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                                                                    EXHIBIT 10.1

                                 PROMISSORY NOTE

$4,550,000.00                                             Minneapolis, Minnesota
                                                          ________________, 2003

         FOR VALUE RECEIVED, the undersigned, NAVARRE CORPORATION, a Minnesota
corporation, whose address is 7400 49th Avenue North, New Hope, MN 55428 agrees
and promises to pay to the order of THE BUSINESS BANK, its endorsees, successors
and assigns ("Holder"), at its principal office at 11100 Wayzata Boulevard,
Suite 150, Minnetonka, MN 55305 or such other place as the Holder may from time
to time designate, the principal sum of Four Million Five Hundred Fifty Thousand
and 00/100 Dollars ($4,550,000.00) or so much as may from time to time be
disbursed hereon in accordance with that certain Construction Loan Agreement
("Construction Loan Agreement") of even date herewith, together with interest on
the unpaid principal balance from the date hereof through September 30, 2004 at
a definite and certain but variable per annum interest rate equal to one quarter
of one percent (.25%) in excess of the rate of interest from time to time
published by The Wall Street Journal as the Prime Rate ("Prime Rate"). Changes
in the Prime Rate shall be deemed to occur as of the date of publication
thereof, and the interest rate provided for herein shall be adjusted as of said
date. The Prime Rate as of the date of this Note is ___________________________.
In the event publication of said Prime Rate is discontinued for any reason,
Holder shall designate a reasonably comparable substitute index for the
determination of interest during such period. Commencing on October 1, 2004 and
thereafter until all amounts due hereunder are paid in full, interest on the
unpaid principal balance shall be at a fixed per annum rate equal to the rate
publicly announced by the Federal Home Loan Bank of Des Moines as of October 1,
2004 for Three (3) Year Fixed Rate Advances, plus two hundred seventy-five basis
points. In the event that public announcement of the Three (3) Year Fixed Rate
Advance rate is discontinued for any reason, Holder shall designate a reasonably
comparable substitute index for the determination of said fixed rate. Interest
hereunder shall be computed using the 365/360 method and shall be payable on the
basis of the actual number of days elapsed. Payment hereunder shall be in lawful
money of the United States as follows:

         1.       Interest only on the first day of each month hereafter up to
                  and including October 1, 2004; and

         2.       On the first day of November, 2004 and on the first day of
                  each month thereafter, principal and interest shall be due and
                  payable in equal monthly installments sufficient to amortize
                  the then unpaid principal balance hereof in equal monthly
                  installments over an amortization of One Hundred Eighty (180)
                  months, until October 1, 2007, on which date the entire unpaid
                  principal balance and interest, if not sooner paid, shall
                  become due and payable in full. It is hereby acknowledged and
                  agreed that the One Hundred and Eighty (180) month period
                  referred to above is solely for the purpose of determining the
                  amount of the monthly installment payment hereunder and is not
                  intended to extend the term hereof.

All payments shall be applied first to interest and then to principal, except
that if any advance made by the Holder under the terms of any instrument
securing this Note is not repaid, any

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monies received, at the option of the Holder, may first be applied to repay such
advances, cost of collection, plus interest thereon, and the balance, if any,
shall be applied as above.

         This Note may be prepaid in whole or in part at any time without
premium. Any prepayment shall be made on ten (10) days advance written notice to
the Holder and shall be accompanied by accrued interest, and shall not suspend
required installment payments. At the option of the Holder this Note is subject
to mandatory prepayment without premium, upon certain events of damage,
destruction or condemnation of the real property mortgaged as security for this
Note all as more fully set forth in the Mortgage hereinafter referred to.

         In the event that any payment required hereunder or under any
instruments securing this Note or under the Construction Loan Agreement is not
received prior to the tenth (10th) day after its due date, the undersigned
agrees to pay a late charge of $.05 per $1.00 of unpaid payment as and for
liquidated damages incident to such late payment. This provision shall not be
deemed to excuse a late payment or be deemed a waiver of any other rights the
Holder may have including the right to declare the entire unpaid principal and
interest immediately due and payable.

         This Note is made pursuant to the laws of the State of Minnesota and is
the Note referred to in and secured by a Mortgage and Security Agreement and
Fixture Financing Statement ("Mortgage") and other security instruments of even
date herewith given by the undersigned to the Holder encumbering certain real
property and personal property situated in Hennepin County, Minnesota.

