-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Gxs/9ow5rCx5cSA2EHUjuKnqy6AAnFD4KaLeNVYe+pPXlT9E96qjRzLPmkoGMZ/P HUo/XFqZ9eNWPd6v7I3gfA== 0001193125-10-022293.txt : 20100204 0001193125-10-022293.hdr.sgml : 20100204 20100204172529 ACCESSION NUMBER: 0001193125-10-022293 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20100204 DATE AS OF CHANGE: 20100204 GROUP MEMBERS: CCG OPERATIONS, LLC GROUP MEMBERS: CCP A, L.P. GROUP MEMBERS: JOSE E. FELICIANO GROUP MEMBERS: STEVEN C. CHANG SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: Purple Communications, Inc. CENTRAL INDEX KEY: 0001101268 STANDARD INDUSTRIAL CLASSIFICATION: RADIO TELEPHONE COMMUNICATIONS [4812] IRS NUMBER: 223693371 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-60637 FILM NUMBER: 10575010 BUSINESS ADDRESS: STREET 1: 773 SAN MARIN DRIVE STREET 2: SUITE 2210 CITY: NOVATO STATE: CA ZIP: 94945 BUSINESS PHONE: 415-408-2300 MAIL ADDRESS: STREET 1: 773 SAN MARIN DRIVE STREET 2: SUITE 2210 CITY: NOVATO STATE: CA ZIP: 94945 FORMER COMPANY: FORMER CONFORMED NAME: GOAMERICA INC DATE OF NAME CHANGE: 19991220 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Clearlake Capital Partners, LLC CENTRAL INDEX KEY: 0001409591 IRS NUMBER: 208563474 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 650 MADISON AVENUE 23RD FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 212-610-9000 MAIL ADDRESS: STREET 1: 650 MADISON AVENUE 23RD FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 SC 13D/A 1 dsc13da.htm AMENDMENT NO.3 TO SCHEDULE 13D Amendment No.3 to Schedule 13D

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No. 3)*

 

 

PURPLE COMMUNICATIONS, INC.

(Name of Issuer)

 

 

Common Stock, par value $0.01 per share

(Title of Class of Securities)

380 20R 30 4

(CUSIP Number)

CCP A, L.P.

650 Madison Avenue, 23rd Floor

New York, NY 10022

Attn: Jose E. Feliciano

Tel: (212) 610-9129

with a copy to:

Melainie K. Mansfield, Esq.

Milbank, Tweed, Hadley & McCloy, LLP

601 S. Figueroa Street, 30th Floor

Los Angeles, CA 90017

Tel: (213) 892-4000

(Name, Address and Telephone Number of Person Authorized to

Receive Notices and Communications)

December 14, 2009

(Date of Event Which Requires Filing of this Statement)

 

 

If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. ¨

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

 

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 

 

 

 

CUSIP No. 380 20R 30 4

 

  1   

Name of Reporting Person

S.S. or I.R.S. Identification No. of Above Person

 

CCP A, L.P.

  2  

Check the Appropriate Box if a Member of a Group (See Instructions)

 

(a)  ¨        

(b)  x

  3  

SEC Use Only

 

  4  

Source of Funds (See Instructions)

 

WC

  5  

Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e)

 

¨

  6  

Citizenship or Place of Organization

 

Delaware

Number of

Shares

Beneficially

Owned by

Each

Reporting

Person

With

      7    

Sole Voting Power

 

145,229,092 shares (1)

     8   

Shared Voting Power

 

0

     9   

Sole Dispositive Power

 

145,229,092 shares (1)

   10   

Shared Dispositive Power

 

0

11

  

Aggregate Amount Beneficially Owned by Each Reporting Person

 

145,229,092 shares (1)

12

  

Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)

 

¨

13

  

Percent of Class Represented by Amount in Row (11)

 

93.1% (2)

14

  

Type of Reporting Person (See Instructions)

 

PN

 

(1)

Includes 297,585 shares of Common Stock, 7,456,480 shares of Series A Preferred Stock, 3,333,333 shares of Series B Preferred Stock, and warrants to purchase 66,666,660 shares of Common Stock of the Issuer. The Series A Preferred Stock accrues a cumulative dividend of 8% per annum. The Series B Preferred Stock accrues a cumulative dividend of 12% per annum. In the event that there are any accrued dividends that have not been paid in cash upon the conversion of the Series A Preferred Stock or Series B Preferred Stock into Common Stock, the holder of the Series A Preferred Stock or Series B Preferred Stock being converted is entitled to receive a number of additional shares of Common Stock equal to such accrued but unpaid dividends divided by the then-applicable conversion price (as of December 23, 2009, 44,885,497 shares of Common Stock for conversion of all of the Series A Preferred Stock and 33,379,350 shares of Common Stock for conversion of all of the Series B Preferred Stock).

(2)

Based on 9,218,542 shares of Common Stock outstanding on December 14, 2009 as set forth in the Issuer’s definitive information statement filed with the Securities and Exchange Commission on January 21, 2010.

 

1

 

CUSIP No. 380 20R 30 4

 

  1   

Name of Reporting Person

S.S. or I.R.S. Identification No. of Above Person

 

Clearlake Capital Partners, LLC

  2  

Check the Appropriate Box if a Member of a Group (See Instructions)

 

(a)  ¨

(b)  x

  3  

SEC Use Only

 

  4  

Source of Funds (See Instructions)

 

AF, WC

  5  

Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e)

 

¨

  6  

Citizenship or Place of Organization

 

Delaware

Number of

Shares

Beneficially

Owned by

Each

Reporting

Person

With

      7    

Sole Voting Power

 

0

     8   

Shared Voting Power

 

146,990,019 shares (1)

     9   

Sole Dispositive Power

 

0

   10   

Shared Dispositive Power

 

146,990,019 shares (1)

11

  

Aggregate Amount Beneficially Owned by Each Reporting Person

 

146,990,019 shares (1)

12

  

Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)

 

¨

13

  

Percent of Class Represented by Amount in Row (11)

 

94.3% (2)

14

  

Type of Reporting Person (See Instructions)

 

HC, IA

 

(1)

Includes 297,585 shares of Common Stock, 7,456,480 shares of Series A Preferred Stock, 3,333,333 shares of Series B Preferred Stock, warrants to purchase 66,666,660 shares of Common Stock of the Issuer, 280,464 shares of Series A Preferred Stock held directly by Clearlake Capital Partners I Co-Investment Fund, LLC (f/k/a Clearlake Capital GoAmerica Coinvestment, LLC) (“Clearlake Coinvestment”), 37,500 shares of Common Stock issuable upon exercise of stock options that were granted to Mr. Chang in his capacity as director of the Company and that were issued to Clearlake Capital Partners, LLC at Mr. Chang’s request, and 37,500 shares of Common Stock issuable upon exercise of stock options were granted to Behdad Eghbali in his capacity as director of the Company and that were issued to Clearlake Capital Partners, LLC at Mr. Eghbali’s request. The Series A Preferred Stock accrues a cumulative dividend of 8% per annum. The Series B Preferred Stock accrues a cumulative dividend of 12% per annum. In the event that there are any accrued dividends that have not been paid in cash upon the conversion of the Series A Preferred Stock or Series B Preferred Stock into Common Stock, the holder of the Series A Preferred Stock or Series B Preferred Stock being converted is entitled to receive a number of additional shares of Common Stock equal to such accrued but unpaid dividends divided by the then-applicable conversion price (as of December 23, 2009, 46,571,424 shares of Common Stock for conversion of all of the Series A Preferred Stock and 33,379,350 shares of Common Stock for conversion of all of the Series B Preferred Stock).

(2)

Based on 9,218,542 shares of Common Stock outstanding on December 14, 2009 as set forth in the Issuer’s definitive information statement filed with the Securities and Exchange Commission on January 21, 2010.

 

2

 

CUSIP No. 380 20R 30 4

 

  1   

Name of Reporting Person

S.S. or I.R.S. Identification No. of Above Person

 

CCG Operations, LLC

  2  

Check the Appropriate Box if a Member of a Group (See Instructions)

 

(a)  ¨        

(b)  x

  3  

SEC Use Only

 

  4  

Source of Funds (See Instructions)

 

AF, WC

  5  

Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e)

 

¨

  6  

Citizenship or Place of Organization

 

Delaware

Number of

Shares

Beneficially

Owned by

Each

Reporting

Person

With

      7    

Sole Voting Power

 

0

     8   

Shared Voting Power

 

146,990,019 shares (1)

     9   

Sole Dispositive Power

 

0

   10   

Shared Dispositive Power

 

146,990,019 shares (1)

11

  

Aggregate Amount Beneficially Owned by Each Reporting Person

 

146,990,019 shares (1)

12

  

Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)

 

¨

13

  

Percent of Class Represented by Amount in Row (11)

 

94.3% (2)

14

  

Type of Reporting Person (See Instructions)

 

HC, OO

 

(1)

Includes 297,585 shares of Common Stock, 7,456,480 shares of Series A Preferred Stock, 3,333,333 shares of Series B Preferred Stock, warrants to purchase 66,666,660 shares of Common Stock of the Issuer, 280,464 shares of Series A Preferred Stock held directly by Clearlake Capital Partners I Co-Investment Fund, LLC (f/k/a Clearlake Capital GoAmerica Coinvestment, LLC) (“Clearlake Coinvestment”), 37,500 shares of Common Stock issuable upon exercise of stock options that were granted to Mr. Chang in his capacity as director of the Company and that were issued to Clearlake Capital Partners, LLC at Mr. Chang’s request, and 37,500 shares of Common Stock issuable upon exercise of stock options were granted to Behdad Eghbali in his capacity as director of the Company and that were issued to Clearlake Capital Partners, LLC at Mr. Eghbali’s request. The Series A Preferred Stock accrues a cumulative dividend of 8% per annum. The Series B Preferred Stock accrues a cumulative dividend of 12% per annum. In the event that there are any accrued dividends that have not been paid in cash upon the conversion of the Series A Preferred Stock or Series B Preferred Stock into Common Stock, the holder of the Series A Preferred Stock or Series B Preferred Stock being converted is entitled to receive a number of additional shares of Common Stock equal to such accrued but unpaid dividends divided by the then-applicable conversion price (as of December 23, 2009, 46,571,424 shares of Common Stock for conversion of all of the Series A Preferred Stock and 33,379,350 shares of Common Stock for conversion of all of the Series B Preferred Stock).

(2)

Based on 9,218,542 shares of Common Stock outstanding on December 14, 2009 as set forth in the Issuer’s definitive information statement filed with the Securities and Exchange Commission on January 21, 2010.

 

3

 

CUSIP No. 380 20R 30 4

 

  1   

Name of Reporting Person

S.S. or I.R.S. Identification No. of Above Person

 

Steven C. Chang

  2  

Check the Appropriate Box if a Member of a Group (See Instructions)

 

(a)  ¨        

(b)  x

  3  

SEC Use Only

 

  4  

Source of Funds (See Instructions)

 

WC, AF

  5  

Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e)

 

¨

  6  

Citizenship or Place of Organization

 

United States

Number of

Shares

Beneficially

Owned by

Each

Reporting

Person

With

      7    

Sole Voting Power

 

0

     8   

Shared Voting Power

 

146,990,019 shares (1)

     9   

Sole Dispositive Power

 

0

   10   

Shared Dispositive Power

 

146,990,019 shares (1)

11

  

Aggregate Amount Beneficially Owned by Each Reporting Person

 

146,990,019 shares (1)

12

  

Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)

 

¨

13

  

Percent of Class Represented by Amount in Row (11)

 

94.3% (2)

14

  

Type of Reporting Person (See Instructions)

 

IN, HC

 

(1)

Includes 297,585 shares of Common Stock, 7,456,480 shares of Series A Preferred Stock, 3,333,333 shares of Series B Preferred Stock, warrants to purchase 66,666,660 shares of Common Stock of the Issuer, 280,464 shares of Series A Preferred Stock held directly by Clearlake Capital Partners I Co-Investment Fund, LLC (f/k/a Clearlake Capital GoAmerica Coinvestment, LLC) (“Clearlake Coinvestment”), 37,500 shares of Common Stock issuable upon exercise of stock options that were granted to Mr. Chang in his capacity as director of the Company and that were issued to Clearlake Capital Partners, LLC at Mr. Chang’s request, and 37,500 shares of Common Stock issuable upon exercise of stock options were granted to Behdad Eghbali in his capacity as director of the Company and that were issued to Clearlake Capital Partners, LLC at Mr. Eghbali’s request. The Series A Preferred Stock accrues a cumulative dividend of 8% per annum. The Series B Preferred Stock accrues a cumulative dividend of 12% per annum. In the event that there are any accrued dividends that have not been paid in cash upon the conversion of the Series A Preferred Stock or Series B Preferred Stock into Common Stock, the holder of the Series A Preferred Stock or Series B Preferred Stock being converted is entitled to receive a number of additional shares of Common Stock equal to such accrued but unpaid dividends divided by the then-applicable conversion price (as of December 23, 2009, 46,571,424 shares of Common Stock for conversion of all of the Series A Preferred Stock and 33,379,350 shares of Common Stock for conversion of all of the Series B Preferred Stock).

(2)

Based on 9,218,542 shares of Common Stock outstanding on December 14, 2009 as set forth in the Issuer’s definitive information statement filed with the Securities and Exchange Commission on January 21, 2010.

 

4

 

CUSIP No. 380 20R 30 4

 

  1   

Name of Reporting Person

S.S. or I.R.S. Identification No. of Above Person

 

Jose E. Feliciano

  2  

Check the Appropriate Box if a Member of a Group (See Instructions)

 

(a)  ¨        

(b)  x

  3  

SEC Use Only

 

  4  

Source of Funds (See Instructions)

 

WC, AF

  5  

Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e)

 

¨

  6  

Citizenship or Place of Organization

 

United States

Number of

Shares

Beneficially

Owned by

Each

Reporting

Person

With

      7    

Sole Voting Power

 

0

     8   

Shared Voting Power

 

146,990,019 shares (1)

     9   

Sole Dispositive Power

 

0

   10   

Shared Dispositive Power

 

146,990,019 shares (1)

11

  

Aggregate Amount Beneficially Owned by Each Reporting Person

 

146,990,019 shares (1)

12

  

Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)

 

¨

13

  

Percent of Class Represented by Amount in Row (11)

 

94.3% (2)

14

  

Type of Reporting Person (See Instructions)

 

IN, HC

 

(1)

Includes 297,585 shares of Common Stock, 7,456,480 shares of Series A Preferred Stock, 3,333,333 shares of Series B Preferred Stock, warrants to purchase 66,666,660 shares of Common Stock of the Issuer, 280,464 shares of Series A Preferred Stock held directly by Clearlake Capital Partners I Co-Investment Fund, LLC (f/k/a Clearlake Capital GoAmerica Coinvestment, LLC) (“Clearlake Coinvestment”), 37,500 shares of Common Stock issuable upon exercise of stock options that were granted to Mr. Chang in his capacity as director of the Company and that were issued to Clearlake Capital Partners, LLC at Mr. Chang’s request, and 37,500 shares of Common Stock issuable upon exercise of stock options were granted to Behdad Eghbali in his capacity as director of the Company and that were issued to Clearlake Capital Partners, LLC at Mr. Eghbali’s request. The Series A Preferred Stock accrues a cumulative dividend of 8% per annum. The Series B Preferred Stock accrues a cumulative dividend of 12% per annum. In the event that there are any accrued dividends that have not been paid in cash upon the conversion of the Series A Preferred Stock or Series B Preferred Stock into Common Stock, the holder of the Series A Preferred Stock or Series B Preferred Stock being converted is entitled to receive a number of additional shares of Common Stock equal to such accrued but unpaid dividends divided by the then-applicable conversion price (as of December 23, 2009, 46,571,424 shares of Common Stock for conversion of all of the Series A Preferred Stock and 33,379,350 shares of Common Stock for conversion of all of the Series B Preferred Stock).

