Contract
EXHIBIT
4
EXECUTION COPY
THIS WARRANT WAS ORIGINALLY ISSUED ON AUGUST 17, 2005, AND WAS NOT
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAW. THIS WARRANT AND THE SECURITIES
OBTAINABLE UPON EXERCISE HEREOF MAY NOT BE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAW. THE
TRANSFER OF THIS WARRANT AND THE SECURITIES OBTAINABLE UPON EXERCISE
HEREOF IS SUBJECT TO THE CONDITIONS SET FORTH IN THE SERIES C
CONVERTIBLE PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT DATED AS
OF AUGUST 17, 2005, BETWEEN THE ISSUER (THE “COMPANY”) AND THE OTHER
PARTIES THERETO. THE COMPANY RESERVES THE RIGHT TO REFUSE ANY
TRANSFER OF SUCH SECURITIES UNTIL SUCH CONDITIONS HAVE BEEN
FULFILLED WITH RESPECT TO SUCH TRANSFER. A COPY OF SUCH CONDITIONS
SHALL BE FURNISHED WITHOUT CHARGE TO THE HOLDER HEREOF UPON WRITTEN
REQUEST TO THE COMPANY.
SOFTBRANDS, INC.
STOCK PURCHASE WARRANT
| Date of Issuance: August 17, 2005 | Certificate No. W-1 |
FOR VALUE RECEIVED, SoftBrands, Inc., a Delaware corporation (the “Company”), hereby grants to
ABRY Mezzanine Partners, L.P., a Delaware limited partnership, or its registered assigns (the
“Registered Holder”) the right to purchase from the Company 1,000,000 shares of the Company’s
Common Stock at a price per share equal to $2.11 (as adjusted from time to time hereunder, the
“Exercise Price”). This Warrant is one of several warrants (collectively, the “Warrants”) issued
by the Company to certain investors (the “Investors”) pursuant to the Series C Convertible
Preferred Stock and Warrant Purchase Agreement, dated as of August 17, 2005 (the “Purchase
Agreement”). Certain capitalized terms used herein are defined in Section 5 hereof. The amount
and kind of securities obtainable pursuant to the rights granted hereunder and the purchase price
for such securities are subject to adjustment pursuant to the provisions contained in this Warrant.
This Warrant is subject to the following provisions:
Section 1. Exercise of Warrant.
1A. Exercise Period. The Registered Holder may exercise, in whole or in part (but not
as to a fractional share of Common Stock), the purchase rights represented by this Warrant at any
time and from time to time after the Date of Issuance to and including the 10th anniversary thereof
(the “Exercise Period”). The Company shall give the Registered Holder written notice of the
expiration of the rights hereunder at least 30 days but not more than 90 days prior to the end of
the Exercise Period.
1B. Exercise Procedure.
(i) This Warrant shall be deemed to have been exercised when the Company has received
all of the following items (the “Exercise Time”):
(a) a completed Exercise Agreement, as described in Section 1C below,
executed by the Person exercising all or part of the purchase rights represented by
this Warrant (the “Purchaser”);
(b) this Warrant;
(c) if this Warrant is not registered in the name of the Purchaser, an
Assignment or Assignments in the form set forth in Exhibit II hereto
evidencing the assignment of this Warrant to the Purchaser, in which case the
Registered Holder shall have complied with the provisions set forth in Section
7 hereof in connection with such transfer; and
(d) either (1) a check payable to the Company in an amount equal to the product
of the Exercise Price multiplied by the number of shares of Common Stock being
purchased upon such exercise (the “Aggregate Exercise Price”), or (2) a written
notice to the Company that the Purchaser is exercising the Warrant (or a portion
thereof) by authorizing the Company to withhold from issuance a number of shares of
Common Stock issuable upon such exercise of the Warrant which when multiplied by the
Market Price of the Common Stock is equal to the sum of the Aggregate Exercise Price
plus the aggregate Exercise Price for any such shares of Common Stock requested to
be withheld (and such withheld shares shall no longer be issuable under this
Warrant).
(ii) Certificates for shares of Common Stock purchased upon exercise of this Warrant
shall be delivered by the Company to the Purchaser within five Business Days after the date
of the Exercise Time. Unless this Warrant has expired or all of the purchase rights
represented hereby have been exercised, the Company shall prepare a new Warrant,
substantially identical hereto, representing the rights formerly represented
by this Warrant which have not expired, been withheld or been exercised, and shall
within such five-day period, deliver such new Warrant to the Person designated for delivery
in the Exercise Agreement.
