NAVARRE CORP /MN/
FORM OF WARRANT AGREEMENT
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>5
<FILENAME>c81606exv10w3.txt
<DESCRIPTION>FORM OF WARRANT AGREEMENT
<TEXT>
<PAGE>
                                                                    EXHIBIT 10.3



                                                                       EXHIBIT A

NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED
BY SUCH SECURITIES.

                               NAVARRE CORPORATION

                                     WARRANT

Warrant No. [ ]                                    Date of Original Issuance:[ ]

         Navarre Corporation, a Minnesota corporation (the "COMPANY"), hereby
certifies that, for value received, [ ] or its registered assigns (the
"HOLDER"), is entitled to purchase from the Company up to a total of [ ] shares
of common stock, no par value (the "COMMON STOCK"), of the Company (each such
share, a "WARRANT SHARE" and all such shares, the "WARRANT SHARES") at an
exercise price equal to $7.00 per share (as adjusted from time to time as
provided in Section 9, the "EXERCISE PRICE"), at any time and from time to time
from and after the sixth month anniversary of the date hereof and through and
including the fifth year anniversary of the issuance date hereof (the
"EXPIRATION DATE"), and subject to the following terms and conditions:

         1.       Definitions. In addition to the terms defined elsewhere in
this Warrant, capitalized terms that are not otherwise defined herein shall have
the meanings given to such terms in the Securities Purchase Agreement to which
the Company and the original Holder are parties (as amended from time to time,
the "PURCHASE AGREEMENT").

         2.       Registration of Warrant. The Company shall register this
Warrant, upon records to be maintained by the Company for that purpose (the
"WARRANT REGISTER"), in the name of the record Holder hereof from time to time.
The Company may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any distribution
to the Holder, and for all other purposes, absent actual notice to the contrary.

<PAGE>

         3.       Registration of Transfers. The Company shall register the
transfer of any portion of this Warrant in the Warrant Register, upon surrender
of this Warrant, with the Form of Assignment attached hereto duly completed and
signed, to the Company at its address specified herein. Upon any such
registration or transfer, a new Warrant to purchase Common Stock, in
substantially the form of this Warrant (any such new Warrant, a "NEW WARRANT"),
evidencing the portion of this Warrant so transferred shall be issued to the
transferee and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the transferring Holder. The
acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance by such transferee of all of the rights and obligations of a holder
of a Warrant.

         4.       Exercise and Duration of Warrants.

                  (a)      This Warrant shall be exercisable by the registered
Holder at any time and from time to time commencing six months from the date of
original issuance first noted in this Warrant through and including the
Expiration Date. At 6:30 p.m., New York City time on the Expiration Date, the
portion of this Warrant not exercised prior thereto shall be and become void and
of no value.

                  (b)      Subject to the provisions of this Section 4(b), at
any time after the first anniversary of the Closing Date, if the: (i) VWAP (as
defined below) of the Common Stock for each of 30 consecutive Trading Days after
such first anniversary is greater than $12.00 (as may be adjusted pursuant to
Section 9), (ii) the Warrant Shares are either registered for resale pursuant to
an effective registration statement naming the Holder as a selling stockholder
thereunder (and the prospectus thereunder is available for use by the Holder as
to all then available Warrant Shares) or freely transferable without volume
restrictions pursuant to Rule 144(k) promulgated under the Securities Act, as
determined by counsel to the Company pursuant to a written opinion letter
addressed and in form and substance reasonably acceptable to the Holder and the
transfer agent for the Common Stock, and (iii) the Company shall have fully
honored in accordance with the terms of this Warrant all Exercise Notices
delivered prior to 6:30 p.m. (New York City time) on the Call Date (as defined
below), then the Company may, subject to Section 11, require cash exercise
pursuant to Section 10(a) hereof of all, but (subject to Section 11) not less
than all, of the portion of this Warrant for which Exercise Notices have not
been delivered by 6:30 p.m. on the Call Date. To exercise this right, the
Company must deliver to the Holder an irrevocable written notice (a "CALL
NOTICE"), indicating therein that this Warrant shall be exercised. If the
conditions for such Call are satisfied from the period from the date of the Call
Notice through and including the Call Date, then, subject to Section 11, this
Warrant shall be deemed to have been exercised in full on a cash basis pursuant
to Section 10(a) hereof at 6:30 p.m. (New York City time) on the tenth Trading
Day after the date the Call Notice is received by the Holder (such date, the
"CALL DATE"). The Holder shall deliver payment in immediately available funds of
the Exercise Price for the number of Warrant Shares for which this Warrant is
required to be exercised under this subsection promptly but in any event no
later than ten business days following the Call Date. The Company covenants and
agrees that it will honor all Exercise Notices with respect to Warrant Shares
that are tendered from the time of delivery of the Call Notice through 6:30 p.m.
(New York City time) on the Call Date. "VWAP" means on any particular Trading
Day or for any particular period, the volume weighted average trading price per
share of Common Stock on such date or for such period as reported by

