Exhibit 10.10

 

TRANSITION AGREEMENT

 

THIS TRANSITION AGREEMENT (the “Transition Agreement”) made and entered into as
of the first day of October, 2005 by and between SoftBrands, Inc. a Delaware
corporation (“SoftBrands”) and George H. Ellis, an individual resident of the
State of Texas (“Executive”).

 

WHEREAS, SoftBrands and Executive are parties to that certain employment
agreement dated as of January 1, 2002, as amended by that certain amendment to
employment agreement dated as of November 26, 2002 (the “Employment Agreement”),
pursuant to which Executive has served, and continues to serve, as the Chief
Executive Officer and Chairman of the Board of SoftBrands;

 

WHEREAS, Executive has expressed his desire to transition his position with
SoftBrands, effective January 1, 2006 (the “Transition Date”), to Executive
Chairman of the Board and to promote Randal Tofteland to the position of Chief
Executive Officer effective such date;

 

WHEREAS, Executive and SoftBrands wish to confirm the employment and
compensation arrangements that will apply on and after the Transition Date and
consistent with such arrangements to terminate the Employment Agreement as of
the Termination Date.

 

NOW, THEREFORE, in consideration of the forgoing recitals, and in consideration
of the mutual promises and agreements made herein and for other good and
valuable consideration the receipt and adequacy of which are hereby
acknowledged, the parties hereby agree as follows:

 

ARTICLE I
EMPLOYMENT PRIOR TO TERMINATION DATE

 

1.1          EMPLOYMENT UNTIL TRANSITION DATE.  DURING THE PERIOD COMMENCING ON
THE DATE OF THIS TRANSITION AGREEMENT AND ENDING ON THE DAY BEFORE THE
TRANSITION DATE, THE EMPLOYMENT OF EXECUTIVE BY SOFTBRANDS SHALL BE GOVERNED BY
AND PURSUANT TO THE PROVISIONS OF THE EMPLOYMENT AGREEMENT AND SHALL CONTINUE AT
THE RATE OF BASE PAY ($360,000 PER ANNUM OR $90,000 PER QUARTER) IN EFFECT ON
SEPTEMBER 30, 2005.  DURING SUCH PERIOD THE EXECUTIVE SHALL REMAIN ELIGIBLE TO
RECEIVE A BONUS BASED ON PERFORMANCE AND EXECUTIVE’S ATTAINMENT OF OBJECTIVES
ESTABLISHED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF
SOFTBRANDS FOR SUCH PERIOD.

 

1.2          TERMINATION OF EMPLOYMENT AGREEMENT.  EFFECTIVE ON THE TRANSITION
DATE, THE EMPLOYMENT AGREEMENT AND ALL PRIOR EMPLOYMENT OR CONSULTING AGREEMENTS
BETWEEN EXECUTIVE OR ITS SUBSIDIARIES SHALL BE AND THE SAME ARE HEREBY
TERMINATED AND THERE SHALL BE NO RIGHT TO SEVERANCE OR OTHER RELATED BENEFITS
THEREUNDER; PROVIDED, HOWEVER, THAT THE FOREGOING WILL NOT APPLY TO ANY
OBLIGATION OF SOFTBRANDS OR ANY OF ITS SUBSIDIARIES TO PROVIDE AND CONTINUE IN
FULL FORCE AND EFFECT AN OFFICER’S AND DIRECTOR’S LIABILITY INSURANCE POLICY OR
TO INDEMNIFY EXECUTIVE AGAINST ANY LOSSES, COSTS, DAMAGES OR

 

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EXPENSES, INCLUDING THE OBLIGATIONS UNDER SECTION 3.5 OF THE EMPLOYMENT
AGREEMENT OR UNDER THE INDEMNIFICATION AGREEMENT DATED AS OF JANUARY 1, 2002
WITH EXECUTIVE (THE “INDEMNIFICATION AGREEMENT”).

 

ARTICLE II
TRANSITION – EMPLOYMENT AS EXECUTIVE CHAIRMAN
AND ELECTION AS CHAIRMAN OF THE BOARD

 

2.1          TRANSITION EXECUTIVE CHAIRMAN AND TERM.  EFFECTIVE ON THE
TRANSITION DATE, EXECUTIVE HEREBY RESIGNS AS CHIEF EXECUTIVE OFFICER OF
SOFTBRANDS.  EFFECTIVE SUCH DATE, EXECUTIVE IS HEREBY EMPLOYED AS, AND APPOINTED
TO THE POSITION OF, EXECUTIVE CHAIRMAN OF THE BOARD OF DIRECTORS OF SOFTBRANDS
(“EXECUTIVE CHAIRMAN”) TO SERVE IN SUCH POSITION FOR A TERM OF ONE YEAR ENDING
DECEMBER 31, 2006 (THE “INITIAL EXECUTIVE TERM”), UNLESS THE INITIAL EXECUTIVE
TERM IS TERMINATED EARLIER AS PROVIDED FOR HEREIN, OR UNLESS SUCH TERM IS
RENEWED FOR AN ADDITIONAL ONE YEAR PERIOD ENDING DECEMBER 31, 2007 (THE
“EXTENDED EXECUTIVE TERM” AND TOGETHER, IF APPLICABLE, WITH THE INITIAL
EXECUTIVE TERM, (THE “EXECUTIVE TERM”) UPON WRITTEN NOTICE DELIVERED TO
EXECUTIVE ON OR BEFORE SEPTEMBER 1, 2006.  UPON TERMINATION OF THE EXECUTIVE
TERM, EXECUTIVE’S EMPLOYMENT WITH SOFTBRANDS SHALL TERMINATE, BUT EXECUTIVE
SHALL REMAIN A DIRECTOR, AND CHAIRMAN OF THE BOARD OF DIRECTORS OF SOFTBRANDS
(“CHAIRMAN OF THE BOARD”), UNTIL THE EARLIER OF (I) DECEMBER 31, 2008, OR
(II) IF HE IS NOT REELECTED TO A POSITION AS A DIRECTOR OF SOFTBRANDS, UNTIL THE
ANNUAL MEETING OF STOCKHOLDERS OF SOFTBRANDS HELD IN 2008 (THE PERIOD COMMENCING
IMMEDIATELY AFTER THE EXECUTIVE TERM AND ENDING DECEMBER 31, 2008, BEING
HEREAFTER REFERRED TO AS THE CHAIRMAN TERM”).  DURING THE CHAIRMAN TERM,
EXECUTIVE SHALL, SUBJECT TO ACTION OF STOCKHOLDERS OF THE COMPANY, REMAIN A
DIRECTOR OF SOFTBRANDS AND SERVE AS CHAIRMAN OF THE BOARD OF DIRECTORS OF
SOFTBRANDS, BUT HE SHALL NOT BE AN EMPLOYEE OF SOFTBRANDS.

