Document:

Exhibit
4.11

 

AMENDMENT
NO. 1 TO INVESTORS’ RIGHTS AGREEMENT

 

This Amendment No. 1 dated August 18,
2004(“Amendment No. 1”), amends that certain Investors’ Rights Agreement
dated as of November 26, 2002 (as amended and in effect from time to time,
the “Rights Agreement”), by and among SoftBrands, Inc., a Delaware
corporation (“SoftBrands” or the “Company”) and Capital Resource Partners IV, L.P, a
Delaware limited partnership (“CRP” or the “Investor”).

 

WHEREAS, pursuant to Amendment No. 2 to the
Senior Subordinated Secured Note and Warrant Purchase Agreement, dated as of November 26,
2002 (the “Purchase Agreement Amendment”), SoftBrands is issuing to CRP
shares of its Series B Convertible Preferred Stock, par value $0.01 per share
(the “Series B Preferred”);

 

WHEREAS, CRP has conditioned its investment
in the Series B Preferred on the execution of this Amendment No. 1 and the
grant thereby of certain registration rights to CRP for such shares of Series B
Preferred;

 

NOW THEREFORE, in consideration of the foregoing
recitals, and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:

 

1.             Amendment
to Rights Agreement.  The definitions
of the term “Warrant Shares” set forth in Section 1.1 of the Rights
Agreement are hereby amended and restated in their entirety so that the first
such definition shall be removed in its entirety and the second such definition
shall read in its entirety as follows:

 

““Warrant
Shares” shall mean the Info-Quest Shares and the shares of Common Stock
issued or issuable upon exercise of the Warrants or upon conversion of shares
of the Company’s Series B Convertible Preferred Stock, par value $0.01 per
share.”

 

2.             Miscellaneous.

 

(a)           Effect.  Except as amended hereby, the Rights
Agreement shall remain in full force and effect.

 

(b)           Waiver.  This Amendment No. 1 is effective only in the
specific instance and for the specific purpose for which it is executed and
shall not be considered a waiver or agreement to amend as to any provision of
the Rights Agreement in the future.

 

(c)           Defined
Terms.  All capitalized terms used
but not specifically defined herein shall have the same meanings given such
terms in the Rights Agreement unless the context clearly indicates or dictates
a contrary meaning.

 

 

(d)           Costs,
Expenses, Taxes.  The Company agrees
to pay all costs and expenses of the Investor in connection with the
preparation, execution and delivery of this Amendment No. 1 and other
instruments and documents to be delivered hereunder, including the reasonable
fees and out-of-pocket expenses of the Investor and the fees of Testa, Hurwitz
& Thibeault, LLP, special counsel for the Investor, with respect thereto.

 

(e)           Governing
Law.  This Amendment No. 1 shall be
governed by, and construed and enforced in accordance with, the internal laws
of the Commonwealth of Massachusetts, without regard to conflicts of law
principles.

 

(f)            Severability.  If any provision of this Amendment No. 1
shall be held to be illegal, invalid or unenforceable, such illegality,
invalidity or unenforceability shall attach only to such provision and shall
not in any manner affect or render illegal or unenforceable any other provision
of this Amendment No. 1, and this Amendment No. 1 shall be carried out as if
any such illegal, invalid or unenforceable provision were not contained herein.

 

(g)           Counterparts.  This Amendment No. 1 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 Amendment
No. 1 by signing any of such counterparts.

 

IN WITNESS WHEREOF, the parties hereto have
caused this Amendment No. 1 to be signed as of the date first written above.

 

 

	
   

  	
  SOFTBRANDS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David G. Latzke

  	
   

  
	
   

  	
   

  	
  Name: David
  G. Latzke

  
	
   

  	
   

  	
  Title:
  Senior Vice President, Chief

  
	
   

  	
   

  	
  Financial
  Officer and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CAPITAL RESOURCE PARTNERS IV, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  CRP Partners
  IV, L.L.C.

  
	
   

  	
   

  	
  Its General
  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Alexander S. McGrath

  	
   

  
	
   

  	
  Name:  Alexander S. McGrath

  
	
   

  	
  Title:  Managing MemberExhibit 4.12

 

SECURITY AGREEMENT

 

SECURITY
AGREEMENT, dated as of November 26, 2002 (the “Security Agreement”), is
made jointly and severally by SoftBrands, Inc., a Delaware company (the “Parent”)
and each subsidiary of the Parent set forth on the signature pages hereto
(collectively with the Parent, the “Company”) in favor of those other
parties set forth on the signature pages hereto (the “Purchasers”).

