Exhibit 10.12
THIS WARRANT OR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS. NO SALE, DISPOSITION OR EXERCISE MAY BE EFFECTED
WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (ii) AN OPINION
OF COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATION IS NOT REQUIRED, (iii) RECEIPT OF A NO-ACTION LETTER(S) FROM THE
APPROPRIATE GOVERNMENTAL AUTHORITY(IES), OR (iv) OTHERWISE COMPLYING WITH THE
PROVISIONS OF SECTION 8 OF THIS WARRANT.
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SERIES BD WARRANT TO PURCHASE SHARES
OF COMMON STOCK (this "WARRANT")
Warrant No.: BD-4
Cytation Corporation, a Delaware corporation (the "COMPANY"), hereby certifies
that, for value received, Midtown Partners & Co., LLC (the "HOLDER"), or
registered assigns, is the registered holder of a warrant (the "WARRANT") to
subscribe for and purchase ___________ shares of the fully paid and
nonassessable Common Stock (as adjusted pursuant to Section 4 hereof, the
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"WARRANT SHARES") of the Company, at a price per share equal to one dollar and
fifty cents ($1.50)(the "WARRANT PRICE," as adjusted pursuant to Section 4
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hereof), subject to the provisions and upon the terms and conditions hereinafter
set forth.
As used herein, (a) the term "COMMON STOCK" shall mean the Company's
presently authorized Common Stock, par value $.001 per share, and any stock into
or for which such Common Stock may hereafter be converted or exchanged, (b) the
term "DATE OF GRANT" shall mean April __, 2006, and (c) the term "OTHER
WARRANTS" shall mean any warrant issued upon transfer or partial exercise of
this Warrant. The term "WARRANT" as used herein shall be deemed to include
Other Warrants unless the context hereof or thereof clearly requires otherwise.
The Warrant has been issued in connection with that certain Securities Purchase
and Exchange Agreement of even date herewith (the "PURCHASE AGREEMENT").
1. Term. The purchase right represented by this Warrant is
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exercisable, in whole or in part, at any time after the earlier of (a) the date
the Registration Statement on Form SB-2 (or an alternative available form if the
Company is not eligible to file a Form SB-2) covering the Warrants and
underlying Warrant Shares is declared effective; or (b) twelve (12) months from
the Date of Grant (the "INITIAL EXERCISE DATE") and from time to time thereafter
through and including the close of business on the date five (5) years from the
Initial Exercise Date (the "EXPIRATION DATE"); provided, however, that in the
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event that any portion of this Warrant is unexercised as of the Expiration Date,
the terms of Section 2(b), below, shall apply.
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2. Exercise; Expiration; Redemption.
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a. Method of Exercise; Payment; Issuance of New Warrant. Subject to
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Section 1 hereof, the purchase right represented by this Warrant may be
exercised by the holder hereof, in whole or in part and from time to time
after the Initial Exercise Date, by the surrender of this Warrant (with the
notice of exercise form attached hereto as Exhibit A duly executed) at the
principal office of the Company and by the payment to the Company of an
amount equal to the then applicable Warrant Price multiplied by the number
of Warrant Shares then being purchased. The person or persons in whose
name(s) any certificate(s) representing shares of Common Stock shall be
issuable upon exercise of this Warrant shall be deemed to have become the
holder(s) of record of, and shall be treated for all purposes as the record
holder(s) of, the shares represented thereby (and such shares shall be
deemed to have been issued) immediately prior to the close of business on
the date or dates upon which this Warrant is exercised. In the event of any
exercise of the rights represented by this Warrant, certificates for the
shares of stock so purchased shall be delivered to the holder hereof as
soon as possible and in any event within thirty (30) days after such
exercise and, unless this Warrant has been fully exercised, a new Warrant
representing the portion of the Warrant Shares, if any, with respect to
which this Warrant shall not then have been exercised shall also be issued
to the holder hereof as soon as possible and in any event within such
thirty (30)-day period.
b. Expiration. In the event that any portion of this Warrant is
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unexercised as of the Expiration Date, such portion of this Warrant shall
automatically expire, and the Holder shall have no rights with respect to
such unexercised portion of this Warrant.
c. Maximum. In no event shall any holder be entitled to exercise any
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Warrant Shares to the extent that, after such exercise, the sum of the
number of shares of Common Stock beneficially owned by any holder and its
affiliates (other than shares of Common Stock which may be deemed
beneficially owned through the ownership of the unexercised portion of the
Warrant Shares or any unexercised right held by any holder subject to a
similar limitation), would result in beneficial ownership by any holder and
its affiliates of more than 4.99% of the outstanding shares of Common Stock
(after taking into account the shares to be issued to the holder upon such
exercise). For purposes of this Section 2(c), beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange Act
of 1934, as amended. Nothing herein shall preclude the holder from
disposing of a sufficient number of other shares of Common Stock
beneficially owned by the holder so as to thereafter permit the continued
exercise of this Warrant.
