THE SECURITIES REPRESENTED BY THIS WARRANT MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
FILED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT.
Void after 5:00 P.M., New York Time, on August 14, 2005
Warrant to Purchase
25,000 Shares of
Common Stock
REDEEMABLE COMMON STOCK PURCHASE WARRANT
This Is to Certify That, FOR VALUE RECEIVED,
JOHN P. KELLY
is entitled to purchase, subject to the provisions of this Warrant, from
SYCONET.COM, INC. (the "Company"), a Delaware corporation, at any time on or
after August 14, 2000 (the "effective date"), and not later than 5:00 P.M., New
York time, on August 14, 2005, twenty-five thousand (25,000) shares of Common
Stock of the Company at a purchase price per share of $0.12; provided, however,
that the number of shares of Common Stock to be received upon the exercise of
this Warrant and the price to be paid for a share of Common Stock shall be
adjusted from time to time as hereinafter set forth. The shares of Common Stock
deliverable upon such exercise, and as adjusted from time to time, are
hereinafter sometimes referred to as "Warrant Stock" and the exercise price of
this Warrant in effect at any time and as adjusted from time to time is
hereinafter sometimes referred to as the "Exercise Price". The above-named
registered owner of this Warrant and its permitted transferees and/or assignees
are hereinafter referred to as, collectively, the "Holder".
(a) Exercise of Warrant. This Warrant may be exercised in whole or in part
at any time or from time to time on or after the effective date, but not later
than 5:00 P.M., New York time, on August 14, 2005, or if such expiration date is
a day on which banking institutions are authorized by law to close, then on the
next succeeding day which shall not be such a day, by presentation and surrender
hereof to the Company with the Purchase Form annexed
<PAGE>
hereto duly executed and accompanied by payment of the Exercise Price for the
number of shares of Warrant Stock specified in such form, together with all
federal and state taxes applicable upon such exercise.
If this Warrant should be exercised in part only, the Company shall,
upon surrender of this Warrant for cancellation, execute and deliver a new
warrant evidencing the right of the Holder to purchase the balance of the
Warrant Stock purchasable hereunder. At the close of business on the day of
receipt by the Company of this Warrant at the office or agency of the
Company, in proper form for exercise and accompanied by payment as
aforesaid for the Warrant Stock to be acquired, the Holder shall be deemed
to be the holder of record of the number of fully paid and non-assessable
shares of Common Stock issuable upon such exercise, notwithstanding that
the stock transfer books of the Company shall then be closed or that
certificates representing such shares of Common Stock shall not then
actually be delivered to the Holder.
(b) Reservation of Shares. The Company hereby agrees that at all times
there shall be reserved for issuance and/or delivery upon exercise of this
Warrant such number of shares of its Common Stock as shall be required for
issuance or delivery upon exercise of this Warrant.
(c) Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the holder an amount in cash equal to such fraction
multiplied by the current market value of such fractional share, determined as
follows:
(1) If the Common Stock is listed on a national securities exchange or
admitted to unlisted trading privileges on such exchange, the current value
shall be the last reported sales price of the Common Stock on such exchange
on the last trading day prior to the date of exercise of this Warrant, or
if no such sale is made on such day, the average closing bid and asked
prices for such day on the composite tape of such exchange; or
(2) If the Common Stock is not so listed or admitted to unlisted
trading privileges, the current value shall be the mean of the last
reported bid and asked prices reported by the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") (or, if not
reported by NASDAQ, then reported by Pink Sheets LLC) on the last trading
day prior to the date of the exercise of this Warrant; or
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<PAGE>
(3) If the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and asked prices are not so reported, the
current value shall be an amount, not less than fully diluted book value,
determined in such reasonable manner as may be prescribed by the Board of
Directors of the Company, such determination to be final and binding on the
Holder.
