As filed with the Securities and Exchange Commission on September 15, 1999
Registration No. 333-__________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------
FORM S-8
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 incorporation (I.R.S. Employer
or organization) Identification No.)
7400 49TH AVENUE NORTH
NEW HOPE, MINNESOTA 55428
(Address of Principal Executive Offices and zip code)
----------------------------
NAVARRE CORPORATION
1992 STOCK OPTION PLAN
(Full title of the Plan)
----------------------------
Eric H. Paulson Copy to:
Chief Executive Officer Thomas G. Lovett IV
Navarre Corporation Lindquist & Vennum P.L.L.P.
7400 49th Avenue North 4200 IDS Center
New Hope, MN 55428 80 South Eighth Street
(612) 535-8333 Minneapolis, MN 55402
(Name, address, including zip code and (612) 371-3211
telephone number of agent for service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ----------------------------------------------------------------------------------------------
Proposed Proposed
Title of Securities Maximum Maximum
to be Registered Amount Offering Aggregate Amount of
to be Price Offering Registration
Registered Per Share Price Fee
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 1,300,000 shares $11.0625(1) $14,381,250(1) $3,997.99
No par value, to be issued
pursuant to the Navarre Corporation
1992 Stock Option Plan
- ----------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(c) and (h) and based upon the average of the high
and low prices of the Company's Common Stock on the Nasdaq National
Market on September 13, 1999.
<PAGE>
INCORPORATION OF CONTENTS OF REGISTRATION STATEMENT
BY REFERENCE
A Registration Statement on Form S-8 (File No. 333-80218) was filed
with the Securities and Exchange Commission on June 14, 1994 covering the
registration of 237,000 shares initially authorized for issuance under the
Company's 1992 Stock Option Plan (the "Plan"). On November 29, 1994, a
Registration Statement on Form S-8 (File No. 333-86762) was filed with the
Securities and Exchange Commission covering the registration of an additional
200,000 shares authorized under the Plan. The total number of shares authorized
under the Plan was increased to 874,000 following a two-for-one split effective
June 21, 1996. On July 10, 1997, a Registration Statement on Form S-8 (File No.
333- 31017) was filed with the Securities and Exchange Commission covering the
registration of an additional 1,300,000 shares authorized under the Plan.
Pursuant to General Instruction E of Form S-8 and Rule 429, this Registration
Statement is being filed to register an additional 1,300,000 shares authorized
under the Plan. An amendment to the Plan to increase the reserved and authorized
number of shares under the Plan by 1,300,000 was adopted by the Company's Board
of Directors on July 16, 1999 and such amendment was approved by the Company's
shareholders on September 9, 1999. This Registration Statement should also be
considered a post-effective amendment to the prior Registration Statement. The
contents of the prior Registration Statement are incorporated herein by
reference.
PART I
Pursuant to the Note to Part I of Form S-8, the information required by
Items 1 and 2 of Form S-8 is not filed as a part of this Registration Statement.
PART II
Item 3. Incorporation of Documents by Reference.
The following documents filed with the Securities and Exchange
Commission are hereby incorporated by reference herein:
(a) The Annual Report of the Company on Form 10-K for the fiscal year
ended March 31, 1999, as amended by Amendment No. 1 filed July 29, 1999.
(b) The Definitive Proxy Statement dated July 30, 1999 for the 1999
Annual Meeting of Shareholders held on September 9, 1999.
(c) The Quarterly Report of the Company on Form 10-Q for the quarter
ended June 30, 1999.
(d) The description of the Company's Common Stock as set forth under
the caption "Capital Stock" in the Company's Registration Statement on Form 8-A
(File No. 0-22982).
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, prior to the
filing of a post-effective amendment which indicates that all securities offered
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference in this Registration Statement and to
be a part hereof from the date of filing of such documents.
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Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
The Company's Bylaws provide for indemnification of directors to the
full extent permitted by the Minnesota Business Corporation Act. Section
302A.521 of the Minnesota Business Corporation Act provides that a corporation
shall indemnify a person made or threatened to be made a party to a proceeding
by reason of the former or present official capacity of the person against
judgments, penalties, fines, including, without limitation, excise taxes
assessed against the person with respect to an employee benefit plan,
settlements, and reasonable expenses, including attorneys' fees and
disbursements, incurred by the person in connection with the proceeding, if,
with respect to the acts or omissions of the person complained of in the
proceeding, the person:
(1) Has not been indemnified by another organization or employee
benefit plan for the same judgments, penalties, fines,
including, without limitation, excise taxes assessed against
the person with respect to an employee benefit plan,
settlements, and reasonable expenses, including attorneys'
fees and disbursements, incurred by the person in connection
with the proceeding with respect to the same acts or
omissions;
(2) Acted in good faith;
(3) Received no improper personal benefit and section 302A.255
(Director Conflicts of Interest), if applicable, has been
satisfied;
(4) In the case of a criminal proceeding, had no reasonable cause
to believe the conduct was unlawful; and
(5) In the case of acts or omissions occurring in the official
capacity described in subdivision 1, paragraph (c), clause (1)
or (2), reasonably believed that the conduct was in the best
interests of the corporation, or in the case of acts or
omissions occurring in the official capacity described in
subdivision 1, paragraph (c), clause (3), reasonably believed
that the conduct was not opposed to the best interests of the
corporation. If the person's acts or omissions complained of
in the proceeding relate to conduct as a director, officer,
trustee, employee, or agent of an employee benefit plan, the
conduct is not considered to be opposed to the best interests
of the corporation if the person reasonably believed that the
conduct was in the best interests of the participants or
beneficiaries of the employee benefit plan
"Proceeding" means a threatened, pending or completed civil, criminal,
administrative, arbitration or investigative proceeding, including one by or in
the right of the Company.
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Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the registrant has been
informed 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.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
Exhibit
- -------
4.1 Navarre Corporation 1992 Stock Option Plan, as amended.
5.1 Opinion of Lindquist & Vennum P.L.L.P.
23.1 Consent of Lindquist & Vennum P.L.L.P. (included in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP.
24.1 Power of Attorney (set forth on the signature page hereof)
Item 9. Undertakings.
(a) The Company hereby undertakes:
(a) (1) File, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) 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. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) under the Securities Act of
1933 if, in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
registration statement; and
(iii) 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.
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<PAGE>
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
(b) That, for purposes of determining any liability under the Securities Act of
1933, each filing of the Company's annual report pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of 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 (the "Act") may be permitted to directors, officers, and controlling
persons of the small business issuer pursuant to the foregoing provisions, or
otherwise, the issuer 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 small
business issuer of expenses incurred or paid by a director, officer or
controlling person of the small business issuer in the successful defense of any
action, suit or proceeding) is asserted by such director, officer, or
controlling person in connection with the securities being registered, the small
business issuer 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.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 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 September 13, 1999.
