Document:

Exhibit
10.10

 

TRANSITION
AGREEMENT

 

THIS TRANSITION
AGREEMENT (the “Transition Agreement”) made and
entered into as of the first day of October, 2005 by and between SoftBrands, Inc.
a Delaware corporation (“SoftBrands”) and George H. Ellis, an individual resident
of the State of Texas (“Executive”).

 

WHEREAS, SoftBrands
and Executive are parties to that certain employment agreement dated as of January 1,
2002, as amended by that certain amendment to employment agreement dated as of November 26,
2002 (the “Employment Agreement”), pursuant to which Executive has served, and
continues to serve, as the Chief Executive Officer and Chairman of the Board of
SoftBrands;

 

WHEREAS, Executive
has expressed his desire to transition his position with SoftBrands, effective January 1,
2006 (the “Transition Date”), to Executive Chairman of the Board and to promote
Randal Tofteland to the position of Chief Executive Officer effective such
date;

 

WHEREAS, Executive
and SoftBrands wish to confirm the employment and compensation arrangements
that will apply on and after the Transition Date and consistent with such
arrangements to terminate the Employment Agreement as of the Termination Date.

 

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

 

ARTICLE I

EMPLOYMENT PRIOR TO TERMINATION DATE

 

1.1          Employment Until Transition Date.  During
the period commencing on the date of this Transition Agreement and ending on
the day before the Transition Date, the employment of Executive by SoftBrands
shall be governed by and pursuant to the provisions of the Employment Agreement
and shall continue at the rate of base pay ($360,000 per annum or $90,000 per
quarter) in effect on September 30, 2005. 
During such period the Executive shall remain eligible to receive a
bonus based on performance and Executive’s attainment of objectives established
by the Compensation Committee of the Board of Directors of SoftBrands for such
period.

 

1.2          Termination of Employment Agreement.  Effective on the Transition Date, the
Employment Agreement and all prior employment or consulting agreements between
Executive or its subsidiaries shall be and the same are hereby 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
SoftBrands or any of its subsidiaries to provide and continue in full force and
effect an officer’s and director’s liability insurance policy or to indemnify
Executive against any losses, costs, damages or

 

 

expenses, including the obligations under Section 3.5 of the
Employment Agreement or under the Indemnification Agreement dated as of January 1,
2002 with Executive (the “Indemnification Agreement”).

 

ARTICLE II

TRANSITION – EMPLOYMENT AS EXECUTIVE CHAIRMAN

AND ELECTION AS CHAIRMAN OF THE BOARD

 

2.1          Transition Executive Chairman and Term.  Effective on the Transition Date, Executive
hereby resigns as Chief Executive Officer of SoftBrands.  Effective such date, Executive is hereby
employed as, and appointed to the position of, Executive Chairman of the Board
of Directors of SoftBrands (“Executive Chairman”) to serve in such position for
a term of one year ending December 31, 2006 (the “Initial Executive Term”),
unless the Initial Executive Term is terminated earlier as provided for herein,
or unless such term is renewed for an additional one year period ending December 31,
2007 (the “Extended Executive Term” and together, if applicable, with the
Initial Executive Term, (the “Executive Term”) upon written notice delivered to
Executive on or before September 1, 2006. 
Upon termination of the Executive Term, Executive’s employment with
SoftBrands shall terminate, but Executive shall remain a director, and Chairman
of the Board of Directors of SoftBrands (“Chairman of the Board”), until the
earlier of (i) December 31, 2008, or (ii) if he is not reelected
to a position as a director of SoftBrands, until the annual meeting of
stockholders of SoftBrands held in 2008 (the period commencing immediately
after the Executive Term and ending December 31, 2008, being hereafter
referred to as the Chairman Term”). 
During the Chairman Term, Executive shall, subject to action of
stockholders of the Company, remain a director of SoftBrands and serve as
Chairman of the Board of Directors of SoftBrands, but he shall not be an employee
of SoftBrands.

 

2.2          Duties.

 

(a)           Executive Term.  Executive hereby accepts, during the
Executive Term, employment with SoftBrands in accordance with this Transition
Agreement and agrees to render the services described below.  The Executive shall accept and follow the directions
of the Board in the performance of his duties, and shall comply with all
existing and future regulations applicable to employees of SoftBrands and to
SoftBrands’ business.  Executive shall
during such period or extended period serve as the Executive Chairman in
accordance with the policies, procedures and duties as adopted by the Board of
Directors of SoftBrands.  Executive’s
duties as Executive Chairman include substantial ongoing mentoring and support
of the Chief Executive Officer and his team in the areas of board
communications, regulatory relations, capital markets strategy, corporate
finance, shareholder relations, acquisitions and business development.  Throughout the Executive Term, SoftBrands
will use its best efforts, subject to its rights of termination under this
Agreement, to cause Executive to be elected as a member of the Board.

 

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(b)           Chairman Term. Executive’s
major responsibilities as Chairman of the Board include the management of Board
communications and its governance process, and implementing and monitoring the
direction of the Board as to management oversight.  This requires attendance at substantially all
board and committee meetings and at the annual meeting of SoftBrands.

 

2.3          Non-Exclusive Services.  Subject to the provisions of Article V
of this Transition Agreement, it is understood and agreed that Executive’s
position as Executive Chairman is not full-time and accordingly the Executive
may engage in other business activities during the Executive Term and the
Chairman Term, whether or not for profit or other revenue, without the consent
or approval of SoftBrands, except as may be required by the provisions of Article V
or by his fiduciary obligations as a director.

 

2.4          Reporting Obligations.  In performance of his duties as Executive
Chairman and as Chairman of the Board, the Executive shall report directly to
the Board.;

 

ARTICLE III

COMPENSATION AND BENEFITS OF EXECUTIVE

 

3.1          Annual Base Salary.  SoftBrands shall pay the Executive a base
salary for the services to be rendered by him as Executive Chairman during the
Executive Term at the rate of two hundred thousand dollars ($200,000) annually
(prorated for any portion of a year).  Such
base salary shall be payable in periodic installments in accordance with the
terms of SoftBrands’ regular payroll practices in effect from time to time
during the term of this Transition Agreement, but in no event less frequently
than once each month.  Such base salary
cannot be decreased.  During the
Executive Term, Executive shall be eligible for such benefits and expenses as
SoftBrands makes available to its employees generally.

 

3.2          Director Fees.  During the Executive Term and the Chairman
Term, SoftBrands shall pay Executive annual fees of at least $100,000 for all
of Executive’s services as a director and Chairman of the Board (the “Chairman
Fee”), subject to increases, if any, as SoftBrands’ Compensation Committee may
determine.  Such Chairman Fee shall be
paid in accordance with the terms in effect from time-to-time adopted by
SoftBrands’ Compensation Committee. 
During the Chairman Term, Executive shall be eligible for such benefits
and expenses as SoftBrands make available to its members of the Board of
Directors, including participating in director option grants.

 

3.3          Bonuses.  Executive is not eligible to receive bonuses
or other incentive compensation in either of the positions of Executive
Chairman or Chairman of the Board.

 

3.4          Expenses.  SoftBrands 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
Transition Agreement in accordance with the expense reimbursement policies of
SoftBrands in effect from time to time during the Executive Term, upon
presentation of proper expense statements or

 

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vouchers or such other written supporting documents as SoftBrands may
reasonably require.

 

3.5          Vacation.  The Executive shall not be entitled to paid
vacation during the Executive Term.

 

3.6          Indemnification.  Consistent with the terms of SoftBrands’
certificate of incorporation and bylaws, SoftBrands shall indemnify Executive
against any losses, costs, damages or expenses incurred as a direct consequence
of the discharge of his duties or by reason of his status as an agent of
SoftBrands and hold Executive harmless for any actions taken or decisions made
by him in good faith while performing services in his capacity as an officer or
director of SoftBrands during the Executive Term and the Chairman Term.  Nothing in this Transition Agreement shall
cause termination, alteration or amendment of the Indemnification Agreement and
Executive shall be entitled to the benefit of such Agreement throughout the
Executive Term.  SoftBrands has in effect
and will continue in full force and effect at all times during the Executive
Term and the Chairman Term, an officer’s and director’s liability insurance
policy covering the Executive on terms no less favorable than those in effect
on the Transition Date in all respects, including coverage and amounts.

 

3.7          General Employment Benefits.  Except where expressly provided 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 SoftBrands
makes available generally to its employees, as the same may be in effect from
time to time during the Executive Term. 
Except that the Executive and his dependents shall be entitled to
participate in health insurance benefits during the Chairman Term and until
termination of this Agreement as if he continued to be an employee, Executive
shall not otherwise be entitled to participate in such plans or programs during
the Chairman Term. After expiration of the Chairman Term, Executive shall be
entitled to participate in the Company’s executive retirement health plan,
which offers continued health benefit coverage subject to certain payments or
co-payments by executives.

 

3.8          Office Space. 
SoftBrands shall reimburse the Executive for seventy-five percent (75%)
of the actual cost paid by the Executive for maintaining during the Executive
Term an office at 8401 North Central Expressway, Suite 840, Dallas, Texas,
not to exceed $60,000 per annum.  If
there is no Extended Executive Term, then for the calendar year 2007,
SoftBrands shall reimburse the Executive for fifty percent (50%)of the actual
cost paid by the Executive for maintaining during calendar year 2007 an office
at 8401 North Central Expressway, Suite 840, Dallas, Texas, not to exceed
$40,000 per annum.  From and after January 1,
2008, SoftBrands will not reimburse Executive for any expenses for maintaining
any office.

 

3.9          Personal Secretary.  SoftBrands shall provide at Softbrands’
expense a personal secretary at the Executive’s choice during the Executive
Term.  If there is no Extended Executive
Term, then for calendar year 2007, SoftBrands shall provide at Softbrands’
expense a personal secretary at the Executive’s choice, not to exceed $60,000

 

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per annum.  From and after January 1,
2008, SoftBrands shall not provide any personal secretary or secretarial
services to Executive.

 

3.10        Location; Travel.  In connection with his employment during the
Executive Term, unless otherwise agreed by the Executive, the Executive will be
based in the Dallas metropolitan area. 
Executive will undertake normal business travel on behalf of SoftBrands,
the reasonable expenses of which will be paid by SoftBrands pursuant to Section 3.4
of this Transition Agreement.

 

3.11        Options.  Executive is hereby granted effective as of
the Transition Date an option to purchase 50,000 shares of SoftBrands common
stock pursuant to the SoftBrands’ Stock Incentive Plan at the fair market value
of the stock on the Transition Date. 
One-third of such options shares shall be fully vested on the Transition
Date and one-third thereof shall be full vested on the first anniversary of the
Transition Date and the balance of such options shares shall be fully vested on
the second anniversary of the Transition Date and the option shall expire 10
years from the Transition Date.  In
addition, during the calendar years 2007 and 2008 the Executive shall be
eligible to participate in SoftBrands option grants to directors, which
pursuant to current policy, would cause the grant on July 31st
of each year to each director an option to purchase 20,000 shares of SoftBrands’
common stock, exercisable over a ten (10) year period.  Consistent with the Employment Agreement, and
except as provided in Section 4.2 below, all stock options granted to
Executive prior to the date of this Transition Agreement to purchase an
aggregate of 1,650,000 shares of common stock shall remain outstanding after
termination of the Executive Term for the balance of the term of such options
and shall vest in accordance with their terms; provided, however, that
Executive acknowledges and agrees that, to the extent such options are not
fully exercised and do not expire within 90 days after termination of the
Executive Term, and to the extent that any such options continue to vest after
termination of the Executive Term, such options shall not be incentive stock
options and shall not be entitled to the treatment afforded under Section 422
of the Internal revenue Code, as amended.

 

ARTICLE IV

TERMINATION OF EMPLOYMENT AND POSITION AS CHAIRMAN

 

4.1          Termination.  The employment services during the Executive
Term, and the services as Chairman under this Transition Agreement may be
terminated early as provided for in this Article IV.