(iii) The Common Stock issuable upon the exercise of this Warrant shall be deemed to
have been issued to the Purchaser at the Exercise Time, and the
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Purchaser shall be deemed
for all purposes to have become the record holder of such Common Stock at the Exercise Time.
(iv) The issuance of certificates for shares of Common Stock upon exercise of this
Warrant shall be made without charge to the Registered Holder or the Purchaser for any
issuance tax in respect thereof if issued to the Registered Holder or other cost incurred by
the Company in connection with such exercise and the related issuance of shares of Common
Stock. Each share of Common Stock issuable upon exercise of this Warrant shall upon payment
of the Exercise Price therefor, be fully paid and nonassessable and free from all liens and
charges with respect to the issuance thereof.
(v) The Company shall not close its books against the transfer of this Warrant or of
any share of Common Stock issued or issuable upon the exercise of this Warrant in any manner
which interferes with the timely exercise of this Warrant. The Company shall from time to
time take all such action as may be necessary to assure that the par value per share of the
unissued Common Stock acquirable upon exercise of this Warrant is at all times equal to or
less than the Exercise Price then in effect.
(vi) The Company shall reasonably assist and cooperate with any Registered Holder or
Purchaser required to make any governmental filings or obtain any governmental approvals
prior to or in connection with any exercise of this Warrant (including, without limitation,
making any filings required to be made by the Company, but excluding the filing of any
registration statement with the Securities and Exchange Commission, other than any
registration statement which the Company is contractually or otherwise required to file).
(vii) Notwithstanding any other provision hereof, if an exercise of any portion of this
Warrant is to be made in connection with a registered public offering or the sale of the
Company, the exercise of any portion of this Warrant may, at the election of the holder
hereof, be conditioned upon the consummation of the public offering or sale of the Company
in which case such exercise shall not be deemed to be effective until the consummation of
such transaction.
(viii) The Company shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock solely for the purpose of issuance upon the exercise of
the Warrants, such number of shares of Common Stock issuable upon the exercise of all
outstanding Warrants. All shares of Common Stock which are so issuable shall, when issued
against payment of the Aggregate Exercise Price therefor, be duly and validly issued, fully
paid and nonassessable and free from all taxes, liens and charges. The Company shall take
all such actions as may be reasonably necessary to assure that all such shares of Common
Stock may be so issued without violation of any
applicable law or governmental regulation or any requirements of any domestic
securities exchange upon which shares of Common Stock may be listed (except for official
notice of issuance which shall be immediately delivered by the Company upon each such
issuance, and excluding the filing of any registration statement, other than any
registration statement with the Securities and Exchange Commission which the Company is
contractually or otherwise required to file). The Company shall not take any action
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which
would cause the number of authorized but unissued shares of Common Stock to be less than the
number of such shares required to be reserved hereunder for issuance upon exercise of the
Warrants.
1C. Exercise Agreement. Upon any exercise of this Warrant, the Exercise Agreement
shall be substantially in the form set forth in Exhibit I hereto, except that if the shares
of Common Stock are not to be issued in the name of the Registered Holder of this Warrant, the
Exercise Agreement shall also state the name of the Person to whom the certificates for the shares
of Common Stock are to be issued, and if the number of shares of Common Stock to be issued does not
include all the shares of Common Stock purchasable hereunder, it shall also state the name of the
Person to whom a new Warrant for the unexercised portion of the rights hereunder is to be
delivered, and shall, unless such transfer or assignment of shares or this Warrant has been
registered under applicable securities laws, be accompanied by an opinion of counsel reasonably
satisfactory to the Company that such transfer may be made without such registration. Such
Exercise Agreement shall be dated the actual date of execution thereof.
1D. Fractional Shares. If a fractional share of Common Stock would, but for the
provisions of Section 1A, be issuable upon exercise of the rights represented by this
Warrant, the Company shall, unless prohibited by any agreement to which the Company is a party,
within five Business Days after the date of the Exercise Time, deliver to the Purchaser a check
payable to the Purchaser in lieu of such fractional share in an amount equal to the difference
between Market Price of such fractional share as of the date of the Exercise Time and the Exercise
Price of such fractional share.
Section 2. Adjustment of Exercise Price and Number of Shares. In order to prevent
dilution of the rights granted under this Warrant, the Exercise Price shall be subject to
adjustment from time to time as provided in this Section 2, and the number of shares of
Common Stock obtainable upon exercise of this Warrant shall be subject to adjustment from time to
time as provided in this Section 2.