 

2.2          DUTIES.

 

(A)           EXECUTIVE TERM.  EXECUTIVE HEREBY ACCEPTS, DURING THE EXECUTIVE
TERM, EMPLOYMENT WITH SOFTBRANDS IN ACCORDANCE WITH THIS TRANSITION AGREEMENT
AND AGREES TO RENDER THE SERVICES DESCRIBED BELOW.  THE EXECUTIVE SHALL ACCEPT
AND FOLLOW THE DIRECTIONS OF THE BOARD IN THE PERFORMANCE OF HIS DUTIES, AND
SHALL COMPLY WITH ALL EXISTING AND FUTURE REGULATIONS APPLICABLE TO EMPLOYEES OF
SOFTBRANDS AND TO SOFTBRANDS’ BUSINESS.  EXECUTIVE SHALL DURING SUCH PERIOD OR
EXTENDED PERIOD SERVE AS THE EXECUTIVE CHAIRMAN IN ACCORDANCE WITH THE POLICIES,
PROCEDURES AND DUTIES AS ADOPTED BY THE BOARD OF DIRECTORS OF SOFTBRANDS. 
EXECUTIVE’S DUTIES AS EXECUTIVE CHAIRMAN INCLUDE SUBSTANTIAL ONGOING MENTORING
AND SUPPORT OF THE CHIEF EXECUTIVE OFFICER AND HIS TEAM IN THE AREAS OF BOARD
COMMUNICATIONS, REGULATORY RELATIONS, CAPITAL MARKETS STRATEGY, CORPORATE
FINANCE, SHAREHOLDER RELATIONS, ACQUISITIONS AND BUSINESS DEVELOPMENT. 
THROUGHOUT THE EXECUTIVE TERM, SOFTBRANDS WILL USE ITS BEST EFFORTS, SUBJECT TO
ITS RIGHTS OF TERMINATION UNDER THIS AGREEMENT, TO CAUSE EXECUTIVE TO BE ELECTED
AS A MEMBER OF THE BOARD.

 

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(B)           CHAIRMAN TERM. EXECUTIVE’S MAJOR RESPONSIBILITIES AS CHAIRMAN OF
THE BOARD INCLUDE THE MANAGEMENT OF BOARD COMMUNICATIONS AND ITS GOVERNANCE
PROCESS, AND IMPLEMENTING AND MONITORING THE DIRECTION OF THE BOARD AS TO
MANAGEMENT OVERSIGHT.  THIS REQUIRES ATTENDANCE AT SUBSTANTIALLY ALL BOARD AND
COMMITTEE MEETINGS AND AT THE ANNUAL MEETING OF SOFTBRANDS.

 

2.3          NON-EXCLUSIVE SERVICES.  SUBJECT TO THE PROVISIONS OF ARTICLE V OF
THIS TRANSITION AGREEMENT, IT IS UNDERSTOOD AND AGREED THAT EXECUTIVE’S POSITION
AS EXECUTIVE CHAIRMAN IS NOT FULL-TIME AND ACCORDINGLY THE EXECUTIVE MAY ENGAGE
IN OTHER BUSINESS ACTIVITIES DURING THE EXECUTIVE TERM AND THE CHAIRMAN TERM,
WHETHER OR NOT FOR PROFIT OR OTHER REVENUE, WITHOUT THE CONSENT OR APPROVAL OF
SOFTBRANDS, EXCEPT AS MAY BE REQUIRED BY THE PROVISIONS OF ARTICLE V OR BY HIS
FIDUCIARY OBLIGATIONS AS A DIRECTOR.

 

2.4          REPORTING OBLIGATIONS.  IN PERFORMANCE OF HIS DUTIES AS EXECUTIVE
CHAIRMAN AND AS CHAIRMAN OF THE BOARD, THE EXECUTIVE SHALL REPORT DIRECTLY TO
THE BOARD.;

 

ARTICLE III
COMPENSATION AND BENEFITS OF EXECUTIVE

 

3.1          ANNUAL BASE SALARY.  SOFTBRANDS SHALL PAY THE EXECUTIVE A BASE
SALARY FOR THE SERVICES TO BE RENDERED BY HIM AS EXECUTIVE CHAIRMAN DURING THE
EXECUTIVE TERM AT THE RATE OF TWO HUNDRED THOUSAND DOLLARS ($200,000) ANNUALLY
(PRORATED FOR ANY PORTION OF A YEAR).  SUCH BASE SALARY SHALL BE PAYABLE IN
PERIODIC INSTALLMENTS IN ACCORDANCE WITH THE TERMS OF SOFTBRANDS’ REGULAR
PAYROLL PRACTICES IN EFFECT FROM TIME TO TIME DURING THE TERM OF THIS TRANSITION
AGREEMENT, BUT IN NO EVENT LESS FREQUENTLY THAN ONCE EACH MONTH.  SUCH BASE
SALARY CANNOT BE DECREASED.  DURING THE EXECUTIVE TERM, EXECUTIVE SHALL BE
ELIGIBLE FOR SUCH BENEFITS AND EXPENSES AS SOFTBRANDS MAKES AVAILABLE TO ITS
EMPLOYEES GENERALLY.

 

3.2          DIRECTOR FEES.  DURING THE EXECUTIVE TERM AND THE CHAIRMAN TERM,
SOFTBRANDS SHALL PAY EXECUTIVE ANNUAL FEES OF AT LEAST $100,000 FOR ALL OF
EXECUTIVE’S SERVICES AS A DIRECTOR AND CHAIRMAN OF THE BOARD (THE “CHAIRMAN
FEE”), SUBJECT TO INCREASES, IF ANY, AS SOFTBRANDS’ COMPENSATION COMMITTEE MAY
DETERMINE.  SUCH CHAIRMAN FEE SHALL BE PAID IN ACCORDANCE WITH THE TERMS IN
EFFECT FROM TIME-TO-TIME ADOPTED BY SOFTBRANDS’ COMPENSATION COMMITTEE.  DURING
THE CHAIRMAN TERM, EXECUTIVE SHALL BE ELIGIBLE FOR SUCH BENEFITS AND EXPENSES AS
SOFTBRANDS MAKE AVAILABLE TO ITS MEMBERS OF THE BOARD OF DIRECTORS, INCLUDING
PARTICIPATING IN DIRECTOR OPTION GRANTS.

 

3.3          BONUSES.  EXECUTIVE IS NOT ELIGIBLE TO RECEIVE BONUSES OR OTHER
INCENTIVE COMPENSATION IN EITHER OF THE POSITIONS OF EXECUTIVE CHAIRMAN OR
CHAIRMAN OF THE BOARD.

 

3.4          EXPENSES.  SOFTBRANDS SHALL PAY OR REIMBURSE THE EXECUTIVE FOR ALL
REASONABLE, ORDINARY AND NECESSARY BUSINESS EXPENSES ACTUALLY INCURRED OR PAID
BY THE EXECUTIVE IN THE PERFORMANCE OF EXECUTIVE’S SERVICES UNDER THIS
TRANSITION AGREEMENT IN ACCORDANCE WITH THE EXPENSE REIMBURSEMENT POLICIES OF
SOFTBRANDS IN EFFECT FROM TIME TO TIME DURING THE EXECUTIVE TERM, UPON
PRESENTATION OF PROPER EXPENSE STATEMENTS OR

 

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VOUCHERS OR SUCH OTHER WRITTEN SUPPORTING DOCUMENTS AS SOFTBRANDS MAY REASONABLY
REQUIRE.

 

3.5          VACATION.  THE EXECUTIVE SHALL NOT BE ENTITLED TO PAID VACATION
DURING THE EXECUTIVE TERM.

 

3.6          INDEMNIFICATION.  CONSISTENT WITH THE TERMS OF SOFTBRANDS’
CERTIFICATE OF INCORPORATION AND BYLAWS, SOFTBRANDS SHALL INDEMNIFY EXECUTIVE
AGAINST ANY LOSSES, COSTS, DAMAGES OR EXPENSES INCURRED AS A DIRECT CONSEQUENCE
OF THE DISCHARGE OF HIS DUTIES OR BY REASON OF HIS STATUS AS AN AGENT OF
SOFTBRANDS AND HOLD EXECUTIVE HARMLESS FOR ANY ACTIONS TAKEN OR DECISIONS MADE
BY HIM IN GOOD FAITH WHILE PERFORMING SERVICES IN HIS CAPACITY AS AN OFFICER OR
DIRECTOR OF SOFTBRANDS DURING THE EXECUTIVE TERM AND THE CHAIRMAN TERM.  NOTHING
IN THIS TRANSITION AGREEMENT SHALL CAUSE TERMINATION, ALTERATION OR AMENDMENT OF
THE INDEMNIFICATION AGREEMENT AND EXECUTIVE SHALL BE ENTITLED TO THE BENEFIT OF
SUCH AGREEMENT THROUGHOUT THE EXECUTIVE TERM.  SOFTBRANDS HAS IN EFFECT AND WILL
CONTINUE IN FULL FORCE AND EFFECT AT ALL TIMES DURING THE EXECUTIVE TERM AND THE
CHAIRMAN TERM, AN OFFICER’S AND DIRECTOR’S LIABILITY INSURANCE POLICY COVERING
THE EXECUTIVE ON TERMS NO LESS FAVORABLE THAN THOSE IN EFFECT ON THE TRANSITION
DATE IN ALL RESPECTS, INCLUDING COVERAGE AND AMOUNTS.

