Document:

Exhibit 10.2

 

TH&T Comments 11/05/02

 

AMENDMENT

TO

EMPLOYMENT AGREEMENT

BETWEEN

SOFTBRANDS, INC. AND

GEORGE H. ELLIS

 

This
AMENDMENT TO EMPLOYMENT AGREEMENT (this “Amendment”), is made effective as of
November 26, 2002 (the “Effective Date”), by and between SoftBrands, Inc., a
Delaware corporation (the “Company”), and George H. Ellis (the “Executive”),
collectively referred to herein as the “parties.”

 

WHEREAS,
the Executive and the Company are parties to that certain Employment Agreement,
effective as of January 1, 2002 (the “Agreement”);

 

WHEREAS,
the Compensation Committee of the Board of Directors of the Company on October
29, 2002 approved a Restructuring Bonus in the aggregate amount of $450,000
(the “Restructuring Bonus”) to be made by the Company upon the terms approved
by the Compensation Committee, including (i) that $100,000 of the Restructuring
Bonus will be payable upon the Company’s consummation of an acceptable
financing transaction (as determined by the Compensation Committee of the Board
of Directors) (such a transaction, an “Acceptable Financing Transaction”), (ii)
that $350,000 of the Restructuring Bonus will be payable in twenty four equal
monthly installments at the beginning of each calendar month commencing October
1, 2002 and (iii) that, in the event that the Executive voluntarily terminates
his employment (other than for good reason) or is terminated for cause, the
Executive shall forfeit any right to receive any portion of the Restructuring
Bonus to be paid after the date of termination; and

 

WHEREAS,
in connection with and consideration of the Restructuring Bonus and subject to
the terms thereof above, the Company and the Executive have agreed to amend the
Agreement as provided in this Amendment.

 

NOW,
THEREFORE, for and in consideration of the mutual promises and conditions made
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

 

ARTICLE I

AMENDMENT

 

Sections 5.1, 5.3 and 5.4 of the Agreement are amended in their
entirety to read as follows:

 

“5.1        Noncompetition.  The Executive acknowledges that he will have
access at the highest level to, and the opportunity to acquire knowledge of,
the Company’s customer lists, customer needs, business plans, trade secrets and
other confidential and proprietary information from which the Company 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 the Company, and to induce the Company to enter into this
Agreement.  The Executive agrees not to
compete with the Company or its direct or indirect subsidiaries (a “Company
Entity”) or to engage in any unfair competition with the Company during the
Employment Term and for a period of one year after the end of the Employment
Term.  For purposes of this Agreement,
the phrase “compete with the Company,” 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.  During the Employment Term and
for a period of one year after the end of the Employment Term, 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 the Company.  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 the Company is in default in the payment of any
obligation owed to the Executive.

 

“5.2        Confidential
Information.  During the Employment
Term and thereafter, Executive agrees to keep secret and to retain in the
strictest confidence all material confidential matters which relate to the
Company 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 the Company derives an economic or competitive
advantage, or from which the Company 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 the Company,
whether during or after the Employment Term, except in connection with pursuing
in good faith the interests and business of the Company.  The foregoing restrictions and obligations under
this Section 5.2 will not

 

2

 

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 the Company, 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 the Company.  The Company may waive application of the
foregoing restrictions and obligations in its discretion from time to time.

 

“5.3        Non-Solicitation
of Customers.  During the Employment
Term, the Executive will have access to confidential records and data
pertaining to the Company’s customers, their needs, and the relationship
between the Company and its customers. 
Such information is considered secret and is disclosed during the
Employment Term in confidence. 
Accordingly, during the Employment Term and for a period of one year
after the end of the Employment Term, 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 the Company 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 the Company or its 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 the
Company 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
Employment 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 the Company is in default in the
payment of any obligation owed to the Executive.

 

“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, during the
Employment Term and for a period of one year period after the end of the
Employment Term, directly or indirectly solicit, interfere with, offer to hire
or induce any person who is or was an officer or employee of the Company 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 the Company or an affiliate of the
Company,.  (These acts are hereinafter
referred to as the “prohibited acts of solicitation.”).

