Document:

Exhibit 4.9

 

THIS WARRANT AND ANY
SHARES ACQUIRED UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS
AND MAY NOT BE SOLD OR TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR
QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR
APPLICABLE EXEMPTIONS THEREFROM.

 

THE SECURITIES
REPRESENTED BY THIS WARRANT ARE SUBJECT TO AN INVESTORS’ RIGHTS AGREEMENT DATED
AS OF NOVEMBER 26, 2002 (THE “INVESTORS’ RIGHTS AGREEMENT”).  THE TRANSFERABILITY OF THESE SECURITIES IS
RESTRICTED, AND THE SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO THE TERMS AND CONDITIONS OF THE INVESTORS’ RIGHTS’ AGREEMENT.  THE SECURITIES REPRESENTED BY THIS WARRANT
AND COPIES OF THE INVESTORS RIGHTS AGREEMENT ARE ON FILE AT THE OFFICE OF THE
SECRETARY OF THE COMPANY.

 

	
  No. W-03

  	
   

  	
  Right to Purchase 4,016,518 Shares

  of Common Stock of

  SoftBrands, Inc.

  

 

SOFTBRANDS, INC.

 

COMMON STOCK PURCHASE WARRANT

 

August 18, 2004

 

SoftBrands,
Inc., a Delaware corporation (the “Company”), hereby certifies that, for value
received, Capital Resource Partners IV, L.P. or assigns, is entitled, subject
to the terms set forth below, to purchase from the Company at any time or from
time to time before 5:00 p.m., Boston time, on November 26, 2012, or such
later time as may be specified in Section 17 hereof, 4,016,518 fully paid
and nonassessable shares of Common Stock, par value $0.01 per share, of the
Company, at a purchase price per share of $1.06 (such purchase price per share
as adjusted from time to time as herein provided is referred to herein as the “Purchase
Price”).  The number and character of
such shares of Common Stock and the Purchase Price are subject to adjustment as
provided herein.

 

This
Warrant is one of the Warrants evidencing the right to purchase shares of
Common Stock of the Company issued pursuant to a certain Senior Subordinated
Secured Note and Warrant Purchase Agreement dated as of November 26, 2002
(as the same may be amended from time to time, referred to herein as the “Agreement”),
by and among the Company and Capital Resource Partners IV, L.P., a Delaware
limited partnership, and the other parties set forth on the signature pages
thereto and subject to the Investors’ Rights Agreement, copies of which
agreements are on file at the principal office of the Company, and the holder
of this Warrant shall be entitled to all of the benefits and bound by all of
the applicable obligations of the Agreement, the Investors’ Rights Agreement,
as provided therein.

 

 

As
used herein the following terms, unless the context otherwise requires, have
the following respective meanings:

 

(a)     The term “Company”
shall include SoftBrands, Inc., and any corporation which shall succeed to, or
assume the obligations of, the Company hereunder.

 

(b)     The term “Common
Stock” includes (i) the Company’s Common Stock, par value $0.01 per share, as
authorized on the date of the Agreement, (ii)  any other capital stock of
any class or classes (however designated) of the Company, authorized on or
after such date, the holders of which shall have the right, without limitation
as to amount per share, either to all or to a share of the balance of current
dividends and liquidating distributions after the payment of dividends and
distributions on any shares entitled to preference in the payment thereof, and
the holders of which shall ordinarily, in the absence of contingencies, be
entitled to vote for the election of a majority of directors of the Company (even
though the right so to vote may have been suspended by the happening of such a
contingency) and (iii) any other securities into which or for which any of the
securities described in (i) or (ii) above may be converted or exchanged
pursuant to a plan of recapitalization, reorganization, merger, sale of assets
or otherwise.

 

(c)     The term “Conversion
Price” means the amount that the Purchase Price would be, immediately prior to
the determination of the Conversion Price and giving effect to all adjustments
that would have been required under Section 5, if the initial Purchase
Price had been $1.06 per share of Common Stock.

 

(d)     The term “Other
Securities” refers to any class of stock (other than Common Stock) and other
securities of the Company or any other person (corporate or otherwise) which
the holders of the Warrants at any time shall be entitled to receive, or shall
have received, on the exercise of the Warrants, in lieu of or in addition to
Common Stock, or which at any time shall be issuable or shall have been issued
in exchange for or in replacement of Common Stock or Other Securities pursuant
to Section 5 or otherwise.

 

1.       Exercise of Warrant.

 

1.1           Full Exercise. 
This Warrant may be exercised at any time before its expiration in full
by the holder hereof by surrender of this Warrant, with the form of
subscription at the end hereof duly executed by such holder, to the Company at
its principal office, accompanied by payment, in cash or by certified or
official bank check payable to the order of the Company, in the amount obtained
by multiplying the number of shares of Common Stock for which this Warrant is
then exercisable by the Purchase Price then in effect; provided, however,
that notwithstanding the fact that for purposes of Section 5 of this Warrant
the Purchase Price may be adjusted to below $0.01 per share, for purposes of
paying the Purchase Price upon exercise of this Warrant, the Purchase Price
shall in no event be less than $0.01 per share.

 

1.2           Partial Exercise. 
This Warrant may be exercised at any time before its expiration in part
(in lots of 100 shares or, if this Warrant is then exercisable for a lesser
amount, in such lesser amount) by surrender of this Warrant and payment of the
Purchase Price then in 

 

2

 

effect in the manner and at the place provided in subsection 1.1,
except that the amount payable by the holder on such partial exercise shall be
the amount obtained by multiplying (a) the number of shares of Common Stock
designated by the holder in the subscription at the end hereof by (b) the
Purchase Price then in effect; provided, however, that
notwithstanding the fact that for purposes of Section 5 of this Warrant
the Purchase Price may be adjusted to below $0.01 per share, for purposes of
paying the Purchase Price upon exercise of this Warrant, the Purchase Price
shall in no event be less than $0.01 per share. 
On any such partial exercise the Company at its expense will forthwith
issue and deliver to or upon the order of the holder hereof a new Warrant or
Warrants of like tenor, in the name of the holder hereof or as such holder
(upon payment by such holder of any applicable transfer taxes) may request,
calling in the aggregate on the face or faces thereof for the number of shares of
Common Stock for which such Warrant or Warrants may still be exercised.

 

1.3           Payment by Surrender of Notes. 
Notwithstanding the payment provisions of subsections 1.1 and 1.2, all
or part of the payment due upon exercise of this Warrant in full or in part may
be made by the surrender by such holder to the Company of any of the Company’s
Notes issued pursuant to the Agreement and such Notes so surrendered shall be
credited against such payment in an amount equal to the principal amount
thereof plus premium (if any) and accrued interest to the date of surrender.

 

1.4           Company Acknowledgment. 
The Company will, at the time of the exercise of this Warrant, upon the
request of the holder hereof acknowledge in writing its continuing obligation
to afford to such holder any rights to which such holder shall continue to be
entitled after such exercise in accordance with the provisions of this
Warrant.  If the holder shall fail to
make any such request, such failure shall not affect the continuing obligation
of the Company to afford to such holder any such rights.

 

1.5           Trustee for Warrant Holders. 
In the event that a bank or trust company shall have been appointed as
trustee for the holders of the Warrants pursuant to subsection 4.2, such
bank or trust company shall have all the powers and duties of a warrant agent
appointed pursuant to Section 12 and shall accept, in its own name for the
account of the Company or such successor person as may be entitled thereto, all
amounts otherwise payable to the Company or such successor, as the case may be,
on exercise of this Warrant pursuant to this Section 1.

 

1.6           Net Issue Election. 
The holder may elect to receive, without the payment by the holder of
any additional consideration, shares equal to the value of this Warrant or any
portion hereof by the surrender of this Warrant or such portion to the Company,
with the net issue election notice annexed hereto duly executed, at the office
of the Company.  Thereupon, the Company
shall issue to the holder such number of fully paid and nonassessable shares of
Common Stock as is computed using the following formula:

 

X = Y (A-B)

   A

 

where
X =           the number of shares to
be issued to the holder pursuant to this subsection 1.6.

 

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Y =       the number of
shares covered by this Warrant in respect of which the net issue election is
made pursuant to this subsection 1.6.

 

A =      the fair market
value of one share of Common Stock, as determined in accordance with the
provisions of this subsection 1.6.

 

B =       the Purchase
Price in effect under this Warrant at the time the net issue election is made
pursuant to this subsection 1.6.

