<PAGE>

EXHIBIT 10.12

                              Employment Agreement

     This Employment Agreement (this "Agreement") is entered into as of January
2, 2001 between Eagle Point Software Corporation, a Delaware corporation (the
"Company"), Randy K. Ambrosy (the "Executive").

     Whereas, the Company desires to employ the Executive to serve as one of its
Vice-Presidents, and the Executive desires to be employed by the Company, upon
the terms and subject to the conditions set forth herein.

     Whereas, the Company and the Executive have entered into an Employee
Confidentiality and Noncompetition Agreement (as the same may be amended from
time to time, the "Confidentiality and Noncompetition Agreement").

     Now, therefore, in consideration of the premises and the mutual agreements
contained herein, the Company and the Executive hereby agree as follows:

     1.   Employment.  The Company hereby employs the Executive and the
          ----------
Executive hereby agrees to be employed by the Company upon the terms and subject
to the conditions contained in this Agreement.  The term of employment of the
Executive by the Company pursuant to this Agreement shall commence on the date
hereof.  The period during which the Executive shall be employed pursuant to
this Agreement shall be referred to herein as the "Employment Period."

     2.   Position and Duties; Responsibilities.  The Company shall employ the
          -------------------------------------
Executive during the Employment Period as a Vice-President. The Executive shall
report to the Chief Executive Officer of the Company (the "Chief Executive
Officer") or such other person as shall be designated by the Chief Executive
Officer. The Executive shall perform such duties (not inconsistent with the
position of Vice President) on behalf of the Company and its subsidiaries as may
from time to time be authorized or directed by the Board of Directors of the
Company (the "Board"), the Chief Executive Officer or such other person as may
be designated by either. During the Employment Period, the Executive shall
perform faithfully and loyally and to the best of the Executive's abilities the
duties assigned to the Executive hereunder and shall devote the Executive's full
business time, attention and effort to the affairs of the Company and its
subsidiaries and shall use reasonable best efforts to promote the interests of
the Company and its subsidiaries. The Executive may engage in charitable, civic
or community activities provided that such activities do not interfere with the
Executive's duties hereunder or violate the terms of any of the covenants
contained in Section 6 hereof or in the Confidentiality and Noncompetition
Agreement.

     3.   Compensation.  (a) Base Salary. During the Employment Period, the
          ------------       -----------
Company shall pay to the Executive a base salary at the rate of $75,000 per
annum ("Base Salary"), payable in accordance with the Company's executive
payroll policy. Such Base Salary shall be reviewed annually, and shall be
subject to such annual increases, if any, as determined by the Compensation
Committee of the Board (the "Compensation Committee"), the Chief Executive
Officer or such other person as may be designated by either.

     (b)  Periodic Bonuses. The Executive shall be eligible to receive periodic
          ----------------
incentive bonuses (each, a "Bonus") in accordance with the Company's policy for
bonus payments to its executives as the same may be in effect from time to time
during the Employment Period.

     (c)  Other Benefits.  During the Employment Period, the Executive shall be
          --------------
entitled to participate in the Company's employee benefit plans generally
available to executives of the Company (such benefits being hereinafter referred
to as the "Employee Benefits"). The Executive shall be entitled to take time off
for vacation or illness in accordance with the Company's policy for executives
and to

                                     -56-
<PAGE>

receive all other fringe benefits as are from time to time made generally
available to executives of the Company.

     (d)  Expense Reimbursement.  During the Employment Period, the Company
          ---------------------
shall reimburse the Executive, in accordance with the Company's policies and
procedures, for all proper expenses incurred by the Executive in the performance
of the Executive's duties hereunder.

