Document:

Exhibit
4.3

 

SOFTBRANDS,
INC.

INCENTIVE
STOCK OPTION AGREEMENT

 

This Incentive Stock Option Agreement (the “Agreement”)
is made this          day of                             ,            (the
“Grant Date”), by and between SoftBrands, Inc., a Delaware corporation (the “Company”)
and                              (“Employee”).

 

WITNESSETH, THAT:

 

WHEREAS, the Company
has adopted the SoftBrands, Inc. 2001 Stock Incentive Plan (the “Plan”) which
permits issuance of stock options for the purchase of shares of common stock of
the Company, and the Company has taken all necessary actions to grant the
following option pursuant and subject to the terms of the Plan.

 

NOW THEREFORE, in
accordance with the terms and conditions of the Plan and the mutual covenants
herein contained, the parties hereto agree as follows:

 

1.                                       Grant of
Option.  The Company hereby grants
Employee the right and option (the “Option”) to purchase all or any part of an
aggregate of «amount» shares of the
Company’s common stock, par value $0.01 per share, at the Option price of $             
per share on the terms and conditions set forth in this Agreement and in the
Plan.  It is understood and agreed that
the Option price is greater than or equal to the per share fair market value of
such shares on the date of this Agreement. 
The Option is intended to be an Incentive Stock Option governed by the
provisions of Section 422 of the Internal Revenue Code of 1986, as amended
(the “Code”).  The terms of the Plan and
the Option shall be interpreted and administered so as to satisfy the
requirements of the Code.  The Option is
issued pursuant to the Plan and is subject to its terms.  A copy of the Plan will be furnished upon
request of Employee.

 

The Option shall terminate at the close of
business on the tenth (10th) anniversary of the Grant Date or such shorter
period as is prescribed herein.  Employee
shall not have any of the rights of a stockholder with respect to the shares
subject to the Option until such shares shall be issued to Employee upon the
proper exercise of the Option.

 

2.                                       Vesting and
Exercisability of Option Rights.

 

(a)                                  The
Option shall not be exercisable on the date of grant.  The Option shall become fully vested and
exercisable in its entirety on the seventh (7th) anniversary of the Grant Date.

 

(b)                                 Notwithstanding
the foregoing, in the event that (i) the Company becomes subject to the reporting requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934, or (ii)
consummates a “change of control” (as defined below), the exercisability of the
Option shall be accelerated and the Option shall become exercisable, but only
to the extent vested in accordance with the schedule contained in Section 2(c),
on the date (the “Exercisability Date”) that is (A) in the case of
clause (i) above, the date the Company becomes subject to such reporting
obligations, or (B) in the case of a change of control, 15 days prior to the
date of such

 

 

change
of control.  After the Exercisability
Date, the Option shall become exercisable to the extent vested in accordance
with Section 2(c).

 

A “change of control”
shall mean any of the following: 
(i) the consummation of a merger or consolidation of the Company
with or into another entity or any other corporate reorganization, if more than
50% of the combined voting power of the continuing or surviving entity’s
securities outstanding immediately after such merger, consolidation or other
reorganization are owned by persons who were not stockholders of the Company
immediately prior to such merger, consolidation or other reorganization, (ii) a
public announcement that any person has acquired beneficial ownership of 51% or
more of the then outstanding shares of common stock of the Company and, for
this purpose, the terms “person” and “beneficial ownership” shall have the
meanings provided in Section 13(d) of the Securities Exchange Act of 1934,
as amended, or related rules promulgated by the Securities and Exchange
Commission, (iii) the commencement of or public announcement of an
intention to make a tender or exchange offer for 51% or more of the then
outstanding shares of the common stock of the Company, (iv) a sale of all
or substantially all of the assets of the Company, (vi) the Board of Directors
of the Company, in its sole and absolute discretion, determines that there has
been a sufficient change in the stock ownership of the Company to constitute a
change in control of the Company.

 

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

 

	
  On or after each of

  the following dates

  	
   

  	
  Additional percentage

  of Option

  which is exercisable

  
	
  1st Anniversary of the Grant Date

  	
   

  	
  25% of the Option

  
	
  2nd Anniversary of the Grant Date

  	
   

  	
  25% of the Option

  
	
  3rd Anniversary of the Grant Date

  	
   

  	
  25% of the Option

  
	
  4th Anniversary of the Grant Date

  	
   

  	
  25% of the Option

  

 

(d)                                 Employee
understands that to the extent that the aggregate fair market value (determined
at the time the option was granted) of the shares of the common stock of the Company
with respect to which all options that are incentive stock options within the
meaning of Section 422 of the Code are exercisable for the first time by
Employee during any calendar year exceed $100,000, in accordance with Section 422(d)
of the Code, such options shall be treated as options that do not qualify as
incentive stock options.

 

(e)                                  During
the lifetime of Employee, the Option shall be exercisable only by Employee and
shall not be assignable or transferable by Employee, other than by will or the
laws of descent and distribution.

 

3.                                       Exercise of
Option after Death or Termination of Employment.  If Employee ceases to be employed by the
Company or its subsidiaries, the Option may be exercised only on the following
terms:

 

2

 

(a)                                  If
Employee’s employment shall be terminated for any reason, voluntary or
involuntary, other than for “Cause” (as defined below) or Employee’s death or
disability (as set forth in Section 3(c)), the Option may be exercised by
Employee within ninety (90) days of the date of termination of employment to
the extent of the full number of shares exercisable on the date of termination
of such employment.

 

(b)                                 If
Employee’s employment is terminated for Cause, the Option shall be terminated
as of the date of the act giving rise to such termination.  As used herein, “Cause” shall mean (i)
Employee’s breach of any contractual obligation to the Company under the terms
of the Plan, a stock option agreement, or any other agreement between Employee
and the Company, or of any fiduciary duty to the Company, (ii) Employee’s
conviction of any crime involving moral turpitude or any felony, (iii) Employee’s
failure to carry out any reasonable directive of the Company, (iv) Employee’s embezzlement
of funds of the Company, (v) any conduct by Employee which is detrimental to
the Company, (vi) any failure by Employee to comply with the policies or
performance standards of the Company, or (vii) a demonstrated lack of
commitment of Employee to the Company.

 

(c)                                  If
Employee shall die while the Option is still exercisable according to its
terms, or if employment is terminated because Employee has become disabled
(within the meaning of Code Section 22(e)(3)) while in the employ of the
Company and Employee shall not have fully exercised the Option, the Option may
be exercised within twelve (12) months from the date of death or date of
termination for such disability by Employee, personal representatives or
administrators, or guardians of Employee, as applicable, or by any person or
persons to whom the Option is transferred by will or the applicable laws of
descent and distribution, to the extent of the full number of shares
exercisable on the date of death, termination of employment, if earlier, or
date of termination for such disability.

 

(d)                                 Notwithstanding
the above, in no case may the Option be exercised to any extent by anyone after
the termination date of the Option.

 

4.                                       Method of
Exercise of Option.  Subject to the
foregoing, the Option may be exercised in whole or in part from time to time by
serving written notice of exercise on the Company at its principal office
within the Option period.  The notice
shall state the number of shares as to which the Option is being exercised and
shall be accompanied by payment of the purchase price.  Payment of the purchase price shall be made
in cash (including bank check, personal check or money order payable to the
Company), or, with the approval of the Company (which may be given in its sole
discretion), by delivering to the Company for cancellation shares of the
Company’s common stock already owned by Employee having a fair market value
equal to the full purchase price of the shares being acquired or a combination
of cash and such shares; provided,
however, that Employee shall not be entitled to tender shares of the Common
Stock pursuant to successive, substantially simultaneous exercises of this
Option or any other stock option of the Company.  For these purposes, the fair market value of
the Company’s common stock as of any date shall be as reasonably determined by
the Company.

 

3

 

5.                                       Miscellaneous.

 

(a)                                  Neither
the Plan nor this Agreement shall (i) be deemed to give any individual a right
to remain an employee of the Company, (ii) restrict the right of the Company to
discharge any employee, with or without cause, or (iii) be deemed to be a
written contract of employment.  Employee
shall have none of the rights of a stockholder with respect to shares subject
to the Option until such shares shall have been issued to Employee upon
exercise of the Option.

 

(b)                                 The
exercise of all or any parts of the Option shall only be effective at such time
that the sale of shares of common stock pursuant to such exercise will not
violate any state or federal securities or other laws.

 

(c)                                  The
Option may not be transferred, except by will or the laws of descent and
distribution to the extent provided in Section 3(c), and during Employee’s
lifetime, the Option is exercisable only by Employee.

 

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

 

(e)                                  The
Company shall at all times during the term of the Option reserve and keep
available such number of shares of the Company’s common stock as will be
sufficient to satisfy the requirements of this agreement.

 

(f)                                    If
Employee shall dispose of any of the shares of common stock acquired upon
exercise of the Option within two (2) years from the date the Option was
granted or within one (1) year after the date of exercise of the Option, then,
in order to provide the Company with the opportunity to claim the benefit of
any income tax deduction, Employee shall promptly notify the Company of the
dates of acquisition and disposition of such shares, the number of shares so
disposed of, and the consideration, if any, received for such shares.  In order to comply with all applicable
federal or state income tax laws or regulations, the Company may take such
action as it deems appropriate to assure (i) notice to the Company of any
disposition of the shares of the Company within the time periods described
above, and (ii) that, if necessary, all applicable federal or state payroll,
withholding, income or other taxes are withheld or collected from Employee.

 

4

 

(g)                                 The
Company, in its sole and absolute discretion, may allow Employee to satisfy
Employee’s federal and state income tax withholding obligations upon exercise
of the Option by (i) having the Company withhold a portion of the shares of
common stock otherwise to be delivered upon exercise of the Option having a
fair market value equal to the amount of federal and state income tax required
to be withheld upon such exercise, in accordance with such rules as the Company
may from time to time establish, or (ii) delivering to the Company shares of
its common stock other than the shares issuable upon exercise of the Option
with a fair market value equal to such taxes, in accordance with such rules.

 

(h)                                 Employee
shall not disclose either the contents or any of the terms and conditions of
the Option to any other person and agrees that such disclosure may result in
both immediate termination of the Option without the right to exercise any part
thereof and termination of employment with the Company.

 

IN WITNESS WHEREOF,
the Company and Employee have executed this agreement on the date set forth in
the first paragraph.

 

	
   

  	
  SOFTBRANDS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  David G. Latzke

  
	
   

  	
   

  	
  Senior Vice President and Chief Financial
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [Name]

  

 

5Exhibit
4.4

 

 

 

SENIOR SUBORDINATED SECURED
NOTE AND

WARRANT PURCHASE AGREEMENT

 

among

 

SOFTBRANDS, INC. and certain of
its SUBSIDIARIES

and

CAPITAL RESOURCE PARTNERS IV,
L.P.,

 

 

Dated as of November  26,
2002

 

 

 

 

SOFTBRANDS,
INC.

 

Senior Subordinated Secured
Note and

Warrant Purchase Agreement

 

Dated as of  November 26, 2002

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I

  	
   

  
	
  DEFINITIONS

  	
   

  
	
  1.01.

  	
  Definitions

  	
   

  
	
  1.02.

  	
  Accounting
  Terms

  	
   

  
	
  ARTICLE II

  	
   

  
	
  PURCHASE, SALE AND TERMS OF
  NOTES; PAYMENTS

  	
   

  
	
  2.01.

  	
  The Notes

  	
   

  
	
  2.02.

  	
  Purchase and Sale of Notes

  	
   

  
	
  2.03.

  	
  Issue Price;
  Original Issue Discount

  	
   

  
	
  2.04.

  	
  Use of Proceeds

  	
   

  
	
  2.05.

  	
  Payments and Endorsements

  	
   

  
	
  2.06.

  	
  Redemptions.

  	
   

  
	
  (a)

  	
  Required Periodic
  Redemptions

  	
   

  
	
  (b)

  	
  Required Liquidity
  Redemptions

  	
   

  
	
  (c)

  	
  Optional Redemptions

  	
   

  
	
  (d)

  	
  Notice of
  Redemptions; Pro Rata Redemptions

  	
   

  
	
  2.07.

  	
  Default Rate of Interest

  	
   

  
	
  2.08.

  	
  Maximum Legal Rate of
  Interest

  	
   

  
	
  2.09.

  	
  Payment on Non-Business
  Days

  	
   

  
	
  2.10.

  	
  Transfer and Exchange of
  Notes

  	
   

  
	
  2.11.

  	
  Replacement of Notes

  	
   

  
	
  2.12.

  	
  Subordination

  	
   

  
	
  2.13.

  	
  Closing
  Fee

  	
   

  
	
  2.14.

  	
  Guaranty

  	
   

  
	
  ARTICLE III

  	
   

  
	
  PURCHASE AND SALE OF
  WARRANTS

  	
   

  
	
  3.01.

  	
  The
  Warrants

  	
   

  
	
  3.02.

  	
  Purchase and Sale of
  the Warrants

  	
   

  
	
  3.03.

  	
  Right to Put Warrant Shares

  	
   

  
	
  3.04.

  	
  Notice and Payment

  	
   

  
	
  3.05.

  	
  Insufficiency of Funds

  	
   

  
	
  3.06.

  	
  [Reserved]

  	
   

  
	
  3.07.

  	
  Right to Purchase New
  Securities

  	
   

  
	
  3.08.

  	
  Termination Upon
  Qualified IPO

  	
   

  
	
  ARTICLE IV

  	
   

  
	
  CONDITIONS TO
  PURCHASERS’ OBLIGATION

  	
   

  
	
  4.01.

  	
  Representations and
  Warranties

  	
   

  
	
  4.02.

  	
  Documentation at Closing

  	
   

  
	
  4.03.

  	
  [Reserved]

  	
   

  
	
  4.04.

  	
  No Default

  	
   

  
	
  4.05.

  	
  Noncompetition Agreement

  	
   

  
	
  4.06.

  	
  Release from Board Members

  	
   

  

 

i

 

	
  4.07.

  	
  Termination

  	
   

  
	
  4.08.

  	
  Rights
  Plan

  	
   

  
	
  4.09.

  	
  Release

  	
   

  
	
  ARTICLE V

  	
   

  
	
  REPRESENTATIONS
  AND WARRANTIES OF THE PURCHASERS

  	
   

  
	
  5.01.

  	
  Representations and Warranties
  of the Purchasers

  	
   

  
	
  ARTICLE VI

  	
   

  
	
  REPRESENTATIONS
  AND WARRANTIES OF THE COMPANY AND THE SUBSIDIARIES

  	
   

  
	
  6.01.

  	
  Organization and Standing
  of the Company and Subsidiaries; Ownership

  	
   

  
	
  6.02.

  	
  Corporate
  Action

  	
   

  
	
  6.03.

  	
  Governmental Approvals

  	
   

  
	
  6.04.

  	
  Litigation

  	
   

  
	
  6.05.

  	
  Compliance with Law

  	
   

  
	
  6.06.

  	
  Federal Reserve Regulations

  	
   

  
	
  6.07.

  	
  Title
  to Assets

  	
   

  
	
  6.08.

  	
  Financial Information

  	
   

  
	
  6.09.

  	
  Taxes

  	
   

  
	
  6.10.

  	
  ERISA

  	
   

  
	
  6.11.

  	
  Transactions with
  Affiliates

  	
   

  
	
  6.12.

  	
  Assumptions
  or Guaranties of Indebtedness of Other Persons

  	
   

  
	
  6.13.

  	
  Loans to Other Persons

  	
   

  
	
  6.14.

  	
  Securities
  Act

  	
   

  
	
  6.15.

  	
  Disclosure

  	
   

  
	
  6.16.

  	
  No Brokers or Finders

  	
   

  
	
  6.17.

  	
  Other Agreements of
  Officers

  	
   

  
	
  6.18.

  	
  Capitalization
  of the Company; Status of Capital Stock

  	
   

  
	
  6.19.

  	
  Capital Stock of
  Subsidiaries

  	
   

  
	
  6.20.

  	
  Labor
  Relations

  	
   

  
	
  6.21.

  	
  Insurance

  	
   

  
	
  6.22.

  	
  Books and Records

  	
   

  
	
  6.23.

  	
  Registration Rights

  	
   

  
	
  6.24.

  	
  Other
  Agreements

  	
   

  
	
  6.25.

  	
  Environmental Matters

  	
   

  
	
  6.26.

  	
  Customers,
  Vendors and Suppliers

  	
   

  
	
  6.27.

  	
  U.S. Real
  Property Holding Corporation

  	
   

  
	
  6.28.

  	
  No
  Violations

  	
   

  
	
  6.29.

  	
  Intellectual Property

  	
   

  
	
  6.30.

  	
  Security Interests

  	
   

  
	
  6.31.

  	
  Claims

  	
   

  
	
  6.32.

  	
  Knowledge

  	
   

  
	
  ARTICLE VII

  	
   

  
	
  COVENANTS OF THE COMPANY

  	
   

  
	
  7.01.

  	
  Affirmative
  Covenants of the Company Other Than Reporting Requirements

  	
   

  
	
  (a)

  	
  Punctual
  Payment

  	
   

  
	
  (b)

  	
  Payment of Taxes and
  Trade Debt

  	
   

  
	
  (c)

  	
  Maintenance of Insurance

  	
   

  
	
  (d)

  	
  Preservation of Corporate
  Existence

  	
   

  
	
  (e)

  	
  Compliance
  with Laws

  	
   

  
	
  (f)

  	
  Inspection
  Rights

  	
   

  
	
  (g)

  	
  Keeping of Records and Books of
  Account

  	
   

  
	
  (h)

  	
  Maintenance of Properties, Etc

  	
   

  
	
  (i)

  	
  Compliance with ERISA

  	
   

  
	
  (j)

  	
  Attendance at Board
  Meetings

  	
   

  
	
  (k)

  	
  Board of Directors
  and Committees

  	
   

  
	
  (l)

  	
  U.S. Real
  Property Holding Corporation

  	
   

  

 

ii

 

	
  (m)

  	
  Preferred Stock
  Subordination Agreement

  	
   

  
	
  (n)

  	
  Proceeds of Liquidating
  Trust

  	
   

  
	
  (o)

  	
  Financial Covenants

  	
   

  
	
  (p)

  	
  Ownership of
  Intellectual Property

  	
   

  
	
  (q)

  	
  Non-disclosure
  and Developments Agreements

  	
   

  
	
  (r)

  	
  Debenture

  	
   

  
	
  (s)

  	
  Certificates

  	
   

  
	
  (t)

  	
  Insurance

  	
   

  
	
  (u)

  	
  Rights Certificates

  	
   

  
	
  (v)

  	
  Silicon Valley Bank

  	
   

  
	
  (w)

  	
  Perfection
  of Registered Intellectual Property

  	
   

  
	
  7.02.

  	
  Negative
  Covenants of the Company

  	
   

  
	
  (a)

  	
  Liens

  	
   

  
	
  (b)

  	
  Indebtedness

  	
   

  
	
  (c)

  	
  Lease Obligations

  	
   

  
	
  (d)

  	
  Assumptions or
  Guaranties of Indebtedness of Other Persons

  	
   

  
	
  (e)

  	
  Mergers, Sale
  of Assets, Etc.

  	
   

  
	
  (f)

  	
  Investments in Other
  Persons

  	
   

  
	
  (g)

  	
  Distributions

  	
   

  
	
  (h)

  	
  Dealings with Affiliates

  	
   

  
	
  (i)

  	
  Maintenance of
  Ownership of Subsidiaries

  	
   

  
	
  (j)

  	
  Additional Subsidiaries

  	
   

  
	
  (k)

  	
  Change in Nature of
  Business

  	
   

  
	
  (l)

  	
  No
  Amendment or Waiver of Charter Documents

  	
   

  
	
  (m)

  	
  Capital Expenditures

  	
   

  
	
  (n)

  	
  Compensation

  	
   

  
	
  (o)

  	
  Preferred
  Stock

  	
   

  
	
  (p)

  	
  Intellectual Property

  	
   

  
	
  (q)

  	
  Assets of Subsidiaries

  	
   

  
	
  (r)

  	
  Indirect Subsidiaries

  	
   

  
	
  (s)

  	
  Other
  Mergers

  	
   

  
	
  (t)

  	
  Loans.

  	
   

  
	
  7.03.

  	
  Reporting
  Requirements

  	
   

  
	
  ARTICLE VIII

  	
   

  
	
  EVENTS OF DEFAULT

  	
   

  
	
  8.01.

  	
  Events of Default

  	
   

  
	
  8.02.

  	
  Annulment of Defaults

  	
   

  
	
  ARTICLE IX

  	
   

  
	
  MISCELLANEOUS

  	
   

  
	
  9.01.

  	
  No Waiver;
  Cumulative Remedies

  	
   

  
	
  9.02.

  	
  Amendments, Waivers and Consents

  	
   

  
	
  9.03.

  	
  Addresses for Notices, Etc; Wire
  Transfer Instructions

  	
   

  
	
  9.04.

  	
  Costs,
  Expenses and Taxes

  	
   

  
	
  9.05.

  	
  Binding
  Effect; Assignment

  	
   

  
	
  9.06.

  	
  Payments in Respect of Notes

  	
   

  
	
  9.07.

  	
  Indemnification

  	
   

  
	
  9.08.

  	
  Survival of
  Representations and Warranties

  	
   

  
	
  9.09.

  	
  Prior
  Agreements

  	
   

  
	
  9.10.

  	
  Severability

  	
   

  
	
  9.11.

  	
  Governing
  Law

  	
   

  
	
  9.12.

  	
  Waiver of Right to Jury
  Trial

  	
   

  
	
  9.13.

  	
  Headings

  	
   

  
	
  9.14.

  	
  Sealed Instrument

  	
   

  
	
  9.15.

  	
  Counterparts

  	
   

  
	
  9.16.

  	
  Further Assurances

  	
   

  

 

iii

 

	
  9.17.

  	
  Consent to Jurisdiction

  	
   

  
	
  9.18.

  	
  Effect of Judgment

  	
   

  
	
  9.19.

  	
  Service of Process

  	
   

  
	
  9.20.

  	
  No
  Limitation

  	
   

  
	
  9.21.

  	
  Specific Performance

  	
   

  
	
  9.22.

  	
  Actions by Purchasers

  	
   

  
	
  9.23.

  	
  Termination of Letter
  of Intent

  	
   

  

 

iv

 

EXHIBITS AND SCHEDULES

 

	
  1.01(a)

  	
  Employment Agreements

  
	
  2.01

  	
  Form of Senior Subordinated Notes

  
	
  2.02

  	
  Allocation of Principal Amount of Notes

  
	
  2.03

  	
  Issue Price

  
	
  2.12

  	
  Form of Subordination Agreement

  
	
  3.01

  	
  Form of Common Stock Purchase Warrant

  
	
  3.02

  	
  Allocation of Warrant Shares

  
	
  4.02(b)

  	
  Form of Opinions of Dorsey & Whitney
  LLP

  
	
  4.02(i)

  	
  Form of Security Agreement

  
	
  4.02(j)

  	
  UCC-1 Financing Statements

  
	
  4.02(k)

  	
  Form of Investors’ Rights Agreement

  
	
  4.02(l)

  	
  Form of Debenture

  
	
  4.02(n)

  	
  Stock Certificates to be Delivered At the
  Closing

  
	
  6.01

  	
  Schedule of Subsidiaries

  
	
  6.04

  	
  Schedule of Litigation

  
	
  6.07(a)

  	
  Schedule of Title Exceptions

  
	
  6.07(d)

  	
  Leases

  
	
  6.07(f)

  	
  Limitations on Intellectual Property

  
	
  6.08(a)

  	
  Financial Statements

  
	
  6.08(d)

  	
  Schedule of Indebtedness

  
	
  6.11

  	
  Affiliate Transactions

  
	
  6.16

  	
  Brokers Fees

  
	
  6.18

  	
  Schedule of Fully-Diluted Ownership of
  Capital Stock

  
	
  6.24

  	
  Schedule of Other Agreements

  
	
  6.25

  	
  Environmental Matters

  
	
  6.29(a)

  	
  Company Registered Intellectual Property

  
	
  6.29(b)

  	
  Licenses

  
	
  6.29(c)

  	
  Third Party Licenses of Company
  Intellectual Property

  
	
  6.29(l)

  	
  Non-Competition Agreements

  
	
  6.30(a)

  	
  Security Interests

  
	
  6.30(b)

  	
  Location of Collateral

  
	
  6.31

  	
  Claims Pursuant to the Plan

  
	
  7.01(m)

  	
  Form of Preferred Stock Subordination
  Agreement

  
	
  7.01(o)(i)

  	
  Minimum EBITDA

  
	
  7.01(o)(ii)

  	
  Fixed Charge Coverage Ratio

  
	
  7.02(b)

  	
  Form of Junior Subordination Agreement

  
	
  7.02(c)

  	
  Operating Leases

  
	
  7.02(j)

  	
  Instrument of Accession

  
	
  7.02(m)

  	
  Capital Expenditures

  
	
  7.02(s)

  	
  Stock Certificates to be Delivered After
  Closing

  
	
  7.03

  	
  Form of CRP Report

  

 

v

 

SOFTBRANDS,
INC.

Two
Meridian Crossing

Suite 800

Minneapolis,
Minnesota  55423

 

 

Dated as of  November 26, 2002

 

 

Capital Resource Partners IV, L.P.

85 Merrimac Street

Suite 200

Boston, Massachusetts  02114

 

Re:          Senior
Subordinated Secured Notes due 2009 and

Warrants

 

Ladies and Gentlemen:

 

SoftBrands, Inc., a Delaware corporation, hereby agrees with Capital
Resource Partners IV, L.P., a Delaware limited partnership, as follows:

 

ARTICLE I

 

DEFINITIONS

 

1.01.        Definitions. 
As used herein, the following terms shall have the following meanings
(such meanings to be equally applicable to both the singular and plural forms
of the terms defined):

 

“Affiliate” means, as to any specified
Person, any other Person controlling, controlled by or under common control
with such specified Person.

 

“Agreement” means this Senior
Subordinated Note and Warrant Purchase Agreement, including all schedules and
exhibits hereto, all as from time to time amended and in effect between the
parties.

 

“Applicable Laws” shall have the
meaning assigned to that term in Section 6.05.

 

“AremisSoft” means AremisSoft
Corporation, a Delaware corporation and former parent of the Company.

 

“Bank” means and shall include such
commercial banks organized in the United States that are regulated by federal
and state banking laws and that have deposits that are insured by the Federal
Deposit Insurance Corporation providing an extension of credit to the Company
which would represent claims senior to the Purchasers.

 

“Budget” shall have the meaning
assigned to that term in Section 7.03(d).

 

 

“Business Day” means any day other
than a Saturday, Sunday or public holiday or the equivalent for banks under the
laws of The Commonwealth of Massachusetts.

 

“Capital Expenditure” means any
payment made directly or indirectly for the purpose of acquiring or constructing
fixed assets, real property or equipment which in accordance with GAAP would be
added as a debit to the fixed asset account of the Person making such
expenditure, including without limitation, amounts paid or payable under any
conditional sale or other title retention agreement or under any lease or other
periodic payment arrangement which is of such a nature that payment obligations
of the lessee or obligor thereunder would be required by GAAP to be capitalized
and shown as liabilities on the balance sheet of such lessee or obligor,
including, without limitation, all Capital Leases, provided, however, that
payments of up to $4,500,000 in the aggregate to Micro Data Base Systems, Inc.
(“MDBS”) in connection with a license agreement pursuant to Section 10 of
that certain Option Agreement between the Company and MDBS dated June 30,
2002 (the “Option Agreement”) shall not be included in the definition of
Capital Expenditures for purposes of Section 7.02(m) hereof.

 

“Capital Lease” means any lease of property
(real, personal or mixed) which, in accordance with GAAP, should be capitalized
on the lessee’s balance sheet or for which the amount of the asset and
liability thereunder as if so capitalized should be disclosed in a note to such
balance sheet.

 

“Cash” “ shall mean, on a consolidated
basis, the aggregate of cash and marketable securities reported on the Company’s
then-current balance sheet, all to be determined in accordance with GAAP.

 

“Certificate of Incorporation” means
the Amended and Restated Certificate of Incorporation of Softbrands, Inc. as
amended November 25, 2002.

 

“Change in Control” means any
transaction or any event as a result of which (i) any one or more Persons
who are Affiliates or acting in concert (other than a Purchaser or a stockholder
of the Company on the Closing Date) acquires or for the first time controls or
is able to vote (directly or through nominees or beneficial ownership) after
the Closing Date (other than as the direct result of a transfer by descent or
distribution of a decedent’s estate) fifty percent (50%) or more of any class
of stock of the Company outstanding at the time having power ordinarily to vote
for directors of the Company; or (ii) George Ellis is no longer the chief
executive officer of the Company and the Company (a) has failed within 30 days
to propose a plan to replace Mr. Ellis satisfactory to the Purchasers and (b)
has not replaced Mr. Ellis to the satisfaction of the Purchasers within six (6)
months; provided, however, that no distribution of stock of the Company
pursuant to, and in accordance with the terms of, the Plan shall be deemed to
result in a Change in Control and provided further that no involuntary
termination of George Ellis without “cause” by the Company where any
representative of the Purchasers on the Board of Directors of the Company has
voted in favor of the termination shall give rise to a Change of Control.

 

“Closing” shall have the meaning
assigned to that term in Section 2.02.

 

“Closing Date” shall have the meaning
assigned to that term in Section 2.02.

 

“Code” shall have the meaning assigned
to that term in Section 2.03.

 

“Commission” means the United States
Securities and Exchange Commission (or any other federal agency at that time
administering the Securities Act).