 

For purposes of this subsection 1.6,
the “fair market value” per share of the Company’s Common Stock shall mean:

 

(a)           If the net issue election is exercised in
connection with and contingent upon the Company’s initial public offering, and
if the Company’s registration statement relating to such offering has been
declared effective by the Securities and Exchange Commission, then the initial “Price
to Public” specified in the final prospectus with respect to such offering; or

 

(b)           If the net issue election is not
exercised in connection with and contingent upon the Company’s initial public
offering, then as follows:

 

(1)           If
the Common Stock is traded on a national securities exchange or admitted to
unlisted trading privileges on such an exchange, or is listed on the National
Market (the “National Market”) of the National Association of Securities
Dealers Automated Quotations System (the “NASDAQ”), the fair market value shall
be the last reported sale price of the Common Stock on such exchange or on the
National Market on the last business day before the effective date of exercise
of the net issue election or if no such sale is made on such day, the mean of
the closing bid and asked prices for such day on such exchange or on the
National Market;

 

(2)           If
the Common Stock is not so listed or admitted to unlisted trading privileges,
the fair market value shall be the mean of the last bid and asked prices
reported on the last business day before the date of the election (1) by
the NASDAQ or (2) if reports are unavailable under clause (1) above
by the National Quotation Bureau Incorporated; and

 

(3)           If
the Common Stock is not so listed or admitted to unlisted trading privileges
and bid and ask prices are not reported, the fair market value shall be the
price per share which the Company could obtain from a willing buyer for shares
sold by the Company from authorized but unissued shares, as such price shall be
determined by mutual agreement of the Company and the holder of this Warrant.
If the holder of this Warrant and the Company are unable to agree on such fair
market value, the holder of this Warrant shall select a pool of three
independent and nationally recognized investment banking firms from which the
Company shall select one such firm to appraise the fair market value of the
Warrant and to 

 

4

 

perform the computations
involved.  The determination of such
investment banking firm shall be binding upon the Company, the holder of this
Warrant and any other holder of Warrants or Warrant Shares in connection with
any transaction occurring at the time of such determination.  All expenses of such investment banking firm
shall be borne by the Company.  In all
cases, the determination of fair market value shall be made without
consideration of the lack of a liquid public market for the Common Stock and
without consideration of any “control premium” or any discount for holding less
than a majority or controlling interest of the outstanding Common Stock.

 

(4)           The
parties acknowledge that the exercise of this Warrant pursuant to this subsection 1.6
shall constitute a “reorganization” within the meaning of Section 368(a)(1)(E)
of the Internal Revenue Code of 1986, as amended (the “Code”) and the Company
agrees not to take any position inconsistent with such treatment for federal
income tax purposes including, but not limited to, in any filing, return or
information statement.

 

2.             Delivery of Stock Certificates, etc. on
Exercise.  As soon as practicable after the exercise of
this Warrant in full or in part, and in any event within ten (10) days
thereafter, the Company at its expense (including the payment by it of any
applicable issue taxes) will cause to be issued in the name of and delivered to
the holder hereof, or as such holder (upon payment by such holder of any
applicable transfer taxes) may direct, a certificate or certificates for the
number of fully paid and nonassessable shares of Common Stock (or Other
Securities) to which such holder shall be entitled on such exercise, plus, in
lieu of any fractional share to which such holder would otherwise be entitled,
cash equal to such fraction multiplied by the then current market value of one
full share, together with any other stock or other securities and property
(including cash, where applicable) to which such holder is entitled upon such
exercise pursuant to Section 1 or otherwise.

 

3.             Adjustment for Dividends in Other Stock,
Property, etc.; Reclassification, etc.  In case at
any time or from time to time, the holders of Common Stock (or Other
Securities) in their capacity as such shall have received, or (on or after the
record date fixed for the determination of shareholders eligible to receive)
shall have become entitled to receive, without payment therefor,

 

(a)           other or additional stock or other
securities or property (other than cash) by way of dividend, or

 

(b)           any cash (excluding cash dividends
payable solely out of earnings or earned surplus of the Company), or

 

(c)           other or additional stock or other
securities or property (including cash) by way of spin-off, split-up,
reclassification, recapitalization, combination of shares or similar corporate
rearrangement,

 

other than additional shares of Common Stock (or Other
Securities) issued as a stock dividend or in a stock-split (adjustments in
respect of which are provided for in Section 5), then and in each 

 

5

 

such case the holder of this Warrant, on the exercise
hereof as provided in Section 1, shall be entitled to receive the amount
of stock and other securities and property (including cash in the cases
referred to in subdivisions (b) and (c) of this Section 3) which such
holder would hold on the date of such exercise if on the date hereof he had
been the holder of record of the number of shares of Common Stock called for on
the face of this Warrant and had thereafter, during the period from the date
hereof to and including the date of such exercise, retained such shares and all
such other or additional stock and other securities and property (including
cash in the cases referred to in subdivisions (b) and (c) of this Section 3)
receivable by him as aforesaid during such period, giving effect to all
adjustments called for during such period by Sections 4 and 5.

 

4.             Adjustment for Reorganization,
Consolidation, Merger, etc.

 

4.1           Reorganization, Consolidation, Merger,
etc.  In case at any time or from time to time, the
Company shall (a) effect a reorganization, (b) consolidate with or merge into
any other person, or (c) transfer all or substantially all of its properties or
assets to any other person under any plan or arrangement contemplating the
dissolution of the Company, then, in each such case, the holder of this
Warrant, on the exercise hereof as provided in Section 1 at any time after
the consummation of such reorganization, consolidation or merger or the
effective date of such dissolution, as the case may be, shall receive, in lieu
of the Common Stock (or Other Securities) issuable on such exercise prior to
such consummation or such effective date, the stock and other securities and
property (including cash) to which such holder would have been entitled upon
such consummation or in connection with such dissolution, as the case may be,
if such holder had so exercised this Warrant, immediately prior thereto, all
subject to further adjustment thereafter as provided in Sections 3 and 5.

 

4.2           Dissolution. 
In the event of any dissolution of the Company following the transfer of
all or substantially all of its properties or assets, the Company, prior to
such dissolution, shall at its expense deliver or cause to be delivered the
stock and other securities and property (including cash, where applicable)
receivable by the holders of the Warrants after the effective date of such
dissolution pursuant to this Section 4 to a bank or trust company having
its principal office in Boston, Massachusetts, as trustee for the holder or
holders of the Warrants.

 

4.3           Continuation of Terms. 
Upon any reorganization, consolidation, merger or transfer (and any
dissolution following any transfer) referred to in this Section 4, this
Warrant shall continue in full force and effect, subject to expiration in
accordance with Section 17 hereof, and the terms hereof shall be
applicable to the shares of stock and other securities and property receivable
on the exercise of this Warrant after the consummation of such reorganization,
consolidation or merger or the effective date of dissolution following any such
transfer, as the case may be, and shall be binding upon the issuer of any such
stock or other securities, including, in the case of any such transfer, the
person acquiring all or substantially all of the properties or assets of the
Company, whether or not such person shall have expressly assumed the terms of
this Warrant as provided in Section 6.

 

6

 

5.             Anti-Dilution Adjustment.

 

5.1           General.  The Purchase
Price shall be subject to adjustment from time to time as hereinafter
provided.  Upon each adjustment of the
Purchase Price, the holder of this Warrant shall thereafter be entitled to
purchase, at the Purchase Price resulting from such adjustment (provided,
however, that notwithstanding the fact that for purposes of Section 5
of this Warrant the Purchase Price may be adjusted to below $0.01 per share,
for purposes of paying the Purchase Price upon exercise of this Warrant, the
Purchase Price shall in no event be less than $0.01 per share), the number of
shares obtained by multiplying the Purchase Price in effect immediately prior
to such adjustment by the number of shares purchasable pursuant hereto
immediately prior to such adjustment and dividing the product thereof by the
Purchase Price resulting from such adjustment.

 

5.2           Purchase Price Adjustments. 
If and whenever after the date hereof the Company shall issue or sell
any shares of its Common Stock (except upon exercise of one or more of the Warrants)
for a consideration per share less than the Purchase Price in effect
immediately prior to the time of such issue or sale, and/or the Company shall
issue or sell any shares of its Common Stock for a consideration per share less
than the Conversion Price on the date of such issue or sale, or shall be deemed
under the provisions of this Section 5 to have effected any such issuance
or sale, then, forthwith upon such issue or sale, the Purchase Price shall be
reduced to the price (calculated to the nearest $0.0001) obtained by
multiplying the Purchase Price in effect immediately prior to the time of such
issue or sale by a fraction, the numerator of which shall be the sum of
(i) the number of shares of Common Stock outstanding immediately prior to such
issue or sale multiplied by the Conversion Price immediately prior to such
issue or sale plus (ii) the consideration received by the Company upon
such issue or sale, and the denominator of which shall be the product of
(iii) the total number of shares of Common Stock outstanding immediately
after such issue or sale, multiplied by (iv) the Conversion Price
immediately prior to such issue or sale. 
Notwithstanding the foregoing, no adjustment of the Purchase Price shall
be made in an amount less than $0.0001 per share, but any such lesser
adjustment shall be carried forward and shall be made at the time of and
together with the next subsequent adjustment which together with any
adjustments so carried forward shall amount to $0.0001 per share or more.

