Exhibit 4.1


 


THIS WARRANT WAS ORIGINALLY ISSUED ON AUGUST 17, 2005, AND WAS NOT REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES
LAW.  THIS WARRANT AND THE SECURITIES
OBTAINABLE UPON EXERCISE HEREOF MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAW.  THE TRANSFER OF THIS
WARRANT AND THE SECURITIES OBTAINABLE UPON EXERCISE HEREOF IS SUBJECT TO THE
CONDITIONS SET FORTH IN THE SERIES C CONVERTIBLE PREFERRED STOCK AND
WARRANT PURCHASE AGREEMENT DATED AS OF AUGUST 17, 2005, BETWEEN THE ISSUER (THE “COMPANY”) AND THE OTHER PARTIES
THERETO. THE COMPANY RESERVES THE RIGHT TO REFUSE ANY TRANSFER OF SUCH
SECURITIES UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH
TRANSFER.  A COPY OF SUCH CONDITIONS
SHALL BE FURNISHED WITHOUT CHARGE TO THE HOLDER HEREOF UPON WRITTEN REQUEST TO
THE COMPANY.


 


SOFTBRANDS,
INC.


 


STOCK
PURCHASE WARRANT


 


	
  Date of Issuance:
  August 17, 2005

  	
   

  	
  Certificate No. W-

  



 


FOR VALUE RECEIVED,
SoftBrands, Inc., a Delaware corporation (the “Company”), hereby grants to
                                         ,
or its registered assigns (the “Registered
Holder”) the right to purchase from the Company           shares
of the Company’s Common Stock at a price per share equal to $2.11 (as adjusted from time to time
hereunder, the “Exercise Price”).  This Warrant is one of several warrants
(collectively, the “Warrants”)
issued by the Company to certain investors (the “Investors”) pursuant to the Series C Convertible
Preferred Stock and Warrant Purchase Agreement, dated as of August 17,
2005 (the “Purchase Agreement”).  Certain capitalized terms used herein are
defined in Section 5 hereof.  The
amount and kind of securities obtainable pursuant to the rights granted
hereunder and the purchase price for such securities are subject to adjustment
pursuant to the provisions contained in this Warrant.


 


This Warrant is subject
to the following provisions:


 





















 


Section 1.               Exercise
of Warrant.


 


1A.          Exercise
Period.  The Registered Holder may
exercise, in whole or in part (but not as to a fractional share of Common
Stock), the purchase rights represented by this Warrant at any time and from
time to time after the Date of Issuance to and including the 10th anniversary
thereof (the “Exercise Period”).  The Company shall give the Registered Holder
written notice of the expiration of the rights hereunder at least 30 days but
not more than 90 days prior to the end of the Exercise Period.


 


1B.          Exercise
Procedure.


 


(i)            This
Warrant shall be deemed to have been exercised when the Company has received
all of the following items (the “Exercise Time”):


 


(a)           a
completed Exercise Agreement, as described in Section 1C below,
executed by the Person exercising all or part of the purchase rights
represented by this Warrant (the “Purchaser”);


 


(b)           this
Warrant;


 


(c)           if
this Warrant is not registered in the name of the Purchaser, an Assignment or
Assignments in the form set forth in Exhibit II hereto evidencing
the assignment of this Warrant to the Purchaser, in which case the Registered
Holder shall have complied with the provisions set forth in Section 7
hereof in connection with such transfer; and


 


(d)           either
(1) a check payable to the Company in an amount equal to the product of
the Exercise Price multiplied by the number of shares of Common Stock being purchased
upon such exercise (the “Aggregate Exercise Price”),
or (2) a written notice to the Company that the Purchaser is exercising
the Warrant (or a portion thereof) by authorizing the Company to withhold from
issuance a number of shares of Common Stock issuable upon such exercise of the
Warrant which when multiplied by the Market Price of the Common Stock is equal
to the sum of the Aggregate Exercise Price plus the aggregate Exercise Price
for any such shares of Common Stock requested to be withheld (and such withheld
shares shall no longer be issuable under this Warrant).


 


(ii)           Certificates
for shares of Common Stock purchased upon exercise of this Warrant shall be
delivered by the Company to the Purchaser within five Business Days after the
date of the Exercise Time.  Unless this
Warrant has expired or all of the purchase rights represented hereby have been
exercised, the Company shall prepare a new Warrant, substantially identical
hereto, representing the rights formerly represented by this Warrant which have
not expired, been withheld or been exercised, and shall within such five-day
period, deliver such new Warrant to the Person designated for delivery in the
Exercise Agreement.