(d) Exchange, Assignment or Loss of Warrant. This Warrant is exchangeable,
without expense, at the option of the Holder, upon presentation and surrender
hereof to the Company or at the office of its stock transfer agent, if any, for
other Warrants of different denominations entitling the Holder thereof to
purchase in the aggregate the same amount of Warrant Stock purchasable
hereunder. Any such assignment shall be made by surrender of this Warrant to the
Company or at the office of its stock transfer agent, if any, with the
Assignment Form annexed hereto duly executed and funds sufficient to pay any
transfer tax; whereupon the Company shall, without charge, execute and deliver a
new Warrant in the name of the assignee named in such instrument of assignment
and this Warrant shall promptly be cancelled. This Warrant may be divided or
combined with other Warrants which carry the same rights upon presentation
hereof at the office of the Company or at the office of its stock transfer
agent, if any, together with a written notice specifying the names and
denominations in which new Warrants are to be issued. The term "Warrant" as used
herein includes any Warrants issued in substitution for or replacement of this
Warrant, or into which this Warrant may be divided or exchanged. Upon receipt by
the Company of evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction) of
indemnification reasonably satisfactory in form and substance to its counsel,
and upon surrender and cancellation of this Warrant, if mutilated, the Company
will execute and deliver a new Warrant of like tenor and date. Any such new
Warrant executed and delivered shall constitute an additional contractual
obligation on the part of the Company, whether or not this Warrant so lost,
stolen, destroyed, or mutilated, shall be at any time enforceable by anyone.
(e) Rights of the Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder of the Company, either at law or in
equity, and the rights of the Holder are limited to those expressed in this
Warrant and are not enforceable against the Company except to the extent set
forth herein.
(f) Anti-Dilution Provisions.
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<PAGE>
(1) Stock Dividends, Subdivisions and Combinations. If the Company
shall at any time issue Common Stock or Convertible Securities by way of
dividend or other distribution on any stock of the Company, or subdivide or
combine the outstanding shares of Common Stock, then the Exercise Price
shall be proportionately decreased in the case of such issuance (on the day
following the date fixed for determining shareholders entitled to receive
such dividend or other distribution) or decreased in the case of such
subdivision or increased in the case of such combination (on the date that
such subdivision or combination shall become effective). Upon any
adjustment of the Exercise Price pursuant to this Section (f)(1), the
holder of this Warrant shall thereafter (until another such adjustment) be
entitled to purchase, at the new Exercise Price, the amount of Warrant
Stock, calculated to the nearest full share, obtained by multiplying the
number of shares of Warrant Stock then issuable upon exercise of this
Warrant by the Exercise Price then in effect and dividing the product so
obtained by the new Exercise Price.
(2) No Adjustment for Small Amounts. Anything in this Section (f) to
the contrary notwithstanding, the Company shall not be required to give
effect to any adjustment in the Exercise Price unless and until the net
effect of one or more adjustments, determined as above provided, shall have
required a change of the Exercise Price by at least five percent in such
Price, but when the cumulative net effect of more than one adjustment so
determined shall be to change the actual Exercise Price by at least five
percent, such change in the Exercise Price shall thereupon be given effect.
(3) Common Stock Defined. Whenever reference is made in this Section
(f) to the issue or sale of shares of Common Stock, the term "Common Stock"
shall mean the Common Stock of the Company of the class authorized as of
the date hereof and any other class of stock ranking on a parity with such
Common Stock. However, subject to the provisions of Section (i) hereof,
shares issuable upon exercise hereof shall include only shares of the class
designated as Common Stock of the Company as of the date hereof.
(g) Officer's Certificate. Whenever the Exercise Price shall be adjusted as
required by the provisions of Section (f) hereof, the Company shall forthwith
file in the custody of its Secretary or an Assistant Secretary at its principal
office, and with its stock transfer agent, if any, an officer's certificate
showing the adjusted Exercise Price determined as herein provided and setting
forth in reasonable detail the facts requiring such adjustments. Each officer's
certificate shall be made available at
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<PAGE>
all reasonable times for inspection by the Holder, and the Company shall,
forthwith after each such adjustment, mail a copy of such certificate to the
Holder. Such certificate shall be conclusive as to the correctness of such
adjustment.