 

5.3           Option Grants. 
In the event that at any time the Company shall in any manner grant
(directly, by assumption in a merger or otherwise) any rights to subscribe for
or to purchase, or any options for the purchase of, Common Stock or any stock
or securities convertible into or exchangeable for Common Stock (such rights or
options being herein called “Options” and such convertible or exchangeable
stock or securities being herein called “Convertible Securities”), whether or
not such Options or the right to convert or exchange any such Convertible
Securities are immediately exercisable, and the price per share for which
Common Stock is issuable upon the exercise of such Options or upon conversion
or exchange of such Convertible Securities (determined by dividing (i) the
total amount, if any, received or receivable by the Company as consideration
for the granting of such Options, plus the minimum aggregate amount of
additional consideration payable to the Company upon the exercise of all such
Options, plus, in the case of any such Options which relate to Convertible
Securities, the minimum aggregate amount of additional consideration, if any,
payable upon the issue or sale of such Convertible Securities and upon the
conversion or exchange thereof, by (ii) the total number of shares of
Common Stock issuable upon the exercise of such Options or upon the conversion
or 

 

7

 

exchange of all such Convertible Securities issuable
upon the exercise of such Options) shall be less than the Purchase Price or
Conversion Price in effect immediately prior to the time of the granting of
such Options, then the total number of shares of Common Stock issuable upon the
exercise of such Options or upon conversion or exchange of the total amount of such
Convertible Securities issuable upon the exercise of such Options shall (as of
the date of granting such Options) be deemed to be outstanding and to have been
issued for such price per share.  Except
as otherwise provided in subsection 5.5, no further adjustment of the
Purchase Price shall be made upon the actual issue of such Common Stock or of
such Convertible Securities upon exercise of such Options or upon the actual
issue of such Common Stock upon conversion or exchange of such Convertible
Securities.

 

5.4           Convertible Security Grants. 
In the event that the Company shall in any manner issue (directly, by
assumption in a merger or otherwise) or sell any Convertible Securities (other
than pursuant to the exercise of Options to purchase such Convertible
Securities covered by subsection 5.3), whether or not the rights to
exchange or convert thereunder are immediately exercisable, and the price per
share for which Common Stock is issuable upon such conversion or exchange
(determined by dividing (i) 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 (ii) the total
maximum number of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities) shall be less than the Purchase
Price or the Conversion Price in effect immediately prior to the time of such
issue or sale, then the total maximum number of shares of Common Stock issuable
upon conversion or exchange of all such Convertible Securities shall (as of the
date of the issue or sale of such Convertible Securities) be deemed to be
outstanding and to have been issued for such price per share, provided that,
except as otherwise provided in subsection 5.5, no further adjustment of
the Purchase Price shall be made upon the actual issue of such Common Stock
upon conversion or exchange of such Convertible Securities.

 

5.5           Effect of Alteration to Option or
Convertible Security Terms.  In connection
with any change in, or the expiration or termination of, the purchase rights
under any Option or the conversion or exchange rights under any Convertible
Securities, the following provisions shall apply:

 

(A)          If
the purchase price provided for in any Option referred to in subsection 5.3,
the additional consideration, if any, payable upon the conversion or exchange
of any Convertible Securities referred to in subsection 5.3 or 5.4, or the
rate at which any Convertible Securities referred to in subsection 5.3 or
5.4 are convertible into or exchangeable for Common Stock shall change at any
time (other than under or by reason of provisions designed to protect against
dilution), then the Purchase Price in effect at the time of such change shall
forthwith be increased or decreased to the Purchase Price which would be in
effect immediately after such change if (a) the adjustments which were
made upon the issuance of such Options or Convertible Securities had been made
upon the basis of (and taking into account the total consideration received
for) (i) the issuance at that time of the Common Stock, if any, delivered
upon the exercise of any such Options or upon the conversion or exchange of any
such Convertible Securities before such change, and (ii) the issuance at
that time of all such Options 

 

8

 

or Convertible
Securities, with terms and provisions reflecting such change, which are still
outstanding after such change, and (b) the Purchase Price as adjusted
pursuant to clause (a) preceding had been used as the basis for the adjustments
required hereunder in connection with all other issues or sales of Common
Stock, Options or Convertible Securities by the Company subsequent to the
issuance of such Options or Convertible Securities.

 

(B)           On
the partial or complete expiration of any Options or termination of any right
to convert or exchange Convertible Securities, the Purchase Price then in effect
hereunder shall forthwith be increased or decreased to the Purchase Price which
would be in effect at the time of such expiration or termination if
(a) the adjustments which were made upon the issuance of such Options or
Convertible Securities had been made upon the basis of (and taking into account
the total consideration received for) (i) the issuance at that time of the
Common Stock, if any, delivered upon the exercise of such Options or upon the
conversion or exchange of such Convertible Securities before such expiration or
termination, and (ii) the issuance at that time of only those such Options
or Convertible Securities which remain outstanding after such expiration or
termination, and (b) the Purchase Price as adjusted pursuant to clause (a)
preceding had been used as the basis for adjustments required hereunder in
connection with all other issues or sales of Common Stock, Options or
Convertible Securities by the Company subsequent to the issuance of such
Options or Convertible Securities.

 

(C)           If the purchase price provided for in any
Option referred to in subsection 5.3 or the rate at which any Convertible
Securities referred to in subsection 5.3 or 5.4 are convertible into or
exchangeable for Common Stock shall be reduced at any time under or by reason
or provisions with respect thereto designed to protect against dilution, and
the event causing such reduction is one that did not also require an adjustment
in the Purchase Price under other provisions of this Section 5, then in
case of the delivery of shares of Common Stock upon the exercise of any such
Option or upon conversion or exchange of any such Convertible Securities, the
Purchase Price then in effect hereunder shall forthwith be adjusted to such
amount as would have obtained if such Option or Convertible Securities had
never been issued and if the adjustments made upon the issuance of such Option
or Convertible Securities had been made upon the basis of the issuance of (and
taking into account the total consideration received for) the shares of Common
Stock delivered as aforesaid (provided that the Conversion Price used in such
determination shall be the Conversion Price on the date of issue of such
shares); provided that no such adjustment shall be made unless the Purchase
Price then in effect would be reduced thereby.

 

5.6           Dividends of Common Stock, Options or
Convertible Securities.  In the event that the Company
shall declare a dividend or make any other distribution upon any stock of the
Company payable in Common Stock, Options or Convertible Securities, any Common
Stock, Options or Convertible Securities, as the case may be, issuable in
payment of such dividend or distribution shall be deemed to have been issued or
sold without consideration; provided, however, that this subsection 5.6
shall not apply to a stock split of the Common Stock payable in the form of a
dividend, for which event adjustment shall be made pursuant to subsection 5.8.

 

5.7           Dilution in Case of Other Securities. 
In case any Other Securities shall be issued or sold by the Company, or
shall become subject to issue upon the conversion or exchange of any stock (or
Other Securities) of the Company (or any other issuer of Other Securities or
any 

 

9

 

other person referred to in Section 4) or to
subscription, purchase or other acquisition pursuant to any rights or options
granted by the Company (or such other issuer or person), for a consideration
per share such as to dilute the purchase rights evidenced by this Warrant, the
computations, adjustments and readjustments provided for in this Section 5
with respect to the Purchase Price and the number of shares of Common Stock
issuable upon exercise of this Warrant shall be made as nearly as possible in
the manner so provided and applied to determine the amount of Other Securities
from time to time receivable on the exercise of the Warrants, so as to protect
the holders of the Warrants against the effect of such dilution.

 

5.8           Stock Splits and Reverse Splits. 
In the event that the Company shall at any time either subdivide its
outstanding shares of Common Stock into a greater number of shares or effect a
stock split of its Common Stock payable in the form of a dividend, the Purchase
Price in effect immediately prior to such subdivision shall be proportionately
reduced and the number of Warrant Shares purchasable pursuant to this Warrant
immediately prior to such subdivision shall be proportionately increased, and
conversely, in the event that the outstanding shares of Common Stock of the
Company shall at any time be combined into a smaller number of shares, the
Purchase Price in effect immediately prior to such combination shall be
proportionately increased and the number of Warrant Shares purchasable upon the
exercise of this Warrant immediately prior to such combination shall be
proportionately reduced.  Except as
provided in this subsection 5.8 no adjustment in the Purchase Price and no
change in the number of Warrant Shares purchasable shall be made under this Section 5
as a result of or by reason of any such subdivision or combination.