Navarre Corporation.
By /s/ Eric H. Paulson
-------------------------------------------
Eric H. Paulson, 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,
with power to act one without the other, 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 and all amendments (including
post-effective amendments) to this Registration Statement and all documents
relating thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing necessary or advisable to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons on
September 13, 1999 in the capacities indicated.
Signature
- ---------
/s/ Eric H. Paulson Chairman, President and Chief Executive Officer
- ----------------------- (principal executive officer)
Eric H. Paulson
/s/ Charles E. Cheney Secretary, Treasurer, Executive Vice President and
- ----------------------- Chief Financial Officer (principal financial and
Charles E. Cheney accounting officer) and Director
Director
- -----------------------
Dickinson G. Wiltz
/s/ James G. Sippl Director
- -----------------------
James G. Sippl
/s/ Michael L. Snow Director
- -----------------------
Michael L. Snow
/s/ Alfred Teo Director
- -----------------------
Alfred Teo
6
EXHIBIT 4.1
NAVARRE CORPORATION
1992 STOCK OPTION PLAN
ARTICLE 1. ESTABLISHMENT AND PURPOSE.
1.1 Establishment. Navarre Corporation (the "Company") hereby
establishes a plan providing for stock-based compensation incentive awards for
the performance by certain eligible individuals of services for the Company.
This plan shall be known as the Navarre Corporation 1992 Stock Option Plan (the
"Plan").
1.2 Purpose. The purpose of the Plan is to advance the interests of the
Company and its shareholders by enabling the company to attract and retain
persons of ability to perform services for the Company, by providing an
incentive to such persons through equity participation in the Company and by
rewarding such persons who contribute to the achievement by the Company of its
economic objectives.
ARTICLE 2. DEFINITIONS.
The following terms shall have the meanings set forth below, unless the
context clearly otherwise requires:
2.1 "Board" means the Board of Directors of the Company.
2.2 "Broker Exercise Notice" means the written notice described in
section 6.6(b) of the Plan.
2.3 "Change in Control" means an event described in Section 10.1 of the
Plan.
2.4 "Code" means the Internal Revenue Code of 1986, as amended.
2.5 "Committee" means a committee of the Board as may be designated by
the Board, from time to time, for the purpose of administering this Plan as
contemplated by Section 3 hereof.
2.6 "Common Stock" means the common stock of the Company, no par value,
or the number and kind of shares of stock or other securities into which such
Common Stock may be changed in accordance with Section 4.3 of the Plan.
2.7 "Disability" means the disability of the Participant as defined in
the long-term disability plan of the Company then covering the Participant or,
if no such plan exists, the permanent and total disability of the Participant
within the meaning of Section 22(e)(3) of the Code.
2.8 "Eligible Recipient" means all employees (including, without
limitation, officers and directors who are also employees and nonemployee
directors, consultants and independent contractors of the Company or any
Subsidiary.
2.9 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.10 "Fair Market Value" means, with respect to the Common Stock, the
following:
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(a) If the Common Stock is listed or admitted to unlisted
trading privileges on any national securities exchange or is not so
listed or admitted by transactions in the Common Stock are reported on
the Nasdaq State Market (including Nasdaq) as of such date (or, if no
shares were traded on such day, as of the next preceding day on which
there was such a trade).
(b) If the Common Stock is not so listed or admitted to
unlisted trading privileges or reported on the Nasdaq State Market, and
bid and asked prices therefor in the over-the-counter market are
reported by the Nasdaq OTC Bulletin Board or the National Quotation
Bureau, Inc. (or any comparable reporting service), the mean of the
closing bid and asked prices as of such date, as so reported by the
Nasdaq OTC Bulletin Board or, if not so reported thereon, as reported
by the National Quotation Bureau, Inc. (or such comparable reporting
service).
(c) If the Common Stock is not so listed or admitted to
unlisted trading privileges, or reported on the State Market and such
bid and asked prices are not so reported, such price as the Committee
determines in good faith in the exercise of its reasonable discretion.
2.11 "Incentive Stock Option" means a right to purchase Common Stock
granted to an Eligible Recipient pursuant to Article 6 of the Plan that
qualifies as an "incentive stock option" within the meaning of Section 422 of
the Code.
2.12 "Non-Employee Director" means a "Non-Employee Director" within the
meaning of Rule 16b-3(b)(3) under the Exchange Act or any successor rule.
2.13 "Non-Statutory Stock Option" means a right to purchase Common
Stock granted to an Eligible Recipient pursuant to Article 6 of the Plan that
does not qualify as an Incentive Stock Option.
2.14 "Option" means an Incentive Stock Option or a Non-Statutory Stock
Option.
2.15 "Outside Director" means a director who (a) is not a current
employee of the Company or any member of an affiliated group which includes the
Company; (b) is not a former employee of the Company who receives compensation
for prior services (other than benefits under a tax-qualified retirement plan)
during the taxable year; (c) has not been an officer of the Company; (d) does
not receive remuneration from the Company, either directly or indirectly, in any
capacity other than as a director, except as otherwise permitted under Code
Section 162(m) and regulations thereunder. For this purpose, remuneration
includes any payment in exchange for goods or services. This definition shall be
further governed by the provisions of Code Section 162(m) and regulations
promulgated thereunder.
2.16 "Participant" means an Eligible Recipient who receives one or more
Options or Restricted Stock awards under the Plan.
2.17 "Person" means any individual, corporation, partnership, group,
association or other "person" (as such term is used in Section 14(d) of the
Exchange Act), other than the Company, a wholly owned subsidiary of the Company
or any employee benefit plan sponsored by the Company or a wholly owned
subsidiary of the Company.
2.18 "Previously Acquired Shares" means shares of Common Stock that are
already owned by the Participant and shares of Common Stock that are to be
acquired by the Participant pursuant to the exercise of an Option or the
termination of restrictions of a Restricted Stock award.
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2.19 "Restricted Stock" means an award of shares of Common Stock that
are subject to restrictions under Article 7 below.
2.20 "Retirement" means the retirement of a Participant pursuant to and
in accordance with the regular or, if approved by the Board for purposes of the
Plan, early retirement/pension plan or practice of the Company or Subsidiary
then covering the Participant.
2.21 "Securities Act" means the Securities Act of 1933, as amended.
2.22 "Subsidiary" means any subsidiary corporation of the Company
within the meaning of Section 424(f) of the Code.
2.23 "Tax Date" means the date any withholding tax obligation arises
under the Code for a Participant with respect to an Option or a Restricted Stock
award.
ARTICLE 3. PLAN ADMINISTRATION.
