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


 





















 


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


 


6





















 


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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