 

3

 

ARTICLE II

RESTRUCTURING BONUS

 

Sections 3.2 (“Bonuses”) of the Agreement is amended to add the
following three paragraphs at the end of such Section.

 

“Without limiting the foregoing as it may apply to other bonuses for performance, the
Company shall pay, at the times and subject to the following provisions, a
restructuring bonus to Executive equal to $450,000 (the “Restructuring Bonus”)
in recognition of the separation of the Company from AremisSoft Corporation
pursuant to that certain First Amended
Plan of Reorganization of AremisSoft Corporation Jointly Proposed by the Debtor
and SoftBrands, Inc. and effective August 2, 2002.  Such Restructuring Bonus shall be subject to,
and shall not be paid until, completion of a financing transaction by the
Company acceptable to the Board of Directors (an “Acceptable Financing
Transaction”).  Upon completion of an
Acceptable Financing Transaction, the Company shall pay the Executive $100,000
of the Restructuring Bonus and such amount of the remaining $350,000 of the
Restructuring Bonus as is equal to $9,722.22 multiplied by the number of full
months elapsed after October 1, 2002. 
The balance of the Restructuring Bonus shall be paid in equal monthly
installments of $9,722.22 on the first day of each month thereafter until paid
in full; provided, however, that the right of Executive to receive any further
payments of the Restructuring Bonus shall terminate in the event that the
Executive’s employment is terminated, other than by the Company “without cause”
(as set forth in Section 4.3) or by the Executive for “good reason” (as set
forth in Section 4.7).  For purposes of
Section 4.6 of this Agreement, the Restructuring Bonus shall be deemed declared
as of the date hereof, but not yet paid.”

 

ARTICLE III

MISCELLANEOUS PROVISIONS

 

3.1          Effect
of Amendment.  Except as expressly
amended hereby, the Agreement is in all respects ratified and confirmed and all
the terms, conditions and provisions thereof shall remain in full force and
effect.

 

3.2          Governing
Law.  This Amendment will be governed
by and construed in accordance with the laws of the State of Delaware, without
regard to its conflict of laws principles.

 

3.3          Counterparts.  This Amendment 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 Amendment, facsimile signature shall be treated the same as original
signatures.

 

3.4          Company
Representations.  The Company
represents and warrants to the Executive that this Amendment has been duly
authorized and approved by the Board of Directors of the Company.  Copies of the resolutions of the Board of
Directors evidencing such action will be provided to the Executive not later
than the Effective Date.

 

4

 

IN
WITNESS WHEREOF, the parties have executed and delivered this Amendment as of
the date first above written.

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  SOFTBRANDS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David
  G. Latzke

  	
   

  
	
   

  	
   

  	
  David G. Latzke,
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
  /s/ George
  H. Ellis

  	
   

  
	
   

  	
  George H.
  Ellis

  
					

 

5Exhibit 10.3

 

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

BETWEEN

SOFTBRANDS, INC.

AND

RANDY B. TOFTELAND

 

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”),
is made effective as of January 1, 2004 (“Effective Date”), by and between
SoftBrands, Inc., a Delaware corporation (the “Company”) and Randy B.
Tofteland (the “Executive”), collectively referred to herein as the “parties.”

 

WHEREAS, the Company and Executive have heretofore
entered into that certain Employment Agreement dated as of January 1,
2002;

 

WHEREAS, the duties of Executive have increased and
the Executive has been promoted and the Company wishes to reflect such
increased duties and provide for terms of employment commensurate with such
increased position.

 

NOW, THEREFORE, for and in consideration of the mutual
promises and conditions made herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereby agree as follows:

 

ARTICLE
I

EMPLOYMENT AND TERM OF EMPLOYMENT

 

1.1          Employment
and Term.  The Company hereby employs
Executive to render full-time services to the Company, subject to
Section 2.2 of the Agreement, and except during vacation periods and
reasonable periods of absence due to sickness, personal injury or other
disability, upon the terms and conditions set forth below, from the date of
this Agreement until the employment relationship is terminated in accordance
with the provisions of this Agreement. 
This Agreement is for a term of one (1) year (the “Stated Term”)
unless renewed or terminated earlier as provided for herein (the “Employment
Term”).

