acquisition or other business combination involving the Company or any of its subsidiaries, or (iii) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to the Company or any of its subsidiaries;

(g) publicly disclose, or cause or facilitate the public disclosure (including without limitation the filing of any document or report with the SEC or any other governmental agency or any disclosure to any journalist, member of the media or securities analyst) of, any intent, purpose, plan or proposal to obtain any waiver, or consent under, or any amendment of, any of the provisions of Section 4(d) or this Section 5, or otherwise seek (in any manner that would require public disclosure by any of the members of the Shareholder Group or their Affiliates or Associates) to obtain any waiver, consent under, or amendment of, any provision of this Agreement;

(h) publicly disparage any member of the Board or management of the Company; provided that this provision shall not apply to compelled testimony, either by legal process, subpoena or otherwise, or to communications that are required by an applicable legal obligation and are subject to contractual provisions providing for confidential disclosure;

(i) enter into any arrangements, understandings or agreements (whether written or oral) with, or advise, finance, assist or encourage, any other person that engages, or offers or proposes to engage, in any of the foregoing; or

(j) take or cause or induce or assist others to take any action inconsistent with any of the foregoing.

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Notwithstanding the foregoing, it is understood and agreed that this Agreement shall not be deemed to prohibit the Shareholder Group from (i) making public statements (including statements contemplated by Rule 14a-1 (1) (2) (iv) under the Exchange Act), (ii) engaging in discussion with other stockholders or (iii) soliciting, or encouraging or participating in the solicitation of, proxies or consents with respect to voting securities of the Company (so long as such discussions are in compliance with Section 5(c) hereof) in each case with respect to any transaction that has been publicly announced by the Company involving (1) the recapitalization of the Company, (2) an acquisition, disposition or sale of assets or a business by the Company where the consideration to be received or paid in such transaction requires approval by the holders of the Common Stock or (3) a change of control of the Company.

Further, it is understood and agreed that this Agreement shall not be deemed to prohibit Becker or Drapkin from engaging in any lawful act in his capacity as a director of the Company.

6. Company Policies. By the Appointment Date, each of Becker and Drapkin will have reviewed the Company’s Standards of Business Ethics, Corporate Governance Guidelines, Insider Trading Policy, Window Period Policy and Policy on Majority Votes in Director Elections (“Majority Voting Policy”) and agrees to abide by the provisions thereof during his service as a director of the Company. The members of the Shareholder Group acknowledge that they are aware that United States securities law prohibits any person who has material non-public information about a company from purchasing or selling any securities of such company, or from communicating such information to any other person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell such securities. The members of the Shareholder Group acknowledge that Becker or Drapkin, or both of them, may be required, in accordance with the Majority Voting Policy, to tender their resignations from the Board in the event that they receive more “withheld” votes than “for” votes in an uncontested election of the Company’s directors, and that the Company’s Governance and Nominating Committee, in accordance with such Policy, may determine that it is in the best interests of the Company to accept such resignations. The members of the Shareholder Group acknowledge and agree that such action or actions in accordance with the Majority Voting Policy shall not constitute a breach of this Agreement by the Company.

7. Questionnaires. By the Appointment Date, each of Becker and Drapkin will have accurately completed the form of questionnaire provided by the Company for its use in connection with their appointment to the Board and preparation of the Company’s proxy statement and other reports filed with the SEC.

8. Compensation. Each of Becker and Drapkin shall be compensated for his service as a director and shall be reimbursed for his expenses on the same basis as all other non-employee directors of the Company are compensated and shall be eligible to be granted equity-based compensation on the same basis as all other non-employee directors of the Company.

9. Indemnification and Insurance. Each of Becker and Drapkin shall be entitled to the same rights of indemnification as the other directors of the Company as such rights may exist from time to time. The Company shall, promptly after their election, take such action, if any, as may be necessary to add Becker and Drapkin to the Company’s directors and officers’ liability insurance policy as Insured Persons.

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10. Non-Disparagement. During the Standstill Period the Company shall not publicly disparage any member of the Shareholder Group or any member of the management of the Shareholder Group, provided that this provision shall not apply to compelled testimony, either by legal process, subpoena or otherwise, or to communications that are required by an applicable legal obligation and are subject to contractual provisions providing for confidential disclosure.

