EXHIBIT 10.2
AMENDED AND RESTATED
EXECUTIVE SEVERANCE AGREEMENT
     THIS AMENDED AND RESTATED EXECUTIVE SEVERANCE AGREEMENT (the “Agreement”)
dated as of the 20th day of March, 2008 (the “Effective Date”), is entered into
by and between NAVARRE CORPORATION, a Minnesota corporation (the “Company”), and
J. Reid Porter, the Company’s Executive Vice President and Chief Financial
Officer (the “Executive’).
     WHEREAS, in order to promote the stability of the Company by providing
appropriate assurances to Executive with respect to certain events that result
in the Executive’s involuntary termination, the Company and Executive previously
entered into an Executive Severance Agreement on December 12, 2007 (the
“Original Agreement”);
     WHEREAS, the Company and Executive now desire to amend in certain respects
and restate the Original Agreement in its entirety, as set forth below, in order
to, among other things, secure Executive’s continued services in the event of
any actual or threatened change in control and ensure compliance with
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”); and
     WHEREAS, the Board of Directors of the Company (the “Board”) has determined
that both the Original Agreement and this Agreement are in the best interests of
the Company and its shareholders in order to secure Executive’s continued
services.
     NOW, THEREFORE, in consideration of the above recitals and the mutual
promises herein contained, the parties hereto agree as follows:

1.   Definitions. For purposes of this Agreement the following definitions
apply:

a. “Base Salary” shall mean the Executive’s annualized base salary as adjusted
from time to time.
b. “Cause” shall mean a termination of Executive’s employment by the Company due
to any of the following:
(i) Executive’s conviction of, or the entering by Executive of a plea of nolo
contendere to, any felony charge or to any non-felony crime involving
misrepresentation, fraud or moral turpitude;
(ii) Executive’s gross neglect, willful malfeasance or willful misconduct in
connection with his employment hereunder which has had or could have a material
adverse effect on the business or reputation of the Company and its
subsidiaries, unless Executive reasonably believed in good faith that such act
or non-act was in the best interests of the Company;
(iii) A substantial and continual refusal by Executive to perform Executive’s
duties, responsibilities or obligations as assigned by the Company (provided
that such duties, responsibilities or obligations are not inconsistent with
Executive’s position as Chief Financial Officer and are otherwise lawful and
further provided that the failure to perform is not due to incapacity caused by
a disability) that continues for thirty (30)

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days after receipt by Executive of written notice from the Company identifying
the duties, responsibilities or obligations not being performed;
(iv) A violation by Executive of any policy of the Company that is generally
applicable to all employees or all officers of the Companies including, but not
limited to, policies concerning insider trading or sexual harassment, or the
Company’s code of conduct, that Executive knows or reasonably should know could
reasonably be expected to result in a material adverse effect on the Company,
unless such violation is capable of being cured and is not cured within thirty
(30) days after receipt of notice thereof from the Company;
(v) Any fraudulent or dishonest action, or failure to act, with respect to the
business or affairs of the Company or breach of the duty of loyalty toward the
Company, including, without limitation, providing false or misleading
information to the Company as part of the application process or otherwise;
(vi) Executive’s failure to cooperate, if requested by the Board, with any
investigation or inquiry into his or the Company’s business practices, whether
internal or external, including, but not limited to Executive’s refusal to be
deposed or to provide testimony at any trial or inquiry;
(vii) Any material breach by Executive of the provisions of Paragraphs 3, 4, or
5 of this Agreement, unless such violation is capable of being cured and is not
cured within thirty (30) days after receipt of notice thereof from the Company.
c. “Change in Control” shall mean a transaction involving any of the following:
(i) The approval by the shareholders of the Company of (i) any sale, lease,
exchange or other transfer of all or at least seventy percent (70%) of the
assets of the Company (in one transaction or in a series of related
transactions) to a corporation that is not controlled by the Company, (ii) any
plan or proposal for the liquidation or dissolution of the Company, or (iii) any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of Company stock
would be converted into cash, securities or other property, other than a merger
of the Company in which shareholders immediately prior to the merger have the
same proportionate ownership of stock of the surviving corporation immediately
after the merger;
(ii) A change in control of the Company of a nature that would be required to be
reported (assuming such event has not been “previously reported”) in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), whether or not the
Company is then subject to such reporting requirement;
(iii) The public announcement (which, for purposes of this definition, shall
include, without limitation, a report filed pursuant to Section 13(d) of the
Exchange Act) by any “person” (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act), or by the Company, that such “person” has become the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company’s outstanding securities; or