d. Cashless Exercise. Subject to the provisions hereof, at any time or
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from time to time prior to the Expiration Date, the Holder shall also have
the right to exercise this Warrant or any portion thereof, without payment
by the Holder of the Warrant Price in cash or any other consideration
(other than the surrender of rights to receive Warrant Shares hereunder),
as provided herein (a "CASHLESS EXERCISE"). Upon a Cashless Exercise with
respect to a particular number of Warrant Shares (the "EXCHANGED WARRANT
SHARES"), the Company shall deliver to the Holder (without payment by the
Holder of the Warrant Price in cash or any other consideration (other than
the surrender of rights to receive Common Stock hereunder) that number of
Warrant Shares computed using the following formula:
X = Y (A - B)
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A
Where: X = the number of Warrant Shares to be delivered to the
holder;
Y = the number of Exchanged Warrant Shares;
A = the Fair Market Value of the Warrant Shares as
determined in accordance with Section 4.
B = the Warrant Price (as adjusted through the Cashless
Exercise Date)
A Cashless Exercise may be effected by the Holder by the surrender of this
Warrant as provided herein, together with a written statement specifying that
the Holder thereby intends to effect a Cashless Exercise and indicating the
number of Exchanged Warrant Shares which are covered by the Cashless Exercise.
Such Cashless Exercise shall be effective upon receipt by the Company of this
Warrant, together with the aforesaid written statement, or on such later date as
is specified therein (the "CASHLESS EXERCISE DATE"). The Company shall issue to
the Holder as of the Cashless Exercise Date a certificate for the Warrant Shares
issuable upon the Cashless Exercise and, if applicable, a new warrant of like
tenor evidencing the balance of the Warrant Shares remaining subject to this
Warrant.
3. Intentionally Omitted.
4. Adjustment of Warrant Price and Number of Shares. The number and
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kind of securities purchasable upon the exercise of this Warrant and the Warrant
Price shall be subject to adjustment from time to time upon the occurrence of
certain events, as follows:
a. Reclassification or Merger. In case of any reclassification, change
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or conversion of securities of the class issuable upon exercise of this
Warrant (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision
or combination), or in case of any merger of the Company with or into
another corporation (other than a merger with another corporation in which
the Company is the acquiring and the surviving corporation and which does
not result in any reclassification or change of outstanding securities
issuable upon exercise of this Warrant), or in case of any sale of all or
substantially all of the assets of the Company, the Company, or such
successor or purchasing corporation, as the case may be, shall duly execute
and deliver to the holder of this Warrant a new Warrant (in form and
substance satisfactory to the holder of this Warrant), so that the holder
of this Warrant shall have the right to receive, at a total purchase price
not to exceed that payable upon the exercise of the unexercised portion of
this Warrant, and in lieu of the shares of Common Stock theretofore
issuable upon exercise of this Warrant, the kind and amount of shares of
stock, other securities, money and property receivable upon such
reclassification, change or merger by a holder of the number of shares of
Common Stock then purchasable under this Warrant. Such new Warrant shall
provide for adjustments that shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 4. The
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provisions of this Section 4(a) shall similarly apply to successive
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reclassifications, changes, mergers and transfers.
b. Subdivision or Combination of Shares. If at any time while this
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Warrant remains outstanding and unexpired the Company shall subdivide or
combine its outstanding shares of Common Stock, the Warrant Price shall be
proportionately decreased in the case of a subdivision or increased in the
case of a combination, effective at the close of business on the date the
subdivision or combination becomes effective.
c. Stock Dividends. If at any time while this Warrant is outstanding
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and unexpired the Company shall pay a dividend with respect to Common Stock
payable in Common Stock, then the Warrant Price shall be adjusted, from and
after the date of determination of stockholders entitled to receive such
dividend or distribution, to that price determined by multiplying the
Warrant Price in effect immediately prior to such date of determination by
a fraction (i) the numerator of which shall be the total number of shares
of Common Stock outstanding immediately prior to such dividend, and (ii)
the denominator of which shall be the total number of shares of Common
Stock outstanding immediately after such dividend.
d. Rights Offerings. In case the Company shall, at any time after the
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Date of Grant, issue rights, options or warrants to the holders of equity
securities of the Company, entitling them to subscribe for or purchase
shares of Common Stock (or securities convertible or exchangeable into
Common Stock)(excluding Exempt Securities, as such term is defined in
Section 4(i) below) at a price per share of Common Stock (or having a
conversion or exchange price per share of Common Stock if a security
convertible or exchangeable into Common Stock) less than the Series D
Conversion Price (as defined in the certificate of designations,
preferences, and rights for the Series D Convertible Preferred Stock) per
share of Common Stock on the record date for such issuance (or the date of
issuance, if there is no record date), the Warrant Price to be in effect on
and after such record date (or issuance date, as the case may be) shall be
reduced, concurrently with such issue, to a price equal to the
consideration received per share in connection with the issuance of such
Additional Shares of Common Stock. In case such purchase or subscription
price may be paid in part or in whole in a form other than cash, the fair
value of such consideration shall be determined by the Board of Directors
of the Company in good faith as set forth in a duly adopted board
resolution certified by the Company's Secretary or Assistant Secretary.
