Exhibit 10.12


 


SEVERANCE PAY AGREEMENT


 


This Agreement is made as of the tenth day of November, 2005, between
SoftBrands, Inc., a Delaware corporation (the “Company”) and                              (“Executive”).


 


WITNESSETH THAT:


 


WHEREAS, it is the purpose of this Agreement to specify the financial
arrangements that the Company will provide to the Executive upon Executive’s
separation from employment with the Company or with a subsidiary of the Company
or one of its subsidiaries under the circumstances described herein; and


 


WHEREAS, this Agreement is adopted in the belief that it is in the best
interests of the Company and its stockholders to provide stable conditions of
employment for Executive, thereby minimizing personnel turnover and enhancing
the Company’s and its subsidiaries’ ability to recruit highly qualified people.


 


NOW, THEREFORE, to assure the Company that it will have the continued
dedication of Executive notwithstanding the possibility, threat or occurrence
of a bid to take over control of the Company, and to induce Executive to remain
in the employ of the Company, and for other good and valuable consideration,
the Company and Executive agree as follows:


 


1.                                       Term
of Agreement.  This Agreement shall
be for a two-year term commencing on the date hereof.  This Agreement shall be automatically renewed
for additional one-year terms thereafter unless either Executive or the Company
provides written notice at least sixty (60) days prior to its scheduled termination
of their intent not to renew the same; provided that this Agreement shall
continue for at least two years after a Change of Control that occurs during
the term of this Agreement.


 


2.                                       Termination
of Employment.


 


(i)                                     If
a Change in Control (as defined in Section 3(i) hereof) occurs during
the term of this Agreement and any of the following events occur within one
year after such Change of Control, the terminated Executive shall be entitled
to receive the cash payment provided in Section 4 hereof if:


 


(a)                                  the
Company shall have exercised its right to terminate the Executive without
cause; or


 


(b)                               the
Executive shall have voluntarily exercised his option to terminate his
employment for Good Reason (as defined in Section 3(ii) hereof).  Notice of election of this option must
identify the Executive who desires to terminate his employment and set forth in
reasonable detail the facts and circumstances claimed to constitute Good
Reason.


 





















 


(ii)                                  From
and after the date of a Change in Control, the Company shall have the right to
terminate Executive from employment at any time during the term of this
Agreement for Cause (as defined in Section 3(iii) hereof), by written
notice to the Executive, specifying the particulars of the conduct of Executive
forming the basis for such termination, and Executive shall not be entitled to
any payment pursuant to Section 4 for termination for Cause.


 


(iii)                               From
and after the date of a Change in Control during the term of this Agreement,
Executive shall not be removed from employment with the Company except as
provided in Section 2(i) or (ii) hereof or as a result of
Executive’s Disability (as defined in Section 3(iv) hereof) or his
death.  Executive’s rights upon
termination of employment prior to a Change in Control or after the expiration
of the term of this Agreement shall be governed by the standard employment
termination policy applicable to Executive in effect at the time of
termination.


 


Any notice given
by Executive pursuant to this Section 2 shall be effective five (5) business
days after the date it is given by Executive.


 


3.                                       Definitions


 


(i)                                     A
“Change in Control” shall mean an event involving one transaction or a
series of related transactions in which:


 


(a)                                  any
person or persons acting in concert acquire more than fifty percent (50%) of
the beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended (“the “Exchange Act”), or
any successor provision) of the outstanding voting power of the then
outstanding securities entitled to vote generally in the election of directors
(“Voting Stock”) of the Company,


 


(b)                                 the
Company issues securities representing more than fifty percent (50%) of the
Voting Stock of the Company in connection with a merger, consolidation or other
business combination (other than for purposes of reincorporation),


 


(c)                                  the
Company is acquired in a merger or other business combination transaction in
which the Company is not the surviving corporation (other than a
reincorporation),


 


(d)                                 more
than fifty percent (50%) of the Company’s consolidated assets or earning power
are sold or transferred, or


 


(e)                                  the
Board of the Company determines, in its sole and absolute discretion, that
there has been a change in control of the Company;


 


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Provided, however, that
clauses (b), (c) and (d), above, will constitute a “Change in Control”
only if all or substantially all of the individuals and entities who were the
beneficial owners of Voting Stock of the Company immediately prior to such
merger, consolidation or other business combination or sale or transfer of
earning power or assets (each, a “Business Combination”) beneficially own less
than 50% of the combined voting power of the then outstanding shares of Voting
Stock of the entity resulting from such Business Combination (including,
without limitation, an entity which as a result of such transaction owns the
Company or all or substantially all of the Company’s earning power or assets
either directly or through one or more subsidiaries) and shall specifically not
include any change of control that results from the issuance of securities or
property in connection with a reorganization under the United States Bankruptcy
Code, as amended.


