Document:

Exhibit 4.5

 

Execution Copy

 

AMENDMENT
NO. 1 TO

 

SENIOR
SUBORDINATED SECURED NOTE AND

WARRANT PURCHASE AGREEMENT

 

This Amendment No. 1 effective as of September 30,
2003 (this “Amendment No 1”) amends that certain Senior Subordinated
Secured Note and Warrant Purchase Agreement dated as of November 26, 2002
(as so amended and in effect from time to time, the “Purchase Agreement”),
by and among SoftBrands, Inc., a Delaware corporation (the “Company”),
its Significant Subsidiaries (as defined in the Purchase Agreement)
(collectively, the “Borrowers”) and Capital Resource Partners IV, L.P.
(the “Purchaser”).

 

1.                                      Amendment
of the Purchase Agreement.

 

1.01.                     Section 2.01
of the Purchase Agreement shall be amended such that it shall read in its
entirety as follows:

 

“2.01.                  The Notes.  The Company has authorized the issuance and
sale to the Purchasers of the Company’s Senior Subordinated Secured Notes, due December 31,
2008, in the original aggregate principal amount of $20,000,000.  The Senior Subordinated Secured Notes shall
be substantially in the form set forth as Exhibit 2.01 attached hereto
and are herein referred to individually as a “Note” and collectively as
the “Notes.” which terms shall also include any notes delivered in
exchange or replacement therefor.  Except
as otherwise set forth in this Agreement, the Notes shall (a) be payable on December 31,
2008 and (b) bear interest (based on a 360-day year counting actual days
elapsed) on the unpaid principal amount thereof (x) commencing on November 27,
2002 until September 30, 2003 at the rate of twelve and one-half percent
(12.5%) per annum and (y) commencing on October 1, 2003 until due and
payable at the rate of fourteen percent (14%) per annum, which interest shall
be payable in immediately available funds quarterly in arrears on the last
Business Day of March, June, September and December in each year,
commencing December 31, 2003, and at maturity or prior prepayment of the
Notes in full.”

 

1.02.                     Exhibit
2.01 to the Purchase Agreement shall be replaced with Exhibit 2.01
attached as Exhibit A hereto.  On
surrender for exchange of any Note pursuant to Section 2.10 of the
Purchase Agreement, the Company shall issue in exchange therefor another Note
or Notes substantially in the form set forth in Exhibit A hereto in the
name of the holder pursuant to Section 2.10 of the Purchase Agreement.

 

1.03.                     Section 2.06
of the Purchase Agreement shall be amended such that it shall read in its
entirety as follows:

 

“(a)                            Required
Periodic Redemptions.  On December 31,
2005 and December 31, 2006, the Company will redeem, without penalty or
premium, the principal amount of the Notes equal to the amounts set forth next
to the corresponding dates set forth on Schedule 2.06(a) attached
hereto, or such lesser amount as may be then outstanding, together with all
accrued and unpaid interest then due on the amount so redeemed.  Beginning on March 31, 2007 and
quarterly thereafter, the Company will redeem, without penalty or premium, the
principal amount of the

 

 

Notes equal to the amounts
set forth next to the corresponding dates set forth on Schedule 2.06(a)
attached hereto, or such lesser amount as may be then outstanding, together
with all accrued and unpaid interest then due on the amount so redeemed.  On the stated or accelerated maturity of the
Notes, the Company agrees to pay the principal amounts of the Notes then
outstanding together with all accrued and unpaid interest then due
thereon.  Except as set forth in subsection 2.06(c),
no optional redemption of less than all of the Notes shall affect the
obligation of the Company to make the redemptions required by this subsection.

 

(b)                                 Required
Liquidity Redemptions.  In the event
and upon the closing of a Qualifying Liquidity Event, the Company shall redeem,
without penalty or premium except as set forth in Section 2.06(d), all of
the outstanding Notes, together with all accrued and unpaid interest then due
thereon.

 

(c)                                  Optional
Redemptions.  In addition to the
redemptions of the Notes required under subsections 2.06(a) and (b), the Company
may, at any time and from time to time, redeem, without penalty or premium
except as set forth in Section 2.06(d), the Notes, in whole or in part (in
integral multiples of $1,000), together with interest due on the amount so
redeemed through the date of redemption. 
Partial redemptions made as provided in this subsection 2.06(c)
shall, to the extent thereof, be applied first to reduce the principal due at
maturity of the Notes and next to reduce the payments required by subsection 2.06(a)
in inverse order of maturity thereof.