 

3.7          GENERAL EMPLOYMENT BENEFITS.  EXCEPT WHERE EXPRESSLY PROVIDED FOR
HEREIN, THE EXECUTIVE SHALL BE ENTITLED TO PARTICIPATE IN, AND TO RECEIVE THE
BENEFITS UNDER, ANY PENSION, HEALTH, LIFE, ACCIDENT AND DISABILITY INSURANCE
PLANS OR PROGRAMS AND ANY OTHER EMPLOYEE BENEFIT OR FRINGE BENEFIT PLANS THAT
SOFTBRANDS MAKES AVAILABLE GENERALLY TO ITS EMPLOYEES, AS THE SAME MAY BE IN
EFFECT FROM TIME TO TIME DURING THE EXECUTIVE TERM.  EXCEPT THAT THE EXECUTIVE
AND HIS DEPENDENTS SHALL BE ENTITLED TO PARTICIPATE IN HEALTH INSURANCE BENEFITS
DURING THE CHAIRMAN TERM AND UNTIL TERMINATION OF THIS AGREEMENT AS IF HE
CONTINUED TO BE AN EMPLOYEE, EXECUTIVE SHALL NOT OTHERWISE BE ENTITLED TO
PARTICIPATE IN SUCH PLANS OR PROGRAMS DURING THE CHAIRMAN TERM. AFTER EXPIRATION
OF THE CHAIRMAN TERM, EXECUTIVE SHALL BE ENTITLED TO PARTICIPATE IN THE
COMPANY’S EXECUTIVE RETIREMENT HEALTH PLAN, WHICH OFFERS CONTINUED HEALTH
BENEFIT COVERAGE SUBJECT TO CERTAIN PAYMENTS OR CO-PAYMENTS BY EXECUTIVES.

 

3.8          OFFICE SPACE.  SOFTBRANDS SHALL REIMBURSE THE EXECUTIVE FOR
SEVENTY-FIVE PERCENT (75%) OF THE ACTUAL COST PAID BY THE EXECUTIVE FOR
MAINTAINING DURING THE EXECUTIVE TERM AN OFFICE AT 8401 NORTH CENTRAL
EXPRESSWAY, SUITE 840, DALLAS, TEXAS, NOT TO EXCEED $60,000 PER ANNUM.  IF THERE
IS NO EXTENDED EXECUTIVE TERM, THEN FOR THE CALENDAR YEAR 2007, SOFTBRANDS SHALL
REIMBURSE THE EXECUTIVE FOR FIFTY PERCENT (50%)OF THE ACTUAL COST PAID BY THE
EXECUTIVE FOR MAINTAINING DURING CALENDAR YEAR 2007 AN OFFICE AT 8401 NORTH
CENTRAL EXPRESSWAY, SUITE 840, DALLAS, TEXAS, NOT TO EXCEED $40,000 PER ANNUM. 
FROM AND AFTER JANUARY 1, 2008, SOFTBRANDS WILL NOT REIMBURSE EXECUTIVE FOR ANY
EXPENSES FOR MAINTAINING ANY OFFICE.

 

3.9          PERSONAL SECRETARY.  SOFTBRANDS SHALL PROVIDE AT SOFTBRANDS’
EXPENSE A PERSONAL SECRETARY AT THE EXECUTIVE’S CHOICE DURING THE EXECUTIVE
TERM.  IF THERE IS NO EXTENDED EXECUTIVE TERM, THEN FOR CALENDAR YEAR 2007,
SOFTBRANDS SHALL PROVIDE AT SOFTBRANDS’ EXPENSE A PERSONAL SECRETARY AT THE
EXECUTIVE’S CHOICE, NOT TO EXCEED $60,000

 

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PER ANNUM.  FROM AND AFTER JANUARY 1, 2008, SOFTBRANDS SHALL NOT PROVIDE ANY
PERSONAL SECRETARY OR SECRETARIAL SERVICES TO EXECUTIVE.

 

3.10        LOCATION; TRAVEL.  IN CONNECTION WITH HIS EMPLOYMENT DURING THE
EXECUTIVE TERM, UNLESS OTHERWISE AGREED BY THE EXECUTIVE, THE EXECUTIVE WILL BE
BASED IN THE DALLAS METROPOLITAN AREA.  EXECUTIVE WILL UNDERTAKE NORMAL BUSINESS
TRAVEL ON BEHALF OF SOFTBRANDS, THE REASONABLE EXPENSES OF WHICH WILL BE PAID BY
SOFTBRANDS PURSUANT TO SECTION 3.4 OF THIS TRANSITION AGREEMENT.

 

3.11        OPTIONS.  EXECUTIVE IS HEREBY GRANTED EFFECTIVE AS OF THE TRANSITION
DATE AN OPTION TO PURCHASE 50,000 SHARES OF SOFTBRANDS COMMON STOCK PURSUANT TO
THE SOFTBRANDS’ STOCK INCENTIVE PLAN AT THE FAIR MARKET VALUE OF THE STOCK ON
THE TRANSITION DATE.  ONE-THIRD OF SUCH OPTIONS SHARES SHALL BE FULLY VESTED ON
THE TRANSITION DATE AND ONE-THIRD THEREOF SHALL BE FULL VESTED ON THE FIRST
ANNIVERSARY OF THE TRANSITION DATE AND THE BALANCE OF SUCH OPTIONS SHARES SHALL
BE FULLY VESTED ON THE SECOND ANNIVERSARY OF THE TRANSITION DATE AND THE OPTION
SHALL EXPIRE 10 YEARS FROM THE TRANSITION DATE.  IN ADDITION, DURING THE
CALENDAR YEARS 2007 AND 2008 THE EXECUTIVE SHALL BE ELIGIBLE TO PARTICIPATE IN
SOFTBRANDS OPTION GRANTS TO DIRECTORS, WHICH PURSUANT TO CURRENT POLICY, WOULD
CAUSE THE GRANT ON JULY 31ST OF EACH YEAR TO EACH DIRECTOR AN OPTION TO PURCHASE
20,000 SHARES OF SOFTBRANDS’ COMMON STOCK, EXERCISABLE OVER A TEN (10) YEAR
PERIOD.  CONSISTENT WITH THE EMPLOYMENT AGREEMENT, AND EXCEPT AS PROVIDED IN
SECTION 4.2 BELOW, ALL STOCK OPTIONS GRANTED TO EXECUTIVE PRIOR TO THE DATE OF
THIS TRANSITION AGREEMENT TO PURCHASE AN AGGREGATE OF 1,650,000 SHARES OF COMMON
STOCK SHALL REMAIN OUTSTANDING AFTER TERMINATION OF THE EXECUTIVE TERM FOR THE
BALANCE OF THE TERM OF SUCH OPTIONS AND SHALL VEST IN ACCORDANCE WITH THEIR
TERMS; PROVIDED, HOWEVER, THAT EXECUTIVE ACKNOWLEDGES AND AGREES THAT, TO THE
EXTENT SUCH OPTIONS ARE NOT FULLY EXERCISED AND DO NOT EXPIRE WITHIN 90 DAYS
AFTER TERMINATION OF THE EXECUTIVE TERM, AND TO THE EXTENT THAT ANY SUCH OPTIONS
CONTINUE TO VEST AFTER TERMINATION OF THE EXECUTIVE TERM, SUCH OPTIONS SHALL NOT
BE INCENTIVE STOCK OPTIONS AND SHALL NOT BE ENTITLED TO THE TREATMENT AFFORDED
UNDER SECTION 422 OF THE INTERNAL REVENUE CODE, AS AMENDED.

