EXHIBIT 10.58
OPTION #
NAVARRE CORPORATION 2004 STOCK PLAN
INCENTIVE STOCK OPTION AGREEMENT
You have been granted an option to purchase shares of the Company, subject to
the terms and conditions of the 2004 Stock Plan and the Option Agreement set
forth below, as follows:
Name of Optionee: ___________________
Grant Date: ___________________
Total number of Option Shares: ___________ Shares of Common Stock
Exercise price per share: $__________ [Fair Market Value]
Expiration date of option*: ___________ [ten years]
Vesting Schedule: First Exercisable Number of Option Shares
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[1st anniversary] [1/3]
[2nd anniversary] [1/3]
[3rd anniversary] [1/3]
* Subject to earlier expiration as provided below.
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INCENTIVE STOCK OPTION AGREEMENT
1 GRANT OF OPTION.
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Navarre Corporation, a Minnesota corporation (together with all
successors thereto, the "Company"), hereby grants to the optionee named above
(the "Optionee"), who is an employee of the Company or a parent or subsidiary of
the Company, an option (the "Stock Option") to purchase on or prior to the
expiration date specified above, subject to earlier termination as is specified
herein, all or any part of the number of shares indicated above (the "Option
Shares") of the Company's common stock, no par value (the "Common Stock"), at
the per share option exercise price specified above (the "Exercise Price"),
subject to the terms and conditions set forth in this Option Agreement (the
"Agreement") and in the Navarre Corporation 2004 Stock Plan, as amended from
time to time (the "Plan"). This Stock Option is intended to qualify as an
"incentive stock option" as defined in Section 422(b) of the Internal Revenue
Code of 1986 (the "Code"). All capitalized terms used herein and not otherwise
defined shall have the respective meanings set forth in the Plan.
2. ACCEPTANCE.
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Your execution of this Agreement will indicate your acceptance of and
your willingness to be bound by its terms. This Agreement imposes no obligation
upon you to purchase any of the Option Shares. Your obligation to purchase
Option Shares can arise only upon your exercise of this Option in the manner set
forth in Section 4. below. This Option may not be exercised unless you have
executed and returned this Agreement to the Company.
3. WHEN OPTION MAY BE EXERCISED.
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3.1 Vesting Schedule. Subject to the terms and conditions hereof, the Option
shall first become exercisable with respect to the Option Shares in the
installments and on the vesting dates specified above (the "Vesting Schedule").
The rights to exercise this Option on the specified vesting dates shall be
cumulative with respect to the Option Shares becoming exercisable on each such
date but in no event shall this Option be
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exercisable after, and this Option shall become void and expire as to all
unexercised Option Shares at, 4:00 p.m. (Minneapolis time) on the expiration
date set forth above (the "Expiration Date").
3.2 Termination of Employment or Service. In the event that your employment with
the Company or a parent or subsidiary terminates by reason of your death,
disability, retirement or any other reason except termination for cause (as
defined in Section 3.3 below), this Option shall remain exercisable to the
extent exercisable as of such termination but shall expire and become void as to
all unexercised Option Shares at 4:00 p.m. (Minneapolis time) on the 91st day
following the date of such termination, unless the Expiration Date precedes the
91st day. The Vesting Schedule shall no longer continue to apply after the date
of termination and only those Option Shares exercisable at the date of
termination shall thereafter be exercisable. Termination will be considered due
to "Disability" if you meet the requirements of the Company's long-term
disability plan or, if no such plan exists, you are permanently and totally
disabled within the meaning of Section 22(e)(3) of the Code. Your termination
will be considered due to "Retirement" if the Committee so determines at the
time of your termination. A change in status from an employee to a consultant,
agent, advisor or independent contractor is considered a termination of
employment or service as applicable.
3.3 Termination for Cause. In the event that your employment with the Company or
a parent or subsidiary is terminated by your employer for Cause, this Option
shall expire and become void as to all unexercised Option Shares at 4:00 p.m.
(Minneapolis time) on the effective date of such termination. For purposes of
this Agreement, the term "Cause" shall mean: (i) committing any act of
malfeasance or wrongdoing affecting the Company or a Related Company or any act
clearly tending to bring discredit upon the Company or a Related Company; (ii)
breaching any employment contract, covenant not to compete or duty of
confidentiality affecting the Company or a Related Company; (iii) engaging in
conduct which constitutes a conflict of interest with the Company or a Related
Company; (iv) violating the Company's or a Related Company's policies,
procedures or work rules, including but not limited to the Navarre Code of
Conduct and the Insider Trading Policy, which violation would warrant
termination after one or more infractions; or (v) failing to substantially
perform reasonably assigned duties unless such failure can be reasonably excused
due to circumstances beyond your control. If you are party to an employment
agreement with the Company or a Related Company which contains a definition of
termination for cause which conflicts with the foregoing provision, your
employment agreement will be controlling.