2A. Adjustment of Exercise Price and Number of Shares upon Issuance of Common Stock.
(i) If and whenever after the Date of Issuance of this Warrant, the Company issues or
sells, or in accordance with Section 2B is deemed to have issued or
sold, any share of Common Stock for a consideration per share less than (x) eighty
percent (80%) of the Market Price of the Common Stock at such time or (y) the Exercise Price
in effect immediately prior to such time (the greater of such amounts being referred to
herein as, the “Adjustment Multiplier”), then immediately upon such issue or sale or deemed
issue or sale, the Exercise Price shall be reduced to the Exercise Price determined by
multiplying (x) the Exercise Price in effect immediately prior to such issue or sale by (y)
the quotient obtained by dividing (i) the sum of (A) the product determined by multiplying
the Adjustment Multiplier by the number of shares of Common Stock Deemed Outstanding
immediately prior to such issue or sale, plus (B) the consideration, if any, received by the
Company upon such issue or sale, by (ii) the product determined by multiplying the
Adjustment Multiplier by the number of shares of Common Stock Deemed Outstanding immediately
after such issue or sale. Upon each such adjustment of
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the Exercise Price hereunder, the
number of shares of Common acquirable upon exercise of this Warrant shall be adjusted to the
number of shares determined by multiplying the Exercise Price in effect immediately prior to
such adjustment by the number of shares of Common Stock acquirable upon exercise of this
Warrant immediately prior to such adjustment and dividing the product thereof by the
Exercise Price resulting from such adjustment.
(ii) Notwithstanding the foregoing, there shall be no adjustment to the Exercise Price
or the number of shares of Common Stock obtainable upon exercise of this Warrant with
respect to a Permitted Issuance.
2B. Effect on Exercise Price of Certain Events. For purposes of determining the
adjusted Exercise Price under Section 2A, the following shall be applicable:
(i) Issuance of Rights or Options. If the Company in any manner grants or
sells any Options and the price per share for which Common Stock is issuable upon the
exercise of such Options, or upon conversion or exchange of any Convertible Securities
issuable upon exercise of such Options, is less than the Adjustment Multiplier, then the
total maximum number of shares of Common Stock issuable upon the exercise of such Options or
upon conversion or exchange of the total maximum amount of such Convertible Securities
issuable upon the exercise of such Options shall be deemed to be outstanding and to have
been issued and sold by the Company at the time of the granting or sale of such Options for
such price per share. For purposes of this paragraph, the “price per share for which Common
Stock is issuable” shall be determined by dividing (A) the total amount, if any, received or
receivable by the Company as consideration for the granting or sale of such Options, plus
the minimum aggregate amount of additional consideration payable to the Company upon
exercise of all such Options, plus in the case of such Options which relate to Convertible
Securities, the minimum aggregate amount of additional consideration, if any, payable to the
Company upon the issuance or sale of such Convertible Securities and the conversion or
exchange thereof, by (B) the total maximum number of shares of Common Stock issuable upon
the exercise of such Options or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such Options. No further adjustment of the
Exercise Price or the
number of shares of Common Stock issuable hereunder shall be made when Convertible
Securities are actually issued upon the exercise of such Options or when Common Stock is
actually issued upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.
(ii) Issuance of Convertible Securities. If the Company in any manner issues
or sells any Convertible Securities and the price per share for which Common Stock is
issuable upon conversion or exchange thereof is less than the Adjustment Multiplier, then
the maximum number of shares of Common Stock issuable upon conversion or exchange of such
Convertible Securities shall be deemed to be outstanding and to have been issued and sold by
the Company the time of the issuance or sale of such Convertible Securities for such price
per share. For the purposes of this paragraph, the “price per share for which Common Stock
is issuable” shall be determined by dividing (A) the total amount received or receivable by
the Company as consideration for the issue
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or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any, payable to the Company upon
the conversion or exchange thereof, by (B) the total maximum number of shares of Common
Stock issuable upon the conversion or exchange of all such Convertible Securities. No
further adjustment of the Exercise Price or the number of shares of Common Stock issuable
hereunder shall be made when Common Stock is actually issued upon the conversion or exchange
of such Convertible Securities, and if any such issue or sale of such Convertible Securities
is made upon exercise of any Options for which adjustments of the Exercise Price or the
number of shares of Common Stock issuable hereunder had been or are to be made pursuant to
other provisions of this Section 2, no further adjustment of the Exercise Price or
the number of shares of Common Stock issuable hereunder shall be made by reason of such
issue or sale.
