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REGISTRATION RIGHTS AGREEMENT



This Registration Rights Agreement (this “Agreement”) is made as of March 14th,
2005, by and among Navarre Corporation, a Minnesota corporation (the “Company”), and
Michael A. Bell (the “Seller”).




RECITALS




          A.      The Company and the Seller have entered into a Stock Purchase Agreement of even date
herewith (the “Purchase Agreement”), pursuant to which the Company is acquiring all of the
Seller’s shares of Encore Software, Inc., a Minnesota corporation (the “Shares”).



          B.      The execution of this Agreement at Closing is required by the Purchase Agreement.



          C.      Capitalized terms used in this Agreement but not otherwise defined shall have the meanings
given in the Purchase Agreement.



          D.      A portion of the consideration paid for the Shares consists of up to 600,000 shares of the
Company’s Common Stock, no par value (the “Common Stock”). This Registration Rights Agreement will
provide the Seller with certain rights with respect to the registration of the Common Stock
received by Seller.



AGREEMENT




     In consideration of the mutual promises and covenants in this Agreement, the Company and the
Seller agrees as follows:


1.      Definitions. For purposes of this Agreement:





          a.      “Act” means the Securities Act of 1933, as amended.




          b.      “Effective Date” means the date of Closing of the transactions contemplated
by the Purchase Agreement.




          c.      “Holder” means any person owning or having the right to acquire Registrable
Securities or any successor or assignee thereof.




          d.      “1934 Act” means the Securities Exchange Act of 1934, as amended.




          e.      “register,” “registered” and “registration” refer to a
registration effected by preparing and filing a registration statement or similar document
in compliance with the Act, and the declaration or ordering of effectiveness of such
registration statement or document.




          f.      “Registrable Securities” means the shares of Common Stock received by the
Seller in accordance with the terms of the Purchase Agreement. In addition, Common Stock or
other securities shall only be treated as Registrable Securities if and so long as












 






	   	they have not been (A) sold to or through a broker or dealer or underwriter in a public
distribution or a public securities transaction, including sales made pursuant to Rule 144
promulgated under the Act or (B) sold in a transaction exempt from the registration and
prospectus delivery requirements of the Act under Section 4(1) thereof so that all transfer
restrictions, and restrictive legends with respect thereto, if any, are removed upon the
consummation of such sale. The number of Registrable Securities outstanding shall be the
sum of the shares of Common Stock outstanding that are Registrable Securities.

	 
	   	g.     “SEC” shall mean the Securities and Exchange Commission.
	 
	2.	Registration Rights.
	 
	   	a.      Required Registration. If the Holder makes a written request that the Company
file a registration statement for 100% of the Registrable Securities, then the Company will
use its best efforts to effect a registration statement under the Securities Act covering
all Registrable Securities which the Holder requested to be registered. The Company shall
be obligated to prepare, file and cause to become effective only one (1) registration
statement pursuant to this Section 2.a., and to pay the expenses associated with such
registration statement, and shall not be obligated to effect a registration during the
period starting within 60 days prior to the filing date of a registration statement of the
Company, and ending 180 days after the effective date of a Company registration.
Furthermore, the Company shall only be obligated to effect a registration under this Section
2.a. if the Holder’s proposed disposal of Registrable Securities may be immediately
registered on Form S-3 pursuant to a Form S-3 registration.
	 
	   	In the event that a registration has been requested pursuant to this Section, but the Holder
determines for any reason not to proceed with a registration at any time before the
registration statement has been declared effective by the Commission, and Holder requests
the Company to withdraw such registration statement, if theretofore filed with the
Commission, with respect to the Registrable Securities covered thereby, and (b) the Holder
agrees to bear his own expenses incurred in connection therewith and to reimburse the
Company for the expenses incurred by it attributable to the registration of such Registrable
Securities, then the Holder shall not be deemed to have exercised his right to require the
Company to register Registrable Securities pursuant to this Section 2.a.
	 
	   	b.      Incidental Registration. Each time the Company shall determine to proceed with
the actual preparation and filing of a registration statement under the Securities Act of
1933 (the “Securities Act”) in connection with the proposed offer and sale for money of any
of its securities by it or any of its security holders (other than a registration statement
on Form S-4, Form S-8, or any form that does not permit the inclusion of shares by its
security holders), the Company will give written notice of its determination to the Holder.
Upon a written request given within 30 days after receipt of any such notice from the
Company, the Company will, except as herein provided, use its best efforts to cause all such
Registrable Securities that the Holder has so requested registration thereof, to be included
in such registration statement, all to the extent requisite to permit the sale or other
disposition by the prospective seller or sellers of the Registrable Securities to be so
registered; provided, however, that (a) nothing herein shall prevent the Company from, at