 

1.2          Renewal.  This Agreement will be automatically renewed
for an additional one (1) year period (without any action by either party)
at the end of the Stated Term and on each anniversary thereof (“Renewal Period”),
unless one party gives to the other written notice sixty (60) days in
advance of the beginning of any of the Renewal Period that this Agreement is to
be terminated.

 

1.3          Acceptance.  Executive hereby accepts employment with the
Company and agrees to devote his full-time attention and best efforts to
rendering the services described below. 
The Executive shall accept and follow the direction and authority of the
Board in the performance of his duties, and shall comply with all existing and
future regulations applicable to employees of the Company and to the Company’s
business.

 

 

1.4          Termination
of Prior Agreements.  Upon execution
of this Agreement all prior employment and/or consultant agreements between
Executive and the Company or its subsidiaries shall be deemed terminated
(including, without limitation, that certain Employment Agreement dated as of
January 1, 2002) 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 the Company or any of its subsidiaries under that certain
Indemnification Agreement dated as of January 1, 2002, or to otherwise
indemnify Executive against any losses, costs, damages or expenses in
accordance with the charter documents of the Company or any of its subsidiaries
or applicable law or regulation.

 

ARTICLE
II

DUTIES OF EMPLOYEE

 

2.1          General
Duties.  Executive shall serve as
President and Chief Operating Officer or in such other position as the Board of
Directors shall assign to Executive.  To
the extent consistent with the Company’s Certificate of Incorporation (“articles”)
and Bylaws (“bylaws”), Executive shall have all powers, duties and
responsibilities necessary to carry out his duties, and such other powers and
duties as the Board may prescribe consistent with the Company’s articles and
bylaws.

 

2.2          Exclusive
Services.  It is understood and
agreed that the Executive may not engage in any other business activity during
the Employment Term, whether or not for profit or other remuneration, without
the prior written consent of the Company; provided, however, that the Executive
may (i) manage personal and family investments (ii) engage in
charitable, philanthropic, educational, religious, civic and similar types of
activities to the extent that such activities do not hinder or otherwise
interfere with the business of the Company or any affiliate or subsidiary of
the Company, or the performance of the Executive’s duties under this Agreement
and (iii) subject to the approval of the Board, serve as a director or as
a member of an advisory board of another business enterprise.

 

2.3          Reporting
Obligations.  In connection with the
performance of his duties hereunder, the Executive shall report to the Chief
Executive Officer.

 

ARTICLE
III

COMPENSATION AND BENEFITS OF EMPLOYEE

 

3.1          Annual
Base Salary.  The Company shall pay
the Executive salary for the services to be rendered by him during the
Employment Term at the rate of Two Hundred Seventy -Five Thousand Dollars
($275,000) annually (prorated for any portion of a year), subject to increases,
if any, as the Company’s Compensation Committee may determine in its sole
discretion after periodic review of the Executive’s performance of his duties
hereunder not less frequently than annually. 
Such base salary shall be payable in periodic installments in accordance
with the terms of the Company’s regular payroll practices in effect from time
to time during the term of this Agreement, but in no event less frequently than
once each month.  Such base salary cannot
be decreased.

 

2

 

3.2          Bonuses.  In addition to the base salary and other
benefits provided to Executive hereunder, Executive is eligible to receive
bonuses based on performance and Executive’s attainment of objectives
established by the Board or Compensation Committee periodically.  For the fiscal year ended September 30,
2004, Executive shall be entitled to a bonus based on the executive bonus plan
adopted by the Company and approved by the Company’s compensation committee,
which would pay Executive a bonus of $275,000 if targeted performance is
achieved.

 

3.3          Expenses.  The Company 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 Agreement in accordance with the expense reimbursement policies of
the Company in effect from time to time during the Employment Term, upon
presentation of proper expense statements or vouchers or such other written
supporting documents as the Company may reasonably require.

