STOCK PURCHASE AGREEMENT

     THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is made and entered into
as of the 14th day of March, 2005 (the “Effective Date”), by and among Navarre
Corporation, a Minnesota corporation (“Purchaser”) and Michael A. Bell
(“Seller”).

W I T N E S S E T H:

     WHEREAS, Seller is the owner of 20,000 shares of the issued and outstanding
common stock of Encore Software, Inc., a Minnesota corporation (the “Company”),
which shares currently represent 20% of the outstanding common stock of the
Company (the “Shares”);

     WHEREAS, Purchaser has proposed to purchase the Shares on the terms and
conditions contained herein; and

     WHEREAS, Purchaser and Seller desire to consummate the purchase and sale of
the Shares on the terms set forth below.

     NOW, THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

1.      Termination of Buy and Sell Agreement.   Buyer hereby acknowledges and
agrees that the Stock Buy and Sell Agreement entered into effective as of
August 2002 by and between Buyer and Encore Software, Inc f/k/a Encore
Acquisition Corporation (the “Buy and Sell Agreement”) is terminated and of no
further force or effect, and that this Agreement is being entered into in lieu
of giving any effect to the provisions of the Buy and Sell Agreement in
connection with Seller’s sale of the Shares.

2.      Purchase and Sale of Stock.   Effective as of the Effective Date (as
defined below), Purchaser shall purchase and acquire from Seller and Seller
shall sell, transfer, assign and deliver to Purchaser, the Shares on the terms
and conditions set forth herein.

3.      Purchase Price.   The purchase price of the Shares (the “Purchase
Price”) shall be the sum of:

    (a)      One Million and No/100 Dollars ($1,000,000.00) in cash (the “Cash
Consideration”); and       (b)      Up to six hundred thousand (600,000) shares
of unregistered common stock of Purchaser (the “Stock Consideration”).

4.      Manner of Payment.   The Purchase Price shall be payable to Seller as
follows:

    (a)      The Cash Consideration shall be paid by Purchaser to Seller on
April 15, 2005, by wire transfer to an account designated by Seller;

 

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    (b)      300,000 shares of the Stock Consideration (the “Closing Stock
Consideration”) shall be issued to Seller on the Effective Date; and      
(c)      Up to 300,000 shares of the Stock Consideration (the “Contingent Stock
Consideration”) shall be issued to Seller upon achievement of the milestones set
forth in Section 4 of this Agreement.

5.      Payment of Contingent Stock Consideration.   Seller’s receipt of the
Contingent Stock Consideration is contingent on the Company achieving certain
targets for Operating Income (as such term is defined below) (each, an
“Operating Income Target”).

    (a)      Seller shall receive 150,000 shares of the Contingent Stock
Consideration if the Company’s Operating Income for the fiscal year ended
March 31, 2006 is greater than $9,000,000 (the “2006 Target”); and      
(b)      Seller shall receive 150,000 shares of the Contingent Stock
Consideration if the Company’s Operating Income for the fiscal year ended
March 31, 2007 is greater than $4,000,000 (the “2007 Target”).       (c)     
Notwithstanding the foregoing, if the 2006 Target is not achieved, but the
Company’s cumulative Operating Income for the fiscal years ended March 31, 2006
and 2007 is greater than $13,000,000, Seller shall receive the full amount of
the Contingent Stock Consideration.

“Operating Income” shall mean the EBIT of the Company, calculated consistently
with the current business practices of the Company and Purchaser, including
expenses allocated to the Company by Purchaser that are determined in a manner
consistent with existing practices, but without reduction for any expenses
otherwise allocated to the Company by Purchaser in connection with any
extraordinary costs or one-time charges not arising out of the business of the
Company, determined on a standalone basis by Purchaser’s accountants (the
“Accountants”).