Such adjustment shall be made successively whenever such an issuance
occurs; and in the event that such rights, options, warrants, or
convertible or exchangeable securities are not so issued or expire or cease
to be convertible or exchangeable before they are exercised, converted, or
exchanged (as the case may be), then the Warrant Price shall again be
adjusted to be the Warrant Price that would then be in effect if such
issuance had not occurred; provided, however, that the Company shall adjust
the number of Warrant Shares issued upon any exercise of this Warrant after
the adjustment required pursuant to this Section 4(d) but prior to the date
such subsequent adjustment is made, in order to equitably reflect the fact
that such rights, options, warrants, or convertible or exchangeable
securities were not so issued or expired or ceased to be convertible or
exchangeable before they were exercised, converted, or exchanged (as the
case may be).
e. Other Issuances of Securities. In case the Company or any
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Subsidiary shall, at any time after the Date of Grant, issue shares of
Common Stock, or rights, options, warrants or convertible or exchangeable
securities containing the right to subscribe for or purchase shares of
Common Stock (excluding (i) shares, rights, options, warrants, or
convertible or exchangeable securities issued in any of the transactions
described in Sections 4(b), 4(c), 4(d), or 4(f) above; (ii) shares issued
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upon the exercise of such rights, options or warrants or upon conversion or
exchange of such convertible or exchangeable securities; (iii) this Warrant
and any shares issued upon exercise thereof; and (iv) Exempt Securities (as
defined in Section 4(i) below)), at a price per share of Common Stock
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(determined in the case of such rights, options, warrants, or convertible
or exchangeable securities by dividing (x) the total amount receivable by
the Company in consideration of the sale and issuance of such rights,
options, warrants, or convertible or exchangeable securities, plus the
total minimum consideration payable to the Company upon exercise,
conversion, or exchange thereof by (y) the total maximum number of shares
of Common Stock covered by such rights, options, warrants, or convertible
or exchangeable securities) lower than the Series D Conversion Price, then
the Warrant Price shall be reduced, concurrently with such issue, to a
price equal to the consideration received per share in connection with the
issuance of such Additional Shares of Common Stock. For the purposes of
such adjustment, the maximum number of shares of Common Stock which the
holder of any such rights, options, warrants or convertible or exchangeable
securities shall be entitled to subscribe for or purchase shall be deemed
to be issued and outstanding as of the date of such sale and issuance and
the consideration received by the Company therefor shall be deemed to be
the consideration received by the Company for such rights, options,
warrants, or convertible or exchangeable securities, plus the minimum
consideration or premium stated in such rights, options, warrants, or
convertible or exchangeable securities to be paid for the shares of Common
Stock covered thereby. In case the Company shall sell and issue shares of
Common Stock, or rights, options, warrants, or convertible or exchangeable
securities containing the right to subscribe for or purchase shares of
Common Stock for a consideration consisting, in whole or in part, of
property other than cash or its equivalent, then, in determining the price
per share of Common Stock and the consideration received by the Company for
purposes of the first sentence of this Section 4(e), the Board of Directors
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of the Company shall determine, in good faith, the fair value of said
property, and such determination shall be described in a duly adopted board
resolution certified by the Company's Secretary or Assistant Secretary. In
case the Company shall sell and issue rights, options, warrants, or
convertible or exchangeable securities containing the right to subscribe
for or purchase shares of Common Stock together with one (1) or more other
securities as a part of a unit at a price per unit, then, in determining
the price per share of Common Stock and the consideration received by the
Company for purposes of the first sentence of this Section 4(e), the Board
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of Directors of the Company shall determine, in good faith, which
determination shall be described in a duly adopted board resolution
certified by the Company's Secretary or Assistant Secretary, the fair value
of the rights, options, warrants, or convertible or exchangeable securities
then being sold as part of such unit. Such adjustment shall be made
successively whenever such an issuance occurs, and in the event that such
rights, options, warrants, or convertible or exchangeable securities expire
or cease to be convertible or exchangeable before they are exercised,
converted, or exchanged (as the case may be), then the Warrant Price shall
again be adjusted to the Warrant Price that would then be in effect if such
sale and issuance had not occurred, but such subsequent adjustment shall
not affect the number of Warrant Shares issued upon any exercise of the
Warrant prior to the date such subsequent adjustment is made.