 

ARTICLE IV
TERMINATION OF EMPLOYMENT AND POSITION AS CHAIRMAN

 

4.1          TERMINATION.  THE EMPLOYMENT SERVICES DURING THE EXECUTIVE TERM,
AND THE SERVICES AS CHAIRMAN UNDER THIS TRANSITION AGREEMENT MAY BE TERMINATED
EARLY AS PROVIDED FOR IN THIS ARTICLE IV.

 

4.2          TERMINATION FOR CAUSE.  SOFTBRANDS RESERVES THE RIGHT TO TERMINATE
EXECUTIVE’S EMPLOYMENT DURING THE EXECUTIVE TERM, OR TO TERMINATE EXECUTIVE’S
SERVICES AS CHAIRMAN OF THE BOARD, FOR CAUSE UPON: (A) EXECUTIVE’S WILLFUL AND
CONTINUED FAILURE TO SUBSTANTIALLY PERFORM HIS DUTIES WITH SOFTBRANDS (OTHER
THAN SUCH FAILURE RESULTING FROM HIS INCAPACITY DUE TO PHYSICAL OR MENTAL
ILLNESS) (B) EXECUTIVE’S WILLFUL ENGAGEMENT IN GROSS MISCONDUCT, AS DETERMINED
BY THE BOARD IN GOOD FAITH, WHICH IS MATERIALLY AND DEMONSTRABLY INJURIOUS TO
SOFTBRANDS; OR (C) EXECUTIVE’S COMMISSION OF A FELONY, OR AN ACT OF FRAUD
AGAINST SOFTBRANDS OR ITS AFFILIATES.  ANY ACT OR FAILURE TO ACT THAT IS DONE OR
OMITTED TO BE DONE BY EXECUTIVE IN GOOD FAITH FOR SOFTBRANDS WILL BE
CONCLUSIVELY

 

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PRESUMED NOT TO BE WILLFUL FOR PURPOSES OF THIS SECTION 4.2.  SOFTBRANDS MAY NOT
TERMINATE THE EXECUTIVE’S EMPLOYMENT OR SERVICES FOR CAUSE UNDER THIS
SECTION 4.2 UNLESS, IN THE CASE OF SECTION 4.2(A), SOFTBRANDS HAS FIRST PROVIDED
EXECUTIVE WITH WRITTEN NOTICE, SPECIFYING IN DETAIL THE ACT OR ACTS ALLEGED TO
CONSTITUTE CAUSE, AND PROVIDED THE EXECUTIVE WITH A PERIOD OF NOT LESS THAN 30
CALENDAR DAYS TO CURE THE FAILURE IN THE MANNER SPECIFIED IN SUCH NOTICE.  THE
EXECUTIVE’S EMPLOYMENT OR SERVICES MAY BE TERMINATED FOR CAUSE ONLY UPON THE
ADOPTION OF A RESOLUTION BY THE AFFIRMATIVE VOTE OF AT LEAST A MAJORITY OF THE
BOARD (EXCLUDING THE EXECUTIVE, IF THE EXECUTIVE IS THEN A MEMBER OF THE BOARD)
FINDING CAUSE AND TERMINATING EXECUTIVE’S EMPLOYMENT OR SERVICES FOR CAUSE.

 

Executive shall not be entitled to any severance benefits and all stock options
of SoftBrands granted to Executive which have not vested shall be canceled upon
termination for cause.

 

4.3          SEVERANCE FOR EMPLOYMENT SERVICES.  IN THE EVENT THAT DURING THE
EXECUTIVE TERM, (A) THE EXECUTIVE TERM IS TERMINATED BY SOFTBRANDS OTHER THAN
PURSUANT TO SECTION 4.2, OR (B) SOFTBRANDS DOES NOT ELECT TO RENEW THE INITIAL
EXECUTIVE TERM OR THE EXTENDED EXECUTIVE TERM, THE EXECUTIVE, OR THE EXECUTIVE’S
ESTATE, SHALL BE PROVIDED OR PROMPTLY BE PAID UPON TERMINATION OF THE EXECUTIVE
TERM (I) ANY ACCRUED BUT UNPAID SALARY AND CHAIRMAN FEES, UNREIMBURSED EXPENSES
WHICH OTHERWISE WOULD BE REIMBURSED IN THE NORMAL COURSE AND VESTED BENEFITS
UNDER ANY OF THE SOFTBRANDS’ BENEFIT PLANS IN WHICH THE EXECUTIVE IS A
PARTICIPANT, (II) ANY BONUS PREVIOUSLY DECLARED BUT NOT YET PAID, (III) A LUMP
SUM CASH PAYMENT EQUAL TO FOUR HUNDRED THOUSAND DOLLARS ($400,000) MINUS THE
AGGREGATE AMOUNT OF BASE SALARY PAYMENTS PAID BY SOFTBRANDS TO EXECUTIVE FOR THE
EXECUTIVE TERM, AND (IV) SOFTBRANDS SHALL CONTINUE TO PAY, REGARDLESS OF SUCH
TERMINATION ANY EXPENSES THAT WOULD OTHERWISE BE PAYABLE TO EXECUTIVE PURSUANT
TO SECTION 3.8 OR 3.9 OF THIS TRANSITION AGREEMENT.

 

4.4          SEVERANCE FOR CHAIRMAN OF BOARD SERVICES.  IN THE EVENT THAT, AT
ANY TIME PRIOR TO DECEMBER 31, 2008, EXECUTIVE’S SERVICES AS CHAIRMAN ARE
TERMINATED BY SOFTBRANDS OTHER THAN PURSUANT TO SECTION 4.2, OR IF EXECUTIVE IS
NOT ELECTED A DIRECTOR AT THE ANNUAL MEETING OF STOCKHOLDERS OF SOFTBRANDS
DURING 2008 FOR ANY REASON OTHER THAN PURSUANT TO SECTION 4.2, SOFTBRANDS SHALL
NEVERTHELESS PAY TO EXECUTIVE THE FEES REQUIRED BY SECTION 4.3 THROUGH
DECEMBER 31, 2008 AS IF EXECUTIVE REMAINED CHAIRMAN OF THE BOARD.

 

4.5          MITIGATION.  THE EXECUTIVE SHALL NOT BE REQUIRED TO MITIGATE
DAMAGES WITH RESPECT TO THE TERMINATION OF THE EXECUTIVE TERM UNDER THIS
TRANSITION AGREEMENT BY SEEKING OTHER EMPLOYMENT OR OTHERWISE, AND THERE SHALL
BE NO OFFSET BY ANY CLAIMS SOFTBRANDS MAY HAVE AGAINST THE EXECUTIVE, AND
SOFTBRANDS’ OBLIGATION TO MAKE THE PAYMENTS PROVIDED FOR IN THIS TRANSITION
AGREEMENT, AND OTHERWISE TO PERFORM ITS OBLIGATIONS HEREUNDER, SHALL NOT BE
AFFECTED BY ANY OTHER CIRCUMSTANCES, INCLUDING, WITHOUT LIMITATION, ANY
COUNTERCLAIM, RECOUPMENT, DEFENSE OR OTHER RIGHT WHICH SOFTBRANDS MAY HAVE
AGAINST THE EXECUTIVE OR OTHERS.