 

(d)                                 Redemption
Premium.  Should the Company redeem
the Notes, in whole or in part, whether pursuant to Section 2.06(b) or Section 2,06(c),
at any time prior to September 30, 2005, the Company shall be obligated to
pay at the time of such redemption to each holder of the Notes an additional
amount equal to the interest that, but for the redemption of the Notes, would
have accrued on the outstanding principal amount of the Notes held by such
holder so redeemed for the period from the date of redemption through and
including September 30, 2005.

 

(e)                                  Notice
of Redemption, Pro Rata Redemption. 
Notice of any optional redemption pursuant to subsection 2.06(c)
shall be given to all holders of the Notes at least ten (10) Business Days prior
to the date of such redemption and notice of any required redemption pursuant
to Section 2.06(b) shall be given to all holders of the Notes at least ten
(10) Business Days prior to the closing of a Qualifying Liquidity Event.  Each redemption of Notes pursuant to
subsections 2.06(a) or (c) shall be made so that the Notes then held by each
holder shall be redeemed in a principal amount which shall bear the same ratio
to the total unpaid principal amount being redeemed on all Notes as the unpaid
principal amount of Notes then held by such holder bears to the aggregate
unpaid principal amount of all of the Notes then outstanding.”

 

1.04.                     Schedule 2.06(a)
attached as Exhibit B hereto shall be added to the Purchase Agreement as
Schedule 2.06(a).

 

1.05.                     Section 2.07
of the Purchase Agreement shall be amended such that it shall read in its
entirety as follows:

 

“2.07.                  Default Rate of Interest.  If an Event of Default has occurred and is
continuing, from and after the date such Event of Default occurred the entire
outstanding unpaid principal balance of the Notes and any matured but unpaid
interest from time to time due thereon shall

 

2

 

bear interest, payable on
demand, (i) should the Event of Default be pursuant to Section 8.01(a) or
(b) hereof, at the rate of nineteen percent (19%) per annum, or such lower rate
as then may be the maximum rate permitted by applicable law, or (ii) otherwise,
at the rate of seventeen percent (17%) per annum, or such lower rate as then
may be the maximum rate permitted by applicable law, provided, however,
that upon the cessation or cure of such Event of Default, if no other Event of
Default is then continuing, the Notes shall resume bearing interest at the rate
set forth in Section 2.01 from the date such Events of Default are cured.”

 

1.06.                     Exhibit
3.01 to the Purchase Agreement shall be replaced with Exhibit 3.01
attached as Exhibit C hereto.  On
surrender for exchange of any Warrant, properly endorsed, to the Company, the
Company at its expense will issue and deliver to the holder a new Warrant or
Warrants substantially in the form set forth in Exhibit C hereto in the
name of the holder pursuant to Section 10 of the Warrant.

 

1.07.                     Section 7.01(k)
of the Purchase Agreement shall be amended such that it shall read in its
entirety as follows:

 

“(k)                            Board
of Directors and Committees.  The
Purchaser Representative shall at all times be entitled to appoint one
representative to the board of directors of the Company.  The board of directors of the Company shall
meet at least four (4) times per calendar year. 
The Company shall at all times maintain a Compensation Committee and an
Audit Committee of its board of directors. 
The Purchaser Representative shall at all times be entitled to appoint
one representative to each of the Compensation Committee and the Audit
Committee.  The Purchaser Representative
shall at all times have a representative or) each other committee of the board
of directors unless and only for so long as they waive such right with respect
to a specific committee or they have waived the right to appoint one
representative to the board of directors of the Company.  The Company shall reimburse the Purchaser
Representative and its appointees for all reasonable costs incurred by them in
connection with traveling to and from and attending meetings of the board of
directors and committees of the board of directors of the Company, in addition
to any directors fees regularly paid to any members of the Company’s board of
directors; provided, however, that in the case of CRP and its
appointees, all such reimbursements and fees shall be payable to Capital
Resource Management, Inc. and, to the extent legally possible, compensation in
the form of stock options shall be issued to Capital Resource Management, Inc.,
or should that not be legally possible, such stock options shall, to the extent
legally possible, be transferable at the discretion of the holder thereof.  The Company agrees to pay the fees regularly
paid to any members of the Company’s board of directors or any committees to
Capital Resource Management, Inc. regardless of whether a representative of the
Purchaser Representative is a member of the board of directors.”