 

“Common Stock” includes (a) the
Company’s common stock, par value $0.01 per share, as authorized on the date of
this Agreement, (b) any other capital stock of any class or classes
(however

 

1

 

designated) of the Company, authorized on or after the date hereof, the
holders of which shall have the right, without limitation as to amount per
share, either to all or to a share of the balance of current dividends and
liquidating distributions after the payment of dividends and distributions on
any shares entitled to preference in the payment thereof, and the holders of
which shall ordinarily, in the absence of contingencies, be entitled to vote
for the election of a majority of directors of the Company (even though the
right so to vote may have been suspended by the happening of such a
contingency), and (c) any other securities into which or for which any of
the securities described in (a) or (b) above may be converted or exchanged
pursuant to a plan of recapitalization, reorganization, merger, sale of assets
or otherwise.

 

“Company” means and shall include
Softbrands, Inc., a Delaware corporation, and its successors and assigns.

 

“Commercial Software Rights” shall
mean packaged commercially available software programs generally available to
the public in any manner which have been licensed to the Company pursuant to
end-user licenses and which are lawfully used in the business of the Company
but are in no way a component of or incorporated in any products of the Company
or any related Company Intellectual Property.

 

“Company Intellectual Property” shall
mean any Intellectual Property (other than Commercial Software Rights) that is
used in the business of the Company and its Subsidiaries as currently conducted
and as proposed to be conducted.

 

“Company Registered Intellectual Property”
means all of the Registered Intellectual Property owned by, or filed in the
name of, the Company or any Subsidiary.

 

“Constituent of Concern” means any
substance defined or regulated as a pollutant, contaminant, waste, hazardous or
toxic substance, hazardous waste, or hazardous material by any Environmental
Law, including, without limitation, any petroleum hydrocarbon or
asbestos-containing materials, radioactive materials, or air pollutant, the
handling, storage, treatment, remediation, use, or exposure of or to which is
subject to regulation or liability under any Environmental Law.

 

“Covered Subsidiaries” shall have the
meaning assigned to that term in Section 7.02(q).

 

“CRP” means Capital Resource Partners
IV, L.P., a Delaware limited partnership, and its successors and assigns.

 

“Debenture” shall have the meaning
assigned to that term in Section 4.02(l).

 

“Distribution” shall have the meaning
assigned to that term in Section 7.02(g).

 

“EBITDA” shall mean, for any
particular period, the aggregate of :

 

(a)           Net Income;

 

(b)           all amounts
deducted in the calculation of Net Income in respect of income taxes, capital
gains taxes, capital taxes or similar taxes, whether paid, accrued or deferred;

 

(c)           all amounts
deducted in the calculation of Net Income in respect of depreciation and
amortization;

 

2

 

(d)           all amounts
deducted in the calculation of Net Income in respect of the aggregate Interest
Expense, including in respect of a capital lease allocable to Interest Expense;

 

which calculation shall be based on the
consolidated financial statements of the Company and determined in accordance
with GAAP.

 

“Employment Agreements” shall mean the
current employment agreements, each dated as of January 1, 2002 between
the Company and each of the employees identified in Exhibit 1.01(a)
hereto.

 

“Environmental Laws” shall mean any
laws or regulations pertaining to health or the environment, including, without
limitation, (i) the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (42 U.S.C. §§9601 et  seq.), as amended from
time to time (“CERCLA”) (including, without limitation, as amended pursuant to
the Superfund Amendments and Reauthorization Act of 1986), and regulations
promulgated under CERCLA, (ii) the Resource Conservation and Recovery Act of
1976 (42 U.S.C. §§6901 et  seq.), as amended from time to time (“RCRA”),
and regulations promulgated thereunder, (iii) statutes, rules or regulations,
whether federal, state or local, relating to asbestos or polychlorinated
biphenyls, and (iv) the environmental provisions contained in the laws of any
jurisdiction in which the Company owns, leases or possesses property.

 

“Equity Securities” shall mean any equity
securities of the Company or any Subsidiary or any options or convertible
securities, exercisable for or convertible into such equity securities of the
Company or any Subsidiary.

 

“ERISA” shall have the meaning
assigned to that term in Section 6.10.

 

“Events of Default” shall have the
meaning assigned to that term in Section 8.01.

 

“Exchange Act” means the Securities
Exchange Act of 1934, as amended, or any similar successor federal statute, and
the rules and regulations of the Commission thereunder, all as the same shall
be in effect at the time.

 

“Excluded Securities” means Equity
Securities:

 

(a) issued or issuable upon exercise of the
Warrants;

 

(b) issued or issuable as a dividend or
distribution on Common Stock;

 

(c) up to an aggregate of 8,400,000 shares of
Common Stock issued or issuable to employees, directors and consultants of the
Company pursuant to an employee benefit plan approved by the Board of Directors
and the shareholders of the Company;

 

(d) issued or issuable in an underwritten
public offering pursuant to registration under the Securities Act; or

 

(e) issued solely in connection with the
acquisition of assets, capital stock or other property representing the
acquisition of intellectual property, contracts or other assets of a software
business.

 

3

 

“Excess Amount” shall mean the
difference between (x) any amount required to be returned, rebated,
paid-back, refunded or set-off by the Company or any Subsidiary with respect to
any arrangement or agreement, and (y) the amount paid to the Company or
any Subsidiary pursuant to such agreement or arrangement; provided that if the
Excess Amount is a negative number it shall be deemed to be zero.

 

“Excess Damages” shall mean any
liability of the Company or any Subsidiary for consequential damages.

 

“Financial Statements” shall have the
meaning assigned to that term in Section 6.08.

 

“Fixed Charges” shall mean, on a
consolidated basis, for any given period, the Company’s Interest Expense, plus
Capital Expenditures, plus cash taxes paid, payable or accrued for such
period plus cash dividends paid, payable or accrued for such period plus
cash principal payments paid, payable or accrued for such period on
Indebtedness for Money Borrowed, excluding principal payments made pursuant to
any revolving line of credit facility and principal payments made pursuant to
or in connection with refinancing of a Capital Lease provided such refinancing
results in a new Capital Lease with a principal amount equal to or less than
the previous Capital Lease, all to be determined in accordance with GAAP.

 

“Fixed Charge Coverage Ratio” shall
mean, on a consolidated basis, the Company’s EBITDA for the twelve-month period
which precedes the end of a fiscal quarter, divided  by the
Company’s Fixed Charges for the twelve-month period which precedes the end of a
fiscal quarter.

 

“GAAP” means generally accepted
accounting principles recognized as such by the American Institute of Certified
Public Accountants.  Unless otherwise
specifically stated herein, use of the term “GAAP” means that such principles
are applied and maintained on a consistent basis for the Company and its
Subsidiaries throughout the period indicated and consistent with the prior
financial practices of the Company and its Subsidiaries as reflected on the
Financial Statements so as to properly reflect the financial condition, and the
results of operations and cash flows of the Company and its Subsidiaries.

 

“Guaranteed Obligations” shall have
the meaning assigned to that term in Section 2.14.

 

“Indebtedness” means all obligations
for borrowed money, contingent and otherwise, which should, in accordance with
GAAP, be classified upon the obligor’s balance sheet as liabilities, but in any
event including, without limitation, (i) liabilities secured by any mortgage on
property owned or acquired subject to such mortgage, whether or not the
liability secured thereby shall have been assumed, in an amount equal to the
lesser of (A) such obligations, and (B) the fair market value of such property
if such obligations have not been assumed, (ii) all guaranties, endorsements
and other contingent obligations in respect of Indebtedness of others, whether
or not the same are or should be so reflected in said balance sheet, except
guaranties by endorsement of negotiable instruments for deposit or collection
or similar transactions in the ordinary course of business, and (iii) the
present value of any Capital Leases.

 

“Indebtedness for Money Borrowed” of a
Person means at any time the sum at such time of (a) Indebtedness of such
Person for borrowed money or for the deferred purchase price of property or
services, (b) any obligations of such Person in respect of letters of
credit, banker’s or other acceptances or similar obligations issued or created
for the account of such Person, (c) obligations of such Person with
respect to Capital Leases, (d) all liabilities secured by any lien on any
property owned by such Person, to the extent attached to such Person’s interest
in such property, even though such Person has not assumed or become personally
liable for the payment thereof, in an amount equal to the lesser of (A)

 

4

 

such obligations, and (B) the fair market value of such property if
such obligations have not been assumed, (e) obligations of third parties
which are being guaranteed or indemnified against by such Person or which are
secured by the property of such Person, and (f) any obligation of such
Person for amounts advanced to such Person under an employee stock ownership
plan or other similar employee benefit plan; but, in all events, excluding
trade and other accounts payable in the ordinary course of business in
accordance with customary trade terms and which are not overdue (as determined
in accordance with past practices) or which are being disputed in good faith by
such Person and for which adequate reserves are being provided on the books of
such Person in accordance with GAAP.

 

“Indirect Subsidiaries” shall mean
each and any company, entity or organization, other than a Subsidiary, where
the Company or any Subsidiary holds an ownership interest.

 

“Intellectual Property” shall mean
any or all of the following and all rights in, arising out of, or associated
therewith:  (i) all United States,
and foreign patents and applications therefor and all reissues, divisions,
renewals, extensions, provisionals, continuations and continuations-in-part
thereof; (ii) all inventions (whether or not patentable), invention
disclosures, improvements, trade secrets, proprietary information, know how,
computer software programs (in both source code and object code form),
technology, technical data and customer lists, tangible or intangible
proprietary information, and all documentation relating to any of the
foregoing; (iii) all copyrights, copyrights registrations and applications
therefor, and all other rights corresponding thereto throughout the world;
(iv) all industrial designs and any registrations and applications
therefor throughout the world; (v) all trade names, logos, common law
trademarks and service marks, trademark and service mark registrations and
applications therefor throughout the world; (vi) all databases and data
collections and all rights therein throughout the world; (vii) all moral
and economic rights of authors and inventors, however denominated, throughout
the world; (viii) all Web addresses, sites and domain names and
registrations for domain names throughout the world; and (ix) any similar
or equivalent rights to any of the foregoing anywhere in the world.

 

“Interest Expense” shall mean, on a
consolidated basis, for any given period, the aggregate cash interest expense
of the Company and the Subsidiaries paid, payable or accrued for such period,
all to be determined in accordance with GAAP.

 

“Investors’ Rights
Agreement” shall have the meaning assigned to that term in Section 4.02(k).

 

“Knowledge” with
respect to the Company means the knowledge of each of the Company’s officers
and directors (including, without limitation, the individuals on Schedule 1.01(a))
and of each employee of the Company having responsibility for the subject
matter of a given representation.

 

“Leases” has the meaning stated in
Paragraph 6.07(d).

 

“Liquidity Disposition” means
(i) any merger or consolidation with any Person, (ii) any sale,
assignment, lease or other disposition of or voluntary parting with the control
of (whether in one transaction or in a series of transactions) all or
substantially all of the consolidated assets (whether now owned or hereafter acquired)
of the Company and the Subsidiaries except for (1) mergers, consolidations
or asset transfers with or between two or more Significant Subsidiaries,
(2) mergers or asset transfers by any Subsidiary with or to the Company
and (3) the merger of any Person into the Company or other issuance of
securities by the Company in connection with the acquisition of a Person as
long such merger or acquisition does not result in the violation of any of the
provisions of this Agreement and no such violation exists at the time of such
merger or acquisition, and the holders of common stock of the

 

5

 

Company immediately prior to the merger hold a majority of the voting
securities of the entity surviving the merger.

 

“Material Adverse Effect” shall have
the meaning assigned to that term in Section 6.01.

 

“Net Distribution” shall equal any
cash payments received by the Company or a Significant Subsidiary from the
Liquidating Trust pursuant to the Plan less the sum of (i) any amounts paid,
payable, or accrued with respect to taxes on such payments and (ii) any
amounts paid or payable pursuant to Section 7.01(n)

 

“Net Income” shall mean the net income
of the Company as determined in accordance with GAAP, adjusted for the elimination
of the following items if, and only if, such items shall never require the
expenditure of cash by the Company or any Subsidiary: (i) any non-cash interest
or dividends, (ii) non-cash employee compensation expense and (iii) any
nonrecurring charges.

 

“Net Worth” shall mean total assets
minus total liabilities of the Company and the Subsidiaries, all to be
determined in accordance with GAAP.

 

“New Debt” shall mean any Indebtedness
for Money Borrowed of the Company or any Subsidiary from any Person, including
any extensions or renewals thereof, that is by its terms junior and subordinate
to the Notes and will not require or permit any payment of cash interest or
principal prior to the repayment in full of the Notes and all interest due
thereon.

 

“New Securities” shall mean any New
Debt and any Equity Securities other than Excluded Securities.

 

“Noncompetition Agreement” shall have
the meaning assigned to that term in Section 4.05

 

“Note Agreements” shall mean this
Agreement, the Notes, the Subordination Agreement, the Preferred Stock
Subordination Agreement and the Security Agreement.

 

“Notes” shall have the meaning
assigned to that term in Section 2.01.

 

“Obligations” shall mean all
obligations of every nature of the Company from time to time owed to the Purchasers
with respect to the Notes, whether under this Agreement or any other Note
Agreement, whether for principal, interest, redemption, fees, expenses,
indemnification or otherwise.

 

“Operating Leases” shall mean any
leases or rental agreements or arrangements other than Capital Leases.

 

“Operative Documents” shall mean each
of the Notes, the Warrants, the Security Agreement, the Investors’ Rights
Agreement, the Debenture and
the Noncompetition Agreement.

 

“Option Agreement” shall have the
meaning assigned to that term in the definition of Capital Expenditures.

 

“Outstanding Common Stock” shall have
the meaning assigned to that term in Section 3.07.

 

“Permitted Liens” shall have the
meaning assigned to that term in Section 7.02(a).

 

6

 

“Person” means and includes an
individual, a corporation, a partnership, a joint venture, a trust, an
unincorporated organization, a limited liability company, or a government or
any agency or political subdivision thereof.

 

“Plan” shall have the meaning assigned
to that term in Section 6.31.

 

“Preferred Stock” means any shares of
preferred stock now or hereafter authorized for issuance pursuant to the
Company’s Certificate of Incorporation.

 

“Preferred Stock Subordination Agreement”
shall have the meaning assigned to that term in Section 7.01(m).

 

“Public Company Status” means any time
that (i) the Company’s Common Stock is registered pursuant to Section 12(b)
or 12(g) of the Exchange Act and such securities are listed for trading on the
New York Stock Exchange or quoted on the Nasdaq National Market; (ii) the
aggregate market valuation of the Company’s Common Stock is not less than $100
million and (iii) the average weekly reported volume of trading for such
securities during the eight calendar weeks preceding such date exceeds 3% of
total amount of such securities then outstanding.

 

“Publicly Available Software” means
any software obtained by the Company from any publicly available source (“Public
Software”) that is incorporated into, embedded with, or distributed with
Software of the Company that is sold, licensed or distributed to third parties
(“Company Customer Software”) and that requires as a condition of use, and/or
distribution of such Public Software that such Public Software or any Company
Customer Software derived from, or distributed with such Public Software, or
into which such Public Software is incorporated, (a) be disclosed or
distributed in source code form; or (b) be redistributable at no or minimal
charge.  Publicly Available Software
includes, without limitation, software licensed or distributed under any of the
GNU General Public License (GPL) or Lesser/Library GPL (LGPL) or similar
distribution models.

 

“Purchasers” means and shall include
CRP, and any other holder or holders from time to time of any of the Securities
who are entitled to the rights under this agreement in accordance with the
provisions of Sections 2.10 and 9.05 hereto.

 

“Purchaser Representative” means (a)
as long as CRP holds Notes representing at least a majority of the principal
amount of the Notes then outstanding, the person designated by Capital Resource
Management, Inc., and (b) in the event CRP no longer holds Notes representing a
majority of the principal amount of the Notes then outstanding, such successor
as the holders of Notes representing a majority of the principal amount of the
Notes then outstanding shall designate.

 

“Put Cash Adjustment” means the number
obtained by adding (x) the cash and marketable securities of the Company and
Subsidiaries as of the month most recently ended to (y) the aggregate exercise
price payable upon the exercise of the outstanding Warrants and subtracting (z)
the Indebtedness of the Company and Subsidiaries as of the month most recently
ended.

 

“Put Closing Date” shall have the
meaning assigned to that term in Section 3.04.

 

“Put Notice” shall have the meaning
assigned to that term in Section 3.04.

 

“Qualified IPO” means a firm
commitment underwritten public offering of shares of the Company’s Common Stock
in which (i) the aggregate proceeds to the Company and/or any stockholders

 

7

 

participating in the offering, if any, are at least $25 million
and (ii) the aggregate market valuation of the Company’s Common Stock is
then not less than $100 million.

 

“Qualifying Liquidity Event” means
each of (i) a Change in Control and (ii) a Liquidity Disposition.

 

“Real Property” means
all real property owned, leased, subleased, occupied, used or held by the
Company for use in connection with its business, in each case, together with
all buildings, fixtures and improvements erected thereon, and all
appurtenances, easements, privileges, licenses and other rights benefiting or
appurtenant hereto.

 

“Registered Intellectual Property”
means all Intellectual Property that is the subject of a pending application or
an issued patent, trademark, copyright, design right or other similar
registration formalizing exclusive rights.

 

“Real Property Liens” means any
mortgage, lien, pledge, claim, charge, reservation, restriction, restrictive
covenant, limitation, condition of record, right of first refusal, option to
purchase, lease, security interest, deed in trust, easement or encumbrance of
any kind on the Real Property.

 

“Repurchase Price” shall mean for each
Warrant Share the fair market value and the “fair market value” of a share of
Common Stock shall be determined in good faith by the Purchasers then
exercising their put rights pursuant to Section 3.03 hereof and the
Company if such Purchasers and the Company are unable to agree on such fair
market value, such Purchasers shall select a pool of three independent and
nationally-recognized investment banking firms from which the Company shall
select one such firm to appraise the fair market value of the Warrant Shares
and to perform the computations involved. 
The determination of such investment banking firm shall be binding upon
the Company, the Purchasers then exercising their put rights pursuant to Section 3.03
hereof and any other holder of Warrant Shares. 
All expenses of such investment banking firm shall be borne by the
Company.  In all cases, the determination
of fair market value shall be made without consideration of the lack of a
liquid public market for the Warrant Shares and without consideration of any “control
premium” or any discount for holding less than a majority or controlling
interest of the Warrant Shares.

 

“Rights Plan” shall have the meaning
assigned to that term in Section 4.08.

 

“Securities” means collectively the
Notes, the Warrants and the Warrant Shares.

 

“Securities Act” means the Securities
Act of 1933, as amended, or any similar successor federal statute, and the
rules and regulations of the Commission thereunder, all as the same shall be in
effect at the time.

 

“Security Agreement” shall have the
meaning assigned to that term in Section 4.02(j).

 

“Senior Debt” means, in an aggregate
amount not to exceed $7,500,000, (i) all Indebtedness for Money Borrowed
of the Company and any of its Subsidiaries from any Bank, including any
extensions or renewals thereof, whether outstanding on the date hereof or
hereafter created or incurred, which is not by its terms subordinate and junior
to the Notes and which is disclosed on the financial statements and is
permitted by this Agreement at the time it is created or incurred,
(ii) all Indebtedness for Money Borrowed of the Company and any of its
Subsidiaries incurred to refinance any of the Indebtedness for Money Borrowed
referred to in item (i) above, where the security securing such
Indebtedness is substantially the same security as that securing the
Indebtedness for Money Borrowed being refinanced,

 

8

 

(iii) all obligations of the Company and any of its Subsidiaries
under Capital Leases which are permitted by this Agreement at the time they are
incurred and (iv) all guarantees by the Company and any of its
Subsidiaries which are not by their terms subordinate and junior to the Notes
and which are permitted hereby at the time they are made of Indebtedness of any
Subsidiary if such Indebtedness would have been Senior Debt pursuant to the
provisions of clause (i), (ii) or (iii) of this sentence had it been
indebtedness of the Company.

 

“Significant Stockholders” shall mean
Info-Quest, SA, Schiffrin & Barroway, Irwin Jacobs, Carl Pohlad, any of
their Affiliates and any other stockholder known or knowable to the Company
after due inquiry to beneficially own 5% or more of the Common Stock of the
Company.

 

“Significant Subsidiary” shall mean
Softbrands Manufacturing, Inc., a Minnesota corporation, Softbrands
Hospitality, Inc., a Delaware corporation, Softbrands International, Inc., a
Delaware corporation, Softbrands Licensing, Inc., a Delaware corporation and
Softbrands Europe Limited, a corporation organized under the laws of the United
Kingdom or any Subsidiary who becomes a signatory to this Agreement and a party
to the Security Agreement.

 

“Subordination Agreement” shall have
the meaning assigned to that term in Section 2.12.

 

“Subsidiary” or “Subsidiaries”
means (i) any corporation more than fifty percent (50%) of whose stock of
any class or classes having by the terms thereof ordinary voting power to elect
a majority of the directors of such corporation (irrespective of whether or not
at the time stock of any class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency) is at
the time owned directly or indirectly by the Company and/or any one or more of
its Subsidiaries, and (ii) any partnership, limited liability company,
association, joint venture or other entity in which the Company and/or one or
more of its Subsidiaries has more than a fifty percent (50%) equity interest at
the time.

 

“Transfer” shall have the meaning assigned
to that term in Section 2.10(b).

 

“Trigger Event” shall have the meaning
assigned to that term in Section 8.01(e).

 

“Unscheduled Claims” means any claims
brought under the Plan or against AremisSoft or any of its subsidiaries which
are not disclosed on Exhibit 6.32 hereto.

 

“Warrants” shall have the meaning
assigned to that term in Section 3.01

 

“Warrant Shares” shall have the
meaning assigned to that term in Section 3.02.

 

1.02.        Accounting Terms.  All accounting terms not specifically defined
herein shall be construed in accordance with GAAP, and all financial data
submitted pursuant to this Agreement and all financial tests to be calculated
in accordance with this Agreement shall be prepared and calculated in
accordance with GAAP.

 

9

 

ARTICLE II

 

PURCHASE, SALE AND TERMS OF NOTES; PAYMENTS

 

2.01.        The Notes.  The
Company has authorized the issuance and sale to the Purchasers of the Company’s
12.5% Senior Subordinated Secured Notes, due November 2009, in the
original aggregate principal amount of $20,000,000. The 12.5% Senior
Subordinated Secured Notes shall be substantially in the form set forth as Exhibit 2.01
attached hereto and are herein referred to individually as a “Note” and
collectively as the “Notes”, which terms shall also include any notes delivered
in exchange or replacement therefor. 
Except as otherwise set forth in this Agreement, the Notes shall
(a) be payable on November 26, 2009 and (b) bear interest (based
on a 360-day year counting actual days elapsed) on the unpaid principal amount
thereof commencing on November 27, 2002 until due and payable at the rate
of twelve and one-half percent (12.5%) per annum, which interest shall be
payable in immediately available funds quarterly in arrears on the last
Business Day of March, June, September and December in each year,
commencing December 31, 2002, and at maturity or prior prepayment of the
Notes in full.

 

2.02.        Purchase and Sale of Notes.  The Company agrees to issue and sell to each
Purchaser, and, subject to and in reliance upon the representations,
warranties, terms and conditions of this Agreement, each Purchaser, severally
and not jointly, agrees to purchase, a Note in the principal amount set forth
opposite such Purchaser’s name on Exhibit 2.02 attached
hereto.  Such purchase and sale shall
take place at a closing (the “Closing”) to be held at the offices of Testa,
Hurwitz & Thibeault, LLP, 125 High Street, Boston, Massachusetts, at 10:00
a.m. local time, two (2) Business Days subsequent to the satisfaction of the
conditions set forth in Article IV hereof or at such other time as is
agreed to by the parties hereto (the “Closing Date”).  At the Closing, the Company will initially
issue and sell to each Purchaser, one Note, dated the Closing Date and payable
to the order of such Purchaser, in the principal amount set forth opposite such
Purchaser’s name on Exhibit 2.02 attached hereto, against receipt
of funds by wire transfer to an account or accounts designated by the Company
prior to the Closing in the amount set forth opposite such Purchaser’s name on Exhibit 2.02
attached hereto in payment of the full purchase price for the Notes.

 

2.03.        Issue Price; Original Issue Discount.  Having considered all facts relevant to a
determination of the value of the Notes and the Warrants being acquired by the
Purchasers, the Company, on the one hand, and the Purchasers, on the other
hand, have concluded and do hereby agree that, for purposes of Section 1273
of the Internal Revenue Code of 1986, as amended (the “Code”), and the
Regulations thereunder, and for purposes of determining any original issue
discount with respect to the Notes thereunder, the aggregate “issue price” for
the Notes issued at the Closing is as set forth on Exhibit 2.03
attached hereto.  The Company and each
Significant Subsidiary and each Purchaser agrees not to take a position on any
income tax return, before any governmental agency charged with the collection
of any income tax or in any judicial proceeding that is inconsistent with the
terms of this Section 2.03.  The
Company and the Purchasers agree that (i) neither the Purchasers nor any of
their Affiliates have rendered or have agreed to render any services to the
Company in connection with this Agreement or the issuance of the Notes and
Warrants and (ii) the Warrants are not being issued as compensation.

 

2.04.        Use of Proceeds. 
The Company agrees to use the full proceeds from the sale of the Notes
and Warrants for the purposes of general working capital and for the
acquisition of software businesses or assets in transactions that do not
constitute a violation of the terms of this Agreement.

 

2.05.        Payments and Endorsements.  Payments of principal and interest on the
Notes shall be made without setoff or counterclaim directly (i) in the case of
CRP, by means of wire transfer in

 

10

 

accordance with the instructions provided in writing by CRP to the
Company in accordance with Section 9.03 hereof, or (ii) in the case of the
other Purchasers, either by check duly mailed or delivered to the Purchasers at
their addresses referred to in Section 9.03 hereof or by wire transfer
pursuant to written instructions delivered by the Purchasers, and, in case of
either (i) or (ii), without any presentment or notation of payment, except that
prior to any transfer of any Note, the holder thereof shall endorse on such
Note a record of the date to which interest has been paid and all payments made
on account of principal of such Note. 
All payments and prepayments of principal of and interest on the Notes
shall be applied (to the extent thereof) to all of the Notes pro  rata
based on the principal amount outstanding and held by each holder thereof.

 

2.06.        Redemptions.

 

(a)           Required Periodic Redemptions.  Beginning on December 31, 2007 and
quarterly thereafter through September 30, 2008, the Company will redeem,
without penalty or premium, the principal amount of the Notes equal to
$1,666,666.67, or such lesser amount as may be then outstanding, together with
all accrued and unpaid interest then due on the amount so redeemed.  Beginning on December 31, 2008 and
quarterly thereafter through September 30, 2009, the Company will redeem,
without penalty or premium the principal amount of the Notes equal to
$3,333,333.33, or such lesser amount as may be then outstanding, together with
all accrued and unpaid interest then due on the amount so redeemed.  On the stated or accelerated maturity of the
Notes, the Company agrees to pay the principal amounts of the Notes then
outstanding together with all accrued and unpaid interest then due
thereon.  Except as set forth in subsection 2.06(c),
no optional redemption of less than all of the Notes shall affect the
obligation of the Company to make the redemptions required by this subsection.

 

(b)           Required Liquidity Redemptions.  In the event and upon the closing of a
Qualifying Liquidity Event, the Company shall redeem, without penalty or
premium except as set forth in Section 2.06(d), all of the outstanding
Notes, together with all accrued and unpaid interest then due thereon.

 

(c)           Optional Redemptions.  In addition to the redemptions of the Notes
required under subsections 2.06(a) and (b), the Company may, at any time and
from time to time, redeem, without penalty or premium except as set forth in Section 2.06(d),
the Notes, in whole or in part (in integral multiples of $1,000), together with
interest due on the amount so redeemed through the date of redemption.  Partial redemptions made as provided in this
subsection 2.06(c) shall, to the extent thereof, be applied first to
reduce the principal due at maturity of the Notes and next to reduce the
payments required by subsection 2.06(a) in inverse order of maturity
thereof.

 

(d)           Notice of Redemptions; Pro Rata
Redemptions.  Notice of any
optional redemption pursuant to subsection 2.06(c) shall be given to all
holders of the Notes at least ten (10) Business Days prior to the date of
such redemption and notice of any required redemption pursuant to Section 2.06(b)
shall be given to all holders of the Notes at least ten (10) Business Days
prior to the closing of a Qualifying Liquidity Event.  Each redemption of Notes pursuant to
subsections 2.06(a) or (c) shall be made so that the Notes then held by each
holder shall be redeemed in a principal amount which shall bear the same ratio
to the total unpaid principal amount being redeemed on all Notes as the unpaid
principal amount of Notes then held by such holder bears to the aggregate
unpaid principal amount of all of the Notes then outstanding.

 

2.07.        Default Rate of Interest.  If an Event of Default has occurred and is
continuing, from and after the date such Event of Default occurred the entire
outstanding unpaid principal balance of the Notes

 

12

 

and any matured but unpaid interest from time to time due thereon shall
bear interest, payable on demand, (i) should the Event of Default be pursuant
to Section 8.01(a) or (b) hereof, at the rate of 17.5% per annum, or such
lower rate as then may be the maximum rate permitted by applicable law, or (ii)
otherwise, at the rate of 15.5% per annum, or such lower rate as then may be
the maximum rate permitted by applicable law, provided, however,
that upon the cessation or cure of such Event of Default, if no other Event of
Default is then continuing, the Notes shall resume bearing interest at the rate
set forth in Section 2.01 from the date such Events of Default are cured.

