Exhibit 4.2


 


FIRST
AMENDMENT


 


FIRST AMENDMENT, dated as of August 17,
2005 (the “Amendment”), to the Rights Agreement, dated as of November 26,
2002 (the “Rights Agreement”), by and between SoftBrands, Inc., a Delaware
corporation (the “Company”) and WELLS FARGO BANK, NATIONAL ASSOCIATION (the “Rights
Agent”).


 


WHEREAS, the Board of Directors has deemed it
to be in the best interests of the Company to amend the Rights Agreement to
accommodate the purchase of shares of Series C Convertible Preferred Stock
of the Company by ABRY Partners LLC and its managed and affiliated investment
vehicles; and


 


WHEREAS, pursuant to the terms of the Rights
Agreement, the Company has delivered an officer’s certificate to the Rights
Agent which states that the proposed amendment has been approved by a majority
of the Board of Directors of the Company and is in compliance with the terms of
the section of the Rights Agreement regarding supplements and amendments.


 


NOW, THEREFORE, in consideration of the
premises and mutual agreements hereinafter set forth, the Company and the
Rights Agent agree to amend the Rights Agreement as follows:


 


The definition of “Acquiring Person”
contained in Section 1 of the Rights Agreement is hereby amended to read
in its entirety as follows:


 


“Acquiring
Person” shall mean any Person that Beneficially Owns 10% or more of the Voting
Shares of the Company then outstanding; provided, however, that the term “Acquiring
Person” shall not include:


 


(i) an Exempt
Person;


 


(ii) any Person that would not otherwise
be an Acquiring Person but for a reduction in the number of outstanding Voting
Shares resulting from a stock repurchase program or other similar plan of the
Company or from a self tender offer of the Company, which plan or tender offer
commenced on or after the date hereof; provided, however, that the term “Acquiring
Person” shall include such Person described in this subclause (ii) from
and after the first date upon which (A) such Person, since the date of the
commencement of such plan or tender offer, shall have acquired Beneficial
Ownership of, in the aggregate, a number of Voting Shares of the Company equal
to 1% or more of the Voting Shares of the Company then outstanding and (B) such
Person, together with all Affiliates and Associates of such Person, shall
Beneficially Own 10% or more of the Voting Shares of the Company then
outstanding;


 





















 


(iii) any
Person that would not otherwise be an Acquiring Person but for its Beneficial
Ownership of Rights;


 


(iv) any Person that becomes the
Beneficial Owner of 10% or more of the outstanding Voting Shares of the Company
solely as the result of the distribution to such person of Voting Shares
pursuant to the AremisSoft Plan of Reorganization; provided, however, that the
term Acquiring Person shall include any such Person (A) who, together with
all Affiliates and Associates of such Person, becomes the Beneficial Owner or
10% or more of the outstanding Voting Shares of the Company because of the
purchase, acquisition or transfer of the right to receive such a distribution
pursuant to the AremisSoft Plan of Reorganization after the Distribution Record
Date (as defined in the AremisSoft Plan of Reorganization), or (B) who
shall  have acquired, without the prior approval of the Board of Directors
of the Company, Beneficial Ownership of additional Voting Shares after November 26,
2002, other than as a result of such AremisSoft Plan of Reorganization equal to
1% of the then outstanding Voting Shares of the Company and, together with all
Affiliates and Associates of such Person, shall Beneficially Own more than 10%
or more of the Voting Shares of the Company then outstanding;


 


(v) any transferee, assignee or
purchaser from CRP of any of those certain Common Stock Purchase Warrants dated
August 18, 2004, or any replacement or substitute warrants or any Voting
Shares issued or issueable under those certain Common Stock Purchase Warrants
dated August 18, 2004, or any transferee, assignee or purchaser from CRP
of shares of Series B Convertible Preferred Stock, or of any replacement
or substitute warrants or shares of Series B Convertible Preferred Stock,
each to the extent such Person would, absent the operation of this clause (v),
have become an Acquiring Person solely because of the acquisition of 
warrants, Series B Convertible Preferred Stock or Voting Shares from CRP;
provided, however, that the term “Acquiring Person” shall include such Person
described in this subclause (v) from and after the first date upon which (A) such
Person, since the date of acquisition from CRP, shall have acquired Beneficial
Ownership of, in the aggregate, a number of additional Voting Shares of the
Company equal to 1% or more of the Voting Shares of the Company then
outstanding and (B) such Person, together with all Affiliates and
Associates of such Person, shall Beneficially Own 10% or more of the Voting
Shares of the Company then outstanding;