 


(iii)          The
Common Stock issuable upon the exercise of this Warrant shall be deemed to have
been issued to the Purchaser at the Exercise Time, and the


 


2





















 


Purchaser shall be deemed for all purposes to have become the record
holder of such Common Stock at the Exercise Time.


 


(iv)          The
issuance of certificates for shares of Common Stock upon exercise of this
Warrant shall be made without charge to the Registered Holder or the Purchaser
for any issuance tax in respect thereof if issued to the Registered Holder or
other cost incurred by the Company in connection with such exercise and the
related issuance of shares of Common Stock. 
Each share of Common Stock issuable upon exercise of this Warrant shall
upon payment of the Exercise Price therefor, be fully paid and nonassessable
and free from all liens and charges with respect to the issuance thereof.


 


(v)           The
Company shall not close its books against the transfer of this Warrant or of
any share of Common Stock issued or issuable upon the exercise of this Warrant
in any manner which interferes with the timely exercise of this Warrant.  The Company shall from time to time take all
such action as may be necessary to assure that the par value per share of the
unissued Common Stock acquirable upon exercise of this Warrant is at all times
equal to or less than the Exercise Price then in effect.


 


(vi)          The Company
shall reasonably assist and cooperate with any Registered Holder or Purchaser
required to make any governmental filings or obtain any governmental approvals
prior to or in connection with any exercise of this Warrant (including, without
limitation, making any filings required to be made by the Company, but
excluding the filing of any registration statement with the Securities and
Exchange Commission, other than any registration statement which the Company is
contractually or otherwise required to file).


 


(vii)         Notwithstanding
any other provision hereof, if an exercise of any portion of this Warrant is to
be made in connection with a registered public offering or the sale of the
Company, the exercise of any portion of this Warrant may, at the election of
the holder hereof, be conditioned upon the consummation of the public offering
or sale of the Company in which case such exercise shall not be deemed to be
effective until the consummation of such transaction.


 


(viii)        The
Company shall at all times reserve and keep available out of its authorized but
unissued shares of Common Stock solely for the purpose of issuance upon the
exercise of the Warrants, such number of shares of Common Stock issuable upon
the exercise of all outstanding Warrants. 
All shares of Common Stock which are so issuable shall, when issued
against payment of the Aggregate Exercise Price therefor, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and
charges.  The Company shall take all such
actions as may be reasonably necessary to assure that all such shares of Common
Stock may be so issued without violation of any applicable law or governmental regulation
or any requirements of any domestic securities exchange upon which shares of
Common Stock may be listed (except for official notice of issuance which shall
be immediately delivered by the Company upon each such issuance, and excluding
the filing of any registration statement, other than any registration statement
with the Securities and Exchange Commission which the Company is contractually
or otherwise required to file).  The
Company shall not take any action


 


3





















 


which would cause the number of authorized but unissued shares of
Common Stock to be less than the number of such shares required to be reserved
hereunder for issuance upon exercise of the Warrants.


 


1C.          Exercise
Agreement.  Upon any exercise of this
Warrant, the Exercise Agreement shall be substantially in the form set forth in
Exhibit I hereto, except that if the shares of Common Stock are not
to be issued in the name of the Registered Holder of this Warrant, the Exercise
Agreement shall also state the name of the Person to whom the certificates for
the shares of Common Stock are to be issued, and if the number of shares of
Common Stock to be issued does not include all the shares of Common Stock
purchasable hereunder, it shall also state the name of the Person to whom a new
Warrant for the unexercised portion of the rights hereunder is to be delivered,
and shall, unless such transfer or assignment of shares or this Warrant has
been registered under applicable securities laws, be accompanied by an opinion
of counsel reasonably satisfactory to the Company that such transfer may be
made without such registration.  Such
Exercise Agreement shall be dated the actual date of execution thereof.


 


1D.          Fractional
Shares.  If a fractional share of
Common Stock would, but for the provisions of Section 1A, be
issuable upon exercise of the rights represented by this Warrant, the Company
shall, unless prohibited by any agreement to which the Company is a party,
within five Business Days after the date of the Exercise Time, deliver to the
Purchaser a check payable to the Purchaser in lieu of such fractional share in
an amount equal to the difference between Market Price of such fractional share
as of the date of the Exercise Time and the Exercise Price of such fractional
share.


 


Section 2.               Adjustment
of Exercise Price and Number of Shares. 
In order to prevent dilution of the rights granted under this Warrant,
the Exercise Price shall be subject to adjustment from time to time as provided
in this Section 2, and the number of shares of Common Stock obtainable
upon exercise of this Warrant shall be subject to adjustment from time to time
as provided in this Section 2.


 


2A.          Adjustment
of Exercise Price and Number of Shares upon Issuance of Common Stock.