 

1.08.                     Section 7.01(o)(i)
and Section 7.01(o)(ii) of the Purchase Agreement shall be amended such
that they shall read in their entirety as follows:

 

“(i)                               Minimum
EBITDA.  Commencing with and
including the fiscal quarter ending March 31, 2004, the Company will
maintain, on a consolidated basis, measured at the end of each fiscal quarter,
EBITDA for the previous twelve (12) months of not less than those amounts set
forth next to the corresponding fiscal quarters set forth on Schedule 7.01(o)(i)
attached hereto; provided, that (a) for the quarter ending March 31, 2004
EBITDA for the previous (3)

 

3

 

months shall be measured;
(b) for the quarter ending June 30, 2004 EBITDA for the previous six (6)
months shall be measured and (c) for the quarter ending September 30, 2004
EBITDA for the previous nine (9) months shall be measured.

 

(ii)                                  Fixed
Charge Coverage Ratio.  Commencing on
and including the fiscal quarter ending March 31, 2004, the Company will
maintain, on a consolidated basis, measured at the end of each fiscal quarter,
a Fixed Charge Coverage Ratio for the previous twelve (12) months of not less
than the amounts set forth next to the corresponding fiscal quarters set forth
on Schedule 7.01(o)(ii) attached hereto; provided, that (a) for the
quarter ending March 31, 2004 Fixed Charge Coverage Ratio for the previous
three (3) months shall be measured; (b) for the quarter ending June 30,
2004 Fixed Charge Coverage Ratio for the previous six (6) months shall be
measured and (c) for the quarter ending September 30, 2004 Fixed Charge
Coverage Ratio for the previous nine (9) months shall be measured.”

 

1.09.                     Schedule 7.01(o)(i)
to the Purchase Agreement shall be replaced with Schedule 7.01(o)(i)
attached as Exhibit D hereto.

 

1.10.                     Schedule 7.01(o)(ii)
to the Purchase Agreement shall be replaced with Schedule 7.01(o)(ii)
attached as Exhibit E hereto.

 

1.11.                     The
Company and the Purchaser hereby acknowledge and agree that the definition of “Senior
Debt” in the Purchase Agreement is hereby amended by changing “S6,000,000” to “$7,500,000.”
Section 7.02(b) of the Purchase Agreement shall be amended such that it
shall read in its entirety as follows:

 

“(b)                           Indebtedness.  Without the prior written consent of the
Purchasers, create, incur, assume or suffer to exist, or permit any Subsidiary
to create, incur, assume or suffer to exist, any liability with respect to
Indebtedness for Money Borrowed other than (1) up to $7.5 million in Senior
Debt less the sum of (i) any amounts outstanding under the Notes described in
(5) and (ii) the amount of any contingent consideration described in (5) that
may be paid on or after the date hereof (2) the Notes (3) Indebtedness of the
Company to a Significant Subsidiary, or a Significant Subsidiary to the Company
or a Significant Subsidiary to a Significant Subsidiary and (4) New Debt issued
in compliance with Section 3.07 if the person or entity acquiring such New
Debt executes and delivers a junior subordination agreement substantially in
the form of Exhibit 7.02(b), and (5) up to $804,000 of promissory notes
to the three shareholders of WinnLodge as partial consideration of the purchase
price therefore, and to the extent it would otherwise be considered
Indebtedness for Borrowed Money, up to $696,000 of contingent consideration
that may be paid to such shareholders, provided that the incurrence and
maintenance of all such Indebtedness does not result in the Company’s or any
Subsidiary’s failure to comply with any of the provisions of Article VII
hereof.  Notwithstanding the foregoing,
the Company shall not create, incur, assume or suffer to exist, or permit any
Subsidiary to create, incur, assume or suffer to exist, any Senior Debt until
the principal amount of the Notes represents less than two and one-half (2.5)
times EBITDA for the trailing twelve-month period.”

