EXHIBIT 1
AMENDED AND RESTATED
SUBSCRIPTION AGREEMENT
This Amended and Restated Subscription Agreement (this "Agreement") dated
as of July 31, 1999 is entered into by and between Navarre Corporation, a
corporation organized under the laws of Minnesota (together with its successors,
"Navarre"), and Xxxxxxxx International Limited, a company organized under the
laws of the Cayman Islands (together with its successors, "Xxxxxxxx").
The parties hereto agree as follows:
1. Purchase and Sale; Rights. In consideration of and upon the basis of
the representations, warranties and agreements and subject to the terms and
conditions set forth in this Agreement:
a. Initial Preferred Shares and Warrant.
(i) Xxxxxxxx agrees to purchase from Navarre, and Navarre
agrees to sell to Xxxxxxxx on the Initial Closing Date (as defined
below), in accordance with Section 2 below, 34,000 shares (the
"Initial Preferred Shares") of Navarre's Class B Convertible
Preferred Stock, liquidation preference $250 per share (the "Class B
Preferred Stock"), having the terms and conditions set forth in the
Certificate of Rights and Preferences attached hereto as Annex A
(the "Certificate of Rights and Preferences"), at an aggregate
purchase price of $8,500,000. In addition, Navarre shall issue to
Xxxxxxxx on the Initial Closing Date one warrant substantially in
the form attached hereto as Annex B (a "Warrant") to purchase from
time to time up to an aggregate of 16,000 shares of Class B
Preferred Stock at a per share purchase price equal to the
liquidation preference of the Class B Preferred Stock, not to exceed
an aggregate purchase price of $4,000,000. Navarre shall have the
right to require Xxxxxxxx to convert the outstanding Initial
Preferred Shares into shares of Common Stock in the manner, and
subject to the terms, specified in Section 1.e. of this Agreement.
(ii) The closing (the "Initial Closing") of the sale of the
Initial Preferred Shares shall occur on the third Trading Day
following the Effective Date (as defined in Section 1.f), upon
satisfaction or, if applicable, waiver of the conditions set forth
in Sections 8 and 9 hereof, or at such other date and time as
Xxxxxxxx and Navarre shall mutually agree
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(such date, the "Initial Closing Date"). As used herein, the term
"Initial Common Shares" means the shares of Navarre common stock, no
par value (the "Common Stock"), issuable upon conversion of the
Initial Preferred Shares and upon conversion of the shares of Class
B Preferred Stock issuable upon exercise of the Warrant issued on
the Initial Closing Date; the term "Investment Securities" means all
Warrants and shares of Class B Preferred Stock issued or issuable
hereunder (including shares issued or issuable upon exercise of
Warrants), and all shares of Common Stock issued or issuable upon
conversion of such shares of Class B Preferred Stock; the term
"Trading Day" means any day on which the Common Stock is quoted on
Nasdaq; and the term "Nasdaq" means the Nasdaq National Market, but
if the Nasdaq National Market is not then the principal U.S. trading
market for the Common Stock, then "Nasdaq" shall be deemed to mean
the principal U.S. national securities exchange (as defined in the
Securities Exchange Act of 1934, as amended ("the Exchange Act")) on
which the Common Stock is then traded.
x. Xxxxxxx Rights. Xxxxxxxx grants Navarre the right to issue to
Xxxxxxxx, and Xxxxxxxx agrees to buy, an additional number of shares of
Class B Preferred Stock as determined below:
(i) Primary Navarre Right. During the period (the "Primary
Navarre Exercise Period") beginning on the sixth month anniversary
of the date the Registration Requirement (as defined in Section
1.b.iv below) is satisfied with respect to the Initial Common Shares
and ending on the third annual anniversary of the Effective Date,
Xxxxxxxx grants Navarre the right (the "Primary Navarre Right") to
issue to Xxxxxxxx, and Xxxxxxxx agrees to buy on the Primary Navarre
Closing Date (as defined below), an aggregate of 34,000 shares (the
"Primary Navarre Shares") of Class B Preferred Stock at an aggregate
purchase price of $8,500,000. Upon exercise of the Primary Navarre
Right, Navarre shall also issue to Xxxxxxxx on the Primary Navarre
Closing Date one additional Warrant. Navarre shall have the right to
require Xxxxxxxx to convert the outstanding Primary Navarre Shares
into shares of Common Stock in the manner, and subject to the terms,
specified in Section 1.e. of this Agreement.
(ii) Rollover Navarre Right. In the event Xxxxxxxx does not
exercise its Primary Xxxxxxxx Right (as defined in Section 1.c
below), then, during the Rollover Navarre Exercise Period, Xxxxxxxx
grants Navarre the right (the "Rollover Navarre Right" and, together
with the Primary Navarre Right, the "Navarre Rights") to issue to
Xxxxxxxx from time to
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time, and Xxxxxxxx agrees to buy on the applicable Rollover Navarre
Closing Date (as defined below), up to an aggregate of 50,000 shares
(the "Rollover Navarre Shares" and, together with the Primary
Navarre Shares, the "Navarre Preferred Shares") of Class B Preferred
Stock at a per share purchase price equal to $250, not to exceed an
aggregate purchase price of $12,500,000. The "Rollover Navarre
Exercise Period" means the period from but excluding the last day of
the Primary Xxxxxxxx Exercise Period and ending on the one year
anniversary thereof, provided that, in the event Navarre issues on
the applicable Rollover Navarre Closing Date a lesser number of
shares of Class B Preferred Stock than the number specified in its
Navarre Notice (as defined below) for that date (the difference
between the specified number and the lesser number being the
"Remaining Number") solely because of Navarre's failure to satisfy
in full the condition to exercise specified in Section 1.b.(iv)(E),
then, as to the Remaining Number, the Rollover Navarre Exercise
Period shall be extended by one Trading Day for each Trading Day
that such condition to exercise remains unsatisfied, up to a maximum
of 14 months.
(iii) Notice of Exercise. To exercise any Navarre Rights,
Navarre shall have delivered to Xxxxxxxx a written notice in the
form attached hereto as Annex C during the Primary Navarre Exercise
Period, in the case of the Primary Navarre Right, and a written
notice in the form attached hereto as Annex D during the Rollover
Navarre Exercise Period, in the case of the Rollover Navarre Right
(each such notice is referred to as a "Navarre Notice" and each such
date of delivery, a "Navarre Notice Date"). In all cases, a Navarre
Notice must be delivered on a Trading Day prior to 5:00 p.m. eastern
time. Each time that a Navarre Right is exercised, the closing of
the sale of the shares of Class B Preferred Stock (a "Navarre
Closing") shall take place in accordance with Section 2 on the
twenty-third Trading Day following and excluding the Navarre Notice
Date or such other date and time as Navarre and Xxxxxxxx shall
mutually agree (such date and time being referred to herein as the
"Primary Navarre Closing Date" in the case of the Primary Navarre
Right and a "Rollover Navarre Closing Date" in the case of the
Rollover Navarre Right, and collectively as the "Navarre Closing
Dates"), upon satisfaction of the terms and conditions described
herein, including satisfaction (or, if applicable, waiver) of the
relevant conditions set forth in Sections 8 and 9 hereof.
(iv) Conditions to Exercise. Notwithstanding anything else in
this Agreement to the contrary, no Navarre Rights may be
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exercised unless the following conditions are satisfied as of the
Navarre Notice Date and the corresponding Navarre Closing Date:
(A) the shares of Common Stock are listed on Nasdaq;
(B) one or more Registration Statements are effective
for all then outstanding shares of Common Stock issued
hereunder and all shares of Common Stock issuable upon
conversion of outstanding Preferred Shares (as defined in
Section 1.c below), and contain a current prospectus that can
be used by Xxxxxxxx for resale purposes (the "Registration
Requirement");
(C) there has been no Blackout Period (as defined in
Section 3.A.) or any other period in which the Registration
Statements referred to in the immediately preceding clause (B)
are not effective or not able to be used by Xxxxxxxx for
resales within the preceding thirty Trading Days;
(D) the volume weighted average price of the Common
Stock for each of the preceding three Trading Days has
continually exceeded $6.00;
(E) the number of Assumed Shares does not exceed 9.9% of
the number of shares of Common Stock then outstanding, where
"Assumed Shares" means the sum of:
(i) the number of shares of Common Stock issuable
upon conversion of the Class B Preferred Stock (x) to be
issued on the applicable Navarre Closing Date and (y) in
the case of the exercise of the Primary Navarre Right,
issuable upon exercise of the Warrant issuable on the
Primary Navarre Closing Date, as if such Warrant had
been exercised in full on such date;
(ii) the number of shares of Common Stock issued
during the preceding 14 months upon prior conversion of
shares of Class B Preferred Stock;
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(iii) the number of shares of Common Stock
issuable upon conversion of all outstanding shares of
Class B Preferred Stock issued during the preceding 14
months;
(iv) the number of shares of Common Stock issuable
upon conversion of shares of Class B Preferred Stock
that remain issuable upon exercise of outstanding
Warrants; and
(v) the number of shares of Common Stock issuable
upon conversion of shares of Class B Preferred Stock
issuable under any unexercised Rollover Xxxxxxxx Right
still in effect at that time;
provided that the shares of Class B Preferred Stock referred
to in the preceding clauses (i), (iii), (iv) and (v) shall be
assumed to be converted into shares of Common Stock on (x) the
applicable Navarre Notice Date for purposes of determining
Navarre's satisfaction of the condition specified in this
paragraph (E) on such date, and (y) the applicable Navarre
Closing Date for purposes of determining Navarre's
satisfaction of the condition specified in this paragraph (E)
on such date;
(F) Xxxx X. Xxxxxxx shall continue to serve as the
Chairman of the Board, President and Chief Executive Officer
of Navarre and Xxxxxxx X. Xxxxxx shall continue to serve as
Executive Vice President and Chief Financial Officer or Co-
Chairman of the Board of Navarre (in each case performing at
least substantially the same responsibilities as they were
performing on the Effective Date), except if one of them
becomes incapacitated due to illness or death;
(G) The number of shares of Common Stock (i) issued
pursuant to prior conversions of shares of Class B Preferred
Stock, (ii) issued in satisfaction of Navarre's dividend
obligations pursuant to Section 2(B) of the Certificate of
Rights and Preferences, and (iii) issuable upon the assumed
conversion, as of that Navarre Closing Date, of all of the
shares of Class B Preferred Stock then outstanding or issuable
under this Agreement (including shares of Class B Preferred
Stock issuable upon exercise of unexercised Xxxxxxxx Rights
and issued or issuable Warrants) does
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not exceed the 19.9% Limit (as defined in Section 4(C) of the
Certificate of Rights and Preferences) unless the Required
Consent (as defined in Section 4(C) of the Certificate of
Rights and Preferences) has been obtained; and
(H) No Default Event (as defined in Section 2(C) of the
Certificate of Rights and Preferences) has occurred and is
continuing.