 

RECITALS

 

Pursuant to that certain Senior Subordinated Secured
Note and Warrant Purchase Agreement, to be entered into on the date hereof (the
“Purchase Agreement”), by and among the Company, the Purchasers and the
other parties set forth in the signature pages thereto, the Purchasers will
agree to purchase from the Parent, upon the terms and subject to the conditions
set forth therein, the promissory notes (the “Notes”) to be issued by
the Parent thereunder.  It is a condition
precedent to the obligation of the Purchasers to Parent to purchase and pay for
the Notes under the Purchase Agreement that the Company shall have executed and
delivered this Security Agreement to the Purchasers.

 

NOW,
THEREFORE, in consideration of the foregoing premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and to induce the Purchasers to enter into the Purchase
Agreement, the Company hereby agrees with the Purchasers as follows:

 

1.             Defined
Terms.  Unless otherwise defined
herein, terms which are defined in the Purchase Agreement and used herein are
so used as so defined, and terms which are defined in the Uniform Commercial
Code in effect in the State of Delaware on the date hereof are used herein as
therein defined; and the following terms shall have the following meanings:

 

“Code”
means the Uniform Commercial Code as from time to time in effect in the
Commonwealth of Massachusetts.

 

“Collateral”
shall have the meaning assigned to it in Section 2 of this Security
Agreement.

 

“CRP”
shall mean Capital Resource Partners IV, L.P., a Delaware limited partnership
and one of the Purchasers.

 

“Liens”
means any mortgage, title retention, pledge, lien, right of set-off, charge,
security interest, assignment or other encumbrance whatsoever, whether fixed or
floating and howsoever created or arising.

 

“Obligations”
means all indebtedness of the Company under Article II of the Purchase
Agreement for principal, interest, fees, expenses and other amounts now

 

 

 

existing or hereafter
incurred or due and owing in respect of the Notes and pursuant to Section 9.04
of the Purchase Agreement.

 

“Permitted
Liens” means those Liens permitted by Section 7.02(a) of the Purchase
Agreement.

 

“Prime
Rate” means the rate of interest publicly announced by The Bank of New York from time to time in New York City as its prime interest
rate.

 

“Security
Agreement” means this Security Agreement, as amended, supplemented or
otherwise modified from time to time.

 

2.             Grant
of Security Interest.  As collateral
security for the prompt and complete payment and performance when due (whether
at the stated maturity, by acceleration or otherwise) of the Obligations, the
Company hereby grants to the Purchasers a security interest in all of the
Company’s right, title and interest in or to its personal property, and
interests in property, of the Company, whether now owned or at any time
hereafter acquired by the Company or in which the Company now has or at any
time in the future may acquire any right, title or interest, including, without
limitation: (i) Accounts; (ii) Chattel Paper; (iii) Deposit Accounts;
(iv) Documents; (v) Equipment, other than Equipment subject to an
agreement which, by its terms, prohibits the Company from granting a security
interest therein; (vi) Fixtures; (vii) General Intangibles (including patents,
patent applications, trademarks, service marks, trade names and copyrights and
any applications therefor or registrations thereof, payment intangibles and
software); (viii) Goods; (ix) Instruments; (x) Inventory; (xi)
Investment Property and Financial Assets; (xii) Letter-of-Credit Rights and Letters
of Credit; (xiii) Money; (xiv) rights to payment for money or funds advanced or
sold (including money or funds advanced or loaned to any of the Company’s
subsidiaries); (xv) rights to payments from the Liquidating Trust of AremisSoft
Corporation formed pursuant to the terms of 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; (xvi) Supporting Obligations; (xvii) insurance claims and proceeds,
including, without limitation, proceeds from that certain term life insurance
policy on the life of George Ellis issued by National Life Insurance Company in
the amount of $5,000,000 and any renewals, extensions or substitutions with
respect thereto; (xviii) no more than sixty-five percent (65%) of the
equity securities of any foreign subsidiaries of the Company; (xix) one hundred
percent (100%) of the equity securities of U.S. subsidiaries of the Company
(xx) books and records, computer programs, databases and other computer
materials of the Company pertaining to any and all of the foregoing; and
(xxi) to the extent not otherwise included, Proceeds and products of any
and all of the foregoing (collectively, the “Collateral”).