3.4 Change of Control Transaction. For purposes of this Section 3.3, the term
"Change of Control Transaction" shall have the meaning set forth in Section 2.
of the Plan. Upon the occurrence of a Change of Control Transaction, the Vesting
Schedule shall no longer apply and this Option shall automatically and
immediately become exercisable in full. The Committee in its discretion may make
further adjustments or modifications to the Option pursuant to Section 15.4. of
the Plan.
4. HOW OPTION MAY BE EXERCISED.
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4.1 Notice. If exercisable, this Option may be exercised in whole or in part
(but in increments of at least 100 Option Shares) from time to time by a written
notice signed by you, or your legal representative, and delivered to the Company
in person or by mailing it, postage prepaid, certified or registered mail,
return receipt requested, or via nationally recognized overnight courier, to its
principal executive office in New Hope, Minnesota (Attention: Controller),
signifying your election to exercise this Option. The notice must identify this
Option, state the number of Option Shares you are electing to purchase, and
contain a statement by you (in a form acceptable to the Company) that such
shares are being acquired by you for investment and not with a view to their
distribution or resale (unless a registration statement covering the shares
purchasable has been declared effective by the Securities and Exchange
Commission). The Option Exercise Notice attached hereto as Exhibit A may be used
for this purpose. The notice must be accompanied by payment in full pursuant to
Section 5. below of the aggregate Exercise Price for the Option Shares being
purchased.
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4.2 Proof of Representation. If notice of the exercise of this option is given
by a person or persons other than you, the Company may require, as a condition
to the exercise of this Option, the submission to the Company of appropriate
proof of the right of such person or persons to exercise this Option.
4.3 Issuance of Shares. Certificates evidencing ownership of the shares of
Common Stock purchased upon any exercise of this Option will be issued as soon
as practicable. If permitted by law and the rules of the applicable stock
exchange, the issuance of shares may be effected on a noncertificated basis. The
Company, however, shall not be required to issue or deliver a certificate for
any shares until it has complied with all requirements of the Securities Act of
1933, as amended, the Securities Exchange Act of 1934, as amended, any stock
exchange on which the Company's Common Stock may then be listed and all
applicable state laws in connection with the issuance or sale of such shares or
the listing of such shares on said exchange. The Company may cause each
certificate evidencing the purchased Common Stock to be endorsed with one or
more legends setting forth the restrictions on transfer of such Common Stock.
Until the issuance of the Option Shares pursuant to this Agreement and the Plan,
you, or such other person as may be entitled to exercise this option, shall have
none of the rights of a shareholder with respect to the Option Shares.
4.4 Incentive Stock Option Limit. To the extent that the aggregate Fair Market
Value of Common Stock with respect to which Incentive Stock Options are
exercisable by you for the first time during any calendar year exceeds $100,000
(the Fair Market Value being determined as of the Grant Date for the Option),
such portion in excess of $100,000 shall be treated as Nonqualified Stock
Options. This provision shall be applied by taking Incentive Stock Options into
account in the order in which they were granted (or with respect to an Incentive
Stock Option for which the Vesting Schedule has been accelerated, when
acceleration occurs). If the $100,000 limitation applies to an Incentive Stock
Option, the Company may, but is not required to, (i) issue a separate stock
certificate for the stock that is issued with respect to the portion of the
Incentive Stock Option that is treated as an Incentive Stock Option and
designate such stock as Incentive Stock Option stock in the Company's transfer
records and (ii) issue a separate stock for the stock that is issued with
respect to the portion of the Incentive Stock Option that is treated as an
Nonqualified Stock Option and designate such stock as Nonqualified Stock Option
stock in the Company's transfer records. The Committee, in its sole discretion,
may determine the Fair Market Value of Common Stock for purposes of Incentive
Stock Options pursuant to a method that differs from the method that is set
forth in the definition of Fair Market Value for purposes of the Plan if it is
necessary to comply, or advisable in the Committee's sole discretion to ensure
compliance, with the provisions of Section 422 of the Code.
4.5 Tax Consequences. You acknowledge that there are tax consequences that may
be adverse to you upon the exercise of this Option and/or the disposition of
Option Shares and that you should consult a tax adviser prior to such exercise
or disposition. The Company makes no representations with respect to tax
consequences.
5. PAYMENT FOR OPTION SHARES.
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5.1 How Paid. At the time of exercise, you must deliver consideration to the
Company equal to the product of the Exercise Price and the number of Option
Shares being purchased. Forms of payment acceptable to the Company are: (i)
cash; (ii) a personal check or a certified or bank cashier's check, payable to
the order of the Company; (iii) the tender of shares of Common Stock already
owned by you, provided that such shares were held for the minimum period
required by applicable accounting rules to avoid a charge to the Company's
earnings or were not acquired from the Company as compensation; (iv) a properly
executed "same day sale" commitment between you and a broker/dealer that is a
member of the National Association of Securities Dealers (a "NASD Dealer")
whereby you irrevocably instruct the NASD Dealer to deliver promptly to the
Company the aggregate amount of sale or loan proceeds sufficient to pay the
aggregate Exercise Price in accordance with the regulations of the Federal
Reserve Board; and (v) any combination of the foregoing.