11. Reimbursement of Expenses. All costs and expenses incurred in connection with this Agreement will be paid by the party incurring such cost or expense.

12. Specific Performance. Each party hereto acknowledges and agrees, on behalf of itself and its Affiliates, that irreparable harm would occur in the event any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties will be entitled to specific relief hereunder, including, without limitation, an injunction or injunctions to prevent and enjoin breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof in any state or federal court in the State of California, in addition to any other remedy to which they may be entitled at law or in equity. Any requirements for the securing or posting of any bond with such remedy are hereby waived.

13. Jurisdiction. Each party hereto agrees, on behalf of itself and its Affiliates, that any actions, suits or proceedings arising out of or relating to this Agreement or the transactions contemplated hereby will be brought solely and exclusively in any state or federal court in the State of California (and the parties agree on behalf of themselves and their respective Affiliates not to commence any action, suit or proceeding relating thereto except in such courts), and further agrees that service of any process, summons, notice or document by U.S. registered mail to the respective addresses set forth in Section 17 of this Agreement will be effective service of process for any such action, suit or proceeding brought against any party in any such court. Each party, on behalf of itself and its Affiliates, irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby, in the state or federal courts in the State of California, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an improper or inconvenient forum.

14. Applicable Law. This Agreement shall be governed in all respects, including validity, interpretation and effect, by the laws of the State of California applicable to contracts executed and to be performed wholly within such state, without giving effect to the choice of law principles of such state.

15. Counterparts; Facsimile or Electronic Signatures. This Agreement may be executed in two or more counterparts which together shall constitute a single agreement. Facsimile or electronic (i.e., PDF) signatures shall be as effective as original signatures.

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16. Entire Agreement; Amendment and Waiver; Successors and Assigns. This Agreement contains the entire understanding of the parties hereto with respect to, and supersedes all prior agreements relating to, its subject matter. There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings between the parties other than those expressly set forth herein. This Agreement may be amended only by a written instrument duly executed by the parties hereto or their respective successors or assigns. No failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law. The terms and conditions of this Agreement shall be binding upon, inure to the benefit of, and be enforceable by the parties hereto and their respective successors, heirs, executors, legal representatives, and assigns.

17. Notices. All notices, consents, requests, instructions, approvals and other communications provided for herein and all legal process in regard hereto shall be in writing and shall be deemed validly given, made or served, (a) if given by telecopy, when such telecopy is transmitted to the telecopy number set forth below, or to such other telecopy number as is provided by a party to this Agreement to the other parties pursuant to notice given in accordance with the provisions of this Section, and the appropriate confirmation is received, or (b) if given by any other means, when actually received during normal business hours at the address specified in this Section, or at such other address as is provided by a party to this Agreement to the other parties pursuant to notice given in accordance with the provisions of this Section:

if to the Company:

Hot Topic, Inc.

18305 E. San Jose Ave.

City of Industry, California 91748

Facsimile: (626) 581-0894

Attention: Chief Executive Officer

with a copy to:

Cooley LLP

4401 Eastgate Mall

San Diego, CA 92121

Facsimile: (858) 550-6420

Attention: Jason L. Kent, Esq.

if to the Shareholder Group or any member thereof:

Becker Drapkin Management, L.P.

300 Crescent Court

Suite 1111

Dallas, Texas 75201

Facsimile: (214) 756 6037

Attention: Steven R. Becker

Attention: Matthew A. Drapkin

9

with a copy to:

Boies, Schiller & Flexner LLP

575 Lexington Avenue, 7^th Floor

New York, New York 10022

Facsimile: (212) 446-2350

Attention: Richard J. Birns, Esq.

18. No Third-Party Beneficiaries. Nothing in this Agreement is intended to confer on any person other than the parties hereto or their respective successors and assigns, and their respective Affiliates to the extent provided herein, any rights, remedies, obligations or liabilities under or by reason of this Agreement.

[Signature page follows.]

10

IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized signatories of the parties as of the date first written above.

COMPANY:
HOT TOPIC, INC.
By:	/s/ Bruce A. Quinnell
	Name:	Bruce A. Quinnell
	Title:	Chairman of the Board of Directors

IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized signatories of the parties as of the date first written above.