(2)

Based on 9,218,542 shares of Common Stock outstanding on December 14, 2009 as set forth in the Issuer’s definitive information statement filed with the Securities and Exchange Commission on January 21, 2010.

 

5

Introductory Statement

This Amendment No. 3 (this “Amendment”) supplements, pursuant to Rule 13d-2(a), the Schedule 13D (as amended on October 15, 2007 and January 10, 2008 the “Schedule 13D”) of CCP A, L.P. (“CCP A”), Clearlake Capital Partners, LLC (“Clearlake Capital Partners”), CCG Operations, LLC (“CCG Operations”), Steven C. Chang and José E. Feliciano filed with the Securities and Exchange Commission on August 1, 2007. This Amendment relates to the Common Stock, par value $0.01 per share (the “Common Stock”) of Purple Communications, Inc. (“Purple” or “Issuer”). The principal executive offices of the Issuer are 773 San Marin Drive, Suite 2210, Novato, CA 94945.

Items  3, 4, 5 and 6 of Schedule 13D are hereby amended and supplemented as follows:

 

Item 3. Source and Amount of Funds or Other Consideration.

On December 14, 2009, the Issuer entered into a stock purchase arrangement with CCP A (as amended from time to time, the “Series B Preferred Stock Purchase Agreement”). On December 14, 2009, pursuant to the Series B Preferred Stock Purchase Agreement, the Issuer issued to CCP A 1,333,333 shares of Series B Preferred Stock for an aggregate purchase price of $1,999,999.50 and warrants to purchase 26,666,660 shares of Common Stock with an exercise price of $0.15 per share of Common Stock. On December 22, 2009, pursuant to the Series B Preferred Stock Purchase Agreement, the Issuer issued to CCP A 2,000,000 shares of Series B Preferred Stock for an aggregate purchase price of $3,000,000.00 and warrants to purchase 40,000,000 shares of Common Stock with an exercise price of $0.15 per share of Common Stock. The funds for such purchases were obtained from the working capital of CCP A. A copy of the Series B Preferred Stock Purchase Agreement is attached to this Amendment as Exhibit 7.15. A copy of the warrant issued to CCP A on December 14, 2009 is attached to this Amendment as Exhibit 7.16. A copy of the warrant issued to CCP A on December 22, 2009 is attached to this Amendment as Exhibit 7.17.

 

Item 4. Purpose of Transaction.

The proceeds of the Series B Preferred Stock acquired by CCP A on December 15, 2009 and December 22, 2009, were used, in part, for general working capital purposes of the Issuer.

The Reporting Persons acquired the Series B Preferred Stock for investment purposes. They intend to monitor and evaluate their investment in the Series B Preferred Stock on a continuing basis. The Reporting Persons may, however, at any time and from time to time in their discretion, review or reconsider their position with respect to the Series B Preferred Stock and any such matters. In addition to the additional investments identified above, the Reporting Persons retain the right to (a) change their investment intent, (b) make further acquisitions of the Series B Preferred Stock and/or Common Stock from one or more sellers in the open market or otherwise, (c) dispose of all or a portion of the Issuer’s Series B Preferred Stock and/or Common Stock in the open market or otherwise, (d) acquire or dispose of beneficial ownership of other securities of the Issuer, (e) review the performance of the Issuer with the Issuer’s management and/or board of directors, (f) communicate with other stockholders of the Issuer, and/or (g) take any other action with respect to the Issuer, its stockholders or any of the Issuer’s debt or equity securities, including, but not limited to, the Series B Preferred Stock and Common Stock, in any manner permitted by law.

Currently, the Issuer has an insufficient number of authorized shares of Common Stock to permit the conversion in full of the Series B Preferred Stock and to permit the exercise in full of the warrants to be issued in connection with the Series B Preferred Stock Purchase Agreement. However, CCP A, as the

 

6

majority shareholder of the Issuer, has agreed to the authorization of the increase of the number of authorized shares of Common Stock to permit the conversion in full of the Series B Preferred Stock and to permit the exercise in full of the warrants. CCP A currently expects that the increase in the number of authorized shares of Common Stock will occur promptly following the filing and mailing of the definitive information statement filed with the Securities and Exchange Commission on January 21, 2010.

 

Item 5. Interest in Securities of the Issuer.

Based upon information provided by the Issuer, as of December 15, 2009, there were 9,218,542 shares of Common Stock issued and outstanding. As of the date of this Amendment, CCP A directly holds (1) a total of 297,585 shares of Common Stock (2) warrants to purchase 66,666,660 shares of Common Stock, (3) 7,456,480 shares of Series A Preferred Stock, and (4) 3,333,333 shares of Series B Preferred Stock. In addition, Clearlake Coinvestment holds 280,464 shares of Series A Preferred Stock, and Clearlake Capital Partners, LLC holds options exercisable for 75,000 shares of Common Stock. The Series A Preferred Stock accrues a cumulative cash dividend of 8% per annum. The Series B Preferred Stock accrues a cumulative cash dividend of 12% per annum. In the event that there are any accrued dividends that have not been paid in cash upon the conversion of the Series A Preferred Stock or Series B Preferred Stock into Common Stock, the holder of the Series A Preferred Stock or Series B Preferred Stock being converted is entitled to receive a number of additional shares of Common Stock equal to such accrued but unpaid dividends divided by the then-applicable conversion price (as of December 23, 2009, 46,571,424 shares of Common Stock for conversion of all of the Series A Preferred Stock and 33,379,350 shares of Common Stock for conversion of all of the Series B Preferred Stock).

Thus, as of the date of this Amendment, for the purposes of Reg. Section 240.13d-3, CCP A may be deemed to beneficially own approximately 145,229,092 shares of Common Stock, or 93.1% of the shares of Common Stock deemed issued and outstanding as of that date, and the other Reporting Persons may be deemed to beneficially own approximately 146,990,019 shares of Common Stock, or 94.3% of the shares of Common Stock deemed issued and outstanding as of that date.

Since the filing of Amendment No. 2 to the Schedule 13D as of January 10, 2008, the only transaction relating to Common Stock, or securities convertible into, exercisable for or exchangeable for shares of Common involving any Reporting Persons, which was not effected in an ordinary brokerage transaction, was the transaction (1) on December 14, 2009, pursuant to the Series B Preferred Stock Purchase Agreement, whereby the Issuer issued to CCP A 1,333,333 shares of Series B Preferred Stock for an aggregate purchase price of $1,999,999.50 and warrants to purchase 26,666,660 shares of Common Stock at a per share price of $0.15 and (2) on December 22, 2009, pursuant to the Series B Preferred Stock Purchase Agreement, whereby the Issuer issued to CCP A 2,000,000 shares of Series B Preferred Stock for an aggregate purchase price of $3,000,000.00 and warrants to purchase 40,000,000 shares of Common Stock at a per share price of $0.15.

 

Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.

Other than as set forth herein or in the Series B Preferred Stock Purchase Agreement (as shown on Exhibit 7.15), which are incorporated herein by reference, the Reporting Persons have no plans or proposals that relate to or would result in any of the events set forth in Item 4 of this Schedule 13D.

 

7

Series B Stock Purchase Agreement

On December 14, 2009, the Issuer entered into the Series B Preferred Stock Purchase Agreement with CCP A. On December 14, 2009, under the Series B Preferred Stock Purchase Agreement, CCP A purchased a total of 1,333,333 shares of Series B Preferred Stock at a price of $1.50 per share and was issued warrants to purchase an aggregate of 26,666,660 shares of Common Stock, with an exercise price of $0.15 per share of Common Stock. On December 22, 2009, under the Series B Preferred Stock Purchase Agreement, CCP A purchased a total of 2,000,000 shares of Series B Preferred Stock at a price of $1.50 per share and was issued warrants to purchase an aggregate of 40,000,000 shares of Common Stock, with an exercise price of $0.15 per share of Common Stock.

December 14, 2009 Warrant

Pursuant to the Common Stock Warrant, dated December 14, 2009, the Issuer granted CCP A the right to purchase 26,666,660 shares of Common Stock at a price of $0.15 per share.

December 22, 2009 Warrant

Pursuant to the Common Stock Warrant, dated December 22, 2009, the Issuer granted CCP A the right to purchase 40,000,000 shares of Common Stock at a price of $0.15 per share.

 

Item 7. Material to be Filed as Exhibits.

 

Exhibit 7.15    Series B Preferred Stock Purchase Agreement, dated as of December 14, 2009
Exhibit 7.16    Common Stock Warrant, dated December 14, 2009
Exhibit 7.17    Common Stock Warrant, dated December 22, 2009

 

8

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth herein is true, complete and correct.

 

Date: February 4, 2010     CCP A, L.P., a Delaware limited partnership
    By: Clearlake Capital Partner, LLC
    Its: General Partner
    By: CCG Operations, LLC
    Its: Managing Member
    Clearlake Capital Partner, LLC
    By: CCG Operations, LLC
    Its: Managing Member
    CCG Operations, LLC
    Each of the above by:
      By:   /s/    BEHDAD EGHBALI        
      Name:   Behdad Eghbali
      Title:   Authorized Person
      By:   /s/    STEVEN CHANG        
      Name:   Steven Chang
      By:   /s/    JOSE FELICIANO        
      Name:   Jose Feliciano
 EX-7.15 2 dex715.htm SERIES B PREFERRED STOCK PURCHASE AGREEMENT, DATED AS OF DECEMBER 14, 2009 Series B Preferred Stock Purchase Agreement, dated as of December 14, 2009

Exhibit 7.15

SERIES B PREFERRED STOCK PURCHASE AGREEMENT

THIS SERIES B PREFERRED STOCK PURCHASE AGREEMENT (this “Agreement”) is made as of December 14, 2009, by and between Purple Communications, Inc., a Delaware corporation (the “Company”), and the investors listed on Schedule A hereto (each, an “Investor” and collectively, the “Investors”).

THE PARTIES HEREBY AGREE AS FOLLOWS:

1. Purchase and Sale of Stock.

1.1 Sale and Issuance of Series B Preferred Stock.

(a) The Board of Directors of the Company has approved and shall file with the Secretary of State of the State of Delaware on or before the Closing (as defined below), a Certificate of Designations, Preferences and Rights of Series B Preferred Stock in the form attached hereto as Exhibit A-1 (the “Certificate of Designations”).

(b) The Board of Directors of the Company has authorized, subject to the receipt of all necessary stockholder approvals and the filing of the Certificate of Amendment (as defined below), (i) the sale and issuance to the Investors of the Series B Preferred Stock (as defined below), (ii) the issuance of the shares of Common Stock (as defined below) to be issued upon conversion of the Series B Preferred Stock (the “Conversion Shares”), (iii) the sale and issuance to the Investors of the Warrants (as defined below), and (iv) the issuance of the shares of Common to be issued upon exercise of the Warrants (the “Warrant Shares”). The Series B Preferred Stock, the Conversion Shares and the Warrant Shares shall have the rights, preferences, privileges and restrictions set forth in the Certificate of Designations or the Fourth Amended and Restated Certificate of Incorporation of the Company, as applicable.

(c) Subject to the terms and conditions of this Agreement, each Investor agrees, severally and not jointly, to purchase at the Closing (as defined below) and the Company agrees to sell and issue to each Investor at the Closing, that number of shares of the Company’s Series B Preferred Stock set forth opposite each Investor’s name on Part I of Schedule A hereto for a purchase price of $1.50 per share (the “Per Share Price”).

(d) Subject to the terms and conditions of this Agreement, each Investor agrees, severally and not jointly, to purchase at the Subsequent Closing (as defined below) and the Company agrees to sell and issue to each Investor at the Subsequent Closing, that number of shares of the Company’s Series B Preferred Stock set forth opposite each Investor’s name on Part II of Schedule A hereto for a purchase price of the Per Share Price.

1.2 Closing and Subsequent Closing. Assuming that all other conditions of Closing have been satisfied or waived, the purchase and sale of the Series B Preferred Stock to be sold at the Closing pursuant to Section 1.1(c) shall take place at the offices of Stradling Yocca Carlson & Rauth, 660 Newport Center Drive, Suite 1600, Newport Beach, CA 92660 at 10:00 am on December 14, 2009 or at such other time and place as the Company and Investors acquiring in the aggregate more than half of the shares of Series B Preferred Stock sold pursuant hereto mutually agree upon orally or in writing (which time and place are designated as the “Closing”). At the

Closing, the Company shall deliver to each Investor a certificate representing the Series B Preferred Stock that such Investor is purchasing against payment of the purchase price therefor by wire transfer of immediately available funds to an account designated by the Company.

Assuming that all conditions of the Subsequent Closing have been satisfied or waived, the purchase and sale of the Series B Preferred Stock to take place at the Subsequent Closing shall take place at the offices of Stradling Yocca Carlson & Rauth, 660 Newport Center Drive, Suite 1600, Newport Beach, CA 92660 at 10:00 am on December 18, 2009 or at such other time and place as the Company and Investors acquiring in the aggregate more than half of the shares of Series B Preferred Stock sold pursuant hereto mutually agree upon orally or in writing (which time and place are designated as the “Subsequent Closing”). At the Subsequent Closing, the Company shall deliver to each Investor a certificate representing the Series B Preferred Stock that such Investor is purchasing at the Subsequent Closing against payment of the purchase price therefor by wire transfer of immediately available funds to an account designated by the Company.

1.3 Use of Proceeds. The Company shall use the proceeds from the sale of the Series B Preferred Stock to the Investors (a) to pay all fees and expenses incurred in connection with the issuance of the Series B Preferred Stock (including, without limitation, the fees and expenses of the Investors) and (b) for general working capital purposes.

1.4 Warrants. Concurrently with the Closing and, as applicable, the Subsequent Closing, the Company shall issue to each Investor a warrant (a “Warrant”) to purchase two (2) shares of Common Stock of the Company for each share of Common Stock into which the Series B Preferred Stock purchased by such Investor hereunder is initially convertible. The Warrant shall be in the form of agreement attached hereto as Exhibit A-3.