 

1.12.                     Section 7.02(m)
of the Purchase Agreement shall be amended such that it shall read in its
entirety as follows:

 

4

 

“(m)                         Capital
Expenditures.  Make, or permit any
Subsidiary to make, Capital Expenditures during any fiscal quarter of the
Company which, when added to the Capital Expenditures for the Company and its
Subsidiaries for the previous nine (9) months, exceed the amount set forth next
to the corresponding quarter set forth on Schedule 7.02(m);
provided, that (a) for the quarter ending March 31, 2004 Capital
Expenditures for the previous three (3) months shall be measured; (b) for the
quarter ending June 30, 2004 Capital Expenditures for the previous six (6)
months shall be measured and (c) for the quarter ending September 30, 2004
Capital Expenditures for the previous nine (9) months shall be measured.”.”

 

1.13.                     Schedule 7.02(m)
to the Purchase Agreement shall be replaced with Schedule 7.02(m),
attached as Exhibit F hereto.

 

2.                                      Annulment
of Defaults.

 

Pursuant to Section 8.02 of the Purchase
Agreement, the Purchaser, as the holder of a majority or more in principal
amount of all Notes outstanding, hereby agrees that upon payment of the amounts
set forth in Section 3.04 below this Amendment No. 1 shall be deemed a
written instrument filed with the Company in order to rescind and annul the
declaration of Events of Default and their consequences under Section 8.01(c)
of the Purchase Agreement as a result of the Company’s failure to perform the
covenants contained in Section 7.01(o) and Section 7.02(m) of the
Purchase Agreement on or prior to September 30, 2003.  The parties hereby acknowledge and agree that
paragraph 10 of that certain Agreement dated as of May 12, 2003 by and between
the Company and the Purchaser shall remain in full force and effect.

 

3.                                      Miscellaneous.

 

3.01.                     Effect.  Except as amended hereby, the Purchase
Agreement shall remain in full force and effect.

 

3.02.                     Waiver.  This Amendment No. 1 is effective only in the
specific instance and for the specific purpose for which it is executed and
shall not be considered a waiver or agreement to amend as to any provision of
the Purchase Agreement in the future.

 

3.03.                     Defined
Terms.  All capitalized terms used
but not specifically defined herein shall have the same meanings given such
terms in the Purchase Agreement unless the context clearly indicates or
dictates a contrary meaning.

 

3.04.                     Costs,
Expenses, Taxes.  The Company agrees
to pay a restructuring fee of $50,000 to Capital Resource Management, Inc. and
all costs and expenses of the Purchaser in connection with the preparation,
execution and delivery of this Amendment No. 1 and other instruments and
documents to be delivered hereunder, including the reasonable fees and
out-of-pocket expenses of the Purchaser and the fees of Testa, Hurwitz &
Thibeault, LLP, special counsel for the Purchaser, with respect thereto.

 

3.05.                     Governing
Law.  This Amendment No. 1 shall be
governed by, and construed and enforced in accordance with, the internal laws
of the Commonwealth of Massachusetts, without regard to conflicts of laws
principles.

 

5

 

3.06.                     Seal.  This Amendment No. 1 is executed as an
instrument under seal.

 

3.07.                     Counterparts.  This Amendment No. 1 may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same instrument, and each of the parties hereto may execute this Amendment
No. 1 by signing any of such counterparts.

 

IN WITNESS WHEREOF, the parties hereto have executed
this Amendment No. 1 or have caused it to be executed by their respective
officers thereunto duly authorized, as of the date first above written.

 

	
   

  	
  PURCHASER:

  
	
   

  	
   

  	
   

  
	
   

  	
  CAPITAL RESOURCE PARTNERS IV, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  CRP Partners Iv, LLC,

  
	
   

  	
   

  	
  Its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert Ammerman

  	
   

  
	
   

  	
   

  	
  Name: Robert C. Ammerman

  
	
   

  	
   

  	
  Title: Managing Member

  

 

6

 

	
   

  	
  BORROWERS:

  
	
   

  	
   

  	
   

  
	
   

  	
  SOFTBRANDS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ George H. Ellis

  	
   

  
	
   

  	
   

  	
  Name (Printed): 
  George H. Ellis

  
	
   

  	
   

  	
  Title: 
  Chairman and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
  SOFTBRANDS MANUFACTURING, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ George H. Ellis

  	
   

  
	
   

  	
   