 

3.             Rights
of Purchasers; Limitations on Purchasers’ Obligations.

 

(a)           Company
Remains Liable under Accounts. 
Anything herein to the contrary notwithstanding, the Company shall
remain liable under each of the Accounts to

 

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observe and perform all
the conditions and obligations to be observed and performed by it thereunder,
all in accordance with the terms of any agreement giving rise to each such
Account.  The Purchasers shall not have
any obligation or liability under any Account (or any agreement giving rise
thereto) by reason of or arising out of this Security Agreement or the receipt
by the Purchasers of any payment relating to such Account pursuant hereto, nor
shall the Purchasers be obligated in any manner to perform any of the
obligations of the Company under or pursuant to any Account (or any agreement
giving rise thereto), to make any payment, to make any inquiry as to the nature
or the sufficiency of any payment received by it or as to the sufficiency of
any performance by any party under any Account (or any agreement giving rise
thereto), to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.

 

(b)           Notice
to Account Debtors.  Upon the request
of the Purchaser Representative (defined in Section 14 hereof), at any
time after the occurrence and during the continuance of an Event of Default,
the Company shall notify account debtors on the Accounts that the Accounts have
been assigned to the Purchasers and that payments in respect thereof shall be
made directly to the Purchaser Representative. 
The Purchaser Representative may in its own name or in the names of
others communicate with account debtors on the Accounts to verify with them to
its satisfaction the existence, amount and terms of any Accounts, provided
however, that if no Event of Default has occurred or is continuing such
communications shall be in the name of others.

 

(c)           Collections
on Accounts.  The Purchasers hereby
authorize the Company to collect the Accounts, and the Purchasers may curtail
or terminate said authority at any time after the occurrence and during the
continuance of an Event of Default upon written notice from the Purchaser
Representative to the Company.  If
required by the Purchaser Representative at any time after the occurrence and
during the continuance of an Event of Default, any payments of Accounts, when
collected by the Company, shall be forthwith (and, in any event, within two
Business Days) deposited by the Company in the exact form received, duly
endorsed by the Company to the Purchaser Representative if required, in a
special collateral account maintained by the Purchaser Representative, subject
to withdrawal by the Purchaser Representative only, as hereinafter provided,
and, until so turned over, shall be held by the Company in trust for the
Purchaser Representative, segregated from other funds of the Company.  All Proceeds constituting collections of
Accounts deposited into the special collateral account maintained by the
Purchaser Representative (or held by the Company in trust for the Purchasers)
shall continue to be collateral security for all of the Obligations while so
held and shall promptly applied to the Obligations if held by the Purchaser
Representative.  Proceeds so deposited
shall not constitute payment of the Obligations until applied thereto by the
Purchaser Representative, or by the Company with the Purchaser Representative’s
consent.  If an Event of Default shall
have occurred and be continuing, the Purchaser Representative shall apply funds
on deposit in said special collateral account on account of the Obligations in
such order as the Purchaser Representative may elect, and any part of such
funds which the Purchaser Representative elects not so to apply shall be paid
over from time to time by the Purchaser Representative to the

 

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Company or to whomsoever
may be lawfully entitled to receive the same. 
After and during the continuance of an Event of Default, and at the
Purchaser Representative’s request, the Company shall deliver to the Purchaser
Representative all original and other documents evidencing, and relating to, the
agreements and transactions which gave rise to the accounts, including, without
limitation, all original orders, invoices and shipping receipts.

 

(d)           Trust
Account.  Upon the occurrence and
during the continuance of an Event of Default, the Purchaser Representative
may, in its sole discretion, elect to require the Company to establish with the
Purchaser Representative a trust account or lockbox and to deal with all of its
receivables subject to the provisions of this Section.  Following such election, the Company will
collect its Accounts as the Purchasers’ collection agent, hold such collections
in trust for the Purchasers without commingling the same with other funds of
the Company and will promptly, on the day of receipt thereof, transmit such
collections to the Purchasers pro rata to the amount of Notes then held by the
Purchasers in the identical form in which they were received by the Company,
with such endorsements as may be appropriate, accompanied by a report, in form
approved by the Purchaser Representative, showing the amount of such
collections and the cash discounts applicable thereto.

 

(e)           Title
to Collateral.  The Company
represents and warrants to the Purchasers that it has marketable title to all
of the Collateral, free and clear of all liens, security interests and adverse
interests, other than the Permitted Liens, in favor of any person or entity
other than the Purchasers.

 

(f)            Limitation
of Rights.  The Purchasers agree and
acknowledge that their rights pursuant to Sections 3(b), 3(c) and (d) hereof
are subject to the terms of the Purchase Agreement.

