Credit Agreement – Amendment – Navarre Corp.

AMENDMENT NO. 5 TO CREDIT AGREEMENT

THIS AMENDMENT NO. 5 TO CREDIT AGREEMENT (this “Amendment“) is entered
into as of December 29, 2011, by and among the Lenders identified on the
signature pages hereof (such Lenders, together with their respective successors
and permitted assigns, are referred to hereinafter each individually as a
“Lender” and collectively as the “Lenders“), WELLS FARGO CAPITAL
FINANCE, LLC, formerly known as Wells Fargo Foothill, LLC, a Delaware limited
liability company, as the arranger and administrative agent for the Lenders (in
such capacity, “Agent“) and NAVARRE CORPORATION, a Minnesota corporation
(“Borrower“).

WHEREAS, Borrower, Agent, and Lenders are parties to that certain Credit
Agreement dated as of November 12, 2009 (as amended, modified or supplemented
from time to time, the “Credit Agreement“);

WHEREAS, in connection with the foregoing, Borrower, Agent and Lenders have
agreed to amend the Credit Agreement in certain respects (including, without
limitation, to extend the maturity date thereof from November 12, 2012 to the
date that is 5 years from the date of this Amendment);

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

1. Defined Terms. Unless otherwise defined herein, capitalized terms
used herein shall have the meanings ascribed to such terms in the Credit
Agreement.

2. Amendments to Credit Agreement: Subject to the satisfaction of the
conditions set forth in Section 5 below, in reliance upon the
representations and warranties of Borrower set forth in Section 6 below,
the Credit Agreement is hereby amended in the following respects:

(a) The following new Section 2.14 is added to the Credit Agreement:

2.14. Increase in Revolver Commitments.

(a) Provided there exists no Default or Event of Default and subject to the
prior written consent of Agent (which may be provided or withheld in Agent153s
sole discretion and without the consent of any other Lender, and absent which
any notice from Borrower described below shall be void and of no force and
effect), the Borrower may, from time to time prior to the Maturity Date, upon
written notice to the Agent (whereupon Agent shall promptly deliver a copy to
each of the Lenders), request up to four (4) increases (in minimum increments of
$5,000,000), not to exceed $20,000,000 in the aggregate to the Maximum Revolver
Amount (any such increase, each a “Revolver Increase“). At the time of
sending such notice, the Borrower (in consultation with the Agent) shall specify
the time period within which each Lender is requested to respond (which shall in
no event be less than ten Business Days from the date of delivery of such notice
to the Lenders).

(b) Each Lender shall notify the Agent within such time period whether or not
it agrees to increase its Revolver Commitment in connection with such Revolver
Increase and, if so, whether by a percentage of the requested Revolver Increase
equal to, greater than, or less than its Pro Rata Share in respect of the
aggregate amount of the Revolver Commitments of all Lenders. Any Lender not
responding within such time period shall be deemed to have declined to increase
its Revolver Commitment.

(c) The Agent shall notify the Borrower and each Lender of the Lenders153
responses to each request for a Revolver Increase made hereunder. To achieve the
full amount of a requested Revolver Increase if existing Lenders do not elect to
provide the full amount of a requested Revolver Increase, and subject to the
consent and of the Agent in its sole discretion and to the approval of the
Agent, the Issuing Lender and the Swing Lender with respect to the identity of
such Person, the Borrower may also invite additional Persons to become Lenders
pursuant to a joinder to this Agreement in form and substance satisfactory to
the Agent and its counsel.

(d) If the Revolver Commitments and Maximum Revolver Amount are increased in
accordance with this Section 2.14, the Agent (in consultation with the
Borrower) shall determine the effective date (the “Revolving Credit Increase
Effective Date“) and the final allocation of such increase. The Agent shall
promptly notify the Borrower and the Lenders of the final allocation of such
increase and the Revolving Credit Increase Effectiveness Date.

(e) As additional conditions precedent to any Revolver Increase (and without
limiting Agent153s discretion as to whether to consent to any Revolver Increase),
(i) the Borrower shall deliver to the Agent a certificate of each Loan Party
dated as of the Revolving Credit Increase Effective Date (in sufficient copies
for each Lender) signed by an officer of such Loan Party, certifying and
attaching the resolutions adopted by such Loan Party approving or consenting to
such increase, and certifying that the conditions precedent set out in the
following subclauses (ii) through (iv) have been satisfied, (ii) no Default or
Event of Default shall have occurred and be continuing or would result from such
Revolver Increase, (iii) before and after giving effect to such Revolver
Increase, the representations and warranties contained in this Agreement and the
other Loan Documents shall be true and correct in all material respects (except
that such materiality qualifier shall not be applicable to any representations
that already are qualified or modified by materiality in the text thereof) on
and as of the Revolving Credit Increase Effective Date, except to the extent
that such representations and warranties specifically refer to an earlier date,
in which case they shall be true and correct in all material respects (and in
all respects if any such representation or warranty is already qualified by
materiality) as of such earlier date, (iv) after giving effect to such Revolver
Increase, the Borrower would be in pro forma compliance with Section 7(a) of the
Agreement for the twelve-month period to which the most recent Compliance
Certificate received by the Agent pursuant to Schedule 5.1 relates, assuming
that the Revolver Commitments (after giving

effect to such increase) are fully drawn. The Borrower shall prepay any
Advances, Letter of Credit Disbursements or Swing Loans (to the extent
participated to Lenders) outstanding on the Revolving Credit Increase Effective
Date to the extent necessary to keep the outstanding Advances, Letter of Credit
Disbursements or Swing Loans (to the extent participated to Lenders), as the
case may be, ratable with any revised Pro Rata Share of a Lender in respect of
the Revolver Commitments arising from any nonratable increase in the Revolver
Commitments under this Section 2.14.