 

2.08.        Maximum Legal Rate of Interest.  Nothing in this Agreement or in the Notes
shall require the Company to pay interest at a rate in excess of the maximum
rate permitted by applicable law.  Any
interest payable under the Notes or under any other instrument relating to the
indebtedness evidenced thereby that is in excess of the maximum rate permitted
by applicable law shall, in the event of acceleration of maturity, late payment,
prepayment, or otherwise, be applied to a reduction of the unrepaid
indebtedness evidenced thereby and not to the payment of interest, or if such
excessive interest exceeds the unpaid balance of such unrepaid indebtedness,
such excess shall be refunded to the Company. 
To the extent not prohibited by applicable law, determination of the
maximum rate permitted by applicable law shall at all times be made by
amortizing, prorating, allocating and spreading in equal parts, during the full
term of the indebtedness evidenced by the Notes, all interest at any time
contracted for, charged or received from the Company in connection with the
indebtedness evidenced thereby, so that the actual rate of interest on account
of such indebtedness is uniform throughout such term.

 

2.09.        Payment on Non-Business Days.  Whenever any payment to be made on the Notes
shall be due on a day which is not a Business Day, such payment may be made on
the next succeeding Business Day, and such extension of time shall in such case
be included in the computation and payment of interest due.

 

2.10.        Transfer and Exchange of Notes.  (a) Subject to Section 2.10(b), the
holder of any Note or Notes may, prior to maturity or prepayment thereof,
surrender such Note or Notes at the principal office of the Company for
transfer or exchange.  Any holder
desiring to transfer or exchange any Note shall first notify the Company in
writing at least five (5) days in advance of such transfer or exchange.  Within a reasonable time after such notice to
the Company from a holder of its intention to make such exchange and without
expense (other than transfer taxes, if any) to such holder, the Company shall
issue in exchange therefor another Note or Notes, in such denominations as
requested by the holder, for the same aggregate principal amount, as of the
date of such issuance, as the unpaid principal amount of the Note or Notes so
surrendered and having the same maturity and rate of interest, containing the
same provisions and subject to the same terms and conditions as the Note or
Notes so surrendered.  Each new Note
shall be made payable to such Person or Persons, or assigns, as the holder of
such surrendered Note or Notes may designate, and such transfer or exchange
shall be made in such a manner that no gain or loss of principal or interest
shall result therefrom.

 

(b)           Except
for any transfer of a portfolio of investments by CRP and any distributions to
Affiliates or affiliated funds or holders of the equity interests of CRP,
including limited partners (to which this Section 2.10(b) shall not
apply), no holder of Notes shall assign, pledge, mortgage, transfer or
otherwise dispose of, either in whole or in part, all or any part of the Note
or Notes (“Transfer”) held by such holder except in accordance with this Section 2.10(b).  Prior to the Transfer of the Note or Notes
held by such holder, such holder shall first offer to the Company the right to
acquire such Notes in a written notice (the “Offer Notice”) which shall
identify the Notes proposed to be Transferred. 
The Company will then have the right to offer to acquire such Notes if
the Company notifies the holder in writing of its proposed terms for such
Transfer, including, without limitation, price and the amount of Notes proposed
to be acquired, within five (5) days of receipt of the Offer Notice.  A holder shall be

 

13

 

entitled to Transfer any Notes not purchased by the Company pursuant to
this Section 2.10(b): (i) during the period ending six (6) months after
the date of the Offer Notice and (ii) at not less than the price and upon terms
not materially less favorable to the holder than those offered by the Company,
but may not otherwise Transfer such Notes without renewed compliance with this Section 2.10(b).

 

2.11.        Replacement of Notes.  Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of any Note and, if
requested by the Company in the case of any such loss, theft or destruction,
upon delivery of an indemnity bond or other agreement or security reasonably
satisfactory to the Company, or, in the case of any such mutilation, upon
surrender and cancellation of such Note, the Company will issue a new Note, of
like tenor and amount and dated the date to which interest has been paid, in
lieu of such lost, stolen, destroyed or mutilated Note; provided, however,
if any Note of which a Purchaser, its nominee, or any of its partners is the
holder is lost, stolen or destroyed, the affidavit of an authorized partner or
officer of the holder setting forth the circumstances with respect to such
loss, theft or destruction shall be accepted as satisfactory evidence thereof,
and no indemnification bond or other security shall be required as a condition
to the execution and delivery by the Company of a new Note in replacement of
such lost, stolen or destroyed Note other than the holder’s written agreement
to indemnify the Company.

 

2.12.        Subordination. 
The Purchasers agree that the indebtedness evidenced by the Notes and
the rights and remedies of the Purchasers under this Agreement shall be
subordinate and junior to certain indebtedness of the Company incurred in
compliance with Section 7.02(b) and agree to enter into a subordination
agreement in connection therewith (the “Subordination Agreement”), such
agreement to be in the form of Exhibit 2.12 attached hereto.

 

2.13.        Closing Fee. 
At the Closing, the Company shall pay $400,000 to Capital Resource
Management, Inc. as a fee for financial services rendered to the date hereof in
addition to the amounts required to be paid pursuant to Sections 4.02(f)
and 9.04.

 

2.14.        Guaranty.

 

(a)           The
Significant Subsidiaries hereby jointly and severally unconditionally guarantee
(the “Guaranty”) due payment, performance and fulfillment to the Purchasers of
all Obligations, whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising or acquired, sole, joint or
several, and whether consisting of obligations to pay money or to perform
obligations (the “Guaranteed Obligations”).

 

(b)           The
Guaranty shall operate as a continuing and absolute guaranty and shall remain
in full force and effect until all of the Guaranteed Obligations have been paid
in full.

 

(c)           Notice
of the acceptance of this Guaranty and notices of transactions entered into in
reliance hereon are hereby waived.  The
Significant Subsidiaries consent to any renewal, extension or postponement of
the time of payment of any of the Guaranteed Obligations or to any other
forbearance or indulgence with respect thereto and consent to any substitution,
exchange, modification or release of any security therefor or the release of
any other person primarily or secondarily liable on any of the Guaranteed
Obligations whether or not notice thereof shall be given to the Significant
Subsidiaries, and agree to the provisions of any instrument, security or other
writing evidencing or securing any of the Guaranteed Obligations, and the
enforcement hereof shall not be affected by the delay or failure of the Purchasers
to take any action with respect to any security, right, obligation, guaranty or
other means of collecting the Guaranteed Obligations which it may at any time
hold, including perfection or enforcement thereof, or by any change with
respect to the Company in the form or manner of doing business, it being

 

14

 

hereby agreed that the Significant Subsidiaries shall be and remain
jointly and severally bound upon this Guaranty irrespective of any action,
delay or omission by the Purchasers in dealing with the Company, any of the
Guaranteed Obligations, any collateral therefor or any person at any time
liable with respect thereto.

 

(d)           On
any default or failure by the Company to pay or perform any of the Guaranteed Obligations,
the liability of the Significant Subsidiaries hereunder shall be effective
immediately and the Significant Subsidiaries waive all requirements of notice,
demand, presentment or protest and any right which the Significant Subsidiaries
might otherwise have to require the Purchasers first to proceed against the
Company or against any other person or first to realize on any security held by
it before proceeding against any or all of the Significant Subsidiaries for the
enforcement of this Guaranty.  The
Significant Subsidiaries shall not assert any right arising from payment or
other performance hereunder, whether by set-off or counterclaim, or claim of
indemnity, reimbursement, subrogation or otherwise, until the Significant
Subsidiaries’ liability hereunder shall have been discharged in full and all of
the Guaranteed Obligations shall have been fulfilled.

 

(e)           If
for any reason the Company is under no legal obligation to discharge any of the
Guaranteed Obligations, or if any amounts included in the Guaranteed
Obligations shall have become irrecoverable from the Company by operation of
law or for any other reason, or if any security or other guaranty shall be
found invalid, the Significant Subsidiaries shall nonetheless be and remain
jointly and severally bound upon this Guaranty.

 

(f)            Any
deposits or other sums at any time credited by or due from the Purchasers to
the Significant Subsidiaries, and any securities or other property of any or
all of the Significant Subsidiaries at any time held by the Purchasers may at
all times be held and treated as security for all obligations of the
Significant Subsidiaries hereunder. 
Regardless of the adequacy of security the Purchasers may apply or set
off such deposits or other sums against such obligations (whether or not then
due or payable) at any time.

 

ARTICLE III

 

PURCHASE AND SALE OF WARRANTS

 

3.01.        The Warrants. 
The Company has authorized the issuance and sale to the Purchasers of
warrants to purchase shares of the Company’s Common Stock (subject to adjustment
as provided therein) in amounts as provided therein.  The Warrants shall be substantially in the
form set forth as Exhibit 3.01 attached hereto. The Warrants are herein
referred to individually as a “Warrant” and collectively as the “Warrants”
which terms shall also include any warrants delivered in exchange or
replacement therefore.  The Warrants
shall be exercisable at a purchase price as provided therein.

 

3.02.        Purchase and Sale of the Warrants.  The Company agrees to issue to the Purchasers
at the Closing a Warrant for the number of shares of the Company’s Common Stock
(the “Warrant Shares”) as set forth opposite such Purchaser’s name on Exhibit 3.02
attached hereto.

 

3.03.        Right to Put Warrant Shares. From and
after the earlier of (i) a Change of Control and (ii) November 26, 2009
(the “Put Date”), the Purchasers shall have the right to sell to the Company
(and upon exercise of such right, the Company agrees to purchase) the Warrant
Shares at the Repurchase Price, all in accordance with the terms of this Article III;
provided, however, that any and all rights pursuant to this Section 3.03
shall terminate, and this Section 3.03 shall have no further force or
affect,

 

15

 

from and after the earlier of (x) a Qualified IPO; (y) the date on
which the Company has achieved and maintained Public Company Status for three
consecutive months or (z) November 26, 2012.

 

3.04.        Notice and Payment.  A holder of a Warrant or Warrant Shares shall
give the Company at least ten (10) days’ prior written notice (which notice
shall be irrevocable) of its intention to exercise any right of sale set forth
in Section 3.03 (the “Put Notice”) and shall specify in such notice the
number of Warrant Shares to be sold and may specify in such notice a proposed
date of sale.  Upon receipt of the Put
Notice, the Company shall within two (2) Business Days of receipt of the Put
Notice send a copy of the Put Notice to all other Purchasers who shall then
have a period of three (3) Business Days to notify the Company of its intent to
participate in the sale pursuant to Section 3.03 on the terms and
conditions as the other Purchasers so participating and to submit to the
Company a notice specifying the number of Warrant Shares to be sold.  The closing of any repurchase of the Warrant
Shares pursuant to Section 3.03 shall take place at the offices of the
Company at 10:00 a.m. local time on a Business Day (the “Put Closing Date”)
which shall not be later than the latest to occur of (i) the date specified
in the Put Notice and (ii) the date five days after a final determination
of the Repurchase Price.

 

On or prior to the Put Closing Date, the
Company shall deliver a certified or bank cashier’s check to the holder of the
Warrant Shares being repurchased, at his or its address as the same appears in
the transfer records of the Company, in an amount equal to the aggregate
Repurchase Price for the Warrant Shares being repurchased from such holder, or
shall transfer such amount by wire transfer of immediately available funds to
any account specified in writing by such holder to the Company.

 

3.05.        Insufficiency of Funds.  In the event that any or all of the
Repurchase Price is not paid to any holder entitled thereto as a result of the
insufficiency of legally available funds under the Delaware General Corporation
Law or otherwise, the obligation to effect the repurchase shall remain an
obligation of the Company and shall be performed as soon as there are funds
legally available therefor.  Interest
shall accrue on the Repurchase Price of any such unperformed obligations at a
rate of seventeen percent (17.0%) per annum, compounded on a quarterly basis,
to the extent permitted by law.  Such
interest shall become due and payable on the date when the Repurchase Price is
due and payable.

 

3.06.        [Reserved] 

 

3.07.        Right to Purchase New Securities.  Prior to issuing any New Securities of the
Company or any Subsidiary to any Person, the Company will first give or cause
such Subsidiary to give to each of the holders of the Warrants and the Warrant
Shares the right to purchase, on the same terms, the same proportion of the New
Securities proposed to be sold by the Company or such Subsidiary as the number
of Warrant Shares owned or exercisable by such holder on an as converted basis
bears to the total number of shares of Common Stock outstanding at that time on
a fully-diluted, as converted basis assuming the exercise of all outstanding
Warrants (the “Outstanding Common Stock”). 
Persons electing to purchase New Securities pursuant to this Section shall
also be entitled to purchase (pro rata according to their holdings of Warrant
Shares assuming the exercise of all Warrants into Warrant Shares) offered New
Securities that other holders decline to purchase.  Any such right of purchase shall be
exercisable for a period of twenty (20) days after the holders receive written
notice of a proposed issuance of New Securities (and any such notice by the
Company or a Subsidiary shall be given not less than twenty (20) nor more than
ninety (90) days prior to any such issuance).

 

3.08.        Termination Upon Qualified IPO.  Each of the Purchaser’s right to purchase New
Securities set forth in Section 3.07 shall terminate upon the earlier to
occur of (x) a Qualified IPO; (y) the Company achieving and maintaining Public
Company Status for a period of three consecutive months.

 

16

 

ARTICLE IV

 

CONDITIONS TO
PURCHASERS’ OBLIGATION

 

The obligation of the Purchasers to purchase
and pay for the Notes and the Warrants at the Closing is subject to
satisfaction of the following conditions, all or any of which may be waived in
writing by the Purchasers:

 

4.01.        Representations and Warranties.  At the Closing, each of the representations
and warranties of the Company and the Subsidiaries set forth in Article VI
hereof shall be true and correct in all respects at the time of, and
immediately after giving effect to, the sale of the Notes and the Warrants.

 

4.02.        Documentation at Closing.  The Purchasers shall have received prior to
or at the Closing all of the following documents, instruments or evidence of
completion thereof, each in form and substance satisfactory to the Purchasers
and their special counsel:

 

(a)           A
certified copy of all charter documents of the Company and each of its
Significant Subsidiaries; a certified copy of the resolutions of the board of
directors and, to the extent required, the stockholders of the Company
evidencing approval, as applicable, of this Agreement, the Operative Documents
and all other matters contemplated hereby and thereby; a certified copy of the
By-laws of the Company and each of its Significant Subsidiaries; and certified
copies of all documents evidencing other necessary corporate or other action
and governmental approvals, if any, with respect to this Agreement, the
Operative Documents and all other matters contemplated hereby or thereby.

 

(b)           Opinions
of Dorsey & Whitney LLP, counsel for the Company, in the form attached
hereto as Exhibit 4.02(b).

 

(c)           A
certificate of the Secretary or an Assistant Secretary of the Company and each
of its Significant Subsidiaries which shall certify the names of the officers
of the Company or the Significant Subsidiaries, as applicable, authorized to
sign this Agreement, the Operative Documents and any other documents or
certificates to be delivered pursuant hereto or thereto by the Company or such
Significant Subsidiary, as applicable, or any of its officers, together with
the true signatures of such officers. 
The Purchasers may conclusively rely on such certificates until they
shall receive a further certificate of the Secretary or an Assistant Secretary
of the Company or such Significant Subsidiary, as applicable, canceling or
amending the prior certificate and submitting the signatures of the officers
named in such further certificate.

 

(d)           A
certificate from a duly authorized officer of the Company and a certificate
from a duly authorized officer of each of the Significant Subsidiaries stating
that the representations and warranties contained in Article VI hereof and
otherwise made by the Company or the Significant Subsidiaries, as applicable,
in writing in connection with the transactions contemplated hereby are true and
correct and that no condition or event has occurred or is continuing or will
result from the execution and delivery of this Agreement or the Operative
Documents and the consummation of the transactions contemplated thereby which
constitutes an Event of Default or would constitute an Event of Default but for
the requirement that notice be given or time elapse or both.

 

(e)           A waiver by Info-Quest SA of that certain
Investor Rights Agreement executed by the Company and Info-Quest SA dated as of
May 15, 2002 in form and substance satisfactory to the Purchasers and their
special counsel.

 

17

 

(f)            Payment
for the costs, expenses, taxes and filing fees identified in Section 9.04
as to which the Purchasers give the Company notice prior to the Closing.

 

(g)           Payment to Capital Resource Management, Inc. of an amount
equal to $400,000 as set forth in Section 2.13.

 

(h)           A
certificate from a duly authorized officer of the Company stating that all the
conditions set forth in this Article IV have been satisfied, other than
those, if any, waived in writing by Purchasers to receive at the Closing a
majority in interest of the Notes to be issued at the Closing.

 

(i)            A
Security Agreement (the “Security Agreement”) executed by the Company and its
Subsidiaries in the form of the attached Exhibit 4.02(i).

 

(j)            The
UCC-1 financing statements for the entities and the jurisdictions set forth on Exhibit
4.02(j) attached hereto.

 

(k)           An Investors’ Rights Agreement executed by the Company
and the Purchasers in the form attached as Exhibit 4.02(k).

 

(l)            A Debenture executed by Softbrands Europe Limited in
the form of the attached Exhibit 4.02(l) (the “Debenture”).

 

(m)          Such other documents referenced in any Exhibit hereto
or relating to the transactions contemplated by this Agreement as the
Purchasers or their special counsel may reasonably request.

 

(n)           The
stock certificates listed on Exhibit 4.02(n).

 

4.03.        [Reserved].

 

4.04.        No Default.  At
the time of and immediately after giving effect to the sale of the Notes and
the Warrants there shall exist no Event of Default and no condition, event or
act that, with the giving of notice or lapse of time, or both, would constitute
such an Event of Default.

 

4.05.        Non-Competition Agreement .  The Company shall have entered into an
amendment to that certain Employment Agreement dated as of January 1, 2002
between the Company and George Ellis providing for certain non competition
provisions (the “Noncompetition Agreement”) in a form acceptable to the
Purchasers and their special counsel effective on or prior to the Closing.

 

4.06.        Release from Board Members.  Each officer and director of the Company who
was an officer or director of AremisSoft shall have executed and delivered a
release in a form reasonably satisfactory to the Purchasers and their special
counsel.

 

4.07.        Termination.   
The Company shall have paid in full all amounts due or outstanding
pursuant to that certain Accounts Receivable Purchase Agreement with Silicon
Valley Bank and shall deliver to the Purchasers evidence of the repayment of
such amounts, the termination of such agreement and a release from Silicon
Valley Bank, all in a form acceptable to the Purchasers and their special
counsel.

 

18

 

4.08.        Rights Plan. 
The Company shall have filed a certificate of designation and amended
that certain Rights Agreement dated as of September 16, 2002 (the “Rights
Plan”), both in a form satisfactory to the Purchasers and their special counsel
and shall provide evidence of such amendment and filing to the Purchasers and
their special counsel.

 

4.09.        Release.  The
Company shall have obtained a release and waiver from MHT Securities, LP
relating to that certain letter agreement between the Company and Founders
Equity Securities dated May 1, 2002 relating to payments due thereunder in a
form acceptable to the Purchasers and their special counsel.

 

ARTICLE V

 

REPRESENTATIONS
AND WARRANTIES OF THE PURCHASERS

 

5.01.        Representations and Warranties of
the Purchasers.  Each Purchaser, for
itself only, hereby represents and warrants to the Company, as follows:

 

(a)           Such
Purchaser has duly authorized, executed and delivered this Agreement and such
of the Operative Documents as require execution by such Purchaser.

 

(b)           Such
Purchaser intends to acquire the Securities for its own account.

 

(c)           The
Securities are being and will be acquired for the purpose of investment and not
with a view to distribution or resale thereof.

 

(d)           Such
Purchaser acknowledges that it has reviewed and discussed the business, affairs
and current prospects with such officers of the Company and the Subsidiaries
and others as it has deemed appropriate or desirable in connection with the
transactions contemplated by this Agreement. 
Such Purchaser further acknowledges that it has requested, received and
reviewed such information, undertaken such investigation and made such further
inquiries of officers of the Company and others as it has deemed appropriate or
desirable in connection with such transactions; provided, however, no
investigation made heretofore or hereafter by or on behalf of such Purchaser
shall have any effect whatsoever on the representations and warranties of the
Company hereunder, each of which will survive any such investigation.

 

(e)           Such
Purchaser understands that it must bear the economic risk of its investment in
the Securities for an indefinite period of time because the Securities are not,
and will not be, registered under the Securities Act or any applicable state
securities laws, except as may be provided in the Investors’ Rights Agreement, and
may not be resold unless subsequently registered under the Securities Act and
such other laws or unless an exemption from such registration is
available.  Such Purchaser also
understands that except as may be provided in the Investors’ Rights Agreement,
it is not contemplated that any of the Securities will be registered under the
Securities Act or any state securities laws, or that the Company will take
steps which will make the provisions of Rule 144 under the Securities Act
available to permit resale of the Securities.

 

(f)            Such
Purchaser represents that it has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of its
investment in the Securities.

 

19

 

(g)           No
Person has or will have, as a result of the transactions contemplated by this
Agreement, any rights, interest or valid claim against or upon the Company or
any of its Subsidiaries for any commission, fee or other compensation as a finder
or broker because of any act or omission by such Purchaser or any agent of such
Purchaser, except as provided in Section 2.13.

 

(h)           Such
Purchaser hereby acknowledges that the Notes and the Warrants, and each
certificate representing the Warrant Shares and any other securities issued in
respect of such shares upon any stock split, stock dividend, recapitalization,
merger or similar event (unless no longer required in the opinion of counsel,
which opinion and counsel shall be reasonably satisfactory to the Company, it
being agreed that Testa, Hurwitz & Thibeault, LLP shall be
satisfactory) shall bear a legend substantially in the following form:

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS
AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR TRANSFERRED WITHOUT
COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE
FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM.

 

The acquisition by such Purchaser of the Securities shall constitute a
confirmation by it of the foregoing representations.

 

ARTICLE VI

 

REPRESENTATIONS
AND WARRANTIES OF THE COMPANY AND THE SUBSIDIARIES

 

The Company and each Significant Subsidiary
hereby represent and warrant to the Purchasers, except as set forth in the
Exhibits to this Agreement (whether or not an Exhibit is referenced below), as
follows (For the purposes of this Article VI, unless the context otherwise
requires or as otherwise provided, “Company” shall mean the Company and each
Subsidiary, and any Exhibits in relation to this Article VI shall
specifically indicate matters that relate to the Subsidiaries):

 

6.01.        Organization and Standing of the
Company and Subsidiaries; Ownership. 
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority for the ownership and operation of
its properties and for the carrying on of its business as now conducted and as
now proposed to be conducted.  The
Company is duly licensed or qualified and in good standing as a foreign
corporation authorized to do business in all jurisdictions wherein the
character of the property owned or leased, or the nature of the activities
conducted, by it makes such licensing or qualification necessary, except where
the failure to be so licensed or qualified, either individually or in the
aggregate, could not reasonably be expected to have a material adverse effect
on the business, assets, liabilities, financial condition, or on the results of
operations or prospects of the Company and its Subsidiaries taken as a whole (a
“Material Adverse Effect”).  Except as
set forth on Exhibit 6.01 attached hereto, the Company does not own,
directly or indirectly, any capital stock or other equity or ownership or
proprietary interest in any Person.

 

6.02.        Corporate Action. The Company has all necessary
corporate power and has taken all corporate action required to make all the
provisions of this Agreement, the Operative Documents and any other agreements
and instruments executed in connection herewith and therewith valid and
enforceable

 

20

 

obligations of the Company.  This
Agreement constitutes and, when executed at Closing, each of the Operative
Documents and each other agreement and instrument executed by it in connection
herewith and therewith will constitute the legal, valid and binding obligation
of the Company enforceable against it in accordance with their respective
terms, except as enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or affecting
creditors’ rights generally and by general principles of equity and, with
respect to the enforceability of the provisions set forth in the Investors’
Rights Agreement, applicable federal securities laws.  Sufficient shares of authorized but unissued
Common Stock of the Company have been reserved by appropriate corporate action
in connection with the prospective conversion of the Warrants.  The issuance of the Notes and the Warrants,
and the issuance of shares of Common Stock upon the conversion of the Warrants,
is not subject to any unwaived preemptive or other similar statutory or
contractual rights.

 

6.03.        Governmental Approvals.  No authorization, consent, approval, license,
exemption of or filing or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, is or will be necessary for, or in connection with, the offer,
issuance, sale, execution or delivery by the Company of, or for the performance
by the Company of its obligations under, this Agreement or any of the Operative
Documents, except for the filing of a Form D with the Commission and any
relevant state or commonwealth securities agency or department.

 

6.04.        Litigation. 
Except as set forth on Exhibit 6.04 attached hereto, there
is no litigation, action or governmental proceeding or investigation pending
or, to the Knowledge of the Company, threatened, against the Company, affecting
any of its properties or assets, or against any officer, key employee or
principal stockholder of the Company where such litigation, proceeding or
investigation (i) either individually or in the aggregate would have a
Material Adverse Effect, (ii) might call into question the validity of
this Agreement, any Operative Document or any action taken or to be taken
pursuant hereto or thereto or (iii) seeks to prevent the consummation of
the transactions contemplated by this Agreement, nor, to the Knowledge of the
Company, has there occurred any event on the basis of which any litigation,
proceeding or investigation meeting the criteria of (i), (ii) or (iii) above
might properly be instituted.  Except as
set forth on Exhibit 6.04, neither the Company nor to the Knowledge
of the Company, any of its respective officers, key employees or principal
stockholders, is in default with respect to any order, writ, injunction, decree,
ruling or decision of any court, commission, board or other government agency
affecting the Company.

 

6.05.        Compliance with Law.  The Company is in compliance in all respects
with the terms and provisions of this Agreement and of its Certificate of Incorporation
(or comparable charter documents) and by-laws and the terms and provisions of
all judgments, decrees, governmental orders, statutes, rules and regulations to
which it and its properties and assets are subject, including, without
limitation, the Foreign Corrupt Practice Act and Export Control Regulations,
(collectively, the “Applicable Laws”).

 

6.06.        Federal Reserve Regulations.  The Company is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U of the Board of Governors of the Federal
Reserve System), and no part of the proceeds of the Notes or the Warrants will
be used to purchase or carry any margin security or to extend credit to others
for the purpose of purchasing or carrying any margin security or in any other
manner which would involve a violation of any of the regulations of the Board
of Governors of the Federal Reserve System.

 

6.07.        Title to Assets.

 

(a) 
Except as set forth on Exhibit 6.07(a) attached hereto, the
Company has good and marketable title to its owned assets, including, without
limitation, those reflected on the most recent

 

21

 

consolidated balance sheet of the Company included in the Financial Statements
or acquired since the date of such balance sheet (other than those since
disposed of in the ordinary course of business), free and clear of all security
interests, liens, charges and other encumbrances except Permitted Liens.

 

(b)             With
respect to the assets of the Company that are leased, the Company is in
material compliance with all such leases, and the Company enjoys peaceful and
undisturbed possession under all such leases.

 

(c)             The
plants, buildings, machinery, equipment, structures, fixtures, vehicles and
other property owned, used or leased by the Company have no material defects,
are in good operating condition and repair and have been reasonably maintained
consistent with standards generally followed in the industry (giving due
account to the age and length of use of same, ordinary wear and tear excepted),
are suitable for their present uses and are structurally sound, will to the
Knowledge of the Company not likely require major overhaul or repair in the in
foreseeable future, and conform in all respects with will applicable laws,
ordinances and regulations.

 

(d)             All
leases, subleases and other occupancy agreements to which the Company is a
party are set forth on Exhibit 6.07(d) (the “Leases”).  Except as set forth in Exhibit 6.07(d),
the Company does not lease any Real Property as landlord.  The Leases are in good standing and are
valid, binding and enforceable in accordance with their respective terms, and
there does not exist under any such Lease any default by the Company or, to the
best knowledge of the Company, by any other Person, or any event that, with
notice or lapse of time or both, would constitute a default by the Company or,
to Knowledge of the Company, by any other Person.  The Company enjoys peaceful and undisturbed
possession under the Leases.  All rent
and other charges currently due and payable under the Leases have been
paid.  The Company is the holder of the
lessee’s interest under the Leases and except as set forth in Exhibit
6.07(d), neither has assigned the Leases nor subleased all or any portion
of the premises leased thereunder.  The
Company has not made any alterations, additions or improvements to the premises
leased under the Leases that are required to be removed (or of which lessor
could require removal) at the termination of the respective Lease terms.

 

(e)             The
Real Property, and the present use of the Real Property, are not in violation
of, or out of conformity with, (i) any zoning, subdivision, building,
building code, health, safety, traffic, environmental, flood control, wetlands,
or other land use laws, statutes, ordinances, rules, regulations, variances,
permits or orders of any local state or federal authorities or any other
governmental entity having jurisdiction over the Real Property, including,
without limitation, the Americans with Disabilities Act of 1990, as amended, or
(ii) any Real Property Liens affecting the Real Property.

 

6.08.        Financial Information.  (a) 
Attached hereto as Exhibit 6.08(a) are (i) the audited
combined balance sheet of the Company for and as of the end of the fiscal year
ended December 31, 2001 and the related audited combined statements of
income and retained earnings and of cash flows for the fiscal year then ended,
certified by PricewaterhouseCoopers, the Company’s independent public
accountants and (ii) the unaudited consolidated balance sheet of the Company as
of September 30, 2002 and the related unaudited consolidated statements of
income and retained earnings and of cash flows for the 9 month period then
ended (including the notes thereto, collectively the “Financial Statements”).  All Financial Statements have been prepared
in accordance with GAAP (except for the absence of footnotes and subject to
normal year-end adjustments and accruals on the Financial Statements that are
unaudited) and consistent with prudent business management practices, are
complete in all material respects and fairly present the financial position of
the Company as of the respective dates thereof and results of operations and
changes in financial position of the Company for each of the periods then
ended.

 

22

 

(b)           Since
September 30, 2002, there has been no material adverse change in the
business, assets, liabilities, condition (financial or other, including but not
limited to a change in the nature or terms of the Company’s relationship with
either a customer or supplier which change has effected or may reasonably be
expected to materially adversely effect the Company’s financial position), or
in the results of operations or prospects of the Company.