 






	   	any time, abandoning or delaying any such registration initiated by it, and (b) if the
Company determines not to proceed with a registration after the registration statement has
been filed with Securities and Exchange Commission (the “Commission”) and the Company’s
decision not to proceed is primarily based upon the anticipated public offering price of the
securities to be sold by the Company, the Company shall promptly complete the registration
for the benefit of those selling security holders who wish to proceed with a public offering
of their securities and who bear all expenses incurred by the Company as the result of such
registration after the Company has decided not to proceed. If any registration pursuant to
this Section 2.c. shall be underwritten in whole or in part, the Company may require that
the Registrable Securities requested for inclusion pursuant to this section be included in
the underwriting on the same terms and conditions as the securities otherwise being sold
through the underwriters. In the event that in the good faith judgment of the managing
underwriter of such public offering the inclusion of the Registrable Securities originally
covered by a request for registration would reduce the number of shares to be offered by the
Company or interfere with the successful marketing of the shares of stock offered by the
Company, the number of shares of Registrable Securities otherwise to be included in the
underwritten public offering shall be reduced to such amount as is deemed appropriate in the
good faith judgment of the managing underwriter.






	   	c.      Holdback Agreements.






	   	i.      Holder agrees not to effect any public sale or distribution of equity securities
of the Company, or any securities convertible into or exchangeable or exercisable
for such securities, during the seven days prior to and the 90-day period beginning
on the effective date of any underwritten Incidental Registration (except as part of
such underwritten registration), unless the underwriters managing the registered
public offering otherwise agree in writing.
	 
	   	ii.      the Company agrees (i) not to effect any public sale or distribution of its
equity securities, or any securities convertible into or exchangeable or exercisable
for such securities, during the seven days prior to and during the 90-day period
beginning on the effective date of any underwritten Incidental Registration (except
as part of such underwritten registration or pursuant to registrations on Form S-8
or any successor form), unless the underwriters managing the registered public
offering otherwise agree, and (ii) to use all reasonable efforts to cause each
holder of at least 5% (on a fully-diluted basis) of its equity securities (other
than equity securities acquired in a public trading market), or any securities
convertible into or exchangeable or exercisable for such securities, purchased from
the Company at any time after the date of this Agreement (other than in a registered
public offering) to agree not to effect any public sale or distribution of any such
securities during such period (except as part of such underwritten registration, if
otherwise permitted), unless the underwriters managing the registered public
offering otherwise agree.














 












	   	d.      Registration Procedures. If and whenever the Company is required by the
provisions of Sections 2.a. or 2.b. to effect the registration of any Registrable Securities
under the Securities Act, the Company will:






	   	i.      prepare and file with the Commission a registration statement with respect to
such securities, and use its best efforts to cause such registration statement to
become and remain effective for such period as may be reasonably necessary to effect
the sale of such securities, not to exceed sixty (60) days;
	 
	   	ii.      prepare and file with the Commission such amendments to such registration
statement and supplements to the prospectus contained therein as may be necessary to
keep such registration statement effective for such period as may be reasonably
necessary to effect the sale of such securities, not to exceed sixty (60) days;
	 
	   	iii.      furnish to the Holder and to the underwriters of the securities being
registered such reasonable number of copies of the registration statement,
preliminary prospectus, final prospectus and such other documents as the Holder and
underwriters may reasonably request in order to facilitate the public offering of
such securities;
	 
	   	iv.      use its best efforts to register or qualify the securities covered by such
registration statement under such state securities or blue sky laws of such
jurisdictions as Holder may reasonably request, except that the Company shall not
for any purpose be required to execute a general consent to service of process or to
qualify to do business as a foreign corporation in any jurisdiction wherein it is
not so qualified;
	 
	   	v.      notify the Holder, promptly after it shall receive notice thereof, of the time
when such registration statement has become effective or a supplement to any
prospectus forming a part of such registration statement has been filed;
	 
	   	vi.      notify Holder promptly of any request by the Commission for the amending or
supplementing of such registration statement or prospectus or for additional
information;
	 
	   	vii.      prepare and file with the Commission, promptly upon the request of any such
holders, any amendments or supplements to such registration statement or prospectus
which, in the opinion of counsel for Holder (and concurred in by counsel for the
Company), is required under the Securities Act or the rules and regulations
thereunder in connection with the distribution of the Registrable Securities by such
holder;
	 
	   	viii.      prepare and promptly file with the Commission and promptly notify Holder of
the filing of such amendment or supplement to such registration statement or
prospectus as may be necessary to correct any statements or omissions if, at the
time when a prospectus relating to such securities is required to be delivered under
the Securities Act, any event shall have occurred as the