  	
  Name (Printed): 
  George H. Ellis

  
	
   

  	
   

  	
  Title: 
  Chairman and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
  SOFTBRANDS HOSPITALITY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ George H. Ellis

  	
   

  
	
   

  	
   

  	
  Name (Printed): 
  George H. Ellis

  
	
   

  	
   

  	
  Title: 
  Chairman and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
  SOFTBRANDS INTERNATIONAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ George H. Ellis

  	
   

  
	
   

  	
   

  	
  Name (Printed): 
  George H. Ellis

  
	
   

  	
   

  	
  Title: 
  Chairman and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
  SOFTBRANDS LICENSING, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ George H. Ellis

  	
   

  
	
   

  	
   

  	
  Name (Printed): 
  George H. Ellis

  
	
   

  	
   

  	
  Title: 
  Chairman and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
  SOFTBRANDS EUROPE LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ George H. Ellis

  	
   

  
	
   

  	
   

  	
  Name (Printed): 
  George H. Ellis

  
	
   

  	
   

  	
  Title: 
  Chairman and CEO

  

 

7

 

Exhibit
A

 

EXHIBIT 2.01

 

FORM OF SENIOR SUBORDINATED SECURED
NOTE

 

Filed as Exhibit 4.8 to
Form 10.

 

 

Exhibit
B

 

SCHEDULE 2.06(a)

 

Required Periodic Redemptions

 

	
  Period Ended

  	
   

  	
  Required Redemption

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 31, 2005

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  December 31, 2006

  	
   

  	
  $

  	
  4,000,000

  	
   

  
	
  March 31, 2007

  	
   

  	
  $

  	
  1,500,000

  	
   

  
	
  June 30, 2007

  	
   

  	
  $

  	
  1,500,000

  	
   

  
	
  September 30, 2007

  	
   

  	
  $

  	
  1,500,000

  	
   

  
	
  December 31, 2007

  	
   

  	
  $

  	
  1,500,000

  	
   

  
	
  March 31, 2008

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  June 30, 2008

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  September 30, 2008

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  December 31, 2008

  	
   

  	
  $

  	
  2,000,000

  	
   

  

 

 

Exhibit
C

 

EXHIBIT 3.01

 

FORM OF COMMON STOCK PURCHASE
WARRANT

 

 

As amended, filed as Exhibit 4.9 to Form 10.

 

 

Exhibit
D

 

SCHEDULE 7.01(o)(i)

 

As Amended, Filed as Exhibit A to Exhibit 4.7 to Form 10.

 

 

Exhibit
E

 

SCHEDULE 7.01(o)(ii)

 

As Amended, Filed as Exhibit B to Exhibit 4.7 to Form 10.

 

 

Exhibit
F

 

SCHEDULE 7.02(m)

 

As Amended, Filed as Exhibit C to Exhibit 4.7 to Form 10.Exhibit 4.6

 

AMENDMENT NO. 2 TO

 

SENIOR SUBORDINATED SECURED NOTE AND

WARRANT PURCHASE AGREEMENT

 

This
Amendment No. 2 effective as of August 18, 2004 (“Amendment No. 2”)
amends that certain Senior Subordinated Secured Note and Warrant Purchase
Agreement dated as of November 26, 2002 (as amended and in effect from
time to time, the “Purchase Agreement”), by and among SoftBrands, Inc.,
a Delaware corporation (the “Company”), its Significant Subsidiaries (as
defined in the Purchase Agreement) (collectively, the “Borrowers”) and
Capital Resource Partners IV, L.P. (the “Purchaser”).

 

1.             Amendment
of the Purchase Agreement.

 

1.01.       Section 1.01
of the Purchase Agreement shall be amended to delete the definitions of “Repurchase
Price,” “Put Cash Adjustment,” “Put Closing Date,” and “Put Notice.”

 

1.02        The
definition of “Interest Expense” in Section 1.01 of the Purchase Agreement
shall be amended (such amendment to be deemed a point of clarity with
retroactive effect to the date of original execution of such Purchase
Agreement) such that it reads in its entirety as follows:

 

“Interest Expense” shall mean, on a consolidated
basis, for any given period, the sum of (1) the aggregate cash interest expense
of the Company and the Subsidiaries paid, payable or accrued for such period,
(2) to the extent not included in (1), any noncash expense required to be
recognized by the Company to reflect the obligation represented by the put
right contained in 3.03 of this Agreement before adoption of Amendment No. 2 to
this Agreement and (3) to the extent not included in (1), any noncash expense
recognized by the Company for renegotiation and elimination of such put right,
all to be determined in accordance with GAAP.

