Document:

Exhibit 10.4

 

EMPLOYMENT
AGREEMENT

BETWEEN

SOFTBRANDS, INC.

AND

DAVID G. LATZKE

 

THIS
EMPLOYMENT AGREEMENT (the “Agreement”), is made effective as of January 1, 2002
(“Effective Date”), is entered into by and between SoftBrands, Inc., a Delaware
corporation (the “Company”) and David G. Latzke (the “Executive”), collectively
referred to herein as the “parties.”

 

WHEREAS,
the Company wishes to employ the Executive to serve as its Senior Vice
President—Finance, Chief Financial Officer and Secretary of the Board of
Directors of the Company (the “Board”) as well as to perform other duties on
behalf of the Company, as determined by the Board.

 

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 employees 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 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 to indemnify Executive against any losses, costs, damages or
expenses.

 

ARTICLE II

DUTIES OF EMPLOYEE

 

2.1          General Duties.  Executive shall serve as Senior Vice
President—Finance, Chief Financial Officer and Secretary 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 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.  Except as set forth on Exhibit A
hereto, 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 directly 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 Twenty Five Thousand Dollars ($225,000) 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.

 

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 as Compensation Committee periodically.

 

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

 

2

 

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.  In concurrence with the execution of this
Agreement, the Company shall enter into a specific indemnification agreement
with the Executive.  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          Unreimbursed 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) for up to an additional
$5,000 of expense incurred by Executive for tax and financial planning advice.

 

3.7          General Employment Benefits.  Except where expressly provide 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 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 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

 

3

 

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.  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 pursuant to this Section 4.4.

 

4.5          Severance.  In the event that during the Employment Term
the Executive is terminated by the Company “without cause” (as set forth in
Section 4.3), or in the event the Company fails to renew this Agreement in
accordance with Section 1.2, 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 of 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
his base salary in accordance with normal payroll practice for a period of
twelve months after the date of such termination, 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 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
the Executive is terminated by the Company or the Executive terminates his
employment for “good reason,” as set forth in Section 4.7 of this Agreement,
within twelve (12) months following a “change of control” (as defined below) (a
“Change of Control Termination”), 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 annual compensation paid to
the Executive, averaged over the five years (or such lesser period as Executive
has been employed) ending on the December 31 preceding such termination;
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 accleration

 

4

 

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 in
control” (as defined below).

 

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 Company’s consolidated assets or earning
power are sold or transferred, or (v) 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
after a Change of Control 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 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
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 Executive’s office location

 

5

 

immediately prior
to a Change in Control, 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) 
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.

 

4.8          Mitigation.  The Executive shall not be required to
mitigate damages with respect to the termination of this 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
disables, this Agreement shall be terminated. Executive shall be deemed
permanently and totally disabled if he is unable 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 by
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, or

 

6

 

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-Compensation.  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, 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 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.

 

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 from which the Company derives an economic or competitive
advantage, or 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 disclose to any
director of the Company.  The Company may
waive application of the foregoing restrictions and obligations in its
discretion from time to time.

 

7

 

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 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.

 

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 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) 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

 

8

 

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;

 

(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.

 

5.8          Non-Payment Upon Non-Compliance.  Should Executive breach any one of the
covenants set forth in this Article V, the Company shall have no obligation to
make the payments or to provide Executive the benefits described in Sections
4.5 and 4.6 above, in addition to all other rights and remedies the Company may
have available t law or in equity.  The
Company 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 the Company learns of the breach without
sufficient time to provide ten (10) days notice, the Company shall provide
written notice as soon thereafter as practicable.

 

ARTICLE VIARTICLE 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; provides, 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:

  	
  David G. Latzke

  
	
   

  	
  19600 Sweetwater Curve

  
	
   

  	
  Shorewood, MN 55331

  

 

9

 

	
  To the Company:

  	
  Board of Directors

  
	
   

  	
  AremisSoft Corporations

  
	
   

  	
  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.  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

 

10

 

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 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.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 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
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.  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.

 

11

 

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        Holding Company and Subsidiary Guaranty.  As of the Effective Date, AremisSoft Corporation. (“Parent”) holds all of
the outstanding capital stock of the Company and AremisSoft Manufacturing (US),
Inc. is a subsidiary of the Company.  In
order to induce the Executive to enter into this Agreement, Parent and
Subsidiary hereby agree to cause the Company to perform its obligations under
the Agreement, and Parent and Subsidiary unconditionally guarantee the
performance by the Company of its obligations under the Agreement including
those obligations under Articles III and IV of the Agreement.

 

12

 

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

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AREMISSOFT MANUFACTURING (US), INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ George
  Ellis

  	
   

  
	
   

  	
   

  	
  George Ellis

  
	
   

  	
   

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
  (as to
  Section 6.13 of this Agreement)

  
	
   

  	
   

  
	
   

  	
  AREMISSOFT
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ George
  Ellis

  	
   

  
	
   

  	
   

  	
  George Ellis

  
	
   

  	
   

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
  (as to
  Section 6.13 of this Agreement)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
  /s/ David
  G. Latzke

  	
   

  
	
   

  	
  David G.
  Latzke

  
					

 

13Exhibit 10.5

 

EXECUTIVE COMPENSATION PLAN

Plan Year 2005

Dave Latzke

 

I.              Annual Base Salary $225,000 (to be reviewed
in six months)

 

II.            Performance Incentive Bonus (IB): $175,000
annually.  Your 2005 Incentive Bonus will
be paid based on the following criteria:

 

•      50% ($87,500) of the Performance Incentive bonus is based on the
achievement of the annual EBITDA targets for SoftBrands, Inc.

