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EXHIBIT 10.2
INVESTOR
RIGHTS AGREEMENT
This
INVESTOR RIGHTS AGREEMENT
(this "AGREEMENT") is entered into as of
---------
January , 2006,
by and among Cytation Corporation,
a Delaware corporation
-----
(the "COMPANY"), each
of the persons
identified as Series A investors on
-------
Exhibit A attached
to this Agreement (the
"SERIES A INVESTORS"), each of the
---- ------------------
persons identified as shareholders of
DeerValley Acquisitions, Corp. on Exhibit
-------
B attached to this Agreement (the
"DVA SHAREHOLDERS"), and Vicis Capital Master
-
----------------
Fund (the "LENDER"). The
Series A Investors, DVA Shareholders and the Lender
------
are collectively referred
to as the
"SECURITY HOLDERS")
-----------------
RECITALS
--------
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."
----------
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:
-----------
"AFFILIATE" means
with respect to
any individual, corporation,
---------
partnership, association,
trust, or any
other entity (in each case, a
"PERSON"), any Person
that, directly or indirectly, Controls, is Controlled
------
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
-----------------------------
Designations, Preferences and Rights of the Series A
Convertible Preferred
Stock
"COMMON STOCK" means
shares of the Company's common stock.
------------
"CONTROL" means the
possession, directly or indirectly, of power to
------
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,
-------------
and the rules and regulations
promulgated thereunder.
<PAGE>
"EXEMPT SECURITIES" means (i) shares of Common
Stock issued or deemed
------------------
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.
----
"HOLDER" means any
Series A Investor, DVA Shareholder or Lender owning
------
or having the
right to acquire Registerable Securities or any
assignee
thereof.
"IMMEDIATE FAMILY
MEMBER" means a
child, stepchild, grandchild,
-------------------------
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,
------------
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,
<PAGE>
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
----------------
Securities to the Series A
Investors, DVA Shareholders and Lender.
"NEW SECURITIES" means equity securities of the Company,
whether now
---------------
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
------------------
Exempt Securities.
"OFFERING" means the
Company's offering of (a) up to 750,000 shares of
--------
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.
---------------
"REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration
-------- ---------- ------------
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
-----------------------------------------
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.
---
"SEC RULE
144" means Rule
144 promulgated by the
SEC under the
--------------
Securities Act.
"SEC RULE
144(E)" means Rule 144(e) promulgated by the SEC under the
----------------
Securities Act.
"SECURITIES ACT"
means the Securities Act of 1933, as amended, and the
--------------
rules and regulations promulgated
thereunder.
"SERIES A
PREFERRED STOCK" means
shares of the Company's Series A
---------------------------
Convertible Preferred Stock, $10.00
stated value.
"SERIES B
PREFERRED STOCK" means
shares of the Company's Series B
---------------------------
Convertible Preferred Stock, no
stated value.
"SERIES C
PREFERRED STOCK" means
shares of the Company's Series B
---------------------------
Convertible Preferred Stock, no
stated value.
"SERIES A
WARRANTS" means the
Series A Warrants to the Series A
-------------------
Investors in connection with the
Offering.
<PAGE>
"SERIES B
WARRANTS" means the
Series B Warrants to the Series A
------------------
Investors in connection with the
Offering.
"SERIES C
WARRANTS" means the Series C Warrants to TotalCFO (a DV
-------------------
Shareholder) in connection with the
Offering.
"SERIES D WARRANT" means the Series D Warrant to
Lender in connection
-----------------
with the Offering.
"SHARES" means
shares of capital
stock of the Company at any time
------
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
----------
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:
-------------------
2.1
REGISTRATION RIGHTS UPON
COMPLETION OF INITIAL CLOSING;
ADDITIONAL
----------------------------------------------------------------------
WARRANTS.
--------
(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
------------
STATEMENT") with the
SEC no later than sixty (60) days
after the date of the
---------
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
-----------
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
--------------
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
-----------------------
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
-----------------
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.
-------------
(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,
---------------
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
<PAGE>
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
-------
2.1(a) above), then,
in lieu of monetary damages or specific performance, the
-----
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
---------
DATE DEADLINE"). In addition, for each subsequent thirty (30)
day period after
--------------
the Effectiv