 

4.2          Termination For Cause.  SoftBrands reserves the right to terminate
Executive’s employment during the Executive Term, or to terminate Executive’s
services as Chairman of the Board, for cause upon: (a) Executive’s willful
and continued failure to substantially perform his duties with SoftBrands
(other than such failure resulting from his incapacity due to physical or
mental illness) (b) Executive’s willful engagement in gross misconduct, as
determined by the Board in good faith, which is materially and demonstrably
injurious to SoftBrands; or (c) Executive’s commission of a felony, or an
act of fraud against SoftBrands or its affiliates.  Any act or failure to act that is done or
omitted to be done by Executive in good faith for SoftBrands will be
conclusively

 

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presumed not to be willful for purposes of this Section 4.2.  SoftBrands may not terminate the Executive’s
employment or services for cause
under this Section 4.2 unless, in the case of Section 4.2(a),
SoftBrands has first provided Executive with written notice, specifying in detail
the act or acts alleged to constitute cause, and provided the Executive with a
period of not less than 30 calendar days to cure the failure in the manner
specified in such notice.  The Executive’s
employment or services may be
terminated for cause only upon the adoption of a resolution by the affirmative
vote of at least a majority of the Board (excluding the Executive, if the
Executive is then a member of the Board) finding cause and terminating
Executive’s employment or services for
cause.

 

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

 

4.3          Severance
for Employment Services. 
In the event that during the Executive Term, (a) the Executive Term
is terminated by SoftBrands other than pursuant to Section 4.2, or (b) SoftBrands
does not elect to renew the Initial Executive Term or the Extended Executive
Term, the Executive, or the Executive’s estate, shall be provided or promptly
be paid upon termination of the Executive Term (i) any accrued but unpaid
salary and Chairman Fees, unreimbursed expenses which otherwise would be
reimbursed in the normal course and vested benefits under any of the SoftBrands’
benefit plans in which the Executive is a participant, (ii) any bonus
previously declared but not yet paid, (iii) a lump sum cash payment equal
to four hundred thousand dollars ($400,000) minus the aggregate amount of base
salary payments paid by SoftBrands to Executive for the Executive Term, and (iv) SoftBrands
shall continue to pay, regardless of such termination any expenses that would
otherwise be payable to Executive pursuant to Section 3.8 or 3.9 of this
Transition Agreement.

 

4.4          Severance
for Chairman of Board Services.  In the event that, at any time prior to December 31,
2008, Executive’s services as Chairman are terminated by Softbrands other than
pursuant to Section 4.2, or if Executive is not elected a director at the
Annual Meeting of Stockholders of SoftBrands during 2008 for any reason other
than pursuant to Section 4.2, SoftBrands shall nevertheless pay to
Executive the fees required by Section 4.3 through December 31, 2008
as if Executive remained Chairman of the Board.

 

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

 

4.6          Death.  If Executive
dies prior to the expiration of the Chairman Term, this Transition Agreement
shall be terminated on the last day of the calendar month of his

 

6

 

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, unreimbursed expenses which otherwise would be reimbursed in the
normal course and vested benefits under any of SoftBrands’ benefit plans in
which the Executive is a participant, (ii) any bonus previously declared
but not yet paid.  In addition, upon
termination due to death, any portion of the Options granted to the Executive
that is not then vested shall become fully vested and shall be exercisable for
the balance of the term of such options, and (iii) lump sum cash payment
equal to four hundred thousand dollars ($400,000) minus the aggregate amount of
base salary payments paid by SoftBrands to Executive for the Executive Term and
less the amount of any payment previously made pursuant to Section 4.3(iii).  This
Section 4.6 will not limit the entitlement of the Executive’s estate or
beneficiaries to any death or other benefits then available to the Executive
under any life insurance, stock ownership, stock options, or other benefit plan
or policy that is maintained by SoftBrands for the Executive’s benefit.

 

4.7          Effect of Termination.  Except as expressly provided for in this
Transition Agreement, the termination of employment shall not impair any
obligation that accrued prior to termination, or 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 Transition Agreement.

 

ARTICLE V

COVENANTS AND REPRESENTATIONS OF EMPLOYEE

 

5.1          Noncompetition.  The Executive acknowledges that he has had
and will have access at the highest level to, and the opportunity to acquire
knowledge of, SoftBrands’ customer lists, customer needs, business plans, trade
secrets and other confidential and proprietary information from which
SoftBrands 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 SoftBrands, and to induce SoftBrands
to enter into this Transition Agreement. 
The Executive agrees not to compete with SoftBrands or its direct or
indirect subsidiaries (a “Company Entity”) or to engage in any unfair
competition with SoftBrands through December 31, 2007.  For purposes of this Transition Agreement,
the phrase “compete with SoftBrands,” 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.  Through December 31, 2007,
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 SoftBrands.

 

7

 

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 SoftBrands is in default in the payment of any
obligation owed to the Executive.

 

Nothing in
this Section 5.1 shall limit Executive’s fiduciary obligations as a
director after December 31, 2007.

 

5.2          Confidential
Information.   During
the Executive Term and thereafter, Executive agrees to keep secret and to
retain in the strictest confidence all material confidential matters which
relate to SoftBrands 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 SoftBrands derives an economic or
competitive advantage, or from which SoftBrands 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 SoftBrands,
whether during or after the Executive Term, except in connection with pursuing
in good faith the interests and business of SoftBrands.  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
SoftBrands, 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 SoftBrands. 
SoftBrands may waive application of the foregoing restrictions and
obligations in its discretion from time to time.

 

5.3          Non-Solicitation
of Customers. 
During the Executive Term, the Executive will have access to
confidential records and data pertaining to SoftBrands’ customers, their needs,
and the relationship between SoftBrands and its customers.  Such information is considered secret and is
disclosed during the Executive Term in confidence.  Accordingly, through December 31, 2007,
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 SoftBrands 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 SoftBrands or its

 

8

 

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 SoftBrands
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
Executive 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 SoftBrands is in default in the payment of any
obligation owed to the Executive.

 

Nothing in
this Section 5.3 shall limit Executive’s fiduciary obligations as a
director after December 31, 2007.

 

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,
through December 31, 2007, directly or indirectly solicit, interfere with,
offer to hire or induce any person who is or was an officer or employee of
SoftBrands 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 SoftBrands or
an affiliate of SoftBrands,.  (These acts
are hereinafter referred to as the “prohibited acts of solicitation.”).

 

Nothing in
this Section 5.4 shall limit Executive’s fiduciary obligations as a
director after December 31, 2007

 

5.5          Return of Property.  Upon termination of employment, and at the
request of SoftBrands, the Executive agrees to promptly deliver to SoftBrands
all SoftBrands’ Company or affiliate memoranda, notes, records, reports
manuals, drawings, designs, computer files in any media, and other documents
(including extracts and copies thereof) relating to SoftBrands or its
affiliates, and all other property of SoftBrands.

 

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

 

9

 

5.7          Representations.  The Executive represents and warrants to
SoftBrands that he has full power to enter into this Transition Agreement and
perform his duties hereunder, and that his execution and delivery of this
Transition 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, SoftBrands shall have no obligation
to make the payments or to provide Executive the benefits described in Article IV
above, in addition to all other rights and remedies SoftBrands may have
available at law or in equity. 
SoftBrands 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 SoftBrands learns of the breach
without sufficient time to provide ten (10) days notice, SoftBrands shall
provide written notice as soon thereafter as practicable.

 

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:

  	
  George H.
  Ellis

  
	
   

  	
  8401 North
  Central Expressway

  
	
   

  	
   

  	
  Suite 840

  
	
   

  	
   

  	
  Dallas,
  TX  75225

  
	
   

  	
   

  	
  Facsimile:  (214) 363-4396

  
	
   

  	
   

  	
   

  
	
  To SoftBrands:

  	
  Board of
  Directors

  
	
   

  	
   

  	
  SoftBrands, Inc.

  
	
   

  	
   

  	
  Two Meridian
  Crossings, Suite 800

  
	
   

  	
   

  	
  Minneapolis,
  MN 55423

  
	
   

  	
   

  	
  Facsimile:   (612) 851-1584

  
	
   

  	
   

  	
   

  
	
  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 Transition
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.

 

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6.3          Entire Agreement.  This Transition 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 SoftBrands, 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 SoftBrands 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 SoftBrands.

 

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

 

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

 

6.9          Attorneys Fees.

 

(i)                                     Without
regard to whether the Executive prevails, in whole or in part, in connection
therewith, SoftBrands will pay and be

 

11

 

financially responsible
for 100% of any and all attorneys’ and related fees and expenses incurred by
the Executive in connection with any dispute associated with the interpretation,
enforcement or defense of the Executive’s rights under this Transition
Agreement by litigation or otherwise. 
All such fees and expenses will be paid by SoftBrands as incurred by the
Executive on a monthly basis.

 

(ii)                                  SoftBrands
will reimburse the Executive for all legal fees and expenses incurred by the
Executive in connection with the preparation, review and negotiation of this
Transition Agreement and any document, agreement or arrangement contemplated by
this Transition Agreement or otherwise entered into by Executive in connection
with his employment as Executive Chairman.

 

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

 

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

 

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

 

	
   

  	
  SOFTBRANDS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Randal Tofteland

  	
   

  
	
   

  	
   

  	
  Randal
  Tofteland, President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
  /s/ George H. Ellis

  	
   

  
	
   

  	
  George H.
  Ellis

  
						

 

12Exhibit 10.11

 

 

SAP BUSINESS ONE SOFTWARE

MARKETING AND DISTRIBUTION AGREEMENT

 

This Agreement is
made effective this 15th day of November, 2004, by and between SAP
America, Inc., a Delaware corporation, with offices at 3999 West Chester
Pike, Newtown Square, Pennsylvania, U.S.A., 19073, (“SAP”), and SoftBrands, Inc.,
a Minnesota corporation, with offices at Two Meridian Crossing, Minneapolis, MN
55423 (“Reseller”).

 

RECITAL

 

WHEREAS,
Reseller has represented to SAP that Reseller has significant and valuable
industry experience in small and medium enterprise U.S. market(s), a good sales
and marketing track record, financial stability, and a sound U.S. business; and

 

WHEREAS,
Reseller markets, licenses, and distributes software and provides support and
related services to software end users in such markets; and

 

WHEREAS, SAP and Reseller desire to successfully
partner via this Agreement in order to pervasively penetrate the small and
medium enterprise U.S. market; and

 

WHEREAS,
SAP and Reseller desire to enter into a marketing arrangement, whereby Reseller
will have the non-exclusive right to market, distribute, and support SAP
Business One software to small and medium sized businesses in the Territory (as
defined herein), all in accordance with this Agreement;

 

WHEREAS, SAP desires to grant, and Reseller desires to
accept subject to the terms and conditions of this Agreement, a license to
market and sublicense the Software and to provide support and Related Services
in the Territory as part of its SAP Business One Software Marketing and
Distribution program;

 

NOW,
THEREFORE, SAP and Reseller agree as follows:

 

1.                                       DEFINITIONS.

 

1.1                                 “Authorized
SAP Partner” means an entity authorized by SAP to resell the Software.

 

1.2                                 “Combination
Use” means Use of the Software in combination or conjunction with any of
the following: (i) any software other than the Software; (ii) any
apparatus other than a Designated Unit; and/or (iii) any activities of
Reseller not licensed under this Agreement.

 

SAP CONFIDENTIAL

 

1

 

1.3                                 “Correction
Level” means a change in the Software between Versions made generally
available by SAP to licensees of the Software [e.g., 3.01.01].

 

1.4                                 “Designated
Unit” means each individual computer in which the Software and the Third
Party Database are installed.

 

1.5                                 “Documentation”
means SAP’s standard documentation as related to the Software, in any medium,
which is delivered to the Reseller Licensee, including SAP’s standard manuals,
program listings, data models, flow charts, logic diagrams, functional
specifications, instructions, and complete or partial copies of the foregoing.

 

1.6                                 “Export”
and “Exportation” shall have the meanings given them under the
applicable export control statutes and regulations administered by the relevant
governmental agency.

 

1.7                                 “Maintenance”
means the maintenance and support services for the Software provided by a party
pursuant to the terms and conditions of Appendix B as may be amended from time
to time in accordance with Section 6.1.

 

1.8                                 “Joint
Marketing Committee” has the meaning given in the Solution Partner
Agreement.

 

1.9                                 “Modification”
means a change to the Software that changes the source code.

 

1.10                           “Non-Productive
Use” means Use of the Software solely for Reseller’s testing,
demonstration, backup, support or development work in support of Reseller’s
rights under this Agreement.

 

1.11                           “Productive
Use” means Use of the Software solely to operate Reseller Licensee’s or an
authorized Reseller Subsidiary’s internal information technology business
operations.