(f) In connection with each Revolver Increase and as a further condition to
providing each Revolver Increase, Lenders, Borrower, and each Guarantor shall
execute such amendments, agreements, instruments and documents, if any, as Agent
shall reasonably request to evidence such Revolver Increase

(b) Section 3.3 of the Credit Agreement is amended and restated in its
entirety as follows:

3.3. Maturity.

This Agreement shall continue in full force and effect for a term ending on
December 29, 2016 (the “Maturity Date“). The foregoing notwithstanding,
the Lender Group, upon the election of the Required Lenders, shall have the
right to terminate its obligations under this Agreement immediately and without
notice upon the occurrence and during the continuation of an Event of Default.

(c) Sections 4.1(b), 4.6(d), 4.7(b), 4.13, and 4.19 of the Credit Agreement
are amended by replacing each reference to “the Closing Date” set forth therein
with a reference to “the Fifth Amendment Closing Date”.

(d) Section 4.26 of the Credit Agreement is amended and restated in its
entirety as follows:

4.26. Dissolution of BCI and Funimation Entities.

BCI was dissolved with the Secretary of State of Minnesota effective January
13, 2010. Each of Funimation Channel, Inc., Navarre CP, LLC, Navarre CS, LLC and
Navarre CLP, LLC was dissolved with the Secretary of State of Minnesota
effective December 19, 2011.

(e) Section 5.16 of the Credit Agreement is amended and restated in its
entirety as follows:

5.16. [RESERVED].

(f) Section 6.3(a) of the Credit Agreement is amended by inserting “Other
than in order to consummate a Permitted Acquisition,” to the beginning thereof.

(g) Section 6.12 of the Credit Agreement is amended by (i) inserting “and” at
the end of clause (c) thereof, (ii) replacing the “, and” at the end of clause
(d) thereof with a “.”, and (iii) deleting clause (e) thereof in its entirety.

(h) Section 7 of the Credit Agreement is hereby amended by amending and
restating clause (b) thereof in its entirety as follows:

(b) [reserved]

(i) Section 7 of the Credit Agreement is hereby amended by amending and
restating clause (d) thereof in its entirety as follows:

(d) Excess Availability. Maintain Excess Availability at all
times after the Fifth Amendment Closing Date of at least $5,000,000.

(j) Schedule 1.1 of the Credit Agreement is amended by amending and restating
the definition of the terms “Applicable Unused Line Fee”, “Base LIBOR Rate”,
“Base Rate Margin”, “Capital Expenditures”, “Fee Letter”, “LIBOR Rate Margin”,
“Maximum Revolver Amount”, “Permitted Purchase Money Indebtedness”, “Publishing
Business”, and “WFF” set forth therein in their entirety as follows:

“Applicable Unused Line Fee” means 0.375%.

“Base LIBOR Rate” means the rate per annum, determined by Agent in
accordance with its customary procedures, and utilizing such electronic or other
quotation sources as it considers appropriate, to be the rate at which Dollar
deposits (for delivery on the first day of the requested Interest Period) are
offered to major banks in the London interbank market 2 Business Days prior to
the commencement of the requested Interest Period, for a term and in an amount
comparable to the Interest Period and the amount of the LIBOR Rate Loan
requested (whether as an initial LIBOR Rate Loan or as a continuation of a LIBOR
Rate Loan or as a conversion of a Base Rate Loan to a LIBOR Rate Loan) by
Borrower in accordance with the Agreement, which determination shall be
conclusive in the absence of manifest error.

“Base Rate” means the greatest of (a) the Federal Funds Rate plus
¹/2%, (b) the Base LIBOR Rate (which rate shall be calculated based
upon an Interest Period of 3 months and shall be determined on a daily basis),
plus 1%, and (c) the rate of interest announced, from time to time, within Wells
Fargo at its principal office in San Francisco as its “prime rate”, with the
understanding that the “prime rate” is one of Wells Fargo153s base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publications as Wells Fargo may designate.

“Base Rate Margin” means, as of any date of determination (with
respect to any portion of the outstanding Advances on such date that is a Base
Rate

Loan), the applicable margin set forth in the following table that
corresponds to average daily Excess Availability for the most recently ended
calendar month (the “Monthly Average Excess Availability Amount“);
provided, however, that for the period from the Closing Date
through January 31, 2012, the Base Rate Margin shall be at the margin in the row
styled “Level I”:


Level	Monthly Average Excess Availability Amount	Base Rate Margin
I	Greater than or equal to the greater of (i) $15,000,000 and (ii) 25% of the Maximum Revolver Amount	1.00 percentage points

II	Less than the greater of (i) $15,000,000 and (ii) 25% of the Maximum Revolver Amount	1.25 percentage points

The Base Rate Margin shall be based upon the most recent Monthly Average
Excess Availability Amount, which will be calculated as of the end of each
calendar month. If Borrower fails to provide the information necessary to
calculate the Monthly Average Excess Availability Amount, the Base Rate Margin
shall be set at the margin in the row styled “Level II” until the date on which
such information is delivered (on which date (but not retroactively), without
constituting a waiver of any Default or Event of Default occasioned by the
failure to timely deliver such information, the Base Rate Margin shall be set at
the margin based upon the calculations disclosed by such information.