     4.   Termination.  (a) Death. Upon the death of the Executive, this
          -----------       -----
Agreement shall automatically terminate and all rights of the Executive and the
Executive's heirs, executors and administrators to compensation and other
benefits under this Agreement shall cease immediately, except that the
Executive's heirs, executors or administrators, as the case may be, shall be
entitled to:

     (i)    accrued Base Salary through and including the Executive's date of
death;

     (ii)   accrued Bonuses through and including the Executive's date of
death; and

     (iii)  other Employee Benefits to which the Executive was entitled on the
date of death in accordance with the terms of the plans and programs of the
Company.

     (b)  Disability.  The Company may, at its option, terminate this Agreement
          ----------
upon written notice to the Executive if the Executive, because of physical or
mental incapacity or disability, fails to perform the essential functions of the
Executive's position, with or without reasonable accommodation, required of the
Executive hereunder for a continuous period of 120 days or any 180 days within
any 12-month period. Upon such termination, all obligations of the Company
hereunder shall cease immediately, except that the Executive shall be entitled
to:

     (i)    accrued Base Salary through and including the effective date of the
Executive's termination of employment;

     (ii)   accrued Bonuses through and including the effective date of the
Executive's termination of employment; and

     (iii)  other Employee Benefits to which the Executive is entitled upon
termination of employment in accordance with the terms of the plans and programs
of the Company.

     In the event of any dispute regarding the existence of the Executive's
incapacity or disability hereunder, the matter shall be resolved by the
determination of a physician selected by the Company. The Executive shall submit
to appropriate medical examinations for purposes of such determination.

     (c)  Cause.  (i)  The Company may, at its option, terminate the Executive's
          -----
employment under this Agreement for Cause (as hereinafter defined) upon written
notice to the Executive (the "Cause Notice"). The Cause Notice shall state the
particular action(s) or inaction(s) giving rise to termination for Cause. The
Executive shall have five days after the Cause Notice is given to cure the
particular action(s) or inaction(s), to the extent a cure is possible. If the
Executive so effects a cure to the satisfaction of the Company, the Cause Notice
shall be deemed rescinded and of no force or effect.

     (ii)   As used in this Agreement, the term "Cause" shall mean any one or
more of the following:

     (A)  any refusal by the Executive to perform the Executive's duties under
this Agreement;

     (B)  any intentional act of fraud, embezzlement or theft by the Executive
in connection with the Executive's duties hereunder or in the course of the
Executive's employment hereunder or any prior employment, or the Executive's
admission or conviction of a felony or of any crime involving moral turpitude,
fraud, embezzlement, theft or misrepresentation;

                                     -57-
<PAGE>

     (C)  any gross negligence or willful misconduct of the Executive resulting
in a loss to the Company or any of its subsidiaries, or damage to the reputation
of the Company or any of its subsidiaries;

     (D)  any breach by the Executive of any one or more of the covenants
contained Section 6 hereof or in the Confidentiality and Noncompetition
Agreement; or

     (E)  any violation of any statutory or common law duty of loyalty to
the Company or any of its subsidiaries.

     (iii)  The exercise of the right of the Company to terminate this Agreement
pursuant to this Section 4(c) shall not abrogate the rights or remedies of the
Company in respect of the breach giving rise to such termination.

     (iv)   If the Company terminates the Executive's employment for Cause,
all obligations of the Company hereunder shall cease, except that the Executive
shall be entitled to the payments and benefits specified in Sections 4(b)(i) and
4(b)(iii) hereof.

     (d)  Termination Without Cause.  The Company may, at its option, terminate
          -------------------------
the Executive's employment under this Agreement upon written notice to the
Executive for a reason other than a reason set forth in Section 4(a), 4(b) or
4(c). If the Company terminates the Executive's employment for any such reason,
all obligations of the Company hereunder shall cease immediately, except that
the Executive shall be entitled to:

     (i)    the payments and benefits specified in Sections 4(b)(i) through
4(b)(iii) hereof, inclusive;

     (ii)   if the Company shall terminate the Executive's employment
pursuant to this Section 4(d) at any time before January 1, 2002, a lump-sum
cash payment to be made within 30 days of the effective date of the termination
of employment equal to 75% of the sum of (x) Base Salary as in effect at the
time of such termination and (y) Executive's target total bonus for the year in
which such termination shall occur without deduction for amounts that may have
previously been paid; and

     (iii)  if the Company shall terminate the Executive's employment pursuant
to this Section 4(d) at any time after January 1, 2002, a lump-sum cash payment
to be made within 30 days of the effective date of the termination of employment
equal to 25% of sum of (x) Base Salary as in effect at the time of such
termination and (y) Executive's target total bonus for the year in which such
termination shall occur without deduction for amounts that may have previously
been paid.