(iii) Change in Option Price or Conversion Rate. If, in the case of Options
and Convertible Securities issued on or after the Date of Issuance, the purchase price
provided for in any such Options, the additional consideration, if any, payable upon the
conversion or exchange of any such Convertible Securities or the rate at which any such
Convertible Securities are convertible into or exchangeable for Common Stock changes at any
time, the Exercise Price in effect at the time of such change shall be immediately adjusted
to the Exercise Price which would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed purchase price,
additional consideration or conversion rate, as the case may be, at the time initially
granted, issued or sold, and the number of shares of Common Stock issuable hereunder shall
be correspondingly adjusted. For purposes of Section 2B, if the terms of any Option
or Convertible Security which was outstanding as of the Date of Issuance are changed in the
manner described in the immediately preceding sentence, then such Option or Convertible
Security and the Common Stock deemed issuable upon exercise, conversion or exchange thereof
shall be deemed to have been issued as of the date of such change.
(iv) Treatment of Expired Options and Unexercised Convertible Securities. Upon
the expiration of any Option or the termination of any right to convert or exchange any
Convertible Security without the exercise of any such Option or right,
the Exercise Price then in effect hereunder shall be adjusted immediately to the
Exercise Price which would have been in effect at the time of such expiration or termination
had such Option or Convertible Security, to the extent outstanding immediately prior to such
expiration or termination, never been issued, and the number of shares of Common Stock
issuable hereunder shall be correspondingly adjusted. For purposes of Section 2B,
the expiration or termination of any Option or Convertible Security which was outstanding as
of the Date of Issuance shall not cause the Exercise Price or the number of shares Common
Stock issuable hereunder to be adjusted unless, and only to the extent that, a change in the
terms of such Option or Convertible Security caused it to be deemed to have been issued
after the Date of Issuance.
(v) Calculation of Consideration Received. If any Common Stock, Option or
Convertible Security is issued or sold or deemed to have been issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received by
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the Company
therefor (net of discounts, commissions and related expenses). If any Common Stock, Option
or Convertible Security is issued or sold for a consideration other than cash, the amount of
the consideration other than cash received by the Company shall be the fair value of such
consideration, except where such consideration consists of securities, in which case the
amount of consideration received by the Company shall be the Market Price thereof as of the
date of receipt. If any Common Stock, Option or Convertible Security is issued to the
owners of the non-surviving entity in connection with any merger in which the Company is the
surviving corporation, the amount of consideration therefor shall be deemed to be the fair
value of such portion of the net assets and business of the non-surviving entity as is
attributable to such Common Stock, Option or Convertible Security, as the case may be. The
fair value of any consideration other than cash and securities shall be reasonably
determined by the Board of Directors of the Company in good faith; provided,
however, that in the event any Common Stock, Options or Convertible Securities are
issued or sold or deemed to be issued or sold and such Common Stock, Options or Convertible
Securities represent (on an as-converted basis) greater than 10% of the Common Stock Deemed
Outstanding, then the fair value of such Common Stock, Options or Convertible Securities, as
the case may be, shall be the fair value determined by the Board of Directors of the Company
in good faith; provided that the Company shall notify the Registered Holder of such
determination in writing and such Registered Holder may, within five (5) Business Days of
such notification, advise the Company that it disputes fair value. If such parties are
unable to reach agreement within a reasonable period of time after notification of such
disputed valuation, such fair value shall be determined by an independent appraiser
experienced in valuing such type of consideration jointly selected by the Company and the
Registered Holder. The determination of such appraiser shall be final and binding upon the
parties, and the fees and expenses of such appraiser shall be borne equally by the Company,
on the one hand, and the Registered Holder and the other holders of Warrants disputing such
fair value, on the other hand.
(vi) Integrated Transactions. In case any Option is issued in connection with
the issue or sale of other securities of the Company, together comprising one integrated
transaction in which no specific consideration is allocated to such Option by the parties
thereto, the consideration for the Option shall be the Market Price thereof.
(vii) Treasury Shares. The number of shares of Common Stock outstanding at any
given time shall not include shares owned or held by or for the account of the Company or
any Subsidiary, and the disposition of any shares so owned or held shall be considered an
issue or sale of Common Stock.
