EXHIBIT 99.7
CERTIFICATE OF AMENDMENT TO
CERTIFICATE OF INCORPORATION OF
CYTATION CORPORATION
CERTIFICATE OF DESIGNATION,
PREFERENCES AND RIGHTS
OF
SERIES A CONVERTIBLE PREFERRED STOCK
Cytation Corporation, a corporation organized and existing under the laws
of the State of Delaware (the "CORPORATION"), hereby certifies that the Board of
Directors of the Corporation (the "BOARD OF DIRECTORS" or the "BOARD"), pursuant
to authority of the Board of Directors as required by applicable corporate law,
and in accordance with the provisions of its Certificate of Incorporation and
Bylaws, has and hereby authorizes a series of the Corporation's previously
authorized Preferred Stock, par value $.01 per share (the "PREFERRED STOCK"),
and hereby states the designation and number of shares, and fixes the rights,
preferences, privileges, powers and restrictions thereof, as follows:
SERIES A CONVERTIBLE PREFERRED STOCK DESIGNATION AND AMOUNT
750,000 shares of the authorized and unissued Preferred Stock of the
Corporation are hereby designated "SERIES A CONVERTIBLE PREFERRED STOCK" with
the following rights, preferences, powers, privileges, restrictions,
qualifications and limitations.
1. Stated Value. The stated value of each issued share of Series A
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Convertible Preferred Stock shall be deemed to be $10.00 (the "STATED VALUE"),
as the same may be equitably adjusted whenever there may occur a stock dividend,
stock split, combination, reclassification or similar event affecting the Series
A Convertible Preferred Stock.
2. Dividends.
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a. Dividends on Series A Convertible Preferred Stock.
(i) From and including the Date of Issuance (as defined below) of each
share of Series A Convertible Preferred Stock to the earliest of [A] the
payment of the Individual Series A Liquidation Preference Payment (as
defined in Section 4(a) below) on each share of Series A Convertible
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Preferred Stock upon the liquidation, dissolution or winding-up of the
Corporation, [B] the conversion of the Series A Convertible Preferred
Stock, or [C] the date two (2) years from the Date of Issuance of the share
of Series A Convertible Preferred Stock, the holders of shares of Series A
Convertible Preferred Stock shall be entitled to receive, prior to and in
preference to any declaration or payment of any dividend on any other
shares of capital stock of the Corporation, a dividend for each such share
at a rate per annum equal to seven percent (7%) of the Stated Value (as
such term is defined in Section 1 above) thereof, payable semi-annually by
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one of the following methods, as selected by the Corporation: [Y] in cash,
to the extent funds are legally available therefor in accordance with
applicable corporate law; or [Z] in-kind, with shares of Common Stock
registered on Form SB-2 (or an alternative available form if the reporting
company is not eligible to file a Form SB-2), at a ten percent (10%)
discount to the "MARKET PRICE" (as defined in Section 9 below). The date on
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which the Corporation initially issues any share of Series A Convertible
Preferred Stock shall be deemed its "DATE OF ISSUANCE," regardless of the
number of times transfer of such share is made on the stock records
maintained by or for the Corporation and regardless of the number of
certificates which may be issued to evidence such share.
(ii) From and including the date two (2) years from the Date of
Issuance of a share of Series A Convertible Preferred Stock to the earliest
of [A] the payment of the Individual Series A Liquidation Preference
Payment (as defined in Section 4(a) below) on each share of Series A
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Convertible Preferred Stock upon the liquidation, dissolution or winding-up
of the Corporation; or [B] the conversion of the Series A Convertible
Preferred Stock, each holder of Series A Convertible Preferred Stock shall
receive, in the case of a dividend on Common Stock or any class or series
that is convertible into Common Stock, that dividend per share of Series A
Convertible Preferred Stock as would equal the product of [Y] the dividend
payable on each share of such class or series determined, if applicable, as
if all such shares of such class or series had been converted into Common
Stock and all Series A Convertible Preferred Stock had been converted into
Common Stock, and [Z] the number of shares of Common Stock issuable upon
conversion of a share of Series A Convertible Preferred Stock, calculated
on the record date for determination of holders entitled to receive such
dividend.
b. Priority of Payment. In the event that full dividends are not paid under
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Section 2(a)(i) above to the holders of all outstanding shares of Series A
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Convertible Preferred Stock so entitled to such payment and funds available for
payment of dividends shall be insufficient to permit payment in full to holders
of all such stock of the full preferential amounts to which they are then
entitled, then the entire amount available for payment of dividends shall be
distributed, first, ratably among all holders of Series A Convertible Preferred
Stock in proportion to the full amount to which they would otherwise be
respectively entitled and, second, only after the holders of Series A
Convertible Preferred Stock have received the full amount of dividends to which
they were entitled, ratably among all holders of other Preferred Stock and
Common Stock in proportion to the full amount to which they would otherwise be
respectively entitled.
3. Voting.
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a. Number of Votes. On any matter presented to the stockholders of the
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Corporation for their action or consideration at any meeting of stockholders of
the Corporation (or by written consent of stockholders in lieu of a meeting),
each holder of outstanding shares of Series A Convertible Preferred Stock shall
be entitled, subject to the limitation set forth in Section 3(b) below, to cast
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the number of votes for the Series A Convertible Preferred Stock in an amount
equal to the number of whole shares of Common Stock into which the shares of
Series A Convertible Preferred Stock held by such holder are convertible as of
the record date for determining stockholders entitled to vote on such matter.