 

1.03.       The
definition of “Public Company Status” in Section 1.01 of the Purchase
Agreement shall be amended such that it shall read in its entirety as follows:

 

““Public Company Status” means any time that
(i) the Company’s Common Stock is registered pursuant to Section 12(b) or
12(g) of the Exchange Act and such securities are listed for trading on the New
York Stock Exchange or quoted on the Nasdaq Small Cap Market; (ii) the
aggregate market valuation of the Company’s Common Stock is not less than $100
million and (iii) the average weekly reported volume of trading for such
securities during the six calendar weeks preceding such date exceeds 4% of
total amount of such securities then outstanding.”

 

1.04.       The
definition of “Qualified IPO” in Section 1.01 of the Purchase Agreement
shall be amended such that it shall read in its entirety as follows:

 

 

 

““Qualified IPO” means a firm commitment
underwritten public offering of shares of the Company’s Common Stock in which
(i) the aggregate proceeds to the Company and/or any stockholders participating
in the offering, if any, are at least $25 million, (ii) the aggregate market
valuation of the Company’s Common Stock is then not less than $100 million and
(iii) the offering price per share is at least $2.00 per share.”

 

1.05.       The
definition of “Securities” in Section 1.01 of the Purchase Agreement shall
be amended such that it shall read in its entirety as follows:

 

““Securities” means collectively the Notes, the
Preferred Shares, the Warrants and the Warrant Shares.”

 

1.06.       The following new definitions of “Affiliates,”
“Associates,” “Series B Preferred Stock,” “Preferred Shares” and “Private
Securities” shall be added to Section 1.01 of the Purchase Agreement:

 

““Affiliate”
and “Associate” shall have the respective meanings ascribed to such
terms in Rule 12b-2 promulgated under the Exchange Act, as in effect on the
date hereof.”

 

““Preferred
Shares” means the shares of Series B Preferred Stock issued to the
Purchasers.”

 

““Series
B Preferred Stock” means the Company’s Series B Convertible Preferred
Stock, par value $.01 per share.”

 

““Private
Securities” means Equity Securities issued by the Company in a private
placement where such Equity Securities and any Equity Securities issued in any
related transactions represent less than 50% of the Equity Securities of the
Company and where the issuance will not result in a Person, along with such
Person’s Associates or Affiliates, beneficially owning 50% or more of the
Company’s voting stock.”

 

1.07.       The definition of “Excluded Securities”
in Section 1.01 of the Purchase Agreement shall be amended such that it
shall read in its entirety as follows:

 

“Excluded
Securities” means Equity Securities:

 

(a)
issued or issuable upon exercise of the Warrants or the conversion of the
Preferred Shares;

 

(b)
issued or issuable as a dividend or distribution on Common Stock;

 

(c) up
to an aggregate of 8,400,000 shares of Common Stock issued or issuable to
employees, directors and consultants of the Company pursuant to an employee
benefit plan approved by the Board of Directors and the shareholders of the Company;

 

2

 

 

(d)
issued or issuable in an underwritten public offering pursuant to registration
under the Securities Act; or

 

(e)
issued solely in connection with the acquisition of assets, capital stock or other
property representing the acquisition of intellectual property, contracts or
other assets of a software business where such Equity Securities and any Equity
Securities issued in any related transactions represent less than 50% of the
Equity Securities of the Company and where the issuance will not result in a
Person, along with such Person’s Associates or Affiliates, beneficially owning
50% or more of the Company’s voting stock.”

 

1.08.       Sections
3.03, 3.04 and 3.05 of the Purchase Agreement shall be amended such that each
shall read in its entirety as follows:

 

“[Reserved]”

 

1.09.       Exhibit
3.01 to the Purchase Agreement shall be replaced with Exhibit 3.01
attached as Exhibit A hereto.  In
connection with the execution of this Amendment No. 2, Purchaser shall
surrender for exchange Warrant W-2 issued on September 20, 2003, to the
Company and the Company at its expense will issue and deliver to the Purchaser
a new Warrant substantially in the form set forth in Exhibit A hereto
for 4,016,518 shares of the Company’s Common Stock.  The Company and the Purchaser agree that any
shares of Common Stock issuable upon the exercise of this Warrant shall be “Warrant
Shares” under the Purchase Agreement.