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(iv) The individuals who constitute the board of directors of the Company prior
to the transaction cease for any reason to constitute at least a majority of the
board of directors after the transaction.

  d.   “Good Reason” shall mean a termination of Executive’s employment by the
Executive for any of the following events, provided that Executive shall have
delivered a written notice to the Company within sixty (60) days of his having
actual knowledge of the occurrence of one of such events, stating that he
intends to terminate his employment for Good Reason and specifying the factual
basis for such termination, and such event shall not have been cured by the
Company within thirty (30) days of the receipt of such notice:

(i) A reduction in any of Executive’s compensation rights or benefits unless
part of a general reduction approved by the Board of Directors or Compensation
Committee thereof and applicable to the Company’s executive officers generally
on a proportionate and non-discriminatory basis;
(ii) A material reduction in Executive’s duties, responsibilities or authority
as Chief Financial Officer of the Company or any other position in which he is
then serving; or
(iii) The assignment to Executive of duties or responsibilities that, in
Executive’s reasonable judgment are materially inconsistent with his status and
position as an executive officer or that materially impair Executive’s ability
to function as Chief Financial Officer of the Company or any other position in
which he is then serving;
e.”Severance Event” shall mean either: (i) the effective date of the termination
of Executive’s employment by the Company for any reason other than for Cause; or
(ii) the effective date of the termination of Executive’s employment by the
Executive for Good Reason. A Severance Event shall not include a termination of
Executive’s employment as a result of Executive’s death. The term “termination
of employment” and other similar terms used in this Agreement shall be construed
to have the same meaning as is given to the term “separation from service” in
Section 409A of the Code.
2. Severance Payments.
a. Upon the occurrence of a Severance Event, and in consideration of and
contingent upon the execution and delivery by Executive of a mutually agreeable
general release of all claims and expiration of any applicable revocation period
in connection therewith, Executive shall be entitled to severance payments
(“Severance”) as follows:
(i) Subject to Paragraph 2c below, an amount equal to Executive’s then current
Base Salary, provided, however, if the termination occurs within twelve
(12) months following a Change In Control, then the amount payable shall be
equal to two (2) times Executive’s then current Base Salary in effect prior to
any reduction following a Change in Control; and
(ii) In full substitution for Executive’s rights under the Company’s annual
incentive bonus plan, a substitute incentive award equal to the average amount
of the annual incentive award earned and paid to the Executive with respect to
the preceding

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three (3) fiscal years, provided, however, if the termination occurs within
twelve (12) months following a Change In Control, then the amount payable shall
be equal to two (2) times the average amount of the annual incentive award
earned and paid to the Executive with respect to the preceding three (3) fiscal
years.
b. Severance shall be paid in a lump sum within thirty (30) days after the
effective date of the termination of employment, provided that, if, at the time
of Executive’s termination of employment with the Company, Executive is
considered a “specified employee” within the meaning of Section 409A of the
Code, the payment shall be delayed until the first day of the seventh month
following the month in which such termination of employment occurs.
c. If applicable, the severance amount provided for in Paragraph 2a(i) above
will be offset by any income protection benefits payable to Executive during the
first twelve months of a qualifying disability under the Company’s group
short-term and long-term disability insurance plans.
d. Notwithstanding the foregoing to the contrary, in no event shall the amount
due and payable hereunder constitute a “Parachute Payment” within the meaning of
the Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended. In the
event that any portion of the severance payment would be deemed a Parachute
Payment, the amount of the severance payment shall be reduced only to the extent
necessary to eliminate any such treatment or characterization.
e. It is the intent of the parties that payments under this Agreement comply
with Section 409A of the Code, and, accordingly, to interpret, to the maximum
extent permitted, this Agreement to be in compliance therewith. If the Executive
notifies the Company in writing (with specificity as to the reason therefore)
that the Executive believes that any provision of this Agreement (or of any
payment of compensation under this Agreement) would cause the Executive to incur
any additional tax or interest under Section 409A of the Code, and the Company
concurs with such belief or the Company (without any obligation whatsoever to do
so) independently makes such determination, the parties shall, in good faith,
reform such provision to try to comply with Section 409A through good faith
modifications to the minimum extent reasonably appropriate to conform with
Section 409A. To the extent that any provision hereof is modified by the parties
to try to comply with Section 409Aof the Code, such modification shall be made
in good faith and shall, to the maximum extent reasonably possible, maintain the
original intent of the applicable provision without violating the provisions of
Section 409A. Notwithstanding the foregoing, the Company shall not be required
to assume any economic burden in connection with compliance or noncompliance
with Section 409A of the Code.

