EXHIBIT 10.2
INVESTOR RIGHTS AGREEMENT
This INVESTOR RIGHTS AGREEMENT (this "AGREEMENT") is entered into as of
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January , 2006, by and among Cytation Corporation, a Delaware corporation
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(the "COMPANY"), each of the persons identified as Series A investors on
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Exhibit A attached to this Agreement (the "SERIES A INVESTORS"), each of the
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persons identified as shareholders of DeerValley Acquisitions, Corp. on Exhibit
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B attached to this Agreement (the "DVA SHAREHOLDERS"), and Vicis Capital Master
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Fund (the "LENDER"). The Series A Investors, DVA Shareholders and the Lender
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are collectively referred to as the "SECURITY HOLDERS")
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RECITALS
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A. Each Series A Investor has executed and delivered to the Company a
Securities Purchase and Share Exchange Agreement (the "PURCHASE AGREEMENT") to
purchase Series A Convertible Preferred Stock, Series A Warrants, and Series B
Warrants; each DVA Shareholder has executed and delivered the Purchase Agreement
in connection with the acquisition of either Series B Preferred Stock or Series
C Preferred Stock and Series C Warrants, if applicable, as set forth in a
schedule attached to the Purchase Agreement; and the Lender has executed and
delivered the Purchase Agreement in connection with its acquisition of a Series
D Warrant. The Series A Convertible Preferred Stock, Series B Convertible
Preferred Stock, Series C Convertible Preferred Stock, Series A Warrants, Series
B Warrants, Series C Warrants and Series D Warrant are collectively referred to
as the "SECURITIES."
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B. To induce the Series A Investors, the DVA Shareholders and the
Lender to acquire the Securities, the Security Holders and the Company hereby
agree that this Agreement shall govern the rights of the Security Holders and
the Company.
NOW, THEREFORE, in consideration of the foregoing recitals and for good and
other valuable consideration hereinafter set forth, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement:
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"AFFILIATE" means with respect to any individual, corporation,
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partnership, association, trust, or any other entity (in each case, a
"PERSON"), any Person that, directly or indirectly, Controls, is Controlled
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by, or is under common Control with such Person, including, without
limitation, any general partner, executive officer, or director of such
Person or any holder of ten percent or more of the outstanding equity or
voting power of such Person.
"CERTIFICATE OF DESIGNATIONS" means the Company's Certificate of
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Designations, Preferences and Rights of the Series A Convertible Preferred
Stock
"COMMON STOCK" means shares of the Company's common stock.
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"CONTROL" means the possession, directly or indirectly, of power to
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direct or cause the direction of management or policies (whether through
ownership of voting securities, by agreement or otherwise).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
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and the rules and regulations promulgated thereunder.
"EXEMPT SECURITIES" means (i) shares of Common Stock issued or deemed
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issued to employees or directors of, or consultants to, the Company or any
of its subsidiaries for services rendered pursuant to a plan, agreement, or
arrangement approved by the Board of Directors of the Company (including up
to 5,000 shares of Common Stock per month issued or issuable to third
party(ies) in connection with the provision of guarantees for certain
obligations of the Company); (ii) the issuance of securities pursuant to
the conversion or exercise of convertible or exercisable securities
outstanding on the date hereof; (iii) shares of Common Stock issued in
connection with any stock split or stock dividend of the Company; (iv) the
issuance of shares of Common Stock of the Company in connection with a bona
fide joint venture or business acquisition of or by the Company approved by
the Board of Directors, whether by merger, consolidation, sale of assets,
sale or exchange of stock, or otherwise; provided that, at the time of any
such issuance under this clause (iv), the aggregate of such issuances under
clause (iv) in the preceding twelve (12) month period shall not exceed ten
percent (10%) of the then outstanding Common Stock of the Company (assuming
full conversion and exercise of all convertible and exercisable
securities); (v) the issuance of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series A Warrants, Series B
Warrants, Series C Warrants, and Series D Warrant (including penalty
warrants issued pursuant to Section 2.1 below) in connection with the
Offering, and the issuance of Common Stock upon conversion or exercise of
the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series A Warrants, Series B Warrants, Series C Warrants or Series D
Warrant (including penalty warrants issued pursuant to Section 2.1 below);
(vi) warrants issued to Midtown Partners & Co., LLC, as placement agent in
connection with the Offering, and shares of Common Stock issued in
connection with the exercise thereof; (vii) the Qualified Financing (as
defined in the Certificate of Designations); and (viii) in the event less
that than 750,000 shares of Series A Preferred Stock are issued at the
Initial Closing, that number of shares of Series A Preferred Stock equal to
750,000, minus the number of shares of Series A Preferred Stock issued at
the Initial Closing.