(viii) Record Date. If the Company takes a record of the holders of Common
Stock for the purpose of entitling them (a) to receive a dividend or other distribution
payable in Common Stock, Options or in Convertible Securities or (b) to subscribe for or
purchase Common Stock, Options or Convertible Securities, then such record date shall be
deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been
issued or sold upon the declaration of such dividend or upon the making of such other
distribution or the date of the granting of such right of subscription or purchase, as the
case may be.
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2C. Subdivision or Combination of Common Stock. If the Company at any time subdivides
(by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect
immediately prior to such subdivision shall be proportionately reduced and the number of shares of
Common Stock obtainable upon exercise of this Warrant shall be proportionately increased (and any
other appropriate actions shall be taken by the Company) so that the holder of any Warrant
thereafter surrendered for exercise (without actually requiring this Warrant to be exercised and
without regard to any limitations on exercise set forth in this Warrant or otherwise) shall be
entitled to receive the number of shares of Common Stock or other securities of the Company that
such holder would have owned or would have been entitled to receive upon or by reason of the events
described above, had such Warrant been exercised immediately (without actually requiring this
Warrant to be exercised and without regard to any limitations on exercise set forth in this Warrant
or otherwise) prior to the occurrence of such event. If the Company at any time combines (by
reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock
into a smaller number of shares, the Exercise Price in effect immediately prior to such combination
shall be proportionately increased and the number of shares of Common Stock obtainable upon
exercise of this Warrant (without actually requiring this Warrant to be exercised and without
regard to any limitations on exercise set forth in this Warrant or otherwise) shall be
proportionately decreased (and any other appropriate actions shall be taken by the Company) so that
the holder of any Warrant thereafter surrendered for exercise shall be entitled to receive the
number of shares of Common Stock or other securities of the Company that such holder would have
owned or would have been entitled to receive upon or by reason of the events described above, had
such Warrant been exercised immediately (without actually requiring this Warrant to be exercised
and without regard to any limitations on exercise set forth in this Warrant or otherwise) prior to
the occurrence of such event.
2D. Reorganization, Reclassification, Consolidation, Merger or Sale. Any
recapitalization, reorganization, reclassification, consolidation, merger, sale of all or
substantially all of the Company’s assets or other transaction, in each case which is effected in
such a manner that the holders of Common Stock are entitled to receive (either
directly or upon subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock, is referred to herein as an “Organic Change.” Prior to the consummation
of any Organic Change, the Company shall make appropriate provisions (in form and substance
satisfactory to the Registered Holder) to insure that each of the holders of the Warrants shall
thereafter have the right to acquire and receive, in lieu of or in addition to (as the case may be)
the shares of Common Stock immediately theretofore acquirable and receivable upon the exercise of
such holder’s Warrant, such shares of stock, securities or assets as such holder would have
received in connection with such Organic Change if such holder had exercised its Warrant (without
actually requiring this Warrant to be exercised and without regard to any limitations on exercise
set forth in this Warrant or otherwise) immediately prior to such Organic Change. In each such
case, the Company shall also make appropriate provisions (in form and substance satisfactory to the
Registered Holder) to insure that the provisions of this Section 2 and Sections 3
and 4 hereof shall thereafter be applicable to the Warrants (including, in the case of any
such consolidation, merger or sale in which the successor entity or purchasing entity is other than
the Company, an immediate adjustment of the Exercise Price to the value for the Common Stock
reflected by the terms of such consolidation, merger or sale, and a corresponding immediate
adjustment in the
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number of shares of Common Stock acquirable and receivable upon exercise of the
Warrants, if the value so reflected is less than the Exercise Price in effect immediately prior to
such consolidation, merger or sale). The Company shall not effect any such consolidation, merger
or sale, unless prior to the consummation thereof, the successor entity (if other than the Company)
resulting from consolidation or merger or the entity purchasing such assets assumes by written
instrument (in form and substance satisfactory to the Registered Holder), the obligation to deliver
to each such holder such shares of stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to acquire.