                                      -2-
<PAGE>

Bloomberg L.P., or any successor performing similar functions. Subject to the
immediately following sentence, any unexercised portion of this Warrant
following the Call Date shall automatically be deemed cancelled. The Company and
the Holder agree that, if and to the extent Section 11 of this Warrant would
restrict the ability of the Holder to exercise this Warrant in full in the event
of a delivery of a Call Notice, then notwithstanding anything to the contrary
set forth in the Call Notice, the Call Notice shall be deemed automatically
amended to apply only to such portion of this Warrant as may be exercised by the
Holder by the Call Date in accordance with Section 11. The Holder will promptly
(and, in any event, prior to the Call Date) notify the Company in writing
following receipt of a Call Notice if Section 11 would restrict its exercise of
the Warrant, specifying therein the number of Warrant Shares so restricted.

         5.       Delivery of Warrant Shares.

                  (a)      To effect exercises hereunder, the Holder shall not
be required to physically surrender this Warrant unless the aggregate Warrant
Shares represented by this Warrant is being exercised or delivery is required by
the Warrant transfer agent and such transfer agent is not the Company. Upon
delivery of the Exercise Notice to the Company (with the attached Warrant Shares
Exercise Log) at its address for notice set forth herein and upon payment of the
Exercise Price multiplied by the number of Warrant Shares that the Holder
intends to purchase hereunder, the Company shall promptly (but in no event later
than three Trading Days after the Date of Exercise (as defined herein)) issue
and deliver to the Holder, a certificate for the Warrant Shares issuable upon
such exercise. The Company shall, upon request of the Holder and subsequent to
the date on which a registration statement covering the resale of the Warrant
Shares has been declared effective by the Securities and Exchange Commission,
use its best efforts to deliver Warrant Shares hereunder electronically through
the Depository Trust Corporation or another established clearing corporation
performing similar functions, if available, provided, that, the Company will not
be required to change its transfer agent if its current transfer agent cannot
deliver Warrant Shares electronically through the Depository Trust Corporation.
A "DATE OF EXERCISE" means the date on which the Holder shall have delivered to
Company: (i) the Exercise Notice (with the Warrant Exercise Log attached to it),
appropriately completed and duly signed and (ii) if such Holder is not utilizing
the cashless exercise provisions set forth in this Warrant, payment of the
Exercise Price for the number of Warrant Shares so indicated by the Holder to be
purchased.

                  (b)      If by the third Trading Day after a Date of Exercise
the Company fails to deliver the required number of Warrant Shares in the manner
required pursuant to Section 5(a), then the Holder will have the right to
rescind such exercise.

                  (c)      If by the third Trading Day after a Date of Exercise
the Company fails to deliver the required number of Warrant Shares in the manner
required pursuant to Section 5(a), and if after such third Trading Day and prior
to the receipt of such Warrant Shares, the Holder purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a
sale by the Holder of the Warrant Shares which the Holder anticipated receiving
upon such exercise (a "BUY-IN"), then the Company shall (1) pay in cash to the
Holder the amount by which (x) the Holder's total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so purchased
exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares
that the Company was required to deliver to the Holder in

                                      -3-
<PAGE>

connection with the exercise at issue by (B) the closing bid price of the Common
Stock at the time of the obligation giving rise to such purchase obligation and
(2) at the option of the Holder, either reinstate the portion of the Warrant and
equivalent number of Warrant Shares for which such exercise was not honored or
deliver to the Holder the number of shares of Common Stock that would have been
issued had the Company timely complied with its exercise and delivery
obligations hereunder. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the Buy-In.

                  (d)      The Company's obligations to issue and deliver
Warrant Shares in accordance with the terms hereof are absolute and
unconditional, irrespective of any action or inaction by the Holder to enforce
the same, any waiver or consent with respect to any provision hereof, the
recovery of any judgment against any Person or any action to enforce the same,
or any setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by the Holder or any other Person of any obligation to
the Company or any violation or alleged violation of law by the Holder or any
other Person, and irrespective of any other circumstance which might otherwise
limit such obligation of the Company to the Holder in connection with the
issuance of Warrant Shares. Nothing herein shall limit a Holder's right to
pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company's failure to timely deliver
certificates representing shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.