The calculations for determining any Contingent Stock Consideration which may be
due shall be completed only after Purchaser’s accountants have reported to
Purchaser’s Board of Directors for the relevant fiscal year. In connection with
the calculation for determining whether any Contingent Stock Consideration is
due to Seller, Purchaser shall provide such back-up information and calculations
as Seller may reasonable request and Seller shall have an opportunity to meet
with the Accountants in order to discuss such calculations, provided, however,
that the Accountants determination of Company’s EBIT for any fiscal year shall
be binding on Purchaser and Seller. If Purchaser determines that Seller is
entitled to receive Contingent Stock Consideration, which determination shall be
made no later than the date on which the Accountants have reported the EBIT of
Company to Purchaser’s Board of Directors for the relevant fiscal year of
Company, Purchaser shall have fifteen (15) days to issue the required number of
shares of Contingent Stock Consideration to Seller; provided, further that in no
event shall Purchaser issue Contingent Stock Consideration to Seller any later
than one hundred and twenty (120) days after the end of relevant fiscal year.

 

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6.      Changes in Capital Structure of Purchaser.   If, from time to time
during the term of this Agreement there is a change in the outstanding shares of
Purchaser’s common stock by reason of a recapitalization, stock split, reverse
stock split, combination of shares, stock dividend or similar transaction,
Purchaser agrees that the Stock Consideration provided hereunder, but that has
not yet been issued to Seller, shall be proportionately adjusted, in an
equitable manner. Purchaser acknowledges and agrees that, except as to the
restrictions set forth in Section 7 of this Agreement, Seller’s rights in and to
the Stock Consideration that has been issued to him shall be the same as the
rights of any other holder of common stock of Purchaser.

7.      Restricted Nature of Stock Consideration.

    (a)      During the period beginning on the date of receipt of the Stock
Consideration and ending on the third anniversary of such receipt, Seller shall
not sell, assign, exchange, transfer, distribute or otherwise dispose of (in
each case, “transfer”) any shares of Stock Consideration received by Seller
hereunder except as otherwise permitted by Purchaser or pursuant to the
Registration Rights Agreement (as defined in Section 9(b) hereof).
Notwithstanding the foregoing, during the period beginning on the Effective Date
and ending on the first anniversary of the Effective Date, Seller may transfer,
in the aggregate, up to 100,000 shares of Stock Consideration. During the period
beginning on the first anniversary of the Effective Date and ending on the
second anniversary of the Effective Date, Seller may transfer, in the aggregate,
up to 100,000 shares of Stock Consideration. During the period beginning on the
second anniversary of the Effective Date and ending on the third anniversary of
the Effective Date, Seller may transfer, in the aggregate, up to 100,000 shares
of Stock Consideration.       (b)      Seller will execute an investment letter
in such form reasonably required by Purchaser upon his receipt of Stock
Consideration. Following the restriction periods described in this Section 5,
Seller may transfer his shares of Stock Consideration so long as such transfer
is in accordance with any applicable federal or state securities or “blue sky”
laws, rules or regulations (collectively, “Securities Laws”) and/or the
Registration Rights Agreement. The certificates evidencing the Stock
Consideration delivered to Seller pursuant to this Agreement shall bear a legend
substantially in the form set forth below:

         
 
  THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, ASSIGNED (OTHER
THAN IN CONNECTION WITH A PLEDGE), EXCHANGED, TRANSFERRED, DISTRIBUTED, CHANGED
OR OTHERWISE DISPOSED OF, AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT TO
ANY ATTEMPTED SALE, ASSIGNMENT (OTHER THAN IN CONNECTION WITH A PLEDGE),
EXCHANGE, TRANSFER, DISTRIBUTION, OR OTHER DISPOSITION OTHER THAN IN ACCORDANCE
WITH SECTION 5 OF THAT CERTAIN STOCK PURCHASE AGREEMENT DATED AS OF MARCH 14,
2005 BY AND BETWEEN NAVARRE CORPORATION AND MICHAEL A. BELL.    
 