 

1.10        Section 3.08
of the Purchase Agreement shall be amended such that it shall read in its
entirety as follows:

 

“Right to Sell Securities.  If the
Company or its Subsidiary desire to issue any Equity Securities (other than
Excluded Securities and Private Securities) and such issuance has been approved
by the Company’s Board of Directors, the Company shall first deliver written
notice to each holder of Preferred Shares or Warrant Shares.  The notice must specify: (i) the name and
address of the party to which the Company or subsidiary proposes to issue
Securities, (ii) the Securities proposed to be issued, (iii) the consideration
to be delivered for the proposed issuance and (iv) all other material terms and
conditions of the proposed transaction.  Prior
to the issuance of any Securities by the Company or any Subsidiary (other than
Excluded Securities) to any Person, the Company may, or such Person will, first
make a written offer to each of the holders of the Preferred Shares or Warrant
Shares to purchase all of the Preferred Shares and Warrant Shares held by such
holder to the Company or such Person on the same terms as the proposed issuance
with such offer to be acceptable by the holder of Preferred Shares or Warrant
Shares for a period of not less than twenty (20) business days.  If the Company or the Person has not completed
the purchase of all of the Preferred Shares and Warrant Shares the holders
desire to sell, the Company or 

 

3

 

the
Subsidiary shall not consummate the proposed issuance.  The holders of Preferred Shares and Warrant
Shares shall not be required to provide any indemnification in connection with
the sale of the Preferred Shares or Warrant Shares to the Company or such
Person.”

 

1.11        The
following shall be added as Section 3.09 to the Purchase Agreement:

 

“3.09.  Termination
Upon Qualified IPO.  Each of the
Purchaser’s rights to purchase New Securities set forth in Section 3.07 or
sell its Securities set forth in Section 3.08 shall terminate upon the
earlier to occur of (x) a Qualified IPO or (y) the Company achieving and
maintaining Public Company Status for a period of three consecutive months.”

 

1.12        Section 7.01(m)
of the Purchase Agreement shall be amended such that it shall read in its
entirety as follows:

 

“(m)        Preferred
Stock Subordination Agreement.  Upon
the issuance of any shares of Preferred Stock (other than the Preferred Shares)
having accruing dividends or terms which allow for the redemption of such
stock, the Company shall cause the holders of Preferred Stock to enter into a
subordination agreement (the “Preferred Stock Subordination Agreement”) such
agreement to be in the form of Exhibit 7.01(m) attached hereto.”

 

1.13.       Section 7.02(l)
of the Purchase Agreement shall be amended such that it shall read in its
entirety as follows:

 

“(l)          No Amendment or Waiver of Charter
Documents.  Amend, alter, repeal or terminate its
Certificate of Incorporation (or comparable charter documents), including,
without limitation through any merger certificate of designation, without the
prior written consent of the Purchasers.”

 

1.14.       The
following subparagraph (u) shall be added to Section 7.02 of the Purchase
Agreement:

 

“(u)         Rights
Plan.  The Company shall not amend
the Rights Plan without the prior written consent of the Purchaser
Representative; provided, that the Purchaser Representative hereby
consents to (i) the amendment of the Rights Plan to exempt a third party who
comes to own less than twenty percent (20%) of the Company’s issued and
outstanding shares of capital stock and would otherwise be deemed an Acquiring
Person under the Rights Plan if the Company shall have entered into a
standstill agreement with such third party (or group of affiliated parties)
that provides that such party (or group of affiliated parties) shall not
acquire any further shares of the Company’s capital stock; and (ii) any
amendments required in connection with any merger, consolidation or sale of all
or substantially all of the stock or assets of the Company if the holders of
Series B Convertible Preferred Stock shall have received the payments due to
such stockholders

 

4

 

pursuant
to Section 3A of the certificate of designation setting forth the terms of
the Series B Convertible Preferred Stock.”