f. Adjustment of Number of Shares. Upon each adjustment in the Warrant
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Price, the number of Warrant Shares purchasable hereunder shall be
adjusted, to the nearest whole share, to the product obtained by
multiplying the number of Warrant Shares purchasable immediately prior to
such adjustment in the Warrant Price by a fraction, the numerator of which
shall be the Warrant Price immediately prior to such adjustment and the
denominator of which shall be the Warrant Price immediately thereafter.
g. Determination of Fair Market Value. For purposes of this Section 4,
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"FAIR MARKET VALUE" of a share of Common Stock as of a particular date (the
"DETERMINATION DATE") shall mean (i) if shares of Common Stock are traded
on a national securities exchange (an "EXCHANGE"), the weighted average of
the closing sale price of a share of the Common Stock of the Company on the
last five (5) trading days prior to the Determination Date reported on such
Exchange as reported in The Wall Street Journal (weighted with respect to
the trading volume with respect to each such day); (ii) if shares of Common
Stock are not traded on an Exchange but trade in the over-the-counter
market and such shares are quoted on the National Association of Securities
Dealers Automated Quotations System ("NASDAQ"), the weighted average of the
closing sale price of a share of the Common Stock of the Company on the
last five (5) trading days prior to the Determination Date reported on
NASDAQ as reported in The Wall Street Journal (weighted with respect to the
trading volume with respect to each such day); (iii) if such shares are an
issue for which last sale prices are not reported on NASDAQ, the average of
the closing sale price, in each case on the last five (5) trading days (or
if the relevant price or quotation did not exist on any of such days, the
relevant price or quotation on the next preceding business day on which
there was such a price or quotation) prior to the Determination Date as
reported by the Over the Counter Bulletin Board (the "OTCBB") or the "pink
sheets" by the Pink Sheets, LLC; (iv) if no closing sales price is reported
for the Common Stock by the OTCBB or "pink sheets" by the Pink Sheets, LLC
for such day, the average of the high and low bid and asked price of any of
the market makers for the Common Stock as reported on the OTCBB or in the
"pink sheets" by the Pink Sheets, LLC on the last five (5) trading days; or
(v) if no price can be determined on the basis of the above methods of
valuation, then the judgment of valuation shall be determined in good faith
by the Board of Directors of the Company, which determination shall be
described in a duly adopted board resolution certified by the Company's
Secretary or Assistant Secretary. If the Board of Directors of the Company
is unable to determine any Valuation (as defined below), or if the holders
of at least fifty percent (50%) of all of the Warrant Shares then issuable
hereunder (collectively, the "REQUESTING HOLDERS") disagree with the
Board's determination of any Valuation by written notice delivered to the
Company within five (5) business days after the determination thereof by
the Board of Directors of the Company is communicated to holders of the
Warrants affected thereby, which notice specifies a majority-in-interest of
the Requesting Holders' determination of such Valuation, then the Company
and a majority-in-interest of the Requesting Holders shall select a
mutually acceptable investment banking firm of national reputation which
has not had a material relationship with the Company or any officer of the
Company within the preceding two (2) years, which shall determine such
Valuation. Such investment banking firm's determination of such Valuation
shall be final, binding and conclusive on the Company and the holders of
all of the Warrants issued hereunder and then outstanding. Any and all
costs and fees of such investment banking firm shall be borne equally by
the Company and the Requesting Holders, however, if the Valuation is within
ninety percent (90%) of either party's valuation, then the other party
shall pay all of the costs and fees of such investment banking firm. For
purposes of this Section 4(g), the term "VALUATION" shall mean the
determination, to be made initially by the Board of Directors of the
Company, of the fair market value per share of Common Stock pursuant to
clause (v) above.