 


(ii)                                  “Good
Reason” shall mean the occurrence of any of the following events:


 


(a)                                  the
assignment to Executive of employment responsibilities which are not of
comparable responsibility and status as the employment responsibilities held by
Executive immediately prior to a Change in Control;


 


(b)                                 a
reduction by the Company in Executive’s compensation (including a change in the
form of the bonus compensation plan that makes less likely the achievement of a
targeted bonus) as in effect immediately prior to a Change in Control;


 


(c)                                  except
to the extent otherwise required by applicable law, the failure by the Company,
or the entity that acquires the Company, to continue in effect a material
benefit or compensation plan, stock ownership plan, stock purchase plan, bonus
plan, life insurance plan, health-and-accident plan or disability plan in which
Executive is participating immediately prior to a Change in Control (or plans
providing Executive with substantially similar benefits), the taking of any
action by the Company which would adversely affect Executive’s participation
in, or materially reduce Executive’s benefits under, any of such plans or
deprive Executive of any material fringe benefit enjoyed by Executive
immediately prior to such Change in Control, or the failure by the Company to
provide Executive with the number of paid vacation days to which Executive is
entitled immediately prior to such Change in Control in accordance with the
Company’s vacation policy as then in effect; or


 


(d)                                 the
failure by the Company to obtain, as specified in Section 6(i) hereof
an assumption of the obligations of the Company to perform this Agreement by
any successor to the Company.


 


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For purposes of the foregoing, Executive shall not be considered to
have been assigned employment of lesser responsibility if Executive manages,
has control over, or serves in a similar position with a subsidiary, division
or operating unit of an acquiring entity that generates revenues of comparable
amounts to the revenues generated by the Company before such Change in
Control.  Notwithstanding the foregoing,
none of the forgoing events shall be considered “Good Reason” if it occurs in
connection with the Executive’s death or disability.


 


(iii)                               “Cause”
shall mean termination by the Company of Executive’s employment based upon (a) the
willful and continued failure by Executive substantially to perform his duties
and obligations (other than any such failure resulting from his incapacity due
to physical or mental illness) or (b) the willful engaging by Executive in
misconduct which is materially injurious to the Company or any of its
subsidiaries, monetarily or otherwise. 
For purposes of this paragraph, no act, or failure to act, on Executive’s
part shall be considered “willful” unless done, or omitted to be done, by Executive
in bad faith and without reasonable belief that his action or omission was in
the best interests of the Company and its subsidiaries.


 


(iv)                              “Disability”
shall mean any physical or mental condition which would qualify Executive for a
disability benefit under the long-term disability plan of the Company or the
Subsidiary.


 


4.                                       Benefits
Upon Termination Under Section 2(i). 
Upon the termination of the employment of Executive pursuant to Section 2(i) hereof,
Executive shall be entitled to receive the benefits specified in this Section 4.  The amounts due to Executive under
subparagraphs (a) and (b) of this Section 4 shall be paid to
Executive not later than one business day prior to the date that the
termination of Executive’s employment becomes effective.


 


(a)                                  The
Company shall pay to Executive (i) the full base salary earned by him and
unpaid through the date that the termination of Executive’s employment becomes
effective, at the rate in effect at the time written notice of termination
(voluntary or involuntary) was given, (ii) any amount earned by Executive
as a bonus with respect to the fiscal year of the Company preceding the
termination of his employment if such bonus has not theretofore been paid to
Executive, (iii) an amount equal to a pro rata portion, based on number of
days elapsed, of the bonus Executive would have earned for the year in which
termination is effective, assuming for purposes or calculating such bonus
against any bonus or incentive plan, that the Company’s financial and business performance
for the current compensation year through the date of such termination is
annualized, and (iii) an amount representing credit for any vacation
earned or accrued by him but not taken;


 


(b)                                 In
lieu of any further base salary payments to Executive for periods subsequent to
the date that the termination of Executive’s employment becomes effective, the
Company shall pay as severance pay to Executive a lump-sum cash amount equal to
six months Executive’s salary as of the date of such termination (subject to
withholding for applicable taxes); subject, however, to the restriction that
the Executive shall not be entitled to receive any amount pursuant


 


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to this Agreement which constitutes an “excess parachute
payment” within the meaning of Section 280G of the Internal Revenue Code
of 1986, as amended, or any successor provision or regulations promulgated
there under.  In case of uncertainty as
to whether some portion of a payment might constitute an excess parachute
payment, the Company shall initially make the payment to the Executive and
Executive agrees to refund to the Company any amounts ultimately determined to
be excess parachute payments;


 


(c)                                  The
Company shall pay to Executive all legal fees and expenses incurred by
Executive in seeking to obtain or enforce any right or benefit provided to
Executive by this Agreement, including any and all expenses of arbitration in
accordance with Section 12 below; and


 


(d)                                 The
exercisability or vesting, or both, of all stock options and other stock based
benefits held by the Executive shall become and be accelerated and fully vested
as of the date of such termination, and, to the extent action is required to
exercise or otherwise obtain the benefits thereof, shall remain exercisable for
the period set forth in such option or stock based benefit.


