EXHIBIT 3
Neither the Warrant represented by this certificate nor the securities
issuable upon exercise hereof (including securities issuable upon conversion of
the Preferred Shares defined below) have been registered under the Securities
Act of 1933, as amended (the "Act") or applicable state securi ties laws. The
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 Act and applicable state securities laws,
or unless an exemption from registration is available.
WARRANT NO. W-1 UP TO 16,000 PREFERRED SHARES
WARRANT CERTIFICATE
NAVARRE CORPORATION
This Warrant Certificate certifies that Fletcher International Limited,
or its registered assigns, is the registered holder of one Warrant (the
"Warrant") expiring on the Termination Date (as defined below) to purchase
shares of Class B Preferred Stock, no par value (the "Preferred Shares"), of
NAVARRE CORPORATION, a Minnesota corporation (the "Issuer"). The Warrant
entitles the holder to purchase from the Issuer up to 16,000 Preferred Shares,
at an exercise price per Preferred Share of $250 (the "Exercise Price").
The Warrant represented hereby was issued on August 20, 1999 (the
"Issuance Date") pursuant to the Amended and Restated Subscription Agreement of
the Issuer dated as of July 31, 1999 (the "Subscription Agreement"), and is
subject to the terms and conditions thereof. The Issuance Date was the Initial
Closing Date under the Subscription Agreement. Unless otherwise defined herein,
capitalized terms used herein shall have the meanings set forth in the
Subscription Agreement. A copy of the Subscription Agreement may be obtained by
the registered holder hereof upon written request to the Issuer.
The Warrant represented hereby may be exercised on any Trading Day (a
"Warrant Exercise Date") from and including the Issuance Date to and including
(x) the third annual anniversary thereof, in the event this Warrant was issued
originally on the Initial Closing Date or the Primary Navarre Closing Date and
(y) the fourth annual anniversary thereof, in the event this Warrant was issued
originally on the Primary Fletcher Closing Date, plus, in the case of the
preceding clause (x) or (y) one additional Trading Day for each Trading Day that
the Registration Requirement (as defined in Section 3.A.d of the Subscription
Agreement) is not satisfied with respect to the shares of Common Stock issuable
upon conversion of the Preferred Shares issuable upon exercise of this
Warrant. The Exercise Price multiplied by the Exercise Amount (as defined below)
at any Warrant Exercise Date is referred to herein as a "Warrant Purchase
Price".
The Warrant represented hereby shall have the following additional
terms:
1. To exercise the Warrant, the registered holder must, prior to the
Termination Date, surrender this Warrant Certificate to the Issuer at
its principal office with the Exercise Notice attached hereto (an
"Exercise Notice") duly completed and signed by the registered holder
hereof and stating the total number of Preferred Shares in respect of
which the Warrant is then exercised (the "Exercise Amount") and tender
in cash or by certified or official bank check the applicable Warrant
Purchase Price. The Warrant shall be exercisable only in the minimum
amount of 1,500 Preferred Shares (or such lesser amount as shall
constitute the full amount remaining of this Warrant).
2. On the third Trading Day following a Warrant Exercise Date (an "Issue
Date") the Issuer shall issue and cause to be delivered to the
registered holder hereof at such address as such holder shall specify
in the Exercise Notice a certificate or certificates for the number of
full Preferred Shares issuable upon the exercise of such Warrant,
registered in such holder's name, provided that the holder may, at its
option, instruct the Issuer to cause the simultaneous conversion on the
Issue Date of all or part of the Preferred Shares otherwise deliverable
to the holder into shares of Common Stock in accordance with the terms
thereof, in which case the Issuer shall instead deliver to the holder
on the Issue Date via book-entry transfer or, at the holder's option,
at such address specified by the holder, one or more certificates for
the number of shares of Common Stock so converted and, if the Preferred
Shares were not converted in whole, one or more stock certificates for
the number of Preferred Shares not so converted. Such certificate or
certificates shall be deemed to have been issued and any person so
designated to be named therein shall be deemed to have become a holder
of record of such Preferred Shares and shares of Common Stock, if any,
as of such Warrant Exercise Date.
3. If on such Issue Date the number of Preferred Shares to be delivered
shall be less than the total number of Preferred Shares deliverable
hereunder, there shall be issued to the holder hereof or his assignee
on such Issue Date a new warrant certificate substantially identical to
this Warrant Certificate, except that such new warrant certificate
shall evidence the right to purchase the number of Preferred Shares
equal to (x) the total number of Preferred Shares deliverable hereunder
less (y) the number of Preferred Shares so delivered.
