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.
<PAGE>
"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,
<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
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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.
<PAGE>
"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
<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
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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 con