 


(vi) any transferee, assignee or
purchaser from ABRY or CRP of any of those certain Common Stock Purchase
Warrants dated August 17, 2005, or any replacement or substitute warrants
or any Voting Shares issued or issueable under those certain Common Stock
Purchase Warrants dated August 17, 2005, or any transferee, assignee or
purchaser from ABRY or 


 





















 


CRP of shares of Series C Convertible
Preferred Stock, or of any replacement or substitute shares of Series C
Convertible Preferred Stock or any Voting Shares issued or issuable upon
conversion of such Series C Convertible Preferred Stock, each to the
extent such Person would, absent the operation of this clause (vi), have become
an Acquiring Person solely because of the acquisition of  warrants, Series C
Convertible Preferred Stock or Voting Shares from ABRY or CRP; provided,
however, that the term “Acquiring Person” shall include such Person described
in this subclause (vi) from and after the first date upon which (A) such
Person, since the date of acquisition from ABRY or CRP shall have acquired
Beneficial Ownership of, in the aggregate, a number of additional Voting Shares
of the Company equal to 1% or more of the Voting Shares of the Company then
outstanding and (B) such Person, together with all Affiliates and
Associates of such Person, shall Beneficially Own 10% or more of the Voting
Shares of the Company then outstanding; or


 


(vii) any Person that is the Beneficial
Owner of 10% or more of the outstanding Voting Shares of the Company solely as
the result of the operation of clause (iv) of the definition of “Beneficial
Owner” if and during such period as the Board of Directors shall have
determined that the operation of such clause should be waived in the best
interests of the Company and its stockholders; provided, however, that any
determination pursuant to this clause (vii) shall have been made
prior to any change in the composition of the Board of Directors following the
date that such Person shall have become the Beneficial Owner of such Voting
Shares if such change in composition involved the election of two or more new
members of the Board of Directors.


 


In calculating the percentage of the
outstanding Voting Shares that are Beneficially Owned by a Person for purposes
of this definition, Voting Shares that are Beneficially Owned by such Person
shall be deemed outstanding, and Voting Shares that are not Beneficially Owned
by such Person and that are subject to issuance upon the exercise or conversion
of outstanding conversion rights, exchange rights, rights, warrants or options
shall not be deemed outstanding. Any determination made by the Board of
Directors of the Company as to whether any Person is or is not an Acquiring
Person shall be conclusive and binding upon all holders of Rights.


 


The definition of “Exempt Person” contained
in Section 1 of the Rights Agreement is hereby amended to read in its
entirety as follows:


 


“Exempt Person”
shall mean (i) AremisSoft Corporation; (ii) any disbursing agent for
the shares of the Company pursuant to the AremisSoft Plan of Reorganization; (iii) any
Trustee, Lead Class Counsel or Class Representative pursuant to the
AremisSoft Trust Agreement; (iv) any other person who receives Voting
Shares of the Company temporarily pursuant to the AremisSoft Plan of 


 





















 


Reorganization solely to facilitate the
redistribution of such securities to their ultimate beneficial owner (but
Exempt Person shall not include such ultimate beneficial owner), (v) any
wholly-owned Subsidiary of the Company, (vi) any employee benefit plan of
the Company or of a Subsidiary of the Company, (vii) any Person holding
Voting Shares for or pursuant to the terms of any such employee benefit plan, (viii) Capital
Resource Partners IV, L.P., a Delaware limited partnership, CRP Investment
Partners IV, LLC, a Delaware limited partnership, CRP Partners IV, L.L.C.,
Capital Resource Management, Inc. and their respective Associates or
Affiliates (collectively, “CRP”), and (ix)  ABRY Mezzanine Partners, L.P.,
ABRY Mezzanine Investors, L.P., ABRY Mezzanine Holdings LLC, ABRY Investment
Partnership, L.P., ABRY Investment GP, LLC, ABRY Partners LLC and their
respective Associates and Affiliates (collectively “ABRY”).


 


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


 


	
   

  	
  WELLS FARGO BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Darren Larson

  	
   

  
	
   

  	
  Its

  	
  Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SOFTBRANDS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David G.
  Latzke

  	
   

  
	
   

  	
  Its

  	
  Senior Vice President, Chief Financial

  	
   

  
	
   

  	
   

  	
  Officer and Secretary