(h) Notices to Warrant Holders. So long as this Warrant shall be
outstanding and unexercised, (i) if the Company shall pay any dividend or make
any distribution upon the Common Stock to the holders thereof as a group in
proportion to their respective shareholdings, or (ii) if the Company shall offer
to the holders of Common Stock, as a group in proportion to their respective
shareholdings, for subscription or purchase by them any shares of stock of any
class or any other rights, or (iii) if any capital reorganization of the
Company, reclassification of the capital stock of the Company, consolidation or
merger of the Company with or into another corporation (other than a merger in
which the Company is the continuing corporation and which does not result in any
reclassification, capital reorganization or other similar change of outstanding
shares of Common Stock of the class issuable upon exercise of this Warrant),
sale, lease or transfer of all or substantially all of the property and assets
of the Company to another corporation, or voluntary or involuntary dissolution,
liquidation or winding up of the Company shall be effected, then, in any such
case, the Company shall cause to be delivered to the Holder, at least ten days
prior to the date specified in (x) or (y) below, as the case may be, a notice
containing a brief description of the proposed action and stating the date on
which (x) a record is to be taken for the purpose of such dividend, distribution
or rights, or (y) such reclassification, reorganization, consolida- tion,
merger, conveyance, lease, dissolution, liquidation or winding up is to take
place and the date, if any, as of which the holders of Common Stock of record
shall be entitled to exchange their shares of Common Stock for securities or
other property deliverable upon such reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding up.
(i) Reclassification, Reorganization or Merger. In case of any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the Company (other than a change in par value or to par
value, or as a result of an issuance of Common Stock by way of dividend or other
distribution or of a subdivision or combination), or in case of any
consolidation or merger of the Company with or into another corporation (other
than a merger in which the Company is the continuing corporation and which does
not result in any reclassification, capital reorganization or other similar
change of outstanding shares of Common Stock of the class issuable upon exercise
of this Warrant),
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<PAGE>
or in case of any sale or conveyance to any other corporation of the property
and assets of the Company as an entirety or substantially as an entirety, the
Company shall cause effective provision to be made so that the Holder shall have
the right thereafter, by exercising this Warrant, to purchase the kind and
amount of shares of securities and other property receivable upon such
reclassification, capital reorganization or other similar change, consolidation,
merger, sale or conveyance as if the Holder had exercised this Warrant prior to
such transaction. Any such provision shall include provision for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Warrant. The foregoing provisions of this Section (i) shall
similarly apply to successive reclassifications, capital reorganizations and
similar changes of shares of Common Stock and to successive consolidations,
mergers, sales or conveyances.
(j) Spin-Offs. In the event the Company spins-off a subsidiary by
distributing to the shareholders of the Company, as a dividend or otherwise, the
stock of the subsidiary, the Company shall reserve, for the life of the Warrant,
shares of the subsidiary to be delivered to the Holder upon exercise of the
Warrant to the same extent as if Holder was the owner of record of the Warrant
Stock on the record date for payment of the shares of the subsidiary.
(k) "Piggyback" Registration Rights.
(1) Definitions. As used in this Section (k), the following terms
shall have the following meanings:
(a) The term "Holder" shall mean any person owning or having the
right to acquire Registrable Securities or any permitted transferee of
a Holder.
(b) The terms "register", "registered" and "registration" refer
to a registration effected by preparing and filing a registration
statement or similar document (except a Registration Statement filed
for a purpose which would render inappropriate the covenants of the
Company contained in this Section (k) such as a Registration Statement
on Form S-8 or any other inappropriate form), in compliance with the
Securities Act of 1933, as amended (the "Securities Act"), and the
declaration or order of effectiveness of such registration statement
or document.
(c) The term "Registrable Securities" shall mean the Warrant
Stock; provided, however, that securities shall only be treated as
Registrable Securities if and only for so long as they (A) have not
been disposed of pursuant to a registration
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<PAGE>
statement declared effective by the Securities and Exchange Commission
("SEC"), (B) have not been sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities
Act wherein all transfer restrictions and restrictive legends with
respect thereto are removed upon the consummation of such sale and (C)
are held by a Holder or a permitted transferee of a Holder pursuant to
Section (k)(10) below.
(2) Registration under the Securities Act.
(a) In the event that at any time before the third anniversary of
the issue date of this Warrant the Company intends to register
securities which relate to a current offering of securities of the
Company, the Company shall give written notice (the "Company Notice")
of such intention to the Holder, and upon receipt within 30 days after
the giving of the Company Notice of the written request of the Holder,
the Company shall include in such registration the Registrable
Securities of the Holder so as to permit the public sale thereof by
the Holder in compliance with the Securities Act. Neither the delivery
of a Company Notice nor of a registration request by any Holder shall
in any way obligate the Company to file such Registration Statement.