Except as provided by law or by the provisions of Sections 3(c) and (d) below,
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holders of Series A Convertible Preferred Stock shall vote together with the
holders of Common Stock, and with the holders of any other series of Preferred
Stock the terms of which so provide, together as a single class.
b. Limitation on Number of Votes. Notwithstanding anything contained herein
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to the contrary, the voting rights of each holder of outstanding shares of
Series A Convertible Preferred Stock shall be limited in accordance with Section
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6 hereof, so that each holder of Series A Convertible Preferred Stock shall be
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entitled to vote only that number of votes equal to the number of whole shares
of Common Stock into which the shares of Series A Convertible Preferred Stock
are convertible as of the record date, up to a maximum of 4.99% of the
outstanding shares of Common Stock of the Corporation.
c. Senior Securities or Financial Instruments. At any time when a minimum
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of $3,500,000 of the Stated Value of the shares of Series A Convertible
Preferred Stock are outstanding, except where the vote or written consent of the
holders of a greater number of shares of the Corporation is required by law, by
the Corporation's Certificate of Incorporation, as amended (the "CERTIFICATE OF
INCORPORTION"), or by this Certificate of Designations, Preferences and Rights
of Series A Convertible Preferred Stock (the "CERTIFICATE OF DESIGNATIONS"), and
in addition to any other vote required by law, the Certificate of Incorporation,
or this Certificate of Designations, without the written consent or affirmative
vote of the holders of fifty percent (50%) of the then-outstanding shares of
Series A Convertible 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 Corporation shall not, either directly or by amendment, merger,
consolidation or otherwise, issue any Additional Shares of Common Stock (as
defined in Section 5(d) below) unless the same rank junior to the Series A
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Convertible Preferred Stock with respect to the distribution of assets on the
liquidation, dissolution or winding-up of the Corporation and with respect to
the payment of dividends and redemption rights, if applicable. Notwithstanding
the foregoing, this Section 3(c) shall not apply to a Qualified Financing or the
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Reverse Merger (as such terms are defined in Section 9 below).
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d. Other Limitations on Corporate Action. At any time when a minimum of
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$3,500,000 of the 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 Corporation
is required by law, the Certificate of Incorporation, or by this Certificate of
Designations, and in addition to any other vote required by law, the Certificate
of Incorporation, or by this Certificate of Designation, without the written
consent or affirmative vote of the holders of no-less than fifty percent (50%)
of the outstanding Stated Value of the Series A Convertible Preferred Stock
consenting or voting (as the case may be) as a separate class from the Common
Stock, the Corporation shall not, either directly or by amendment, merger,
consolidation or otherwise:
(i) liquidate, dissolve, or wind-up the business and affairs of the
Corporation, effect any Deemed Liquidation Event, or consent to any of the
foregoing;
(ii) effectuate any merger, reorganization, or recapitalization of the
Corporation, including such transactions with a Subsidiary (as defined in
Section 9 below) or related entity, or enter into any agreement to do any
of the foregoing, other than in connection with the Reverse Merger;
(iii) until the Effective Date of the Registration Statement, purchase
or redeem or pay or declare any dividend or make any distribution on, any
shares of stock other than the Series A Convertible Preferred Stock as
expressly authorized herein, or permit any Subsidiary to take any such
action, except for (A) securities repurchased from former employees,
officers, directors, consultants, or other persons who performed services
for the Corporation or any subsidiary in connection with the cessation of
such employment or service; or (B) securities repurchased upon the exercise
of the Corporation's right of first refusal to purchase such securities,
each as approved by the Board of Directors;
(iv) after the Effective Date of the Registration Statement, purchase
or redeem or pay or declare any dividend or make any distribution on, any
shares of stock other than the Series A Convertible Preferred Stock as
expressly authorized herein, or permit any Subsidiary to take any such
action, so long as an accrued dividend under Section 2 is unpaid, except
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for (A) securities repurchased from former employees, officers, directors,
consultants, or other persons who performed services for the Corporation or
any Subsidiary in connection with the cessation of such employment or
service; or (B) securities repurchased upon the exercise of the
Corporation's right of first refusal to purchase such securities, each as
approved by the Board of Directors;
(v) alter or change the voting or other powers, preferences, or other
rights, privileges, or restrictions of the Series A Convertible Preferred
Stock contained herein (by merger, consolidation, or otherwise);
(vi) increase the authorized number of shares of Preferred Stock or
Series A Convertible Preferred Stock; or
(vii) 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 the Permitted Debt.
4. Liquidation, Dissolution, or Winding-Up; Certain Mergers, Consolidations
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and Asset Sales.
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a. Payments to Holders of Series A Convertible Preferred Stock. Upon any
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liquidation, dissolution or winding-up of the Corporation, whether voluntary or
involuntary, the holders of the shares of Series A Convertible Preferred Stock
shall be paid, before any payment shall be paid to the holders of Common Stock,
or any other stock ranking on liquidation junior to the Series A Convertible
Preferred Stock (including the Series B Preferred Stock and Series C Preferred
Stock (as defined in the Securities Purchase and Share Exchange Agreement) )(the
"JUNIOR STOCK"), an amount for each share of Series A Convertible Preferred
Stock held by such holder equal to the sum of (1) the Stated Value thereof and
(2) an amount equal to dividends accrued but unpaid thereon, computed to the
date payment thereof is made available (such applicable amount payable with
respect to a share of Series A Convertible Preferred Stock sometimes being
referred to as the "INDIVIDUAL SERIES A PREFERRED LIQUIDATION PREFERENCE
PAYMENT" and with respect to all shares of Series A Convertible Preferred Stock
in the aggregate sometimes being referred to as the "AGGREGATE SERIES A
LIQUIDATION PREFERENCE PAYMENT"). If, upon such liquidation, dissolution or
winding-up of the Corporation, whether voluntary or involuntary, the assets to
be distributed among the holders of shares of Series A Convertible Preferred
Stock shall be insufficient to permit payment to the holders of Series A
Convertible Preferred Stock of an aggregate amount equal to the Aggregate Series
A Liquidation Preference Payment, then the entire assets of the Corporation to
be so distributed shall be distributed ratably among the holders of Series A
Convertible Preferred Stock (based on the Individual Series A Preferred
Liquidation Preference Payments due to the respective holders of Series A
Convertible Preferred Stock).
b. Payments to Holders of Junior Stock. After the payment of all
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preferential amounts required to be paid to the holders of the Series A
Convertible Preferred Stock and any other class or series of stock of the
Corporation ranking on liquidation senior to or on a parity with the Series A
Convertible Preferred Stock, the holders of shares of Junior Stock then
outstanding shall be entitled to receive the remaining assets of the Corporation
available for distribution to its stockholders as otherwise set forth in the
Certificate of Incorporation.
c. Deemed Liquidation Events.