"GAAP" means generally accepted accounting principles.
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"HOLDER" means any Series A Investor, DVA Shareholder or Lender owning
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or having the right to acquire Registerable Securities or any assignee
thereof.
"IMMEDIATE FAMILY MEMBER" means a child, stepchild, grandchild,
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parent, stepparent, grandparent, spouse, sibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, of a person referred to
herein.
"INDEBTEDNESS" means, as applied to any Person, all obligations,
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contingent and otherwise, that, in accordance with GAAP, should be
classified upon such Person's balance sheet as liabilities, or to which
reference should be made by footnotes thereto, including, in any event and
whether so classified: (a) all debt and similar monetary obligations,
whether direct or indirect, (b) all liabilities secured by any mortgage,
pledge, security interest, lien, charge, or other encumbrance existing on
property owned or acquired subject thereto, irrespective of whether the
liability secured thereby shall have been assumed; (c) all guarantees,
endorsements, and other contingent obligations, whether direct or indirect,
in respect of indebtedness of others, including any obligation to supply
funds to or in any manner to invest in, directly or indirectly, the debtor,
to purchase indebtedness, or to assure the owner of indebtedness against
loss, through an agreement to purchase goods, supplies, or services for the
purpose of enabling the debtor to make payment of the indebtedness held by
such owner or otherwise; and (d) the obligation to reimburse the issuer in
respect of any letter of credit.
"INITIAL CLOSING" means the first closing of the sale of Company
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Securities to the Series A Investors, DVA Shareholders and Lender.
"NEW SECURITIES" means equity securities of the Company, whether now
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authorized or not, or rights, options, or warrants to purchase such equity
securities, or securities of any type whatsoever that are, or may become,
convertible into or exchangeable into or exercisable for such equity
securities; provided, however, that New Securities shall not include the
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Exempt Securities.
"OFFERING" means the Company's offering of (a) up to 750,000 shares of
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Series A Preferred Stock, at a price of $10.00 for each share of Series A
Preferred Stock, and (b) up to 76,201 shares of Series B Preferred Stock
and Series C Preferred Stock, in the aggregate.
"PREFERRED STOCK" means shares of the Company's preferred stock.
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"REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration
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effected by preparing and filing a registration statement or similar
document in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement or document.
"REGISTERABLE SECURITIES THEN OUTSTANDING" means the number of shares
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determined by adding the number of shares of Common Stock outstanding that
are, and the number of shares of Common Stock issuable pursuant to then
exercisable or convertible securities that are, Registerable Securities.
"SEC" means the United States Securities and Exchange Commission.
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"SEC RULE 144" means Rule 144 promulgated by the SEC under the
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Securities Act.
"SEC RULE 144(E)" means Rule 144(e) promulgated by the SEC under the
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Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
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rules and regulations promulgated thereunder.
"SERIES A PREFERRED STOCK" means shares of the Company's Series A
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Convertible Preferred Stock, $10.00 stated value.
"SERIES B PREFERRED STOCK" means shares of the Company's Series B
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Convertible Preferred Stock, no stated value.
"SERIES C PREFERRED STOCK" means shares of the Company's Series B
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Convertible Preferred Stock, no stated value.
"SERIES A WARRANTS" means the Series A Warrants to the Series A
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Investors in connection with the Offering.