 

	
   

  	
   

  	
  EBITDA

  	
   

  	
  Payment Eligibility

  	
   

  
	
  YTD Q1 (Oct – Dec 04)

  	
   

  	
  1st Quarter Budget

  	
   

  	
  25

  	
  %

  
	
  YTD Q2 (Jan – Mar 05)

  	
   

  	
  2nd Quarter Budget

  	
   

  	
  50

  	
  %

  
	
  YTD Q3 (Apr –Jun 05)

  	
   

  	
  3rd Quarter Budget

  	
   

  	
  75

  	
  %

  
	
  YTD Q4 (Jul – Sep 05)

  	
   

  	
  Annual Budget

  	
   

  	
  100

  	
  %

  

 

 

Performance Incentive Payments —
An advance of 12.5% of your annual bonus for this portion of your incentive will
be paid quarterly based on the attainment of the annual EBITDA metric.   The remaining balance of earned bonus will
be paid upon completion of the annual audit.

 

Threshold for EBITDA Goal
– SoftBrands must achieve
90% of the targeted EBITDA goal to be eligible for the bonus payments.  If SoftBrands achieves 90% of the targeted
goal, you will be eligible for 50% of your targeted incentive bonus.   For achievement of each percentage above
90%, you will receive an additional 5% of your target to a maximum of 100%.  For each percentage achieved in excess of
100% of the annual target, you will receive an additional 1% of your targeted
incentive.

 

•      50%
($87,500) of the Performance Incentive bonus is based on the achievement of the
following performance objectives:

 

•      35%
($30,000) for resumption of public reporting via an effective Form 10
filing.  Payment for achieving this
objective will be made with the first quarterly bonus payout that follows an
effective Form 10.

•      35%
($30,000) for successfully achieving 2005 Sarbanes Oxley compliance requirements
as measured by a PWC Sarbanes Oxley audit without any material weaknesses.  Payment earned will be paid on the first
bonus payout following the PWC audit.

•      30%
($27,500) for improving the effectiveness of the global Finance
organization.  A performance objective
will be established and communicated at the beginning of our fiscal 2nd,
3rd & 4th quarters. 
Attainment of performance objectives will be paid quarterly at a maximum
of $9,167 per quarter.  Successful attainment
of the quarterly performance objective will be reviewed and determined jointly
by the COO and VP of Human Resources.

 

1

 

Note:  SoftBrands must be in compliance with all
debt covenants for any period in which a bonus is paid.

 

III.           Should you
leave the company for any reason; any bonus “not yet received” will be paid per
your employment agreement.

 

2

 

EXECUTIVE COMPENSATION PLAN

Plan Year 2005

Randy Tofteland

 

I.              Annual Base Salary $305,000

 

II.            Performance Incentive Bonus (IB): $305,000
annually.  Your 2005 Incentive Bonus will
be paid based on the following criteria:

 

•      100% ($305,000) of the Performance Incentive bonus is based on the
achievement of the annual EBITDA targets for SoftBrands, Inc.

 

	
   

  	
   

  	
  EBITDA

  	
   

  	
  Payment Eligibility

  	
   

  
	
  YTD Q1 (Oct – Dec 04)

  	
   

  	
  1st Quarter Budget

  	
   

  	
  25

  	
  %

  
	
  YTD Q2 (Jan – Mar 05)

  	
   

  	
  2nd Quarter Budget

  	
   

  	
  50

  	
  %

  
	
  YTD Q3 (Apr –Jun 05)

  	
   

  	
  3rd Quarter Budget

  	
   

  	
  75

  	
  %

  
	
  YTD Q4 (Jul – Sep 05)

  	
   

  	
  Annual Budget

  	
   

  	
  100

  	
  %

  

 

Performance Incentive Payments —
An advance of 12.5% of your annual bonus for this portion of your incentive
will be paid quarterly based on the attainment of the annual EBITDA
metric.   The remaining balance of earned
bonus will be paid upon completion of the annual audit.

 

Threshold for EBITDA Goal
– SoftBrands must achieve
90% of the targeted EBITDA goal to be eligible for the bonus payments.  If SoftBrands achieves 90% of the targeted
goal, you will be eligible for 50% of your targeted incentive bonus.  For achievement of each percentage above 90%,
you will receive an additional 5% of your target to a maximum of 100%.  For each percentage achieved in excess of
100% of the annual target, you will receive an additional 1% of your targeted
incentive.

 

Note:  SoftBrands must be in compliance with all
debt covenants for any period in which a bonus is paid.

 

III.           Should you
leave the company for any reason; any bonus “not yet received” will be paid per
your employment agreement.

 

3

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"}]]