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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;




 









 






	   	(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.




 









 







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.
	 	 
	 
	 	 	 	 






 









 






	 	 	 	 	 
	

	 	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.




 









 






	   	(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




 









 






	 	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:




 









 









	   	(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




 









 








     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




 









 







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.)




 









 








[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 	 



 









 







EXHIBIT A


Registration Rights Agreement


(Attached)