h. Subsequent Changes. If, at any time after any adjustment of the
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Warrant Price shall have been made hereunder as the result of any issuance,
sale or grant of any rights, options, warrants or convertible or
exchangeable securities, any of such rights, options or warrants or the
rights of conversion or exchange associated with such convertible or
exchangeable securities shall expire by their terms or any of such rights,
options, warrants or convertible or exchangeable securities shall be
repurchased by the Company or a Subsidiary for a consideration per
underlying share of Common Stock not exceeding the amount of such
consideration received by the Company in connection with the issuance, sale
or grant of such rights, options, warrants or convertible or exchangeable
securities, the Warrant Price then in effect shall forthwith be increased
to the Warrant Price that would have been in effect if such expiring right,
option or warrant or rights of conversion or exchange or such repurchased
rights, options, warrants or convertible or exchangeable securities had
never been issued. Similarly, if at any time after any such adjustment of
the Warrant Price shall have been made pursuant to this Section 4 above (i)
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any additional aggregate consideration is received or becomes receivable by
the Company in connection with the issuance or exercise of such rights,
options, warrants or convertible or exchangeable securities; or (ii) there
is a reduction in the conversion or exchange ratio applicable to such
convertible or exchangeable securities so that fewer shares of Common Stock
will be issuable upon the conversion or exchange thereof or there is a
decrease in the number of shares of Common Stock issuable upon exercise of
such rights, options or warrants (except where such reduction or decrease
results from a combination of shares described in Section 4(b) above), the
Warrant Price then in effect shall be forthwith readjusted to the Warrant
Price that would have been in effect had such changes taken place at the
time that such rights, options, warrants or convertible or exchangeable
securities were initially issued, granted or sold. In no event shall any
readjustment under this Section 4(h) affect the validity of any Warrant
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Shares issued upon any exercise of this Warrant prior to such readjustment.
i. Excluded Transactions. Notwithstanding the foregoing, Sections
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4(c), (d) or 4(e) above shall not apply to: (i) the Company's offering of
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up to 750,000 shares of Series A Convertible Preferred Stock, with related
Series A Warrants and Series B Warrants, and up to 76,201 shares of Series
B Convertible Preferred Stock and Series C Convertible Preferred Stock, in
the aggregate, pursuant to the Securities Purchase and Share Exchange
Agreement of even date herewith (the "OFFERING"); (ii) 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 5,000 shares of Common Stock per month issued or
issuable to a third party in connection with the provision of guarantees
for certain obligations of the Company); (iii) the issuance of securities
pursuant to the conversion or exercise of convertible or exercisable
securities outstanding on the date hereof; (iv) shares of Common Stock
issued in connection with any stock split or stock dividend; (v) the
issuance of Series A Convertible Preferred Stock, Series B Convertible
Preferred Stock, Series C Convertible Preferred Stock, Series A Warrants,
Series B Warrants, Series C Warrants or Series D Warrant in connection with
the Offering; (vi) the issuance of shares of Common Stock upon conversion
or exercise, as applicable, of 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 or Series D Warrant
in connection with the Offering, in each case, provided the issuance is
pursuant to the terms of such option or convertible security; (vii)
warrants issued to Midtown Partners & Co., LLC, as placement agent in
connection with Offering, and shares of Common Stock issued in connection
with the exercise thereof; (viii) shares of Common Stock issued or issuable
in connection with a bona fide joint venture or business acquisition of or
by the Company, whether by merger, consolidation, sale of assets, sale or
exchange of stock, or otherwise; provided that any such issuance is
approved by the Board of Directors, and, at the time of such issuance, the
aggregate of that issuance and similar issuances in the then 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); (ix) the Reverse
Merger (as defined in the Certificate of Designations of the Series A
Convertible Preferred Stock); and (x) Series A Warrants issued pursuant to
Section 2 of the Investor Rights Agreement of even date herewith (the
"INVESTOR RIGHTS AGREEMENT")(collectively, the "EXEMPT SECURITIES").
5. Notice of Adjustments. Whenever the Warrant Price or the number of
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Warrant Shares purchasable hereunder shall be adjusted pursuant to Section 4
hereof, the Company shall deliver to the holder of this Warrant a certificate
signed by its chief financial officer setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated, and the Warrant Price and the number of
Warrant Shares purchasable hereunder after giving effect to such adjustment.
6. Piggyback Registration Rights. If the Company, at any time prior to the
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Expiration Date, proposes to register (the "REGISTRATION") any of its securities
under the Securities Act of 1933 (the "SECURITIES ACT") (except registrations by
way of Commission Forms S-4 or S-8, or any successor thereto, or to qualify such
securities under the securities laws of any state or register its securities in
connection with any warrant, option or employee benefit plan), the Company shall
give prompt written notice thereof to the Holder and, if the Holder shall so
request in writing within twenty (20) days after receipt of any such notice, the
Company shall exercise all reasonable efforts to include among securities which
it then endeavors to make the subject of a registration statement to be filed
under the Securities Act all shares the Holder so requests to be registered
thereunder (the "DESIGNATED SHARES") and to use its best efforts to cause all
such registrations to be effected and to be kept effective until all sales or
distributions contemplated in connection therewith are completed; provided that
the Company shall not be obligated to keep such registration in effect for more
than nine months from the effective date thereof. If the Company thereafter
determines for any reason in its sole discretion not to register or to delay
registration of its securities, the Company may, at its election, give written
notice of such determination to the Holder and shall be relieved of any
obligation to register any Designated Shares in connection with such
registration or in case of a determination to delay registration, shall be
permitted to delay in registration of the Designated Shares.
