**EXHIBIT10.1**

 

**SOFTBRANDS,INC.**

**DIRECTOR**

**NONQUALIFIEDSTOCK OPTION AGREEMENT**

 

THIS AGREEMENT, made             by and between SoftBrands, Inc., a Delaware corporation (the “Company”), and                   (“Director”).

 

WITNESSETH, THAT:

 

WHEREAS, the Company pursuant to its 2001 StockIncentive Plan wishes to grant this stock option to Director.

 

NOW, THEREFORE, in consideration of the premises andof the mutual covenants herein contained, the parties hereto hereby agree asfollows:

 

1.                                       Grantof Option

 

The Company hereby grants to Director, on the date setforth above, the right and option (hereinafter referred to as the “option”) topurchase all or any part of an aggregate of                shares of Common Stock, $.01 par value, at the price of $             per share on the terms and conditions set forth herein.  The Option is not intended to be an incentivestock option within the meaning of Section 422 of the Internal Revenue Code of1986, as amended (the “Code”).

 

2.                                       Durationand Exercisability

 

(a)                                  TheOption shall not be exercisable on the date of grant.  The Option shall become fully vested andexercisable in its entirety on the seventh (7th) anniversary of theGrant Date.  The Option shall terminate,if not otherwise terminated, on the tenth anniversary of the date of grant.

 

(b)                                 Notwithstandingthe foregoing, in the event that (i) the Company completes an underwritten initial publicoffering of its common stock pursuant to an effective registration statementfiled with the Securities and Exchange Commission in accordance with theSecurities Act of 1933, as amended (an “IPO”) or (ii) becomes subject, pursuantto an effective registration under Section 12(g) of the Securities Exchange Actof 1934 (the “Exchange Act”) to the reporting requirements of Section 13 or15(d) of the Exchange Act, then this Option shall be exercisable, but only tothe extent vested in accordance with the schedule contained in Section 2(c), onthe date (the “Exercisability Date”) that is (A) in the case of an IPO, 180days following the consummation of such IPO or (B) in the case of an ExchangeAct registration, upon the effective date of such registration, and shallthereafter become further exercisable to the extent vested in accordance withSection 2(c).  In the event of a changeof control, this option shall become exercisable with respect to all of theshares subject to this option, regardless of the degree of vesting inaccordance with Section 2(c).  For suchpurposes, a “change of control” shall mean any of the following:  (i) the consummation of a merger orconsolidation of the Company with or into another entity or any other corporatereorganization, if more than 50% of the combined voting power of the continuingor surviving entity’s securities outstanding immediately after such merger,consolidation or other reorganization are owned by persons who were notstockholders of the Company immediately prior to such merger, consolidation orother reorganization, (ii) a

 

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public announcement thatany person has acquired beneficial ownership of 51% or more of the thenoutstanding shares of common stock of the Company and, for this purpose, theterms “person” and “beneficial ownership” shall have the meanings provided inSection 13(d) of the Securities Exchange Act of 1934, as amended, or relatedrules promulgated by the Securities and Exchange Commission, (iii) thecommencement of or public announcement of an intention to make a tender orexchange offer for 51% or more of the then outstanding shares of the commonstock of the Company, or (iv) a sale of all or substantially all of theassets of the Company.

 

(c)                                  TheOption shall be vested for purposes of acceleration of exercisability inaccordance with section 2(b) in accordance with the following schedule:

 
| **On or after each of  the following dates** | ** ** | **Additional  percentage  of Option  which is exercisable** |
|----------------------------------------------|------------|-------------------------------------------------------------|
| On the Date of Grant                         |       | 1/3 of the Option                                           |
| 1st Anniversary of the Grant Date            |       | 1/3 of the Option                                           |
| 2nd Anniversary of the Grant Date            |       | 1/3 of the Option                                           |

 

3.                                       Effectof Termination of Position

 

(a)                                  IfDirector shall cease to be a director of the Company for any reason other thanhis or her gross and willful misconduct, Director (or Director’s successor)shall have the right to exercise the Option at any time after such terminationof Director’s position as director for the duration of the Option and theoption shall continue to vest, and shall become exercisable, in accordance withits terms.

 

(b)                               Inthe event that Director shall cease to be a director of the Company by reasonof his or her gross and willful misconduct during the course of his or herservice as a director of the Company, including but not limited to wrongfulappropriation of funds of the Company, or the commission of a gross misdemeanoror felony, the Option shall be terminated as of the date of the misconduct.