"SERIES B WARRANTS" means the Series B Warrants to the Series A
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Investors in connection with the Offering.
"SERIES C WARRANTS" means the Series C Warrants to TotalCFO (a DV
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Shareholder) in connection with the Offering.
"SERIES D WARRANT" means the Series D Warrant to Lender in connection
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with the Offering.
"SHARES" means shares of capital stock of the Company at any time
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outstanding, including shares of Preferred Stock and shares of Common Stock
issued or issuable upon exercise or conversion, as applicable, of stock
options, warrants, or other convertible securities of the Company, in each
case, now owned or subsequently acquired by any stockholder, or such
stockholder's successors or assigns.
"SUBSIDIARY" means any entity of which securities or other ownership
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interests having voting power to elect a majority of the board of directors
or other Persons performing similar functions or otherwise granting the
holder Control are directly or indirectly beneficially owned by the
Company, including without limitation, Company.
2. REGISTRATION RIGHTS. The Company covenants and agrees as follows:
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2.1 REGISTRATION RIGHTS UPON COMPLETION OF INITIAL CLOSING; ADDITIONAL
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WARRANTS.
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(a) The Company hereby agrees to file, at its sole cost and expense, a
registration statement on Form SB-2 (or an alternative available form if the
Reporting Company is not eligible to file a Form SB-2) (the "REGISTRATION
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STATEMENT") with the SEC no later than sixty (60) days after the date of the
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Initial Closing, registering the following securities issued by the Company: (i)
all shares of Common Stock issued or issuable upon conversion of the Series A
Preferred Stock; (ii) all shares of Common Stock issued or issuable upon
exercise of the Series A Warrants; (iii) all shares of Common Stock issued or
issuable upon exercise of the Series B Warrants; (iv) all shares of Common Stock
issued or issuable pursuant to Section 4.1 below; (v) all shares of Common Stock
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issued or issuable upon exercise of penalty warrants, if any, issued pursuant to
Section 2.1(b) below; (vi) all shares of Common Stock issued or issuable upon
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exercise of the Series B Preferred Stock; (vii) all shares of Common Stock
issued or issuable upon exercise of the Series C Preferred Stock; (viii) all
shares of Common Stock issued or issuable upon exercise of the Series C
Warrants; and (ix) all shares of Common Stock issued or issuable upon exercise
of the Series D Warrant (collectively, the "REGISTERABLE SECURITIES"). The
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Company hereby agrees to use its best efforts to have the Registration Statement
declared effective by the SEC within one hundred fifty (150) days after the date
of the Initial Closing; provided, however, that if the Company receives a review
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by, and comments from, the SEC, then the registration effective date may be
extended by an additional thirty (30) days without penalties accruing pursuant
to Section 2.1(b) below.
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(b) If the Company does not file the Registration Statement within sixty
(60) days after the date of the Initial Closing (the "FILING DEADLINE"), then,
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in lieu of monetary damages or specific performance, the Company shall
immediately issue to the each Series A Investor an additional Series A Warrant
exercisable for the number of shares of Common Stock equal to 1.5% of the sum of
(i) the number of shares of Common Stock issuable upon conversion of the Series
A Preferred Stock held by each such Series A Investor, and (ii) the number of
shares of Common Stock issuable upon exercise of the Series A Warrants held by
each such Series A Investor. In addition, for each subsequent thirty (30) day
period after the Filing Deadline that the Registration Statement is not filed,
then, in lieu of monetary damages or specific performance, the Company shall
issue to each Series A Investor an additional Series A Warrant exercisable for
the number of shares of Common Stock equal to 1.5% of the sum of (i) the number
of shares of Common Stock issuable upon conversion of the Series A Preferred
Stock held by each such Series A Investor, and (ii) the number of shares of
Common Stock issuable upon exercise of the Series A Warrants held by each such
Series A Investor; provided, however, that in no event shall the aggregate
number of shares of Common Stock issuable upon exercise of the Series A Warrants
issued pursuant to this Section 2.1(b) exceed nine percent (9.0%) of the Common
Stock issuable upon conversion of the Series A Preferred Stock and upon exercise
of the Series A Warrants originally issued on the date of this Agreement.