 

3.4          Vacation.  The Executive shall be entitled to
four (4) weeks paid vacation for each calendar year (prorated for any
portion of a year, as applicable). 
Notwithstanding anything to the contrary in this Agreement, vacation
time shall cease to accrue beyond eight weeks at any given time during the
Employment Term.

 

3.5          Indemnification.  The Company has entered into a specific
indemnification agreement with the Executive dated January 1, 2002.  The Company has in effect and will continue
in full force and effect at all times during the Employment Term an officer’s
and director’s liability insurance policy covering the Executive on terms no
less favorable than those in effect on the Effective Date in all respects,
including coverage and amounts.

 

3.6          Un-reimbursed
Medical Expense and Tax Planning Expense. 
The Company will reimburse Executive, upon presentation of bills
incurred by Executive, for (a) up to $5,000 per year of medical expense
incurred by Executive that is not otherwise paid under the benefit plans
provided in accordance with Section 3.7 (including the deductible portion
of any health benefit reimbursement), and (b) up to an additional $5,000
of expense incurred by Executive for tax and financial planning advice.

 

3.7          General
Employment Benefits.  In addition to
the benefits provided under other sections of this Agreement, 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 the Company makes
available generally to its employees, as the same may be in effect from time to
time during the Employment Term.

 

ARTICLE
IV

TERMINATION OF EMPLOYMENT

 

4.1          Termination.  This Agreement may be terminated earlier as
provided for in this Article IV, or extended as set forth herein.

 

4.2          Termination
For Cause.  The Company reserves the
right to terminate this Agreement for cause upon:  (a) Executive’s willful and continued
failure to substantially perform his duties with the Company (other than such
failure resulting from his incapacity due to physical or mental illness)
(b) Executive’s willful engagement in gross misconduct, as

 

3

 

determined by the Board in good faith, which is materially and
demonstrably injurious to the Company; or (c) Executive’s commission of a
felony, or an act of fraud against the Company or its affiliates.  Any act or failure to act that is done or
omitted to be done by Executive in good faith for the Company will be
conclusively presumed not to be willful for purposes of this
Section 4.2.  The Company may not
terminate the Executive’s employment for cause under this Section 4.2
unless, in the case of Section 4.2(a), the Company 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 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 for cause.

 

Executive shall not be entitled to any severance
benefits and all stock options of the Company granted to Executive which have
not vested shall be canceled upon termination for cause.

 

4.3          Termination
Without Cause.  Notwithstanding
anything to the contrary in this Agreement, the Company reserves the right to
terminate this Agreement at any time upon thirty (30) days’ written notice
to Executive, without cause, subject to the express terms and provisions set
forth in Sections 4.5 and 4.6.

 

4.4          Voluntary
Termination by Executive without Good Reason.  Notwithstanding anything to the contrary in
this Agreement, Executive may terminate this Agreement at any time upon
thirty (30) days’ written notice to the Company, subject to the terms and
provisions below.  The Company shall not
be obligated to pay any severance benefit to Executive if Executive terminates
this Agreement without Good Reason (as defined in Section 4.7) pursuant to
this Section 4.4.

 

4.5          Severance.  In the event that during the Employment Term
(i) the Executive is terminated by the Company “without cause” (as set
forth in Section 4.3), (ii) the Executive terminates his employment
for Good Reason (as defined in Section 4.7) or (iii) the Company
fails to renew this Agreement in accordance with Section 1.2, then the
Executive shall be provided or promptly be paid (i) any accrued but unpaid
salary, accrued but unused vacation time, un-reimbursed expenses which
otherwise would be reimbursed in the normal course and vested benefits under
any of the Company’s benefit plan in which the Executive is a participant, and
(ii) any bonus previously declared but not yet paid.  In addition, upon a termination under this
Section 4.5, (a) any portion of any stock option of the Company (“Options”)
granted to the Executive that is not then vested shall become fully vested and
all Options shall be exercisable until the fifth anniversary of the grant date
for the applicable Options, (b) the Company shall continue to pay to the
Executive, in accordance with normal payroll practice for a period of twelve
months after the date of such termination, a monthly amount equal one twelfth
of the sum of Executive’s annual salary at the time of such termination, plus
the amount of annual bonus that would be payable to Executive for the year in
which such termination occurs had the Company achieved targeted performance,
and (c) the Company shall continue to provide health insurance benefits
for the Employee through the earlier of (i) the date that the Employee has

 

4

 

obtained other full-time employment, or (ii) twelve months from
the date of termination of employment.