All costs and expenses incident to the Company's registration of the
Designated Shares under the Securities Act, including, without limitation, all
registration and filing fees, fees and expenses of compliance with securities or
blue sky laws, printing expenses, messenger and delivery expenses, and fees and
disbursements of counsel for the Company and all independent certified public
accountants, underwriters (excluding discounts and commissions) and other
persons retained by the Company, shall, to the extent permitted by applicable
federal and state securities laws, rules and regulations, be borne by the
Company.
7. Fractional Shares. No fractional shares of Common Stock will be issued
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in connection with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefor based on the fair market value
(as determined in accordance with Section 4(g) above) of a share of Common Stock
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on the date of exercise, or round up to the next whole number of shares, at the
Company's option.
8. Compliance with Securities Act and Investor Rights Agreement;
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Disposition of Warrant or Warrant Shares.
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a. Compliance with Securities Act. The holder of this Warrant, by
---------------------------------
acceptance hereof, agrees that this Warrant and the shares of Common Stock
to be issued upon exercise hereof are being acquired for investment and
that such holder will not offer, sell or otherwise dispose of this Warrant,
or any shares of Common Stock to be issued upon exercise hereof except
under circumstances which will not result in a violation of the Securities
Act. Upon exercise of this Warrant, the holder hereof shall confirm in
writing, that the shares of Common Stock so purchased are being acquired
for investment and not with a view toward distribution or resale. This
Warrant and all shares of Common Stock issued upon exercise of this Warrant
(unless registered under the Securities Act) shall be stamped or imprinted
with a legend in substantially the following form:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION
MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO,
(ii) AN OPINION OF COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO THE
COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED, (iii) RECEIPT OF A NO-ACTION
LETTER(S) FROM THE APPROPRIATE GOVERNMENTAL AUTHORITY(IES), OR (iv) OTHERWISE
COMPLYING WITH THE PROVISIONS OF SECTION 8 OF THE WARRANT UNDER WHICH THESE
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SECURITIES WERE ISSUED DIRECTLY OR INDIRECTLY."
In addition, in connection with the issuance of this Warrant, the holder
specifically represents to the Company by acceptance of this Warrant as follows:
(1) The holder is aware of the Company's business affairs and
financial condition, and has acquired information about the Company
sufficient to reach an informed and knowledgeable decision to acquire this
Warrant. The holder is acquiring this Warrant for its own account for
investment purposes only and not with a view to, or for the resale in
connection with, any "distribution" thereof for purposes of the Securities
Act.
(2) The holder understands that this Warrant and the Warrant Shares
have not been registered under the Securities Act in reliance upon a
specific exemption therefrom, which exemption depends upon, among other
things, the bona fide nature of the holder's investment intent as expressed
herein. In this connection, the holder understands that, in the view of the
SEC, the statutory basis for such exemption may be unavailable if the
holder's representation was predicated solely upon a present intention to
hold the Warrant and the Warrant Shares for the minimum capital gains
period specified under applicable tax laws, for a deferred sale, for or
until an increase or decrease in the market price of the Warrant and the
Warrant Shares, or for a period of one (1) year or any other fixed period
in the future.
(3) The holder further understands that this Warrant and the Warrant
Shares must be held indefinitely unless subsequently registered under the
Securities Act and any applicable state securities laws, or unless
exemptions from registration are otherwise available.
(4) The holder is aware of the provisions of Rule 144 and 144A,
promulgated under the Securities Act, which, in substance, permit limited
public resale of "restricted securities" acquired, directly or indirectly,
from the issuer thereof (or from an affiliate of such issuer), in a
non-public offering subject to the satisfaction of certain conditions, if
applicable, including, among other things: the availability of certain
public information about the Company, the resale occurring not less than
one (1) year after the party has purchased and paid for the securities to
be sold; the sale being made through a broker in an unsolicited "broker's
transaction" or in transactions directly with a market maker (as said term
is defined under the Securities Exchange Act of 1934, as amended) and the
amount of securities being sold during any three (3)month period not
exceeding the specified limitations stated therein.
(5) The holder further understands that at the time it wishes to sell
this Warrant and the Warrant Shares there may be no public market upon
which to make such a sale, and that, even if such a public market then
exists, the Company may not be satisfying the current public information
requirements of Rule 144 and 144A, and that, in such event, the holder may
be precluded from selling this Warrant and the Warrant Shares under Rule
144 and 144A even if the one (1)-year minimum holding period has been
satisfied.