       

 

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  THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION
(COLLECTIVELY, THE “SECURITIES LAWS”) AND MAY NOT BE SOLD, DISPOSED OF OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION, EXCEPT IN ACCORDANCE
WITH AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF ANY APPLICABLE
SECURITIES LAWS PROVIDED THAT NAVARRE CORPORATION SHALL HAVE RECEIVED AN OPINION
OF COUNSEL ACCEPTABLE TO THEM CONFIRMING THAT THE REQUIREMENTS OF SUCH EXEMPTION
HAVE BEEN SATISFIED.    

    (c)      Seller shall not transfer any shares of the Stock Consideration at
any time if such transfer would constitute a violation of any Securities Laws,
or a breach of the conditions to any exemption from registration of the Stock
Consideration under any such Securities Law on which Seller is relying at the
time of his sale, or a breach of any undertaking or agreement of Seller entered
into with Stock Consideration pursuant to such Securities Laws or in connection
with obtaining an exemption thereunder.       (d)      For the purposes of this
Agreement (and the restrictions set forth in this Section 7), the term “Stock
Consideration shall mean and include (i) the shares of common stock Purchaser
issued, granted, conveyed and delivered to Seller pursuant to Section 3 and (ii)
any and all additional share of capital stock of Purchaser issued or delivered
by Purchaser with respect to shares of Stock Consideration described in
subsection (i) above, including, without limitation, any shares issued or
delivered to Seller pursuant to Section 6.

8.      Delivery of Stock Certificate.   The transfer and sale of the Shares
contemplated by this Agreement shall be effectuated by Seller delivering to
Purchaser the certificate(s) representing the Shares purchased by Purchaser,
which certificate(s) shall be duly endorsed in blank or accompanied by
appropriate stock transfer powers duly executed in blank, together with any
other documents necessary to transfer the Shares to Purchaser.

9.      Representations and Warranties of Seller.   As a material inducement to
Purchaser to enter into this Agreement and with the understanding that Purchaser
will be relying thereon, Seller represents and warrants that:

    (a)      Good Title.   Seller has good title to, the right to possession of
and the right to sell the Shares free and clear of any pledges, liens, charges,
encumbrances, proxies, options, rights to purchase or other restrictions or
potentially adverse claims of any kind or nature (collectively, “Adverse
Claims”), and, Concurrent with the execution of this Agreement, Seller will
transfer the Shares to Purchaser free and clear of any Adverse Claims. In
connection therewith, Seller hereby covenants to defend transfer of the Shares
to Purchaser against any and all persons who claim title to or interest in the
Shares.       (b)      Authority.   Seller has the full power and authority to
execute, deliver and perform this Agreement. This Agreement has been duly
executed by Seller and constitutes the legal, valid and binding obligation of
Seller enforceable in accordance with its terms.

 

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    (c)      No Claims.   As of the date of this Agreement, Seller has no claims
against Purchaser, and no cause of action or other demands related to or arising
out of any action or omission prior to the date of this Agreement shall be
pursued by Seller against Purchaser.       (d)      No Pending Lawsuits.   As of
the date of this Agreement, there are no lawsuits, investigations, claims or
proceedings pending or threatened against Seller which have had or may have any
effect on Seller’s rights and title to the Shares or the ability of Seller to
transfer the Shares in the manner contemplated by this Agreement.

Seller does hereby agree to, and shall immediately upon demand, indemnify and
hold harmless the Purchaser from, against and in respect of any and all losses,
damages, liabilities, penalties, interest, costs, expenses or other
deficiencies, including, without limitation, attorneys’ fees and costs, suffered
or incurred by Purchaser by reason of, or arising out of any misrepresentation,
breach of representation or warranty or non-fulfillment of any agreement,
covenant or representation on the part of Seller under this Agreement. The right
to indemnification, payment of damages or other remedy based on the foregoing
will not be affected by any investigation conducted with respect to, or any
knowledge acquired (or capable of being acquired) after the execution and
delivery of this Agreement or the Effective Date, with respect to the accuracy
or inaccuracy of, or compliance with, any representation, warranty, covenant or
obligation of Seller.