If any event occurs triggering any of the adjustment provisions in Section 10 of
the Certificate of Rights and Preferences, then the conditions to exercise of
the Navarre Rights set forth in the immediately preceding clauses (D) and (E)
shall also be proportionally adjusted, if necessary, so that they have
substantially the same force and effect immediately following any such event
that they would have had immediately prior to such action. All of the
adjustments provided for in the preceding sentence shall be made successively
whenever any such event shall occur.
x. Xxxxxxxx Rights. Navarre grants Xxxxxxxx the right to purchase
from Navarre, and Navarre agrees to issue to Xxxxxxxx, an additional
number of shares of Class B Preferred Stock as determined below:
(i) Primary Xxxxxxxx Right. During the period beginning on the
sixth month anniversary of the date the Registration Requirement is
satisfied with respect to the Initial Common Shares and ending on
the third annual anniversary of such beginning date (the "Primary
Xxxxxxxx Exercise Period"), Navarre grants Xxxxxxxx the right (the
"Primary Xxxxxxxx Right") to purchase from Navarre, and Navarre
agrees to issue on the Primary Xxxxxxxx Closing Date (as defined
below), an aggregate of 34,000 shares (the "Primary Xxxxxxxx
Shares") of Class B Preferred Stock at an aggregate purchase price
of $8,500,000. Upon exercise of the Primary Xxxxxxxx Right, Navarre
shall also issue to Xxxxxxxx on the Primary Xxxxxxxx Closing Date
one additional Warrant.
(ii) Rollover Xxxxxxxx Right. In the event Navarre does not
exercise its Primary Navarre Right, then, during the period from but
excluding the last day of the Primary Navarre Exercise Period and
ending on the one year anniversary thereof (the "Rollover Xxxxxxxx
Exercise Period"), Navarre grants Xxxxxxxx the right (the "Rollover
Xxxxxxxx Right" and, together with the Primary Xxxxxxxx Right, the
"Xxxxxxxx Rights") to purchase from Navarre from time to time, and
Navarre agrees to issue on the applicable Rollover Xxxxxxxx Closing
Date (as defined below), up to an aggregate of 50,000 shares (the
"Rollover Xxxxxxxx Shares" and, together with the Primary Xxxxxxxx
Shares, the "Xxxxxxxx Preferred Shares") of Class
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B Preferred Stock at a per share purchase price equal to $250, up to
an aggregate purchase price of $12,500,000. The term "Preferred
Shares" means the Initial Preferred Shares, the Navarre Preferred
Shares, the Xxxxxxxx Preferred Shares and all shares of Class B
Preferred Stock issuable upon exercise of the Warrants.
(iii) Notice of Exercise. To exercise any Xxxxxxxx Rights,
Xxxxxxxx shall have delivered to Navarre a written notice in the
form attached hereto as Annex E during the Primary Xxxxxxxx Exercise
Period, in the case of the Primary Xxxxxxxx Right, and a written
notice in the form attached hereto as Annex F during the Rollover
Xxxxxxxx Exercise Period, in the case of the Rollover Xxxxxxxx Right
(each such notice, a "Xxxxxxxx Notice" and each such date of
delivery, a "Xxxxxxxx Notice Date"). In all cases, a Xxxxxxxx Notice
must be delivered on a Trading Day prior to 5:00 p.m. central time.
Each time that a Xxxxxxxx Right is exercised, the closing of the
sale of the shares of Class B Preferred Stock (a "Xxxxxxxx Closing")
shall take place in accordance with Section 2 on the third Trading
Day following and excluding the Xxxxxxxx Notice Date or such other
date and time as Navarre and Xxxxxxxx shall mutually agree (such
date and time being referred to herein as the "Primary Xxxxxxxx
Closing Date" in the case of the Primary Xxxxxxxx Right and a
"Rollover Xxxxxxxx Closing Date" in the case of the Rollover
Xxxxxxxx Right, and collectively as the "Xxxxxxxx Closing Dates"),
upon satisfaction of the terms and conditions described herein,
including satisfaction (or, if applicable, waiver) of the relevant
conditions set forth in Sections 8 and 9 hereof.
d. Exercise Restriction. Notwithstanding anything else in this
Agreement, but subject to the last sentence of this paragraph, Navarre
Rights and Xxxxxxxx Rights may not be exercised on any date on which
Navarre has a current obligation under Section 3.A to register shares of
Common Stock issued or issuable hereunder or for a period of six months
following effectiveness of a Registration Statement covering such shares.
The Primary Xxxxxxxx Exercise Period shall be extended by one Trading Day
for each Trading Day past the second anniversary of the Effective Date on
which Xxxxxxxx is restricted from exercising the Primary Xxxxxxxx Right
under the preceding sentence and the Rollover Xxxxxxxx Exercise Period
shall be extended by one Trading Day for each Trading Day following the
Primary Navarre Exercise Period on which Xxxxxxxx is restricted from
exercising the Rollover Xxxxxxxx Right under the preceding sentence.
Notwithstanding the foregoing, Xxxxxxxx may exercise the Xxxxxxxx Rights
at any time following the announcement of a proposed Combination (as
defined in Section 6 below).
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e. Conversion Right. Xxxxxxxx grants Navarre the right (the
"Conversion Right") to require Xxxxxxxx to convert the outstanding Initial
Preferred Shares and Primary Navarre Shares into shares of Common Stock in
accordance with their terms on the twelve month anniversary of the later
of (i) the date of issuance thereof or (ii) the first date of
effectiveness of the relevant Registration Statement covering such shares
of Common Stock (the date in clause (i) or (ii) being referred to as the
"Initial Date"), upon prior written notice to Xxxxxxxx within two weeks
following and excluding the Initial Date, provided that, in each case,
Navarre's exercise of the Conversion Right shall be delayed by one Trading
Day for each Trading Day during that corresponding six month period that
either a Blackout Period (as defined in Section 3.A) is in effect or the
Registration Statement is otherwise not effective or a Default Event (as
defined in Section 2(C) of the Certificate of Rights and Preferences) has
occurred and continues.
f. Condition Precedent. Notwithstanding any other provision of this
Agreement to the contrary, it shall be a condition precedent to the
effectiveness of this Agreement that, on or before noon, eastern time, on
August 16, 1999, (x) the Board of Directors of Navarre shall, by written
resolution, have duly authorized the execution, delivery and performance
of this Agreement and the Certificate of Rights and Preferences and the
Warrants by Navarre (including the issuance of the Investment Securities)
and ratified and confirmed the due authorization of all actions previously
taken by any officer of Navarre in connection with this Agreement and the
Certificate of Rights and Preferences and the Warrants, (y) to the extent
deemed necessary by the Board of Directors of Navarre, the Board of
Directors of Net Radio Corporation ("Net Radio"), a majority-owned
subsidiary of the Company, shall have consented to Section 5.g of this
Agreement as it may relate to Net Radio (the Board approvals specified in
the preceding clauses (x) and (y) being referred to collectively as the
"Board Consent"); and (z) on the date the Board Consent is obtained (the
"Effective Date"), the Chief Executive Officer of Navarre shall have
delivered to Xxxxxxxx a certificate certifying that the Board Consent has
been obtained, and attaching a true, correct and complete copy of such
Board Consent. If the conditions specified in the preceding sentence have
not been satisfied by noon, eastern time, on August 16, 1999, this
Agreement shall be null and void and of no further force or effect without
any further action on the part of any party to this Agreement.
2. Closings. The Initial Closing and any Navarre Closings and Xxxxxxxx
Closings (any of the foregoing, an "Investment Closing") shall take place
initially via facsimile on the applicable closing date in the manner set forth
below; provided that original certificates representing shares of Class B
Preferred Stock and Warrants shall be delivered via Federal Express to Xxxxxxxx
as Xxxxxxxx instructs in writing, and provided further that each original
preferred stock certificate issued in accordance with this Section 2 shall
represent 3,400 shares of Class B Preferred Stock (except that to the extent the
number of shares of Class B
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Preferred Stock to be delivered at any given time is not evenly divisible by
3,400, one stock certificate shall represent the remaining shares). As used in
this Agreement, the term "Investment Closing Dates" refers collectively to the
Initial Closing Date and any Navarre Closing Date or Xxxxxxxx Closing Date.
a. Initial Closing Date. At the Initial Closing, the following
deliveries shall be made:
(i) Class B Preferred Stock and Warrant. Navarre shall deliver
to Xxxxxxxx ten stock certificates, each representing 3,400 shares
of Class B Preferred Stock, together with one Warrant duly executed
by Navarre in definitive form, in each case duly registered on the
books of Navarre as instructed by Xxxxxxxx.
(ii) Purchase Price. Xxxxxxxx shall cause to be wire
transferred to Navarre, in accordance with the instructions set
forth in Section 14, the aggregate purchase price of $8,500,000 in
immediately available United States dollars.
(iii) Closing Documents. The closing documents required by
Sections 8 and 9 shall be delivered to Xxxxxxxx and Xxxxxxx,
respectively.
(iv) Delivery Notice. An executed copy of the delivery notice
in the form attached hereto as Annex G shall be delivered to
Xxxxxxxx.
b. Primary Navarre Closing Date. On the Primary Navarre Closing
Date, if any, the following deliveries shall be made:
(i) Class B Preferred Stock and Warrant. Navarre shall deliver
to Xxxxxxxx ten stock certificates, each representing 3,400 shares
of Class B Preferred Stock, together with one Warrant duly executed
by Navarre in definitive form, in each case duly registered on the
books of Navarre as instructed by Xxxxxxxx.
(ii) Purchase Price. Xxxxxxxx shall cause to be wire
transferred to Navarre, in accordance with the instructions set
forth in Section 14, the aggregate purchase price of $8,500,000 in
immediately available United States dollars.
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(iii) Closing Documents. The closing documents required by
Sections 8 and 9 shall be delivered to Xxxxxxxx and Xxxxxxx,
respectively.
(iv) Delivery Notice. An executed copy of the delivery notice
in the form attached hereto as Annex G shall be delivered to
Xxxxxxxx.
c. Rollover Navarre Closing Dates. On each Rollover Navarre Closing
Date, if any, the following deliveries shall be made:
(i) Class B Preferred Stock. Navarre shall deliver to Xxxxxxxx
stock certificates collectively representing the aggregate number of
shares of Class B Preferred Stock to be issued on that closing date,
duly registered on the books of Navarre as instructed by Xxxxxxxx.
(ii) Purchase Price. Xxxxxxxx shall cause to be wire
transferred to Navarre, in accordance with the instructions set
forth in Section 14, the aggregate purchase price therefor in
immediately available United States dollars.