     (e)  Voluntary Termination.  Upon 60 days prior written notice to the
          ---------------------
Company (or such shorter period as may be permitted by the Board or the Chief
Executive Officer), the Executive may voluntarily terminate the Executive's
employment with the Company for any reason.  If the Executive voluntarily
terminates the Executive's employment pursuant to this Section 4(e), all
obligations of the Company hereunder shall cease immediately, except that the
Executive shall be entitled to the payments and benefits specified in Sections
4(b)(i) and 4(b)(iii) hereof.

     5.   Federal and State Withholding.  The Company shall deduct from the
          -----------------------------
amounts payable to the Executive pursuant to this Agreement the amount of all
required federal, state and local withholding taxes in accordance with the
Executive's Form W-4 on file with the Company, and all applicable federal
employment taxes.

     6.   Inventions. The Executive hereby assigns to the Company the entire
          ----------
right, title and interest in and to all discoveries and improvements, patentable
or otherwise, trade secrets and ideas, writings and copyrightable material,
which may be conceived by the Executive or developed or acquired by the
Executive during the Employment Period, which may pertain directly or indirectly
to the business of the Company or any of its subsidiaries. The Executive agrees
to disclose fully all such developments

                                     -58-
<PAGE>

to the Company upon its request, which disclosure shall be made in writing
promptly following any such request. The Executive shall, upon the Company's
request, execute, acknowledge and deliver to the Company all instruments and do
all other acts which are necessary or desirable to enable the Company or any of
its subsidiaries to file and prosecute applications for, and to acquire,
maintain and enforce, all patents, trademarks and copyrights in all countries.

     7.   Enforcement.  The parties hereto agree that the Company and its
          -----------
subsidiaries would be damaged irreparably in the event that any provision of
Section 6 of this Agreement were not performed in accordance with its terms or
were otherwise breached and that money damages would be an inadequate remedy for
any such nonperformance or breach.  Accordingly, the Company and its successors
and permitted assigns shall be entitled, in addition to other rights and
remedies existing in their favor, to an injunction or injunctions to prevent any
breach or threatened breach of any of such provisions and to enforce such
provisions specifically (without posting a bond or other security).  The
Executive agrees that the Executive will submit to the personal jurisdiction of
the courts of the State of Iowa in any action by the Company to enforce an
arbitration award against the Executive or to obtain interim injunctive or other
relief pending an arbitration decision.

     8.   Representations.  The Executive represents and warrants to the Company
          ---------------
that (a) the execution, delivery and performance of this Agreement by the
Executive does not and will not conflict with, breach, violate or cause a
default under any contract, agreement, instrument, order, judgment or decree to
which the Executive is a party or by which the Executive is bound, (b) the
Executive is not a party to or bound by any employment agreement, noncompetition
agreement or confidentiality agreement with any other person or entity and (c)
upon the execution and delivery of this Agreement by the Company, this Agreement
shall be the valid and binding obligation of the Executive, enforceable in
accordance with its terms.

     9.   Survival.  Sections 6 and 7 of this Agreement shall survive and
          --------
continue in full force and effect in accordance with their respective terms,
notwithstanding any termination of the Employment Period.