 

4.6          Change
of Control.  In the event that during
the Employment Term and within twelve (12) months following a “Change of
Control” (as defined below) (a “Change of Control Termination”) (i) the
Executive is terminated by the Company without cause, (ii) the Executive
terminates his employment for “Good Reason” as set forth in Section 4.7 of
this Agreement, or (iii) the Company fails to renew this Agreement, the
Executive shall promptly be paid (i) any accrued but unpaid salary,
accrued but unused vacation time, un-reimbursed expenses which otherwise would
be reimbursed in the normal course and vested benefits under any of the Company’s
benefit plan in which the Executive is a participant, (ii) any bonus
previously declared but not yet paid, and (iii) a lump sum cash payment
equal to two (2) times the sum of Executive’s annual salary at the time of
such termination, plus the amount of annual bonus that would be payable to
Executive for the year in which such termination occurs had the Company
achieved targeted performance; provided, however, that the Executive shall not
be entitled to receive any amount pursuant to this Agreement (including any
amount deemed to have been received by Executive due to acceleration of stock
options or other benefits) 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
thereunder.  In addition, upon a Change
of Control Termination, any portion of any of the Options granted to the
Executive that is not then vested shall become fully vested and all Options
shall be exercisable until the fifth anniversary of the grant date for the
applicable Options.  A “Change in Control
Termination” will also include a termination of the Executive by the Company
without cause or a termination by the Executive of his employment for “Good
Reason,” as set forth in Section 4.7 of this Agreement, in either case,
following the commencement of any discussion with a third person that
ultimately results in a Change of Control (as defined below).  To the extent the provisions of this
Agreement conflict with the terms of any agreement granting Options to the
Executive or the Company’s 2001 Stock Incentive Plan, the foregoing provisions
of this Agreement will control.

 

For purposes of this Section 4.6, a “Change of
Control” shall mean an event involving one transaction or a series of related
transactions in which (i) the Company issues securities representing 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 to any individual,
firm, partnership, or other entity, including a “group” within the meaning of
Section 13(d)(3) of the Exchange Act, (ii) the Company issues
securities representing more than fifty percent (50%) voting stock of the
Company in connection with a merger, consolidation or other business
combination (other than for purposes of reincorporation), (iii) 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), (iv) 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 are acquired by any individual, firm, partnership, or
other entity, including a “group” within the meaning of

 

5

 

Section 13(d)(3) of the Exchange Act (excepting
the liquidating trust formed pursuant to, or any class representative appointed
in accordance with, the bankruptcy of AremisSoft Corporation), (v) more
than fifty percent (50%) of the Company’s consolidated assets or earning power
are sold or transferred, or (vi) the Board of the Company determines, in
its sole and absolute discretion, that there has been a change in control of
the Company; provided, however, that clauses (ii), (iii) and (iv), 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.

 

4.7          Good
Reason.  The Executive may terminate
his employment for “Good Reason” after giving the Company detailed written
notice thereof, if the Company shall have failed to cure the event or circumstances
constituting “Good Reason” within ten business days after receiving such
notice.  Good Reason shall mean the
occurrence of any of the following without the written consent of the
Executive:  (i) the assignment to
Executive of employment responsibilities which are not commensurate with the
responsibilities assigned in this Agreement or, in the case of the twelve
months following a Change of Control, of comparable responsibility and status
as the employment responsibilities held by Executive immediately prior to a
Change in Control; (ii)  a reduction by the Company in Executive’s base
salary or, in the case of the twelve months following a Change of Control,
targeted compensation (including targeted bonus compensation) as in effect
immediately prior to a Change in Control; (iii)  the Company’s requiring
Executive to be based anywhere other than within fifty (50) miles of the
Company’s principal offices in Minneapolis, Minnesota, except for requirements
of temporary travel on the Company’s business to an extent substantially
consistent with Executive’s business travel obligations immediately prior to a
Change in Control; (iv) a material reduction to which the Executive has
objected in the overall mix of health and welfare benefits afforded Executive
by the Company; (v) the failure of the Company to obtain the assumption of
this Agreement by any successors contemplated in Section 6.13 below; or
(vi) after a Change of Control, except to the extent otherwise required by
applicable law, the failure by the Company to continue in effect any 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 or the Subsidiary 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. 
The Executive’s continued employment shall not constitute consent to, or
a waiver of rights with respect to, any act or failure to act constituting “Good
Reason” hereunder.