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(i) The following events shall be deemed to be a liquidation of the
Corporation for purposes of this Section 4 (a "DEEMED LIQUIDATION EVENT"),
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unless the holders of a majority of the shares of Series A Convertible
Preferred Stock elect otherwise by written notice given to the Corporation
at least five (5) days prior to the effective date of any such event:
(A) a merger or consolidation (other than the Reverse Merger) in
which:
(I) the Corporation is a constituent party, or
(II) a Subsidiary is a constituent party and the Corporation
issues shares of its capital stock pursuant to such merger or
consolidation, except that any such merger or consolidation
involving the Corporation or a Subsidiary in which the shares of
capital stock of the Corporation outstanding immediately prior to
such merger or consolidation continue to represent, or are
converted or exchanged for shares of capital stock that
represent, immediately following such merger or consolidation, at
least a majority, by voting power, of the capital stock of (1)
the surviving or resulting corporation or (2) if the surviving or
resulting corporation is a wholly-owned subsidiary of another
corporation immediately following such merger or consolidation,
the parent corporation of such surviving or resulting corporation
(provided that, for the purpose of this Section 4(c)(i), all
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shares of Common Stock issuable upon exercise of options
outstanding immediately prior to such merger or consolidation, or
upon conversion of convertible securities outstanding immediately
prior to such merger or consolidation shall be deemed to be
outstanding immediately prior to such merger or consolidation
and, if applicable, converted or exchanged in such merger or
consolidation on the same terms as the actual outstanding shares
of Common Stock are converted or exchanged); or
(B) the sale, lease, transfer, or other disposition, in a single
transaction or series of related transactions, by the Corporation or
any Subsidiary of all or substantially all of the assets of the
Corporation and its Subsidiaries, taken as a whole, except where such
sale, lease, transfer, or other disposition is to a wholly-owned
Subsidiary.
(ii) The Corporation shall not have the power to effect any
transaction constituting a Deemed Liquidation Event pursuant to Section
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4(c)(i)(A)(I) above unless the agreement or plan of merger or consolidation
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provides that the consideration payable to the stockholders of the
Corporation shall be allocated among the holders of capital stock of the
Corporation in accordance with Sections 4(a) and 4(b) above.
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(iii) In the event of a Deemed Liquidation Event pursuant to Section
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4(c)(i)(A)(II) or (B) above, if the Corporation does not effect a
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dissolution of the Corporation under the Delaware General Corporation Law
within sixty (60) days after such Deemed Liquidation Event, then (A) the
Corporation shall deliver a written notice to each holder of Series A
Convertible Preferred Stock no later than the 60th day after the Deemed
Liquidation Event advising such holders of their right (and the
requirements to be met to secure such right) pursuant to the terms of the
following clause (B) to require the redemption of such shares of Series A
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Convertible Preferred Stock; and (B) if the holders of at least a majority
of the then-outstanding shares of Series A Convertible Preferred Stock so
request in a written instrument delivered to the Corporation not later than
seventy-five (75) days after such Deemed Liquidation Event, the Corporation
shall use the consideration received by the Corporation for such Deemed
Liquidation Event (net of any retained liabilities associated with the
assets sold or technology licensed, as determined in good faith by the
Board of Directors)(the "NET PROCEEDS") to redeem, to the extent legally
available therefor, on the 90th day after such Deemed Liquidation Event
(the "LIQUIDATION REDEMPTION DATE"), all outstanding shares of Series A
Convertible Preferred Stock at a price per share equal to the Series A
Liquidation Amount. In the event of a redemption pursuant to the preceding
sentence, if the Net Proceeds are not sufficient to redeem all outstanding
shares of Series A Convertible Preferred Stock, or if the Proceeds are not
sufficient to redeem all outstanding shares of Series A Convertible
Preferred Stock, or if the Corporation does not have sufficient funds
lawfully available to effect such redemption, the Corporation shall redeem
a pro rata portion of each holder's shares of Series A Convertible
Preferred Stock to the fullest extent of such Net Proceeds or such lawfully
available funds, as the case may be, and, where such redemption is limited
by the amount of lawfully available funds, the Corporation shall redeem the
remaining shares to have been redeemed as soon as practicable after the
Corporation has funds legally available therefor. Prior to the distribution
or redemption provided for in this Section 4(c)(iii), the Corporation shall
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not expend or dissipate the consideration received for such Deemed
Liquidation Event, except to discharge expenses incurred in the ordinary
course of business.
(iv) The amount deemed paid or distributed to the holders of capital
stock of the Corporation upon any such merger, consolidation, sale,
transfer, exclusive license, other disposition or redemption shall be the
cash or the value of the property, rights or securities paid or distributed
to such holders by the Corporation or the acquiring person, firm or other
entity. The value of such property, rights or securities shall be
determined in good faith by the Board of Directors.
5. Optional Conversion. The holders of Series A Convertible Preferred
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Shares shall have the conversion rights as follows (the "CONVERSION RIGHTS").
(a) Right to Convert. Each share of Series A Convertible Preferred Stock
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shall be convertible, at the option of the holder thereof, at any time after the
"CONVERSION DATE" (as defined in Section 9 below), and without the payment of
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additional consideration by the holder thereof, into such number of fully-paid
and nonassessable shares of Common Stock as is determined by dividing (1) the
sum of (i) the Stated Value per share and (ii) all dividends accrued and unpaid
on each such share to the date such share is converted, whether or not declared,
and all other dividends declared and unpaid on each such share through the date
of actual conversion, by (2) the Series A Conversion Price in effect at the time
of conversion. The "SERIES A CONVERSION PRICE" shall be seventy five cents
($.75). The Series A Conversion Price, and the rate at which shares of Series A
Convertible Preferred Stock may be converted into shares of Common Stock, shall
be subject to adjustment as provided below.