2. Representations and Warranties of the Company. The Company hereby represents and warrants to each Investor that, except as set forth in the SEC Reports (as defined below) or in the Disclosure Letter (the “Disclosure Letter”) furnished to each Investor prior to execution hereof, which exceptions shall be deemed to be representations and warranties as if made hereunder:

2.1 Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a material adverse change in the assets, liabilities, customer or supplier relationships, financial condition, operations or results of operations of the Company taken as a whole, provided, however, in each case, not including any change that (A) is generally applicable to the U.S. economy, (B) is generally applicable to Internet protocol data and voice providers, (C) results from the execution of this Agreement, the announcement of this Agreement or the consummation of the transactions contemplated by this Agreement or (D) relates to changes in generally accepted accounting principles generally applicable to companies serving as Internet protocol data and voice providers occurring after the date of this Agreement (a “Material Adverse Effect”).

 

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2.2 Capitalization and Voting Rights.

(a) Authorized Stock. The authorized capital of the Company consists of:

(i) Preferred Stock. 11,671,180 shares of Preferred Stock, par value $.01 per share (the “Preferred Stock”), 7,736,944 of which are designated as Series A Preferred Stock, all of which are issued and outstanding as of the date hereof. Upon filing the Certificate of Designations with the Secretary of State of the State of Delaware, 3,333,333 shares of Preferred Stock shall be designated Series B Preferred Stock, all of which may be sold pursuant to this Agreement. As of the date of the Subsequent Closing, the only shares of Series B Preferred Stock issued and outstanding are the shares issued to the Investors pursuant hereto on the date of the Closing.

(ii) Common Stock. 50,000,000 shares of Common Stock, par value $.01 per share (“Common Stock”), of which 9,218,542 shares are issued and outstanding as of the date hereof.

(b) Valid Issuance. The outstanding shares of Common Stock are all duly and validly authorized and issued, fully paid and nonassessable, and were issued in compliance with all applicable state and federal laws concerning the issuance of securities.

(c) Rights to Acquire. Except for (i) options to purchase an aggregate of 2,252,351 shares of Common Stock granted and outstanding under the Purple Relay Services Co.. 1999 Stock Option Plan, the Purple Communications, Inc. 1999 Stock Plan, the Purple Communications, Inc. Employee Stock Purchase Plan and the Purple Communications, Inc. 2005 Equity Compensation Plan (collectively, the “Company Option Plans”), and (ii) the Warrants, there are not outstanding any options, warrants, rights (including conversion or preemptive rights) or agreements for the purchase or acquisition from the Company of any shares of its capital stock as of the date hereof. The Company has reserved a total of 3,409,055 shares of Common Stock for issuance under the Company Option Plans (including the shares described above).

(d) Voting of Shares. Other than the Amended and Restated Investor Rights Agreement dated January 10, 2008 between the Company and the investors named therein (the “Investor Rights Agreement”), the Company is not a party or subject to any agreement or understanding and, to the Company’s knowledge, there is no agreement or understanding between any persons and/or entities which affects or relates to the voting or giving of written consents with respect to any security of the Company.

2.3 Operating Subsidiaries.

(a) Schedule B hereto sets forth the name of each operating subsidiary of the Company (each, an “Operating Subsidiary” and collectively, the “Operating Subsidiaries”) and the jurisdiction in which such Operating Subsidiary is incorporated. Each Operating Subsidiary is a duly organized and validly existing corporation or other entity and has all requisite corporate power and authority to carry on its business as now conducted. Each Operating Subsidiary is duly qualified to transact business and is in good standing in each jurisdiction in which the failure so to qualify would have a Material Adverse Effect.

(b) All of the outstanding shares of capital stock of each Operating Subsidiary of the Company are duly and validly authorized and issued, fully paid and non-assessable and are owned directly by the Company, free and clear of all liens, encumbrances, preemptive rights, subscription rights, other rights to purchase, voting or transfer restrictions and other claims, except as set forth in or contemplated by the First Lien Credit Agreement and the Second Lien Credit Agreement. There are no outstanding rights, warrants or options to acquire, or instruments convertible into or exchangeable for, any equity interests of any Operating Subsidiary.

 

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Each subsidiary of the Company that is not an Operating Subsidiary (i) has consolidated gross revenues for the period of four fiscal consecutive quarters most recently ended of less than $5,000, (ii) has consolidated total assets on the last day of the fiscal quarter most recently ended of less than $5,000 and (iii) does not own or possess the right to use any Intellectual Property Rights or other assets that are material to the business of the Company and its subsidiaries, taken as a whole. For purposes of this Agreement, the terms “subsidiary” and “subsidiaries” of any person means any corporation, partnership, joint venture, limited liability company, association or other legal entity of which such person (either alone or through or together with any other subsidiary), owns, directly or indirectly, 50% or more of the stock or other equity interests the holder of which is generally entitled to vote for the election of the board of directors or other governing body of such corporation, partnership, joint venture, limited liability company, association or other legal entity.

2.4 Authorization. Other than the completion of the Information Statement Process, the filing of the Certificate of Designations and the Certificate of Amendment with the Secretary of State of the State of Delaware and filings required under federal and state securities laws, all corporate action on the part of the Company, its directors and stockholders necessary for the authorization, execution and delivery by the Company of this Agreement and the Warrants, the performance of all obligations of the Company hereunder and thereunder, and the authorization, sale, issuance and delivery of the Series B Preferred Stock and Warrants being sold hereunder, the Conversion Shares issuable upon conversion of the Series B Preferred Stock and the Warrant Shares issuable upon exercise of the Warrants has been taken or will be taken prior to the Closing or, in respect of the Series B Preferred Stock, Warrants, Conversion Shares and Warrant Shares to be issued or issuable at the Subsequent Closing, the Subsequent Closing. This Agreement and, when executed, the Warrants, constitute valid and legally binding obligations of the Company, enforceable in accordance with their respective terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

2.5 Valid Issuance of Preferred Stock. Other than the completion of the Information Statement Process, the filing of the Certificate of Designations and the Certificate of Amendment with the Secretary of State of the State of Delaware, (A) the Series B Preferred Stock that is being purchased by the Investors hereunder, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, will be duly and validly issued, fully paid and nonassessable and will be free of restrictions on transfer, other than restrictions on transfer (a) under this Agreement and the Investor Rights Agreement, if applicable, (b) under applicable state and federal securities laws and (c) otherwise imposed as a result of actions taken by the Investors; and (B) the Conversion Shares and Warrant Shares have been duly and validly reserved for issuance and, upon issuance in accordance with the terms of the Restated Certificate of Incorporation of the Company, as amended by the Certificate of Amendment, will be duly and validly issued, fully paid and nonassessable and will be free of restrictions on transfer, other than restrictions on transfer (a) under this Agreement and the Investor Rights Agreement, if applicable, (b) under applicable state and federal securities laws and (c) otherwise imposed as a result of actions taken by the Investors.

 

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2.6 Governmental Consents. No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority on the part of the Company is required in connection with the consummation of the transactions contemplated by this Agreement, except for (i) such consents, approvals, orders, authorizations, registrations, qualifications, designations, declarations or filings which are not required to be obtained prior to the Closing and such consents, approvals, orders, authorizations, registrations, qualifications, designations, declarations or filings which are not required to be obtained prior to the Subsequent Closing, (ii) the filing of the Certificate of Designations and the Certificate of Amendment with the Secretary of State of the State of Delaware, and (iii) such filings as are required pursuant to applicable federal and state securities laws and blue sky laws, which filings will be effected within the required statutory period.

2.7 Offering. Subject in part to the truth and accuracy of each Investor’s representations set forth in Section 3 of this Agreement, the offer, sale and issuance of the Series B Preferred Stock, the Warrants, the Conversion Shares and the Warrant Shares as contemplated by this Agreement are exempt from the registration requirements of the Securities Act of 1933, as amended (the “Act”), and the qualification or registration requirements of applicable state blue sky laws, as such registration requirements and laws currently exist. Neither the Company nor any authorized agent acting on its behalf will take any action hereafter that would cause the loss of such exemption.

2.8 Litigation. There is no action, suit, proceeding or investigation pending or, to the Company’s knowledge, currently threatened against the Company that questions the validity of this Agreement or the Warrants, or the right of the Company to enter into such agreements or to consummate the transactions contemplated hereby, or that would reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect or in any change in the current equity ownership of the Company. Neither the Company nor any Operating Subsidiary is a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality.

2.9 Intellectual Property. Except as would not have a Material Adverse Effect:

(a) To its knowledge, the Company and each Operating Subsidiary owns sufficient right, title and interest in and to, or has sufficient right to use pursuant to a valid license, option, assignment or agreement, all of the Intellectual Property Rights (as defined below) used by them and which the Company believes are necessary for the operation of the business of the Company and each Operating Subsidiary as presently conducted, and the lack of which would conflict with or infringe the rights of any third party, except for such items as have yet to be conceived or developed or that are expected to be available for licensing on reasonable terms. The Company and each Operating Subsidiary has taken reasonable actions to maintain and protect the confidentiality of Intellectual Property Rights consisting of trade secrets that it owns. The Intellectual Property Rights that the Company or any Operating Subsidiary owns, consisting of patents, copyrights, trademarks, service marks and trade names, do not, to the Company’s knowledge, conflict with or infringe upon the rights of third parties, except for such items as have yet to be conceived or developed or that are expected to be available for licensing on reasonable terms. Since January 1, 2009, there have been no written claims made against the Company or any subsidiary asserting the invalidity, misuse or unenforceability of any Intellectual Property Rights that the Company or any subsidiary owns and, to the Company’s knowledge, there are no valid grounds for the same. Since January 1, 2009, neither the Company nor any subsidiary has received any communications alleging that the Company or any subsidiary has violated, infringed or

 

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misappropriated any Intellectual Property Rights of any other person or entity. To the Company’s knowledge, neither the Company nor any subsidiary is violating, infringing or misappropriating the Intellectual Property Rights of any other person or entity. Since January 1, 2009, to the Company’s knowledge, no third party has interfered with, infringed upon, violated, misappropriated, or otherwise come into conflict with any of the Company’s or any of its Operating Subsidiary’s Intellectual Property Rights, or of any right of any third party (to the extent licensed by or through the Company or its Operating Subsidiaries), or breached any license or agreement involving Intellectual Property Rights. Except as set forth on the Disclosure Letter, the Company has not brought any action, suit or proceeding or asserted any claim against any person or entity related to the foregoing. The Company is not aware that any of its employees is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with the use of his or her best efforts to promote the interests of the Company or that would prevent the employee from assigning his/her inventions to the Company.

(b) Neither the execution nor delivery of this Agreement or the Warrants, nor the carrying on of the Company’s business by the employees of the Company, nor the employment of any employee of the Company, will, to the Company’s knowledge, conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant or instrument under which any of such employees is now obligated, including but not limited to, any employment contract, patent disclosure agreement, confidentiality agreement or any other contract or agreement relating to the relationship of any such employee with the Company.

(c) For purposes of this Agreement, “Intellectual Property Rights” means all (i) patents, patent applications, patent disclosures and inventions, (ii) trademarks, service marks, trade names, logos and corporate names and registrations and applications for registration thereof, (iii) copyrights (registered and unregistered) and copyrightable works and registrations and applications for registration thereof, (iv) mask works and registrations and applications for registration thereof, (v) computer software, data, databases and documentation thereof, (vi) trade secrets and other confidential information (including, without limitation, ideas, formulas, compositions, inventions (whether patentable or unpatentable and whether or not reduced to practice), know-how, manufacturing and production processes and techniques, research and development information, drawings, specifications, designs, plans, proposals, technical data, financial and marketing plans and customer and supplier lists and information) and (vii) other intellectual property rights. As used in this Agreement, the phrases “to the Company’s knowledge” and “the Company is not aware” or any similar expression or phrase refers to the actual knowledge of the executive officers of the Company (and does not include any constructive or imputed notice of any information).

2.10 Compliance with Other Instruments. The Company is not in violation of any provision of its certificate of incorporation or Bylaws. Neither the Company nor any of its subsidiaries is in violation of any instrument, judgment, order, writ, decree or contract, statute, rule or regulation to which the Company or any subsidiary is subject and a violation of which would reasonably be expected to result in a Material Adverse Effect. The execution, delivery and performance of this Agreement and the Warrants, and the consummation of the transactions contemplated hereby and thereby will not result in any such violation, or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any such provision, instrument, judgment, order, writ, decree or contract or an event that results in the creation of any lien, charge or encumbrance upon any assets of the Company or any subsidiary or the

 

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suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to the Company or any subsidiary, their business or operations or any of their assets or properties, other than conflicts, defaults or other results which would not reasonably be expected to result in a Material Adverse Effect.

2.11 Agreements; Action.

(a) Except for agreements explicitly contemplated hereby, there are no agreements, written or oral, between the Company and any subsidiary and any of their officers, directors or affiliates.

(b) There are no agreements, understandings, instruments, contracts, proposed transactions, judgments, orders, writs or decrees to which the Company or any subsidiary is a party or by which any of them is bound that may involve the license of any Intellectual Property Rights or other proprietary right to or from the Company (other than licenses entered into in the ordinary course of business).

(c) There are no agreements, commitments, understandings, instruments, contracts, proposed transactions, judgments, orders, writs or decrees to which the Company or any subsidiary is a party or by which they are bound that may involve (i) obligations (contingent or otherwise), or payments to the Company or any subsidiary, in excess of $250,000, other than obligations of, or payments to, the Company or any subsidiary arising from agreements entered into in the ordinary course of business, or (ii) provisions materially restricting the development, manufacture or distribution of the Company’s products or services (collectively, “Material Contracts”). The Material Contracts are valid and in full force and effect as to the Company and any Operating Subsidiary, and, to the Company’s knowledge, to the other parties thereto.

(d) With the exception of (i) indebtedness of the Company and its subsidiaries under that certain Credit Agreement dated as of January 10, 2008, as amended from time to time (the “Second Lien Credit Agreement”) by and among the Company, Clearlake Capital Group, LP, as Administrative Agent and Collateral Agent and the Lenders party thereto, and (ii) the indebtedness of the Company and its subsidiaries under that certain Credit Agreement dated as of January 10, 2008, as amended from time to time (the “First Lien Credit Agreement”) by and among the Company, Churchill Financial LLC, as Administrative Agent and Ableco Finance LLC, as Collateral Agent (the First Lien Credit Agreement and the Second Lien Credit Agreement, collectively, the “Debt Financings”), neither the Company nor any subsidiary has outstanding any indebtedness for money borrowed (which, for clarity, the parties agree does not include accounts payables or other trade payables, capital leases or accrued expenses) in excess of $250,000 or, in the case of indebtedness for money borrowed individually less than $250,000, in excess of $5,000,000 in the aggregate, other than liabilities incurred in the ordinary course of business.