 

5.9           Determination of Consideration Received. 
For purposes of this Section 5, the amount of consideration
received by the Company in connection with the issuance or sale of Common
Stock, Options or Convertible Securities shall be determined in accordance with
the following:

 

(A)          In the event that shares of Common Stock,
Options or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the net amount payable to
the Company therefor.

 

(B)           In
the event that any shares of Common Stock, Options or Convertible Securities
shall be issued or sold for a consideration other than cash, the amount of the
consideration other than cash payable to the Company shall be deemed to be the
fair value of such consideration as reasonably determined by the Board of
Directors of the Company; provided, however, that should the
member of the Board of Directors nominated by the Purchaser Representative (as
defined in the Agreement) not agree with such valuation, it shall select a pool
of three independent and nationally recognized investment banking firms from
which the Company shall select one such firm to appraise the fair market value
of such consideration.  The determination
of such investment banking firm shall be binding upon the Company and the
holder of this Warrant.  All expenses of
such investment banking firm shall be borne by the Company.

 

(C)           The
amount of consideration deemed to be received by the Company pursuant to the
foregoing provisions of this subsection 5.9 upon any issuance and/or 

 

10

 

sale, pursuant to an
established compensation plan of the Company, to directors, officers or
employees of the Company in connection with their employment, of shares of
Common Stock, Options or Convertible Securities, shall be increased by the
amount of any tax benefit realized by the Company as a result of such issuance
and/or sale, the amount of such tax benefit being the amount by which the
federal and/or state income or other tax liability of the Company shall be
reduced by reason of any deduction or credit in respect of such issuance and/or
sale.

 

(D)          In
the event that any shares of Common Stock, Options or Convertible Securities
shall be issued 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 as reasonably determined by the Board of Directors of the
Company of such portion of the assets and business of the non-surviving
corporation as such Board shall determine to be attributable to such Common
Stock, Options or Convertible Securities, as the case may be; provided, however,
that should the member of the Board of Directors nominated by the Purchaser
Representative (as defined in the Agreement) not agree with such valuation, it
shall select a pool of three independent and nationally recognized investment
banking firms from which the Company shall select one such firm to appraise the
fair market value of such consideration. 
The determination of such investment banking firm shall be binding upon
the Company and the holder of this Warrant. 
All expenses of such investment banking firm shall be borne by the
Company.

 

(E)           In
the event that any Common Stock, Options and/or Convertible Securities shall be
issued in connection with the issue and sale of other securities or property of
the Company, together comprising one integral transaction in which no specific
consideration is allocated to such Common Stock, Options or Convertible
Securities by the parties thereto, such Common Stock, Options and/or
Convertible Securities shall be deemed to have been issued at the fair value of
such Common Stock, Options or Convertible Securities as reasonably determined
by the Board of Directors of the Company; provided, however, that
should the holders of Warrants representing the holders of a majority of the
common stock issuable on the exercise of all Warrants then outstanding not
agree with such valuation, such holders shall select a pool of three
independent and nationally recognized investment banking firms from which the
Company shall select one such firm to appraise the fair market value of such
consideration.  The determination of such
investment banking firm shall be binding upon the Company and the holder of
this Warrant.  All expenses of such
investment banking firm shall be borne by the Company .

 

5.10         Record Date as Date of Issue or Sale. 
In the event that at any time the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them (i) to
receive a dividend or other distribution payable in Common Stock, Options or
Convertible Securities, or (ii) 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 the making of such
other distribution or the date of the granting of such right of subscription or
purchase, as the case may be.

 

11

 

5.11         Treasury Stock. 
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, and the
disposition of any such shares (other than their cancellation without
reissuance) shall be considered an issue or sale of Common Stock for the
purposes of this Section 5.

 

5.12         Certain Issues of Common Stock Excepted. 
Notwithstanding anything herein to the contrary, the Corporation shall
not be required to make any adjustment to the Purchase Price then in effect in
the case of the issuance of any Excluded Securities (as defined the
Purchase Agreement).

 

6.             No Dilution or Impairment. 
The Company will not, by amendment of its Certificate of Incorporation
or through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of the
Warrants, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holders of the Warrants
against dilution or other impairment. 
Without limiting the generality of the foregoing, the Company
(a) will not increase the par value or stated value of any shares of stock
receivable on the exercise of the Warrants above the amount payable therefor on
such exercise, (b) will take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of stock on the exercise of all Warrants from time to
time outstanding, (c) will not issue any capital stock of any class which
is preferred as to dividends or as to the distribution of assets upon voluntary
or involuntary dissolution, liquidation or winding up, unless the rights of the
holders thereof shall be limited to a fixed sum or percentage of par value in
respect of participation in dividends and in any such distribution of assets,
and (d) will not transfer all or substantially all of its properties and
assets to any other person (corporate or otherwise), or consolidate with or
merge into any other person or permit any such person to consolidate with or
merge into the Company (if the Company is not the surviving person), unless
such other person shall expressly assume in writing and become bound by all the
terms of the Warrants.

 

7.             Accountants’ Certificate as to
Adjustments.  In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable on
the exercise of the Warrants, the Company shall compute such adjustment or
readjustment in accordance with the terms of the Warrants and prepare a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based, including a
statement of (a) the consideration received or receivable by the Company for
any additional shares of Common Stock (or Other Securities) issued or sold or
deemed to have been issued or sold, (b) the number of shares of Common Stock
(or Other Securities) outstanding or deemed to be outstanding, and (c) the
Purchase Price and the number of shares of Common Stock to be received upon
exercise of this Warrant, in effect immediately prior to such issue or sale and
as adjusted and readjusted as provided in this Warrant.  The Company will forthwith mail a copy of
each such certificate to each holder of a Warrant, and will, on the written
request at any time of any holder of a Warrant, furnish to such holder a like
certificate setting forth the Purchase Price at the time in effect and showing
how it was calculated.

 

12

 

8.             Notices of Record Date, etc. 
In the event of

 

(a)           any taking by the Company of a record of
the holders of any class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend or other distribution, or any
right to subscribe for, purchase or otherwise acquire any shares of stock of
any class or any other securities or property, or to receive any other right,
or

 

(b)           any capital reorganization of the
Company, any reclassification or recapitalization of the capital stock of the
Company or any transfer of all or substantially all the assets of the Company
to or consolidation or merger of the Company with or into any other person, or

 

(c)           any voluntary or involuntary dissolution,
liquidation or winding-up of the Company, or

 

(d)           any proposed issue or grant by the
Company of any shares of stock of any class or any other securities, or any
right or option to subscribe for, purchase or otherwise acquire any shares of
stock of any class or any other securities (other than the issue of Common
Stock on the exercise of the Warrants),

 

then and in each such
event the Company will mail or cause to be mailed to each holder of a Warrant a
notice specifying (i) the date on which any such record is to be taken for the
purpose of such dividend, distribution or right, and stating the amount and
character of such dividend, distribution or right, (ii) the date on which any
such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding-up is to take place,
and the time, if any is to be fixed, as of which the holders of record of
Common Stock (or Other Securities) shall be entitled to exchange their shares
of Common Stock (or Other Securities) for securities or other property
deliverable on such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding-up, and
(iii) the amount and character of any stock or other securities, or rights or
options with respect thereto, proposed to be issued or granted, the date of
such proposed issue or grant and the persons or class of persons to whom such
proposed issue or grant is to be offered or made.  Such notice shall be mailed at least twenty
(20) days prior to the date specified in such notice on which any such action
is to be taken.

 

9.             Reservation of Stock, etc. Issuable on
Exercise of Warrants.  The Company will at all times reserve and
keep available, solely for issuance and delivery on the exercise of the
Warrants, all shares of Common Stock (or Other Securities) from time to time
issuable on the exercise of the Warrants.

 

10.           Exchange of Warrants. 
On surrender for exchange of any Warrant, properly endorsed, to the
Company, the Company at its expense will issue and deliver to or on the order
of the holder thereof a new Warrant or Warrants of like tenor, in the name of
such holder or as such holder (on payment by such holder of any applicable
transfer taxes) may direct, calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock called for on the face or
faces of the Warrant or Warrants so surrendered.

