Document:

exv10w3

 

Exhibit 10.3

December 19, 2007

Financing Commitment

XATA Corporation

151 E. Cliff Road, Suite 10

Burnsville, Minnesota 55337

Attention: Mr. Mark Ties, Chief Financial Officer

Ladies and Gentlemen:

Silicon Valley Bank (“SVB”) is pleased to advise you (“you” or “Company”) of its commitment to
provide you with the financing (the “Financing”) outlined in the Summary of Terms and Conditions
attached as Exhibit A hereto and incorporated herein by this reference (the “Summary of Terms”) and
subject to the following general terms. (This letter and the Summary of Terms are together
referred to herein as the “Commitment Letter”.)

1. Conditions. The commitment of SVB is subject to the satisfaction of each of the
following conditions precedent in a manner acceptable to SVB: (a) the accuracy and completeness of
all representations that you and your affiliates make to SVB and your compliance with the terms of
this Commitment Letter; (b) the negotiation, execution and delivery of definitive documentation for
the Financing consistent with the Summary of Terms and otherwise satisfactory to SVB; and (c) no
change, occurrence or development shall have occurred since September 30, 2007, or become known by
SVB on or after the date hereof, that has had or could reasonably be expected to have a material
adverse effect on the operations, business, assets, properties, liabilities (actual or contingent),
condition (financial or otherwise) or prospects of the Company and its subsidiaries, taken as a
whole, or result in a material impairment of the rights and remedies of SVB under any loan
documentation.

2. Representations. You represent, warrant and covenant that (a) all financial projections
concerning the Company and its subsidiaries that have been or are hereafter made available to SVB
by you or any of your representatives (or on your or their behalf) (the “Projections”) have been or
will be prepared in good faith based upon reasonable assumptions, and (b) all other information,
which has been or is hereafter made available to SVB by you or any of your representatives (or on
your or their behalf) in connection with the Financing (the “Information”), as and when furnished,
is and will be complete and correct in all material respects and does not and will not contain any
untrue statement of a material fact or omit to state a material fact necessary to make the
statements contained therein not misleading. You agree to furnish us with further and supplemental
information from time to time until the date of the initial borrowing under the Financing (the
“Closing Date”), so that the representation, warranty and covenant in the immediately preceding
sentence are correct on the Closing Date as if the Information were being furnished, and such
representation, warranty and covenant were being made, on such date. In issuing this commitment,
SVB is and will be using and relying on the Information without independent verification thereof.

 

 

3. Reimbursement. By executing this Commitment Letter, you agree to reimburse SVB from
time to time on demand for all reasonable out-of-pocket fees and expenses incurred in connection
with the Financing (including, but not limited to, the reasonable fees, disbursements and other
charges of its counsel and due diligence expenses in connection with the preparation of the
definitive documentation therefor and otherwise) (collectively, “Costs”).

4. Indemnity. You agree to indemnify and hold harmless SVB, and each of its affiliates,
officers, directors, employees, agents, advisors and other representatives (each an “Indemnified
Party”) from and against any and all claims, damages, losses, liabilities and expenses (including,
without limitation, the reasonable fees, disbursements and other charges of counsel) that may be
incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in
connection with or by reason of (including, without limitation, in connection with any
investigation, litigation or proceeding or preparation of a defense in connection therewith) the
Financing, or any use made or proposed to be made with the proceeds thereof, except to the extent
such claim, damage, loss, liability or expense is found in a final, nonappealable judgment by a
court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or
willful misconduct. In the case of an investigation, litigation or proceeding to which the
indemnity in this paragraph applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by you, your equityholders or creditors or an
Indemnified Party, whether or not an Indemnified Party is otherwise a party thereto and whether or
not any aspect of the Financing is consummated. You also agree that no Indemnified Party shall
have any liability (whether direct or indirect, in contract or tort or otherwise) to you or your
subsidiaries or affiliates or to your or their respective equity holders or creditors arising out
of, related to or in connection with any aspect of the Financing, except to the extent of direct,
as opposed to special, indirect, consequential or punitive, damages determined in a final,
nonappealable judgment by a court of competent jurisdiction to have resulted from such Indemnified
Party’s gross negligence or willful misconduct. Notwithstanding any other provision of this
Commitment Letter, no Indemnified Party shall be liable for any damages arising from the use by
others of information or other materials obtained through electronic telecommunications or other
information transmission systems, other than for direct or actual damages resulting from the gross
negligence or willful misconduct of such Indemnified Party as determined by a final and
nonappealable judgment of a court of competent jurisdiction.