 

4.             Covenants.  The Company covenants and agrees with the
Purchasers that, from and after the date of this Security Agreement until the
Obligations are paid in full:

 

(a)           Further
Documentation; Pledge of Instruments, Investment Property and Chattel Paper.  At any time and from time to time, upon the
written request of the Purchaser Representative, and at the sole expense of the
Company, the Company will promptly and duly execute and deliver such further
instruments and documents and take such further action as the Purchaser
Representative may reasonably request for the purpose of obtaining or
preserving the full benefits of this Security Agreement and of the rights and
powers herein granted.  The Company
hereby authorizes the Purchaser Representative to file without the signature of
the Company any financing or continuation statement under the Uniform
Commercial Code in effect in any jurisdiction with respect to the security
interests and liens created hereby.  A
copy or other reproduction of this Security Agreement shall be sufficient as a
financing statement for filing in any jurisdiction.  If any amount payable under or in connection
with any of the Collateral shall be or become evidenced by any Instrument,
Investment Property or Chattel Paper, such Instrument, Investment Property or
Chattel Paper shall be immediately delivered to

 

4

 

the Purchaser
Representative, duly endorsed in a manner satisfactory to the Purchaser
Representative, to be held as Collateral pursuant to this Security Agreement.

 

(b)           Indemnification.  The Company agrees to pay, and to save the
Purchasers harmless from, any and all liabilities, reasonable costs and
expenses (including, without limitation, legal fees and expenses) (i) with
respect to, or resulting from, any delay in paying, any and all excise, sales
or other taxes which may be payable or determined to be payable with respect to
any of the Collateral, (ii) with respect to, or resulting from, any delay
in complying with any law, rule, regulation or order of any court, arbitrator
or governmental entity, jurisdiction or authority applicable to any of the
Collateral or (iii) in connection with any of the transactions contemplated
by this Security Agreement.  In any suit,
proceeding or action brought by the Purchasers under any Account for any sum
owing thereunder, or to enforce any provisions of any Account, the Company will
save, indemnify and keep the Purchasers harmless from and against all expense,
loss or damage suffered by reason of any defense, set-off, counterclaim,
recoupment or reduction or liability whatsoever of the account debtor or
obligor thereunder, arising out of a breach by the Company of any obligation thereunder
or arising out of any other agreement, indebtedness or liability at any time
owing to or in favor of such account debtor or obligor or its successors from
the Company.  The foregoing
indemnification shall not apply to any liabilities, costs or expenses resulting
directly from the gross negligence or wilful misconduct of the Purchasers. The
Purchasers shall notify the Company, as soon as practicable, of an event
requiring indemnification pursuant to this Section 4(b).

 

(c)           Maintenance
of Records.  The Company will keep
and maintain at its own cost and expense satisfactory and complete records of
the Collateral, including without limitation, a record of all payments received
and all credits granted with respect to the Accounts.  For the Purchasers’ further security, the
Company hereby grants to the Purchasers a security interest in all of the
Company’s books and records pertaining to the Collateral, and upon the
occurrence and during the continuance of an Event of Default, the Company shall
turn over any such books and records to the Purchaser Representative or to its
representatives during normal business hours at the request of the Purchaser
Representative.

 

(d)           Right
of Inspection.  The Purchaser
Representative shall at all times have full and free access during normal
business hours, and upon reasonable prior notice, to all the books of record
and account of the Company, and the Purchaser Representative or its
representatives may examine the same, take extracts therefrom and make copies
thereof, and the Company agrees to render to the Purchaser Representative, at
the Company’s cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. 
The Purchaser Representative and its representatives shall at all times
also have the right during normal business hours, and upon reasonable prior
notice, to enter into and upon any premises where any of the Collateral is
located for the purpose of inspecting the same or otherwise protecting its
interests therein.

 

5

 

(e)           Compliance
with Laws, etc.  The Company will
comply in all material respects with all laws, rules, regulations and orders of
any court, arbitrator or governmental entity, jurisdiction or authority
applicable to the Collateral or any part thereof or to the operation of the
Company’s business where the failure to so comply could reasonably be expected
to have a material adverse effect on the Company; provided, however, that the
Company may contest any such law, rule, regulation or order in any reasonable
manner which shall not, in the reasonable opinion of the Purchaser
Representative, adversely affect the Purchasers’ rights or the priority of
their liens on the Collateral.