 

13

 

11.           Replacement of Warrants. 
On receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of any Warrant and, in the case of any
such loss, theft or destruction of any Warrant, on delivery of an indemnity
agreement or security reasonably satisfactory in form and amount to the Company
or, in the case of any such mutilation, on surrender and cancellation of such
Warrant, the Company at its expense will execute and deliver, in lieu thereof,
a new Warrant of like tenor.

 

12.           Warrant Agent. 
The Company may, by written notice to each holder of a Warrant, appoint
an agent having an office in Boston, Massachusetts for the purpose of issuing
Common Stock (or Other Securities) on the exercise of the Warrants pursuant to Section 1,
exchanging Warrants pursuant to Section 10, and replacing Warrants
pursuant to Section 11, or any of the foregoing, and thereafter any such
issuance, exchange or replacement, as the case may be, shall be made at such
office by such agent.

 

13.           Remedies.  The Company
stipulates that the remedies at law of the holder of this Warrant in the event
of any default or threatened default by the Company in the performance of or
compliance with any of the terms of this Warrant are not and will not be
adequate, and that such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.

 

14.           Negotiability, etc. 
This Warrant is issued upon the following terms, to all of which each
holder or owner hereof by the taking hereof consents and agrees:

 

(a)           subject to the terms of the Investors’
Rights Agreement, title to this Warrant may be transferred by endorsement (by
the holder hereof executing the form of assignment at the end hereof) and
delivery in the same manner as in the case of a negotiable instrument
transferable by endorsement and delivery; and

 

(b)           any person in possession of this Warrant
properly endorsed for transfer to such person (including endorsed in blank) is
authorized to represent himself as absolute owner hereof and is empowered to
transfer absolute title hereto by endorsement and delivery hereof to a bona
fide purchaser hereof for value; each prior taker or owner waives and renounces
all of his equities or rights in this Warrant in favor of each such bona fide
purchaser, and each such bona fide purchaser shall acquire absolute title
hereto and to all rights represented hereby. 
Nothing in this paragraph (b) shall create any liability on the
part of the Company beyond any liability or responsibility it has under law.

 

15.           Notices, etc. 
All notices, requests, demands and other communications from the Company
to the holder of this Warrant shall be in writing and mailed (by first class
registered or certified mail, postage prepaid), sent by express overnight
courier service or electronic facsimile transmission with a copy by mail, or
delivered at such address as may have been furnished to the Company in writing
by such holder or, until any such holder furnishes to the Company an address,
then to, and at the address of, the last holder of this Warrant who has so
furnished an address to the Company.  All
such notices, requests, demands and other communications shall, when mailed or
otherwise sent shall be effective (i) two days after being deposited in the
mail or (ii) one day after 

 

14

 

being delivered deposited
with the express overnight courier service or sent by electronic facsimile
transmission (with receipt confirmed), respectively, addressed as aforesaid.

 

16.           Miscellaneous. 
This Warrant and any term hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.  This Warrant shall be construed and enforced
in accordance with and governed by the internal laws of the Commonwealth of
Massachusetts.  The headings in this
Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof.  This
Warrant is being executed as an instrument under seal.  The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision.

 

17.           Expiration.  The right to
exercise this Warrant shall expire at 5:00 p.m., Boston time, on the later
of (i) November 26, 2012 or (ii) at such time as all principal,
premium (if any) and interest on the Notes (as defined in the Agreement) is
paid in full. Notwithstanding the foregoing, this Warrant shall automatically
be deemed to be exercised in full pursuant to the provisions of subsection 1.6
hereof, without any further action on behalf of the holder, immediately prior
to the time this Warrant would otherwise expire pursuant to the preceding
sentence.

 

IN
WITNESS WHEREOF, the Company has executed this Warrant under seal as of the
date first written above.

 

	
   

  	
  SOFTBRANDS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David G. Latzke

  	
   

  
	
   

  	
   

  	
  Name: David G. Latzke

  
	
   

  	
   

  	
  Title: SVP & CFO

  

 

 

Attest:

 

 

	
  By:

  	
  /s/ Craig
  Thompson

  	
   

  
	
  Name:
  Craig Thompson

  
	
  Title:
  VP, Finance & Accounting

  

 

15

 

FORM OF SUBSCRIPTION

(To be signed only on exercise of Warrant)

 

SOFTBRANDS, INC.

 

The
undersigned, the holder of the within Warrant, hereby irrevocably elects to
exercise this Warrant for, and to purchase thereunder,             
shares of Common Stock of SoftBrands, Inc. and herewith makes payment of $            
therefor, and requests that the certificates for such shares be issued in the
name of, and delivered to              ,
federal taxpayer identification number             ,
whose address is                    

 

	
  Dated:

  	
   

  
	
   

  	
  (Signature must
  conform to name

  of holder as specified on the

  face of the Warrant)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Address)

  

 

	
  Signed in the
  presence of:

  
	
   

  
	
   

  	
   

  

 

FORM OF ASSIGNMENT

(To be signed only on transfer of Warrant)

 

For
value received, the undersigned hereby sells, assigns, and transfers unto                     ,
federal taxpayer identification number                     ,
whose address is                     ,
the right represented by the within Warrant to purchase                     
shares of Common Stock of SoftBrands, Inc. to which the within Warrant relates,
and appoints                               
Attorney to transfer such right on the books of SoftBrands, Inc. with full
power of substitution in the premises.

 

	
  Dated:

  	
   

  
	
   

  	
  (Signature must
  conform to name

  of holder as specified on the

  face of the Warrant)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Address)

  

 

	
  Signed in the
  presence of:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

16Exhibit 4.10

 

INVESTORS’ RIGHTS AGREEMENT

 

INVESTORS’
RIGHTS AGREEMENT (this “Agreement”) dated as of November 26, 2002 by and
between SoftBrands, Inc., a Delaware corporation (the “Company”) and Capital
Resource Partners IV, L.P., a Delaware limited partnership (“CRP” or the “Investors”).

 

WHEREAS,
Info-Quest and the Company entered into that certain Investor Agreement, dated
as of May 15, 2002, whereby the Company granted Info-Quest certain
registration, participation and other rights with respect to the shares of
common stock of the Company held by Info-Quest and the Company and Info-Quest
have agreed to amend such agreement (as amended, the “Info-Quest Agreement”);

 

WHEREAS,
CRP proposes to purchase from the Company warrants to purchase shares of common
stock of the Company (the “Warrants”) pursuant to a Senior Subordinated Secured
Note and Warrant Purchase Agreement dated as of the date hereof (the “Purchase
Agreement”) by and among the Company and CRP;

 

WHEREAS,
the execution and delivery of this Agreement is a condition precedent to the
transactions contemplated by the Purchase Agreement.

 

NOW,
THEREFORE, in consideration of the premises, as an inducement to CRP to
consummate the transactions contemplated by the Purchase Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Company hereby covenants and agrees with the Investors
as follows:

 

ARTICLE I

DEFINITIONS

 

Section 1.1.            Certain Definitions.  As used in this Agreement, the following
terms shall have the following respective meanings:

 

“Commission”
shall mean the United States Securities and Exchange Commission, or any other
federal agency at the time administering the Securities Act.

 

“Common
Stock” shall mean (i) the Company’s Common Stock, par value $0.01 per
share, as authorized on the date of this Agreement, (ii) any other capital
stock of any class or classes (however designated) of the Company, authorized
on or after the date hereof, the holders of which shall have the right, without
limitation as to amount per share, either to all or to a share of the balance
of current dividends and liquidating distributions after the payment of
dividends and distributions on any shares entitled to preference in the payment
thereof, and the holders of which shall ordinarily, in the absence of
contingencies, be entitled to vote for the election of a majority of directors
of the Company (even though the right so to vote has been suspended by the 

 

 

happening of such a
contingency), and (iii) any other securities into which or for which any
of the securities described in (i) or (ii) above may be converted or exchanged
pursuant to a plan of recapitalization, reorganization, merger, sale of assets
or otherwise.

 

“Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.

 

“Person”
shall mean an individual, a corporation, a partnership, limited liability
company, a joint venture, a trust, an unincorporated organization, a government
and any agency or political subdivision thereof.

 

“The
Plan” shall mean the First Amended Plan of Reorganization of AremisSoft
Corporation Jointly Proposed by Debtor and SoftBrands, Inc, dated as of May 24,
2002 and effective as of August 2, 2002.

 

“Warrant
Shares” shall mean the Warrant Shares and/or the Info-Quest Shares.

 

“Registration
Expenses” shall mean the expenses so described in Section 5.

 

“Securities
Act” shall mean the Securities Act of 1933, as amended, or any similar
federal statute, and the rules and regulations of the Commission thereunder,
all as the same shall be in effect at the time.

 

“Warrant
Shares” shall mean the shares of Common Stock issued or issuable upon
exercise of the Warrants.