3.1 The Committee. The Plan shall be administered by the Board or by a
Committee of at least two directors, all of whom shall be Outside Directors and
Non-Employee Directors. The Committee may be a subcommittee of the Compensation
Committee of the Board. Members of such a Committee, if established, shall be
appointed from time to time by the Board, shall serve at the pleasure of the
Board and may resign at any time upon written notice to the Board. A majority of
the members of such a Committee shall constitute a quorum. Such a Committee
shall act by majority approval of the members, shall keep minutes of its
meetings and shall provide copies of such minutes to the Board. Action of such a
Committee may be taken without a meeting if unanimous written consent is given.
Copies of minutes of such a Committee's meetings and of its actions by written
consent shall be provided to the Board and kept with the corporate records of
the Company. As used in this Plan, the term "Committee" will refer to the Board
or to such a Committee, if established.
3.2 Authority of the Committee.
(a) In accordance with and subject to the provisions of the
Plan, the Committee shall have the authority to determine (i) the
Eligible Recipients who shall be selected as Participants, (ii) the
nature and extent of the Options to be granted to each Participant
(including the number of shares of Common Stock to be subject to each
Option, the exercise price and the manner in which Options will vest or
become exercisable), (iii) the time or times when Options will be
granted, (iv) the duration of each Option, (v) the restrictions on and
other conditions to the exercisability or vesting of Options, (vi) such
other provisions of the Options as the Committee may deem necessary or
desirable and as consistent with the terms of the Plan, (vii) the
nature and extent of Restricted Stock awards to be granted to a
Participant (including the number of shares of Common Stock to be
subject to such Restricted Stock award, the nature of restrictions and
the performance criteria of such awards), and (viii) such other
provisions of the Restricted Stock awards as the Committee may deem
necessary or desirable and as consistent with the terms of the Plan.
The Committee shall determine the form or forms of the agreements with
Participants which shall evidence the particular terms, conditions,
rights and duties of the Company and the Participants with respect to
Options or Restricted Stock awards granted pursuant to the Plan, which
agreements shall be consistent with the provisions of the Plan.
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(b) With the consent of the Participant affected thereby, the
Committee may amend or modify the terms of any outstanding Option or
Restricted Stock award in any manner, provided that the amended or
modified terms are permitted by the Plan as then in effect. Without
limiting the generality of the foregoing sentence, the Committee may,
with the consent of the Participant affected thereby, modify the
exercise price, number of shares or other terms and conditions of an
Option or a Restricted Stock award, extend the term of an Option or a
Restricted Stock award, accelerate the exercisability or vesting or
otherwise terminate any restrictions relating to an Option or a
Restricted Stock award, accept the surrender of any outstanding Option
or a Restricted Stock award, or, to the extent not previously exercised
or vested, authorize the grant of new Options or a Restricted Stock
award in substitution for surrendered Options or Restricted Stock
awards.
(c) The Committee shall have the authority, subject to the
provisions of the plan, to establish, adopt and revise such rules and
regulations relating to the Plan as it may deem necessary or advisable
for the administration of the Plan. The Committee's decisions and
determinations under the Plan need not be uniform and may be made
selectively among Participants, whether or not such Participants are
similarly situated. Each determination, interpretation or other action
made or taken by the Committee pursuant to the provisions of the Plan
shall be conclusive and binding for all purposes and on all persons,
including, without limitation, the Company and its Subsidiaries, the
shareholders of the Company, the Committee and each of its members, the
directors, officers and employees of the Company and its Subsidiaries,
and the Participants and their respective successors in interest. No
member of the Committee shall be liable for any action or determination
made in good faith with respect to the Plan or any Option or a
Restricted Stock award granted under the Plan.
ARTICLE 4. STOCK SUBJECT TO THE PLAN.
4.1 Number of Shares. Subject to adjustment as provided in Section 4.3
below, the maximum number of shares of Common Stock that shall be authorized and
reserved for issuance under the Plan shall be 3,474,000 shares of Common Stock.
The maximum number of shares authorized may also be increased from time to time
by approval of the Board and, if required pursuant to Rule 16b-3 under the
Exchange Act, Section 422 of the Code, or the applicable rules of any securities
exchange or the NASD, the shareholders of the Company.
4.2 Shares Available for Use. Shares of Common Stock that may be issued
upon exercise of Options or as Restricted Stock awards shall be applied to
reduce the maximum number of shares of Common Stock remaining available for use
under the Plan. Any shares of Common Stock that are subject to an Option or a
Restricted Stock award (or any portion thereof) that lapses, expires or for any
reason is terminated unexercised shall automatically again become available for
use under the Plan. Upon a stock-for-stock exercise of a State Option or upon
the withholding of State for the payment of taxes, only the net number of shares
issued to the optionee shall be used to calculate the number of shares remaining
available for distribution under the Plan.
4.3 Adjustments to Shares. In the event of any reorganization, merger,
consolidation, recapitalization, liquidation, reclassification, stock dividend,
stock split, combination of shares, rights offering, extraordinary dividend or
divestiture (including a spin-off) or any other change in the corporate
structure or shares of the Company, the Committee (or, if the Company is not the
surviving corporation in any such transaction, the board of directors of the
surviving corporation) shall make appropriate adjustment (which determination
shall be conclusive) as to the number and kind of securities subject to and
reserved under the Plan and, in order to prevent dilution or enlargement of the
rights of Participants,
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the number, kind and exercise price of securities subject to outstanding Options
and Restricted Stock awards (subject to section 7.3(v). Without limiting the
generality of the foregoing, in the event that any of such transactions are
effected in such a way that holders of Common Stock shall be entitled to receive
stock, securities or assets, including cash, with respect to or in exchange for
such Common Stock, all Participants holding outstanding Options or Restricted
Stock awards shall upon the exercise of such Options or upon the termination of
restrictions of such Restricted Stock award receive, in lieu of any shares of
Common Stock they may be entitled to receive, such stock, securities or assets,
including cash, as would have been issued to such Participants if their Options
had been exercised or restrictions of a Restricted Stock award had lapsed and
such Participants had received Common Stock prior to such transaction.
ARTICLE 5. PARTICIPATION.
Participants in the Plan shall be those Eligible Recipients who, in the
judgment of the Committee, have performed, are performing, or during the term of
an Option or during the period of restrictions under a Restricted Stock award
will perform, services in the management, operation and development of the
Company or any Subsidiary, and significantly contributed, are significantly
contributing or are expected to significantly contribute to the achievement of
corporate economic objectives. Eligible Recipients may be granted from time to
time one or more Options or Restricted Stock awards, as may be determined by the
Committee in its discretion. The number, type, terms and conditions of Options
or Restricted Stock awards granted to various Eligible Recipients need not be
uniform, consistent or in accordance with any plan, regardless of whether such
Eligible Recipients are similarly situated. Upon determination by the Committee
that an Incentive Stock Option is to be granted to an Eligible Recipient,
written notice shall be given such person, specifying the terms, conditions,
rights and duties related thereto. Each Eligible Recipient to whom an Option or
a Restricted Stock award is to be granted shall, if requested by the Committee,
enter into an agreement with the Company, in such form as the Committee shall
determine and which is consistent with the provisions of the Plan, specifying
such terms, conditions, rights and duties. Options or Restricted Stock awards
shall be deemed to be granted as of the date specified in the grant resolution
of the Committee, which date shall be the date of the related agreement with the
Participant.