The penalty warrants issuable under this subparagraph (b) shall be subject
to equitable adjustment whenever there shall occur a stock dividend, stock
split, combination, reclassification, or other similar event affecting the
common shares issuable upon conversion of the Series A Preferred Stock and
exercise of the Series A Warrants.
(c) If the Company's Registration Statement is not declared effective by
the SEC within one hundred fifty (150) days after the date of the Initial
Closing (or one hundred eighty (180) days if extended, as provided in Section
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2.1(a) above), then, in lieu of monetary damages or specific performance, the
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Company shall immediately issue to each Series A Investor an additional Series A
Warrant exercisable for the number of shares of Common Stock equal to 1.5% of
the sum of (i) the number of shares of Common Stock issuable upon conversion of
the Series A Preferred Stock into Common Stock held by each such Series A
Investor, and (ii) the number of shares of Common Stock issuable upon exercise
of the Series A Warrants held by each such Series A Investor (the "EFFECTIVE
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DATE DEADLINE"). In addition, for each subsequent thirty (30) day period after
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the Effective Date Deadline that the Registration Statement is not declared
effective by the SEC, then, in lieu of monetary damages or specific performance,
the Company shall issue to each Series A Investor an additional Series A Warrant
exercisable for the number of shares of Common Stock equal to 1.5% of the sum of
(i) the number of shares of Common Stock issuable upon conversion of the Series
A Preferred Stock held by each such Series A Investor, and (ii) the number of
shares of Common Stock issuable upon exercise of the Series A Warrants held by
each such Series A Investor; provided, however, that in no event shall the
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aggregate number of shares of Common Stock issuable upon exercise of the Series
A Warrants issued pursuant to this Section 2.1(c) exceed nine percent (9.0%) of
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the Common Stock issuable upon conversion of the Series A Preferred Stock and
upon exercise of the Series A Warrants originally issued on the date of this
Agreement. Issuances under this subparagraph (c) are in addition to any issuance
that may occur under subparagraph (b) above.
The penalty warrants issuable under this subparagraph (c) shall be subject
to equitable adjustment whenever there shall occur a stock dividend, stock
split, combination, reclassification, or other similar event affecting the
common shares issuable upon conversion of the Series A Preferred Stock and
exercise of the Series A Warrants. The penalty warrants issuable under
subparagraph (b) above and under this subparagraph (c) shall be the sole and
exclusive remedy for failure to file the Registration Statement or to have the
Registration Statement declared effective.
(d) If the Company does not file the Registration Statement by the Filing
Deadline, then, in lieu of monetary damages or specific performance, the Company
shall immediately issue to the Lender a Series A Warrant exercisable for the
number of shares of Common Stock equal to 1.5% the number of shares of Common
Stock issued or issuable upon exercise of the Series D Warrant held by the
Lender. In addition, for each subsequent thirty (30) day period after the Filing
Deadline that the Registration Statement is not filed, then, in lieu of monetary
damages or specific performance, the Company shall issue to the Lender an
additional Series A Warrant exercisable for the number of shares of Common Stock
equal to 1.5% of the number of shares of Common Stock issued or issuable upon
exercise of the Series D Warrant held by the Lender; provided, however, that in
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no event shall the aggregate number of shares of Common Stock issuable upon
exercise of the Series A Warrants issued pursuant to this Section 2.1(d) exceed
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nine percent (9.0%) of the Common Stock issued or issuable upon exercise of the
Series D Warrant originally issued on the date of this Agreement.
The penalty warrants issuable under this subparagraph (d) shall be subject
to equitable adjustment whenever there shall occur a stock dividend, stock
split, combination, reclassification, or other similar event affecting the
common shares issuable upon exercise of the Series D Warrant.