 

6

 

4.8          Mitigation.  The Executive shall not be required to
mitigate damages with respect to the termination of his employment under this
Agreement by seeking other employment or otherwise, and there shall be no
offset by any claims the Company may have against the Executive, and the
Company’s obligation to make the payments provided for in this 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 the Company may have against the
Executive or others.

 

4.9          Disability.  If Executive becomes permanently and totally
disabled, this Agreement shall be terminated. 
Executive shall be deemed permanently and totally disabled if he is
unable, with reasonable accommodation, to engage in the activities required by
this Agreement by reason of any medically determined physical or mental
impairment, as confirmed by three independent physicians, which can be expected
to result in death or which has lasted or can be expected to last for a
continuous period of not less than three months.  Upon termination due to disability, the Executive
shall promptly be paid (i) any accrued but unpaid salary, accrued but
unused vacation time, unreimbursed expenses which otherwise would be reimbursed
in the normal course and vested benefits under any of the Company’s benefit
plans in which the Executive is a participant, (ii) any bonus previously
declared but not yet paid, and (iii) shall receive his salary for the
remainder of the term of this Agreement.

 

4.10        Death.  If Executive dies during the term of this
Agreement, this Agreement shall be terminated on the last day of the calendar
month of his 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, accrued but unused vacation time, unreimbursed expenses which
otherwise would be reimbursed in the normal course and vested benefits under
any of the Company’s benefit plans in which the Executive is a participant, and
(ii) any bonus previously declared but not yet paid.

 

4.11        Effect
of Termination.  Except as expressly
provided for in this Agreement, the termination of employment shall not impair
any obligation that accrued prior to termination, nor 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 Agreement.

 

ARTICLE
V

COVENANTS AND REPRESENTATIONS OF EMPLOYEE

 

5.1          Unfair
and Non-Competition.  The Executive
acknowledges that he will have access at the highest level to, and the
opportunity to acquire knowledge of, the Company’s customer lists, customer
needs, business plans, trade secrets and other confidential and proprietary
information from which the Company 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 the
Company, and to induce the Company to enter into this Agreement.  The Executive agrees not to compete with the
Company or to engage in any unfair competition with the Company during the
Employment Term and for a period of one year after termination of the Employment
Term.  For purposes of this Agreement,

 

7

 

the phrase “compete with the Company,” or the substantial equivalent
thereof, means 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 competitive
with the development, financing and/or marketing of the products, proposed
products or services of the Company. 
During the Employment Term, 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 the
Company without obtaining the prior written consent of the Company.  Notwithstanding the foregoing, this
Section 5.1 shall not apply: 
(i) 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; or (ii) if the Company terminates Executive’s
employment without cause.

 

5.2          Confidential
Information.  Executive agrees to
keep secret and to retain in the strictest confidence all material confidential
matters which relate to the Company or its “affiliates” (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: 
(i) that is the subject of efforts by the Company that are
reasonable under the circumstances to maintain its secrecy; (ii) from
which the Company derives an economic or competitive advantage; or
(iii) from which the Company might derive such advantage in its business,
and not to intentionally disclose any such information to anyone outside of the
Company, whether during or after the Employment Term, except in connection with
pursuing in good faith the interests and business of the Company.  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 the
Company, other than as a result of a disclosure by Executive, (ii) if the
Executive is required by law to make disclosure, or (iii) to disclosures
to any director of the Company.  The
Company may waive application of the foregoing restrictions and obligations in
its discretion from time to time.