 

1.15.       The
first paragraph of Section 7.03 of the Purchase Agreement shall be amended
such that it shall read in its entirety as follows:

 

“7.03.  Reporting
Requirements.  Until the later to
occur of (i) a Qualified IPO and (ii) the repayment in full of the Notes and
all outstanding unpaid interest thereon, the Company will furnish to each
holder of any Note, any Warrant, any Preferred Shares or any Warrant Shares:”

 

1.16         Section 8.01(2)
of the Purchase Agreement shall be amended such that it shall read in its
entirety as follows:

 

“(2)         the Purchasers
may proceed to protect and enforce their rights by suit in equity (including
without limitation a suit for rescission), action at law and/or other
appropriate proceeding either for specific performance of any covenant,
provision or condition contained or incorporated by reference in this Agreement
or any term of the Certificate of Incorporation of the Company, or in aid of
the exercise of any power granted in this Agreement or in the Certificate of
Incorporation of the Company.”

 

2.             Preferred
Stock.

 

In connection with
and in consideration of the execution of this Amendment No. 2., the Company
shall issue to the Purchaser 4,331,540 Preferred Shares.  The Company represents and warrants that when
issued these Preferred Shares will be duly authorized, validly issued and fully
paid and nonassessable.

 

3.             Miscellaneous.

 

3.01.       Effect.  Except as amended by Amendment No. 1 dated September 30,
2003 and hereby, the Purchase Agreement shall remain in full force and effect.

 

3.02.       Waiver.  This Amendment No. 2 is effective only in the
specific instance and for the specific purpose for which it is executed and
shall not be considered a waiver or agreement to amend as to any provision of
the Purchase Agreement in the future.

 

3.03.       Defined
Terms.  All capitalized terms used
but not specifically defined herein shall have the same meanings given such
terms in the Purchase Agreement unless the context clearly indicates or
dictates a contrary meaning.

 

3.04.       Costs,
Expenses, Taxes.  The Company agrees
to pay all costs and expenses of the Purchaser in connection with the
preparation, execution and delivery of this Amendment No. 2 and other
instruments and documents to be delivered hereunder, including the reasonable
fees

 

5

 

and out-of-pocket expenses of the Purchaser and the fees of Testa,
Hurwitz & Thibeault, LLP, special counsel for the Purchaser, with respect
thereto.

 

3.05.       Governing
Law.  This Amendment No. 2 shall be
governed by, and construed and enforced in accordance with, the internal laws
of the Commonwealth of Massachusetts, without regard to conflicts of law
principles.

 

3.06.       Seal.  This Amendment No. 2 is executed as an
instrument under seal.

 

3.07.       Counterparts.  This Amendment No. 2 may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same instrument, and each of the parties hereto may execute this Amendment
No. 2 by signing any of such counterparts.

 

6

 

IN WITNESS
WHEREOF, the parties hereto have executed this Amendment No. 2 as of the date
first above written.

 

	
   

  	
  SOFTBRANDS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David G.
  Latzke

  
	
   

  	
  Name (Printed): David G. Latzke

  
	
   

  	
  Title: Senior Vice President, Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  SOFTBRANDS
  MANUFACTURING, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David G. Latzke

  	
   

  
	
   

  	
  Name (Printed): David G. Latzke

  
	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  SOFTBRANDS
  HOSPITALITY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David G. Latzke

  	
   

  
	
   

  	
  Name (Printed):David G. Latzke

  
	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  SOFTBRANDS
  INTERNATIONAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David G. Latzke

  	
   

  
	
   

  	
  Name (Printed):David G. Latzke

  
	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  SOFTBRANDS
  LICENSING, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David G. Latzke

  	
   

  
	
   

  	
  Name (Printed):David G. Latzke

  
	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SOFTBRANDS
  EUROPE LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David G. Latzke

  	
   

  
	
   

  	
  Name (Printed): David G. Latzke

  
	
   

  	
  Title: Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PURCHASERS:

  
	
   

  	
   

  	
   

  
	
   

  	
  CAPITAL RESOURCE
  PARTNERS IV, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  CRP Partners IV,
  LLC

  
	
   

  	
   

  	
  Its General
  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Alexander S.
  McGrath

  	
   

  
	
   

  	
  Name: Alexander S. McGrath

  
	
   

  	
  Title: Managing Member

  
					

 

7

 

Exhibit A

 

As Amended, Filed as Exhibit 4.9 to Form 10

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