3.   Confidentiality.

a. Executive acknowledges that his position with Company will bring Executive in
close contact with many confidential affairs of the Company and its
subsidiaries, including, but not limited to, information about costs, profits,
financial data, markets, trade secrets, sales, products, key personnel, pricing
policies, customer lists, development projects, operational methods, technical
processes, plans for future development, business affairs and methods and other
information not readily available to the public. In recognition of the
foregoing, Executive covenants and agrees that:

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(i) Executive will keep secret all material confidential matters of the Company
which are not otherwise in the public domain and will not disclose them to
anyone outside of the Company, either during or after the termination of his
Employment, except with the Company’s written consent and except for such
disclosure as is necessary in the performance of Executive’s duties or to the
extent required by an order of a court having competent jurisdiction or under
subpoena from an appropriate government agency; and
(ii) Executive will deliver promptly to the Company on termination of his
employment with the Company, or at any other time the Company may so request,
all memoranda, notes, records, reports and other documents (and all copies
thereof)containing confidential material relating to the Company, which
Executive may then possess or have under his control.

4.   Intellectual Property.

a. All right, title, and interest in and to all inventions, patent applications,
patents thereon, know-how and trade secret information, and all copyrightable
material, copyrights, and copyright applications (collectively, “Intellectual
Property”) that Executive conceives or originates, either individually or
jointly with others, and which relate to the business of the Company, will be
the sole and exclusive property of the Company, and Executive hereby irrevocably
assigns and conveys the sole and exclusive right, title and interest therein,
free and clear of any liens or other encumbrances. Such Intellectual Property
shall include, but not be limited to, Intellectual Property that:
(i) Is based on any confidential or proprietary information of the Company or of
any vendor, supplier or customer of the Company;
(ii) Is related to the actual business of or research and development of the
Company;
(iii) Was developed with use of materials, employees, supplies or facilities of
the Company; or
(iv) Was funded by the Company.
b. Executive agrees to execute promptly any papers and perform promptly any
other reasonable acts necessary to assist the Company to perfect all rights,
including all Intellectual Property rights, reserved or conveyed thereto
hereunder. Executive agrees to render promptly aid and assistance to the Company
in any interference or litigation pertaining to such Intellectual Property, and
all reasonable expenses therefor incurred by Executive at the request of the
Company will be borne by the Company.
c. Executive will promptly disclose to the Company all Intellectual Property
conceived or originated pursuant to his employment.
d. Executive warrants that in the event that Executive creates any original
materials or uses any proprietary information in rendering services, none of
such material shall infringe any copyrights, trade secrets, rights of privacy,
or any other rights of others.

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5.   Covenant Not to Compete.

a. Executive acknowledges that the businesses of the Company and its
subsidiaries is highly competitive and international in scope, that their
licenses are sourced and their products are marketed throughout the world, that
the Company and its subsidiaries compete in nearly all of their business
activities with other organizations which are or could be located in nearly any
part of the world and that the nature of Executive’s services, position and
expertise are such that he is capable of competing with the Company from nearly
any location in the world. Executive further acknowledges that all services of
Executive are exclusive to the Company, and that Executive’s performances and
services hereunder are of a special, unique, unusual, extraordinary and
intellectual character which gives them peculiar value, the loss of which cannot
reasonably or adequately be compensated in an action at law for damages and that
a breach by Executive of the terms of this Article VI will cause the Company
irreparable injury.
b. In recognition of the foregoing Executive covenants and agrees that during
his employment with the Company and for a period of two (2) years thereafter
(the “Restricted Period”) he will not, directly or indirectly, as a principal,
officer, director, shareholder, partner, member, employee, consultant,
independent contractor, agent or executive or in any other capacity whatsoever,
without the prior written consent of the Company, do any of the following:
(i) Engage in the business of acquiring, licensing or distributing music, home
video, video games or computer software;
(ii) Acquire any ownership of any kind in, or become associated with or provide
services to any other person, corporation, partnership, limited liability
company, business trust, association or other business entity (each an “Entity”)
engaged in the business of acquiring, licensing or distributing music, home
video, video games or computer software;
(iii) Intentionally and knowingly solicit or attempt to solicit or participate
in the solicitation of or otherwise advise or encourage any then employee,
agent, consultant or representative of, or vendor or supplier to, the Company to
terminate his, her or its relationship therewith; or
(iv) Solicit or attempt to solicit or encourage any person, who is then, or was
within the then most recent 12-month period, to the knowledge of Executive, an
employee, agent, consultant or representative of the Company, to become an
employee, agent, representative or consultant of or to Executive or any other
individual or entity.
c. Permitted Investments. Nothing in this Paragraph 5 shall prevent Executive
from making or holding an investment in securities traded on any national
securities exchange or traded in the over-the-counter market, provided said
investments do not exceed one percent (1%) of the issued and outstanding
securities of any one such issuer or, if the total investment in the issuer is
$500,000 or less, up to five percent (5%) of such issued and outstanding
securities.
d. Injunctive Relief. Executive agrees that the Company is entitled to
injunctive and other equitable relief to prevent a breach or threatened breach
of this Paragraph 5, which shall be in addition to any other rights or remedies
to which the Company may be entitled.