(e) If the Company's Registration Statement is not declared effective by
the SEC by the Effective Date Filing Deadline, then, in lieu of monetary damages
or specific performance, the Company shall immediately issue to the Lender a
Series A Warrant exercisable for the number of shares of Common Stock equal to
1.5% of the number of shares of Common Stock issued or issuable upon exercise of
the Series D Warrant held by the Lender. In addition, for each subsequent thirty
(30) day period after the Effective Date Deadline that the Registration
Statement is not declared effective by the SEC, then, in lieu of monetary
damages or specific performance, the Company shall issue to the Lender an
additional Series A Warrant exercisable for the number of shares of Common Stock
equal to 1.5% of the number of shares of Common Stock issued or issuable upon
exercise of the Series D Warrant held by the Lender; provided, however, that in
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no event shall the aggregate number of shares of Common Stock issuable upon
exercise of the Series A Warrants issued pursuant to this Section 2.1(e) exceed
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nine percent (9.0%) of the Common Stock issued or issuable upon conversion of
the Series B Preferred Stock or Series C Preferred Stock, as applicable,.
Issuances under this subparagraph (e) are in addition to any issuance that may
occur under subparagraph (d) above.
The penalty warrants issuable under this subparagraph (e) shall be subject
to equitable adjustment whenever there shall occur a stock dividend, stock
split, combination, reclassification, or other similar event affecting the
common shares issuable upon conversion of the Series B Preferred Stock or Series
C Preferred Stock, as applicable,. The penalty warrants issuable under
subparagraph (d) above and under this subparagraph (e) shall be the sole and
exclusive remedy for failure to file the Registration Statement or to have the
Registration Statement declared effective.
2.2 OBLIGATIONS OF THE COMPANY. Whenever required under this Section 2 to
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effect the registration of any Registerable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) prepare and file with the SEC a registration statement with respect to
such Registerable Securities and use its best efforts to cause such registration
statement to become effective, and keep such registration statement effective
until all Holders of Registerable Securities can sell such Registerable
Securities without restriction within a 180 day period;
(b) prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement;
(c) furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request to
facilitate the disposition of Registerable Securities owned by them; and
(d) use its best efforts to register and qualify the securities covered by
such registration statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Holders; provided,
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however, that the Company shall not be required in connection therewith or as a
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condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions, unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act.
2.3 FURNISH INFORMATION. It shall be a condition precedent to the
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obligations of the Company to take any action pursuant to this Section 2 with
respect to the Registerable Securities of a Holder that such Holder shall
furnish to the Company such information regarding itself, the Registerable
Securities held by it, and the intended method of disposition of such securities
as shall be reasonably required to effect the registration of such Holder's
Registerable Securities.
2.4 DELAY OF REGISTRATION. No Holder shall have any right to obtain or seek
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an injunction restraining or otherwise delaying any registration pursuant to
this Agreement as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 2.
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2.5 REPORTS UNDER EXCHANGE ACT. With a view to making available to the
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Holders the benefits of SEC Rule 144 promulgated under the Securities Act and
any other rule or regulation of the SEC that may at any time permit a Holder to
sell securities of the Company to the public without registration, the Company
agrees to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after the effective date of
the first registration statement filed by the Company for the offering of its
securities to the general public;
(b) file with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act; and
(c) furnish to any Holder, so long as the Holder owns any Registerable
Securities, forthwith upon request (i) a written statement by the Company that
it has complied with the reporting requirements of SEC Rule 144, the Securities
Act and the Exchange Act (at any time after it has become subject to such
reporting requirements); (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company; and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC that permits the
selling of any such securities without registration or pursuant to such form.
2.6 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company to
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register Registerable Securities pursuant to this Section 2 may be assigned (but
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only with all related obligations) by a Holder to a transferee or assignee of
such securities, provided that:(a) the Company is, within a reasonable time
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after such transfer, furnished with written notice of the name and address of
such transferee or assignee and the securities with respect to which such
registration rights are being assigned; and (b) such transferee or assignee
agrees in writing to be bound by and subject to the terms and conditions of this
Agreement.