     10.  Arbitration.  Except as otherwise set forth in Section 7 hereof, any
          -----------
dispute or controversy between the Company and the Executive, whether arising
out of or relating to this Agreement, the breach of this Agreement, or
otherwise, shall be settled by arbitration in Iowa administered by the American
Arbitration Association, with any such dispute or controversy arising under this
Agreement being so administered in accordance with its Commercial Rules then in
effect, and judgment on the award rendered by the arbitrator may be entered in
any court having jurisdiction thereof. The arbitrator shall have the authority
to award any remedy or relief that a court of competent jurisdiction could order
or grant, including, without limitation, the issuance of an injunction. However,
either party may, without inconsistency with this arbitration provision, apply
to any court having jurisdiction over such dispute or controversy and seek
interim provisional, injunctive or other equitable relief until the arbitration
award is rendered or the controversy is otherwise resolved. Except as necessary
in court proceedings to enforce this arbitration provision or an award rendered
hereunder, or to obtain interim relief, neither a party nor an arbitrator may
disclose the existence, content or results of any arbitration hereunder without
the prior written consent of the Company and the Executive. The Company and the
Executive acknowledge that this Agreement evidences a transaction involving
interstate commerce. Notwithstanding any choice of law provision included in
this Agreement, the United States Federal Arbitration Act shall govern the
interpretation and enforcement of this arbitration provision.

     11.  Notices. All notices and other communications required or permitted
          -------
hereunder shall be in writing and shall be deemed given when (a) delivered
personally or by overnight courier to the following address of the other party
hereto (or such other address for such party as shall be specified by notice
given pursuant to this Section) or (b) sent by facsimile to the following
facsimile number of the other party hereto (or such other facsimile number for
such party as shall be specified by notice given pursuant

                                     -59-
<PAGE>

to this Section), with the confirmatory copy delivered by overnight courier to
the address of such party pursuant to this Section 13:

     If to the Company, to:

          Eagle Point Software Corporation
          4131 Westmark Dr.
          Dubuque, Iowa 52002
          ATTN: Dennis J. George, CFO
          Facsimile: 319-556-8424

     If to the Executive, to:

          Randy K. Ambrosy
          1593 Marjorie Circle.
          Dubuque, Iowa 52002

     12.  Severability.  Whenever possible, each provision of this Agreement
          ------------
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement or the validity, legality or enforceability of such provision in any
other jurisdiction, but this Agreement shall be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.

     13.  Entire Agreement.  This Agreement, together with the Confidentiality
          ----------------
and Noncompetition Agreement, constitutes the entire agreement and understanding
between the parties with respect to the subject matter hereof and supersedes and
preempts any other prior understandings, agreements or representations by or
between the parties, written or oral, which may have related in any manner to
the subject matter hereof.

     14.  Successors and Assigns.  This Agreement shall be enforceable by the
          ----------------------
Executive and the Executive's heirs, executors, administrators and legal
representatives, and by the Company and its successors and assigns.

     15.  Governing Law.  This Agreement shall be governed by and construed and
          -------------
enforced in accordance with the internal laws of the State of Iowa without
regard to principles of conflict of laws that might result in the application of
the internal laws of another jurisdiction.

     16.  Amendment and Waiver.  The provisions of this Agreement may be amended
          --------------------
or waived only by the written agreement of the Company and the Executive, and no
course of conduct or failure or delay in enforcing the provisions of this
Agreement shall affect the validity, binding effect or enforceability of this
Agreement.

     17.  Counterparts.  This Agreement may be executed in two counterparts,
          ------------
each of which shall be deemed to be an original and both of which together shall
constitute one and the same instrument.

     In Witness Whereof, the parties hereto have executed this Agreement as of
the date first written above.

                              EAGLE POINT SOFTWARE CORPORATION


                              By:

                                     -60-
<PAGE>

                               /s/ Thomas O. Miller
                              -------------------------------------
                              Thomas O. Miller
                              Chairman of the Board



                              EXECUTIVE

                               /s/ Randy K. Amvbrosy
                              -------------------------------------
                              Randy K. Ambrosy

                                     -61-