(b) Fractional Shares. No fractional shares of Common Stock shall be issued
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upon conversion of the Series A Convertible Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the fair market
value of a share of Common Stock as determined in good faith by the Board of
Directors, or round-up to the next whole number of shares, at the Corporation's
option. Whether or not fractional shares would be issuable upon such conversion
shall be determined on the basis of the total number of shares of Series A
Convertible Preferred Stock the holder is at the time converting into Common
Stock and the aggregate number of shares of Common Stock issuable upon such
conversion.
(c) Mechanics of Conversion.
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(i) For a holder of Series A Convertible Preferred Stock to
voluntarily convert shares of Series A Convertible Preferred Stock into
shares of Common Stock, that holder shall surrender the certificate or
certificates for such shares of Series A Convertible Preferred Stock (or,
if the registered holder alleges that such certificate has been lost,
stolen, or destroyed, a lost certificate affidavit and agreement reasonably
acceptable to the Corporation to indemnify the Corporation against any
claim that may be made against the Corporation on account of the alleged
loss, theft, or destruction of such certificate), at the office of the
transfer agent for the Series A Convertible Preferred Stock (or at the
principal office of the Corporation if the Corporation serves as its own
transfer agent), together with written notice that the holder elects to
convert all or any number of the shares of the Series A Convertible
Preferred Stock represented by such certificate or certificates and, if
applicable, any event on which such conversion is contingent. The notice
shall state the holder's name or the names of the nominees in which the
holder wishes the certificate or certificates for shares of Common Stock to
be issued. If required by the Corporation, certificates surrendered for
conversion shall be endorsed or accompanied by a written instrument or
instruments of transfer, in form satisfactory to the Corporation, duly
executed by the registered holder or his, her, or its attorney duly
authorized in writing. The close of business on the date of receipt by the
transfer agent of such certificates (or lost certificate affidavit and
agreement) and notice (or by the Corporation if the Corporation serves as
its own transfer agent) shall be the time of conversion (the "CONVERSION
TIME"), and the shares of Common Stock issuable upon conversion of the
shares represented by such certificate shall be deemed to be outstanding of
record as of that date. The Corporation shall, as soon as practicable after
the Conversion Time, issue and deliver at such office to the holder of
Series A Convertible Preferred Stock, or to his, her, or its nominee(s), a
certificate or certificates for the number of shares of Common Stock to
which the holder(s) shall be entitled, together with cash in lieu of any
fraction of a share, if applicable.
(ii) The Corporation shall at all times while the Series A Convertible
Preferred Stock is outstanding, reserve and keep available out of its
authorized but unissued stock, for the purpose of effecting the conversion
of the Series A Convertible Preferred Stock, such number of its duly
authorized shares of Common Stock as shall from time to time be sufficient
to effect the conversion of all outstanding Series A Convertible Preferred
Stock; and if, at any time, the number of authorized but unissued shares of
Common Stock shall not be sufficient to effect the conversion of all
then-outstanding shares of the Series A Convertible Preferred Stock, the
Corporation shall take such corporate action as may be necessary to
increase its authorized but unissued shares of Common Stock to such number
of shares as shall be sufficient for such purposes, including, without
limitation, engaging in best efforts to obtain the requisite stockholder
approval of any necessary amendment to the Certificate of Incorporation.
(iii) All shares of Series A Convertible Preferred Stock that shall
have been surrendered for conversion as herein provided shall no longer be
deemed to be outstanding, and all rights with respect to such shares,
including the rights, if any, to receive notices, to vote, and to receive
payment of any dividends accrued or declared but unpaid thereon, shall
immediately cease and terminate at the Conversion Time, except only the
right of the holders thereof to receive shares of Common Stock in exchange
therefor. Any shares of Series A Convertible Preferred Stock so converted
shall be retired and cancelled and shall not be reissued as shares of such
series, and the Corporation (without the need for stockholder action) may
from time to time take such appropriate action as may be necessary to
reduce the authorized number of shares of Series A Convertible Preferred
Stock accordingly.
(iv) Upon any such conversion, no adjustment to the Series A
Conversion Price shall be made for any accrued or declared but unpaid
dividends on the Series A Convertible Preferred Stock surrendered for
conversion or on the Common Stock delivered upon conversion.
(v) The Corporation shall pay any and all issue and other similar
taxes that may be payable in respect of any issuance or delivery of shares
of Common Stock upon conversion of shares of Series A Convertible Preferred
Stock pursuant to this Section 5. The Corporation shall not, however, be
required to pay any tax that may be payable in respect of any transfer
involved in the issuance and delivery of shares of Common Stock in a name
other than that in which the shares of Series A Convertible Preferred Stock
so converted were registered, and no such issuance or delivery shall be
made unless and until the person or entity requesting such issuance has
paid to the Corporation the amount of any such tax or has established, to
the satisfaction of the Corporation, that such tax has been paid.
(d) Adjustments to Series A Conversion Price for Diluting Issues.
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(i) Special Definitions. For purposes of this Section 5, the following
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definitions shall apply:
(A) "OPTION" shall mean rights, options, or warrants to subscribe
for, purchase, or otherwise acquire Common Stock or Convertible
Securities.
(B) "SERIES A ORIGINAL ISSUE DATE" shall mean the date on which
the first share of Series A Convertible Preferred Stock was issued.
(C) "CONVERTIBLE SECURITIES" shall mean any evidence of
indebtedness, shares or other securities directly or indirectly
convertible into or exchangeable for Common Stock, but excluding
Options.