(iii) Closing Documents. The closing documents required by
Sections 8 and 9 shall be delivered to Xxxxxxxx and Xxxxxxx,
respectively.
(iv) Delivery Notice. An executed copy of the delivery notice
in the form attached hereto as Annex H shall be delivered to
Xxxxxxxx.
d. Primary Xxxxxxxx Closing Date. On the Primary Xxxxxxxx Closing
Date, if any, the following deliveries shall be made:
(i) Class B Preferred Stock and Warrant. Navarre shall deliver
to Xxxxxxxx ten stock certificates, each representing 3,400 shares
of Class B Preferred Stock, together with one Warrant duly executed
by Navarre in definitive form, in each case duly registered on the
books of Navarre as instructed by Xxxxxxxx.
(ii) Purchase Price. Xxxxxxxx shall cause to be wire
transferred to Navarre, in accordance with the instructions set
forth in Section 14, the aggregate purchase price of $8,500,000 in
immediately available United States dollars.
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(iii) Closing Documents. The closing documents required by
Sections 8 and 9 shall be delivered to Xxxxxxxx and Xxxxxxx,
respectively.
(iv) Delivery Notice. An executed copy of the delivery notice
in the form attached hereto as Annex G shall be delivered to
Xxxxxxxx.
e. Rollover Xxxxxxxx Closing Dates. On each Rollover Xxxxxxxx
Closing Date, if any, the following deliveries shall be made:
(i) Class B Preferred Stock. Navarre shall deliver to Xxxxxxxx
stock certificates collectively representing the aggregate number of
shares of Class B Preferred Stock to be issued on that closing date,
duly registered on the books of Navarre as instructed by Xxxxxxxx.
(ii) Purchase Price. Xxxxxxxx shall cause to be wire
transferred to Navarre, in accordance with the instructions set
forth in Section 14, the aggregate purchase price therefor in
immediately available United States dollars.
(iii) Closing Documents. The closing documents required by
Sections 8 and 9 shall be delivered to Xxxxxxxx and Xxxxxxx,
respectively.
(iv) Delivery Notice. An executed copy of the delivery notice
in the form attached hereto as Annex H shall be delivered to
Xxxxxxxx.
In the case of each of the preceding paragraphs (a) through (e), the deliveries
specified therein shall be deemed to occur simultaneously as part of a single
transaction, and no delivery shall be deemed to have been made until all such
deliveries have been made.
3. Representations and Warranties of Navarre. Navarre hereby represents
and warrants to Xxxxxxxx on the Effective Date, on each Investment Closing Date,
on each date that Xxxxxxxx exercises a Warrant and on each date any Preferred
Share is converted into Common Stock, as follows:
x. Xxxxxxx has been duly incorporated and is validly existing in
good standing under the laws of Minnesota or, after the Initial Closing
Date, if another entity has succeeded Navarre in accordance with the terms
hereof, under the laws of one of the states of the United States.
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b. Subject only to receipt of the Board Consent specified in Section
1.f. on or before noon, eastern time, on August 16, 1999, (i) the
execution, delivery and performance of this Agreement and the Certificate
of Rights and Preferences and the Warrants by Navarre (including the
issuance of the Investment Securities) have been duly authorized by all
requisite corporate action and no further consent or authorization of
Navarre, its Board of Directors or its shareholders is required, and (ii)
this Agreement has been duly executed and delivered by Navarre and, when
this Agreement is duly authorized, executed and delivered by Xxxxxxxx,
will be a valid and binding agreement enforceable against Navarre in
accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights generally and to general
principles of equity.
x. Xxxxxxx has full corporate power and authority necessary to
execute and deliver this Agreement and to perform its obligations
hereunder and under the Certificate of Rights and Preferences and the
Warrants (including the issuance of the Investment Securities).
d. No consent, approval, authorization or order of any court,
governmental agency or other body is required for execution and delivery
by Navarre of this Agreement or the performance by Navarre of any of its
obligations hereunder and under the Certificate of Rights and Preferences
and the Warrants other than such as may already have been received.
e. Neither the execution and delivery by Navarre of this Agreement
nor the performance by Navarre of any of its obligations hereunder and
under the Certificate of Rights and Preferences and the Warrants:
(1) violates, conflicts with, results in a breach of, or
constitutes a default (or an event which with the giving of notice
or the lapse of time or both would be reasonably likely to
constitute a default) under (A) the articles of incorporation or
by-laws of Navarre or any of its subsidiaries, (B) any decree,
judgment, order, law, treaty, rule, regulation or determination of
which Navarre is aware (after due inquiry) of any court,
governmental agency or body, or arbitrator having jurisdiction over
Navarre or any of its subsidiaries or any of their respective
properties or assets, (C) the terms of any bond, debenture, note or
any other evidence of indebtedness, or any agreement, stock option
or other similar plan, indenture, lease, mortgage, deed of trust or
other instrument to which Navarre or any of its subsidiaries is a
party, by which Navarre or any of its subsidiaries is bound, or to
which any of the
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properties or assets of Navarre or any of its subsidiaries is
subject, (D) the terms of any "lock-up" or similar provision of any
under writing or similar agreement to which Navarre or any of its
subsidiaries is a party or (E) any rules of the National Association
of Securities Dealers, Inc. or Nasdaq or any rules or regulations on
the markets where Navarre's securities are publicly traded
applicable to Navarre or the transactions contemplated hereby (other
than the Required Consent, as defined in Section 4(C) of Certificate
of Rights and Preferences); or
(2) results in the creation or imposition of any lien, charge
or encumbrance upon any Investment Securities or upon any of the
properties or assets of Navarre or any of its subsidiaries.
x. Xxxxxxx has validly reserved for issuance to Xxxxxxxx 150,000
shares of Class B Preferred Stock pursuant to this Agreement and
15,000,000 shares of Common Stock for issuance upon conversion of the
Preferred Shares. Navarre shall at all times reserve for issuance all the
Preferred Shares issuable under this Agreement (including upon exercise of
Warrants) and such number of its shares of Common Stock as shall from time
to time be sufficient to effect the conversion of all such Preferred
Shares and to satisfy its delivery obligation upon exercise of the Share
Option specified in Section 2(B) of the Certificate of Rights and
Preferences. When issued to Xxxxxxxx against payment therefor, each
Investment Security:
(1) will have been duly and validly authorized, duly and
validly issued, fully paid and non-assessable;
(2) will be free and clear of any security interests, liens,
claims or other encumbrances; and
(3) will not have been issued or sold in violation of any
preemptive or other similar rights of the holders of any securities
of Navarre.
x. Xxxxxxx satisfies all listing and quantitative maintenance
criteria of the Nasdaq National Market or, after the Effective Date, has a
valid exemption from such criteria of which it has previously notified
Xxxxxxxx in writing. All of the Covered Securities (as defined in Section
3.A.d) will, when issued, be duly listed and admitted for trading on all
of the markets where shares of Common Stock are traded, including the
Nasdaq National Market.
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h. There is no pending or, to the best knowledge of Navarre,
threatened action, suit, proceeding or investigation before any court,
governmental agency or body, or arbitrator having jurisdiction over
Navarre or any of its affiliates that would materially affect the
execution by Navarre of, or the performance by Navarre of its obligations
under, this Agreement, the Certificate of Rights and Preferences or the
Warrants.
i. Since April 1, 1997, none of Navarre's filings with the United
States Securities and Exchange Commission (the "SEC") under the Securities
Act of 1933, as amended (the "Securities Act") or under Section 13(a) or
15(d) of the Exchange Act (each an "SEC Filing") contained any untrue
statement of a material fact or omitted to state any material fact
necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading. Since the date
of Navarre's most recent SEC Filing, there has not been, and Navarre is
not aware of, any development that is reasonably likely to result in any
material adverse change in the condition, financial or otherwise, or in
the business affairs or prospects of Navarre, whether or not arising in
the ordinary course of business.
j. The offer and sale of the Investment Securities to Xxxxxxxx
pursuant to this Agreement will, subject to compliance by Xxxxxxxx with
the applicable representations and warranties contained in Section 4
hereof and with the applicable covenants and agreements contained in
Section 7 hereof, be made in accordance with the provisions and
requirements of Regulation D promulgated under the Securities Act and any
applicable state law.
k. As of the date hereof, the authorized capital stock of Navarre
consists of 50,000,000 shares of Common Stock and 10,000,000 shares of
preferred stock, no par value ("Preferred Stock"). As of July 28, 1999,
(A) 23,504,394 shares of Common Stock and no shares of Preferred Stock
were issued and outstanding, (B) 80,498 shares of Common Stock and no
shares of Preferred Stock were reserved for issuance upon exercise of
outstanding stock options, warrants or other convertible rights, (C)
1,029,253 shares of Common Stock and no shares of Preferred Stock are
currently subject to issuance upon the exercise of outstanding stock
options, warrants or other convertible rights, (D) no shares of Common
Stock or Preferred Stock are held in the treasury of Navarre and (E) up to
1,300,000 additional shares of Common Stock may be issued under the 1992
Stock Option Plan. All of the outstanding shares of Common Stock are, and
all shares of capital stock which may be issued pursuant to stock options,
warrants or other convertible rights will be, when issued and paid for in
accordance with the respective terms thereof, duly authorized, validly
issued, fully paid and non-assessable and free of any preemptive rights in
respect thereof. As of the date hereof, except as set forth above, and
except for shares of Common Stock or other securities issued upon
conversion, exchange, exercise or
18
purchase associated with the securities, options, warrants, rights and
other instruments referenced above, no shares of capital stock or other
voting securities of Navarre were outstanding, no equity equivalents,
interests in the ownership or earnings of Navarre or other similar rights
were outstanding, and there were no existing options, warrants, calls,
subscriptions or other rights or agreements or commitments relating to the
capital stock of Navarre or any of its subsidiaries or obligating Navarre
or any of its subsidiaries to issue, transfer, sell or redeem any shares
of capital stock, or other equity interest in, Navarre or any of its
subsidiaries or obligating Navarre or any of its subsidiaries to grant,
extend or enter into any such option, warrant, call, subscription or other
right, agreement or commitment.
l. Solvency. The sum of the assets of Navarre, both at a fair
valuation and at present fair salable value, exceeds its liabilities,
including contingent liabilities, Navarre has sufficient capital with
which to conduct its business as pres ently conducted and as proposed to
be conducted and Navarre has not incurred debts, and does not intend to
incur debts, beyond its ability to pay such debts as they mature. For
purposes of this paragraph, "debt" means any liability on a claim, and
"claim" means (x) a right to payment, whether or not such right is reduced
to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or unsecured,
or (y) a right to an equitable remedy for breach of performance if such
breach gives rise to a payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured, unmatured,
disputed, undisputed, secured, or unsecured. With respect to any such
contingent liabilities, such liabilities shall be computed at the amount
which, in light of all the facts and circumstances existing at the time,
represents the amount which can reasonably be expected to become an actual
or matured liability.
m. Audited Financials. Attached hereto as Annex K is a true, correct
and complete copy of the report of Ernst & Young LLP to the Board of
Directors and Shareholders of Navarre dated April 30, 1999, together with
the accompanying consolidated financial statements and schedule of Navarre
as of March 31, 1999 and 1998 and for each of the three years in the
period ended March 31, 1999, as such report appears in the Annual Report
on Form 10-K for the fiscal year ended March 31, 1999 filed by Navarre
with the SEC (the "E&Y Report").