(6) The holder further understands that, in the event that all of the
requirements of Rule 144 and 144A are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rule
144 and 144A are not exclusive, the Staff of the SEC has expressed its
opinion that persons proposing to sell private placement securities other
than in a registered offering and otherwise than pursuant to Rule 144 and
144A will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that
such persons and their respective brokers who participate in such
transactions do so at their own risk.
b. Exchange. This Warrant may be exchanged, without payment of any
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service charge, for one (1) or more new Warrants of like tenor exercisable
for the same aggregate number of shares of Common Stock upon surrender to
the Company by the registered holder hereof in person or by legal
representative or by attorney duly authorized in writing and, upon issuance
of the new Warrant or Warrants, the surrendered Warrant shall be cancelled
and disposed of by the Company.
c. Disposition of Warrant or Warrant Shares. With respect to any
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offer, sale or other disposition of this Warrant, or any Warrant Shares
acquired pursuant to the exercise of this Warrant prior to registration of
such Warrant or Warrant Shares, the holder hereof and each subsequent
holder of this Warrant agrees to give written notice to the Company prior
thereto, describing briefly the manner thereof, together with a written
opinion of such holder's counsel, if reasonably requested by the Company,
to the effect that such offer, sale or other disposition may be effected
without registration or qualification (under the Securities Act as then in
effect or any federal or state law then in effect) of this Warrant or such
Warrant Shares and indicating whether or not under the Securities Act
certificates for this Warrant or such Warrant Shares to be sold or
otherwise disposed of require any restrictive legend as to applicable
restrictions on transferability in order to ensure compliance with
applicable laws. Promptly upon receiving such written notice and reasonably
satisfactory opinion, if so requested, the Company, as promptly as
practicable, shall notify such holder that such holder may sell or
otherwise dispose of this Warrant or such Warrant Shares, all in accordance
with the terms of the notice delivered to the Company. If a determination
has been made pursuant to this Section 8(c) that the opinion of counsel for
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the holder is not reasonably satisfactory to the Company, the Company shall
so notify the holder promptly after such determination has been made and
neither this Warrant nor any Warrant Shares shall be sold or otherwise
disposed of until such disagreement has been resolved. The foregoing
notwithstanding, this Warrant or such Warrant Shares may (i) as to such
federal laws, be offered, sold or otherwise disposed of in accordance with
Rule 144 and 144A under the Securities Act, provided that the Company shall
have been furnished with such information as the Company may reasonably
request to provide a reasonable assurance that the provisions of Rule 144
and 144A have been satisfied and (ii) be offered, sold, distributed or
otherwise transferred to Affiliates of the Holder without regard to this
Section 8(c), but only if the Company is in receipt of an opinion of
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counsel as to the permissibility of such transfer under federal and state
securities laws and an investor representation letter from the transferee,
in form and substance reasonably satisfactory to the Company. Each
certificate representing this Warrant or the Warrant Shares thus
transferred (except a transfer pursuant to Rule 144) shall bear a legend as
to the applicable restrictions on transferability in order to ensure
compliance with such laws, unless, in the aforesaid opinion of counsel for
the holder, such legend is not required in order to ensure compliance with
such laws. The Company may issue stop transfer instructions to its transfer
agent or, if acting as its own transfer agent, the Company may stop
transfer on its corporate books, in connection with such restrictions. As
used herein, "AFFILIATE OF THE HOLDER" shall mean (x) any owner,
shareholder, partner or member of the Holder, and (y) any other Person that
directly or indirectly, through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Holder.
9. Rights as Stockholders; Information. No holder of this Warrant, as such,
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shall be entitled to vote or be deemed the holder of Common Stock or any other
securities of the Company which may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained herein be construed to
confer upon the holder of this Warrant, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of the
directors or upon any matter submitted to stockholders at any meeting thereof,
or to receive notice of meetings, until this Warrant shall have been exercised
and the Warrant Shares purchasable upon the exercise hereof shall have become
deliverable, as provided herein. The foregoing notwithstanding, the Company will
transmit to the holder of this Warrant such information, documents and reports
as are generally distributed to the holders of any class or series of the
securities of the Company concurrently with the distribution thereof to the
stockholders.
10. Intentionally Omitted.
11. Additional Rights.
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11.1 Mergers. In the event that the Company undertakes to (i) sell,
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lease, exchange, convey or otherwise dispose of all or substantially all of
its property or business; or (ii) merge into or consolidate with any other
corporation (other than a wholly-owned Subsidiary), or effect any
transaction (including a merger or other reorganization) or series of
related transactions, in which more than fifty percent (50%) of the voting
power of the Company is disposed of, the Company will use its best efforts
to provide at least thirty (30) days notice to the holder of the terms and
conditions of the proposed transaction. The Company shall cooperate with
the holder in consummating the sale of this Warrant in connection with any
such transaction.
