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EXHIBIT #2.1

                            ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT, made and entered into effective as of this 3rd
day of November, 2003, by and among Navarre Corporation, a Minnesota corporation
("Navarre"), BCI Eclipse Company, LLC, a Minnesota limited liability company
("Buyer"), BCI Eclipse LLC, a New York limited liability company ("Seller"), and
David E. Catlin ("Catlin") and Edward D. Goetz ("Goetz") (Catlin and Goetz are
hereinafter collectively referred to as the "Members").

                              W I T N E S S E T H:

WHEREAS, Seller is wholly-owned by the Members and Brentwood Communications,
Inc., and is engaged in the business of manufacturing, marketing and packaging
of music and video content for sale to distributors and retailers (the
"Business");

WHEREAS, Buyer is a wholly-owned subsidiary of Navarre;

WHEREAS, Seller and the Members desire to sell to Buyer, and Buyer desires to
buy from Seller, substantially all operating assets of Seller, other than those
specifically excluded, on the terms and subject to the conditions indicated
below.

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants
and agreements herein contained and other good and valuable consideration, the
receipt, sufficiency and mutuality of which are hereby acknowledged, the parties
agree as follows:

                                   ARTICLE 1.

                               PURCHASE OF ASSETS

1.1 PURCHASED ASSETS. On the terms and subject to the conditions contained in
this Agreement, on the "Closing Date" (as such term is defined in Section 1.3),
Seller shall sell and assign to Buyer, and Buyer shall purchase from Seller, all
tangible and intangible assets of Seller, other than the "Excluded Assets" (as
such term is defined under Section 1.2), including, without limitation, the
following (all assets of Seller to be purchased by Buyer are collectively
referred to as the "Purchased Assets"):

         1.1.1 ACCOUNTS RECEIVABLE. All accounts receivable of Seller (the
         "Accounts Receivable"), together with the associated allowance for
         doubtful accounts (the "Receivables Reserve") and the associated
         allowance for returns (the "Returns Reserve"). Attached Exhibit 1.1.1
         lists the Accounts Receivable, the Receivables Reserve and the Returns
         Reserve as of the Closing Date.

         1.1.2 INVENTORY. All inventory of Seller (the "Inventory"). Attached
         Exhibit 1.1.2 lists all of the inventory of Seller as of the Closing
         Date.


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         1.1.3 MASTERS. The original material object in which sounds and/or
         images are fixed by any method and from which sounds and/or images can
         be perceived, reproduced or otherwise communicated, either directly or
         with the aid of a machine, device, or process, associated with Seller
         Products (as defined in Section 3.22.1 below).

         1.1.4 FURNITURE AND EQUIPMENT. All furniture, fixtures, equipment and
         machinery (including fully depreciated items), including those items
         described on attached Exhibit 1.1.4, and all warranties relating
         thereto (collectively, the "Furniture and Equipment").

         1.1.5 PREPAYMENTS. All prepayments and deposits made by Seller
         (collectively, the "Prepayments"), including all employee advances,
         prepaid expenses and lease deposits as described on attached Exhibit
         1.1.5.

         1.1.6 LICENSES, PERMITS AND AUTHORIZATIONS. All of Seller's rights in
         and to the licenses, permits and other authorizations issued to Seller
         by any governmental authority and used or necessary in the conduct of
         its business (collectively, the "Authorizations").

         1.1.7 REAL AND PERSONAL PROPERTY LEASES. All right, title and interest
         under those certain real and personal property leases described on
         attached Exhibit 1.1.7 (the "Assigned Leases"), including leasehold
         improvements and deposits relating to the Assigned Leases.

         1.1.8 LICENSE AGREEMENTS. All right, title and interest under Seller's
         license agreements with third parties (whether existing, modified, new
         or to be negotiated), as described in Exhibit 1.1.8 attached hereto as
         of the Closing Date (collectively, the "Assigned Agreements").

         1.1.9 BUSINESS CONTRACTS. All other contract rights related to or
         useful in connection with the operation of the Business, including, but
         not limited to, the sales representation agreements and employment
         agreements described on attached Exhibit 1.1.9 (the "Assumed
         Contracts").

         1.1.10 INTELLECTUAL PROPERTY RIGHTS. All (i) United States and foreign
         patents and patent applications, (ii) copyrights and registrations or
         applications for registration of any such copyright; (iii) trademarks,
         service marks, trade names and associated goodwill, and registrations
         or applications for registration of any such marks or names; (iv)
         licenses and contract rights; (v) rights of publicity, if any, relating
         to the Seller Products; (vi) rights to use likeness and name; and (vii)
         other proprietary rights associated with the Business (the
         "Intellectual Property Rights").

         1.1.11 GENERAL INTANGIBLES. All trade secrets, know-how, goodwill,
         customer lists and other proprietary rights and general intangibles
         relating to the Business (including, but not limited to, the names
         Brentwood Home Video, BCI Music, BCI Latino, BCI Kids, BCI Eclipse
         Music, Eclipse Music Group, BCI Classics and Dollar DVD) (collectively,
         the "General Intangibles"), including those described on attached
         Exhibit 1.1.11.

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         1.1.12 SOFTWARE. Designated software of Seller (the "Included
         Software"), including the software listed and itemized on Exhibit
         1.1.12.

         1.1.13 RECORDS. Other than Seller's minute books (which are listed as
         "Excluded Assets" below), all reports, studies, files, records,
         advertising and customer lists and other reports and records relating
         to the operations or business of Seller (collectively, the "Records").
         Seller, upon reasonable notice to Buyer, will continue to have
         reasonable access to the Records.

1.2 EXCLUDED ASSETS. Notwithstanding anything in this Agreement to the contrary,
the following assets shall not be purchased by Buyer and shall be retained by
Seller (collectively, the "Excluded Assets"):

         1.2.1 CASH AND MARKETABLE SECURITIES. All cash and marketable
         securities of Seller as of the Closing Date.

         1.2.2 PERSONAL PROPERTY. Personal assets as more specifically described
         on attached Exhibit 1.2.2 (the "Personal Assets"), it being understood
         that these are personal assets not owned by Seller.

         1.2.3 MINUTE BOOKS. The minute books of Seller, provided Buyer shall be
         entitled to access to and copies of such books upon request.

         1.2.4 EXCLUDED SOFTWARE. Designated software of Seller (the "Excluded
         Software"), including the Software listed and itemized on Exhibit
         1.2.4.

All tangible Excluded Assets retained by Seller shall be removed by Seller from
the property locations to be leased and occupied by Buyer within such time
frames as are mutually agreed to between Buyer and Seller.

1.3 CLOSING. Closing on the purchase and sale of the Purchased Assets shall take
place at the offices of Seller on the date first written above, or at such other
date and place as may be mutually agreed upon by the parties to this Agreement
(such date is referred to in this Agreement as the "Closing Date"). The
effective time of the closing shall be as of 8:00 a.m. on the Closing Date (the
"Closing").

1.4 TITLE AND RISK OF LOSS. Seller shall bear all cost and expense, and shall
assume and bear all risk of loss, damage and destruction, due to theft,
expropriation, seizure, destruction, damage, fire or other casualty of or
related to the Purchased Assets until title thereto is passed to Buyer at
Closing.



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                                   ARTICLE 2.
                     CONSIDERATION FOR THE PURCHASED ASSETS
                                AND PAYMENT TERMS

2.1 PURCHASE PRICE AMOUNT. The aggregate purchase price to be paid for the
Purchased Assets shall be equal to the sum of: (i) Seven Million Two Hundred
Fifty Thousand and 00/100 Dollars ($7,250,000.00) in cash; plus (ii) 1,000,000
shares of Navarre Stock (as defined in Section 2.7 below) (the "Closing Stock
Consideration"); plus (iii) the amount of the Assumed Liabilities (as such term
is defined in Section 2.4.1 below); plus (iv) the "Earn-Out Amount" (as such
term is defined in Section 2.4.2 below) (the "Purchase Price").

2.2 CLOSING DATE ADJUSTMENT.

         2.2.1 If the Net Book Value of Seller on the Closing Date (the "Closing
         Date Net Book Value"), is below the Minimum Net Book Value (as defined
         in Section 2.4.1 hereof), then Buyer shall have the option to either
         (a) terminate this Agreement, or (b) reduce the Purchase Price by the
         amount that the Closing Date Net Book Value is less than the Minimum
         Net Book Value (the "Closing Date Adjustment"); it being the intention
         of Buyer and Seller that Seller deliver to Buyer at the Closing no less
         than the Minimum Net Book Value. For purposes hereof, "Net Book Value"
         shall mean the book value of the Purchased Assets less the Assumed
         Liabilities. The Closing Date Adjustment, if any, shall be determined
         on the basis of the balance sheet of Seller as of the Closing Date (the
         "Closing Balance Sheet"), and shall include a calculation of the
         Closing Date Net Book Value. The Closing Balance Sheet shall be
         prepared by Seller in accordance with generally accepted accounting
         principles ("GAAP"), except where the use of GAAP would render the
         Closing Balance Sheet inconsistent with the past practices of Seller,
         and shall be certified as true and correct in all material respects by
         Seller's Chief Financial Officer.

         2.2.2 Buyer's independent accounting firm shall have the opportunity to
         examine, promptly as and when prepared, the work papers, schedules and
         other documents prepared by Seller in connection with its preparation
         of the Closing Balance Sheet and the calculation of the Closing Date
         Net Book Value.

         2.2.3 Within thirty (30) days following the delivery of the Closing
         Balance Sheet, Buyer may deliver to Seller a notice of objection (an
         "Objection Notice") with respect to the Closing Balance Sheet and the
         calculation of the Closing Date Net Book Value. If no Objection Notice
         is delivered to Seller within such thirty (30) day period, the Closing
         Balance Sheet and the calculation of the Closing Date Net Book Value
         and the Closing Date Adjustment, if any, shall be final and binding on
         the parties. Any Objection Notice shall specify in reasonable detail
         the items on the Closing Balance Sheet disputed and shall describe in
         reasonable detail the basis for the objection and all information in
         the possession of the objecting party which forms the basis thereof, as
         well as the amount in dispute. If an Objection Notice is given, Seller
         and Buyer shall consult with each other with respect to the objection.
         If the parties are unable to reach agreement within fifteen (15) days
         after an Objection Notice has been given, any unresolved disputed items
         shall be promptly referred to a mutually acceptable independent public
         accounting firm (the


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         "Unrelated Accounting Firm"). The Unrelated Accounting Firm shall be
         directed to render a written report on the unresolved disputed issues
         with respect to the Closing Balance Sheet as promptly as practicable
         and to resolve only those issues of dispute set forth in the Objection
         Notice. If unresolved disputed issues are submitted to the Unrelated
         Accounting Firm, Seller and Buyer will each furnish to the Unrelated
         Accounting Firm such work papers, schedules and other documents
         relating to the unresolved disputed issues as the Unrelated Accounting
         Firm may reasonably request. The resolution of the dispute by the
         Unrelated Accounting Firm shall be final and binding on the parties. If
         the parties or the Unrelated Accounting firm determine that a
         Post-Closing Adjustment with respect to the Closing Date Adjustment is
         appropriate, payment of the amount of the Post-Closing Adjustment shall
         be made by wire transfer of immediately available funds no more than
         five business days after such determination is made, by the party owing
         such amount to the party entitled to receive the Post-Closing
         Adjustment.

         2.2.4 The Unrelated Accounting Firm shall determine the party (i.e.,
         Buyer or Seller) whose asserted position as to the Closing Date Net
         Book Value under examination before the Unrelated Accounting Firm is
         furthest from the determination thereof by the Unrelated Accounting
         Firm (i.e., the non-prevailing party), and such non-prevailing party
         shall pay the fees and expenses of the Unrelated Accounting Firm

2.3 PAYMENT TERMS. The Purchase Price shall be paid as follows:

         2.3.1 CLOSING PAYMENT. The portion of the Purchase Price to be paid at
         Closing (the "Closing Payment") shall be paid as follows:

                  A. CASH PAYMENT. $7,250,000 shall be paid by Buyer to Seller
                  in cash or certified funds or by wire transfer on the Closing
                  Date.

                  B. NAVARRE STOCK. On the Closing Date, Navarre shall issue the
                  Closing Stock Consideration.

         2.3.2 ASSUMPTION OF LIABILITIES AND OBLIGATIONS. In addition to the
         payments indicated above, on the Closing Date Buyer shall assume the
         Assumed Liabilities and shall additionally assume those obligations
         accruing after the Closing Date under the Assigned Leases, the Assigned
         Agreements and the Assumed Contracts, excluding any liabilities for
         pre-closing breaches, penalties or similar expenses or payments
         (collectively, with the Assumed Liabilities, the "Assumed
         Obligations"). It is expressly understood that Buyer is assuming only
         the Assumed Obligations, Buyer shall have no responsibility or
         liability for any liabilities or other obligations of Seller other than
         the Assumed Obligations, and all liabilities and other obligations of
         Seller other than the Assumed Obligations shall remain obligations of
         Seller. Without limiting the generality of the above:

                  A. Seller shall retain, and be responsible for paying,
                  performing and discharging when due, all liabilities


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                  of Seller other than the Assumed Liabilities, regardless of
                  when incurred, whether or not Buyer is alleged to have
                  liability as a successor to Seller.

                  B. Except for the Assumed Obligations, Buyer is not, directly
                  or indirectly, assuming any debt, obligation or liability of
                  or claim against Seller of any kind whatsoever, whether known
                  or unknown, actual or contingent, matured or unmatured,
                  currently existing or arising in the future.