3.A Registration Provisions.
x. Xxxxxxx shall as soon as practicable and at its own expense, but
in no event later than 30 days after the Effective Date, file a
Registration Statement (as defined below) under the Securities Act
covering the sale or resale of all of the Initial Common Shares and shall
use its best efforts to cause such Registration Statement to be declared
effective not later than the Required Registration Date (as
19
defined below). Pursuant to the preceding sentence, Navarre shall register
not less than twice the number of shares that would be issuable on the
assumption that, on the day prior to the effectiveness of such
Registration Statement, all Initial Preferred Shares had been converted
into Initial Common Shares and all shares of Class B Preferred Stock
issuable upon exercise of the Warrant issued on the Initial Closing Date
had been converted into shares of Common Stock, and shall promptly amend
such Registration Statement from time to time if the maximum number of
Initial Common Shares is greater than the number of shares of Common Stock
registered pursuant to such Registration Statement, provided that Xxxxxxxx
shall have provided such information and cooperation in connection
therewith as Navarre may reasonably request.
b. Not later than five Trading Days after any Navarre Closing Date,
Navarre shall at its own expense file a Registration Statement under the
Securities Act covering the sale or resale of all of the shares of Common
Stock issuable upon conversion of (i) the shares of Class B Preferred
Stock issued on that Navarre Closing Date and (ii) in the case of the
Primary Navarre Right, the shares of Class B Preferred Stock issuable upon
exercise of the Warrant issued on that Navarre Closing Date. Navarre shall
use its best efforts to cause such Registration Statement to be declared
effective not later than the Required Registration Date. Pursuant to the
second preceding sentence, Navarre shall register not less than twice the
number of shares of Common Stock that would be issuable on the assumption
that, on the day prior to the effectiveness of such Registration
Statement, all the shares of Class B Preferred Stock issued on that
Navarre Closing Date had been converted into shares of Common Stock and,
in the case of the Primary Navarre Right, all shares of Class B Preferred
Stock issuable upon exercise of the Warrant issued on that Navarre Closing
Date had been converted into shares of Common Stock. Navarre shall
promptly amend such Registration Statement from time to time if the
maximum number of shares of Common Stock issuable under the first sentence
of this paragraph is greater than the number of shares of Common Stock
registered pursuant to such Registration Statement, provided that Xxxxxxxx
shall have provided such information and coop eration in connection
therewith as Navarre may reasonably request.
x. Xxxxxxx shall as soon as practicable and at its own expense, but
in no event later than 30 days after any Xxxxxxxx Closing Date, file a
Registration Statement under the Securities Act covering the sale or
resale of all of the shares of Common Stock issuable upon conversion of
(i) the shares of Class B Preferred Stock issued on that Xxxxxxxx Closing
Date and (ii) in the case of the Primary Xxxxxxxx Right, the shares of
Class B Preferred Stock issuable upon exercise of the Warrant issued on
that Xxxxxxxx Closing Date. Navarre shall use its best efforts to cause
such Regis tration Statement to be declared effective not later than the
Required Registration Date. Pursuant to the second preceding sentence,
Navarre shall register not less than
20
twice the number of shares of Common Stock that would be issuable on the
assumption that, on the day prior to the effectiveness of such
Registration Statement, all the shares of Class B Preferred Stock issued
on that Xxxxxxxx Closing Date had been converted into shares of Common
Stock and, in the case of the Primary Xxxxxxxx Right, all shares of Class
B Preferred Stock issuable upon exercise of the Warrant issued on that
Xxxxxxxx Closing Date had been converted into shares of Common Stock.
Navarre shall promptly amend such Registration Statement from time to time
if the maximum number of shares of Common Stock issuable under the first
sentence of this paragraph is greater than the number of shares of Common
Stock registered pursuant to such Registration Statement, provided that
Xxxxxxxx shall have provided such information and cooperation in
connection therewith as Navarre may reasonably request.
d. Each share of Common Stock issuable upon conversion of any share
of Class B Preferred Stock is a "Covered Security" and each registration
statement filed or required to be filed under the Securities Act in
accordance with Sections 3.A.a., 3.A.b., or 3.A.c. hereof is referred to
as a "Registration Statement"). The "Required Registration Date" means (i)
in the case of Section 3.A.a., the 90th calendar day after the Effective
Date, or, if Navarre is not eligible to register the Covered Securities on
Form S-3 under the Securities Act on such day, the 120th calendar day
after the Effective Date; (ii) in the case of Section 3.A.b., the 60th
calendar day after the Navarre Closing Date, or, if Navarre is not
eligible to register the Covered Securities on Form S-3 under the
Securities Act on such day, the 90th calendar day after the Navarre
Closing Date; and (iii) in the case of Section 3.A.c., the 90th calendar
day after the Xxxxxxxx Closing Date, or, if Navarre is not eligible to
register the Covered Securities on Form S-3 under the Securities Act on
such day, the 120th calendar day after the Xxxxxxxx Closing Date. Navarre
shall provide prompt written notice to Xxxxxxxx when each such
Registration Statement has been declared effective by the SEC.
x. Xxxxxxx will use its best efforts to: (A) keep such registration
effective until the earlier of (x) the second anniversary of the issuance
of each Covered Security (provided that, Xxxxxxxx may freely resell such
Covered Securities), (y) the later of the date all of the Preferred Shares
and Covered Securities shall have been sold by Xxxxxxxx and the date the
Navarre Rights and the Xxxxxxxx Rights expire or (z) such time as all of
the Covered Securities held by Xxxxxxxx can be sold by Xxxxxxxx or any of
its affiliates within a three-month period without compliance with the
registration requirements of the Securities Act pursuant to Rule 144 under
the Securities Act ("Rule 144"); (B) prepare and file with the SEC such
amendments and supplements to the Registration Statements and the
prospectus used in connection with the Registration Statements (as so
amended and supplemented from time to time, the "Prospectus") as may be
necessary to comply with the provisions of the Securities Act with respect
to the disposition of all Covered Securities by Xxxxxxxx
21
or any of its affiliates; (C) furnish such number of Prospectuses and
other documents incident thereto, including any amendment of or supplement
to the Prospectus, as Xxxxxxxx from time to time may reasonably request;
(D) cause all Covered Securities to be listed on each securities exchange
and quoted on each quotation service on which similar securities issued by
Navarre are then listed or quoted; (E) provide a transfer agent and
registrar for all Covered Securities and a CUSIP number for all Covered
Securities; (F) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC; and (G) file the documents
required of Navarre and otherwise use its best efforts to obtain and
maintain requisite blue sky clearance in (x) New York, Minnesota and all
other jurisdictions in which any of the shares of Common Stock were
originally sold and (y) all other states specified in writing by Xxxxxxxx,
provided, however, that as to this clause (y), Navarre shall not be
required to qualify to do business or consent to service of process in any
state in which it is not now so qualified or has not so consented.
Xxxxxxxx shall have the right to approve the description of the plan of
distribution and all other references to Xxxxxxxx contained in any
Prospectus.
x. Xxxxxxx shall furnish to Xxxxxxxx upon request a reasonable
number of copies of a supplement to or an amendment of such Prospectus as
may be necessary in order to facilitate the public sale or other
disposition of all or any of the Covered Securities by Xxxxxxxx or any of
its affiliates pursuant to the Registration Statement.
g. With a view to making available to Xxxxxxxx and its affiliates
the benefits of Rule 144 and Form S-3 under the Securities Act, Navarre
covenants and agrees to: (A) make and keep available adequate current
public information (within the meaning of Rule 144(c)) concerning Navarre,
until the earlier of (x) the second anniversary of the issuance of each
Covered Security (provided that, Xxxxxxxx may freely resell such Covered
Securities) or (y) such date as all of the Covered Securities shall have
been resold by Xxxxxxxx or any of its affiliates; and (B) furnish to
Xxxxxxxx upon request, as long as Xxxxxxxx owns any Covered Securities,
(x) a written statement by Navarre that it has complied with the reporting
requirements of the Securities Act and the Exchange Act, (y) a copy of the
most recent annual or quarterly report of Navarre, and (z) such other
information as may be reasonably requested in order to avail Xxxxxxxx and
its affiliates of Rule 144 or Form S-3 with respect to such Covered
Securities.
h. Notwithstanding anything else in this Section 3.A, if, at any
time during which a Prospectus is required to be delivered in connection
with the sale of any Covered Securities, Navarre determines in good faith
that a development has occurred or a condition exists as a result of which
the Registration Statement or the Prospectus contains a material
misstatement or omission, Navarre will immediately
22
notify Xxxxxxxx thereof by telephone and in writing. Upon receipt of such
notification, Xxxxxxxx and its affiliates will immediately suspend all
offers and sales of any Covered Securities pursuant to the Registration
Statement. In such event, Navarre will amend or supplement the
Registration Statement as promptly as practicable and will take such other
steps as may be required to permit sales of the Covered Securities
thereunder by Xxxxxxxx and its affiliates in accordance with applicable
federal and state securities laws. Navarre will promptly notify Xxxxxxxx
after it has determined in good faith that such sales have become
permissible in such manner and will promptly deliver copies of the
Registration Statement and the Prospectus (as so amended or supplemented)
to Xxxxxxxx in accordance with paragraphs (e) and (f) of this Section 3.A.
Notwithstanding the foregoing, (A) under no circumstances shall Navarre be
entitled to exercise its right to suspend sales of any Covered Securities
pursuant to the Regis tration Statement more than two times in any
twelve-month period, (B) the period during which such sales may be
suspended (each a "Blackout Period") shall not exceed thirty days and (C)
no Blackout Period may commence less than 30 days after the end of the
preceding Blackout Period.