ARTICLE 6. STOCK OPTIONS.
6.1 Grant. An Eligible Recipient may be granted one or more Options
under the Plan, and such Options shall be subject to such terms and conditions,
consistent with the other provisions of the Plan, as shall be determined by the
Committee in its discretion. The Committee may designate whether an Option is to
be considered an Incentive Stock Option or a Non-Statutory Stock Option;
provided, however, that an Incentive Stock Option shall be granted only to an
Eligible Recipient who is an employee of the Company or a Subsidiary. The terms
of the agreement relating to a Non-Statutory Stock Option shall expressly
provide that such Option shall not be treated as an Incentive Stock Option.
No Participant shall receive Options under this Plan which exceed
300,000 shares during any fiscal year of the Company.
6.2 Exercise. An Option shall become exercisable at such times and in
such installments (which may be cumulative) as shall be determined by the
Committee, in its discretion, at the time the Option is granted. Upon the
completion of its exercise period, an Option, to the extent not then exercised,
shall expire. Notwithstanding the foregoing and subject to the discretionary
acceleration rights of the Committee, an Option granted to a director, officer
or 10% shareholder of the Company shall not be
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exercisable for a period of six (6) months unless the Option has been approved
by the Board, the Committee or the shareholders of the Company.
6.3 Exercise Price.
(a) Incentive Stock Options. The per share price to be paid by
the Participant at the time an Incentive Stock Option is exercised
shall be determined by the Committee, in its discretion, at the time
the Option is granted; provided, however, that such price shall not be
less than (i) 100% of the Fair Market Value of one share of Common
Stock on the date the Option is granted, or (ii) 110% of the Fair
Market Value of one share of Common Stock on the date the Option is
granted if, at the time the Option is granted, the Participant owns,
directly or indirectly (as determined pursuant to Section 424(d) of the
Code), more than 10% of the total combined voting power of all classes
of stock of the Company or any subsidiary or parent corporation of the
Company (within the meaning of Sections 424(f) and 424(e),
respectively, of the Code).
(b) Non-Statutory Stock Options. The per share price to be
paid by the Participant at the time a Non-Statutory Stock Option is
exercised shall be determined by the Committee, in its discretion, at
the time the Option is granted.
6.4 Duration.
(a) Incentive Stock Options. The period during which an
Incentive Stock Option may be exercised shall be fixed by the
Committee, in its discretion, at the time the Option is granted;
provided, however, that in no event shall such period exceed 10 years
from its date of grant or, in the case of a Participant who owns,
directly or indirectly (as determined pursuant to Section 424(d) of the
Code), more than 10% of the total combined voting power of all classes
of stock of the Company or any subsidiary or parent corporation of the
Company (within the meaning of Sections 424(f) and 424(e),
respectively, of the Code), five years from its date of grant.
(b) Non-Statutory Stock Options. The period during which a
Non-Statutory Stock Option may be exercised shall be fixed by the
Committee, in its discretion, at the time the Option is granted.
(c) Effect of Termination of Employment or Other Service.
Notwithstanding this Section 6.4, except as provided in Articles 9 and
10 of the Plan, all Options granted to a Participant shall terminate
and may no longer be exercised if the Participant's employment or other
service with the Company and all Subsidiaries ceases.
6.5 Manner of Exercise. An Option may be exercised by a Participant in
whole or in part from time to time, subject to the conditions contained herein
and in the agreement evidencing such Option, by delivery, in person or through
certified or registered mail, of written notice of exercise to the Company at
its principal executive office in New Hope, Minnesota (Attention: President),
and by paying in full the total Option exercise price for the shares of Common
Stock purchased. Such notice shall be in a form satisfactory to the Committee
and shall specify the particular Option (or portion thereof) that is being
exercised and the number of shares with respect to which the Option is being
exercised. Subject to compliance with Section 13.1 of the Plan, the exercise of
the Option shall be deemed effective upon receipt of such notice and payment
complying with the terms of the Plan and the agreement evidencing such Option.
As soon as practicable after the effective exercise of the Option, the
Participant shall be recorded on the stock transfer books of the Company as the
owner of the shares purchased, and the
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Company shall deliver to the Participant one or more duly issued stock
certificates evidencing such ownership. If a Participant exercises any Option
with respect to some, but not all, of the shares of Common Stock subject to such
Option, the right to exercise such Option with respect to the remaining shares
shall continue until it expires or terminates in accordance with its terms. An
Option shall only be exercisable with respect to whole shares.
6.6 Payment of Exercise Price.
(a) The total purchase price of the shares to be purchased
upon exercise of an Option shall be paid entirely in cash (including
check, bank draft or money order); provided, however, that the
Committee, in its sole discretion, may allow such payments to be made,
in whole or in part, by delivery of a Broker Exercise Notice or a
promissory note (containing such terms and conditions as the Committee
may in its discretion determine), by transfer from the Participant to
the Company of Previously Acquired Shares, or by a combination thereof.
In determining whether or upon what terms and conditions a Participant
will be permitted to pay the purchase price of an Option in a form
other than cash, the Committee may consider all relevant facts and
circumstances, including, without limitation, the tax and securities
law consequences to the Participant and the Company and the financial
accounting consequences to the Company. In the event the Participant is
permitted to pay the total purchase price of an Option in whole or in
part with Previously Acquired Shares, the value of such shares shall be
equal to their Fair Market Value on the date of exercise of the Option.
(b) For purposes of this Section 6.6, a "Broker Exercise
Notice" shall mean a written notice from a Participant to the Company
at its principal executive office in New Hope, Minnesota (Attention:
President), made on a form and in the manner as the Committee may from
time to time determine, pursuant to which the Participant irrevocably
elects to exercise all or any portion of an Option and irrevocably
directs the Company to deliver the Participant's stock certificates to
be issued to such Participant upon such Option exercise directly to a
broker or dealer. A Broker Exercise Notice must be accompanied by or
contain irrevocable instructions to the broker or dealer (i) to
promptly sell a sufficient number of shares of such Common Stock or to
loan the Participant a sufficient amount of money to pay the exercise
price for the Options and, if not otherwise satisfied by the
Participant, to fund any related employment and withholding tax
obligations due upon such exercise, and (ii) to promptly remit such to
the Company upon the broker's or dealer's receipt of the stock
certificates.