SHAREHOLDER GROUP:

STEVEN R. BECKER			MATTHEW A. DRAPKIN
/s/ Steven R. Becker			/s/ Matthew A. Drapkin
BECKER DRAPKIN MANAGEMENT, L.P.			BECKER DRAPKIN PARTNERS (QP), L.P.
By:	BC Advisors LLC, its general partners		By:	Becker Drapkin Management, L.P., its general partner
			By:	BC Advisors LLC, its general partners
By:	/s/ Steven R. Becker		By:	/s/ Steven R. Becker
	Name:	Steven R. Becker		Name:	Steven R. Becker
	Title:	Co-managing Member		Title:	Co-managing Member
BECKER DRAPKIN PARTNERS, L.P.			BD PARTNERS I, L.P.
By:	Becker Drapkin Management, L.P., its general partner		By:	Becker Drapkin Management, L.P., its general partner
By:	BC Advisors LLC, its general partners		By:	BC Advisors LLC, its general partners
By:	/s/ Steven R. Becker		By:	/s/ Steven R. Becker
	Name:	Steven R. Becker		Name:	Steven R. Becker
	Title:	Co-managing Member		Title:	Co-managing Member
BC ADVISORS, LLC
By:	/s/ Steven R. Becker
	Name:	Steven R. Becker
	Title:	Co-managing Member

EX-10.2

Exhibit 10.2

AGREEMENT

This Agreement, dated as of September 19, 2010, is by and among Hot Topic, Inc., a California corporation (the “Company”), and the individuals and entities that are signatories hereto (collectively, the “Shareholder Group”).

WHEREAS, the Company and the Shareholder Group have determined that the interests of the Company and its shareholders would be best served by adding Steven R. Becker, an individual resident of Texas (“Becker”) and Matthew A. Drapkin, an individual resident of New York (“Drapkin”) to the Company’s Board of Directors on the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the foregoing premises and the respective representations, warranties, covenants, agreements and conditions hereinafter set forth, and intending to be legally bound hereby, the parties hereby agree as follows:

1. Representations and Warranties of the Company. The Company represents and warrants as follows as of the date hereof:

(a) The Company has the corporate power and authority to execute, deliver and carry out the terms and provisions of this Agreement and to consummate the transactions contemplated hereby.

(b) This Agreement has been duly and validly authorized, executed and delivered by the Company, constitutes a valid and binding obligation and agreement of the Company, and is enforceable against the Company in accordance with its terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws affecting the rights of creditors and subject to general equity principles.

(c) The execution, delivery and performance of this Agreement by the Company does not and will not (i) violate or conflict with any law, rule, regulation, order, judgment or decree applicable to it, or (ii) result in any material breach or violation of or constitute a material default (or an event which with notice or lapse of time or both could become a material default) under or pursuant to, or result in the loss of a material benefit under, or give any right of termination, amendment, acceleration or cancellation of, any organizational document, agreement, contract, commitment, understanding or arrangement to which the Company is a party or by which it is bound.

2. Representations and Warranties of the Shareholder Group. Each of the members of the Shareholder Group severally, and not jointly, represents and warrants with respect to himself or itself as follows as of the date hereof:

(a) Such party has the power and authority to execute, deliver and carry out the terms and provisions of this Agreement and to consummate the transactions contemplated hereby. Such party, if an entity, has the corporate, limited partnership or limited liability company power and authority, as applicable, to execute, deliver and carry out the terms and provisions of this Agreement and to consummate the transactions contemplated hereby.

(b) This Agreement has been duly and validly authorized, executed, and delivered by such party, constitutes a valid and binding obligation and agreement of such party, and is enforceable against such party in accordance with its terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws affecting the rights of creditors and subject to general equity principles.

(c) As of the date thereof, such party was the “beneficial owner” of a number of shares of Common Stock (as defined below) as set forth on the cover page relating to such party in the Schedule 13D filed by Carlson Capital, L.P. with the Securities and Exchange Commission (the “SEC”) on September 2, 2010 (the “Schedule 13D”). As of the date hereof, the members of the Shareholder Group own in the aggregate 1,764,800 shares of Common Stock. Except for those Affiliates and Associates of such member with respect to whom a cover page is included in the Schedule 13D, no other Affiliate or Associate of such member beneficially owns any shares of Common Stock.