         6.       Charges, Taxes and Expenses. Issuance and delivery of
certificates for shares of Common Stock upon exercise of this Warrant shall be
made without charge to the Holder for any issue or transfer tax, withholding
tax, transfer agent fee or other incidental tax or expense in respect of the
issuance of such certificates, all of which taxes and expenses shall be paid by
the Company; provided, however, that the Company shall not be required to pay
any tax which may be payable in respect of any transfer involved in the
registration of any certificates for Warrant Shares or Warrants in a name other
than that of the Holder. The Holder shall be responsible for all other tax
liability that may arise as a result of holding or transferring this Warrant or
receiving Warrant Shares upon exercise hereof.

         7.       Replacement of Warrant. If this Warrant is mutilated, lost,
stolen or destroyed, the Company shall issue or cause to be issued in exchange
and substitution for and upon cancellation hereof, or in lieu of and
substitution for this Warrant, a New Warrant, but only upon receipt of an
affidavit reasonably satisfactory to the Company attesting to such loss, theft
or destruction and customary and reasonable indemnity (which may include a
surety bond), if requested. Applicants for a New Warrant under such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable third-party costs as the Company may
prescribe. If a New Warrant is requested as a result of a mutilation of this
Warrant, then the Holder shall deliver such mutilated Warrant to the Company as
a condition precedent to the Company's obligation to issue the New Warrant.

         8.       Reservation of Warrant Shares. The Company covenants that it
will at all times reserve and keep available out of the aggregate of its
authorized but unissued and otherwise unreserved Common Stock, solely for the
purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as
herein provided, the number of Warrant Shares which are then

                                      -4-
<PAGE>

issuable and deliverable upon the exercise of this entire Warrant, free from
preemptive rights or any other contingent purchase rights of persons other than
the Holder (taking into account the adjustments and restrictions of Section 9).
The Company covenants that all Warrant Shares so issuable and deliverable shall,
upon issuance and the payment of the applicable Exercise Price in accordance
with the terms hereof, be duly and validly authorized, issued and fully paid and
nonassessable.

         9.       Certain Adjustments. The Exercise Price and number of Warrant
Shares issuable upon exercise of this Warrant are subject to adjustment from
time to time as set forth in this Section 9.

                  (a)      Stock Dividends and Splits. If the Company, at any
time while this Warrant is outstanding, (i) pays a stock dividend on its Common
Stock or otherwise makes a distribution on any class of capital stock that is
payable in shares of Common Stock, (ii) subdivides outstanding shares of Common
Stock into a larger number of shares, or (iii) combines outstanding shares of
Common Stock into a smaller number of shares, then in each such case the
Exercise Price shall be multiplied by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding immediately before such event
and of which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event. Any adjustment made pursuant to clause
(i) of this paragraph shall become effective immediately after the record date
for the determination of shareholders entitled to receive such dividend or
distribution, and any adjustment pursuant to clause (ii) or (iii) of this
paragraph shall become effective immediately after the effective date of such
subdivision or combination. If any event requiring an adjustment under this
paragraph occurs during the period that an Exercise Price is calculated
hereunder, then the calculation of such Exercise Price shall be adjusted
appropriately to reflect such event.

                  (b)      Fundamental Transactions. If, at any time while this
Warrant is outstanding, (1) the Company effects any merger or consolidation of
the Company with or into another Person, (2) the Company effects any sale of all
or substantially all of its assets in one or a series of related transactions,
(3) any tender offer or exchange offer (whether by the Company or another
Person) is completed pursuant to which holders of Common Stock are permitted to
tender or exchange their shares for other securities, cash or property, or (4)
the Company effects any reclassification of the Common Stock or any compulsory
share exchange pursuant to which the Common Stock is effectively converted into
or exchanged for other securities, cash or property (in any such case, a
"FUNDAMENTAL TRANSACTION"), then the Holder shall have the right thereafter to
receive, upon exercise of this Warrant, the same amount and kind of securities,
cash or property as it would have been entitled to receive upon the occurrence
of such Fundamental Transaction if it had been, immediately prior to such
Fundamental Transaction, the holder of the number of Warrant Shares then
issuable upon exercise in full of this Warrant (the "ALTERNATE CONSIDERATION").
For purposes of any such exercise, the determination of the Exercise Price shall
be appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be