 






	   	result of which any such prospectus or any other prospectus as then in effect would
include an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances in which
they were made, not misleading; and






	   	ix.      advise Holder, promptly after it shall receive notice or obtain knowledge
thereof, of the issuance of any stop order by the Commission suspending the
effectiveness of such registration statement or the initiation or threatening of any
proceeding for that purpose and promptly use its best efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such stop order should be
issued;






	   	e.      Expenses. With respect to any registration requested pursuant to Section 2.a.
(except as otherwise provided in Section 2.a. with respect to registrations voluntarily
terminated at the request of the requesting security holders) and with respect to each
inclusion of shares of Registrable Securities in a registration statement pursuant to
Section 2.c. (except as otherwise provided in Section 2.i. with respect to registrations
terminated by the Company), the Company shall bear the following fees, costs and expenses:
all registration, filing and NASD fees, printing expenses, fees and disbursements of counsel
and accountants for the Company, fees and disbursements of counsel for the underwriter or
underwriters of such securities (if the Company and/or selling security holders are required
to bear such fees and disbursements), reasonable fees and disbursements of one counsel for
the selling security holders, all internal the Company expenses, the premiums and other
costs of policies of insurance for the Company against liability arising out of the public
offering, and all legal fees and disbursements and other expenses of complying with state
securities or blue sky laws of any jurisdictions in which the securities to be offered are
to be registered or qualified.
	 
	   	f.      Indemnification. In the event that any Registrable Securities are included in a
registration statement under Sections 2.a. or 2.b.:






	   	i.      The Company will indemnify and hold harmless each holder (together with all
officers, directors, agents and affiliates of the holder) of Registrable Securities
which are included in a registration statement pursuant to the provisions of this
Section 2 and any underwriter (as defined in the Securities Act) for such holder and
each person, if any, who controls such holder (or any affiliates of the holder) or
such underwriter within the meaning of the Securities Act, from and against any and
all loss, damage, liability, cost and expense to which such holder or any such
underwriter or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, damages, liabilities, costs or expenses are
caused by any untrue statement or alleged untrue statement of any material fact
contained in such registration statement, any prospectus contained therein or any
amendment or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading; provided, however, that the Company will not be
liable in any such case to the extent that any such loss,














 






	   	damage, liability, cost or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made in
conformity with written information furnished by such holder, such underwriter or
such controlling person.






	   	ii.      Each holder of Registrable Securities which are included in a registration
pursuant to the provisions of this Section 2 will indemnify and hold harmless the
Company, any controlling person and any underwriter from and against any and all
loss, damage, liability, cost or expense to which the Company or any controlling
person and/or any underwriter may become subject under the Securities Act or
otherwise, insofar as such losses, damages, liabilities, costs or expenses are
caused by any untrue or alleged untrue statement of any material fact contained in
such registration statement, any prospectus contained therein or any amendment or
supplement thereto, or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances in which they were
made, not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was so
made in reliance upon and in strict conformity with written information furnished by
such holder.
	 
	   	iii.      Promptly after receipt by an indemnified party pursuant to the provisions of
paragraph (i) or (ii) of this section of notice of the commencement of any action
involving the subject matter of the foregoing indemnity provisions, such indemnified
party will, if a claim thereof is to be made against the indemnifying party pursuant
to the provisions of said paragraph (i) or (ii), promptly notify the indemnifying
party of the commencement thereof; but the omission to so notify the indemnifying
party will not relieve it from any liability which it may have to any indemnified
party otherwise than hereunder unless the indemnifying party is materially
prejudiced. In case such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the indemnifying party
shall have the right to participate in, and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party; provided, however, if the
defendants in any action include both the indemnified party and the indemnifying
party and there is a conflict of interest which would prevent counsel for the
indemnifying party from also representing the indemnified party, the indemnified
party or parties shall have the right to select separate counsel to participate in
the defense of such action on behalf of such indemnified party or parties. After
notice from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party will not be liable to such
indemnified party pursuant to the provisions of said paragraph (i) or (ii) for any
legal or other expense subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation, unless (i)
the indemnified party shall have employed counsel in accordance with the proviso of
the preceding sentence, (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent














 






	   	the indemnified party within a reasonable time after the notice of the commencement
of the action, or (iii) the indemnifying party has authorized the employment of
counsel for the indemnified party at the expense of the indemnifying party.






	   	g.      NonTransferability of Registration Rights. The registration rights granted to
the holders of Registrable Securities pursuant to this Section 2 shall not be transferable.
	 
	   	h.      Termination of Registration Rights. The registration rights granted pursuant to
this Section 2 shall terminate with respect to any holder of Registrable Securities upon the
earlier of (i) three (3) years from the date of this Agreement or (ii) at the time such
holder is able to sell all Registrable Securities held by it in a single open market
transaction under Rule 144 promulgated under the Securities Act or any successor provision.






