Exhibit 10.2

OPTION #

NAVARRE CORPORATION

AMENDED AND RESTATED 2004 STOCK PLAN

EMPLOYEE NONQUALIFIED STOCK OPTION AGREEMENT

You have been granted an option to purchase shares of Navarre Corporation,
subject to the terms and conditions of the 2004 Amended and Restated Stock Plan,
as amended from time to time (the “Plan”), and the Nonqualified Stock Option
Agreement (the “Agreement”) set forth below, as follows:

 

Name of Optionee:

  

Grant Date:

  

Total number of Option Shares:

                        Shares of Common Stock

Exercise price per share:

   $                 [Fair Market Value]

Expiration date of option*:

                            [ten years]

 

Vesting Schedule:    First Exercisable   Number of Option Shares     
[1st anniversary]                  Shares       [2nd anniversary]    
             Shares       [3rd anniversary]                  Shares   

 

* Subject to earlier expiration as provided below.

 

Nonqualified Stock Option Agreement

 

1 GRANT OF OPTION.

Navarre Corporation, a Minnesota corporation (together with all successors
thereto, the “Company”), hereby grants to the optionee named above (the
“Optionee”), who is an employee of the Company or a Related Company, an option
(the “Stock Option”) to purchase on or prior to the expiration date specified
above, subject to earlier termination as is specified herein, all or any part of
the number of shares indicated above (the “Option Shares”) of the Company’s
common stock, no par value (the “Common Stock”), at the per share option
exercise price specified above (the “Exercise Price”), subject to the terms and
conditions set forth in this Agreement and in the Plan. This Stock Option is not
intended to qualify as an “incentive stock option” as defined in Section 422(b)
of the Internal Revenue Code of 1986 (the “Code”). All capitalized terms used
herein and not otherwise defined shall have the respective meanings set forth in
the Plan.

 

2. ACCEPTANCE.

Your execution of this Agreement will indicate your acceptance of and your
willingness to be bound by its terms. This Agreement imposes no obligation upon
you to purchase any of the Option Shares. Your obligation to purchase Option
Shares can arise only upon your exercise of this Option in the manner set forth
in Section 4 below. This Option may not be exercised unless you have executed
and returned this Agreement to the Company.

 

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3. WHEN OPTION MAY BE EXERCISED.

3.1 Vesting Schedule. Subject to the terms and conditions hereof, the Option
shall first become exercisable with respect to the Option Shares in the
installments and on the vesting dates specified above (the “Vesting Schedule”).
The rights to exercise this Option on the specified vesting dates shall be
cumulative with respect to the Option Shares becoming exercisable on each such
date but in no event shall this Option be exercisable after, and this Option
shall become void and expire as to all unexercised Option Shares at, 4:00 p.m.
(Minneapolis time) on the expiration date set forth above (the “Expiration
Date”).

3.2 Termination of Employment or Service. In the event that your employment with
the Company or a Related Company terminates for any reason other than retirement
(as defined below in Section 3.3) or termination for cause (as defined in
Section 3.4 below), this Option shall remain exercisable to the extent
exercisable as of such termination but shall expire and become void as to all
unexercised Option Shares at 4:00 p.m. (Minneapolis time) on the 91st day
following the date of such termination, unless the Expiration Date precedes the
91st day. The Vesting Schedule shall no longer continue to apply after the date
of termination and only those Option Shares exercisable at the date of
termination shall thereafter be exercisable. For clarification, a termination of
employment occurs if the entity that employs you no longer qualifies as a
Related Company of the Company. A change in status from an employee to a
consultant, agent, advisor or independent contractor is also considered a
termination of employment.

3.3 Retirement. Your termination will be considered due to “Retirement” only if
you terminate your employment with the Company or a Related Company at any time
after your age plus your years of employment with the Company or a Related
Company total 70 or greater (Rule of 70). In the event of termination due to
Retirement, this Option shall remain exercisable to the extent exercisable as of
such termination but shall expire and become void as to all unexercised Option
Shares at 4:00 p.m. (Minneapolis time) on the third anniversary of your
Retirement, unless the Expiration Date precedes the third anniversary. The
Vesting Schedule shall no longer continue to apply after the date of termination
and only those Option Shares exercisable at the date of termination shall
thereafter be exercisable.

