As filed with the Securities and Exchange Commission on July 30, 1996
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM S-3
Registration Statement
Under
The Securities Act of 1933
____________________
NAVARRE CORPORATION
(Exact name of registrant as specified in its charter)
Minnesota 41-1704319
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
7400 49th Avenue North
New Hope, Minnesota 55428
(612) 535-8333
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive office)
__________________
Eric H. Paulson
Chairman and Chief Executive Officer
Navarre Corporation
7400 49th Avenue North
New Hope, Minnesota 55428
(612) 535-8333
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
____________________
COPIES TO:
Thomas G. Lovett, IV
Lindquist & Vennum P.L.L.P.
4200 IDS Center
80 South Eighth Street
Minneapolis, Minnesota 55402
Telephone: (612) 371-3211
Approximate date of commencement of proposed sale to public: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. ____
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box:
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number
of the earlier effective registration statement for the same offering:
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earliest effective registration
statement for the same offering:
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box:
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Title of Each Proposed Proposed
Class of Secur- Maximum Maximum Amount of
ities to be Amount to be Offering Price Aggregate Registration
Registered Registered Per Share Offering Price Fee
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
no par value... 530,000 shares $8.25(1) $4,372,500(1) $1,508
</TABLE>
(1) Estimated solely for the purpose of determining the registration fee
based on the average of the high and low sale prices of the Company's
Common Stock on The Nasdaq National Market on July 26, 1996 pursuant
to Rule 457(c).
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment that specifically states that this
registration statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until the registration
statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>
PRELIMINARY PROSPECTUS
SUBJECT TO COMPLETION, DATED JULY 30, 1996
PROSPECTUS
NAVARRE CORPORATION
530,000 Shares of
Common Stock
This Prospectus relates to the offering of up to 530,000 shares (the
"Shares") of Common Stock, no par value, of Navarre Corporation (the
"Company") which may be offered from time to time by the shareholders named
herein (the "Selling Shareholders"). The Company will not receive any of
the proceeds from the sale of the Shares by the Selling Shareholders. See
"Use of Proceeds."
The Company will bear all expenses of the offering hereunder other than
underwriting discounts and commissions incurred in connection with the sale
of the Shares by the Selling Shareholders. The Company's Common Stock is
quoted on The Nasdaq National Market under the symbol "NAVR." On July 26,
1996, the last reported sale price of the Company's Common Stock on The
Nasdaq National Market was $8.25.
For information concerning risk factors which should be considered by
prospective purchasers of the Common Stock offered hereby, see "Risk Factors"
beginning on page 5 of this Prospectus.
The Selling Shareholders have advised the Company that they intend to
sell the Shares from time to time in transactions on The Nasdaq National
Market at prices prevailing at the time of the sale or otherwise as set forth
below. The Selling Shareholders have also advised the Company that, as of
the date hereof, they have made no arrangement with any brokerage firm for
the sale of the Shares. The Selling Shareholders may be deemed to be
"underwriters" within the meaning of the Act, in which case any commissions
received by a broker or dealer may be deemed to be underwriting commissions
or discounts under the Act. See "Plan of Distribution."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
______________________________________________________
The date of this Prospectus is July 30, 1996
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). The reports, proxy
and information statements and other information can be inspected and copied
at the public facilities maintained by the Commission at Judiciary Plaza,
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and are also
available at the Commission's Regional Offices at 7 World Trade Center,
13th Floor, New York, New York 10048, and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material also
can be obtained at prescribed rates from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The Company's
Common Stock is quoted on The Nasdaq National Market ("Nasdaq").
The Company has filed with the Commission a Registration Statement under the
Securities Act of 1933, as amended, with respect to the shares offered
hereby. This Prospectus does not contain all of the information set forth
in the Registration Statement and the exhibits thereto, certain parts of
which were omitted as permitted by the rules and regulations of the
Commission. Such additional information may be obtained from the
Commission's principal office in Washington, D.C. Statements contained in
this Prospectus or in any document incorporated in this Prospectus by
reference as to the content of any contract or other document referred to
herein or therein are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as
an exhibit to the Registration Statement or each other document, each
such statement being qualified in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed with the Commission by the Company (File No.