 

(f)            Payment
of Obligations.  The Company will pay
promptly when due all taxes, assessments and governmental charges or levies
imposed upon the Collateral or in respect of its income or profits therefrom,
as well as all claims of any kind (including, without limitation, claims for
labor, materials and supplies) against or with respect to the Collateral,
except that no such charge need be paid if (i) the validity thereof is
being contested in good faith by appropriate proceedings, (ii) such
proceedings do not involve any material danger of the sale, forfeiture or loss
of any of the Collateral or any interest therein and (iii) such charge is
adequately reserved against on the Company’s books in accordance with GAAP.

 

(g)           Limitation
on Liens on Collateral.  The Company
will not create, incur or permit to exist, will defend the Collateral against,
and will take such other action as is necessary to remove, any Lien on or to
the Collateral, other than Permitted Liens, and will defend the right, title
and interest of the Purchasers in and to any of the Collateral against the
claims and demands of all persons or entities whatsoever other than the holders
of Permitted Liens.

 

(h)           Limitations
on Dispositions of Collateral.  The
Company will not sell, transfer, lease or otherwise dispose of any of the
Collateral, or attempt, offer or contract to do so, except for sales, licenses
or other dispositions of Collateral in the ordinary course of business or in
transactions otherwise permitted by
the Purchase Agreement.

 

(i)            Limitations
on Discounts, Compromises, Extensions of Collateral.  Other than in the ordinary course of business
as generally conducted by the Company and consistent with its past practices,
the Company will not grant any extension of the time of payment of any of the
Collateral, compromise, compound or settle the same for less than the full
amount thereof, release, wholly or partially, any person or entity liable for
the payment thereof, or allow any credit or discount whatsoever thereon.

 

(j)            Maintenance
of Collateral.  Except for
dispositions of Collateral permitted under clause (h) above, the Company will
maintain each item of Collateral in good operating condition, ordinary wear and
tear and immaterial impairments of value and damage by the elements excepted,
and will provide all maintenance, service and repairs necessary for such
purpose.

 

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(k)           Maintenance
of Insurance.  The Company will
maintain, with financially sound and reputable companies, insurance policies
(i) insuring the Collateral against loss by fire, explosion, theft and
such other casualties as may be reasonably satisfactory to the Purchaser
Representative and (ii) insuring the Company and the Purchasers against
liability for personal injury and property damage relating to such Collateral,
such policies to be in such form and amounts and having such coverage as may be
reasonably satisfactory to the Purchaser Representative, with losses payable to
the Company and the Purchasers as their respective interests may appear.  All such insurance shall (i) provide
that no termination, cancellation, material reduction in amount or material
change in coverage thereof shall be effective until at least 10 days after
receipt by the Purchasers of written notice thereof, (ii) name the Purchasers
as loss payee and additional insureds and (iii) be reasonably satisfactory
in all other respect to the Purchaser Representative.  From time to time upon the request of the
Purchaser Representative, the Company shall deliver to the Purchaser
Representative insurance policies, certificates or binders as the Purchaser
Representative may from time to time reasonably request.  In addition, within thirty (30) days after
the end of each fiscal year of the Company, the Company shall cause its
insurance carrier(s) and those of its subsidiaries to confirm in writing to the
Purchaser Representative the insurance coverage provided by such provider to
the Company and the subsidiaries, as applicable as provided under Section 7.03
of the Purchase Agreement.

 

(l)            Further
Identification of Collateral.  The
Company will furnish to the Purchaser Representative from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Purchaser
Representative may reasonably request, all in reasonable detail.

 

(m)          Further
Assurances.  The Company shall
execute any further instruments and take further actions as the Purchaser
Representative reasonably requests to perfect of continue the Purchasers’
security interest in the Collateral or to effect the purposes of this
Agreement.

 

5.             Purchaser
Representative’s Appointment as Attorney-in-Fact.

 

(a)           Powers.  The Company hereby irrevocably constitutes
and appoints the Purchaser Representative and any officer or agent thereof,
with full power of substitution, as its true and lawful attorney-in-fact with
full irrevocable power and authority in the place and stead of the Company and
in the name of the Company or in its own name, from time to time in the
Purchaser Representative’s sole discretion after an Event of Default shall have
occurred and is continuing, for the purpose of carrying out the terms of this
Security Agreement, to take any and all appropriate action and to execute any
and all instruments which may be necessary or desirable to accomplish the
purposes of this Security Agreement, and, without limiting the generality of
the foregoing, the Company hereby gives the Purchaser Representative the power
and right, on behalf of the Company, without notice to or assent by the
Company, to do the following after an Event of Default shall have occurred and
is continuing:

 