(e) For the purposes of subsections (a) and (b) above, all indebtedness, liabilities, agreements, understandings, instruments, contracts and proposed transactions involving the same person or entity (including persons or entities the Company has reason to believe are affiliated therewith) shall be aggregated for the purpose of meeting the individual minimum dollar amounts of such subsections.

2.12 Related Party Transactions. Since the filing of the last SEC Report (as defined below), there have been no related party transactions that would be required to be disclosed in the SEC Reports pursuant to Item 404(a) of the SEC’s Regulation S-K that have not been so disclosed in the SEC Reports.

 

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2.13 SEC Filings; Financial Statements.

(a) Except for its Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, the Company has timely filed all reports and proxy statements (including all information incorporated therein, amendments and supplements thereto) required to be filed by the Company with the Securities and Exchange Commission (the “SEC”) since January 1, 2009 (all reports filed by the Company under the Securities Exchange Act of 1934, and the applicable rules and regulations promulgated thereunder since January 1, 2009, including any amendments thereto, collectively, the “SEC Reports”). As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Exchange Act of 1934, and the applicable rules and regulations promulgated thereunder. As of the time of filing with the SEC, none of the SEC Reports so filed contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(b) The audited consolidated financial statements of the Company (including any related notes thereto) included in the SEC Reports (the “Year-End Statements”) have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects the consolidated financial position of the Company and its subsidiaries at the respective dates thereof and the consolidated results of operations, cash flows and changes in stockholders’ equity of the Company and its subsidiaries for the periods indicated. The unaudited consolidated financial statements of the Company (including any related notes thereto) for all interim periods included in the SEC Reports (together with the Year-End Statements, the “Financial Statements”) have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects the consolidated financial position of the Company and its subsidiaries at of the respective dates thereof and the consolidated results of operations, cash flows and changes in stockholders’ equity of the Company and its subsidiaries for the periods indicated (subject to normal and recurring period-end adjustments that have not been and are not expected to be material to the Company and its subsidiaries taken as a whole).

(c) To the Company’s knowledge, except as set forth in the Financial Statements or the Disclosure Letter, the Company has no material liabilities, contingent or otherwise, other than (a) liabilities incurred in the ordinary course of business subsequent to June 30, 2009 and (b) liabilities or obligations under contracts and commitments incurred in the ordinary course of business or otherwise not required under generally accepted accounting principles to be reflected in the Financial Statements. Except as disclosed in the Financial Statements, neither the Company nor any subsidiary is a guarantor or indemnitor of any indebtedness of any other person, firm or corporation, other than the Company or any subsidiary. The Company maintains a system of accounting established and administered in accordance with generally accepted accounting principles.

2.14 Changes. Since June 30, 2009, except as would not reasonably be expected to have a Material Adverse Effect and except as contemplated by the transactions associated with the Operative Agreements and the Debt Financings, there has not been:

(a) any change in the assets, liabilities, financial condition or operating results of the Company and its subsidiaries, taken as a whole, from that reflected in the Financial Statements, except changes in the ordinary course of business;

 

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(b) any material change or amendment to a material contract or arrangement by which the Company or any of its assets or properties is bound or subject;

(c) any sale, assignment, pledge, grant of security interest or transfer of any patents, trademarks, copyrights, trade secrets or other intangible assets;

(d) any resignation or termination of employment of any key employee of the Company and its Operating Subsidiaries;

(e) any mortgage, pledge, transfer of a security interest in, or lien, created by the Company or any subsidiary, with respect to any of its material properties or assets, except liens for taxes not yet due or payable; or

(f) any agreement or commitment by the Company or any subsidiary to do any of the things described in this Section 2.14.

2.15 Tax Returns, Payments and Elections. The Company has timely filed all tax returns (federal, state and local) required to be filed by it, which tax returns are true and correct in all material respects. The Company has paid all taxes and other assessments due, if any, except those contested by it in good faith that are listed in the Disclosure Letter. Except as set forth in the Disclosure Letter, none of the Company’s federal income tax returns and none of its state income or franchise tax or sales or use tax returns has ever been audited by governmental authorities and, as of the date hereof, to the Company’s knowledge, there is no such audit pending or threatened. Since June 30, 2009, the Company has not incurred any taxes, assessments or governmental charges other than in the ordinary course of business and the Company has made adequate provisions on its books of account for all taxes, assessments and governmental charges with respect to its business, properties and operations for such period. Except as would not constitute a Material Adverse Effect, the Company has withheld or collected from each payment made to each of its employees, the amount of all taxes (including, but not limited to, federal income taxes, Federal Insurance Contribution Act taxes and Federal Unemployment Tax Act taxes) required to be withheld or collected therefrom, and has paid the same to the proper tax receiving officers or authorized depositories.

2.16 Permits. The Company and its Operating Subsidiaries have all franchises, permits, licenses and any similar authority necessary for the conduct of their respective businesses as now being conducted by them, the lack of which would result in a Material Adverse Effect. Neither the Company nor any Operating Subsidiary is in default in any material respect under any of such franchises, permits, licenses or other similar authority. To the Company’s knowledge, neither the Company nor any Operating Subsidiary has received notification of proceedings relating to revocation or modification of any such franchises, permits, licenses or other similar authority.

2.17 Environmental and Safety Laws. To the Company’s knowledge, the Company and its subsidiaries are in compliance in all material respects with all applicable statutes, laws and regulations relating to the environment or occupational health and safety and, to the Company’s knowledge, no material expenditures are or will be required in order to comply with any

 

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such existing statute, law or regulation. Neither the Company nor any subsidiary has received any written communication from a governmental authority with respect to any material violation of such statutes, laws or regulations.

2.18 Disclosure. Neither this Agreement (including all the exhibits and schedules hereto) nor any certificates made or delivered in connection herewith contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements herein or therein not misleading in light of the circumstances under which they were made.

2.19 Title to Property and Assets. The property and assets that the Company or any subsidiary owns are owned by the Company or that subsidiary free and clear of all mortgages, liens, loans and encumbrances, except (i) for statutory liens for the payment of current taxes that are not yet delinquent, (ii) for liens, encumbrances and security interests that arise in the ordinary course of business and that do not secure indebtedness for borrowed money (which, for clarity, the parties agree does not include accounts payables or other trade payables, capital leases or accrued expenses) or guarantees thereof, (iii) defects in title, none of which, individually or in the aggregate, materially impair the Company’s or the subsidiary’s ownership or use of such property or assets, and (iv) liens created in connection with the Debt Financings. With respect to the property and assets the Company or any subsidiary leases, the Company or the subsidiary, as applicable, is in compliance with such leases except where the failure to be in compliance would not constitute a Material Adverse Effect and, to its knowledge, holds a valid leasehold interest free of any liens, claims or encumbrances, subject to clauses (i), (ii) and (iii).

2.20 Employee Benefit Plans. The Company does not have or contribute to any “employee benefit plan” as such term is defined in the Employee Retirement Income Security Act of 1974 (“ERISA”) that is subject to Title IV of ERISA or the funding requirements of Section 412 of the Internal Revenue Code of 1986, as amended.

2.21 Labor Agreements and Actions. Neither the Company nor any subsidiary is bound by or subject to any contract, commitment or arrangement with any labor union. Except as disclosed in the SEC Reports, neither the Company nor any subsidiary is a party to or bound by any currently effective material employment contract, deferred compensation agreement, bonus plan, incentive plan, profit sharing plan, retirement agreement or other employee compensation agreement. To the Company’s knowledge, the Company and each subsidiary has complied in all material respects with all applicable state and federal equal employment opportunity and other laws related to employment.

2.22 Insurance. The Company and its subsidiaries maintain insurance coverage of a type and amount customary for entities of similar size engaged in similar lines of business. All of the insurance policies covering the Company and its subsidiaries are in full force and effect. There are no claims in excess of $100,000 in the aggregate pending against the Company under any insurance policies currently in effect, or by the Company against any of its insurance carriers and covering the property, business or employees of the Company, and all premiums due and payable with respect to the policies maintained by the Company have been paid.

2.23 Fees. Except as set forth in the Disclosure Letter, the Company has no contract, arrangement or understanding with any broker, finder or similar agent with respect to the transactions contemplated by this Agreement.

 

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3. Representations and Warranties of the Investors. Each Investor severally and not jointly hereby represents, warrants and covenants that:

3.1 Authorization. Such Investor has full power and authority to enter into this Agreement and the Warrants to which it is a party, and each such agreement executed and delivered by such Investor constitutes its valid and legally binding obligation, enforceable in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (b) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies, and (c) to the extent the indemnification provisions contained in the Second Amended and Restated Investor Rights Agreement may be limited by applicable federal or state securities laws.

3.2 Purchase Entirely for Own Account. This Agreement is made with such Investor in reliance upon such Investor’s representation to the Company, which by such Investor’s execution of this Agreement such Investor hereby confirms, that the Series B Preferred Stock and Warrants to be received by such Investor and the Conversion Shares and Warrant Shares issuable upon conversion or exercise thereof (collectively, the “Securities”) will be acquired for investment for such Investor’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that such Investor has no present intention of selling, granting any participation in or otherwise distributing the same. By executing this Agreement, such Investor further represents that such Investor does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Securities.

3.3 Disclosure of Information. Such Investor believes it has received all the information it considers necessary or appropriate for deciding whether to purchase the Series B Preferred Stock. Such Investor further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Securities and the business, properties, prospects and financial condition of the Company. The foregoing, however, does not limit or modify the representations and warranties of the Company in Section 2 of this Agreement or the right of the Investors to rely thereon.

3.4 Investment Experience. Such Investor is an investor in public companies with relatively low market capitalizations and acknowledges that it is able to fend for itself, can bear the economic risk of its investment, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Securities. If other than an individual, such Investor also represents it has not been organized for the purpose of acquiring the Securities.

3.5 Accredited Investor. Such Investor is an “accredited investor” within the meaning of SEC Rule 501 of Regulation D, as presently in effect.

3.6 Restricted Securities. Such Investor understands that the Securities it is purchasing are characterized as “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such Securities may be resold without registration under the Act only in certain limited circumstances. In the absence of an effective registration statement covering the Securities or an available exemption from registration under the Act, the Securities must be held indefinitely. In this connection, such Investor represents that it is familiar with SEC Rule

 

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144, as presently in effect, and understands the resale limitations imposed thereby and by the Act, including without limitation the Rule 144 condition that current information about the Company be available to the public.

3.7 Further Limitations on Disposition. Without in any way limiting the representations set forth above, such Investor further agrees not to make any disposition of all or any portion of the Securities unless and until the transferee has agreed in writing for the benefit of the Company to be bound by this Section 3 and the Investor Rights Agreement, provided and to the extent that this Section 3 and the Investor Rights Agreement are then applicable, and:

(a) There is then in effect a registration statement under the Act covering such proposed disposition and such disposition is made in accordance with such registration statement; or

(b) (i) Such Investor shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and (ii) if requested by the Company, such Investor shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company that such disposition will not require registration of such Securities under the Act.

 

             Notwithstanding the provisions of subsections (a) and (b) above, no such registration statement or opinion of counsel shall be necessary for a transfer by an Investor to any affiliated venture capital fund or investment fund, or by an Investor that is a partnership to a partner of such partnership or a retired partner of such partnership who retires after the date hereof, or to the estate of any such partner or retired partner or the transfer by gift, will or intestate succession of any partner to his or her spouse or to the siblings, lineal descendants or ancestors of such partner or his or her spouse, if the transferee agrees in writing to be subject to the terms hereof to the same extent as if he or she were an original Investor hereunder.

3.8 Legends. It is understood that the certificates evidencing the Securities may bear one or all of the following legends:

(a) “THESE SECURITIES HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED UNLESS (A) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS, COVERING ANY SUCH TRANSACTION INVOLVING SAID SECURITIES, (B) THE COMPANY RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY STATING THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION, OR (C) THE COMPANY OTHERWISE SATISFIES ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION.”

(b) Any legend required by applicable laws.

3.9 Tax Advisors. Such Investor has reviewed with such Investor’s own tax advisors the federal, state and local tax consequences of this investment, where applicable, and the transactions contemplated by this Agreement. Each such Investor is relying solely on such advisors and not on any statements or representations of the Company or any of its agents and understands that each such Investor (and not the Company) shall be responsible for such Investor’s own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement.

 

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3.10 Legal Advisors. Such Investor acknowledges that such Investor has had the opportunity to review this Agreement, the exhibits and the schedules attached hereto and the transactions contemplated by this Agreement and the Disclosure Letter with such Investor’s own legal counsel. Each such Investor is relying solely on such Investor’s legal counsel and, except with respect to the opinions to be delivered to the Investors pursuant to Sections 5.4 and 8.4 hereof, not on any statements or representations of the Company or any of the Company’s agents, including Stradling Yocca Carlson & Rauth PC, for legal advice with respect to this investment or the transactions contemplated by this Agreement.

4. Conditions of Investors’ and Company’s Obligations at the Closing. The obligations of each Investor and the Company under Section 1.1(c) of this Agreement are subject to the satisfaction or, where permitted by law, waiver on or before the Closing of each of the following conditions:

4.1 No Prohibition. No law, statute, rule, regulation, executive order, decree, ruling, injunction or other order (whether temporary, preliminary or permanent) shall have been enacted, entered, promulgated or enforced by any United States or state court or any governmental entity which prohibits, restrains or enjoins the consummation of the transactions contemplated hereunder.

4.2 Qualifications. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Series B Preferred Stock and the Warrants in the Closing pursuant to this Agreement shall have been duly obtained and shall be effective as of the Closing, other than such authorizations, approvals or permits or other filings which may be timely made after the Closing or which, if not obtained, would not materially adversely affect the Company upon consummation of the Closing.

4.3 Certificate of Designations. The Certificate of Designations shall have been filed with the Secretary of State of the State of Delaware.

4.4 Fairness Opinion. The Company shall have received a fairness opinion in form and substance satisfactory to the Investors, stating, among other things, that the issuance of the Series B Preferred Stock and the Warrants and the consummation of the Rights Offering is fair from a financial perspective to the stockholders of the Company.

5. Additional Conditions of Investors’ Obligations at the Closing. The obligations of each Investor under Section 1.1(c) of this Agreement are also subject to the satisfaction or, where permitted by law, waiver on or before the Closing of each of the following conditions:

5.1 Representations and Warranties. The representations and warranties of the Company set forth in this Agreement shall be true and correct in all respects (without giving effect to any “materiality,” “Material Adverse Effect” or similar qualifiers contained in any such representations and warranties, other than any qualifiers contained in any representation or warranty requiring disclosure in the Disclosure Letter of a list of items qualified as to materiality) as of the Closing as though made on and as of such date (unless any such representation or warranty is made

 

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only as of a specific date, in which event such representation and warranty shall be so true and correct as of such specified date), except where the failure of any such representations and warranties to be so true and correct, in the aggregate, has not had, and would not reasonably be expected to have, a Material Adverse Effect.