0-22982) are incorporated by reference in this Prospectus: (i) the Company's
Annual Report on Form 10-K for the year ended March 31, 1996; (ii) the
Company's Proxy Statement for its Annual Meeting of Shareholders to be held
on September 5, 1996; and (iii) the description of the Company's Common
Stock as set forth in the Company's Registration Statement on Form 8-A dated
November 1993 including any amendments or reports filed for the purpose of
updating such information.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15 of the 1934 Act after the date of this Prospectus and prior to the
termination of the offering of securities contemplated hereby shall also be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents or reports. Any statement
contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes
of this Prospectus to the extent that a statement contained herein or in any
other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith. Such documents (other than exhibits to such
documents, unless such exhibits are specifically incorporated by reference
to such documents) are available, without charge, to any person, including
any beneficial owner, to whom this Prospectus is delivered, on written or
oral request, to Navarre Corporation, 7400 49th Avenue North, New Hope,
Minnesota 55428, Attention: Investor Relations, or by telephone at (612)
535-8333.
____________________
This Prospectus, including the information incorporated by reference herein,
contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. Actual results could differ significantly from those projected or
contemplated in the forward-looking statements as a result, in part, of the
risk factors set forth elsewhere in this Prospectus. In connection with the
forward-looking statements which appear in these disclosures, prospective
purchasers of the Company's Common Stock offered hereby should carefully
review all of such risk factors.
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus
and in documents incorporated herein by reference. Unless otherwise
indicated, all share information in this Prospectus has been adjusted to
reflect a two-for-one stock split effective in June 1996.
The Company
Navarre Corporation ("Navarre" or the "Company"), a Minnesota
corporation, has been engaged in the distribution of prerecorded music and
personal computer software since 1983.
The Company operates through two principal divisions, its Music Products
Division and its Computer Products Division. Building upon its strength and
expertise as a leading independent distributor of prerecorded music, the
Company has achieved increasing sales in the growing market for personal
computer software and interactive CD-ROM software. The Company's product
line contains over 20,000 SKUs of compact discs, cassettes, personal computer
software and interactive CD-ROM software sold to over 500 customers with over
9,000 locations throughout the United States. Its primary customers include
(i) music and computer specialty chains, (ii) membership wholesale clubs,
(iii) mass merchandisers and discount retailers and (iv) wholesalers and
rackjobbers.
In 1994 the Company established a CD-ROM publishing company named
Digital Entertainment, Inc., which was owned eighty percent by Navarre. All
of its products are exclusively distributed by the Company through its
Computer Products Division. During fiscal 1996, the Company acquired the
minority shareholder interest in Digital Entertainment Inc.
The Company's principal executive offices are located at 7400 49th Avenue
North, New Hope, Minnesota 55428 and its telephone number is (612) 535-8333.
<PAGE>
The Offering
Common Stock offered by Selling Shareholders. . . 530,000
Common Stock outstanding after offering (1) . . . 6,782,168
Nasdaq Symbol . . . . . . . . . . . . . . . . . . NAVR.
________________________
(1) Includes 180,000 shares issuable upon exercise of warrants by warrant
holders and excludes shares of Common Stock reserved for under the
Company's 1992 Stock Option Plan.
Use of Proceeds
The Company will not receive any proceeds from sales of the Shares by the
Selling Shareholders except to the extent that the warrant holders exercise
their warrants to purchase common stock. The Company intends to use the
$702,000 for working capital purposes. See "Use of Proceeds."
<PAGE>
RISK FACTORS
Prospective purchasers of the Common Stock offered hereby should consider
carefully all the information contained in this Prospectus and, in
particular, the following risk factors.
