Document:

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                                                                   EXHIBIT 10.47

                                 LEASE AGREEMENT

                                     between

                          NL VENTURES IV NEW HOPE, L.P.

                                    as Lessor

                                       and

                               NAVARRE CORPORATION

                                    as Lessee

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                                 LEASE AGREEMENT

         THIS LEASE AGREEMENT (this "Lease") dated as of May 27, 2004, is made
and entered into between NL VENTURES IV NEW HOPE, L.P., a Texas limited
partnership ("Lessor"), and NAVARRE CORPORATION, a Minnesota corporation
("Lessee").

                                   ARTICLE I

         SECTION 1.01 LEASE OF PREMISES; TITLE AND CONDITION. Upon and subject
to the terms and conditions herein specified, Lessor hereby leases to Lessee,
and Lessee hereby leases from Lessor, the premises (the "Premises") consisting
of:

                  (a) that parcel of land more particularly described in Exhibit
A attached hereto and made a part hereof for all purposes having an address at
7900 49th Avenue North, New Hope, Minnesota together with all of Lessor's right,
title and interest, if any, in and to all easements, rights-of-way,
appurtenances and other rights and benefits associated with such parcel of land
and to all public or private streets, roads, avenues, alleys or passways, open
or proposed, on or abutting such parcel of land (collectively, the "Land"); and

                  (b) all of the buildings, structures, fixtures, facilities,
installations and other improvements of every kind and description now or
hereafter in, on, over and under the Land and all plumbing, gas, electrical,
ventilating, lighting and other utility systems, ducts, hot water heaters, oil
burners, domestic water systems, elevators, escalators, canopies, air
conditioning systems and all other building systems and fixtures attached to or
comprising a part of the buildings, including, but not limited to, all other
building systems and fixtures necessary to the operation of the buildings, but
excluding all personal property now or hereafter belonging to Lessee and
Severable Property (as defined in Section 3.01 hereof) (collectively, the
"Improvements").

         The Premises are leased to Lessee in their present condition without
representation or warranty by Lessor and subject to the rights of parties in
possession, to the existing state of title, to all applicable Legal Requirements
(as defined in Section 5.02(b)) now or hereafter in effect and to Permitted
Exceptions listed in Exhibit B attached hereto and made a part hereof for all
purposes. Lessee has examined the Premises and title to the Premises and has
found all of the same satisfactory for all purposes. SUBJECT TO THE WARRANTIES
PROVIDED BY THE GENERAL CONTRACTOR OF THE PREMISES WHICH LESSOR SHALL EXERCISE
FOR THE BENEFIT OF LESSEE, LESSOR LEASES AND WILL LEASE AND LESSEE TAKES AND
WILL TAKE THE PREMISES AS IS. LESSEE ACKNOWLEDGES THAT LESSOR (WHETHER ACTING AS
LESSOR HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE NOR SHALL LESSOR BE
DEEMED TO HAVE MADE, ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH
RESPECT TO ANY OF THE PREMISES, INCLUDING ANY WARRANTY OR REPRESENTATION AS TO
(i) ITS

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FITNESS, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE, (ii) THE QUALITY
OF THE MATERIAL OR WORKMANSHIP THEREIN, (iii) THE EXISTENCE OF ANY DEFECT,
LATENT OR PATENT, (iv) LESSOR'S TITLE THERETO, (v) VALUE, (vi) COMPLIANCE WITH
SPECIFICATIONS, (vii) LOCATION, (viii) USE, (ix) CONDITION, (x) MERCHANTABILITY,
(xi) QUALITY, (xii) DESCRIPTION, (xiii) DURABILITY, (xiv) OPERATION, (xv) THE
EXISTENCE OF ANY HAZARDOUS SUBSTANCE, HAZARDOUS CONDITION OR HAZARDOUS ACTIVITY
OR (xvi) COMPLIANCE OF THE PREMISES WITH ANY LAW; AND ALL RISKS INCIDENT THERETO
ARE TO BE BORNE BY LESSEE. LESSEE ACKNOWLEDGES THAT THE PREMISES IS OF ITS
SELECTION AND TO ITS SPECIFICATIONS AND THAT THE PREMISES HAS BEEN INSPECTED BY
LESSEE AND IS SATISFACTORY TO IT. IN THE EVENT OF ANY DEFECT OR DEFICIENCY IN
ANY OF THE PREMISES OF ANY NATURE, WHETHER LATENT OR PATENT, LESSOR SHALL NOT
HAVE ANY RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO OR FOR ANY INCIDENTAL
OR CONSEQUENTIAL DAMAGES (INCLUDING STRICT LIABILITY IN TORT). The provisions of
this paragraph have been negotiated and are intended to be a complete exclusion
and negation of any warranty by Lessor, express or implied, with respect to any
of the Premises, arising pursuant to the Uniform Commercial Code or any other
law now or hereafter in effect or arising otherwise.

Lessor shall nonetheless cooperate in Lessee's attempt to enforce any warranty
and other obligations of contractors and suppliers for the original construction
of the Premises, but shall have no other responsibility or liability for the
design, construction or condition of Premises and makes no warranties with
respect thereto.

         SECTION 1.02 USE. Lessee may use the Premises for all activities as may
be lawfully carried on and that are in compliance with current zoning laws
applicable to the Premises, in and about the Premises and for no other purpose.
Lessee shall not knowingly use or occupy or permit any of the Premises to be
used or occupied, nor knowingly do or permit anything to be done in or on any of
the Premises, in a manner which would (i) make void or voidable or cause any
insurer to cancel any insurance required by this Lease, or make it difficult or
impossible to obtain any such insurance at commercially reasonable rates, (ii)
make void or voidable, cancel or cause to be canceled or release any warranty,
guaranty or indemnity running to the benefit of the Premises or the Lessor,
(iii) cause structural injury to any of the Improvements, or (iv) constitute a
public or private nuisance or waste.

         SECTION 1.03 TERM. This Lease shall be for a Primary Term of fifteen
years beginning on May 27, 2004 ("Commencement Date") and ending at midnight on
June 30, 2019. The time period during which this Lease shall actually be in
effect, including the Primary Term or any Extended Term, as any of the same may
be terminated prior to their scheduled expiration pursuant to the provisions
hereof, is sometimes referred to herein as the "Term" or "Lease Term." Lessor
and Lessee agree to sign a Commencement Date Letter stating the commencement
date of the Primary Term and identifying the expiration date of the Primary
Term. The Commencement Letter shall be prepared by Lessor and acknowledged by
Lessee within thirty (30) days of the Commencement Date. If the Commencement
Date begins any day other than the 1st day of the month then the parties agree
that the expiration date of the Primary Term shall be the last date of

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the month after the first full month of the term (e.g, if the Lease commences on
February 20, 2004 then the expiration date shall be March 30, 2019).

         SECTION 1.04 RENEWAL OPTION. Lessee shall have the options to extend
its tenancy beyond the Primary Term of this Lease for two (2) five (5) year
periods (the "First Extension Term" and the "Second Extension Term",
respectively and, collectively, the "Extension Terms") upon the following terms
and conditions: (i) Lessee shall give Lessor written notice of its election to
exercise each such option (an "Extension Notice") not later than three hundred
sixty-five (365) days prior to the expiration of the preceding term; and (ii)
Lessee shall not be in default under the Lease beyond any period of cure
permitted hereunder and the Lease shall be in full force and effect both on the
date Lessee delivers an Extension Notice and, unless waived by Lessor, on the
last day of the term in which such notice is delivered. If Lessee timely and
properly exercises the foregoing options, the Base Rent due shall be as set
forth on Exhibit C and all other terms and conditions of this Lease shall also
be applicable.

         SECTION 1.05 RENT. During the Primary Term and any Extension Terms,
Lessee shall pay to Lessor the amounts set forth in Exhibit C attached hereto
and made a part hereof for all purposes as basic rent for the Premises ("Basic
Rent"). Lessee shall pay Basic Rent to Lessor (or to Lessor's Mortgagee, upon
Lessor's request) by wire transfer, in immediately available funds, as follows:

                  Bank: Mellon Bank Pittsburgh, PA

                  ABA Routing #: 043 000 261

                  Account Number: 101-1730

                  Account Name: Merrill Lynch

                  For further credit to: Account No. 586-07095, Account Name: NL
                  Ventures IV New Hope, L.P.

                  Merrill Lynch contact: Susan West @ 972-980-8675,

or at such other address or to such other person as Lessor from time to time may
designate. Lessor shall give Lessee not less than 15 days' prior written notice
of any change in the address to which such payments are to be made. If the party
entitled to receive Basic Rent or such party's address shall change, Lessee may,
until receipt of notice of such change from the party entitled to receive Basic
Rent immediately preceding such change, continue to pay Basic Rent and
additional charges to the party to which, and in the manner in which, the
preceding installment of Basic Rent or additional charges, as the case may be,
was paid. Such annual rentals shall be payable in equal monthly installments in
advance on the first day of each month and prorated Basic Rent shall be payable
on the Commencement Date, if such date does not fall on the first day of the
month. Any rental payment made in respect of a period which is less than one
month shall be prorated by multiplying the then applicable monthly rental by a
fraction the numerator of which is the number of days in such month with respect
to which rent is being paid and the denominator of which is the total number of
days in such month. Lessee shall perform all its

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obligations under this Lease at its sole cost and expense, and shall pay all
Basic Rent, additional charges and any other sum due hereunder when due and
payable, without notice or demand.

                                   ARTICLE II

         SECTION 2.01 MAINTENANCE AND REPAIR.

                  (a) Lessee, at its own expense, will maintain all parts of the
Premises in as good repair, appearance and condition as when received and will
take all action and will make all structural and nonstructural, foreseen and
unforeseen and ordinary and extraordinary changes and repairs which may be
required to keep all parts of the Premises in as good repair and condition as
when received (including, but not limited to, all painting, glass, utilities,
conduits, fixtures and equipment, foundation, roof, exterior walls, heating and
air conditioning systems, wiring, plumbing, sprinkler systems and other
utilities, and all paving, sidewalks, roads, parking areas, curbs and gutters
and fences). Lessor shall not be required to maintain, repair or rebuild all or
any part of the Premises. Lessee waives the right to require Lessor to maintain,
repair or rebuild all or any part of the Premises or make repairs at the expense
of Lessor pursuant to any Legal Requirement, Agreement, contract, covenant,
condition or restrictions at any time.

                  (b) If all or any part of the Improvements shall encroach upon
any property, street or right-of-way adjoining or adjacent to the Premises, or
shall violate the agreements or conditions affecting the Premises or any part
thereof, or shall hinder, obstruct or impair any easement or right-of-way to
which the Premises are subject, then, promptly after written request of Lessor
(unless such encroachment, violation, hindrance, obstruction or impairment is a
Permitted Exception) or of any person so affected, Lessee shall, at its expense,
either (i) obtain valid and effective waivers or settlements of all claims,
liabilities and damages resulting therefrom or (ii) if Lessor consents thereto,
make such changes, including alteration or removal, to the Improvements and take
such other action as shall be necessary to remove or eliminate such
encroachments, violations, hindrances, obstructions or impairments. To the
extent any easements are, in Lessor's good faith judgment, necessary for
Lessee's use and occupancy of the Premises as contemplated by this Lease, upon
Lessee's written request, Lessor will execute such easements without
unreasonable delay and not otherwise conditioned.

                  (c) Notwithstanding the above, in the event of any damage to
the Premises arises out of the willful misconduct or gross negligence of the
Lessor during the Term and causes such loss or damage, Lessor shall be
responsible for the uninsured deductible losses not to exceed the amount of $10,
000 per occurrence.

         SECTION 2.02 ALTERATIONS, REPLACEMENTS AND ADDITIONS. Lessee may, at
its expense, make additions to and alterations of the Improvements, and
construct additional Improvements, provided that (i) the fair market value, the
utility, the square footage or the useful life of the Premises shall not be
lessened thereby, (ii) such work shall be expeditiously completed in a good and
workmanlike manner and in compliance with all applicable Legal Requirements and
the requirements of all insurance policies required to be maintained by Lessee
hereunder, (iii) no structural alterations shall be made to the Improvements or
structural demolitions conducted in connection therewith unless Lessee shall
have obtained Lessor's consent and furnished Lessor

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with such surety bonds or other security acceptable to Lessor as shall be
reasonably acceptable to Lessor (but in no event greater than the cost of such
alterations or demolitions), (iv) no additions, replacements or alterations,
other than cosmetic, interior or nonstructural alterations, which cost in excess
of $200,000 shall be made during any year of the Term unless prior written
consent from Lessor and Lessor's Mortgagee shall have been obtained, which
consent shall not be unreasonably withheld, conditioned or delayed and (v) no
Event of Default exists. Cosmetic, interior or nonstructural alterations
(including demolition or construction of interior demising walls that are
non-structural and non load-bearing) that cost $100,000 or less shall not
require prior written consent from Lessor or Lessor's Mortgagee. All additions
and alterations of the Premises, without consideration by Lessor, shall be and
remain part of the Premises (not subject to removal upon termination) and the
property of Lessor and shall be subject to this Lease. To the extent that Lessor
shall fail to respond to any request for consent by Lessee pursuant to this
Section 2.02 within 15 days after receipt of such request, Lessee may make a
second request for consent. If such second request states on its face that the
consent of Lessor will be deemed given if not responded to within 10 days after
receipt of such second request, Lessor's consent will be deemed given 10 days
after Lessor receives such second request.

