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                                                                    EXHIBIT 10.5

                                    INDEMNITY
                               (ADA/ENVIRONMENTAL)

         This Indemnity ("Indemnity") is made this _____ day of _____________,
2003, by NAVARRE CORPORATION, a Minnesota corporation, ("Borrower"), to and for
the benefit of THE BUSINESS BANK ("Lender").

                                    RECITALS

         A.       Borrower has applied to Lender for a loan ("Loan") in the
principal amount of Four Million Five Hundred and Fifty Thousand and 00/100
Dollars ($4,550,000.00). The Loan is evidenced by a Promissory Note (the "Note")
and is secured by a Mortgage and Security Agreement and Fixture Financing
Statement (the "Mortgage") on real property located in Hennepin County,
Minnesota (the "Premises").

         B.       The Borrower is hereinafter referred to as "Indemnitor".

         C.       Lender is unwilling to make the Loan to Borrower without an
indemnity from Indemnitor against certain matters relating to environmental
protection and clean-up and to providing access to or removal of existing
barriers to access to the Premises. To induce Lender to enter into and make the
Loan, Indemnitor has agreed to provide Lender such indemnity on the terms set
forth below.

         NOW, THEREFORE, as a material inducement to Lender to make the Loan,
Indemnitor hereby agrees as follows:

         1.       Definitions. As used in this Indemnity:

         a.       Governmental Authority. The term "Governmental Authority"
                  means any federal, state or local governmental authority or
                  department now or hereafter authorized to regulate materials
                  and substances in the environment.

         b.       Hazardous Materials, Pollutants. The term "Hazardous
                  Materials, Pollutants" means any hazardous, toxic or dangerous
                  substance, waste or material which is or becomes regulated
                  under any federal, state or local statute, ordinance, rule,
                  regulation or other law now or hereafter in effect pertaining
                  to environmental protection, contamination or clean-up,
                  including without limitation any substance, waste or material
                  which now or hereafter is (i) designated as a "hazardous
                  substance" under or pursuant to the Federal Water Pollution
                  Control Act (33 U.S.C. Section 1257 et seq.), (ii) defined as
                  a "hazardous waste" under or pursuant to the Resource
                  Conservation and Recovery Act (42 U.S.C. Section 6901 et
                  seq.), or (iii) defined as a "hazardous substance" in (or for
                  purposes of) the Comprehensive Environmental Response,
                  Compensation and Liability Act (42 U.S.C. Section 9601 et
                  seq.), and further including petroleum products, asbestos,
                  formaldehyde and urea.

         c.       ADA or similar laws. The term "ADA or similar laws" means the
                  Federal Americans With Disabilities Act of 1990 or any
                  federal, state or local statute,

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                  ordinance, rule or regulation pertaining to the providing of
                  access or the removal of existing barriers to access for
                  persons with disabilities.

         2.       Indemnification. Indemnitor is aware that Lender is relying on
this Indemnity in making the Loan, and Indemnitor hereby indemnifies and agrees
to hold harmless Lender and its officers, directors, employees and agents from
and against any and all liabilities, losses, claims, damages and expenses,
including reasonable attorneys' fees and disbursements (collectively
"Liabilities") to which Lender or any of the foregoing persons may become
subject, insofar as such Liabilities arise out of or are based upon any of the
following:

         a.       Any violation or alleged violation, with respect to the
                  Premises, of any federal, state or local statute, ordinance,
                  rule, regulation or other law now or hereafter in effect
                  pertaining to environmental protection, contamination or
                  clean-up, or any governmental or judicial claim, order or
                  judgment with respect to the clean-up of any Hazardous
                  Materials or Pollutants at or with respect to the Premises;

         b.       Any damages to third persons for personal injury or property
                  damage arising from the releasing, spilling, leaking, pumping,
                  emitting, pouring, emptying or dumping of Hazardous Materials
                  or Pollutants into waters or onto lands, whether or not
                  located within the boundaries of the Premises.

         c.       Any violation or alleged violation with respect to the
                  Premises of the ADA or similar laws and any and all expense,
                  cost, loss, liability, including reasonable attorneys fees
                  incurred by Lender in connection with such matters.