6.7 Rights as a Shareholder. The Participant shall have no rights as a
shareholder with respect to any shares of Common Stock covered by an Option
until the Participant shall have become the holder of record of such shares, and
no adjustments shall be made for dividends or other distributions or other
rights as to which there is a record date preceding the date the Participant
becomes the holder of record of such shares, except as the Committee may
determine pursuant to Section 4.3 of the Plan.
6.8 Disposition of Common Stock Acquired Pursuant to the Exercise of
Incentive Stock Options. Prior to making a disposition (as defined in Section
424(c) of the Code) of any shares of Common Stock acquired pursuant to the
exercise of an Incentive Stock Option granted under the Plan before the
expiration of two years after its date of grant or before the expiration of one
year after its date of exercise and the date on which such shares of Common
Stock were transferred to the Participant pursuant to exercise of the Option,
the Participant shall send written notice to the Company of the proposed date of
such disposition, the number of shares to be disposed of, the amount of proceeds
to be received from such disposition and any other information relating to such
disposition that the Company
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may reasonably request. The right of a Participant to make any such disposition
shall be conditioned on the receipt by the Company of all amounts necessary to
satisfy any federal, state or local withholding and employment-related tax
requirements attributable to such disposition. The Committee shall have the
right, in its discretion, to endorse the certificates representing such shares
with a legend restricting transfer and to cause a stop transfer order to be
entered with the Company's transfer agent until such time as the Company
receives the amounts necessary to satisfy such withholding an employment-related
tax requirements or until the later of the expiration of two years from its date
of grant or one year from its date of exercise and the date on which such shares
were transferred to the Participant pursuant to the exercise of the Option.
6.9 Aggregate Limitation of Stock Subject to Incentive Stock Options.
To the extent that the aggregate Fair Market Value (determined as of the date an
Incentive Stock Option is granted) of the shares of Common Stock with respect to
which incentive stock options (within the meaning of Section 422 of the Code)
are exercisable for the first time by a Participant during any calendar year
(under the Plan and any other incentive stock option plans of the Company or any
subsidiary or any parent corporation of the company (within the meaning of
Sections 424(f) and 424(e), respectively, of the Code)) exceeds $100,000 (or
such other amount as may be prescribed by the Code from time to time), such
excess Options shall be treated as Non-Statutory Stock Options. The
determination shall be made by taking Incentive Stock Options into account in
the order in which they were granted. If such excess only applies to a portion
of an Incentive Stock Option, the Committee, in its discretion, shall designate
which shares shall be treated as shares to be acquired upon exercise of an
Incentive Stock Option.
ARTICLE 7. RESTRICTED STOCK.
7.1 Administration. Shares of Restricted Stock may be issued either
alone or in addition to other awards granted under the Plan. The Committee shall
determine the officers, key employees, members of the Board and consultants of
the Company and Subsidiaries to whom, and the time or times at which, grants of
Restricted Stock will be made, the number of shares to be awarded, the time or
times within which such awards may be subject to forfeiture, and all other
conditions of the awards. The Committee may also condition the grant of
Restricted Stock upon the attainment of specified performance goals. The
provisions of Restricted Stock awards need not be the same with respect to each
recipient.
7.2 Awards and Certificates. The prospective recipient of an award of
shares of Restricted Stock shall not have any rights with respect to such award,
unless and until such recipient has executed an agreement evidencing the award
and has delivered a fully executed copy thereof to the Company, and has
otherwise complied with the then applicable terms and conditions.
(i) Each Participant who has received a Restricted Stock award
shall be issued a stock certificate in respect of shares of Restricted
Stock awarded under the Plan. Such certificate shall be registered in
the name of the Participant, and shall bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such
award, substantially in the following form:
"The transferability of this certificate and the
shares of stock represented hereby are subject to
the terms and conditions (including forfeiture) of
the Navarre Corporation 1992 Stock Option Plan and
an agreement entered into between the registered
owner and Navarre Corporation. Copies of such Plan
and Agreement are on file in the offices of Navarre
Corporation, 7400 49th Ave. N., New Hope, MN 55428."
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(ii) The Committee shall require that the stock certificates
evidencing such shares be held in custody by the Company until the
restrictions thereon shall have lapsed, and that, as a condition of any
Restricted Stock award, the Participant shall have delivered a stock
power, endorsed in blank, relating to the Common Stock covered by such
award.
7.3 Restrictions and Conditions. The shares of Restricted Stock awarded
pursuant to the Plan shall be subject to the following restrictions and
conditions:
(i) Subject to the provisions of this Plan and the award
agreement, during a period set by the Committee commencing with the
date of such award (the "Restriction Period"), the Participant shall
not be permitted to sell, transfer, pledge or assign shares of
Restricted Stock awarded under the Plan. Within these limits, the
Committee may provide for the lapse of such restrictions in
installments where deemed appropriate.
(ii) Except as provided in paragraph 7.3(i) of this Article 7,
the Participant shall have, with respect to the shares of Restricted
Stock, all of the rights of a shareholder of the Company, including the
right to vote the shares and the right to receive any cash dividends.
The Committee, in its sole discretion, may permit or require the
payment of cash dividends to be deferred and, if the Committee so
determines, reinvested in additional shares of Restricted Stock (but
only to the extent shares are available under Article 4). Certificates
for shares of unrestricted Common Stock shall be delivered to the
Participant promptly after, and only after, the period of forfeiture
shall have expired without forfeiture in respect of such shares of
Restricted Stock.
(iii) Subject to the provisions of the award agreement and
paragraph (iv) of this Section 7.3, upon termination of employment for
any reason during the Restriction Period, all shares still subject to
restriction shall be forfeited by the Participant.
(iv) In the event of special hardship circumstances of a
Participant whose employment is terminated (other than for cause),
including death, Disability or Retirement, or in the event of an
unforeseeable emergency of a Participant still in service, the
Committee may, in its sole discretion, when it finds that a waiver
would be in the best interest of the Company, waive in whole or in part
any or all remaining restrictions with respect to such Participant's
shares of Restricted Stock.
(v) Notwithstanding the foregoing, in the event of the sale by
the Company of substantially all of its assets and the consequent
discontinuance of its business, or in the event of a merger, exchange,
consolidation or liquidation of the Company, the Board shall, in its
sole discretion, in connection with the Board's adoption of the plan
for sale, merger, exchange, consolidation or liquidation, provide for
one or more of the following with respect to Restricted Stock awards
that are, on such date, still subject to a Restriction Period: (i) the
removal of the restrictions on any or all outstanding Restricted Stock
awards; (ii) the complete termination of this Plan and forfeiture of
outstanding Restricted Stock awards prior to a date specified by the
Board; and (iii) the continuance of the Plan with respect to the
Restricted Stock award which were outstanding as of the date of
adoption by the Board of such plan for sale, merger, exchange,
consolidation or liquidation and provide to participants holding
Restricted Stock awards the right to an equivalent number of restricted
shares of stock of the corporation succeeding the Company by reason of
such sale, merger, exchange, consolidation or liquidation. The grant of
a Restricted Stock award pursuant to the Plan shall not limit in any
way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or
business
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structure or to merge, exchange or consolidate or to dissolve,
liquidate, sell or transfer all or any part of its business or assets.