10.      Representations and Warranties of Purchaser.   As a material inducement
to Seller to enter into this Agreement and with the understanding that Seller
will be relying thereon, Purchaser represents and warrants that:

    (a)      Organization.   Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Minnesota.      
(b)      Authority.   Purchaser has full power and authority to enter into,
execute and deliver this Agreement and to consummate the transactions
contemplated hereby and any instruments or agreements required herein. This
Agreement has been duly and validly executed and delivered by Purchaser and
constitutes a valid and binding obligation of Purchaser according to its terms.
The execution of this Agreement by Purchaser has been duly authorized by the
Board of Directors of Purchaser.       (c)      No Violation.   Neither the
execution and delivery by Purchaser of this Agreement, the consummation of the
transactions contemplated hereby, nor compliance by Purchaser with any of the
provisions hereof will:

  i.        Violate or conflict with any provision of the Articles of
Incorporation or Bylaws of Purchaser;     ii.        Violate or constitute a
default under or give rise to any right of termination, cancellation or
acceleration under the terms, conditions or provisions of any agreement or
instrument to which Purchaser is a party or by which Purchaser or any of its
properties or assets is bound except as has been duly and validly waived,
consented to, or approved of by the other parties to such agreement or
instrument; or

 

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

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

Purchaser does hereby agree to, and shall immediately upon demand, indemnify and
hold harmless the Seller from, against and in respect of any and all losses,
damages, liabilities, penalties, interest, costs, expenses or other
deficiencies, including, without limitation, attorneys’ fees and costs, suffered
or incurred by Seller by reason of, or arising out of any misrepresentation,
breach of representation or warranty or non-fulfillment of any agreement,
covenant or representation on the part of Purchaser under this Agreement. The
right to indemnification, payment of damages or other remedy based on the
foregoing will not be affected by any investigation conducted with respect to,
or any knowledge acquired (or capable of being acquired) after the execution and
delivery of this Agreement or the Effective Date, with respect to the accuracy
or inaccuracy of, or compliance with, any representation, warranty, covenant or
obligation of Purchaser.

11.      Additional Covenants of the Parties.   In consideration of the
transactions described herein, the parties hereto agree to the following:

    (a)      Registration Rights Agreement.   Seller and Purchaser shall execute
a registration rights agreement substantially in the form attached hereto as
Exhibit A (the “Registration Rights Agreement”).       (b)      Expenses.   Each
party shall pay its own expenses incurred in connection with the transactions
contemplated by this Agreement. Notwithstanding the foregoing, Purchaser shall
reimburse Seller in an aggregate amount not to exceed $5,000 for Seller’s
out-of-pocket expenses incurred for legal and other professional advice in
connection with the transaction contemplated by this Agreement. Purchaser shall
make such reimbursement within fifteen (15) days after Seller’s submission of
reasonable supporting documentation for such expenses.

12.      Documents to Be Delivered by Purchaser.   Purchaser shall deliver or
cause to be delivered to Seller the following:

    (a)      A duly executed Registration Rights Agreement in the form attached
hereto as Exhibit A; and       (b)      The Closing Stock Consideration.

13.      Documents to Be Delivered by Seller.   Seller shall deliver or cause to
be delivered to Purchaser the following:

 

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    (a)      A duly Registration Rights Agreement in the form attached hereto as
Exhibit A; and       (b)      Stock certificate(s) representing all of the
Shares, which certificate(s) shall be duly endorsed in blank or accompanied by
appropriate stock transfer powers duly executed in blank, together with any
other documents necessary to transfer the Shares to Purchaser.

14.      Survival of Representations and Warranties.   The statements,
representations, warranties, covenants, agreements and indemnities of the
parties hereto as contained in this Agreement and in any certificate, instrument
or document delivered by or on behalf of any of the parties hereto pursuant to
this Agreement and the transactions contemplated hereby shall survive the
closing and shall not terminate.