5.2 Performance. The Company shall have performed and complied in all material respects with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing.

5.3 Compliance Certificate. The President of the Company shall deliver to each Investor at the Closing a certificate in the form attached hereto as Exhibit B stating that the conditions specified in Sections 5.1 and 5.2 have been fulfilled.

5.4 Opinion of Company Counsel. Each Investor shall have received from Stradling Yocca Carlson & Rauth PC, counsel for the Company, an opinion, dated as of the Closing, substantially in the form attached hereto as Exhibit C.

5.5 Secretary’s Certificate. Investors shall have received from the Company’s Secretary a certificate in form and substance reasonably satisfactory to the Investors having attached thereto (a) the Company’s Certificate of Incorporation as in effect at the time of the Closing, (b) the Company’s Bylaws as in effect at the time of the Closing, and (c) resolutions approved by the Company’s board of directors authorizing the transactions contemplated hereby.

5.6 Material Adverse Effect. Since the date of this Agreement, no event shall have occurred which shall have had a Material Adverse Effect.

5.7 Settlement of Investigations. The Company shall have entered into a settlement on terms satisfactory to the Investors in their sole discretion, with all state and federal regulatory authorities of any currently on-going investigations of the Company and its subsidiaries, and such settlement shall be in full force and effect.

5.8 Amendments to Debt Financings. The Company shall have entered into an amendment to each of the First Lien Credit Agreement and the Second Lien Credit Agreement, in each case, in form and substance satisfactory to the Investors in their sole discretion, and all conditions precedent contemplated by such amendments shall have been satisfied, unless the failure to satisfy any such condition precedent is due to any act or failure to act by the Investors.

6. Additional Conditions of the Company’s Obligations at the Closing. The obligations of the Company under Sections 1.1(c) of this Agreement are also subject to the satisfaction or, where permitted by law, waiver on or before the Closing of each of the following conditions:

6.1 Representations and Warranties. The representations and warranties of the Investors set forth in this Agreement shall be true and correct in all respects (without giving effect to any “materiality,” “Material Adverse Effect” or similar qualifiers contained in any such representations and warranties as of the Closing as though made on and as of such date (unless any such representation or warranty is made only as of a specific date, in which event such representation and warranty shall be so true and correct as of such specified date), except where the failure of any such representations and warranties to be so true and correct, in the aggregate, has not had, and would not reasonably be expected to have, a Material Adverse Effect.

 

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6.2 Performance. The Investors shall have performed and complied in all material respects with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing.

6.3 Payment of Purchase Price at Closing. The Investors shall have delivered to the Company the aggregate purchase price owed by such Investors for the Series B Preferred Stock being sold hereunder at the Closing.

7. Conditions of Investors’ and Company’s Obligations at the Subsequent Closing. With respect to the Subsequent Closing, the obligations of each Investor and the Company under Section 1.1(d) of this Agreement are subject to the satisfaction or, where permitted by law, waiver on or before the Subsequent Closing of each of the following conditions:

7.1 Closing. The Closing shall have occurred not more than sixty (60) calendar days prior to the Subsequent Closing.

7.2 No Prohibition. No law, statute, rule, regulation, executive order, decree, ruling, injunction or other order (whether temporary, preliminary or permanent) shall have been enacted, entered, promulgated or enforced by any United States or state court or any governmental entity which prohibits, restrains or enjoins the consummation of the transactions contemplated hereunder.

7.3 Qualifications. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Series B Preferred Stock and the Warrants in the Subsequent Closing pursuant to this Agreement or shall have been duly obtained and shall be effective as of the Subsequent Closing, other than such authorizations, approvals or permits or other filings which may be timely made after the Subsequent Closing or which, if not obtained, would not materially adversely affect the Company or the Investors upon consummation of the Subsequent Closing.

8. Additional Conditions of Investors’ Obligations at the Subsequent Closing. The obligations of each Investor under Section 1.1(d) of this Agreement are also subject to the satisfaction or, where permitted by law, waiver on or before the Subsequent Closing of each of the following conditions:

8.1 Representations and Warranties. The representations and warranties of the Company set forth in this Agreement shall be true and correct in all respects (without giving effect to any “materiality,” “Material Adverse Effect” or similar qualifiers contained in any such representations and warranties, other than any qualifiers contained in any representation or warranty requiring disclosure in the Disclosure Letter of a list of items qualified as to materiality) as of the Subsequent Closing as though made on and as of such date (unless any such representation or warranty is made only as of a specific date, in which event such representation and warranty shall be so true and correct as of such specified date), except where the failure of any such representations and warranties to be so true and correct, in the aggregate, has not had, and would not reasonably be expected to have, a Material Adverse Effect.

 

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8.2 Performance. The Company shall have performed and complied in all material respects with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Subsequent Closing.

8.3 Compliance Certificate. The President of the Company shall deliver to each Investor at the Subsequent Closing a certificate in the form attached hereto as Exhibit B stating that the conditions specified in Sections 8.1 and 8.2 have been fulfilled.

8.4 Opinion of Company Counsel. Each Investor shall have received from Stradling Yocca Carlson & Rauth PC, counsel for the Company, an opinion, dated as of the Subsequent Closing, substantially in the form attached hereto as Exhibit C.

8.5 Secretary’s Certificate. Investors shall have received from the Company’s Secretary a certificate in form and substance reasonably satisfactory to the Investors having attached thereto (a) the Company’s Certificate of Incorporation as in effect at the time of the Subsequent Closing, (b) the Company’s Bylaws as in effect at the time of the Subsequent Closing, and (c) resolutions approved by the Company’s board of directors authorizing the transactions contemplated hereby.

8.6 Material Adverse Effect. Since the date of this Agreement, no event shall have occurred which shall have had a Material Adverse Effect.

8.7 Settlement of Investigations. The Company shall have entered into a settlement with all state and federal regulatory authorities of any currently on-going investigations of the Company and its subsidiaries on terms satisfactory to the Investors in their sole discretion, and such settlement shall be in full force and effect.

8.8 Amendments to Debt Financings. The Company shall have entered into an amendment to each of the First Lien Credit Agreement and the Second Lien Credit Agreement, in each case, in form and substance satisfactory to the Investors in their sole discretion, and all conditions precedent contemplated by such amendments shall have been satisfied, unless the failure to satisfy any such condition precedent is due to any act or failure to act by the Investors.

9. Additional Conditions of the Company’s Obligations. The obligations of the Company to the Investors under this Agreement in connection with the Subsequent Closing are subject to the satisfaction or, where permitted by law, waiver on or before the Subsequent Closing of each of the following conditions by that Investor:

9.1 Representations and Warranties. The representations and warranties of the Investors set forth in this Agreement shall be true and correct in all respects (without giving effect to any “materiality,” “Material Adverse Effect” or similar qualifiers contained in any such representations and warranties as of the Subsequent Closing as though made on and as of such date (unless any such representation or warranty is made only as of a specific date, in which event such representation and warranty shall be so true and correct as of such specified date), except where the failure of any such representations and warranties to be so true and correct, in the aggregate, has not had, and would not reasonably be expected to have, a Material Adverse Effect.

 

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9.2 Performance. The Investors shall have performed and complied in all materials respects with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by them before the Subsequent Closing.

9.3 Payment of Purchase Price at Subsequent Closing. The Investors shall have delivered to the Company the aggregate purchase price owed by such Investors for the Series B Preferred Stock being sold hereunder at the Subsequent Closing.

10. Covenants.

10.1 Consent, Information Statement and Certificate of Amendment.

(a) Promptly following the Closing, the Company shall (i) obtain the consent of the holders of a majority of the then-outstanding Series A Preferred Stock to the Certificate of Amendment, which consent shall be in the form attached hereto as Exhibit D-1 (the “Series A Consent”), (ii) obtain the consent of the holders of a majority of the then-outstanding Series B Preferred Stock to the Certificate of Amendment, which consent shall in the form attached hereto as Exhibit D-2 (the “Series B Consent”) and (iii) obtain the consent of the holders of a majority of the then-outstanding Common Stock (on an as-converted-to-Common-Stock basis) to the Certificate of Amendment, which consent shall be in the form attached hereto as Exhibit D-3 (together with the Series A Consent and the Series B Consent, the “Consents”).

(b) Promptly after obtaining the Consents, the Company shall prepare and file with the SEC an information statement in conformance with the rules and regulations under the Exchange Act (the “Information Statement”). The Company shall use reasonable commercial efforts to resolve all SEC comments with respect to the Information Statement as promptly as practicable after receipt thereof and to cause the Information Statement in definitive form to be cleared by the SEC and mailed to the Company’s stockholders as promptly as reasonably practicable following filing with the SEC.

(c) The Board of Directors of the Company has approved and, upon the execution and delivery of the Consents, the stockholders constituting the requisite vote will have approved, a Certificate of Amendment to the Restated Certificate of Incorporation of the Company in the form attached hereto as Exhibit A-2 (the “Certificate of Amendment”), which Certificate of Amendment shall be filed with the Secretary of State of the State of Delaware within three (3) business days after completion of the Information Statement Process. For purposes of this Agreement, “Information Statement Process” means the filing of an Information Statement pursuant to Section 14C of the Securities Exchange Act of 1934, as amended, relating to the approval by the Company’s stockholders of the Certificate of Amendment, the mailing of such Information Statement to the stockholders of the Company and the expiration of all related waiting periods pursuant to federal proxy laws and the rules and regulations of the Securities and Exchange Commission. The Investors hereby acknowledge and agree that they cannot convert the Series B Preferred Stock into Common Stock until the authorized share amount of Common Stock has been increased upon the filing of the Certificate of Amendment.

 

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10.2 Alternate Financing Proposals.

(a) The Company shall promptly notify the Investors within 48 hours of the receipt of any Alternate Financing Proposal after the date hereof, which notice shall include the material terms of such Alternate Financing Proposal. If (A) the Company’s Board of Directors determines in good faith, after consultation with its financial advisors and outside legal counsel, in response to an Alternate Financing Proposal, that such proposal is a Superior Proposal, (B) the Company notifies the Investors in writing of the terms of the Superior Proposal and the determinations described in clause (A) above and of its intent to terminate this Agreement, (C) the Company’s Board of Directors takes into account any revised proposal made by the Investors to the Company (a “Revised Investor Proposal”) within three (3) business days after the Investors’ receipt of such notice and again determines in good faith after consultation with its outside legal counsel and independent financial advisors that such Alternate Financing Proposal (as the same may have been modified or amended) remains a Superior Proposal, and (D) the Company’s Board of Directors, if a Revised Investor Proposal has been made, and such Alternate Financing Proposal had been modified or amended prior to the Board’s re-determination referred to in clause (C) above, (x) first, notifies the Investors of the revised terms of such Alternate Financing Proposal; (y) second, establishes a deadline, and notifies the Investors and the person making such Alternate Financing Proposal thereof, to occur not less than three (3) nor more than seven (7) business days after giving such notice, for the submission of final proposals from both the Investors and such person; and (z) within seven (7) business days after such deadline, again determines in good faith after consultation with its outside legal counsel and independent financial advisors that such Alternate Financing Proposal remains a Superior Proposal and notifies the Investors of such determination, the Company or its Board of Directors may terminate this Agreement in order to enter into a definitive agreement with respect to such Superior Proposal.

(b) For purposes of this Agreement, the following terms shall have the meanings assigned below:

(i) “Alternate Financing Proposal” means any inquiry, proposal or offer from any Person or group of Persons (other than the Investors) relating to (i) any proposal or offer concerning an alternate financing for the Company’s general and working capital needs or (ii) any proposal or offer concerning an acquisition of all or substantially all of the issued and outstanding capital stock of the Company or an acquisition of all or substantially all the assets of the Company.

(ii) “Superior Proposal” means any Alternate Financing Proposal (x) on terms more favorable to the Company than the transactions contemplated by this Agreement, taking into account all of the terms and conditions of such proposal and this Agreement (including any proposal to amend the terms of the transactions contemplated by this Agreement, the First Lien Credit Agreement or the Second Lien Credit Agreement), and (y) that the Board of Directors of the Company determines in good faith is reasonably capable of being completed, taking into account the identity of the person or persons making the proposal and all financial, regulatory, legal and other aspects of such proposal.

10.3 Further Assurances. Subject to the terms and conditions of this Agreement, each party will use its reasonable commercial efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary, proper or advisable under applicable laws and regulations to consummate the transactions contemplated by this Agreement.

10.4 Public Statements. Each of the Company and the Investors agrees that no public release or announcement concerning the transactions contemplated hereby shall be issued without the prior written consent of the Company or the Investors, except as such release or

 

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announcement may be required by law or the rules or regulations of any applicable securities exchange or regulatory or governmental body to which the relevant party is subject, wherever situated, in which case the party required to make the release or announcement shall use its reasonable commercial efforts to provide the Company or the Investors, as the case may be, reasonable time to comment on such release or announcement in advance of such issuance, it being understood that the final form and content of any such release or announcement, to the extent so required, shall be at the final discretion of the disclosing party.

10.5 Reservation of Shares. From and after the filing of the Certificate of Amendment, the Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than 100% of the number of shares of Common Stock needed to provide for the issuance of the Conversion Shares upon full conversion of all outstanding shares of Series B Preferred Stock and the Warrant Shares upon the full exercise of all outstanding Warrants.

10.6 Rights Offering. Within six months of the Closing, the Company shall offer for purchase (the “Rights Offering”) to each holder of Common Stock and Series A Preferred Stock of the Company shares of Series B Preferred Stock at a per share price equal to the Per Share Price (the “Rights Offering Price”). The number of shares of Series B Preferred Stock offered to each such holder shall be equal to the product obtained by multiplying (A) the aggregate number of shares of Common Stock and Series A Preferred Stock owned or held by such holder (on an as-converted-to-Common-Stock basis) by (B) the quotient obtained by dividing (i) the number of shares of Series B Preferred Stock purchased by the Investors hereunder by (ii) the aggregate number of shares of Series A Preferred Stock (on an as-converted-to-Common-Stock basis) and Common Stock owned or held by the Investors immediately prior to the Closing.