(d) The execution, delivery and performance of this Agreement by such party does not and will not (i) violate or conflict with any law, rule, regulation, order, judgment or decree applicable to him or it, or (ii) result in any material breach or violation of or constitute a material default (or an event which with notice or lapse of time or both could become a material default) under or pursuant to, or result in the loss of a material benefit under, or give any right of termination, amendment, acceleration or cancellation of, any organizational document, agreement, contract, commitment, understanding or arrangement to which he or it is a party or by which he or it is bound.

3. Definitions. For purposes of this Agreement:

(a) The terms “Affiliate” and “Associate” have the respective meanings set forth in Rule 12b-2 promulgated by the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), provided that neither “Affiliate” nor “Associate” shall include (i) any person that is a publicly held concern and is otherwise an Affiliate or Associate by reason of the fact that a principal of any member of the Shareholder Group serves as a member of the board of directors or similar governing body of such concern, (ii) such member of the board of directors or other similar governing body of such concern or (iii) any entity which is an Associate solely by reason of clause (1) of the definition of Associate in Rule 12b-2; the terms “beneficial owner” and “beneficial ownership” shall have the respective meanings as set forth in Rule 13d-3 promulgated by the SEC under the Exchange Act; and the terms “person” or “persons” shall mean any individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization or other entity of any kind or nature.

(b) “Board” means the Board of Directors of the Company.

(c) “Common Stock” means the Common Stock of the Company, with no par value.

(d) “Standstill Period” means the period from the date hereof until the earlier of:

(i) the date on which the Governance and Nominating Committee notifies the Shareholder Group that it has provided notice to either Becker or Drapkin pursuant to Section 4(f) below that it has not resolved to nominate either of Becker and Drapkin for election to the Board at Company’s 2012 Annual Meeting of Shareholders (the “2012 Annual Meeting”);

(ii) the two year anniversary of the date hereof; or

(iii) such date, if any, as the Company has materially breached any of its representations, warranties, commitments or obligations set forth in Sections 1, 4(a), 4(b), 4(e), and 4(f) of this Agreement (the “Principal Obligations”).

4. Election of Becker and Drapkin; Related Matters.

(a) As soon as reasonably practicable but in any event within ten business days from the date hereof (the “Appointment Date”):

(i) In accordance with the Company’s Amended and Restated Articles of Incorporation and Amended and Restated Bylaws, the Board shall have, if required to meet its other obligations pursuant to this Agreement, adopted a resolution increasing the size of the Board by two directors, to a total of nine directors, effective as of the Appointment Date;

(ii) In accordance with the Company’s Amended and Restated Articles of Incorporation and Amended and Restated Bylaws, the Board shall have appointed Becker and Drapkin as directors of the Company, effective as of the Appointment Date, to serve as members of the Board until the Company’s 2011 Annual Meeting of Shareholders (the “2011 Annual Meeting”) and until their successors are duly elected and qualified; and

(iii) The Board shall adopt a resolution appointing one of Becker or Drapkin to serve as a member of the Compensation Committee and appoint the other of Becker or Drapkin to serve as a member of the Governance and Nominating Committee, effective as of the Appointment Date, and each of Becker and Drapkin shall continue to serve on the applicable Committee so long as he continues to be a member of the Board.

(b) The Board and the Governance and Nominating Committee shall nominate Becker and Drapkin for election as directors at the 2011 Annual Meeting. The Company agrees to recommend that the Company’s shareholders vote, and shall solicit proxies, in favor of the election of each of Becker and Drapkin at such meeting and otherwise support Becker and Drapkin for election in a manner no less rigorous and favorable than the manner in which the Company supports its other nominees.

(c) The members of the Shareholder Group shall promptly file an amendment to the Schedule 13D reporting the entry into this agreement, amending applicable items to conform to their obligations hereunder and appending or incorporating by reference this Agreement as an exhibit thereto. Such amendment shall also reflect the termination of the “group” pursuant to Rule 13d–5(b)(1) promulgated under the Exchange Act, consisting of Carlson Capital, L.P. and certain of its affiliates and Becker Drapkin Management, L.P. and certain of its affiliates (the “Becker Drapkin Group”). Such members of the Shareholder Group shall provide to the Company a reasonable opportunity to review and comment on such amendments in advance of filing, and shall consider in good faith the reasonable and timely comments of the Company.