2.7 NO TRADING IN COMMON STOCK UNTIL CERTIFICATE RECEIVED. Each Holder
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hereby agrees that, unless the Holder has taken possession of the stock
certificate for Common Stock, it or its Affiliates will not (a) lend, offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, or otherwise transfer or indirectly dispose of Common Stock not yet
received, or (b) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership for
Common Stock not yet received.
3. RESTRICTIVE COVENANTS. At any time when a minimum of $3,500,000 of the
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Stated Value (as defined in the Certificate of Designation) of the shares of
Series A Preferred Stock is outstanding, except where the vote or written
consent of the holders of a greater number of shares of the Company is required
by law, without the written consent or affirmative vote of the holders of fifty
percent (50%) of the then-outstanding shares of Series A Preferred Stock given
in writing or by vote at a meeting, consenting or voting (as the case may be) as
a separate class from the Common Stock, the Company or its Affiliates shall not:
(a) either directly or by amendment, merger, consolidation or otherwise
issue any New Securities unless the same rank junior to the Series A Preferred
Stock with respect to the distribution of assets on the liquidation, dissolution
or winding-up of the Company and with respect to the payment of dividends and
redemption rights, if applicable; provided, however, the Company may issue up to
$3,000,000 of New Securities, in the aggregate, without the prior written
consent of the Series A Investors; provided,however, that (i) the gross
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aggregate proceeds raised and liquidation preferences shall be no more than
$3,000,000; (ii) the dividend rate shall not exceed ten percent (10%); and (iii)
the holders of the securities issued in connection with such financing shall not
have voting rights more favorable than voting rights granted to the Series A
Preferred Stock.;
(b) make, or permit any subsidiary to make, any loan or advance to any
person, including, without limitation, any employee or director of the Company,
or incur any Indebtedness, except (i) trade payables incurred in the ordinary
course of business; (ii) one or more debt facilities used to finance the
purchase of raw materials for products manufactured by the Company and
inventory; (iii) factoring of accounts receivables; (iv) surety bonds and
letters of credit issued or obtained in the ordinary course of business; (v) the
refinancing of debt existing on the date of this Agreement, upon substantially
similar terms; (vi) up to $3,000,000 of new Indebtedness; and (vii) debt
incurred pursuant to that certain Interest Bearing Non-Convertible Installment
Promissory Note, of even date herewith, that forms a part of the Purchase
Agreement (the "PERMITTED DEBT");
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(c) guarantee, directly or indirectly, or permit any subsidiary to
guarantee, directly or indirectly, any indebtedness except for indebtedness
permitted in Section 3(b) above;
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(d) directly or indirectly, declare, order, pay, make, or set apart any sum
for any distribution or dividend payment, unless all accrued dividends on the
Series A Preferred Stock have been paid;
(e) alter or change the voting or other powers, preferences, or other
rights, privileges, or restrictions of the Series A Preferred Stock contained
herein (by merger, consolidation, or otherwise); or
(f) increase the authorized number of shares of Preferred Stock or
Series A Preferred Stock.
4. SERIES A INVESTORS' RIGHT OF FIRST OFFER; MOST FAVORED NATIONS EXCHANGE.
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4.1 RIGHT OF FIRST OFFER. Subject to the terms and conditions specified in
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this Section 4.1 and applicable securities laws, if the Company proposes to
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offer or sell any New Securities within twelve (12) months after the Initial
Closing, the Company shall first make an offering of such New Securities to each
Series A Investor in accordance with the following provisions of this Section 4
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(the "RIGHT OF FIRST OFFER"); provided, however, that, for purposes of this
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Section 4 only, the New Securities shall be deemed to include securities issued
in connection with a Qualified Financing. A Series A Investor shall be entitled
to apportion the right of first offer hereby granted to it among itself and its
partners, members, and Affiliates in such proportions as it deems appropriate
subject to any applicable securities laws limitations and subject to such
Persons who acquire New Securities becoming a party to this Agreement.