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

16.      Notices.   All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand, claim
or other communication hereunder shall be delivered personally to the recipient,
delivered by United States Post Office mail or nationally recognized overnight
courier, telecopied to the intended recipient at the facsimile number set forth
below, or sent to the recipient by reputable express courier service and
addressed to the intended recipient as set forth on the signature page hereto or
to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. Any such
communication shall be deemed to have been duly given and received when
delivered.

     If to Purchaser, to:

Navarre Corporation
7400 49th Avenue North
New Hope, MN 55428
Attn: Ryan Urness, General Counsel
Fax: (763)504-1107

     With a copy to:

Winthrop & Weinstine, P.A.
Suite 3500
225 South Sixth Street
Minneapolis, Minnesota 55402
Attn: Scott J. Dongoske, Esq.
Fax: (612) 604-6800

 

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     If to Seller:

Michael A. Bell
1028 9th Street
Manhatten Beach, CA 90266
Fax: (310) 318-9071

     With a copy to:

Robin C. Gilden
Reish Luftman Reicher & Cohen
11755 Wilshire Blvd., 10th Floor
Los Angeles, CA 90025
Fax: (310) 388-4627

17.      Specific Performance.   Seller agrees that breach of this Agreement by
Seller will cause Purchaser irreparable harm for which there is no adequate
remedy of law and, without limiting whatever other rights and remedies Purchaser
may have under this Agreement, Purchaser is entitled to the remedy of specific
performance to enforce this Agreement and Seller consents to the issuance of an
order by a court of competent jurisdiction requiring the specific performance of
this Agreement by Seller.

18.      Entire Agreement.   This Agreement expresses the whole agreement
between the parties with respect to the transactions contemplated hereby, there
being no representations, warranties or other agreements (oral or written) not
expressly set forth or provided for herein.

19.      Counterparts; Facsimile Signatures.   This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. This Agreement may
be executed by facsimile signatures which, for all purposes, shall be accepted
as original signatures by the parties.

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

21.      Governing Law; Jurisdiction.   This Agreement shall be deemed to be a
contract made under the laws of the State of Minnesota. The laws of the State of
Minnesota shall govern the validity, construction and performance of this
Agreement, regardless of the laws that might otherwise govern under applicable
principles of conflicts of law. Any legal proceeding related to this agreement
shall be brought in an appropriate court in Hennepin County, Minnesota. If any
action at law or in equity is brought by either party to enforce or interpret
the terms of this Agreement, the prevailing party shall be entitled to recover
from the unsuccessful party attorneys’ fees, costs and expenses (including,
without limitation, expert witness fees) in addition to any other relief to
which it may be entitled

 

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22.      Construction.   Wherever possible, each provision of this Agreement and
each related document shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement or any
related document shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or the remaining
provisions of this Agreement or such related documents.

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

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

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

26.      Successor and Assigns.   This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, personal
representatives, successors and permitted assigns.

27.      Preparation of Agreement.   Winthrop & Weinstine, P.A. has drafted this
Agreement at the request of Purchaser. By signing this Agreement, Seller
acknowledges that he has been advised that Winthrop & Weinstine, P.A. is not
representing him individually in this transaction. Seller further acknowledges
that he has been encouraged to seek separate counsel, and that Seller has in
fact received or has had the opportunity to receive separate counsel.

(The remainder of this page has been intentionally left blank.)

 

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[Signature Page to Stock Purchase Agreement]

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

            PURCHASER:

NAVARRE CORPORATION
      By:    /s/ JAMES G. GILBERTSON       James G. Gilbertson        Chief
Financial Officer     

            SELLER:
       /s/ MICHAEL A. BELL     Michael A. Bell
   

 
As to the effectiveness of the termination
of the Buy and Sell Agreement set forth in
Section 1 of this Agreement:

        ENCORE SOFTWARE, INC.
    By:      /s/ JAMES G. GILBERTSON       James G. Gilbertson        Chief
Administrative Officer   

 

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EXHIBIT A

Registration Rights Agreement

(Attached)