 

(c)           The
Company does not have any liability, contingent or otherwise, not disclosed in
the Financial Statements or in the notes thereto that could, together with all
such other liabilities, have a Material Adverse Effect, nor does the Company
have any reasonable grounds to know of any such liability.

 

(d)           A
schedule of Indebtedness for Money Borrowed of the Company as of the
Closing Date (including Capital Leases) is attached hereto as Exhibit 6.08(d).

 

6.09.        Taxes.  The Company
has accurately prepared and timely filed all federal, state and other tax
returns required by law to be filed by it, or is under valid extension
effective as to such filings, and all taxes shown to be due and all additional
assessments have been paid or provision made therefor including, without
limitation, all taxes which the Company is obligated to withhold from amounts
owing to employees, creditors and third parties.  To the Knowledge of the Company, no
additional assessments or adjustments pending or threatened against the Company
for any period, nor is there any basis for any such assessment or
adjustment.  The Company is not currently
the subject of an audit by the Internal Revenue Service or other comparable
governmental agency.  The charges,
accruals and reserves on the books of the Company in respect of taxes or other
governmental charges are, in the opinion of the Company, adequate.  Neither the Company nor any of its present or
former shareholders has filed an election pursuant to Section 1362 of the
Code that the Company be treated as an S Corporation.  The Company is not subject to any claim for
taxes, and no liability currently for any taxes will be imposed on the Company,
in connection with or as a result of its status as a successor to, or
subsidiary of, AremisSoft.

 

6.10.        ERISA. (a)  Each “employee
benefit plan” within the meaning of the Employee Retirement Income Security Act
of 1974, as amended (“ERISA”), that is maintained or contributed to by the
Company or any entity that would be considered to be under common control with
the Company under Section 414 of the Code (each such entity an “ERISA
Affiliate”) has been maintained in substantial compliance with its terms and
with the applicable requirements prescribed by any and all statutes, orders,
rules and regulations, including but not limited to ERISA and the Code.

 

(b)           Each
employee benefit plan which is intended to be qualified under Section 401(a)
of the Code is so qualified and has been so qualified during the period from
its adoption to date, and each trust forming a part thereof is exempt from tax
pursuant to Section 501(a) of the Code.

 

(c)           Neither the Company nor any ERISA Affiliate has ever
maintained or contributed to a “multiemployer plan” (as defined in Section 3(37)
of ERISA) or any employee benefit plan subject to Title IV of ERISA or Section 412
of the Code.

 

6.11.        Transactions with Affiliates.  Except as set forth on Exhibit 6.11
attached hereto, specifically contemplated by this Agreement, there are no loans,
leases, royalty agreements or other continuing transactions between the
Company, on the one hand, and (i) any officer of the Company or a member of
such officer’s family, or (ii) any director of the Company or a member of such
director’s family or (iii) any Significant Stockholder, on the other hand
..  Any loans, leases, royalty agreements
or other continuing transaction between the Company, on the one hand, and any
other stockholder of the

 

23

 

Company, on the other hand, has been in arms-length commercially
reasonably transactions with terms no more favorable than those negotiated with
a third party.

 

6.12.        Assumptions or Guaranties of
Indebtedness of Other Persons. 
Except as provided in Exhibit 6.12 or Section 7.02(b),
the Company has not assumed, guaranteed, endorsed or otherwise become directly
or contingently liable on (including, without limitation, liability by way of
agreement, contingent or otherwise, to purchase, to provide funds for payment,
to supply funds to or otherwise invest in the debtor or otherwise to assure the
creditor against loss) any Indebtedness of any other Person.

 

6.13.        Loans to Other Persons.  Except as provided in Section 7.02(f),
the Company has not made any loans or advances to any Person which is
outstanding on the date of this Agreement, nor is the Company obligated or
committed to make any such loans or advances.

 

6.14.        Securities Act. 
Neither the Company nor anyone acting on its behalf has offered or will
offer to sell the Notes, the Warrants, or the Warrant Shares or similar
securities to, or solicit offers with respect thereto from, or enter into any
preliminary conversations or negotiations relating thereto with, any Person, so
as to bring the issuance and sale of the Notes, the Warrants or the Warrant
Shares under the registration provisions of the Securities Act.

 

6.15.        Disclosure. 
Neither this Agreement, the Financial Statements, the Operative
Documents, nor any other agreement, document, certificate or written statement
furnished to any Purchaser or the Purchasers’ special counsel by or on behalf
of the Company or any of its Subsidiaries in connection with the transactions
contemplated hereby or thereby contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading in light of the circumstances under
which they were made.  There is no fact
within the knowledge of the Company or any of its executive officers which has
not been disclosed herein and which has a Material Adverse Effect.

 

6.16.        No Brokers or Finders.  Except as set forth in Exhibit 6.16
attached hereto, which fees will be paid in full
by the Company as of the Closing, no Person had, has or will have, as a result
of the transactions contemplated by this Agreement, any right, interest or
valid claim against or upon the Company, any Subsidiary or any Purchaser for
any commission, fee or other compensation as a finder or broker because of any
act or omission by the Company or any of its or their agents.

 

6.17.        Other Agreements of Officers.  To the Knowledge of the Company, no officer
or key employee of the Company is a party to or bound by any agreement,
contract or commitment, or subject to any restrictions, particularly but
without limitation in connection with any previous employment of any such
person, which has a Material Adverse Effect. 
To the Knowledge of the Company, no officer or key employee of the
Company has any present intention of terminating his employment with the
Company and the Company has no present intention of terminating any such
employment.

 

6.18.        Capitalization of the Company;
Status of Capital Stock.  The
Company has a total authorized capitalization consisting of 85,000,000 shares
of Common Stock, of which 40,000,000 shares are issued and outstanding, and
15,000,000 shares of Preferred Stock, of which no shares are issued and
outstanding.  A complete list of the
outstanding capital stock of the Company and the names in which such capital
stock of the Company is registered on the books of the Company is set forth on Exhibit 6.18
attached hereto.  All the outstanding
shares of capital stock of the Company have been duly authorized, are validly
issued and are fully paid and nonassessable. 
The Warrant Shares, when issued against payment of the purchase price
for such shares, will be duly authorized, validly issued and fully paid and
nonassessable.  Except for the Warrants
and as otherwise set forth on Exhibit 6.18, there are no options,

 

24

 

warrants or rights to purchase shares of capital stock or other
securities of the Company authorized, issued or outstanding, nor is the Company
obligated in any other manner to issue shares of its capital stock or other
securities.  Except as otherwise set
forth on Exhibit 6.18 or as set forth in this Agreement, or the
Investors’ Rights Agreement, there are no restrictions on the transfer of
shares of capital stock of the Company other than those imposed by relevant
state and federal securities laws. 
Except as set forth in this Agreement, in the Warrants, in the Investors’
Rights Agreement or as otherwise set forth on Exhibit 6.18, no
holder of any security of the Company is entitled to preemptive or similar statutory
or contractual rights, either arising pursuant to any agreement or instrument
to which the Company is a party, or which are otherwise binding upon the
Company.  The offer and sale of all
shares of capital stock and other securities of the Company issued before the
Closing complied with or were exempt from all federal and state securities
laws.

 

6.19.        Capital Stock of Subsidiaries.
Except as set forth in Exhibit 6.19 attached hereto, the Company owns
all of the outstanding capital stock of each of the Subsidiaries, beneficially
and of record, free and clear of all liens, encumbrances, restrictions and
claims of every kind.  All the
outstanding shares of capital stock of each of the Subsidiaries have been duly
authorized, are validly issued and are fully paid and nonassessable.  There are no options, warrants or rights to
purchase shares of capital stock or other securities of any of the Subsidiaries
authorized, issued or outstanding, nor is any Subsidiary obligated in any other
manner to issue shares of its capital stock or other securities.

 

6.20.        Labor Relations. 
To the Knowledge of the Company, no labor union or any representative
thereof has made any attempt to organize or represent employees of the
Company.  There are no unfair labor
practice charges, pending trials with respect to unfair labor practice charges,
pending material grievance proceedings or adverse decisions of a Trial Examiner
of the National Labor Relations Board against the Company or any of its
Subsidiaries.  Furthermore, to the Knowledge
of the Company, relations with employees of the Company are good and there is
no reason to believe that any material labor difficulties will arise in the
foreseeable future.

 

6.21.        Insurance. The Company has insurance covering its
properties and business adequate and customary for the type and scope of its
properties and business, but in any event in amounts sufficient to prevent the
Company from becoming a co-insurer.

 

6.22.        Books and Records.  The books of account, ledgers, order books,
records and documents of the Company accurately and completely reflect all
material information relating to the business of the Company, the nature,
acquisition, maintenance, location and collection of the assets of the Company,
and the nature of all transactions giving rise to the obligations or accounts
receivable of the Company.

 

6.23.        Registration Rights.  Other than pursuant to the terms of the
Stockholders’ Agreement, no Person has demand or other rights to cause the
Company to file any registration statement under the Securities Act relating to
any securities of the Company or any right to participate in any such
registration statement.

 

6.24.        Other Agreements.  Except as explicitly disclosed and described
in the Financial Statements or as set forth on Exhibit 6.24
attached hereto, the Company is not party to any written or oral contract or
instrument or other corporate restriction the due performance of which
individually or in the aggregate could have a Material Adverse Effect.  Except as specifically contemplated by this
Agreement or as set forth on Exhibit 6.24 attached hereto the
Company is not a party to or otherwise bound or affected by any written or
oral:

 

25

 

(a)           vendor
or services contract or agreement whose value is equal to or in excess of
$50,000 for any year (except for contracts which are not material to the
business of the Company);

 

(b)           [Reserved]

 

(c)           [Reserved]

 

(d)           contract
for the future purchase of fixed assets or for the future purchase of materials,
supplies or equipment in excess of its normal operating requirements and that
requires payments, in the aggregate, of $50,000 or more;

 

(e)           contract
for the employment of any officer, individual, employee or other Person on a
full-time or consulting basis which provides for total compensation (salary and
bonus) in excess of $150,000 for any twelve-month period;

 

(f)            bonus, pension, profit-sharing,
retirement, hospitalization, insurance, stock purchase, stock option or similar
plan, contract or understanding pursuant to which benefits are provided to any
employee of the Company (other than group insurance plans and expense
reimbursements applicable to employees generally);

 

(g)           agreement
or indenture relating to the borrowing of money or to the mortgaging or
pledging of, or otherwise placing a lien or security interest on, any asset of
the Company;

 

(h)           guaranty
of any obligation for borrowed money or otherwise;

 

(i)            voting
trust, stockholders agreement, pledge agreement or buy-sell agreement relating
to any securities of the Company which shall be in effect after the Closing
except to the extent contemplated hereunder or in the Stockholders’ Agreement;

 

(j)            agreement,
or group of related agreements with the same party or any group of affiliated
parties, under which the Company has advanced or agreed to advance money or has
agreed to lease any property as lessee or lessor;

 

(k)           agreement
or obligation (contingent or otherwise) to issue or sell or to repurchase or
otherwise acquire or retire any share of its capital stock or any of its other
equity securities, other than stock options or agreements for the repurchase of
shares of Common Stock held by any employee or consultant of the Company at
cost upon the termination of such employee’s or consultant’s services to such
entity;

 

(l)            other
contract or group of related contracts with the same party involving more than
$50,000 and continuing over a period of more than six months from the date or
dates thereof (including renewals or extensions optional with another party),
which contract or group of contracts is not terminable by the Company without
penalty upon notice of thirty (30) days, or less, but excluding any contract or
group of contracts with a vendor to, or customer of, the Company for the sale,
lease or rental of their respective products or services if such contract or
group of contracts was entered into in the ordinary course of business; or

 

(m)          other
contract, instrument, commitment, plan or arrangement, a copy of which would be
required to be filed with the Commission as an exhibit to a registration
statement on Form S-1 if the Company were registering securities under the
Securities Act.

 

26

 

The Company and, to the Knowledge of the Company, each other party
thereto have in all material respects performed all the obligations required to
be performed by them to date, have received no notice of default and are not in
material default under any lease, agreement or contract now in effect to which
the Company is a party or by which the Company or its respective property may
be bound.  The Company has no present
expectation or intention of not fully performing all its obligations under each
such lease, contract or other agreement, and to the Knowledge of the Company
there is no material breach or anticipated material breach by the other party
to any contract or commitment to which the Company is a party.

 

6.25.  Environmental
Matters.  To the Knowledge of the
Company, neither the Company nor any of its owned, leased or operated assets,
is currently in violation of, or subject to any existing, pending or,
threatened investigation or inquiry by any governmental authority or to any
remedial obligations under any Environmental Laws, and this representation and
warranty would continue to be true and correct following disclosure to the
applicable governmental authorities of all relevant facts, conditions and
circumstances, if any, pertaining to such assets and operations of the Company.  To the Knowledge of the Company, none of the
owned, leased or operated assets of the Company have been used in a manner that
would be in violation of any Environmental Laws, and to the Knowledge of the
Company, the Company has not received any written complaint, order, citation or
notice with regard to any alleged violation of any Environmental Laws with
respect to such assets.  The Company is
not required to obtain any permits, licenses or similar authorizations to
construct, occupy, operate or use any buildings, improvements, fixtures and
equipment owned, leased or operated by the Company by reason of any
Environmental Laws.  None of the assets
owned, leased or operated by the Company are on any federal or state “Superfund”
list or subject to any environmental related liens.

 

6.26.        Customers, Vendors and Suppliers.  None of the ten (10) largest customers
of the Company in the manufacturing segment (based on total sales volume) as
set forth on Exhibit 6.26, the ten (10) largest customers of the Company
in the hospitality segment (based on total sales volume) as set forth on Exhibit
6.26, the ten (10) largest vendors or suppliers of merchandise or
supplies in the manufacturing segment (based on total purchase volume), or the
ten (10) largest vendors of suppliers of merchandise or supplies in the
hospitality segment (based on total purchase volume) to the Company has
cancelled or otherwise terminated or to the Knowledge of the Company and except
as set forth in Exhibit 6.26, threatened to cancel or otherwise
terminate its relationship with the Company, nor to the Knowledge of the
Company has any such customer, vendor or supplier indicated an intent or desire
to materially decrease its sales volume or purchase volume, as the case may be,
or change its relationship with the Company, including a material change in the
pricing terms relating to such relationship.

 

6.27.        U.S. Real Property Holding
Corporation.  The Company does
not now, nor will it immediately after the Closing, hold any “United States
real property interest” to the extent such interest shall cause the Company to
be treated as a “United States real property holding corporation” as those
terms are defined in Section 897(c)(2) of the Code and Section 1.897-2(b)
of the Regulations promulgated by the Internal Revenue Service.

 

6.28.        No Violations. 
Neither the execution and delivery of this Agreement and the Operative
Documents, nor the consummation of any of the transactions contemplated hereby
or thereby, by the Company, will (a) violate, conflict with, or result in
a breach or default under any provision of the Certificate of Incorporation or
By-Laws of the Company, (b) violate Applicable Laws, or (c) result in
a violation or breach by the Company of, conflict with, constitute (with or
without due notice or lapse of time or both) a default by the Company (or give
rise to any right of termination, cancellation, payment or acceleration) under,
or result in the creation of any lien upon any of the properties or assets of
the

 

27

 

Company under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, franchise, permit, agreement, lease,
franchise agreement or other instrument or obligation to which the Company is a
party, or by which it or any of its respective properties or assets may be
bound.

 

6.29.  Intellectual
Property.

 

(a)           Exhibit 6.29(a)
sets forth a complete list of all Company Registered Intellectual Property and
all material Company Intellectual Property and specifies the jurisdictions in
which such Company Registered Intellectual Property has been issued or
registered or in which an application for such issuance and registration has
been filed, including the respective registration or application numbers and
the names of all registered owners, together with a list of all software
products currently marketed by the Company and an indication as to which, if
any, of such software products have been registered for copyright protection
with the United States Copyright Office and any foreign offices and by whom
such items have been registered.  Exhibit 6.29(a)
also sets forth a complete list of any requests the Company has received to
make any such registration, including the identity of the requestor and the
item requested to be so registered and the jurisdiction for which such request
has been made.

 

(b)           Exhibit 6.29(b)
sets forth a complete list of all licenses, sublicenses and other agreements
requiring payments equal to or in excess of $50,000 in any year to which the
Company is a party and pursuant to which the Company or any other Person is
authorized to use any Company Intellectual Property, and includes the date
thereof and identity of all parties thereto.

 

(c)           Exhibit
6.29(c) sets forth any agreement pursuant to which a third party has
licensed or transferred any Intellectual Property to the Company (other than
licenses of Commercial Software Rights) and includes the date thereof and
identity of all parties thereto.  Except
as set forth in Exhibit 6.29(c), the Company is in compliance with
any agreements relating to the use of the Intellectual Property of any third
party.

 

(d)           The
execution and delivery of this Agreement by the Company, and the consummation
of the transactions contemplated hereby, will not cause the Company to be in
violation or default in any material respect under any license, sublicense or
agreement listed on Exhibit 6.29(b) or Exhibit 6.29(c),
nor entitle any other party to any such license, sublicense or agreement to
terminate or modify such license, sublicense or agreement.

 

(e)           The Company has not been sued or charged as a
defendant in any claim, suit, action, or proceeding which involves a claim of
infringement of any Intellectual Property of any third party and which has not
been finally terminated prior to the date hereof nor does the Company have any
knowledge of any such charge or claim or any infringement liability with
respect to, or infringement or violation by, the Company of any Intellectual
Property of another.  No Company Intellectual
Property or product of the Company is subject to any outstanding decree, order,
judgment or stipulation restricting in any manner the licensing of products by
the Company.

 

(f)            Each
item of Company Registered Intellectual Property is valid and subsisting.  All necessary registration, maintenance and
renewal fees currently due in connection with such Company Registered
Intellectual Property have been made and all necessary documents, recordations
and certificates in connection with such Company Registered Intellectual
Property have been filed with the relevant patent, copyright, trademark or
other authorities in the United States or foreign jurisdictions, as the case
may be, for the purposes of maintaining such Company Registered Intellectual
Property.

 

28

 

(g)           Except as set forth on Exhibit
6.29(g), the Company is the owner or licensee of, with all right, title,
and interest in and to each item of Company Intellectual Property, free and
clear of any liens, pledges, charges, claims, restrictions on transfer,
mortgages, security interests or other encumbrances of any sort, and has rights
(and the Company is not contractually obligated to pay any compensation, other
than commercially reasonable licensing fees and royalties to any third party in
respect thereof) to the use thereof (including without limitation any right to
copy, modify or distribute) or the material covered thereby in connection with
the services or products in respect of which the Company Intellectual Property
is being used.  The Company does not use
nor is it licensed to use, and none of its products include or incorporate,
(i) any software distributed free of charge on a trial basis for which a
paid license would be required and has not been obtained for commercial
distribution or (ii) any software whose ownership has been retained by a
third party who controls its distribution. The Company Intellectual Property
does not include any Publicly Available Software and the Company has not used
Publicly Available Software in whole or in part in the development of any part
of the Company Intellectual Property in a manner that may subject the Company
Intellectual Property in whole or in part, to all or part of the license
obligations of any Publicly Available Software.

 

(h)           Except as set forth on Exhibit
6.29(h) all Company Intellectual Property is currently owned and held by
the Company or by a Significant Subsidiary and not by any of its
subsidiaries.  To the extent that any
material Company Intellectual Property has been developed or created by a third
party for the Company, the Company has a written agreement with such third
party with respect thereto, and the Company thereby either (i) has
obtained ownership of, and is the exclusive owner of, or (ii) has obtained
a license (sufficient for the conduct of its business as currently conducted
and as proposed to be conducted) to all such third party’s Intellectual
Property in such work, material or invention by operation of law or by valid
assignment.

 

(i)            The Company has not
transferred ownership of, or granted any exclusive license with respect to, any
Intellectual Property that is or was material Company Intellectual Property, to
any third party and except for licenses granted by the Company on commercially
reasonable terms no third party has the right to distribute or license the
Company Intellectual Property identified on Schedule 6.29(a) and the
Company has not escrowed any Company Intellectual Property source code that is
pursuant to any agreement or arrangement that grants a third party the right to
distribute or license such source code.

 

(j)            All contracts,
licenses and agreements relating to the Company Intellectual Property are in
full force and effect. The Company is in material compliance with, and has not
breached any term of such contracts, licenses and agreements and all other
parties to such contracts, licenses and agreements are in compliance with, and
have not breached any term of, such contracts, licenses and agreements.

 

(k)           No
claims with respect to Company Intellectual Property have been asserted or, to
the Company’s knowledge, are threatened by any Person, nor are there any valid
grounds for any bona fide claims or infringement liability (i) to the
effect that the manufacture, sale, licensing or use of any of the products of
the Company infringes on or misappropriates any Intellectual Property or
constitutes unfair competition or trade practices under the laws of any
jurisdiction; (ii) against the use by the Company of any Intellectual
Property used in the business of the Company as currently conducted; or
(iii) challenging the ownership by the Company, validity or effectiveness
of any Company Intellectual Property.  To
the Company’s knowledge, there is no unauthorized use, infringement or
misappropriation of any Company Intellectual Property by any third party,
including any employee or former employee of the Company.

 

29

 

(l)            The Company has taken
reasonable steps to protect the Company’s respective rights in the Company’s
respective confidential information and trade secrets that it wishes to protect
or any trade secrets or confidential information of third parties provided to
the Company, and, without limiting the foregoing, the Company has and enforces
a policy requiring each employee and contractor to execute a proprietary
information/nondisclosure agreement substantially in the form provided to
Purchasers and, except as set forth on Exhibit 6.29(l), all current and
former employees and contractors of the Company have executed such an agreement.

 

(m)          Except as set forth on Exhibit 6.29(m),
none of the Company’s professional services agreements with customers,
agreements with merchants, agreements with outside consultants for the
performance of professional services on the Company’s, or customers’ behalf,
nor any agreement or license with any end user or reseller of the Company’s
products, confers upon any party other than the Company any ownership right
with respect to any Intellectual Property developed in connection with such
agreement or license.

 

(n)           The Company has not
breached or violated the terms of any license, sublicense, or other agreement
relating to any Commercial Software Rights, and the Company has a valid right
to use such Commercial Software Rights under such licenses and agreements.  The Company is not nor will be as a result of
the execution and delivery of this Agreement or the performance of the Company’s
obligations hereunder, in violation of any license, sublicense, or agreement
relating to Commercial Software Rights. 
No claims with respect to the Commercial Software Rights have been
asserted or, to the knowledge of the Company, are threatened by any Person
against the Company, nor to the knowledge of the Company are there any valid
grounds for any bona fide claims (i) to the effect that the use of any product
as now used by the Company infringes on any Intellectual Property, (ii) against
the use by the Company of any Company Intellectual Property or (iii)
challenging the validity or effectiveness of any of the rights of the Company
to use Commercial Software Rights.  There
is no unauthorized use, infringement, or misappropriation of any of the
Commercial Software Rights by the Company or any employee or former employee
thereof.  No Commercial Software Right is
subject to any outstanding order, judgment, decree, stipulation, or agreement
restricting in any manner the use thereof by the Company.

 

6.30.        Security Interests.  Upon consummation of the transactions
contemplated by this Agreement and except as set forth on Exhibit 6.30(a)
attached hereto, no person other than a Bank, if any, shall have a security
interest in any or all of the Collateral (as such term is defined in the
Security Agreement) senior in right to that security interest granted to the
Purchasers pursuant to the Security Agreement. The Collateral is physically
located solely at the locations set forth on Exhibit 6.30(b) attached
hereto with the exception of motor vehicles owned or leased by the Company and
with the exception of tools, equipment and machinery temporarily on location at
sites where the Company is performing work.

 

6.31.        Claims.  Except as
set forth on Exhibit 6.31, there are no claims outstanding, pending or
threatened, including but not limited to, Administrative Claims, Disputed
Claims and Unsecured Claims, (all as defined in the Plan) under the First
Amended Plan of Reorganization of AremisSoft Corporation Jointly Proposed by
Debtor and Softbrands, Inc, dated as of May 24, 2002 and effective as of August
2, 2002 (the “Plan”) and except as set forth in the Plan the Company has no
liability for any claims against AremisSoft or any subsidiaries of AremisSoft
by reason of transferee or successor liability or otherwise.

 

6.32.        Knowledge. 
Where any representation or warranty contained in this Agreement is
expressly qualified by reference to the “Knowledge of the Company” or similar
language, the Company confirms that (i) the Company has in effect procedures
that are reasonably designed to inform the

 

30

 

Company fully as to the matters that are the subject of such
representation and warranty and that the Company has observed such procedures
and (ii) the Company has made due and diligent inquiry as to the matters that
are subject to such representation and warranty.

 

ARTICLE VII

 

COVENANTS OF THE COMPANY

 

7.01.        Affirmative Covenants of the Company Other
Than Reporting Requirements.  Without
limiting any other covenants and provisions hereof, the Company covenants and
agrees that, as long as any of the Securities are outstanding (except that
(1) the provisions of Sections 7.01(a), (c), (d), (e), (g), (h), (i),
(m), (n), (o), (p), (q), (r), (s), (t), (v) and (w) shall terminate upon
repayment in full of the aggregate outstanding principal balance of the Notes
together with all interest and premium, if any, due thereon, and (2) the
remainder of the provisions of this Section 7.01 shall terminate upon the later
to occur of either (a) (1) above and (b) the earlier to occur of a Qualified
IPO and the Company achieving and maintaining Public Company Status for a
period of three consecutive months), it will perform and observe the following
covenants and provisions and will cause each Subsidiary to perform and observe
such of the following covenants and provisions as are applicable to such
Subsidiary:

 

(a)           Punctual Payment.  Pay the principal of, premium, if any, and
interest on each of the Notes within the time periods and at the place and in
the manner provided in the Notes and herein.

 

(b)           Payment of Taxes and Trade Debt.  Pay and discharge, and cause each Subsidiary
to pay and discharge, all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or business, or upon any
properties belonging to it, prior to the date on which penalties attach
thereto, and all lawful claims which, if unpaid, might become a lien or charge
upon any properties of the Company or any Subsidiary, provided that neither the
Company nor any Subsidiary shall be required to pay any such tax, assessment,
charge, levy or claim which is being contested in good faith and by appropriate
proceedings if the Company or the Subsidiary concerned shall have set aside on
its books adequate reserves with respect thereto.  Pay and cause each Subsidiary to pay, when
due, or in conformity with customary trade terms, all lease obligations, all
trade debt, and all other Indebtedness incident to the operations of the
Company or the Subsidiaries, except such as are being contested in good faith
and by appropriate proceedings if the Company or the Subsidiary concerned shall
have set aside on its books adequate reserves with respect thereto.

 

(c)           Maintenance of Insurance.  Maintain, and cause each Subsidiary to
maintain, insurance with responsible and reputable insurance companies or
associations in such amounts and covering such risks as is usually carried by
companies engaged in similar businesses and owning similar properties in the
same general areas in which the Company or such Subsidiary operates and in any
event in amounts sufficient to prevent the Company or such Subsidiary from
becoming a co-insurer.  The Company and
the Subsidiaries will add the Purchasers as a notice party for each such policy
and shall request that the issuer of each policy provide the Purchasers with
ten (10) days’ notice before such policy is terminated (for failure to pay
premiums or otherwise) or assigned before any change is made in the beneficiary
thereof.

 

(d)           Preservation of Corporate Existence.  Preserve and maintain, and cause each Significant
Subsidiary to preserve and maintain, its corporate existence, rights,
franchises and privileges in the jurisdiction of its incorporation, and qualify
and remain qualified, and cause each Significant Subsidiary to qualify and
remain qualified, as a foreign corporation in each jurisdiction in which such

 

31

 

qualification is necessary or desirable in view of its business and
operations or the ownership of its properties, except where the failure to
remain so qualified would not, either individually or in the aggregate, have a
Material Adverse Effect; provided, however, that nothing herein contained shall
prevent any merger, consolidation or transfer of assets permitted by subsection
7.02(f).  Preserve and maintain, and
cause each Subsidiary to preserve and maintain, all licenses and other rights
to use patents, processes, licenses, trademarks, trade names, inventions,
intellectual property rights or copyrights owned or possessed by it and
necessary to the conduct of its business.

 

(e)           Compliance with Laws.  Comply, and cause each Subsidiary to comply,
with all applicable laws, rules, regulations and orders of any governmental
authority, the noncompliance with which could have a Material Adverse Effect.

 

(f)            Inspection Rights.  At any reasonable time and from time to time,
permit the Purchasers or any of their agents or representatives, to examine and
make copies of and extracts from the records and books of account of, and visit
and inspect the properties of, the Company and any Subsidiary, and to discuss
the affairs, finances and accounts of the Company and any Subsidiary with any
of their officers or directors and independent accountants.  All reasonable out-of-pocket expenses of the
Purchasers (or their agents or representatives), the Company or any Subsidiary
incurred in connection with such inspection rights shall be borne by the
Company.

 

(g)           Keeping of Records and Books of Account.  Keep, and cause each Subsidiary to keep,
adequate records and books of account, in which complete entries will be made
in accordance with GAAP, reflecting all financial transactions of the Company
and each Subsidiary, and in which, for each fiscal year, all proper reserves
for depreciation, depletion, obsolescence, amortization, taxes, bad debts and
other purposes in connection with its business shall be made.

 

(h)           Maintenance of Properties, Etc.  Maintain and preserve, and cause each
Subsidiary to maintain and preserve, all of its properties, necessary or useful
in the proper conduct of its business, in good repair, working order and
condition, ordinary wear and tear excepted.