 

1.12                           “Program
Concepts” means the concepts, techniques, ideas and know-how embodied and
expressed in any computer programs or modules included in the Software,
including their structure, sequence and organization.

 

1.13                           “Proprietary
Information” means: (i) with respect to SAP and SAP AG, the Software
and Documentation and any complete or partial copies thereof, the Program
Concepts, the Third Party Database, any other third party software licensed
with or as part of the Software, benchmark results, (ii) with respect to
Reseller, the Reseller Software, Reseller Extension and any third party
software licensed with or as part of the Reseller Software and benchmark
results and (iii) any other information reasonably identifiable as
confidential and proprietary information of SAP, Reseller, their other
licensors, or Reseller Licensees excluding any part of the Proprietary
Information which: (a) was in the public domain before the recipient party’s
receipt of the Proprietary Information; (b) enters the public domain
through no act or omission of the recipient party; or (c) has been
rightfully furnished to the recipient party by a third party without
restrictions on use or disclosure.

 

2

 

1.14                           “Related
Services” means physical installation, implementation, training,
customization, Maintenance and/or other services related to the Software.

 

1.15                           “Release”
means each issuance of the Software, excluding third party software, identified
by the numeral to the left of the decimal point (e.g., 3.01).

 

1.16                           “Reseller
Agent” is defined in Section 2.10.

 

1.17                           “Reseller
Licensee” means the legal entity that is a customer of Reseller or a
Reseller Agent hereunder and has executed an SAP End User License Agreement
with SAP in accordance with the terms herein.

 

1.18                           “Reseller
Software” means (i) the SoftBrands Fourth Shift Edition for Business
One in the current Version as of the date of this Agreement, (ii) the
DemandStream software in the current Version as of the date of this Agreement, (iii) any
releases, versions or correction levels of the Reseller Software released
during the term of the Agreement, and (iv) any complete or partial copies
of any of the foregoing.

 

1.19                           “Reseller
Extension” means the Extension developed by Reseller pursuant to the
Solution Partner Agreement, as more fully defined therein.

 

1.20                           “SAP
End User License Agreement” means the license agreement between SAP AG or
one of its affiliates, including SAP, and a licensee (including without
limitation a Reseller Licensee) under which rights have been granted to such
licensee to Use the Software, Documentation and Third Party Database.

 

1.21                           “SAP
AG” means SAP Aktiengesellschaft, the licensor of the SAP Proprietary
Information to SAP.

 

1.22                           “SAP
Partner Program” means the SAP Partner Program set out in Appendix D to the
Solution Partner Agreement..

 

1.23                           “Software”
means: (i) the SAP Business One Software in the Version as of the date of
this Agreement which Reseller is authorized to distribute in accordance with
this Agreement, (ii) any Releases, Versions, or Correction Levels of the
Software released during the term of this Agreement, and (iii) any
complete or partial copies of any of the foregoing.

 

1.24                           “SoftBrands
Stack” means the Reseller Software, Reseller Extension and the Software
licensed to an End User customer as an integrated solution.

 

1.25                           “Solution
Partner Agreement” means that certain SAP Business One Solution Partner
Agreement by and between SAP and Reseller dated June 15, 2004.

 

3

 

1.26                           “Territory”
means the United States of America.

 

1.27                           “Third
Party Database” means a version of third party, proprietary database
software licensed through SAP and/or Reseller to Reseller Licensees that is
required for Use with the Software limited for Use solely in support of the
Software.

 

1.28                           “Use”
means to load, access, execute, employ, utilize, store, or display the
Software.

 

1.29                           “Users”
means those user types identified of defined in SAP End User License Agreement
(s) or Appendices.

 

1.30                           “Version”
means each issuance of each Release of the Software, excluding third party
software, identified by the numeral to the right of the decimal point (e.g., 3.01).

 

1.31                           “Yearly
Business Review”  means the process
by which Reseller will provide SAP information which SAP reasonably requires to
determine which additional products and delivery vehicles, if any, Reseller
will be permitted to offer in the Territory. 
Such information may include financial information, future business
plans, sales training programs attended, support infrastructure training and
capabilities and any other information required by SAP.

 

2.                                       AUTHORIZATION
AND COMMITMENT OF RESOURCES.

 

2.1(a) 
Authorization. Subject to the terms of this Agreement, including the
terms and conditions of the SAP Partner Program and SAP’s right from SAP AG and
other licensors to provide such authorization, SAP hereby grants to Reseller,
and Reseller hereby accepts, for the period commencing on the date specified in
the first paragraph of this Agreement and ending December 31, 2006, a
non-exclusive, non-transferable, non-sublicenseable license to:

 

(i) 
market and distribute the Software and Documentation, either as part of the
Reseller Stack or on a stand-alone basis, subject, in either case to the terms
of this Agreement, and provide Related Services to prospective and current
Reseller Licensees in the Territory;

 

(ii) Use
the Software for testing with such Reseller Licensee’s systems and for the demonstration
to prospective Reseller Licensees and for similar Non-Productive Uses at
Reseller’s place of business, at a prospective Reseller Licensee’s premises, or
at appropriate off-site locations located in the Territory.  Such Non-Productive Use shall be subject to
the terms and conditions of the Software End-User Non-Productive Use License
previously executed between the parties.

 

2.1(b) Scope

 

(i)  The rights granted to Reseller under this
paragraph 2.1 expressly do not extend to Reseller with respect to Reseller
Licensees and prospective Reseller Licensees which are (1) U.S. affiliates
with a parent organization outside the Territory, except upon advance notice
and

 

4

 

coordination with SMB channel management or (2) require Use of the
Software outside of the United States, except as provided in §2.1(b)(ii) below.

 

(ii)  Notwithstanding anything to the contrary in
this Agreement, Reseller will be allowed to distribute the Software outside the
Territory to multinational customers on the condition that (a) Reseller is
in compliance with the terms of this Agreement, (b) the applicable
multinational customer meets the customer requirements of this Agreement (other
than the Territory requirements), and (c) the management of the SAP
Affiliate in whose country the Software will be distributed gives written
approval to such distribution.

 

(iii) The
rights granted to Reseller under this paragraph 2.1(a) further expressly
exclude any entity which Uses or intends to Use the Software and Documentation
to train its employees and/or consultants to provide implementation, testing
and/or consultancy services to third parties, or Uses or intends to Use the
Software and Documentation to perform software integration, testing or
development services other than to support its Productive Use. The grants in
this Article 2 are non-transferable without the prior written consent of
SAP except as specifically identified in §2.10 or in connection with a
permitted assignment as forth in §16.1.

 

2.2                                 Reseller Licenses.

 

2.2(a) 
Other than the terms of the SAP End User License Agreement, Reseller controls
the terms on which it does business with its Reseller Licensees, including any
commitments on behalf of Reseller relating to the Software (e.g. specifying
future discounts or prices), and is
responsible for compliance with, and enforcement of, its agreements with such
Reseller Licensees.  Reseller agrees
that, as a part of its obligations to SAP, Reseller shall not impose any
liabilities on SAP or agree to any provisions with a Reseller Licensee that are
inconsistent with SAP’s intellectual, industrial and other property
rights.  Except as specifically provided
in Section 2.10(a), in no event shall a Reseller Licensee be granted a
right to assign, sublicense or distribute the Software to Reseller Licensees,
or other persons or entities.  Reseller
will reasonably cooperate and assist SAP in enforcing any of SAP’s rights
against Reseller Licensees.  Reseller
acknowledges and agrees that such enforcement by SAP may include, without
limitation, termination of the SAP End-User License Agreement(s) between SAP
and a Reseller Licensee against which SAP has undertaken enforcement
action.  SAP shall have no liability
whatsoever to Reseller in the event of such termination.  Reseller acknowledges and agrees that in the
event of such terminations, its other contracts with such terminated Reseller
Licensees may be adversely affected, and Reseller shall take appropriate steps
to address this potential issue in its other contracts.  Reseller will notify SAP promptly of any
unauthorized use of the Software or other SAP Proprietary Information by
Reseller Licensees that comes to Reseller’s attention. SAP, SAP AG and its
licensors shall have the sole right and discretion to bring enforcement
proceedings involving the Software, provided, however, that it may agree with
Reseller to jointly bring and/or pursue such proceedings.

 

2.2(b)  All licenses of the Software, Third Party
Database and Documentation distributed by Reseller shall be consistent in all
respects with the SAP End User License Agreement

 

5

 

provided by SAP to Reseller Licensee. 
Reseller shall not deliver any Software or other SAP Proprietary
Information to Reseller Licensee until SAP and Reseller Licensee execute the
SAP End-User License Agreement for the Software, Third Party Database and
Documentation.  Any unauthorized change
in the SAP End User License Agreement by Reseller is a default in the performance
of a material obligation of this Agreement and grounds for termination under Section 15.2(b) of
this Agreement.  SAP may amend the SAP
End User License Agreement from time to time without prior notice from SAP, and
such amended documents may be provided by SAP for use by Reseller in
distributing the Software hereunder.  The
current version of the SAP End User License Agreement is attached as Appendix
A.

 

2.3                                 Non-Exclusivity.  SAP
and Reseller agree that the rights granted to Reseller hereunder are non-exclusive.  SAP AG and/or SAP and/or its or their
affiliates may itself or may authorize others to offer the Software, Related
Services and/or other services related to the Software in the Territory as
it/they may deem appropriate in its/their sole discretion.

 

2.4                                 SAP
Retained Rights.

 

2.4(a)  The licensing of the
Software is further subject to any additional restrictions contained in the
then current SAP Business One U.S. List of Prices and Conditions.  SAP reserves the right to alter, change,
amend or otherwise modify in any manner whatsoever the SAP Business One U.S.
List of Prices and Conditions in accordance with Section 7.2 of this
Agreement upon ninety (90) days prior written notice..  Reseller acknowledges and agrees that the SAP
Partner Program is an integral part of the relationship between the parties.

 

2.4(b) SAP
retains the right to enter and market in any lines of business by itself or
with or through third parties in the Territory, including without limitation
lines of business that involve or relate to the Software and Related Services
so long as no Reseller Proprietary Information is used by SAP.  SAP shall not be required to pay Reseller any
fees or royalties associated with transactions between SAP and any entities
pursuant to SAP’s retained rights.

 

2.5                                 Services.
Reseller shall ensure that all contracts for services provided by Reseller to
Reseller Licensees are entered into and executed in the name of and by the
party performing such services and that SAP and SAP AG shall have no liability
under such contracts or for such services.

 

2.6                                 Efforts.
Reseller shall use commercially reasonable efforts to market and license the
Software and market and provide Maintenance. 
RESELLER DOES SO AT ITS OWN RISK AND FOR ITS OWN
ACCOUNT EXCEPT AS OTHERWISE SET FORTH HEREIN.

 

2.7                                 End-User
Transition.

 

2.7(a) 
Subject to the terms in Appendix B, Reseller acknowledges and agrees that
Reseller Licensees may, from time to time, choose to terminate their
relationship(s) with Reseller and receive Related Services from SAP, SAP
affiliates, or other authorized distributors of SAP

 

6

 

software. In the event a Reseller Licensee ceases to be a customer of
Reseller, for any reason, Reseller shall cooperate with SAP and such Reseller
Licensee in order to ensure the smooth transition of the business relationship
from Reseller to another party selected by Reseller Licensee or SAP.  Reseller acknowledges and agrees that SAP
shall have no liability in this regard.

 

2.7(b) 
In the event any SAP licensee divests an entity and such entity does not have
Use or access rights to the Software pursuant to an SAP End User License
Agreement, and provided that such entity does not fit within the requirements
of Section 2.1, SAP in its sole discretion shall determine whether the
Reseller shall be entitled to license to such divested entity in accordance
with this Agreement.

 

2.7(c) 
In the event a Reseller Licensee is acquired by or otherwise merged with or
into an existing licensee of SAP software, and provided that such entity does
not fit within the requirements of Section 2.1, Reseller shall no longer
be entitled to license the Software to that entity without the prior express
written approval of SAP.

 

2.8                                 Reputation.  Reseller agrees not to act in any manner that
negatively affects or is likely to negatively affect the reputation of SAP, its
software (including the Software), services, or SAP’s trademarks.  SAP agrees not to act in any manner that
negatively affects or is likely to negatively affect the reputation of
Reseller, its software (including the Reseller Stack), services, or Reseller’s
trademarks.