(d) So long as the Company has complied and is complying with the Principal Obligations, each member of the Shareholder Group shall cause all shares of Common Stock owned of record and shall instruct the record owner, in case of all shares of Common Stock beneficially owned but not of record, by it and their respective Affiliates, as of the record date for the 2011 Annual Meeting, to be present for quorum purposes and to be voted, and shall cause all shares of Common Stock held by their respective Associates to be present for quorum purposes and to be voted, in favor of all directors nominated by the Board for election at the 2011 Annual Meeting; provided such directors nominated by the Board are either current members of the Board or otherwise reasonably acceptable to the Shareholder Group.

(e) The Company agrees that the Board shall only be increased at any time prior to the conclusion of the 2012 Annual Meeting in connection with the appointment of Becker and Drapkin.

(f) At least 60 days prior to the last date upon which a notice to the Secretary of the Company of nominations of persons for election to the Board or the proposal of business at the 2012 Annual Meeting would be considered timely under the Company’s Amended and Restated Bylaws, the Governance and Nominating Committee will notify each of Becker and Drapkin, and provide a copy of such notice to the Shareholder Group, whether it has resolved to recommend them for re-election to the Board at the 2012 Annual Meeting. If the Governance and Nominating Committee has resolved to so recommend each of Becker and Drapkin, (i) the Board and the Governance and Nominating Committee shall nominate Becker and Drapkin for election as directors at the 2012 Annual Meeting, (ii) the Company shall recommend that the Company’s shareholders vote, and shall solicit proxies, in favor of, the election of each of Becker and Drapkin at such meeting and otherwise support Becker and Drapkin for election in a manner no less rigorous and favorable than the manner in which the Company supports its other nominees and (iii) so long as the Company has complied and is complying with the Principal Obligations, each member of the Shareholder Group shall cause all shares of Common Stock owned of record and shall instruct the record owner, in case of all shares of Common Stock beneficially owned but not of record, by it and their respective Affiliates, as of the record date for the 2012 Annual Meeting, to be present for quorum purposes and to be voted, and shall cause all shares of Common Stock held by their respective Associates to be present for quorum purposes and to be voted, in favor of all directors nominated by the Board for election at the 2012 Annual Meeting; provided such directors nominated by the Board are either current members of the Board or otherwise reasonably acceptable to the Shareholders Group.

5. Standstill.

Each of the members of the Shareholder Group agrees that, during the Standstill Period, he or it will not, and he or it will cause each of such person’s Affiliates or agents or other persons acting on his or its behalf not to, and will cause his or its respective Associates not to:

(a) acquire, offer to acquire or agree to acquire, alone or in concert with any other individual or entity, by purchase, tender offer, exchange offer, agreement or business combination or any other manner, beneficial ownership of any securities of the Company or any securities of any Affiliate of the Company, if, after completion of such acquisition or proposed acquisition, such party would beneficially own more than 14.99% of the outstanding shares of Common Stock;

(b) submit any shareholder proposal (pursuant to Rule 14a-8 promulgated by the SEC under the Exchange Act or otherwise) or any notice of nomination or other business for consideration, or nominate any candidate for election to the Board or oppose the directors nominated by the Board, other than as expressly permitted by this Agreement;

(c) form, join in or in any other way participate in a “partnership, limited partnership, syndicate or other group” within the meaning of Section 13(d)(3) of the Exchange Act with respect to the Common Stock or deposit any shares of Common Stock in a voting trust or similar arrangement or subject any shares of Common Stock to any voting agreement or pooling arrangement, other than solely with other members of the Shareholder Group or one or more Affiliates of a member of the Shareholder Group with respect to the Common Stock currently owned as set forth in Section 2(c) of this Agreement or acquired in the future subject to the limitations set forth in Section 5(a) or to the extent such a group may be deemed to result with the Company or any of its Affiliates as a result of this Agreement;