“Capital Expenditures” means, with respect to any Person for any
period, the aggregate of all expenditures by such Person and its Subsidiaries
during such period that are capital expenditures as determined in accordance
with GAAP, whether such expenditures are paid in cash or financed, excluding (i)
any Production Costs, (ii) any Vendor Advances, and (iii) Permitted
Acquisitions.

“Fee Letter” means that certain amended and restated fee letter
between Borrower and Agent dated as of the Fifth Amendment Closing Date.

“LIBOR Rate Margin” means, as of any date of determination (with
respect to any portion of the outstanding Advances on such date that is a LIBOR
Rate Loan), the applicable margin set forth in the following table that
corresponds to average daily Excess Availability for the most recently ended
calendar month (the “Monthly Average Excess Availability Amount“);
provided, however, that for the period from the Closing Date
through January 31, 2012, the LIBOR Rate Margin shall be at the margin in the
row styled “Level I”:


Level	Monthly Average Excess Availability Amount	LIBOR Rate Margin
I	Greater than or equal to the greater of (i) $15,000,000 and (ii) 25% of the Maximum Revolver Amount	2.00 percentage points

II	Less than the greater of (i) $15,000,000 and (ii) 25% of the Maximum Revolver Amount	2.25 percentage points

The LIBOR Rate Margin shall be based upon the most recent Monthly Average
Excess Availability Amount, which will be calculated as of the end of each
calendar month. If Borrower fails to provide the information necessary to
calculate the Monthly Average Excess Availability Amount, the LIBOR Rate Margin
shall be set at the margin in the row styled “Level II” until the date on which
such information is delivered (on which date (but not retroactively), without
constituting a waiver of any Default or Event of Default occasioned by the
failure to timely deliver such information, the LIBOR Rate Margin shall be set
at the margin based upon the calculations disclosed by such information.

“Maximum Revolver Amount” means $50,000,000, decreased by the amount
of reductions in the Revolver Commitments made in accordance with Section
2.4(c) of the Agreement, and increased by the amount of any Revolver
Increases made pursuant to Section 2.14 of the Agreement.

“Permitted Purchase Money Indebtedness” means collectively, as of any
date of determination, (i) Purchase Money Indebtedness incurred after the
Closing Date in an aggregate principal amount outstanding at any one time not in
excess of $500,000, and (ii) Purchase Money Inventory Indebtedness incurred
after the Fifth Amendment Closing Date in an aggregate principal amount
outstanding at any one time not in excess of $10,000,000.

“Publishing Business” means the publishing business of Encore
Software, Inc., a Minnesota corporation as presently conducted and any similar
business of any Loan Party that may be conducted in the future.

“WFF” means Wells Fargo Capital Finance, LLC (formerly known as Wells
Fargo Foothill, LLC), a Delaware limited liability company.

(k) Schedule 1.1 of the Credit Agreement is amended by amending the
definition of the term “Borrowing Base” set forth therein by (i) replacing the
reference to “$15,000,000” in clause (b)(i) thereof with a reference to
“$20,000,000”, and (ii) replacing the reference to “50%” in clause (b)(iv)
thereof with a reference to “60%”.

(l) Schedule 1.1 of the Credit Agreement is amended by amending the
definition of the term “EBITDA” set forth therein by (i) deleting the “and”
following subclause

(v) of clause (c) thereof, (ii) inserting a comma and the word “and”
following the reference to “of such Person of any Stock” at the end of subclause
(vi) of clause (c) thereof, and (iii) inserting a new subclause (vii) in clause
(c) thereof following such newly inserted “and” and prior to the phrase “in each
case to the extent included in the calculation of consolidated net income of
such Person for such period in accordance with GAAP”:

(vii) Fifth Amendment EBITDA Restructuring Expenses to the extent incurred
during the fiscal year of Borrower ending March 31, 2012,

(m) Schedule 1.1 of the Credit Agreement is amended by amending the
definition of the term “Eligible Accounts” set forth therein by amending and
restating clause (a) thereof in its entirety as follows:

(a) Accounts that the Account Debtor (other than the Specified Account
Debtor) has failed to pay within 90 days of original invoice date or Accounts of
an Account Debtor (other than the Specified Account Debtor) with selling terms
of more than 61 days (or, in the case of Best Buy and its Affiliates, accounts
with selling terms of more than 90 days); or Accounts that the Specified Account
Debtor has failed to pay within 30 days of due date or Accounts of the Specified
Account Debtor with selling terms of more than 60 days after the month end in
which such Account arose (provided, that the aggregate portion of the
Accounts of the Specified Account Debtor in excess of $2,000,000 shall not be
Eligible Accounts),

(n) Schedule 1.1 of the Credit Agreement is amended by amending the
definition of the term “Eligible Accounts set forth therein by amending and
restating clause (i) thereof in its entirety as follows:

(i) Accounts owing by an Account Debtor and its Affiliates (other than Best
Buy and its Affiliates, Walmart/Sam153s Club and its Affiliates, Costco and its
Affiliates, Fry153s Electronics and its Affiliates, Staples and its Affiliates,
Anderson Merchandisers and its Affiliates or Target and its Affiliates) whose
total obligations owing to Borrower exceed 10% (such percentage, as applied to a
particular Account Debtor and its Affiliates, being subject to reduction by
Agent in its Permitted Discretion if the creditworthiness of such Account Debtor
and its Affiliates deteriorates) of all Eligible Accounts, to the extent of the
obligations owing by such Account Debtor and its Affiliates in excess of such
percentage; Accounts owing by Best Buy and its Affiliates if the total
obligations owing to Borrower by Best Buy and its Affiliates exceed 35% (such
percentage, as applied to Best Buy and its Affiliates, being subject to
reduction by Agent in its Permitted Discretion if the creditworthiness of Best
Buy and its Affiliates deteriorates) of all Eligible Accounts, to the extent of
the obligations owing by Best Buy and its Affiliates in excess of such
percentage; Accounts owing by Wal-Mart/Sam153s Club and its Affiliates if the
total obligations owing to Borrower by Wal-Mart/Sam153s Club and its Affiliates
exceed 20% (such percentage, as applied to Wal-Mart/Sam153s Club and its
Affiliates, being subject to reduction by Agent in its Permitted Discretion if
the creditworthiness of Wal-Mart/Sam153s Club and its Affiliates deteriorates) of
all Eligible Accounts, to the extent of the obligations

owing by Wal-Mart/Sam153s Club and its Affiliates in excess of such percentage;
Accounts owing by Costco and its Affiliates if the total obligations owing to
Borrower by Costco and its Affiliates exceed 15% (such percentage, as applied to
Costco and its Affiliates, being subject to reduction by Agent in its Permitted
Discretion if the creditworthiness of Costco and its Affiliates deteriorates) of
all Eligible Accounts, to the extent of the obligations owing by Costco and its
Affiliates in excess of such percentage; Accounts owing by Fry153s Electronics and
its Affiliates if the total obligations owing to Borrower by Fry153s Electronics
and its Affiliates exceed 15% (such percentage, as applied to Fry153s Electronics
and its Affiliates, being subject to reduction by Agent in its Permitted
Discretion if the creditworthiness of Fry153s Electronics and its Affiliates
deteriorates) of all Eligible Accounts, to the extent of the obligations owing
by Fry153s Electronics and its Affiliates in excess of such percentage; Accounts
owing by Staples and its Affiliates if the total obligations owing to Borrower
by Staples and its Affiliates exceed 15% (such percentage, as applied to Staples
and its Affiliates, being subject to reduction by Agent in its Permitted
Discretion if the creditworthiness of Staples and its Affiliates deteriorates)
of all Eligible Accounts, to the extent of the obligations owing by Staples and
its Affiliates in excess of such percentage; Accounts owing by Anderson
Merchandisers and its Affiliates if the total obligations owing to Borrower by
Anderson Merchandisers and its Affiliates exceed 15% (such percentage, as
applied to Anderson Merchandisers and its Affiliates, being subject to reduction
by Agent in its Permitted Discretion if the creditworthiness of Anderson
Merchandisers and its Affiliates deteriorates) of all Eligible Accounts, to the
extent of the obligations owing by Anderson Merchandisers and its Affiliates in
excess of such percentage; and Accounts owing by Target and its Affiliates if
the total obligations owing to Borrower by Target and its Affiliates exceed 15%
(such percentage, as applied to Target and its Affiliates, being subject to
reduction by Agent in its Permitted Discretion if the creditworthiness of Target
and its Affiliates deteriorates) of all Eligible Accounts, to the extent of the
obligations owing by Target and its Affiliates in excess of such percentage;
provided, however, that, in each case, the amount of Eligible
Accounts that are excluded because they exceed the foregoing percentages shall
be determined by Agent based on all of the otherwise Eligible Accounts prior to
giving effect to any eliminations based upon the foregoing concentration limits,

(o) In order to correct numbering and punctuation errors in the definition of
“Eligible Accounts” resulting from the Consent and Amendment No. 2 to Credit
Agreement dated May 17, 2010 and the Amendment No. 3 to Credit Agreement dated
September 30, 2010, Schedule 1.1 of the Credit Agreement is amended by amending
the definition of the term “Eligible Accounts” set forth therein by (i) deleting
the “or” at the end of clause (p) thereof, (ii) replacing the period at the end
of clause (q) thereof with a comma, (iii) renumbering clause (s) thereof
(reading “Accounts originally created by Punch and acquired by Encore from Punch
in under the Punch Acquisition Agreement (provided that the foregoing shall not
include Accounts created by Encore after the Punch Acquisition Closing Date).”
as clause (r) thereof, and (iv) replacing the period at the end of such clause
(r) thereof with “, or”.

(p) Schedule 1.1 of the Credit Agreement is amended by amending the
definition of the term “Eligible Accounts” set forth therein by inserting the
following new clause (s) at the end thereof:

(s) such Accounts that were acquired in a Permitted Acquisition or arise from
the business acquired in a Permitted Acquisition, unless Agent shall have
completed a field examination with respect to the business and assets acquired
in connection with such Permitted Acquisition in accordance with Agent153s
customary procedures and practices and as otherwise required by the nature and
circumstances of the business acquired in connection with such Permitted
Acquisition, the scope and results of which shall be satisfactory to Agent, and
the criteria for Eligible Accounts set forth herein are satisfied with respect
to such Accounts in accordance with this Agreement (or such other or additional
criteria as Agent may, at its option, establish with respect thereto in
accordance with the definition of Eligible Accounts).