(D) "ADDITIONAL SHARES OF COMMON STOCK" shall mean all shares of
Common Stock issued (or, pursuant to Section 5(d)(iii) below, deemed
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to be issued) by the Corporation after the Series A Original Issue
Date, other than the following ("EXEMPTED SECURITIES"):
(I) shares of Common Stock issued or deemed issued as a
dividend or distribution on Series A Convertible Preferred Stock,
Series A Warrants (as defined in Section 9 below) issued as
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penalty warrants to holders of Series A Convertible Preferred
Stock pursuant to Section 2 of the Investor Rights Agreement, and
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Series A Warrants issued as penalty warrants to the holder of the
Series D Warrant pursuant to Section 2 of the Investor Rights
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Agreement;
(II) shares of Common Stock issued or issuable by reason of
a dividend, stock split, split-up or other distribution on shares
of Common Stock that is covered by Section 5(e) or 5(f) below;
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(III) shares of Common Stock issued or deemed issued to
employees or directors of, or consultants to, the Corporation or
any of its Subsidiaries for services rendered pursuant to a plan,
agreement, or arrangement approved by the Board of Directors
(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);
(IV) shares of Common Stock or Convertible Securities
actually issued upon the exercise of Options, or shares of Common
Stock actually issued upon the conversion or exchange of
Convertible Securities (including the Series A Convertible
Preferred Stock, the Series B Convertible Preferred Stock, the
Series C Convertible Preferred Stock, the Series A Warrants, the
Series B Warrants, the Series C Warrants, the Series D Warrant,
and the warrants issued to Midtown Partners & Co., LLC (as
placement agent) in connection with the offering of the Series A
Convertible Preferred Stock), in each case, provided the issuance
is pursuant to the terms of such Option or Convertible Security;
(V) shares of Common Stock issued or deemed issued in
connection with a bona fide joint venture or business acquisition
of or by the Corporation, 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 preceding twelve (12) month period shall
not exceed ten percent (10%) of the then-outstanding Common Stock
(assuming full conversion and exercise of all convertible and
exercisable securities);
(VI) shares of Common Stock, Preferred Stock or other
securities issued by the Corporation in connection with the
Reverse Merger (the "EXCHANGED SECURITIES"), in exchange for
outstanding shares of Common Stock, Preferred Stock or other
securities of DeerValley Acquisitions Corp. (the "SURRENDERED
SECURITIES"); and
(VII) the Company's offering of up to 750,000 shares of
Series A Convertible Preferred Stock, 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.
(ii) No Adjustment of Series A Conversion Price. No adjustment in the
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Series A Conversion Price shall be made as the result of the issuance of
Additional Shares of Common Stock if: (a) the consideration per share
(determined pursuant to Section 5(d)(v) below) for such Additional Shares
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of Common Stock issued or deemed to be issued by the Corporation is equal
to or greater than the applicable Series A Conversion Price in effect
immediately prior to the issuance or deemed issuance of such Additional
Shares of Common Stock; or (b) prior to such issuance or deemed issuance,
the Corporation receives written notice from the holders of at least a
majority of the then-outstanding shares of Series A Convertible Preferred
Stock agreeing that no such adjustment shall be made as the result of the
issuance or deemed issuance of such Additional Shares of Common Stock.
(iii) Deemed Issue of Additional Shares of Common Stock.
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(A) If the Corporation, at any time or from time to time after
the Series A Original Issue Date, shall issue any Options or
Convertible Securities (excluding Options or Convertible Securities
that, upon exercise, conversion, or exchange thereof, would entitle
the holder thereof to receive Exempted Securities pursuant to Sections
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5(d)(i)(D)(I), (II), (III), (IV), (V), (VI) or (VII)) or shall fix a
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record date for the determination of holders of any class of
securities entitled to receive any such Options or Convertible
Securities, then the maximum number of shares of Common Stock (as set
forth in the instrument relating thereto, assuming the satisfaction of
any conditions to exercisability, convertibility, or exchangeability
but without regard to any provision contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such Options
or, in the case of Convertible Securities and Options therefor, the
conversion or exchange of such Convertible Securities, shall be deemed
to be Additional Shares of Common Stock issued as of the time of such
issue or, in case such a record date shall have been fixed, as of the
close of business on such record date.
(B) If the terms of any Option or Convertible Security, the
issuance of which resulted in an adjustment to the Series A Conversion
Price pursuant to the terms of Section 5(d)(iv) below, are revised
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(either automatically pursuant to the provisions contained therein or
as a result of an amendment to such terms) to provide for either (1)
any increase or decrease in the number of shares of Common Stock
issuable upon the exercise, conversion, or exchange of any such Option
or Convertible Security or (2) any increase or decrease in the
consideration payable to the Corporation upon such exercise,
conversion, or exchange, then, effective upon such increase or
decrease becoming effective, the Series A Conversion Price computed
upon the original issue of such Option or Convertible Security (or
upon the occurrence of a record date with respect thereto) shall be
readjusted to such Series A Conversion Price as would have been
obtained had such revised terms been in effect upon the original date
of issuance of such Option or Convertible Security. Notwithstanding
the foregoing, no adjustment pursuant to this clause (B) shall have
the effect of increasing the Series A Conversion Price to an amount
that exceeds the lower of (i) the Series A Conversion Price on the
original adjustment date, or (ii) the Series A Conversion Price that
would have resulted from any issuances of Additional Shares of Common
Stock between the original adjustment date and such readjustment date.
(C) If the terms of any Option or Convertible Security (excluding
Options or Convertible Securities that, upon exercise, conversion, or
exchange thereof, would entitle the holder thereof to receive Exempted
Securities pursuant to Sections 5(d)(i)(D)(I), (II), (III), (IV), (V),
-----------------------------------------------
(VI) or (VII) above), the issuance of which did not result in an
--------------
adjustment to the Series A Conversion Price pursuant to the terms of
Section 5(d)(iv) below (either because the consideration per share
----------------
(determined pursuant to Section 5(d)(v) below) of the Additional
----------------
Shares of Common Stock subject thereto was equal to or greater than
the Series A Conversion Price then in effect, or because such Option
or Convertible Security was issued before the Series A Original Issue
Date), are revised after the Series A Original Issue Date (either
automatically pursuant to the provisions contained therein or as a
result of an amendment to such terms) to provide for either (1) any
increase or decrease in the number of shares of Common Stock issuable
upon the exercise, conversion, or exchange of any such Option or
Convertible Security or (2) any increase or decrease in the
consideration payable to the Corporation upon such exercise,
conversion, or exchange, then such Option or Convertible Security, as
so amended, and the Additional Shares of Common Stock subject thereto
(determined in the manner provided in Section 5(d)(iii)(A) above)
-------------------
shall be deemed to have been issued effective upon such increase or
decrease becoming effective.