                                      -5-
<PAGE>

given the same choice as to the Alternate Consideration it receives upon any
exercise of this Warrant following such Fundamental Transaction. At the Holder's
option and request, any successor to the Company or surviving entity in such
Fundamental Transaction shall, either (1) issue to the Holder a new warrant
substantially in the form of this Warrant and consistent with the foregoing
provisions and evidencing the Holder's right to purchase the Alternate
Consideration for the aggregate Exercise Price upon exercise thereof, or (2)
purchase the Warrant from the Holder for a purchase price, payable in cash
within five Trading Days after such request (or, if later, on the effective date
of the Fundamental Transaction), equal to the Black Scholes value of the
remaining unexercised portion of this Warrant on the date of such request. The
terms of any agreement pursuant to which a Fundamental Transaction is effected
shall include terms requiring any such successor or surviving entity to comply
with the provisions of this paragraph (b) and insuring that the Warrant (or any
such replacement security) will be similarly adjusted upon any subsequent
transaction analogous to a Fundamental Transaction.

                  (c)      Number of Warrant Shares. Simultaneously with any
adjustment to the Exercise Price pursuant to paragraph (a) of this Section, the
number of Warrant Shares that may be purchased upon exercise of this Warrant
shall be increased or decreased proportionately, so that after such adjustment
the aggregate Exercise Price payable hereunder for the adjusted number of
Warrant Shares shall be the same as the aggregate Exercise Price in effect
immediately prior to such adjustment.

                  (d)      Calculations. All calculations under this Section 9
shall be made to the nearest cent or the nearest 1/100th of a share, as
applicable. The number of shares of Common Stock outstanding at any given time
shall not include shares owned or held by or for the account of the Company, and
the disposition of any such shares shall be considered an issue or sale of
Common Stock.

                  (e)      Notice of Adjustments. Upon the occurrence of each
adjustment pursuant to this Section 9, the Company at its expense will promptly
compute such adjustment in accordance with the terms of this Warrant and prepare
a certificate setting forth such adjustment, including a statement of the
adjusted Exercise Price and adjusted number or type of Warrant Shares or other
securities issuable upon exercise of this Warrant (as applicable), describing
the transactions giving rise to such adjustments and showing in detail the facts
upon which such adjustment is based. Upon written request, the Company will
promptly deliver a copy of each such certificate to the Holder and to the
Company's Transfer Agent.

                  (f)      Notice of Corporate Events. If the Company (i)
declares a dividend or any other distribution of cash, securities or other
property in respect of its Common Stock, including without limitation any
granting of rights or warrants to subscribe for or purchase any capital stock of
the Company or any Subsidiary, (ii) authorizes or approves, enters into any
agreement contemplating or solicits shareholder approval for any Fundamental
Transaction or (iii) authorizes the voluntary dissolution, liquidation or
winding up of the affairs of the Company, then the Company shall deliver to the
Holder a notice describing the material terms and conditions of such
transaction, at least 20 calendar days prior to the applicable record or
effective date on which a Person would need to hold Common Stock in order to
participate in or vote with respect to such transaction, and the Company will
take all steps reasonably necessary in order to

                                      -6-
<PAGE>

insure that the Holder is given the practical opportunity to exercise this
Warrant prior to such time so as to participate in or vote with respect to such
transaction; provided, however, that the failure to deliver such notice or any
defect therein shall not affect the validity of the corporate action required to
be described in such notice.

         10.      Payment of Exercise Price. The Holder may pay the Exercise
Price in one of the following manners:

                  (a)      Cash Exercise. The Holder may deliver immediately
available funds; or

                  (b)      Cashless Exercise. If an Exercise Notice is delivered
after the Effectiveness Date (as defined in the Registration Rights Agreement
among the original Holder and the Company in connection with this Warrant) and a
registration statement permitting the Holder to resell the Warrant Shares is not
then effective or the prospectus forming a part thereof is not then available to
the Holder for the resale of the Warrant Shares, then and only then, the Holder
may notify the Company in an Exercise Notice of its election to utilize cashless
exercise, in which event the Company shall issue to the Holder the number of
Warrant Shares determined as follows:

                                    X = Y [(A-B)/A]

                           where:

                                    X = the number of Warrant Shares to be
                                    issued to the Holder.

                                    Y = the number of Warrant Shares with
                                    respect to which this Warrant is being
                                    exercised.

                                    A = the average of the closing prices for
                                    the five Trading Days immediately prior to
                                    (but not including) the Exercise Date.