Dependence Upon Significant Customers
In each of the past several years, the Company has had one or more
customers that has accounted for ten percent or more of the Company's net
sales. During the fiscal year ended March 31, 1996, sales to three
customers, Sam's Clubs, Musicland Stores Corporation and Best Buy, each
represented more than ten percent of net sales. The Company competes with
other companies for the business of each of its customers and there can be
no assurance that the Company will continue to recognize a significant amount
of revenue from sales to any specific customers. If the Company is unable
to continue to sell its products to all or any of these three customers or
is unable to continue to maintain its sales to these customers at their
current levels, and is unable to find other customers to replace the list
sales, there might be an adverse impact on the Company's revenues and future
profitability.
Seasonality
Much of the Company's business is seasonal in nature with a higher
percentage of sales during the second half of the calendar year. As a
distributor of products ultimately sold at retail, the Company's business is
affected by the pattern of seasonability common to other suppliers of
retailers, particularly the holiday selling season. Historically, more than
70% of the Company's sales and a substantial portion of the Company's profits
have been in the third and fourth quarters of the calendar year. Due to the
lower level of sales during the off periods, the Company has historically
incurred losses during these periods. Because of this seasonality, if the
Company experiences a weak holiday season, it could significantly affect the
Company's profitability for the entire year.
Dependence Upon Bank Borrowings
The Company has relied upon bank borrowings to finance its expansion,
primarily for inventory and accounts receivable financing and currently has
a $35.0 million credit facility in place. At June 30, 1996, the Company had
total bank borrowings of $23.3 million. The Company believes that it may be
necessary for it to acquire additional bank financing in the future depending
upon the growth of its business and the possible financing of acquisitions.
If the Company is unable to obtain additional bank financing, its future
growth and profitability would be adversely affected. Under the terms of the
Company credit facility, borrowings are dependent upon the eligibility of
accounts receivable and inventory, in the discretion of the bank.
Low Industry Margins
Competition in the prerecorded music and personal computer software
distribution industry is often based on price, and distributors such as the
Company generally experience low gross and operating margins. Consequently,
the Company's profitability is highly dependent upon achieving expected sales
levels as well as effective cost and management controls. Any erosion in the
Company's gross profit margins could affect the Company's ability to
maintain profitability.
<PAGE>
Dependence Upon Management
Eric H. Paulson, the Company's President and Chief Executive Officer, and
Charles E. Cheney, its Executive Vice President and Chief Financial Officer,
have been with the Company since its inception in 1983 and since 1985,
respectively. Although the Company has invested a substantial amount of time
and effort in developing its total management team and its management team
has over 90 years of experience in the industry, the loss of either Mr.
Paulson or Mr. Cheney could have a material adverse effect upon the Company.
The Company carries "key person" insurance on the life of Mr. Paulson in the
amount of $1.0 million, one-half of which is pledged to cover any existing
indebtedness to the bank.
Need for Additional Capital
As a distributor of prerecorded music and personal computer software
products, the Company purchases products directly from manufacturers for
resale to retailers. As a result, the Company has significant working
capital requirements, the majority of which are to finance inventory and
accounts receivable. These working capital needs will expand as inventory
and accounts receivable increase in response to the Company's growth. Future
growth will likely require additional working capital. Although the Company
has obtained financing sufficient to meet its requirements to date, there can
be no assurance that the Company will be able to obtain additional financing
upon favorable terms when required in the future.
Dependence Upon Recording Artists
A portion of the sales of the Company's Music Products Division are made
pursuant to exclusive distribution agreements. The continued growth and
success of the Company depends partly upon its ability to procure and retain
these agreements and sell the underlying recordings. In addition, the
Company is dependent upon these artists and labels to generate additional
quality recordings. In order to procure future marketing agreements, the
Company regularly reviews artists. There are no assurances that the Company
will sign such artists to distribution agreements or that it will be able to
sell recordings under existing distribution agreements. Further, there can
be no assurance that any current distribution agreements will be renewed or
that current agreements will not be terminated.
Dependence Upon Software Developers and Manufacturers
The Company, through its wholly owned subsidiary Digital Entertainment,
Inc., distributes interactive CD-ROM software pursuant to distribution
agreements with software developers and manufacturers. A portion of the
sales are made pursuant to exclusive distribution agreements. The
continued growth and success of the Company depends partly upon its ability
to procure and retain these agreements and sell the underlying software.