 

ARTICLE II

REGISTRATION RIGHTS

 

Section 2.1.            CRP
Demand Registration.

 

(a)           At
any time on or after January 1, 2004 that the Company is or becomes
subject to Section 13 or Section 15(d) of the Exchange Act, holders
of at least fifty percent (50%) of the Warrant Shares may request the Company
to register under the Securities Act all or any portion of the Warrant Shares
held by such requesting holders in the manner specified in such request and
upon receipt of such request the Company shall promptly deliver notice of such
request to all Persons holding Warrant Shares, including each Person party to
this Agreement who has the right to acquire Warrant Shares, who shall then have
thirty (30) days to notify the Company in writing of their desire to be
included in such registration.  The
Company will use its best efforts to expeditiously effect the registration of
all Warrant Shares whose holders request participation in such registration under
the Securities Act, but only to the extent provided for in the following
provisions of this Agreement; provided, however,
that the Company shall not be required to effect registration pursuant to a
request under this Section 2.1 more than two (2) times; and provided further, that a registration pursuant to a request
under this Section 2.1 shall 

 

2

 

be not be counted toward
the maximum number of two (2) registrations in the event the Company fails to
effectively register all Warrant Shares as to which registration have been
requested.  Notwithstanding anything to
the contrary contained herein, no request may be made under this Section 2.1
within 180 days after the effective date of a registration statement filed by
the Company covering a firm commitment underwritten public offering in which
CRP shall have been entitled to join pursuant to Section 2.3 or 2.9 and in
which there shall have been effectively registered all Warrant Shares as to
which registration shall have been requested.

 

(b)           Whenever
a requested registration pursuant to Section 2.1(a) is for an underwritten
offering, only Warrant Shares which are to be included in the underwriting may
be included in the registration, and, if the managing underwriter of such
offering determines in good faith that the number of Warrant Shares so included
which are to be sold by the holders of the Warrant Shares should be limited due
to market conditions and/or the necessity of including in such underwriting or
registration securities to be sold for the account of the Company, the holders
of Warrant Shares to be included in such underwriting and registration shall
share pro rata in the number of such Warrant Shares being underwritten and
registered for their account, such sharing to be based on the number of all
Warrant Shares held by such holders, respectively; provided, that in no event
shall the holders of Warrant Shares that requested such registration pursuant
to Section 2.1(a) have the number of their Warrant Shares to be included
in such underwriting and registration reduced or limited (including pursuant to
Section 2.2 or 2.3 hereof) until the number of securities whose holders
have a contractual, incidental “piggy back” right to include such securities in
the registration statement as to which inclusion has been requested pursuant to
such right have been reduced to zero (0). 
Whenever a requested registration pursuant to Section 2.1(a) is for
an underwritten public offering, the holders of a majority of the Warrant
Shares to be sold in such offering, subject to the approval of the Company
(which approval will not be unreasonably withheld, conditioned or delayed), may
designate the managing underwriter(s) of such offering.  The Company may not cause any other registration
of securities for sale for its own account (other than in connection with the
registration of equity securities issued or issuable pursuant to an employee
stock option, stock purchase, stock bonus or similar plan or pursuant to a
merger, exchange offer or transaction of the type specified in Rule 145(a)
under the Securities Act) to become effective less than 90 days after the
effective date of any registration required pursuant to this Section 2.1.

 

(c)           If
at the time of any request to register Warrant Shares pursuant to Section 2.1(a)
the Company is preparing or within thirty (30) days thereafter commences
to prepare a registration statement for a public offering (other than in
connection with the registration of equity securities issued or issuable
pursuant to an employee stock option, stock purchase, stock bonus or similar
plan or pursuant to a merger, exchange offer or transaction of the type
specified in Rule 145(a) under the Securities Act) which in fact is filed and
becomes effective within ninety (90) days after the request and the
Company has complied with the provisions of Section 2.3 hereof, or is
engaged in any activity which, in the good faith determination of the Company’s
board of directors, would be adversely affected by the requested registration
to the material detriment of the Company, then the Company may at its option
direct that such request be delayed for a period not in excess of four months
from the effective date of such offering or the date of commencement of such
other activity, as the case may be, such right to delay a 

 

3

 

request to be exercised
by the Company not more than once in any two year period.  Nothing in this Section 2.1(c) shall
preclude a holder of Warrant Shares from enjoying registration rights which it
might otherwise possess under Section 2.3 hereof.  If the Company has exercised its right to
delay a registration pursuant to this Section and the holders of Warrant
Shares withdraw the demand for such registration, such withdrawn demand shall
not be counted as a demand under this Section 2.1.

 

Section 2.2.            [Reserved].

 

Section 2.3.            Piggyback
Registration.  If the Company at any
time proposes to register any of its securities under the Securities Act
(including pursuant to a demand of any stockholder of the Company exercising
registration rights) for sale to the public (other than in connection with the
registration of equity securities issued or issuable pursuant to an employee
stock option, stock purchase, stock bonus or similar plan or pursuant to a
merger, exchange offer or transaction of the type specified in Rule 145(a)
under the Securities Act), each such time it will give written notice to all
holders of the outstanding Warrant Shares, including each holder who has the
right to acquire Warrant Shares, of its intention to do so.  Upon the written request of any of such
holders of the Warrant Shares given within twenty (20) days after receipt by
such holder of such notice, the Company will, subject to the limits contained
in this Section 2.3, use its reasonable best efforts to cause all such
Warrant Shares of said requesting holders to be registered under the Securities
Act and qualified for sale under any state blue sky law, all to the extent
requisite to permit such sale or other disposition by such holder of the
Warrant Shares so registered; provided, however, that if the Company is advised
in writing in good faith by any managing underwriter of the Company’s
securities being offered in a public offering pursuant to such registration
statement that the amount to be sold by persons other than the Company
(collectively, “Selling Stockholders”) is greater than the amount which can be
offered without adversely affecting the offering, the Company may reduce the
amount offered for the accounts of Selling Stockholders (including such holders
of shares of Warrant Shares)to a number deemed satisfactory by such managing
underwriter provided that no reduction shall be made in the amount of Warrant
Shares offered for the accounts of the holders of Warrant Shares unless such
reduction is imposed pro rata with respect to all securities whose holders have
a contractual right to include such securities in the registration statement as
to which inclusion has been requested pursuant to such right; and provided, further, that there is first excluded from such
registration statement all shares of Common Stock sought to be included therein
by (i) any officer or employee of the Company or any subsidiary of the
Company, (ii) any holder thereof not having any such contractual,
incidental registration rights, and (iii) any holder thereof having
contractual, incidental registration rights subordinated and junior to the
rights of the holders of Warrant Shares. 
For purposes of this Section 2.2, holders of Registrable Securities
(as defined in the Info-Quest Agreement) shall be deemed to have contractual
incidental registration rights or “piggyback” registration rights that rank on
a par with holders of Warrant Shares and the holders of any securities issued
in connection with those certain warrants to purchase shares of Common Stock of
the Company issued to MHT Securities, L.P., Founders Equity Securities, Inc.
and Silicon Valley Bank shall be deemed to have contractual, incidental
registration rights subordinated and junior to the rights of the holders of
Warrant Shares and Registrable Securities .

 

4

 

Section 2.4.            Registration
Procedures.  If and whenever the
Company is required by the provisions of this Agreement to use its reasonable
best efforts to effect the registration of any of its securities under the
Securities Act, the Company will, as expeditiously as possible:

 

(i)            prepare
and file with the Commission a registration statement with respect to such
securities and use its reasonable best efforts to cause such registration
statement to become and remain effective; provided, however, that
notwithstanding any other provision of this Agreement, the Company shall not in
any event be required to use its reasonable best efforts to maintain the
effectiveness of any such registration statement for a period in excess of nine
(9) months;

 

(ii)           prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may
be necessary to keep such registration statement effective and to comply with
the provisions of the Securities Act with respect to the sale or other
disposition of all securities covered by such registration statement whenever
the seller or sellers of such securities shall desire to sell or otherwise
dispose of the same, but only to the extent provided in this Agreement;

 

(iii)          furnish
to each seller such number of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents as such seller may reasonably request in order to facilitate
the public sale or other disposition of the securities owned by such seller;

 

(iv)          use
reasonable best efforts to register or qualify the securities covered by such
registration statement under such other securities or state blue sky laws of
such jurisdictions as each seller shall reasonably request, and do any and all
other acts and things which may be necessary under such securities or blue sky
laws to enable such seller to consummate the public sale or other disposition
in such jurisdictions of the securities owned by such seller, except that the
Company shall not for any such purpose be required to qualify to do business as
a foreign corporation in any jurisdiction wherein it is not so qualified;