                                    B = the Exercise Price.

For purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have commenced, on
the date this Warrant was originally issued.

         11.      Limitation on Exercise.

                           (i)      Notwithstanding anything to the contrary
contained herein, the number of shares of Common Stock that may be acquired by
the Holder upon any exercise of this Warrant (or otherwise in respect hereof)
shall be limited to the extent necessary to insure that, following such exercise
(or other issuance), the total number of shares of Common Stock then
beneficially owned by such Holder and its Affiliates and any other Persons whose
beneficial ownership of Common Stock would be aggregated with the Holder's for
purposes of Section 13(d) of the Exchange Act, does not exceed 4.999% of the
total number of issued and outstanding shares of Common Stock (including for
such purpose the shares of Common Stock

                                      -7-
<PAGE>

issuable upon such exercise). For such purposes, beneficial ownership shall be
determined in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder. Each delivery of an Exercise Notice
hereunder will constitute a representation by the Holder that it has evaluated
the limitation set forth in this paragraph and determined that issuance of the
full number of Warrant Shares requested in such Exercise Notice is permitted
under this paragraph. This provision shall not restrict the number of shares of
Common Stock which a Holder may receive or beneficially own in order to
determine the amount of securities or other consideration that such Holder may
receive in the event of a merger or other business combination or
reclassification involving the Company as contemplated in Section 9 of this
Warrant. By written notice to the Company, the Holder may waive the provisions
of this Section but any such waiver will not be effective until the 61st day
after such notice is delivered to the Company.

                           (ii)     Notwithstanding anything to the contrary
contained herein, the number of shares of Common Stock that may be acquired by
the Holder upon any exercise of this Warrant (or otherwise in respect hereof)
shall be limited to the extent necessary to insure that, following such exercise
(or other issuance), the total number of shares of Common Stock then
beneficially owned by such Holder and its Affiliates and any other Persons whose
beneficial ownership of Common Stock would be aggregated with the Holder's for
purposes of Section 13(d) of the Exchange Act, does not exceed 9.999% of the
total number of issued and outstanding shares of Common Stock (including for
such purpose the shares of Common Stock issuable upon such exercise). For such
purposes, beneficial ownership shall be determined in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
Each delivery of an Exercise Notice hereunder will constitute a representation
by the Holder that it has evaluated the limitation set forth in this paragraph
and determined that issuance of the full number of Warrant Shares requested in
such Exercise Notice is permitted under this paragraph. This provision shall not
restrict the number of shares of Common Stock which a Holder may receive or
beneficially own in order to determine the amount of securities or other
consideration that such Holder may receive in the event of a merger or other
business combination or reclassification involving the Company as contemplated
in Section 9 of this Warrant. This restriction may not be waived.

         12.      No Fractional Shares. No fractional shares of Warrant Shares
will be issued in connection with any exercise of this Warrant. In lieu of any
fractional shares which would, otherwise be issuable, the Company shall pay cash
equal to the product of such fraction multiplied by the closing price of one
Warrant Share as reported by Bloomberg L.P. (or the successor to its function of
reporting share prices) on the date of exercise.

         13.      Notices. Any and all notices or other communications or
deliveries hereunder (including, without limitation, any Exercise Notice) shall
be in writing and shall be deemed given and effective on the earliest of (i) the
date of transmission, if such notice or communication is delivered via facsimile
at the facsimile number specified in this Section prior to 6:30 p.m. (New York
City time) on a Trading Day, (ii) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section on a day that is not a Trading Day or
later than 6:30 p.m. (New York City time) on any Trading Day, (iii) the Trading
Day following the date of mailing, if sent by nationally recognized overnight
courier service, or (iv) upon actual receipt by the party to whom

                                      -8-
<PAGE>

such notice is required to be given. The addresses for such communications shall
be: (i) if to the Company, to the address set forth in the Purchase Agreement,
or (ii) if to the Holder, to the address or facsimile number appearing on the
Warrant Register or such other address or facsimile number as the Holder may
provide to the Company in accordance with this Section.

         14.      Warrant Agent. The Company shall serve as warrant agent under
this Warrant. Upon 30 days' notice to the Holder, the Company may appoint a new
warrant agent. Any corporation into which the Company or any new warrant agent
may be merged or any corporation resulting from any consolidation to which the
Company or any new warrant agent shall be a party or any corporation to which
the Company or any new warrant agent transfers substantially all of its
corporate trust or shareholders services business shall be a successor warrant
agent under this Warrant without any further act. Any such successor warrant
agent shall promptly cause notice of its succession as warrant agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder's last
address as shown on the Warrant Register.