                  C. Buyer shall not, as a result of the transactions
                  contemplated by this Agreement or otherwise, acquire or be
                  responsible for any debts, obligations or liabilities of or
                  claims against Seller other than the Assumed Obligations. All
                  debts, obligations, liabilities and claims of any nature
                  whatsoever which relate to a period or periods prior to the
                  Closing Date, other than the Assumed Liabilities, shall be the
                  responsibility of Seller and shall be paid by Seller.

                  D. Subject to Section 9.6, Seller shall be solely and
                  absolutely responsible for all liabilities, costs and expenses
                  (other than Assumed Liabilities) relating to any and all
                  threatened or pending litigation, together with any litigation
                  commenced after the Closing Date, which relates to facts,
                  circumstances or other occurrences arising on or before the
                  Closing Date and which affects or otherwise relates to Seller
                  and/or the Business.

                  E. Seller shall be solely and absolutely responsible for any
                  and all income, sales, use or other similar taxes relating to
                  or resulting from (i) the operation of the Business prior to
                  the Closing Date, and (ii) the purchase and sale of the
                  Purchased Assets as described in this Agreement.

2.3.3 PAYMENT OF EARN-OUT AMOUNT. Subject to Sections 8.8 and 9.6 hereof,
receipt of payment of the Earn-Out Amount is contingent on the BCI Division (as
such term is defined in Section 2.4.2 below) achieving certain targets for
Operating Income (as such term is defined in Section 2.4.2 below) (each, an
"Operating Income Target").

                  A. The calculations for determining any Earn-Out Amount (the
                  "Initial Determination") which may be due shall be completed
                  only after Buyer's accountants have reported to Buyer's Board
                  of Directors for the prior 12-month period (or stub period, in
                  the case of the first and last Earn-Out Amounts), commencing
                  with the first day of the month after the Closing Date (each,
                  an "Earn-Out Period") provided, however, that each Earn-Out
                  Amount shall be paid no later than ninety (90) days following
                  the Earn-Out Period being measured unless there is a dispute
                  as provided for below. In connection therewith, Buyer shall
                  provide Seller with such back-up information and calculations
                  as Seller may reasonably request.

                  B. If Seller does not agree that any Initial Determination
                  correctly states the Operating Income of the BCI Division
                  through the Earn-Out Period under examination, Seller shall
                  promptly (but not later than thirty (30) days after delivery
                  of such Initial Determination) give written notice to Buyer of
                  any


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                  exceptions thereto (in reasonable detail describing the nature
                  of the disagreement asserted). If Seller and Buyer reconcile
                  their differences, the Initial Determination shall be adjusted
                  accordingly (as so adjusted, the "Adjusted Determination") and
                  shall thereupon become final and conclusive upon all of the
                  parties hereto. If Seller and Buyer are unable to reconcile
                  their differences in writing within twenty (20) days after
                  written notice of exceptions is delivered by the Seller, the
                  items in dispute shall be submitted to the Minneapolis office
                  of an Unrelated Accounting Firm. The determination of the
                  accounting firm so selected shall be set forth in writing and
                  shall be conclusive and binding upon the parties. The Initial
                  Determination shall be deemed adjusted (as so adjusted, the
                  "Adjusted Determination") in accordance with the determination
                  of the Unrelated Accounting Firm and shall become binding,
                  final and conclusive upon all of the parties hereto. The
                  Unrelated Accounting Firm shall consider only the items in
                  dispute and shall be instructed to act within thirty (30) days
                  (or such longer period as the Seller and Buyer may agree) to
                  resolve all items in dispute. If Seller does not give notice
                  of any exception within thirty (30) days after the delivery of
                  an Initial Determination or if Seller in its discretion gives
                  written notification of its acceptance of an Initial
                  Determination prior to the end of such 30-day period, such
                  Initial Determination shall thereupon become binding, final
                  and conclusive upon all the parties hereto.

                  C. The Unrelated Accounting Firm shall determine the party
                  (i.e., Buyer or Seller) whose asserted position as to the
                  amount of Operating Income under examination before the
                  Unrelated Accounting Firm is furthest from the determination
                  thereof by the Unrelated Accounting Firm (i.e., the
                  non-prevailing party), and such non-prevailing party shall pay
                  the fees and expenses of the Unrelated Accounting Firm.

2.4 DEFINITIONS.

         2.4.1 ASSUMED LIABILITIES. For purposes of this Agreement, the term
         "Assumed Liabilities," shall mean only those amounts properly recorded
         on Seller's books as of the Closing Date in accordance with GAAP,
         relating to:

                  A. Seller's debt to Merrill Lynch Business Financial Services,
                  Inc. (the "ML Loan") in an amount not to exceed $2,400,000;

                  B. Seller's trade payables associated with the Purchased
                  Assets;

                  C. Seller's other liabilities as set forth on Exhibit 2.4.1,
                  in an amount not to exceed $10,000; and

                  D. The amount of accrued royalties on Seller's books as of the
                  Closing Date (the "Closing Date Accrued Royalties").

         Notwithstanding the foregoing, the amount of the Assumed Liabilities
         shall be limited so that the book value of the Purchased Assets exceeds
         the amount of the Assumed


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         Liabilities by not less than $2,300,000 (the "Minimum Net Book Value")
         on the Closing Date. The Assumed Liabilities as of the Closing Date is
         set forth in Exhibit 2.4.1 attached hereto.

         2.4.2 EARN-OUT AMOUNT.

                  A. DEFINITIONS. For purposes of calculating the Earn-Out
                  Amount, the following definitions shall apply:

                           I. OPERATING INCOME. "Operating Income" shall mean
                           all revenues of the BCI Division, less (a) all
                           adjustments to such revenues, and (b) all expenses of
                           Buyer directly attributable to the generation of such
                           revenues, all in accordance with GAAP.
                           Notwithstanding the foregoing, Operating Income shall
                           be determined in substantially the same manner as
                           determined by Seller prior to Closing.

                           II. BCI DIVISION. "BCI Division" shall mean Buyer's
                           operation of the business acquired by Buyer from
                           Seller pursuant to this Agreement as a separate
                           division of Buyer, provided that the following costs
                           and expenses shall not be attributed to those
                           operations: (i) costs and expenses associated with
                           consummation of the transactions contemplated by this
                           Agreement or other future acquisition costs and
                           expenses, (ii) charges to the BCI Division for
                           general overhead or other general administrative
                           costs and expenses of Buyer, other than as mutually
                           agreed upon by Buyer and Seller, (iii) any
                           depreciation deductions in excess of what Seller
                           would have deducted pursuant to GAAP had it not sold
                           its assets to Buyer pursuant to this Agreement; (iv)
                           any amounts paid pursuant to Section 2.3.3 hereof;
                           (v) any amounts paid to Goetz as a bonus; (vi) any
                           amount which must be recorded as an expense as a
                           result of the granting of stock options to Goetz; and
                           (vii) any Losses (as defined in Section 9.1 hereof)
                           attributable to IP Claims (as defined in Section 9.5
                           hereof).

                  B. EARN-OUT AMOUNT. The "Earn-Out Amount" shall mean an amount
                  equal to the sum of the following:

                           I. INITIAL 5-MONTH AMOUNT. An amount equal to $87,500
                           if the Operating Income of the BCI Division during
                           the 5-month period beginning November 1, 2003 and
                           ending March 31, 2004 equals or exceeds $1,000,000.

                           II. YEAR ONE AMOUNT. An amount equal to $350,000 if
                           the Operating Income of the BCI Division during the
                           12-month period beginning April 1, 2004 and ending
                           March 31, 2005 equals or exceeds $4,600,000.



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                           III. YEAR TWO AMOUNT. An amount equal to $350,000 if
                           the Operating Income of the BCI Division during the
                           12-month period beginning April 1, 2005 and ending
                           March 31, 2006 equals or exceeds $5,100,000.

                           IV. YEAR THREE AMOUNT. An amount equal to $300,000 if
                           the Operating Income of the BCI Division during the
                           12-month period beginning April 1, 2006 and ending
                           March 31, 2007 equals or exceeds $5,100,000.

                           V. YEAR FOUR AMOUNT. An amount equal to $250,000 if
                           the Operating Income of the BCI Division during the
                           12-month period beginning April 1, 2007 and ending
                           March 31, 2008 equals or exceeds $5,100,000.

                           VI. YEAR FIVE AMOUNT. An amount equal to $187,500 if
                           the Operating Income of the BCI Division during the
                           7-month period beginning April 1, 2008 and ending
                           October 31, 2008 equals or exceeds $3,900,000.

                  C. ADJUSTMENT. The Earn-Out Amount paid for a particular
                  Earn-Out Period will be reduced as set forth below in the
                  event that actual Operating Income is below the Operating
                  Income Target for that Earn-Out Period as follows: if the
                  Operating Income is less than 75% of that Earn-Out Period's
                  Operating Income Target, there will be no Earn-Out Amount for
                  that Earn-Out Period, and that Earn-Out Period's Earn-Out
                  Amount will be forfeited. If the Operating Income falls
                  between 75% and 100% of that Earn-Out Period's Operating
                  Income Target, the Earn-Out Amount for that Earn-Out Period
                  will be reduced by 4% for each percentage point that actual
                  Operating Income is below the Operating Income Target. For
                  example, if the Operating Income were at 98% of the Operating
                  Income Target, the Earn-Out Amount for that Earn-Out Period
                  would be reduced by 8%.

2.5 TAXES. Seller shall be responsible for payment of any and all income, sales,
use or other similar taxes relating to or resulting from the purchase and sale
of the Purchased Assets as described in this Agreement.

2.6 ALLOCATION OF PURCHASE PRICE. Buyer and Seller have agreed upon allocation
of the Closing Payment among the Purchased Assets pursuant to the requirements
of Internal Revenue Code Section 1060. Such allocation is attached as Exhibit
2.6 to this Agreement. If the Purchase Price is determined to differ from the
Closing Payment pursuant to Section 2.2 above, Buyer and Seller shall agree upon
allocation of the Purchase Price among the Purchased Assets pursuant to
requirements of Internal Revenue Code 1060. Such allocation shall be reduced to
writing and attached as Exhibit 2.6 to this Agreement, replacing the original
Exhibit 2.6. Buyer and Seller agree that the Purchase Price reflects the fair
market value of the Purchased Assets and further


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agree to allocate the Purchase Price for business and tax purposes in the manner
provided on Exhibit 2.6.

2.7 NAVARRE STOCK.

         2.7.1 During the period beginning on the date of receipt of the Navarre
         Stock and ending January 1, 2004, Seller or its assignee shall not
         sell, assign, exchange, transfer, distribute or otherwise dispose of
         (in each case, "transfer") any shares of Navarre Stock received by it
         hereunder except as otherwise permitted by Buyer or pursuant to Section
         8.10 hereof. During the period beginning on January 1, 2004 and ending
         January 1, 2005, Seller or its assignee may transfer, in the aggregate,
         up to 500,000 shares of Navarre Stock, but only 125,000 shares of
         Navarre Stock during each calendar quarter. During the period beginning
         on January 1, 2005 and ending January 1, 2006, Seller or its assignee
         may transfer, in the aggregate, up to 500,000 shares of Navarre Stock,
         but only 200,000 shares of Navarre Stock during each calendar quarter.
         Notwithstanding the foregoing, Buyer shall be deemed to have consented
         to any transfer of Navarre Stock by Buyer to the Members, and by the
         Members to any trust where a beneficiary of the trust is such Member's
         spouse, child(ren) or grandchild(ren), and the trustee of the trust is
         such Member or a successor trustee upon the death of such Member.

         The recipient of the Navarre Stock will execute an investment letter in
         such form reasonably required by Navarre upon its, his or her receipt
         of such stock. Following the restriction periods described in this
         Section 2.7.1, Seller or its assignee may transfer its, his or her
         shares of Navarre Stock so long as such transfer is in accordance with
         any applicable federal or state securities or "blue sky" laws, rules or
         regulations (collectively, "Securities Laws") and/or Section 8.10
         hereof. The certificates evidencing the Navarre Stock delivered to
         Seller pursuant to this Agreement shall bear a legend substantially in
         the form set forth below:

                  THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
                  ASSIGNED (OTHER THAN IN CONNECTION WITH A PLEDGE), EXCHANGED,
                  TRANSFERRED, DISTRIBUTED, CHANGED OR OTHERWISE DISPOSED OF,
                  AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT TO ANY
                  ATTEMPTED SALE, ASSIGNMENT (OTHER THAN IN CONNECTION WITH A
                  PLEDGE), EXCHANGE, TRANSFER, DISTRIBUTION, OR OTHER
                  DISPOSITION OTHER THAN IN ACCORDANCE WITH SECTION 2.7 OF THAT
                  CERTAIN ASSET PURCHASE AGREEMENT DATED AS OF NOVEMBER 1, 2003,
                  BY AND AMONG NAVARRE CORPORATION, BCI ECLIPSE COMPANY, LLC,
                  BCI ECLIPSE, LLC AND DAVID E. CATLIN AND EDWARD D. GOETZ.

                  THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE
                  HAVE NOT BEEN REGISTERED UNDER THE SECURITIES LAWS OF ANY
                  STATE OR OTHER JURISDICTION (COLLECTIVELY, THE "SECURITIES
                  LAWS") AND MAY NOT BE


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                  SOLD, DISPOSED OF OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
                  SUCH REGISTRATION, EXCEPT IN ACCORDANCE WITH AN AVAILABLE
                  EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF ANY APPLICABLE
                  SECURITIES LAWS PROVIDED THAT NAVARRE CORPORATION SHALL HAVE
                  RECEIVED AN OPINION OF COUNSEL ACCEPTABLE TO THEM CONFIRMING
                  THAT THE REQUIREMENTS OF SUCH EXEMPTION HAVE BEEN SATISFIED.