 

2.9                                 Limitation
and Restrictions.  Except as expressly provided herein, Reseller
shall not, and shall not license, authorize, or permit any Reseller Licensee or
any other third party to:

 

(i)                                     modify,
create any derivative work of, include in any other software or make any copies
of the Software or Documentation or any portion thereof except that Reseller
shall be permitted to use and copy the Documentation to create additional
technical and/or user documentation explaining use and operation of the
Reseller Stack that may be delivered to Reseller Licensees together with the
Documentation.

 

(ii)                                  create
any Modifications or, except as specifically authorized by SAP in writing or
the SAP Partner Program Agreement, or extensions to the Software;

 

(iii)                               market,
distribute, sell, or deploy the Software or Documentation or any copies thereof
packaged, bundled, incorporated in, or embedded with or into any product or
service not provided by SAP without SAP’s prior express consent;

 

(iv)                              disassemble,
or decompile, nor recreate or attempt to recreate, by reverse engineering or
otherwise, the source code from the object code of the Software or use it to
create a derivative work except as previously authorized or directed by SAP for
the purposes of correcting errors in the Software or performing warranty,
Maintenance, and other support services; or

 

7

 

(v)                                 Use
the Software for timesharing, service bureau or service provider purposes,
except as may be specifically authorized by SAP in writing.

 

The restrictions in this
Agreement, including this Section 2.9, shall not affect any rights or
licenses granted to Reseller by SAP in any other agreement between the parties.

 

2.10                           Authorization
of Reseller Agents 

 

2.10 (a)  Subject to this Agreement,
including without limitation all restrictions on use and disclosure of the
Software and other SAP Proprietary Information, Reseller may authorize third
parties who are Authorized SAP Partners (“Reseller Agents”) to exercise the
rights of Reseller under Section 2.1(a). 
Prior to such authorization, Reseller shall either confirm or facilitate
the qualification of each such Reseller Agent prospect in accordance with
Appendix D.  In addition to all
requirements under Appendix D, and prior both to authorizing any entity as a
Reseller Agent hereunder and disclosing any SAP Proprietary Information to such
entity, Reseller shall attach Appendix E as an addendum to its operative
agreement(s).  Reseller shall identify
each certified Reseller Agent to SAP, and provide information reasonable
required by SAP regarding each such certified Reseller Agent, unless otherwise
provided during the certification process.

 

2.10(b)  Reseller shall indemnify
SAP, and hold SAP harmless from and against, any and all liability, loss,
claim, cost or expense (including reasonable attorney’s fees) resulting from
any claim against SAP by any third party arising out of any action by a
Reseller Agent in marketing or distributing the SoftBrands Stack, excluding
claims related to warranty, intellectual property indemnification or other
claims pursuant to the SAP End User License Agreement the Software or the Reseller
Agent’s direct, contractual relationship with SAP..

 

2.10(c)  Except as set forth herein,
including without limitation in Appendix E, Reseller controls the terms on
which it does business with its Reseller Agents and is responsible for its own
account for compliance with, and enforcement of, its agreements with such
Reseller Agents.  SAP ASSUMES NO OBLIGATIONS WHATSOEVER TO SUCH RESELLER
AGENTS PURSUANT TO ANY AGREEMENTS BETWEEN RESELLER AND SUCH RESELLER
AGENTS.  Reseller agrees that,
with respect to the Reseller Agents, Reseller shall not impose any contractual
liabilities on SAP other than those set forth in Appendix E.  Reseller shall not grant to any Reseller
Agent a right to assign, sublicense or distribute the Software to other
Reseller Agents, Reseller Licensees, persons or entities except as may be
expressly provided for herein.  Reseller
shall undertake any and all commitments with Reseller Agents on its own behalf
and for its own account, and SAP shall have no liability therefor.

 

2.10(d)  SAP reserves the right to
review Reseller’s certification of prospective Reseller Agents and Reseller
shall, at the written discretion of SAP, revoke immediately any such
certification that has not complied with or otherwise satisfied the
certification guidelines set forth herein. 
Further, Reseller shall, upon becoming aware of any material breach by
any Reseller

 

8

 

Agent of the terms and conditions set forth herein, inform SAP of the
same and, at SAP’s direction, revoke such Reseller Agent’s certification.

 

2.10(e)  Subject to this Agreement,
Reseller may authorize third parties to act as referral parties in connection
with the marketing of the software (“Referral Party”).  Referral Party may identify potential end
user transaction leads and provide such information to Reseller on such
financial terms as Referral Party and SoftBrands may agree.  Referral Party shall, for purposes of the
activities permitted hereunder, at all times be the agent of SoftBrands, under
its direction and control, and SAP shall have no liability for any statement,
action or obligation of Referral Party. 
Referral Party shall not create or impose any obligation of any kind on
SAP.

 

3.                                       ENCUMBRANCE,
OWNERSHIP, COPYRIGHT NOTICES, TRANSLATION AND EXPORTATION.

 

3.1                                 Encumbrance.
In no event shall Reseller engage in the lease, transfer, rental, loan or any
other encumbrance of the Software by any means including by operation of law.

 

3.2                                 No
Translation. Reseller shall not translate any portion of the SAP
Proprietary Information, including Documentation, into any other language.

 

3.3                                 No
Exportation. Regardless of any disclosure made by Reseller to SAP of an
ultimate destination of the Software, Documentation, Third-Party Database, and
other provided SAP Proprietary Information, Reseller acknowledges that SAP’s
Software, Documentation, and Proprietary Information are being released or
transferred to Reseller in the United States and are therefore subject to the
U.S. export control laws.  Reseller shall
not Export nor knowingly permit the Exportation of the Software from the United
States of America to any destination without the express prior written
authorization of SAP.  Reseller agrees
that it will not submit the Software to any government agency for licensing
consideration or other regulatory approval without the prior written consent of
SAP.  Failure to abide by this provision
is a material breach of this Agreement.

 

4.                                       MARKETING.

 

4.1                                 Joint
Marketing Committee As described
in the Solution Partner Agreement, the
parties shall establish a Joint Marketing Committee.  The Joint Marketing committee shall cooperate
to mutually agree upon marketing strategy for the Software as part of the
Reseller Stack.

 

4.2                                 Premises
and Personnel. As determined by the Joint Marketing Committee, Reseller
shall maintain an appropriate organization in the Territory dedicated to the
performance of Reseller’s obligations hereunder with competent sales, marketing
implementation and software support capabilities.  Reseller agrees to employ qualified
consultants and other personnel as needed to fulfill its obligations hereunder
and shall provide appropriate training for its employees.

 

9

 

4.3                                 Business
Opportunity Management. The Joint Marketing Committee shall agree upon the
manner in which Reseller shall use and maintain customer leads in the sales
opportunity management system maintained by SAP.

 

4.4                                 Responsibilities.
Reseller shall be solely responsible for the collection of payments,
demonstration, installation, implementation, training and support for the
Software, and Reseller’s obligations under Maintenance at the location of any
of its Reseller Licensees.  Reseller
shall not knowingly distribute the Software to a prospective Reseller Licensee
who does not intend to use the Software and Documentation to run its internal
business operations or who intends to Use the Software or Documentation in any
manner in contravention of this Agreement or the SAP End User License Agreement.  Reseller will: (i) provide instruction
to its Reseller Licensees regarding the Use and installation of the Software; (ii) use
trained technicians experienced in the computing industry and familiar with the
Software to provide technical support and assistance; and (iii) provide
answers to current and prospective Reseller Licensee questions and problems
regarding the installation and Use of the Software, all as required under its
obligations for Maintenance described in Appendix B.

 

4.5                                 Accountability.
RESELLER SHALL BE RESPONSIBLE FOR ACCURATELY AND
COMPLETELY REPRESENTING THE SOFTWARE AND ITS SERVICES IN ACCORDANCE WITH THE
DOCUMENTATION OR OTHER SAP OFFICIALLY SANCTIONED MATERIALS. RESELLER SHALL
ASSUME ALL FINANCIAL AND LEGAL LIABILITY FOR THE QUALITY, RELIABILITY, AND
ACCURACY OF ALL REPRESENTATIONS MADE BY RESELLER, ITS EMPLOYEES, AGENTS, AND
CONSULTANTS REGARDING THE SOFTWARE, WHETHER ORAL OR WRITTEN, BEYOND WHAT IS
CONTAINED IN THE DOCUMENTATION AND OTHER SAP OFFICIALLY SANCTIONED MATERIALS,
AND SHALL ASSUME PRIMARY RESPONSIBILITY FOR ALL COMMUNICATIONS ASSOCIATED WITH
ANY CLAIMS, PROBLEMS, OR OTHER COMPLAINTS AS TO QUALITY, FUNCTION, PURPOSE, AND
COMPATIBILITY IN ACCORDANCE WITH THE DOCUMENTATION WHENEVER THE SOFTWARE IS
REFERENCED, DEMONSTRATED OR ADVERTISED. Reseller shall give SAP, SAP
AG and its licensors appropriate credit for the ownership of the Software at
any presentation of the Software.

 

4.6                                 Performance Targets. 

 

4.6(a)                   Performance Targets.  Reseller shall meet the sales and other
performance targets set forth in the SAP Partner Program or as otherwise
mutually agreed upon by the parties in writing from time to time.

 

4.6(b)                  Sales
Capacity. Reseller shall create and
maintain a sales capacity at each location within the Territory, which is comprised
of sales, pre-sales, support and administrative personnel and equipment, at the
Reseller’s own expense, required to meet its Sales Targets, Customer
Satisfaction Targets, any other performance targets established as provided
hereunder, and otherwise perform its obligations hereunder.

 

10

 

4.6(c)                   Customer
Satisfaction Targets.  Reseller shall
obtain and maintain customer satisfaction ratings, as set forth in the SAP
Partner Program or as mutually agreed upon by the parties in writing from time
to time (“Customer Satisfaction Target”). 
Customer satisfaction shall be measured by SAP in substantially the same
manner as SAP measures customer satisfaction for its directly licensed
customers.  In the event Reseller does
not provide SAP accurate, complete and timely information required to complete
customer satisfaction surveys, Reseller shall be deemed to have received an
unsatisfactory rating for that period. 
Unless otherwise requested in writing by the customer, SAP shall
promptly deliver to Reseller all customer satisfaction questionnaires and
surveys received by it with respect to the Reseller.

 

4.7                                 Third Party Products. Due to the unusual complexity of the Software,
some third party software and hardware may not be compatible with the Software,
may impose special support obligations or may hinder the Software’s use,
thereby causing damage to SAP and/or Reseller. Therefore, Reseller agrees to
not distribute, support, promote, or recommend any third party product for
purposes of interoperating with the Software which has not been previously
approved in writing by SAP or otherwise has been made known to the public
officially as appropriate for Use or interoperation with the Software.  Reseller’s breach of this provision shall be
a material breach of this Agreement.  In
the event Reseller desires to determine whether a third party product is
approved by SAP for interoperation with the Software, Reseller shall submit
such request in writing to SAP in accordance with SAP’s policies.  All expenses relative to the third party
product approval shall be borne by Reseller, and any SAP resources shall be
invoiced at SAP’s then-current rates, to be paid within thirty (30) days of the
date of such invoice.  Reseller shall provide
SAP ninety days’ prior written notice of its intention to develop or market
third party software interoperability with the Reseller Software or Reseller
Extensions distributed as part of the SoftBrands Stack.

 

4.8                                 Marketing and Advertising.

 

4.8(a)                   Reseller
agrees to promote locally within the Territory, as necessary and appropriate,
to promote the Software, achieve Reseller’s sales targets, and exploit the
local market potential for the Software and Reseller’s maintenance and support
services, as determined by the Joint Marketing Committee.

 

4.8(b)                  As
determined by the Joint Marketing Committee, Reseller will be expected to
participate actively in trade shows and events suitable for promoting the
Software and support services. All advertising, promotions, and participation
in trade shows and events shall be at Reseller’s expense, except as otherwise
agreed in writing between SAP and Reseller.

 

4.8(c)                   Marketing and promotional materials, including
advertising and publicity materials, which are provided by SAP will be provided
by SAP to Reseller upon Reseller’s request, and charged to Reseller at SAP’s
cost, unless otherwise agreed between SAP and Reseller. As determined by the
Joint Marketing Committee, Reseller shall be expected to participate actively
in the development of such materials.

