exv10w5



 







Exhibit 10.5




NAVARRE CORPORATION 2004 STOCK PLAN

PERFORMANCE STOCK UNIT AGREEMENT



You have been granted an Award of performance based Stock Units, subject to the terms and
conditions of the 2004 Stock Plan, as amended, and the Performance Stock Unit Agreement set forth
below, as follows:




	 	 	 
	Name of Participant:

	 	                                        
	Grant Date:

	 	                                        
	Number of Award Shares:

	 	                     shares of Common Stock
	Settlement Date:

	 	                                                            *
	Measurement Period:

	 	                                                            
	 
	 	 
	Performance Criteria:

	 	                                                            






 




*       Subject to earlier expiration as provided below.



 




Performance Stock Unit Agreement




1 GRANT OF STOCK UNIT AWARD.




     Navarre Corporation, a Minnesota corporation (together with all successors thereto, the
“Company”), hereby grants to the Participant named above, who is an employee of the Company or a
Related Company, an award of performance Stock Units (the “Stock Units”) subject to the terms and
conditions set forth in this Performance Stock Unit Agreement (the “Agreement”) and in the Navarre
Corporation 2004 Stock Plan, as amended from time to time (the “Plan”). The Stock Units represent
the contingent right to receive on the Settlement Date specified above, subject to earlier
termination as is specified herein, the number of shares (the “Award Shares”) indicated above of
the Company’s common stock, no par value (the “Common Stock”) depending on the achievement of the
Performance Criteria as described in Section 3 below. This Stock Unit award is intended to qualify
as “performance-based compensation” within the meaning of Section 162(m) 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. No Award Shares will be issued unless you have executed and returned this
Agreement to the Company.



3. VESTING OF STOCK UNITS.



3.1 Vesting Schedule. If the Performance Criteria indicated above is met at the end of the
measurement period, then the Award Shares indicated above will vest. Vested Award Shares, in whole
numbers, will be issued on the Settlement Date and Stock Units for partial shares or for which
Award
Shares do not vest shall be immediately cancelled. If the Performance Criteria is not met at the
end of the measurement period no Award Shares will be issued.




 









 







3.2 Termination of Employment or Service. In the event that your employment or service
with the Company or a Related Company terminates voluntarily or involuntarily for any reason prior
to the Settlement Date indicated above (except for termination as a result of a Change in Control
Transaction in which case Section 3.3 below shall apply), this award of Stock Units shall expire
and be deemed forfeited and no Award Shares shall be issued or due to you.



3.3 Change of Control Transaction. For purposes of this Section 3.3, 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 the
Company shall issue the Award Shares, pro-rated for the portion of the Measurement Period that
transpired prior to the Change of Control Transaction. The Committee in its discretion may make
further adjustments or modifications to the Award Shares pursuant to Section 15.4 of the Plan.




4. ISSUANCE OF SHARES.



4.1 Issuance of Shares. Certificates evidencing ownership of the Award Shares
granted and earned hereunder will be issued on the Settlement Date. If permitted by law and the
rules of the applicable stock exchange, the issuance of shares may be effected on a noncertificated
basis. The Company, however, shall not be required to issue or deliver a certificate 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
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 Award Shares pursuant to
this Agreement and the Plan, you shall have none of the rights of a shareholder with respect to the
Award Shares.



4.2 Withholding Taxes. You acknowledge that the value of the Award Shares issued on the
Settlement Date will constitute compensation for which you will have an ordinary income tax
obligation, and you should consult a tax adviser concerning the same. The Company makes no
representations with respect to tax consequences. Prior to the delivery of the Award Shares, 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 such compensation; or (ii) require you to remit the amount of such
withholding to the Company in cash. 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.




5. TRANSFERABILITY OF STOCK UNITS.




     You may not sell, assign, pledge (as loan collateral or otherwise), encumber (by operation of
law or otherwise), or transfer this Agreement or the Stock Units in any manner, including, without
limitation, by will or the applicable laws of descent or distribution. Any attempt to transfer or
encumber this Agreement, the Stock Units or the Award Shares shall be null and void and shall void
this Agreement.



 









 





6. THIS AGREEMENT SUBJECT TO PLAN.




     This Agreement, the Stock Units granted hereunder and the Award Shares issued pursuant to the
Stock Units have been granted, or will be issued, as the case may be, 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, including determination of the achievement of the Performance Criteria, 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.



7. NO GUARANTEE OF CONTINUED EMPLOYMENT.




     You acknowledge and agree that the vesting of Award Shares pursuant to the Vesting Schedule is
contingent upon continuing your employment at the will of the Company or a Related Company. You
further acknowledge and agree that this award of Stock Units 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 (or a Related Company’s) right to terminate your employment or service
at any time with or without cause.



8. MISCELLANEOUS.



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



8.2 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.



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



8.4 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 the Committee determines in good faith 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	 	 	 	PARTICIPANT	 	 
	 
	 	 	 	 	 	 	 	 
	By
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Its