5. Confidentiality. This Commitment Letter is confidential and, except for disclosure
hereof on a confidential basis to your accountants, attorneys and other professional advisors
retained by you in connection with the Financing or as otherwise required by law, may not be
disclosed in whole or in part to any person or entity without our prior written consent. SVB
hereby notifies you that pursuant to the requirements of the USA PATRIOT Act, Title III of Pub. L.
107-56 (signed into law October 26, 2001) (the “Act”), it is required to obtain, verify and record
information that identifies you, which information includes your name and address and other
information that will allow SVB to identify you in accordance with the Act.

6. Acknowledgments. You acknowledge that SVB or its affiliates may be providing financing
or other services to parties whose interests may conflict with yours. SVB agrees that it will not
furnish confidential information obtained from you to any of its other customers and that it will
treat confidential information relating to you with the same degree of care as it treats its own
confidential information. In connection with the services and transactions contemplated

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hereby, you agree that SVB is permitted to access, use and share with any of its bank or non-bank
affiliates, agents, advisors (legal or otherwise) or representatives any information concerning
you, or any of your affiliates that is or may come into the possession of SVB or any of such
affiliates. In connection with all aspects of each transaction contemplated by this Commitment
Letter, you acknowledge and agree that: (a) (i) the Financing is an arm’s-length commercial
transaction between you and your affiliates, on the one hand, and SVB, on the other hand, (ii) you
have consulted your own legal, accounting, regulatory and tax advisors to the extent you have
deemed appropriate, and (iii) you are capable of evaluating, and understand and accept, the terms,
risks and conditions of the transactions contemplated hereby; (b) SVB has been, is, and will be
acting solely as a principal and has not been, is not, and will not be acting as an advisor, agent
or fiduciary for you, any of your affiliates or any other person or entity; (c) SVB has no
obligation to you or your affiliates with respect to the transactions contemplated hereby except
those obligations expressly set forth herein; and (d) SVB and its respective affiliates may be
engaged in a broad range of transactions that involve interests that differ from yours and those of
your affiliates, and SVB has no obligation to disclose any of such interests to you or your
affiliates. To the fullest extent permitted by law, you hereby waive and release any claims that
you may have against SVB with respect to any breach or alleged breach of any alleged agency or
fiduciary duty in connection with any aspect of any transaction contemplated by this Commitment
Letter, and the parties agree that no such agency or fiduciary relationship exists between them.

7. Survival. The provisions of Sections 1 through 11 hereof shall remain in full force and
effect regardless of whether any definitive documentation for the Financing shall be executed and
delivered, and notwithstanding the termination of this Commitment Letter or any commitment or
undertaking of SVB hereunder.

8. General. This Commitment Letter may be executed in counterparts which, taken together,
shall constitute an original. Delivery of an executed counterpart of this Commitment Letter by
telecopier or facsimile shall be effective as delivery of a manually executed counterpart thereof.
The commitments and undertakings of SVB may be terminated by us if you fail to perform your
obligations under this Commitment Letter on a timely basis. This Commitment Letter embodies the
entire agreement and understanding between SVB and you with respect to the Financing and supersedes
all prior agreements and understandings relating to the specific matters hereof. However, please
note that the terms and conditions of the commitment of SVB and the undertaking of SVB hereunder
are not limited to those set forth herein or in the Summary of Terms. Those matters that are not
covered or made clear herein are subject to mutual agreement of the parties. No party has been
authorized by SVB to make any oral or written statements that are inconsistent with this Commitment
Letter. This Commitment Letter is not assignable by you without our prior written consent and is
intended to be solely for the benefit of the parties hereto and the Indemnified Parties. This
Commitment Letter shall be governed by, and construed in accordance with, the internal laws of the
State of California. Each of you and SVB hereby irrevocably waives any and all right to trial by
jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to this Commitment Letter or any transactions contemplated hereby or the
actions of SVB in the negotiation, performance or enforcement hereof (collectively, an “Action”.
IF ANY ACTION IS FILED IN A COURT OF THE STATE OF CALIFORNIA BY OR AGAINST ANY PARTY HERETO AND
EACH PARTY HERETO DOES NOT SUBSEQUENTLY WAIVE