 

11

 

4.8(d)                  All
marketing and promotional materials developed by or for Reseller, including,
but not limited to, print advertisement, broadcast or telecast commercials,
product brochures, sales aids, manuals, displays, and publicity concerning the
Software and services shall be of first quality and graphically shall be
designed to meet the buying characteristics of the target market. All such
materials shall be submitted to the SAP SMB Business Development Manager to
ensure consistency with SAP and industry standards for review at least ten (10) business
days prior to publication, distribution or broadcast.

 

4.8(e)                   As
determined by the Joint Marketing Committee, SAP will agree from time to time
to provide speakers and staff support without charge to Reseller for conducting
conferences subject to the availability of SAP’s own resources and its prior
obligations.

 

4.9                                 Information Duties of Reseller.

 

4.9(a)                   As
determined by the Joint Marketing Committee, Reseller will regularly inform SAP
about its market, the marketing activities, and the results of its sales
efforts as related to the Software.  Such
information shall be considered Reseller Proprietary Information so long as the
exclusions in Section 1.12 do not apply to the information.

 

4.9(b)                  As
determined by the Joint Marketing Committee, Reseller will regularly solicit,
and investigate requests from its Reseller Licensees for alteration and further
development of the Software and maintenance and support services. It will
submit proposals for such further development and support to SAP for evaluation
utilizing the SAP development support questionnaires.

 

4.9(c)                   As
determined by the Joint Marketing Committee, Reseller will provide accurate and
up-to-date marketing and forecasting information to SAP on a regular basis, in
accordance with Section 4.3, including prompt updates concerning matters
that materially affect the current sales forecast. From time-to-time, SAP may
make special requests with respect to marketing and forecasting information.
Upon such requests, Reseller will use its reasonable efforts to provide such
information in an organized, timely and accurate fashion.

 

4.9(d)                  As
determined by the Joint Marketing Committee, Reseller and SAP will conduct a
Yearly Business Review, as directed by SAP.

 

4.10                           Reseller
Licensee Training. As part of its standard services offerings, Reseller, at
its own expense, will make available to its customers appropriate and necessary
user training related to use of the Software and training facilities or will
arrange for the provision of such training by SAP-authorized third party
training partners or by SAP.

 

4.11                           Notification.  If Reseller learns of any unauthorized Use by
Reseller Licensees of the Software under the SAP End User License Agreement,
including any third party software, it shall promptly notify SAP.

 

12

 

5.                                       ADDITIONAL
OBLIGATIONS OF THE PARTIES.

 

5.1.                              Sales Execution Process.  To the best of its ability, Reseller shall
comply with the SAP standard sales execution process which includes the
procedures for, licensing of the Software to Reseller Licensees, placing orders
for Software, delivery of Software, and invoicing.  SAP may amend the sales execution process
upon thirty (30) days notice to Reseller

 

5.2                                 Encryption
and Authorization Codes. Except as expressly authorized or directed by SAP
hereunder or elsewhere in writing, Reseller shall not copy or arrange for or
allow third parties to copy any part of the Software or Documentation. Reseller
shall comply with all of SAP’s instructions regarding authorization codes, and
any encryption and security procedures and devices that may be incorporated
from time to time within the Software or any part of the Documentation

 

5.3                                 Duty of SAP to Deliver.

 

5.3(a) In
accordance with the terms of this Agreement and SAP’s standard Sales Execution
Process, SAP shall make available to Reseller the Software, Documentation,
Maintenance, and other services as are offered to similarly situated
distributors of the Software by SAP from time to time.

 

5.3(b) In
SAP’s reasonable discretion, SAP’s obligations under Section 5.3(a) above
may be suspended or waived under any of the circumstances set forth in Sections
5.3(b)(i) through (vi). SAP shall notify Reseller immediately when it has
determined that it will suspend performance of any of such obligations.  Unless SAP expressly indicates otherwise,
suspension of any such obligations shall not constitute a termination notice
under Article 15.

 

5.3(b)(i) If
Reseller has materially breached a provision of this Agreement and such breach
has not been remedied within thirty (30) days after SAP notifies Reseller of
such breach, or an anticipatory breach has occurred by Reseller and reasonable
assurances are not provided to SAP within thirty (30)  days of such notice that the anticipated
breach will not occur. Such breaches may include, but are not limited to, delay
in payment, violation of Software protection and secrecy, marketing contrary to
or in disregard of the standard practices of SAP, and material, substantiated
Reseller Licensee complaints attributable to Reseller’s action or inaction;

 

5.3(b)(ii) If
there are serious technical problems which exist with regard to the Software
and have not yet been corrected, product liability risks, or problems in the
production or third-party distribution of the Software;

 

5.3(b)(iii) If
Reseller has not cured a failure to achieve or maintain full compliance with a
legal or other regulatory requirement which failure exposes SAP or Reseller to
the risk of penalties or other punitive action; or

 

13

 

5.3(b)(iv) Reseller
has executed a license agreement for the SoftBrands Stack with a Reseller
Licensee which contains obligations relative to the Software which have not
been approved by SAP in writing (other than standard maintenance obligations as
SAP provides to its own licensees).

 

5.3(b)(v) If
Reseller fails to timely pay it invoices to SAP; or

 

5.3(b)(vi) If
there is any other circumstance which SAP reasonably determines endangers the
security or confidentiality of the Software.

 

5.4                                 Delivery Procedures.

 

5.4(a) SAP
shall deliver the Software to Reseller for its or its Reseller Agents’ delivery
to Reseller Licensees. Delivery procedures shall be established in the sales
execution process in accordance with Section 5.1 of this Agreement.  SAP shall not be liable to Reseller for
delays in shipments due to causes beyond SAP’s reasonable control.

 

5.4(b) The
Software and Documentation will be provided in machine-readable form on CD-ROM
or such other media as SAP or SAP AG then provides to the commercial market.

 

5.5                                 Support of Reseller.

 

5.5(a) SAP
shall make available support services for Reseller and its Reseller Licensees
as set forth Appendix B to this Agreement. For services not set forth herein,
SAP will provide such services at the prices and under the conditions set forth
in its then-current SAP Business One U.S. List of Prices and Conditions, or if
not applicable then in accordance with SAP’s then-current rates for such
services, or as otherwise may be reasonably determined by SAP.

 

5.5(b) As
more fully set forth in Appendix B, Reseller’s requests for support service
from SAP must be in writing (including by email) and with a description of the
technical problem and functionality requirements in sufficient detail to allow
SAP to properly evaluate the scope of any problem and the degree of support
required. Requests for support service from SAP in instance of critical
downtime may be made orally with a written request submitted shortly
thereafter. Prior to initiating any support, SAP, Reseller, and the Reseller
Licensee, as appropriate, shall consult and agree upon all
aspects of support to be provided.

 

5.6                                 Information for Reseller. SAP will keep Reseller informed in timely fashion
of matters affecting Reseller and its relations with its Reseller Licensees and
prospective Reseller Licensees, including but not limited to new functionality,
technical problems, and delays in delivery. Such notice may be made available
in SAP AG’s Online Service System and Customer Support System (“CSS or CSU in
the Americas”) or other SAP online support portal (collectively referred to as,
“OSS/CSU”) at SAP’s sole discretion.  SAP
will notify Reseller as much in advance of such developments as is reasonably
possible and sufficiently in advance of changes in the Software and SAP
business terms, so that Reseller may take the steps necessary to accommodate such
changes in its business operations. SAP will provide Reseller with access to

 

14

 

OSS/CSU as may be necessary under this Agreement in SAP’s
sole discretion.

 

5.7                                 Use
of Software by Reseller. Upon Reseller’s request, SAP will provide a
sufficient number of copies and licensed users for the Software to Reseller for
testing, training of its employees, and demonstration by Reseller to
prospective Reseller Licensees in accordance with Section 2.1(a)(ii).  Any third party software required with the
Software shall be provided to Reseller at then-current prices in effect.  Reseller shall thereafter bear all
responsibility for maintenance and enforcement and performance of third party
license requirements.  In the event
Reseller desires the Software for its own Productive Use, Reseller and SAP
shall execute SAP’s standard SAP End User License Agreement in advance of such
Productive Use.

 

6.                                       SOFTWARE
MAINTENANCE AND SUPPORT SERVICES.

 

6.1                                 Maintenance and Support Services.  The
parties shall provide the Maintenance and support services set forth in
Appendix B (“Maintenance”).  SAP reserves
the right to alter, change, amend or otherwise modify in any manner
whatsoever Appendix B upon thirty (30)
days prior written notice to Reseller.

 

6.2                                 Availability
to Reseller Licensees.  Throughout
the term of this Agreement, Reseller will offer to all Reseller Licensees an
opportunity to purchase Maintenance on such specific terms and at such prices
as Reseller may from time to time determine. 
Reseller will promptly notify SAP of each Reseller Licensee that
purchases or renews an annual agreement for such Maintenance, and of any
Reseller Licensee that declines to purchase or renew such annual Maintenance.

 

6.3                                 Annual
Maintenance Royalty.  In
consideration of SAP’s provision of Maintenance services as described in
Appendix B, Reseller shall pay to SAP an annual Maintenance royalty as stated
in Appendix C.  The first annual (or such
prorated portion thereof as applicable) payment for such Maintenance royalty
shall be due with the Software royalty payment as stated in Article 7, and
shall be pro-rated if such payment is due prior to January 1 of the
following calendar year.  Maintenance
royalties are invoiced on an annual basis in advance effective January 1
of a calendar year

 

6.4                                 Maintenance
and Support Software.  In addition to
the Maintenance obligations stated in Section 6.1, SAP shall provide
maintenance support to Reseller for SAP Business One release 2004 and each
subsequent Software Release for a period of not less than twenty-four (24)
months from the date of initial commercial availability of such Software
Release.  SAP’s and Reseller’s
obligations to provide Maintenance in accordance with this Agreement shall
survive termination of this Agreement for a period of the greater of (i) twelve
months, or (ii) if specifically agreed to in writing by SAP, such longer
period of time remaining on Reseller’s support obligations to any Reseller
Licensee.

 

15

 

7.                                       PRICES
AND PAYMENT.

 

7.1                                 Royalties
and Payments. The royalties and payment process for the Software, and the
respective rights and obligations of the parties with regard to remuneration,
are set forth in Appendix C.  The
marketing and distribution of the Software by Reseller is subject to any
additional restrictions contained in the then-current SAP Business One U.S.
List of Prices and Conditions; provided however that nothing in the SAP
Business One U.S. List of Prices and Conditions shall be read to change or
modify the terms of this Agreement

 

7.2                                 Prices. The services provided by SAP to Reseller will be governed by the
most current SAP Business One U.S. List of Prices and Conditions in effect for
such services at the time the services are rendered unless otherwise agreed;
provided however that nothing in the SAP Business One U.S. List of Prices and
Conditions shall be read to change or modify the terms of this Agreement.

 

7.3                                 Changes
to Price List and Distribution of Software. 
SAP reserves the right (i) to change its standard SAP Business One
U.S. List of Prices and Conditions (applicable to all its Business One
customers) as may be reasonably required and consistent with SAP’s practices
and only upon providing Reseller with ninety (90) days prior written notice and
(ii) to discontinue the distribution of all or any components or
functionality of the Software upon sixty (60) days prior written notice to
Reseller and to cancel any orders for such discontinued Software without
liability to Reseller except the return of any prepaid license fees or service
fees for such Software.

 

7.4                                 Overdue
Accounts. Any amounts past due shall bear simple interest from and after
the date such amount is due until payment is made at a rate per annum up to, and
not exceeding, the U.S. prime rate plus 5%. 
The parties acknowledge and agree that all fees to be collected by it
are for its own account and shall not be applied to reduce, offset or make
contingent any payments due the other party.

 

7.5                                 Taxes
and Duties. Reseller shall either collect and pay or furnish SAP with
appropriate proof of exemption from all sales, use and other applicable taxes
and all customs duties and fees, Export taxes and fees, and other charges (with
the exception of the income taxes of SAP) applicable to SAP’s delivery of the
Software and the Documentation to Reseller or any services to the Reseller
Licensee.  SAP shall have no liability or
obligation relative thereto.  Reseller
shall provide to SAP copies of all valid resale certificates prior to Reseller’s
exercise of any rights under this Agreement, shall keep current all such resale
certificates, and shall notify SAP immediately if any such resale certificates
are no longer valid.