Upon the commencement of a Blackout Period pursuant to this Section
3.A, Xxxxxxxx will notify Navarre of any contracts to sell any Covered
Securities (each a "Sales Contract") that Xxxxxxxx or any of its
affiliates has entered into prior to the commencement of such Blackout
Period and that would require delivery of such Cov ered Securities during
such Blackout Period, which notice will contain the aggregate sale price
and volume of Covered Securities pursuant to such Sales Contract. Upon
receipt of such notice, Navarre will immediately notify Xxxxxxxx of its
election either (i) to terminate the Blackout Period and, as promptly as
practicable, amend or supplement the Registration Statements or the
Prospectus in order to correct the material misstatement or omission and
deliver to Xxxxxxxx copies of such amended or supplemented Registration
Statement and Prospectus in accordance with paragraphs (e) and (f) of this
Section 3.A or (ii) to continue the Blackout Period in accordance with
this paragraph. If Navarre elects to continue the Blackout Period, and
Xxxxxxxx or any of its affiliates are therefore unable to consummate the
sale of Covered Securities pursuant to the Sales Contract (such unsold
Covered Securities being hereinafter referred to herein as the "Unsold
Securities"), Navarre will promptly indemnify each Xxxxxxxx Indemnified
Party (as such term is defined in Section 12 below) against any Proceeding
(as such term is defined in Section 12 below) that each Xxxxxxxx
Indemnified Party may incur arising out of or in connection with
Xxxxxxxx'x breach or alleged breach of any such Sales Contract, and
Navarre shall reimburse each Xxxxxxxx Indemnified Party for any reasonable
costs or expenses (including reasonable legal fees) incurred by such party
in investigating or defending any such Proceeding (collectively, the
"Indemnification Amount"); provided, however, that each Xxxxxxxx
Indemnified Party shall take all actions reasonably necessary or
appropriate to mitigate such Indemnification Amount; and provided further,
however, that the Indemnification
23
Amount shall be reduced by an amount equal to the product of (x) the
number of Unsold Securities multiplied by (y) the amount, if any, by which
(i) the actual per share price received by Xxxxxxxx or any of its
affiliates upon the sale of the Unsold Securities (if such sale occurs
within three Trading Days of the end of the Blackout Period) or the
closing sale price of the Common Stock on Nasdaq on the third Trading Day
after the end of the Blackout Period (if the Unsold Securities are not
sold by Xxxxxxxx or any of its affiliates within three Trading Days of the
end of the Blackout Period) exceeds (ii) the per share sale price for the
Unsold Securities provided in the Sales Contract.
3.B. Conversion of Preferred Shares. Preferred Shares are convertible into
shares of Common Stock in accordance with the terms and conditions set forth in
Section 4 of the Certificate of Rights and Preferences. The form of the
"Conversion Notice" to be executed and delivered by Xxxxxxxx to Xxxxxxx as
specified therein is attached hereto as Annex I and the form of the "Conversion
Delivery Notice" to be executed and delivered by Navarre to Xxxxxxxx as
specified therein is attached hereto as Annex J.
4. Representations and Warranties of Xxxxxxxx. Xxxxxxxx hereby represents
and warrants to Navarre on the Effective Date and each Investment Closing Date:
x. Xxxxxxxx has been duly incorporated and is validly existing in
good standing under the laws of the Cayman Islands, or after the Effective
Date, under the laws of the jurisdiction of its organization.
b. The execution, delivery and performance of this Agreement by
Xxxxxxxx have been duly authorized by all requisite corporate action and
no further consent or authorization of Xxxxxxxx, its Board of Directors or
its shareholders is required. This Agreement has been duly executed and
delivered by Xxxxxxxx and, when duly authorized, executed and delivered by
Navarre, will be a valid and binding agreement enforceable against
Xxxxxxxx in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights generally and to general
principles of equity.
x. Xxxxxxxx understands that no United States federal or state
agency has passed on, reviewed or made any recommendation or endorsement
of the Investment Securities.
d. Subject to Section 3.A hereof, Xxxxxxxx understands that the
Investment Securities have not been registered under the Securities Act
and may not be re-offered or resold in the United States other than
pursuant to registration thereunder or an available exemption therefrom.
24
x. Xxxxxxxx is an "accredited investor" as such term is defined in
Regulation D promulgated under the Securities Act.
x. Xxxxxxxx is purchasing the Investment Securities for its own
account for investment only and not with a view to, or for resale in
connection with, the public sale or distribution thereof in the United
States, except pursuant to sales registered under the Securities Act.
x. Xxxxxxxx understands that the Investment Securities are being or
will be offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal securities laws and
that Navarre is relying on the truth and accuracy of, and Xxxxxxxx'x
compliance with, the representations, warranties, agreements,
acknowledgments and understandings of Xxxxxxxx set forth herein in order
to determine the availability of such exemptions and the eligibility of
Xxxxxxxx to acquire the Investment Securities.
5. Covenants of Navarre. Navarre covenants and agrees with Xxxxxxxx as
follows:
a. For so long as Xxxxxxxx owns any Investment Securities, or any
Navarre Rights or Xxxxxxxx Rights exist, and in any case for a period of
90 days thereafter, Navarre will use its best efforts to (i) maintain the
eligibility of the Common Stock for quotation on the Nasdaq National
Market and (ii) regain the eligibility of the Common Stock for quotation
on all markets and exchanges including the Nasdaq National Market in the
event that the Common Stock is delisted by the Nasdaq National Market or
other applicable markets and exchanges.
x. Xxxxxxx will provide Xxxxxxxx with an opportunity to review and
comment on any public disclosure by Navarre of information regarding this
Agreement and the transactions contemplated hereby. Beginning on the date
hereof and for so long as any Navarre Rights or Xxxxxxxx Rights exist, and
in any case for a period of 90 days thereafter, Navarre will (i) promptly
notify Xxxxxxxx immediately following any public disclosure by Navarre of
material information regarding Navarre or its financial condition,
prospects or results of operation and (ii) provide Xxxxxxxx with copies of
all SEC Filings.
c. As soon as such information is available (but in no event later
than two weeks after the Effective Date), Navarre shall deliver to
Xxxxxxxx a written notice stating the number of outstanding shares of
Common Stock as of the Effective Date.
25
x. Xxxxxxx will make all filings required by law with respect to the
transactions contemplated hereby.
x. Xxxxxxx will cause the Common Stock issuable upon conversion of
the Preferred Shares to be duly listed and admitted for trading on the
Nasdaq National Market.
f. On the day following the Effective Date, Navarre will make the
appropriate filing for the Initial Common Shares to become duly listed and
admitted for trading on Nasdaq and thereafter Navarre shall use its best
efforts to ensure that all shares of Common Stock issuable upon conversion
of all other Preferred Shares become listed and admitted for trading as
soon as practicable. Moreover, Navarre will immediately notify Xxxxxxxx in
writing, pursuant to Section 14, once the shares are duly listed.
g. For a period beginning on the date hereof and ending on the day
which is one year after the Initial Closing Date or a Navarre Closing Date
or Xxxxxxxx Closing Date, whichever is later, Navarre will not, and will
not permit any of its subsidiaries to, issue any preferred stock, Common
Stock or other equity securities (or any securities convertible into or
exchangeable for such preferred stock, Common Stock or other equity
securities) in reliance upon Section 4(2) of the Securities Act or
Regulation D promulgated thereunder or under Regulation S promulgated
under the Securities Act without Xxxxxxxx'x prior written consent,
provided that:
(i) Navarre may, in addition to the shares issuable upon
exercise of options and warrants listed in Section 3.k (other than
in Section 3.k.(E)) issue up to an additional 1,300,000 shares of
its Common Stock (or options exercisable for such number of shares
of Common Stock) pursuant to employee benefit plans, but only if
such issuances are made in the ordinary course of business
consistent with past practice, it being understood and agreed that
the term "issue" as used in this clause (i) shall not be deemed to
include sales of capital stock of Net Radio outstanding as of the
date hereof owned by Navarre, as long as such sales have received
Independent Director Approval. "Independent Director Approval" means
the prior written approval of a majority of the disinterested
directors of Navarre as being in the best interests of all the
shareholders of Navarre, both holders of Common Stock and holders of
Class B Preferred Stock.
26
(ii) Navarre's subsidiaries (other than Net Radio) may issue
up to 5% of the then outstanding number of its shares of common
stock (or options exercisable for such number of shares of common
stock) pursuant to employee benefit plans, but only if such
issuances are made in the ordinary course of business consistent
with past practice.
(iii) If Net Radio is not a Public Company (as defined below),
Net Radio may issue additional shares of its common stock (or
options exercisable for shares of its common stock) pursuant to
employee benefit plans, but only if such issuances (i) are made in
the ordinary course of business consistent with past practice and
(ii) do not, in the aggregate, exceed 25% of the then currently
outstanding number of such shares of common stock of Net Radio. As
of the date hereof, the aggregate number of shares of common stock
of Net Radio (or options exercisable for shares of its common stock)
issued pursuant to employee benefit plans equals 21.4% of the
currently outstanding number of shares of common stock of Net Radio.
A "Public Company" means that at least 40% of the capital stock of
Net Radio is publicly owned (excluding holders of 10% or more of the
capital stock) and Navarre does not own more than 40% of the capital
stock of Net Radio.
(iv) If Net Radio is not a Public Company, Net Radio may issue
shares of its common stock in one or more private placements in
order to raise capital or enter into a strategic alliance, but only
if (x) such shares of common stock are not exercisable for,
convertible into, or exchangeable for shares of Common Stock and (y)
the issuance of such shares has received Independent Director
Approval.
(v) As long as Net Radio is a Public Company, the restrictions
set forth in this Section 5.g will not apply to issuances of capital
stock by Net Radio (other than issuances of capital stock to Navarre
or its other subsidiaries, as to which clause (vi) below will
apply).
(vi) Whether or not Net Radio is a Public Company, all
transactions between Net Radio, on the one hand, and Navarre or any
of Navarre's other subsidiaries, on the other, must receive
Independent Director Approval.
27
x. Xxxxxxx will comply with the terms and conditions of the
Preferred Shares as set forth in the Certificate of Rights and
Preferences, and will not amend the Certificate of Rights and Preferences
without Xxxxxxxx'x express written consent or issue any Preferred Stock
other than as provided hereunder without Xxxxxxxx'x express written
consent.
i. Prior to the filing of each of its quarterly reports on Form 10-Q
with the SEC, Navarre shall cause Ernst & Young LLP to deliver to Navarre
a review report relating to the final consolidated unaudited financial
statements contained therein, prepared in accordance with Statements of
Auditing Standard No. 71.