 

(i)            Compliance with ERISA.  Comply, and cause each Subsidiary to comply,
with all minimum funding requirements applicable to any Employee Benefit Plan, and
comply, and cause each Subsidiary to comply, in all other material respects
with the provisions of ERISA and the Code, and the rules and regulations
thereunder, which are applicable to any such plan.  Neither the Company nor any Subsidiary will
permit any event or condition to exist which could permit any such plan to be
terminated under circumstances which would cause the lien provided for in
Section 4068 of ERISA to attach to the assets of the Company.

 

(j)            Attendance at Board Meetings.  At any time at which a nominee of the
Purchaser Representative is not a member of the board of directors or any
committee of the Company as provided in this Agreement, permit such Purchaser
Representative or its designee to have one observer attend each meeting of the board
of directors of the Company and any committee thereof.  The Company will send to any such Purchaser
Representative and its designee the notice of the time and place of any such
meeting in the same manner and at the same time as notice is sent to the directors
or committee members, as the case may be; provided, however, that each such
Purchaser Representative and its designee shall always receive at least three
(3) days’ prior notice of any meeting. 
The Company shall also provide to such Purchaser Representative copies
of all notices, reports, minutes, consents and other documents at the time and
in the manner as they are provided to the board of directors or
committees.  The Company shall reimburse
each such Purchaser Representative for all reasonable costs incurred by the
Purchaser

 

32

 

Representative or its designee in connection with traveling to and from
and attending meetings of the Company’s board of directors and committees.

 

(k)           Board of Directors and Committees.  The Purchaser Representative shall at all
times be entitled to appoint one representative to the board of directors of
the Company. The board of directors of the Company shall meet at least four (4)
times per calendar year. The Company shall at all times maintain a Compensation
Committee and an Audit Committee of its board of directors. The Purchaser
Representative shall at all times be entitled to appoint one representative to
each of the Compensation Committee and the Audit Committee. The Purchaser
Representative shall at all times have a representative on each other committee
of the board of directors unless and only for so long as they waive such right
with respect to a specific committee or they have waived the right to appoint
one representative to the board of directors of the Company.  The Company shall reimburse the Purchaser
Representative and its appointees for all reasonable costs incurred by them in
connection with traveling to and from and attending meetings of the board of
directors and committees of the board of directors of the Company, in addition
to any directors fees regularly paid to any members of the Company’s board of
directors; provided, however, that in the case of CRP and its appointees, all
such reimbursements and fees shall be payable to Capital Resource Management,
Inc. and, to the extent legally possible, compensation in the form of stock
options shall be issued to Capital Resource Management, Inc., or should that
not be legally possible, such stock options shall, to the extent legally
possible, be transferable at the discretion of the holder thereof.

 

(l)            U.S. Real Property Holding
Corporation.  The Company shall
conduct its business, and do or cause to be done any and all actions as are
necessary, so that the Company shall not at any time be a “United States real
property holding corporation” as defined in Section 897(c)(2) of the Code
and Section 1.897-2(b) of the Regulations promulgated by the Internal
Revenue Service.

 

(m)          Preferred Stock Subordination
Agreement.  Upon the
issuance of any shares of Preferred Stock having accruing dividends or terms
which allow for the redemption of such stock, the Company shall cause the
holders of Preferred Stock to enter into a subordination agreement (the “Preferred
Stock Subordination Agreement”) such agreement to be in the form of Exhibit
7.01(m) attached hereto.

 

(n)           Proceeds of Liquidating Trust.  If an Event of Default shall have occurred
and shall not have been rescinded or annulled pursuant to Section 8.02, any
proceeds due or payable to the Company by the Liquidating Trust pursuant to the
Plan, less any amounts paid with respect to applicable taxes on such proceeds,
shall be first paid to the Purchasers as an optional redemption pursuant to the
terms of Section 2.06(c) until the Notes are repaid in full.

 

(o)           Financial Covenants.

 

(i)            Minimum
EBITDA.  Commencing with and
including the fiscal quarter ending March 31, 2003, the Company will maintain,
on a consolidated basis, measured at the
end of each fiscal quarter, EBITDA for the previous twelve (12) months
of not less than those amounts set forth next to the corresponding fiscal
quarters set forth on Schedule 7.01(o)(i) attached hereto; provided,
that (a) for the quarter ending March 31, 2003 EBITDA for the previous three
(3) months shall be measured; (b) for the quarter ending June 30, 2003 EBITDA
for the previous six (6) months shall be measured and (c) for the quarter
ending September 30, 2003 EBITDA for the previous nine (9) months shall be
measured.

 

33

 

(ii)           Fixed
Charge Coverage Ratio.  Commencing on
and including the fiscal quarter ending March 31, 2003, the Company will
maintain, on a consolidated basis, measured at the end of each fiscal quarter,
a Fixed Charge Coverage Ratio for the previous twelve (12) months of not less
than the amounts set forth next to the corresponding fiscal quarters set forth
on Schedule 7.01(o)(ii) attached hereto; provided, that (a) for the
quarter ending March 31, 2003 Fixed Charge Coverage Ratio for the previous
three (3) months shall be measured; (b) for the quarter ending June 30, 2003
Fixed Charge Coverage Ratio for the previous six (6) months shall be measured
and (c) for the quarter ending September 30, 2003 Fixed Charge Coverage Ratio
for the previous nine (9) months shall be measured.

 

(p)           Ownership of Intellectual Property.  The Company shall transfer or cause to be
transferred, no later than June 30, 2003, all of its rights in any Company
Intellectual Property, whether currently held in the name of the Company or any
of its Subsidiaries, to Softbrands Licensing, Inc., a Delaware corporation and
wholly owned subsidiary of the Company.

 

(q)           Non-disclosure and Developments
Agreements.  The Company shall
cause each new employee and each employee who is granted options to purchase
shares of capital stock of the Company to execute a non-disclosure and
developments agreement in a form consistent with industry practice.

 

(r)            Debenture.  The
Company shall deliver to and file with the Registrar of Companies in the United
Kingdom an original fully-executed Debenture, together with an executed
Form 395 and an executed counterpart of this Agreement within ten (10)
Business Days of the Closing and deliver a copy of such filing to the Purchasers
and their special counsel.

 

(s)           Certificates. 
The Company shall deliver to the Purchaser Representative the stock
certificates identified on Schedule 7.01(s) within thirty (30) Business
Days of the Closing.  In the event stock
certificates are issued to the Company after the date of this Agreement, the
Company shall deliver to the Purchaser Representative such stock certificates
within ten (10) Business Days of such issuance.

 

(t)            Insurance.  The
Company shall obtain with a financially sound and reputable insurance company,
term life insurance on the life of George Ellis in the face amount of at least
$5 million, the proceeds of which shall be payable solely to the order of the
Company and shall deliver evidence of such insurance to the Purchasers and their
special counsel within twenty (20) Business Days of the Closing.

 

(u)           Rights Certificates.  The Company shall cause the Rights Agent (as
defined in the Rights Plan) to deliver Rights Certificates (as defined in the
Rights Plan) to the holders of Warrant Shares if Rights Certificates are or
have been delivered to other holders of Common Stock.

 

(v)           Silicon Valley Bank.  The Company shall, within three (3) Business
Days of the date hereof provide evidence of the release of all security
interests by Silicon Valley Bank.

 

(w)          Perfection of Registered
Intellectual Property.  The
Company shall, within thirty (30) Business Days of the date hereof, execute all
documents reasonably requested by the Purchasers for filing with the United
States Patent and Trademark Office and the United States Copyright Office, as
applicable, to perfect the Purchasers security interest in the Company’s
Registered Intellectual Property.

 

34

 

7.02.        Negative Covenants of the Company.  Without limiting any other covenants and
provisions hereof, the Company covenants and agrees that, as long as any of the
Securities are outstanding (except that (1) the provisions of
Sections 7.02(a), (b), (c), (d), (e), (f), (g), (i), (j), (k), (l), (m), (o), (p), (q) and (r) shall terminate upon repayment
in full of the aggregate outstanding principal balance of the Notes together
with all interest and premium, if any, due thereon, and (2) the remainder of
the provisions of this Section 7.02 shall terminate upon the later to occur of
either (a) (1) above and (b) the earlier to occur of a Qualified IPO and the
company achieving and maintaining Public Company Status for a period of three
consecutive months), it will comply with and observe the following covenants and
provisions, and will cause each Subsidiary to comply with and observe such of
the following covenants and provisions as are applicable to such Subsidiary,
and will not:

 

(a)           Liens.  Create,
incur, assume or suffer to exist, or permit any Subsidiary to create, incur,
assume or suffer to exist, any mortgage, deed of trust, pledge, lien, security
interest or other charge or encumbrance (including the lien or retained
security title of a conditional vendor) of any nature, upon or with respect to
any of its properties, now owned or hereafter acquired, or assign or otherwise
convey any right to receive income, except that the foregoing restrictions
shall not apply to mortgages, deeds of trust, pledges, liens, security
interests or other charges or encumbrances (collectively, “Permitted Liens”):

 

(i)            for
taxes, assessments or governmental charges or levies on property of the Company
or any Subsidiary if the same shall not at the time be delinquent or thereafter
can be paid without penalty, or are being contested in good faith and by
appropriate proceedings;

 

(ii)           imposed
by law, such as carriers’, warehousemen’s and mechanics’ liens and other
similar liens arising in the ordinary course of business;

 

(iii)          arising
out of pledges or deposits under workers’ compensation laws, unemployment
insurance, old age pensions, or other social security or retirement benefits,
or similar legislation;

 

(iv)          securing
the performance of bids, tenders, contracts (other than for the repayment of
borrowed money), statutory obligations and surety bonds;

 

(v)           in
the nature of zoning restrictions, easements and rights or restrictions of
record on the use of real property which do not materially detract from its
value or impair its use;

 

(vi)          arising
by contract or by operation of law in favor of the owner or sublessor of leased
premises and confined to the property rented;

 

(vii)         arising
from any litigation or proceeding which is being contested in good faith by
appropriate proceedings, provided, however, that no execution or levy has been
made;

 

(viii)        bankers’
liens, rights of set-off and similar liens made in connection with deposits in
the ordinary course of business up to an amount equal to the Senior Debt
permitted by Section 7.02(b);

 

(ix)           of
vendors or suppliers of the Company for products supplied by such vendors or
suppliers, provided that each such lien shall not exceed $50,000 with a maximum
of $100,000 in the aggregate;

 

35

 

(x)            described
on Exhibit 6.07(a) which secure the Indebtedness set forth on Exhibit 6.08(d),
provided that no such lien is extended to cover other or different property of
the Company or any Subsidiary; and

 

(xi)           liens
which secure Indebtedness permitted by Section 7.02(b).

 

(b)           Indebtedness. 
Without the prior written consent of the Purchasers, create, incur,
assume or suffer to exist, or permit any Subsidiary to create, incur, assume or
suffer to exist, any liability with respect to Indebtedness for Money Borrowed
other than (1) up to $7.5 million in Senior Debt (2) the Notes
(3) Indebtedness of the Company to a Significant Subsidiary, or a Significant
Subsidiary to the Company or a Significant Subsidiary to a Significant
Subsidiary and (4) New Debt issued in compliance with Section 3.07 if the
person or entity acquiring such New Debt executes and delivers a junior
subordination agreement substantially in the form of Exhibit 7.02(b), provided
that the incurrence and maintenance of all such Indebtedness does not result in
the Company’s or any Subsidiary’s failure to comply with any of the provisions
of Article VII hereof.

 

(c)           Lease Obligations.  The Company will not pay or become obligated
to pay, or permit any Subsidiary to pay or become obligated to pay in any
fiscal quarter, rent under any Operating Lease if the amount of the aggregate
lease or other payments due under such Operating Lease, when added to the
aggregate lease or other payments due under all other Operating Leases exceeds
the amount set forth next to the corresponding fiscal quarter on Schedule 7.02(c).

 

(d)           Assumptions or Guaranties of Indebtedness
of Other Persons.  Assume, guarantee,
endorse or otherwise become directly or contingently liable on, or permit any
Subsidiary to assume, guarantee, endorse or otherwise become directly or
contingently liable on (including, without limitation, liability by way of
agreement, contingent or otherwise, to purchase, to provide funds for payment,
to supply funds to or otherwise invest in the debtor or otherwise to assure the
creditor against loss) any Indebtedness of any other Person, except for
guarantees by endorsement of negotiable instruments for deposit or collection
in the ordinary course of business and except by the Company with respect to
any Indebtedness of any Subsidiary which is permitted by this Agreement.

 

(e)           Mergers, Sale of Assets, Etc .  Without the prior written consent of the
Purchaser Representative, except as permitted by Section 7.02(f)(ix), merge or
consolidate with any Person, or sell, assign, lease or otherwise dispose of or
voluntarily part with the control of (whether in one transaction or in a series
of transactions) any of its assets (whether now owned or hereinafter acquired)
or permit any Subsidiary to do so, except that (1) any Significant Subsidiary
may merge into or consolidate with or transfer assets to any other Significant
Subsidiary, (2) any Significant Subsidiary may merge into or transfer assets to
the Company and (3) the Company or any Subsidiary may sell, assign, lease
or otherwise dispose of (i) inventory in the ordinary course of business,
(ii) equipment that is no longer used or useful in the Company’s or any of
its Subsidiaries’ business or that is physically obsolete, provided that the
proceeds thereof are used first to reduce outstanding Senior Debt, if any, and
then to reduce other outstanding Indebtedness, (iii) sales of equipment
the proceeds of which are applied within thirty (30) days of such sale to the
purchase of replacement equipment with like value and function and
(iv) other sales of assets in any given year which have a fair market
value of less than one million dollars ($1,000,000) in the aggregate provided
that the proceeds from such dispositions are applied first to reduce
outstanding Senior Debt, if any, and then to reduce other outstanding
Indebtedness; provided however that if an Event of Default shall have occurred
and shall not have been rescinded or annulled pursuant to Section 8.02,
proceeds received by the Company pursuant to (ii) or (iv) above are applied

 

36

 

first to reduce outstanding Senior Debt, if any, and then applied to
repay the Notes pursuant to Section 2.06(c).

 

(f)            Investments in Other Persons.  Without the prior written consent of the
Purchasers, make or permit any Subsidiary to make, any loan or advance to any
Person, or except as set forth in Section 7.02(m) with respect to capital
expenditures, purchase, otherwise acquire, or permit any Subsidiary to purchase
or otherwise acquire, any capital stock, assets or other property of, obligations
of, or any interest in, any Person, except:

 

(i)            investments
by the Company or a Subsidiary in evidences of Indebtedness issued or fully
guaranteed by the United States of America and having a maturity of not more
than one year from the date of acquisition;

 

(ii)           investments
by the Company or a Subsidiary in certificates of deposit, notes, acceptances
and repurchase agreements having a maturity of not more than one year from the
date of acquisition issued by a bank organized in the United States having
capital, surplus and undivided profits of at least $100,000,000 and whose
parent holding company has long-term debt rated Aa1 or higher, and whose
commercial paper (if rated) is rated Prime 1 by Moody’s Investors Service,
Inc.;

 

(iii)          loans
or advances from a Subsidiary to the Company;

 

(iv)          investments
by the Company or a Subsidiary in the highest-rated commercial paper having a
maturity of not more than one year from the date of acquisition;

 

(v)           reasonable
advances to employees for travel or relocation in accordance with the ordinary
course of business and with past practices;

 

(vi)          acquisitions
of assets, capital stock or other property which individually and in the
aggregate are not material to the Company or such Subsidiary (assets, capital
stock and other property with a fair market value of less than $250,000
acquired in any one-year period in the aggregate shall not be deemed “material”);
provided, however, that each such acquisition can be made in compliance with
the other terms of this Agreement, including, without limitation,
Section 7.02(l);

 

(vii)         extensions
of trade credit in the ordinary course of business pursuant to standard terms;

 

(viii)        investments
by any Subsidiary in the Company or a Significant Subsidiary;

 

(ix)           acquisitions
of assets, capital stock or other property representing the acquisition of
intellectual property, contracts or other assets of a software business
(whether structured as a purchase or a merger) to the extent the aggregate
consideration paid or issued in connection with such acquisitions in any form,
including, without limitation, cash, Equity Securities or Indebtedness, after
the Closing, does not exceed $5,000,000 in the aggregate (excluding up to
$4,500,000 in the aggregate paid by the Company to MBDS pursuant to the Option
Agreement); provided, however, that the $5,000,000 limitation in this
Section 7.02(f)(vii) shall be increased by an amount equal to one-half of
the Net Distributions; and

 

37

 

(x)            loans
by the Company or a Significant Subsidiary to a Covered Subsidiary permitted
under Section 7.02(t).

 

(xi)           loans
or advances from the Company to a Significant Subsidiary.

 

(g)           Distributions. 
Without the prior written consent of the Purchasers, declare or pay any
dividends (accrued or otherwise), purchase, redeem, retire, or otherwise
acquire for value any of its capital stock (or rights, options or warrants to
purchase such shares) now or hereafter outstanding, return any capital to its
stockholders as such, or make any distribution of assets to its stockholders as
such, or permit any Subsidiary to do any of the foregoing (such transactions
being hereinafter referred to as “Distributions”); provided, however, that
nothing herein contained shall prevent:

 

(i)            the
Company from effecting a stock split or declaring or paying any dividend
consisting of shares of any class of Common Stock to the holders of shares of
such class of Common Stock, provided that such stock split or dividend is
effected equally across all classes of Common Stock; or

 

(ii)           the
Company from repurchasing or redeeming any Securities in accordance with the
terms of Article III hereof; or

 

(iii)          any
Subsidiary from declaring or making payment of cash and stock dividends,
returns of capital or distributions of assets to the Company;

 

if in the case of any such transaction the Distribution can be made in
compliance with the other terms of this Agreement.

 

(h)           Dealings with Affiliates. Without the
prior written consent of the Board of Directors, (i) enter or permit any
Subsidiary to enter into any transaction with any other subsidiary or any
Significant Stockholder or director or officer of the Company or any Subsidiary
or any member of their families or any corporation or other entity in which any
one or more of such director, officer or Significant Stockholder or members of
their immediate families directly or indirectly holds any class of capital
stock; or (ii) enter or permit any Subsidiary to enter into any transaction
with any Indirect Subsidiaries or other stockholder which is not at arms-length
and on terms no more favorable than those of a third party commercially
reasonable transaction; provided, however, that this Section 7.02(h) shall
not apply to any transaction which is governed by Section 7.02(n).

 

(i)            Maintenance of Ownership of
Subsidiaries.  Sell or otherwise
dispose of any shares of capital stock of any Subsidiary, except to the Company
or another Subsidiary, or permit any Subsidiary to issue, sell or otherwise
dispose of any shares of its capital stock or the capital stock of any
Subsidiary, except to the Company or another Subsidiary, provided, however,
that nothing herein contained shall prevent any merger, consolidation or
transfer of assets permitted by subsection 7.02(e).

 

(j)            Additional Subsidiaries.  Acquire assets, capital stock or other
property or obligations of, or interest in, any Person, whether by way of stock
or asset purchase, merger, consolidation or otherwise, where after giving
effect to such acquisition such Person shall constitute a Subsidiary, or
otherwise form or create any Subsidiary, unless in each case such Subsidiary
(i) executes an instrument of accession in the form attached hereto as Exhibit
7.02(j), pursuant to which the Subsidiary agrees (a) with respect to U.S.
Subsidiaries, to become bound by the terms and conditions of this Agreement as
a Significant Subsidiary and (ii) executes an instrument of accession to the
Operative

 

38

 

Documents to the extent required thereby or (b) with respect to foreign
subsidiaries, to comply with Section 7.02(q) hereto.

 

(k)           Change in Nature of Business.  Without the prior written consent of the
Purchasers, make, or permit any Subsidiary to make, any change in the nature of
its business as carried on at the date hereof.

 

(l)            No Amendment or Waiver of Charter
Documents.  Amend, alter, repeal
or terminate its Certificate of Incorporation (or comparable charter documents)
without the prior written consent of the Purchasers.

 

(m)          Capital Expenditures.  Make, or permit any Subsidiary to make,
Capital Expenditures during any fiscal quarter of the Company which, when added
to the Capital Expenditures for the Company and its Subsidiaries for the
previous nine (9) months, exceed the amount set forth next to the corresponding
quarter set forth on Schedule 7.02(m) provided, that (a) for the quarter
ending December 31, 2002 Capital Expenditures for the previous three (3) months
shall be added; (b) for the quarter ending March 31, 2003 Capital Expenditures
for the previous six (6) months shall be added and (c) for the quarter ending
June 30, 2003 Capital Expenditures for the previous nine (9) months shall be
added.

 

(n)           Compensation. 
Without the prior written consent of the Purchasers, (i) amend any of the
Employment Agreements or the Noncompetition Agreement or (ii) pay, directly or
indirectly, as salary, bonuses, fringe benefits, expenses, stock option grants,
drawing accounts or otherwise compensation to any executive officer of the
Company, any employee who reports to the president or chief executive officer
of the company, or any person identified on Exhibit 1.01(a) hereto,
unless such compensation is approved by the compensation committee of Board of
Directors of the Company.

 

(o)           Preferred Stock  Without the prior written consent of the
Purchaser Representative, sell or issue any Equity Security with any dividend,
redemption or other payment feature which could obligate the Company or any
Subsidiary to make any cash payments prior to the payment in full of the Notes.

 

(p)           Intellectual Property.  Transfer, assign or permit any transfer or
assignment of the Company’s Intellectual Property to any Subsidiary or party
other than the Company or a Significant Subsidiary.

 

(q)           Assets of Subsidiaries.  Without the consent of the Purchaser
Representative, permit the aggregate net book value (as determined in
accordance with GAAP) of all Subsidiaries that are not a Significant Subsidiary
(the “Covered Subsidiaries”) to exceed $2,000,000 in aggregate for any fiscal
quarter.

 

(r)            Indirect Subsidiaries.  Permit the aggregate investment in any
Indirect Subsidiaries to exceed $100,000 for any fiscal quarter.

 

(s)           Other Mergers. 
Without the prior written consent of the Purchaser Representative, merge
or consolidate with any Person, or sell, assign, lease or otherwise dispose of
or voluntarily part with the control of (whether in one transaction or in a
series of transactions) any of its assets (whether now owned or hereinafter
acquired) or permit any Subsidiary to do so if any employee or director of the
Company or any Subsidiary enters into any arrangement or agreement providing
for the receipt of any consideration or compensation other than amounts paid
with respect to equity of the

 

39

 

Company owned by such employee or director prior to such merger, sale,
assignment or disposition; provided, that the assumption by any third party of
any contracts entered into and existing prior to the negotiation of such
merger, sale, assignment or disposition or the payment of severance provided
for in such agreements will not be deemed to be an arrangement or agreement
providing for compensation or consideration to any employee or director of the
Company or any Subsidiary for purposes of this Section 7.02(s).

 

(t)            Loans.  Without the
prior written consent of the Purchaser Representative, permit loans from the
Company and the Significant Subsidiaries to the Covered Subsidiaries to exceed
$500,000 in the aggregate in any fiscal quarter.

 

7.03.        Reporting Requirements.  Until the later to occur of (i) a Qualified
IPO and (ii) the repayment in full of the Notes and all outstanding unpaid
interest thereon, the Company will furnish to each holder of any Note, any
Warrant or any Warrant Shares:

 

(a)           as soon as possible and
in any event within five (5) days after the occurrence of each Event of Default
or each event which, with the giving of notice or lapse of time or both, would
constitute an Event of Default, the statement of the chief financial officer of
the Company setting forth details of such Event of Default or event and the
action which the Company proposes to take with respect thereto to cure such
Event of Default;

 

(b)           as soon as available
and in any event within thirty (30) days after the end of each month,
consolidated balance sheets of the Company and its Subsidiaries as of the end
of such month and the related consolidated statements of income and retained
earnings and of cash flows of the Company and its Subsidiaries for such month and
for the period commencing at the end of the previous fiscal year and ending
with the end of such month, setting forth in each case in comparative form the
corresponding figures for the corresponding period of the preceding fiscal year
and the Budget for the current year, all in reasonable detail, in a format
reasonably satisfactory to the Purchasers (provided, however, that the Company
shall furnish such reports in the form attached hereto as Exhibit 7.03
at least once every three (3) calendar months), and duly certified (except for
the absence of footnotes and subject to normal year-end adjustments and
accruals) by the chief financial officer of the Company as having been prepared
in accordance with GAAP and including a discussion by the Company’s management
of any variance from the Budget for such fiscal year; provided, however, that
solely with respect to periods ending on or before December 31, 2002, the
Company shall not be obligated to provide comparative information with respect
to comparable periods in the previous fiscal year;

 

(c)           as soon as available
and in any event within ninety (90) days after the end of each fiscal year of
the Company, a copy of the annual audit report for such year for the Company
and its Subsidiaries, including therein the consolidated balance sheets of the
Company and its Subsidiaries as of the end of such fiscal year and the related
consolidated statements of income and retained earnings and of cash flows of
the Company and its Subsidiaries for such fiscal year, setting forth in each
case in comparative form the corresponding figures for the preceding fiscal
year, all duly certified by independent public accountants of recognized
national standing acceptable to the Purchasers and including a discussion by
the Company’s management of any variance from the Budget for the fiscal year
just ended;

 

(d)           prior to the end of
each fiscal year of the Company, (x) an operating budget (the “Budget”) of
the Company and its Subsidiaries for the next fiscal year in the form
customarily prepared by management for internal use, which Budget shall be
reasonably satisfactory in form and substance to the Purchasers but which shall
in any case include a detailed balance sheet and detailed monthly

 

40

 

statements of income and cash flows, and (y) three to five year
financial plans for the Company and the Subsidiaries in the form customarily
prepared by management for internal use, which shall be reasonably satisfactory
in form and substance to the Purchasers;

 

(e)           at the time of delivery
of each monthly statement contemplated by subsection 7.03(b) and annual
statement contemplated by subjection 7.03(c), a certificate, executed by the
chief financial officer of the Company, stating that such officer has caused
this Agreement and the Operative Documents to be reviewed and has no knowledge
of any default by the Company or any Subsidiary in the performance or
observance of any of the provisions of this Agreement or any of the Operative
Documents or, if such officer has such knowledge, specifying such default and
the nature thereof, and setting forth computations in reasonable detail
demonstrating compliance with the provisions of subsections 7.01(o) and
subsections 7.02(b) and (c);

 

(f)            as soon as available and
in any event within thirty (30) days after the end of each fiscal quarter of
the Company, an updated capitalization table of the Company setting forth all
issued and outstanding equity of the Company, including all options, warrants
or rights to purchase shares of capital stock or other securities of the
Company authorized, issued or outstanding;

 

(g)           within thirty (30) days
after the end of each fiscal year of the Company, a certificate from the
Company’s and each Subsidiary’s insurance provider(s) confirming the insurance
coverage provided by such provider to the Company and the Subsidiaries, as
applicable;

 

(h)           promptly upon receipt
thereof, any written report submitted to the Company or any Subsidiary by
independent public accountants in connection with an annual or interim audit of
the books of the Company and the Subsidiaries made by such accountants;

 

(i)            promptly after the
commencement thereof, notice of all actions, suits and proceedings before any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting the Company or any Subsidiary
of the type described in Section 6.04;

 

(j)            simultaneously as they
are sent to the Bank, if any, copies of all financial statements, and upon
written request of the Purchasers, reports and other information delivered by
or on behalf of the Company or a Subsidiary to the Bank, if any;

 

(k)           promptly after sending,
making available, or filing the same, such reports and financial statements as
the Company or any Subsidiary shall send or make available to the stockholders
of the Company or the Commission; and

 

(l)            such other information
respecting the business, assets, liabilities, financial condition, results of
operations or prospects of the Company or any of its Subsidiaries as the
Purchasers may from time to time reasonably request, and to make available to
the Purchasers and their representatives, members of management and employees
with significant responsibilities (such as department heads) for the purposes of
updating the Purchasers as to the condition of the Company and its
Subsidiaries.

 

The Company shall send the reports contemplated in Section 7.03(b),
(c), (d), (f) and (j) hereof in electronic format either to an e-mail address
previously designated in writing by such person to the Company or, should the
recipient not provide an e-mail address to the Company, by hard copy in
accordance with Section 9.03 hereof.