 

4.6          DEATH.  IF EXECUTIVE DIES PRIOR TO THE EXPIRATION OF THE CHAIRMAN
TERM, THIS TRANSITION AGREEMENT SHALL BE TERMINATED ON THE LAST DAY OF THE
CALENDAR MONTH OF HIS

 

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DEATH SUBJECT TO THE EXPRESS TERMS AND PROVISIONS BELOW.  UPON TERMINATION DUE
TO DEATH, THE DESIGNATED BENEFICIARY, AS PROVIDED IN SECTION 6.8 BELOW, OR THE
ESTATE OR REPRESENTATIVE OF EXECUTIVE, SHALL PROMPTLY BE PAID (I) ANY ACCRUED
BUT UNPAID SALARY, UNREIMBURSED EXPENSES WHICH OTHERWISE WOULD BE REIMBURSED IN
THE NORMAL COURSE AND VESTED BENEFITS UNDER ANY OF SOFTBRANDS’ BENEFIT PLANS IN
WHICH THE EXECUTIVE IS A PARTICIPANT, (II) ANY BONUS PREVIOUSLY DECLARED BUT NOT
YET PAID.  IN ADDITION, UPON TERMINATION DUE TO DEATH, ANY PORTION OF THE
OPTIONS GRANTED TO THE EXECUTIVE THAT IS NOT THEN VESTED SHALL BECOME FULLY
VESTED AND SHALL BE EXERCISABLE FOR THE BALANCE OF THE TERM OF SUCH OPTIONS, AND
(III) LUMP SUM CASH PAYMENT EQUAL TO FOUR HUNDRED THOUSAND DOLLARS ($400,000)
MINUS THE AGGREGATE AMOUNT OF BASE SALARY PAYMENTS PAID BY SOFTBRANDS TO
EXECUTIVE FOR THE EXECUTIVE TERM AND LESS THE AMOUNT OF ANY PAYMENT PREVIOUSLY
MADE PURSUANT TO SECTION 4.3(III).  THIS SECTION 4.6 WILL NOT LIMIT THE
ENTITLEMENT OF THE EXECUTIVE’S ESTATE OR BENEFICIARIES TO ANY DEATH OR OTHER
BENEFITS THEN AVAILABLE TO THE EXECUTIVE UNDER ANY LIFE INSURANCE, STOCK
OWNERSHIP, STOCK OPTIONS, OR OTHER BENEFIT PLAN OR POLICY THAT IS MAINTAINED BY
SOFTBRANDS FOR THE EXECUTIVE’S BENEFIT.

 

4.7          EFFECT OF TERMINATION.  EXCEPT AS EXPRESSLY PROVIDED FOR IN THIS
TRANSITION AGREEMENT, THE TERMINATION OF EMPLOYMENT SHALL NOT IMPAIR ANY
OBLIGATION THAT ACCRUED PRIOR TO TERMINATION, OR SHALL IT EXCUSE THE PERFORMANCE
OF ANY OBLIGATION WHICH IS REQUIRED OR CONTEMPLATED HEREUNDER TO BE PERFORMED
AFTER TERMINATION, AND ANY SUCH OBLIGATION SHALL SURVIVE THE TERMINATION OF
EMPLOYMENT AND THIS TRANSITION AGREEMENT.

 

ARTICLE V
COVENANTS AND REPRESENTATIONS OF EMPLOYEE

 

5.1          NONCOMPETITION.  THE EXECUTIVE ACKNOWLEDGES THAT HE HAS HAD AND
WILL HAVE ACCESS AT THE HIGHEST LEVEL TO, AND THE OPPORTUNITY TO ACQUIRE
KNOWLEDGE OF, SOFTBRANDS’ CUSTOMER LISTS, CUSTOMER NEEDS, BUSINESS PLANS, TRADE
SECRETS AND OTHER CONFIDENTIAL AND PROPRIETARY INFORMATION FROM WHICH SOFTBRANDS
MAY DERIVE ECONOMIC OR COMPETITIVE ADVANTAGE, AND THAT HE IS ENTERING INTO THE
COVENANTS AND REPRESENTATIONS IN THIS ARTICLE V IN ORDER TO PRESERVE THE
GOODWILL AND GOING CONCERN VALUE OF SOFTBRANDS, AND TO INDUCE SOFTBRANDS TO
ENTER INTO THIS TRANSITION AGREEMENT.  THE EXECUTIVE AGREES NOT TO COMPETE WITH
SOFTBRANDS OR ITS DIRECT OR INDIRECT SUBSIDIARIES (A “COMPANY ENTITY”) OR TO
ENGAGE IN ANY UNFAIR COMPETITION WITH SOFTBRANDS THROUGH DECEMBER 31, 2007.  FOR
PURPOSES OF THIS TRANSITION AGREEMENT, THE PHRASE “COMPETE WITH SOFTBRANDS,” OR
THE SUBSTANTIAL EQUIVALENT THEREOF, MEANS, SUBJECT TO THE EXCEPTIONS SET FORTH
BELOW, THAT EXECUTIVE, EITHER ALONE OR AS A PARTNER, MEMBER, DIRECTOR, EMPLOYEE,
SHAREHOLDER OR AGENT OF ANY OTHER BUSINESS, OR IN ANY OTHER INDIVIDUAL OR
REPRESENTATIVE CAPACITY, DIRECTLY OR INDIRECTLY OWNS, MANAGES, OPERATES,
CONTROLS, OR PARTICIPATES IN THE OWNERSHIP, MANAGEMENT, OPERATION OR CONTROL OF,
OR WORKS FOR OR PROVIDES CONSULTING SERVICES TO, OR PERMITS THE USE OF HIS NAME
BY OR LENDS MONEY TO, ANY BUSINESS OR ACTIVITY WHICH IS OR WHICH BECOMES, AT THE
TIME OF THE ACTS OR CONDUCT IN QUESTION, DIRECTLY OR INDIRECTLY COMPETITIVE WITH
THE DEVELOPMENT, FINANCING AND/OR MARKETING OF THE PRODUCTS, PROPOSED PRODUCTS
OR SERVICES OF ANY COMPANY ENTITY.  THROUGH DECEMBER 31, 2007, EXECUTIVE SHALL
NOT DIRECTLY OR INDIRECTLY ACQUIRE ANY STOCK OR INTEREST IN ANY CORPORATION,
PARTNERSHIP, OR OTHER BUSINESS ENTITY THAT COMPETES, DIRECTLY OR INDIRECTLY,
WITH THE BUSINESS OF A COMPANY ENTITY WITHOUT OBTAINING THE PRIOR WRITTEN
CONSENT OF SOFTBRANDS.

 

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NOTWITHSTANDING THE FOREGOING, THIS SECTION 5.1 SHALL NOT APPLY TO THE OWNERSHIP
OR ACQUISITION OF STOCK OR AN INTEREST REPRESENTING LESS THAN A 5% BENEFICIAL
INTEREST IN A CORPORATION THAT IS OBLIGATED TO FILE REPORTS WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO THE EXCHANGE ACT.  THE COVENANTS AND
RESTRICTIONS AGAINST COMPETITION CONTAINED IN THIS SECTION 5.1 (I) SHALL ONLY
APPLY TO SOFTWARE PRODUCTS AND RELATED TECHNOLOGIES AND SERVICES DEVELOPED,
DESIGNED, MANUFACTURED, PROVIDED AND/OR SOLD FOR THE HOSPITALITY AND
MANUFACTURING SOFTWARE MARKETS AND (II) SHALL NOT, FOR THE AVOIDANCE OF DOUBT,
RESTRICT THE EXECUTIVE FROM, DIRECTLY OR INDIRECTLY OWNING, MANAGING, OPERATING,
CONTROLLING, OR PARTICIPATING IN THE OWNERSHIP, MANAGEMENT, OPERATION OR CONTROL
OF, OR WORKING FOR OR PROVIDING CONSULTING SERVICES TO, OR PERMITTING THE USE OF
HIS NAME BY OR LENDING MONEY TO BUSINESSES ENGAGED IN OR ACTIVITIES RELATED TO
DEVELOPING, MARKETING, SELLING, LICENSING OR SERVICING SOFTWARE AND RELATED
TECHNOLOGIES FOR SUPPLY CHAIN MANAGEMENT, AND (III) SHALL NOT APPLY TO THE
EXTENT THAT SOFTBRANDS IS IN DEFAULT IN THE PAYMENT OF ANY OBLIGATION OWED TO
THE EXECUTIVE.