 

(v)           before
filing the registration statement or prospectus or amendments or supplements
thereto, furnish to one counsel selected by the holders of Warrant Shares
copies of such documents proposed to be filed which shall be subject to the
reasonable approval of such counsel;

 

(vi)          use
its reasonable best efforts to furnish to each prospective seller a signed
counterpart, addressed to the prospective seller, of (A) an opinion of
counsel for the Company, dated the effective date of the registration
statement, and (B) a “comfort” letter signed by the independent public
accountants who have certified the Company’s financial statements included in
the registration statement, covering substantially the same matters with
respect to the registration statement (and the prospectus included therein) and
(in the case of the accountants’ letter) with respect to events subsequent to
the date of the financial statements, as are customarily covered (at the time of
such registration) in opinions of the Company’s counsel and in 

 

5

 

accountants’ letters
delivered to the underwriters in underwritten public offerings of securities;
and

 

(vii)         otherwise
use its best efforts to comply with all applicable rules and regulations of the
Commission relating to such registration and the distribution of the securities
being offered (including, without limitation, Regulation M, with respect to
which the Company shall also use its best efforts timely to apprise each Holder
of any bids and purchases by the Company, and of any known bids and purchases
by each “affiliated purchaser” (as defined in Regulation M) of the Company,
that would in the opinion of the Company be prohibited under Regulation M in
connection with a “distribution” (as so defined) by such Holder) and make
generally available to its security holders earning statements satisfying the
provisions of Section 11(a) of the Securities Act, no later than 60 days
after the end of any 12-month period (or 90 days, if such period is a fiscal
year) commencing at the end of any fiscal quarter in which the Warrant Shares
are sold to underwriters in a firm commitment or best efforts underwritten
offering, or, if not sold to underwriters in such an offering, beginning with
the first month of the Company’s first fiscal quarter commencing after the
effective date of such registration statement, which earning statements shall
cover such 12-month periods;

 

(viii)        use
its reasonable best efforts to list the Warrant Shares covered by such
registration statement with any securities exchange on which the Common Stock
of the Company is then listed.

 

Section 2.5.            Expenses.  All expenses incurred in effecting the
registrations provided for in Sections 2.1, 2.2, 2.3 and 2.9, including,
without limitation, all registration and filing fees, printing expenses, fees
and disbursements of counsel for the Company and fees of one counsel for all of
the selling holders of Warrant Shares, underwriting expenses (other than fees,
commissions or discounts attributable to the sale of the Warrant Shares),
expenses of any audits incident to or required by any such registration and
expenses of complying with the securities or blue sky laws of any jurisdictions
pursuant to Section 2.4(iv) hereof (all of such expenses referred to as “Registration
Expenses”), shall be paid by the Company; provided, that if an offering
pursuant to any registration commenced pursuant to Section 2.1 or 2.2 is
abandoned by the holders of Warrant Shares or Info-Quest, respectively (other
than by reason of adverse information pertaining to the Company’s business
affairs or financial position, as opposed to stock market conditions, unknown
to the holders of Warrant Shares or Info-Quest prior to the commencement of
such registration proceedings, in which event the Company shall bear all
Registration Expenses), the holders of Warrant Shares or Info-Quest,
respectively, shall bear any costs incurred by the Company in conjunction with
such registration.  In either event, the
number of registrations to which the holders of Warrant Shares or Info-Quest is
entitled pursuant to Section 2.1 or Section 2.2, respectively, shall
not be reduced thereby.

 

Section 2.6.            Indemnification.  (a) The Company shall indemnify and hold
harmless the seller of such securities, each underwriter (as defined in the
Securities Act), and each other Person who participates in the offering of such
securities and each other Person, if any, who controls (within the meaning of
the Securities Act) such seller, underwriter or participating Person
(individually and collectively the “Indemnified Person”) against any losses,
claims, 

 

6

 

damages or liabilities
(collectively the “liability”), joint or several, to which such Indemnified
Person may become subject under the Securities Act or any other statute or at
common law, insofar as such liability (or action in respect thereof) arises out
of or is based upon (i) any untrue statement or alleged untrue statement
of any material fact contained, on the effective date thereof, in any
registration statement under which such securities were registered under the
Securities Act, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereto, or (ii) any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading.  Except as otherwise provided in Section Section 2.6(d),
the Company shall reimburse each such Indemnified Person in connection with
investigating or defending any such liability; provided, however, that the
Company shall not be liable to any Indemnified Person in any such case to the
extent that any such liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, preliminary or final prospectus, or amendment or
supplement thereto in reliance upon and in conformity with information
furnished in writing to the Company by such Person specifically for use
therein, or upon such statement or omission therein based on the authority of
an expert within the meaning of that term as defined in the Securities Act (but
only if the Company had no reasonable ground to believe, and did not believe,
that the statements made on the authority of an expert were untrue or that
there was an omission to state a material fact); and provided further, that the
Company shall not be required to indemnify any Person against any liability
arising from any untrue or misleading statement or omission contained in any
preliminary prospectus if such deficiency is corrected in the final prospectus
or for any liability which arises out of the failure of any Person to deliver a
prospectus as required by the Securities Act regardless of any investigation
made by or on behalf of such Indemnified Person and shall survive transfer of
such securities by such seller.

 

(b)           Each
holder of any Warrant Shares shall, by acceptance thereof, indemnify and hold
harmless each other holder of any Warrant Shares, the Company, its directors
and officers, each underwriter and each other Person, if any, who controls the
Company or such underwriter (individually and collectively also the “Indemnified
Person”), against any liability, joint or several, to which any such
Indemnified Person may become subject under the Securities Act or any other
statute or at common law, insofar as such liability (or actions in respect
thereof) arises out of or is based upon (i) any untrue statement or
alleged untrue statement of any material fact contained, on the effective date
thereof, in any registration statement under which securities were registered
under the Securities Act at the request of such holder, any preliminary
prospectus or final prospectus contained therein, or any amendment or
supplement thereto, or (ii) any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in the case of (i) and (ii) to the extent,
but only to the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in such registration statement,
preliminary or final prospectus, amendment or supplement thereto in reliance
upon and in conformity with information furnished in writing to the Company by
such holder specifically for use therein, and then only to the extent that such
untrue statement or alleged untrue statement or omission or alleged omission by
the holder was not based on the authority of an expert as to which the holder
had no reasonable ground to believe, and did not believe, that the statement
made on the authority of such expert 

 

7

 

was untrue or that there
was an omission to state a material fact. 
Such holder shall reimburse any Indemnified Person for any legal fees
incurred in investigating or defending any such liability; provided, however, that
such holder’s obligations hereunder shall be limited to an amount equal to the
proceeds to such holder of the Warrant Shares sold in any such registration;
and provided further, however, that no holder of Warrant Shares shall be
required to indemnify any Person against any liability arising from any untrue
or misleading statement or omission contained in any preliminary prospectus if
such deficiency is corrected in the final prospectus or for any liability which
arises out of the failure of any Person to deliver a prospectus as required by
the Securities Act.

 

(c)           Indemnification
similar to that specified in Sections 2.6(a) and (b) shall be given by the
Company and each holder of any Warrant Shares (with such modifications as may
be appropriate) with respect to any required registration or other
qualification of the Warrant Shares under any federal or state law or
regulation of governmental authority other than the Securities Act.

 

(d)           In
the event the Company, any holder or other Person receives a complaint, claim
or other notice of any liability or action, giving rise to a claim for
indemnification under Sections 2.6(a), (b) or (c), the Person claiming
indemnification under such paragraphs shall promptly notify the Person against
whom indemnification is sought of such complaint, notice, claim or action, and
such indemnifying Person shall have the right to investigate and defend any
such loss, claim, damage, liability or action. 
The Person claiming indemnification shall have the right to employ
separate counsel in any such action and to participate in the defense thereof
but the fees and expenses of such counsel shall not be at the expense of the
Person against whom indemnification is sought (unless the indemnifying party
fails to promptly defend, in which case the fees and expenses of such separate
counsel shall be borne by the Person against whom indemnification is
sought).  In no event shall a Person
against whom indemnification is sought be obligated to indemnify any Person for
any settlement of any claim or action effected without the indemnifying Person’s
prior written consent.

 

(e)           Contribution.