 

4.                                       Mannerof Exercise

 

(a)                                  TheOption can be exercised only by Director or other proper party by deliveringwithin the option period written notice to the Company at its principaloffice.  The notice shall state thenumber of shares as to which the Option is being exercised and be accompaniedby payment in full of the option price for all shares designated in the notice.

 

(b)                                 Directormay, at Director’s election, pay the Option price either by check (bank check,certified check or personal check) or by delivering to the Company forcancellation Common Stock of the Company with a fair market value equal to theoption price.  For these purposes, thefair market value of the Company’s Common Stock shall be the average of theclosing representative bid and asked prices of the Common Stock as reported onthe National Association of Securities Dealers Automated Quotation System or,if the Common Stock is then traded on a national securities exchange, theclosing price of the stock on such exchange, or, if the Common Stock of theCompany is not publicly traded, as otherwise reasonably determined by theCompany.

 

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5.                                       Miscellaneous

 

(a)                                  TheOption is issued pursuant to the Company’s 2001 Stock Incentive Plan and issubject to its terms.  The terms of thePlan are available for inspection during business hours at the principaloffices of the Company.

 

(b)                                 ThisAgreement shall not confer on Director any right with respect to employment orto the continuance of any position on the board of directors of the Company orany of its subsidiaries, nor will it interfere in any way with the right of theCompany, through its other directors or shareholders, to remove Director at anytime.  Director shall have none of therights of a shareholder with respect to shares subject to the Option until suchshares shall have been issued to him or her upon exercise of the Option.

 

(c)                                  Theexercise of all or any part of the Option shall only be effective at such timeas counsel to the Company shall have determined that the issuance and deliveryof Common Stock pursuant to such exercise will not violate any state or federalsecurities or other laws.  Director maybe required by the Company, as a condition of the effectiveness of any exerciseof the Option, to agree in writing that all Common Stock to be acquiredpursuant to such exercise shall be held for Director’s own account without aview to any further distribution thereof, that the certificates for such sharesshall bear an appropriate legend to that effect and that such shares will notbe transferred or disposed of except in compliance with applicable federal andstate securities laws.  The Company may,in its sole discretion, defer the effectiveness of any full or partial exerciseof the Option in order to allow the issuance of Common Stock pursuant theretoto be made pursuant to registration or an exemption from registration or othermethods for compliance available under federal or state securities laws.  The Company shall be under no obligation toeffect the registration pursuant to the Securities Act of 1933 of any CommonStock to be issued upon exercise of the Option or to effect similar complianceunder any state laws.  The Company shallinform Director in writing of its decision to defer the effectiveness of theexercise of the Option.  During theperiod that the effectiveness of the exercise of the Option has been deferred,Director may, by written notice, withdraw such exercise and obtain the refundof any amount paid with respect thereto.

 

(d)                                 Notwithstandingany other provision of this Option Agreement, if there shall be any change inthe common stock subject to the Option through merger, consolidation,reorganization, recapitalization, dividend or other distribution, stock splitor other similar corporate transaction or event of the Company, or the Companyshall enter into a written agreement to undergo such a transaction or event,the Company, in its absolute discretion, may either:  (i) make appropriate adjustment in the numberof shares and the price per share of the shares subject to the Option in orderto prevent dilution or enlargement of the Option rights granted hereunder(provided that the number of shares subject to the Option shall always be awhole number) or (ii) cancel any or all of this Option and pay to Director incash the value of such cancelled Option or portion thereof based on the priceper share received, or to be received, by a shareholder of the Company in suchtransaction event

 

(e)                                  TheCompany shall at all times during the term of the Option reserve and keepavailable such number of shares as will be sufficient to satisfy therequirements of this Agreement.

 

(f)                                    Inorder to provide the Company with the opportunity to claim the benefit of anyincome tax deduction which may be available to it upon the exercise of theOption, and in order to comply with all applicable federal or state income taxlaws or regulations, the Company may take such action as it deems appropriateto insure that, if necessary, all applicable federal or state payroll,withholding, income or other taxes are withheld or collected from Director.

 

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IN WITNESS WHEREOF, the parties hereto have causedthis Agreement to be executed on the day and year first above written.

 

 
|   | SoftBrands, Inc.                              |   |
|--------|-----------------------------------------------|--------|
|   |                                          |   |
|   |                                          |   |
|   | By                                            |   |
|   | David G. Latzke, Senior Vice President — |   |
|   | Chief Financial Officer and Secretary         |   |
|   |                                          |   |
|   | /s/                                           |   |

 

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