(vi) Subject to Article 11 below, recipients of Restricted
Stock awards under the Plan are not required to make any payment or
provide consideration other than the rendering of services.
ARTICLE 8. CASH BONUSES.
In connection with any grant of Options or Restricted Stock awards or
at any time thereafter, the Committee may, in its discretion, grant a cash bonus
to a Participant in connection with the grant or vesting or exercise of an
Option or a Restricted Stock award. The determination of whether to grant such a
cash bonus, the nature and amount of any such cash bonus and the terms and
conditions of such cash bonus shall be within the discretion of the Committee.
ARTICLE 9. EFFECT OF ON OPTIONS TERMINATION OF EMPLOYMENT OR OTHER SERVICE.
9.1 Termination of Employment or Other Service Due to Death, Disability
or Retirement. Except as otherwise provided in Article 10 of the Plan, in the
event a Participant's employment or other service with the Company and all
Subsidiaries is terminated by reason of such Participant's death, Disability or
Retirement, all outstanding Options then held by the Participant shall remain
exercisable to the extent exercisable as of such termination for a period of
three months after such termination (but in no event after the expiration date
of any such Option).
9.2 Termination of Employment or Other Service for Reasons Other than
Death, Disability or Retirement. Except as otherwise provided in Article 10 of
the Plan, in the event a Participant's employment or other service is terminated
with the Company and all Subsidiaries for any reasons other than death,
Disability or Retirement, all rights of the Participant under the Plan shall
immediately terminate without notice of any kind, and no Options then held by
the Participant shall thereafter be exercisable.
9.3 Modification of Effect of Termination. Notwithstanding the
provisions of this Article 9, upon a Participant's termination of employment or
other service with the Company and all Subsidiaries, the Committee may, in its
discretion (which may be exercised before or following such termination), cause
Options, or any portions thereof, then held by such Participant to become
exercisable and remain exercisable following such termination in the manner
determined by the Committee; provided, however, that no Option shall be
exercisable after the expiration date thereof and any Incentive Stock Option
that remains unexercised more than three months following employment termination
by reason of Retirement or more than one year following employment termination
by reason of Disability shall thereafter be deemed to be a Non-Statutory Stock
Option.
9.4 Date of Termination. Unless the Committee shall otherwise determine
in its discretion, a Participant's employment or other service shall, for
purposes of the Plan, be deemed to have terminated on the date such Participant
ceases to perform services for the Company and all Subsidiaries, as determined
in good faith by the Committee.
ARTICLE 10. CHANGE OF CONTROL.
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10.1 Change in Control. For purposes of this Article 10, a "Change in
Control" of the Company shall mean (a) the sale, lease, exchange or other
transfer of all or substantially all of the assets of the Company (in one
transaction or in a series of related transactions) to a corporation that is not
controlled by the Company, (b) the approval by the shareholders of the Company
of any plan or proposal for the liquidation or dissolution of the Company, or
(c) a change in control of the Company of a nature that would be required to be
reported (assuming such event has not been "previously reported") in response to
Item 1(a) of the Current Report on Form 8-K, as in effect on the effective date
of the Plan, pursuant to Section 13 or 15(d) of the Exchange Act, whether or not
the Company is then subject to such reporting requirement; provided, however,
that, without limitation, such a Change in Control shall be deemed to have
occurred at such time as (x) any Person becomes after the effective date of the
Plan the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of 50% or more of the combined voting power of the
Company's outstanding securities ordinarily having the right to vote at
elections of directors, or (y) individuals who constitute the board of directors
of the Company on the effective date of the Plan cease for any reason to
constitute at least a majority thereof, provided that any person becoming a
director subsequent to the effective date of the Plan whose election, or
nomination for election by the Company's shareholders, was approved by a vote of
at least a majority of the directors comprising the board of directors of the
Company on the effective date of the Plan (either by a specific vote or by
approval of the proxy statement of the Company in which such person is named as
a nominee for director, without objection to such nomination) shall be, for
purposes of this clause (y), considered as though such person were a member of
the board of directors of the Company on the effective date of the Plan.
10.2 Acceleration of Vesting. If a Change of Control of the Company
shall occur, then, without any action by the Committee or the Board, all
outstanding Options shall become immediately exercisable in full and shall
remain exercisable during the remaining term thereof, regardless of whether the
Participants to whom such Options have been granted remain in the employ or
service of the Company or any Subsidiary.
10.3 Cash Payment. If a Change in Control of the Company shall occur,
then the Committee, in its discretion, and without the consent of any
Participant affected thereby, may determine that some or all Participants
holding outstanding Options shall receive, with respect to some or all of the
shares of Common Stock subject to such Options, as of the effective date of any
such Change in Control of the Company, cash in an amount equal to the excess of
the Fair Market Value of such shares immediately prior to the effective date of
such Change in Control of the Company over the exercise price per share of such
Options.
10.4 Limitation on Change in Control Payments. Notwithstanding anything
in Section 10.2 or 10.3 above to the contrary, if, with respect to a
Participant, the acceleration of the exercisability of an Option as provided in
Section 10.2 or the payment of cash in exchange for all or part of an Option as
provided in section 10.3 above (which acceleration or payment could be deemed a
"payment" within the meaning of Section 280G(b)(2) of the Code), together with
any other payments which such Participant has the right to receive from the
Company or any corporation which is a member of an "affiliated group" (as
defined in Section 1504(a) of the Code without regard to Section 1504(b) of the
Code) of which the Company is a member, would constitute a "parachute payment"
(as defined in Section 280G(b)(2) of the Code), then the payments to such
Participant pursuant to Section 10.2 or 10.3 above shall be reduced to the
largest amount as will result in no portion of such payments being subject to
the excise tax imposed by Section 4999 of the Code.
ARTICLE 11. RIGHT TO WITHHOLD; PAYMENT OF WITHHOLDING TAXES.
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11.1 General Rules. The Company is entitled to (a) withhold and deduct
from future wages of the Participant (or from other amounts which may be due and
owing to the Participant from the Company), or make other arrangements for the
collection of, all legally required amounts necessary to satisfy any and all
federal, state and local withholding and employment-related tax requirements (i)
attributable to the grant or exercise of an Option or a Restricted Stock award
or to a disqualifying disposition of stock received upon exercise of an
Incentive Stock Option, or (ii) otherwise incurred with respect to an Option or
a Restricted Stock award, or (b) require the Participant promptly to remit the
amount of such withholding to the Company before taking any action with respect
to an Option or a Restricted Stock award.
