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
5
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