 

41

 

ARTICLE VIII

 

EVENTS OF
DEFAULT

 

8.01.        Events of Default.  If any of the following events (“Events of
Default”) shall occur and be continuing:

 

(a)           The Company shall fail
to pay any installment of principal of any of the Notes when due; or

 

(b)           The Company shall fail
to pay any interest or premium, if any, on any of the Notes when due; or

 

(c)           The Company or any Subsidiary shall
default in the performance of any covenant contained in Section 7.01(o), (r),
(u) or (v), Section 7.02(c) or (m) or Section 7.03; or

 

(d)           The Company or any Subsidiary shall fail
to perform or observe any term, covenant or agreement contained in this
Agreement or the Operative Documents on its part to be performed or observed
(other than those set forth in (c) above) and any such failure remains
unremedied in whole or in part for ten (10) Business Days from the time of such
failure to perform or observe such term, covenant or agreement; or

 

(e)           Any representation or
warranty made by the Company or any Subsidiary in this Agreement or any
Operative Document or by the Company (or any of its officers) or any Subsidiary
(or any of its officers) in any certificate, instrument or written statement
contemplated by or made or delivered pursuant to or in connection with this
Agreement or any Operative Document shall prove to have been incorrect when
made or an event described in the proviso at the end of this Section 8.01(e)
shall have occurred (a “Trigger Event”) and either (x) any Trigger Event or the
effect of the facts or circumstances relating to, causing or underlying any
such incorrect statement results in, or could reasonably be expected to result
in, a (i) loss, (ii) liability, (iii) reduction in revenue, (iv) expense or (v)
reduction in value of the Company, any Subsidiary or any asset of the Company
or any Subsidiary in excess of $100,000 or (y) all or all of the Trigger
Events and the effect of the facts or circumstances relating to, causing or
underlying any or all such incorrect statements results in, or could reasonably
be expected to result in, or could reasonably be expected to result in, a
(i) loss, (ii) liability, (iii) reduction in revenue, (iv) expense or (v)
reduction in value of the Company, any Subsidiary or any asset of the Company
or any Subsidiary in excess of $300,000 in the aggregate, or (z) regardless
of the amount of the loss, was an intentional and knowing misstatement or
omission when made; provided, that if the Company or the Subsidiary becomes or
agrees to be (or a third party asserts that the Company or any Subsidiary is):

 

(i)            obligated
under any arrangement or agreement to return, rebate, pay-back, refund or
set-off an amount in excess of the amount paid to the Company or such
Subsidiary pursuant to such contract or agreement; or

 

(ii)           liable
for consequential damages or damages to property under any arrangement or
agreement,

 

42

 

then the Company hereby acknowledges and agrees that any Excess Amount
or Excess Damages relating to or arising out of such Trigger Event shall be
deemed to be a loss for purposes of this Section 8.01(e); or

 

(f)            The Company or any
Subsidiary shall fail to pay any Indebtedness for Money Borrowed exceeding
$100,000 owing by the Company or such Subsidiary (as the case may be), or any
interest or premium thereon, when due (or, if permitted by the terms of the
relevant document, within any applicable grace period), whether such
Indebtedness for Money Borrowed shall become due by scheduled maturity, by
required prepayment, by acceleration, by demand or otherwise, or shall fail to
perform any term, covenant or agreement on its part to be performed under any
agreement or instrument evidencing or securing or relating to any such
Indebtedness for Money Borrowed owing by the Company or any Subsidiary, as the
case may be, when required to be performed (or, if permitted by the terms of
the relevant document, within any applicable grace period), if the effect of
such failure to pay or perform is to accelerate, or to permit the holder or
holders of such Indebtedness for Money Borrowed, or the trustee or trustees
under any such agreement or instrument to accelerate the maturity of such
Indebtedness for Money Borrowed, unless such failure to pay or perform shall be
waived by the holder or holders of such Indebtedness for Money Borrowed or such
trustee or trustees; or

 

(g)           The Company or any
Subsidiary shall be involved in financial difficulties evidenced (i) by its
admitting in writing its inability to pay its debts generally as they become
due; (ii) by its commencement of a voluntary case under Title 11 of the
United States Code as from time to time in effect, or by its authorizing, by
appropriate proceedings of its board of directors or other governing body, the
commencement of such a voluntary case; (iii) by its filing an answer or other
pleading admitting or failing to deny the material allegations of a petition
filed against it commencing an involuntary case under said Title 11, or
seeking, consenting to or acquiescing in the relief therein provided, or by its
failing to controvert timely the material allegations of any such petition;
(iv) by the entry of an order for relief in any involuntary case commenced
under said Title 11; (v) by its seeking relief as a debtor under any
applicable law, other than said Title 11, of any jurisdiction relating to
the liquidation or reorganization of debtors or to the modification or
alteration of the rights of creditors, or by its consenting to or acquiescing
in such relief; (vi) by the entry of an order by a court of competent
jurisdiction (a) finding it to be bankrupt or insolvent, (b) ordering or
approving its liquidation, reorganization or any modification or alteration of
the rights of its creditors, or (c) assuming custody of, or appointing a
receiver or other custodian for, all or a substantial part of its property; or
(vii) by its making an assignment for the benefit of, or entering into a
composition with, its creditors, or appointing or consenting to the appointment
of a receiver or other custodian for all or a substantial part of its property;
or

 

(h)           A Change in Control
occurs, which Change in Control is not consented to specifically with reference
to this Section 8.01(h) by the Purchasers who are holders of at least more
than fifty percent (50%) of the outstanding principal amount of the Notes; or

 

(i)            Any judgment, writ, warrant of attachment
or execution or similar process shall be issued or levied against a substantial
part of the property of the Company or any Subsidiary and such judgment, writ,
or similar process shall not be released, vacated or fully bonded within thirty
(30) days after its issue or levy; or

 

(j)            The Company or any
Subsidiary becomes liable for any amounts due pursuant to any Unscheduled
Claims in excess of $100,000; or

 

43

 

(k)           The
Company or any Subsidiary becomes subject to any claim for indemnification or
damages in connection with or as a result of its status as a successor to, or
subsidiary of, AremisSoft in excess of the amounts distributed to the Company
by the liquidating trust formed in accordance with the Plan; or

 

(l)            The Company is in
violation of the Securities Act or the Exchange Act including all regulations
relating thereto and such violation continues or remains unremedied for ninety
(90) days except for any violations resulting from the Company’s failure to
file audited financial statements for AremisSoft for any period prior to August
2, 2002 in connection with a filing with the Commission; or

 

(m)          The Company is required
to restate the financial statements for any prior period ending on or after
December 31, 2001 other than any restatements which are (1) solely a
reclassification of line items in such financial statements or (2) the result
of changes in the assumptions related to the formation of the Company and the
implementation of the Plan which are required by the Commission in connection
with a filing by the Company with the Commission; or

 

(n)           The Company is
required to file a registration statement pursuant to the Exchange Act and such
registration statement is not filed within ninety (90) days of the date such
requirement was determined; or

 

(o)           EBITA as of December
31, 2002 for the previous three (3) months shall be a loss greater than
$1,600,000

 

where “EBITA” shall mean, for any
particular period the aggregate of:

 

(a)           Net Income;

 

(b)           all amounts deducted
in the calculation of Net Income in respect of income taxes, capital gains
taxes, capital taxes or similar taxes, whether paid, accrued or deferred;

 

(c)           all amounts deducted
in the calculation of Net Income in respect of amortization;

 

(d)           all amounts deducted
in the calculation of Net Income in respect of the aggregate Interest Expense,
including in respect of a capital lease allocable to Interest Expense;

 

which calculation shall be based on the consolidated financial
statements of the Company and determined in accordance with GAAP

 

then, and in any such event listed in Section 8.01(a) through (o),

 

(1)           the
Purchasers may, by notice to the Company, declare the entire unpaid principal
amount of the Notes, all interest accrued and unpaid thereon and all other
amounts payable under this Agreement to be forthwith due and payable, whereupon
the Notes, all such accrued interest and all such amounts shall become and be
forthwith due and payable (unless there shall have occurred an Event of Default
under subsection 8.01(g) in which case all such amounts shall automatically
become due and payable), without presentment, demand, protest or

 

44

 

further notice of any kind, all of which are hereby expressly waived by
the Company and each Subsidiary, and

 

(2)           the
Purchasers may proceed to protect and enforce their rights by suit in equity
(including without limitation a suit for rescission), action at law and/or
other appropriate proceeding either for specific performance of any covenant,
provision or condition contained or incorporated by reference in this Agreement
or any term of the Certificate of Incorporation of the Company, or in aid of
the exercise of any power granted in this Agreement or in the Certificate of
Incorporation of the Company, and, immediately, in the case of
Section 8.01(g) hereof, and at any time after the giving of the Put Notice
to the Company pursuant to Article III hereof, the theretofore unexercised
“put” rights set forth in Article III hereof shall, to the extent not
already exercisable, be deemed to have become immediately exercisable and
thereafter any Purchaser may in such Put Notice to the Company declare all or
part of such theretofore unexercised “put” rights to be forthwith exercised and
due and payable (unless there shall have occurred an Event of Default under
Section 8.01(g) hereof, in which case such “put” rights shall be
automatically exercised and due and payable), whereupon the Repurchase Price
for the Warrant Shares shall become so due and payable without presentation,
presentment, protest or further demand or notice of any kind, all of which are
expressly waived), and any such holder or holders may proceed to enforce
payment of such amount or part thereof in such manner as it or they may elect.

 

Without in any way limiting the rights of the holders of the Notes, the
Company and the Subsidiaries hereby agree that the holders of the Warrant
Shares would have no adequate remedy at law, for monetary compensation or
otherwise, for the damages that would be suffered if the Company were to fail
to comply with its obligations under Article III hereof, and that the
Company and the Subsidiaries therefore agrees that the holders of the Warrant
Shares shall be entitled to obtain specific performance of the Company’s
obligations under Article III of this Agreement.

 

8.02.        Annulment of Defaults.  Section 8.01 is subject to the condition
that, if at any time after the principal of any of the Notes shall have become
due and payable, and before any judgment or decree for the payment of the
moneys so due, or any portion thereof, shall have been entered, then and in
every such case the holders of a majority or more in principal amount of all
Notes then outstanding may, by written instrument filed with the Company,
rescind and annul such declaration and its consequences, but no such rescission
or annulment shall extend to or affect any subsequent default or Event of
Default or impair any right consequent thereon.

 

ARTICLE IX

 

MISCELLANEOUS

 

9.01.        No Waiver; Cumulative Remedies.  No failure or delay on the part of any
Purchaser, or any other holder of the Notes, Warrants or Warrant Shares in
exercising any right, power or remedy hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy hereunder.  The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.

 

9.02.        Amendments,
Waivers and Consents.  Any
provision in this Agreement or the other Operative Documents to the contrary
notwithstanding, changes in or additions to this Agreement may be

 

45

 

made, and compliance with any covenant or provision herein set forth
may be omitted or waived, if the Company shall, (i) prior to the issuance of
the Notes, obtain consent thereto in writing from Purchasers obligated hereby
to purchase at least a majority of the principal amount of the Notes to be
issued at the Closing, (ii) as long as any Notes are outstanding, obtain
consent thereto in writing from the holder or holders of at least a majority in
principal amount of all Notes then outstanding, or, (iii) if the Notes have
previously been issued hereunder and if no Notes are then outstanding, obtain
consent thereto in writing from the holder or holders of at least a majority of
the Warrants (on an as-converted basis) and the Warrant Shares, and shall, in
any case, deliver copies of such consent in writing to all other holders of
Notes and/or Warrants and/or Warrant Shares or, if prior to the Closing, all
Persons obligated to purchase Notes and Warrants; provided that no such consent
shall be effective to reduce or to postpone the date fixed for the payment of
the principal (including any required redemption) or interest payable on any
Note without the consent of the holder thereof, or to alter or amend the
consent mechanism provided for under this Section 9.02; and, provided
further, that no covenant or provision set forth in the terms of the Warrants
may be omitted or waived without the written consent of the holder or holders
of at least a majority of the Warrant Shares issued or issuable upon conversion
of the Warrants.  Any waiver or consent
may be given subject to satisfaction of conditions stated therein and any
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. 
Written notice of any waiver or consent effected under this Section 9.02
shall promptly be delivered by the Company to any holders who did not execute
the same.

 

9.03.        Addresses for Notices, Etc.; Wire
Transfer Instructions.  All notices,
requests, demands and other communications provided for hereunder shall be in
writing and mailed (by first class registered or certified mail, postage
prepaid), sent by express overnight courier service or electronic facsimile
transmission with a copy by mail, or delivered to the applicable party at the
addresses indicated below:

 

If to the Company or any Subsidiary:

 

Softbrands, Inc.

Two
Meridian Crossings

Suite 800

Minneapolis, Minnesota  55423

Attention: Chief Executive Officer

 

With a copy to:

 

Dorsey & Whitney LLP

50 South Street, Suite 1500

Minneapolis, Minnesota  55402

Attention:  Thomas Martin, Esq.

Facsimile No.:  (612) 340-7800

 

If to any other holder of the Notes or
Warrants or Warrant Shares:

 

at such holder’s address for notice as set

forth in the transfer records of the

Company

 

46

 

With a copy to:

Testa, Hurwitz & Thibeault, LLP

125 High Street

Boston, Massachusetts  02110

Attention: 
Kathy A. Fields, Esq.

Facsimile No.: (617) 248-7100

 

or, as to each of the foregoing, at such
other address as shall be designated by such Person in a written notice to the
other party complying as to delivery with the terms of this Section.  All such notices, requests, demands and other
communications shall, when mailed or otherwise sent shall be effective (i) two
days after being deposited in the mails or (ii) one day after being deposited
with an express overnight courier service or sent by electronic facsimile
transmission (with receipt confirmed), respectively, addressed as aforesaid.

 

Wire transfers to be made pursuant to this Agreement shall be made in
accordance with instructions provided in writing by such person receiving the
wire transfer.

 

9.04.        Costs,
Expenses and Taxes. The Company agrees to pay on
demand all costs and expenses of the Purchasers (including all reasonable fees
and expenses of Testa, Hurwitz & Thibeault, LLP counsel to the Purchasers)
in connection with the preparation, execution and delivery of this Agreement,
the Notes, the Warrants, the other Operative Documents and other instruments
and documents to be delivered hereunder, and in connection with the
consummation of the transactions contemplated hereby and thereby, as well as
all costs and expenses of the Purchasers and their special counsel in
connection with the preparation, execution and delivery of the Subordination
Agreement any amendment, waiver (whether or not such amendment or waiver
becomes effective) or enforcement of this Agreement, the Plan, the Operative
Documents, and other instruments and documents to be delivered hereunder and
thereunder. In addition, the Company agrees to pay any and all stamp and other
taxes payable or determined to be payable in connection with the execution and
delivery of this Agreement, the Notes, the Warrants, the other Operative
Documents, and the other instruments and documents to be delivered hereunder or
thereunder and the Company agrees to save each Purchaser harmless from and
against any and all liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes and filing fees.

 

9.05.        Binding Effect; Assignment.  This Agreement shall be binding upon and
inure to the benefit of the Company and each of the Purchasers and their
respective successors and assigns, except neither the Company nor any
Significant Subsidiary shall have the right to assign its rights hereunder or
any interest therein without the prior written consent of (i) prior to the
issuance of the Notes, Purchasers obligated hereby to purchase at least a
majority in principal amount of the Notes to be issued at the Closing, (ii) as
long as any Notes are outstanding, obtain consent thereto in writing from the
holder or holders of at least a majority in principal amount of all Notes then
outstanding, or, (iii) if the Notes have previously been issued hereunder and
if no Notes are then outstanding, obtain consent thereto in writing from the
holder or holders of at least a majority of the Warrants (on an as-converted
basis) and the Warrant Shares.  Except as
expressly set forth herein, nothing in this Agreement shall confer any claim,
right, interest or remedy on any third party or inure to the benefit of any
third party.

 

9.06.        Payments in Respect of Notes.  Each Purchaser and any successor holder of
the Notes, by their acceptance thereof, agree that, with respect to all sums
received by them applicable to the

 

47

 

payment of principal of or interest on the Notes, equitable adjustment
will be made among them so that, in effect, all such sums shall be shared
ratably by all of the holders of the Notes whether received by voluntary
payment, by realization upon security, by the exercise of the right of setoff,
by counterclaim or cross-action or by the enforcement of any or all of the
Notes.  If any holder of the Notes
receives any payment on its Notes in excess of its pro rata portion, then such
holder receiving such excess payment shall purchase for cash from the other
holders an interest in their Notes in such amounts as shall result in a ratable
participation by all of the holders in the aggregate unpaid amount of Notes
then outstanding.  The Company shall not
have any obligation to any Person under this Section 9.06.

 

9.07.        Indemnification.  The Company and each Significant Subsidiary
agrees to indemnify and hold harmless each Purchaser, its subsidiaries,
directors, officers, partners, counsel, employees, agents, brokers and other
representatives from and against any and all liability (including, without
limitation, reasonable legal fees incurred in defending against any such
liability) under, arising out of or relating to this Agreement, the Operative
Documents, the Warrants and the Warrant Shares, the transactions contemplated
hereby or thereby or in connection herewith or therewith, including (to the
maximum extent permitted by law) any liability arising under federal or state
securities laws, except to the extent such liability shall result from any act
or omission on the part of such Purchaser or its subsidiaries, directors,
officers, partners, counsel, employees, agents, brokers or other representatives.  The obligations of the Company and each
Significant Subsidiary under this Section 9.07 shall survive and continue
to be in full force and effect notwithstanding (a) the repayment of the
Notes and (b) the termination of this Agreement.

 

9.08.        Survival of Representations and
Warranties.  All representations
and warranties made in this Agreement, the Operative Documents or any other
instrument or document delivered in connection herewith or therewith, shall
survive the execution and delivery hereof and thereof, regardless of any
investigation made by the Purchasers or on behalf of the Purchasers.

 

9.09.        Prior Agreements.  This Agreement, including the exhibits,
schedules and other agreements delivered pursuant to this Agreement contain all
of the terms and conditions agreed upon by the parties relating to the subject
matter of this Agreement and supersede all prior agreements, negotiations,
correspondence, undertakings and communications of the parties, whether oral or
written respecting that subject matter.

 

9.10.        Severability. 
The invalidity or unenforceability of any provision hereof shall in no
way affect the validity or enforceability of any other provision.

 

9.11.        Governing Law. 
This Agreement shall be governed by, and construed in accordance with, the
internal laws of the Commonwealth of Massachusetts.

 

9.12.        Waiver of Right to Jury Trial.  The parties hereby waive all rights to a
trial by jury for all legal proceedings concerning this Agreement, the Notes or
the Warrants.

 

9.13.        Headings. 
Article, Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose. 
Any reference herein to an Article, Section or subsection is,
unless otherwise indicated, a reference to that Article, Section or subsection of
this Agreement.

 

9.14.        Sealed Instrument.  This Agreement is executed as an instrument
under seal.

 

48

 

9.15.        Counterparts. 
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument, and each of
the parties hereto may execute this Agreement by signing any such counterpart.

 

9.16.        Further Assurances.  From and after the date of this Agreement,
upon the request of the Purchasers, the Company and each Significant Subsidiary
shall execute and deliver such instruments, documents and other writings as may
be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement and the Operative Documents.

 

9.17.        Consent to Jurisdiction. The Company and
each Significant Subsidiary irrevocably submits to the non-exclusive
jurisdiction of any state or federal court sitting in the Commonwealth of
Massachusetts over any suit, action or proceeding arising out of or relating to
this Agreement or any of the Operative Documents.  To the fullest extent it may effectively do
so under applicable law, the Company and each Significant Subsidiary
irrevocably waives and agrees not to assert, by way of motion, as a defense or
otherwise, any claim that it is not subject to the jurisdiction of any such
court, any objection that it may now or hereafter have to the laying of the
venue of any such suit, action or proceeding brought in any such court and any
claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.

 

9.18.        Effect of Judgment. The Company and each
Significant Subsidiary agrees, to the fullest extent it may effectively do so
under applicable law, that a judgment in any suit, action or proceeding of the
nature referred to in Section 9.17 brought in any such court shall,
subject to such rights of appeal on issues other than jurisdiction as may be
available to the Company or any Significant Subsidiary, be conclusive and
binding upon the Company and each Significant Subsidiary and may be enforced in
the courts of the United States of America or the Commonwealth of Massachusetts
(or any other courts to the jurisdiction of which the Company or any
Significant Subsidiary is or may be subject) by a suit upon such judgment.

 

9.19.        Service of Process. The Company and each
Significant Subsidiary consents to service of process in any suit, action or
proceeding of the nature referred to in Section 9.17 by actual receipt of
a copy thereof by registered or certified mail, postage prepaid, return receipt
requested, to the address of the Company specified in or designated pursuant to
Section 9.03. The Company and each Significant Subsidiary agrees that such
service (i) shall be deemed in every respect effective service of process
upon the Company and each Significant Subsidiary in any such suit, action or
proceeding and (ii) shall, to the fullest extent permitted by law, be
taken and held to be valid personal service upon and personal delivery to the
Company or any Significant Subsidiary, as applicable.

 

9.20.        No Limitation. 
Nothing in Section 9.17, 9.18, 9.19 or 9.21 shall affect the right
of any Purchaser to serve process in any manner permitted by law, or limit any
right that any Purchaser may have to bring proceedings against the Company or
any Significant Subsidiary in the courts of any jurisdiction or to enforce in
any lawful manner a judgment obtained in one jurisdiction in any other
jurisdiction.

 

9.21.        Specific Performance.  Upon breach or default by the Company or any
Significant Subsidiary with respect to any obligation hereunder or any of the
Operative Documents, each Purchaser shall be entitled to protect and enforce
its rights at law, or in equity or by other appropriate proceedings for
specific performance of such obligation, or for an injunction against such
breach or default, or in aid of the exercise of any power or remedy granted hereby
or thereby or by law.

 

49

 

9.22.        Actions by Purchasers.  Wherever in this Agreement action is required
or permitted to be taken by, or consent is required of, or a matter requires
the satisfaction of, the Purchasers, unless the context otherwise requires,
such action may be taken by, and/or such consent may be obtained from, and/or
such satisfaction may be expressed by, (i) prior to the Closing, Persons
obligated to purchase at least a majority of the principal amount of the Notes
to be issued at Closing, (ii) for as long as any of the Notes remain
outstanding, the holders of at least a majority of the principal amount of all
Notes then outstanding, or (iii) if subsequent to the Closing and if no
Notes are then outstanding, the holders of at least a majority of the Warrants
(on an as-converted basis) and the Warrants Shares; provided, however, that the
provisions of this Section 9.22 shall not limit in any manner any action
which may be taken by any Purchasers or any other holder of Notes pursuant to
the provisions of Section 8.01 hereof.

 

9.23.        Termination of Letter of Intent.  That certain letter of
intent agreement, dated as of August 2, 2002, by and between the Company
and CRP is hereby terminated and of no further force and effect.

 

50

 

IN WITNESS WHEREOF, the parties hereto have
executed this Senior Subordinated Note and Warrant Purchase Agreement as of the
date first above written.

 

	
   

  	
  SOFTBRANDS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ George Ellis

  	
   

  
	
   

  	
  Name (Printed): George Ellis

  
	
   

  	
  Title: Chairman and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  SOFTBRANDS MANUFACTURING, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ David G. Latzke

  	
   

  
	
   

  	
  Name (Printed): David G. Latzke

  
	
   

  	
  Title: SVP & CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SOFTBRANDS HOSPITALITY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ David G. Latzke

  	
   

  
	
   

  	
  Name (Printed): David G. Latzke

  
	
   

  	
  Title: SVP & CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SOFTBRANDS INTERNATIONAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ David G. Latzke

  	
   

  
	
   

  	
  Name (Printed): David G. Latzke

  
	
   

  	
  Title: SVP & CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SOFTBRANDS LICENSING, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ David G. Latzke

  	
   

  
	
   

  	
  Name (Printed): David G. Latzke

  
	
   

  	
  Title: CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SOFTBRANDS EUROPE LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ David G. Latzke

  	
   

  
	
   

  	
  Name (Printed): David G. Latzke

  
	
   

  	
  Title: CFO

  
					

 

51

 

	
   

  	
  PURCHASERS:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CAPITAL RESOURCE PARTNERS IV, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    CRP Partners IV, LLC

  
	
   

  	
   

  	
    Its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert Ammerman

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title: Managing Member

  
					

 

52

 

EXHIBITS
AND SCHEDULES TO SENIOR SUBORDINATED SECURED NOTE AND 

WARRANT
PURCHASE AGREEMENT (As filed with Form 10)

 

	
  1.01(a)

  	
  Employment Agreements

  
	
  2.01

  	
  Form of Senior Subordinated Notes(1)

  
	
  2.02

  	
  Allocation of Principal Amount of Notes*

  
	
  2.03

  	
  Issue Price*

  
	
  2.12

  	
  Form of Subordination Agreement

  
	
  3.01

  	
  Form of Common Stock Purchase Warrant(2)

  
	
  3.02

  	
  Allocation of Warrant Shares*

  
	
  4.02(b)

  	
  Form of Opinions of Dorsey & Whitney LLP*

  
	
  4.02(i)

  	
  Form of Security Agreement(3)

  
	
  4.02(j)

  	
  UCC-1 Financing Statements*

  
	
  4.02(k)

  	
  Form of Investors’ Rights Agreement(4)

  
	
  4.02(l)

  	
  Form of Debenture(5)

  
	
  4.02(n)

  	
  Stock Certificates to be Delivered At the Closing*

  
	
  6.01

  	
  Schedule of Subsidiaries*

  
	
  6.04

  	
  Schedule of Litigation*

  
	
  6.07(a)

  	
  Schedule of Title Exceptions*

  
	
  6.07(d)

  	
  Leases*

  
	
  6.07(f)

  	
  Limitations on Intellectual Property*

  
	
  6.08(a)

  	
  Financial Statements*

  
	
  6.08(d)

  	
  Schedule of Indebtedness*

  
	
  6.11

  	
  Affiliate Transactions*

  
	
  6.16

  	
  Brokers Fees*

  
	
  6.18

  	
  Schedule of Fully-Diluted Ownership of Capital Stock*

  
	
  6.24

  	
  Schedule of Other Agreements*

  
	
  6.25

  	
  Environmental Matters*

  
	
  6.29(a)

  	
  Company Registered Intellectual Property*

  
	
  6.29(b)

  	
  Licenses*

  
	
  6.29(c)

  	
  Third Party Licenses of Company Intellectual Property*

  
	
  6.29(l)

  	
  Non-Competition Agreements*

  
	
  6.30(a)

  	
  Security Interests*

  
	
  6.30(b)

  	
  Location of Collateral*

  
	
  6.31

  	
  Claims Pursuant to the Plan*

  
	
  7.01(m)

  	
  Form of Preferred Stock Subordination Agreement

  
	
  7.01(o)(i)

  	
  Minimum EBITDA(6)

  
	
  7.01(o)(ii)

  	
  Fixed Charge Coverage Ratio(7)

  
	
  7.02(b)

  	
  Form of Junior Subordination Agreement

  
	
  7.02(c)

  	
  Operating Leases

  
	
  7.02(j)

  	
  Instrument of Accession

  
	
  7.02(m)

  	
  Capital Expenditures(8)

  
	
  7.02(s)

  	
  Stock Certificates to be Delivered After Closing*

  
	
  7.03

  	
  Form of CRP Report*

  

 

* Will be furnished to the Securities and Exchange Commission
supplementally upon request

(1) As amended, filed as Exhibit 4.8 to Form 10.   

(2) As amended, filed as Exhibit 4.9 to Form 10

(3) Filed as Exhibit 4.12 to Form 10

(4) Filed as Exhibit 4.10, and amendment filed as Exhibit 4.11, to Form
10

(5) Filed as Exhibit 4.13 to Form 10

(6) As amended, included as Exhibit D to Exhibit 4.7 to Form 10

(7) As amended, included as Exhibit E to Exhibit 4.7 to Form 10

(8) As amended, included as Exhibit F to Exhibit 4.7 to Form 10

 

 

EXHIBIT 1.01(a)

 

EMPLOYMENT
AGREEMENTS

 

Michael Preston

James Johnson

Paul Bloom

George Ellis

Randy Tofteland

David Latzke

John Picardi.

 

 

EXHIBIT 2.12

 

SUBORDINATION
AND INTERCREDITOR AGREEMENT

 

This Subordination and Intercreditor
Agreement (this “Agreement”) is entered into as of                           
    , 20   by and among [SENIOR
LENDER], a national bank (the “Bank”), CAPITAL RESOURCE PARTNERS IV,
L.P., a Delaware limited partnership (the “Purchaser”), and SoftBrands, Inc., a
Delaware corporation (the “Company”).

 

RECITALS

 

WHEREAS, the Company desires to enter into a [Loan Agreement] to be dated as of               
    , 20   with the Bank (such [Loan Agreement], as it may be amended, modified or
supplemented from time to time, together with all instruments, promissory notes
and other related documents, being the “Loan Agreement”), which would permit
the Company to borrow up to an aggregate principal amount of [Dollars] Dollars ($                         )
on the terms and conditions set forth therein;

 

WHEREAS, the Company also has entered into a
Senior Subordinated Secured Note and Warrant Purchase Agreement dated as of                         
    , 2002 with the Purchasers (such Senior Subordinated
Secured Note and Warrant Purchase Agreement, as it may be amended, modified or
supplemented from time to time, being the “Purchase Agreement”), where the
Purchasers lent to the Company an aggregate principal amount of twenty million
Dollars ($20,000,000) on the terms and conditions set forth therein in exchange
for 12.5% Senior Subordinated Notes due                         ,
2009 in the aggregate principal amount of twenty million Dollars ($20,000,000)
(the “Notes”) and warrants to purchase shares of the Company’s common stock
(the “Warrants”).;

 

WHEREAS, as a condition to entering the Loan
Agreement, the Bank requires that the Purchasers subordinate, to the extent and
in the manner hereinafter set forth, the obligations of the Company to the
Purchasers pursuant to the Purchase Agreement to the obligations of the Company
to the Bank pursuant to the Loan Agreement; and

 

WHEREAS, the Purchasers have requested that
the Bank permit the Purchasers to cure certain defaults or to purchase the
loans then outstanding under the Loan Agreement to the extent and in the manner
hereinafter set forth.

 

NOW, THEREFORE, in consideration of the
foregoing premises and the covenants contained herein, the parties hereto agree
as follows:

 

AGREEMENT

 

Section 1.  Definitions.

 

As used in this Agreement, the terms defined
above shall have their respective meanings set forth above and the following
terms shall have the following meanings:

 

 

1.1.          “Senior
Event of Default” shall mean the Company’s failure to pay any installment of
principal or interest on any Senior Obligations when due, whether at stated
maturity, by acceleration or otherwise, or failure to pay any other amount due under
the Loan Agreement within ten (10) days after the due date thereof.

 

1.2.          “Senior
Lender” shall mean the Bank.

 

1.3.          “Senior
Obligations” shall mean all indebtedness of the Company to the Senior Lender
for principal, interest, fees, indemnities, expenses and costs (including
collection costs and expenses and post-petition interest in bankruptcy) or
other amounts, including amounts advanced to protect the liens and security
interests of the Senior Lender as provided under the Loan Agreement, direct or indirect,
contingent or noncontingent, secured or unsecured, now existing or hereafter
incurred or now or hereafter due and owing, pursuant to the terms of the Loan
Agreement; provided that the principal amount of such indebtedness does
not exceed seven million five hundred thousand Dollars ($7,500,000) in the
aggregate (exclusive of interest, fees, expenses, costs, protective advances
and other amounts which may be added to principal under the Loan Agreement),
and any other indebtedness of the Company to the Senior Lender that the Company
and the Subordinated Creditors holding sixty-six and two thirds percent (66
2/3%) in interest of the principal amount of the Subordinate Liabilities
then-outstanding expressly agree in writing is senior to the Subordinate Liabilities.