(d) solicit proxies or written consents of shareholders, or otherwise conduct any nonbinding referendum with respect to Common Stock, or make, or in any way participate in, any “solicitation” of any “proxy” within the meaning of Rule 14a-1 promulgated by the SEC under the Exchange Act to vote, or advise, encourage or influence any person with respect to voting, any shares of Common Stock with respect to any matter, or become a “participant” in any contested “solicitation” for the election of directors with respect to the Company (as such terms are defined or used under the Exchange Act and the rules promulgated by the SEC thereunder), other than a “solicitation” or acting as a “participant” in support of all of the nominees of the Board at the 2011 Annual Meeting or the 2012 Annual Meeting as set forth in this Agreement;

(e) seek, in any capacity, to call, or to request the calling of, a special meeting of the shareholders of the Company, or seek to make, or make, a shareholder proposal at any meeting of the shareholders of the Company or make a request for a list of the Company’s shareholders (or otherwise induce, encourage or assist any other person to initiate or pursue such a proposal or request) or otherwise acting alone, or in concert with others, seek to control or influence the governance or policies of the Company, except as expressly permitted by this Agreement;

(f) effect or seek to effect, in any capacity (including, without limitation, by entering into any discussions, negotiations, agreements or understandings with any third person), offer or propose (whether publicly or otherwise) to effect, or cause or participate in, or in any way assist or facilitate any other person to effect or seek, offer or propose (whether publicly or otherwise) to effect or cause or participate in (i) any acquisition of any material assets or businesses of the Company or any of its subsidiaries, (ii) any tender offer or exchange offer, merger, acquisition or other business combination involving the Company or any of its subsidiaries, or (iii) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to the Company or any of its subsidiaries;

(g) publicly disclose, or cause or facilitate the public disclosure (including without limitation the filing of any document or report with the SEC or any other governmental agency or any disclosure to any journalist, member of the media or securities analyst) of, any intent, purpose, plan or proposal to obtain any waiver, or consent under, or any amendment of, any of the provisions of Section 4(d) or this Section 5, or otherwise seek (in any manner that would require public disclosure by any of the members of the Shareholder Group or their Affiliates or Associates) to obtain any waiver, consent under, or amendment of, any provision of this Agreement;

(h) publicly disparage any member of the Board or management of the Company; provided that this provision shall not apply to compelled testimony, either by legal process, subpoena or otherwise, or to communications that are required by an applicable legal obligation and are subject to contractual provisions providing for confidential disclosure;

(i) enter into any arrangements, understandings or agreements (whether written or oral) with, or advise, finance, assist or encourage, any other person that engages, or offers or proposes to engage, in any of the foregoing; or

(j) take or cause or induce or assist others to take any action inconsistent with any of the foregoing.

Notwithstanding the foregoing, it is understood and agreed that this Agreement shall not be deemed to prohibit the Shareholder Group from (i) making public statements (including statements contemplated by Rule 14a-1 (1) (2) (iv) under the Exchange Act), (ii) engaging in discussion with other stockholders or (iii) soliciting, or encouraging or participating in the solicitation of, proxies or consents with respect to voting securities of the Company (so long as such discussions are in compliance with Section 5(c) hereof) in each case with respect to any transaction that has been publicly announced by the Company involving (1) the recapitalization of the Company, (2) an acquisition, disposition or sale of assets or a business by the Company where the consideration to be received or paid in such transaction requires approval by the holders of the Common Stock or (3) a change of control of the Company.

6. Non-public Information. The Company and the Shareholder Group agree that the Shareholder Group will not receive non-public information from the Company regarding the Company, unless the Company and the Shareholder Group have separately entered into a non-disclosure agreement with respect to such information prior to the Shareholder Group receiving such information.

7. Non-Disparagement. During the Standstill Period the Company shall not publicly disparage any member of the Shareholder Group or any member of the management of the Shareholder Group, provided that this provision shall not apply to compelled testimony, either by legal process, subpoena or otherwise, or to communications that are required by an applicable legal obligation and are subject to contractual provisions providing for confidential disclosure.

8. Reimbursement of Expenses. All costs and expenses incurred in connection with this Agreement will be paid by the party incurring such cost or expense.