There can be no assurances that the Company will sign such developers and
manufacturers to distribution agreements or that it will be able to sell
software under existing distribution agreements. Further, there can be no
assurance that any current distribution agreements will be renewed or that
current agreements will not be terminated.
Effect of Technology Developments on Distribution
Prerecorded music and personal computer software presently are marketed
and delivered on a physical delivery basis. If in the future these products
are marketed and delivered through technology transfers, such as "electronic
downloading" to a retail store or consumer's home, then retail and
distribution could be revolutionized. Although the Company has made certain
acquisitions and taken other measures that are designed to mitigate the
potential impact that such changes in the retail and distribution industry
could have on the Company, if this type of sales of prerecorded music and
personal computer software became widespread, it could have a material
adverse impact on the Company. The Company believes, however, that
technological changes in sales methods will occur slowly.
<PAGE>
Returns; Inventory Obsolescence
The Company maintains a significant investment in product inventory and,
like other companies in this industry, experiences a relatively high level of
product returns as a percentage of revenues. The Company's agreements with
its suppliers generally permit the Company to return products that are in the
suppliers' current product listing. Adverse financial or other developments
with respect to a particular supplier could cause a significant decline in
the value and marketability of its products, and could make it difficult for
the Company to return products to such a supplier and recover its initial
product acquisition costs. Such an event could have a material adverse
effect upon the Company's business and financial results. The Company
maintains a sales return reserve based on its trailing twelve months
experience of sales returns by product line and small inventory obsolescence
reserve. The Company has historically experienced an actual return rate
range of 13% to 20%, depending upon the product, which the Company believes
is in line with the industry experience. Although the Company's past
experience indicates that these levels are adequate to cover potential
returns in these areas, there can be no assurance that these reserves are
adequate or will be adequate in the future. The Company also takes a portion
of its product offerings on consignment in order to lessen its exposure to
this risk.
Adverse Changes in Methods of Distribution
The success of the Company's current sales strategy depends upon its
wholesale and retail customers' continued purchasing of products through the
Company rather than directly from manufacturers, through other distributors
or through other means of distribution. These customers and retailers are
constantly searching for ways to lower costs in an attempt to maintain
competitive prices and meet the pricing demands of consumers. The Company's
business could be adversely affected if its customers decide to purchase
directly from manufacturers, other distributors or other distribution
channels rather than from the Company.
Competition
The prerecorded music and personal computer software distribution industry
is highly competitive. The Company's competitors include other national and
regional distributors as well as certain suppliers that sell directly to
retailers. Certain of these competitors have substantially greater financial
and other resources than the Company. The ability of the Company to
effectively compete in the future depends upon a number of factors,
including its ability to (i) obtain exclusive national distribution contracts
and licenses with independent labels and manufacturers, (ii) maintain its
margins and volume, (iii) expand its sales through a varied range of products
and personalized services, (iv) anticipate changes in the marketplace
including technological developments, and (v) maintain operating expenses at
an appropriate level.
Recent Acquisitions
The Company recently acquired all the outstanding stock of Record Service,
Inc., and Surfside Distributors, Inc., a Hawaiian-based distributor of
prerecorded music, in an effort to expand its national presence in the
prerecorded music industry. Although the Company believes the acquisitions
will enable it to expand its national presence and to act as an exclusive
distributor for two major recording labels in Hawaii, there can be no
assurance that these acquisitions will enable the Company to achieve these
results.
<PAGE>
The Company recently acquired an equity interest in Net Radio Corporation,
which owns and operates Net.radio Network, an Internet-only radio network,
in an effort to increase its presence in the marketplace as a content
provider on the Internet, and to become a publisher and distributor on an
international basis in both music and interactive CD-ROM. There can be no
assurance that the purchase of Net Radio Corporation will help achieve these
goals.
Possible Volatility of Stock Price
The stock markets have experienced price and volume fluctuations, resulting
in changes in the market prices of the stock of many companies which may not
have been directly related to the operating performance of those companies.