11.2 Special Rules.
(a) Without limiting the generality of Section 11.1 above, the
Committee may, in its discretion and subject to such rules as the
Committee may adopt, permit a Participant to satisfy, in whole or in
part, any withholding or employment-related tax obligations described
in Section 11.1 above by agreeing to deliver a promissory note in
payment of some or all of the necessary amounts (containing such terms
as the Committee in its discretion may determine) or electing to have
the Company accept a Broker Exercise Notice. In addition, the
Participant may elect to use Previously Acquired Shares or to authorize
the Company to retain from the number of shares of Common Stock that
would otherwise be delivered to the Participant upon the exercise of
the Option, that number of shares, in any such case, having a Fair
Market Value, on the Tax Date, equal to the amount necessary to satisfy
the withholding or employment-related taxes due.
(b) A Participant's election to use Previously Acquired
shares, deliver a Broker Exercise Notice, withhold shares of Common
Stock, or deliver a promissory note must be made on or prior to the Tax
Date, is irrevocable and is subject to the consent or disapproval of
the Committee. Any such election shall be in accordance with, and
subject to, applicable tax and securities laws, regulations and rulings
and in the event shares are withheld, the amount withheld may not
exceed the minimum required federal, state and FICA withholding
amounts. If the Participant is an officer, director or beneficial owner
of more than 10% of the outstanding Common Stock of the Company has a
class of equity securities registered under Section 12 of the Exchange
Act, an election to use Previously Acquired Shares may not be made
within six months of the date the Option is granted (unless the death
or Disability of the Participant occurs prior to the expiration of such
six-month period), and (unless otherwise permitted by the Committee in
its discretion) must be made either six months prior to the Tax Date or
at any time prior to the Tax Date between the third and twelfth
business days following public release of any of the Company's
quarterly or annual summary earnings statements. When shares of Common
Stock are issued prior to the Tax Date to a participant making an
election to use Previously Acquired Shares, the Participant shall agree
in writing to surrender that number of shares on the Tax Date having an
aggregate Fair Market Value equal to the tax due.
ARTICLE 12. RIGHTS OF ELIGIBLE RECIPIENTS AND PARTICIPANTS: TRANSFERABILITY.
12.1 Employment of Service. Nothing in the Plan shall interfere with or
limit in any way the right of the Company or any Subsidiary to the employment or
service of any Eligible Recipient or Participant at any time, nor confer upon
any Eligible Recipient or Participant any right to continue in the employ or
service of the Company or any Subsidiary.
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12.2 Restrictions on Transfer. Other than pursuant to a qualified
domestic relations order (as defined by the Code), no right or interest of any
Participant in an Option prior to the exercise of such Options shall be
assignable or transferable, or subjected to any lien, during the lifetime of the
Participant, either voluntarily or involuntarily, directly or indirectly, by
operation of law or otherwise, including execution, levy, garnishment,
attachment, pledge, divorce or bankruptcy. A Participant shall, however, be
entitled to designate a beneficiary to receive an Option upon such Participant's
death. In the event of a Participant's death, such Participant's rights and
interest in Options shall be transferable by testamentary will or the laws of
descent and distribution, and payment of any amounts due under the Plan shall be
made to, and exercise of any Options (to the extent permitted pursuant to
Article 9 of the Plan) may be made by, the Participant's legal representatives,
heirs or legatees. If in the opinion of the Committee a Participant holding an
Option is disabled from caring for his or her affairs because of mental
condition, physical condition or age, any payments due the Participant may be
made to, and any rights of the Participant under the Plan shall be exercised by,
such Participant's guardian, conservator or other legal personal representative
upon furnishing the Committee with evidence satisfactory to the Committee of
such status. Notwithstanding the foregoing, the Board or the Committee may, in
its discretion, determine that an Option may be exercised by someone other than
the Optionee and that the Option may be transferable based on the tax and
federal securities laws then in effect for such Options.
12.3 Non-Exclusivity of the Plan. Nothing contained in the Plan is
intended to amend, modify or rescind any previously approved compensation plans
to programs entered into by the Company. The Plan will be construed to be in
addition to any and all such other plans or programs. Neither the adoption of
the Plan nor the submission of the Plan to the shareholders of the Company for
approval will be construed as creating any limitations on the power or authority
of the Board to adopt such additional or other compensation arrangements as the
Board may deem necessary or desirable.
ARTICLE 13. SECURITIES LAW RESTRICTIONS.
13.1 Share Issuances. Notwithstanding any other provision of the Plan
or any agreement entered into pursuant hereto, the Company shall not be required
to issue or deliver any certificate for shares of Common Stock under this Plan,
and an Option shall not be considered to be exercised notwithstanding the tender
by the Participant of any consideration therefor, unless and until each of the
following conditions has been fulfilled:
(a) (i) There shall be in effect with respect to such shares a
registration statement under the Securities Act and any applicable
state securities laws if the Committee, in its discretion, shall have
determined to file, cause to become effective and maintain the
effectiveness of such registration statement; or (ii) if the Committee
has determined not to so register the shares of Common Stock to be
issued under the Plan, (A) exemptions from registration under the
Securities Act and applicable state securities laws shall be available
for such issuance (as determined by counsel to the Company) and (B)
there shall have been received from the Participant (or, in the event
of death or disability, the Participant's heirs(s) or legal
representative(s)) any representations or agreements requested by the
Company in order to permit such issuance to be made pursuant to such
exemptions; and
(b) There shall have been obtained any other consent, approval
or permit from any state or federal governmental agency which the
Committee shall, in its discretion upon the advice of counsel, deem
necessary or advisable.
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13.2 Share Transfers. Shares of Common Stock issued pursuant to Options
or Restricted Stock awards granted under the Plan may not be sold, assigned,
transferred, pledged, encumbered or otherwise disposed of, whether voluntarily
or involuntarily, directly or indirectly, by operation of law or otherwise,
except pursuant to registration under the Securities Act and applicable state
securities laws or pursuant to exemptions from such registrations. The Company
may condition the sale, assignment, transfer, pledge, encumbrance or other
disposition of such shares not issued pursuant to an effective and current
registration statement under the Securities Act and all applicable state
securities laws on the receipt from the party to whom the shares of Common Stock
are to be so transferred of any representations or agreements requested by the
Company in order to permit such transfer to be made pursuant to exemptions from
registration under the Securities Act and applicable state securities laws.