 

1.4.          “Subordinate
Liabilities” shall mean all indebtedness of the Company to the Subordinated
Creditors for (a) principal of and interest on the Notes, together with
any prepayment fees or premiums under the Notes, and (b) all other
indebtedness or liabilities of the Company, direct or indirect, contingent or
noncontingent, now existing or hereafter incurred or now or hereafter due and
owing to the Subordinated Creditors under or with respect to the Notes or the
Purchase Agreement, including fees, reimbursement obligations, expenses, costs,
and post-petition interest in bankruptcy.

 

1.5.          “Subordinated
Creditors” shall mean the Purchasers, and its successors and assigns, and any
holder of the Subordinate Liabilities.

 

Section 2.  Subordination.

 

2.1.          Subordination.  So long as any Senior Obligations are
outstanding, each Subordinated Creditor agrees, for itself and each future
holder of the Subordinate Liabilities held by it, that the Subordinate
Liabilities are and shall be expressly subordinate and junior in right of
payment to all Senior Obligations in the manner and solely to the extent set
forth in this Section 2. Any lien, security interest in, mortgage, pledge
of or into any of the assets of the Company in favor of or for the benefit of
the Subordinated Creditors, whether now existing or arising in the future, are
hereby expressly made subordinate and junior in priority and right of
enforcement to any liens, security interests, mortgages or pledges of or into
any of the assets of the Company, both now existing and arising in the future,
securing any of the Senior Obligations.

 

2.2.          Insolvency,
Etc.

 

(a)           In
the event of any insolvency, bankruptcy, receivership, liquidation,
reorganization or other similar proceedings, relative to the Company or to its
property, or in the event of any proceedings for voluntary liquidation,
dissolution or other winding up of the Company, whether or not involving
insolvency or bankruptcy, so long as any Senior Obligations are outstanding,
the holders of Senior Obligations shall be entitled in any such proceedings to
receive payment in full of all Senior Obligations before the holders of
Subordinate Liabilities are entitled in such proceedings to receive any

 

 

payment on account of the Subordinate Liabilities, and to that end in
any such proceedings, so long as any Senior Obligations remain outstanding, any
payment or distribution of any kind or character, whether in cash or in other
property, to which the holders of Subordinate Liabilities would be entitled but
for the provisions hereof (except securities which are subordinate and junior
in right of payment to all Senior Obligations then outstanding) shall be
delivered to the holders of Senior Obligations to the extent necessary to make
payment in full of all Senior Obligations remaining unpaid, after giving effect
to any concurrent payment or distribution to or for the holders of Senior
Obligations in respect thereof.

 

(b)           Upon
any holder of Subordinate Liabilities failing to take within five (5) business
days of such request any of the following actions requested by the holders of
the Senior Obligations, so long as any Senior Obligations remain outstanding,
the holders of Senior Obligations (or their representatives), as
attorney-in-fact for such holder of Subordinate Liabilities, are (A) authorized
and empowered, in any proceedings described in Section 2.2(a), in their
own names or in the names of the holders of Subordinate Liabilities, to
(i) file claims, proofs of claim and other instruments of similar
character reasonably necessary to enforce the obligations of the Company in
respect of the Subordinate Liabilities, and (ii) receive and apply to the
Senior Obligations every payment or distribution referred to in Section 2.2(a)
to which such holders of Subordinate Liabilities are entitled in respect
thereof and give acquittance therefor and (B) each holder of Subordinate
Liabilities hereby appoints the holders of Senior Obligations, or any agent or
representative designated by them for the purpose, as attorney-in-fact for such
holder of Subordinate Liabilities, to (i) demand, sue for, collect and
receive any and all such monies or other assets and give acquittance therefor
and to file any claim, proof of claim or other instrument of similar character,
and (ii) to take such other action incidental thereto in its own name or
in the name of the holders of Subordinate Liabilities as the holders of Senior
Obligations may reasonably deem necessary; and the holders of Subordinate
Liabilities will execute and deliver such other and further powers of attorney
or other instruments as the holders of Senior Obligations, or any agent or
representative designated by them for the purpose, may request in order to
accomplish the foregoing.  Notwithstanding
the foregoing, neither this Section 2.2 nor any other provision of this
Agreement, the Notes, the Purchase Agreement or the Company’s charter documents
shall be construed to give any holder of Senior Obligations any right to vote
any Notes or any Warrant Shares or any portion of such Notes, Warrant Shares or
claim, whether in connection with any resolution, arrangements, plan of
reorganization, compromise, settlement, election of trustees or otherwise.

 

2.3.          Senior
Acceleration.  (a) In the event that
all of the Senior Obligations held by the Senior Lender have become due and
payable (at stated maturity, by demand, by acceleration or otherwise) under
circumstances in which Section 2.2 is not applicable and after notice by
the Senior Lender to the Subordinated Creditors, no Subordinated Creditor shall
be entitled to (i) receive or retain any direct or indirect payment (in cash,
property, by set-off or otherwise) on or with respect to the Subordinate
Liabilities until payment in full of all such Senior Obligations shall have
been made or otherwise provided for to the satisfaction of the holders thereof,
(ii) commence or join (unless the Senior Lender shall also join) in any
involuntary proceeding against the Company under any bankruptcy,
reorganization, receivership, liquidation or insolvency law or statute of any
federal or state government, (iii) commence any action or proceeding against
the Company to enforce payment of all or any part of the Subordinate
Liabilities or (iv) enforce any lien it may at any time have on the Company’s
property, real or personal, as security for any of the Subordinate Liabilities.

 

(b)           In
the event of a Senior Event of Default, the Senior Lender agrees to notify the
Subordinated Creditors no later than two (2) business days after any
acceleration of the Senior Obligations as to the aggregate amount of principal,
interest, penalties and actual third party collection costs and expenses
outstanding under the Loan Agreement (“Payoff Amount”) as of the date of such
notice.  After the receipt of any such
notice, the Subordinated Creditors shall have the option, which

 

 

option may be exercised by delivering written notice to the Senior
Lender within ten (10) business days, to purchase from the Senior Lender
all of the Senior Lender’s rights in, under and pursuant to the Loan Agreement
without recourse or representation or warranty of any kind (except as to the
amount outstanding thereunder and the ownership of the Senior Lender’s interest
in Loan Agreement), for a purchase price equal to the Payoff Amount as of the
date of purchase.  In the event the
Subordinated Creditors exercise the above option as set forth above, the
closing of the purchase of the Loan Agreement shall occur within
thirty (30) days from the date of the Senior Lender’s receipt of the
Subordinated Creditors’ notice exercising the option.  During the period:  (a) between the Subordinated Creditors’
receipt of the Senior Lender’s notice of the acceleration of the Senior
Obligations and the earlier of (i) the Senior Lender’s receipt of written
notice from the Subordinated Creditors exercising the option set forth above or
agreeing not to exercise such option, and (ii) ten (10) business days
after the Subordinated Creditors’ receipt of the notice of acceleration of the
Senior Obligations; and (b) between the date the Subordinated Creditors
exercise the option and the date of the purchase of the Loan Agreement
(provided such date occurs within thirty (30) days from the date of
the exercising of the option), the Senior Lender shall not (x) foreclose,
realize on (including, without limitation, the notification of any account
debtor), liquidate, or take possession of, any of the collateral securing the
obligations under the Loan Agreement, (y) commence or join in the commencement
of any bankruptcy or insolvency proceeding against the Company or any of its
direct or indirect subsidiaries, or (z) commence or take any legal or other
similar proceedings (whether at law, or equity, by arbitration or otherwise) to
enforce any of its rights and remedies or any of the Loan Agreement or
applicable law against the Company or any of its direct or indirect
subsidiaries.

 

2.4.          Senior
Events of Default.

 

(a)           So
long as a Senior Event of Default has occurred and is continuing under
circumstances in which Sections 2.2 and 2.3 are not applicable, and after
written notice by the Senior Lender to the Subordinated Creditors, subject to Section 2.4(b),
no Subordinated Creditor shall be entitled to receive or retain any direct or
indirect payment (in cash, property, by set-off or otherwise) on or with
respect to the Subordinate Liabilities.

 

(b)           Notwithstanding the restrictions set
forth in Section 2.4(a), if any amount which becomes due and payable (at
stated maturity, by demand, by acceleration or otherwise) on or with respect to
the Subordinate Liabilities is not paid as a result of the continuance of a
Senior Event of Default (under circumstances in which Sections 2.2 and 2.3
are not applicable), the Subordinated Creditors shall be entitled to receive
and retain such amount after the earlier of:

 

(i)            the date on which all Senior Events of Default have been
cured or waived; and

 

(ii)           the
date occurring ninety (90) days after the date of the occurrence of a Senior
Event of Default (the period of time from the occurrence of a Senior Event of
Default to the earlier of the date on which all Senior Events of Default shall
have been cured or waived or such 90 days being hereinafter referred to as the “Standstill
Period”); provided, however, that the Subordinated Creditors shall not be
subject to a standstill more that once in any rolling 360-day period.

 

 

2.5.          Turn-Over
of Payments Received.

 

(a)           In
the event that the Company shall make any payment on the Subordinate
Liabilities which the holders thereof are not permitted to receive and retain
pursuant to Sections 2.2, 2.3, or 2.4, such payment shall be held in trust
for the benefit of, and shall be paid over promptly on demand by the Senior
Lender to, the holders of Senior Obligations, or their representative or
representatives, as their respective interests may appear, for application to
the payment of all Senior Obligations remaining due and payable until the same
shall have been paid in full, after giving effect to any concurrent payment or
distribution to the holders of such Senior Obligations.

 

Nothing contained in this Section 2
shall at any time prevent the Company from making, or prevent the Subordinated
Creditors from receiving or retaining, except as provided in Sections 2.2,
2.3, 2.4, and 2.5, payments with respect to Subordinate Liabilities in
accordance with their respective terms.

 

(b)           The
proceeds of any sale or other disposition (other than to the Company) of
Subordinate Liabilities in compliance with Section 4.1 hereof, which may
be received by a holder thereof, shall not be treated as a payment to which the
holders of Senior Obligations are entitled under this Agreement.

 

2.6.          Obligations
Absolute.  The provisions of this
Agreement are solely for the purpose of defining the relative rights of the
holders of Senior Obligations on the one hand and the holders of Subordinate
Liabilities on the other hand with respect to the priority of payment of the
various obligations of the Company to each of them.  Nothing herein shall impair, as between the
Company and the holder of any Subordinate Liabilities, the obligations of the
Company, which are unconditional and absolute, to pay to the holder thereof the
principal and interest thereon and any other liabilities encompassed in the
Subordinate Liabilities, all in accordance with their respective terms, nor
shall anything in this Agreement prevent the occurrence of any event of default
under the Purchase Agreement or the Notes, or prevent the holder of a
Subordinate Liability from exercising all remedies otherwise permitted by the
Purchase Agreement and the Notes, applicable law or otherwise, subject to
(a) the rights, if any, of the holders of Senior Obligations under Section 2.5
of this Agreement to receive cash or property otherwise payable or deliverable
to holders of Subordinate Liabilities, and (b) the restrictions on the
holders of Subordinate Liabilities in favor of the holders of Senior
Obligations set forth in Section 2 hereof.

 

2.7.          Subrogation.  Upon and subject to the payment in full of
the Senior Obligations, the holders of Subordinate Liabilities shall be
subrogated to the rights of the holders of Senior Obligations to receive
payments or distributions of assets of the Company applicable to the Senior
Obligations until the Subordinate Liabilities shall be paid in full; and, for the
purposes of such subrogation, no payments or distributions to the holders of
Senior Obligations to which the holders of Subordinate Liabilities would be
entitled except for the provisions of this Agreement shall, as between the
Company and its creditors other than the holders of Senior Obligations and the
holders of Subordinate Liabilities, be deemed to be a payment on account of the
Senior Obligations.  Each Subordinated
Creditor hereby waives any claim against the Senior Lender based on impairment
of the Subordinated Creditor’s rights of subrogation against the Company due to
the action or inaction of the Senior Lender or otherwise.

 

2.8.          Subordination
Not Affected.  Without the necessity
of any reservation of rights against or any notice to or further assent by the
Subordinated Creditors, any demand for payment of any Senior Obligations made
by any holder of Senior Obligations may be rescinded in whole or in part by

 

 

such holder and any Senior Obligations may be continued, the holders of
Senior Obligations may exercise or refrain from exercising any rights and
remedies against the Company and others, the Senior Obligations, or any
collateral security therefor or right of offset with respect thereto, may be
extended, modified, accelerated, compromised, waived, surrendered or released
by the holders of the Senior Obligations, and any agreement or instrument
evidencing, securing or otherwise relating to the Senior Obligations may be
amended or modified, all without impairing, abridging, releasing or affecting
the subordination provided for herein; provided that the holders of
Senior Obligations shall not increase the stated principal amount of the Senior
Obligations above seven million five hundred thousand Dollars
($7,500,000) in the aggregate or increase the rate of interest on the Senior
Obligations above the maximum rate stated in the Loan Agreement (as in effect
on the date hereof), or extend the maturities of the term loan portion of the
Senior Obligations beyond [maturity date],
without the prior written consent of the Subordinated Creditors holding
sixty-six and two-thirds percent (66 2/3%) in interest of the principal amount
of the Subordinate Liabilities then outstanding.   Each holder of Subordinate Liabilities
waives any and all notice (except notices specifically provided for herein) of
the creation or modification of any Senior Obligations and notice of or proof
of reliance by the holders of Senior Obligations upon the subordination
provided for herein.  The Senior
Obligations shall conclusively be deemed to have been created, contracted or
incurred in reliance upon the provisions of this Agreement.

 

2.9.          Right
To Retain Payment Received. 
Notwithstanding anything to the contrary herein, any payment in respect
of the Subordinate Liabilities which is not required to be held in trust for
the benefit of, or paid over to, the holders of Senior Obligations pursuant to Section 2.5,
and which is received by the holders thereof shall become the sole and absolute
property of the holders of Subordinate Liabilities and shall not, by virtue of
the provisions of this Agreement or otherwise, be subject to any payment over
or any distribution to or claim by any holders of Senior Obligations or any
other person.

 

2.10         Limited
Right to Cure.  The Subordinated
Creditors shall have the right no more than two (2) times in any rolling
360 day period to cure a default by the Company in making the payments
called for under the Loan Agreement by advancing to the Bank on behalf or for
the account of the Company the amount of the payment plus any applicable late
charge no later than the first calendar day of the month following the month in
which the payment was due.  The
Subordinated Creditors shall have no obligation to cure a payment default.  The Subordinated Creditors shall have no
right or ability to cure any default of the Company under the Loan Agreement
other than a payment default and the curing by the Subordinated Creditors of a
payment default shall not cure or in any way affect any other default or
condition or event which would constitute a default under the Loan
Agreement.  Unless and until the
Subordinated Creditors effect a cure of a payment default, the Company shall be
considered to be in default as a result of a failure to make a payment and the
Bank may accelerate and demand payment of the Senior Obligations as a result
thereof, subject to the obligation of the Bank to reverse the acceleration and
revoke the demand for payment if the Subordinated Creditors cure the monthly
payment default.

 

Section 3.  Notices.

 

3.1           By
the Bank to the Subordinated Creditors. 
The Bank agrees to provide the Subordinated Creditors with notice of any
default by the Company under the Loan Agreement simultaneously with giving
notice to the Company, provided, however, that the Bank shall
have no liability to the Subordinated Creditors for the Bank’s failure to
provide the Subordinated Creditors with any such notice(s), and further  provided,
that the failure to give any such notice(s) shall not alter, amend, or affect
the subordinate interest held by the Subordinated Creditors to the Bank
pursuant to this Agreement.

 

 

3.2           By
the Subordinated Creditors to the Bank. 
The Subordinated Creditors shall provide the Bank with notice of any
default by the Company under the Purchase Agreement simultaneously with giving
notice to the Company, provided, however, that the Subordinated
Creditors shall have no liability to the Bank for the Subordinated Creditor’s’
failure to provide the Bank with any notice required under this Section 3.2.

 

Section 4.  Miscellaneous.

 

4.1           Transfers.  No Subordinated Creditor shall sell, assign
or otherwise transfer, in whole or in part, any Subordinate Liabilities or any
interest therein, to any other person or entity (a “Transferee”) unless such
Transferee signs an acknowledgment in the form of Exhibit A hereto
and delivers a signed counterpart hereof acknowledged by the Company to each
other party hereto, whereby each such Transferee expressly acknowledges the
subordination provided for herein and agrees to be bound by all of the terms
hereof.

 

4.2.          Modifications.  No amendment, modification, termination or
waiver of any provision of this Agreement, or consent to any departure
therefrom, shall in any event be effective without the written concurrence of
the Senior Lender and the Subordinated Creditor holding sixty-six and
two-thirds percent (66 2/3%) in interest of the principal amount of the
Subordinate Liabilities then outstanding. 
However, nothing in this Agreement or in the right of the Senior Lender
to collect, enforce or receive payment of the Senior Obligations shall be
construed to restrict in any respect whatsoever the right of the Subordinated
Creditors to amend the Purchase Agreement; provided that no change to
any payment or repayment terms or amortization schedules or rates of interest
of any of the Company’s obligations to the Subordinated Creditors may be made
without the prior written consent of the Senior Lender.

 

4.3           Termination.  This Agreement shall remain in full force and
effect until payment in full of all Senior Obligations, provided that this
Agreement shall continue to be effective or be reinstated (as the case may be)
if at any time payment of any of the Senior Obligations is refunded or must
otherwise be returned by the Bank upon the bankruptcy, arrangement,
reorganization or similar proceeding for relief of debtors under state or
federal law, all as though such payment had not been made.

 

4.4           Notices.  All notices, requests, demands and other
communications provided for hereunder shall be in writing and mailed (by first
class registered or certified mail, postage prepaid), sent by express overnight
courier service or electronic facsimile transmission with a copy by mail, or
delivered to the applicable party at the addresses provided by such person in
writing to the Bank.  All such notices,
requests, demands and other communications shall, when mailed or otherwise sent
shall be effective (i) two days after being deposited in the mails or (ii) one
day after being delivered deposited with the express overnight courier service
or sent by electronic facsimile transmission (with receipt confirmed),
respectively, addressed as aforesaid.

 

4.5.          Third
Party Rights.  This Agreement is
solely for the benefit of the Senior Lender and the Subordinated Creditors, and
no other person shall have any right, benefit, priority or other interest
under, or because of the existence of, this Agreement.

 

4.6.          Counterparts.  This Agreement and any amendments, waivers,
consents, or supplements may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same
instrument.

 

 

4.7.          Governing
Law.  This Agreement shall be
governed by, and shall be construed and enforced in accordance with, the
internal laws of the Commonwealth of Massachusetts, without regard to conflicts
of laws principles.

 

4.8.          Waiver.  No waiver by any party hereto of any breach
hereof shall operate or be construed as a waiver of any subsequent breach
hereof.

 

4.9.          Descriptive
Headings.  The descriptive headings
of this Agreement are for convenience only and shall have no legal effect.

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

 

 

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

 

	
   

  	
  BANK:

  
	
   

  	
   

  
	
   

  	
  [NAME]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name (Printed):

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
   

  
	
   

  	
  [Address and Contact Person and Fax Number]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  With a Copy to:

  
	
   

  	
   

  
	
   

  	
  [Bank’s Attorney]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PURCHASERS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CAPITAL RESOURCE PARTNERS IV, L.P.,

  
	
   

  	
  A Delaware limited partnership

  
	
   

  	
   

  
	
   

  	
  By: CRP PARTNERS IV, L.L.C.,

  
	
   

  	
  its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name (Printed):

  
	
   

  	
   

  	
  Title: Managing Member

  

 

 

	
   

  	
  Notice Address:

  
	
   

  	
   

  
	
   

  	
  CAPITAL RESOURCE PARTNERS IV, L.P.

  
	
   

  	
  c/o CAPITAL RESOURCE PARTNERS

  
	
   

  	
  85 Merrimac Street, Suite 200

  
	
   

  	
  Boston, Massachusetts 02114

  
	
   

  	
  ATTN:

  
	
   

  	
  Facsimile Number: (617) 723-9819

  
	
   

  	
   

  
	
   

  	
  With a Copy to:

  
	
   

  	
   

  
	
   

  	
  Andrew E. Taylor, Jr., Esq.

  
	
   

  	
  Kathy A. Fields, Esq.

  
	
   

  	
  TESTA, HURWITZ & THIBEAULT, LLP

  
	
   

  	
  125 High Street

  
	
   

  	
  Boston, MA 02110

  
	
   

  	
  Facsimile Number: (617) 248-7100

  

 

 

The Company, by its execution of this
Agreement, hereby acknowledges and agrees to the foregoing provisions of this
Agreement.

 

	
   

  	
  SOFTBRANDS, INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name (Printed):

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
   

  
	
   

  	
  [Address and Fax Number]

  

 

EXHIBIT A

 

ACKNOWLEDGMENT

 

 

The undersigned purchaser, assignee, or
transferee of the Subordinate Liabilities described in Schedule 1
attached hereto, hereby acknowledges the terms of this Agreement and the
subordination provided for herein and agrees to be bound by all of the terms
hereof.

 

 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name (Printed):

  
	
   

  	
  Date

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ATTN:

  	
   

  
	
   

  	
  Facsimile Number:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Acknowledged and Agreed:

  	
   

  
	
   

  	
   

  
	
  SOFTBRANDS, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name (Printed):

  	
   

  
	
   

  	
  Title:

  	
   

  
									

 

 

EXHIBIT 7.01(m)

 

PREFERRED STOCK SUBORDINATION
AGREEMENT

 

PREFERRED STOCK SUBORDINATION AGREEMENT (this
“Agreement”) dated as of                          
    , 20   by and among Softbrands, Inc., a
Delaware corporation (the “Company”), [Bank], a
national banking association (the “Bank”), Capital Resource Partners IV, L.P.,
a Delaware limited partnership (the “Purchaser”), and the holders of Preferred
Stock (as defined herein) whose names appear on the signature pages to this
Agreement.

 

W I T N E S S
E T H:

 

WHEREAS, the parties hereto (other than the
Company) are the holders of certain obligations and securities of the Company
and the parties hereto desire to establish hereby the relative rights and
priorities of payment of such obligations and securities to such parties.

 

NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:

 

SECTION 1.  DEFINITIONS.

 

As used in this Agreement, the following
terms shall have the following meanings:

 

“Certificate of Incorporation” shall
mean the Company’s certificate of incorporation filed on                   
    , 20    with the Secretary of the State
of the State of Delaware.

 

“Loan Agreement” shall mean the [Loan Agreement] dated the date hereof by and between the
Bank and the Company, and the documents ancillary thereto as provided for
therein.

 

“Notes” shall mean the 12.5% Senior
Subordinated Secured Notes due (November      ,
2009) issued by the Company pursuant to the Purchase Agreement, and any notes
issued in exchange therefor or in replacement thereof, as the same may be
amended, modified or supplemented.

 

“Preferred Stock” shall mean the
Company’s [describe Preferred Stock], as
authorized on the date of this Agreement.

 

“Purchase Agreement” shall mean the
Senior Subordinated Secured Note and Warrant Purchase Agreement dated as of                       ,
2002 by and among the Company and the Purchasers, as hereinafter amended,
modified or supplemented.

 

“Senior Creditor” shall mean any
holder of Senior Obligations as such.

 

“Senior Obligations” shall mean all
indebtedness of the Company for principal, interest, fees, expenses and other
amounts now existing or hereafter incurred or due and owing under the Loan
Agreement, the Notes and/or the Purchase Agreement.

 

 

“Senior Subordination Agreement” shall
mean any agreement or instrument pursuant to which Senior Obligations (other
than the Senior Obligations created pursuant to the Loan Agreement) or
Subordinated Obligations are subordinated in right of payment to Senior Debt
(as defined in the Purchase Agreement), including, without limitation, the
Subordination and Intercreditor Agreement dated the date hereof by and among
the Purchasers and the Bank.

 

“Shareholders’ Agreement” shall mean
the Company’s shareholders’ agreement, dated as of              
    , 20   , by and among the Company and
the other parties set forth on the signature pages thereto.

 

“Subordinated Investor” shall mean any
holder of Subordinated Obligations as such.

 

“Subordinated Obligations” shall mean
any and all obligations or liabilities of the Company now existing or hereafter
arising, absolute or contingent, arising by contract, at law or otherwise, with
respect to (a) dividends payable on Preferred Stock, (b) the
purchase, redemption or other acquisition of Preferred Stock, and (c) any
other amount payable to holders of Preferred Stock as such.

 

Unless otherwise defined herein, capitalized terms used in this
Agreement shall have the meanings assigned to them in the Purchase Agreement.

 

SECTION 2.  SUBORDINATION.

 

2.1           Subordination.  Each of the Subordinated Investors agrees,
for itself and each future holder of Subordinated Obligations and for the
benefit of all future holders of Senior Obligations, that in the manner and to
the extent set forth in this Section 2, the Subordinated Obligations and
the Preferred Stock are and shall be expressly subordinate and junior in right
of payment to all Senior Obligations.

 

2.2           Restrictions
on Payments.  So long as any Senior
Obligations are outstanding, neither the Company nor any of its Subsidiaries
will make or cause to be made, and no Subordinated Investor will demand, accept
or receive, directly or indirectly, any payment (in cash, property, by set-off
or otherwise) on or with respect to Subordinated Obligations (except securities
that are subordinate and junior in right of payment to the Senior Obligations).

 

2.3           Turn-Over
of Payments Received.  If any
Subordinated Investor receives any payment or distribution on Subordinated
Obligations which it is not entitled to receive and retain under the provisions
of this Section 2, such Subordinated Investor will hold any amount so
received in trust for the Senior Creditors and shall forthwith remit such
payment in the form received (with any necessary endorsements) to the Senior
Creditors (except to the extent otherwise required pursuant to any Senior
Subordination Agreement).

 

2.4           Limitations
on Remedies.  So long as any Senior
Obligations are outstanding, no Subordinated Investor shall (a) commence
or join (unless the Senior Creditors shall also join) in any proceeding against
the Company or any of its Subsidiaries under any bankruptcy, reorganization,
readjustment of debt, arrangement of debt, receivership, liquidation or insolvency
law or statute of any federal or state government, or (b) commence any
action or proceeding against the Company or any of its Subsidiaries to enforce
payment or to collect payment of all or any part of the Subordinated
Obligations.

 

2.5           Subordination
Not Affected.  A Senior Creditor may
at any time and from time to time, without the consent of or notice to the
Subordinated Investors, without incurring liability to the Subordinated
Investors, and without impairing or releasing the obligations of the Subordinated
Investors

 

 

under this Agreement: (a) change the manner, place or terms of
payment or change the time of payment of or renew, alter, waive, release or
compromise the Senior Obligations or any security therefor, or amend or modify
in any manner any agreement, note, guaranty or other instrument evidencing or
securing or otherwise relating to any Senior Obligations, except that the
Senior Creditors shall not extend the maturity of the Senior Obligation beyond                    
      , 20    without the written
consent of the Subordinated Investors; (b) exercise or refrain from
exercising any rights against the Company and others (including Subordinated
Investors); and (c) apply any sums by whomsoever paid or howsoever
realized to the Senior Obligations.

 

SECTION 3.  MISCELLANEOUS.

 

3.1           Instrument
Legend.  Any certificate, agreement
or instrument evidencing any of the Subordinated Obligations shall be inscribed
with a legend or shall otherwise conspicuously indicate that the obligations
evidenced thereby are subordinate and junior in right of payment to the Senior
Obligations in the manner and to the extent set forth in this Agreement.

 

3.2           Transfer
of Claims.  No Subordinated Investor
shall sell, assign or otherwise transfer, in whole or in part, any Subordinated
Obligations or any interest therein, unless such sale, assignment or transfer
is made expressly subject to and the transferee becomes bound by the terms of
this Agreement applicable to such Subordinated Obligations.

 

3.3           Waivers
by Subordinated Investors.  All
Senior Obligations shall be deemed to have been made or incurred in reliance
upon this Agreement.  The Subordinated
Investors expressly waive all notice of the acceptance by the Senior Creditors
of the subordination and other provisions of this Agreement and all other
notices whatsoever, and expressly waive proof of reliance by the Senior
Creditors upon the subordination and other agreements herein set forth.  The Senior Creditors shall have no liability
to the Subordinated Investors for any and all actions which the Senior
Creditors, in good faith and without willful misconduct or breach of an express
obligation to the Subordinated Investors hereunder, take or omit to take with
respect to the agreements or instruments creating, evidencing or securing
Senior Obligations or the collection of the Senior Obligations.

 

3.4           Obligations
Unimpaired.  The provisions of this
Agreement are solely for the purpose of defining the relative rights of the
holders of Senior Obligations, on the one hand, and the holders of Subordinated
Obligations, on the other hand, with respect to the priority of payment of the
various obligations of the Company to each of them.  Nothing herein shall impair, as between the
Company and any holder of Preferred Stock, the obligations of the Company to
pay to the holder thereof dividends payable on Preferred Stock, amounts payable
upon the purchase, redemption or other acquisition of the Preferred Stock and
any other amount payable to the holders of Preferred Stock as such, all in
accordance with the rights, restrictions, privileges and preferences of the
Preferred Stock as set forth in the Certificate of Incorporation, nor shall
anything in this Agreement prevent a holder of Preferred Stock from exercising
all remedies otherwise permitted by the Certificate of Incorporation, the
Purchase Agreement, the Shareholders Agreement, applicable law or otherwise,
subject to (a) the rights, if any, of the holders of Senior Obligations under Section 2.3
of this Agreement to receive payments or distributions otherwise payable or
deliverable to holders of Subordinated Obligations, and (b) the restrictions on
the holders of Subordinated Obligations in favor of the holders of Senior
Obligations set forth in Section 2 hereof.