2E. Certain Distributions. In case the Company shall at any time or from time to
time, prior to exercise of this Warrant, distribute to all holders of shares of the Common Stock
(including any such distribution made in connection with a merger or consolidation in which the
Company is the resulting or surviving Person and the Common Stock is not changed or exchanged)
cash, evidences of indebtedness of the Company or another issuer, securities of the Company or
another issuer or other assets (excluding dividends payable in shares of Common Stock for which
adjustment is made under another paragraph of this Section 2, any distribution in
connection with a Permitted Issuance and any Liquidating Dividend) or rights or warrants to
subscribe for or purchase of any of the foregoing, then, and in each such case, the Exercise Price
then in effect shall be adjusted (and any other appropriate actions shall be taken by the Company)
by multiplying the Exercise Price in effect immediately prior to the date of such distribution by a
fraction (x) the numerator of which shall be the Market Price of the Common Stock immediately prior
to the date of distribution less the then fair market value (as determined by the Board of
Directors in the exercise of their fiduciary duties) of the portion of the cash, evidences of
indebtedness, securities or other assets so distributed or of such rights or warrants applicable to
one share of Common Stock and (y) the denominator of which shall be the Market Price of the Common
Stock immediately prior to the date of distribution (but such fraction shall not be greater than
one); provided, however, that no adjustment shall be made with respect to any
distribution of rights or warrants to subscribe for or purchase securities of the Company if the
holder of this Warrant would otherwise be entitled to receive such rights or warrants upon
exercise at any time of Warrants into Common Stock. Such adjustment shall be made whenever
any such distribution is made and shall become effective retroactively to a date immediately
following the close of business on the record date for the determination of stockholders entitled
to receive such distribution.
2F. Certain Events. If any event occurs of the type contemplated by the provisions of
this Section 2 but not expressly provided for by such provisions (including, without
limitation, the granting of stock appreciation rights, phantom stock rights or other rights with
equity features), then the Company’s Board of Directors shall make an appropriate adjustment in the
Exercise Price and the number of shares of Common Stock obtainable upon exercise of this Warrant so
as to protect the rights of the holders of the Warrants; provided that no such adjustment
shall increase the Exercise Price as otherwise determined pursuant to this Section 2 or
decrease the number of shares of Common Stock obtainable as otherwise determined pursuant to this
Section 2.
2G. Notices.
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(i) Immediately upon any adjustment of the Exercise Price, the Company shall give
written notice thereof to the Registered Holder, setting forth in reasonable detail and
certifying the calculation of such adjustment.
(ii) The Company shall give written notice to the Registered Holder at least 20 days
prior to the date on which the Company closes its books or takes a record (A) with respect
to any dividend or distribution upon the Common Stock, (B) with respect to any pro rata
subscription offer to holders of Common Stock or (C) for determining rights to vote with
respect to any Organic Change, dissolution or liquidation.
(iii) The Company shall also give written notice to the Registered Holders at least 20
days prior to the date on which any Organic Change, dissolution or liquidation shall take
place.
Section 3. Liquidating Dividends. If the Company declares or pays a dividend upon the
Common Stock payable otherwise than in cash out of earnings or earned surplus (determined in
accordance with generally accepted accounting principles, consistently applied) except for a stock
dividend payable in shares of Common Stock (a “Liquidating Dividend”), then the Company shall pay
to the Registered Holder of this Warrant at the time of payment thereof the Liquidating Dividend
which would have been paid to such Registered Holder on the Common Stock had this Warrant been
fully exercised (without actually requiring this Warrant to be exercised and without regard to any
limitations on exercise set forth in this Warrant or otherwise) immediately prior to the date on
which a record is taken for such Liquidating Dividend, or, if no record is taken, the date as of
which the record holders of Common Stock entitled to such dividends are to be determined.
Section 4. Purchase Rights. If at any time the Company grants, issues or sells any Options, Convertible Securities or
rights (including any Rights) to purchase stock, warrants, securities or other property pro rata to
the record holders of any class of Common Stock (the “Purchase Rights”), then the Registered holder
of this Warrant shall be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which such holder could have acquired if such holder had held the
number of shares of Common Stock acquirable upon complete exercise of this Warrant immediately
before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights,
or, if no such record is taken, the date as of which the record holders of Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights.
Section 5. Definitions. The following terms have meanings set forth below:
“Business Day” means any day other than a Saturday, Sunday, or any day on which banks
in New York City are authorized or obligated by applicable law to close.
“Common Stock” means, collectively, the Company’s Common Stock, par value $0.01 per
share (and any associated Rights) and any capital stock of any class of the Company hereafter
authorized which is not limited to a fixed sum or percentage of par or stated value in respect to
the rights of the holders thereof to participate in dividends or in the distribution of assets upon
any liquidation, dissolution or winding up of the Company.
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“Common Stock Deemed Outstanding” means at any given time, the number of shares of
Common Stock actually outstanding at such time, plus the number of shares of Common Stock issuable
upon exercise of Options outstanding at such time or upon conversion of Convertible Securities
(including the Series C Preferred Stock and this Warrant) outstanding at such time.