(D) Upon the expiration or termination of any unexercised Option
or unconverted or unexchanged Convertible Security that resulted
(either upon its original issuance or upon a revision of its terms) in
an adjustment to the Series A Conversion Price pursuant to the terms
of Section 5(d)(iv) below, the Series A Conversion Price shall be
----------------
readjusted to such Series A Conversion Price as would have been
obtained had such Option or Convertible Security never been issued.
(iv) Adjustment of Series A Conversion Price Upon Issuance of
----------------------------------------------------------------
Additional Shares of Common Stock. If the Corporation shall at any time
-------------------------------------
after the Series A Original Issue Date issue Additional Shares of Common
Stock (including Additional Shares of Common Stock deemed to be issued
pursuant to Section 5(d)(iii) above), without consideration or for a
-----------------
consideration per share less than the applicable Series A Conversion Price
in effect immediately prior to such issue, then the Series A Conversion
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.
(v) Determination of Consideration. For purposes of this Section 5(d),
------------------------------
the consideration received by the Corporation for the issue of any
Additional Shares of Common Stock shall be computed as follows:
(A) Cash and Property: Such consideration shall:
-----------------
(I) insofar as it consists of cash, be computed at the
aggregate amount of cash received by the Corporation, excluding
amounts paid or payable for accrued interest;
(II) insofar as it consists of property other than cash, be
computed at the fair market value thereof at the time of such
issue, as determined in good faith by the Board of Directors; and
(III) if Additional Shares of Common Stock are issued
together with other shares or securities or other assets of the
Corporation for consideration that covers both, be the proportion
of such consideration so received, computed as provided in
clauses (I) and (II) above, as determined in good faith by the
Board of Directors.
(B) Options and Convertible Securities. The consideration per
-------------------------------------
share received by the Corporation for Additional Shares of Common
Stock deemed to have been issued pursuant to Section 5(d)(iii) above,
----------------
relating to Options and Convertible Securities, shall be determined by
dividing
(I) the total amount, if any, received or receivable by the
Corporation as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments
relating thereto, without regard to any provision contained
therein for a subsequent adjustment of such consideration)
payable to the Corporation upon the exercise of such Options or
the conversion or exchange of such Convertible Securities, or in
the case of Options for Convertible Securities, the exercise of
such Options for Convertible Securities and the conversion or
exchange of such Convertible Securities, by
(II) the maximum number of shares of Common Stock (as set
forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Options or the
conversion or exchange of such Convertible Securities.
(vi) Multiple Closing Dates. If the Corporation shall issue on more
------------------------
than one date Additional Shares of Common Stock that are a part of one
transaction or a series of related transactions and that would result in an
adjustment to the Series A Conversion Price pursuant to the terms of
Section 5(d)(iv) above, then, upon the final such issuance, the Series A
----------------
Conversion Price shall be readjusted to give effect to all such issuances
as if they occurred on the date of the first such issuance (and without
giving additional effect to any adjustments as a result of any subsequent
issuances within such period).
(e) Adjustment for Stock Splits and Combinations. If the Corporation shall,
--------------------------------------------
at any time or from time to time after the Series A Original Issue Date, effect
a subdivision of the outstanding Common Stock without a comparable subdivision
of the Series A Convertible Preferred Stock, or combine the outstanding shares
of Series A Convertible Preferred Stock without a comparable combination of the
Common Stock, the Series A Conversion Price in effect immediately before that
subdivision or combination shall be proportionately decreased so that the number
of shares of Common Stock issuable on conversion of each share of such series
shall be increased in proportion to such increase in the aggregate number of
shares of Common Stock outstanding or in proportion to such decrease in the
aggregate number of shares of Series A Convertible Preferred Stock outstanding,
as applicable. If the Corporation shall, at any time or from time to time after
the Series A Original Issue Date, combine the outstanding shares of Common Stock
without a comparable combination of the Series A Convertible Preferred Stock or
effect a subdivision of the outstanding shares of Series A Convertible Preferred
Stock without a comparable subdivision of the Common Stock, the Series A
Conversion Price in effect immediately before the combination or subdivision
shall be proportionately increased so that the number of shares of Common Stock
issuable on conversion of each share of such series shall be decreased in
proportion to such decrease in the aggregate number of shares of Common Stock
outstanding or in proportion to such increase in the aggregate number of shares
of Series A Convertible Preferred Stock outstanding, as applicable. Any
adjustment under this subsection shall become effective at the close of business
on the date the subdivision or combination becomes effective.
(f) Adjustment for Certain Dividends and Distributions. If the Corporation
--------------------------------------------------
shall, at any time or from time to time after the Series A Original Issue Date,
make or issue, or fix a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable on the
Common Stock in additional shares of Common Stock, then, and in each such event,
the Series A Conversion Price in effect immediately before such event shall be
decreased as of the time of such issuance or, in the event such a record date
shall have been fixed, as of the close of business on such record date, by
multiplying the Series A Conversion Price then in effect by a fraction:
(1) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date, and
(2) the denominator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of
shares of Common Stock issuable in payment of such dividend or
distribution;
provided, however, that if such record date shall have been fixed and such
dividend is not fully paid or if such distribution is not fully made on the date
fixed therefor, the Series A Conversion Price shall be recomputed accordingly as
of the close of business on such record date and thereafter the Series A
Conversion Price shall be adjusted pursuant to this subsection as of the time of
actual payment of such dividends or distributions; and provided further,
however, that no such adjustment shall be made if the holders of Series A
Convertible Preferred Stock simultaneously receive (i) a dividend or other
distribution of shares of Common Stock in a number equal to the number of shares
of Common Stock as they would have received if all outstanding shares of Series
A Convertible Preferred Stock had been converted into Common Stock on the date
of such event; or (ii) a dividend or other distribution of shares of Series A
Convertible Preferred Stock that are convertible, as of the date of such event,
into such number of shares of Common Stock as is equal to the number of
additional shares of Common Stock being issued with respect to each share of
Common Stock in such dividend or distribution.