         2.7.2 Seller shall not transfer any shares of the Navarre Stock at any
         time if such transfer would constitute a violation of any Securities
         Laws, or a breach of the conditions to any exemption from registration
         of the Navarre Stock under any such Securities Law on which Seller is
         relying at the time of his sale, or a breach of any undertaking or
         agreement of Seller entered into with Navarre Stock pursuant to such
         Securities Laws or in connection with obtaining an exemption
         thereunder.

         2.7.3 For purposes of this Agreement (and the restrictions set forth in
         this Section 2.7), the term "Navarre Stock" shall mean and include (i)
         the shares of common stock of Buyer issued, granted, conveyed and
         delivered to Seller pursuant to Section 2.3 hereof, and (ii) any and
         all other additional shares of capital stock of Buyer issued or
         delivered by Buyer with respect to the shares of Navarre Stock
         described in clause (i) hereof, including without limitation any shares
         of capital stock of Buyer issued or delivered with respect to such
         shares as a result of any stock split, stock dividend, stock
         distribution, recapitalization or similar transaction.

                                   ARTICLE 3.
                         REPRESENTATIONS, WARRANTIES AND
                       COVENANTS OF SELLER AND THE MEMBERS

In connection with and as an inducement to Buyer to enter into and be bound by
the terms of this Agreement, Seller and the Members each hereby, jointly and
severally, represents, warrants and covenants to Buyer as follows:

3.1 ORGANIZATION, STANDING AND POWER. Seller is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
New York and has all requisite power and authority to own, lease and operate its
properties and assets and to carry on its business as is now being conducted.
Seller is not required to be qualified or licensed as a foreign entity in any
jurisdiction other than New York and California, and the property owned, leased
or operated by Seller and the nature of business conducted by Seller are such
that qualification or licensing in any other jurisdiction is not necessary.
Seller has delivered to Buyer complete and correct certified copies of the
Articles of Organization and the Operating Agreement of Seller as currently in
effect.

3.2 STRUCTURE. Seller has no outstanding subscriptions, warrants, options, calls
or commitments relating to its equity, no obligations or securities convertible
into or exchangeable for its equity, and no plans or other agreements of any
character providing for the purchase, issuance or sale of its equity. All
outstanding units of membership interest of Seller are validly


                                       11
<PAGE>

issued, fully paid and nonassessable and are owned by the Members. Exhibit 3.2
sets forth a list of all members of Seller, Brentwood Communications, Inc., BCII
and Advantage Media Services, Inc. ("AMS"). Except as set forth in Exhibit 3.2,
neither Seller nor any Member owns any stock, partnership interest, joint
venture interest or other security or interest in any other corporation,
organization or entity related to the Business.

3.3 AUTHORITY. Seller has the full power and authority to enter into, execute
and deliver this Agreement and to consummate the transactions contemplated
hereby and any instruments or agreements required herein. The Members have the
full power and authority to enter into, execute and deliver this Agreement and
to approve the sale of assets contemplated hereby on behalf of all of the
members of Seller. This Agreement has been duly and validly executed and
delivered by Seller and the Members and constitutes a valid and binding
obligation of Seller and the Members according to its terms, enforceable against
Seller and the Members. The execution of this Agreement by Seller has been duly
authorized by the managers and the members of Seller.

3.4 NO VIOLATION. Neither the execution and delivery by Seller and the Members
of this Agreement, the consummation of the transactions contemplated hereby, nor
compliance by Seller and the Members with any of the provisions hereof will:

         3.4.1 Violate or conflict with any provision of the Articles of
         Organization or Operating Agreement of Seller.

         3.4.2 Except as disclosed in Exhibit 3.4.2, violate or constitute a
         default under or give rise to any right of termination, cancellation or
         acceleration under the terms, conditions or provisions of any agreement
         or instrument to which Seller or any of the Members is a party or by
         which any of them or any of their properties or assets is bound except
         as has been duly and validly waived, consented to or approved of by the
         other parties to such agreement or instrument;

         3.4.3 Result in the creation or imposition of any security interest,
         lien or other encumbrance upon any of the Purchased Assets under any
         agreement or commitment; or

         3.4.4 Violate any statute or law or any judgment, order, decree,
         regulation or rule of any court or governmental authority applicable to
         Seller or any of the Members or any of the Purchased Assets.

3.5 FINANCIAL STATEMENTS, ETC. All financial information made available by
Seller to Buyer and its agents as part of Buyer's due diligence efforts,
including the items described on attached Exhibit 3.5, are collectively referred
to as the "Financial Documents." The Financial Documents are true and correct
and fairly and accurately represent the financial matters stated therein. All
financial statements included as part of the Financial Documents have been
prepared in accordance with GAAP, consistently applied throughout the period
specified therein, and such financial statements fairly present the financial
condition of Seller as of the dates specified therein and the results of its
operations for the periods specified therein. The Financial Documents do not
include any material misstatements or omit to state any material asset or



                                       12
<PAGE>

liability, absolute or contingent, or other facts, the inclusion or omission of
which render the Financial Documents, in light of the circumstances in which
they are made, misleading.

3.6 PURCHASED ASSETS. Seller has good and marketable title to all of the
Purchased Assets and shall transfer title of the Purchased Assets to Buyer free
and clear of all mortgages, pledges, liens, conditional sales agreements or
other encumbrances of any kind or nature whatsoever, other than the Assumed
Liabilities. All of the tangible Purchased Assets are in reasonably good
operating condition, normal wear and tear excepted, and each is adequate for
use, after the Closing Date, in the ordinary course of business consistent with
past practice. The Purchased Assets, together with the services and arrangements
described on Exhibit 3.17 and services provided by AMS (and other than employees
(leased or otherwise) of Seller), comprise all assets and services required for
the continued conduct of the Business by Buyer as now being conducted. None of
the Purchased Assets are owned by BCII.

3.7 BOOKS, RECORDS AND ACCOUNTS. All accounts, books, ledgers and official and
other records of whatsoever kind material to Seller's business have been fully,
properly and accurately kept and completed in all material respects, there are
no material inaccuracies or discrepancies of any kind contained or reflected
therein, and collectively they fairly present the financial position of Seller.
Seller does not have any of its records, systems, controls, data or information
recorded, stored, maintained, operated or otherwise wholly or partly dependent
on or held by any means (including any electronic, mechanical or photographic
process, whether computerized or not), which (including all means of access
thereto and therefrom) are not under the exclusive ownership and direct control
of Seller. Seller keeps its records and books of account in conformity with
GAAP.

3.8 JUDGMENTS. Except as provided in attached Exhibit 3.8, there are no
unsatisfied judgments of record against Seller.

3.9 LIABILITIES. Except for those liabilities disclosed on attached Exhibit 3.9,
and other than liabilities incurred by Seller in the ordinary course of business
since October 1, 2003, there are no liabilities of any kind or character
outstanding for which Seller is or may be liable which are not reflected on
Seller's September 30, 2003 interim financial statements, copies of which have
been delivered to Buyer under Section 3.5. Other than the Assumed Obligations,
no liability of Seller of any kind whatsoever is being assumed, directly or
indirectly, by Buyer. Except as otherwise provided herein, Buyer shall not, as a
result of this transaction, acquire or be responsible for any liabilities of or
claims against Seller other than the Assumed Obligations, and all liabilities,
claims or expenses of any nature whatsoever which relate to a period or periods
prior to the Closing Date, other than the Assumed Obligations, shall be the
responsibility of Seller and shall be paid by Seller in the ordinary course of
business as due. The amount of the Closing Date Accrued Royalties is sufficient
to cover all royalties due under the Assigned Agreements as of the Closing Date.

3.10 ACCOUNTS RECEIVABLE. Attached Exhibit 1.1.1 is a complete and accurate list
of all Accounts Receivable of Seller as of the Closing Date, indicating the
amount owed and the aging of each such receivable, the name and last known
address of the party from whom such receivable is owing, and any security
interest in favor of Seller for the repayment of such receivable which Seller
purports to have. The Accounts Receivable represent bona fide claims


                                       13
<PAGE>

for sales or services by Seller in the ordinary course of business, consistent
with past practice. Except to the extent of the Receivables Reserve, and except
as set forth in Section 8.3 hereof, each Account Receivable will be good and
collectible in full in the ordinary course of business and in any event not
later than two hundred seventy (270) days after the Closing Date. Except as set
forth in Section 8.3 hereof, none of the Accounts Receivable or other debts
arising therefrom are or will be subject to any counterclaim or set-off. The
Closing Date Receivables Reserve is consistent with Seller's prior practices.

3.11 NO ADVERSE CHANGE. Except as set forth on Exhibit 3.11, since December 31,
2002, there has not been any material adverse change in the condition (financial
or otherwise), assets, liabilities, revenues, income or business of Seller or in
its relationships with suppliers, dealers, customers or employees, including,
but not limited to:

         3.11.1 Any increase (other than those in the ordinary course) in the
         wages, salaries, compensation, pension or other benefits payable or to
         become payable by Seller to any of its respective officers, employees
         or agents;

         3.11.2 Any incurrence by Seller of any obligations or liabilities,
         whether absolute, accrued, contingent or otherwise (including, without
         limitation, liabilities as guarantor or otherwise with respect to
         obligations of others), other than obligations and liabilities incurred
         in the ordinary course of business and none of which are materially
         adverse;

         3.11.3 Any discharge or satisfaction of any lien or encumbrance or
         payment of any obligation or liability by Seller other than current
         liabilities shown or reflected on Seller's December 31, 2002 financial
         statements or current liabilities incurred since December 31, 2002 in
         the ordinary course of business and shown on Seller's September 30,
         2003 interim financial statements included as part of the Financial
         Documents;

         3.11.4 The mortgage, pledge or subjection to lien, security interest or
         any other encumbrance of any of Seller's assets, real or personal,
         tangible or intangible, other than in the ordinary course of business;

         3.11.5 The sale or transfer of any of Seller's tangible assets, or the
         cancellation or release of any debts or claims, except, in each case,
         in the ordinary course of business;

         3.11.6 The sale, assignment, transfer or encumbrance by Seller of any
         trademarks, trade names or other intangible assets;

         3.11.7 Any extraordinary losses incurred by Seller;

         3.11.8 The failure by the Seller to take or make any charges,
         write-offs, increases in bad debt reserves or other adjustments in
         Seller's accounts receivable by reason of failure or inability to
         collect or diminished prospects for collection of Seller's accounts
         receivable;

         3.11.9 The occurrence of any event or condition of any character
         materially and adversely affecting Seller's business or tax liabilities
         or any material change in the condition of Seller's assets, liabilities
         or business;



                                       14
<PAGE>

         3.11.10 Licensed, sold, transferred, pledged, modified, disclosed,
         disposed of or permitted to lapse any right to the use of any
         Intellectual Property Right other than in the ordinary course of
         business; or

         3.11.11 Any entry by Seller into any other transaction other than in
         the ordinary course of business.

3.12 LEASES. The schedule of leases attached hereto as Exhibit 3.12 sets forth a
complete and correct description of all leases of real and personal property to
which Seller is a party. Seller has delivered to Buyer complete and correct
copies of all lease agreements described in said Exhibit 3.12 and each such
lease agreement is valid and subsisting and no event or condition exists which
constitutes, or after notice or lapse of time or both would constitute, a
default thereunder. All of Seller's right, title and interests under the
Assigned Leases (as listed on Exhibit 1.1.7) are assignable except as disclosed
therein, no consents to any such assignment are required or, to the extent
required, such consents have been or will be (on or prior to the Closing Date)
obtained and, following the closing of the transactions contemplated by this
Agreement, all such right, title and interest will be effectively and completely
conveyed and assigned to Buyer.

3.13 INSURANCE. Seller has maintained and continues to maintain, with
financially sound and reputable insurers, insurance with respect to its
properties and businesses against loss or damage of the kinds customarily
insured against by corporations of established reputations engaged in the same
or similar businesses and similarly situated, of such types and in such amounts
as are set forth in Exhibit 3.13. The complete list and summary description of
all insurance policies maintained by Seller are set forth on Exhibit 3.13. The
policies listed on Exhibit 3.13 are in full force and effect, all premiums due
thereon have been paid, Seller has complied in all material respects with the
provisions of such policies, and Seller has not received any notice of
cancellation, termination or non-renewal of such policies. At Buyer's option,
Seller agrees to take all action reasonably necessary to enable Buyer to
continue all such policies of insurance and transfer all such policies of
insurance into Buyer's name.

3.14 LITIGATION. Other than disclosed on Exhibit 3.14 hereto, Seller, its
assets, properties and business, are subject to no pending or threatened
litigation, action, suit or proceeding by or before any court, arbitrator or
federal, state or other governmental commission, board or other agency, or by
any private party. As provided in Section 2.3.2 above, and except for the
Assumed Liabilities, Seller shall be solely and absolutely responsible for all
liabilities, costs and expenses relating to any and all threatened or pending
litigation, together with any litigation commenced after the Closing Date, which
relates to facts and circumstances or other occurrences arising on or before the
Closing Date.

3.15 ORDERS, COMMITMENTS, WARRANTY CLAIMS AND RETURNS.

         3.15.1 All accepted and unfulfilled orders for the sale of Seller
         Products entered into by Seller and all outstanding Contracts for the
         purchase of supplies and materials were made in the ordinary course of
         business.

         3.15.2 The schedule of allowances attached hereto as Exhibit 3.15 sets
         forth a complete and correct description of all allowances made by
         Seller to its customers for products or


                                       15
<PAGE>

         services including, without limitation, rebates, cash refunds,
         merchandise credits or other rights of return, as of the Closing Date.

         3.15.3 To Seller's knowledge, and except as disclosed on Exhibit 3.15
         or as set forth in the Financial Documents, there are no claims against
         Seller to return Seller Products, or claims for refunds with respect to
         Seller Products, in excess of an aggregate of Five Thousand Dollars
         ($5,000).