 

Nothing in this Section 5.1 shall limit Executive’s fiduciary obligations as a
director after December 31, 2007.

 

5.2          CONFIDENTIAL INFORMATION.   DURING THE EXECUTIVE TERM AND
THEREAFTER, EXECUTIVE AGREES TO KEEP SECRET AND TO RETAIN IN THE STRICTEST
CONFIDENCE ALL MATERIAL CONFIDENTIAL MATTERS WHICH RELATE TO SOFTBRANDS OR ITS
“AFFILIATE” (AS THAT TERM IS DEFINED IN THE EXCHANGE ACT), INCLUDING, WITHOUT
LIMITATION CUSTOMER LISTS, CLIENT LISTS, TRADE SECRETS, PRICING LISTS, BUSINESS
PLANS, FINANCIAL PROJECTIONS AND REPORTS, BUSINESS STRATEGIES, INTERNAL
OPERATING PROCEDURES, AND OTHER CONFIDENTIAL BUSINESS INFORMATION FROM WHICH
SOFTBRANDS DERIVES AN ECONOMIC OR COMPETITIVE ADVANTAGE, OR FROM WHICH
SOFTBRANDS MIGHT DERIVE SUCH ADVANTAGE IN ITS BUSINESS, LABELED “SECRET” OR
“CONFIDENTIAL” OR SOME SIMILAR TERM, AND NOT TO INTENTIONALLY DISCLOSE ANY SUCH
INFORMATION TO ANYONE OUTSIDE OF SOFTBRANDS, WHETHER DURING OR AFTER THE
EXECUTIVE TERM, EXCEPT IN CONNECTION WITH PURSUING IN GOOD FAITH THE INTERESTS
AND BUSINESS OF SOFTBRANDS.  THE FOREGOING RESTRICTIONS AND OBLIGATIONS UNDER
THIS SECTION 5.2 WILL NOT APPLY (I) TO ANY CONFIDENTIAL INFORMATION THAT IS OR
BECOMES GENERALLY AVAILABLE TO THE PUBLIC OR GENERALLY KNOWN TO PERSONS ENGAGED
IN BUSINESSES SIMILAR TO OR RELATED TO THAT OF SOFTBRANDS, OTHER THAN AS A
RESULT OF A DISCLOSURE BY EXECUTIVE, (II) IF THE EXECUTIVE IS REQUIRED BY LAW TO
MAKE DISCLOSURE, OR (III) TO DISCLOSURE MADE TO ANY DIRECTOR OF SOFTBRANDS. 
SOFTBRANDS MAY WAIVE APPLICATION OF THE FOREGOING RESTRICTIONS AND OBLIGATIONS
IN ITS DISCRETION FROM TIME TO TIME.

 

5.3          NON-SOLICITATION OF CUSTOMERS.  DURING THE EXECUTIVE TERM, THE
EXECUTIVE WILL HAVE ACCESS TO CONFIDENTIAL RECORDS AND DATA PERTAINING TO
SOFTBRANDS’ CUSTOMERS, THEIR NEEDS, AND THE RELATIONSHIP BETWEEN SOFTBRANDS AND
ITS CUSTOMERS.  SUCH INFORMATION IS CONSIDERED SECRET AND IS DISCLOSED DURING
THE EXECUTIVE TERM IN CONFIDENCE.  ACCORDINGLY, THROUGH DECEMBER 31, 2007,
EXECUTIVE AND ANY ENTITY CONTROLLED BY HIM OR WITH WHICH HE IS ASSOCIATED (AS
THE TERMS “CONTROL” AND “ASSOCIATE” ARE DEFINED IN THE EXCHANGE ACT) SHALL NOT,
DIRECTLY OR INDIRECTLY (I) SOLICIT FOR A COMPETITIVE PURPOSE, INTERFERE WITH,
INDUCE OR ENTICE AWAY ANY PERSON OR ENTITY THAT IS OR WAS A CLIENT, CUSTOMER OR
AGENT OF SOFTBRANDS OR ITS AFFILIATES (AS THE TERM “AFFILIATE” IS DEFINED IN THE
EXCHANGE ACT) OR (II) IN ANY MANNER PERSUADE OR ATTEMPT TO PERSUADE ANY SUCH
PERSON OR ENTITY (A) TO DISCONTINUE ITS BUSINESS RELATIONSHIP WITH SOFTBRANDS OR
ITS

 

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AFFILIATES, OR (B) TO ENTER INTO A BUSINESS RELATIONSHIP WITH ANY ENTITY OR
PERSON THE LOSS OF WHICH THE EXECUTIVE SHOULD REASONABLY ANTICIPATE WOULD BE
DETRIMENTAL TO SOFTBRANDS OR ITS AFFILIATES IN ANY RESPECT.  THE COVENANTS AND
RESTRICTIONS CONTAINED IN THIS SECTION 5.3 (I) SHALL ONLY APPLY TO CLIENTS,
CUSTOMERS OR AGENTS FOR SOFTWARE PRODUCTS AND RELATED TECHNOLOGIES AND SERVICES
DEVELOPED, DESIGNED, MANUFACTURED, PROVIDED AND/OR SOLD FOR THE HOSPITALITY AND
MANUFACTURING SOFTWARE MARKETS, AND (II) SHALL NOT, FOR THE AVOIDANCE OF DOUBT,
APPLY TO CLIENTS, CUSTOMERS OR AGENTS WHO ENTER INTO RELATIONSHIPS, DIRECTLY OR
INDIRECTLY, WITH THE EXECUTIVE RELATING TO, OR WITH ANY BUSINESS WITH WHICH
EXECUTIVE MAY BECOME ASSOCIATED AFTER THE EXECUTIVE TERM THAT IS ENGAGED IN,
DEVELOPING, MARKETING, SELLING, LICENSING OR SERVICING SOFTWARE AND RELATED
TECHNOLOGIES FOR SUPPLY CHAIN MANAGEMENT, AND (III) SHALL NOT APPLY TO THE
EXTENT THAT SOFTBRANDS IS IN DEFAULT IN THE PAYMENT OF ANY OBLIGATION OWED TO
THE EXECUTIVE.

 

Nothing in this Section 5.3 shall limit Executive’s fiduciary obligations as a
director after December 31, 2007.

 

5.4          NON-SOLICITATION OF EMPLOYEES.  THE EXECUTIVE AND ANY ENTITY
CONTROLLED BY HIM OR WITH WHICH HE IS ASSOCIATED (AS THE TERMS “CONTROL” AND
“ASSOCIATE” ARE DEFINED IN THE EXCHANGE ACT) SHALL NOT, THROUGH DECEMBER 31,
2007, DIRECTLY OR INDIRECTLY SOLICIT, INTERFERE WITH, OFFER TO HIRE OR INDUCE
ANY PERSON WHO IS OR WAS AN OFFICER OR EMPLOYEE OF SOFTBRANDS OR ANY AFFILIATE
(AS THE TERM “AFFILIATE” IS DEFINED IN THE EXCHANGE ACT) (OTHER THAN SECRETARIAL
PERSONNEL WHO WORKED DIRECTLY WITH EXECUTIVE DURING HIS EMPLOYMENT) TO
DISCONTINUE HIS OR HER RELATIONSHIP WITH SOFTBRANDS OR AN AFFILIATE OF
SOFTBRANDS,.  (THESE ACTS ARE HEREINAFTER REFERRED TO AS THE “PROHIBITED ACTS OF
SOLICITATION.”).