 

5.3          Non-Solicitation
of Customers.  During the Employment
Term, the Executive will have access to confidential records and data
pertaining to the Company’s customers, their needs, and the relationship
between the Company and its customers. 
Such information is considered secret and is disclosed during the
Employment Term in confidence. 
Accordingly, during the Employment Term and for a period of one year
after termination of the Employment, 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 the Company or its
affiliates (as the term “affiliate” is defined in the Exchange Act) within the
preceding 12 months or (ii) in any manner persuade or attempt to persuade
any such person or entity (A) to discontinue its business relationship
with the Company or its affiliates, or (B) to enter into a business
relationship with any entity or person the loss of

 

8

 

which the Executive should reasonably anticipate would be detrimental
to the Company or its affiliates in any respect.

 

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, during the
Employment Term and for a period of one year after termination of the
Employment, directly or indirectly solicit, interfere with, offer to hire or
induce any person who is or was an officer or employee of the Company or any
affiliate (as the term “affiliate” is defined in the Exchange Act) (other than
secretarial personnel) to discontinue his or her relationship with the Company
or an affiliate of the Company, in order to accept employment by, or enter into
a business relationship with, any other entity or person.  (These acts are hereinafter referred to as
the “prohibited acts of solicitation.”) 
The foregoing restriction, however, shall not apply to solicitation of
employees by advertising in periodicals of general circulation.

 

5.5          Return
of Property.  Upon termination of his
employment with the Company, the Executive shall deliver promptly to the
Company all records, manuals, books, blank forms, documents, letters,
memoranda, notes, notebooks, reports, data, tables, calculations or copies
thereof that relate in any way to the business, products, practices or
techniques of the Company, and all other property, trade secrets and confidential
information of the Company, including, but not limited to, all documents that
in whole or in part contain any trade secrets or confidential information of
the Company, which in any of these cases are in his possession or under his
control..

 

5.6          Inventions.  All processes, inventions, patents,
copyrights, trademarks and other intangible rights that may be conceived or
developed by the Executive (hereafter, “Developments”), either alone or with
others, during the Employment 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 the Company was used, or
that relate at the time of conception or reduction to practice of the invention
to the business of the Company, or to the Company’s actual or demonstrably
anticipated research or development, or that result from any work performed by
Executive for the Company, shall be the sole property of the Company.  Upon the request of the Company, Executive
shall disclose to the Company all inventions or ideas conceived during the
Employment Term, whether or not the property of the Company under the terms of
this provision, provided that such disclosure shall be received by the Company
in confidence.  Upon the request of the
Company, Executive shall execute all documents, including patent applications
and assignments, required by the Company to establish the Company’s rights
under this provision.  Notwithstanding
the foregoing, the provisions of this Section 5.6 shall not apply to any
Development meeting the following conditions:

 

(a)           such
Development was developed entirely on the Executive’s own time;

 

(b)           such
Development was made without the use of any Company equipment, supplies,
facility or trade secret information;

 

9

 

(c)           such
Development does not relate (A) directly to the business of the Company or
(B) to the Company’s actual or demonstrably anticipated research or
development; and

 

(d)           such
Development does not result from any work performed by the Employee for the
Company.

 

5.7          Representations.  The Executive represents and warrants to the
Company that he has full power to enter into this Agreement and perform his
duties hereunder, and that his execution and delivery of this 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.

 

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:                                                    Randy
Tofteland

8325 Stone Creek Dr.

Chanhassen, MN  55317

 

To the Company:                                                    Board
of Directors

SoftBrands, Inc.

Two Meridian Crossings

Minneapolis, Minnesota  55423

 

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 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.

 

6.3          Entire
Agreement.  This 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 the Company, and contains the complete and final
agreement and understanding of the parties with respect thereto; provided,
however, that the foregoing will not apply that certain Indemnification
Agreement dated as of

 

10

 

January 1, 2002 and, subject to Section 4.6, any existing
option agreements granting Options to Executive.  The Executive acknowledges that no
representation, inducements, promises or agreements, oral or otherwise, have
been made by the Company 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 the Company.