3.4 Termination for Cause. In the event that your employment with the Company or
a Related Company is terminated for Cause, this Option shall expire and become
void as to all unexercised Option Shares at 4:00 p.m. (Minneapolis time) on the
effective date of such termination. For purposes of this Agreement, the term
“Cause” shall mean: (i) committing any act of malfeasance or wrongdoing
affecting the Company or a Related Company or any act clearly tending to bring
discredit upon the Company or a Related Company; (ii) breaching any employment
or service contract, covenant not to compete or duty of confidentiality
affecting the Company or a Related Company; (iii) engaging in conduct which
constitutes a conflict of interest with the Company or a Related Company;
(iv) violating the Company’s or a Related Company’s policies, procedures or work
rules, including but not limited to the Navarre Code of Conduct and the Insider
Trading Policy, which violation would warrant termination after one or more
infractions; or (v) failing to substantially perform reasonably assigned duties
unless such failure can be reasonably excused due to circumstances beyond your
control. If you are party to an employment agreement with the Company or a
Related Company which contains a definition of termination for cause which
conflicts with the foregoing provision, your employment agreement will be
controlling.

 

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3.5 Change of Control Transaction. For purposes of this Section 3.5, the term
“Change of Control Transaction” shall have the meaning set forth in Section 2 of
the Plan. Upon the occurrence of a Change of Control Transaction, the Vesting
Schedule shall no longer apply and this Option shall automatically and
immediately become exercisable in full. The Committee in its discretion may make
further adjustments or modifications to the Option pursuant to Section 15.4. of
the Plan.

 

4. HOW OPTION MAY BE EXERCISED.

4.1 Notice. If exercisable, this Option may be exercised in whole or in part
(but in increments of at least 100 Option Shares) from time to time by accessing
Merrill Lynch Benefits OnLine (www.benefits.ml.com) and following instructions
provided to you by the Company and Merrill Lynch. Exercise must be accompanied
by payment in full pursuant to Section 5. below of the aggregate Exercise Price
for the Option Shares being purchased.

4.2 Proof of Representation. If notice of the exercise of this option is given
by a person or persons other than you, the submission of appropriate proof of
the right of such person or persons to exercise this Option will be required as
a condition to the exercise of this Option.

4.3 Issuance of Shares. Certificates evidencing ownership of the shares of
Common Stock purchased upon any exercise of this Option will be issued as soon
as practicable. If permitted by law and the rules of the applicable stock
exchange, the issuance of shares will be effected on a noncertificated basis.
The Company, however, shall not be required to issue or deliver a certificate or
book-entry for any shares until it has complied with all requirements of the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, any stock exchange on which the Company’s Common Stock may then be
listed and all applicable state laws in connection with the issuance or sale of
such shares or the listing of such shares on said exchange. The Company may
cause each certificate or book-entry evidencing the purchased Common Stock to be
endorsed with one or more legends setting forth the restrictions on transfer of
such Common Stock. Until the issuance of the Option Shares pursuant to this
Agreement and the Plan, you, or such other person as may be entitled to exercise
this option, shall have none of the rights of a shareholder with respect to the
Option Shares.

4.4 Tax Consequences. You acknowledge that there are tax consequences that may
be adverse to you upon the exercise of this Option and/or the disposition of
Option Shares and that you should consult a tax adviser prior to such exercise
or disposition. The Company makes no representations with respect to tax
consequences.

 

5. PAYMENT FOR OPTION SHARES.

5.1 How Paid. At the time of exercise, you must deliver consideration to Merrill
Lynch equal to the product of the Exercise Price and the number of Option Shares
being purchased. Forms of payment acceptable are: (i) cash (by wire transfer to
Merrill Lynch); (ii) a personal check or a certified or bank cashier’s check,
payable to Merrill Lynch; (iii) authorization to Merrill Lynch to sell only
enough of the underlying shares to cover the Exercise Price, taxes and fees
(cashless hold); (iv) authorization to Merrill Lynch to sell all of the
underlying shares and deliver the proceeds, less taxes and fees, to you or your
Merrill Lynch account (cashless sell); or (v) the tender of shares of Common
Stock that you have owned for at least six months with a value on the day of
exercise equal to the Exercise Price, taxes and fees (stock swap exercise).