 

Nothing in this Section 5.4 shall limit Executive’s fiduciary obligations as a
director after December 31, 2007

 

5.5          RETURN OF PROPERTY.  UPON TERMINATION OF EMPLOYMENT, AND AT THE
REQUEST OF SOFTBRANDS, THE EXECUTIVE AGREES TO PROMPTLY DELIVER TO SOFTBRANDS
ALL SOFTBRANDS’ COMPANY OR AFFILIATE MEMORANDA, NOTES, RECORDS, REPORTS MANUALS,
DRAWINGS, DESIGNS, COMPUTER FILES IN ANY MEDIA, AND OTHER DOCUMENTS (INCLUDING
EXTRACTS AND COPIES THEREOF) RELATING TO SOFTBRANDS OR ITS AFFILIATES, AND ALL
OTHER PROPERTY OF SOFTBRANDS.

 

5.6          INVENTIONS.  ALL PROCESSES, INVENTIONS, PATENTS, COPYRIGHTS,
TRADEMARKS AND OTHER INTANGIBLE RIGHTS THAT MAY BE CONCEIVED OR DEVELOPED BY THE
EXECUTIVE, EITHER ALONE OR WITH OTHERS, DURING THE EXECUTIVE TERM, WHETHER OR
NOT CONCEIVED OR DEVELOPED DURING EXECUTIVE’S WORKING HOURS, AND WITH RESPECT TO
WHICH THE EQUIPMENT, SUPPLIES, FACILITIES OR TRADE SECRET INFORMATION OF
SOFTBRANDS WAS USED, OR THAT RELATE AT THE TIME OF CONCEPTION OR REDUCTION TO
PRACTICE OF THE INVENTION TO THE BUSINESS OF SOFTBRANDS, OR TO SOFTBRANDS’
ACTUAL OR DEMONSTRABLY ANTICIPATED RESEARCH OR DEVELOPMENT, OR THAT RESULT FROM
ANY WORK PERFORMED BY EXECUTIVE FOR SOFTBRANDS, SHALL BE THE SOLE PROPERTY OF
SOFTBRANDS.  UPON THE REQUEST OF SOFTBRANDS, EXECUTIVE SHALL DISCLOSE TO
SOFTBRANDS ALL INVENTIONS OR IDEAS CONCEIVED DURING THE EXECUTIVE TERM, WHETHER
OR NOT THE PROPERTY OF SOFTBRANDS UNDER THE TERMS OF THIS PROVISION, PROVIDED
THAT SUCH DISCLOSURE SHALL BE RECEIVED BY SOFTBRANDS IN CONFIDENCE.  UPON THE
REQUEST OF SOFTBRANDS, EXECUTIVE SHALL EXECUTE ALL DOCUMENTS, INCLUDING PATENT
APPLICATIONS AND ASSIGNMENTS, REQUIRED BY SOFTBRANDS TO ESTABLISH SOFTBRANDS’
RIGHTS UNDER THIS PROVISION.

 

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5.7          REPRESENTATIONS.  THE EXECUTIVE REPRESENTS AND WARRANTS TO
SOFTBRANDS THAT HE HAS FULL POWER TO ENTER INTO THIS TRANSITION AGREEMENT AND
PERFORM HIS DUTIES HEREUNDER, AND THAT HIS EXECUTION AND DELIVERY OF THIS
TRANSITION AGREEMENT AND THE PERFORMANCE OF HIS DUTIES SHALL NOT RESULT IN A
BREACH OF, OR CONSTITUTE A DEFAULT UNDER, ANY AGREEMENT OR UNDERSTANDING,
WHETHER ORAL OR WRITTEN, INCLUDING, WITHOUT LIMITATION, ANY RESTRICTIVE COVENANT
OR CONFIDENTIALITY AGREEMENT, TO WHICH HE IS A PARTY OR BY WHICH HE MAY BE
BOUND.

 

5.8          NON-PAYMENT UPON NON-COMPLIANCE.  SHOULD EXECUTIVE BREACH ANY ONE
OF THE COVENANTS SET FORTH IN THIS ARTICLE V, SOFTBRANDS SHALL HAVE NO
OBLIGATION TO MAKE THE PAYMENTS OR TO PROVIDE EXECUTIVE THE BENEFITS DESCRIBED
IN ARTICLE IV ABOVE, IN ADDITION TO ALL OTHER RIGHTS AND REMEDIES SOFTBRANDS MAY
HAVE AVAILABLE AT LAW OR IN EQUITY.  SOFTBRANDS SHALL PROVIDE WRITTEN NOTICE TO
EXECUTIVE, TEN (10) DAYS PRIOR TO AN EXPECTED PAYMENT, OF THE BREACH OF A
COVENANT AND THE ENSUING NON-PAYMENT THEREOF; PROVIDED, HOWEVER, THAT IF
SOFTBRANDS LEARNS OF THE BREACH WITHOUT SUFFICIENT TIME TO PROVIDE TEN (10) DAYS
NOTICE, SOFTBRANDS SHALL PROVIDE WRITTEN NOTICE AS SOON THEREAFTER AS
PRACTICABLE.

 

ARTICLE VI
MISCELLANEOUS PROVISIONS

 

6.1          NOTICES.  ALL NOTICES TO BE GIVEN BY EITHER PARTY TO THE OTHER
SHALL BE IN WRITING AND MAY BE TRANSMITTED BY PERSONAL DELIVERY, FACSIMILE
TRANSMISSION, OVERNIGHT COURIER OR MAIL, REGISTERED OR CERTIFIED, POSTAGE
PREPAID WITH RETURN RECEIPT REQUESTED; PROVIDED, HOWEVER, THAT NOTICES OF CHANGE
OR ADDRESS OR TELEX OR FACSIMILE NUMBER SHALL BE EFFECTIVE ONLY UPON ACTUAL
RECEIPT BY THE OTHER PARTY.  NOTICES SHALL BE DELIVERED AT THE FOLLOWING
ADDRESSES, UNLESS CHANGED AS PROVIDED FOR HEREIN.

 

To the Executive:

George H. Ellis

 

8401 North Central Expressway

 

 

Suite 840

 

 

Dallas, TX  75225

 

 

Facsimile:  (214) 363-4396

 

 

 

To SoftBrands:

Board of Directors

 

 

SoftBrands, Inc.

 

 

Two Meridian Crossings, Suite 800

 

 

Minneapolis, MN 55423

 

 

Facsimile:   (612) 851-1584

 

 

 

With Copy to:

Thomas Martin

 

 

Dorsey & Whitney LLP

 

 

50 South Sixth Street

 

 

Minneapolis, MN 55402

 

 

Facsimile:  (612) 340-7800

 

6.2          NO ASSIGNMENT, IN GENERAL.  EXCEPT AS PROVIDED BELOW, THIS
TRANSITION AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES, MAY NOT BE
ASSIGNED BY EITHER PARTY WITHOUT THE PRIOR WRITTEN CONSENT OF THE OTHER PARTY.