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(i)            in the
case of any Collateral, in the name of the Company or its own name, or
otherwise, to take possession of and endorse and collect any checks, drafts,
notes, acceptances or other instruments for the payment of moneys due under any
Collateral or with respect to any other action or proceeding in any court of
law or equity or otherwise deemed appropriate by the Purchaser Representative
for the purpose of collecting any and all such moneys due under any Collateral
whenever payable;

 

(ii)           to pay or
discharge taxes and Liens levied or placed on or threatened against the
Collateral, to effect any repairs or any insurance called for by the terms of
this Security Agreement and to pay all or any part of the premiums therefor and
the costs thereof; and

 

(iii)          (A) to
direct any party liable for any payment under any of the Collateral to make
payment of any and all moneys due or to become due thereunder directly to the
Purchaser Representative or as the Purchaser Representative shall direct;
(B) to ask or demand for, collect, receive payment of and receipt for, any
and all moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (C) to sign and endorse any
invoices, freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications, notices and other
documents in connection with any of the Collateral; (D) to commence and
prosecute any suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any thereof and to enforce
any other right in respect of any Collateral; (E) to defend any suit,
action or proceeding brought against the Company with respect to any
Collateral; (F) to settle, compromise or adjust any suit, action or
proceeding described in clause (E) above and, in connection therewith, to give
such discharges or releases as the Purchaser Representative may deem
appropriate; and (G) generally, to sell, transfer, pledge and make any
agreement with respect to or otherwise deal with any of the Collateral as fully
and completely as though the Purchaser Representative were the absolute owner
thereof for all purposes, and to do, at the Purchaser Representative’s option
and the Company’s expense, at any time, or from time to time, all acts and
things which the Purchaser Representative in its sole discretion deems
necessary to protect, preserve or realize upon the Collateral and the
Purchasers’ Liens thereon and to effect the intent of this Security Agreement,
all as fully and effectively as the Company might do.

 

At the reasonable request
of the Purchaser Representative, the Company shall deliver to the Purchaser
Representative, such further documents ratifying any and all actions that said
attorneys shall lawfully take or do or cause to be taken or done by virtue
hereof.

 

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This power of attorney is
a power coupled with an interest and shall be irrevocable until this Agreement
is terminated.

 

(b)           Other
Powers.  The Company also authorizes
the Purchaser Representative, at any time and from time to time, to execute, in
connection with the sales provided for in this Section 5 or Section 7
hereof, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral.

 

(c)           No
Duty on Purchasers’ Part.  The powers
conferred on the Purchasers and the Purchaser Representative hereunder are
solely to protect the Purchasers’ interests in the Collateral and shall not
impose any duty upon the Purchasers or the Purchaser Representative to exercise
any such powers.  The Purchasers and the
Purchaser Representative shall be accountable only for amounts that they
actually receive as a result of the exercise of such powers, and no Purchaser
nor any of its officers, directors, employees or agents shall be responsible to
the Company for any act or failure to act hereunder, except for its own gross
negligence or willful misconduct.

 

6.             Performance
by Purchasers of Company’s Obligations. 
If the Company fails to perform or comply with any of its agreements
contained herein and the Purchasers or the Purchaser Representative, as
provided for by the terms of this Security Agreement, shall themselves perform
or comply, or otherwise cause performance or compliance, with such agreement,
the expenses of the Purchasers or the Purchaser Representative, as applicable,
incurred in connection with such performance or compliance, together with
interest thereon at a rate per annum equal to the Prime Rate plus 5%, or such
lower rate as may be the maximum rate permitted by applicable law, shall be
payable by the Company to the Purchasers or the Purchaser Representative, as
the case may be, on demand and shall constitute Obligations secured hereby.

 

7.             Remedies.  If an Event of Default shall occur and be
continuing, the Purchaser Representative may exercise, in addition to all other
rights and remedies granted to it or to the Purchasers in this Security
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Obligations, all rights and remedies of a secured party under
the Code.  Without limiting the
generality of the foregoing, the Purchaser Representative, without demand of
performance or other demand, presentment, protest, or notice of any kind
(except any notice required by law referred to below) to or upon the Company or
any other person or entity (all and each of which are hereby waived), may, on
behalf of the Purchasers, in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may,
on behalf of the Purchasers, forthwith sell, lease, assign, give option or
options to purchase, or otherwise dispose of and deliver the Collateral or any
part thereof (or contract to do any of the foregoing), in one or more parcels
at public or private sale or sales, at any exchange or office of the Purchaser
Representative or elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for cash or on credit or for
future delivery without assumption of any credit risk.  The Purchasers shall have the right upon any
such public sale or sales, and, to the extent permitted by law, upon any such
private sale or sales, to purchase the whole or any part of the