 

(i)            If
the indemnification provided for in this Section 2.6 from the indemnifying
party is unavailable to an indemnified party hereunder in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses in such proportion as
is appropriate to reflect the relative fault of the indemnifying party and
indemnified parties in connection with the actions that resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations; provided, however, that in no event
shall the liability of any holder or Warrant Shares for contribution under this
Section 2.6(e) exceed the proceeds received by such holder from the sale
of Warrant Shares under the applicable registration statement.  The relative fault of such indemnifying party
and indemnified parties shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a 

 

8

 

material fact, has been
made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such action.  The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth above,
any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.

 

(ii)           The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 2.6(e) were determined by pro  rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding
paragraph.  No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.

 

(iii)          If
indemnification is available under this Section 2.6, the indemnifying
parties shall indemnify each indemnified party to the full extent provided in Section 2.6(a)
and Section 2.6(b) hereof without regard to the relative fault of said
indemnifying party or indemnified party or any other equitable consideration
provided for in this Section 2.6(e).

 

Section 2.7.            Compliance
with Rule 144.  In the event that the
Company (i) registers a class of securities under Section 12 of the
Exchange Act or (ii) shall commence to file reports under Section 13
or 15(d) of the Exchange Act, thereafter, at the request of any holder of the
Warrant Shares who proposes to sell the Warrant Shares in compliance with
Rule 144 of the Commission, subject prior to January 1, 2004 to the
potential inability of the Company to provide certain required financial
information, the Company shall forthwith furnish to such holder or holders a
written statement of compliance with the filing requirements of the Commission
as set forth in such Rule, as such Rule may be amended from time to time, and
make available to the public and such holders such information as will enable
the holders to make sales of Warrant Shares pursuant to Rule 144.

 

Section 2.8.            Consent
to be Bound.  Each subsequent holder
of Warrant Shares must consent in writing to be bound by the terms and
conditions of this Agreement in order to acquire the rights granted pursuant to
this Agreement.

 

Section 2.9.            Form
S-3.  After the first public offering
of its securities registered under the Securities Act, the Company shall use
its best efforts to qualify and remain qualified to register securities on
Form S-3 under the Securities Act. 
The holders of the Warrant Shares shall have the right to request any
number of registrations on Form S-3 (such requests shall be in writing and
shall state the number of shares of Warrant Shares to be disposed of and the
intended method of disposition of such shares by such holder or holders).  The Company shall not be required to effect a
registration pursuant to this Section 2.9 if, in the good faith judgment
of the Company, such registration will hinder or interfere with a concurrent or
proposed security issuance of, or acquisition by, the Company or if the holder
or holders requesting registration propose to dispose of shares of the Warrant
Shares having an aggregate disposition price (before deduction of underwriting
discounts and expenses of sale) of less than $500,000.  This Section 

 

9

 

shall not be interpreted
to restrict the Company from acquiring its own shares or to require the Company
to sell its own shares.  The Company
shall give notice to all holders of the Warrant Shares of the receipt of a
request for registration pursuant to this Section 2.9 and shall provide a
reasonable opportunity for other holders to participate in the
registration.  Subject to the foregoing,
the Company will use its best efforts, in each case, to effect promptly the
registration of all shares of the Warrant Shares on Form S-3 to the extent
requested by the holder or holders thereof for purposes of disposition.

 

Section 2.10.          Assignability
of Registration Rights.  Subject to Section 2.8
hereof, the registration rights set forth in this Agreement other than the
rights set forth in Section 2.2 hereof are assignable to each assignee as
to each share of Warrant Shares or securities convertible into Warrant Shares
conveyed in accordance herewith who agrees in writing to be bound by the terms
and conditions of this Agreement.  The
term “seller” as used in this Agreement refers to a holder of the Warrant
Shares selling such shares.

 

Section 2.11.          Rights
Which May Be Granted to Subsequent Investors.  The Company shall not grant subsequent
registration rights to third parties superior or equal to the registration
rights granted pursuant to this Agreement so long as any of the registration
rights under this Agreement remain in effect.

 

Section 2.12.          Damages.  The Company recognizes and agrees that each
holder of Warrant Shares will not have an adequate remedy if the Company fails
to comply with the terms and provisions of this Agreement and that damages will
not be readily ascertainable, and the Company expressly agrees that, in the
event of such failure, it shall not oppose an application by any holder of
Warrant Shares or any other Person entitled to the benefits of this Agreement
requiring specific performance of any and all provisions hereof or enjoining
the Company from continuing to commit any such breach of this Agreement.

 

Section 2.13.          Information.  It shall be a condition precedent to the
obligations of the Company to register any Warrant Shares of any selling holder
pursuant to this Section 2 that such older shall furnish to the Company,
in writing, such information regarding itself, the Warrant Shares held by it,
and the intended method of disposition of such securities as shall be legally
required to effect the registration of such holder’s Warrant Shares.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

Section 3.1             Representations
and Warranties of the Company.  The
Company represents and warrants to the Investors as follows:

 

(a)  The execution, delivery and performance of
this Agreement by the Company have been duly authorized by all requisite
corporate action and will not violate any provision of law, any order of any
court or other agency of government, the Certificate of Incorporation or
By-laws of the Company or any provision of any indenture, agreement or other
instrument to which it or any or its properties or assets is bound, conflict
with, result in a breach of or constitute (with 

 

10

 

due notice or lapse of
time or both) a default under any such indenture, agreement or other instrument
or result in the creation or imposition of any lien, charge or encumbrance of
any nature whatsoever upon any of the properties or assets of the Company.

 

(b)           This
Agreement has been duly and validly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company, enforceable
in accordance with its terms.

 

ARTICLE IV

MISCELLANEOUS

 

Section 4.1.                     Miscellaneous.

 

(a)           All
notices, requests, demands and other communications provided for hereunder
shall be in writing and mailed (by first class registered or certified mail,
postage prepaid), sent by express overnight courier service or electronic
facsimile transmission (with a copy by mail), or delivered to the applicable
party at the addresses indicated below:

 

If to the Company:

 

Softbrands, Inc.

Two
Meridian Crossing

Suite 800

Minneapolis, Minnesota
55423

Attention: David Latzke

Facsimile No.: (612)
851-6280

 

With a copy to:

 

Dorsey & Whitney LLP

50 South Street, Suite
1500

Minneapolis, Minnesota
55402

Attention: Thomas Martin,
Esq.

Facsimile No.: (612)
340-7800

 

If to the CRP:

 

Capital Resource Partners

85 Merrimac Street

Suite 200

Boston, Massachusetts
02114

Attention: Robert
Ammerman

Telecopy No.: (617)
723-9819

 

11

 

With a copy to:

 

Testa, Hurwitz &
Thibeault, LLP

125 High Street

Boston, Massachusetts
02110

Attention: Kathy A.
Fields, Esq.

Telecopy No.: (617)
248-7100

 

If to any other holder of Warrant Shares:

at such holder’s address
for notice as set

forth in the books and
records of the Company,

 

or, as to each of the
foregoing, at such other address as shall be designated by such Person in a
written notice to the other parties complying as to delivery with the terms of
this subsection (a).  All such
notices, requests, demands and other communications shall, when mailed or
otherwise sent be effective (i) two days after being deposited in the mails or
(ii) one day after being deposited with the express overnight courier service
or sent by electronic facsimile transmission (with receipt confirmed),
respectively, addressed as aforesaid.

 

(b)           This
Agreement shall be governed by and construed in accordance with the internal
laws of the Commonwealth of Massachusetts.

 

(c)           This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.

 

(d)           If
any provision of this Agreement shall be held to be illegal, invalid or
unenforceable, such illegality, invalidity or unenforceability shall attach
only to such provision and shall not in any manner affect or render illegal,
invalid or unenforceable any other provision of this Agreement, and this
Agreement shall be carried out as if any such illegal, invalid or unenforceable
provision were not contained herein.

 

Section 4.2.            Amendments.  The provisions of this Agreement 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 holders of at least a majority of the
Warrant Shares.

 

Section 4.3.            Termination.  This Agreement shall terminate at such time
as the holders of Warrant Shares are able to sell, within any three month
period, all of the Warrant Shares pursuant to Rule 144 under the
Securities Act.

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

12

 

IN
WITNESS WHEREOF, the parties hereto have caused this Investors’ Rights
Agreement to be duly executed as of the date first set forth above.

 

	
   

  	
  SOFTBRANDS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ George H. Ellis

  	
   

  
	
   

  	
   

  	
  Name: George H.
  Ellis

  
	
   

  	
   

  	
  Title: Chairman
  and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CAPITAL RESOURCE
  PARTNERS IV, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  CRP Partners IV,
  L.L.C.

  
	
   

  	
   

  	
  Its General
  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  Robert Ammerman

  	
   

  
	
   

  	
   

  	
  Name (Printed):

  
	
   

  	
   

  	
  Title: Managing
  Member

  
					

 

13

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