13.3 Legends.
(a) Unless a registration statement under the Securities Act
is in effect with respect to the issuance or transfer of shares of
Common Stock under the Plan, each certificate representing any such
shares shall be endorsed with a legend in substantially the following
form, unless counsel for the Company is of the opinion as to any such
certificate that such legend is unnecessary:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED ("THE ACT"), OR UNDER
APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND SUCH STATE LAWS OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUCH STATE LAWS,
THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE
SATISFACTION OF THE COMPANY.
(b) The Committee, in its discretion, may endorse certificates
representing shares issued pursuant to the exercise of Incentive Stock
Options with a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED, ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED OF
ON OR BEFORE (THE LATER OF THE ONE-YEAR OR TWO-YEAR INCENTIVE
STOCK OPTION HOLDING PERIODS), WITHOUT THE PRIOR WRITTEN
CONSENT OF THE COMPANY.
ARTICLE 14. PLAN AMENDMENT, MODIFICATION AND TERMINATION.
The Board may suspend or terminate the Plan or any portion thereof at
any time, and may amend the plan from time to time in such respects as the Board
may deem advisable in order that Options or Restricted Stock awards under the
Plan shall conform to any change in applicable laws or regulations or in any
other respect the Board may deem to be in the best interests of the Company;
provided, however, that no such amendment shall be effective, without approval
of the shareholders of the Company, if shareholder approval of the amendment is
then required pursuant to Rule 16b-3 under the Exchange Act or any successor
rule or Section 422 of the Code or under the applicable rules or regulations of
any
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securities exchange or the NASD. No termination, suspension or amendment of the
Plan shall alter or impair any outstanding Option or a Restricted Stock award
without the consent of the Participant affected thereby; provided, however, that
this sentence shall not impair the right of the Committee to take whatever
action it deems appropriate under Section 4.3 or Article 10 of the Plan.
ARTICLE 15. EFFECTIVE DATE OF THE PLAN.
15.1 Effective Date. The Plan is effective as of September 1, 1992, the
date it was adopted by the Board.
15.2 Duration of the Plan. The Plan shall terminate at midnight on
September 1, 2002, and may be terminated prior thereto by Board action, and no
Option or a Restricted Stock award shall be granted after such termination.
Options outstanding upon termination of the Plan may continue to be exercised in
accordance with their terms.
ARTICLE 16. MISCELLANEOUS.
16.1 Construction and Headings. The use of the masculine gender shall
also include within its meaning the feminine, and the singular may include the
plural and may include the singular, unless the context clearly indicates to the
contrary. The headings of the Articles, Sections and subparts of the Plan are
for convenience of reading only and are not meant to be of substantive
significance and shall not add or detract from the meaning of such Article,
Section or subpart.
16.2 Public Policy. No person shall have any claim or right to receipt
of an Option or a Restricted Stock award if, in the opinion of counsel to the
Company, such receipt conflicts with law or is opposed to governmental or public
policy.
16.3 Governing Law. The place of administration of the Plan shall be
conclusively deemed to be within the State of Minnesota, and the rights and
obligations of any and all persons having or claiming to have had an interest
under the Plan or under any agreements evidencing Options and Restricted Stock
awards shall be governed by and construed exclusively and solely in accordance
with the laws of the State of Minnesota without regard to the conflict of laws
provisions of any jurisdictions. All parties agree to submit to the jurisdiction
of the state and federal courts of Minnesota with respect to matters relating to
the Plan and agree not to raise or assert the defense that such forum is not
convenient for such party.
16.4 Successors and Assigns. This Plan shall be binding upon and inure
to the benefit of the successors and permitted assigns of the Company,
including, without limitation, whether by way of merger, consolidation,
operation of law, assignment, purchase or other acquisition of substantially all
of the assets or business of the Company and any and all such successors and
assigns shall absolutely and unconditionally assume all of the Company's
obligations under the Plan.
16.5 Survival of Provisions. The rights, remedies, agreements,
obligations and covenants contained in or made pursuant to the Plan, any
agreement evidencing an Option or a Restricted Stock award and any other notices
or agreements in connection therewith, including, without limitation, any notice
of exercise of an Option, shall survive the execution and delivery of such
notices and agreements and the delivery and receipt of shares of Common Stock
and shall remain in full force and effect.
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ARTICLE 17. GRANTING OF OPTIONS TO DIRECTORS WHO ARE NOT EMPLOYEES.
17.1 Each director who is not an employee of the Company on March 5,
1996 shall receive an Option to purchase 20,000 shares of the Company's Common
Stock at a price equal to the Fair Market Value. Such Options shall be
designated as Non-Statutory Stock Options and shall be subject to the same terms
and provisions as are then in effect with respect to granting of Non-Statutory
Stock Options to salaried officers and key employees of the Company. Each option
shall vest in increments of 20% of the original Option grant beginning one year
from the date of grant and shall expire six years from the date of grant.
Subject to the foregoing, all provisions of this Plan not inconsistent with the
foregoing shall apply to the Options granted to directors who are not employees
except that directors shall always have the right to make payment by delivery of
Broker Exercise Notice or by delivery of previously acquired shares as provided
in Section 6.6 of the Plan.
In addition, each director who is not an employee of the Company and
serves as a director on April 1 of each year, beginning on April 1, 1997, shall
receive an Option to purchase 6,000 shares of Common Stock at a price equal to
Fair Market Value. Such Options shall be designated as Non-Statutory Stock
Options. Each Option shall vest in increments of 20% of the original Option
grant beginning one year from the date of grant and shall expire on the earlier
of (i) six years from the date of grant, and (ii) one year after the person
ceases to serve as a director.
In the event discretionary Options are granted to members of the
Committee, such Options shall be granted by the Board.
As amended by Board of Directors
Approved by shareholders on September 9, 1999.
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EXHIBIT 5.1
September 15, 1999
Navarre Corporation
7400 49th Avenue North
New Hope, MN 55347
Re: Opinion of Counsel as to Legality of 1,300,000 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-8 of 1,300,000 shares of Common Stock, no par
value, of Navarre Corporation (the "Company") offered to officers, other key
employees and consultants of the Company pursuant to the Navarre Corporation
1992 Stock Option Plan (the "Plan").
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
1,300,000 shares of Common Stock to be issued by the Company under the Plan,
will, when paid for and issued, be legally and 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.
/s/ Lindquist & Vennum P.L.L.P.
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EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statement on Form S-8 for the registration of an additional 1,300,000 shares of
its common stock under the Company's 1992 Stock Option Plan, of our report dated
April 30, 1999, with respect to the consolidated financial statements and
schedule of Navarre Corporation included in its Annual Report on Form 10-K for
the year ended March 31, 1999, filed with the Securities and Exchange
Commission.
/s/ ERNST & YOUNG LLP
Minneapolis, Minnesota
September 13, 1999
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