 

9

 

Collateral so sold, free
of any right or equity of redemption in the Company, which right or equity is
hereby waived or released.  The Company
further agrees, at the Purchaser Representative’s request, to assemble the
Collateral and make it available to the Purchaser Representative at places
which the Purchaser Representative shall reasonably select, whether at the
Company’s premises or elsewhere.  The
Purchaser Representative shall cause the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred therein or incidental to
the care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Purchasers hereunder, including, without
limitation, reasonable attorneys’ fees and disbursements, to be applied to the
payment in whole or in part of the Obligations, in such order as the Purchaser
Representative may elect, and only after such application and after the payment
by the Purchaser Representative of any other amount required by any provision
of law, including, without limitation, Section 9-615 of the Code, need the
Purchasers account for the surplus, if any, to the Company.  To the extent permitted by applicable law,
the Company waives all claims, damages and demands it may acquire against the
Purchasers and the Purchaser Representative arising out of the exercise by the
Purchasers or the Purchaser Representative of any of their rights hereunder,
provided that such release shall not apply to any claim, damage or demand
resulting directly from the gross negligence or actual wilful misconduct, of
the Purchasers or the Purchaser Representative. 
If any notice of a proposed sale or other disposition of Collateral shall
be required by law, such notice shall be deemed reasonable and proper if given
at least ten days before such sale or other disposition.  The Company shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay the Obligations and the fees and disbursements of any
attorneys employed by the Purchasers and the Purchaser Representative to
collect such deficiency.

 

8.             Limitation
on Duties Regarding Preservation of Collateral.  The Purchasers’ and the Purchaser
Representative’s sole duty with respect to the custody, safekeeping and
physical preservation of the Collateral in their possession, under
Sections 9-207 through Section 9-210 of the Code or otherwise, shall
be to deal with it in the same manner as the Purchasers or the Purchaser
Representative, as applicable, deal with similar property for their own
account.  Neither the Purchasers or the
Purchaser Representative nor any of their directors, officers, employees or
agents shall be liable for failure to demand, collect or realize upon all or
any part of the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
the Company or otherwise.

 

9.             Powers
Coupled with an Interest.  All
authorizations and agencies herein contained with respect to the Collateral are
irrevocable until this Agreement is terminated and powers coupled with an
interest.

 

10.           Severability.  Any provision of this Security Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions

 

10

 

hereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

 

11.           Paragraph
Headings.  The paragraph headings
used in this Security Agreement are for convenience of reference only and are
not to affect the construction hereof or be taken into consideration in the
interpretation hereof.

 

12.           No
Waiver; Cumulative Remedies.  The
Purchasers shall not by any act (except by a written instrument pursuant to Section 13
hereof), delay, indulgence, omission or otherwise be deemed to have waived any
right or remedy hereunder or to have acquiesced in any Event of Default or in
any breach of any of the terms and conditions hereof.  No failure to exercise, nor any delay in
exercising, on the part of the Purchasers or the Purchaser Representative, any
right, power or privilege hereunder shall operate as a waiver thereof.  No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.  A waiver by the Purchasers or the Purchaser
Representative of any right or remedy hereunder on any one occasion shall not
be construed as a bar to any right or remedy which the Purchasers or the
Purchaser Representative would otherwise have on any future occasion.  The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of
any rights or remedies provided by law.

 

13.           Waivers
and Amendments; Successors and Assigns.  None of the terms or provisions of this
Security Agreement may be waived, amended, supplemented or otherwise modified
except by a written instrument executed by the Company and the Purchaser
Representative, provided that any provision of this Security Agreement may be
waived by the Purchaser Representative in a written letter or agreement
executed by the Purchaser Representative or by telex or facsimile transmission
from the Purchaser Representative.  This
Security Agreement shall be binding upon the successors and assigns of the
Company and shall inure to the benefit of the Purchasers and their successors
and assigns.