(g) Adjustments for Other Dividends and Distributions. If the Corporation
--------------------------------------------------
shall, at any time or from time to time after the Series A Original Issue Date,
make or issue, or fix a record date for the determination of holders of capital
stock of the Corporation entitled to receive, a dividend or other distribution
payable in securities of the Corporation (other than a distribution of shares of
Common Stock in respect of outstanding shares of Common Stock) or in other
property, then, and in each such event, the holders of Series A Convertible
Preferred Stock shall receive, simultaneously with the distribution to the
holders of such capital stock, a dividend or other distribution of such
securities or other property in an amount equal to the amount of such securities
or other property as they would have received if all outstanding shares of
Series A Convertible Preferred Stock had been converted into Common Stock on the
date of such event.
(h) Adjustment for Merger or Reorganization, etc. Subject to the provisions
--------------------------------------------
of Section 4(c) above, if there shall occur any reorganization,
------------
recapitalization, reclassification, consolidation or merger involving the
Corporation in which the Common Stock (but not the Series A Convertible
Preferred Stock) is converted into or exchanged for securities, cash, or other
property (other than a transaction covered by Sections 5(e), (f), or (g) above),
-------------------------
then, following any such reorganization, recapitalization, reclassification,
consolidation, or merger, each share of Series A Convertible Preferred Stock
shall thereafter be convertible in lieu of the Common Stock into which it was
convertible prior to such event into the kind and amount of securities, cash or
other property that a holder of the number of shares of Common Stock of the
Corporation issuable upon conversion of one share of Series A Convertible
Preferred Stock immediately prior to such reorganization, recapitalization,
reclassification, consolidation, or merger would have been entitled to receive
pursuant to such transaction; and, in such case, appropriate adjustment (as
determined in good faith by the Board of Directors) shall be made in the
application of the provisions in this Section 5 with respect to the rights and
---------
interests thereafter of the holders of the Series A Convertible Preferred Stock,
to the end that the provisions set forth in this Section 5 (including provisions
---------
with respect to changes in and other adjustments of the Series A Conversion
Price) shall thereafter be applicable, as nearly as reasonably may be, in
relation to any securities or other property thereafter deliverable upon the
conversion of the Series A Convertible Preferred Stock.
(i) Certificate as to Adjustments. Upon the occurrence of each adjustment
------------------------------
or readjustment of the Series A Conversion Price pursuant to this Section 5, the
---------
Corporation, at its expense, shall, as promptly as reasonably practicable, but
in any event not later than ten (10) days thereafter, compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Series A Convertible Preferred Stock a certificate setting forth such adjustment
or readjustment (including the kind and amount of securities, cash or other
property into which the Series A Convertible Preferred Stock is convertible) and
showing in detail the facts upon which such adjustment or readjustment is based.
The Corporation shall, as promptly as reasonably practicable after the written
request at any time of any holder of Series A Convertible Preferred Stock (but
in any event not later than ten (10) days thereafter), furnish or cause to be
furnished to such holder a certificate setting forth (i) the Series A Conversion
Price then in effect, and (ii) the number of shares of Common Stock and the type
and amount, if any, of other securities, cash, or property that then would be
received upon the conversion of Series A Convertible Preferred Stock.
(j) Notice of Record Date. In the event:
--------------------
(i) the Corporation shall take a record of the holders of its Common
Stock (or other stock or securities at the time issuable upon conversion of
the Series A Convertible Preferred Stock) for the purpose of entitling or
enabling them to receive any dividend or other distribution, or to receive
any right to subscribe for or purchase any shares of stock of any class or
any other securities, or to receive any other right; or
(ii) of any capital reorganization of the Corporation, any
reclassification of the Common Stock, or any Deemed Liquidation Event; or
(iii) of the voluntary or involuntary dissolution, liquidation, or
winding-up of the Corporation, then, and in each such case, the Corporation
will send or cause to be sent to the holders of the Series A Convertible
Preferred Stock a notice specifying, as the case may be, (i) the record
date for such dividend, distribution, or right, and the amount and
character of such dividend, distribution, or right; or (ii) the effective
date on which such reorganization, reclassification, consolidation, merger,
transfer, dissolution, liquidation, or winding-up is proposed to take
place, and the time, if any is to be fixed, as of which the holders of
record of Common Stock (or such other stock or securities at the time
issuable upon the conversion of the Series A Convertible Preferred Stock)
shall be entitled to exchange their shares of Common Stock (or such other
stock or securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, transfer,
dissolution, liquidation, or winding-up, and the amount per share and
character of such exchange applicable to the Series A Convertible Preferred
Stock and the Common Stock. Such notice shall be sent at least ten (10)
days prior to the record date or effective date for the event specified in
such notice. Any notice required by the provisions hereof to be given to a
holder of shares of Series A Convertible Preferred Stock shall be deemed
sent to such holder if deposited in the United States mail, postage
prepaid, and addressed to such holder at his, her, or its address appearing
on the books of the Corporation.
6. Conversion Cap. In no event shall any holder be entitled to convert any
--------------
Series A Convertible Preferred Stock to the extent that, after such conversion,
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 unconverted portion of the
Series A Convertible Preferred Stock 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
conversion). For purposes of this Section 6, 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 conversion of the Series A
Convertible Preferred Stock.
7. Intentionally omitted.
8. Waiver. Any of the rights, powers, or preferences of the holders of
------
Series A Convertible Preferred Stock set forth herein may be waived by the
affirmative consent or vote of the holders of at least a majority of the shares
of Series A Convertible Preferred Stock then outstanding.