 

6.4          Amendments
and Modifications.  This Agreement
may be amended or modified only by a writing signed by both parties hereto.

 

6.5          Withholding
Taxes.  All amounts payable under
this Agreement, whether such payment is to be made in cash or other property,
including without limitation stock of the Company, 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 the Company, 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 Agreement is held to
be invalid or unenforceable by any judgment of a tribunal of competent
jurisdiction, the remaining provisions and terms of this Agreement shall not be
affected by such judgment, and this 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 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 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 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 the Company or, in the absence of such
designation, to his estate or personal representative.

 

6.9          Settlement
of Disputes.

 

(a)           Arbitration.  Except as provided in Section 6.9(b),
any claims or disputes of any nature between the Company and the Executive
arising from or related to the performance, breach, termination, expiration,
application or meaning of this Agreement or any matter relating to the Employee’s
employment and the termination of that employment by the Company shall be
resolved exclusively by arbitration in Minneapolis Minnesota, in accordance
with the applicable rules of the American Arbitration

 

11

 

Association.  In
the event of submission of any dispute to arbitration, each party shall, not
later than 30 days prior to the date set for hearing, provide to the other
party and to the arbitrator(s) a copy of all exhibits upon which the party
intends to rely at the hearing and a list of all persons each party intends to
call at the hearing.  The fees of the
arbitrator(s) and other costs incurred by the Executive and the Company in
connection with such arbitration shall be paid by the party that is
unsuccessful in such arbitration, as determined by the arbitrator.  The decision of the arbitrator(s) shall be
final and binding upon both parties. 
Judgment of the award rendered by the arbitrator(s) may be entered in
any court of competent jurisdiction.

 

(b)           Resolution
of Certain Claims—Injunctive Relief. 
Section 6.9(a) shall have no application to claims by the Company
asserting a violation of Article V or seeking to enforce, by injunction or
otherwise, the terms of Article V. 
Such claims may be maintained by the Company in a lawsuit subject to the
terms of Section 6.9(c).  The
Executive acknowledges that it would be difficult to fully compensate the
Company for damages resulting from any breach by him of the provisions of
Article V of this Agreement. 
Accordingly, the Executive agrees that, in addition to, but not to the
exclusion of any other available remedy, the Company shall have the right to
enforce the provisions of Article V by applying for temporary and permanent
restraining orders or injunctions from a court of competent jurisdiction
without the necessity of filing a bond therefor, and without the necessity of
proving actual damages.

 

(c)           Venue.  Any action at law, suit in equity or judicial
proceeding arising directly, indirectly, or otherwise in connection with, out
of, related to or from this Agreement, or any provision hereof, shall be
litigated only in the courts of the State of Minnesota, County of
Hennepin.  The Executive and the Company
consent to the jurisdiction of such courts over the subject matter set forth in
Section 6.9(b).

 

6.10        Governing
Law.  This 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 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 Agreement, facsimile signature shall be treated the same as original
signatures.

 

6.12        Company
Representations.  The Company
represents and warrants to the Executive that this Agreement will be duly
authorized and approved by the Board not later than the Effective Date.  Copies of the resolutions of the Board
evidencing such action will be provided to the Executive not later than the
Effective Date.

 

6.13        Successors.  This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns.  The Company hereby agrees that it will require
any successor (whether direct or indirect, by purchase, merger or consolidation
or otherwise) to all or substantially all the business and/or assets of the
Company, as a condition to effecting such transaction, to assume expressly and
agree to perform this Agreement in the same manner and to

 

12

 

the same extent that the Company would be required to perform it if no
such succession had taken place.  The
term “Company” shall include the Company as defined above in this Agreement and
any successor to its business and/or assets that assumes and agrees to perform
this Agreement by operation of law or otherwise.

 

IN WITNESS WHEREOF, the parties have executed and
delivered this Agreement as of the date first above written.

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  SOFTBRANDS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ George
  Ellis

  
	
   

  	
   

  	
  George
  Ellis, Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
  /s/ Randy
  B. Tofteland

  
	
   

  	
  Randy B.
  Tofteland

  

 

13

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00076-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00076-of-00352.parquet"}]]