11. Termination.

11.1 Termination. This Agreement may be terminated:

(a) by mutual written consent of the Investors and the Company;

(b) by the Investors or the Company if any court of competent jurisdiction or other governmental entity shall have issued a final order, decree or ruling or taken any other final action restraining, enjoining or otherwise prohibiting the transactions contemplated hereunder and such order, decree, ruling or other action is or shall have become final and nonappealable;

(c) by either the Investors or the Company if:

(i) the Closing shall not have occurred on or before December 14, 2009; provided, however, that the right to terminate this Agreement pursuant to this Section 11.1(c)(i) shall not be available to the party seeking to terminate unless the party seeking to terminate pursuant to this Section 11.1(c)(i) shall not have been the cause of the failure of the Closing to occur on or before such date and such action or failure to perform constitutes a breach of this Agreement; or

 

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(ii) the Subsequent Closing shall not have occurred on or before February 12, 2010; provided, however, that the right to terminate this Agreement pursuant to this Section 11.1(c)(ii) shall not be available to the party seeking to terminate unless the party seeking to terminate pursuant to this Section 11.1(c)(ii) shall not have been the cause of the failure of the Subsequent Closing to occur on or before such date and such action or failure to perform constitutes a breach of this Agreement;

(d) by the Company:

(i) if there shall have been a breach of any representation, warranty, covenant or agreement on the part of the Investors such that the conditions set forth in Sections 4, 6, 7 and 9 would not be satisfied and, in either such case, such breach is not cured or curable by (A) in respect of the Closing and the conditions thereto, the date on which all other conditions to consummate the transactions contemplated by this Agreement have been satisfied, and (B) in respect of the Subsequent Closing and the conditions thereto, the date on which all other conditions to consummate the transactions contemplated by this Agreement have been satisfied; or

(ii) in accordance with, and subject to the terms and conditions of, Section 10.3(a); or

(e) by Investors who have agreed to purchase a majority of the Shares of Series B Preferred Stock to be sold in connection with the Closing if there shall have been a breach of any representation, warranty, covenant or agreement on the part of the Company contained in this Agreement such that the conditions set forth in Sections 4, 5, 7 and 8 would not be satisfied and, in either such case, such breach is not cured or curable by (A) in respect of the Closing and the conditions thereto, the date on which all other conditions to consummate the transactions contemplated by this Agreement have been satisfied, and (B) in respect of the Subsequent Closing and the conditions thereto, the date on which all other conditions to consummate the transactions contemplated by this Agreement have been satisfied.

11.2 Effect of Termination. In the event of the termination of this Agreement pursuant to Section 11.1, this Agreement shall forthwith become void and there shall be no liability or obligation on the part of any party hereto, except as provided in Section 10.6, this Section 11.2 and Section 12, which shall survive such termination; provided, however, that nothing herein shall relieve any party from liability for any breach of this Agreement.

12. Miscellaneous.

12.1 Survival. The warranties, representations and covenants of the Company and Investors contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing and shall in no way be affected by any investigation of the subject matter thereof made by or on behalf of the Investors or the Company.

12.2 Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties (including transferees of any securities). Nothing in this Agreement, express or implied, is intended to confer upon any party, other than the parties hereto or their respective successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

 

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12.3 Governing Law. This Agreement shall be governed by and construed under the laws of the State of California without regard to principles of conflicts of law.

12.4 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

12.5 Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified; (b) when sent by confirmed telex or facsimile or by electronic mail if sent during normal business hours of the recipient, if not, then on the next business day; (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the address as set forth on the signature page hereof or at such other address as such party may designate by ten days’ advance written notice to the other parties hereto.

12.6 Finder’s Fee. Each party represents that, except as set forth in the Disclosure Letter or in this Section 12.6, it neither is nor will be obligated for any finder’s fee or commission in connection with this transaction. Each Investor agrees to indemnify and to hold harmless the Company from any liability for any commission or compensation in the nature of a finder’s fee (and the costs and expenses of defending against such liability or asserted liability) for which such Investor or any of its officers, partners, employees or representatives is responsible. The Company agrees to indemnify and hold harmless each Investor from any liability for any commission or compensation in the nature of a finders’ fee (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible.

12.7 Expenses; Attorneys’ Fees. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the Certificate of Designations or the Warrants, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.

12.8 Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), (i) prior to the Closing, only with the written consent of the Company and Investors acquiring in the aggregate more than half the shares of Series B Preferred Stock to be sold pursuant hereto, (ii) after the Closing but prior to the Subsequent Closing, only with the written consent of the Company, Investors acquiring in the aggregate more than half of the shares of Series B Preferred Stock to be issued at the Subsequent Closing and the holders of a majority of the Common Stock issuable or issued upon conversion of the Series B Preferred Stock sold at the Closing pursuant to this Agreement and (iii) after the Subsequent Closing, only with the written consent of the Company and the holders of a majority of the Common Stock issuable or issued upon conversion of the Series B Preferred Stock sold pursuant to this Agreement. Any amendment or waiver effected in accordance with this Section 12.8 shall be binding upon each holder of any securities purchased under this Agreement (including securities into which such securities are convertible) at the time outstanding, each future holder of all such Series B Preferred Stock and the Company. The failure of any party to assert any rights or remedies shall not constitute a waiver of such rights or remedies.

 

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12.9 Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

12.10 Aggregation of Stock. All shares of the Series B Preferred Stock held or acquired by affiliated entities or persons shall be aggregated together for the purpose of determining the availability of any rights under this Agreement.

12.11 Entire Agreement. This Agreement and the documents, schedules and exhibits referred to herein constitute the entire agreement among the parties and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein or therein.

12.12 Counterparts. 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.

[SIGNATURE PAGES FOLLOW]

 

22

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

 

COMPANY:
PURPLE COMMUNICATIONS, INC.
By:   /s/ Daniel R. Luis
Name:   Daniel R. Luis
Title:   Chief Executive Officer

 

Address:  
  Attn.: Chief Executive Officer
With a copy to:  
  Stradling Yocca Carlson & Rauth PC
  660 Newport Center Drive,
Suite 1600 Newport Beach,
CA 92660
  Attn.: Michael E. Flynn, Esq.
  Fax No. (949) 725-4100

[SIGNATURE PAGE TO SERIES B PREFERRED STOCK PURCHASE AGREEMENT]

 

23

INVESTOR:
CCP A, L.P.
By:  

CLEARLAKE CAPITAL PARTNERS, LLC

Its General Partner

By:  

CCG Operations, LLC

Its Managing Member

By:   /s/ Behdad Eghbali
Name:   Behdad Eghbali
Title:   Authorized Signatory
Address:  

650 Madison Avenue, 26th Floor

  New York, NY 10022
  Fax No. (212) 610-9121
With a copy to:
 

Milbank, Tweed, Hadley & McCloy LLP

601 S. Figueroa St., 30th Floor

Los Angeles, CA 90017

  Attn.: Melainie K. Mansfield, Esq.
  Fax No. (213) 892-4711

[SIGNATURE PAGE TO SERIES B PREFERRED STOCK PURCHASE AGREEMENT]

 

24

SCHEDULE A

Schedule of Investors

Part I

 


Investor

   
Purchase Price		    Shares of Series B
Preferred Stock

CCP A, L.P.

    $ 1,999,999.50    1,333,333

Total

    $ 1,999,999.50   

Part II

 

Investor

    Purchase Price    Shares of Series B
Preferred Stock

CCP A, L.P.

    $ 3,000,000.00    2,000,000

Total

    $ 3,000,000.00   

 

25

EX-7.16 3 dex716.htm COMMON STOCK WARRANT, DATED DECEMBER 14, 2009 Common Stock Warrant, dated December 14, 2009

Exhibit 7.16

THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS THE REGISTRATION PROVISIONS OF THE ACT AND APPLICABLE STATE SECURITIES LAWS HAVE BEEN COMPLIED WITH OR UNLESS COMPLIANCE WITH SUCH PROVISIONS IS NOT REQUIRED.

December 14, 2009

PURPLE COMMUNICATIONS, INC.

COMMON STOCK WARRANT

For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by Purple Communications, Inc., a Delaware corporation, with its principal office at 773 San Marin Drive, Suite 2210, Novato, California 94945 (the “Company”), CCP A, L.P. (the “Holder”), of 650 Madison Avenue, 23rd Floor, New York, New York 10022, subject to the terms and conditions of this Common Stock Warrant (the “Warrant”), is hereby granted the right to purchase, at the initial exercise price (the “Initial Exercise Price”) of $0.15 per share of common stock, $0.01 par value, of the Company (the “Common Stock”), at any one or more times after the date hereof until 5:00 p.m. on December 14, 2016, in the aggregate, 26,666,660 shares of Common Stock (the “Shares”) subject to adjustment as provided in Section 5 hereof.

Notwithstanding the foregoing, this Warrant is not exercisable until the Company has filed an amendment to its Fourth Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware that authorizes the Company to issue at least 400,000,000 shares of Common Stock.

This Warrant initially is exercisable at the Initial Exercise Price payable in cash (except as provided below), by wire transfer of immediately available funds or other form of payment satisfactory to the Company, subject to adjustment as provided in Section 5 hereof.

1. Exercise of Warrant. The purchase rights represented by this Warrant are exercisable at the option of the Holder hereof, in whole or in part, at one or more times during any period in which this Warrant may be exercised as set forth above. The Holder shall not be deemed to have exercised its purchase rights hereunder until the Company receives written notice of the Holder’s intent to exercise its purchase rights hereunder. The written notice shall be in the form of the Subscription Form attached hereto and made a part hereof. Less than all of the Shares may be purchased under this Warrant. In lieu of exercising this Warrant by the payment of cash, 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 the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company together with notice of such election, in which event the Company shall issue to the holder hereof a number of shares of Common Stock computed using the following formula:

 

   Y (A - B)   
X =    A   

Where

 

X —    The number of shares of Common Stock to be issued to the Holder pursuant to this net exercise;
Y —    The number of shares of Common Stock in respect of which the exercise election is made;
A —    The Market Price of one share of the Company’s Common Stock at the time the exercise election is made;
B —    The Exercise Price (as adjusted to the date of net exercise).

In addition to issuing to the Holder the number of shares represented by “X” in the forgoing formula pursuant to such exercise, the Company shall also reduce the number of Shares covered by this Warrant by the number of shares represented by “Y” in the foregoing formula.

As used herein, the term “Market Price” shall mean the average of the closing price of the Company’s Common Stock on any national securities exchange, on the Nasdaq Global Market or the Nasdaq Capital Market, or, if the Company’s Common Stock is not so listed on any national securities exchange, on the Nasdaq Global Market or the Nasdaq Capital Market, then on the domestic over-the-counter market as reported on the Over-The-Counter Bulletin Board or by the Pink OTC Markets, Inc., or any similar successor organization, for the ten (10) trading days prior to the date the Holder exercises this Warrant.

2. Issuance of Certificates. Upon the exercise of this Warrant and subject to the second paragraph of this Warrant, the issuance of certificates for Shares underlying this Warrant shall be made forthwith (and in any event within three days) after the Company’s receipt of (i) written notice hereunder as specified in Section 1 above) and/or (ii) funds in respect of the Exercise Price (as defined in Section 4.2 hereof) pursuant to Section 4 hereof for the shares so exercised and such certificates shall be issued in the name of the Holder hereof.

3. Restriction on Transfer; Investment Representations; Registration Rights.

3.1 Restriction on Transfer.

(a) The Holder acknowledges that neither this Warrant nor any Shares issuable upon exercise hereof have been registered under the Securities Act of 1933, as amended (the “Act”), and neither may be sold or transferred in whole or in part unless the Holder shall have first given prior written notice to the Company describing such sale or transfer; provided, however, that the foregoing shall not apply if there is in effect a registration statement with respect to this Warrant or the Shares issuable upon exercise hereof, as the case may be, at the time of the proposed sale or transfer.

(b) Any transfer of all or any portion of this Warrant (and the Shares), or any interest herein or therein, that is otherwise in compliance with the Act shall be effected by surrendering this Warrant to the Company at its principal office, together with a duly executed form of assignment, in the form attached hereto. In the event of any such transfer of this Warrant, the Company shall issue (i) a new warrant or warrants of like tenor to the transferee(s) (which warrant or warrants shall bear a legend identical the legend contained in this Warrant), representing the right to purchase the same number of Shares and cash, securities or other property, if any, which were purchasable by the Holder of the transferred portion of this Warrant, and (ii) a new warrant of like tenor to the Holder (which warrant shall bear a legend identical the legend contained in this Warrant), representing the right to purchase the number of Shares, and cash, securities or other property, if any, purchasable by the Holder of the un-transferred portion of this Warrant. Until this Warrant or any portion thereof is transferred on the books of the Company, the Company may treat the Holder as the absolute holder of this Warrant and all right, title and interest therein for all purposes, notwithstanding any notice to the contrary.

3.2 Investment Representations. The Holder represents that: (i) it is an accredited investor within the meaning of Regulation D under the Act; (ii) it is acquiring this Warrant and upon exercise hereof, the Shares, for its own account for investment only, and not with a view towards, or for resale in connection with, their distribution; (iii) it has had an opportunity to discuss the Company’s business and affairs with management of the Company and is satisfied with the results thereof; and (iv) it has also had the opportunity to ask questions of and receive answers from, the Company and its management regarding the terms and conditions of its investment.

4. Price.

4.1 Initial and Adjusted Exercise Price. The initial purchase price for the purchase of the Shares shall be equal to the Initial Exercise Price. The Initial Exercise Price shall be adjusted from time to time in accordance with the provisions of Section 5 hereof.

4.2 Exercise Price. The term “Exercise Price” herein shall mean the Initial Exercise Price or the adjusted Exercise Price, as the case may be.

5. Adjustments of Exercise Price and Number of Shares. The Shares subject to this Warrant and the Exercise Price thereof shall be appropriately adjusted by the Company in accordance herewith.

5.1 Adjustment to Exercise Price and Number of Shares. In case, prior to the expiration of this Warrant by exercise or by its terms, the Company shall issue any shares of its Common Stock as a stock dividend or subdivide the number of outstanding shares of its Common Stock into a greater number of shares, then in either of such cases, the then applicable Exercise Price per share of the Shares of Common Stock purchasable pursuant to this Warrant in effect at the time of such action shall be proportionately reduced and the number of shares at that time purchasable pursuant to this Warrant shall be proportionately increased; and conversely, in the event the Company shall contract the number of outstanding shares of Common Stock by combining such shares into a smaller number of shares, then, in such case, the then applicable Exercise Price per share of the Shares of Common Stock purchasable pursuant to this Warrant in

effect at the time of such action shall be proportionately increased and the number of Shares purchasable pursuant to this Warrant shall be proportionately decreased. If the Company shall, at any time during the term of this Warrant, declare a dividend payable in cash on its Common Stock and shall, at substantially the same time, offer to its stockholders a right to purchase new Common Stock from the proceeds of such dividend or for an amount substantially equal to the dividend, all Common Stock so issued shall, for the purpose of this Warrant, be deemed to have been issued as a stock dividend. Any dividend paid or distributed upon the Common Stock shall be treated as a dividend paid in Common Stock to the extent that shares of Common Stock are issuable upon conversion thereof.