 


Executive shall
not be required to mitigate the amount of any payment provided for in this Section 4
by seeking other employment or otherwise. 
The amount of any payment or benefit provided in this Section 4
shall not be reduced by any compensation earned by Executive as a result of any
employment by another employer.


 


5.                                       Successors;
Binding Agreement; Assignment.


 


(i)                                     The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise), to all or substantially all of the
business and/or assets of the Company, by agreement in form and substance
satisfactory to Executive, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.  Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a breach
of this Agreement and shall entitle Executive to compensation from the Company
in the same amount and on the same terms as Executive would be entitled
hereunder if Executive terminated his employment after a Change in Control for
Good Reason, except that for purposes of implementing the foregoing, the date
on which any such succession becomes effective shall be deemed the Termination
Date.  As used in this Agreement, “Company”
shall mean the Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which executes and delivers the agreement
provided for in this Section 5(i) or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of law.


 


(ii)                                  This
Agreement is personal to Executive and Executive may not assign or transfer any
part of his rights or duties hereunder, or any compensation due to him
hereunder, to any other person. 
Notwithstanding the foregoing, this Agreement shall inure to the benefit
of and be


 


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enforceable by Executive’s personal or legal
representatives, executors, administrators, heirs, distributees, devisees and
legatees.


 


6.                                       Modification;
Waiver.  No provisions of this
Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in a writing signed by Executive and
such officer as may be specifically designated by the Board of Directors of the
Company.  No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.


 


8.                                       Notice.  All notices, requests, demands and all other
communications required or permitted by either party to the other party by this
Agreement (including, without limitation, any notice of termination of
employment) shall be in writing and shall be deemed to have been duly given
when delivered personally or mailed by regular, certified or registered mail,
return receipt requested, at the address of the other party, as follows:


 


If to the Company, to:


 


SoftBrands, Inc.


Two Meridian Crossings


Suite 800


Minneapolis, MN 55423


 


If to Executive, to:


[Executive]


[Address]


[City, State and Zip Code]


 


Either party
hereto may change its address for purposes of this Section 8 by giving
fifteen (15) days’ prior notice to the other party hereto.


 


9.                                       Severability.  If any term or provision of this Agreement or
the application hereof to any person or circumstances shall to any extent be
invalid or unenforceable, the remainder of this Agreement or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable shall not be affected thereby, and each
term and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.


 


10.                                 Headings.  The headings in this Agreement are inserted
for convenience or reference only and shall not be a part of or control or
affect the meaning of this Agreement.


 


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11.                                 Counterparts.  This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.


 


12.                                 Governing
Law/Arbitration.  This Agreement has
been executed and delivered in the State of Minnesota and shall in all respects
be governed by, and construed and enforced in accordance with, the laws of the
State of Minnesota, including all matters of construction, validity and
performance.  Notwithstanding the
foregoing, any dispute as to the occurrence of a “Change of Control,” or as to “Good
Reason,” shall be settled by final and binding arbitration in accordance with
the Center for Public Resources Rules for Non-Administered Arbitration of
Business Disputes in effect as of the date of this Agreement by a sole
arbitrator.   The arbitration shall be
governed by the United States Arbitration Act, 9 U.S.C. § 1-16, and judgment
upon the award rendered by the arbitrator may be entered by any court having
jurisdiction thereof.  The place of
arbitration shall be Minneapolis, Minnesota. 
The arbitrator is empowered to award damages in excess of compensatory
damages.


 


13.                                 Entire
Agreement.  This Agreement supersedes
any and all other oral or written agreements or policies made relating to the
subject matter hereof; provided  that, this Agreement shall not
supersede or limit in any way Executive’s rights under any benefit plan, program
or arrangements in accordance with their terms.


 


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IN WITNESS
WHEREOF, the Company has caused this Agreement to be executed in its name by a
duly authorized officer, and Executive has hereunto set his hand, all as of the
date first written above.


 


 


	
   

  	
  SoftBrands, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   Its

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [Executive]

  
					



 


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