(a) The Company shall deliver a notice in accordance with the provisions of
Section 6.5 hereof (the "OFFER NOTICE") to each of the Series A Investors
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stating (i) its bona fide intention to offer such New Securities; (ii) the
number of such New Securities to be offered; and (iii) the price and terms, if
any, upon which it proposes to offer such New Securities.
(b) By written notification received by the Company, within ten (10)
calendar days after mailing of the Offer Notice, each of the Series A Investors
may elect to purchase or obtain, at the price and on the terms specified in the
Offer Notice, up to that portion of such New Securities that equals the
proportion that the number of shares of Common Stock issued and held, or
issuable upon conversion of the Series A Preferred Stock (and any other
securities convertible into, or otherwise exercisable or exchangeable for,
shares of Common Stock) then held, by such Series A Investor bears to the total
number of shares of Common Stock of the Company issued and held, or issuable
upon conversion of the Series A Preferred Stock then held, by all of the Series
A Investors. The Company promptly shall inform in writing each Series A Investor
that elects to purchase all the shares available to it (each, a
"FULLY-EXERCISING INVESTOR") of any other Series A Investor's failure to do
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likewise. During the ten (10) day period commencing after receipt of such
information, each Fully-Exercising Investor shall be entitled to obtain that
portion of the New Securities for which Series A Investors were entitled to
subscribe but for which the Series A Investors did not subscribe that is equal
to the proportion that the number of shares of Common Stock issued and held, or
issuable upon conversion of Series A Preferred Stock then held, by such
Fully-Exercising Investor bears to the total number of shares of Common Stock
issued and held, or issuable upon conversion of the Series A Preferred Stock
then held, by all Fully-Exercising Investors who wish to purchase such
unsubscribed shares.
(c) If all New Securities referred to in the Offer Notice are not elected
to be purchased or obtained as provided in Section 4.1(b) hereof, the Company
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may, during the ninety (90) day period following the expiration of the period
provided in Section 4.1(b) hereof, offer the remaining unsubscribed portion of
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such New Securities (collectively, the "REFUSED SECURITIES") to any Person(s) at
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a price not less than, and upon terms no more favorable to the offeree than,
those specified in the Offer Notice. If the Company does not enter into an
agreement for the sale of the New Securities within such period, or if such
agreement is not consummated within thirty (30) days of the execution thereof,
the right provided hereunder shall be deemed to be revived and such New
Securities shall not be offered unless first reoffered to the Series A Investors
in accordance with this Section 4.1.
4.2 EXPIRATION OF RIGHT OF FIRST OFFER. The Right of First Offer provided
-----------------------------------
to each Series A Investor under this Section 4 shall expire, with respect to any
shares of Common Stock issued or issuable upon conversion of the Series A
Preferred Stock (and any other securities convertible into, or otherwise
exercisable or exchangeable for, shares of Common Stock), when such shares are
sold into the public market pursuant to an effective Registration Statement,
such that the Right of First Offer provided hereunder to each Series A Investor
shall not be transferable to any purchaser for value who acquires the shares on
the public market.
5. Intentionally Omitted.
6. MISCELLANEOUS.
-------------
6.1 TRANSFERS, SUCCESSORS, AND ASSIGNS; JOINDER. 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. 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.
6.2 GOVERNING LAW. This Agreement shall be governed by and construed in
--------------
accordance with the General Corporation Law of the State of Florida as to
matters within the scope thereof, and as to all other matters shall be governed
by and construed in accordance with the internal laws of the State of Florida,
without regard to its principles of conflicts of laws.
6.3 COUNTERPARTS. This Agreement may be executed in any number of
------------
counterparts with the same effect as if all parties hereto had signed the same
document, and all counterparts shall be construed together and shall constitute
one instrument. This Agreement may be executed by any party by delivery of a
facsimile signature, which signature shall have the same force as an original
signature. A facsimile or photocopied signature shall be deemed to be the
functional equivalent of an original for all purposes.