(q) Schedule 1.1 of the Credit Agreement is amended by amending the
definition of the term “Eligible Inventory” set forth therein by (i) deleting
the “or” following clause (m) thereof, (ii) replacing the period following
clause (n) thereof with a comma, and (iii) adding the following new clauses (o)
and (p) at the end thereof:

(o) it is subject to Purchase Money Inventory Indebtedness, or

(p) it was acquired in a Permitted Acquisition or arises from the business
acquired in a Permitted Acquisition, unless Agent shall have completed an
appraisal and field examination with respect to such Inventory in accordance
with Agent153s customary procedures and practices and as otherwise required by the
nature and circumstances of such Inventory, the scope and results of which shall
be satisfactory to Agent, and the criteria for Eligible Inventory set forth
herein are satisfied with respect to such Inventory in accordance with this
Agreement (or such other or additional criteria as Agent may, at its option,
establish with respect thereto in accordance with the definition of Eligible
Inventory).

(r) Schedule 1.1 of the Credit Agreement is amended by amending the
definition of the term “Permitted Indebtedness” set forth therein by (i)
deleting the “and” at the end of clause (k) thereof, (ii) replacing the period
at the end of clause (l) thereof with a comma, and (iii) inserting new clauses
(m) and (n) at the end thereof as follows:

(m) Acquired Indebtedness in an amount not to exceed $1,000,000 outstanding
at any one time, and

(n) contingent liabilities in respect of any indemnification obligation,
adjustment of purchase price, non-compete or similar obligation of Borrower or
the applicable Loan Party incurred in connection with the consummation of one or
more Permitted Acquisitions.

(s) Schedule 1.1 of the Credit Agreement is amended by amending the
definition of the term “Permitted Investments” by amended and restating clause
(k) thereof in its entirety as follows:

(k) so long as no Event of Default has occurred and is continuing or would
result therefrom, Vendor Advances in an amount not to exceed $4,000,000 per
fiscal year,

(t) Schedule 1.1 of the Credit Agreement is amended by amending the
definition of the term “Permitted Investments” by (i) renumbering existing
clause (l) thereof such that it appears as clause (m) thereof, and (ii) adding
the following new clause (l) thereto:

(l) Permitted Acquisitions, and

(u) Schedule 1.1 of the Credit Agreement is amended by amending the
definition of the term “Permitted Liens” set forth therein by amending and
restating clause (f) thereof in its entirety as follows:

(f) (i) purchase money Liens on Equipment or the interests of lessors under
Capital Leases of Equipment to the extent that such Liens or interests secure
Permitted Purchase Money Indebtedness that does not constitute Purchase Money
Inventory Indebtedness and so long as (A) such Lien attaches only to the asset
purchased or acquired and the proceeds thereof, and (B) such Lien only secures
the Indebtedness that was incurred to acquire the asset purchased or acquired or
any Refinancing Indebtedness in respect thereof, and (ii) purchase money Liens
on Inventory to the extent that such Liens or interests secure Permitted
Purchase Money Indebtedness constituting Purchase Money Inventory Indebtedness
and so long as (A) such Lien attaches only to the Inventory purchased or
acquired and the identifiable cash proceeds thereof, (B) such Lien only secures
the Indebtedness that was incurred to acquire the Inventory purchased or
acquired or any Refinancing Indebtedness in respect thereof, and (C) the holder
of such Lien has executed and delivered a waiver agreement to Agent in the form
attached as

Exhibit P hereto.

(v) Schedule 1.1 of the Credit Agreement is amended by amending the
definition of the term “Permitted Liens” set forth therein by (i) deleting “and”
from the end of clause (o) thereof, (ii) replacing the period at the end of
clause (p) thereof with a comma, and (iii) adding the following new clauses (q)
and (r) thereto:

(q) Liens solely on any cash earnest money deposits made by Borrower or its
Subsidiaries in connection with any letter of intent or purchase agreement with
respect to a Permitted Acquisition, and

(r) Liens assumed by Borrower or any of its Subsidiaries in connection with a
Permitted Acquisition that secure Acquired Indebtedness.

(w) Schedule 1.1 of the Credit Agreement is amended by adding the following
new defined terms thereto in their appropriate alphabetical order as follows:

“Acquired Indebtedness” means Indebtedness of a Person whose assets or
Stock is acquired by Borrower or any of its Subsidiaries in a Permitted
Acquisition; provided, however, that such Indebtedness (a) is
either Purchase Money Indebtedness or a Capital Lease with respect to Equipment
or mortgage financing with respect to Real Property, (b) was in existence prior
to the date of such Permitted Acquisition, and (c) was not incurred in
connection with, or in contemplation of, such Permitted Acquisition.

“Dominion Period” means each period beginning on any date that Excess
Availability is less than $15,000,000 and ending upon such date thereafter upon
which Excess Availability has been greater than $15,000,000 for sixty (60)
consecutive days.

“Fifth Amendment Closing Date” means December 29, 2011.