6. Consolidation, Merger, Etc. In case Navarre shall be a party to any
transaction providing for (i) any acquisition of Navarre by means of merger or
other form of corporate reorganization in which outstanding shares of Navarre
are exchanged for securities or other consideration issued, or caused to be
issued, by the acquiring corporation (the "Acquirer") or its subsidiary or (ii)
a sale of all or substantially all of the assets of Navarre (on a consolidated
basis) or (iii) any other transaction or series of related transactions by
Navarre in which in excess of 50% of Navarre's voting power is transferred to a
single entity or group acting in concert (each of the foregoing being referred
to as a "Combination"), Xxxxxxxx, at its sole option for each separate exercise
of any Xxxxxxxx Rights and Warrants, or any portion thereof, may choose (in any
combination) to (1) exercise Xxxxxxxx Rights and Warrants (in whole or in part)
before the Combination is closed (the "Combination Closing") or simultaneously
with the Combination Closing to receive shares of Class B Preferred Stock; (2)
as part of the Combination Closing, cause each Xxxxxxxx Right and Warrant (in
whole or in part) to be converted into a right to acquire the same number of
shares of Acquirer Preferred Stock (as defined below) on the same terms and
conditions as the Xxxxxxxx Right and Warrant so converted, but only to the
extent that the Acquirer Preferred Stock would not, as of the date of the
Combination Closing, represent the right to acquire in excess of 1% of the
shares of Acquirer Common Stock outstanding immediately after the Combination
Closing, determined as if all such shares of Acquirer Preferred Stock had been
converted into Acquirer Common Stock on such date; or (3) receive cash, for any
Xxxxxxxx Rights and Warrants, or any portion thereof, which have not been
exercised or converted pursuant to (1) and (2) above, in an amount equal to
thirty-three percent of the U.S. dollar amount of the unexercised Xxxxxxxx
Rights and Warrants. Navarre agrees that it shall be a condition to any
Combination Closing that as of the Combination Closing, all shares of the
Acquirer Common Stock to be issued to Xxxxxxxx shall have been registered under
the Securities Act. Navarre further agrees that it will not enter into an
agreement with an Acquirer for a Combination unless such agreement expressly
obligates the Acquirer to assume all of Navarre's obligations under this
Agreement and the Warrants and to give Xxxxxxxx written notice that the Acquirer
has assumed such obligations. "Acquirer Preferred Stock" shall mean preferred
stock of the Acquirer with terms substantially identical to the Class B
Preferred Stock. The "Acquirer Common Stock" shall mean the class of publicly
traded common stock of the Acquirer
28
having the largest market capitalization as of the Combination Closing Date.
Navarre shall provide Xxxxxxxx with written notice of any proposed Combination
as soon as the existence of a proposed Combination is made public by any person
(the "Combination Notice"), and shall notify Xxxxxxxx promptly of any material
developments with respect to such Combination, including reasonable advance
notice of the date the Combination is expected to become effective. Upon the
earlier of any Combination or Combination Notice, any unexercised Navarre Rights
shall be terminated and thereafter shall be null and void.
7. Covenants of Xxxxxxxx. Xxxxxxxx hereby covenants and agrees with
Navarre as follows:
a. Neither Xxxxxxxx nor any of its affiliates nor any person acting
on its or their behalf will at any time offer or sell any Investment
Securities other than pursuant to registration under the Securities Act or
pursuant to an available exemption therefrom.
x. Xxxxxxxx will not sell Covered Securities on Nasdaq on any
Pricing Day. Xxxxxxxx may execute short sales of Common Stock at any time,
but Xxxxxxxx may not use Covered Securities to cover such short positions.
Xxxxxxxx may enter into any other hedging or trading strategies relating
to the Common Stock, including without limitation, options, derivatives
and swaps, without restriction, except that Xxxxxxxx shall not enter into
a new hedging contract (but may extend an existing position) on any
Pricing Day. A "Pricing Day" means (x) if the actual applicable Conversion
Price for Preferred Shares is based on Section 4(E)(i) of the Certificate
of Rights and Preferences, each of the 15 Trading Days during the Pricing
Period and (y) if the actual applicable Conversion Price is based on
Section 4(E) (ii) of the Certificate of Rights and Preferences, each of
the first three Trading Days of the Pricing Period. As used in the
preceding sentence, the terms "Conversion Price" and "Pricing Period" have
the same meanings ascribed to them in Section 4(E) of the Certificate of
Rights and Preferences. For the avoidance of doubt, it is understood and
agreed that no Pricing Day shall be deemed to have occurred where the
actual applicable Conversion Price is based on Section 4(E)(iii) of the
Certificate of Rights and Preferences.
7.A. Legend. Subject to Section 3.A., Xxxxxxxx understands that the
certificates or other instruments representing the Investment Securities shall
bear a restrictive legend in the following form (and a stop transfer order may
be placed against transfer of such certificates or other instruments):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
APPLICABLE STATE SECURITIES LAWS. THE
29
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS, OR UNLESS AN EXEMPTION FROM REGISTRATION
IS AVAILABLE.
The legend set forth above shall be removed and Navarre shall issue a
certificate without such legend to any holder of Investment Securities if,
unless otherwise required by state securities laws, (a) such shares are sold
pursuant to an effective Registration Statement under the Securities Act, or (b)
such holder provides Navarre with assurances reasonably satisfactory to Navarre
that such shares may be publicly sold pursuant to an exemption from such
registration requirements without restriction.
8. Conditions Precedent to Xxxxxxxx'x Obligations. The obligations of
Xxxxxxxx hereunder are subject to the performance by Navarre of its obligations
hereunder and to the satisfaction of the following additional conditions
precedent, unless expressly waived in writing by Xxxxxxxx:
a. On each Investment Closing Date, (i) the representations and
warranties made by Navarre in this Agreement shall be true and correct,
and (ii) Navarre shall have complied fully with all of the covenants and
agreements in this Agreement; and Xxxxxxxx shall have received on each
such date a certificate of the Chief Executive Officer and the Chief
Financial Officer of Navarre dated such date and to such effect.
b. On each Investment Closing Date, Navarre shall have delivered to
Xxxxxxxx an opinion of Xxxxxxxxx & Xxxxxx P.L.L.P. reasonably satisfactory
to Xxxxxxxx, dated the date of delivery, confirming in substance the
matters covered in paragraphs (a), (b), (c), (d), (e), (f) and (h) of
Section 3 hereof and to the effect that the offer and sale of the
Investment Securities to Xxxxxxxx hereunder do not require registration
under the Securities Act.
c. On each Investment Closing Date, Xxxxxxxx shall have received a
letter from Ernst & Young LLP to the effect that, as of such date, they
are consenting to the inclusion in this Agreement of:
(i) in the event the Investment Closing Date occurs prior to
the filing by Navarre with the SEC of its Annual Report on Form 10-K
for the fiscal year ended March 31, 2000, the E&Y Report, and
30
(ii) in the event the Investment Closing Date occurs on or
after the date of filing by Navarre with the SEC of its Annual
Report on Form 10-K for the fiscal year ended March 31, 2000, the
report of Ernst & Young LLP attached to the Delivery Notice
delivered by Navarre to Xxxxxxxx on the corresponding Investment
Closing Date in accordance with Section 2.b.(iv), 2.c.(iv), 2.d.(iv)
or 2.e.(iv) hereof, as applicable.
9. Conditions Precedent to Navarre's Obligations. The obligations of
Navarre hereunder are subject to the performance by Xxxxxxxx of its obligations
hereunder and to the satisfaction (unless expressly waived in writing by
Navarre) of the additional conditions precedent that, on the applicable
Investment Closing Date: (i) the representations and warranties made by Xxxxxxxx
in this Agreement shall be true and correct and (ii) Xxxxxxxx shall have
complied fully with all the covenants and agreements in this Agreement; and
Navarre shall have received on each such date a certificate of an appropriate
officer of Xxxxxxxx dated such date and to such effect.
10. Fees and Expenses. Each of Xxxxxxxx and Navarre agrees to pay its own
expenses incident to the performance of its obligations hereunder, including,
but not limited to the fees, expenses and disbursements of such party's counsel,
except as is otherwise expressly provided in this Agreement.
11. Non-Performance. If on any Investment Closing Date, Navarre shall fail
to deliver the Investment Securities to Xxxxxxxx required to be delivered
pursuant to this Agreement for any reason other than the failure of any
condition precedent to Navarre's obligations hereunder or the failure by
Xxxxxxxx to comply with its obligations hereunder, then Navarre shall:
a. hold Xxxxxxxx harmless against any loss, claim or damage
(including without limitation, incidental and consequential damages)
arising from or as a result of such failure by Navarre; and
b. reimburse Xxxxxxxx for all of its reasonable out-of-pocket
expenses, including fees and disbursements of its counsel, incurred by
Xxxxxxxx in connection with this Agreement and the transactions
contemplated herein and therein;
provided, however, that Navarre shall then be under no further liability to
Xxxxxxxx except as provided in this Section 11 and Section 12 hereof.
31
12. Indemnification.
a. Indemnification of Xxxxxxxx. Navarre hereby agrees to indemnify
Xxxxxxxx and each of its officers, directors, employees, agents and
affiliates and each person that controls (within the meaning of Section 20
of the Exchange Act) any of the foregoing persons (each a "Xxxxxxxx
Indemnified Party") against any claim, demand, action, liability, damages,
loss, cost or expense (including, without limitation, reasonable legal
fees) (a "Proceeding"), that it may incur in connection with any of the
transactions contemplated hereby arising out of or based upon:
(1) any untrue or alleged untrue statement of a material fact
in an SEC Filing or this Agreement by Navarre or any of its
affiliates or any person acting on its or their behalf or omission
or alleged omission to state therein or herein any material fact
necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading by Navarre
or any of its affiliates or any person acting on its or their
behalf;
(2) any of the representations or warranties made by Navarre
herein being untrue or incorrect at the time such representation or
warranty was made; and
(3) any breach or non-performance by Navarre of any of its
covenants, agreements or obligations under this Agreement;
and Navarre hereby agrees to reimburse each Xxxxxxxx Indemnified Party for
any reasonable legal or other expenses incurred by such Xxxxxxxx
Indemnified Party in investigating or defending any such Proceeding;
provided, however, that the foregoing indemnity shall not apply to any
Proceeding to the extent that it arises out of or is based upon the gross
negligence or wilful misconduct of Xxxxxxxx in connection therewith.
Furthermore, the foregoing indemnity rights will not take effect unless or
until the total amount of the indemnification is $10,000 or greater.
b. Indemnification of Navarre. Xxxxxxxx hereby agrees to indemnify
Navarre and each of its officers, directors, employees, agents and
affiliates and each person that controls (within the meaning of Section 20
of the Exchange Act) any of the foregoing persons (each a "Navarre
Indemnified Party") against any Proceeding, that it may incur in
connection with any of the transactions contemplated hereby arising out of
or based upon:
32
(1) any untrue or alleged untrue statement of a material fact
by Xxxxxxxx or any of its affiliates or any person acting on its or
their behalf or omission or alleged omission to state any material
fact necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading by Xxxxxxxx
or any of its affiliates or any person acting on its or their
behalf;
(2) any of the representations or warranties made by Xxxxxxxx
herein being untrue or incorrect at the time such representation or
warranty was made; and
(3) any breach or non-performance by Xxxxxxxx of any of its
covenants, agreements or obligations under this Agreement;
and Xxxxxxxx hereby agrees to reimburse each Navarre Indemnified Party for
any reasonable legal or other expenses incurred by such Navarre
Indemnified Party in investigating or defending any such Proceeding;
provided, however, that the foregoing indemnity shall not apply to any
Proceeding to the extent that it arises out of or is based upon the gross
negligence or wilful misconduct of Navarre in connection there with.