	   	3.      Miscellaneous.






	   	a.      Specific Performance. The Company agrees that breach of this Agreement by the
Company will cause Seller irreparable harm for which there is no adequate remedy of law and,
without limiting whatever other rights and remedies Seller may have under this Agreement,
Seller is entitled to the remedy of specific performance to enforce this Agreement and the
Company consents to the issuance of an order by a court of competent jurisdiction requiring
the specific performance of this Agreement by the Company.
	 
	   	b.      Successors and Assigns. Except as otherwise provided herein, the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns of the parties. The Company may not assign its rights or
delegate its duties under this Agreement to any other person or entity without the prior
written consent of the Holder provided, however, that no consent shall be required in
connection with sale, merger or other change of control transaction of the Company. Holder
shall not assign his rights or delegate his duties under this Agreement. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided in this
Agreement.
	 
	   	c.      Governing Law. This Agreement shall be governed by and construed under the laws
of the State of Minnesota as applied to agreements among Minnesota residents entered into
and to be performed entirely within Minnesota.
	 
	   	d.      Counterparts. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute one and the
same instrument.
	 
	   	e.      Titles and Subtitles. The titles and subtitles used in this Agreement are used
for convenience only and are not to be considered in construing or interpreting this
Agreement.














 












	   	f.      Notices. All notices, requests, demands, claims, and other communications
hereunder shall be in writing. Any notice, request, demand, claim or other communication
hereunder shall be delivered personally to the recipient, delivered by United States Post
Office mail or nationally recognized overnight courier, telecopied to the intended recipient
at the facsimile number set forth on the signature page hereto, or sent to the recipient by
reputable express courier service and addressed to the intended recipient as set forth on
the signature page hereto or to such other address as the party to whom notice is to be
given may have furnished to the other party in writing in accordance herewith. Any such
communication shall be deemed to have been duly given and received when delivered.
	 
	   	g.      Expenses. If any action at law or in equity is necessary to enforce or interpret
the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys’
fees, costs and necessary disbursements in addition to any other relief to which such party
may be entitled.
	 
	   	h.      Entire Agreement; Amendments and Waivers. This Agreement (including the exhibits
hereto) constitutes the full and entire understanding and agreement among the parties with
regard to the subjects hereof and thereof. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the written
consent of all parties to this Agreement affected thereby. Any amendment or waiver effected
in accordance with this paragraph shall be binding upon Holder.
	 
	   	i.      Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from this Agreement and
the balance of the Agreement shall be interpreted as if such provision were so excluded and
shall be enforceable in accordance with its terms.
	 
	   	j.      Counterparts; Facsimile Signatures. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument. This Agreement may be executed by facsimile
signatures which, for all purposes, shall be accepted as original signatures by the parties.





[SIGNATURE PAGE FOLLOWS]














 








[Signature Page to Registration Rights Agreement]




     The parties have executed this Registration Rights Agreement as of the date first above
written.



	 	 	 	 	 
	Addresses for Notice:	 	COMPANY:
	 
	 	 	 	 
	Navarre Corporation

7400 49th Avenue North

New Hope, Minnesota 55428	 	Navarre Corporation
	Attention: Eric Paulson, President	 	By: 	 	 /s/ JAMES G. GILBERTSON
	Ryan Urness, General Counsel	 	 	 	

	Fax No.: (763) 504-1107	 	 	 	James G. Gilbertson

Chief Financial Officer
	 
	 	 	 	 
	with a copy (which shall not

constitute notice) to:
	 	 	 	 
	 
	 	 	 	 
	Philip T. Colton

Winthrop & Weinstine P.A.

225 South Sixth Street, Suite 3600

Minneapolis, Minnesota 55402
	 	 	 	 
	 
	 	 	 	 
	Michael A. Bell

1028 9th Street

Manhatten Beach, CA 90266

Fax: (310) 318-9071
	 	SELLER:
	 
	 	/s/ MICHAEL A. BELL
	with a copy (which shall not constitute notice) to:	 	

Michael A. Bell
	 
	 	 	 	 
	Robin C. Gilden

Reish Luftman Reicher & Cohen

11755 Wilshire Blvd., 10th Floor

Los Angeles, CA 90025

Fax: (310) 388-4627