 

3.5           Subrogation.  Upon and subject to the payment in full of
the Senior Obligations, the holders of Subordinated Obligations shall be
subrogated to the rights of the holders of Senior Obligations to receive
payments or distributions of assets of the Company applicable to the Senior
Obligations until

 

 

the Subordinated Obligations shall be paid in full; and, for the
purposes of such subrogation, no payments or distributions to the holders of
Senior Obligations to which the holders of Subordinated Obligations would be entitled
except for the provisions of this Agreement shall, as between the Company and
its creditors other than the holders of Senior Obligations and Subordinated
Obligations, be deemed to be a payment on account of the Senior Obligations.  Each holder of Preferred Stock hereby waives
any claim against the Senior Creditors based on impairment of the rights of
subrogation of the holders of Subordinated Obligations against the Company due
to the action or inaction of the Senior Creditors or otherwise.

 

3.6           Governing
Law and Consent to Jurisdiction. This Agreement shall be construed and
interpreted, and the rights and obligations of the parties hereto determined,
in accordance with the laws of the State of [Delaware].  The parties consent to the jurisdiction of the
courts of the State of                      
as to any issues related to this Agreement, including the validity,
enforceability, or interpretation thereof, which require judicial resolution.

 

3.7           Successors
and Assigns.  This agreement shall be
binding upon, and shall inure to the benefit of, the parties hereto and their
respective transferees, successors and assigns, including without limitation
any receiver, trustee, custodian, or debtor-in-possession, as holders of Senior
Obligations and Subordinated Obligations.

 

3.8           Notices.  All notices, requests, demands and other
communications provided for hereunder shall be in writing and mailed (by first
class registered or certified mail, postage prepaid), sent by express overnight
courier service or electronic facsimile transmission with a copy by mail, or
delivered to the applicable party at the address set forth on Exhibit A
to this Agreement, or at such other address as shall be designated by such
person in a written notice to the other party complying as to delivery with the
terms of this Section.  All such notices,
requests, demands and other communications shall, when mailed or otherwise sent
shall be effective (i) two days after being deposited in the mails or (ii) one
day after being delivered deposited with the express overnight courier service
or sent by electronic facsimile transmission (with receipt confirmed),
respectively, addressed as aforesaid. 
Any notice given hereunder shall be in writing and shall be deemed to
have been validly given to a party hereto (i) three business days after
being deposited in the United States Postal Service as registered or certified
mail, return receipt requested, with proper postage prepaid, and addressed to
such party at its address set forth on Exhibit A to this Agreement,
or at such other address as such party may designate to the other parties by
like notice; or (ii) on the date of delivery at such party’s address as
specified above by hand delivery, telex, telegraph or facsimile transmitter.

 

3.9           Section Titles.
 The section titles contained in
this Agreement are and shall be without substantive meaning or content of any
kind whatsoever, are not a part of the agreement between the parties hereto,
and are provided solely for convenience of reference.

 

3.10         Waivers,
etc.  No failure to exercise and no
delay in exercising any right, power or privilege under this Agreement shall
operate as a waiver thereof; and no single or partial exercise of any right,
power or privilege under this Agreement shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies provided in this
Agreement are cumulative and shall not be exclusive of any rights or remedies
provided by other agreements or by law.

 

3.11         Amendments.  The subordination provisions contained herein
are for the benefit of the holders from time to time of Senior Obligations, and
may be rescinded or cancelled, and except as otherwise expressly provided for
herein, amended or modified, only with the express prior written

 

 

consent of all holders of the Senior Obligations and a majority in
interest of the Subordinated Obligations.

 

3.12         Counterparts.  This Agreement may be executed in any number
of separate counterparts, all of which shall constitute one and the same
agreement.

 

 

[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

 

IN WITNESS WHEREOF, this Preferred Stock
Subordination Agreement has been executed by the parties hereto as of the day
and year first above set forth.

 

	
   

  	
  SOFTBRANDS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [BANK]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  CAPITAL RESOURCE PARTNERS IV, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  CRP Partners IV, L.L.C., L.P.,

  
	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name (Printed):

  
	
   

  	
   

  	
  Title: Managing Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [SIGNATURE BLOCKS FOR PREFERRED

  
	
   

  	
  STOCKHOLDERS]

  
				

 

 

EXHIBIT 7.02(b)

 

JUNIOR
SUBORDINATION AND INTERCREDITOR AGREEMENT

 

This Subordination and Intercreditor
Agreement (this “Agreement”) is entered into as of                            
    , 20   by and among CAPITAL RESOURCE PARTNERS
IV, L.P., a Delaware limited partnership (the “Purchasers”), SoftBrands, Inc.,
a Delaware corporation (the “Company”) and the undersigned (the “Junior Lender”).

 

RECITALS

 

WHEREAS, the Company desires to enter into a [Loan Agreement] to be dated as of                   
    , 20   with the Junior Lender (such [Loan Agreement], as it may be amended, modified or
supplemented from time to time, together with all instruments, promissory notes
and other related documents, being the “Loan Agreement”), which would permit
the Company to borrow up to an aggregate principal amount of [Dollars] Dollars ($                           )
on the terms and conditions set forth therein;

 

WHEREAS, the Company also has entered into a
Senior Subordinated Secured Note and Warrant Purchase Agreement dated as of November     ,
2002 with the Purchasers (such Senior Subordinated Secured Note and Warrant
Purchase Agreement, as it may be amended, modified or supplemented from time to
time, being the “Purchase Agreement”), where the Purchasers lent to the Company
an aggregate principal amount of twenty million Dollars ($20,000,000) on the
terms and conditions set forth therein in exchange for 12.5% Senior
Subordinated Notes due                        ,
2009 in the aggregate principal amount of twenty million Dollars ($20,000,000)
(the “Notes”) and warrants to purchase shares of the Company’s common stock
(the “Warrants”) and;

 

WHEREAS, as a condition to entering the
Purchase Agreement, the Purchasers require that the Junior Lender subordinate,
to the extent and in the manner hereinafter set forth, the obligations of the
Company to the Junior Lender pursuant to the Loan Agreement to the obligations
of the Company to the Purchasers pursuant to the Purchase Agreement.

 

NOW, THEREFORE, in consideration of the
foregoing premises and the covenants contained herein, the parties hereto agree
as follows:

 

AGREEMENT

 

Section 1.  Definitions.

 

As used in this Agreement, the terms defined
above shall have their respective meanings set forth above and the following
terms shall have the following meanings:

 

1.1.          “Senior
Event of Default” shall mean the Company’s failure to pay any installment of
principal or interest on any Senior Obligations when due, whether at stated
maturity, by acceleration or otherwise, or failure to pay any other amount due
under the Purchase Agreement within ten (10) days after the due date thereof.

 

 

1.2.          “Senior
Lender” shall mean the Purchasers, and their successors and assigns, and any
holder of the Notes.

 

1.3.          “Senior
Obligations” shall mean all indebtedness of the Company to the Senior Lender
for (a) principal of and interest on the Notes, together with any
prepayment fees or premiums under the Notes, and (b) all other
indebtedness or liabilities of the Company, direct or indirect, contingent or
noncontingent, now existing or hereafter incurred or now or hereafter due and
owing to the Senior Lender under or with respect to the Notes or the Purchase
Agreement, including fees, reimbursement obligations, expenses, costs, and
post-petition interest in bankruptcy.

 

1.4.          “Subordinate
Liabilities” shall mean all indebtedness of the Company to the Junior Lender
for principal, interest, fees, indemnities, expenses and costs (including
collection costs and expenses and post-petition interest in bankruptcy) or
other amounts, including amounts advanced to protect the liens and security
interests of the Junior Lender as provided under the Loan Agreement, direct or
indirect, contingent or noncontingent, secured or unsecured, now existing or
hereafter incurred or now or hereafter due and owing, pursuant to the terms of
the Loan Agreement.

 

1.5.          “Subordinated
Creditors” shall mean the Junior Lender, and its successors and assigns, and
any holder of the Subordinate Liabilities.

 

Section 2.  Subordination.

 

2.1.          Subordination.  So long as any Senior Obligations are
outstanding, each Subordinated Creditor agrees, for itself and each future
holder of the Subordinate Liabilities held by it, that the Subordinate
Liabilities are and shall be expressly subordinate and junior in right of
payment to all Senior Obligations in the manner and solely to the extent set
forth in this Section 2. Any lien, security interest in, mortgage, pledge
of or into any of the assets of the Company in favor of or for the benefit of
the Subordinated Creditors, whether now existing or arising in the future, are
hereby expressly made subordinate and junior in priority and right of
enforcement to any liens, security interests, mortgages or pledges of or into
any of the assets of the Company, both now existing and arising in the future,
securing any of the Senior Obligations.

 

2.2.          Insolvency,
Etc.

 

(a)           In
the event of any insolvency, bankruptcy, receivership, liquidation,
reorganization or other similar proceedings, relative to the Company or to its
property, or in the event of any proceedings for voluntary liquidation,
dissolution or other winding up of the Company, whether or not involving
insolvency or bankruptcy, so long as any Senior Obligations are outstanding,
the holders of Senior Obligations shall be entitled in any such proceedings to
receive payment in full of all Senior Obligations before the holders of
Subordinate Liabilities are entitled in such proceedings to receive any payment
on account of the Subordinate Liabilities, and to that end in any such
proceedings, so long as any Senior Obligations remain outstanding, any payment
or distribution of any kind or character, whether in cash or in other property,
to which the holders of Subordinate Liabilities would be entitled but for the
provisions hereof (except securities which are subordinate and junior in right
of payment to all Senior Obligations then outstanding) shall be delivered to
the holders of Senior Obligations to the extent necessary to make payment in
full of all Senior Obligations remaining unpaid, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Obligations
in respect thereof.

 

(b)           Upon
any holder of Subordinate Liabilities failing to take within five (5) business
days of such request any of the following actions requested by the holders of
the Senior

 

 

Obligations, so long as any Senior Obligations remain outstanding, the
holders of Senior Obligations (or their representatives), as attorney-in-fact for
such holder of Subordinate Liabilities, are (A) authorized and empowered, in
any proceedings described in Section 2.2(a), in their own names or in the
names of the holders of Subordinate Liabilities, to (i) file claims,
proofs of claim and other instruments of similar character reasonably necessary
to enforce the obligations of the Company in respect of the Subordinate
Liabilities, and (ii) receive and apply to the Senior Obligations every
payment or distribution referred to in Section 2.2(a) to which such
holders of Subordinate Liabilities are entitled in respect thereof and give
acquittance therefor and (B) each holder of Subordinate Liabilities hereby
appoints the holders of Senior Obligations, or any agent or representative
designated by them for the purpose, as attorney-in-fact for such holder of
Subordinate Liabilities, to (i) demand, sue for, collect and receive any
and all such monies or other assets and give acquittance therefor and to file
any claim, proof of claim or other instrument of similar character, and
(ii) to take such other action incidental thereto in its own name or in
the name of the holders of Subordinate Liabilities as the holders of Senior
Obligations may reasonably deem necessary; and the holders of Subordinate
Liabilities will execute and deliver such other and further powers of attorney
or other instruments as the holders of Senior Obligations, or any agent or
representative designated by them for the purpose, may request in order to
accomplish the foregoing.

 

2.3.          Senior
Acceleration.  (a) In the event that
all of the Senior Obligations held by the Senior Lender have become due and
payable (at stated maturity, by demand, by acceleration or otherwise) under
circumstances in which Section 2.2 is not applicable and after notice by the
Senior Lender to the Subordinated Creditors, no Subordinated Creditor shall be
entitled to (i) receive or retain any direct or indirect payment (in cash,
property, by set-off or otherwise) on or with respect to the Subordinate
Liabilities until payment in full of all such Senior Obligations shall have
been made or otherwise provided for to the satisfaction of the holders thereof,
(ii) commence or join (unless the Senior Lender shall also join) in any
involuntary proceeding against the Company under any bankruptcy,
reorganization, receivership, liquidation or insolvency law or statute of any
federal or state government, (iii) commence any action or proceeding against
the Company to enforce payment of all or any part of the Subordinate
Liabilities or (iv) enforce any lien it may at any time have on the Company’s
property, real or personal, as security for any of the Subordinate Liabilities.

 

(b)           In
the event of a Senior Event of Default, the Senior Lender agrees to notify the
Subordinated Creditors no later than ten (10) business days after any
acceleration of the Senior Obligations as to the aggregate amount of principal,
interest, penalties and actual third party collection costs and expenses
outstanding under the Notes (“Payoff Amount”) as of the date of such
notice.  After the receipt of any such
notice, the Subordinated Creditors shall have the option, which option may be
exercised by delivering written notice to the Senior Lender within
ten (10) business days, to purchase from the Senior Lender all of the
Senior Lender’s rights in, under and pursuant to the Notes without recourse or
representation or warranty of any kind (except as to the amount outstanding
thereunder and the ownership of the Senior Lender’s interest in the Notes), for
a purchase price equal to the Payoff Amount as of the date of purchase.  In the event the Subordinated Creditors
exercise the above option as set forth above, the closing of the purchase of
the Notes shall occur within thirty (30) days from the date of the Senior
Lender’s receipt of the Subordinated Creditors’ notice exercising the
option.  During the period:  (a) between the Subordinated Creditors’
receipt of the Senior Lender’s notice of the acceleration of the Senior
Obligations and the earlier of (i) the Senior Lender’s receipt of written
notice from the Subordinated Creditors exercising the option set forth above or
agreeing not to exercise such option, and (ii) ten (10) business days
after the Subordinated Creditors’ receipt of the notice of acceleration of the
Senior Obligations; and (b) between the date the Subordinated Creditors
exercise the option and the date of the purchase of the Notes (provided such
date occurs within thirty (30) days from the date of the exercising
of the option), the Senior Lender shall not (x) foreclose, realize on
(including, without limitation, the notification of any account debtor),
liquidate, or take possession of, any of the collateral

 

 

securing the obligations under the Notes, (y) commence or join in the
commencement of any bankruptcy or insolvency proceeding against the Company or
any of its direct or indirect subsidiaries, or (z) commence or take any legal
or other similar proceedings (whether at law, or equity, by arbitration or
otherwise) to enforce any of its rights and remedies or any of the Purchase
Agreement or applicable law against the Company or any of its direct or
indirect subsidiaries.

 

2.4.          Senior
Events of Default.

 

So long as a Senior Event of Default has
occurred and is continuing under circumstances in which Sections 2.2 and
2.3 are not applicable, and after written notice by the Senior Lender to the
Subordinated Creditors, no Subordinated Creditor shall be entitled to receive
or retain any direct or indirect payment (in cash, property, by set-off or
otherwise) on or with respect to the Subordinate Liabilities.

 

2.5.          Turn-Over
of Payments Received.

 

(a)           In
the event that the Company shall make any payment on the Subordinate
Liabilities which the holders thereof are not permitted to receive and retain
pursuant to Sections 2.2, 2.3, or 2.4, such payment shall be held in trust
for the benefit of, and shall be paid over promptly on demand by the Senior
Lender to, the holders of Senior Obligations, or their representative or
representatives, as their respective interests may appear, for application to
the payment of all Senior Obligations remaining due and payable until the same
shall have been paid in full, after giving effect to any concurrent payment or
distribution to the holders of such Senior Obligations.

 

The Company shall not make, or pay to the
Subordinated Creditors any cash payments with respect to Subordinate
Liabilities until the Senior Lender has received full payment of all amounts
due and owing to the Senior Lender under or with respect to the Notes or the
Purchase Agreement.

 

(b)           The
proceeds of any sale or other disposition (other than to the Company) of
Subordinate Liabilities in compliance with Section 3.1 hereof, which may
be received by a holder thereof, shall not be treated as a payment to which the
holders of Senior Obligations are entitled under this Agreement.

 

2.6.          Obligations
Absolute.  The provisions of this
Agreement are solely for the purpose of defining the relative rights of the
holders of Senior Obligations on the one hand and the holders of Subordinate
Liabilities on the other hand with respect to the priority of payment of the
various obligations of the Company to each of them.  Nothing herein shall impair, as between the
Company and the holder of any Subordinate Liabilities, the obligations of the
Company, which are unconditional and absolute, to pay to the holder thereof the
principal and interest thereon and any other liabilities encompassed in the
Subordinate Liabilities, all in accordance with their respective terms, nor
shall anything in this Agreement prevent the occurrence of any event of default
under the Loan Agreement, or prevent the holder of a Subordinate Liability from
exercising all remedies otherwise permitted by the Loan Agreement, applicable
law or otherwise, subject to (a) the rights, if any, of the holders of
Senior Obligations under Section 2.5 of this Agreement to receive cash or
property otherwise payable or deliverable to holders of Subordinate
Liabilities, and (b) the restrictions on the holders of Subordinate
Liabilities in favor of the holders of Senior Obligations set forth in Section 2
hereof.

 

 

2.7.          Subrogation.  Upon and subject to the payment in full of
the Senior Obligations, the holders of Subordinate Liabilities shall be
subrogated to the rights of the holders of Senior Obligations to receive
payments or distributions of assets of the Company applicable to the Senior
Obligations until the Subordinate Liabilities shall be paid in full; and, for
the purposes of such subrogation, no payments or distributions to the holders
of Senior Obligations to which the holders of Subordinate Liabilities would be
entitled except for the provisions of this Agreement shall, as between the
Company and its creditors other than the holders of Senior Obligations and the
holders of Subordinate Liabilities, be deemed to be a payment on account of the
Senior Obligations.  Each Subordinated
Creditor hereby waives any claim against the Senior Lender based on impairment
of the Subordinated Creditor’s rights of subrogation against the Company due to
the action or inaction of the Senior Lender or otherwise.

 

2.8.          Subordination
Not Affected.  Without the necessity
of any reservation of rights against or any notice to or further assent by the
Subordinated Creditors, any demand for payment of any Senior Obligations made
by any holder of Senior Obligations may be rescinded in whole or in part by
such holder and any Senior Obligations may be continued, the holders of Senior
Obligations may exercise or refrain from exercising any rights and remedies against
the Company and others, the Senior Obligations, or any collateral security
therefor or right of offset with respect thereto, may be extended, modified,
accelerated, compromised, waived, surrendered or released by the holders of the
Senior Obligations, and any agreement or instrument evidencing, securing or
otherwise relating to the Senior Obligations may be amended or modified, all
without impairing, abridging, releasing or affecting the subordination provided
for herein.   Each holder of Subordinate
Liabilities waives any and all notice (except notices specifically provided for
herein) of the creation or modification of any Senior Obligations and notice of
or proof of reliance by the holders of Senior Obligations upon the
subordination provided for herein.  The
Senior Obligations shall conclusively be deemed to have been created,
contracted or incurred in reliance upon the provisions of this Agreement.

 

2.9.          Right
To Retain Payment Received.  Upon
full payment of all amounts due and owing to the Senior Lender under or with
respect to the Notes or the Purchase Agreement, any payment in respect of the
Subordinate Liabilities which is not required to be held in trust for the
benefit of, or paid over to, the holders of Senior Obligations pursuant to Section 2.5,
and which is received by the holders thereof shall become the sole and absolute
property of the holders of Subordinate Liabilities and shall not, upon full
payment of all amounts due and owing to the Senior Lender under or with respect
to the Notes or the Purchase Agreement, be subject to any payment over or any
distribution to or claim by any holders of Senior Obligations or any other
person.

 

Section 3. Miscellaneous.

 

3.1           Transfers.  No Subordinated Creditor shall sell, assign
or otherwise transfer, in whole or in part, any Subordinate Liabilities or any
interest therein, to any other person or entity (a “Transferee”) unless such
Transferee signs an acknowledgment in the form of Exhibit A hereto
and delivers a signed counterpart hereof acknowledged by the Company to each
other party hereto, whereby each such Transferee expressly acknowledges the
subordination provided for herein and agrees to be bound by all of the terms
hereof.

 

3.2.          Modifications.  No amendment, modification, termination or
waiver of any provision of this Agreement, or consent to any departure
therefrom, shall in any event be effective without the written concurrence of
the Senior Lender and the Subordinated Creditor holding sixty-six and
two-thirds percent (66 2/3%) in interest of the principal amount of the
Subordinate Liabilities then outstanding. 
However, nothing in this Agreement or in the right of the Senior Lender
to collect, enforce

 

 

or receive payment of the Senior Obligations shall be construed to
restrict in any respect whatsoever the right of the Subordinated Creditors to
amend the Loan Agreement; provided that no change to any payment or
repayment terms or amortization schedules or rates of interest of any of the
Company’s obligations to the Subordinated Creditors may be made without the
prior written consent of the Senior Lender.

 

3.3           Termination.  This Agreement shall remain in full force and
effect until payment in full of all Senior Obligations, provided that this
Agreement shall continue to be effective or be reinstated (as the case may be)
if at any time payment of any of the Senior Obligations is refunded or must
otherwise be returned by the Purchasers upon the bankruptcy, arrangement,
reorganization or similar proceeding for relief of debtors under state or federal
law, all as though such payment had not been made.

 

3.4           Notices.  All notices, requests, demands and other
communications provided for hereunder shall be in writing and mailed (by first
class registered or certified mail, postage prepaid), sent by express overnight
courier service or electronic facsimile transmission with a copy by mail, or
delivered to the applicable party at the addresses provided by such person in
writing to the Purchasers.  All such
notices, requests, demands and other communications shall, when mailed or
otherwise sent shall be effective (i) two days after being deposited in the
mails or (ii) one day after being delivered deposited with the express
overnight courier service or sent by electronic facsimile transmission (with
receipt confirmed), respectively, addressed as aforesaid.

 

3.5.          Third
Party Rights.  This Agreement is
solely for the benefit of the Senior Lender and the Subordinated Creditors, and
no other person shall have any right, benefit, priority or other interest
under, or because of the existence of, this Agreement.

 

3.6.          Counterparts.  This Agreement and any amendments, waivers,
consents, or supplements may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument.

 

3.7.          Governing
Law.  This Agreement shall be
governed by, and shall be construed and enforced in accordance with, the
internal laws of the Commonwealth of Massachusetts, without regard to conflicts
of laws principles.

 

3.8.          Waiver.  No waiver by any party hereto of any breach
hereof shall operate or be construed as a waiver of any subsequent breach
hereof.

 

3.9.          Descriptive
Headings.  The descriptive headings
of this Agreement are for convenience only and shall have no legal effect.

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

 

 

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

 

	
   

  	
  PURCHASERS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CAPITAL RESOURCE PARTNERS IV, L.P.,

  
	
   

  	
  A Delaware limited partnership

  
	
   

  	
   

  
	
   

  	
  By: 
  CRP PARTNERS IV, L.L.C.,

  
	
   

  	
  its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name (Printed):

  
	
   

  	
   

  	
  Title: 
  Managing Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
   

  
	
   

  	
  CAPITAL RESOURCE PARTNERS IV, L.P.

  
	
   

  	
  c/o CAPITAL RESOURCE PARTNERS

  
	
   

  	
  85 Merrimac Street, Suite 200

  
	
   

  	
  Boston, Massachusetts 02114

  
	
   

  	
  ATTN:

  
	
   

  	
  Facsimile Number: (617) 723-9819

  
	
   

  	
   

  
	
   

  	
  With a Copy to:

  
	
   

  	
   

  
	
   

  	
  Andrew E. Taylor, Jr., Esq.

  
	
   

  	
  Kathy A. Fields, Esq.

  
	
   

  	
  TESTA, HURWITZ & THIBEAULT, LLP

  
	
   

  	
  125 High Street

  
	
   

  	
  Boston, MA 02110

  
	
   

  	
  Facsimile Number: (617) 248-7100

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JUNIOR LENDER:

  
	
   

  	
   

  
	
   

  	
  [NAME]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name (Printed):

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Notice Address:

  

 

 

	
   

  	
  [Address and Contact Person and Fax Number]

  

 

The Company, by its execution of this
Agreement, hereby acknowledges and agrees to the foregoing provisions of this
Agreement.

 

	
   

  	
  SOFTBRANDS, INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name (Printed):

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
   

  
	
   

  	
  [Address and Fax Number]

  

 

 

EXHIBIT A

 

ACKNOWLEDGMENT

 

The undersigned purchaser, assignee, or
transferee of the Subordinate Liabilities described in Schedule 1
attached hereto, hereby acknowledges the terms of this Agreement and the
subordination provided for herein and agrees to be bound by all of the terms
hereof.

 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name (Printed):

  
	
   

  	
  Date

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ATTN:

  	
   

  
	
   

  	
  Facsimile Number:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Acknowledged and Agreed:

  	
   

  
	
   

  	
   

  
	
  SOFTBRANDS, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name (Printed):

  	
   

  
	
   

  	
  Title:

  	
   

  
									

 

 

SCHEDULE 7.02(c)

 

Operating
Leases

 

	
  Fiscal Quarter Ended

  	
   

  	
  Operating Leases

  	
   

  
	
  December 31,
  2002

  	
   

  	
  $

  	
  1,125,000

  	
   

  
	
  March 31,
  2003

  	
   

  	
  $

  	
  1,125,000

  	
   

  
	
  June 30,
  2003

  	
   

  	
  $

  	
  1,125,000

  	
   

  
	
  September 30,
  2003

  	
   

  	
  $

  	
  1,125,000

  	
   

  
	
  December 31,
  2003

  	
   

  	
  $

  	
  1,125,000

  	
   

  
	
  March 31,
  2004

  	
   

  	
  $

  	
  1,225,000

  	
   

  
	
  June 30,
  2004

  	
   

  	
  $

  	
  1,225,000

  	
   

  
	
  September 30,
  2004

  	
   

  	
  $

  	
  1,225,000

  	
   

  
	
  December 31,
  2004

  	
   

  	
  $

  	
  1,225,000

  	
   

  
	
  March 31,
  2005

  	
   

  	
  $

  	
  1,325,000

  	
   

  
	
  June 30,
  2005

  	
   

  	
  $

  	
  1,325,000

  	
   

  
	
  September 30,
  2005

  	
   

  	
  $

  	
  1,325,000

  	
   

  
	
  December 31,
  2005

  	
   

  	
  $

  	
  1,325,000

  	
   

  
	
  March 31,
  2006

  	
   

  	
  $

  	
  1,425,000

  	
   

  
	
  June 30,
  2006

  	
   

  	
  $

  	
  1,425,000

  	
   

  
	
  September 30,
  2006

  	
   

  	
  $

  	
  1,425,000

  	
   

  
	
  December 31,
  2006

  	
   

  	
  $

  	
  1,425,000

  	
   

  
	
  March 31,
  2007

  	
   

  	
  $

  	
  1,525,000

  	
   

  
	
  June 30,
  2007

  	
   

  	
  $

  	
  1,525,000

  	
   

  
	
  September 30,
  2007

  	
   

  	
  $

  	
  1,525,000

  	
   

  
	
  December 31,
  2007

  	
   

  	
  $

  	
  1,525,000

  	
   

  
	
  March 31,
  2008

  	
   

  	
  $

  	
  1,625,000

  	
   

  
	
  June 30,
  2008

  	
   

  	
  $

  	
  1,625,000

  	
   

  
	
  September 30,
  2008

  	
   

  	
  $

  	
  1,625,000

  	
   

  
	
  December 31,
  2008

  	
   

  	
  $

  	
  1,625,000

  	
   

  
	
  March 31,
  2009

  	
   

  	
  $

  	
  1,725,000

  	
   

  
	
  June 30,
  2009

  	
   

  	
  $

  	
  1,725,000

  	
   

  
	
  September 30,
  2009

  	
   

  	
  $

  	
  1,725,000

  	
   

  
	
  December 31,
  2009

  	
   

  	
  $

  	
  1,725,000

  	
   

  

 

 

EXHIBIT 7.02(j)

 

INSTRUMENT OF
ACCESSION

 

Pursuant to Section 7.02(j) of that certain Senior Subordinated
Note and Warrant Purchase Agreement dated as of November 26, 2002 (the “Purchase
Agreement”) by and among Capital Resource Partners IV, L.P., a Delaware limited
partnership and SoftBrands, Inc. a Delaware corporation, (the “Company”) and
certain of its subsidiaries, the undersigned, as consideration for becoming a
Subsidiary pursuant to the terms of the Purchase Agreement, hereby agrees as
follows (all capitalized terms used herein without definition shall have the
meanings given such terms in the Purchase Agreement).

 

Effective immediately upon execution and
delivery to the Purchasers of this Instrument of Accession, the undersigned
shall be bound by all of the representations and warranties, covenants and
other terms and conditions applicable to a Guarantor and the Company, as issuer
of the Notes, under the Purchase Agreement. 
Contemporaneous with the execution and delivery to the Purchasers of
this Instrument of Accession, the undersigned is executing and delivering to
each of the Purchasers and the Company a counterpart signature page to the
Purchase Agreement which shall be inserted in and become an integral part of
the Purchase Agreement.

 

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]

 

 

IN WITNESS WHEREOF, the undersigned has duly
executed and delivered this Instrument of Accession as of the          
day of                      ,
20    .

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Name of Subsidiary (typed or printed)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature on behalf of Subsidiary

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title of Person Signing for Subsidiary

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address of Subsidiary:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ACCEPTED BY NOTE PURCHASERS:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  CAPITAL RESOURCE PARTNERS IV, L.P.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  CRP Partners IV, LLC,

  	
   

  	
   

  
	
   

  	
  Its General Partner

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

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