 


(i)            If and
whenever after the Date of Issuance of this Warrant, the Company issues or
sells, or in accordance with Section 2B is deemed to have issued or
sold, any share of Common Stock for a consideration per share less than (x)
eighty percent (80%) of the Market Price of the Common Stock at such time or
(y) the Exercise Price in effect immediately prior to such time (the greater of
such amounts being referred to herein as, the “Adjustment
Multiplier”), then immediately upon such issue or sale or deemed
issue or sale, the Exercise Price shall be reduced to the Exercise Price
determined by multiplying (x) the Exercise Price in effect immediately prior to
such issue or sale by (y) the quotient obtained by dividing (i) the sum of
(A) the product determined by multiplying the Adjustment Multiplier by the
number of shares of Common Stock Deemed Outstanding immediately prior to such
issue or sale, plus (B) the consideration, if any, received by the Company
upon such issue or sale, by (ii) the product determined by multiplying the
Adjustment Multiplier by the number of shares of Common Stock Deemed
Outstanding immediately after such issue or sale.  Upon each such adjustment of


 


4





















 


the Exercise Price hereunder, the number of shares of Common acquirable
upon exercise of this Warrant shall be adjusted to the number of shares
determined by multiplying the Exercise Price in effect immediately prior to
such adjustment by the number of shares of Common Stock acquirable upon
exercise of this Warrant immediately prior to such adjustment and dividing the
product thereof by the Exercise Price resulting from such adjustment.


 


(ii)           Notwithstanding
the foregoing, there shall be no adjustment to the Exercise Price or the number
of shares of Common Stock obtainable upon exercise of this Warrant with respect
to a Permitted Issuance.


 


2B.          Effect
on Exercise Price of Certain Events. 
For purposes of determining the adjusted Exercise Price under Section 2A,
the following shall be applicable:


 


(i)            Issuance
of Rights or Options.  If the Company
in any manner grants or sells any Options and the price per share for which
Common Stock is issuable upon the exercise of such Options, or upon conversion
or exchange of any Convertible Securities issuable upon exercise of such
Options, is less than the Adjustment Multiplier, then the total maximum number
of shares of Common Stock issuable upon the exercise of such Options or upon
conversion or exchange of the total maximum amount of such Convertible
Securities issuable upon the exercise of such Options shall be deemed to be
outstanding and to have been issued and sold by the Company at the time of the
granting or sale of such Options for such price per share.  For purposes of this paragraph, the “price
per share for which Common Stock is issuable” shall be determined by dividing (A) the
total amount, if any, received or receivable by the Company as consideration
for the granting or sale of such Options, plus the minimum aggregate amount of
additional consideration payable to the Company upon exercise of all such
Options, plus in the case of such Options which relate to Convertible
Securities, the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the issuance or sale of such Convertible Securities
and the conversion or exchange thereof, by (B) the total maximum number of
shares of Common Stock issuable upon the exercise of such Options or upon the
conversion or exchange of all such Convertible Securities issuable upon the
exercise of such Options.  No further
adjustment of the Exercise Price or the number of shares of Common Stock
issuable hereunder shall be made when Convertible Securities are actually
issued upon the exercise of such Options or when Common Stock is actually
issued upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.


 


(ii)           Issuance
of Convertible Securities.  If the
Company in any manner issues or sells any Convertible Securities and the price
per share for which Common Stock is issuable upon conversion or exchange
thereof is less than the Adjustment Multiplier, then the maximum number of
shares of Common Stock issuable upon conversion or exchange of such Convertible
Securities shall be deemed to be outstanding and to have been issued and sold
by the Company the time of the issuance or sale of such Convertible Securities
for such price per share.  For the
purposes of this paragraph, the “price per share for which Common Stock is
issuable” shall be determined by dividing (A) the total amount received or
receivable by the Company as consideration for the issue


 


5





















 


or sale of such Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (B) the total maximum number of shares
of Common Stock issuable upon the conversion or exchange of all such
Convertible Securities.  No further
adjustment of the Exercise Price or the number of shares of Common Stock issuable
hereunder shall be made when Common Stock is actually issued upon the
conversion or exchange of such Convertible Securities, and if any such issue or
sale of such Convertible Securities is made upon exercise of any Options for
which adjustments of the Exercise Price or the number of shares of Common Stock
issuable hereunder had been or are to be made pursuant to other provisions of
this Section 2, no further adjustment of the Exercise Price or the
number of shares of Common Stock issuable hereunder shall be made by reason of
such issue or sale.


 


(iii)          Change
in Option Price or Conversion Rate. 
If, in the case of Options and Convertible Securities issued on or after
the Date of Issuance, the purchase price provided for in any such Options, the
additional consideration, if any, payable upon the conversion or exchange of
any such Convertible Securities or the rate at which any such Convertible
Securities are convertible into or exchangeable for Common Stock changes at any
time, the Exercise Price in effect at the time of such change shall be
immediately adjusted to the Exercise Price which would have been in effect at
such time had such Options or Convertible Securities still outstanding provided
for such changed purchase price, additional consideration or conversion rate,
as the case may be, at the time initially granted, issued or sold, and the
number of shares of Common Stock issuable hereunder shall be correspondingly
adjusted.  For purposes of Section 2B,
if the terms of any Option or Convertible Security which was outstanding as of
the Date of Issuance are changed in the manner described in the immediately
preceding sentence, then such Option or Convertible Security and the Common
Stock deemed issuable upon exercise, conversion or exchange thereof shall be
deemed to have been issued as of the date of such change.


 


(iv)          Treatment
of Expired Options and Unexercised Convertible Securities.  Upon the expiration of any Option or the
termination of any right to convert or exchange any Convertible Security
without the exercise of any such Option or right, the Exercise Price then in
effect hereunder shall be adjusted immediately to the Exercise Price which
would have been in effect at the time of such expiration or termination had
such Option or Convertible Security, to the extent outstanding immediately
prior to such expiration or termination, never been issued, and the number of
shares of Common Stock issuable hereunder shall be correspondingly
adjusted.  For purposes of Section 2B,
the expiration or termination of any Option or Convertible Security which was
outstanding as of the Date of Issuance shall not cause the Exercise Price or
the number of shares Common Stock issuable hereunder to be adjusted unless, and
only to the extent that, a change in the terms of such Option or Convertible
Security caused it to be deemed to have been issued after the Date of Issuance.


 


(v)           Calculation
of Consideration Received.  If any
Common Stock, Option or Convertible Security is issued or sold or deemed to
have been issued or sold for cash, the consideration received therefor shall be
deemed to be the amount received by


 


6





















 


the Company therefor (net of discounts, commissions and related
expenses).  If any Common Stock, Option
or Convertible Security is issued or sold for a consideration other than cash,
the amount of the consideration other than cash received by the Company shall
be the fair value of such consideration, except where such consideration
consists of securities, in which case the amount of consideration received by
the Company shall be the Market Price thereof as of the date of receipt.  If any Common Stock, Option or Convertible
Security is issued to the owners of the non-surviving entity in connection with
any merger in which the Company is the surviving corporation, the amount of
consideration therefor shall be deemed to be the fair value of such portion of
the net assets and business of the non-surviving entity as is attributable to
such Common Stock, Option or Convertible Security, as the case may be.  The fair value of any consideration other
than cash and securities shall be reasonably determined by the Board of
Directors of the Company in good faith; provided, however, that
in the event any Common Stock, Options or Convertible Securities are issued or
sold or deemed to be issued or sold and such Common Stock, Options or
Convertible Securities represent (on an as-converted basis) greater than 10% of
the Common Stock Deemed Outstanding, then the fair value of such Common Stock,
Options or Convertible Securities, as the case may be, shall be the fair value
determined by the Board of Directors of the Company in good faith; provided
that the Company shall notify the Registered Holder of such determination in
writing and such Registered Holder may, within five (5) Business Days of
such notification, advise the Company that it disputes fair value.  If such parties are unable to reach agreement
within a reasonable period of time after notification of such disputed
valuation, such fair value shall be determined by an independent appraiser
experienced in valuing such type of consideration jointly selected by the
Company and the Registered Holder.  The
determination of such appraiser shall be final and binding upon the parties,
and the fees and expenses of such appraiser shall be borne equally by the
Company, on the one hand, and the Registered Holder and the other holders of
Warrants disputing such fair value, on the other hand.


 


(vi)          Integrated
Transactions.  In case any Option is
issued in connection with the issue or sale of other securities of the Company,
together comprising one integrated transaction in which no specific
consideration is allocated to such Option by the parties thereto, the
consideration for the Option shall be the Market Price thereof.


 


(vii)         Treasury
Shares.  The number of shares of
Common Stock outstanding at any given time shall not include shares owned or
held by or for the account of the Company or any Subsidiary, and the
disposition of any shares so owned or held shall be considered an issue or sale
of Common Stock.


 


(viii)        Record
Date.  If the Company takes a record
of the holders of Common Stock for the purpose of entitling them (a) to
receive a dividend or other distribution payable in Common Stock, Options or in
Convertible Securities or (b) to subscribe for or purchase Common Stock,
Options or Convertible Securities, then such record date shall be deemed to be
the date of the issue or sale of the shares of Common Stock deemed to have been
issued or sold upon the declaration of such dividend or upon the making of such
other distribution or the date of the granting of such right of subscription or
purchase, as the case may be.


 


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2C.          Subdivision
or Combination of Common Stock.  If
the Company at any time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the Exercise Price in effect
immediately prior to such subdivision shall be proportionately reduced and the
number of shares of Common Stock obtainable upon exercise of this Warrant shall
be proportionately increased (and any other appropriate actions shall be taken
by the Company) so that the holder of any Warrant thereafter surrendered for
exercise (without actually requiring this Warrant to be exercised and without
regard to any limitations on exercise set forth in this Warrant or otherwise)
shall be entitled to receive the number of shares of Common Stock or other
securities of the Company that such holder would have owned or would have been
entitled to receive upon or by reason of the events described above, had such
Warrant been exercised immediately (without actually requiring this Warrant to be
exercised and without regard to any limitations on exercise set forth in this
Warrant or otherwise) prior to the occurrence of such event.  If the Company at any time combines (by
reverse stock split or otherwise) one or more classes of its outstanding shares
of Common Stock into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination shall be proportionately increased and
the number of shares of Common Stock obtainable upon exercise of this Warrant
(without actually requiring this Warrant to be exercised and without regard to
any limitations on exercise set forth in this Warrant or otherwise) shall be
proportionately decreased (and any other appropriate actions shall be taken by
the Company) so that the holder of any Warrant thereafter surrendered for
exercise shall be entitled to receive the number of shares of Common Stock or
other securities of the Company that such holder would have owned or would have
been entitled to receive upon or by reason of the events described above, had
such Warrant been exercised immediately (without actually requiring this
Warrant to be exercised and without regard to any limitations on exercise set
forth in this Warrant or otherwise) prior to the occurrence of such event.


 


2D.          Reorganization,
Reclassification, Consolidation, Merger or Sale. Any recapitalization,
reorganization, reclassification, consolidation, merger, sale of all or
substantially all of the Company’s assets or other transaction, in each case
which is effected in such a manner that the holders of Common Stock are
entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock, is
referred to herein as an “Organic Change.”  Prior to the consummation of any Organic
Change, the Company shall make appropriate provisions (in form and substance
satisfactory to the Registered Holder) to insure that each of the holders of
the Warrants shall thereafter have the right to acquire and receive, in lieu of
or in addition to (as the case may be) the shares of Common Stock immediately
theretofore acquirable and receivable upon the exercise of such holder’s
Warrant, such shares of stock, securities or assets as such holder would have
received in connection with such Organic Change if such holder had exercised
its Warrant (without actually requiring this Warrant to be exercised and
without regard to any limitations on exercise set forth in this Warrant or
otherwise) immediately prior to such Organic Change.  In each such case, the Company shall also
make appropriate provisions (in form and substance satisfactory to the
Registered Holder) to insure that the provisions of this Section 2
and Sections 3 and 4 hereof shall thereafter be applicable to the
Warrants (including, in the case of any such consolidation, merger or sale in
which the successor entity or purchasing entity is other than the Company, an
immediate adjustment of the Exercise Price to the value for the Common Stock
reflected by the terms of such consolidation, merger or sale, and a
corresponding immediate adjustment in the


 


8





















 


number of shares of
Common Stock acquirable and receivable upon exercise of the Warrants, if the
value so reflected is less than the Exercise Price in effect immediately prior
to such consolidation, merger or sale). 
The Company shall not effect any such consolidation, merger or sale,
unless prior to the consummation thereof, the successor entity (if other than
the Company) resulting from consolidation or merger or the entity purchasing
such assets assumes by written instrument (in form and substance satisfactory
to the Registered Holder), the obligation to deliver to each such holder such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to acquire.


 


2E.           Certain
Distributions.  In case the Company
shall at any time or from time to time, prior to exercise of this Warrant,
distribute to all holders of shares of the Common Stock (including any such
distribution made in connection with a merger or consolidation in which the
Company is the resulting or surviving Person and the Common Stock is not
changed or exchanged) cash, evidences of indebtedness of the Company or another
issuer, securities of the Company or another issuer or other assets (excluding
dividends payable in shares of Common Stock for which adjustment is made under
another paragraph of this Section 2, any distribution in connection
with a Permitted Issuance and any Liquidating Dividend) or rights or warrants
to subscribe for or purchase of any of the foregoing, then, and in each such
case, the Exercise Price then in effect shall be adjusted (and any other
appropriate actions shall be taken by the Company) by multiplying the Exercise
Price in effect immediately prior to the date of such distribution by a
fraction (x) the numerator of which shall be the Market Price of the Common
Stock immediately prior to the date of distribution less the then fair market
value (as determined by the Board of Directors in the exercise of their
fiduciary duties) of the portion of the cash, evidences of indebtedness,
securities or other assets so distributed or of such rights or warrants
applicable to one share of Common Stock and (y) the denominator of which shall
be the Market Price of the Common Stock immediately prior to the date of
distribution (but such fraction shall not be greater than one); provided, however, that no adjustment shall be made with respect
to any distribution of rights or warrants to subscribe for or purchase
securities of the Company if the holder of this Warrant would otherwise be
entitled to receive such rights or warrants upon exercise at any time of
Warrants into Common Stock.  Such
adjustment shall be made whenever any such distribution is made and shall
become effective retroactively to a date immediately following the close of
business on the record date for the determination of stockholders entitled to
receive such distribution.


 


2F.           Certain
Events. If any event occurs of the type contemplated by the provisions of
this Section 2 but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation rights,
phantom stock rights or other rights with equity features), then the Company’s
Board of Directors shall make an appropriate adjustment in the Exercise Price
and the number of shares of Common Stock obtainable upon exercise of this
Warrant so as to protect the rights of the holders of the Warrants; provided
that no such adjustment shall increase the Exercise Price as otherwise
determined pursuant to this Section 2 or decrease the number of
shares of Common Stock obtainable as otherwise determined pursuant to this Section 2.


 


9





















 


2G.          Notices.


 


(i)            Immediately
upon any adjustment of the Exercise Price, the Company shall give written
notice thereof to the Registered Holder, setting forth in reasonable detail and
certifying the calculation of such adjustment.


 


(ii)           The Company
shall give written notice to the Registered Holder at least 20 days prior to
the date on which the Company closes its books or takes a record (A) with
respect to any dividend or distribution upon the Common Stock, (B) with
respect to any pro rata subscription offer to holders of Common Stock or (C) for
determining rights to vote with respect to any Organic Change, dissolution or
liquidation.


 


(iii)          The
Company shall also give written notice to the Registered Holders at least 20
days prior to the date on which any Organic Change, dissolution or liquidation
shall take place.


 


Section 3.               Liquidating
Dividends.  If the Company declares
or pays a dividend upon the Common Stock payable otherwise than in cash out of
earnings or earned surplus (determined in accordance with generally accepted
accounting principles, consistently applied) except for a stock dividend
payable in shares of Common Stock (a “Liquidating Dividend”),
then the Company shall pay to the Registered Holder of this Warrant at the time
of payment thereof the Liquidating Dividend which would have been paid to such
Registered Holder on the Common Stock had this Warrant been fully exercised
(without actually requiring this Warrant to be exercised and without regard to
any limitations on exercise set forth in this Warrant or otherwise) immediately
prior to the date on which a record is taken for such Liquidating Dividend, or,
if no record is taken, the date as of which the record holders of Common Stock
entitled to such dividends are to be determined.


 


Section 4.               Purchase
Rights.  If at any time the Company
grants, issues or sells any Options, Convertible Securities or rights
(including any Rights) to purchase stock, warrants, securities or other
property pro rata to the record holders of any class of Common Stock (the “Purchase Rights”), then the Registered holder of this
Warrant shall be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which such holder could have
acquired if such holder had held the number of shares of Common Stock
acquirable upon complete exercise of this Warrant immediately before the date
on which a record is taken for the grant, issuance or sale of such Purchase
Rights, or, if no such record is taken, the date as of which the record holders
of Common Stock are to be determined for the grant, issue or sale of such
Purchase Rights.


 


Section 5.               Definitions.  The following terms have meanings set forth
below:


 


“Business Day”
means any day other than a Saturday, Sunday, or any day on which banks in New
York City are authorized or obligated by applicable law to close.


 


“Common Stock”
means, collectively, the Company’s Common Stock, par value $0.01 per share (and
any associated Rights) and any capital stock of any class of the Company hereafter
authorized which is not limited to a fixed sum or percentage of par or stated
value in respect to the rights of the holders thereof to participate in
dividends or in the distribution of assets upon any liquidation, dissolution or
winding up of the Company.


 


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“Common Stock Deemed
Outstanding” means at any given time, the number of
shares of Common Stock actually outstanding at such time, plus the number of
shares of Common Stock issuable upon exercise of Options outstanding at such
time or upon conversion of Convertible Securities (including the Series C
Preferred Stock and this Warrant) outstanding at such time.


 


“Convertible Securities”
means any stock or securities (directly or indirectly) convertible into or
exchangeable for Common Stock.


 


“Market Price”
of any security means the average of the closing prices of such security’s
sales on all securities exchanges on which such security may at the time be
listed, or, if there has been no sales on any such exchange on any day, the
average of the highest bid and lowest asked prices on all such exchanges at the
end of such day, or, if on any day such security is not so listed, the average
of the representative bid and asked prices quoted in the NASDAQ System as of
4:00 P.M., New York time, or, if on any day such security is not quoted in
the NASDAQ System, the average of the highest bid and lowest asked prices on
such day in the domestic over-the-counter market as reported by the National
Quotation Bureau, Incorporated, or any similar successor organization, in each
such case (i) averaged over a period of 30 days consisting of the day as
of which “Market Price” is being determined and the 29 consecutive Business
Days prior to such day, and (ii) averaged on a volume-weighted basis based
on the trading volume for each such Business Day.  If at any time such security is not listed on
any securities exchange or quoted in the NASDAQ System or the over-the-counter
market, the “Market Price” shall be the fair value thereof determined by the
Board of Directors of the Company in good faith; provided that the
Company shall notify the Registered Holder of such determination in writing and
such Registered Holder may, within five (5) Business Days of such
notification, advise the Company that it disputes fair value.  If such parties are unable to reach agreement
within a reasonable period of time after notification of such disputed
valuation, such fair value shall be determined by an independent appraiser
experienced in valuing securities jointly selected by the Company and the
Registered Holder.  The determination of
such appraiser shall be final and binding upon the parties, and the fees and
expenses of such appraiser shall be borne equally by the Company, on the one
hand, and the Registered Holder and the other holders of Warrants disputing
such fair value, on the other hand.


 


“Options”
means any rights, warrants or options to subscribe for or purchase Common Stock
or Convertible Securities.


 


“Permitted Issuance”
means (i) the granting of Options to purchase Common Stock, or other
stock-based benefits, to employees, directors or consultants of the Company or
the exercise thereof, pursuant to any reservation under any employee benefit
plan to the extent and as in effect on the date of this Warrant, or approved
thereafter by the Board of Directors and stockholders of the Company, including
the holders of at least a majority of the Common Stock issuable upon exercise
of the Warrants issued under the Purchase Agreement, (ii) the issuance of
Common Stock upon conversion of the Series C Preferred Stock or Series B
Preferred Stock, (iii) the issuance of Common Stock pursuant to the
exercise of Options, Convertible Securities or other rights to acquire Common
Stock that are outstanding on the date of this Warrant, (iv) shares of
Common Stock, or Options or Convertible Securities to purchase shares of Common
Stock, issued or issuable by reason of a dividend, stock split, split-up or
other distribution on


 


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shares of Common
Stock, or a recapitalization, to the extent covered by Subsection 2C,
2D, 3 or 4 above, (v) shares of Common Stock, or Options or
Convertible Securities to purchase shares of Common Stock, issued or issuable
to banks, equipment lessors or other financial institutions, or to real
property lessors, pursuant to a debt financing, equipment leasing or real
property leasing transaction approved by the Board of Directors of the Company
in an aggregate amount not to exceed 1% of the Common Stock Deemed Outstanding
as of the date hereof, (vi) the issuance of shares of Common Stock, or
Options or Convertible Securities to purchase shares of Common Stock, in
licensing or collaborative arrangements, or in strategic partnerships, to the
other party to such arrangement or partnership in connection with the licensing
of technology approved by the Board of Directors of the Company in an aggregate
amount not to exceed 1% of the Common Stock Deemed Outstanding as of the date
hereof, and (viii) the issuance of Common Stock, or Options or Convertible
Securities to purchase shares of Common Stock, in connection with any
acquisition or merger to the extent approved by the Board of Directors,
including the ABRY Director (as defined in the Purchase Agreement) to the
seller in such acquisition or merger.


 


“Person” means
any corporation, individual, limited liability company, joint stock company,
joint venture, partnership, unincorporated association, governmental regulatory
entity, country, state or political subdivision thereof, trust, municipality or
other entity.


 


“Right” has that meaning
set forth in that certain Rights Agreement dated as of November 27, 2002,
by and between the Company and Wells Fargo Bank Minnesota, National
Association, as Rights Agent, as amended, restated or modified from time to
time.


 


“Series C Preferred Stock
Certificate of Designations” means the Certificate of
Designations designating the rights and preferences of the Series C
Preferred Stock adopted by the Board of Directors.


 


Other capitalized terms
used in this Warrant but not defined herein shall have the meanings set forth
in the Purchase Agreement.


 


Section 6.               No Voting
Rights; Limitations of Liability. 
This Warrant shall not entitle the holder hereof to any voting rights or
other rights as a stockholder of the Company. 
No provision hereof, in the absence of affirmative action by the
Registered Holder to purchase Common Stock, and no enumeration herein of the
rights or privileges of the Registered Holder shall give rise to any liability
of such holder for the Exercise Price of Common Stock acquirable by exercise
hereof or as a stockholder of the Company.


 


Section 7.               Warrant
Transfer.  Neither this Warrant, nor
the shares of Common Stock issued upon exercise of this Warrant, may be
transferred except pursuant to registration under the Securities Act of 1933,
as amended, or an opinion of counsel reasonably acceptable to the Company that
such registration is not required. Subject to such transfer conditions, this
Warrant and all rights hereunder are transferable, in whole or in part, without
charge to the Registered Holder, upon surrender of this Warrant with a properly
executed Assignment (in the form of Exhibit II hereto) at the
principal office of the Company.


 


Section 8.               Warrant
Exchangeable for Different Denominations. 
This Warrant is exchangeable, upon the surrender hereof by the
Registered Holder at the principal office of the


 


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Company, for new Warrants
of like tenor representing in the aggregate the purchase rights hereunder, and
each of such new Warrants shall represent such portion of such rights as is
designated by the Registered Holder at the time of such surrender.  The date the Company initially issues this
Warrant shall be deemed to be the “Date of Issuance”
hereof regardless of the number of times new certificates representing the
unexpired and unexercised rights formerly represented by this Warrant shall be
issued.  All Warrants representing
portions of the rights hereunder are referred to herein as the “Warrants.”


 


Section 9.               Replacement.
Upon receipt of evidence reasonably satisfactory to the Company (an affidavit
of the Registered Holder shall be satisfactory) of the ownership and the loss,
theft, destruction or mutilation of any certificate evidencing the Warrant, and
in the case of any such loss, theft or destruction, upon receipt of indemnity
reasonably satisfactory to the Company (provided that if the holder is a
financial institution or other institutional investor its own agreement shall
be satisfactory), or, in the case of any such mutilation upon surrender of such
certificate, the Company shall (at its expense) execute and deliver in lieu of
such certificate a new certificate of like kind representing the number of
Warrants of such class represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.


 


Section 10.             Notices.
Except as otherwise expressly provided hereunder, all notices referred to
herein shall be in writing and shall be delivered by registered or certified
mail, return receipt requested and postage prepaid, or by reputable overnight
courier service, charges prepaid, and shall be deemed to have been given when
so mailed or sent (i) to the Company, at its principal executive offices
and (ii) to any Registered Holder, at such holder’s address as it appears
in the stock records of the Company (unless otherwise indicated by any such
holder).


 


Section 11.             Amendment
and Waiver.  Except as otherwise
provided herein, the provisions of this Warrant may be amended and the Company
may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company has obtained the written
consent of the Registered Holder of this Warrant.


 


Section 12.             Descriptive
Headings; Governing Law.  The
descriptive headings of the several Sections and paragraphs of this Warrant are
inserted for convenience only and do not constitute a part of this
Warrant.  The corporation laws of the
State of Delaware shall govern all issues concerning the relative rights of the
Company and its Stockholders.  All other
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be governed by the internal law of the State of Delaware,
without giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Delaware or any other jurisdictions) that would cause the
application of the laws of any jurisdictions other than the State of Delaware.


 


* 
*  *  * 
*  *


 


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IN WITNESS WHEREOF, the
Company has caused this Warrant to be signed and attested by its duly
authorized officers under its corporate seal and to be dated the Date of
Issuance hereof.


 


 


	
   

  	
  SOFTBRANDS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ David G. Latzke

  	
   

  
	
   

  	
  Its Senior Vice President, Chief

  
	
   

  	
  Financial Officer and Secretary

  



 





















 


EXHIBIT I


 


EXERCISE
AGREEMENT


 




	
  To:

  	
   

  	
  Dated:

  	
   

  






 


The undersigned, pursuant
to the provisions set forth in the attached Warrant (Certificate No. W-[
]), hereby agrees to subscribe for the purchase of              
shares of the Common Stock covered by such Warrant and makes payment herewith
in full therefor at the price per share provided by such Warrant.


 


	
   

  	
  Signature

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address

  	
   

  	
   

  
	
   

  	
   

  
					



 





















 


EXHIBIT II


 


ASSIGNMENT



 


FOR VALUE RECEIVED,                                                              
hereby sells, assigns and transfers all of the rights of the undersigned under
the attached Warrant (Certificate No. W-[ ]) with respect to the number of
shares of the Common Stock covered thereby set forth below, unto:


 


	
  Names of Assignee

  	
   

  	
  Address

  	
   

  	
  No. of Shares

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 


 


	
   

  	
  Signature

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Witness