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LIMITED WAIVER WITH RESPECT TO AMENDED AND RESTATED CREDIT AGREEMENT




     This LIMITED WAIVER WITH RESPECT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
“Waiver”) is entered into as of this 15th day of March, 2005, by NAVARRE
CORPORATION, a Minnesota corporation (“Borrower”), the Credit Parties signatory hereto,
GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation, as agent (the “Agent”) for
itself and the Lenders under and as defined in the Credit Agreement (as hereinafter defined), and
the Lenders. Unless otherwise specified herein, capitalized terms used in this Waiver shall have
the meanings ascribed to them by the Credit Agreement.



RECITALS




     WHEREAS, the Borrower, the Credit Parties, the Agent and the Lenders have entered into that
certain Amended and Restated Credit Agreement, dated as of June 18, 2004 (as amended, supplemented,
restated or otherwise modified from time to time, the “Credit Agreement”); and



     WHEREAS, the Borrower, the Credit Parties, the Agent and the Lenders have agreed to waive
certain provisions of the Credit Agreement as set forth herein.



     NOW THEREFORE, in consideration of the foregoing recital, mutual agreements contained herein
and for good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower, the Credit Parties, the Agent, and Lenders hereby agree as follows:



SECTION 1. Limited Waivers.




     (a) The Agent and the Lenders hereby waive the provisions of Section 6.3(a) of the
Credit Agreement to the extent, and solely to the extent, necessary to permit the Borrower to incur
on or prior to May 31, 2005 unsecured Indebtedness in an aggregate amount not to exceed
$125,000,000 on terms and subject to conditions substantially similar to the terms and conditions
set forth in the Description of Notes that was delivered to the Agent on the date hereof (the
foregoing transaction is referred to herein as the “Senior Notes Issuance”).



     (b) As long as no Default or Event of Default has occurred and is continuing at the time of
the Encore Stock Purchase (as defined below) and after giving effect thereto, the Agent and the
Lenders hereby waive the provisions of Sections 6.2 and 6.5 of the Credit Agreement to the
extent, and solely to the extent, necessary to permit the purchase by Borrower all of the Stock of
Encore Software owned by Michael Bell on or prior to May 31, 2005 for an aggregate purchase price
consisting solely of (i) an amount not to exceed $1,000,000 payable in cash, and (ii) up to a
maximum of 600,000 shares of common Stock of Borrower, in each case pursuant to and in accordance
with a stock purchase agreement and other related agreements, documents, opinions, certificates,
and other instruments, each of which shall be in form and substance satisfactory to the Agent (the
foregoing transaction is referred to herein as the “Encore Stock Purchase”);
provided, that promptly upon the consummation of the Encore Stock Purchase, Borrower shall
pledge to the Agent, for the benefit of the Agent and the Lenders, all of the Stock
acquired by Borrower pursuant to the Encore Stock Purchase as additional collateral security
for the Obligations pursuant to documentation in form and substance satisfactory to the Agent.



 









 





     (c) The Agent and the Lenders hereby waive the provisions of Section 6.7 of the Credit
Agreement to the extent, and solely to the extent, necessary to permit the Borrower to place the
net proceeds received by Borrower from the Senior Notes Issuance (the “Senior Notes
Proceeds”) in an investment account (the “Securities Account”) and grant to the trustee
for the holders of the notes issued pursuant to the Senior Notes Issuance (the “Trustee”) a
first priority perfected security interest in such Securities Account pursuant to an account
control agreement (the “Account Control Agreement”) (which shall be in form and substance
satisfactory to the Agent) by and among the Borrower, the Trustee and a securities intermediary
until the earlier of (i) the time at which the FUNimation Acquisition is consummated or (ii) the
time at which the Senior Notes Proceeds are returned to the Trustee, in each case pursuant to the
Account Control Agreement.


SECTION 2. Effectiveness. The effectiveness of this Waiver is subject to the satisfaction
of each the following conditions precedent:




     (a) this Waiver shall have been duly executed and delivered by the Borrower, the Credit
Parties, the Agent and each Lender; and



     (b) the representations and warranties contained herein shall be true and correct in all
respects.