5.2 Recapitalization. In case, prior to the expiration of this Warrant by exercise or by its terms, the Company shall be recapitalized by reclassifying its outstanding Common Stock, (other than a change in par value to no par value), or the Company or a successor corporation shall consolidate or merge with or convey all or substantially all of its or of any successor corporation’s property and assets to any other corporation or corporations (any such other corporations being included within the meaning of the term “successor corporation” hereinbefore used in the event of any consolidation or merger of any such other corporation with, or the sale of all or substantially all of the property of any such other corporation to, another corporation or corporations), then, as a condition of such recapitalization, consolidation, merger or conveyance, lawful and adequate provision shall be made whereby the Holder of this Warrant shall thereafter have the right to purchase, upon the basis and on the terms and conditions specified in this Warrant, in lieu of the Shares theretofore purchasable upon the exercise of this Warrant, such shares of stock, securities or assets of the other corporation as to which the Holder of this Warrant would have been entitled had this Warrant been exercised immediately prior to such recapitalization, consolidation, merger or conveyance; and in any such event, the rights of the Warrant Holder to any adjustment in the number of Shares purchasable upon the exercise of this Warrant, as hereinbefore provided, shall continue and be preserved in respect of any stock which the Holder becomes entitled to purchase.

5.3 Exercise Price Reset Provision. In the event that after the date hereof but prior to the expiration of this Warrant the Company issues publicly or privately (i) shares of its Common Stock, (ii) securities convertible into shares of its Common Stock, or (iii) options or warrants to purchase shares of its Common Stock or securities convertible into shares of its Common Stock (“Additional Stock”), other than Excluded Stock (as defined below), at a sale, conversion or exercise price per share (the “Issue Price”), as the case may be, less than the Exercise Price then in effect, the Exercise Price shall forthwith be adjusted to such lower sale, conversion or exercise price, regardless of the number of shares of Additional Stock issued.

 

    

“Excluded Stock” shall mean: (i) shares of Common Stock issued pursuant to a transaction described in Section 5.1 and 5.2; (ii) shares of Common Stock issuable or issued to employees, consultants or directors of the Company pursuant to a stock option plan or restricted stock plan approved by the board of directors of the Company (the “Board”); (iii) shares of Common Stock issued or issuable in a bona fide, underwritten public offering of shares of Common Stock; (iv) shares of Common Stock issued or issuable upon conversion of the Series B Preferred Stock of the Company (the “Series B Preferred Stock”) or as dividends or distributions on the Series B Preferred Stock, or upon exercise of options or warrants or conversion of any other convertible securities outstanding as of the date of this Warrant; (v) shares of Common Stock issued in

 

connection with a bona fide business acquisition of or by the Company that is approved by the Board, whether by merger, consolidation, sale of assets, sale or exchange of stock or otherwise; (vi) shares of Common Stock issued or issuable upon exercise of warrants or other securities or rights pursuant to equipment lease financings or bank credit arrangements approved by the Board and not undertaken for the primary purpose of raising equity capital; or (vii) shares of Common Stock issued or issuable upon exercise of warrants or other securities or rights to persons or entities with which the Company has business relationships or corporate partnering arrangements, including without limitation, the acquisition of technology, and provided that such issuances are approved by the Board and not undertaken for the primary purpose of raising equity capital.

5.4 Dissolution. In case the Company at any time while this Warrant shall remain unexpired and unexercised shall sell all or substantially all of its property or dissolve, liquidate or wind up its affairs, lawful provision shall be made as part of the terms of any such sale, dissolution, liquidation or winding up, so that the Holder of this Warrant may thereafter receive upon exercise hereof in lieu of each share of Common Stock of the Company which it would have been entitled to receive, the same kind and amount of any securities or assets as may be issuable, distributable or payable upon any such sale, dissolution, liquidation or winding up with respect to each share of Common Stock of the Company; provided, however, that in any case of any such sale or of dissolution, liquidation or winding up, the right to exercise this Warrant shall terminate on a date fixed by the Company. Such date so fixed shall be no earlier than 3 p.m. Los Angeles time, on the fifteenth (15th) day next succeeding the date on which notice of such termination of the right to exercise this Warrant has been given by mail to the registered Holder of this Warrant at its address as it appears on the books of the Company.

5.5 No Fractional Shares. Upon any exercise of this Warrant by the Holder, the Company shall not be required to deliver fractions of one share, but adjustment in the Exercise Price payable by the Holder shall be made in respect of any such fraction of one share on the basis of the Exercise Price per share then applicable upon exercise of this Warrant.

5.6 Notices. In the event that, prior to the expiration of this Warrant by exercise or by its terms, the Company shall determine to take a record of its stockholders for the purpose of determining stockholders entitled to receive any dividend, stock dividend, distribution or other right whether or not it may cause any change or adjustment in the number, amount, price or nature of the securities or assets deliverable upon the exercise of this Warrant pursuant to the foregoing provisions, the Company shall give at least ten (10) days’ prior written notice to the effect that it intends to take such record to the registered Holder of this Warrant at its address as it appears on the books of the Company, said notice to specify the date as of which such record is to be taken, the purpose for which such record is to be taken, and the effect which the action which may be taken will have upon this Warrant.

5.7 Registered Owner. The Company may deem and treat the registered Holder of the Warrant at any time as the absolute owner hereof for all purposes, and shall not be affected by any notice to the contrary.

5.8 Status. This Warrant shall not entitle any Holder thereof to any of the rights of a stockholder, and shall not entitle any Holder thereof to any dividend declared upon the Common Stock unless the Holder shall have exercised the within Warrant and purchased the shares of Common Stock prior to the record date fixed by the Board for the determination of holders of Common Stock entitled to exercise any such rights or receive said dividend.

5.9 Issuance of New Warrants; Company Acknowledgment. Upon any partial exercise of this Warrant, the Company, at its expense, will forthwith and, in any event within ten (10) business days, issue and deliver to the Holder a new warrant or warrants of like tenor, registered in the name of the Holder, exercisable, in the aggregate, for the balance of the Shares. Moreover, the Company shall, at the time of any exercise of this Warrant, upon the request of the Holder, acknowledge in writing its continuing obligation to afford to the Holder any rights to which the H older shall continue to be entitled after such exercise in accordance with the provisions of this Warrant; provided, however, that if the Holder shall fail to make any such request, such failure shall not affect the continuing obligation of the Company to afford to the Holder any such rights.

6. Replacement of Warrant. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and, in case of such loss, theft, destruction or mutilation, of indemnity or security reasonably satisfactory to it in its sole discretion, and reimbursement to the Company of all expenses incidental or relating thereto, and upon surrender and cancellation of this Warrant (unless lost, stolen or destroyed), the Company will make and deliver a new Warrant of like tenor, in lieu of this Warrant.

7. Notices to Warrant Holder. Except as set forth in Section 5.6 hereto, nothing contained in this Warrant shall be construed as conferring upon the Holder hereof the right to vote or to consent or to receive notice as a stockholder in respect of any meetings of stockholders for the election of directors or any other matter, or as having any rights whatsoever as a stockholder of the Company.

8. Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Warrant shall inure to the benefit of and be binding upon the respective successors and assigns of the parties (including transferees of any securities). Nothing in this Warrant, express or implied, is intended to confer upon any party, other than the parties hereto or their respective successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Warrant, except as expressly provided in this Warrant.

9. Governing Law. This Warrant shall be governed by and construed under the laws of the State of California without regard to principles of conflicts of law.

10. Titles and Subtitles. The titles and subtitles used in this Warrant are used for convenience only and are not to be considered in construing or interpreting this Warrant.

11. Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified; (b) when sent by confirmed telex or facsimile or by electronic mail if sent during normal business hours of the recipient, if not, then on the next business day; (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the address as set forth on the signature page hereof or at such other address as such party may designate by ten days’ advance written notice to the other parties hereto.

12. Severability. If one or more provisions of this Warrant are held to be unenforceable under applicable law, such provision shall be excluded from this Warrant and the balance of this Warrant shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

13. Entire Agreement. This Warrant and the documents, schedules and exhibits referred to herein constitute the entire agreement among the parties and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein or therein.

14. No Impairment. The Company will not, by amendment of its Amended and Restated Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issuance or sale of securities, sale or other transfer of any of its assets or properties, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith carry out all such terms and take such action as may be necessary or appropriate in order to protect the rights of the Holder hereunder against impairment. Without limiting the generality of the foregoing, the Company (a) will not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the amount payable therefor on such exercise, and (b) will take all action that may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant.

15. Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach of it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. In any action or proceeding brought to enforce any provision of this Warrant or where any provision hereof is validly asserted as a defense, the successful party to such action or proceeding shall be entitled to recover reasonable attorneys’ fees in addition to any other available remedy.

16. Counterparts. This Warrant 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.

IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in its corporate name by, and such signature to be attested to by, a duly authorized officer as of the date first above written.

 

PURPLE COMMUNICATIONS, INC.
By:   /s/ Daniel R. Luis
  Name: Daniel R. Luis
  Title: Chief Executive Officer

 

ACCEPTED AND AGREED:
CCP A, L.P.
By:   CLEARLAKE CAPITAL PARTNERS, LLC
  Its General Partner
By:   CCG Operations, LLC
  Its Managing Member
By:   /s/ Behdad Eghbali
Name:   Behdad Eghbali
Title:   Authorized Signatory

ASSIGNMENT

(To Be Executed By the Registered Holder

to Effect a Transfer of the Within Warrant)

 

FOR VALUE RECEIVED    

 

hereby sells, assigns and transfers unto

     
 
(Name)
 

(Address)

 

the right to purchase Common Stock evidenced by the within Warrant, to the extent                      of shares of Common Stock, and does hereby irrevocably constitute and appoint                                         

 

_____________________________________________________________

   
to transfer the said right on the books of the Company, with full power of substitution.   

Dated:                             , 20__.

 

  
(Signature)

 

 

 

NOTICE:

   The signature to this assignment must correspond with the name as written upon the case of the within Warrant in every particular, without alteration or enlargement, or any change whatsoever and must be guaranteed by a bank, other than a savings bank or trust company, having an office or correspondent in New York, or by a firm having membership on a registered national securities exchange and an office in New York, New York.

FORM OF SUBSCRIPTION

(To be signed only upon exercise of Warrant)

To Purple Communications, Inc.

The undersigned hereby elects to [check applicable subsection]:

 

  (a)

Purchase                      1 shares of Common Stock of Purple Communications, Inc. pursuant to the terms of the attached Warrant and tenders herewith payment in full for the Exercise Price of the Shares being purchased, together with all applicable transfer taxes, if any;

OR

 

  (b) Exercise the attached Warrant for                      shares of Common Stock purchasable under the Warrant pursuant to the net exercise provisions of Section 1 of such Warrant.

The undersigned hereby represents that:

 

  (a) it is an accredited investor within the meaning of Regulation D under the Act; and

 

  (b) it is acquiring the Shares for its own account for investment only, and not with a view towards, or for resale in connection with, their distribution.

Dated:

 

  

(Signature must conform in all respects to

name of Holder as specified on the face of

the Warrants)

  
(Address)

 

 

1

Insert here the maximum number of shares or, in the case of a partial exercise, the portion thereof as to which the Warrant is being exercised.

EX-7.17 4 dex717.htm COMMON STOCK WARRANT, DATED DECEMBER 22, 2009 Common Stock Warrant, dated December 22, 2009

Exhibit 7.17

THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS THE REGISTRATION PROVISIONS OF THE ACT AND APPLICABLE STATE SECURITIES LAWS HAVE BEEN COMPLIED WITH OR UNLESS COMPLIANCE WITH SUCH PROVISIONS IS NOT REQUIRED.

December 22, 2009

PURPLE COMMUNICATIONS, INC.

COMMON STOCK WARRANT

For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by Purple Communications, Inc., a Delaware corporation, with its principal office at 773 San Marin Drive, Suite 2210, Novato, California 94945 (the “Company”), CCP A, L.P. (the “Holder”), of 650 Madison Avenue, 23rd Floor, New York, New York 10022, subject to the terms and conditions of this Common Stock Warrant (the “Warrant”), is hereby granted the right to purchase, at the initial exercise price (the “Initial Exercise Price”) of $0.15 per share of common stock, $0.01 par value, of the Company (the “Common Stock”), at any one or more times after the date hereof until 5:00 p.m. on December 22, 2016, in the aggregate, 40,000,000 shares of Common Stock (the “Shares”) subject to adjustment as provided in Section 5 hereof.

Notwithstanding the foregoing, this Warrant is not exercisable until the Company has filed an amendment to its Fourth Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware that authorizes the Company to issue at least 400,000,000 shares of Common Stock.

This Warrant initially is exercisable at the Initial Exercise Price payable in cash (except as provided below), by wire transfer of immediately available funds or other form of payment satisfactory to the Company, subject to adjustment as provided in Section 5 hereof.

1. Exercise of Warrant. The purchase rights represented by this Warrant are exercisable at the option of the Holder hereof, in whole or in part, at one or more times during any period in which this Warrant may be exercised as set forth above. The Holder shall not be deemed to have exercised its purchase rights hereunder until the Company receives written notice of the Holder’s intent to exercise its purchase rights hereunder. The written notice shall be in the form of the Subscription Form attached hereto and made a part hereof. Less than all of the Shares may be purchased under this Warrant. In lieu of exercising this Warrant by the payment of cash, 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 the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company together with notice of such election, in which event the Company shall issue to the holder hereof a number of shares of Common Stock computed using the following formula:

 

   Y (A - B)   
X =    A   

Where

 

X —    The number of shares of Common Stock to be issued to the Holder pursuant to this net exercise;
Y —    The number of shares of Common Stock in respect of which the exercise election is made;
A —    The Market Price of one share of the Company’s Common Stock at the time the exercise election is made;
B —    The Exercise Price (as adjusted to the date of net exercise).

In addition to issuing to the Holder the number of shares represented by “X” in the forgoing formula pursuant to such exercise, the Company shall also reduce the number of Shares covered by this Warrant by the number of shares represented by “Y” in the foregoing formula.

As used herein, the term “Market Price” shall mean the average of the closing price of the Company’s Common Stock on any national securities exchange, on the Nasdaq Global Market or the Nasdaq Capital Market, or, if the Company’s Common Stock is not so listed on any national securities exchange, on the Nasdaq Global Market or the Nasdaq Capital Market, then on the domestic over-the-counter market as reported on the Over-The-Counter Bulletin Board or by the Pink OTC Markets, Inc., or any similar successor organization, for the ten (10) trading days prior to the date the Holder exercises this Warrant.

2. Issuance of Certificates. Upon the exercise of this Warrant and subject to the second paragraph of this Warrant, the issuance of certificates for Shares underlying this Warrant shall be made forthwith (and in any event within three days) after the Company’s receipt of (i) written notice hereunder as specified in Section 1 above) and/or (ii) funds in respect of the Exercise Price (as defined in Section 4.2 hereof) pursuant to Section 4 hereof for the shares so exercised and such certificates shall be issued in the name of the Holder hereof.