         If default be made in any payment of principal or interest when due in
accordance with the terms and conditions of this Note or if a default or an
Event of Default occurs under the Mortgage, or any other instrument securing
this Note, the entire unpaid principal balance together with accrued interest
thereon shall become immediately due and payable at the option of the Holder
hereof. Whether or not Holder has exercised its right to accelerate, in the
event of such a default in payment or an Event of Default under the Mortgage or
any other instrument securing this Note, the Holder shall have the right to
set-off any amount owed to it by the undersigned under this Note against any
right that the undersigned may have to receive money from the Holder. No prior
notice of such set-off must be given. If there is more than one undersigned, the
right to set-off shall be joint and several. The Holder shall have no liability
for wrongful dishonor in the event that an instrument is dishonored due to the
Holder having exercised its rights of set-off.

         Upon an Event of Default (as defined in the Mortgage), and at the
option of the Holder hereof, interest shall thereafter be payable on the whole
of the unpaid principal sum at the lesser of Two percent (2%) per annum in
excess of the Note Rate or the highest maximum rate permitted by law ("Default
Rate") whether or not the Holder hereof has exercised its option to accelerate
the maturity of this Note and declare the entire unpaid principal indebtedness
due and payable.

         Time is of the essence. No delay or omission on the part of the Holder
in exercising any right hereunder shall operate as a waiver of such right or of
any other remedy under this Note. A waiver on any one occasion shall not be
construed as a bar to or waiver of any such right or remedy on a future
occasion.

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         The undersigned agrees to pay all costs, including reasonable
attorney's fees, at any time paid or incurred by the Holder in connection with
the collection of any amounts due or enforcement of any other rights of Holder
hereunder, or under the Mortgage, Construction Loan Agreement, whether or not
suit is filed with respect thereto, and whether or not Holder prevails therein.

         The undersigned, all sureties, guarantors, and all other persons liable
for all or any part of the principal balance evidenced by this Note severally
waive presentment for payment, protest and notice of non-payment. Such parties
hereby consent without affecting their liability to any extension or alteration
of the time or terms of payment hereof, any renewal, any release of any party or
all of the security given for the payment hereof, any acceptance of additional
security of any kind, and any release of, or resort to any party liable for
payment hereof.

         All agreements between the undersigned and the Holder are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason of acceleration of maturity of the indebtedness evidenced hereby or
otherwise, shall the amount paid or agreed to be paid to the Holder for the use,
forbearance, loaning or detention of the indebtedness evidenced hereby exceed
the maximum permissible under applicable law. If from any circumstances
whatsoever, fulfillment of any provisions hereof or of the Mortgage or any other
security instrument at any time given for the performance of such provision
shall involve transcending the maximum permissible limits prescribed by law,
then, the amounts to be paid shall automatically be reduced to the limit of such
maximum permissible limits and if from any circumstances the Holder should ever
receive as interest an amount which would exceed the maximum permissible limits,
such amounts in excess of maximum permissible limits shall be applied to the
reduction of the principal balance evidenced hereby and not to the payment of
interest. This provision shall control every other provision of all agreements
between the undersigned and Holder.

         In the event the undersigned shall sell, convey, transfer, lease,
further mortgage or encumber or dispose of the mortgaged property, or any part
thereof, or any interest therein, or if a Change of Control (as defined in that
certain Credit Agreement dated October 3, 2001 between the undersigned as
Borrower and General Electric Capital Corporation as Lender) occurs, each
without the written consent of the Holder being first obtained, then at the sole
option of the Holder, the Holder may declare the entire unpaid principal
balance, together with accrued interest, due and payable in full and call for
payment of the same in full at once.

         This Note shall be construed, enforced and otherwise governed by the
laws of the State of Minnesota.

LENDER AND BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE
RIGHT EITHER MAY HAVE TO TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE AND ANY
AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONNECTION THEREWITH, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
EITHER PARTY. BORROWER ACKNOWLEDGES THAT THIS WAIVER OF JURY TRIAL IS A MATERIAL
INDUCEMENT TO THE LENDER IN EXTENDING CREDIT TO THE BORROWER,

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THAT THE LENDER WOULD NOT HAVE EXTENDED CREDIT WITHOUT THIS JURY TRIAL WAIVER,
AND THAT BORROWER HAS BEEN REPRESENTED BY AN ATTORNEY OR HAS HAD AN OPPORTUNITY
TO CONSULT WITH AN ATTORNEY IN CONNECTION WITH THIS JURY TRIAL WAIVER TO
UNDERSTAND THE LEGAL EFFECT OF THIS WAIVER.

                                             NAVARRE CORPORATION

                                             By ________________________________

                                             Its _______________________________

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