         3.       No Limitations.

         a.       Indemnitor's obligations under this Indemnity shall not be
                  subject to any non-recourse or other limitation of liability
                  provisions in the Note, the Mortgage or any other instrument
                  or document evidencing or securing the Loan or otherwise
                  executed in connection therewith, and Indemnitor acknowledges
                  that the obligations hereunder are unconditional and are not
                  limited by any such non-recourse or similar limitation of
                  liability provisions.

         b.       Indemnitor acknowledges and agrees that the covenants and
                  obligations of Indemnitor set forth in this Indemnity are
                  separate obligations from the obligations evidenced and
                  secured by the Note, Mortgage and other loan documents, and
                  that the covenants and obligations of Indemnitor set forth in
                  this Indemnity are not secured by the Mortgage or any other
                  instrument or document securing the Loan. Indemnitor further
                  acknowledges and agrees that the covenants and obligations of
                  Indemnitor set forth in this Indemnity shall survive any
                  repayment of the Loan, discharge of the Indemnitor by
                  operation of law or foreclosure of the Mortgage, whether
                  judicial or non-judicial, to the maximum extent permitted by
                  law, and if title to the Premises or any interest therein or
                  portion thereof is transferred pursuant to foreclosure
                  proceedings (whether judicial or non-judicial), or by deed in
                  lieu of foreclosure or otherwise in connection with any Event
                  of Default (as defined in the Mortgage), then the

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                  covenants and obligations of Indemnitor set forth in this
                  Indemnity shall survive such transfer, and shall continue in
                  effect for so long as a valid claim may be lawfully asserted
                  with respect to matters for which Lender and its officers,
                  directors, employees and agents are indemnified under this
                  Indemnity. Notwithstanding the foregoing, the indemnity
                  contained herein, it shall not apply with respect to any loss,
                  damage, liability, cost or expense which Indemnitor provides
                  by a preponderance of the evidence was caused solely by or
                  resulted solely from any act or omission of any person, other
                  than an Indemnitor or an agent, employee, invitee or
                  contractor of an Indemnitor and which occurred after the
                  Lender or anyone claiming by, through or under the Lender
                  acquired title to the Mortgaged Property by foreclosure of the
                  Mortgage or deed in lieu of foreclosure or otherwise and took
                  control of the Mortgaged Property.

         c.       The provisions of this paragraph 3 shall control over any
                  provision of the Note, the Mortgage or any other loan document
                  which may be to the contrary, and the Note, the Mortgage and
                  any and all such other loan documents shall be construed
                  accordingly.

         4.       Time of Payment. The Liabilities for which Lender and its
officers, directors, employees and agents are indemnified under this Indemnity
shall be reimbursable to Lender as Lender's obligations to make payments with
respect thereto are incurred, without any requirement of waiting for ultimate
outcome of any litigation, claim or other proceeding, and Indemnitor shall pay
such Liability to Lender as so incurred and on demand by notice from Lender
itemizing the amounts incurred to the date of such notice. In addition to any
remedy otherwise available for failure to periodically pay such amounts, such
amount shall bear interest at the Note rate (or the maximum amount permitted by
applicable law, if such be less) from the date such amounts are demanded by
Lender to date of reimbursement.

         5.       Waivers. Indemnitor waives any acceptance of this Indemnity by
Lender. The failure of Lender or any other person indemnified hereunder to
enforce any right or remedy hereunder, or promptly to enforce any such right or
remedy, shall not constitute a waiver thereof, nor give right to any estoppel
against Lender or such other person, nor excuse Indemnitor from any obligations
hereunder. Any waiver of such right or remedy must be in writing and signed by
Lender or such other person.

         6.       Enforcement. This Indemnity is subject to enforcement at law
and/or equity, including actions for damages and/or specific performance.

         7.       Costs and Expenses. Indemnitor agrees to pay on demand all
costs and expenses of the Lender, including but not limited to reasonable
attorneys fees and costs, environmental consultant and appraisal costs, incurred
by Lender in connection with the enforcement of the Indemnity and the collection
of any amounts due hereunder.

         8.       Successors and Assigns. This Indemnity shall bind the
Indemnitor and its heirs, devisees, legatees, administrators, executors,
successors and assigns and inure to the benefit of the Lender and its successors
and assigns.

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         9.       Governing Law. This Indemnity shall be construed, enforced and
otherwise governed by the laws of the State of Minnesota.

         IN WITNESS WHEREOF, this Indemnity has been executed as of the day and
year first above written.

                                                NAVARRE CORPORATION, a
                                                Minnesota corporation

                                                By _____________________________

                                                Its ____________________________

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