3.16 DEFECTS IN PRODUCTS; WARRANTIES. There are no defects in Seller Products
heretofore or currently being distributed or sold by Seller which would
materially adversely affect the performance and quality of such products. Except
as disclosed on Exhibit 3.16, there are no express or implied warranties
outstanding with respect to Seller Products, except as imposed by law.

3.17 CONTRACTS.

         3.17.1 Exhibit 3.17 contains a complete list of all Current Customers
         of the Business. For purposes of this Agreement, "Current Customer"
         means any Person from whom Seller has recognized revenue in the past
         twelve months or for whom Seller has any obligation to complete work or
         honor any contractual warranty. For purposes hereof, "Person" means any
         natural person, corporation, firm, joint venture, partnership, limited
         liability company, association, enterprise, trust, or other entity or
         organization or any government or political subdivision or agency,
         department or instrumentality thereof. Exhibit 3.17 contains a list of
         all currently outstanding but unaccepted written proposals relating to
         proposed contracts with customers and a description of all oral
         proposals relating to proposed contracts with customers which would be
         materially burdensome to Seller or involve a material deviation from
         past practice, to the extent such proposals are enforceable upon
         acceptance by the offeree without further action by Seller. Attached to
         Exhibit 3.17 are true and correct copies of all standard form customer
         contracts used by Seller. No contract for any Current Customer, whether
         written or oral, differs in any material respect from the attached
         standard form customer contracts. True and correct copies of all
         written Contracts with Current Customers of the Business have been
         provided or made available to Buyer. Except as disclosed on Exhibit
         3.17, since December 31, 2002, no Current Customers of the Business
         have canceled or terminated their Contracts, or notified Seller of
         their intent to cancel or terminate their Contract.

         3.17.2 Exhibit 3.17 contain a complete list of all suppliers of Seller
         who since December 31, 2002, have invoiced Seller for Five Thousand
         Dollars ($5,000) or more, including the types of products and/or
         services provided by each such supplier.

         3.17.3 Exhibit 3.17 sets forth a true and complete list of all of the
         currently effective written contracts or written or binding oral
         agreements (the "Contracts") to which Seller is a party other than
         Contracts disclosed in Sections 3.17.1 and 3.17.2, and other than
         Contracts relating to the manufacture, use, reproduction and marketing
         of Seller Products, of the following types:

                  A. Employment agreements and any offers of employment
                  outstanding.



                                       16
<PAGE>

                  B. Consulting agreements.

                  C. Agreements or commitments for capital expenditures or the
                  acquisition by purchase or lease of fixed assets providing for
                  payments in excess of Five Thousand Dollars ($5,000)
                  individually or in the aggregate.

                  D. Agreements for the purchase, sale, lease or other transfer
                  of any services, products, materials or supplies in excess of
                  Five Thousand Dollars ($5,000) individually or in the
                  aggregate from a single Person.

                  E. Joint venture or partnership agreements with any other
                  Person.

                  F. Non-competition or similar agreements which prevent Seller
                  or any of its employees from competing with any Person (other
                  than Seller).

                  G. Confidentiality or employee non-solicitation agreements
                  with any other Person (other than as are contained in the
                  Customer Contracts).

                  H. Agreements relating to the research or development by
                  Seller for others or by others for Seller.

                  I. Agreements for the long-term borrowing or long-term lending
                  of money (including capitalized leases).

                  J. Agreements for the short-term borrowing or short-term
                  lending of money.

                  K. Any Contract, not listed in other Exhibits to this
                  Agreement, requiring the performance by Seller of any
                  obligation for a period of time extending more than one year
                  from the date of this Agreement or calling for Seller to pay a
                  consideration or incur costs of more than Five Thousand
                  Dollars ($5,000).

         3.17.4 Seller has in all material respects performed, and is now
         performing, the obligations of, and Seller is not in default (nor would
         by the lapse of time or the giving of notice or both be in default) in
         respect of any Contract referred to in the Exhibits to this Agreement.
         Each of the Contracts or other instruments shown on the Exhibits
         referred to in this Agreement is in full force and effect and is a
         valid and enforceable obligation against Seller and, to Seller's
         knowledge, against the other party or parties thereto in accordance
         with its terms (subject, as to the enforcement of remedies, to
         applicable bankruptcy, reorganization, insolvency, moratorium and
         similar laws affecting creditors' rights, and, with respect to the
         remedy of specific performance, equitable doctrines applicable
         thereto). To Seller's knowledge, no other parties to such Contracts or
         other instruments is in default in any material respect (or would by
         the lapse of time or the giving of notice or both be in default in any
         material respect) thereunder or has breached in any material respect
         any terms or provisions thereof.

         3.17.5 Other than royalty advances which may not be recouped, there are
         no Contracts to which Seller is a party to or bound by which either
         separately or in the aggregate has or is likely to result in a loss to
         Seller.



                                       17
<PAGE>

         3.17.6 No third party has raised any claim with respect to any of the
         Contracts, nor has Seller received notice of alleged default by Seller
         with respect to its obligations under any such Contracts.

         3.17.7 Other than as provided in Section 3.17.1, true and complete
         copies of all of the Contracts and instruments referred to in the
         Exhibits delivered under this Agreement have been delivered to Buyer.

3.18 TAXES. Seller has duly filed all federal, foreign, state and local tax
information and tax returns of any and every nature and description (the
"Returns") required to be filed by it (all such returns being accurate and
complete in all respects) and has duly paid or made provision for the payment of
all taxes and other governmental charges (including without limitation any
interest, penalty or additions to tax thereto) which have been incurred or are
shown to be due on said Returns or are claimed in writing to be due from Seller
or imposed on Seller or its properties, assets, income, franchises, leases,
licenses, sales or use, by any federal, state, local or foreign taxing
authorities (collectively, the "Taxes") on or prior to the date hereof, other
than Taxes which are being contested in good faith and by appropriate
proceedings and as to which Seller has set aside on its books adequate reserves
or which may be attributable to the transactions contemplated hereby. Neither
the IRS nor any state, local or foreign taxing authority has ever examined any
income tax return of the Seller, whether singly or as a member of an affiliated
group. Seller has provided to Buyer complete and correct copies of its federal,
state and local income tax returns filed on or prior to the date hereof and all
examination reports, if any, relating to the audit of such returns by the IRS or
other tax authority for each taxable year beginning on or after January 1, 2001.
All monies required to be withheld from employees, independent contractors,
partners, or creditors of Seller for Taxes, including, but not limited to,
income taxes, back-up withholding taxes, social security and unemployment
insurance taxes or collected from customers or others as Taxes, including, but
not limited to, sales, use or other taxes, have been withheld or collected and
paid, when due, to the appropriate governmental authority, or if such payment is
not yet due, an adequate reserve has been established for such Taxes.

3.19 EMPLOYMENT CONTRACTS AND FRINGE BENEFITS. Seller is not a party to or bound
by any written employment, collective bargaining or other labor contracts or any
pension, profit sharing, retirement, bonus or deferred compensation plans,
employee benefit plans or similar obligations evidenced by writings (or oral
employment contracts other than those terminable at will), except as set forth
on the Schedule of Employment Contracts and Fringe Benefits attached hereto as
Exhibit 3.19 and for which complete and correct copies of each have been
furnished by Seller to Buyer (collectively, the "Employee Benefit Plans and
Agreements"). All employee welfare benefit plans and all employee pension
benefit plans are in compliance with all applicable provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA") and the Internal Revenue Code
of 1986, as amended (the "Code"), and no funding deficiency exists with respect
to such plans. Buyer will incur no liability or obligation under the Employee
Benefit Plans and Agreements other than to the extent listed and identified as
an Assumed Liability pursuant to Section 2.2.2.

3.20 REAL PROPERTY. The Purchased Assets do not include any real property other
than real property leased, and not owned, by Seller pursuant to an Assigned
Lease. With respect to the real property subject to the Assigned Leases, Seller
shall be responsible for all liability which


                                       18
<PAGE>

relates to a period or results from a transaction occurring prior to the Closing
Date under any federal, state or local statute, regulation or ordinance related
to human health or the environment, including, without limitation, any law,
regulation or ordinance concerning the protection or preservation of natural
resources, air, water, noise or soil pollution or contamination, or the use,
generation, storage or disposal of hazardous materials.

3.21 COMPLIANCE WITH LAWS. Seller is in compliance in all material respects with
all applicable laws, regulations, orders, judgments and decrees (including,
without limitation, all applicable provisions of any anti-pollution and
environmental protection laws, laws relating to waste disposal, laws relating to
occupational safety and health standards and equal employment opportunity, and
rules and regulations under such laws as currently administered). Seller has all
permits and licenses from governmental authorities required to conduct its
business as it is now being conducted.

3.22 INTELLECTUAL PROPERTY.

         3.22.1 COMPANY PRODUCTS. Exhibit 3.22 contains a list of all products
         which are or could be offered for sale by the Business (the "Seller
         Products"). Seller has a valid written agreement allowing Seller to
         manufacture, reproduce, market and sell all such Seller Products.

         3.22.2 LICENSE AGREEMENTS. Seller has the right to, among other things,
         use, manufacture, market, sublicense or distribute third party music or
         video content embodied in the Seller Products.

         3.22.3 CERTAIN INTELLECTUAL PROPERTY RIGHTS. Exhibit 3.22 contains a
         complete list of the following items included in the Intellectual
         Property Rights: (i) United States and foreign patents and patent
         applications, and, in the case of patent applications, a description of
         the current status of each of the applications; (ii) copyrights and
         other works of authorship which are registered with any Governmental
         Entity; or for which registration applications have been filed; (iii)
         United States and foreign trademarks, service marks and trade names,
         for which registrations have been received or applications for
         registration have been filed; (iv) rights of publicity; (v) rights to
         use likeness and name; and (vi) a list of unregistered trade names used
         by Seller.

         3.22.4 MISCELLANEOUS.

                  A. Seller owns good and marketable title to, or has the right
                  to possess (whether by license, sublicense or otherwise), use,
                  manufacture, reproduce, license, and distribute, all Seller
                  Products and Intellectual Property Rights in the United States
                  and Canada in the Business as currently conducted and Seller
                  has done nothing to cause such rights to be owned or possessed
                  by any third party, except pursuant to the grant of a
                  sublicense by Seller. Company has received no claim that any
                  Seller Product or any Intellectual Property Right is in whole
                  or in part invalid, unenforceable, ineffective or in violation
                  of the rights of others. All Seller Products and all
                  Intellectual Property Rights developed by Seller employees
                  and/or independent contractors are owned or licensed
                  exclusively by


                                       19
<PAGE>

                  Seller, except where Seller has knowingly sublicensed any such
                  Intellectual Property Rights to others.

                  B. There is no pending or threatened claim or litigation
                  contesting the right to use, sell, license or dispose of any
                  Seller Product or Intellectual Property Right, nor, to
                  Seller's knowledge, is there any fact or alleged fact which
                  would reasonably serve as a basis for any such claim that
                  could materially limit the protection afforded by the
                  Intellectual Property Rights to the use, sale, license, or
                  disposition of Seller Products.

                  C. Except as disclosed on Exhibit 3.22, Seller is in material
                  compliance with the terms and conditions of all license
                  agreements governing the use of third party music or video
                  content.

                  D. To the extent that the same may exist, and except as
                  disclosed on Exhibit 3.22, Seller has taken reasonable steps
                  to safeguard and maintain the secrecy and confidentiality of
                  all trade secrets and proprietary or confidential business and
                  technical information included in the Intellectual Property
                  Rights, including, without limitation, entering to appropriate
                  confidentiality or disclosure agreements with employees,
                  officers, consultants, independent contractors and licensees
                  that serve Seller, the forms of which have been delivered to
                  Buyer.

                  E. To the extent that the same may exist, all documents and
                  materials containing trade secrets or proprietary or
                  confidential business or technical information of Seller are
                  presently located at one of the premises identified as leased
                  real property in Exhibit 3.12 (and physical possession of such
                  material will be delivered to Buyer at or prior to Closing),
                  and, to Seller's knowledge, have not been used, divulged, or
                  appropriated for the benefit of any Person other than Seller,
                  or to the detriment of Seller.

                  F. To Seller's knowledge, no third party is infringing on any
                  Intellectual Property Right in a manner that could materially
                  limit the protection afforded by the Intellectual Property
                  Rights to the use, sale, license or disposition of Seller
                  Products in the Business as currently conducted.

                  G. The execution, delivery and performance of this Agreement
                  and the consummation of the transactions contemplated hereby
                  will not breach, violate or conflict with any material
                  instrument or material agreement to which Seller is a party,
                  governing any Intellectual Property Right, will not cause the
                  forfeiture or termination or give rise to a right of
                  forfeiture or termination of any Intellectual Property Right
                  or in any way materially impair the right of Seller to use,
                  sell, license or dispose of or bring any action for the
                  infringement of, any Intellectual Property Right or any Seller
                  Product.

3.23 SOFTWARE LICENSES. Seller has a sufficient number of valid licenses to
cover all software used by Seller. Any fees, increased maintenance costs or
other transfer fees (whether direct or


                                       20
<PAGE>

indirect) which are required to be paid in connection with the transfer of the
software licenses by Seller to Buyer shall be paid by Seller.