SECTION 3. Representations and Warranties. In order to induce the Agent and each Lender
to enter into this Waiver, each Credit Party hereby represents and warrants to the Agent and each
Lender, which representations and warranties shall survive the execution and delivery of this
Waiver, that:




     (a) all of the representations and warranties contained in the Credit Agreement and in each
Loan Document are true and correct as of the date hereof after giving effect to this Waiver
(determined as if all references to “Closing Date” were references to March 15, 2005), except to
the extent that any such representations and warranties expressly relate to an earlier date;



     (b) the execution, delivery and performance by such Credit Party of this Waiver has been duly
authorized by all necessary corporate action required on its part and this Waiver, and the Credit
Agreement is the legal, valid and binding obligation of such Credit Party enforceable against such
Credit Party in accordance with its terms, except as its enforceability may be affected by the
effect of bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to or affecting the rights or remedies of creditors generally;



     (c) neither the execution, delivery and performance of this Waiver by such Credit Party, the
performance by such Credit Party of the Credit Agreement nor the consummation of the transactions
contemplated hereby does or shall contravene, result in a breach of, or violate (i) any provision
of any Credit Party’s certificate or articles of incorporation or bylaws or other similar
documents, or agreements, (iii) any law or regulation, or any order or decree of any court or
government instrumentality, or (iii) any indenture, mortgage, deed of trust, lease, agreement or
other instrument to which any Credit Party or any of its Subsidiaries is a party or by which
any Credit Party or any of its Subsidiaries or any of their property is bound, except in any such
case



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to the extent such conflict or breach has been waived herein or by a written waiver document,
a copy of which has been delivered to Agent on or before the date hereof; and



     (d) no Default or Event of Default has occurred and is continuing.


SECTION 4. Reference to and Effect Upon the Credit Agreement.




     (a) Except as specifically set forth above, the Credit Agreement and the other Loan Documents
shall remain in full force and effect and are hereby ratified and confirmed; and



     (b) The waivers set forth herein are effective solely for the purposes set forth herein and
shall be limited precisely as written, and shall not be deemed to (i) be a consent to any
amendment, waiver or modification of any other term or condition of the Credit Agreement or any
other Loan Document, (ii) operate as a waiver or otherwise prejudice any right, power or remedy
that the Agent or the Lenders may now have or may have in the future under or in connection with
the Credit Agreement or any other Loan Document or (iii) constitute a waiver of any provision of
the Credit Agreement or any Loan Document, except as specifically set forth herein. Upon the
effectiveness of this Waiver, each reference in the Credit Agreement to “this Agreement”, “herein”,
“hereof” and words of like import and each reference in the Credit Agreement and the Loan Documents
to the Credit Agreement shall mean the Credit Agreement as amended hereby. This Waiver shall be
construed in connection with and as part of the Credit Agreement.


SECTION 5. Costs And Expenses. As provided in Section 11.3 of the Credit
Agreement, the Borrower agrees to reimburse Agent for all fees, costs, and expenses, including the
reasonable fees, costs, and expenses of counsel or other advisors for advice, assistance, or other
representation in connection with this Waiver.



SECTION 6. GOVERNING LAW. THIS WAIVER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF ILLINOIS.



SECTION 7. Headings. Section headings in this Waiver are included herein for convenience
of reference only and shall not constitute part of this Waiver for any other purposes.



SECTION 8. Counterparts. This Waiver may be executed in any number of counterparts, each
of which when so executed shall be deemed an original, but all such counterparts shall constitute
one and the same instrument.




(signature page follows)




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     IN WITNESS WHEREOF, the parties hereto have executed and delivered this Waiver as of the date
first written above.


	 	 	 	 	 
	 	BORROWER:





NAVARRE CORPORATION

 	 
	 	By:  	 /s/ James
G. Gilbertson	 
	 	Name: 	 James
G. Gilbertson
	 	Title: 	 Chief
Financial Officer
	 
	 	GENERAL ELECTRIC CAPITAL CORPORATION, as Agent and

Lender

 	 
	 	By:  	 /s/
Leeanne C. Manning	 
	 	Name: 	 Leeanne
C. Manning
	 	Title: 	 Duly
authorized signatory
	 




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[Signature Page To Limited Waiver With Respect To Credit Agreement]





 









 





     IN WITNESS WHEREOF, this Waiver has been duly executed as of the date first written above by
below Persons in their capacity as Credit Parties not as Borrower.


	 	 	 	 	 
	 	ENCORE SOFTWARE, INC., as Credit Party

 	 
	 	By:  	 /s/
James G. Gilbertson	 
	 	Name:  	 James G. Gilbertson
	 	Title:  	 Chief
Administrative Officer
	 
	 	BCI ECLIPSE COMPANY, LLC, as Credit Party

 	 
	 	By:  	 /s/
James G. Gilbertson	 
	 	Name:  	 James G. Gilbertson
	 	Title:  	 Chief
Administrative Officer
	 




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[Signature Page To Limited Waiver With Respect To Credit Agreement]