5.2 Payment by Tendering Shares. If paying all or a portion of the aggregate
Exercise Price by tendering previously owned shares, you may satisfy such
delivery by presenting proof of beneficial ownership of such
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shares rather than physical delivery. The Company will accept such delivery by
attestation as payment and deduct the same number of shares from the number of
Option Shares issued pursuant to the exercise. Any previously owned shares used
for payment will be valued at Fair Market Value, as defined in Section 2. of the
Plan, as of the day of exercise.
6. INCENTIVE STOCK OPTION DISQUALIFYING DISPOSITION.
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If you sell or otherwise dispose of any of the Option Shares acquired
upon exercise of this Option within two (2) years from the Grant Date or within
one (1) year after the date you exercise this Option (a disqualifying
disposition for incentive stock option purposes), then, in order to provide the
Company with the opportunity to claim the benefit of any income tax deduction,
you shall promptly notify the Company, in writing, of the intended or actual
disposition of such shares, the number of shares, and the consideration, if any,
to be received for such shares. In such event upon your exercise of this Option
and prior to the delivery of the Option Shares purchased pursuant to such
exercise, the Company is entitled to: (i) withhold and deduct from your future
wages (or from other amounts which the Company may owe you), or make other
arrangements for the collection of, all legally required amounts necessary to
satisfy any federal, state or local withholding and employment-related tax
requirements attributable to the grant or exercise of this Option or otherwise
incurred with respect to this Option; or (ii) require you to promptly remit the
amount of such withholding to the Company before acting on your exercise notice.
In the event that the Company is unable to withhold such amounts, for whatever
reason, you hereby agree to pay to the Company an amount equal to the amount the
Company would otherwise be required to withhold under federal, state or local
law.
7. TRANSFERABILITY OF OPTION.
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You may not sell, assign, pledge (as loan collateral or otherwise),
encumber (by operation of law or otherwise), or transfer this Option in any
manner, other than by will or the applicable laws of descent or distribution.
During your lifetime, this Option is exercisable only by you or a legal
representative. Any attempt to transfer or encumber this Option or the Option
Shares shall be null and void and shall void this Option.
8. THIS OPTION SUBJECT TO PLAN.
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This Option and the Option Shares granted and issued pursuant to this
Agreement have been granted and issued under, and are subject to the terms of,
the Plan. The terms of the Plan are incorporated by reference herein in their
entirety, and, by execution hereof, you acknowledge having reviewed a copy of
the Plan. The provisions of this Agreement shall be interpreted so as to be
consistent with the Plan, and any ambiguities herein shall be interpreted by
reference to the Plan. In the event that any provision hereof is inconsistent
with the terms of the Plan, the terms of the Plan shall prevail. You acknowledge
and agree that in the event of any question or controversy relating to the terms
of the Plan or this Agreement, the decision of the Committee administering the
Plan shall be conclusive and final. A copy of the Plan is contained in the
Company's Proxy Statement for the September 13, 2004 Annual Meeting, has been
filed with the Securities and Exchange Commission and is available from the
Company, attention Human Resources.
9. NO GUARANTEE OF CONTINUED EMPLOYMENT.
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You acknowledge and agree that the vesting of shares pursuant to the
Vesting Schedule is earned only by continuing your employment at the will of the
Company. You further acknowledge and agree that the award of this Option and
this Agreement do not constitute an express or implied promise of continued
employment for any period and shall not interfere with your right or the
Company's right to terminate your employment at any time with or without cause.
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10. MISCELLANEOUS.
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10.1 Binding Effect. This Agreement shall be binding upon the heirs, executors,
administrators and successors of the parties hereto.
10.2 Governing Law. This Agreement and all rights and obligations hereunder
shall be construed in accordance with the Plan and governed by the laws of the
State of Minnesota, without regard to its choice of laws provisions. The parties
agree that any action relating to this Agreement may be brought in the state or
federal courts located in Hennepin County, Minnesota and the parties hereby
consent to the jurisdiction of such courts
10.3 Entire Agreement. This agreement and the Plan set forth the entire
agreement and understanding of the parties hereto with respect to the grant and
exercise of this Option and the administration of the Plan and supersede all
prior agreements, arrangements, plans and understandings relating to the grant
and exercise of this Option and the administration of the Plan.
10.4 Amendment and Waiver. This Agreement may be amended, waived, modified or
canceled by the Committee at any time, provided that all such amendments,
waivers, modifications or cancellations shall comply with and not be prohibited
by the provisions of the Plan, and any amendment, waiver, modification or
cancellation that has a material adverse affect on your rights under this
Agreement shall be with your consent in a written instrument executed by you and
the Company.
Agreed and accepted as of the Grant Date:
NAVARRE CORPORATION OPTIONEE
By
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Its
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