 

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5.2 Payment by Tendering Shares. If paying all or a portion of the aggregate
Exercise Price by a stock swap exercise, you may satisfy such delivery by
presenting proof of beneficial ownership of such shares rather than physical
delivery. The Company will accept such delivery by attestation as payment and
deduct the same number of shares from the number of Option Shares issued
pursuant to the exercise.

 

6. WITHHOLDING TAXES.

Upon your exercise of this Option and prior to the delivery of the Option Shares
purchased pursuant to such exercise, the Company is entitled to: (i) withhold
and deduct from your future wages (or from other amounts which the Company may
owe you), or make other arrangements for the collection of, all legally required
amounts necessary to satisfy any federal, state or local withholding and
employment-related tax requirements attributable to the grant or exercise of
this Option or otherwise incurred with respect to this Option; or (ii) require
you to promptly remit the amount of such withholding to Merrill Lynch before
acting on your exercise notice. In the event that the Company is unable to
withhold such amounts, for whatever reason, you hereby agree to pay to the
Company an amount equal to the amount the Company would otherwise be required to
withhold under federal, state or local law.

 

7. TRANSFERABILITY OF OPTION.

You may not sell, assign, pledge (as loan collateral or otherwise), encumber (by
operation of law or otherwise), or transfer this Option in any manner, other
than by will or the applicable laws of descent or distribution. During your
lifetime, this Option is exercisable only by you or a legal representative. Any
attempt to transfer or encumber this Option or the Option Shares shall be null
and void and shall void this Option.

 

8. THIS OPTION SUBJECT TO PLAN.

This Option and the Option Shares granted and issued pursuant to this Agreement
have been granted and issued under, and are subject to the terms of, the Plan.
The terms of the Plan are incorporated by reference herein in their entirety,
and, by execution hereof, you acknowledge having reviewed a copy of the Plan.
The provisions of this Agreement shall be interpreted so as to be consistent
with the Plan, and any ambiguities herein shall be interpreted by reference to
the Plan. In the event that any provision hereof is inconsistent with the terms
of the Plan, the terms of the Plan shall prevail. You acknowledge and agree that
in the event of any question or controversy relating to the terms of the Plan or
this Agreement, the decision of the Committee administering the Plan shall be
conclusive and final. A copy of the Plan has been filed with the Securities and
Exchange Commission as an Exhibit to S-8 Registration Statement dated
February 20, 2006, and is available from the Company, attention Human Resources.

 

9. NO GUARANTEE OF CONTINUED EMPLOYMENT.

You acknowledge and agree that the vesting of shares pursuant to the Vesting
Schedule is earned only by continuing your employment or other service at the
will of the Company. You further acknowledge and agree that the award of this
Option and this Agreement do not constitute an express or implied promise of
continued employment for any period and shall not interfere with your right or
the Company’s right to terminate your employment or service at any time with or
without cause.

 

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10. MISCELLANEOUS.

10.1 Binding Effect. This Agreement shall be binding upon the heirs, executors,
administrators and successors of the parties hereto.

10.2 Governing Law. This Agreement and all rights and obligations hereunder
shall be construed in accordance with the Plan and governed by the laws of the
State of Minnesota, without regard to its choice of laws provisions. The parties
agree that any action relating to this Agreement may be brought in the state or
federal courts located in Hennepin County, Minnesota and the parties hereby
consent to the jurisdiction of such courts.

10.3 Entire Agreement. This agreement and the Plan set forth the entire
agreement and understanding of the parties hereto with respect to the grant and
exercise of this Option and the administration of the Plan and supersede all
prior agreements, arrangements, plans and understandings relating to the grant
and exercise of this Option and the administration of the Plan.

10.4 Amendment and Waiver. This Agreement may be amended, waived, modified or
canceled by the Committee at any time, provided that all such amendments,
waivers, modifications or cancellations shall comply with and not be prohibited
by the provisions of the Plan, and any amendment, waiver, modification or
cancellation that has a material adverse affect on your rights under this
Agreement shall be with your consent in a written instrument executed by you and
the Company.

Agreed and accepted as of the Grant Date:

 

NAVARRE CORPORATION     OPTIONEE By  

 

         

 

Its  

 

   

 

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