 

8.                                       REPRESENTATIVES.

 

8.1                                 Appointment.
Each party shall appoint qualified business and technical representatives who
shall be responsible for monitoring each phase of the marketing, distribution,
and support efforts and who shall act as the contact point(s) between the
parties during the term of this Agreement.

 

16

 

8.2                                 Reports/Meetings.
Reseller shall submit those reports and attend those meetings related to the
business of marketing and distributing the Software as determined by the Joint
Marketing Committee from time to time.

 

9.                                       TRAINING.

 

9.1(a)
 Training Obligation. 
Reseller and Reseller’s key sales and marketing personnel and key
technical and support personnel shall attend an appropriate number of
designated SAP-sponsored Software training courses at rates set forth in SAP’s
then-current SAP Business One U.S. Price List and Conditions, or if not
applicable then in accordance with SAP’s then-current rates for such services,
or as otherwise may be reasonably determined by SAP.  SAP shall waive course fees for Reseller for
such scheduled training classes during the initial term of this Agreement.  Reseller shall pay for travel accommodation,
meals and other related expenses for its attendees.

 

9.1(b)
 Reseller Training.  In order
for Reseller to fulfill its obligations under Section 9.1(a), SAP shall
provide to Reseller the documentation, materials and training necessary in
order for Reseller to conduct “train the trainer” training for its employees
and agents, which will provide for those individuals being trained in the
manner required by SAP’s then-current training program for Software maintenance
and support personnel.

 

9.2                                 Reseller
Personnel.

 

9.2(a) 
Reseller shall continue the training of sales and marketing personnel,
technical support personnel, and any consultants engaged by Reseller as
required to fulfill its obligations hereunder.

 

9.2(b) Upon
written request of Reseller, training days may be scheduled by SAP at rates set
forth in its then-current SAP Business One U.S. List of Prices and Conditions, or
if not applicable then in accordance with SAP’s then-current rates for such
services, or as otherwise may be reasonably determined by SAP.  Reseller shall pay SAP’s invoice for
training, together with all travel and living expenses of SAP’s representatives,
if any, within thirty days of submittal by SAP to Reseller.

 

9.2(c) Subject
to § 9.1, SAP will provide training to Reseller’s pre-sales and sales
personnel by SAP, at then-current rates. 
Any classes or training offered at no charge, will be subject to
reimbursement to SAP at then-current rates if such personnel remain in Reseller’s
employ but do not remain in sales or pre-sales for at least twelve (12) months
after training.

 

10.                                 RECORDS
AND AUDITS.

 

10.1                           Proper
Records. Reseller shall keep proper records, books of account and logs
concerning the distribution and reproduction, if any, of the Software. Such records shall be adequate to

 

17

 

determine the amount of license fees owed to SAP and shall be preserved
by Reseller for a period of three years immediately following termination of
this Agreement.

 

10.2                           Audit.
During the term of this Agreement, and during the three-year period immediately
following termination, SAP shall have the right to audit Reseller’s records
concerning the reproduction and sublicensing of the Software, and any other
obligations of Reseller to SAP under this Agreement. Such
audits shall be conducted at SAP’s expense, during normal business hours
following written advance notice to Reseller not less than ten business days in
advance, and in a manner so as to not unreasonably interfere with Reseller’s
business operations.

 

10.3                           Confidentiality.
SAP will keep any and all Proprietary Information derived from any audits
confidential. This Proprietary Information
shall not be used by SAP for any purpose other than to verify or resolve any
discrepancy involving the payment of license fees due from Reseller under this
Agreement and in SAP’s reviews of Reseller’s performance under this Agreement
(including in all cases use in proceedings to enforce SAP’s rights).

 

10.4                           Discrepancy.
In the event an audit of Reseller’s records, books of account or logs reveals
that Reseller has underpaid any fees or amounts due to SAP for the period under
audit, Reseller shall promptly pay to SAP the amount of the underpayment. If
the amount of underpayment for the period under audit exceeds ten percent of
the amount owed during such period, Reseller shall reimburse SAP for all
reasonable costs incurred by SAP in connection with the audit and, consistent
with Section 15.2(b), SAP may determine to terminate this Agreement.

 

11.                                 PROPRIETARY
INFORMATION.

 

11.1                           Ownership of Proprietary Information.

 

11.1(a) Ownership
of and title in and to all intellectual property rights, including patent,
copyright, trade secret, trademark, service mark, and domain name rights, in
the SAP Proprietary Information are and shall remain in SAP, SAP AG, and their
licensors. Reseller acquires only the right to use the SAP Proprietary Information
under the terms and conditions of this Agreement and does not acquire any
ownership rights or title in or to the SAP Proprietary Information.  Reseller may only provide the Software and
Documentation to Reseller Licensees and Reseller Agents, or as otherwise
provided herein.  Such delivery must be
in the SAP-provided form and on the SAP-provided media.

 

11.1(b) Notwithstanding
any prior agreements to the contrary (including any SAP End User Agreement with
Reseller), as of the effective date of this Agreement any Modifications that
are created on behalf of Reseller or any third party shall be the exclusive
property of SAP.  Reseller expressly
assigns any existing rights in such Modifications to SAP and agrees to assign
to SAP any such rights that it may subsequently acquire, including but not
limited to patent rights. Upon SAP’s request, Reseller will execute,
acknowledge, and deliver to SAP all documents and do all things necessary, at
SAP’s expense, to enable SAP to obtain and secure all rights in such
Modifications throughout the world. 
Reseller will secure the necessary rights and obligations from relevant
employees and third parties to satisfy the above obligations.  If SAP is unable, after reasonable effort, to
secure any signature on any application for patent, copyright,

 

18

 

trademark, or other analogous registration or other documents regarding
any legal intellectual property protection, whether because of physical or
mental incapacity or for any other reason whatsoever, Reseller hereby
irrevocably designates and appoints SAP and its duly authorized officers and
agents as its agent and attorney-in-fact, to act for and in its behalf and
stead to execute and file any such application or applications or other
documents and to do all other lawfully permitted acts to further the
prosecution and issuance of patent, copyright, or trademark registrations or
any other legal protection thereon with the same legal force and effect as if
executed by Reseller.

 

11.1(c) 
As between Reseller and SAP, Reseller shall own all right, title, and interest
in and to any Reseller Proprietary Information including any Reseller Software,
training, documentation, or marketing materials created by Reseller.

 

11.1(d) Reseller
shall maintain a current, complete, and accurate accounting of the number and
location of all copies of the Software and Documentation it has licensed and all
SAP Proprietary Information in its possession.

 

11.1(e) Reseller
shall not remove any proprietary, copyright, patent, trademark, or service mark
legend from the Software, Documentation, Third Party Database, or other SAP
Proprietary Information. Reseller shall ensure that SAP’s, SAP AG’s, and their
licensors’ legends contained in or on any copies of the SAP Proprietary
Information remain in or on the original and any copies reproduced by
Reseller.  The inclusion of a copyright
notice on any portion of the Software, Documentation, Third Party Database, or
any other Proprietary Information shall not cause nor be construed to cause it
to be a published work.

 

11.2                           Protection of Proprietary Information.

 

11.2(a) Neither
party shall, without the other party’s prior consent, use, disclose, or make
available any of the Proprietary Information of the other party in any form to
any person, except to those whose access is necessary to enable such party to
exercise its rights hereunder. Each party agrees that prior to disclosing any
Proprietary Information of the other party to any contractual third party, it
will obtain from that third party a written agreement containing restrictions
on use, copying, and disclosure that are at least equal to those restrictions
contained in this Article 11.

 

11.2(b) Reseller
and SAP agree that any unauthorized use or disclosure to third parties of the
other’s Proprietary Information may cause immediate and irreparable harm to the
owner of the disclosed Proprietary Information; therefore, each party agrees to
take all reasonable steps and the same protective precautions to protect the other’s
Proprietary Information from disclosure to third parties as it takes with its
own proprietary and confidential information, but in no event less than a
reasonable degree of care.

 

11.2(c) In
the event that Reseller becomes aware that unauthorized third parties have
obtained SAP Proprietary Information from Reseller and are making unlawful use
of any SAP Proprietary Information (including the Software and Documentation)
Reseller shall inform SAP immediately of any reports of such activity. Reseller,
at Reseller’s own cost, shall assist SAP as reasonably requested by SAP in SAP’s
enforcement of SAP’s rights in its Proprietary

 

19

 

Information.  Such assistance
includes, but is not limited to, sending cease and desist notifications and
terminating Maintenance.

 

11.2(d) In
the event that SAP becomes aware that unauthorized third parties have obtained
Reseller Proprietary Information from SAP and are making unlawful use of any
Reseller Proprietary Information (including the Reseller Software
Documentation), SAP shall inform Reseller immediately of any reports of such
activity.  SAP at SAP’s cost, shall
assist Reseller as reasonably requested by Reseller in Reseller’s enforcement
of Reseller’s rights in its Proprietary Information.  Such assistance includes, but is not limited
to, sending cease and desist notifications.

 

11.2(e) Each
party either has or shall establish specific procedures designed to meet the
obligations of this Agreement. Such procedures will include the execution of
appropriate agreements with such party’s contractors, agents, and employees
containing restrictions on use, copying, and disclosure that are at least equal
to those restrictions contained in Article 11, prior to any disclosure of
the Proprietary Information.  Reseller
shall immediately notify SAP in the event an employee, consultant, or agent of
Reseller,
for which a C-number has been assigned by SAP for purposes of access to SAP
and/or SAP AG systems, is terminated, resigns or otherwise no longer
requires such C-number.

 

11.3                           Trademarks.

 

11.3(a) SAP
hereby grants Reseller a non-exclusive, non-transferable, limited license to
use the trademarks and service marks used by SAP, SAP AG, or their licensors in
connection with the Software (collectively, the “Marks”). Reseller may use the
Marks solely in connection with the distribution, marketing, promotion, and
advertisement of the Software and Related Services described in this Agreement.
Reseller shall use the Marks in the proper form and manner and with appropriate
legends as prescribed by SAP from time to time. Reseller shall not use the
Marks in connection with any other trademarks, service marks or logos without
SAP’s prior approval.  With respect to
Reseller’s use of the Marks, Reseller shall comply with SAP’s trademark use
guidelines as same may be amended from time to time, as well as the SAP Partner
Program.

 

11.3(b) All
right, title, and interest in and to the Marks, including all goodwill
associated with the Marks, shall remain vested in SAP, SAP AG, or their
licensors. All use of the Marks by Reseller shall inure to the benefit of and
be on behalf of SAP, SAP AG or their licensors, as the case may be. Reseller
warrants that it will not act in a manner inconsistent with such ownership and
will not challenge the validity of the Marks.

 

11.3(c) The
nature and quality of all uses of the Marks made by Reseller shall conform to
the standards set by SAP and communicated to Reseller, either directly or
indirectly.

 

11.3(d) Reseller
will reasonably cooperate and assist SAP in registering, maintaining, and
protecting the Marks. Reseller will notify SAP promptly of any unauthorized use
of the Marks by others that comes to Reseller’s attention. SAP, SAP AG, and
their licensors shall have the sole right and discretion to bring infringement
or other proceedings involving the Marks; provided, however, that it may agree
with Reseller to jointly bring and/or pursue such proceedings.  SAP shall bear the cost of registering,
maintaining, protecting, and enforcing the Marks.

 

20

 

11.3(e) SAP
may use the trademarks and service marks (other than the Marks) used by
Reseller in connection with the Reseller Software and Reseller Stack (“Reseller
Marks”) solely in connection with the marketing, promotion, and advertisement
of the Reseller Stack as proscribed by the Joint Marketing Committee from time
to time. Reseller shall use the Reseller Marks in the proper form and manner
and with appropriate legends as prescribed by Reseller from time to time. SAP
shall not use the Reseller Marks in connection with any other trademarks,
service marks or logos without Reseller’s prior approval.  With respect to SAP’s use of the Reseller,
SAP shall comply with Reseller’s trademark use guidelines as same may be
amended from time to time.

 

11.3(f) All
right, title and interest in and to the Reseller Marks shall remain vested in
Reseller or its licensors.  All use of
the Reseller Marks by SAP shall inure to the benefit of and be on behalf of
Reseller or its licensors, as the case may be. SAP warrants that it will not
act in a manner inconsistent with such ownership and will not challenge the
validity of the Reseller Marks.