 

14.           Purchaser
Representative.  In order to
administer the transactions contemplated by this Agreement, the Purchasers
hereby designate and appoint CRP as their representative for purposes of this
Agreement and as attorney-in-fact and agent for and on behalf of each such
Purchaser (in such capacity, the “Purchaser Representative”).  The Purchasers hereby authorize the Purchaser
Representative to represent the Purchasers and their successors with respect to
all matters arising under this Agreement. 
In the event that CRP ceases to hold Notes or resigns from such
position, the Purchasers having a majority in interest of the Notes then
outstanding shall select another representative to fill such vacancy and such
substituted Purchaser Representative shall be deemed to be the Purchaser
Representative for all purposes of this Agreement.  All actions of the Purchaser Representative
shall be binding upon all of the Purchasers and no Purchaser shall have the
right to object, dissent, protest or otherwise contest same.  The Purchaser Representative shall incur no
liability to the Purchasers or any of them with respect to any action taken or
suffered by the Purchaser Representative, including without

 

11

 

limitation, in reliance
upon advice of legal counsel, accountants or auditors or any notice, direction,
instruction, consent, statement or other documents believed by it to be
genuinely and duly authorized and the Purchasers hereby jointly and severally
indemnify the Purchaser Representative for any and all damages, losses,
liabilities, costs and expenses (including reasonable expenses of investigation
and reasonable attorney’s fees and disbursements in connection with any claim,
action, suit or proceeding) (“Losses”) incurred by the Purchaser
Representative in such capacity other than those liabilities, costs or expenses
resulting directly from the gross negligence or wilful misconduct of the
Purchaser Representative in such capacity.

 

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

 

16.           Termination.  This Security Agreement shall terminate
automatically upon the satisfaction in full of the Obligations.

 

17.           Additional
Subsidiaries.  Should the Company or
its Subsidiaries at any time 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, such Subsidiary shall forthwith execute an instrument of
accession in the form attached hereto as Schedule I.  This Section 17 shall apply only to U.S.
subsidiaries of the Company.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

12

 

IN WITNESS WHEREOF, the Company has caused this
Security Agreement to be duly executed and delivered in favor of the Purchasers
as of the date first above written.

 

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  	
   

  
	
   

  	
  SOFTBRANDS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ George H. Ellis

  	
   

  
	
   

  	
   

  	
  Name: George H.
  Ellis

  	
   

  
	
   

  	
   

  	
  Title: Chairman
  and Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SOFTBRANDS
  MANUFACTURING, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David G. Latzke

  	
   

  
	
   

  	
   

  	
  Name: David G.
  Latzke

  	
   

  
	
   

  	
   

  	
  Title: CFO

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SOFTBRANDS
  HOSPITALITY, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David G. Latzke

  	
   

  
	
   

  	
   

  	
  Name: David G.
  Latzke

  	
   

  
	
   

  	
   

  	
  Title: CFO

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SOFTBRANDS
  INTERNATIONAL, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David G. Latzke

  	
   

  
	
   

  	
   

  	
  Name: David G.
  Latzke

  	
   

  
	
   

  	
   

  	
  Title: CFO

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SOFTBRANDS
  LICENSING, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David G. Latzke

  	
   

  
	
   

  	
   

  	
  Name: David G.
  Latzke

  	
   

  
	
   

  	
   

  	
  Title: CFO

  	
   

  

 

13

 

	
   

  	
   

  	
   

  
	
   

  	
  PURCHASERS:

  
	
   

  	
   

  	
   

  
	
   

  	
  CAPITAL RESOURCE
  PARTNERS IV, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  CRP Partners IV,
  LLC

  
	
   

  	
   

  	
  Its General
  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert
  Ammerman

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:
  Managing Member

  
					

 

14

 

Schedule I

 

Instrument of Accession

 

SoftBrands, Inc.

Security Agreement

 

The
undersigned, hereby agrees to become a party to and bound by that Security
Agreement, dated as of November 26, 2002 (the “Security Agreement”), by
and among SoftBrands, Inc. and the other persons set forth on the signature
pages thereto.  The undersigned shall
become party to the Security Agreement as the Company, as defined therein.  This Instrument of Accession shall take
effect and shall become an integral part of the Security Agreement immediately
upon execution and delivery by both the undersigned and the Company of this
Instrument.  Capitalized terms not
defined herein shall have the meaning ascribed to such terms in the Security
Agreement.

 

IN
WITNESS WHEREOF, this INSTRUMENT OF ACCESSION has been duly executed by or on
behalf of the undersigned, as a sealed instrument under the laws of the
Commonwealth of Massachusetts, as of the date below written.

 

	
  SUBSIDIARY:

  	
   

  
	
   

  	
   

  	
   

  
	
  [Subsidiary]

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  AGREED AND
  ACCEPTED:

  	
   

  
	
   

  	
   

  	
   

  
	
  SoftBrands, Inc.

  	
   

  
	
   

  	
   

  	
   

  
	
  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"}]]