9. Specific Performance. Each party hereto acknowledges and agrees, on behalf of itself and its Affiliates, that irreparable harm would occur in the event any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties will be entitled to specific relief hereunder, including, without limitation, an injunction or injunctions to prevent and enjoin breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof in any state or federal court in the State of California, in addition to any other remedy to which they may be entitled at law or in equity. Any requirements for the securing or posting of any bond with such remedy are hereby waived.

10. Jurisdiction. Each party hereto agrees, on behalf of itself and its Affiliates, that any actions, suits or proceedings arising out of or relating to this Agreement or the transactions contemplated hereby will be brought solely and exclusively in any state or federal court in the State of California (and the parties agree on behalf of themselves and their respective Affiliates not to commence any action, suit or proceeding relating thereto except in such courts), and further agrees that service of any process, summons, notice or document by U.S. registered mail to the respective addresses set forth in Section 14 of this Agreement will be effective service of process for any such action, suit or proceeding brought against any party in any such court. Each party, on behalf of itself and its Affiliates, irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby, in the state or federal courts in the State of California, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an improper or inconvenient forum.

11. Applicable Law. This Agreement shall be governed in all respects, including validity, interpretation and effect, by the laws of the State of California applicable to contracts executed and to be performed wholly within such state, without giving effect to the choice of law principles of such state.

12. Counterparts; Facsimile or Electronic Signatures. This Agreement may be executed in two or more counterparts which together shall constitute a single agreement. Facsimile or electronic (i.e., PDF) signatures shall be as effective as original signatures.

13. Entire Agreement; Amendment and Waiver; Successors and Assigns. This Agreement contains the entire understanding of the parties hereto with respect to, and supersedes all prior agreements relating to, its subject matter. There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings between the parties other than those expressly set forth herein. This Agreement may be amended only by a written instrument duly executed by the parties hereto or their respective successors or assigns. No failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law. The terms and conditions of this Agreement shall be binding upon, inure to the benefit of, and be enforceable by the parties hereto and their respective successors, heirs, executors, legal representatives, and assigns.

14. Notices. All notices, consents, requests, instructions, approvals and other communications provided for herein and all legal process in regard hereto shall be in writing and shall be deemed validly given, made or served, (a) if given by telecopy, when such telecopy is transmitted to the telecopy number set forth below, or to such other telecopy number as is provided by a party to this Agreement to the other parties pursuant to notice given in accordance with the provisions of this Section, and the appropriate confirmation is received, or (b) if given by any other means, when actually received during normal business hours at the address specified in this Section, or at such other address as is provided by a party to this Agreement to the other parties pursuant to notice given in accordance with the provisions of this Section:

if to the Company:

Hot Topic, Inc.

18305 E. San Jose Ave.

City of Industry, California 91748

Facsimile: (626) 581-0894

Attention: Chief Executive Officer

with a copy to:

Cooley LLP

4401 Eastgate Mall

San Diego, CA 92121

Facsimile: (858) 550-6420

Attention: Jason L. Kent, Esq.

if to the Shareholder Group or any member thereof:

Carlson Capital, L.P.

2100 McKinney Avenue

Dallas, Texas 75201

Facsimile: (214) 932-9712

Attention: Steven J. Pully

with a copy to:

Schulte Roth & Zabel LLP

919 Third Avenue

New York, New York 10022

Facsimile: (212) 593 5955

Attention: David E. Rosewater

15. No Third-Party Beneficiaries. Nothing in this Agreement is intended to confer on any person other than the parties hereto or their respective successors and assigns, and their respective Affiliates to the extent provided herein, any rights, remedies, obligations or liabilities under or by reason of this Agreement.

[Signature page follows.]

IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized signatories of the parties as of the date first written above.

COMPANY:

HOT TOPIC, INC.
By:	/s/ Bruce A. Quinnell
	Name:	Bruce A. Quinnell
	Title:	Chairman of the Board of Directors

IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized signatories of the parties as of the date first written above.