12. Intentionally Omitted.
13. Modification and Waiver. This Warrant and any provision hereof may
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be changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
14. Notices. Unless otherwise specifically provided herein, all
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communications under this Warrant shall be in writing and shall be deemed to
have been duly given (i) on the date of service if served personally on the
party to whom notice is to be given; (ii) on the day of transmission if sent by
facsimile transmission to the number shown on the books of the Company, and
telephonic confirmation of receipt is obtained promptly after completion of
transmission; (iii) on the day after delivery to Federal Express or similar
overnight courier; or (iv) on the fifth day after mailing, if mailed to the
party to whom notice is to be given, by first class mail, registered or
certified, postage prepaid, and properly addressed, return receipt requested, to
each such holder at its address as shown on the books of the Company or to the
Company at the address indicated therefor on the signature page of this Warrant.
Any party hereto may change its address for purposes of this Section 14 by
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giving the other party written notice of the new address in the manner set forth
herein.
15. Binding Effect on Successors. This Warrant shall be binding upon
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any corporation succeeding the Company by merger, consolidation or acquisition
of all or substantially all of the Company's assets, and all of the obligations
of the Company relating to the Common Stock issuable upon the exercise or
conversion of this Warrant shall survive the exercise, conversion and
termination of this Warrant and all of the covenants and agreements of the
Company shall inure to the benefit of the successors and assigns of the holder
hereof. The Company will, at the time of the exercise or conversion of this
Warrant, in whole or in part, upon request of the holder hereof but at the
Company's expense, acknowledge in writing its continuing obligation to the
holder hereof in respect of any rights to which the holder hereof shall continue
to be entitled after such exercise or conversion in accordance with this
Warrant; provided, however, that the failure of the holder hereof to make any
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such request shall not affect the continuing obligation of the Company to the
holder hereof in respect of such rights.
16. Lost Warrants or Stock Certificates. The Company covenants to the
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holder hereof that, upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant or any
stock certificate and, in the case of any loss, theft or destruction, upon
receipt of an executed lost securities bond or indemnity reasonably satisfactory
to the Company, or in the case of any such mutilation upon surrender and
cancellation of such Warrant or stock certificate, the Company will make and
deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost,
stolen, destroyed or mutilated Warrant or stock certificate.
17. Descriptive Headings. The descriptive headings of the several
---------------------
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.
18. Governing Law. This Warrant shall be construed and enforced in
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accordance with, and the rights of the parties shall be governed by, the laws of
the State of Florida.
19. Intentionally Omitted.
20. Remedies. In case any one (1) or more of the covenants and
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agreements contained in this Warrant shall have been breached, the holders
hereof (in the case of a breach by the Company), or the Company (in the case of
a breach by a holder), may proceed to protect and enforce their or its rights
either by suit in equity and/or by action at law, including, but not limited to,
an action for damages as a result of any such breach and/or an action for
specific performance of any such covenant or agreement contained in this
Warrant.
21. Acceptance. Receipt of this Warrant by the holder hereof shall
----------
constitute acceptance of and agreement to the foregoing terms and conditions.
22. No Impairment of Rights. The Company will not, by amendment of its
-----------------------
Certificate of Incorporation or through any other means, 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 assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holder of this Warrant against impairment.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed on
its behalf by one of its officers thereunto duly authorized.
Dated: April __, 2006 CYTATION CORPORATION
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Executive Officer
NOTICE TO FLORIDA RESIDENTS:
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WHERE SALES ARE MADE TO FIVE OR MORE PERSONS IN FLORIDA (EXCLUDING CERTAIN
INSTITUTIONAL PURCHASERS DESCRIBED IN SECTION 517.061(7) OF THE FLORIDA
SECURITIES AND INVESTOR PROTECTION ACT) (THE "ACT"), ANY SUCH SALE MADE PURSUANT
TO SECTION 517.061(11) OF THE ACT SHALL BE VOIDABLE BY THE PURCHASER EITHER
WITHIN THREE DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY SUCH
PURCHASER TO THE ISSUER, OR AN AGENT OF THE ISSUER, OR AN ESCROW AGENT OR WITHIN
THREE DAYS AFTER THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH
PURCHASER, WHICHEVER OCCURS LATER.
EXHIBIT A
NOTICE OF EXERCISE
To:
1. The undersigned hereby elects to purchase shares of Common Stock of
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__________. pursuant to the terms of the attached Warrant, and tenders herewith
payment of the purchase price of such shares in full.
2. Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name or names as are specified
below:
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(Name)
----------------------------
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(Address)
3. The undersigned represents that the aforesaid shares are being acquired
for the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares. In support
thereof, the undersigned shall execute an Investment Representation Statement in
form reasonably acceptable to the Company.
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(Signature)
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(Date)