“Convertible Securities” means any stock or securities (directly or indirectly)
convertible into or exchangeable for Common Stock.
“Market Price” of any security means the average of the closing prices of such
security’s sales on all securities exchanges on which such security may at the time be listed, or,
if there has been no sales on any such exchange on any day, the average of the highest bid and
lowest asked prices on all such exchanges at the end of such day, or, if on any day such security
is not so listed, the average of the representative bid and asked prices quoted in the NASDAQ
System as of 4:00 P.M., New York time, or, if on any day such security is not quoted in the NASDAQ
System, the average of the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case (i) averaged over a period of 30 days consisting of the
day as of which “Market Price” is being determined and the 29 consecutive Business Days prior to
such day, and (ii) averaged on a volume-weighted basis based on the trading volume for each such
Business Day. If at any time such security is not listed on any securities exchange or quoted in
the NASDAQ System or the over-the-counter market, the “Market Price” shall be the fair value
thereof determined by the Board of Directors of the
Company in good faith; provided that the Company shall notify the Registered Holder of
such determination in writing and such Registered Holder may, within five (5) Business Days of such
notification, advise the Company that it disputes fair value. If such parties are unable to reach
agreement within a reasonable period of time after notification of such disputed valuation, such
fair value shall be determined by an independent appraiser experienced in valuing securities
jointly selected by the Company and the Registered Holder. The determination of such appraiser
shall be final and binding upon the parties, and the fees and expenses of such appraiser shall be
borne equally by the Company, on the one hand, and the Registered Holder and the other holders of
Warrants disputing such fair value, on the other hand.
“Options” means any rights, warrants or options to subscribe for or purchase Common
Stock or Convertible Securities.
“Permitted Issuance” means (i) the granting of Options to purchase Common Stock, or
other stock-based benefits, to employees, directors or consultants of the Company or the exercise
thereof, pursuant to any reservation under any employee benefit plan to the extent and as in effect
on the date of this Warrant, or approved thereafter by the Board of Directors and stockholders of
the Company, including the holders of at least a majority of the Common Stock issuable upon
exercise of the Warrants issued under the Purchase Agreement, (ii) the issuance of Common Stock
upon conversion of the Series C Preferred Stock or Series B Preferred Stock, (iii) the issuance of
Common Stock pursuant to the exercise of Options, Convertible Securities or other rights to acquire
Common Stock that are outstanding on the date of this Warrant, (iv) shares of Common Stock, or
Options or Convertible Securities to purchase shares of Common Stock, issued or issuable by reason
of a dividend, stock split, split-up or other distribution on
11
shares of Common Stock, or a
recapitalization, to the extent covered by Subsection 2C, 2D, 3 or 4 above, (v) shares of
Common Stock, or Options or Convertible Securities to purchase shares of Common Stock, issued or
issuable to banks, equipment lessors or other financial institutions, or to real property lessors,
pursuant to a debt financing, equipment leasing or real property leasing transaction approved by
the Board of Directors of the Company in an aggregate amount not to exceed 1% of the Common Stock
Deemed Outstanding as of the date hereof, (vi) the issuance of shares of Common Stock, or Options
or Convertible Securities to purchase shares of Common Stock, in licensing or collaborative
arrangements, or in strategic partnerships, to the other party to such arrangement or partnership
in connection with the licensing of technology approved by the Board of Directors of the Company in
an aggregate amount not to exceed 1% of the Common Stock Deemed Outstanding as of the date hereof,
and (viii) the issuance of Common Stock, or Options or Convertible Securities to purchase shares of
Common Stock, in connection with any acquisition or merger to the extent approved by the Board of
Directors, including the ABRY Director (as defined in the Purchase Agreement) to the seller in such
acquisition or merger.
“Person” means any corporation, individual, limited liability company, joint stock
company, joint venture, partnership, unincorporated association, governmental regulatory entity,
country, state or political subdivision thereof, trust, municipality or other entity.
“Right” has that meaning set forth in that certain Rights Agreement dated as of
November 27, 2002, by and between the Company and Xxxxx Fargo Bank Minnesota, National Association,
as Rights Agent, as amended, restated or modified from time to time.
“Series C Preferred Stock Certificate of Designations” means the Certificate of
Designations designating the rights and preferences of the Series C Preferred Stock adopted by the
Board of Directors.
Other capitalized terms used in this Warrant but not defined herein shall have the meanings
set forth in the Purchase Agreement.