         15.      Miscellaneous.

                  (a)      This Warrant shall be binding on and inure to the
benefit of the parties hereto and their respective successors and assigns.
Subject to the preceding sentence, nothing in this Warrant shall be construed to
give to any Person other than the Company and the Holder any legal or equitable
right, remedy or cause of action under this Warrant. This Warrant may be amended
only in writing signed by the Company and the Holder and their successors and
assigns.

                  (b)      All questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. Each party
agrees that all legal proceedings concerning the interpretations, enforcement
and defense of this Warrant and the transactions herein contemplated
("PROCEEDINGS") (whether brought against a party hereto or its respective
Affiliates, employees or agents) shall be commenced exclusively in the state and
federal courts sitting in the City of New York, Borough of Manhattan (the "NEW
YORK COURTS"). Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any Proceeding, any claim that it is not personally subject to the jurisdiction
of any New York Court, or that such Proceeding has been commenced in an improper
or inconvenient forum. Each party hereto hereby irrevocably waives personal
service of process and consents to process being served in any such Proceeding
by mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Warrant and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law. Each party hereto hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Warrant or the transactions
contemplated hereby. If either party shall commence a Proceeding to enforce any
provisions of this Warrant, then the prevailing party in such Proceeding shall
be reimbursed by the other party for its attorney's fees

                                      -9-
<PAGE>

and other costs and expenses incurred with the investigation, preparation and
prosecution of such Proceeding.

                  (c)      The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or affect any
of the provisions hereof.

                  (d)      In case any one or more of the provisions of this
Warrant shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby and the parties will attempt in good
faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
                             SIGNATURE PAGE FOLLOWS]

                                      -10-
<PAGE>

         IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.

                                           NAVARRE CORPORATION

                                           By:_________________________
                                           Name:
                                           Title:

                                      -11-
<PAGE>

                                 EXERCISE NOTICE

To [ ]:

         The undersigned hereby irrevocably elects to purchase _____________
shares of common stock, no par value, of Navarre Corporation ("COMMON STOCK"),
pursuant to Warrant No. [ ], originally issued [ ] (the "WARRANT"), and, if such
Holder is not utilizing the cashless exercise provisions set forth in the
Warrant, encloses herewith $________ in cash, certified or official bank check
or checks or other immediately available funds, which sum represents the
aggregate Exercise Price (as defined in the Warrant) for the number of shares of
Common Stock to which this Exercise Notice relates, together with any applicable
taxes payable by the undersigned pursuant to the Warrant.

         By its delivery of this Exercise Notice, the undersigned represents and
warrants to the Company that in giving effect to the exercise evidenced hereby
the Holder will not beneficially own in excess of the number of shares of Common
Stock (determined in accordance with Section 13(d) of the Securities Exchange
Act of 1934) permitted to be owned under Section 11 of this Warrant to which
this notice relates.

         By its delivery of this Exercise Notice, the undersigned represents and
warrants to the Company that it is an "accredited investor" as defined in Rule
501(a) under the Securities Act of 1933.

         The undersigned requests that certificates for the shares of Common
Stock issuable upon this exercise be issued in the name of

                                    PLEASE INSERT SOCIAL SECURITY OR
                                    TAX IDENTIFICATION NUMBER

                         (Please print name and address)

<PAGE>

                           Warrant Shares Exercise Log

<TABLE>
<CAPTION>
                                                                                          Number of Warrant
                 Number of Warrant Shares            Number of Warrant Shares           Shares Remaining to
Date             Available to be Exercised                  Exercised                       be Exercised
-----------------------------------------------------------------------------------------------------------
<S>              <C>                                 <C>                                <C>
</TABLE>

<PAGE>

                               FORM OF ASSIGNMENT

         [To be completed and signed only upon transfer of Warrant]

         FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the within
Warrant to purchase ____________ shares of Common Stock of Navarre Corporation
to which the within Warrant relates and appoints ________________ attorney to
transfer said right on the books of the Company with full power of substitution
in the premises.

Dated: _______________, ____

                                         _______________________________________
                                         (Signature must conform in all respects
                                          to name of holder as specified on the
                                          face of the Warrant)

                                         _______________________________________
                                         Address of Transferee

                                         _______________________________________

                                         _______________________________________

In the presence of:

________________________

</TEXT>
</DOCUMENT>