Furthermore, the foregoing indemnity rights will not take effect unless or
until the total amount of the indemnification is $10,000 or greater.
c. Conduct of Claims.
(1) Whenever a claim for indemnification shall arise under
this Section, the party seeking indemnification (the "Indemnified
Party"), shall notify the party from whom such indemnification is
sought (the "Indemnifying Party") in writing of the Proceeding and
the facts constituting the basis for such claim in reasonable
detail;
(2) Upon delivery of such notice, such Indemnified Party shall
have a duty to take all reasonable steps to mitigate any losses,
liabilities, costs, charges and expenses relating to any such
Proceeding;
(3) Such Indemnifying Party shall have the right to retain the
counsel of its choice in connection with such Proceeding and to
participate at its own expense in the defense of any such
Proceeding; provided, however, that counsel to the Indemnifying
Party shall not (except with the consent of the relevant Indemnified
Party) also be counsel to such Indemnified Party. In no event shall
the Indemnifying Party be liable for fees and expenses of more than
one counsel (in addition to any local counsel) separate from its own
counsel for all Indemnified Parties in
33
connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general
allegations or circum stances; and
(4) No Indemnifying Party shall, without the prior written
consent of the Indemnified Parties (which consent shall not be un
reasonably withheld), settle or compromise or consent to the entry
of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which
indemnification could be sought under this Section unless such
settlement, compromise or consent (A) includes an unconditional
release of each Indemnified Party from all liability arising out of
such litigation, investigation, proceeding or claim and (B) does not
include a statement as to or an admission of fault, culpability or a
failure to act by or on behalf of any Indemnified Party.
13. Survival of the Representations, Warranties, etc. The respective
representations, warranties, and agreements made herein by or on behalf of the
parties hereto shall remain in full force and effect, regardless of any
investigation made by or on behalf of the other party to this Agreement or any
officer, director or employee of, or person controlling or under common control
with, such party and will survive delivery of and payment for any Investment
Securities issuable hereunder.
14. Notices. All communications hereunder shall be in writing and
delivered as set forth below.
a. If sent to Xxxxxxxx, all communications shall be delivered by
hand, sent by registered mail or transmitted and confirmed by facsimile to
Xxxxxxxx, unless otherwise notified in writing of a substitute address,
at:
Xxxxxxxx International Limited
c/o Midland Bank Trust Corporation (Cayman) Limited
X.X. Xxx 0000
Xxxx Xxxxxx
Xxxxx Xxxxxx, Xxxxxx Xxxxxxx, B.W.I.
Attn: Xxxxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
34
with a copy to:
Xxxxxxxx Asset Management
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0000 Xxx Xxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To the extent that any funds shall be delivered to Xxxxxxxx by wire
transfer, unless otherwise instructed by Xxxxxxxx, such funds should be
delivered in accordance with the following wire instructions:
Xxxxxxxx International Limited
Bank:
ABA Number:
For the benefit of:
Account Number:
For credit to:
Account Number:
b. If sent to Navarre, all communications shall be delivered by
hand, sent by registered mail or transmitted and confirmed by facsimile to
Navarre, unless otherwise notified in writing of a substitute address, at:
Navarre Corporation
0000 00xx Xxxxxx Xxxxx
Xxx Xxxx, Xxxxxxxxx 00000
Attention: Chief Financial Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
35
with a copy to:
Xxxxxxxxx & Xxxxxx P.L.L.P.
1420 IDS Center
00 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To the extent that any funds shall be delivered to Navarre by wire
transfer, unless otherwise instructed by Navarre, such funds should be
delivered in accordance with the following wire instructions:
Navarre Corporation
Account Number:
ABA Number:
Bank:
Account Name:
15. Miscellaneous.
a. This Agreement may be executed in one or more counterparts and it
is not necessary that signatures of all parties appear on the same
counterpart, but such counterparts together shall constitute but one and
the same agreement.
b. This Agreement shall inure to the benefit of and be binding upon
the parties hereto, their respective successors and assigns and, with
respect to Section 12 hereof, their respective officers, directors,
employees, agents, affiliates and controlling persons, and no other person
shall have any right or obligation hereunder. Navarre may not assign this
Agreement. Xxxxxxxx may assign any of its rights and associated
obligations, in whole or in part, at its sole discretion (including,
without limitation, any Xxxxxxxx Rights), provided that, without
restricting assignments to affiliates of Xxxxxxxx, Xxxxxxxx may not,
without Navarre's consent, (i) assign this Agreement to any person that
primarily operates a hedge fund, or that on the Effective Date is or is
affiliated with a principal competitor or principal customer of Navarre in
Navarre's primary business or (ii) assign its obligation under Section
1.b. to purchase the Navarre Preferred Shares on the Navarre Closing Date
and to purchase the number of shares of Class B Preferred Stock issuable
on the Rollover Navarre Closing Date, in each case upon satisfaction of
the terms and conditions described herein.
36
c. This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of New York, and each of the parties
hereto hereby submits to the non-exclusive jurisdiction of any State or
Federal court in the State of New York and any court hearing any appeal
therefrom, over any suit, action or proceeding against it arising out of
or based upon this Agreement (a "Related Proceeding"). Each of the parties
hereto hereby waives any objection to any Related Proceeding in such
courts whether on the grounds of venue, residence or domicile or on the
ground that the Related Proceeding has been brought in an inconvenient
forum.
d. The parties shall take all actions reasonably necessary to cause
the transactions contemplated hereby to be consummated in accordance with
the terms hereof.
e. The headings of the sections of this document have been inserted
for convenience of reference only and shall not be deemed to be a part of
this Agreement. This Agreement constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
between the parties hereto with respect to the subject matter of this
Agreement. This Agreement is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
f. Each party represents and acknowledges that, in the negotiation
and drafting of this Agreement and the other instruments and documents
required or contemplated hereby, it has been represented by and relied
upon the advice of counsel of its choice. Each party hereby affirms that
its counsel has had a substantial role in the drafting and negotiation of
this Agreement and such other instruments and documents. Therefore, each
party agrees that no rule of construction to the effect that any
ambiguities are to be resolved against the drafter shall be employed in
the interpretation of this Agreement and such other instruments and
documents.
g. Without prejudice to other rights or remedies hereunder
(including any specified interest rate), interest shall be due on any
amount that is due pursuant to this Agreement and has not been paid when
due, calculated for the period from and including the due date to but
excluding the date on which such amount is paid at the prime rate of U.S.
money center banks as published in the Wall Street Journal (or if the Wall
Street Journal does not exist or publish such information, then the
average of the prime rates of three U.S. money center banks agreed to by
the parties) plus two percent.
16. Navarre's Obligations. Navarre agrees that the parties have negotiated
in good faith and at arms' length concerning the transactions contemplated
herein, and that Xxxxxxxx would not have agreed to the terms of this Agreement
without each and every of the
37
terms, conditions, protections and remedies provided herein and in the
Certificate of Rights and Preferences. Except for Navarre's obligations to
deliver securities hereunder, Navarre's obligations, including, but not limited
to, Navarre's obligations to indemnify and hold Xxxxxxxx harmless in accordance
with Section 12 of this Agreement, to pay Fletcher cash in accordance with
Section 6 of this Agreement for any unexercised Xxxxxxxx Right or Warrant, to
pay dividends on the Class B Preferred Stock in the manner specified in Section
2(B) of the Certificate of Rights and Preferences, and to redeem the Class B
Preferred Stock in the manner specified in Section 11 of the Certificate of
Rights and Preferences, are debts of Navarre that Navarre promises to pay to
Xxxxxxxx when and as they become due and that Navarre promises to reflect them
as liabilities on its books and records. In addition, Navarre agrees that its
breach of its obligation to repay a debt to Xxxxxxxx shall give rise to a right
to payment in Xxxxxxxx for which Xxxxxxxx shall be entitled to file a proof of
claim in any bankruptcy or insolvency proceeding filed by or against Navarre,
and that such right to payment shall not be subject to subordination under 11
U.S.C. ss. 510(b) or any similar federal, state or local law.
17. Time of Essence. Time shall be of the essence in this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement, all as of the day and year first above written.
NAVARRE CORPORATION
By:
-------------------------------------
Name:
Title:
XXXXXXXX INTERNATIONAL LIMITED,
by its duly authorized investment advisor,
XXXXXXXX ASSET MANAGEMENT, INC.
By:
-------------------------------------
Name:
Title:
38
ANNEX C
[FORM OF NOTICE OF PRIMARY NAVARRE RIGHT]
[date]
Xxxxxxxx International Limited
c/o Fletcher Asset Management
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Ladies and Gentlemen:
Reference is made to the Amended and Restated Subscription Agreement
(the "Agreement") dated as of July 31, 1999 by and between Navarre Corporation
("Navarre") and Xxxxxxxx International Limited ("Xxxxxxxx"). Capitalized terms
not otherwise defined herein shall have the meanings ascribed thereto in the
Agreement.
Navarre hereby elects to exercise the Primary Navarre Right. In
accordance with and subject to the terms and conditions of the Agreement, the
Navarre Closing Date is ________ (the twenty-third Trading Day following and
excluding the date hereof). Navarre hereby represents and warrants that all of
the conditions to exercise of the Primary Navarre Right set forth in Section
1.b.(iv) of the Agreement are satisfied as of the date hereof.
NAVARRE CORPORATION
By:
-------------------------------------
Name:
Title:
39
AGREED AND ACKNOWLEDGED (for purposes of the first two sentences of the second
paragraph above):
XXXXXXXX INTERNATIONAL LIMITED, by its duly authorized investment advisor,
XXXXXXXX ASSET MANAGEMENT, INC.
By:
-------------------------------------
Name:
Title:
40
ANNEX D
[FORM OF NOTICE OF ROLLOVER NAVARRE RIGHT]
[date]
Xxxxxxxx International Limited
c/o Fletcher Asset Management
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Ladies and Gentlemen:
Reference is made to the Amended and Restated Subscription Agreement
(the "Agreement") dated as of July 31, 1999 by and between Navarre Corporation
("Navarre") and Xxxxxxxx International Limited ("Xxxxxxxx"). Capitalized terms
not otherwise defined herein shall have the meanings ascribed thereto in the
Agreement.