3.24 INVESTMENT REPRESENTATIONS. Each Member represents and warrants that he or
she is an "accredited investor," as that term is defined and construed pursuant
to Rule 501 of Regulation D under the Securities Act of 1933. Further, with
respect to his or her investment in the Navarre Stock, each Member who receives
the Navarre Stock represents and warrants as follows:

         3.24.1 that he or she has such knowledge and experience in financial
         and business matters generally, and with respect to the business and
         other activities of Buyer in particular, that he or she is capable of
         evaluating the merits and risks of the proposed investment in the
         Navarre Stock;

         3.24.2 that he or she has had access to or received as much information
         with respect to Buyer and the Navarre Stock as he or she deems
         advisable in making a decision to invest in the Navarre Stock;

         3.24.3 that the Navarre Stock is being and will be acquired for his or
         her own account and not on behalf of any person or persons and not with
         a view to, or for sale in connection with, any public distributions
         thereof;

         3.24.4 that all documents, records and books pertaining to his or her
         investment in the Navarre Stock and requested by him or her have been
         made available or delivered to him or her;

         3.24.5 that he or she has had an opportunity to ask questions of and
         receive answers from Buyer, or persons acting on its behalf, concerning
         the terms and conditions of his or her investment in the Navarre Stock;

         3.24.6 that it has never been represented, guaranteed or warranted to
         the undersigned by any broker, Buyer, its stockholders, directors,
         officers, agents or employees, expressly or by implication, the
         approximate or exact length of time that he or she will be required to
         remain as owner of the Navarre Stock; or the percentage of profit
         and/or amount of time of consideration, profit or loss (including tax
         write-offs and/or tax benefits) to be realized, if any, as a result of
         such investment;

         3.24.7 that he or she is aware that there are substantial restrictions
         on the transferability of the Navarre Stock;

         3.24.8 that he or she has no need for liquidity in his or her
         investment in the Navarre Stock; and

         3.24.9 that he or she is aware that the tax treatment of Seller and the
         Members is not susceptible to absolute prediction, and new developments
         such as Internal Revenue Service rulings, court decision or legislative
         changes may have an adverse effect on one or more of the tax
         consequences resulting from an investment in the Navarre Stock.



                                       21
<PAGE>

3.25 DISCLOSURE. No representation or warranty by Seller or the Members in this
Agreement and no statement contained in this Agreement or in any document
delivered or to be delivered pursuant hereto contains or will contain an untrue
statement of material fact or omits or will omit to state any material fact
necessary to make the statements herein or therein contained, in light of the
circumstances under which made, not misleading; it being understood that as used
in this subparagraph "material" means material to any individual statement or
omission and in the aggregate as to all statements and omissions.

3.26 RELIANCE. The foregoing representations, warranties and covenants are made
by Seller and the Members with the knowledge and expectation that Buyer is
relying thereon.

Subject to Section 9.4 hereof, the foregoing representations, warranties and
covenants, together with any and all other representations, warranties and
covenants contained in this Agreement, shall survive consummation of the
purchase and sale contemplated by this Agreement.

                                   ARTICLE 4.
               REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER

In connection with and as an inducement to Seller and the Members to enter into
and be bound by the terms of this Agreement, Buyer hereby represents, warrants
and covenants to Seller and the Members as follows:

4.1 ORGANIZATION. Buyer is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Minnesota.

4.2 AUTHORITY. Buyer has full power and authority to enter into, execute and
deliver this Agreement and to consummate the transactions contemplated hereby
and any instruments or agreements required herein. This Agreement has been duly
and validly executed and delivered by Buyer and constitutes a valid and binding
obligation of Buyer according to its terms. The execution of this Agreement by
Buyer has been duly authorized by the Board of Governors of Buyer.

4.3 NO VIOLATION. Neither the execution and delivery by Buyer of this Agreement,
the consummation of the transactions contemplated hereby, nor compliance by
Buyer with any of the provisions hereof will:

         4.3.1 Violate or conflict with any provision of the Articles of
         Organization or Operating Agreement of Buyer;

         4.3.2 Violate or constitute a default under or give rise to any right
         of termination, cancellation or acceleration under the terms,
         conditions or provisions of any agreement or instrument to which Buyer
         is a party or by which Buyer or any of its properties or assets is
         bound except as has been duly and validly waived, consented to, or
         approved of by the other parties to such agreement or instrument; or

         4.3.3 Violate any statute or law or any judgment, order, decree,
         regulation or rule of any court or governmental authority applicable to
         Buyer.



                                       22
<PAGE>

4.4 DISCLOSURE. No representation or warranty by Buyer in this Agreement and no
statement contained in this Agreement or in any other document delivered or to
be delivered pursuant hereto contains or will contain an untrue statement of
material fact or omits or will omit to state any material fact necessary to make
the statements herein or therein contained, in light of the circumstances under
which made, not misleading; it being understand that as used in this
subparagraph "material" means material to any individual statement or omission
and in the aggregate as to all statements and omissions.

4.5 RELIANCE. The foregoing representations, warranties and covenants are made
by Buyer with the knowledge and expectation that Seller and the Members are
relying thereon.

Subject to Section 9.4 hereof, the foregoing representations, warranties and
covenants, together with any and all other representations, warranties and
covenants contained in this Agreement, shall survive consummation of the
purchase and sale contemplated by this Agreement.

                                   ARTICLE 5.
              REPRESENTATIONS, WARRANTIES AND COVENANTS OF NAVARRE

In connection with and as an inducement to Seller and the Members to enter into
and be bound by the terms of this Agreement, Navarre hereby represents, warrants
and covenants to Seller and the Members as follows:

5.1 ORGANIZATION. Navarre is a corporation duly organized, validly existing and
in good standing under the laws of the State of Minnesota.

5.2 AUTHORITY. Navarre has full power and authority to enter into, execute and
deliver this Agreement and to consummate the transactions contemplated hereby
and any instruments or agreements required herein. This Agreement has been duly
and validly executed and delivered by Navarre and constitutes a valid and
binding obligation of Navarre according to its terms. The execution of this
Agreement by Navarre has been duly authorized by the Board of Directors of
Navarre.

5.3 NO VIOLATION. Neither the execution and delivery by Navarre of this
Agreement, the consummation of the transactions contemplated hereby, nor
compliance by Navarre with any of the provisions hereof will:

         5.3.1 Violate or conflict with any provision of the Articles of
         Incorporation or Bylaws of Navarre;

         5.3.2 Violate or constitute a default under or give rise to any right
         of termination, cancellation or acceleration under the terms,
         conditions or provisions of any agreement or instrument to which
         Navarre is a party or by which Navarre or any of its properties or
         assets is bound except as has been duly and validly waived, consented
         to, or approved of by the other parties to such agreement or
         instrument; or

         5.3.3 Violate any statute or law or any judgment, order, decree,
         regulation or rule of any court or governmental authority applicable to
         Navarre.



                                       23
<PAGE>

5.4 NAVARRE STOCK. The shares of Navarre Stock to be issued to Seller pursuant
to this Agreement are duly authorized and, when issued in accordance with the
terms of this Agreement, will be validly issued, fully paid and nonassessable
and free and clear of all encumbrances, except for any encumbrances created by
Seller and encumbrances resulting from restrictions on transferability imposed
by Securities Laws. Upon delivery to Seller of the certificates evidencing the
Navarre Stock, Seller shall acquire valid title to the Navarre Stock.

                                   ARTICLE 6.
                         CONDITIONS PRECEDENT TO CLOSING

6.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER AND THE MEMBERS. All of the
agreements and obligations of Seller and the Members under this Agreement are
subject to the fulfillment, on or prior to the Closing Date, of the following
conditions precedent, any or all of which may be waived, in whole or in part, in
writing by Seller and the Members:

         6.1.1 PERFORMANCE AND COMPLIANCE. Buyer shall have performed and
         complied with all of the agreements, covenants and conditions required
         by this Agreement to be performed or complied with by Buyer on or prior
         to the Closing Date, and all of the representations and warranties of
         Buyer under this Agreement shall be true and correct in all material
         respects as of the Closing Date.

         6.1.2 OPINION OF BUYER'S COUNSEL. Seller and its counsel shall have
         been furnished with an opinion of legal counsel substantially in the
         form provided on attached Exhibit 6.1.2 ("Opinion of Buyer's Counsel").

         6.1.3 EMPLOYMENT AGREEMENT. Buyer shall have executed and delivered to
         Goetz an Employment Agreement to be entered into by and between Buyer
         and Goetz, substantially in the form attached hereto as Exhibit 6.1.3
         (the "Employment Agreement").

         6.1.4 CONSULTING AGREEMENT. Buyer shall have executed and delivered to
         Catlin a Consulting Agreement to be entered into by and between Buyer
         and Catlin, substantially in the form attached hereto as Exhibit 6.1.4
         (the "Consulting Agreement").

         6.1.5 SERVICES AGREEMENT. Buyer shall have executed and delivered to
         AMS a Services Agreement to be entered into by and between Buyer and
         AMS, substantially in the form attached hereto as Exhibit 6.1.5 (the
         "Services Agreement").

         6.1.6 RELEASE OF GUARANTY AND LEASE. Catlin shall have been released
         from any personal guaranty of the ML Loan and/or Seller's real estate
         lease.

         6.1.7 NO TERMINATION. No party to this Agreement shall have terminated
         this Agreement as permitted herein.

Satisfaction or waiver of any or all of the above conditions precedent shall not
in any manner reduce the scope of the representations, warranties and covenants
made by Buyer elsewhere in this Agreement or the right and ability of Seller and
the Members to be indemnified for any misrepresentation, inaccurate warranty or
unfulfilled covenant.



                                       24
<PAGE>

6.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND NAVARRE. All of the
agreements and obligations of Buyer and Navarre under this Agreement are subject
to the fulfillment, on or prior to the Closing Date, of the following conditions
precedent, any or all of which may be waived, in whole or in part, in writing by
Buyer:

         6.2.1 PERFORMANCE AND COMPLIANCE. Seller and the Members shall have
         performed and complied with all of the agreements, covenants and
         conditions required by this Agreement to be performed or complied with
         by them on or prior to the Closing Date, and all of the representations
         and warranties of Seller and the Members under this Agreement shall be
         true and correct in all material respects as of the Closing Date.

         6.2.2 OPINION OF SELLER'S COUNSEL. Buyer and its counsel shall have
         been furnished with an opinion of legal counsel substantially in the
         form provided on attached Exhibit 6.2.2 ("Opinion of Seller's
         Counsel").

         6.2.3 DUE DILIGENCE REVIEW. Buyer shall have completed a due diligence
         review of all aspects of the business and operations of Seller, the
         results of which are determined to be satisfactory to Buyer in its sole
         and absolute discretion.

         6.2.4 EMPLOYMENT AGREEMENT. Goetz shall have executed and delivered to
         Buyer the Employment Agreement.

         6.2.5 PRODUCTION AGREEMENT. Buyer shall have entered into an agreement
         satisfactory to Buyer, in its sole discretion, with BCII.

         6.2.6 SERVICES AGREEMENT. Buyer shall have entered into the Services
         Agreement.

         6.2.7 GOOD TITLE. Seller shall show and deliver to Buyer good and
         marketable title to all of the Purchased Assets free and clear of all
         mortgages, pledges, liens, conditional sales agreements or other
         encumbrances of any kind or nature, other than the Assumed Liabilities.

         6.2.8 CONSENTS TO ASSIGNMENTS. Buyer shall have received consents in
         form and content satisfactory to Buyer to the extent reasonably deemed
         necessary by Buyer to enable a complete and effective transfer to Buyer
         of all rights and interests of Seller to be assigned and conveyed under
         this Agreement.

         6.2.9 FINANCING. Buyer shall have secured financing to consummate the
         transactions contemplated by this Agreement, upon terms and conditions
         satisfactory to Buyer in its sole discretion.

         6.2.10 BOARD APPROVAL. Navarre's Board of Directors shall have approved
         the transactions contemplated by this Agreement.

         6.2.11 SUBORDINATION AND INTERCREDITOR AGREEMENT. Seller shall have
         executed and delivered to Navarre and General Electric Capital
         Corporation ("GE") a Subordination and Intercreditor Agreement to be
         entered into by and among Seller, Navarre and GE,


                                       25
<PAGE>

         substantially in the form attached hereto as Exhibit 6.2.11 (the "GE
         Subordination Agreement").

         6.2.12 SUBORDINATION AGREEMENT. Seller shall have executed and
         delivered to Navarre and Hilco Capital LP ("Hilco") a Subordination
         Agreement to be entered into by and among Seller, Navarre and Hilco,
         substantially in the form attached hereto as Exhibit 6.2.12 (the "Hilco
         Subordination Agreement").

         6.2.13 STOCK PLEDGE AGREEMENT. Seller or its designee(s) shall have
         delivered to Navarre a Stock Pledge Agreement substantially in the form
         attached hereto as Exhibit 6.2.13 (the "Stock Pledge Agreement").

         6.2.14 ASSIGNMENT OF REPRESENTATIONS AND WARRANTIES. Seller and the
         Members shall have consented to Navarre's and Buyer's assignment of
         Seller's and the Members' representations, warranties, covenants and
         indemnities set forth in the Agreement to each of Hilco and GE pursuant
         to such agreements as Hilco and GE shall require on the Closing Date.

         6.2.15 NO TERMINATION. No party to this Agreement shall have terminated
         this Agreement as permitted herein.

Satisfaction or waiver of any or all of the above conditions precedent shall not
in any manner reduce the scope of the representations, warranties and covenants
made by Seller or the Members elsewhere in this Agreement or the right and
ability of Buyer to be indemnified for any misrepresentation, inaccurate
warranty or unfulfilled covenant.

                                   ARTICLE 7.
                              DELIVERY OF DOCUMENTS

On the Closing Date, Buyer and Navarre, as one party, and Seller and the
Members, as another party, shall execute and deliver to the other party the
following documents, instruments and agreements, together with such other
documents, instruments and agreements as the other party may reasonably request
to consummate the purchase and sale contemplated hereby:

7.1 BY BUYER TO SELLER AND THE MEMBERS. Buyer and/or Navarre shall deliver the
following to Seller and the Members:

         7.1.1 CASH PAYMENT. A cashier's or certified check payable to the order
         of Seller in the amount required in Section 2.2..1.a, or an appropriate
         wire transfer of such funds.

         7.1.2 NAVARRE STOCK. The Closing Stock Consideration as required in
         Section 2.3.1.b..

         7.1.3 OPINION OF BUYER'S COUNSEL. Seller and its counsel shall be
         furnished with the Opinion of Buyer's Counsel.

         7.1.4 EMPLOYMENT AGREEMENT. The Employment Agreement, duly executed by
         an authorized officer of Buyer.



                                       26
<PAGE>

         7.1.5 CONSULTING AGREEMENT. The Consulting Agreement, duly executed by
         an authorized officer of Buyer.

         7.1.6 SERVICES AGREEMENT. The Services Agreement, duly executed by an
         authorized officer of Buyer.

         7.1.7 AUTHORIZING RESOLUTIONS OF BUYER. A copy, certified by an officer
         of Buyer, of the duly adopted resolutions of the board of governors of
         Buyer approving this Agreement and authorizing the execution and
         delivery of this Agreement and the consummation of the transactions
         contemplated hereby.

         7.1.8 AUTHORIZING RESOLUTIONS OF NAVARRE. A copy, certified by an
         officer of Navarre, of the duly adopted resolutions of the board of
         directors of Navarre approving this Agreement and authorizing the
         execution and delivery of this Agreement and the consummation of the
         transactions contemplated hereby.

         7.1.9 CERTIFICATE OF GOOD STANDING. A copy of Buyer's Certificate of
         Good Standing from the State of Minnesota.

         7.1.10 ASSUMPTION OF LIABILITIES. An assumption agreement in form and
         substance attached hereto as Exhibit 7.1.11 pursuant to which Buyer
         will assume the Assumed Liabilities.

7.2 BY SELLER AND THE MEMBERS TO BUYER. Seller and the Members shall deliver the
following to Buyer:

         7.2.1 OPINION OF SELLER'S COUNSEL. Buyer and its counsel shall be
         furnished with the Opinion of Seller's Counsel.

         7.2.2 EMPLOYMENT AGREEMENT. The Employment Agreement, duly executed by
         Goetz.

         7.2.3 BILL OF SALE. A bill of sale, substantially in the form attached
         as Exhibit 7.2.3 (the "Bill of Sale"), duly executed by an authorized
         officer of Seller, with full covenants of warranty, endorsements and
         assignment and other good and sufficient instruments of transfer and
         conveyance as shall be reasonably required to vest in Buyer good and
         marketable title to all of these tangible Purchased Assets to be sold
         as provided in this Agreement.

         7.2.4 ASSIGNMENTS AND CONSENTS. Assignment and consent documents, in
         form and content acceptable to Buyer and duly executed by an authorized
         officer of Seller, pursuant to which all rights and interests of Seller
         to be assigned and conveyed under this Agreement, including the
         Accounts Receivables, each of the Assigned Leases and the Assumed
         Contracts, the General Intangibles and the Records are completely and
         effectively transferred and conveyed to Buyer.

         7.2.5 RELEASES AND TERMINATION STATEMENTS. Releases or terminations of
         all financing statements and satisfactions of all other encumbrances
         filed with the office of


                                       27
<PAGE>

         the Secretary of State or any county recorder or similar office
         evidencing a lien on any of the Purchased Assets.

         7.2.6 AUTHORIZING RESOLUTIONS. A copy, certified by an officer of
         Seller, of the duly adopted resolutions of the members and managers of
         Seller approving this Agreement and authorizing the execution and
         delivery of this Agreement and the consummation of the transactions
         contemplated hereby.

         7.2.7 CERTIFICATE OF GOOD STANDING. A copy of Seller's Certificate of
         Good Standing from the State of New York, and a certificate evidencing
         Seller's certificate of authority to do business as a foreign company
         in the State of California.

         7.2.8 SUBORDINATION AGREEMENTS. The GE Subordination Agreement and the
         Hilco Subordination Agreement, duly executed by Seller.

         7.2.9 ASSIGNMENT OF REPRESENTATIONS AND WARRANTIES. Such consents as
         Hilco and GE shall require pursuant to Section 6.2.14 hereof.

                                   ARTICLE 8.
                      ADDITIONAL COVENANTS AND COMMITMENTS

8.1 PRORATION OF OBLIGATIONS. In addition to the Assumed Obligations, there
shall be other obligations and payments relating to the Purchased Assets and the
underlying business where amounts paid or to be paid cover time periods
straddling the Closing Date (for example, utility bills, phone bills,
prepayments on contracts, license fees, etc.), and these obligations shall also
be prorated between Buyer, as one party, and Seller, as the other party, as of
the Closing Date. Proration payments between the parties shall be made
approximately every thirty (30) days following the Closing Date, with
appropriate documentation to be made available to substantiate claims for
reimbursement or payment of prorated amounts.

8.2 SELLER EMPLOYEES. Buyer may desire to hire certain employees of Seller as
designated by Buyer (the "Seller Employees") effective as of the Closing Date,
and Seller shall use its best efforts to facilitate Buyer's efforts to hire the
Seller Employees.

8.3 ACCOUNTS RECEIVABLE. On the Closing Date, Buyer shall reduce the Accounts
Receivable first by the amount of the Closing Date Receivables Reserve, and then
reduce the net number by 20%, to arrive at the amount of Accounts Receivable
that must be good and collectible in full by Buyer in the ordinary course of
business and in any event not later than two hundred seventy (270) days after
the Closing Date (the "Guaranteed Receivables Balance"). Notwithstanding the
foregoing, Buyer shall have one (1) year after the Closing Date to collect that
certain receivable from Red Hill in the approximate amount of $618,000 as of
November 1, 2003 (the "Red Hill Receivable"). None of the Accounts Receivable of
Seller are or will be subject to any counterclaim or set-off, except as set
forth in Section 8.3.3 below. Prior to the Second True-Up Date (as defined in
Section 8.8.2 below), any payments received by Seller relating to the Accounts
Receivable shall be immediately transferred by Seller to Buyer. The following
procedures will apply for collection of the Accounts Receivable after the
Closing Date:



                                       28
<PAGE>

         8.3.1 IDENTIFICATION OF ACCOUNTS. Exhibit 1.1.1 shall include each
         Accounts Receivable account debtor by name and address and the amount
         owed Seller by such account debtor as of the Closing Date. From the
         Closing Date until two hundred seventy (270) days thereafter (or one
         (1) year in the case of the Red Hill Receivable), Buyer shall use
         commercially reasonable efforts to collect the Accounts Receivable.
         "Commercially reasonable efforts" as used herein shall not be
         interpreted to require Buyer to initiate any legal proceedings for the
         collection of amounts owed by, or defense of any claims made by, an
         account debtor.

         8.3.2 APPLICATION OF RECEIPTS. Any and all sums received by Buyer
         subsequent to the Closing Date from an Accounts Receivable account
         debtor shall be applied by Buyer to the oldest balance first for each
         such account debtor up to the amount that is due according to Exhibit
         1.1.1, and then to any indebtedness to Buyer arising after the Closing
         Date; provided, however, that (i) if the payment specifically
         references an invoice, the payment shall be applied to that invoice,
         (ii) if the account debtor contests an invoice, the payment shall not
         be applied to that invoice, and (iii) if the amount of the payment
         matches up with the amount of a given invoice, the payment shall be
         applied to that invoice. Buyer shall attempt to give Seller reasonable
         notice of any contested invoice. Seller shall have the right, at any
         time subsequent to the Closing Date and fifteen (15) months thereafter,
         upon reasonable notice to Buyer, to audit Buyer's books and records
         with respect to receipt of Accounts Receivable payments, and if Seller
         uncovers any error in Buyer's records, the parties hereto agree to
         promptly make all appropriate monetary adjustments.

         8.3.3 APPLICATION OF CHARGEBACKS, PRICE PROTECTION, PROMOTIONS, ETC.
         The amount of the Accounts Receivable existing as of the Closing Date
         may be reduced to the extent of any rebates, allowances for promotion
         and advertising, and price protection (collectively, "Accounts
         Receivable Allowances") which are approved by Buyer after the Closing
         Date in its sole discretion, which approval shall not be unreasonably
         withheld. Such Accounts Receivable Allowances shall be applied to
         reduce the outstanding amount of Accounts Receivable that must be
         repurchased by Seller under Section 8.3.5 hereof.

         8.3.4 DISTRIBUTION OF RECEIPTS; REPORTS. Buyer shall, on a monthly
         basis, furnish Seller with a statement of the Accounts Receivable
         collected, which shall include an aging of each account listed on
         Exhibit 1.1.1, and the amount of Accounts Receivable Allowances applied
         to the Accounts Receivable.

         8.3.5 REPURCHASE OF ACCOUNTS RECEIVABLE. Any Guaranteed Accounts
         Receivable which are not collected in full two hundred seventy (270)
         days (or one (1) year in the case of the Red Hill Receivable) from the
         Closing Date shall immediately be repurchased from Buyer by Seller for
         an amount equal to the aggregate outstanding balance of such
         receivables (i.e., discounted for any Accounts Receivable Allowances).
         The outstanding aggregate balance of any such Accounts Receivable on
         such date shall hereinafter be referred to as the "Remaining Balance"
         of such Accounts Receivable. The procedure for such repurchase is set
         forth in Section 8.8 below. Any payments received by Buyer thereafter
         from a customer relating to a transferred account shall be transferred
         to Seller.



                                       29
<PAGE>

8.4 ASSIGNED AGREEMENTS. Seller shall attempt to receive the consents necessary
to enable a complete and effective transfer to Buyer of all rights and interests
of Seller under all of the Assigned Agreements. Exhibit 8.4 attached hereto
lists the top 20 license agreements of Seller (in terms of gross profit) which
are included in the Assigned Agreements (the "Principal Licenses"). To the
extent that Seller is unable to receive consent from the other party to a
Principal License within thirty (30) days after Closing, Buyer shall be entitled
to set off the Purchase Price by an amount equal to the twelve (12) months
trailing gross profit generated by any such Principal License in accordance with
the procedures set forth in Section 8.8 below.

8.5 BUSINESS OPERATIONS. Seller shall bear all responsibility for ownership and
operation of the Purchased Assets and the underlying business prior to the
Closing Date, including the responsibility for any claims by third parties which
relate to such business and matters occurring prior to the Closing Date. Buyer
shall bear all responsibility for ownership and operation of the Purchased
Assets and the underlying business after the Closing Date, including
responsibility for any claims by third parties which relate to such business and
matters occurring on or after the Closing Date.

8.6 PUBLIC ANNOUNCEMENTS. Neither Buyer nor Seller shall issue any press release
or make any other public announcement (including any announcement to employees)
relating to the subject matter of this Agreement without first having received
the prior written approval of the other party hereto.

8.7 MUTUAL COOPERATION. Buyer and Seller agree to work together and cooperate to
the extent reasonably necessary so as to facilitate closing on the transactions
contemplated by this Agreement. Further, subsequent to closing, Buyer and
Seller, at the request of the other, shall each execute, deliver and acknowledge
all such further instruments and documents and do and perform all such other
acts and deeds as may be reasonably required to consummate the transactions
contemplated by this Agreement and to carry out the purpose and intent of this
Agreement.

8.8 TRUE-UP AND SET-OFF.

         8.8.1 Within ten (10) days after the thirty (30) day anniversary of the
         Closing Date (the "License True-Up Date"), Buyer shall deliver to
         Seller a statement listing the Principal Licenses for which consent to
         assignment has not been received as of the License True-Up Date. Such
         statement shall also contain a calculation of the twelve (12) months
         trailing gross profit generated by any such Principal License
         (collectively, the "License Profits Adjustment"). Buyer shall be
         entitled to offset the License Profits Adjustment first against the
         outstanding principal of the Promissory Note, and second against the
         remaining Earn-Out Amount, if any.

         8.8.2 Within ten (10) days after the two hundred seventy (270) day
         anniversary of the Closing Date (the "Second True-Up Date"), Buyer
         shall deliver to Seller a statement of the Remaining Balance of the
         Guaranteed Accounts Receivable (other than the Red Hill Receivable) as
         of the Second True-Up Date. With respect to the Remaining Balance of
         the Guaranteed Accounts Receivable, Buyer shall be entitled to offset
         the Remaining Balance of the Guaranteed Accounts Receivable, if any,
         against the shares of Navarre


                                       30
<PAGE>

         Stock being held by Buyer pursuant to the Stock Pledge Agreement, as
         described therein. Notwithstanding the foregoing, Buyer shall give
         Seller the opportunity to pay cash for the amount of the Remaining
         Balance of the Guaranteed Accounts Receivable before exercising its
         rights under the Stock Pledge Agreement.

         8.8.3 Within ten (10) days after the one (1) year anniversary of the
         Closing Date (the "Red Hill True-Up Date"), Buyer shall deliver to
         Seller a statement of the Remaining Balance of the Red Hill Receivable
         as of the Red Hill True-Up Date. To the extent that the Remaining
         Balance of the Red Hill Receivable exceeds the sum of (i) 20% of the
         Remaining Balance of the Red Hill Receivable, and (ii) the amount of
         the Closing Date Receivables Reserve allocated to the Red Hill
         Receivable, Buyer shall be entitled to offset the excess (the "Final
         Uncollected Balance of the Red Hill Receivable"), if any, against the
         shares of Navarre Stock being held by Buyer pursuant to the Stock
         Pledge Agreement, as described therein. Notwithstanding the foregoing,
         Buyer shall give Seller the opportunity to pay cash for the amount of
         the Final Uncollected Balance of the Red Hill Receivable before
         exercising its rights under the Stock Pledge Agreement

8.9 NON-COMPETE; NON-SOLICITATION.

         8.9.1 As an additional inducement to Buyer to enter into and to perform
         its obligations under this Agreement, each of Seller and the Members
         agree that, for a period of three (3) years after the Closing Date (the
         "Non-Competition Period"), Seller and the Members shall not:

                  A. accept employment with or render services for compensation
                  (including, without limitation, consultation or research) to,
                  or acquire any kind of ownership in, any person or entity
                  which is engaged in the design, development, marketing, sale
                  or support of any competitive product or service sold by the
                  Business within the past three (3) years in the United States;

                  B. promote, market, solicit or sell any product or service,
                  similar to or competitive with any product or service sold by
                  the Business within the past three (3) years; or

                  C. induce or attempt to induce (A) any purchaser of any
                  product or service of Buyer or its subsidiaries or affiliates
                  to cancel, allow to lapse, fail to renew or replace any
                  product or service of Buyer or its subsidiaries or affiliates,
                  (B) any representative of Buyer or its subsidiaries or
                  affiliates to terminate or alter his, her, or its relationship
                  with Buyer or its subsidiaries or affiliates, (C) any customer
                  to terminate or alter its relationship with Buyer or its
                  subsidiaries or affiliates, or (D) any employee of either
                  Buyer or its subsidiaries or affiliates to terminate his or
                  her employment with Buyer or its subsidiaries or affiliates.

         8.9.2 The following activities are expressly excluded from the
         restrictions set forth in Section 8.9.1:

                  A. The development, acquisition, funding, production and
                  exploitation of programming for worldwide television
                  broadcast, video on demand, pay-per-


                                       31
<PAGE>

                  view, worldwide retail Internet sales, video/DVD outside of
                  North American, and within North America subject to the
                  agreement set forth in Section 6.2.5 hereof (the BCII
                  Production Agreement);

                  B. The development, acquisition, funding and production of
                  audio and home video products for exploitation outside of the
                  United States and Canada; and

                  C. The rendering of third party fulfillment services as that
                  term is commonly understood in the audio and home video
                  distribution industry, which includes, but is not limited to
                  duplication, packaging, warehousing, order fulfillment and
                  shipping. In this regard, Seller and the Members' continuing
                  ownership and/or operation of AMS in Valencia, California
                  shall not be deemed to violate the restrictions set forth
                  above.

         8.9.3 If, at the time of enforcement of this Section 8.9, a court shall
         hold that the duration, scope or area restrictions stated herein are
         unreasonable under circumstances then existing, the parties agree that
         the maximum duration, scope or area reasonable under such circumstances
         shall be substituted for the stated duration, scope or area.

         8.9.4 Seller and each of the Members recognize and affirm that in the
         event of breach by any of them of any of the provisions of this Section
         8.9, money damages would be inadequate and Buyer would not have any
         adequate remedy at law. Accordingly, Seller and the Members agree that
         Buyer shall have the right, in addition to any other rights and
         remedies existing in its favor, to seek to enforce its rights and the
         obligations under this Section 8.9 by an action or actions for specific
         performance, injunction and/or other equitable relief without posting
         any bond or security to enforce or prevent any violations, whether
         anticipatory, continuing or future, of the provisions of this Section
         8.9, including, without limitation, the extension of the
         Non-Competition Period by a period equal to (i) the length of the
         violation of this Section 8.9, plus (ii) the length of any court
         proceedings necessary to stop such violation. In the event of a breach
         or violation by Seller or any Member of any of the provisions of this
         Section 8.9, the running of the Non-Competition Period, but not of such
         parties, obligations under this Section 8.9, shall be tolled during the
         period during which the occurrence of any such breach or violation is
         investigated and during the continuance of any such breach or
         violation.

8.10 REGISTRATION RIGHTS.

         8.10.1 REQUIRED REGISTRATION. If the holders of Navarre Stock make a
         written request that the Company file a registration statement for 100%
         of the Navarre Stock (or a lesser percentage provided that the
         anticipated aggregate offering price, net of any underwriting discounts
         and commissions, would exceed $2,000,000), then the Company will use
         its best efforts to effect a registration statement under the
         Securities Act covering all Navarre Stock which the holders requested
         to be registered. In addition, upon the receipt of such request, the
         Company shall promptly give written notice to all other record holders
         of Navarre Stock that such registration is to be effected. The Company
         shall include in such registration statement such Navarre Stock for
         which it has received written requests to register by such other record
         holders within 30 days after the Company's written notice to


                                       32
<PAGE>

         such other record holders. The Company shall be obligated to prepare,
         file and cause to become effective only one registration statement
         pursuant to this Section 8.10.1, 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 is not obligated to effect a registration under this
         Section 8.10.1 if the holders' proposed disposal of Navarre Stock may
         be immediately registered on Form S-3 pursuant to a Form S-3
         registration (see Section 8.10.2 below).

         In the event that (a) the holders of a majority of the Navarre Stock
         for which registration has been requested pursuant to this Section
         determine for any reason not to proceed with a registration at any time
         before the registration statement has been declared effective by the
         Commission, and such holders request the Company to withdraw such
         registration statement, if theretofore filed with the Commission, with
         respect to the Navarre Stock covered thereby, and (b) the holders of
         such Navarre Stock agree to bear their own expenses incurred in
         connection therewith and to reimburse the Company for the expenses
         incurred by it attributable to the registration of such Navarre Stock,
         then the holders of such Navarre Stock shall not be deemed to have
         exercised their right to require the Company to register Navarre Stock
         pursuant to this Section 8.10.1.

         The holders of the Navarre Stock seeking registration may select an
         underwriter reasonably acceptable to the Company for the distribution
         of the Navarre Stock. In the event that in the good faith judgment of
         the managing underwriter of such public offering the inclusion of all
         of the Navarre Stock originally covered by a request for registration
         would reduce the number of shares to be offered or interfere with the
         successful marketing of the shares of stock offered, the number of
         shares of Navarre Stock otherwise to be included in the underwritten
         public offering shall be reduced pro rata among the holders thereof to
         such amount as is deemed appropriate in the good faith judgment of the
         managing underwriter, provided that any other securities of the Company
         to be included in such registration statement shall first be reduced or
         removed from such registration statement prior to any such reduction of
         Navarre Stock.

         Without the written consent of the holders of a majority of the Navarre
         Stock for which registration has been requested pursuant to this
         section, neither the Company nor any other holder of securities of the
         Company may include securities in such registration if in the good
         faith judgment of the managing underwriter of such public offering the
         inclusion of such securities would interfere with the successful
         marketing of the Navarre Stock or require the exclusion of any portion
         of the Navarre Stock to be registered.

         8.10.2 S-3 REGISTRATION. Provided the Company qualifies for the use of
         Form S-3, the record holder or holders of any of the Navarre Stock may
         require, pursuant to this Section 8.10.2, the Company to file on one
         occasion, and to pay the expenses associated with, a registration
         statement on Form S-3, if such form is then available for use by the
         Company and such record holder or holders; provided, however, that the
         Company shall not be obligated to file such a registration statement
         (i) if the aggregate offering price of the Navarre Stock is less than
         $500,000, (ii) if the Company has, within the preceding 12


                                       33
<PAGE>

         month period, effected two registrations on Form S-3, or (iii) during
         the period ending 180 days after the effective date of a registration
         statement initiated by the Company.

         8.10.3 INCIDENTAL REGISTRATION. Each time Navarre 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), Navarre will
         give written notice of its determination to all record holders of
         Navarre Stock. Upon the written request of such a record holder of any
         shares of Navarre Stock given within 30 days after receipt of any such
         notice from Navarre, Navarre will, except as herein provided, use its
         best efforts to cause all such Navarre Stock, the record holders of
         which have 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
         Navarre Stock to be so registered; provided, however, that (a) nothing
         herein shall prevent Navarre from, at any time, abandoning or delaying
         any such registration initiated by it, and (b) if Navarre determines
         not to proceed with a registration after the registration statement has
         been filed with Securities and Exchange Commission (the "Commission")
         and Navarre's decision not to proceed is primarily based upon the
         anticipated public offering price of the securities to be sold by
         Navarre, Navarre 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 in excess
         of $20,000 incurred by Navarre as the result of such registration after
         Navarre has decided not to proceed. If any registration pursuant to
         this Section 8.10.3 shall be underwritten in whole or in part, Navarre
         may require that the Navarre Stock 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
         Navarre Stock originally covered by a request for registration would
         reduce the number of shares to be offered by Navarre or interfere with
         the successful marketing of the shares of stock offered by Navarre, the
         number of shares of Navarre Stock otherwise to be included in the
         underwritten public offering shall be reduced pro rata among the
         holders thereof to such amount as is deemed appropriate in the good
         faith judgment of the managing underwriter.

8.10.4 HOLDBACK AGREEMENTS.

                  A. Each of the holders of Navarre Stock agrees not to effect
                  any public sale or distribution of equity securities of
                  Navarre, 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.

                  B. Navarre agrees (i) not to effect any public sale or
                  distribution of its equity securities, or any securities
                  convertible into or exchangeable or exercisable for


                                       34
<PAGE>

                  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) 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 Navarre 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.

         8.10.5 REGISTRATION PROCEDURES. If and whenever Navarre is required by
         the provisions of Sections 8.10.1, 8.10.2 or 8.10.3 to effect the
         registration of any Navarre Stock under the Securities Act, Navarre
         will:

                  A. 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;

                  B. 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;

                  C. furnish to the security holders participating in such
                  registration 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 such security holders
                  and underwriters may reasonably request in order to facilitate
                  the public offering of such securities;

                  D. 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 such
                  participating holders may reasonably request within twenty
                  (20) days following the original filing of such registration
                  statement, except that Navarre 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;

                  E. notify the security holders participating in such
                  registration, 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;



                                       35
<PAGE>

                  F. notify such holders promptly of any request by the
                  Commission for the amending or supplementing of such
                  registration statement or prospectus or for additional
                  information;

                  G. 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 such holders (and concurred in by
                  counsel for Navarre), is required under the Securities Act or
                  the rules and regulations thereunder in connection with the
                  distribution of the Navarre Stock by such holder;

                  H. prepare and promptly file with the Commission and promptly
                  notify such holders 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;

                  I. advise such holders, 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; and

                  J. not file any amendment or supplement to such registration
                  statement or prospectus to which a majority in interest of
                  such holders shall have reasonably objected on the grounds
                  that such amendment or supplement does not comply in all
                  material respects with the requirements of the Securities Act
                  or the rules and regulations thereunder, after having been
                  furnished with a copy thereof at least five business days
                  prior to the filing thereof, unless in the opinion of counsel
                  for Navarre the filing of such amendment or supplement is
                  reasonably necessary to protect Navarre from any liabilities
                  under any applicable federal or state law and such filing will
                  not violate applicable law.

         8.10.6 EXPENSES. With respect to any registration requested pursuant to
         Section 8.10.1 or 8.10.2 (except as otherwise provided in Section
         8.10.1 with respect to registrations voluntarily terminated at the
         request of the requesting security holders) and with respect to each
         inclusion of shares of Navarre Stock in a registration statement
         pursuant to Section 8.10.3 (except as otherwise provided in Section
         8.10.9 with respect to registrations terminated by Navarre), Navarre
         shall bear the following fees, costs and expenses: all registration,
         filing and NASD fees, printing expenses, fees and disbursements of
         counsel and accountants for Navarre, fees and disbursements of counsel
         for the underwriter or underwriters of such securities (if Navarre
         and/or selling security


                                       36
<PAGE>

         holders are required to bear such fees and disbursements), reasonable
         fees and disbursements of one counsel for the selling security holders,
         all internal Navarre expenses, the premiums and other costs of policies
         of insurance for Navarre 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.

         8.10.7 INDEMNIFICATION. In the event that any Navarre Stock are
         included in a registration statement under Sections 8.10.1, 8.10.2 or
         8.10.3:

                  A. Navarre will indemnify and hold harmless each holder
                  (together with all officers, directors, agents and affiliates
                  of the holder) of Navarre Stock which are included in a
                  registration statement pursuant to the provisions of this
                  Section 8.10 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
                  Navarre 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.

                  B. Each holder of Navarre Stock which are included in a
                  registration pursuant to the provisions of this Section 8.10
                  will indemnify and hold harmless Navarre, any controlling
                  person and any underwriter from and against any and all loss,
                  damage, liability, cost or expense to which Navarre 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.



                                       37
<PAGE>

                  C. Promptly after receipt by an indemnified party pursuant to
                  the provisions of paragraph (a) or (b) 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 (a) or (b), 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. 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 (a) or (b) 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.

         8.10.8 NONTRANSFERABILITY OF REGISTRATION RIGHTS OF TRANSFEREES. The
         registration rights granted to the holders of Navarre Stock pursuant to
         this Section 8.10 shall not be transferable, absent express written
         consent by Navarre, which consent shall not be unreasonably withheld.

         8.10.9 TERMINATION OF REGISTRATION RIGHTS. The registration rights
         granted pursuant to this Section 8.10 shall terminate with respect to
         any holder of Navarre Stock 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 Navarre Stock held by it in a single open market
         transaction under Rule 144 promulgated under the Securities Act or any
         successor provision.

                                   ARTICLE 9.
                                 INDEMNIFICATION

9.1 INDEMNIFICATION BY SELLER AND MEMBERS. Buyer, its affiliates and their
respective officers, directors, employees, agents, successors and assigns shall
be indemnified and held harmless, jointly and severally, by Seller or the
Members against any and all liabilities, losses,


                                       38
<PAGE>

damages, claims, costs, expenses, interest, awards, judgments and penalties,
including, without limitation, related attorney and consultant fees and expenses
(hereinafter collectively a "Loss"), actually suffered or incurred by them,
arising out of, relating to or resulting from (a) the inaccuracy of any
representation or warranty made by Seller and the Members in this Agreement, (b)
the breach by Seller or the Members of any of their covenants or agreements in
this Agreement, (c) any failure to comply with laws relating to bulk transfers
or bulk sales with respect to the transactions contemplated by this Agreement,
(d) any liability of Seller not expressly constituting an Assumed Liability or
an Assumed Obligation, (e) any liability to which Buyer or its affiliates may be
subject as a result of or arising in respect of any employee welfare or benefit
plans of Seller or (f) any aspect of the operation of the Business on or prior
to the Closing Date not expressly constituting an Assumed Liability or Assumed
Obligation (all such Losses being referred to herein collectively as the "Buyer
Losses").