9. Definitions. As used herein, the following terms shall have the
-----------
following meanings:
a. "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 (10%) or more of the outstanding equity or voting power of such Person.
b. "CLOSING PRICE" for any day means: (i) the last reported sales price
regular way of the Common Stock on such day on the principal securities exchange
on which the Common Stock is then listed or admitted to trading or on Nasdaq, as
applicable; (ii) if no sale takes place on such day on any such securities
exchange or system, the average of the closing bid and asked prices, regular
way, on such day for the Common Stock as officially quoted on any such
securities exchange or system; (iii) if on such day such shares of Common Stock
are not then listed or admitted to trading on any securities exchange or system,
the last reported sale price, regular way, on such day for the Common Stock in
the domestic over-the-counter market as reported on the Over the Counter
Bulletin Board (the "OTCBB"); (iv) if no sale takes place on such day, the
average of the high and low bid price of the Common Stock on such day in the
domestic over-the-counter market as reported on the OTCBB; (v) if on such day
such shares of Common Stock are not then listed or admitted to trading on any
securities exchange or system, the last reported sale price, regular way, on
such day for the Common Stock in the domestic over-the-counter market as
reported on the by the National Quotation Bureau, Incorporated, or any other
successor organization, or (vi) if no sale takes place on such day, the average
of the high and low bid price of the Common Stock on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any other successor organization. If, at any time, such shares
of Common Stock are not listed on any domestic exchange or quoted in the NASDAQ
System or the domestic over-the-counter market or reported in the "pink sheets,"
the Closing Price shall be the fair market value thereof determined by an
independent appraiser selected in good faith by the Board of Directors.
c. "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).
d. "CONVERSION DATE" shall mean either (1) the Effective Date of the
Registration Statement, or (2) the date that the holder of the Series A
Convertible Preferred Stock has satisfied the minimum one (1) year holding
requirements set forth in SEC Rule 144(d).
e. "EFFECTIVE DATE OF THE REGISTRATION STATEMENT" shall mean the date on
which the SEC declares effective the Corporation's registration statement filed
pursuant to Section 2 of the Investor Rights Agreement.
f. "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, 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.
g. "INVESTOR RIGHTS AGREEMENT" shall mean the Investor Rights Agreement
dated January __, 2006, by and among the Corporation and the other parties
thereto.
h. "MARKET PRICE" shall mean the average of the five (5) Closing Prices of
the Common Stock for the five (5) Trading Days preceding the date or the dates
that the dividend is due or a conversion is to occur. Notwithstanding the
foregoing, if at the time a dividend is paid pursuant to Section 2(a) above with
-----------
registered Common Stock, and the Corporation's Common Stock is not listed on any
domestic exchange or quoted in the NASDAQ System or the domestic
over-the-counter market or reported in the "pink sheets," the Closing Price
shall be the fair market value thereof determined by an independent appraiser
selected in good faith by the Board of Directors.
i. "PERSON" shall mean any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a person under Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended.
j. "PERMITTED DEBT" shall mean (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 as of 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 that forms a part of the Securities Purchase and
Share Exchange Agreement.
k. "QUALIFIED FINANCING" means an equity offering obtained by the
Corporation after the date of this Certificate of Designation, provided,
however, that (i) the gross 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 the Qualified Financing shall not have voting rights more
favorable than voting rights granted to the Series A Convertible Preferred
Stock. As a point of clarification, all equity financings after the date of this
Certificate of Designations shall be aggregated for purposes of determining if
the $3,000,000 cap has been met.
l. "REVERSE MERGER" means the reverse triangular merger transaction, share
exchange or other similar transaction with DeerValley Acquisitions, Corp. to be
contemplated on or about the date of this Certificate of Designations, and the
acquisition of all or substantially all of the issued and outstanding capital
stock of Deer Valley Homebuilders, Inc.
m. "SEC" means the United States Securities and Exchange Commission.
n. "SEC RULE 144" means Rule 144 promulgated by the SEC under the
Securities Act.
o. "SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
p. "SERIES A WARRANTS" means the Series A Warrants for the purchase of
Common Stock issued to purchasers of Series A Convertible Preferred Stock
pursuant to the Securities Purchase and Share Exchange Agreement.
q. "SERIES B WARRANTS" means the Series B Warrants for the purchase of
Common Stock issued to purchasers of Series A Convertible Preferred Stock
pursuant to the Securities Purchase and Share Exchange Agreement.
r. "SERIES C WARRANTS" means the Series C Warrants for the purchase of
Common Stock issued to TotalCFO, LLC pursuant to the Securities Purchase and
Share Exchange Agreement.
s. "SERIES D WARRANT" means the Series D Warrant for the purchase of Common
Stock issued to Vicis Capital Master Fund pursuant to the Securities Purchase
and Share Exchange Agreement.
t. "SECURITIES PURCHASE AND SHARE EXCHANGE AGREEMENT" means the Securities
Purchase and Share Exchange Agreement dated January __, 2006, by and between the
Company, certain shareholders of the Company a party thereto, DeerValley
Acquisitions, Corp. ("DVA"), certain DVA shareholders a party thereto, Vicis
Capital Master Fund, and each of the purchasers of Series A Convertible
Preferred Stock of the Company a party thereto.
u. "SUBSIDIARY" shall mean any corporation, association, partnership,
limited liability company or other business entity of which more than fifty
percent (50%) of the total voting power is, at the time, owned or controlled,
directly or indirectly, by the Corporation or one or more of the other
Subsidiaries of the Corporation or a combination thereof.
v. "TRADING DAY" means a day on which the securities exchange, association,
or quotation system on which shares of Common Stock are listed for trading shall
be open for business or, if the shares of Common Stock shall not be listed on
such exchange, association, or quotation system for such day, a day with respect
to which trades in the United States domestic over-the-counter market shall be
reported.
[signature page follows]
IN WITNESS WHEREOF, this Certificate of Designation has been executed by a
duly authorized officer of the Corporation on this __ day of January, 2006.
CYTATION CORPORATION
By: /s/ Charles G. Masters
----------------------------------------
Charles G. Masters, Chief Executive Officer
[Signature Page to Series A Preferred Certificate of Designation]