“Fifth Amendment EBITDA Restructuring Expenses” means, collectively,
and in each case to the extent incurred during the fiscal year of Borrower
ending March 31, 2012, (a) cash expenses in connection with severance payments
made to Borrower153s prior CEO, Cary Deacon, in connection with his resignation on
March 31, 2011 plus search fees in connection with identifying a successor CEO,
in an aggregate amount not to exceed $1,700,000, (b) cash expenses in an
aggregate amount not to exceed $6,900,000 for (i) severance payments and
outplacement expenses in connection with staff reductions at the Borrower153s
Minnesota headquarters and in connection with the closing of Encore Software,
Inc153s California office along with other miscellaneous personnel related
restructuring costs, in an aggregate amount for such severance payments and
outplacement expenses and other personnel related restructuring costs not to
exceed the maximum corresponding amount set forth on Schedule F-1, and
(ii) cash expenses incurred in connection with Borrower153s negotiation with its
landlord for its Minnesota headquarters to reduce the size of its facility by
vacating one of the three headquarters buildings currently leased by Navarre and
in connection with Borrower153s negotiation with the landlord for Encore Software,
Inc.153s California office to terminate the lease for such office prior to its
scheduled expiration, in an aggregate amount for such expenses in connection
with such leases not to exceed the maximum corresponding amount set forth on
Schedule F-1, and (c) non-cash charges in an aggregate amount not to
exceed $2,600,000 resulting from (i) the writedown of Inventory for certain
software titles of Encore Software, Inc. to be discontinued, (ii) the writedown
of software development costs pertaining to such discontinued Encore Software,
Inc. software titles, and (iii) other miscellaneous non-cash restructuring
charges.

“Permitted Acquisition” means any Acquisition so long as:

(a) no Default or Event of Default shall have occurred and be continuing or
would result from the consummation of the proposed Acquisition and the proposed
Acquisition is consensual,

(b) no Indebtedness will be incurred, assumed, or would exist with respect to
Borrower or its Subsidiaries as a result of such Acquisition, other than
Indebtedness permitted under clause (m) of the definition of Permitted
Indebtedness and no Liens will be incurred, assumed, or would exist with respect
to the assets of Borrower or its Subsidiaries as a result of such Acquisition
other than Permitted Liens,

(c) Borrower has provided Agent with written confirmation, supported by
reasonably detailed calculations, that on a pro forma basis (including pro forma
adjustments arising out of events which are directly attributable to such
proposed Acquisition, are factually supportable, and are expected to have a
continuing impact, in each case, determined as if the combination had been
accomplished at the beginning of the relevant period; such eliminations and
inclusions to be mutually and reasonably agreed upon by Borrower and Agent)
created by adding the historical combined financial statements of Borrower
(including the combined financial statements of any other Person or assets that
were the subject of a prior Permitted Acquisition during the relevant period) to
the historical consolidated financial statements of the Person to be acquired
(or the historical financial statements related to the assets to be acquired)
pursuant to the proposed Acquisition, Borrower and its Subsidiaries (i) would
have been in compliance with the financial covenants in Section 7 of the
Agreement for the 4 fiscal quarter period ended immediately prior to the
proposed date of consummation of such proposed Acquisition, and (ii) are
projected to be in compliance with the financial covenants in Section 7
for the 4 fiscal quarter period ended one year after the proposed date of
consummation of such proposed Acquisition,

(d) Borrower has provided Agent with its due diligence package relative to
the proposed Acquisition, including forecasted balance sheets, profit and loss
statements, and cash flow statements of the Person or assets to be acquired, all
prepared on a basis consistent with such Person153s (or assets153) historical
financial statements, together with appropriate supporting details and a
statement of underlying assumptions for the 1 year period following the date of
the proposed Acquisition, on a quarter by quarter basis), in form and substance
(including as to scope and underlying assumptions) reasonably satisfactory to
Agent,

(e) Borrower shall have Excess Availability (calculated after giving effect
to the payment of any transaction costs and expenses to be paid in connection
therewith) in an amount equal to or greater than $15,000,000 immediately after
giving effect to the consummation of the proposed Acquisition and Borrower shall
have had average daily Excess Availability for the 30 day period ending on the
date of the consummation of the proposed Acquisition (and calculated after
giving effect to such Acquisition) in an amount equal to or greater than
$15,000,000,

(f) the assets being acquired or the Person whose Stock is being acquired did
not have negative EBITDA during the 12 consecutive month period most recently
concluded prior to the date of the proposed Acquisition,

(g) Borrower shall have provided Agent with written notice of the proposed
Acquisition at least 15 Business Days prior to the anticipated closing date of
the proposed Acquisition not later than 5 Business Days prior to the anticipated
closing date of the proposed Acquisition, copies of the acquisition agreement
and other material documents relative to the proposed Acquisition, which
agreement and documents must be reasonably acceptable to Agent,

(h) the assets being acquired (other than a de minimis amount of assets in
relation to Borrower153s and its Subsidiaries153 total assets), or the Person whose
Stock is being acquired, are useful in or engaged in, as applicable, the
business of Parent and its Subsidiaries or a business reasonably related
thereto,

(i) the assets being acquired (other than a de minimis amount of assets in
relation to the assets being acquired) are located within the United States or
the Person whose Stock is being acquired is organized in a jurisdiction located
within the United States,

(j) the subject assets or Stock, as applicable, are being acquired directly
by Borrower or one of its Subsidiaries that is a Loan Party, and, in connection
therewith, Borrower or the applicable Loan Party shall have complied with
Section 5.11 or 5.12, as applicable, of the Agreement and, in the
case of an acquisition of Stock, Borrower or the applicable Loan Party shall
have demonstrated to Agent that the new Loan Parties have received consideration
sufficient to make the joinder documents binding and enforceable against such
new Loan Parties, and

(k) the purchase consideration payable in respect of all Permitted
Acquisitions (including the proposed Acquisition and including any deferred
payment obligations and the amount of Indebtedness assumed) shall not exceed
$5,000,000 in the aggregate.