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6.   Assignment. This Agreement and all of the provisions hereof will be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, except that neither this Agreement nor any of
the rights, interests or obligations hereunder may be assigned by Executive
without the prior written consent of the Company.

7.   Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or
unenforceable or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement. In furtherance and not in limitation of the foregoing, should the
duration or geographical extent of, or business activities covered by, any
provision of this Agreement be in excess of that which is valid and enforceable
under applicable law, then such provision shall be construed to cover only that
duration, extent or activities which may validly and enforceably be covered.
Executive acknowledges the uncertainty of the law in this respect and expressly
stipulates that this Agreement be given the construction which renders its
provisions valid and enforceable to the maximum extent (not exceeding its
express terms) possible under applicable law.

8.   Complete Agreement. This Agreement contains the complete agreement between
the parties with respect to the subject matter hereof and supersedes any prior
understandings, agreements or representations by or between the parties, written
or oral, which may have related to the subject matter hereof in any way. No
person, whether or not an officer, agent, employee or representative of any
party, has made or has any authority to make for or on behalf of that party any
agreement, representation, warranty, statement, promise, arrangement or
understanding not expressly set forth in this Agreement (“Parole Agreements”).
The parties acknowledge that in entering into this Agreement, they have not
relied and will not in any way rely upon any Parole Agreements.

9.   Counterparts. This Agreement may be executed in one or more counterparts,
any one of which need not contain the signatures of more than one party, but all
such counterparts taken together, when delivered, will constitute one and the
same instrument.

10.   Governing Law; Choice of Forum; Enforcement. The internal law, without
regard to conflicts of laws principles, of the State of Minnesota will govern
all questions concerning the construction, validity and interpretation of this
Agreement and the performance of the obligations imposed by this Agreement. Any
and every legal proceeding arising out of or in connection with this Agreement
shall be brought in the appropriate courts of the State of Minnesota, and each
of the parties hereto consents to the exclusive jurisdiction of such courts.

11.   Injunctive Relief. Executive agrees that it would be difficult to
compensate the Company fully for damages for any violation of the provisions of
Paragraphs 3, 4 and 5 of this Agreement. Accordingly, Executive specifically
agrees that the Company shall be entitled to injunctive relief to enforce the
provisions of such Paragraphs.

12.   No Waiver. No term or condition of this Agreement shall be deemed to have
been waived, nor shall there by any estoppel to enforce any provisions of this
Agreement, except by a statement in writing signed by the party against whom
enforcement of the waiver or estoppel is sought. Any written waiver shall not be
deemed a continuing waiver unless specifically stated, shall operate only as to
the specific term or condition waived and shall not constitute a waiver of such
term or condition for the future or as to any act other than that specifically
waived.

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13.   Modification. This Agreement may not be altered, modified or amended
except by an instrument in writing signed by Executive and the Company.

14.   Survival. Paragraphs 3, 4, and 5 shall survive the termination of
Executive’s employment and termination or expiration of this Agreement.

       IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.

              NAVARRE CORPORATION ¸       EXECUTIVE  
By:
           
 
           
 
  Cary L. Deacon                 J. Reid Porter
Its:
  President and CEO        

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