Navarre hereby elects to exercise the Rollover Navarre Right in respect
of an aggregate of ________ shares of Class B Preferred Stock. In accordance
with and subject to the terms and conditions of the Agreement, the Navarre
Closing Date is ________ (the twenty-third Trading Day following and excluding
the date hereof) and the aggregate purchase price for the shares is $__________.
Navarre hereby represents and warrants that all of the conditions to exercise of
the Rollover Navarre Right set forth in Section 1.b.(iv) of the Agreement are
satisfied as of the date hereof.
NAVARRE CORPORATION
By:
-------------------------------------
Name:
Title:
D-1
AGREED AND ACKNOWLEDGED (for purposes of the first two sentences of the second
paragraph above):
XXXXXXXX INTERNATIONAL LIMITED, by its duly authorized investment advisor,
XXXXXXXX ASSET MANAGEMENT, INC.
By:
-------------------------------------
Name:
Title:
D-2
ANNEX E
[FORM OF NOTICE OF PRIMARY XXXXXXXX RIGHT]
[date]
Navarre Corporation
0000 00xx Xxxxxx Xxxxx
Xxx Xxxx, Xxxxxxxxx 00000
Attention: Chief Financial Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Ladies and Gentlemen:
Reference is made to the Amended and Restated Subscription Agreement
(the "Agreement") dated as of July 31, 1999 by and between Navarre Corporation
("Navarre") and Xxxxxxxx International Limited ("Xxxxxxxx"). Capitalized terms
not otherwise defined herein shall have the meanings ascribed thereto in the
Agreement.
Xxxxxxxx hereby elects to exercise the Primary Xxxxxxxx Right. In
accordance with and subject to the terms and conditions of the Agreement, the
Xxxxxxxx Closing Date is ________ (the third Trading Day following and excluding
the date hereof).
[share delivery mechanics to come]
XXXXXXXX INTERNATIONAL LIMITED, by its
duly authorized investment advisor,
XXXXXXXX ASSET MANAGEMENT, INC.
By:
-------------------------------------
Name:
Title:
E-1
AGREED AND ACKNOWLEDGED:
NAVARRE CORPORATION
By:
-------------------------------------
Name:
Title:
E-2
ANNEX F
[FORM OF NOTICE OF ROLLOVER XXXXXXXX RIGHT]
[date]
Navarre Corporation
0000 00xx Xxxxxx Xxxxx
Xxx Xxxx, Xxxxxxxxx 00000
Attention: Chief Financial Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Ladies and Gentlemen:
Reference is made to the Amended and Restated Subscription Agreement
(the "Agreement") dated as of July 31, 1999 by and between Navarre Corporation
("Navarre") and Xxxxxxxx International Limited ("Xxxxxxxx"). Capitalized terms
not otherwise defined herein shall have the meanings ascribed thereto in the
Agreement.
Xxxxxxxx hereby elects to exercise the Rollover Xxxxxxxx Right in
respect of an aggregate of ________ shares of Class B Preferred Stock. In
accordance with and subject to the terms and conditions of the Agreement, the
Xxxxxxxx Closing Date is ________ (the third Trading Day following and excluding
the date hereof).
[share delivery mechanics to come]
XXXXXXXX INTERNATIONAL LIMITED, by its
duly authorized investment advisor,
XXXXXXXX ASSET MANAGEMENT, INC.
By:
-------------------------------------
Name:
Title:
F-1
AGREED AND ACKNOWLEDGED:
NAVARRE CORPORATION
By:
-------------------------------------
Name:
Title:
F-2
ANNEX G
[FORM OF PRIMARY DELIVERY NOTICE]
[date]
Xxxxxxxx International Limited
c/o Fletcher Asset Management
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Ladies and Gentlemen:
Reference is made to the Amended and Restated Subscription Agreement
(the "Agreement") dated as of July 31, 1999 by and between Navarre Corporation
("Navarre") and Xxxxxxxx International Limited ("Xxxxxxxx"). Capitalized terms
not otherwise defined herein shall have the meanings ascribed thereto in the
Agreement.
Attached are copies of the front and back of (i) the ten original stock
certificates, each representing 3,400 shares of Class B Preferred Stock,
purchased by Xxxxxxxx on the date hereof and (ii) Warrant No. __ issued to
Xxxxxxxx, together with a copy of the overnight courier air xxxx which will be
used to ship such stock certificates and warrant. We have the executed original
stock certificates and the warrant and other documents required to be delivered
in connection with the Investment Closing Date occurring on the date hereof.
Upon our confirmation of the payment of the $8,500,000 aggregate purchase price
therefor, we will send the original stock certificates and the warrant by
overnight courier to the following address:
[TO COME]
and we will send the other original documents by overnight courier to the
following address:
Xxxxxxxx International Limited
c/o Midland Bank Trust Corporation (Cayman) Limited
X.X. Xxx 0000
Xxxx Xxxxxx
Xxxxx Xxxxxx, Xxxxxx Xxxxxxx, B.W.I.
Attn: Xxxxxx Xxxxxxxx
G-1
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxx International Limited
c/o Fletcher Asset Management
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxx Xxxxxxx
[INSERT THE FOLLOWING LANGUAGE IF THIS DELIVERY NOTICE IS BEING
DELIVERED ON OR AFTER THE FILING BY NAVARRE WITH THE SEC OF ITS ANNUAL REPORT ON
FORM 10-K FOR THE FISCAL YEAR ENDED MARCH 31, 2000: Attached hereto as Exhibit 1
is a true, correct and complete copy of the most recent report of Ernst & Young
LLP to the Board of Directors and Shareholders of Navarre, together with the
accompanying consolidated financial statements and schedule of Navarre, as such
report appears in the most recent Annual Report on Form 10-K filed by Navarre
with the SEC.]
NAVARRE CORPORATION
By:
-------------------------------------
Name:
Title:
G-2
ANNEX H
[FORM OF ROLLOVER DELIVERY NOTICE]
[date]
Xxxxxxxx International Limited
c/o Fletcher Asset Management
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Ladies and Gentlemen:
Reference is made to the Amended and Restated Subscription Agreement
(the "Agreement") dated as of July 31, 1999 by and between Navarre Corporation
("Navarre") and Xxxxxxxx International Limited ("Xxxxxxxx"). Capitalized terms
not otherwise defined herein shall have the meanings ascribed thereto in the
Agreement.
Attached are copies of the front and back of _____ original stock
certificates, each representing 3,400 shares of Class B Preferred Stock [plus
one additional certificate representing ____ remaining shares], purchased by
Xxxxxxxx on the date hereof, together with a copy of the overnight courier air
xxxx which will be used to ship the stock certificates. We have the executed
original stock certificates and other documents required to be delivered in
connection with the Investment Closing Date occurring on the date hereof. Upon
our confirmation of the payment of the $_________ aggregate purchase price
therefor, we will send the original stock certificates by overnight courier to
the following address:
[TO COME]
and we will send the other original documents by overnight courier to the
following address:
Xxxxxxxx International Limited
c/o Midland Bank Trust Corporation (Cayman) Limited
X.X. Xxx 0000
Xxxx Xxxxxx
Xxxxx Xxxxxx, Xxxxxx Xxxxxxx, B.W.I.
Attn: Xxxxxx Xxxxxxxx
H-1
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxx International Limited
c/o Fletcher Asset Management
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxx Xxxxxxx
Attached hereto as Exhibit 1 is a true, correct and complete copy of
the most recent report of Ernst & Young LLP to the Board of Directors and
Shareholders of Navarre, together with the accompanying consolidated financial
statements and schedule of Navarre, as such report appears in the most recent
Annual Report on Form 10-K filed by Navarre with the SEC.
NAVARRE CORPORATION
By:
-------------------------------------
Name:
Title:
H-2
ANNEX I
[FORM OF CONVERSION NOTICE]
[date]
Navarre Corporation
0000 00xx Xxxxxx Xxxxx
Xxx Xxxx, Xxxxxxxxx 00000
Attention: Chief Financial Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Ladies and Gentlemen:
Reference is made to the Amended and Restated Subscription Agreement
(the "Agreement") dated as of July 31, 1999 by and between Navarre Corporation
("Navarre") and Xxxxxxxx International Limited ("Xxxxxxxx"). Capitalized terms
not otherwise defined herein shall have the meanings ascribed thereto in the
Agreement.
Xxxxxxxx hereby elects to convert _________ shares of Class B Preferred
Stock into ________ shares of Common Stock at a Conversion Price (as defined in
the Certificate of Rights and Preferences) of ____________. In accordance with
Section 4 of the Certificate of Rights and Preferences, such shares of Common
Stock shall be delivered to Xxxxxxxx [in uncertificated form by book-entry
transfer][in certificated form at the address specified below:]
[delivery address to be added, if applicable]
XXXXXXXX INTERNATIONAL LIMITED, by its
duly authorized investment advisor,
XXXXXXXX ASSET MANAGEMENT, INC.
By:
-------------------------------------
Name:
Title:
I-1
AGREED AND ACKNOWLEDGED:
NAVARRE CORPORATION
By:
-------------------------------------
Name:
Title:
I-2
ANNEX J
[FORM OF CONVERSION DELIVERY NOTICE]
[date]
Xxxxxxxx International Limited
c/o Fletcher Asset Management
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Ladies and Gentlemen:
Reference is made to the Amended and Restated Subscription Agreement
(the "Agreement") dated as of July 31, 1999 by and between Navarre Corporation
("Navarre") and Xxxxxxxx International Limited ("Xxxxxxxx"). Capitalized terms
not otherwise defined herein shall have the meanings ascribed thereto in the
Agreement.
This notice confirms that _________ shares of Class B Preferred Stock
have been converted by Xxxxxxxx into ________ shares of Common Stock at a
Conversion Price (as defined in the Certificate of Rights and Preferences) of
____________. [IF THE SHARES ARE BEING DELIVERED BY BOOK ENTRY TRANSFER, INSERT
THE FOLLOWING -- Such shares of Common Stock have been delivered to Xxxxxxxx in
uncertificated form by book-entry transfer.][IF THE SHARES ARE BEING DELIVERED
IN PHYSICAL FORM TO THE HOLDER, INSERT THE FOLLOWING -- Attached are copies of
the front and back of the ____ original stock certificates, each representing
______ shares of Common Stock, together with a copy of the overnight courier air
xxxx which will be used to ship such stock certificates. We will send the
original stock certificates by overnight courier to the following address:
[TO COME]
with a copy to:
Xxxxxxxx International Limited
c/o Fletcher Asset Management
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxx Xxxxxxx
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NAVARRE CORPORATION
By:
-------------------------------------
Name:
Title:
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