SHAREHOLDER GROUP:

BLACK DIAMOND OFFSHORE LTD.			DOUBLE BLACK DIAMOND OFFSHORE LTD.
By:	Carlson Capital, L.P., its investment manager		By:	Carlson Capital, L.P., its investment manager
By:	Asgard Investment Corp., its general partner		By:	Asgard Investment Corp., its general partner
By:	/s/ Clint D. Carlson		By:	/s/ Clint D. Carlson
	Name:	Clint D. Carlson		Name:	Clint D. Carlson
	Title:	President		Title:	President
CARLSON CAPITAL L.P.			ASGARD INVESTMENT CORP.
By:	Asgard Investment Corp., its general partner
By:	/s/ Clint D. Carlson		By:	/s/ Clint D. Carlson
	Name:	Clint D. Carlson		Name:	Clint D. Carlson
	Title:	President		Title:	President
			CLINT D. CARLSON
			/s/ Clint D. Carlson

EX-99.1

Exhibit 99.1

** NEWS RELEASE **

HOT TOPIC, INC. ANNOUNCES APPOINTMENT OF STEVEN R. BECKER AND

MATTHEW A. DRAPKIN TO THE BOARD OF DIRECTORS

CITY of INDUSTRY, CA, September 20, 2010 — Hot Topic, Inc. (Nasdaq Global Select Market: HOTT) announced today the appointment of Steven R. Becker and Matthew A. Drapkin to its board of directors, effective October 1, 2010. In addition, Mr. Becker will serve as a member of the compensation committee, and Mr. Drapkin will serve as a member of the governance and nominating committee. The appointment of Mr. Becker and Mr. Drapkin will increase the size of Hot Topic’s board of directors from seven to nine.

Mr. Becker, age 43, has served as Managing Partner and founder of Becker Drapkin Management (previously known as Greenway Capital), a Dallas based small cap investment fund, since September 2004. Prior to founding Becker Drapkin, Mr. Becker was a partner at the Special Situations Funds, a New York City-based asset manager. Mr. Becker joined Special Situations in April 1997 and ran the Special Situations Private Equity Fund since its inception. Prior to joining Special Situations, Mr. Becker was a part of the distressed debt and leveraged equities research team at Bankers Trust Securities. He began his career at Manley Fuller Asset Management in New York as a small cap analyst. Mr. Becker currently serves on the board of directors of SDIX Inc., a publicly traded life sciences company, and previously served on the board of directors of Plato Learning, Inc., a publicly traded educational software company, until it was acquired in May 2010. Mr. Becker received a B.A. from Middlebury College and a J.D. from the University of Florida.

Mr. Drapkin, age 37, has been a partner at Becker Drapkin Management since December 2009. Previously, he served as head of research, special situations, and private equity at ENSO Capital, a New York based hedge fund, from March 2008 to October 2009. From January 2003 to March 2008, Mr. Drapkin worked at MacAndrews & Forbes, a private investment firm, where he most recently served as the Senior Vice President, Corporate Development, responsible for sourcing, evaluating, and executing investment opportunities. Prior to MacAndrews, Mr. Drapkin was the general manager of several Condé Nast internet sites and an investment banker at Goldman Sachs. Mr. Drapkin currently serves on the board of directors of Alloy, Inc., a publicly traded media and marketing company, and Glu Mobile Inc., a publicly traded publisher of mobile games, and previously served on the board of directors of Plato Learning, Inc. until its acquisition in May 2010. Mr. Drapkin also serves on the Columbia Law School Board of Visitors. He has an M.B.A., Finance from Columbia University School of Business, a J.D. from Columbia University School of Law and a B.A. in American History from Princeton University.

Hot Topic, Inc. is a mall and web based specialty retailer operating the Hot Topic and Torrid concepts, as well as the e-space music concept, ShockHound. Hot Topic offers music/pop culture-licensed and music/pop culture-influenced apparel, accessories, music and gift items for young men and women principally between the ages of 12 and 22. Torrid offers apparel, lingerie, shoes and accessories designed for various lifestyles for plus-size females principally between the ages of 15 and 29. ShockHound (www.shockhound.com) is a genre-spanning music website where people of all ages can purchase MP3s and music merchandise, share their music interests, read the latest music news and view exclusive editorial content. As of August 28, 2010, the company operated 681 Hot Topic stores in all 50 states, Puerto Rico and Canada, 155 Torrid stores, and Internet stores www.hottopic.com, www.torrid.com and www.shockhound.com.

Contact:

Hot Topic, Inc., City of Industry, CA

Jim McGinty, CFO 626-839-4681 x2675