                                  ARTICLE III

         SECTION 3.01 SEVERABLE PROPERTY. Lessee may, at its expense, install,
assemble or place on the Premises and remove and substitute any items of
machinery, equipment, furniture, furnishings or other personal property used or
useful in Lessee's business and trade fixtures described in Exhibit D attached
hereto and made a part hereof for all purposes (collectively, the "Severable
Property"), and title to same shall remain in Lessee. Upon the written request
of Lessee, Lessor will confirm in writing that is does not own or claim any
interest in the Severable Property.

         SECTION 3.02 REMOVAL. Lessee may remove the Severable Property at any
time during the Lease Term. Any of Lessee's Severable Property not removed by
Lessee prior to the expiration of the Lease or 30 days after an earlier
termination shall be considered abandoned by Lessee and may be appropriated,
sold, destroyed or otherwise disposed of by Lessor without obligation to account
therefor. Lessee will repair at its expense all damage to the Premises
necessarily caused by the removal of Lessee's Severable Property, whether
effected by Lessee or by Lessor, excepting ordinary wear and tear.

                                   ARTICLE IV

         SECTION 4.01 LESSEE'S ASSIGNMENT AND SUBLETTING. Lessee may, for its
own account, assign this Lease or sublet the use of all or any part of the
Premises for the Primary Term or Extension Term of this Lease so long as no
Event of Default shall exist hereunder and Lessee shall have obtained Lessor's
and, if any Mortgagee of Lessor shall require, such Mortgagee's prior written
consent to such assignment or sublease, not to be unreasonably withheld,
conditioned or delayed. Lessor shall respond to a request for an assignment or
sublet in each instance within fifteen (15) days of receiving the written
request from Lessee. Failure to respond within such fifteen (15) day period
shall be deemed a rejection by Lessor. Thereafter Lessor shall provide in
writing to Lessee the stated reason for rejecting said assignment. Each such

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assignment or sublease shall expressly be made subject to the provisions hereof.
Except as authorized by this Article IV, no such assignment or sublease shall
modify or limit any right or power of Lessor hereunder or affect or reduce any
obligation of Lessee hereunder, and all such obligations shall be those of
Lessee and shall continue in full effect as obligations of a principal and not
of a guarantor or surety, as though no subletting or assignment had been made,
such liability of the Lessee named herein to continue notwithstanding any
subsequent modifications or amendments of this Lease; provided, however, that
(other than with respect to any modifications required by law or on account of
bankruptcy or insolvency) if any modification or amendment is made without the
consent of Lessee named herein, such modification or amendment shall be
ineffective as against Lessee named herein to the extent, and only to the
extent, that the same shall increase the obligations of Lessee, it being
expressly agreed that Lessee named herein shall remain liable to the full extent
of this Lease as if such modification had not been made. Neither this Lease nor
the Lease Term hereby demised shall be mortgaged by Lessee, nor shall Lessee
mortgage or pledge its interest in any sublease of the Premises or the rentals
payable thereunder. Any sublease made otherwise than as expressly permitted by
this Section 4.01 and any assignment of Lessee's interest hereunder made
otherwise than as expressly permitted by this Section 4.01 shall be void. Lessee
shall, within 20 days after the execution of any assignment or sublease, deliver
a conformed copy thereof to Lessor.

Notwithstanding anything in the Lease to the contrary, in the event Lessee
desires to sublet, assign or otherwise transfer all of the Premises (including a
sublease, assignment or other transfer to (i) a parent or an affiliate of
Lessee, (ii) an entity resulting from the merger, consolidation or amalgamation
of Lessee with a third party, or (iii) an entity purchasing all or substantially
all of the assets of Lessee), Lessor shall consent to such assignment and Lessee
shall be released from all further obligations under the Lease so long as (A)
such successor entity or assignee has a net worth of at least Ten Million and
no/100 Dollars and (B) such proposed successor entity has had a positive GAAP
income for the prior two year period, and Lessee furnishes Lessor with evidence
satisfactory to Lessor, in its reasonable discretion, evidencing the (A) and (B)
requirements stated in this paragraph.

         SECTION 4.02 TRANSFER OR PLEDGE BY LESSOR. Lessor shall be free to
transfer its fee interest in the Premises or any part thereof or interest
therein, subject, however, to the terms of this Lease. Any such transfer shall
relieve the transferor of all liability and obligation hereunder (to the extent
of the interest transferred) accruing after the date of the transfer and any
assignee shall be bound by the terms and provisions of this Lease. Lessor shall
be free to pledge or mortgage its interest in the Premises and this Lease on the
condition that either (i) this Lease shall be superior to such pledge or
mortgage or (ii) if this Lease is to be subordinate to the mortgage of any
Mortgagee of Lessor, then (aa) such mortgagee, trustee or lessor shall first
agree in writing that Lessee's peaceable possession of the Premises and its
rights under this Lease will not be diminished on account thereof; and (bb)
Lessee receives a Non-Disturbance and Attornment Agreement from Lessor's lender
from whom it is obtaining financing, and deliver same to Lessee within thirty
(30) days from the date that it closes on its financing, and from any future
lender within thirty (30) days from obtaining financing from such lender, in
form and substance mutually acceptable to Lessee and Lessor.

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                                   ARTICLE V

         SECTION 5.01 NET LEASE.

                  (a) It is expressly understood and agreed by and between the
parties that this Lease is an absolute net lease, and the Basic Rent and all
other sums payable hereunder to or on behalf of Lessor shall be paid without
notice or demand and without setoff, counterclaim, abatement, suspension,
deduction or defense.

                  (b) Except as otherwise expressly provided in the Lease, this
Lease shall not terminate, nor shall Lessee have any right to terminate this
Lease or be entitled to the abatement of any rent or any reduction thereof, nor
shall the obligations hereunder of Lessee be otherwise affected, by reason of
any damage to or destruction of all or any part of the Premises from whatever
cause, the taking of the Premises or any portion thereof by condemnation or
otherwise, the prohibition, limitation or restriction of Lessee's use of the
Premises, any default on the part of Lessor, any latent or other defect in any
of the Premises, the breach of any warranty of any seller or manufacturer of any
of the Improvements or Severable Property, any violation of any provision of
this Lease by Lessor, the bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution or winding-up of, or other proceeding
affecting Lessor, the exercise of any remedy, including foreclosure, under any
mortgage or collateral assignment, any action with respect to this Lease
(including the disaffirmance hereof) which may be taken by Lessor, any trustee,
receiver or liquidator of Lessor or any court under the Federal Bankruptcy Code
or otherwise, and market or economic changes, or interference with such use by
any private person or corporation, or by reason of any eviction by paramount
title resulting by a claim from Lessor's predecessor in title, or for any other
cause whether similar or dissimilar to the foregoing, any present or future law
to the contrary notwithstanding, it being the intention of the parties hereto
that the rent and all other charges payable hereunder to or on behalf of Lessor
shall continue to be payable in all events and the obligations of Lessee
hereunder shall continue unaffected, unless the requirement to pay or perform
the same shall be terminated pursuant to an express provision of this Lease.
Nothing contained in this Section 5.01 shall be deemed a waiver by Lessee of any
rights that it may have to bring a separate action with respect to any default
by Lessor hereunder or under any other agreement.

                  (c) The obligations of Lessee hereunder shall be separate and
independent covenants and agreements. Lessee covenants and agrees that it will
remain obligated under this Lease in accordance with its terms, and that Lessee
will not take any action to terminate, rescind or avoid this Lease,
notwithstanding the bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution, winding-up or other proceeding affecting
Lessor or any assignee of Lessor in any such proceeding and notwithstanding any
action with respect to this Lease which may be taken by any trustee or receiver
of Lessor or of any assignee of Lessor in any such proceeding or by any court in
any such proceeding.

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                  (d) Except as otherwise expressly provided in the Lease,
Lessee waives all rights now or hereafter conferred by law (i) to quit,
terminate or surrender this Lease or the demised premises or any part thereof or
(ii) to any abatement, suspension, deferment or reduction of the rent, or any
other sums payable hereunder to or on behalf of Lessor, regardless of whether
such rights shall arise from any present or future constitution, statute or rule
of law.

         SECTION 5.02 TAXES AND ASSESSMENTS; COMPLIANCE WITH LAW.

                  (a) Lessee shall pay, prior to delinquency: (i) all taxes,
assessments, levies, fees, water and sewer rents and charges and all other
governmental charges, general and special, ordinary and extraordinary, foreseen
and unforeseen, which are, at any time prior to or during the Term imposed or
levied upon or assessed against or which arise with respect to (A) the Premises,
(B) any Basic Rent, additional rent or other sums payable hereunder, (C) this
Lease or the leasehold estate hereby created or (D) the operation, possession or
use of the Premises; (ii) all gross receipts or similar taxes (i.e., taxes based
upon gross income which fail to take into account deductions with respect to
depreciation, interest, taxes or ordinary and necessary business expenses, in
each case relating to the Premises) imposed or levied upon, assessed against or
measured by any Basic Rent, additional rent or other sums payable hereunder;
(iii) all sales, value added, ad valorem, use and similar taxes at any time
levied, assessed or payable on account of the leasing, operation, possession or
use of the Premises; and (iv) all charges of utilities, communications and
similar services serving the Premises. Notwithstanding the foregoing, Lessee
shall not be required to pay any franchise, estate, inheritance, transfer,
income, capital gains or similar tax of or on Lessor unless such tax is imposed,
levied or assessed in substitution for any other tax, assessment, charge or levy
which Lessee is required to pay pursuant to this Section 5.02(a); provided,
however, that if, at any time during the Lease Term, the method of taxation
shall be such that there shall be assessed, levied, charged or imposed on Lessor
a capital levy or other tax directly on the rents received therefrom, or upon
the value of the Premises or any present or future improvement or improvements
on the Premises, then all such levies and taxes or the part thereof so measured
or based shall be payable by Lessee, and Lessee shall pay and discharge the same
as herein provided. Lessee will furnish to Lessor, promptly after request
therefor, proof of payment of all items referred to above which are payable by
Lessee. If any such assessment may legally be paid in installments, Lessee may
pay such assessment in installments; in such event, Lessee shall be liable only
for installments which become due and payable with respect to any tax period
occurring in whole or in part during the Lease Term hereof; provided, however,
that all amounts referred to in this Section 5.02(a) for the fiscal or tax year
in which the Lease Term shall expire shall be apportioned so that Lessee shall
pay those portions thereof which correspond with the portion of such year as are
within the Lease Term hereby demised. Lessee shall, (i) if possible, have the
tax bills mailed directly to Lessee by the proper governmental agency, and (ii)
for the last lease year of the Term hereof, furnish an apportionment between
Lessee and Lessor based on the number of days of Lessee's last lease year which
fall within the then current calendar year. Further, Lessor acknowledges that
the Premises is subject to a Tax Increment Financing Agreement ("TIF") between
Lessee and the City of New Hope, Minnesota and the county assessor and all
payments received under the TIF shall belong to and remain with Lessee so long
as no Event of Default exists hereunder or Lessee is released from liability
hereunder.

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                  (b) Lessee shall comply with and cause the Premises to comply
with and shall assume all obligations and liabilities with respect to (i) all
laws, ordinances and regulations and other governmental rules, orders and
determinations presently in effect or hereafter enacted, made or issued, whether
or not presently contemplated (collectively, "Legal Requirements"), as applied
to the Premises or the ownership, operation, use or possession thereof and (ii)
all contracts, insurance policies (including, without limitation, to the extent
necessary to prevent cancellation thereof and to insure full payment of any
claims made under such policies), agreements, covenants, conditions and
restrictions now or hereafter applicable to the Premises or the ownership,
operation, use or possession thereof (other than covenants, conditions and
restrictions imposed by Lessor subsequent to the date of this agreement without
the consent of Lessee), including, but not limited to, all such Legal
Requirements, contracts, agreements, covenants, conditions and restrictions
which require structural, unforeseen or extraordinary changes; provided,
however, that, with respect to any of the obligations of Lessee in clause (ii)
above which are not now in existence, Lessee shall not be required to so comply
unless Lessee is either a party thereto or has given its written consent
thereto, or unless the same is occasioned by Legal Requirements or Lessee's
default (including any failure or omission by Lessee) under this Lease. Nothing
in clause (ii) of the immediately preceding sentence or the following sentence
shall modify the obligations of Lessee under Section 5.04 of this Lease.

                  (c) If required by Lessor's Mortgagee at any time during the
Lease Term, or if an Event of Default shall occur, upon the request of Lessor,
Lessee shall, in addition to and concurrently with the payment of Basic Rent as
required in subsection 1.04(a) hereof, pay one-twelfth of the amount (as
estimated by Lessor or Lessor's Mortgagee, as applicable) of the annual taxes
and assessments described in subsection 5.02(a) hereof and the annual premiums
for insurance required in Section 6.03 hereof next becoming due and payable with
respect to the Premises. Lessee shall also pay to Lessor on demand therefor the
amount by which the actual taxes and assessments and insurance premiums exceed
the payment by Lessee required in this subsection.