“Purchase Money Inventory Indebtedness” means Indebtedness (other than
the Obligations), incurred at the time of, or within 20 days after, the
acquisition of any Inventory for the purpose of financing all or any part of the
acquisition cost thereof, so long as the holder of such Indebtedness has
executed and delivered a waiver agreement to Agent in the form attached as
Exhibit P hereto.

(x) The following Schedules to the Credit Agreement are amended and restated
in their entirety as set forth on Exhibit A to this Amendment: Schedule
A-2 (Authorized Persons), Schedule C-1 (Commitments), Schedule E-1 (Eligible
Inventory Locations), Schedule P-1 (Permitted Investments), Schedule P-2
(Permitted Liens), Schedule P-3 (Specific Permitted Indebtedness), Schedule
4.1(b) (Capitalization of Borrower), Schedule 4.1(c) (Capitalization of
Borrower153s Subsidiaries), Schedule 4.6(a) (States of Organization), Schedule
4.6(b) (Chief

Executive Offices), Schedule 4.6(c) (Organizational Identification Numbers),
Schedule 4.6(d) (Commercial Tort Claims), Schedule 4.7(b) (Litigation), Schedule
4.12 (Environmental Matters), Schedule 4.13 (Intellectual Property), Schedule
4.15 (Deposit Accounts and Securities Accounts), Schedule 4.17 (Material
Contracts), Schedule 4.19 (Closing Date Indebtedness), Schedule 4.30 (Location
of Inventory and Equipment), and Schedule 6.6 (Nature of Business), and Schedule
6.12 (Transactions with Affiliates).

(y) Schedule 5.2 of the Credit Agreement is hereby amended by replacing the
reference to “Weekly” on the left side of the first row thereof with a reference
to “Weekly (not later than Tuesday of each week) at such times that a Dominion
Period is in effect, and monthly (not later than the 10th day of each month) at
such times that a Dominion Period is not in effect”.

(z) Schedule 6.12 (Transactions with Affiliates) to the Credit Agreement is
hereby deleted.

(aa) A new Schedule F-1 (Fifth Amendment EBITDA Restructuring Expenses) is
added to the Credit Agreement in the form attached as Exhibit F-1 to this
Amendment.

(bb) Exhibit C-1 to the Credit Agreement is amended and restated in its
entirety in the form attached as Exhibit C-1 to this Amendment.

(cc) A new Exhibit P is added to the Credit Agreement in the form attached as
Exhibit P to this Amendment.

3. Continuing Effect. Except as expressly set forth in Section
2 of this Amendment, nothing in this Amendment shall constitute a
modification or alteration of the terms, conditions or covenants of the Credit
Agreement or any other Loan Document, or a waiver of any other terms or
provisions thereof, and the Credit Agreement and the other Loan Documents shall
remain unchanged and shall continue in full force and effect, in each case as
amended hereby.

4. Reaffirmation and Confirmation. Borrower hereby ratifies, affirms,
acknowledges and agrees that the Credit Agreement and the other Loan Documents
represent the valid, enforceable and collectible obligations of Borrower, and
further acknowledges that there are no existing claims, defenses, personal or
otherwise, or rights of setoff whatsoever with respect to the Credit Agreement
or any other Loan Document. Borrower hereby agrees that this Amendment in no way
acts as a release or relinquishment of the Liens and rights securing payments of
the Obligations. The Liens and rights securing payment of the Obligations are
hereby ratified and confirmed by Borrower in all respects.

5. Conditions to Effectiveness. This Amendment shall become effective
upon the satisfaction of each of the following conditions precedent, each in
form and substance acceptable to Agent:

(a) Agent shall have received a fully executed copy of this Amendment (along
with the Consent and Reaffirmation attached hereto) and each of the additional
documents, instruments and agreements listed on the Closing Checklist attached
hereto as Annex 1 to this

Amendment, each in form and substance acceptable to Agent, together with such
other documents, agreements and instruments as Agent may require or reasonably
request;

(b) Capital One Leverage Finance Corp. shall have assigned all of its
Revolver Commitment to Wells Fargo Capital Finance, LLC effective immediately
prior to the effectiveness of this Amendment such that Wells Fargo Capital
Finance, LLC is the sole Lender under the Credit Agreement as of the
effectiveness of this Amendment; and

(c) No Default or Event of Default shall have occurred and be continuing on
the date hereof (other than the Existing Defaults) or as of the date of the
effectiveness of this Amendment.

6. Representations and Warranties. In order to induce Agent and
Lenders to enter into this Amendment, Borrower hereby represents and warrants to
Agent and Lenders that, after giving effect to this Amendment:

(a) All representations and warranties contained in the Credit Agreement and
the other Loan Documents are true and correct on and as of the date of this
Amendment, in each case as if then made, other than representations and
warranties that expressly relate solely to an earlier date (in which case such
representations and warranties were true and correct on and as of such earlier
date);

(b) No Default or Event of Default has occurred and is continuing;

(c) This Amendment and the Credit Agreement, as modified hereby, constitute
legal, valid and binding obligations of Borrower and are enforceable against
Borrower in accordance with their respective terms.