3. Restriction on Transfer; Investment Representations; Registration Rights.

3.1 Restriction on Transfer.

(a) The Holder acknowledges that neither this Warrant nor any Shares issuable upon exercise hereof have been registered under the Securities Act of 1933, as amended (the “Act”), and neither may be sold or transferred in whole or in part unless the Holder shall have first given prior written notice to the Company describing such sale or transfer; provided, however, that the foregoing shall not apply if there is in effect a registration statement with respect to this Warrant or the Shares issuable upon exercise hereof, as the case may be, at the time of the proposed sale or transfer.

(b) Any transfer of all or any portion of this Warrant (and the Shares), or any interest herein or therein, that is otherwise in compliance with the Act shall be effected by surrendering this Warrant to the Company at its principal office, together with a duly executed form of assignment, in the form attached hereto. In the event of any such transfer of this Warrant, the Company shall issue (i) a new warrant or warrants of like tenor to the transferee(s) (which warrant or warrants shall bear a legend identical the legend contained in this Warrant), representing the right to purchase the same number of Shares and cash, securities or other property, if any, which were purchasable by the Holder of the transferred portion of this Warrant, and (ii) a new warrant of like tenor to the Holder (which warrant shall bear a legend identical the legend contained in this Warrant), representing the right to purchase the number of Shares, and cash, securities or other property, if any, purchasable by the Holder of the un-transferred portion of this Warrant. Until this Warrant or any portion thereof is transferred on the books of the Company, the Company may treat the Holder as the absolute holder of this Warrant and all right, title and interest therein for all purposes, notwithstanding any notice to the contrary.

3.2 Investment Representations. The Holder represents that: (i) it is an accredited investor within the meaning of Regulation D under the Act; (ii) it is acquiring this Warrant and upon exercise hereof, the Shares, for its own account for investment only, and not with a view towards, or for resale in connection with, their distribution; (iii) it has had an opportunity to discuss the Company’s business and affairs with management of the Company and is satisfied with the results thereof; and (iv) it has also had the opportunity to ask questions of and receive answers from, the Company and its management regarding the terms and conditions of its investment.

4. Price.

4.1 Initial and Adjusted Exercise Price. The initial purchase price for the purchase of the Shares shall be equal to the Initial Exercise Price. The Initial Exercise Price shall be adjusted from time to time in accordance with the provisions of Section 5 hereof.

4.2 Exercise Price. The term “Exercise Price” herein shall mean the Initial Exercise Price or the adjusted Exercise Price, as the case may be.

5. Adjustments of Exercise Price and Number of Shares. The Shares subject to this Warrant and the Exercise Price thereof shall be appropriately adjusted by the Company in accordance herewith.

5.1 Adjustment to Exercise Price and Number of Shares. In case, prior to the expiration of this Warrant by exercise or by its terms, the Company shall issue any shares of its Common Stock as a stock dividend or subdivide the number of outstanding shares of its Common Stock into a greater number of shares, then in either of such cases, the then applicable Exercise Price per share of the Shares of Common Stock purchasable pursuant to this Warrant in effect at the time of such action shall be proportionately reduced and the number of shares at that time purchasable pursuant to this Warrant shall be proportionately increased; and conversely, in the event the Company shall contract the number of outstanding shares of Common Stock by combining such shares into a smaller number of shares, then, in such case, the then applicable Exercise Price per share of the Shares of Common Stock purchasable pursuant to this Warrant in

effect at the time of such action shall be proportionately increased and the number of Shares purchasable pursuant to this Warrant shall be proportionately decreased. If the Company shall, at any time during the term of this Warrant, declare a dividend payable in cash on its Common Stock and shall, at substantially the same time, offer to its stockholders a right to purchase new Common Stock from the proceeds of such dividend or for an amount substantially equal to the dividend, all Common Stock so issued shall, for the purpose of this Warrant, be deemed to have been issued as a stock dividend. Any dividend paid or distributed upon the Common Stock shall be treated as a dividend paid in Common Stock to the extent that shares of Common Stock are issuable upon conversion thereof.

5.2 Recapitalization. In case, prior to the expiration of this Warrant by exercise or by its terms, the Company shall be recapitalized by reclassifying its outstanding Common Stock, (other than a change in par value to no par value), or the Company or a successor corporation shall consolidate or merge with or convey all or substantially all of its or of any successor corporation’s property and assets to any other corporation or corporations (any such other corporations being included within the meaning of the term “successor corporation” hereinbefore used in the event of any consolidation or merger of any such other corporation with, or the sale of all or substantially all of the property of any such other corporation to, another corporation or corporations), then, as a condition of such recapitalization, consolidation, merger or conveyance, lawful and adequate provision shall be made whereby the Holder of this Warrant shall thereafter have the right to purchase, upon the basis and on the terms and conditions specified in this Warrant, in lieu of the Shares theretofore purchasable upon the exercise of this Warrant, such shares of stock, securities or assets of the other corporation as to which the Holder of this Warrant would have been entitled had this Warrant been exercised immediately prior to such recapitalization, consolidation, merger or conveyance; and in any such event, the rights of the Warrant Holder to any adjustment in the number of Shares purchasable upon the exercise of this Warrant, as hereinbefore provided, shall continue and be preserved in respect of any stock which the Holder becomes entitled to purchase.

5.3 Exercise Price Reset Provision. In the event that after the date hereof but prior to the expiration of this Warrant the Company issues publicly or privately (i) shares of its Common Stock, (ii) securities convertible into shares of its Common Stock, or (iii) options or warrants to purchase shares of its Common Stock or securities convertible into shares of its Common Stock (“Additional Stock”), other than Excluded Stock (as defined below), at a sale, conversion or exercise price per share (the “Issue Price”), as the case may be, less than the Exercise Price then in effect, the Exercise Price shall forthwith be adjusted to such lower sale, conversion or exercise price, regardless of the number of shares of Additional Stock issued.

 

    

“Excluded Stock” shall mean: (i) shares of Common Stock issued pursuant to a transaction described in Section 5.1 and 5.2; (ii) shares of Common Stock issuable or issued to employees, consultants or directors of the Company pursuant to a stock option plan or restricted stock plan approved by the board of directors of the Company (the “Board”); (iii) shares of Common Stock issued or issuable in a bona fide, underwritten public offering of shares of Common Stock; (iv) shares of Common Stock issued or issuable upon conversion of the Series B Preferred Stock of the Company (the “Series B Preferred Stock”) or as dividends or distributions on the Series B Preferred Stock, or upon exercise of options or warrants or conversion of any other convertible securities outstanding as of the date of this Warrant; (v) shares of Common Stock issued in

 

connection with a bona fide business acquisition of or by the Company that is approved by the Board, whether by merger, consolidation, sale of assets, sale or exchange of stock or otherwise; (vi) shares of Common Stock issued or issuable upon exercise of warrants or other securities or rights pursuant to equipment lease financings or bank credit arrangements approved by the Board and not undertaken for the primary purpose of raising equity capital; or (vii) shares of Common Stock issued or issuable upon exercise of warrants or other securities or rights to persons or entities with which the Company has business relationships or corporate partnering arrangements, including without limitation, the acquisition of technology, and provided that such issuances are approved by the Board and not undertaken for the primary purpose of raising equity capital.

5.4 Dissolution. In case the Company at any time while this Warrant shall remain unexpired and unexercised shall sell all or substantially all of its property or dissolve, liquidate or wind up its affairs, lawful provision shall be made as part of the terms of any such sale, dissolution, liquidation or winding up, so that the Holder of this Warrant may thereafter receive upon exercise hereof in lieu of each share of Common Stock of the Company which it would have been entitled to receive, the same kind and amount of any securities or assets as may be issuable, distributable or payable upon any such sale, dissolution, liquidation or winding up with respect to each share of Common Stock of the Company; provided, however, that in any case of any such sale or of dissolution, liquidation or winding up, the right to exercise this Warrant shall terminate on a date fixed by the Company. Such date so fixed shall be no earlier than 3 p.m. Los Angeles time, on the fifteenth (15th) day next succeeding the date on which notice of such termination of the right to exercise this Warrant has been given by mail to the registered Holder of this Warrant at its address as it appears on the books of the Company.

5.5 No Fractional Shares. Upon any exercise of this Warrant by the Holder, the Company shall not be required to deliver fractions of one share, but adjustment in the Exercise Price payable by the Holder shall be made in respect of any such fraction of one share on the basis of the Exercise Price per share then applicable upon exercise of this Warrant.

5.6 Notices. In the event that, prior to the expiration of this Warrant by exercise or by its terms, the Company shall determine to take a record of its stockholders for the purpose of determining stockholders entitled to receive any dividend, stock dividend, distribution or other right whether or not it may cause any change or adjustment in the number, amount, price or nature of the securities or assets deliverable upon the exercise of this Warrant pursuant to the foregoing provisions, the Company shall give at least ten (10) days’ prior written notice to the effect that it intends to take such record to the registered Holder of this Warrant at its address as it appears on the books of the Company, said notice to specify the date as of which such record is to be taken, the purpose for which such record is to be taken, and the effect which the action which may be taken will have upon this Warrant.

5.7 Registered Owner. The Company may deem and treat the registered Holder of the Warrant at any time as the absolute owner hereof for all purposes, and shall not be affected by any notice to the contrary.

5.8 Status. This Warrant shall not entitle any Holder thereof to any of the rights of a stockholder, and shall not entitle any Holder thereof to any dividend declared upon the Common Stock unless the Holder shall have exercised the within Warrant and purchased the shares of Common Stock prior to the record date fixed by the Board for the determination of holders of Common Stock entitled to exercise any such rights or receive said dividend.

5.9 Issuance of New Warrants; Company Acknowledgment. Upon any partial exercise of this Warrant, the Company, at its expense, will forthwith and, in any event within ten (10) business days, issue and deliver to the Holder a new warrant or warrants of like tenor, registered in the name of the Holder, exercisable, in the aggregate, for the balance of the Shares. Moreover, the Company shall, at the time of any exercise of this Warrant, upon the request of the Holder, acknowledge in writing its continuing obligation to afford to the Holder any rights to which the H older shall continue to be entitled after such exercise in accordance with the provisions of this Warrant; provided, however, that if the Holder shall fail to make any such request, such failure shall not affect the continuing obligation of the Company to afford to the Holder any such rights.

6. Replacement of Warrant. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and, in case of such loss, theft, destruction or mutilation, of indemnity or security reasonably satisfactory to it in its sole discretion, and reimbursement to the Company of all expenses incidental or relating thereto, and upon surrender and cancellation of this Warrant (unless lost, stolen or destroyed), the Company will make and deliver a new Warrant of like tenor, in lieu of this Warrant.

7. Notices to Warrant Holder. Except as set forth in Section 5.6 hereto, nothing contained in this Warrant shall be construed as conferring upon the Holder hereof the right to vote or to consent or to receive notice as a stockholder in respect of any meetings of stockholders for the election of directors or any other matter, or as having any rights whatsoever as a stockholder of the Company.

8. Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Warrant shall inure to the benefit of and be binding upon the respective successors and assigns of the parties (including transferees of any securities). Nothing in this Warrant, express or implied, is intended to confer upon any party, other than the parties hereto or their respective successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Warrant, except as expressly provided in this Warrant.

9. Governing Law. This Warrant shall be governed by and construed under the laws of the State of California without regard to principles of conflicts of law.

10. Titles and Subtitles. The titles and subtitles used in this Warrant are used for convenience only and are not to be considered in construing or interpreting this Warrant.

11. Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified; (b) when sent by confirmed telex or facsimile or by electronic mail if sent during normal business hours of the recipient, if not, then on the next business day; (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the address as set forth on the signature page hereof or at such other address as such party may designate by ten days’ advance written notice to the other parties hereto.

12. Severability. If one or more provisions of this Warrant are held to be unenforceable under applicable law, such provision shall be excluded from this Warrant and the balance of this Warrant shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

13. Entire Agreement. This Warrant and the documents, schedules and exhibits referred to herein constitute the entire agreement among the parties and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein or therein.

14. No Impairment. The Company will not, by amendment of its Amended and Restated Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issuance or sale of securities, sale or other transfer of any of its assets or properties, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith carry out all such terms and take such action as may be necessary or appropriate in order to protect the rights of the Holder hereunder against impairment. Without limiting the generality of the foregoing, the Company (a) will not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the amount payable therefor on such exercise, and (b) will take all action that may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant.

15. Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach of it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. In any action or proceeding brought to enforce any provision of this Warrant or where any provision hereof is validly asserted as a defense, the successful party to such action or proceeding shall be entitled to recover reasonable attorneys’ fees in addition to any other available remedy.

16. Counterparts. This Warrant 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.

IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in its corporate name by, and such signature to be attested to by, a duly authorized officer as of the date first above written.

 

PURPLE COMMUNICATIONS, INC.
By:   /s/ Daniel R. Luis
  Name: Daniel R. Luis
  Title: Chief Executive Officer

 

ACCEPTED AND AGREED:
CCP A, L.P.
By:   CLEARLAKE CAPITAL PARTNERS, LLC
  Its General Partner
By:   CCG Operations, LLC
  Its Managing Member
By:   /s/ Behdad Eghbali
Name:   Behdad Eghbali
Title:   Authorized Signatory

ASSIGNMENT

(To Be Executed By the Registered Holder

to Effect a Transfer of the Within Warrant)

 

FOR VALUE RECEIVED    

 

hereby sells, assigns and transfers unto

     
 
(Name)
 

(Address)

 

the right to purchase Common Stock evidenced by the within Warrant, to the extent                      of shares of Common Stock, and does hereby irrevocably constitute and appoint                                              

 

_____________________________________________________________

   
to transfer the said right on the books of the Company, with full power of substitution.   

Dated:                             , 20__.

 

  
(Signature)

 

 

 

NOTICE:

   The signature to this assignment must correspond with the name as written upon the case of the within Warrant in every particular, without alteration or enlargement, or any change whatsoever and must be guaranteed by a bank, other than a savings bank or trust company, having an office or correspondent in New York, or by a firm having membership on a registered national securities exchange and an office in New York, New York.

FORM OF SUBSCRIPTION

(To be signed only upon exercise of Warrant)

To Purple Communications, Inc.

The undersigned hereby elects to [check applicable subsection]:

 

  (a)

Purchase                      1 shares of Common Stock of Purple Communications, Inc. pursuant to the terms of the attached Warrant and tenders herewith payment in full for the Exercise Price of the Shares being purchased, together with all applicable transfer taxes, if any;

OR

 

  (b) Exercise the attached Warrant for                      shares of Common Stock purchasable under the Warrant pursuant to the net exercise provisions of Section 1 of such Warrant.

The undersigned hereby represents that:

 

  (a) it is an accredited investor within the meaning of Regulation D under the Act; and

 

  (b) it is acquiring the Shares for its own account for investment only, and not with a view towards, or for resale in connection with, their distribution.

Dated:

 

  

(Signature must conform in all respects to

name of Holder as specified on the face of

the Warrants)

  
(Address)

 

 

1

Insert here the maximum number of shares or, in the case of a partial exercise, the portion thereof as to which the Warrant is being exercised.

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