9.2 INDEMNIFICATION BY BUYER. Seller, the Members, their affiliates and their
respective officers, directors, employees, agents, successors and assigns shall
be indemnified and held harmless by Buyer against any and all Losses actually
suffered or incurred by them arising out of or resulting from (a) the inaccuracy
of any representation or warranty made by Buyer in this Agreement, (b) the
breach by Buyer of any of its covenants or agreements in this Agreement or (c)
any aspect of the operation of the Business by Buyer after the Closing Date (all
such Losses being referred to herein collectively as the "Seller Losses").

9.3 NOTICE AND OPPORTUNITY TO DEFEND. Each party shall promptly, and in all
events within thirty (30) days of obtaining actual knowledge thereof, notify the
Indemnifying Party (as defined in Section 9.6 hereof) of the existence of any
claim, demand or other matter requiring a defense to which the Indemnifying
Party's obligations under this Article 9 would apply. The Indemnified Party (as
defined in Section 9.6 hereof) shall give the Indemnifying Party a reasonable
opportunity to defend the claim, demand or matter at the Indemnifying Party's
own expense and with counsel selected by the Indemnifying Party and reasonably
satisfactory to the Indemnified Party; provided that the Indemnified Party shall
at all times also have the right to fully participate in the defense at its own
expense. Any such claim, demand or other matter shall not be settled or
compromised without the consent of the Indemnified Party; provided, however, if
the Indemnified Party does not consent to such written settlement or compromise
offer, such claim, demand or other matter shall not be settled or compromised,
but the Indemnifying Party's obligation to indemnify with respect hereto shall
be limited to the amount for which such claim, demand or other matter could have
been settled or compromised, together with the cost of defense through the date
such matter could have been settled or compromised. If the Indemnifying Party
shall, within a reasonable time after receipt of notice, fail to defend, the
Indemnified Party shall have the right, but not the obligation, to undertake the
defense, and to compromise or settle, exercising reasonable business judgment,
the claim, demand or other matter on behalf, for the account and at the risk of
the Indemnifying Party. If the claim is one that cannot by its nature be
defended solely by the Indemnifying Party (including, without limitation, any
federal or state tax proceeding), the Indemnified Party shall make available, or
cause to be made available, all information and assistance that the Indemnifying
Party may reasonably request.

9.4 SURVIVAL. The representations and warranties set forth in this Agreement or
in any writing delivered to Buyer or Seller in connection with this Agreement
shall survive the Closing


                                       39
<PAGE>

Date and the consummation of the transactions contemplated hereby for a period
of three (3) years and shall not be affected by any examination made for or on
behalf of Buyer or Seller, the knowledge of any of Buyer's or Seller's officers,
directors, managers, shareholders, members, partners, employees or agents, or
the acceptance by Buyer or Seller of any certificate or opinion; provided,
however, that the representations and warranties made with respect to Sections
3.6 and 3.9 hereof shall survive the Closing Date and the consummation of the
transactions contemplated hereby for a period of four (4) years, and the
representations and warranties made with respect to Sections 3.18 and 3.19
hereof shall survive until the applicable statute of limitations has expired.

9.5 LIMITATION OF LIABILITY. Any indemnification right related to a Buyer Loss
shall be subject to reaching a minimum aggregate obligation (a "Threshold") of
One Hundred Thousand Dollars ($100,000), whereupon the entire aggregate amount
of all obligations and liabilities in excess of the Threshold shall be
immediately due and payable; provided, however, that the Threshold shall not
apply to (i) any claim related to a breach of representation or warranty where
Seller or any Member had actual knowledge of such breach at Closing and
intentionally and willfully failed to disclose such breach, or (ii) any claim
resulting from Seller's failure to pay any Seller liability which is not an
Assumed Liability. Further, the maximum amount required to be paid by Seller and
the Members for Buyer Losses related to (x) any claim for violations under
Section 3.22, or (y) any other claim related to a breach of representation or
warranty concerning Seller's Intellectual Property Rights (the claims described
in clauses (x) and (y) shall hereinafter be known as "IP Claims"), shall not
exceed $1,000,000, and the sole remedy for IP Claims shall be the offset right
set forth in Section 9.6.2.

9.6 RIGHT OF OFFSET.

         9.6.1 For purposes of this Section 9.6 and Section 9.3, a party seeking
         indemnification shall be considered the "Indemnified Party" and the
         party from whom indemnification is sought shall be considered the
         "Indemnifying Party." The Indemnifying Party shall reimburse the
         Indemnified Party, on demand, for any payment made by the Indemnified
         Party at any time in respect of any liability, obligation or a claim to
         which the foregoing indemnity relates. The Indemnified Party shall be
         entitled to offset any amount owed to the Indemnifying Party against
         the amount of the indemnification obligation of the Indemnifying Party
         under this Agreement.

         9.6.2 Notwithstanding the foregoing, Buyer shall comply with the
         following procedures for any offset right resulting from any claim
         under this Agreement: Buyer's Losses shall be set off against any
         Earn-Out Amount which becomes due under this Agreement. As an example,
         assume that during the first year after the Closing Date, Buyer suffers
         a Buyer Loss in the amount of $500,000. Assume further that the
         Earn-Out Amount for the first twelve-month period following Closing is
         $300,000. Buyer would retain the $300,000 in satisfaction of the Buyer
         Loss. Buyer would then need to wait until the end of the second
         twelve-month period following Closing to recoup the remaining $200,000
         against the Earn-Out Amount, if any. If the amount of the Earn-Out
         Amount for the second twelve-month period following Closing was less
         than $200,000, Buyer would need to wait until the end of the third
         twelve-month period following Closing to recoup the excess, and so on
         through the Earn-Out period.



                                       40
<PAGE>

                                  ARTICLE 10.
                            MISCELLANEOUS PROVISIONS

10.1 NOTICES. All notices, offers, requests or other communications from either
of the parties hereto to the other shall be in writing and shall be considered
to have been duly delivered or served if sent by first class certified mail,
return receipt requested, postage prepaid, to the party at its address as set
forth below or to such other address as such party may hereafter designate by
written notice to the other party:

         If to Buyer, to:

         BCI Eclipse Company, LLC
         7400-49th Avenue North
         New Hope, MN  55428
         Fax No.:  (763) 535-2109
         Attn:  Eric Paulson, CEO

         With copies to:

         Winthrop & Weinstine, P.A.
         Suite 3500 225 South Sixth Street
         Minneapolis, MN  55402
         Fax No.:  (612) 604-6800
         Attn:  Scott J. Dongoske

         and

         Navarre Corporation
         7400-49th Avenue North
         New Hope, MN  55428
         Fax No.:  (763) 535-2109
         Attn:  Ryan Urness, Corporate Counsel

         If to Seller or the Members:

         David E. Catlin
         1289 Westwind Circle
         Westlake Village, CA 91361
         Fax No:

         Edward D. Goetz
         258 Spruce Circle
         Simi Valley, CA  93065



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<PAGE>

         With a copy to:

         Howard M. Zelener, Esq.
         548 Carnes Circle
         Redlands, CA 92374
         Fax No.: 909-794-9120

         and to:

         Paul T. Kestenbaum, Esq.
         Kestenbaum & Hoffman LLP
         9454 Wilshire Boulevard, Suite 715
         Beverly Hills, CA 90212
         Fax No.: 310-858-5286


10.2 BROKERS. Each party hereto warrants, covenants and represents to the other
that they have dealt with no agent or broker in connection with this Agreement.
Each party hereto hereby agrees to indemnify and hold harmless the other party
from and against any claim, loss or cause of action suffered by or brought
against the other party on account of a breach of the foregoing representation,
warranty and covenant.

10.3 ENTIRE AGREEMENT. This Agreement, including the schedules and exhibits
attached hereto, as the same may be amended at closing, and the instruments and
agreements referred to herein to be executed and delivered at Closing, expresses
the whole agreement between the parties with respect to the purchase and sale
contemplated hereby, there being no representations, warranties or other
agreements (oral or written) not expressly set forth or provided for herein.

10.4 COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

10.5 CHANGES. Any and all agreements by the parties hereto to amend, change,
extend, revise or discharge this Agreement, in whole or in part, shall be
binding upon the parties to such agreement, even though such agreements may lack
legal consideration, provided such agreements are in writing and executed by the
party against whom enforcement is sought.

10.6 GOVERNING LAW. This Agreement shall be deemed to be a contract made under
the laws of the State of Minnesota. The laws of the State of Minnesota shall
govern the validity, construction and performance of this Agreement, regardless
of the laws that might otherwise govern under applicable principles of conflicts
of law. Any legal proceeding related to this agreement shall be brought in an
appropriate Minnesota court, and each of the parties hereto hereby consents to
the exclusive jurisdiction of the courts of the State of Minnesota for this
purpose.

10.7 CONSTRUCTION. Wherever possible, each provision of this Agreement and each
related document shall be interpreted in such manner as to be effective and
valid under applicable law,


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<PAGE>

but if any provision of this Agreement or any related document shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions of this
Agreement or such related documents.

10.8 WAIVER. No failure on the part of either party to exercise, and no delay in
exercising any right or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right or remedy hereunder preclude
any other or further exercise thereof or the exercise of any other right or
remedy granted hereby or by any related document or by law.

10.9 SEVERABILITY. In the event any part of this Agreement is found to be void,
the remaining provisions of this Agreement shall nevertheless be binding with
the same effect as though the void parts were deleted.

10.10 TITLES AND SUB-TITLES. The titles of the paragraphs and subparagraphs are
placed herein for convenient reference only and shall not to any extent have the
effect of modifying, amending or changing the expressed terms and provisions of
this Agreement.

10.11 NO THIRD PARTY BENEFICIARIES. This Agreement is a contract solely among
Buyer, Seller and the Members. No third party beneficiaries (including, without
limitation, employees and customers of Buyer) are intended and none shall be
inferred, and no party other than Buyer, Seller and the Members may assert any
right, make any claim or otherwise attempt to enforce any provision of or under
this Agreement.

10.12 PREPARATION OF AGREEMENT. Winthrop & Weinstine, P.A. has drafted this
Agreement at the request of Buyer. By signing this Agreement, Seller and the
Members acknowledge that they have been advised that Winthrop & Weinstine, P.A.
is not representing them individually, that they have been encouraged them to
seek separate counsel (other than Winthrop & Weinstine, P.A.), and that they
have in fact received or have had the opportunity to receive separate counsel.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]



                                       43
<PAGE>


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

                                     BUYER:

                                     BCI ECLIPSE COMPANY, LLC


                                     By:
                                        ----------------------------------------
                                        James Gilbertson
                                        Its CEO

                                     SELLER:

                                     BCI ECLIPSE LLC


                                     By:
                                        ----------------------------------------
                                        Its:

                                     THE MEMBERS:

                                        ----------------------------------------
                                        David E. Catlin

                                        ----------------------------------------
                                        Edward D. Goetz

The undersigned hereby executes this Agreement solely for purposes of agreeing
to be bound by the terms and provisions of Article 5 and Section 8.10 of this
Agreement:

                                     NAVARRE CORPORATION


                                     By:
                                        ----------------------------------------
                                        Its:


                                       44
<PAGE>

                                LIST OF EXHIBITS

Exhibit 1.1.1     -        Accounts Receivable and Receivables Reserve
Exhibit 1.1.2     -        Inventory
Exhibit 1.1.4     -        Furniture and Equipment
Exhibit 1.1.5     -        Prepayments
Exhibit 1.1.7     -        Assigned Leases
Exhibit 1.1.8     -        Assigned Agreements
Exhibit 1.1.9     -        Assumed Contracts
Exhibit 1.1.11    -        General Intangibles
Exhibit 1.1.12    -        Included Software
Exhibit 1.2.2     -        Personal Assets
Exhibit 1.2.4     -        Excluded Software
Exhibit 2.4.1     -        Assumed Liabilities
Exhibit 2.6       -        Allocation of Purchase Price
Exhibit 3.2       -        Affiliates
Exhibit 3.4.2     -        No Violation
Exhibit 3.5       -        Financial Documents
Exhibit 3.8       -        Judgments
Exhibit 3.9       -        Liabilities
Exhibit 3.11      -        Adverse Changes
Exhibit 3.12      -        Leases of Seller
Exhibit 3.13      -        Insurance Policies
Exhibit 3.14      -        Litigation
Exhibit 3.15      -        Product Allowances and Claims for Return
Exhibit 3.16      -        Warranties
Exhibit 3.17      -        Material Contracts
Exhibit 3.19      -        Employment Contracts and Fringe Benefits
Exhibit 3.22      -        Seller Products and Intellectual Property Rights
Exhibit 6.1.2     -        Opinion of Buyer's Counsel
Exhibit 6.1.3     -        Goetz Employment Agreement
Exhibit 6.1.4     -        Consulting Agreement
Exhibit 6.1.5     -        Services Agreement
Exhibit 6.2.2     -        Opinion of Seller's Counsel
Exhibit 6.2.11    -        GE Subordination Agreement
Exhibit 6.2.12    -        Hilco Subordination Agreement
Exhibit 6.2.13    -        Stock Pledge Agreement
Exhibit 7.1.11    -        Assumption Agreement
Exhibit 7.2.3     -        Bill of Sale
Exhibit 8.4       -        Principal Licenses




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