 

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6.3          ENTIRE AGREEMENT.  THIS TRANSITION AGREEMENT AND THE DOCUMENTS
DELIVERED PURSUANT HERETO SUPERSEDES ANY AND ALL OTHER AGREEMENTS OR
UNDERSTANDINGS OF THE PARTIES, EITHER ORAL OR WRITTEN, WITH RESPECT TO THE
EMPLOYMENT OF THE EXECUTIVE BY SOFTBRANDS, AND CONTAINS THE COMPLETE AND FINAL
AGREEMENT AND UNDERSTANDING OF THE PARTIES WITH RESPECT THERETO.  THE EXECUTIVE
ACKNOWLEDGES THAT NO REPRESENTATION, INDUCEMENTS, PROMISES OR AGREEMENTS, ORAL
OR OTHERWISE, HAVE BEEN MADE BY SOFTBRANDS OR ANY OF ITS OFFICERS, DIRECTORS,
EMPLOYEES, OR AGENTS, WHICH ARE NOT EXPRESSED HEREIN, AND THAT NO OTHER
AGREEMENT SHALL BE VALID OR BINDING ON SOFTBRANDS.

 

6.4          AMENDMENTS AND MODIFICATIONS.  THIS TRANSITION AGREEMENT MAY BE
AMENDED OR MODIFIED ONLY BY A WRITING SIGNED BY BOTH PARTIES HERETO.

 

6.5          WITHHOLDING TAXES.  ALL AMOUNTS PAYABLE UNDER THIS TRANSITION
AGREEMENT, WHETHER SUCH PAYMENT IS TO BE MADE IN CASH OR OTHER PROPERTY,
INCLUDING WITHOUT LIMITATION STOCK OF SOFTBRANDS, SHALL BE SUBJECT TO
WITHHOLDING FOR FEDERAL, STATE AND LOCAL INCOME TAXES, EMPLOYMENT AND PAYROLL
TAXES AND OTHER LEGALLY REQUIRED WITHHOLDING TAXES AND CONTRIBUTIONS TO THE
EXTENT APPROPRIATE IN THE DETERMINATION OF SOFTBRANDS, AND THE EXECUTIVE AGREES
TO REPORT ALL SUCH AMOUNTS AS ORDINARY INCOME ON HIS PERSONAL INCOME TAX RETURNS
AND FOR ALL OTHER PURPOSES, AS CALLED FOR.

 

6.6          SEVERABILITY.  IF ANY PROVISION OF THIS TRANSITION AGREEMENT IS
HELD TO BE INVALID OR UNENFORCEABLE BY ANY JUDGMENT OF A TRIBUNAL OF COMPETENT
JURISDICTION, THE REMAINING PROVISIONS AND TERMS OF THIS TRANSITION AGREEMENT
SHALL NOT BE AFFECTED BY SUCH JUDGMENT, AND THIS TRANSITION AGREEMENT SHALL BE
CARRIED OUT AS NEARLY AS POSSIBLE ACCORDING TO ITS ORIGINAL TERMS AND INTENT
AND, TO THE FULL EXTENT PERMITTED BY LAW, ANY PROVISION OR RESTRICTIONS FOUND TO
BE INVALID SHALL BE AMENDED WITH SUCH MODIFICATIONS AS MAY BE NECESSARY TO CURE
SUCH INVALIDITY, AND SUCH RESTRICTIONS SHALL APPLY AS SO MODIFIED, OR IF SUCH
PROVISIONS CANNOT BE AMENDED, THEY SHALL BE DEEMED SEVERABLE FROM THE REMAINING
PROVISIONS AND THE REMAINING PROVISIONS SHALL BE FULLY ENFORCEABLE IN ACCORDANCE
WITH LAW.

 

6.7          EFFECT OF WAIVER.  THE FAILURE OF EITHER PARTY TO INSIST ON STRICT
COMPLIANCE WITH ANY PROVISION OF THIS TRANSITION AGREEMENT BY THE OTHER PARTY
SHALL NOT BE DEEMED A WAIVER OF SUCH PROVISION, OR A RELINQUISHMENT OF ANY RIGHT
THEREUNDER, OR TO AFFECT EITHER THE VALIDITY OF THIS TRANSITION AGREEMENT, AND
SHALL NOT PREVENT ENFORCEMENT OF SUCH PROVISION, OR ANY SIMILAR PROVISION, AT
ANY TIME.

 

6.8          DESIGNATION OF BENEFICIARY.  IF THE EXECUTIVE SHALL DIE BEFORE
RECEIPT OF ALL PAYMENTS AND BENEFITS TO WHICH HE IS ENTITLED UNDER THIS
TRANSITION AGREEMENT, PAYMENT OF SUCH AMOUNTS OR BENEFITS IN THE MANNER PROVIDED
HEREIN SHALL BE MADE TO SUCH BENEFICIARY AS HE SHALL HAVE DESIGNATED IN WRITING
FILED WITH THE SECRETARY OF SOFTBRANDS OR, IN THE ABSENCE OF SUCH DESIGNATION,
TO HIS ESTATE OR PERSONAL REPRESENTATIVE.

 

6.9          ATTORNEYS FEES.

 

(I)                                     WITHOUT REGARD TO WHETHER THE EXECUTIVE
PREVAILS, IN WHOLE OR IN PART, IN CONNECTION THEREWITH, SOFTBRANDS WILL PAY AND
BE

 

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FINANCIALLY RESPONSIBLE FOR 100% OF ANY AND ALL ATTORNEYS’ AND RELATED FEES AND
EXPENSES INCURRED BY THE EXECUTIVE IN CONNECTION WITH ANY DISPUTE ASSOCIATED
WITH THE INTERPRETATION, ENFORCEMENT OR DEFENSE OF THE EXECUTIVE’S RIGHTS UNDER
THIS TRANSITION AGREEMENT BY LITIGATION OR OTHERWISE.  ALL SUCH FEES AND
EXPENSES WILL BE PAID BY SOFTBRANDS AS INCURRED BY THE EXECUTIVE ON A MONTHLY
BASIS.

 

(II)                                  SOFTBRANDS WILL REIMBURSE THE EXECUTIVE
FOR ALL LEGAL FEES AND EXPENSES INCURRED BY THE EXECUTIVE IN CONNECTION WITH THE
PREPARATION, REVIEW AND NEGOTIATION OF THIS TRANSITION AGREEMENT AND ANY
DOCUMENT, AGREEMENT OR ARRANGEMENT CONTEMPLATED BY THIS TRANSITION AGREEMENT OR
OTHERWISE ENTERED INTO BY EXECUTIVE IN CONNECTION WITH HIS EMPLOYMENT AS
EXECUTIVE CHAIRMAN.

 

6.10        GOVERNING LAW.  THIS TRANSITION AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD
TO ITS CONFLICT OF LAWS PRINCIPLES.

 

6.11        COUNTERPARTS.  THIS TRANSITION AGREEMENT MAY BE EXECUTED IN ONE OR
MORE COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED TO BE AN ORIGINAL, BUT ALL OF
WHICH TOGETHER SHALL CONSTITUTE ONE AND THE SAME INSTRUMENT.  FOR THE PURPOSE OF
PROVING THE AUTHENTICITY OF THIS TRANSITION AGREEMENT, FACSIMILE SIGNATURE SHALL
BE TREATED THE SAME AS ORIGINAL SIGNATURES.

 

6.12        SOFTBRANDS REPRESENTATIONS.  SOFTBRANDS REPRESENTS AND WARRANTS TO
THE EXECUTIVE THAT THIS TRANSITION AGREEMENT WILL BE DULY AUTHORIZED AND
APPROVED BY THE BOARD NOT LATER THAN THE TRANSITION DATE.  COPIES OF THE
RESOLUTIONS OF THE BOARD EVIDENCING SUCH ACTION WILL BE PROVIDED TO THE
EXECUTIVE NOT LATER THAN THE TRANSITION DATE.

 

IN WITNESS WHEREOF, the parties have executed and delivered this Transition
Agreement as of the date first above written.

 

 

SOFTBRANDS, INC.

 

 

 

 

 

By:

/s/ Randal Tofteland

 

 

 

Randal Tofteland, President

 

 

 

 

 

 

EXECUTIVE:

 

 

 

/s/ George H. Ellis

 

 

George H. Ellis

 

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