         SECTION 5.03 LIENS. Lessee will remove and discharge any charge, lien,
security interest or encumbrance upon the Premises or upon any Basic Rent,
additional rent or other sums payable hereunder which arises for any reason,
including, without limitation, all liens which arise out of the possession, use,
occupancy, construction, repair or rebuilding of the Premises or by reason of
labor or materials furnished or claimed to have been furnished to Lessee or for
the Premises, but not including (i) the liens and encumbrances set forth in
Exhibit B, (ii) this Lease and any assignment hereof or any sublease permitted
hereunder and (iii) any mortgage, charge, lien, security interest or encumbrance
created or caused by or through Lessor or its agents, employees or
representatives without the consent of Lessee. Lessee may provide a bond or
other security reasonable acceptable to Lessor (but in no event greater in
amount than the amount of such encumbrance) to remove or pay all costs
associated with the removal of any such lien, provided the conditions of Section
5.05 shall be satisfied. Nothing contained in this Lease shall be construed as
constituting the consent or request of Lessor, express or implied, to or for the
performance (on behalf of or for the benefit of Lessor) by any contractor,
laborer, materialman or vendor, of any labor or services or for the furnishing
of any materials for any construction,

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alteration, addition, repair or demolition of or to the Premises or any part
thereof. NOTICE IS HEREBY GIVEN THAT LESSOR WILL NOT BE LIABLE FOR ANY LABOR,
SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO LESSEE, OR TO ANYONE
HOLDING AN INTEREST IN THE PREMISES OR ANY PART THEREOF THROUGH OR UNDER LESSEE,
AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS
SHALL ATTACH TO OR AFFECT THE INTEREST OF LESSOR IN AND TO THE PREMISES UNLESS
BY OR THROUGH LESSOR OR ITS AGENTS, EMPLOYEES OR REPRESENTATIVES WITHOUT THE
CONSENT OF LESSEE.

         SECTION 5.04 INDEMNIFICATION.

                  (a) Except for the gross negligence or willful misconduct of
any Indemnified Party (as defined herein), Lessee shall defend all actions
against Lessor and any partner, officer, director, member, employee or
shareholder of the foregoing (collectively, "Indemnified Parties"), with respect
to, and shall pay, protect, indemnify and save harmless the Indemnified Parties
from and against, any and all liabilities, losses, damages, costs, expenses
(including, without limitation, reasonable attorneys' fees and expenses), causes
of action, suits, claims, demands or judgments of any nature arising from (i)
injury to or death of any person, or damage to or loss of property, on or about
the Premises, or connected with the use, condition or occupancy of any thereof,
(ii) violation by Lessee of this Lease, (iii) use, act or omission of Lessee or
its agents, contractors, licensees, sublessees or invitees and (iv) contest
referred to in Section 5.05 of this Lease. LESSEE UNDERSTANDS AND AGREES THAT
THE FOREGOING INDEMNIFICATION OBLIGATIONS OF LESSEE ARE EXPRESSLY INTENDED TO
AND SHALL INURE TO THE BENEFIT OF THE INDEMNIFIED PARTIES EVEN IF SOME OR ALL OF
THE MATTERS FOR WHICH SUCH INDEMNIFICATION IS PROVIDED ARE CAUSED OR ALLEGED TO
HAVE BEEN CAUSED BY THE SOLE SIMPLE, JOINT OR CONCURRENT NEGLIGENCE OR STRICT
LIABILITY OF ANY OF THE INDEMNIFIED PARTIES, BUT NOT TO THE EXTENT CAUSED BY THE
INDEMNIFIED PARTIES' GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. The obligations of
Lessee under this Section 5.04 shall survive any termination, expiration,
rejection in bankruptcy, or assumption in bankruptcy of this Lease.

                  (b) The rights and obligations of Lessor and Lessee with
respect to claims by Lessor against Lessee brought pursuant to this Section 5.04
and Section 5.06 shall be subject to the following conditions:

                           (i) If a Lessor receives notice of the assertion of
any claim in respect of which it intends to make an indemnification claim under
this Section 5.04 or Section 5.06, Lessor shall promptly provide written notice
of such assertion to Lessee; provided that failure of Lessor to give Lessee
prompt notice as provided herein shall not relieve Lessee of any of its
obligations hereunder, except to the extent the Lessee is prejudiced by such
failure. The notice shall describe in reasonable detail the nature of the claim
and the basis for an indemnification claim under Section this Section 5.04 or
Section 5.06, and shall be accompanied by all papers and documents which have
been served upon Lessor and such other documents and information as may be
appropriate to an understanding of such claim and the liability of Lessee to
indemnify Lessor hereunder. Except as required by law, the Lessor shall not
answer or otherwise respond to

                                       10
<PAGE>

such claim or take any other action which may prejudice the defense thereof
unless and until Lessee has been given the opportunity to assume the defense
thereof as required by this Section 5.04 and refused to do so.

                           (ii) Upon receipt of an indemnification notice under
this Section 5.04, the Lessee shall have the right, but not the obligation, to
promptly assume and take exclusive control of the defense, negotiation and/or
settlement of such claim; provided, however, that if the representation of both
parties by Lessee would be inappropriate due to actual or potential differing
interests between them, then the Lessee shall not be obligated to assume such
defense. In the event of a conflict of interest or dispute or during the
continuance of an Event of Default, Lessor shall have the right to select
counsel, and the reasonable costs of such counsel shall be paid by Lessee. The
parties acknowledge that, with respect to claims for which insurance is
available, the rights of the parties to select counsel for the defense of such
claims shall be subject to such approval rights as the insurance company
providing coverage may have.

                           (iii) The party controlling the defense of a claim
shall keep the other party reasonably informed at all stages of the defense of
such claim. The party not controlling the defense of any claim shall have the
right, at its sole cost and expense, to participate in, but not control, the
defense of any such claim. Each party shall reasonably cooperate with the other
in the defense, negotiation and/or settlement of any such claim. In connection
with any defense of a claim undertaken by Lessee, Lessor shall provide Lessee,
and its counsel, accountants and other representatives, with reasonable access
to relevant books and records and make available such personnel of Lessor as
Lessee may reasonably request.

         SECTION 5.05 PERMITTED CONTESTS.

                  (a) Lessee, at its expense, may contest, by appropriate legal
proceedings conducted in good faith and with due diligence, any Legal
Requirement with which Lessee is required to comply pursuant to Section 5.02(b)
or any Environmental Law under Section 5.06, or the amount or validity or
application, in whole or in part, of any tax, assessment or charge which Lessee
is obligated to pay or any lien, encumbrance or charge not permitted by Sections
2.01, 2.02, 5.02(a), 5.03 and 6.02, provided that unless Lessee has already paid
such tax, assessment or charge (i) the commencement of such proceedings shall
suspend the enforcement or collection thereof against or from Lessor and against
or from the Premises, (ii) neither the Premises nor any rent therefrom nor any
part thereof or interest therein would be in any danger of being sold,
forfeited, attached or lost, (iii) Lessee shall have furnished such security, if
any, as may be required in the proceedings and as may be reasonably required by
Lessor (but in no event shall such additional security be required in excess of
125% of the amount in dispute and may be in the form of a letter of credit), and
(iv) if such contest be finally resolved against Lessee, Lessee shall promptly
pay the amount required to be paid, together with all interest and penalties
accrued thereon. Lessor, at Lessee's expense, shall execute and deliver to
Lessee such authorizations and other documents as reasonably may be required in
any such contest. Lessee shall indemnify and save Lessor harmless against any
cost or expense of any kind that may be imposed upon Lessor in connection with
any such contest and any loss resulting therefrom. Notwithstanding any other
provision of this Lease to the contrary, Lessee shall not be in default
hereunder in respect to the compliance with any Legal Requirement with which
Lessee is obligated to comply pursuant to

                                       11
<PAGE>

Section 5.02(b), any Environmental Law under Section 5.06, or in respect to the
payment of any tax, assessment or charge which Lessee is obligated to pay or any
lien, encumbrance or charge not permitted by Section 2.01, 2.02, 5.02(a), 5.03
and 6.02 which Lessee is in good faith contesting.

                  (b) Without limiting the provisions of Section 5.05(a), so
long as no Lease Event of Default exists and the conditions set forth in Section
5.05(a) are satisfied, Lessor hereby irrevocably appoints Lessee as Lessor's
attorney-in-fact solely for the purpose of prosecuting a contest of any tax,
assessment or charge which Lessee is obligated to pay. Such appointment is
coupled with an interest. Notwithstanding the foregoing appointment, if Lessee
determines it to be preferable in prosecution of a contest of a tax, assessment
or charge, upon Lessee's prior request, Lessor shall execute the real estate tax
complaint and/or other documents reasonably needed by Lessee to prosecute the
complaint as to such tax, assessment or charge and return same to Lessee within
ten (10) days. In such event, Lessee shall pay all of Lessor's costs and
expenses in connection therewith, including, without limitation, reasonable
attorneys' fees and Lessee shall arrange for preparation of such documentation
at Lessee's sole cost and expense.

         SECTION 5.06 ENVIRONMENTAL COMPLIANCE.

                  (a) For purposes of this Lease:

                           (i) the term "Environmental Laws" shall mean and
include the Resource Conservation and Recovery Act, as amended by the Hazardous
and Solid Waste Amendments of 1984, the Comprehensive Environmental Response,
Compensation and Liability Act, the Hazardous Materials Transportation Act, the
Toxic Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide
Act and all applicable state and local environmental laws, ordinances, rules,
requirements, regulations and publications, as any of the foregoing may have
been or may be from time to time amended, supplemented or supplanted and any and
all other federal, state or local laws, ordinances, rules, requirements,
regulations and publications, now or hereafter existing, relating to (i) the
preservation or regulation of the public health, welfare or environment, (ii)
the regulation or control of toxic or hazardous substances or materials, or
(iii) any wrongful death, personal injury or property damage that is caused by
or related to the presence, growth, proliferation, reproduction, dispersal, or
contact with any biological organism or portion thereof (living or dead),
including molds or other fungi, bacteria or other microorganisms or any
etiologic agents or materials; and

                           (ii) the term "Regulated Substance" shall mean and
include any, each and all substances, biological and etiologic agents or
materials now or hereafter regulated pursuant to any Environmental Laws,
including, but not limited to, any such substance, biological or etiological
agent or material now or hereafter defined as or deemed to be a "regulated
substance," "pesticide," "hazardous substance" or "hazardous waste" or included
in any similar or like classification or categorization thereunder.

                  (b) Lessee shall:

                                       12
<PAGE>

                           (i) , not cause or permit any Regulated Substance to
be placed, held, located, released, transported or disposed of on, under, at or
from the Premises in violation of Environmental Laws (but Lessee is not
precluded from having a Regulated Substance on the Premises that it uses in its
business in such instance where Lessee maintains a license to use and dispose of
such Regulated Substance) and does so in compliance with applicable law;

                           (ii) contain at or remove from the Premises, or
perform any other necessary remedial action regarding, any Regulated Substance
in any way affecting the Premises if, as and when such containment, removal or
other remedial action is required under any Legal Requirement and, whether or
not so required, shall perform any containment, removal or remediation of any
kind involving any Regulated Substance in any way materially adversely affecting
the Premises in compliance with all Legal Requirements and, upon reasonable
request of Lessor after consultation with Lessee (which request may be given
only if Lessor has received information such that it reasonably believes that
environmental contamination exists which may have a material adverse effect on
the Premises), shall arrange a phase I environmental audits (as such term is
defined now or hereafter by the environmental remediation industry), or such
other or further testing or actions as may be required by Legal Requirements or
as may be mutually agreed to by Lessor and Lessee, to be conducted at the
Premises by qualified companies retained by Lessee specializing in environmental
matters and reasonably satisfactory to Lessor in order to ascertain compliance
with all Legal Requirements and the requirements of this Lease, all of the
foregoing to be at Lessee's sole cost and expense;

                           (iii) provide Lessor with written notice (and a copy
as may be applicable) of any of the following within 10 days of receipt thereof:
(A) Lessee's obtaining knowledge or notice of any kind of the material presence,
or any actual or threatened release, of any Regulated Substance in any way
materially adversely affecting the Premises; (B) Lessee's receipt or submission,
or Lessee's obtaining knowledge or notice of any kind, of any report, citation,
notice or other communication from or to any federal, state or local
governmental or quasi-governmental authority regarding any Regulated Substance
in any way materially adversely affecting the Premises; or (C) Lessee's
obtaining knowledge or notice of any kind of the incurrence of any cost or
expense by any federal, state or local governmental or quasi-governmental
authority or any private party in connection with the assessment, monitoring,
containment, removal or remediation of any kind of any Regulated Substance in
any way materially adversely affecting the Premises, or of the filing or
recording of any lien on the Premises or any portion thereof in connection with
any such action or Regulated Substance in any way materially adversely affecting
the Premises; and

                           (iv) in addition to the requirements of Section 5.04
hereof, defend all actions against the Indemnified Parties and Lessor's
Mortgagee and pay, protect, indemnify and save harmless the Indemnified Parties
and Lessor's Mortgagee from and against any and all liabilities, losses,
damages, costs, expenses (including, without limitation, reasonable attorneys'
fees and expenses), causes of action, suits, claims, demands or judgments of any
nature relating to any Environmental Laws, Regulated Substances or other
environmental matters concerning the Premises; except to the extent caused by
through Lessor, Lessor's Mortgagee, or their agents, employees or
representatives. The indemnity contained in this Section 5.06 shall survive the
expiration or earlier termination of this Lease.

                                       13
<PAGE>

                  (c) Upon reasonable cause and prior written notice from
Lessor, Lessee shall permit such reasonably qualified persons as Lessor may
designate ("Site Reviewers") to visit the Premises and perform environmental
site investigations and assessments ("Site Assessments") on the Premises for the
purpose of determining whether there exists on the Premises any violation of
Environmental Laws or any condition which could result in any violations of
Environmental Laws. Such Site Assessments may include both above and below the
ground environmental testing for violations of Environmental Laws and such other
tests as may be necessary, in the reasonable opinion of the Site Reviewers, to
conduct the Site Assessments. Lessee shall supply to the Site Reviewers such
historical and operational information regarding the Premises as may be
reasonably requested by the Site Reviewers to facilitate the Site Assessments,
and shall make available for meetings with the Site Reviewers appropriate
personnel having knowledge of such matters. If no environmental conditions exist
that require remediation then the cost for the Site Assessments shall be paid by
Lessor, and if the Site Assessment reveals that remediation is required then
Lessee shall pay for the cost of the Site Assessment.

If any violation of Environmental Laws occurs or is found to exist and, in
Lessor's reasonable judgment based upon the written bids of reputable
environmental professionals, the cost of the Site Assessment and the cost of the
remediation of, or other response action with respect to, the same is likely to
exceed $100,000, Lessee shall provide to Lessor, within ten (10) days after
Lessor's request therefor, adequate financial assurances that Lessee will effect
such remediation in accordance with applicable Environmental Laws. Such
financial assurances shall be a bond or letter of credit reasonably satisfactory
to Lessor in form and substance and in an amount equal to or greater than
Lessors' reasonable estimate, based upon a Site Assessment performed pursuant to
this Paragraph, of the anticipated cost of such remedial action. The obligations
of Lessee under this provision of the Lease shall survive the termination of the
Lease.

If Lessee fails to correct any violation of Environmental Laws which occurs or
is found to exist, Lessor shall have the right (but no obligation) to take any
and all actions as Lessor shall reasonably deem necessary or advisable in order
to cure such violation of Environmental Laws.

All future leases, subleases or concession agreements permitted by this Lease
relating to the Premises entered into by Lessee shall contain covenants of the
other party not to knowingly at any time (i) cause any violation of
Environmental Laws to occur or (ii) permit any Person occupying the Premises
through said subtenant or concessionaire to knowingly cause any violation of
Environmental Laws to occur.

                                   ARTICLE VI

         SECTION 6.01 PROCEDURE UPON PURCHASE.

                  (a) If Lessee shall purchase the Premises pursuant to Section
6.02 of this Lease, Lessor shall convey or cause to be conveyed title thereto by
special warranty deed, free of any mortgage imposed by Lessor and subject only
to this Lease, the lien of any taxes, exceptions subject to which the Premises
were conveyed to Lessor, exceptions created or consented to or existing by
reason of any action or inaction by Lessee and all Legal Requirements.

                                       14
<PAGE>

                  (b) Upon the date fixed for any purchase of the Premises
pursuant to Section 6.02 of this Lease, Lessee shall pay to Lessor the purchase
price therefor specified herein in immediately available funds, together with
all Basic Rent, additional rent and other sums then due and payable hereunder to
and including such date of purchase, and there shall be delivered to Lessee a
deed or other conveyance of the interests in the Premises then being sold to
Lessee and any other instruments reasonably necessary to evidence the conveyance
of title thereto described in Section 6.01(a) and to assign any other property
then required to be assigned by Lessor pursuant hereto. Lessee acknowledges and
understands that any conveyance of the Premises by Lessor to Lessee shall be
made on an "As-Is", "Where-Is" and "With All Faults" basis, and without any
representations or warranties, express, implied or statutory as to the Premises'
habitability, suitability, marketability, value, fitness for any particular use
or purpose, the absence or presence of any latent or patent defects at or within
the Premises, or the compliance of the Premises with any laws (including,
without limitation, any environmental laws), and the deed by which Lessor
conveys the Premises to Lessee shall contain express language to such effect.

                  (c) There shall be no adjustments at the closing of a purchase
pursuant to this Section 6.01. Lessee shall pay all charges incident to such
conveyance and assignment, including, without limitation, reasonable counsel
fees, escrow fees, recording fees, title insurance premiums (but not including
deed tax, if required to be paid by seller under Minnesota law or any income,
capital gain or franchise taxes of Lessor) which may be imposed by reason of
such conveyance and assignment and the delivery of said deed or conveyance and
other instruments. Upon the completion of any purchase of the entire Premises
(but not of any lesser interest than the entire Premises) but not prior thereto
(whether or not any delay or failure in the completion of such purchase shall be
the fault of Lessor), this Lease shall terminate, except with respect to
obligations and liabilities of Lessee hereunder, actual or contingent, which
have arisen on or prior to such completion of purchase or which specifically
survive the expiration or earlier termination of this Lease.

         SECTION 6.02 CONDEMNATION AND CASUALTY.

                  (a) GENERAL PROVISIONS. Except as provided in Section 6.02(b)
and (c), Lessee hereby irrevocably assigns to Lessor any award, compensation or
insurance payment to which Lessee may become entitled by reason of Lessee's
interest in the Premises (i) if the use, occupancy or title of the Premises or
any part thereof is taken, requisitioned or sold in, by or on account of any
actual or threatened eminent domain proceeding or other action by any person
having the power of eminent domain ("Condemnation") or (ii) if the Premises or
any part thereof is damaged or destroyed by fire, flood or other casualty
("Casualty"). All awards, compensations and insurance payments on account of any
Condemnation or Casualty are herein collectively called "Compensation". Lessee
may not unilaterally negotiate, prosecute or adjust any claim for any
Compensation. Lessee must consult with and obtain Lessor's consent thereto. If
the parties are unable to so agree, then they shall appoint an entity or
individual that specializes in such negotiations who shall negotiate, prosecute
and adjust a claim for Compensation. Lessor shall be entitled to participate in
any such proceeding, action, negotiation, prosecution, appeal or adjustment as
contemplated herein. Notwithstanding anything to the contrary contained in this
Article VI, if permissible under applicable law, any separate Compensation made
to Lessee for its moving and relocation expenses, anticipated loss of business
profits, loss of goodwill or

                                       15
<PAGE>

fixtures and equipment paid for by Lessee and which are not part of the Premises
(including, without limitation, the Severable Property) shall be paid directly
to and shall be retained by Lessee (and shall not be deemed to be
"Compensation"). All Compensation shall be applied pursuant to this Section
6.02, and all such Compensation (less the expense of collecting such
Compensation) is herein called the "Net Proceeds." Except as specifically set
for herein, all Net Proceeds shall be paid to the Proceeds Trustee (as defined
herein) and applied pursuant to this Section 6.02.

                  (b) SUBSTANTIAL CONDEMNATION. If a Condemnation shall, in
Lessee's good faith judgment, affect all or a substantial portion of the
Premises and shall render the Premises unsuitable for restoration for continued
use and occupancy in Lessee's business, then Lessee may, not later than 60 days
after a determination has been made as to when possession of the Premises must
be delivered with respect to such Condemnation, deliver to Lessor (i) notice of
its intention ("Notice of Intention") to terminate this Lease on the next rental
payment date which occurs not less than 90 days after the delivery of such
notice (the "Condemnation Termination Date"), (ii) a certificate of an
authorized officer of Lessee describing the event giving rise to such
termination and stating that Lessee has determined that such Condemnation has
rendered the Premises unsuitable for restoration for continued use and occupancy
in Lessee's business, and (iii) an irrevocable offer by Lessee to Lessor to
purchase on the Condemnation Termination Date any remaining portion of the
Premises and the Net Proceeds, if any, payable in connection with such
Condemnation (or the right to receive the same when made, if payment thereof has
not yet been made), at a price equal to the Fair Market Value immediately prior
to the Condemnation. If Lessor shall reject such offer by notice given to Lessee
not later than 15 days prior to the Condemnation Termination Date, this Lease
shall terminate on the Condemnation Termination Date, except with respect to
obligations and liabilities of Lessee hereunder, actual or contingent, which
have accrued on or prior to the Condemnation Termination Date, upon payment by
Lessee of all Basic Rent, additional rent and other sums due and payable
hereunder to and including the Condemnation Termination Date, and the Net
Proceeds shall belong to Lessor. Unless Lessor shall have rejected such offer in
accordance with this Section, Lessor shall be conclusively considered to have
accepted such offer, and, on the Condemnation Termination Date, there shall be
conveyed to Lessee or its designee the remaining portion of the Premises, if
any, and there shall be assigned to Lessee or its designee all its interest in
the Net Proceeds, pursuant to and upon compliance with Section 6.01. In the
event Lessee does not deliver the Notice of Intention to Lessor, Lessor shall
permit so much of the Net Proceeds as may be necessary to be utilized by Lessee
to repair or restore the Premises, subject to the reasonable requirements of
Lessor's Mortgagee.

                  (c) SUBSTANTIAL CASUALTY DURING CERTAIN PERIOD. If an insured
Casualty shall, in Lessee's good-faith judgment, affect all or a substantial
portion of the Premises during the last five years of the Primary Term or the
last two (2) years of any Extended Term and shall render the Premises unsuitable
for restoration for continued use and occupancy in Lessee's business, then
Lessee may, not later than 150 days after such Casualty, deliver to Lessor (i)
notice of its intention to terminate this Lease on the next rental payment date
which occurs not less than 60 days after the delivery of such notice (the
"Casualty Termination Date"), (ii) a certificate of an authorized officer of
Lessee describing the event giving rise to such termination and stating that
Lessee has determined that such Casualty has rendered the Premises unsuitable
for restoration for

                                       16
<PAGE>

continued use and occupancy in Lessee's business, and (iii) documentation to the
effect that termination of this Lease will not be in violation of any agreement
then in effect with which Lessee is obligated to comply pursuant to this Lease.
Upon payment by Lessee of all Basic Rent, additional rent and other sums then
due and payable hereunder to and including the Casualty Termination Date, this
Lease shall terminate on the Casualty Termination Date except with respect to
obligations and liabilities of Lessee hereunder, actual or contingent, which
have accrued on or prior to the Casualty Termination Date, and the Net Proceeds
shall belong to Lessor.

                  (d) LESS THAN SUBSTANTIAL CONDEMNATION OR ANY CASUALTY DURING
THE PRIMARY TERM. If, after a Condemnation or Casualty, Lessee does not give or
does not have the right to give notice of its intention to terminate this Lease
as provided in subsection 6.02(b) or (c), then this Lease shall continue in full
force and effect and Lessee shall, at its expense, rebuild, replace or repair
the Premises in conformity with the requirements of subsections 2.01, 2.02 and
5.03 so as to restore the Premises (in the case of Condemnation, as nearly as
practicable) to the condition, and character thereof immediately prior to such
Casualty or Condemnation; provided that Lessee and Lessor shall use reasonable
efforts to consider modifications which would make the Improvements a more
contemporary design. To the extent the Net Proceeds with respect to any Casualty
are less than $200,000, such amount shall be paid to Lessee to be used to
rebuild, replace or repair the Premises in a lien free and good and workmanlike
manner. To the extent the Net Proceeds from any Casualty are $200,000 or
greater, such amount shall be paid to the Proceeds Trustee and prior to any such
rebuilding, replacement or repair, Lessee shall determine the maximum cost
thereof (the "Restoration Cost"), which amount shall be reasonably acceptable to
Lessor, not to be unreasonably delayed. The Restoration Cost shall be paid first
out of Lessee's own funds to the extent that the Restoration Cost exceeds the
Net Proceeds payable in connection with such occurrence, after which expenditure
Lessee shall be entitled to receive the Net Proceeds from the Proceeds Trustee,
but only against (i) certificates of Lessee delivered to Lessor and the Proceeds
Trustee from time to time but no more often than monthly as such work of
rebuilding, replacement and repair progresses, each such certificate describing
the work for which Lessee is requesting payment and the cost incurred by Lessee
in connection therewith and stating that Lessee has not theretofore received
payment for such work and (ii) such additional documentation or conditions as
Lessor or the Proceeds Trustee may reasonably require, including, but not
limited to, copies of all contracts and subcontracts relating to restoration,
architects' certifications, title policy updates and lien waivers or releases.
Any Net Proceeds remaining after final payment has been made for such work and
after Lessee has been reimbursed for any portions it contributed to the
Restoration Cost with respect to any Casualty shall be paid to Lessee and with
respect to any Condemnation shall be paid to Lessor. In the event of any
temporary Condemnation, this Lease shall remain in full effect and Lessee shall
be entitled to receive the Net Proceeds allocable to such temporary
Condemnation, except that any portion of the Net Proceeds allocable to the
period after the expiration or termination of the Lease Term shall be paid to
Lessor. If the cost of any rebuilding, replacement or repair required to be made
by Lessee pursuant to this subsection 6.02(d) shall exceed the amount of such
Net Proceeds, the deficiency shall be paid by Lessee.

                  (e) Notwithstanding anything to the contrary in this Lease,
all of the foregoing provisions of this Section 6.02 shall be subject and
subordinate to any provisions to the contrary

                                       17
<PAGE>

contained in any Subordination, Non-Disturbance and Attornment Agreement,
Mortgage or other document evidencing or securing a loan made by any Mortgagee
to Lessor.

                                       18
<PAGE>

         SECTION 6.03 INSURANCE.

                  (a) Lessee will maintain insurance on the Premises of the
following character:

                           (i) Insurance against all risks of direct physical
loss, including loss by fire, lightning, flooding (if the Premises are in a
flood zone), earthquakes and other risks which at the time are included under
"extended coverage" endorsements, in amounts sufficient to prevent Lessor and
Lessee from becoming a coinsurer of any loss but in any event in amounts not
less than 100% of the actual replacement value of the Improvements, exclusive of
foundations and excavations, without any exclusion for terrorism or "mold" and
with deductibles of not more than $10,000 per occurrence; provided, however, if
the Premises are not located in an area of special flood or earthquake hazards,
the deductibles for flood and earthquake damage, respectively, may be increased
to $25,000 per occurrence;

                           (ii) General public liability insurance and/or
umbrella liability insurance against claims for bodily injury, death or property
damage occurring on, in or about the Premises in the minimum amounts of
$5,000,000 for bodily injury or death to any one person, $10,000,000 for any one
accident and $5,000,000 for property damage to others or in such greater amounts
as are then customary for property similar in use to the Premises;

                           (iii) Rent loss insurance or business interruption
insurance in an amount sufficient to cover loss of rents from the Premises
pursuant to this Lease for a period of at least twelve (12) months;

                           (iv) Worker's compensation insurance to the extent
required by the law of the state in which the Premises are located;

                           (v) Boiler and machinery insurance in respect of any
boilers and similar apparatus located on the Premises in the minimum amount of
$500,000 or in such greater amounts as to adequately insure the Premises;

                           (vi) During any period of construction on the
Premises, builder's risk insurance on a completed value, nonreporting basis for
the total cost of such alterations or improvements, and workers' compensation
insurance as required by applicable law. This coverage may be provided by
Lessee's all risk property insurance pursuant to Section 6.03(i) herein; and

                           (vii) Such other insurance in such kinds and amounts,
with such deductibles and against such risks, as Lessor's Mortgagee may require
or as is commonly obtained in the case of property similar in use to the
Premises and located in the state in which the Premises are located by prudent
owners of such property and which is available at commercially reasonable
prices.

         Such insurance shall be written by companies authorized to do business
in the state where the Premises are located and carrying a claims paying ability
rating of at least A-XII by A.M.

                                       19
<PAGE>

Best or A by Standard and Poor's, as applicable, and with the exception of
workers' compensation insurance, shall name Lessor as an additional insured as
its interest may appear. If the Premises or any part thereof shall be damaged or
destroyed by Casualty, and if the estimated cost of rebuilding, replacing or
repairing the same shall exceed $200,000, Lessee promptly shall notify Lessor
thereof. In the event that Lessee is unable to obtain insurance as required
herein at rates that are commercially reasonable or such insurances are no
longer offered by commercial carriers insuring property in the State of
Minnesota then in such instance it shall have the right to request Lessee to
waive such requirement or to otherwise increase the deductible amount as
necessary to obtain insurance at a reasonable cost.

                  (b) Every such policy provided pursuant to clause (a)(i),
above shall bear a mortgagee endorsement in favor of any mortgagee(s) or
beneficiary(ies) identified by Lessor (whether one or more, the "Mortgagee")
under any mortgages, deeds of trust or similar security instruments creating a
lien on the interest of Lessor in the Premises (whether one or more, the
"Mortgage"), and any loss under any such policy shall be payable to the
Mortgagee which has a first lien on such interest (if there is more than one
first Mortgagee, then to the trustee for such Mortgagees) to be held and applied
by Mortgagee toward restoration pursuant to Section 6.02. Every such policy with
the exception of workers' compensation insurance, shall name the Mortgagee as an
additional insured as its interest may appear. Every policy referred to in
subsection 6.03(a) shall provide that it will not be cancelled or amended except
after 30 days' written notice to Lessor and the Mortgagee and that it shall not
be invalidated by any act or negligence of Lessor, Lessee or any person or
entity having an interest in the Premises, nor by occupancy or use of the
Premises for purposes more hazardous than permitted by such policy, nor by any
foreclosure or other proceedings relating to the Premises, nor by change in
title to or ownership of the Premises. The "Proceeds Trustee" shall be a
financial institution selected by Lessor and reasonably approved by Lessee and
may be the Mortgagee.

                  (c) Lessee shall deliver to Lessor and Mortgagee (i) upon
request copies of the applicable insurance policies and (ii) original or
duplicate certificates of insurance, satisfactory to Lessor and Mortgagee
evidencing the existence of all insurance which is required to be maintained by
Lessee hereunder and payment of all premiums therefor, such delivery to be made
(i) upon the execution and delivery hereof and (ii) at least 10 days prior to
the expiration of any such insurance. Lessee shall not obtain or carry separate
insurance concurrent in form or contributing in the event of loss with that
required by this Section 6.03 unless Lessor is named an additional insured
therein and unless there is a mortgagee endorsement in favor of Mortgagee with
loss payable as provided herein. Lessee shall immediately notify Lessor whenever
any such separate insurance is obtained and shall deliver to Lessor and
Mortgagee the policies or certificates evidencing the same. Any insurance
required hereunder may be provided under blanket policies, provided that the
Premises are specified therein.

                  (d) The requirements of this Section 6.03 shall not be
construed to negate or modify Lessee's obligations under Section 5.04.

                                       20
<PAGE>

                                  ARTICLE VII

         SECTION 7.01 CONDITIONAL LIMITATIONS; DEFAULT PROVISIONS.

                  (a) Any of the following occurrences or acts shall constitute
an Event of Default under this Lease:

                           (i) If Lessee shall (1) fail to pay any Basic Rent,
additional rent or other sum when due or (2) fail to observe or perform any
other provision hereof and such nonmonetary failure shall continue for 30 days
after written notice to Lessee of such failure (provided that, in the case of
any such failure which cannot be cured by the payment of money and cannot with
diligence be cured within such 30-day period, if Lessee shall commence promptly
to cure the same and thereafter prosecute the curing thereof with diligence, the
time within which such failure may be cured shall be extended for such period
not to exceed 180 days as is necessary to complete the curing thereof with
diligence);

                           (ii) If any representation or warranty of Lessee set
forth in any certificate provided by Lessee pursuant to this Lease, shall prove
to be incorrect in any material adverse respect as of the time when the same
shall have been made in a way adverse to Lessor and Lessor shall suffer a loss
or detriment as a result thereof, including, without limitation, the taking of
any action (including, without limitation, the demise of the Premises to Lessee
herein) in reliance upon such representation or warranty and, in each case, the
facts shall not be conformed to the representation and warranty as soon as
practicable in the circumstances (but in no event to exceed 30 days) after
written notice to Lessee from Lessor of such inaccuracy and Lessor restored to
the position it would have enjoyed had such representation or warranty been
accurate at the time it was made;

                           (iii) If Lessee shall file a petition in bankruptcy
or for reorganization or for an arrangement pursuant to any federal or state law
or shall be adjudicated a bankrupt or become insolvent or shall make an
assignment for the benefit of creditors, or if a petition proposing the
adjudication of Lessee as a bankrupt or its reorganization pursuant to any
federal or state bankruptcy law or any similar federal or state law shall be
filed in any court and Lessee shall consent to or acquiesce in the filing
thereof or such petition shall not be discharged or denied within 90 days after
the filing thereof;

                           (iv) If a receiver, trustee or conservator of Lessee
or of all or substantially all of the assets of Lessee or of the Premises or
Lessee's or estate therein shall be appointed in any proceeding brought by
Lessee, or if any such receiver, trustee or conservator shall be appointed in
any proceeding brought against Lessee and shall not be discharged within 90 days
after such appointment, or if Lessee shall consent to or acquiesce in such
appointment; and

                                       21
<PAGE>

                           (v) If the Premises shall have been abandoned and not
maintained in the manner required hereunder for a period of 10 consecutive days
after written notice of such from Lessor to Lessee.

                           (vi) If a Letter of Credit has been posted as the
Security Deposit or other security hereunder, and the issuer of the Letter of
Credit cancels, terminates or refuses to honor it, Lessee shall fail to renew
the Letter of Credit within ten (10) business days or shall fail to post a cash
equivalent amount of the Letter of Credit within ten (10) days after notice of
such cancellation, termination or refusal.

                  (b) If an Event of Default shall have happened and be
continuing, Lessor shall have the right to give Lessee notice of Lessor's
termination of the Lease Term. Upon the giving of such notice, the Lease Term
and the estate hereby granted shall expire and terminate on such date as fully
and completely and with the same effect as if such date were the date herein
fixed for the expiration of the Lease Term, and all rights of Lessee hereunder
shall expire and terminate, but Lessee shall remain liable as hereinafter
provided.

                  (c) If an Event of Default shall have happened and be
continuing, Lessor shall have the immediate right, whether or not the Lease Term
shall have been terminated pursuant to subsection 7.01(b), to reenter and
repossess the Premises and the right to remove all persons and property (subject
to Section 3.02) therefrom by summary proceedings, ejectment or any other legal
action or in any lawful manner Lessor determines to be necessary or desirable.
Lessor shall be under no liability by reason of any such reentry, repossession
or removal. No such reentry, repossession or removal shall be construed as an
election by Lessor to terminate the Lease Term unless a notice of such
termination is given to Lessee pursuant to subsection 7.01(b) or unless such
termination is decreed by a court.

                  (d) At any time or from time to time after a reentry,
repossession or removal pursuant to subsection 7.01(c), whether or not the Lease
Term shall have been terminated pursuant to subsection 7.01(b), Lessor may relet
the Premises for the account of Lessee, in the name of Lessee or Lessor or
otherwise. Lessor may collect any rents payable by reason of such reletting.
Lessor shall use commercially reasonable best efforts to relet the Premises and
to collect the rent due upon a relet but not be liable for any failure to relet
the Premises or to collect any rent due on such reletting.

                  (e) No expiration or termination of the Lease Term pursuant to
subsection 7.01(b), by operation of law or otherwise, and no reentry,
repossession or removal pursuant to subsection 7.01(c) or otherwise, and no
reletting of the Premises pursuant to subsection 7.01(d) or otherwise, shall
relieve Lessee of its liabilities and obligations hereunder, all of which shall
survive such expiration, termination, reentry, repossession, removal or
reletting.

                  (f) In the event of any expiration or termination of the Lease
Term or reentry or repossession of the Premises or removal of persons or
property therefrom by reason of the occurrence of an Event of Default, Lessee
shall pay to Lessor all Basic Rent, additional rent and other sums required to
be paid by Lessee, in each case to and including the date of such

                                       22
<PAGE>

expiration, termination, reentry, repossession or removal, and, thereafter,
Lessee shall, until the end of what would have been the Lease Term in the
absence of such expiration, termination, reentry, repossession or removal and
whether or not the Premises shall have been relet, be liable to Lessor for, and
shall pay to Lessor, as liquidated and agreed current damages: (i) all Basic
Rent, all additional rent and other sums which would be payable under this Lease
by Lessee in the absence of any such expiration, termination, reentry,
repossession or removal, together with all expenses of Lessor in connection with
such reletting (including, without limitation, all repossession costs, brokerage
commissions, reasonable attorneys' fees and expenses (including, without
limitation, fees and expenses of appellate proceedings), employee's expenses,
alteration costs and expenses of necessary preparation for such reletting), less
(ii) the net proceeds, if any, of any reletting effected for the account of
Lessee pursuant to subsection 7.01(d). Lessee shall pay such liquidated and
agreed current damages on the dates on which rent would be payable under this
Lease in the absence of such expiration, termination, reentry, repossession or
removal, and Lessor shall be entitled to recover the same from Lessee on each
such date.

                  (g) As an exclusive alternative to Lessor's other remedies
hereunder, at any time after any such expiration or termination of the Lease
Term or reentry or repossession of the Premises or removal of persons or
property therefrom by reason of the occurrence of an Event of Default, whether
or not Lessor shall have collected any liquidated and agreed current damages
pursuant to subsection 7.01(f), Lessor shall be entitled to recover from Lessee,
and Lessee shall pay to Lessor on demand, as and for liquidated and agreed final
damages for Lessee's default and in lieu of all liquidated and agreed current
damages beyond the date of such demand (it being agreed that it would be
impracticable or extremely difficult to fix the actual damages), an amount equal
to the excess, if any, of (a) the aggregate of all Basic Rent which would be
payable under this Lease, in each case from the date of such demand (or, if it
be earlier, to date to which Lessee shall have satisfied in full its obligations
under subsection 7.01(f) to pay liquidated and agreed current damages) for what
would be the then unexpired Lease Term (not taking into account any then
unexercised Extension Terms) in the absence of such expiration, termination,
reentry, repossession or removal, discounted at the rate equal to the then
current yield on United States Treasury Notes having a maturity as of the stated
date for expiration of the then existing Term of this Lease, plus 2% per annum
(the "Reference Rate"), over (b) the then fair rental value of the Premises,
discounted at the Reference Rate for the same period. Additionally, Lessee shall
pay Lessor all ad valorem taxes for the then unexpired Lease Term from the date
of such demand (not taking into account any then unexercised Extension Terms)
calculated using the ad valorem taxes paid by Lessee in the tax year immediately
prior to the default, but excluding any extraordinary special assessments that
would not be reoccurring in future years of the unexpired Lease Term (for
example: if the taxes paid in the prior year equaled $30,000, plus a one time
special assessment of $10,000, and the unexpired Lease Term remaining is 5 years
then Lessee shall pay Lessor under this provision an amount equal to $150,000
(i.e. the $30,000 reoccurring agreed upon value of ad valorem taxes multiplied
by 5 years)). If any law shall limit the amount of liquidated final damages to
less than the amount above agreed upon, Lessor shall be entitled to the maximum
amount allowable under such law.

                  (h) Without in any way limiting any other rights or remedies
available to Lessor hereunder, Lessor shall be entitled to draw on the Letter of
Credit which shall be applied to any monetary obligations of Lessee hereunder in
Lessor's sole discretion; provided, however,

                                       23
<PAGE>

if the amount of the proceeds exceeds the aggregate amount of all monetary
obligations of Lessee payable during the entire remaining Term hereof (without
taking into account any then-unexercised Extension Terms) and all other amounts
owing by Lessee hereunder, then such excess, if any, will be paid to Lessor to
be held in an interest-bearing account. Such excess, along with any accrued
interest, shall be paid to Lessee at the end of the Term of this Lease.

         SECTION 7.02 BANKRUPTCY OR INSOLVENCY.

                  (a) If Lessee shall become a debtor in a case filed under
Chapter 7 or Chapter 11 of the Bankruptcy Code and Lessee or Lessee's trustee
shall fail to elect to assume this Lease within 60 days after the filing of such
petition or such additional time as provided by the court within such 60-day
period, this Lease shall be deemed to have been rejected. Immediately thereupon,
Lessor shall be entitled to possession of the Premises without further
obligation to Lessee or Lessee's trustee, and this Lease, upon the election of
Lessor, shall terminate, but Lessor's right to be compensated for damages
(including, without limitation, liquidated damages pursuant to any provision
hereof) or the exercise of any other remedies in any such proceeding shall
survive, whether or not this Lease shall be terminated.

                  (b) Neither the whole nor any portion of Lessee's interest in
this Lease or its estate in the Premises shall pass to any trustee, receiver,
conservator, assignee for the benefit of creditors or any other person or
entity, by operation of law or otherwise under the laws of any state having
jurisdiction of the person or property of Lessee, unless Lessor shall have
consented to such transfer. No acceptance by Lessor of rent or any other
payments from any such trustee, receiver, assignee, person or other entity shall
be deemed to constitute such consent by Lessor nor shall it be deemed a waiver
of Lessor's right to terminate this Lease for any transfer of Lessee's interest
under this Lease without such consent.

         SECTION 7.03 ADDITIONAL RIGHTS OF LESSOR.

                  (a) Except as provided in Section 7.01(g), no right or remedy
hereunder shall be exclusive of any other right or remedy, but shall be
cumulative and in addition to any other right or remedy hereunder or now or
hereafter existing. Failure to insist upon the strict performance of any
provision hereof or to exercise any option, right, power or remedy contained
herein shall not constitute a waiver or relinquishment thereof for the future.
Receipt by Lessor of any Basic Rent, additional rent or other sums payable
hereunder with knowledge of the breach of any provision hereof shall not
constitute waiver of such breach, and no waiver by Lessor of any provision
hereof shall be deemed to have been made unless made in writing. Lessor shall be
entitled to injunctive relief in case of the violation, or attempted or
threatened violation, of any of the provisions hereof, or to a decree compelling
performance of any of the provisions hereof, or to any other remedy allowed to
Lessor by law or equity.

                  (b) Lessee hereby waives and surrenders for itself and all
those claiming under it, including creditors of all kinds, (i) any right and
privilege which it or any of them may have to redeem the Premises or to have a
continuance of this Lease after termination of Lessee's right of

                                       24
<PAGE>

occupancy by order or judgment of any court or by any legal process or writ, or
under the terms of this Lease, or after the termination of the Lease Term as
herein provided, (ii) the benefits of any law which exempts property from
liability for debt and (iii) Lessee specifically waives any rights of redemption
or reinstatement available by law or any successor law.

                  (c) If an Event of Default on the part of Lessee shall have
occurred hereunder and be continuing, then, without thereby waiving such
default, Lessor may, but shall be under no obligation to, take all action,
including, without limitation, entry upon the Premises, to perform the
obligation of Lessee hereunder immediately and without notice in the case of any
emergency as may be reasonably determined by Lessor and upon five business days'
notice to Lessee in other cases. All reasonable expenses incurred by Lessor in
connection therewith, including, without limitation, reasonable attorneys' fees
and expenses (including, without limitation, those incurred in connection with
any appellate proceedings), shall constitute additional rent under this Lease
and shall be paid by Lessee to Lessor upon demand.

                  (d) If Lessee shall be in default in the performance of any of
its obligations under this Lease beyond any applicable grace or cure period
hereunder, Lessee shall pay to Lessor, on demand, all expenses incurred by
Lessor as a result thereof, including, without limitation, reasonable attorneys'
fees and expenses (including, without limitation, those incurred in connection
with any appellate proceedings) and any additional sums (including any late
charge and default penalties, interest and fees of the counsel of Lessor's
Mortgagee) which are payable by Lessor to its Mortgagee by reason of Lessee's
late payment or non-payment of Basic Rent. If Lessor shall be made a party to
any litigation commenced against Lessee and Lessee shall fail to provide Lessor
with counsel approved by Lessor and pay the expenses thereof, Lessee shall pay
all costs and reasonable attorneys' fees and expenses in connection with such
litigation (including, without limitation, fees and expenses incurred in
connection with any appellate proceedings).

                  (e) If Lessee shall fail to pay when due any Basic Rent,
additional rent or other sum required to be paid by Lessee hereunder, Lessor
shall be entitled to collect from Lessee as additional rent and Lessee shall pay
to Lessor, in addition to such Basic Rent, additional rent or other sum, a late
payment charge on the delinquency equal to the Late Rate from the date due until
paid. The Late Rate shall be the lesser of (i) that per annum rate of interest
which exceeds by two (2) percentage points the base rate most recently announced
by Citibank, N.A., New York, New York, as its Base Rate or (ii) the maximum rate
permitted by applicable law. In addition to all other remedies Lessor has
hereunder, if Lessee shall fail to pay any Basic Rent, additional rent or other
sum, as and when required to be paid by Lessee hereunder prior to the expiration
for the period of payment pursuant to subsection 7.01(a)(i)(1), Lessor shall be
entitled to collect from Lessee, and Lessee shall pay to Lessor, as additional
rent, an amount equal to 1% of the amount shown in the notice as unpaid.

                                       25
<PAGE>

                                  ARTICLE VIII

         SECTION 8.01 NOTICES AND OTHER INSTRUMENTS. All notices, offers,
consents and other instruments given pursuant to this Lease shall be in writing
and shall be validly given when hand delivered or sent by a courier or express
service guaranteeing overnight delivery or by telecopy, with original being
promptly sent as otherwise provided above, addressed as follows:

         If to Lessor:              NL Ventures IV New Hope, L.P.
                                    c/o AIC Ventures
                                    8080 North Central Expwy - Suite 1080
                                    Dallas, TX 75206
                                    Attention:  Peter Carlsen
                                    Facsimile: (214) 363-4968

         With a copy to:            Fulbright & Jaworski L.L.P.
                                    300 Convent Street, Suite 2200
                                    San Antonio, Texas 78205
                                    Attention:  Heath D. Esterak
                                    Facsimile:  (210) 270-7205

         If to Lessee:              Navarre Corporation
                                    7400 49th Avenue North
                                    New Hope, MN  55428
                                    Attention:  Jim Gilbertson
                                    Facsimile:   763 504-1107

         With a copy to:            Winthrop & Weinstine, P.A.
                                    Attn: Beth G. Timm
                                    225 South Sixth Street, Suite 3500
                                    Minneapolis, MN 55402-4629
                                    Facsimile:  612-604-6800

         Lessor and Lessee each may from time to time specify, by giving 15
days' notice to each other party, (i) any other address in the United States as
its address for purposes of this Lease and (ii) any other person or entity in
the United States that is to receive copies of notices, offers, consents and
other instruments hereunder. Notices given in accordance with this Section 8.01
shall be deemed delivered on the day after they are sent.

         SECTION 8.02 ESTOPPEL CERTIFICATES; FINANCIAL INFORMATION.

                  (a) Lessee will, upon 10 business days' written notice at the
request of Lessor, execute, acknowledge and deliver to Lessor a certificate of
Lessee, stating that this Lease is unmodified and in full force and effect (or,
if there have been modifications, that this Lease is in full force and effect as
modified, and setting forth such modifications) and stating the dates to

                                       26
<PAGE>

which Basic Rent, additional rent and other sums payable hereunder have been
paid and either stating that to the knowledge of Lessee no default exists
hereunder or specifying each such default of which Lessee has knowledge and
whether or not Lessee is still occupying and operating the Premises and such
other information as Lessor shall reasonably request. Any such certificate may
be relied upon by any actual or prospective mortgagee or purchaser of the
Premises. Lessor will, upon 10 business days' written notice at the request of
Lessee, execute, acknowledge and deliver to Lessee a certificate of Lessor,
stating that this Lease is unmodified and in full force and effect (or, if there
have been modifications, that this Lease is in full force and effect as
modified, and setting forth such modifications) and the dates to which Basic
Rent, additional rent and other sums payable hereunder have been paid, and
either stating that to the knowledge of Lessor no default exists hereunder or
specifying each such default of which Lessor has knowledge. Any such certificate
may be relied upon by Lessee or any actual or prospective assignee or sublessee
of the Premises.

                  (b) Lessee shall deliver to Lessor within ninety (90) days of
the close of each fiscal year, annual audited financial statements of Lessee
(which, at a minimum, shall include a balance sheet of Lessee and its
consolidated subsidiaries, if any, as of the end of such year, a statement of
profits and losses of Lessee and its consolidated subsidiaries, if any, for such
year and a statement of cash flows of Lessee and its consolidated subsidiaries,
if any, for such year, setting forth in each case, in comparative form, the
corresponding figures for the preceding fiscal year in reasonable detail and
scope) prepared by a firm of independent certified public accountants approved
by Lessor. Lessee shall also furnish to Lessor within thirty (30) days after the
end of each quarter unaudited internal financial statements and all other
quarterly reports of Lessee (which, at a minimum, shall include a balance sheet
of Lessee and its consolidated subsidiaries, if any, as of the end of such
quarter and statements of profits and losses of Lessee and its consolidated
subsidiaries, if any, for such quarter, setting forth in each case, in
comparative form, the corresponding figures for the similar quarter of the
preceding year in reasonable detail and scope) certified by Lessee's chief
financial officer. All annual financial statements shall be accompanied by an
opinion of said accountants stating that (A) there are no qualifications as to
the scope of the audit and (B) the audit was performed in accordance with GAAP.

                  (c) Lessor and its agents and designees may enter upon and
examine the Premises and examine the records and books of account and discuss
the finances and business with the officers of the Lessee at reasonable times
during normal business hours and on reasonable advance written notice. Lessee
shall provide the requesting party with copies of any information to which such
party would be entitled in the course of a personal visit. Except in the event
of emergency, Lessee may designate an employee to accompany Lessor, its agents
and designees on such examinations. Lessee will provide, upon Lessor's request,
all information regarding the Premises, including, but not limited to, a current
rent roll, an operating statement reflecting all income from subleases and all
operating expenses for the Premises. Lessor and its agents and designees may
enter upon and examine the Premises and show the Premises to prospective
mortgagees and/or purchasers at reasonable times during normal business hours
and on reasonable advance written notice

                                       27
<PAGE>

                                   ARTICLE IX

         SECTION 9.01 NO MERGER. There shall be no merger of this Lease or of
the leasehold estate hereby created with the fee estate in the Premises by
reason of the fact that the same person acquires or holds, directly or
indirectly, this Lease or the leasehold estate hereby created or any interest
herein or in such leasehold estate, as well as the fee estate in the Premises or
any interest in such fee estate.

         SECTION 9.02 SURRENDER. Upon the expiration or termination of this
Lease, Lessee shall surrender the Premises to Lessor in as good repair and
condition as received under Section 2.01(a) except for any damage resulting from
Condemnation or Casualty or normal wear and tear.

         SECTION 9.03 ASSUMPTION. In the event of a consolidation of Lessee with
one or more Persons or the sale or other disposition of all or substantially all
of the assets of Lessee to one or more Persons, Lessee shall cause the surviving
entity or transferee of assets, as the case may be, to deliver to Lessor, and
any assignee of any interest of Lessor, an acknowledged instrument assuming all
obligations, covenants and responsibilities of Lessee hereunder.

         SECTION 9.04 SEPARABILITY; BINDING EFFECT; GOVERNING LAW. Each
provision hereof shall be separate and independent, and the breach of any
provision by Lessor shall not discharge or relieve Lessee from any of its
obligations hereunder. Each provision hereof shall be valid and shall be
enforceable to the extent not prohibited by law. If any provision hereof or the
application thereof to any person or circumstance shall to any extent be invalid
or unenforceable, the remaining provisions hereof, or the application of such
provision to persons or circumstances other than those as to which it is invalid
or unenforceable, shall not be affected thereby. All provisions contained in
this Lease shall be binding upon, inure to the benefit of and be enforceable by
the successors and assigns of Lessor to the same extent as if each such
successor and assign were named as a party hereto. All provisions contained in
this Lease shall be binding upon the successors and assigns of Lessee and shall
inure to the benefit of and be enforceable by the permitted successors and
assigns of Lessee in each case to the same extent as if each successor and
assign were named as a party hereto. This Lease shall be governed by and
interpreted in accordance with the laws of the state in which the Premises are
located.

         SECTION 9.05 TABLE OF CONTENTS AND HEADINGS; INTERNAL REFERENCES. The
table of contents and the headings of the various paragraphs and exhibits of
this Lease have been inserted for reference only and shall not to any extent
have the effect of modifying the express terms and provisions of this Lease.
Unless stated to the contrary, any references to any Section, subsection,
Exhibit and the like contained herein are to the respective Section, subsection,
Exhibit and the like of this Lease.

         SECTION 9.06 COUNTERPARTS. This Lease may be executed in two or more
counterparts and shall be deemed to have become effective when and only when one
or more of such counterparts shall have been executed by or on behalf of each of
the parties hereto (although it shall not be necessary that any single
counterpart be executed by or on behalf of each of the parties hereto, and all
such counterparts shall be deemed to constitute but one and the same instrument)
and shall have been delivered by each of the parties to the other.

                                       28
<PAGE>

         SECTION 9.07 LESSOR'S LIABILITY. Notwithstanding anything to the
contrary provided in this Lease, it is specifically understood and agreed, such
agreement being a primary consideration for the execution of this Lease by
Lessor, that there shall be absolutely no personal liability on the part of any
partner, director, member, officer or shareholder of Lessor, its successors or
assigns with respect to any of the terms, covenants and conditions of this
Lease, and any liability on the part of Lessor shall be limited solely to the
Premises, such exculpation of liability to be absolute and without any exception
whatsoever.

         SECTION 9.08 AMENDMENTS AND MODIFICATIONS. Except as expressly provided
herein, this Lease may not be modified or terminated except by a writing signed
by Lessor and Lessee.

         SECTION 9.09 ADDITIONAL RENT. All amounts other than Basic Rent which
Lessee is required to pay or discharge pursuant to this Lease, including the
charge provided for by Section 7.03(e) hereof, shall constitute additional rent
which shall include, but not be limited to all reasonable costs and expenses of
Lessee and Lessor which are incurred in connection or associated with (A) the
use, occupancy, possession, operation, condition, design, construction,
maintenance, alteration, repair or restoration of any of the Premises, (B) the
performance of any of Lessee's obligations under this Lease, (C) the
prosecution, defense or settlement of any litigation involving the arising from
any of the Premises or this Lease, (D) the enforcement by Lessor, its successors
and assigns, of any of its right under this Lease, (E) any amendment to or
modification of this Lease made at the request of Lessee, (F) costs of Lessor's
counsel incurred in connection with any act undertaken by Lessor (or its
counsel) at the request of Lessee, or incurred in connection with any act of
Lessor performed on behalf of Lessee pursuant to this Lease.

         SECTION 9.10 CONSENT OF LESSOR. Except as specifically set forth in
this Lease, all consents and approvals to be granted by Lessor shall not be
unreasonably withheld, delayed or conditioned, and Lessee's sole remedy against
Lessor for the failure to grant any consent shall be to seek injunctive relief.

         SECTION 9.11 QUIET ENJOYMENT. Lessor agrees that, subject to the rights
of Lessor under Article VII of this Lease, Lessee shall hold and enjoy the
Premises during the term of this Lease, free from any hindrance or interference
from Lessor or any party claiming by, through or under Lessor.

         SECTION 9.12 HOLDING OVER. If Lessee remains in possession of the
Premises, or any part thereof, after the expiration or other termination of the
Lease Term, without Lessor's express written consent, Lessee shall be guilty of
an unlawful detention of the Premises and shall be liable to Lessor for damages
for use of the Premises during the period of such unlawful detention at a rate
equal to one and one-half times the Basic Rent and all other amounts which would
be payable during the Term hereof. In the event of such unlawful detention,
Lessee shall indemnify and hold Lessor harmless from and against any and all
claims, suits, proceedings, losses, damages, liabilities, costs and expenses,
including, without limitation, attorneys' fees and disbursements, asserted
against or incurred by Lessor, as a result of such unlawful detention.
Notwithstanding the foregoing, Lessor shall be entitled to such other remedies
and damages provided under this Lease or at law or in equity.

                                       29
<PAGE>

         SECTION 9.13 [Intentionally Deleted]

         SECTION 9.14 FINANCING. If Lessor desires to obtain or refinance any
loan, Lessee shall execute any and all documents that such Mortgagee reasonably
requires in connection with such financing, including any subordination,
non-disturbance and attornment agreement ("SNDA" or "Subordination,
Non-Disturbance and Attornment Agreement"), so long as the same do not adversely
affect any right, benefit or privilege or the economic terms of Lessee under
this Lease or increase Lessee's obligations under this Lease.

         SECTION 9.15 SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT.
Notwithstanding anything to the contrary in this Lease, this Lease and Lessee's
interest hereunder shall be subject, subordinate and inferior to any mortgage or
other security instrument granted or entered into by Lessor in connection with
the loan by which Lessor acquired the Premises from Lessee, and any mortgage or
other security instrument hereafter placed upon the Premises by Lessor, and to
any and all advances made or to be made thereunder, to the interest thereon, and
all renewals, replacements and extensions thereof, provided that any such
mortgage (or a separate SNDA entered into between Lessee and the Mortgagee in
whose favor such mortgage was granted so long as the same do not adversely
affect any right, benefit or privilege or the economic terms of Lessee under
this Lease or increase Lessee's obligations under this Lease shall provide for
the recognition of this Lease and all Lessee's rights hereunder unless and until
an Event of Default exists and Lessor shall have the right to terminate this
Lease pursuant to any applicable provision hereof.

         SECTION 9.16 NOTIFICATION OF INTENT TO MARKET. At any time during the
Term hereof, should Lessor determine to publicly market the Premises for sale,
Lessor shall notify Lessee of its intention to do so and give Lessee an
opportunity to make an offer to purchase the Premises. The time allotted for
Lessee's opportunity to make an offer shall be in Lessor's reasonable
discretion. Notwithstanding the foregoing, Lessor does not grant Lessee any
right of first refusal, right of first offer, option, or other right to purchase
the Premises, nor will Lessor's failure to give such notice be a default
hereunder.

         SECTION 9.17 LESSEE'S FINANCIAL COVENANTS AND SECURITY DEPOSIT

                  (a) Lessee shall maintain during the Term of the Lease: (i) a
Tangible Net Worth of at least Twenty Million and No/100 Dollars
($20,000,000.00); and (ii) shall not show a GAAP loss for five (5) consecutive
quarters (the "Lessee's Financial Covenants"). If Lessee fails to be in
compliance with Lessee's Financial Covenants, the Lessee shall provide to Lessor
a Security Deposit, in the form of cash or a Letter of Credit, in an amount
equal to the sum of the next twenty (20) months of Basic Rent.

                  (b) The Security Deposit shall be security for Lessee's full
and faithful performance of the terms of this Lease, it being expressly
understood that such Security Deposit shall not be considered an advance payment
of Rent or a measure of Lessor's damages in case of an Event of Default. Upon
the occurrence of any Event of Default by Lessee, Lessor may, from time to time,
without prejudice to any other remedy, use the Security Deposit to the extent

                                       30
<PAGE>

necessary to make good any arrearages of Rent and any other damage, injury,
expense or liability caused to Lessor by such Event of Default. If Lessor
transfers its interest in the Leased Premises during the Term, Lessor may assign
the Security Deposit to the transferee and, thereafter, Lessor shall have no
further liability for the return of such Security Deposit to Lessee. If Lessee
fails to provide such Security Deposit within five (5) business days following
Lessor's demand therefor, such failure shall constitute an Event of Default
hereunder.

                  (c) Any Security Deposit provided shall remain in place until
the date on which the Lessee has been in compliance with Lessee's Financial
Covenants for eight (8) consecutive quarters as evidenced by the financial
reports of the Lessee.

                  (d) If a Letter of Credit has been posted as the Security
Deposit, Lessor shall have the right to assign to Lessor's Mortgagee or any
other holder of a Mortgage the Letter of Credit during the term of the
applicable Loan, and the Lessor's Mortgagee or such other holder of a Mortgage
shall have all of the rights of, and shall be subject to the terms of, this
Lease. Lessee covenants and agrees to execute such agreements, consents and
acknowledgments as may be reasonably requested by Lessor and Lessor's Mortgagee
from time to time to acknowledge the assignment of the Letter of Credit. If cash
has been deposited as the Security Deposit, Lessor shall deposit the Security
Deposit in an interest bearing account segregated from its other accounts for
the benefit of the Lessee. Interest earned will accrue to the benefit of the
Lessee, assuming Lessee has not otherwise forfeited the Security Deposit.

                  (e) The following terms shall have the following meanings:

                  "Letter of Credit" shall mean an irrevocable standby letter of
credit issued to Lessor by a financially sound national banking association
having assets in excess of $50,000,000,000 and otherwise reasonably acceptable
to Lessor, the proceeds of which shall be available to Lessor without the need
for Lessor to satisfy any requirements or conditions whatsoever other than
delivery of (a) Lessor's sight draft to the issuing institution with reference
to the appropriate letter of credit number for the Letter of Credit, as set
forth therein and (b) (i) a certificate signed by Lessor certifying that an
Event of Default has occurred and is continuing under the Lease, or (ii) a
certificate signed by Lessor certifying that Lessee has canceled or terminated
the Letter of Credit or failed to renew the Letter of Credit at least thirty
(30) days prior to its stated expiration date. The Letter of Credit shall be
valid for an initial period of one (1) year from and after the date of its
issuance and, by its express terms, shall provide (i) that its term shall
automatically be extended for successive one (1) year periods unless at least
thirty (30) days prior to the expiration of the initial one year term or any one
year extension (as applicable) the issuer provides Lessor with written
notification that it will not be extended, and (ii) that Lessor may assign
(whether by way of outright or collateral assignment) all or any portion of its
interest in the Letter of Credit to Lessor's Mortgagee or any other person
(including, without limitation, any third party purchaser).

                  "Tangible Net Worth" at any date means Lessee's total
stockholders' equity as shown on Lessee's most recent financial report filed
with the Securities and Exchange Commission on Form 10K or Form 10Q, less any
amount reported as a deferred income tax asset

                                       31
<PAGE>

or goodwill in such financial statement, all as determined in accordance with
Generally Accepted Accounting Principles.

         SECTION 9.18 FORCE MAJEURE. Either party's failure to perform the terms
and conditions of this Lease, in whole or in part, other than any term requiring
the payment of money, shall not be deemed a breach or a default hereunder or
give rise to any liability of such party to the other if such failure is
attributable to any unforeseeable event beyond such party's reasonable control
and not caused by the negligent acts or omissions or the willful misconduct of
such party, including, without limitation, flood, drought, earthquake, storm,
pestilence, lightning, and other natural catastrophes and acts of God; epidemic,
war riot, civic disturbance or disobedience, and act of the public enemy; fire,
accident, wreck, washout, and explosion; strike, lockout, labor dispute, and
failure, threat of failure, or sabotage of such party's facilities; delay in
transportation or car shortages, or inability to obtain necessary labor,
materials, components, equipment, services, energy, or utilities through such
party's usual and regular sources at usual and regular prices; and any law,
regulation, order or injunction of a court or governmental authority, whether
valid or invalid and including, without limitation, embargoes, priorities,
requisitions, and allocations or restrictions of facilities, equipment or
operations. In the event of the occurrence of such a force majeure event, the
party unable to perform promptly shall notify the other party.

         SECTION 9.19 SHORT FORM MEMORANDUM OF LEASE. Lessor and Lessee shall
record a "short form" Memorandum of Lease identifying the Primary Term and the
option to enter into the Extension Terms granted to Lessee by this Lease. Any
recording costs associated with the memorandum or short form of this Lease shall
be borne by Lessee.

         SECTION 9.20 GUARANTY. [Intentionally Omitted]

         SECTION 9.21 ENVIRONMENTAL ISSUES. [Intentionally Omitted]

         SECTION 9.22 FAIR MARKET VALUE.

                  (a) Whenever a determination of Fair Market Value is required
pursuant to any provision of this Lease, such Fair Market Value shall be
determined in accordance with the following procedures:

                           (i) Lessor and Lessee shall endeavor to agree upon
such Fair Market Value within fifteen (15) days after the date (the "Initial
Date") on which Lessee provides Lessor with the Notice of Intention pursuant to
Section 6.02(b)`. Upon reaching any such agreement, the parties shall execute a
written agreement setting forth the amount of such Fair Market Value.

                  (ii) If the parties shall not have signed such agreement
within fifteen (15) days after the Initial Date, Lessee shall within twenty (20)
days after the Initial Date select an appraiser and notify Lessor in writing of
the name, address and qualifications of such appraiser. Within five (5)days
following Lessor's receipt of Lessee's notice of the appraiser selected by
Lessee, Lessor shall select an appraiser and notify Lessee of the name, address
and qualifications of such appraiser. Such two appraisers shall endeavor to
agree upon Fair Market Value based on a written appraisal made by each of them
(and given to Lessor by Lessee). If such two (2)

                                       32
<PAGE>

appraisers shall agree upon a Fair Market Value, the amount of such Fair Market
Value as so agreed shall be binding and conclusive upon Lessor and Lessee.

                           (iii) If such two (2) appraisers shall be unable to
agree upon a Fair Market Value within twenty (20) days after the selection of an
appraiser by Lessor, then such appraisers shall advise Lessor and Lessee of
their respective determination of Fair Market Value and shall select a third
(3rd) appraiser to make the determination of Fair Market Value. The selection of
the third (3rd) appraiser shall be binding and conclusive upon Lessor and
Lessee.

                           (iv) If such two (2) appraisers shall be unable to
agree upon the designation of a third (3rd) appraiser within ten (10) days after
the expiration of the twenty (20) day period referred to in clause (iii) above,
or if such third (3rd) appraiser does not make a determination of Fair Market
Value within twenty (20) days after his selection, then such third (3rd)
appraiser or a substituted third (3rd) appraiser, as applicable, shall, at the
request of either party hereto, be appointed by the seniormost judge of the
United States District Court, with jurisdiction over the Premises. The
determination of Fair Market Value made by the third (3rd) appraiser appointed
pursuant hereto shall be made within twenty (20) days after such appointment.

                           (v) If a third (3rd) appraiser is selected, Fair
Market Value shall be the average of the determination of Fair Market Value made
by the third (3rd) appraiser and the determination of Fair Market Value made by
the appraiser (selected pursuant to Section 9.20(a)(ii) hereof) whose
determination of Fair Market Value is nearest to that of the third (3rd)
appraiser. Such average shall be binding and conclusive upon Lessor and Lessee.

                           (vi) All appraisers selected or appointed pursuant to
this Section 9.20(a) shall (A) be independent qualified MAI appraisers, (B) have
no right, power or authority to alter or modify the provisions of this Lease,
and (C) be registered in the State of Minnesota if the State of Minnesota
provides for or requires such registration. The cost of the procedure described
in this Section 9.20(a) shall be borne by Lessee.

                  (b) If, by virtue of any delay, Fair Market Value is not
determined by the date set for closing, then the date on which the closing shall
be held shall be extended as reasonably necessary.

             [Signatures of Lessor and Lessee Follow on Next Pages]

                                       33
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Lease to be
executed as of the date first above written.

                                         NL VENTURES IV NEW HOPE, L.P.

                                         By: NL Ventures IV New Hope Management,
                                             L.L.C., its sole General Partner

                                         By:
                                            ------------------------------------
                                            Peter S. Carlsen, Vice-President

                                       34
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Lease to be
executed as of the date first above written.

                                   NAVARRE CORPORATION

                                   By:
                                       -----------------------------------------
                                       John Turner
                                       Senior Vice President of Global Logistics

                                       35
<PAGE>

                                    EXHIBIT A

                                LEGAL DESCRIPTION

         Lot 1, Block 1, Paulson's Prairie according to the plat thereof on
record and of file with the Office of the County Recorder of Hennepin County,
Minnesota.

<PAGE>

                                    EXHIBIT B

                              PERMITTED EXCEPTIONS

1. Drainage and utility easement(s) as shown on the recorded plat of Paulson's
Prairie.

2. Temporary Construction easement dated August 5, 2003, filed of record
November 18, 2003, as Document No. 3878379 (T) by and between Navarre
Corporation and Andrews, Inc.

3. Agreement of Reciprocal Easements, Covenants, Conditions and Restrictions
easement over in favor of as contained in, dated June 16, 2003, filed of record
November 18, 2003, as Document Nos. 3878380 (T) and 8228395 (A) by and between
Navarre Corporation and Cambridge Apartments, Inc.

         Amended by Amendment to Agreement of Reciprocal Easements, Covenants,
Conditions and Restrictions dated of even date hereof.

4. PUD Development Agreement and Variance for Navarre Corporation dated
September 25, 2003, filed of record November 18, 2003, as Document Nos. 3878376
(T) and 8228398 (A).

         Amended by First Amendment to PUD Development Agreement and Variance
for Navarre Corporation dated October 23, 2003, filed of record November 18,
2003, as Document Nos. 3878381 (T) and 8228397 (A).

5. Agreement to Maintain Easement dated of even date hereof between Navarre
Corporation and the City of New Hope.

<PAGE>

                                    EXHIBIT C

                               BASIC RENT SCHEDULE

                                  PRIMARY TERM

<Table>
<Caption>
                                       Monthly                         Annual
                                       -------                         ------
<S>                                  <C>                            <C>
      Lease Year 1                  $ 54,933.33                   $  659,200.00
      Lease Year 2                  $ 56,444.00                   $  677,328.00
      Lease Year 3                  $ 57,996.21                   $  695,954.52
      Lease Year 4                  $ 59,591.11                   $  715,093.27
      Lease Year 5                  $ 61,229.86                   $  734,758.33
      Lease Year 6                  $ 62,913.68                   $  754,964.19
      Lease Year 7                  $ 64,643.81                   $  775,725.70
      Lease Year 8                  $ 66,421.51                   $  797,058.16
      Lease Year 9                  $ 68,248.10                   $  818,977.26
      Lease Year 10                 $ 70,124.93                   $  841,499.13
      Lease Year 11                 $ 72,053.36                   $  864,640.36
      Lease Year 12                 $ 74,034.83                   $  888,417.97
      Lease Year 13                 $ 76,070.79                   $  912,849.46
      Lease Year 14                 $ 78,162.74                   $  937,952.83
      Lease Year 15                 $ 80,312.21                   $  963,746.53

                              FIRST EXTENSION TERM

      Year 1                        $ 82,520.80                   $  990,249.56
      Year 2                        $ 84,790.12                   $1,017.481.42
      Year 3                        $ 87,121.85                   $1,045,462.16
      Year 4                        $ 89,517.70                   $1,074.212.37
      Year 5                        $ 91,979.43                   $1,103,753.21

                              SECOND EXTENSION TERM

      Year 1                        $ 94,508.87                   $1,134,106.42
      Year 2                        $ 97,107.86                   $1,165,294.35
      Year 3                        $ 99,778.33                   $1,197,339.94
      Year 4                        $102,522.23                   $1,230,266.79
      Year 5                        $105,341.59                   $1,264.099.13
</Table>

<PAGE>

                                    EXHIBIT D

                               SEVERABLE PROPERTY

         All apparatus, personal property, trade fixtures, inventory, equipment,
machinery, fittings, furniture, furnishings, chattel, materials and supplies
located on and used in, or related to Lessee's business, including, but not
limited to, mainframe computers, kitchen equipment and telephone and similar
systems and articles of personal property of every kind and nature whatsoever,
and any additions, replacements, accessions and substitutions thereto or
therefor, and all proceeds of all of the foregoing.<PAGE>
                                                                   EXHIBIT 10.48

                    THIRD AMENDMENT TO OFFICE/WAREHOUSE LEASE

         THIS THIRD AMENDMENT TO OFFICE/WAREHOUSE LEASE is made effective as of
the February 23, 2004, by and between Cambridge Apartments, Inc., a Minnesota
corporation ("Lessor"), and Navarre Corporation, a Minnesota corporation
("Lessee").

         WHEREAS, Lessor and Lessee entered into a certain Office/Warehouse
Lease dated April 1, 1998, as subsequently amended by that certain First
Amendment to Lease dated April 1, 1998, as subsequently amended by that certain
Second Amendment to Office/Warehouse Lease dated effective as of July 14, 2003
(collectively, the "Lease") pursuant to which Lessor leased to Lessee certain
premises located in the City of New Hope (the "City"), County of Hennepin, State
of Minnesota consisting of approximately 86,430 square feet of office and
warehouse space, commonly described as the Navarre Building, and located at 7400
49th Avenue North, New Hope, Minnesota (the "Demised Premises"); and

         WHEREAS, Lessee has requested, and Lessor has consented, to Lessee
adding an additional door to the Demised Premises at the location set forth and
described in the attached Exhibit A and described as "Door 120BB", attached
hereto and made a part of this Third Amendment on the terms and subject the
conditions hereinafter set forth.

         NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed as follows:

         1. New Door. Lessor consents to the construction of the new door
(depicted as "North Door #120BB") (the "New Door") to the Demised Premises in
accordance with the location depicted on the attached Exhibit A as an authorized
tenant improvement pursuant to the Lease to be treated as part of the Building
in the Demised Premises.

         2. Construction of New Door. Lessee agrees to construct the New Door at
its sole cost and expense in accordance with all laws, ordinances, governmental
regulations and insurance requirements affecting the Demised Premises.

         3. Escrow for New Door. Lessee agrees that as consideration for Lessor
permitting the New Door, Lessee shall be obligated to remove the New Door within
thirty days after the earlier termination or expiration of the Lease.
Contemporaneously with the execution of this Third Amendment Lessee shall
deposit with Lessor the sum of $15,000 ("New Door Security Deposit"), receipt of
which is hereby acknowledged by Lessor, to be held by Lessor for the faithful
payment and performance by Lessee of its obligation to remove the New Door
required by this Paragraph 3 Lessor shall credit simple interest ( no
compounding) on the New Door Security Deposit each year in an amount equal to
the federal prime rate of interest then in effect as of January 1st each year
and shall provide Lessee with a copy of the interest accrued and credited
annually by February 15th of each year showing the interest accrued for the
prior year (e.g., for interest earnings for 2004 on the initial $15,000 deposit
Lessor shall take the prime rate of interest in effect as of January 1, 2004 and
that interest rate shall be applied for the $15,000 and credited as interest for
the period between the date of this Third Amendment and December 31, 2004 and a
copy of the interest earned shall be sent to Lessee by February 15, 2005).
Lessor may co-mingle such deposit with Lessor's own funds. In the event that
Lessee fails to remove the New Door and repair the Demised Premises to the
condition as existed prior

<PAGE>

to the removal of the New Door, normal wear, tear and casualty excepted, then
Lessor shall be entitled, at its option, to use the New Door Security Deposit to
complete the removal of the New Door and repair of the Demised Premises. Any
funds remaining of the New Door Security Deposit, plus interest accrued thereon
after the removal and repair is completed shall belong to Lessee. If Lessor
incurs costs due to Lessee' failure to perform that are in excess of the New
Door Security Deposit then Lessee shall be obligated to reimburse Lessor for the
same within ten (10) days of receipt of a written invoice reflecting and
substantiating the costs. As long as Lessee performs the removal and repairs
then Lessor shall return the New Door Security Deposit and all interest accrued
thereon shall be released to Lessee when the Lease is terminated or has
otherwise expired by its terms.

         4. Continuation. Except as otherwise expressly amended hereby, the
terms and provisions of the Lease shall remain in full force and effect.

                                      -2-
<PAGE>

         IN WITNESS WHEREOF, Lessor and Lessee have caused this Third Amendment
to Office/Warehouse Lease to be executed and delivered effective as of the date
first above written.

                                          LESSOR:
                                          CAMBRIDGE APARTMENTS, INC.

                                         By:
                                             ----------------------------------
                                             Its:
                                                  -----------------------------

                                          LESSEE:
                                          NAVARRE CORPORATION

                                         By:
                                             ----------------------------------
                                             Its:
                                                  -----------------------------

[Signature Page to Third Amendment to Lease Agreement between Navarre
Corporation and Cambridge Apartments, Inc.]

                                      -3-

<PAGE>

                                    EXHIBIT A
                            (NEW DOOR PLAN - ATTACHED)

                                      -4-

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