In addition, the market price of the Company's Common Stock has increased and
fluctuated significantly since April 1996. The Company believes that factors
such asindications of the market's acceptance of the Company's products and
failure to meet market expectations,as well as general volatility in the
securities markets, could cause the market price of the Common Stock to
fluctuate substantially.
USE OF PROCEEDS
The Company will not receive any proceeds from sales of the Shares by the
Selling Shareholders except to the extent that the warrant holders exercise
their warrants to purchase common stock. The Company intends to use the
$702,000 in proceeds from the exercise of warrants for working capital
purposes.
<PAGE>
SELLING SHAREHOLDERS
The Selling Shareholders in the table below, with the exception of Stewart
Marlowe, who are the shareholders of Net Radio Corporation ("NRC"), acquired
the Shares from the Company in a private transaction on May 1, 1996 pursuant
to an Option Agreement among the Company, NRC, and the shareholders of NRC.
Stewart Marlowe acquired Shares from the Company in a private transaction on
June 27, 1996 pursuant to a Stock Purchase Agreement between the Company and
Stewart Marlowe, as the sole shareholder of Record Service, Inc., and its
subsidiary Surfside Distributors, Inc. The holders of warrants ("Warrant
Holders") to purchase the Company's Common Stock, identified in the table
below, received their warrants in connection with the Company's 1993 Public
Offering of its Common Stock. The Company originally issued a warrant to
Hamilton Investments, Inc., the Representative of the underwriters in
connection with the Company's initial public offering. Hamilton Investments,
Inc. subsequently transferred warrants to purchase 36,000 shares to persons
who were then officers or employees of Hamilton Investments, Inc.
The following table sets forth certain information with respect to the
beneficial ownership of theCompany's Common Stock by all Selling Shareholders
and Warrant Holders as of July 1, 1996, and as adjusted to reflect the sale
of the Shares.
<TABLE>
<CAPTION>
Number of Maximum Number of Shares
Shares Beneficially Number of to be Beneficially
Owned Prior Shares to Owned After
Name to Offering be Sold(1) the Offering(1)
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Stewart Marlowe. . 180,000 180,000 0
Hamilton Investments, Inc2.. 144,000 144,000 0
Robert W. Griggs . . . . . . 36,676 36,676 0
Scott Bourne . . . . . . . . 26,302 26,302 0
Scot Combs . . . . . . . . . 24,450 24,450 0
Terrence K. Mahoney. . . . . . 16,300 16,300 0
Pablo Nyarady. . . . . . . . 13,584 13,584 0
Patrick Mahoney. . . . . . . 13,584 13,584 0
Carl Halverson . . . . . . . 8,892 8,892 0
Thomas Mandt . . . . . . . . 8,212 8,212 0
Mark Bartholomay2. . . . . . 7,200 7,200 0
Geoffrey S. Parker2. . . . . . . 7,200 7,200 0
Deborah Hopp . . . . . . . . 7,026 7,026 0
Douglas Lennick. . . . . . . 6,792 6,792 0
Randy L. Hines2. . . . . . . 5,400 5,400 0
Douglas McConnell2 . . . . . 5,400 5,400 0
Terry T. Stewart2. . . . . . 5,400 5,400 0
Mark Hempel. . . . . . . . . 5,126 5,126 0
Ron Buck . . . . . . . . . . 3,056 3,056 0
William M. Gerstner2 . . . . . . 2,700 2,700 0
Joseph W. Kacergis2. . . . . . . 2,700 2,700 0
------------------------------------
Total . . . . . . . . . 530,000 530,000 0
</TABLE>
________________________
(1) Assumes the sale of all the Shares offered hereunder.
(2) Represents shares issuable upon exercise of warrant.
<PAGE>
PLAN OF DISTRIBUTION
The Company has been advised that the Selling Shareholders may sell the
Shares from time to time in one or more transactions (which may include
block transactions) on Nasdaq at market prices prevailing at the time of the
sale or at prices otherwise negotiated.