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IN AN EFFECTIVE MANNER UNDER CALIFORNIA LAW ITS RIGHT TO A TRIAL BY JURY, THE COURT SHALL, AND IS
HEREBY DIRECTED TO, MAKE A GENERAL REFERENCE PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE SECTION
638 TO A REFEREE OR REFEREES TO HEAR AND DETERMINE ALL OF THE ISSUES IN SUCH ACTION OR PROCEEDING
(WHETHER OF FACT OR OF LAW) AND TO REPORT A STATEMENT OF DECISION, PROVIDED THAT ANY SUCH ISSUES
PERTAINING TO A “PROVISIONAL REMEDY” AS DEFINED IN CALIFORNIA CODE OF CIVIL PROCEDURE SECTION
1281.8 SHALL BE HEARD AND DETERMINED BY THE COURT.

9. Commitment Acceptance. This Commitment Letter must be accepted by delivery to SVB no
later than 5:00 pm. on December 21, 2007 of a signed copy of this Commitment Letter accepting its
terms. Otherwise, this commitment of SVB to provide the Financing set forth in this Commitment
Letter shall expire and be of no further force or effect.

10. Commitment Fee. —Waived—

11. Deposit. Company has provided SVB with a cost deposit in the amount of $15,000 (the
“Deposit”). Whether or not the definitive documentation providing for the Financing is executed,
the Deposit shall be applied to the Costs. If the Deposit exceeds the Costs, the excess shall be
returned to the Company. If the Costs exceed the Deposit, the Company shall pay the excess to SVB
on demand.

[THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

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We are pleased to have the opportunity to work with you in connection with this important
financing.

	 	 	 	 	 
	 	Very truly yours,

SILICON VALLEY BANK

 	 
	 	By:  	/s/ Benjaman Johnson
 	 
	 	 	Name:  	Benjaman Johnson 	 
	 	 	Title:  	Deal Team Leader 	 
	 

ACCEPTED AND AGREED TO

AS OF THE DATE FIRST ABOVE WRITTEN:

	 	 	 	 	 
	XATA CORPORATION

 	 	 
	By:  	/s/ Mark E. Ties
 	 	 
	 	Name:  	Mark E. Ties 	 	 
	 	Title:  	Chief Financial Officer 	 	 

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EXHIBIT A

SUMMARY OF TERMS AND CONDITIONS

Capitalized terms not otherwise defined herein have the same meanings as specified therefor in the
commitment letter (the “Commitment Letter”) to which this Summary of Terms and Conditions is
attached.

	 	 	 
	Financing:

	 	$10,000,000 Revolving Line of Credit
	 
	 	 
	Advance Rate:

	 	Up to 80% of eligible accounts receivable. Advance rates to be
based on the quality of the accounts receivable and attendant
dilution, and will be validated by a collateral audit to be
performed prior to funding.
	 
	 	 
	 

	 	The collateral base will exclude domestic receivables that have aged
over 90 days on an invoice date aging basis. Additional ineligible
receivables will include credit balances over 90 days, contras to
A/R, cross-agings at 50%, concentrations over 25%, receivables owing
from affiliates and other items as set forth in the SVB standard
documentation. Foreign accounts will have to be individually
qualified for inclusion in the borrowing base. Collateral
eligibility is determined from time to time by SVB in its sole
discretion.
	 
	 	 
	 

	 	Concentration limits and foreign account exceptions to be considered
on a case by case basis at the sole discretion of SVB.
	 
	 	 
	 

	 	The collateral base will include contracts with United States
government, provided that SVB has obtained executed assignments in
accordance with the federal Assignment of Claims Act.
	 
	 	 
	 

	 	Up to 25% of Eligible Inventory, not to exceed the lesser of
$1,500,000 or 25% of Eligible A/R.
	 
	 	 
	 

	 	Up to 50% of unrestricted cash held at SVB (note — cash held at SVB
Affiliates will be excluded from the borrowing base calculation).
	 
	 	 
	Maturity:

	 	36 months from date of documents.
	 
	 	 
	Repayment:

	 	Interest monthly; principal due at maturity
	 
	 	 
	Interest Rate:

	 	Floating Rate. Performance-Based Pricing. as follows:
	 

	 	Initial Interest Rate: SVB Prime + 0.5%
If liquidity ratio drops below the thresholds as described in the
“Other” section below, interest rate will increase to SVB Prime +
1.00%. Additionally, SVB will reduce the rate back to SVB Prime
0.5% after two consecutive quarters of performance to said
threshold.

 

 

	 	 	 
	Facility Fee:

	 	$40,000.00, payable at close.
	 
	 	 
	Unused Line Fee:

	 	0.375% annually (paid quarterly) of the Facility.
	 
	 	 
	Termination Fee:

	 	I) Year 1: 1.00% of the Facility
	 

	 	II) Year 2: 0.50% of the Facility
	 

	 	III) Year 3: N/A
	 
	 	 
	Collateral:

	 	Perfected first-priority security interest in all assets of Company,
including IP.
	 
	 	 
	Covenants:

	 	•   Tangible Net Worth (“TNW”), defined as net worth less
intangible assets. At all times, and measured monthly starting with
3/31/08, the borrower’s Tangible Net Worth must be higher than
$1,000,000 below borrower’s TNW as of the close of borrower’s
acquisition of Geologic Solutions, Inc., with such minimum TNW
requirement increasing by $1,500,000 beginning with the month ending
9/30/08. In addition, beginning with the month ending 3/31/09, the
minimum TNW requirement to increase by 50% of quarterly Net Income
for the quarter ending 3/31/09 and for each quarter ending
thereafter, with the minimum TNW requirement being adjusted
quarterly.

	 
	 	 
	 

	 	•   Modified EBITDA: borrower’s EBITDA — Taxes — Distributions
— Unfinanced Capex (“MEBITDA”) for January 2008, January through
February 2008, and January through March 2008, must not be less than
($1,000,000).

	 
	 	 
	 

	 	•   FCCR Covenant: defined as [MEBITDA / Interest + Mandatory
Principal Pmts)] of not less than 1.25:1.00 on a trailing twelve
month basis, starting 12/31/08, monitored quarterly thereafter.

	 
	 	 
	Financial Reporting:

	 	Monthly consolidated financial statements with compliance
certificate shall be submitted within 30 days of each month end.
	 
	 	 
	 

	 	Unqualified audited financial statements within 120 days of year end.
	 
	 	 
	 

	 	Prior to fiscal year end, provide board-approved projections (P&L,
Balance Sheet and Cash flow) for the next fiscal year.

 

	 	 	 
	 
	 	 
	Borrowing Base 

Reporting:

	 	Streamlined Borrowing Base Reporting while Company meets the
Liquidity Ratio threshold; A/R & A/P agings and Borrowing Base
Certificate to be reported monthly, due within 15 days of each month
end.
	 
	 	 
	 

	 	If Company’s Liquidity Ratio falls below the Liquidity Ratio
threshold as outlined in the “Other” section below, A/R & A/P agings
and Transaction Reports to be reported weekly and for each new
advance (but not less frequently than weekly), with a $1,500 monthly
collateral handling fee.
	 
	 	 
	Deposit Accounts:

	 	Operating account(s) and excess funds shall be maintained at SVB.
Company will maintain a lockbox at SVB and all
collections/presentments will be submitted to the lockbox and
customer invoices will instruct customers to make payments to the
lockbox. At such time that weekly and or advance-based reporting is
established, SVB will require that payments be applied to the
outstanding loan balance, and non-electronic payments will be
assessed 2 days of float.
	 
	 	 
	Other:

	 	Liquidity Ratio: Company to maintain a minimum Adjusted Quick Ratio
of 1.25 : 1.00, defined as [(Cash at SVB & SVB Affiliates + Eligible
A/R) divided by (SVB Debt)], measured monthly. This ratio will
increase to 1.50:1.00 as of 12/31/08. If this ratio falls below the
established threshold, it will trigger a higher interest rate, more
frequent reporting, additional handling fees, etc. as described in
the body of this document.
	 
	 	 
	 

	 	Field examination on A/R and/or other collateral to be performed as
conditions warrant at SVB’s sole discretion. Exam fee is $750.00
per day plus out of pocket expenses.
	 
	 	 
	 

	 	Company is responsible for all of SVB’s fees, costs and expenses
(including legal) in connection with the Facility. New documents
will be prepared by outside counsel.
All notes from shareholders, investors and related parties will be
subordinated to SVB and documented by the Bank’s standard agreement.

 

 

	 	 	 
	 
	 	 
	General Provisions:

	 	Conditions precedent, representations and warranties, covenants,
events of default, indemnification, and other provisions per SVB
standard loan documentation with such changes thereto as SVB shall
agree to in its discretion. Conditions precedent to include no
material adverse change, completion of field audit, due diligence
and searches with respect to Company with results satisfactory to
SVB, absence of litigation which could have a material adverse
effect on the Company. Events of default to include without
limitation (i) nonpayment of principal, interest, fees or other
amounts; (ii) failure to perform or observe covenants set forth in
the loan documentation within a specified period of time, where
customary and appropriate, after such failure; (iii) any
representation or warranty proving to have been incorrect when made
or confirmed; (iv) cross-default to other indebtedness; (v)
bankruptcy and insolvency defaults; (vi) inability to pay debts;
(vii) monetary judgment defaults and material nonmonetary judgment
defaults; (viii) ERISA defaults; (ix) actual or asserted invalidity
or impairment of any loan documentation; (x) change of control, and
(xi) material adverse change.
	 
	 	 
	Governing Law:

	 	State of California
	 
	 	 
	Expenses

	 	Company to pay all reasonable costs and expenses associated with the
preparation, due diligence, administration, and closing of all loan
documentation, including, without limitation, the legal fees of SVB
counsel, regardless of whether or not the Financing is closed.exv10w19

 

Exhibit 10.19

THIRD AMENDMENT TO

CREDIT AGREEMENT

     This Third Amendment to Credit Agreement (this “Amendment”), dated as of February 11, 2008, is
by and among SOFTBRANDS, INC., a Delaware corporation (the “Parent”), the subsidiaries of Parent
identified on the signature pages hereto (collectively, with the Parent, the “Borrowers” and
individually, a “Borrower”), WELLS FARGO FOOTHILL, INC., a California corporation, as
Administrative Agent (the “Agent”) and each of the lenders parties hereto (the “Lenders”).

R E C I T A L S

     A. The Borrowers, the Agent and the Lenders are parties to that certain Credit Agreement dated
as of August 14, 2006, as amended by that certain First Amendment to the Credit Agreement dated as
of October 5, 2006, as amended by that certain Second Amendment to the Credit Agreement dated as of
March 15, 2007 (the “Original Credit Agreement”).

     B. The parties hereto desire to further amend the Original Credit Agreement (as the Original
Credit Agreement is amended by this Amendment, and as the Original Credit Agreement may be further
amended, modified or restated from time, collectively the “Credit Agreement”) as provided herein.

     NOW, THEREFORE, in consideration of the premises herein contained, and for other good and
valuable consideration (the receipt, sufficiency and adequacy of which are hereby acknowledged),
the parties hereto (intending to be legally bound) hereby agree as follows:

     1. Definitions. Terms capitalized herein and not otherwise defined herein shall have
the meanings ascribed to such terms in the Credit Agreement.

     2. Amendments to Credit Agreement. Subject to the terms and conditions contained
herein, the parties hereto hereby amend the Credit Agreement as follows:

     (a) The definition of “Permitted Investments” in Schedule 1.1 to the Credit
Agreement is amended and restated as follows:

     “Permitted Investments” means (a) Investments in cash and Cash Equivalents; (b)
Investments in negotiable instruments for collection; (c) advances made in connection with
purchases of goods or services in the ordinary course of business; (d) Investments received in
settlement of amounts due to a Borrower or any Subsidiary of a Borrower effected in the ordinary
course of business or owing to a Borrower or any Subsidiary of a Borrower as a result of Insolvency
Proceedings involving an Account Debtor or upon the foreclosure or enforcement of any Lien in favor
of a Borrower or any Subsidiary of a Borrower; (e) Permitted Acquisitions; (f) subject to
Section 6.12, amounts incurred by a Borrower or any Subsidiary of a Borrower for
operational costs of doing business in a location outside of the United States or China so long as
the aggregate amount of such amount does not exceed $350,000 at any one time; (g) Investments
identified on Schedule P-2 to the Agreement; (h) Investments by Borrowers in the Stock of
their Subsidiaries; (i) loans, advances or capital contributions made by any Borrower to any
Subsidiary and made by any Subsidiary to any Borrower or any other Subsidiary in an aggregate

 

 

amount not to exceed $2,500,000; (j) Guarantees and other Investments constituting Indebtedness
permitted by Section 6.1; (k) promissory notes acquired in connection with dispositions of
assets permitted under Section 6.4; (l) loans and advances to employees of Borrowers and
their Subsidiaries in the ordinary course of business generally consistent with past practice; (m)
Accounts and bank deposits made in the ordinary course of business subject in all cases to Control
Agreements; (n) Permitted Acquisitions; (o) other Investments by Borrowers and their Subsidiaries
in or to Persons other than their Subsidiaries in an aggregate amount not to exceed $500,000, and
(p) the purchase of Indebtedness as permitted in Section 6.7; provided such Indebtedness is
promptly retired.

     (b) Section 6.12 of the Credit Agreement is hereby amended and restated as
follows:

     6.12 Investments. Except for Permitted Investments, directly or indirectly, make or
acquire any Investment or incur any liabilities (including contingent obligations) for or in
connection with any Investment; provided, however, that (a) Administrative Borrower and its U.S.
Subsidiaries shall not have Permitted Investments (other than in the Cash Management Accounts) in
Deposit Accounts or Securities Accounts in an aggregate amount in excess of $500,000 at any one
time unless Administrative Borrower or its U.S. Subsidiary, as applicable, and the applicable
securities intermediary or bank have entered into Control Agreements governing such Permitted
Investments in order to perfect (and further establish) the Agent’s Liens in such Permitted
Investments; (b) Administrative Borrower and its Subsidiaries shall not have any Investments, Cash
Equivalents, cash or any other funds in China in an aggregate amount in excess of $4,000,000 at any
one time (and if at any time such amount referenced in this clause (b) exceeds $4,000,000 at any
one time, then such excess amount shall be as soon as reasonably practicable and in no event more
than 7 Business Days after the occurrence of such event, transferred into a Deposit Account that is
subject to a Control Agreement); and (c) Administrative Borrower and its Subsidiaries shall not
have any Investments, Cash Equivalents, cash or any other funds in any location outside of the
United States or China in an aggregate amount in excess of $5,000,000 at any one time (and if at
any time such amount referenced in this clause (b) exceeds $5,000,000 at any one time, then such
excess amount shall be as soon as reasonably practicable and in no event more than 7 Business Days
after the occurrence of such event, transferred into a Deposit Account that is subject to a Control
Agreement). Subject to the foregoing proviso, Borrowers shall not and shall not permit their
Subsidiaries to establish or maintain any Deposit Account or Securities Account unless Agent shall
have received a Control Agreement in respect of such Deposit Account or Securities Account.

     (c) Section 6.16(a) of the Credit Agreement is hereby amended and restated as follows:

     (a) Minimum EBITDA. Fail to achieve EBITDA, measured on a quarter-end basis, of at
least the required amount set forth in the following table for the applicable period set
forth opposite thereto:

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	Applicable Amount	 	Applicable Period	 
	$1,273,000
	 	For the 3 month period
	 
	 	ending December 31, 2006
	 
	 	 	 
	$2,930,000
	 	For the 6 month period
	 
	 	ending March 31, 2007
	 
	 	 	 
	$5,117,000
	 	For the 9 month period
	 
	 	ending June 30, 2007
	 
	 	 	 
	$8,027,000
	 	For the 12 month period
	 
	 	ending September 30, 2007
	 
	 	 	 
	$7,400,000
	 	For the 12 month period
	 
	 	ending December 31, 2007
	 
	 	 	 
	$8,000,000
	 	For the 12 month period
	 
	 	ending March 31, 2008
	 
	 	 	 
	$11,200,000
	 	For the 12 month period
	 
	 	ending June 30, 2008
	 
	 	 	 
	$11,750,000
	 	For the 12 month period
	 
	 	ending September 30, 2008
	 
	 	 	 
	$12,000,000
	 	For the 12 month period
	 
	 	ending each quarter thereafter
	 
	 	 	 

     3. Conditions Precedent. The amendments contained in Section 2 above are
subject to, and contingent upon, the prior or contemporaneous satisfaction of each of the following
conditions precedent, each in form and substance satisfactory to the Agent:

     (a) The Borrowers, the Agent and the Lenders shall have executed and delivered to each
other this Amendment;

     (b) The Agent shall have received a fully-earned non-refundable amendment fee in the
amount of $25,000; and

     (c) The Borrowers shall have satisfied any other conditions of the Agent required in
connection with this Amendment.

     4. Reference to and Effect on the Credit Agreement. Except as expressly provided
herein, the Credit Agreement and all of the Loan Documents shall remain unmodified and continue in
full force and effect and are hereby ratified and confirmed. The execution, delivery and
effectiveness of this Amendment shall not operate as a waiver of: (a) any right, power or remedy of
the Agent or the Lenders under the Credit Agreement or any of the Loan

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Documents, or (b) any Default or Event of Default under the Credit Agreement or any of the
Loan Documents.

     5. Representations and Warranties of the Borrowers. Each of the Borrowers hereby
represents and warrants to the Agent and the Lenders, which representations and warranties shall
survive the execution and delivery of this Amendment, that on and as of the date hereof and after
giving effect to this Amendment:

     (a) As to each Borrower, the execution, delivery, and performance by such Borrower of
this Amendment have been duly authorized by all necessary action on the part of such
Borrower.

     (b) As to each Borrower, the execution, delivery, and performance by such Borrower of
this Amendment does not and will not (i) violate any provision of federal, state, or local
law or regulation applicable to any Borrower, the Governing Documents of any Borrower, or
any order, judgment, or decree of any court or other Governmental Authority binding on any
Borrower, (ii) conflict with, result in a breach of, or constitute (with due notice or lapse
of time or both) a default under any material contractual obligation of any Borrower, (iii)
result in or require the creation or imposition of any Lien of any nature whatsoever upon
any properties or assets of Borrower, other than Permitted Liens, or (iv) require any
approval of any Borrower’s interest holders or any approval or consent of any Person under
any material contractual obligation of any Borrower, other than consents or approvals that
have been obtained and that are still in force and effect.

     (c) As to each Borrower, this Amendment and all other documents contemplated hereby,
when executed and delivered by such Borrower will be the legally valid and binding
obligations of such Borrower, enforceable against such Borrower in accordance with their
respective terms, except as enforcement may be limited by equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting
creditors’ rights generally.

     (d) The representations and warranties of each of the Borrowers set forth in the Credit
Agreement and in the Loan Documents to which it is a party are true, correct and complete on
and as of the date hereof; provided that the references to the Credit Agreement therein
shall be deemed to include the Credit Agreement as amended by this Amendment.

     (e) Each of the Borrowers acknowledges that the Agent and each Lender is specifically
relying upon the representations, warranties and agreements contained in this Amendment and
that such representations, warranties and agreements constitute a material inducement to the
Agent and each Lender in entering into this Amendment.

     6. Reference to Credit Agreement; No Waiver.

     6.1 Upon the effectiveness of this Amendment, each reference in the Credit
Agreement to “this Credit Agreement,” “hereunder,” “hereof,” “herein” or

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words of like import shall mean and be a reference to the Credit Agreement as
amended hereby. The term “Loan Documents” as defined in Schedule 1.1 of the
Credit Agreement shall include (in addition to the Loan Documents described in the
Credit Agreement) this Amendment and any other agreements, instruments or other
documents executed in connection herewith.

     6.2 The Agent’s and a Lender’s failure, at any time or times hereafter, to
require strict performance by the Borrowers of any provision or term of the Credit
Agreement, this Amendment or the other Loan Documents shall not waive, affect or
diminish any right of the Agent or a Lender thereafter to demand strict compliance
and performance therewith. Any suspension or waiver by the Agent or a Lender of a
breach of this Amendment or any Event of Default under the Credit Agreement shall
not, except as expressly set forth herein, suspend, waive or affect any other breach
of this Amendment or any Event of Default under the Credit Agreement, whether the
same is prior or subsequent thereto and whether of the same or of a different kind
or character. None of the undertakings, agreements, warranties, covenants and
representations of any Borrower contained in this Amendment, shall be deemed to have
been suspended or waived by the Agent or a Lender unless such suspension or waiver
is: (i) in writing and signed by the Agent and each Lender and (ii) delivered to the
Borrower. In no event shall the Agent’s and each Lender’s execution and delivery of
this Amendment establish a course of dealing among the Agent, each Lender, the
Borrowers, or any other obligor or in any other way obligate the Agent or each
Lender to hereafter provide any amendments or waivers with respect to the Credit
Agreement. The terms and provisions of this Amendment shall be limited precisely as
written and shall not be deemed: (A) to be a consent to a modification, amendment or
waiver of any other term or condition of the Credit Agreement or of any other Loan
Documents, or (B) to prejudice any right or remedy that the Agent or each Lender may
now have under or in connection with the Credit Agreement or any of the other Loan
Documents.

     7. Successors and Assigns; Amendment. This Amendment shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns; provided,
however, no Borrower may assign this Amendment or any of its respective rights hereunder
without the Agent’s and each Lender’s prior written consent. Any prohibited assignment of this
Amendment shall be absolutely null and void. This Amendment may only be amended or modified by a
writing signed by the Agent, each Lender and the Borrowers.

     8. Severability; Construction. Wherever possible, each provision of this Amendment
shall be interpreted in such a manner so as to be effective and valid under applicable law, but if
any provision of this Amendment is held to be prohibited by or invalid under applicable law, such
provision or provisions shall be ineffective only to the extent of such provision and invalidity,
without invalidating the remainder of this Amendment. Neither this Amendment nor any uncertainty or
ambiguity herein shall be construed or resolved against Agent or each Lender, whether under any
rule of construction or otherwise. On the contrary, this Amendment has been reviewed by all
parties hereto and shall be construed and interpreted

5

 

according to the ordinary meaning of the words used so as to fairly accomplish the purposes
and intentions of the parties hereto.

     9. Counterparts; Facsimile. This Amendment may be executed in one or more
counterparts, each of which taken together shall constitute one and the same instrument. Delivery
of an executed counterpart of this Amendment by telefacsimile shall be equally as effective as
delivery of a manually executed counterpart of this Amendment. Any party delivering an executed
counterpart of this Amendment by telefacsimile shall also deliver a manually executed counterpart
of this Amendment, but the failure to deliver a manually executed counterpart shall not affect the
validity, enforceability or binding effect of this Amendment.

     10. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

     (a) THE VALIDITY OF THIS AMENDMENT, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER
OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF ILLINOIS.

     (b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS
AMENDMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND TO THE EXTENT PERMITTED BY
APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF COOK, STATE OF ILLINOIS, PROVIDED,
HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY BORROWER COLLATERAL OR OTHER PROPERTY
MAY BE BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO
BRING SUCH ACTION OR WHERE SUCH BORROWERS COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
BORROWER, AGENT AND THE LENDERS WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY
RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO
THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 11(b).

     (c) BORROWERS, AGENT AND THE LENDERS HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AMENDMENT OR ANY OF
THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. BORROWERS, AGENT AND THE LENDERS
REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND IT KNOWINGLY AND VOLUNTARILY WAIVES ITS
JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AMENDMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY
THE COURT.

6

 

     IN WITNESS WHEREOF, the undersigned have caused this Third Amendment to be duly executed and
delivered as of the date first above written.

	 	 	 	 	 
	 	SoftBrands, Inc.

a Delaware corporation, as a Borrower

 	 
	 	By:  	 	 
	 	 	Title:    	 
	 	 	 	 
	 

	 	 	 	 	 
	 	SoftBrands Manufacturing, Inc.

a Minnesota corporation, as a Borrower

 	 
	 	By:  	 	 
	 	 	Title:    	 
	 	 	 	 
	 

	 	 	 	 	 
	 	SoftBrands International, Inc.

a Delaware corporation, as a Borrower

 	 
	 	By:  	 	 
	 	 	Title:    	 
	 	 	 	 
	 

	 	 	 	 	 
	 	SoftBrands Licensing, Inc.

a Delaware corporation, as a Borrower

 	 
	 	By:  	 	 
	 	 	Its: 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	MAI Systems Corporation

a Delaware corporation, as a Borrower

 	 
	 	By:  	 	 
	 	 	Its: 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	Hotel Information Systems, Inc.

a Delaware corporation, as a Borrower

 	 
	 	By:  	 	 
	 	 	Its: 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	CLS Software International, Inc.

a California corporation, as a Borrower

 	 
	 	By:  	 	 
	 	 	Its: 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	Wells Fargo Foothill, Inc.

a California corporation, as Agent and a Lender

 	 
	 	By:  	 	 
	 	 	Its:

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