4. For so long as the Warrant represented hereby has not been exercised in
full, the Issuer shall at all times prior to the Termination Date
reserve and keep available, free from pre-emptive rights, out of its
authorized but unissued capital stock, for issuance upon exercise of
the Warrant represented hereby, the maximum number of shares of
Preferred Shares then so issuable and shares of Common Stock issuable
upon conversion of such Preferred Shares in
accordance with their terms. In the event the number of shares of
Common Stock issuable in respect of the Preferred Shares exceeds the
authorized number of shares of Common Stock or other securities, the
Issuer shall promptly take all actions necessary to increase the
authorized number, including causing its Board of Directors to call a
special meeting of shareholders and recommend such increase.
5. By accepting delivery of this Warrant Certificate, the registered
holder hereof covenants and agrees with the Issuer not to exercise the
Warrant or transfer the Warrant or the Preferred Shares represented
hereby except in compliance with the terms of the Subscription
Agreement and this Warrant Certificate.
6. By accepting delivery of this Warrant Certificate, the registered
holder hereof covenants and agrees with the Issuer that no Warrant may
be sold, assigned, conveyed, encumbered, pledged, hypothecated or in
any other manner disposed of or transferred, in whole or in part,
unless and until such holder shall deliver to the Issuer (i) written
notice of such transfer and of the name and address of the transferee
and such notice has been received by the Issuer; and (ii) a written
agreement of the transferee to comply with the terms of the
Subscription Agreement and this Warrant Certificate. If a portion of
the Warrant is transferred, all rights of the registered holder
hereunder may be exercised by the transferee provided that any
registered holder of the Warrant may deliver an Exercise Notice only
with respect to the Preferred Shares subject to such holder's portion
of the Warrant.
7. The Issuer will pay all documentary stamp taxes (if any) attributable
to the issuance of Preferred Shares upon the exercise of the Warrant by
the registered holder hereof; provided, however, that the Issuer shall
not be required to pay any tax or taxes which may be payable in respect
of any transfer involved in the registration of the Warrant Certificate
or any certificates for Preferred Shares in a name other than that of
the registered holder of the Warrant Certificate surrendered upon the
exercise of a Warrant, and the Issuer shall not be required to issue or
deliver the Warrant Certificate or certificates for Preferred Shares
unless or until the person or persons requesting the issuance thereof
shall have paid to the Issuer the amount of such tax or shall have
established to the satisfaction of the Issuer that such tax has been
paid.
8. In case this Warrant Certificate shall be mutilated, lost, stolen or
destroyed, the Issuer may in its discretion issue in exchange and
substitution for and upon cancellation of the mutilated Warrant
Certificate, or in lieu of and substitution for the Warrant Certificate
lost, stolen or destroyed, a new Warrant Certificate of like tenor, but
only upon receipt of evidence reasonably satisfactory to the Issuer of
such loss, theft or destruction of such Warrant Certificate and
indemnity, if requested, reasonably satisfactory to the Issuer.
Applicants for a substitute Warrant Certificate shall also comply with
such other reasonable regulations and pay such other reasonable charges
as the Issuer may prescribe.
9. The Issuer shall serve as warrant agent (the "Warrant Agent") under
this Agreement. The Warrant Agent hereunder shall at all times maintain
a register (the "Warrant Register") of the holders of Warrants. Upon 30
days' notice to the registered holder hereof, the Issuer may appoint a
new Warrant Agent. Such new Warrant Agent shall be a corporation doing
business and in good standing under the laws of the United States or
any state thereof, and having a combined capital and surplus of not
less than $50,000,000. The combined capital and surplus of any such new
Warrant Agent shall be deemed to be the combined capital and surplus as
set forth in the most recent annual report of its condition published
by such Warrant Agent prior to its appointment; provided that such
reports are published at least annually pursuant to law or to the
requirements of a federal or state supervising or examining authority.
After acceptance in writing of such appointment by the new Warrant
Agent, it shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the
Warrant Agent, without any further assurance, conveyance, act or deed;
but if for any reason it shall be reasonably necessary or expedient to
execute and deliver any further assurance, conveyance, act or deed, the
same shall be done at the expense of the Issuer and shall be legally
and validly executed and delivered by the Issuer.
Any corporation into which the Issuer or any new Warrant Agent may be
merged or any corporation resulting from any consolidation to which the
Issuer or any new Warrant Agent shall be a party or any corporation to
which the Issuer or any new Warrant Agent transfers substantially all
of its corporate trust or shareholders services business shall be a
successor Warrant Agent under this Agreement without any further act;
provided that such corporation (i) would be eligible for appointment as
successor to the Warrant Agent under the provisions of this Section or
(ii) is a wholly owned subsidiary of the Warrant Agent. Any such
successor Warrant Agent shall promptly cause notice of its succession
as Warrant Agent to be mailed (by first class mail, postage prepaid) to
the registered holder hereof at such holder's last address as shown on
the Warrant Register.
This Warrant Certificate shall not be valid unless signed by the
Issuer.
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IN WITNESS WHEREOF, Navarre Corporation has caused this Warrant
Certificate to be signed by its duly authorized officer.
Dated: August ___, 1999
NAVARRE CORPORATION
By:
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Name:
Title: