Document:

Exhibit 4.1

 

THIS WARRANT WAS ORIGINALLY ISSUED ON AUGUST 14, 2006, 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 D CONVERTIBLE PREFERRED STOCK AND
WARRANT PURCHASE AGREEMENT DATED AS OF AUGUST 14, 2006, 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 14, 2006

  	
  Certificate No. W-1

  

 

FOR VALUE
RECEIVED, SoftBrands, Inc., a Delaware corporation (the “Company”), hereby grants to ABRY Mezzanine
Partners, L.P., a Delaware limited partnership,  or its registered
assigns (the “Registered Holder”)
the right to purchase from the Company 333,333 shares of the Company’s Common
Stock at a price per share equal to $1.84 (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 D Convertible Preferred
Stock and Warrant Purchase Agreement, dated as of August 14, 2006 (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 commencing
six months 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 Purchaser shall be deemed for all purposes to have become the record holder
of such Common Stock at the Exercise Time.

 2
 

 

 

(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 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.

 3
 

 

 

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; provided, however,
that the Exercise Price shall not be reduced pursuant to this Section 2A below
the Exercise Price Floor.  Upon each such
adjustment of the Exercise Price hereunder, the number of shares of Common
Stock acquirable upon exercise of this Warrant shall be adjusted to the number
of shares determined by multiplying the Exercise Price in effect immediately

 4
 

 

 

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 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

 5
 

 

 

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
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

 6
 

 

 

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.

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

 7
 

 

 

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 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

 8
 

 

 

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.

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.

 9
 

 

 

(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.

“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

 10
 

 

 

of Convertible Securities (including the Series D
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.

“Exercise
Price Floor” of any share of the Company’s Common Stock
shall be equal to $1.01.

“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 D
Preferred Stock, 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

 11
 

 

 

or other distribution on 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 August 17, 2005, (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 August 17, 2005, 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 Investor 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
D Preferred Stock Certificate of Designations” means the
Certificate of Designations designating the rights and preferences of the
Series D 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.

 12
 

 

 

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 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.

*  *  * 
*  *  *

 13

 

 

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/ RANDAL B. TOFTELAND

  	
   

  
	
   

  	
  Its

  	
  President and CEO

  	
   

  
	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  
	
   

  	
   

  
	
    /s/ GREGG A. WALDON

  	
   

  	
   

  
	
  Title:

  	
     CFO

  	
   

  	
   

  
							

 

 

 

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

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WitnessExhibit 4.2

 

SECOND
AMENDMENT

SECOND AMENDMENT,
dated as of August 14, 2006 (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 D
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-1 Convertible Preferred Stock, or of any
replacement or substitute shares of Series C-1 Convertible Preferred Stock or
any Voting Shares issued or issuable upon conversion of such Series C-1
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-1 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;

(vii) any transferee, assignee or purchaser from ABRY or CRP of any of
those certain Common Stock Purchase Warrants dated August 14, 2006, or any
replacement or substitute warrants or any Voting Shares issued or issueable
under those certain Common Stock Purchase Warrants dated August 14, 2006, or
any transferee, assignee or purchaser from ABRY or CRP of shares of Series D
Convertible Preferred Stock, or of any replacement or substitute shares of
Series D Convertible Preferred Stock or any Voting Shares issued or issuable
upon conversion of such Series D 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
D 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 (vii) 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

(viii) 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.

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

	
  

  	
    WELLS FARGO BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ MARTIN KNAPP

  	
   

  
	
   

  	
  Its

  	
        Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SOFTBRANDS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
        /s/ GREGG A.
  WALDON

  	
   

  
	
   

  	
  Its

  	
        CFO

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00109-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00109-of-00352.parquet"}]]