 

11.3(g) The
nature and quality of all uses of the Reseller Marks made by SAP shall conform
to the standards set by Reseller and communicated to SAP, either directly or
indirectly.

 

11.3(h) SAP
will reasonably cooperate and assist Reseller in registering, maintaining, and
protecting the Reseller Marks. SAP will notify Reseller promptly of any
unauthorized use of the Reseller Marks by others that comes to SAP’s attention.
Reseller and its licensors shall have the sole right and discretion to bring
infringement or other proceedings involving the Reseller Marks; provided,
however, that it may agree with SAP to jointly bring and/or pursue such
proceedings.  Reseller shall bear the
cost of registering, maintaining, protecting, and enforcing the Marks.

 

12.                                 WARRANTIES;
DISCLAIMER OF WARRANTY. 

 

12.1(a) Reseller Representation and Warranty.  Reseller warrants that (i) within
industry standards, it has and will maintain sufficient resources to perform
its obligations under this Agreement; (ii) it is not prevented by any
existing arrangement, contractual or otherwise, from entering into this
Agreement; and (iii) is has now, and will maintain in the future, legal
corporate status in good-standing and that it will comply in all material
respects with all legal requirements applicable in every part of the Territory
in which it does business.

 

12.1(b) SAP Warranty.

 

12.1(b)(1)  Warranty Period; Performance Warranty.  SAP warrants that the Software will
substantially conform to the functional specifications contained in the
Documentation for six (6) months following delivery to the applicable
Reseller Licensee thereof (the “Warranty Period”) when Used without material
alteration on the Designated Unit(s).

 

12.1(b)(2)  Scope of Warranty.  The warranty set forth in this Section 12.1(b) shall
not apply:  (i) if the Software is
not used in accordance with the Documentation; or (ii) to any Extensions
or Modifications; or (iii) if the defect is caused by a Modification or
Extension, Reseller Licensee, or a third-party software malfunction.

 

21

 

12.1(b)(3)  General Warranty.  SAP warrants that (i) within industry
standards, it has and will maintain sufficient resources to perform its
obligations under this Agreement; (ii) it is not prevented by any existing
arrangement, contractual or otherwise, from entering into this Agreement; and (iii) is
has now, and will maintain in the future, legal corporate status in
good-standing and that it will comply in all material respects with all legal
requirements applicable in every part of the Territory in which it does
business.

 

12.2                           Express
Disclaimer. EXCEPT AS SPECIFICALLY SET OUT IN § 12.1 HEREOF, SAP DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY,
RELATED TO THE SOFTWARE AND ANY THIRD PARTY SOFTWARE, OR ITS CHARACTERISTICS,
QUALITY, PERFORMANCE, OR VALUE, INCLUDING WITHOUT LIMITATION THE IMPLIED
WARRANTIES OF MERCHANTABLE QUALITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, AND NON-INFRINGEMENT, EXCEPT TO THE EXTENT THAT ANY WARRANTIES IMPLIED
BY LAW CANNOT BE VALIDLY WAIVED.  EXCEPT
AS SPECIFICALLY SET OUT IN § 12.1(b) HEREOF, SAP DOES NOT
MAKE ANY REPRESENTATIONS OR WARRANTIES REGARDING THE USE OR PERFORMANCE OF THE
SOFTWARE WITH ANY THIRD PARTY SOFTWARE (OTHER THAN THE SOFTWARE’S COMPATIBILITY
WITH THE THIRD PARTY DATABASE) AND DISCLAIMS ALL WARRANTIES WITH RESPECT
THERETO IN ACCORDANCE WITH THIS SECTION 12.2.  SAP MAKES NO REPRESENTATIONS OR WARRANTIES THAT THE SOFTWARE WILL OPERATE
UNINTERRUPTED OR ERROR-FREE, OR THAT IT WILL BE FREE FROM MINOR DEFECTS OR
ERRORS THAT DO NOT MATERIALLY AFFECT PERFORMANCE, OR THAT THE APPLICATIONS
CONTAINED IN THE SOFTWARE ARE DESIGNED TO MEET ALL OF RESELLER’S OR A RESELLER
LICENSEE’S BUSINESS REQUIREMENTS AND DISCLAIMS ALL WARRANTIES WITH RESPECT
THERETO IN ACCORDANCE WITH THIS SECTION 12.2.

 

12.3                           No
Representations or Warranties. Reseller shall not make any representations
or warranties as to the performance of the Software, Maintenance, or other
services on behalf of SAP or SAP AG, or otherwise bind SAP or SAP AG.  SAP’s warranty obligations, limitations, and
liabilities related to the SAP End User License Agreement with Reseller
Licensee shall be solely as stated therein.

 

13.                                 LIMITATION
OF LIABILITY.

 

13.1                           SAP
Not Responsible. Neither SAP, SAP AG, nor their licensors will be
responsible under this Agreement for: (i) the modification or improvement
of the Software to fit the particular requirements of Reseller or a Reseller
Licensee, or (ii) the correction of any program errors as a result of
misuse of the Software by Reseller or by any Reseller Licensee. Under no
condition will SAP, SAP AG, or their licensors be responsible under this
Agreement for preparation or conversion of data into the form required for
Use with the Software.

 

13.2                           Exclusion
of Damages/Liability Limit. ANYTHING TO
THE CONTRARY HEREIN NOTWITHSTANDING, EXCEPT FOR (a) DAMAGES RESULTING FROM
UNAUTHORIZED USE OR DISCLOSURE OF THE RESELLER PROPRIETARY

 

22

 

INFORMATION,
OR (b) DAMAGES UNDER SECTION 14.3(SUBJECT TO THE LIMITATIONS WITHIN
THAT SECTION)UNDER NO CIRCUMSTANCES
SHALL SAP, SAP AG, OR THEIR LICENSORS BE LIABLE TO RESELLER, ANY RESELLER
LICENSEE, OR ANY OTHER PERSON OR ENTITY FOR AN AMOUNT OF DAMAGES IN EXCESS OF
THE TOTAL AMOUNT PAID BY RESELLER TO SAP FOR SOFTWARE ROYALTIES DURING THE
TWELVE (12) MONTH PERIOD IMMEDIATELY PRECEDING THE EVENTS GIVING RISE TO THE
CLAIM.  ANYTHING TO THE CONTRARY HEREIN
NOTWITHSTANDING, EXCEPT FOR (a) DAMAGES RESULTING FROM UNAUTHORIZED USE OR
DISCLOSURE OF THE SAP PROPRIETARY INFORMATION, OR (b) DAMAGES RESULTING
FROM BREACH OF §14.4, UNDER NO CIRCUMSTANCES SHALL RESELLER OR ITS AFFILIATES,
OR THEIR LICENSORS, BE LIABLE TO SAP, SAP AG OR ANY OTHER PERSON OR ENTITY FOR
ANY AMOUNT OF DAMAGES IN EXCESS OF THE TOTAL AMOUNT PAID BY RESELLER TO SAP FOR
SOFTWARE ROYALTIES DURING THE TWELVE (12) MONTH PERIOD IMMEDIATELY PRECEDING
THE EVENTS GIVING RISE TO THE CLAIM. 
ANYTHING TO THE CONTRARY HEREIN NOTWITHSTANDING, UNDER NO CIRCUMSTANCES
SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY, OR THEIR RESPECTIVE AFFILIATES
(INCLUDING SAP AG) OR LICENSORS, BE LIABLE TO THE OTHER PARTY OR ANY OTHER
PERSON OR ENTITY FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL, OR INDIRECT DAMAGES,
LOSS OF GOODWILL OR BUSINESS PROFITS, WORK STOPPAGE, DATA LOSS, COMPUTER
FAILURE OR MALFUNCTION, ANY AND ALL OTHER COMMERCIAL DAMAGES OR LOSS, OR
EXEMPLARY OR PUNITIVE DAMAGES, EVEN IF ADVISED OF THE POSSIBILITY THEREOF.

 

13.3                           The
foregoing limitation of liability does not apply to personal injury or death to
the extent caused by the negligence of or willful misconduct of either
party.  With respect to damage to
tangible personal property (excluding data), SAP, SAP AG, or their licensors
will not be responsible in any amount in excess of the amount by which such
damage is paid by the liability insurance of such entity.

 

13.4                           Severability
of Disclaimer Provisions. IT IS EXPRESSLY UNDERSTOOD
AND AGREED THAT EACH AND EVERY PROVISION OF THIS AGREEMENT THAT PROVIDES FOR A
LIMITATION OF LIABILITY, DISCLAIMER OF WARRANTY, OR EXCLUSION OF DAMAGES, IS
INTENDED BY THE PARTIES TO BE SEVERABLE AND INDEPENDENT OF ANY OTHER PROVISION
AND TO BE ENFORCED AS SUCH.

 

13.5                           Professional
Advice. RESELLER ACKNOWLEDGES THAT NONE OF SAP, SAP
AG, OR THEIR LICENSORS ARE ENGAGED IN THE BUSINESS OF RENDERING LEGAL, TAX, OR
OTHER PROFESSIONAL SERVICES, AND THAT THE INFORMATION PROVIDED BY SAP RELATIVE
TO THIS AGREEMENT OR IN RESPONSE TO RESELLER INQUIRIES ARE NOT INTENDED TO
PROVIDE LEGAL, TAX, OR OTHER EXPERT ADVICE TO RESELLER, OR BE A SUBSTITUTE FOR
A LAWYER, ACCOUNTANT, OR OTHER PROFESSIONAL. IF RESELLER NEEDS LEGAL OR TAX
ADVICE OR OTHER EXPERT ASSISTANCE, THE SERVICES OF A COMPETENT LAWYER,
ACCOUNTANT, OR OTHER

 

23

 

PROFESSIONAL
LICENSED TO PRACTICE IN THE APPLICABLE JURISDICTION SHOULD BE SOUGHT.

 

14.                                 INDEMNIFICATION.

 

14.1                           SAP
Representation. SAP represents that SAP, SAP AG and its licensors, as the
case may be, own the SAP Proprietary Information licensed by SAP to Reseller
hereunder, including all intellectual property rights therein, and that SAP has
all rights from SAP AG and its licensors necessary to license, in accordance
with the terms of this Agreement, such SAP Proprietary Information to Reseller.

 

14.2                           No
Representation Regarding Combination Use. SAP makes no representation with
respect to the possibility of infringement by Combination Use of the Software.
The parties agree that SAP has no duty to investigate or to warn Reseller or
Reseller Licensees of such possibility.

 

14.3                           Indemnification
of Reseller.

 

14.3(a) Subject
to Section 14.2, SAP shall indemnify Reseller against all claims,
liabilities and costs and expenses, including reasonable legal fees, up to the
maximum amount described in Section 14.3(b), reasonably incurred in the
defense of any claim made or brought against Reseller by third parties alleging
that (a) use of the Marks as authorized pursuant to § 11.3 hereof, or
(b) Use of the Software infringes or misappropriates any valid: (i) United
States or European Union country member patent, or (ii) copyright, or (iii) trade
secret or other proprietary rights; provided that Reseller promptly
notifies SAP in writing of any such claim and SAP is permitted to control fully
the defense and any settlement of such claim. Reseller shall cooperate fully in
the defense of such claim and may appear, at its own expense through counsel
reasonably acceptable to SAP. SAP may, in its sole discretion, settle any such
claim on a basis requiring SAP to substitute for the Software alternative
substantially equivalent non-infringing programs and supporting Documentation.

 

14.3(b) The
maximum aggregate liability of SAP under the indemnity provided in Section 14.3(a) above
shall be limited to a sum equal to the full amount of the Software royalties
paid to SAP by Reseller at the time the claim of infringement arises, and if
there should be more than one claim of infringement, the amount payable under
such indemnity in respect of each claim shall be divided pro rata.