The Shares may, without limitation, be sold by one or more of the
following: (i) a block trade in which the broker or dealer so engaged will
attempt to sell the securities as agent but may position and resell a portion
of the block as principal to facilitate the transaction; (ii) purchases by a
broker or dealer as principal and resale by such broker or dealer for its
account pursuant to this Prospectus; and (iii) ordinary brokerage
transactions and transactions in which the broker solicits purchasers.
The Company has been advised that, as of the date hereof, the Selling
Shareholders have made no arrangement with any broker for the sale of the
Shares. Underwriters, brokers or dealers may participate in such
transactions as agents and may, in such capacity, receive brokerage
commissions from the Selling Shareholders or purchasers of such securities.
Such underwriters, brokers or dealers may also purchase Shares and resell
such Shares for their own account in the manner described above. The Selling
Shareholders and such underwriters, brokers or dealers may be considered
"underwriters" as that term is defined by the Securities Act of 1933,
although the Selling Shareholders disclaim such status. Any commissions,
discounts or profits received by such underwriters, brokers or dealers in
connection with theforegoing transactions may be deemed to be underwriting
discounts and commissions under the Securities Act of 1933.
In addition to the foregoing, the Company has entered into a lock-up
agreement which places additional restrictions on Mr. Marlowe's ability to
sell Shares of the Company received by Mr. Marlowe in connection with the
Company's purchase of Record Service, Inc. and its subsidiary, Surfside
Distributors, Inc. Specifically, Mr. Marlowe, subject to any additional
requirements under the federal securities laws, has agreed to sell his Shares
subject to the following restrictions: (i) 45,000 Shares may be sold
immediately; (ii) 60,000 Shares held pursuant to an escrow agreement entered
into at the time of the Company's acquisition for Record Service, Inc. may be
sold from time to time as such Shares are released from the escrow agreement;
and (iii) 75,000 Shares may be sold after a period of two years have elapsed
from the date of issuance of such Shares.
LEGAL MATTERS
The validity of the issuance of the Common Stock offered hereby will be
passed upon for the Company by Lindquist & Vennum P.L.L.P., Minneapolis,
Minnesota.
EXPERTS
The consolidated financial statements of Navarre Corporation at March 31,
1996 and 1995, and for each of the fiscal years or periods ended March 31,
1996, 1995 and 1994 and the year ended December 31, 1993 appearing in Navarre
Corporation's Annual Report (Form 10-K) for the year ended March 31, 1996,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon included therein and incorporated herein by reference
and in the registration statement. Such consolidated financial statements
are incorporated herein by reference in reliance upon such reports given upon
the authority of such firm as experts in accounting and auditing.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14: Other Expenses of Issuance and Distribution
SEC registration fee . . . . . . . . . . . . . . . . . $ 1,508
Accounting fees and expenses . . . . . . . . 2,000
Legal fees and expenses . . . . . . . . . . . . . . . . 5,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . . 1,492
Total . . . . . . . . . . . . . . . . . . . . . . $10,000
Except for the SEC fee, all of the foregoing expenses have been estimated.
ITEM 15: Indemnification of Directors and Officers
The Company's Bylaws require indemnification of its directors and officers
to the fullest extent permitted by Minnesota law. The Bylaws provide that
the Company shall indemnify any person made or threatened to be made a
party to any threatened, pending or completed civil, criminal administrative,
arbitration or investigative proceeding, including a proceeding by or in the
right of the corporation, by reason of the former or present official
capacity of theperson, provided the person seeking indemnification meets five
criteria set forth in Section 302A.521 of the Minnesota Business Corporation
Act.
The Company's Bylaws also authorize the Board of Directors, to the extent
permitted by applicable law, to indemnify any person or entity not described
in the Bylaws pursuant to, and to the extent described in, an agreement
between the Company and such person, or as otherwise determined by the Board
of Directors in its discretion.