Section 6. No Voting Rights; Limitations of Liability. This Warrant shall not entitle
the holder hereof to any voting rights or other rights as a stockholder of the Company. No
provision hereof, in the absence of affirmative action by the Registered Holder to purchase Common
Stock, and no enumeration herein of the rights or privileges of the Registered Holder shall give
rise to any liability of such holder for the Exercise Price of Common Stock acquirable by exercise
hereof or as a stockholder of the Company.
Section 7. Warrant Transfer. Neither this Warrant, nor the shares of Common Stock
issued upon exercise of this Warrant, may be transferred except pursuant to registration under the
Securities Act of 1933, as amended, or an opinion of counsel reasonably acceptable to the Company
that such registration is not required. Subject to such transfer conditions, this Warrant and all
rights hereunder are transferable, in whole or in part, without charge to the Registered Holder,
upon surrender of this Warrant with a properly executed Assignment (in the form of Exhibit
II hereto) at the principal office of the Company.
Section 8. Warrant Exchangeable for Different Denominations. This Warrant is
exchangeable, upon the surrender hereof by the Registered Holder at the principal office of the
12
Company, for new Warrants of like tenor representing in the aggregate the purchase rights
hereunder, and each of such new Warrants shall represent such portion of such rights as is
designated by the Registered Holder at the time of such surrender. The date the Company initially
issues this Warrant shall be deemed to be the “Date of Issuance” hereof regardless of the number of
times new certificates representing the unexpired and unexercised rights formerly represented by
this Warrant shall be issued. All Warrants representing portions of the rights hereunder are
referred to herein as the “Warrants.”
Section 9. Replacement. Upon receipt of evidence reasonably satisfactory to the
Company (an affidavit of the Registered Holder shall be satisfactory) of the ownership and the
loss, theft, destruction or mutilation of any certificate evidencing the Warrant, and in the case
of any such loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the
Company (provided that if the holder is a financial institution or other institutional investor its
own agreement shall be satisfactory), or, in the case of any such mutilation upon surrender of such
certificate, the Company shall (at its expense) execute and deliver in lieu of such certificate a
new certificate of like kind representing the number of Warrants of such class represented by such
lost, stolen,
destroyed or mutilated certificate and dated the date of such lost, stolen, destroyed or
mutilated certificate.
Section 10. Notices. Except as otherwise expressly provided hereunder, all notices
referred to herein shall be in writing and shall be delivered by registered or certified mail,
return receipt requested and postage prepaid, or by reputable overnight courier service, charges
prepaid, and shall be deemed to have been given when so mailed or sent (i) to the Company, at its
principal executive offices and (ii) to any Registered Holder, at such holder’s address as it
appears in the stock records of the Company (unless otherwise indicated by any such holder).
Section 11. Amendment and Waiver. Except as otherwise provided herein, the provisions
of this Warrant may be amended and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company has obtained the written
consent of the Registered Holder of this Warrant.
Section 12. Descriptive Headings; Governing Law. The descriptive headings of the
several Sections and paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. The corporation laws of the State of Delaware shall govern all
issues concerning the relative rights of the Company and its Stockholders. All other questions
concerning the construction, validity, enforcement and interpretation of this Warrant shall be
governed by the internal law of the State of Delaware, without giving effect to any choice of law
or conflict of law provision or rule (whether of the State of Delaware or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the State of Delaware.
* * * * * *
13
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and attested by its duly
authorized officers under its corporate seal and to be dated the Date of Issuance hereof.
| SOFTBRANDS, INC. | ||||||
| By | ||||||
| Its | ||||||
[Corporate Seal]
| Attest: | ||||
Title: |
||||
EXHIBIT I
EXERCISE AGREEMENT
To:
|
Dated: |
The undersigned, pursuant to the provisions set forth in the attached Warrant (Certificate No.
W-[ ]), hereby agrees to subscribe for the purchase of shares of the Common Stock covered by
such Warrant and makes payment herewith in full therefor at the price per share provided by such
Warrant.
| Signature | ||||||
| Address | ||||||
EXHIBIT II
ASSIGNMENT
FOR VALUE RECEIVED, hereby sells, assigns and transfers all of
the rights of the undersigned under the attached Warrant (Certificate No. W-[ ]) with respect to
the number of shares of the Common Stock covered thereby set forth below, unto:
| Names of Assignee | Address | No. of Shares | ||
| Signature | ||||||||
| Witness | ||||||||