6.4 HEADINGS. The headings and subheadings in this Agreement are included
--------
for convenience and identification only and are in no way intended to describe,
interpret, define, or limit the scope, extent, or intent of this Agreement or
any provision hereof.
6.5 NOTICES. All notices and other communications given or made pursuant to
-------
this Agreement 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
electronic mail or facsimile if sent during normal business hours of the
recipient, and if not so confirmed, then on the next business day; (c) five (5)
days after having been sent by registered or certified mail, return receipt
requested, postage prepaid; or (d) one (1) business 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
respective parties at their address as set forth on the signature page or
Exhibit "A" or Exhibit"B" hereto, or to such address or facsimile number as
---------------------------
subsequently modified by written notice given in accordance with this Section
-------
6.5. All notices to the Company shall be sent to:
---
Cytation Corporation
Attn: Xxxxxxx X. Xxxxxxx
0000 Xxxxxxxxxx Xxxx.
Xxxxx 000
Xxxxx, XX 00000
(Fax): (000) 000-0000
6.6 COSTS OF ENFORCEMENT. If any party to this Agreement seeks to enforce
---------------------
its rights under this Agreement by legal proceedings, the non-prevailing party
shall pay all costs and expenses incurred by the prevailing party, including,
without limitation, all reasonable attorneys' fees.
6.7 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), only with
the written consent of the Company and the holders of a majority of the
Registrable Securities then outstanding. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each holder of any
Registrable Securities then outstanding, each future holder of all such
Registrable Securities, and the Company. The Company shall give prompt written
notice of any amendment or termination hereof or waiver hereunder to any party
hereto that did not consent in writing to such amendment, termination or waiver.
Any amendment, termination, or waiver effected in accordance with this Section
-------
6.7 shall be binding on all parties hereto, even if they do not execute such
---
consent. No waivers of or exceptions to any term, condition, or provision of
this Agreement, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such term, condition, or
provision.
6.8 SEVERABILITY. The invalidity or unenforceability of any provision
------------
hereof shall in no way affect the validity or enforceability of any other
provision.
6.9 AGGREGATION OF STOCK. All shares of Registrable Securities held or
----------------------
acquired by Affiliates shall be aggregated together for the purpose of
determining the availability of any rights under this Agreement.
6.10 ADDITIONAL INVESTORS. Notwithstanding anything to the contrary
---------------------
contained herein, if the Company issues additional shares of the Company's
Series A Preferred Stock after the date hereof, any purchaser of such shares
shall become a party to this Agreement by executing and delivering an additional
counterpart signature page to this Agreement and, thereafter, shall be deemed an
"Investor" for all purposes hereunder.
6.11 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
---------------------
power, or remedy accruing to any party under this Agreement, upon any breach or
default of any other party under this Agreement, shall impair any such right,
power or remedy of such non-breaching or non-defaulting party, nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of any similar breach or default thereafter occurring; nor shall any
waiver of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any party of any breach or
default under this Agreement, or any waiver on the part of any party of any
provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.
[Signature page to Investor Rights Agreement]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above stated.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
PURCHASER OF SERIES A PREFERRED STOCK
If an Individual Investor:
----------------------------
Sign:
---------------------------------------
Print Name:
--------------------------------
If an Entity Investor:
------------------------
Print Name of Entity:
----------------------
Sign:
-------------------------------------
Print Your Name:
------------------------
Title:
------------------------------------
[Signature page to Investor Rights Agreement continued]
DVA SHAREHOLDER
----------------
If an Individual Investor:
-----------------------------
Sign:
---------------------------------------
Print Name:
--------------------------------
If an Entity Investor:
------------------
Print Name of Entity:
-------------------
Sign:
---------------------------------------
Print Your Name:
--------------------------
Title:
--------------------------------------
[Signature page to Investor Rights Agreement continued]
LENDER
VICIS CAPITAL MASTER FUND,
By:
--------------------------
Name:
------------------------
Title:
-----------------------
Address:
---------------------
-----------------------------
-----------------------------
Facsimile:
-------------------