Section 302A.521 of the Minnesota Business Corporation Act provides that a
corporation shall indemnify any person who was or is made or is threatened to
be made a party to any proceeding by reason of the former or present official
capacity of such person against judgments, penalties, fines including,
without limitation, excise taxes assessed against such person with respect to
an employee benefit plan, settlements, and reasonable expenses, including
attorneys' fees and disbursements, incurred by such person in connection with
the proceeding if, with respect to the acts or omissions or such person
complained of in the proceeding, such person (i) has not been indemnified by
another organization or employee benefit plan for the same expenses with
respect to the same acts or omissions; (ii) acted in good faith; (iii)
received no improper personal benefit and Section 302A.255 (regarding conflicts
of interest), if applicable, has been satisfied; (iv) in the case of a
criminal proceeding, has no reasonable cause to believe the conduct was
unlawful; and (v) in the case of acts or omissions by person in their official
capacity for the corporation, reasonably believed that the conduct was in the
best interests of the corporation, or in the case of acts or omissions by
persons in their capacity for other organizations, reasonably believed that
the conduct was not opposed to the best interests of the corporation.
Item 16. Exhibits
Exhibit Description
No.
5.1 Opinion and Consent of Lindquist & Vennum P.L.L.P., counsel to
the Company
23.1 Consent of Ernst & Young LLP
23.2 Consent of Lindquist & Vennum P.L.L.P. (see Exhibit 5.1 above)
24 Powers of Attorney (included on signature page hereof)
<PAGE>
Item 17. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the Prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the Registration Statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrant pursuant to Section 13 or
Section 15(d)of the Securities Exchange Act of 1934 that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered herein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statementshall be deemed to be a new registration statement
relating to the securities offered therein, and the offeringof such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions or otherwise, the
registrant has been advised that, in the opinion of the Securities and
Exchange Commission,such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person inconnection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe it meets all
of the requirements for filing a Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New Hope, State of Minnesota,
on the 30th day of July, 1996.
NAVARRE CORPORATION
By /s/ Eric H. Paulson
Eric H. Paulson
Chairman, President and Chief
Executive Officer
POWER OF ATTORNEY
The undersigned officers and directors of Navarre Corporation hereby
constitute and appoint Eric H. Paulson and Charles E. Cheney, or either of
them, our true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution for us and in our stead, in any and all
capacities, to sign any or all amendments to this registration statement,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-factand agents full power and authority to do and
perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as such person,
hereby ratifying and confirming all that said attorney-in-fact and agent or
his substitute or substitutes may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on July 30,
1996 in the capacities indicated.
Signature Title
/s/ Eric H. Paulson Chairman, President and Chief Executive Officer
Eric H. Paulson (principal executive officer)
/s/ Charles E. Cheney Secretary, Treasurer, Executive Vice President and
Charles E. Cheney Chief Financial Officer (principal financial and
accounting officer) and Director
/s/ Dickinson G. Wiltz Director
Dickinson G. Wiltz
/s/ James G. Sippl Director
James G. Sippl
/s/ Michael L. Snow Director
Michael L. Snow
<PAGE>
EXHIBIT 5.1
July 30, 1996
Navarre Corporation
7400 49th Avenue North
New Hope, Minnesota 55428
Re: Opinion of Counsel as to Legality of 530,000 shares of Common Stock
to be Registered under the Securities Act of 1933
Ladies and Gentlemen:
This opinion is furnished in connection with the registration under the
Securities Act of 1933 on Form S-1 of 530,000 shares of Common Stock, $.01
par value per share, of Navarre Corporation (the"Company").
As counsel for the Company, we advise you that it is our opinion, based
on our familiarity with the affairs of the Company and upon our examination
of pertinent documents, that the 530,000 shares of Common Stock to be offered
by the Selling Shareholders, including the 180,000 shares issuable upon
exercise of warrants will, when paid for and issued, be validly issued and
lawfully outstanding, fully paid and nonassessable shares of Common Stock of
the Company.
The undersigned hereby consent to the filing of this opinion with the
Securities and Exchange Commission as an Exhibit to the Registration
Statement with respect to said shares of Common Stock under the Securities
Act of 1933.
Very truly yours,
LINDQUIST & VENNUM P.L.L.P.