 

14.4                           Indemnification
of SAP. Reseller shall indemnify SAP, SAP AG and its licensors against all
claims, liabilities, and costs and expenses, including reasonable legal fees,
reasonably incurred in the defense of any claim made or brought against SAP by
third parties arising out of (i) any misrepresentations related to the Software
made by Reseller or Reseller Agents that are beyond what is contained in the
Documentation or other SAP officially sanctioned materials, or Modifications
made by Reseller to the Software, or (ii) Reseller’s unauthorized Use or
distribution as set forth in Section 17.8, or (iii) Reseller’s breach
of Section 7.5, or (iii) Reseller’s breach of Section 3.3 or
noncompliance with applicable U.S. or foreign law with respect to the

 

24

 

use or transfer of the
Proprietary Information outside the United States by Reseller; provided
that, SAP promptly notifies Reseller in writing of such claim and that Reseller
is permitted to control fully the defense and any settlement of the claim.  SAP shall cooperate fully in the defense of
such claim and may appear, at its own expense through counsel reasonably
acceptable to Reseller.

 

14.5                           Rights
to Commence Infringement Actions.

 

14.5(a) SAP
alone shall be responsible for taking such actions which it determines are
reasonably necessary or desirable in its sole discretion in connection with any
infringement or alleged infringement by a third party of any portion of the
Software. Reseller shall not undertake any action in response to any
infringement or alleged infringement of the Software without the prior written
consent of SAP.  Reseller agrees to
cooperate with and assist SAP in taking whatever action (including consenting
to being named as a party to any suit or other proceeding) SAP determines to be
reasonably necessary or desirable. SAP agrees to reimburse Reseller for
reasonable legal fees and other expenses incurred in connection with
investigating, commencing or participating in an action with respect to any
such claim, suit, damage, or loss.

 

14.5(b) Subject
to SAP rights as provided in §14.5(a), Reseller alone shall be responsible for
taking such actions which it determines are reasonably necessary or desirable
in its sole discretion in connection with any infringement or alleged
infringement by a third party of any portion of the SoftBrands Stack, expressly
excluding any infringement claims relating to the Software.. Subject to SAP
rights as provided in §14.5(a), SAP shall not undertake any such action in
response to any infringement or alleged infringement of the SoftBrands Stack
without the prior written consent of Reseller. 
SAP agrees to cooperate with and assist Reseller in taking whatever
action (including consenting to being named as a party to any suit or other
proceeding) Reseller determines to be reasonably necessary or desirable.
Reseller agrees to reimburse SAP for reasonable legal fees and other expenses
incurred in connection with investigating or commencing action with respect to
any such claim, suit, damage, or loss.

 

14.6                           SAP’s
Duty to Indemnify Reseller. THE
PROVISIONS OF THIS ARTICLE 14 STATE THE SOLE, EXCLUSIVE AND ENTIRE
LIABILITY OF SAP, SAP AG AND ITS LICENSORS TO RESELLER, AND RESELLER’S SOLE
REMEDY, WITH RESPECT TO THE INFRINGEMENT OF THIRD PARTY INTELLECTUAL PROPERTY
RIGHTS.

 

15.                                 TERM
AND TERMINATION.

 

15.1                           Term.
This Agreement shall be effective on the date specified in the first paragraph
of this Agreement and shall have the term specified in Section 2.1, unless
sooner terminated as provided herein.  Unless otherwise agreed to in writing by the parties,
this Agreement shall terminate automatically upon the expiration of the term.

 

25

 

15.2                           Termination.
A party may terminate this Agreement:

 

15.2(a) Upon
thirty (30) days notice if the other party becomes insolvent, is the subject of
a petition in bankruptcy that is not resolved within sixty days, admits in
writing its inability to pay its debts, makes an assignment for the benefit of
creditors, ceases doing business, or attempts an unauthorized assignment of
this Agreement;

 

15.2(b) Upon
notice, if the other party defaults in the performance of any material
obligation of this Agreement, including without limitation failure to promptly
pay any amount due hereunder, and fails to cure such default within thirty (30)
days after receiving notice specifying the default;

 

15.2(c) Immediately
and without prior notice if (i) the other party breaches the Proprietary
Information provisions of Article 11, or (ii), in the case of termination
by SAP against Reseller, if there is a creation of a direct or indirect
financial interest in Reseller with or by another entity that owns or markets a
product competitive with the Software (a “Competitor”) that results in such
entity being required to file a notification pursuant to § 13(d) of
the Securities Act of 1934.

 

15.3                           Rights
and Obligations Upon Termination. Subsequent to any termination or
expiration of this Agreement, the parties shall have the following rights and
obligations:

 

15.3(a) Both
parties shall cease acting in a manner that would suggest any continuing
relationship between the parties regarding the Software and shall cease all
display, advertising and marketing contemplated under this Agreement; provided
that, subject to Section 15.5, SAP and Reseller shall continue to provide
such Maintenance services to its Reseller Licensees pursuant to a contract with
such Reseller Licensees or under this Agreement and in all cases in accordance
with Section 6.4.  Such
post-termination Maintenance period under Section 6.4 may be extended by
the parties in the event and to the extent SAP continues its support of
Reseller (via prior written agreement) beyond such post-termination Maintenance
period.

 

15.3(b) Within
thirty (30) days of demand by SAP to Reseller, Reseller shall return or destroy
all copies of the Software and any materials associated with the Software in
Reseller’s possession or control as a result of this Agreement.

 

15.3(c) Reseller
shall immediately cease any Use (except as necessary to perform its ongoing Maintenance
obligations, if any), reproduction, licensing, or distribution of the Software
pursuant to the license granted under this Agreement.

 

15.3(d) Within
thirty (30) days of SAP’s request, Reseller shall certify in a writing
acceptable to SAP that all copies of the Software and other SAP Proprietary
Information have been delivered to SAP, destroyed or rendered unusable, as
required under this Agreement ;

 

15.3(e) Within
thirty (30) days of Reseller’s request, SAP shall certify in a writing
acceptable to Reseller that all copies of the Reseller Proprietary Information
provided under this Agreement have been delivered to Reseller, destroyed or
rendered unusable.

 

15.3(f) Reseller
shall not Use or employ any Software as part of any other product that Reseller
may Use, license or distribute after the date of termination or expiration of
this Agreement, except as may be permitted under any other agreement between
the parties, including the Solution Partner Agreement.

 

26

 

15.3(g) Reseller
shall immediately cease and desist from any use of the SAP Marks pursuant to
the license granted to Reseller hereunder.

 

15.4                           Effect
of Termination Upon Licenses. Upon termination or expiration of this
Agreement, all valid licenses between SAP and Reseller Licensees shall remain
and continue in full force and effect for the remainder of their term. SAP
shall have no liability to Reseller for any future activities with respect to
such Reseller Licensees.

 

15.5                           Maintenance
Continuance. Reseller shall provide SAP with the names and addresses of all
Reseller Licensees to whom Reseller is under written agreement to provide
Maintenance.  At SAP’s option, Reseller
shall assign and delegate the rights and duties any of such Maintenance agreements
to SAP.

 

15.6                           Survival.
The following provisions of this Agreement shall in all events survive its
termination or expiration: Sections 6.4, 11.1, 11.2, 11.3(b), 11.3(f), 12, 13,
14, 15.3, 15.7, 15.8, 16, 17, and this Section 15.6.  All obligations to pay valid invoices shall
survive termination or expiration of the Agreement, for any reason. Termination
resulting from Reseller’s breach of this Agreement shall result in the
immediate acceleration of Reseller’s obligation to pay all sums due to SAP
under this Agreement.

 

15.7                           Rights
Not Exclusive. The rights and remedies of SAP and Reseller included in this
Article 15 shall not be exclusive and are in addition to any other rights
and remedies provided by law or equity.

 

15.8                           No Compensation. SAP shall not be liable to Reseller for
damages, losses, or expenses of any kind or character on account of the
termination or expiration of this Agreement, whether such damage, loss, or
expense may arise from the loss of existing or prospective customers of Reseller,
or expenses incurred or investments made in connection with the establishment,
development, or maintenance of Reseller’s business with respect to the matters
contemplated under this Agreement. Subject in all cases to applicable law,
termination or expiration shall not affect any valid claim, demand, or
liability of either party created or arising hereunder prior to such
termination or expiration.

 

16.                                 ASSIGNMENT.

 

16.1                           Consent
Necessary. This Agreement shall not be assigned or transferred by Reseller without
the prior written consent of SAP which consent may not be unreasonably
withheld  Any attempt to assign this
Agreement without such consent shall be void.

 

17.                                 GENERAL.

 

17.1                           Notices.
All notices or reports which are required or may be given pursuant to this
Agreement shall be in writing and shall be deemed duly given when delivered to
the respective executive offices of SAP and Reseller at the addresses first set
forth above.

 

17.2                           Governing
Law. This Agreement shall be construed and controlled by the laws of the Commonwealth of Pennsylvania without reference to its
choice of law rules.

 

27

 

17.3                           Injunctive
Relief. Both parties acknowledge that remedies at law may be inadequate to
provide SAP or Reseller with full compensation in the event of Reseller’s
material breach of Sections 11 or 15.3, or SAP’s material breach of Sections 11
and that the non-breaching party shall therefore be entitled to seek injunctive
relief in the event of any such material breach.

 

17.4                           Amendment.
Neither party may amend this Agreement, except by a written amendment or
supplement signed on behalf of SAP and Reseller by their respective duly
authorized representatives.

 

17.5                           Successors.
This Agreement shall inure to the benefit of and be binding upon the parties,
their successors, administrators, and authorized assigns.

 

17.6                           Waiver.
The failure of either party to enforce any term or condition of this Agreement
shall not constitute a waiver of either party’s right to enforce each and every
term and condition of this Agreement.

 

17.7                           Unenforceable
Provisions. Should any provision of this Agreement be held by an arbitrator
or a court of competent jurisdiction, as the case might be, to be illegal,
invalid or unenforceable, the remaining provisions of this Agreement shall not
be affected or impaired thereby.

 

17.8                           Relationship.
Reseller is an independent contractor and is not an agent, employee, or legal
representative of SAP.  Reseller
expressly acknowledges that it has no power or authority to accept any order
for SAP, or to make guarantees or warranties concerning the Software or the
delivery thereof on behalf of SAP, or to make any commitment for SAP or to
obligate SAP in any respect whatsoever. 
Reseller agrees to indemnify SAP and to hold SAP harmless from and
against any loss, claim, damages, fees (including attorneys’ fees) or award
arising from any breach of Reseller’s obligations under this Section 17.8,
including but not limited to any violation or action in excess of Reseller’s
authority hereunder and arising out of any claims by any Reseller
Licensees.  This Agreement shall not be
construed as creating a partnership, joint venture, agency relationship, or
granting a franchise under any applicable laws.

 

17.9                           Force
Majeure. Any delay or nonperformance of any provision of this Agreement
(other than for the payment of amounts due hereunder) caused by conditions
beyond the reasonable control of the performing party shall not constitute a
breach of this Agreement, and the time for performance of such provision, if
any, shall be deemed to be extended for a period equal to the duration of the
conditions preventing performance.

 

17.10                     Confidential
Terms and Conditions.  Neither Party
shall disclose the terms and conditions of this Agreement to any third-party,
except to the limited extent such disclosure is required by law or regulation
or to professional advisors (such as accountants, attorney and financial
advisors) under a written non-disclosure agreement.  This provision shall not be construed as to
prohibit SAP from including information about Reseller in it normal Partner

 

28

 

program promotions,
advertising and customer communications.

 

17.11                     Interim
Agreement.  The parties entered into
that certain SAP Business One Software Marketing and Distribution Agreement as
of September 30, 2004, including the Rider to such agreement
(collectively, the “Interim Agreement”) in order to provide a legal basis for
the completion of certain end user transactions during the negotiation of this
Agreement.  Effective upon the execution
of this Agreement, the Interim Agreement is terminated in full and superceded
by this Agreement, all such end user transactions will be governed, in all
respects, by the terms and conditions of this Agreement as if executed pursuant
hereto. 

 

17.12                     Entire
Agreement.  This Agreement and the
Solution Partner Agreement, including all exhibits and documents referenced
therein, are the complete and exclusive statement of the agreement between SAP
and Reseller, and all previous representations, discussions, and writings are
merged in, and superseded by, this Agreement and the Solution Partner
Agreement.  This Agreement may be
modified only by a writing signed by both parties.

 

IN
WITNESS WHEREOF, the undersigned, intending to be legally bound, have duly
executed this Agreement to become effective as of the date first above written.

 

	
  Accepted by:

  	
  Accepted by:

  
	
  SOFTBRANDS,
  INC.

  	
  SAP
  AMERICA, INC.

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signature:

  	
   

  	
   

  	
  Signature:

  	
   

  	
   

  
										

 

29

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