7. Miscellaneous.

(a) Expenses. Borrower agrees to pay on demand all Lender Group
Expenses of Agent (including, without limitation, the fees and expenses of
outside counsel for Agent) in connection with the preparation, negotiation,
execution, delivery and administration of this Amendment and all other
instruments or documents provided for herein or delivered or to be delivered
hereunder or in connection herewith. All obligations provided herein shall
survive any termination of this Amendment and the Credit Agreement as modified
hereby.

(b) Governing Law. This Amendment shall be a contract made under and
governed by the internal laws of the State of Illinois.

(c) Counterparts. This Amendment may be executed in any number of
counterparts, and by the parties hereto on the same or separate counterparts,
and each such counterpart, when executed and delivered, shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same Amendment. Delivery of an executed counterpart of this Amendment by
facsimile or electronic mail shall be equally effective as delivery of an
original executed counterpart of this Amendment.

8. Release.

(a) In consideration of the agreements of Agent and Lenders contained herein
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Borrower and each Guarantor (by its execution and
delivery of the attached Consent and Reaffirmation), on behalf of itself and its
successors, assigns, and other legal representatives, hereby absolutely,
unconditionally and irrevocably releases, remises and forever discharges Agent
and Lenders, and their successors and assigns, and their present and former
shareholders, affiliates, subsidiaries, divisions, predecessors, directors,
officers, attorneys, employees, agents and other representatives (Agent, each
Lender and all such other Persons being hereinafter referred to collectively as
the “Releasees” and individually as a “Releasee“), of and from all
demands, actions, causes of action, suits, covenants, contracts, controversies,
agreements, promises, sums of money, accounts, bills, reckonings, damages and
any and all other claims, counterclaims, defenses, rights of set-off, demands
and liabilities whatsoever (individually, a “Claim” and collectively,
“Claims“) of every name and nature, known or unknown, suspected or
unsuspected, both at law and in equity, which Borrower, any Guarantor or any of
their respective successors, assigns, or other legal representatives may now or
hereafter own, hold, have or claim to have against the Releasees or any of them
for, upon, or by reason of any circumstance, action, cause or thing whatsoever
in relation to, or in any way in connection with any of the Credit Agreement, or
any of the other Loan Documents or transactions thereunder or related thereto
which arises at any time on or prior to the day and date of this Amendment.

(b) Each of Borrower and each Guarantor understands, acknowledges and agrees
that the release set forth above may be pleaded as a full and complete defense
and may be used as a basis for an injunction against any action, suit or other
proceeding which may be instituted, prosecuted or attempted in breach of the
provisions of such release.

(c) Each of Borrower and each Guarantor agrees that no fact, event,
circumstance, evidence or transaction which could now be asserted or which may
hereafter be discovered shall affect in any manner the final, absolute and
unconditional nature of the release set forth above.

[signature pages follow]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized and delivered as
of the date first above written.


NAVARRE CORPORATION, a Minnesota corporation

By:
Title:

Signature Page to Amendment No. 5 to Credit Agreement


WELLS FARGO CAPITAL FINANCE, LLC, formerly known as Wells Fargo Foothill, LLC, a Delaware limited liability company, as Agent and as a Lender

By:
Title:

Signature Page to Amendment No. 5 to Credit Agreement

CONSENT AND REAFFIRMATION

Each of the undersigned hereby (i) acknowledges receipt of a copy of the
foregoing Amendment No. 5 to Credit Agreement (terms defined therein and used,
but not otherwise defined, herein shall have the meanings assigned to them
therein); (ii) consents to Borrower153s execution and delivery thereof; (iii)
agrees to be bound by the terms of the Amendment, including Section 8 thereof;
and (iv) affirms that nothing contained therein shall modify in any respect
whatsoever any Loan Document to which any of the undersigned is a party and
reaffirm that each such Loan Document is and shall continue to remain in full
force and effect. Although each of the undersigned has been informed of the
matters set forth herein and has acknowledged and agreed to same, each of the
undersigned understands that Agent and Lenders have no obligation to inform any
of the undersigned of such matters in the future or to seek any of the
undersigned153s acknowledgment or agreement to future consents, amendments or
waivers, and nothing herein shall create such a duty.

IN WITNESS WHEREOF, each of the undersigned has executed this Consent and
Reaffirmation on and as of the date of such Amendment.


NAVARRE DISTRIBUTION SERVICES, INC., a Minnesota corporation

By:
Title:


NAVARRE ONLINE FULFILLMENT SERVICES, INC., a Minnesota corporation

By:
Title:


ENCORE SOFTWARE, INC., a Minnesota Corporation

By:
Title:


NAVARRE DIGITAL SERVICES, INC., a Minnesota Corporation

By:
Title:

Consent and Reaffirmation to Amendment No. 5 to Credit Agreement


NAVARRE LOGISTICAL SERVICES, INC., a Minnesota corporation

By:
Title:


NAVARRE DISTRIBUTION SERVICES ULC, a British Columbia unlimited liability company

By:
Title:

Consent and Reaffirmation to Amendment No. 5 to Credit Agreement

Was this helpful?

Why was this helpful?

Easy to understand

Solved my problem

Other

Why was this not helpful?

Missing the information I need

Too complicated / too many steps

Out of date

Other

Stay Up-to-Date With How the Law Affects Your Life

Enter your email address to subscribe:

Learn more about FindLaw’s newsletters, including our terms of use and privacy policy.