Notwithstanding the filing of the Registration Statement the Company
may, at any time prior to the effective date thereof, determine not to
offer the securities to which it relates, without liability to the
Holder except that the Company shall pay such expenses as are to be
paid by it under Section (k)(5).
(b) In no event shall the Company be obligated to file more than
one registration statement for the subject Registrable Securities on
account of the registration rights granted to the Holders thereof.
(3) Obligations of the Company. Whenever required under this Section
(k) to include Registrable Securities in a registration statement, the
Company shall, as expeditiously as reasonably possible:
(a) Use its reasonable best efforts to cause such registration
statement to become effective, and, upon the request of the Holder,
keep such registration statement effective for a period of up to 120
days or until the distribution contemplated in the Registration
Statement has been completed and,
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<PAGE>
during the period that such registration statement is required to be
maintained hereunder, file such post-effective amendments and
supplements thereto as may be required by the Securities Act and the
rules and regulations thereunder or otherwise to ensure that the
prospectus included therein does not contain any untrue statement of
material fact or omit to state a fact required to be stated therein or
necessary to make the statements contained therein, in light of the
circumstances under which they are made, not misleading; provided,
however, that such 120-day period shall be extended for a period of
time equal to the period that the Holder refrains from selling any
securities included in such regis tration at the request of an
underwriter of Common Stock (or other securities) of the Company, and
provided further that if applicable rules under the Securities Act
governing the obligation to file a post-effective amendment permit, in
lieu of filing a post-effective amendment that (i) includes any
prospectus required by Section 10(a)(3) of the Securities Act or (ii)
reflects facts or events representing a material or fundamental change
in the information set forth in the registration statement, the
Company may incorporate by reference information required to be
included in (i) and (ii) above to the extent such information is
contained in periodic reports filed pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
in the registration statement.
(b) Prepare and file with the SEC such amendments and supplements
to such registration statement, and the prospectus used in connection
with such registration statement, as may be necessary to comply with
the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement.
(c) Furnish to the Holder such numbers of copies of a prospectus,
including a preliminary prospectus as amended or supplemented from
time to time, in conformity with the requirements of the Securities
Act, and such other documents as it may reasonably request in order to
facilitate the disposition of Registrable Securities owned by them.
(d) Use its reasonable best efforts to register and qualify the
Registrable Securities covered by such registration statement under
such other federal or state securities laws of such jurisdictions as
shall be reasonably requested by the Holder; provided, however, that
the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general
consent to service of process in any such states or jurisdictions,
unless the Company is already subject
8
<PAGE>
to service in such jurisdiction and except as may be required by the
Securities Act.
(e) In the event of any underwritten public offering, enter into
and perform its obligations under an under writing agreement, in usual
and customary form, with the managing underwriter of such offering.
(f) At any time when a prospectus relating to Registrable
Securities covered by such registration statement is required to be
delivered under the Securities Act, notify each Holder (i) when the
registration statement or any post-effective amendment and supplement
thereto has become effective, (ii) of the issuance by the SEC of any
stop order or the initiation of proceedings for that purpose (in which
event the Company shall make every effort to obtain the withdrawal of
any order suspending effectiveness of the registration statement at
the earliest possible time or prevent the entry thereof), (iii) of the
receipt by the Company of any notification with respect to the
suspension of the qualification of the Registrable Securities for sale
in any jurisdiction or the initiation of any proceeding for such
purpose and (iv) of the happening of any event as a result of which
the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances then existing.
(g) Cause all such Registrable Securities registered hereunder to
be listed on each securities exchange or quotation service on which
similar securities issued by the Company are then listed or quoted.
(h) Provide a transfer agent and registrar for all Registrable
Securities registered hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date
of such registration.
(4) Holder's Obligation to Furnish Information. It shall be a
condition precedent to the obligation of the Company to take any action
pursuant to this Section (k) with respect to the Registrable Securities of
the Holder that Holder shall furnish to the Company such information
regarding the Holder, the Registrable Securities held by the Holder, and
the intended method of disposition of such securities as shall be
reasonably required by the Company to effect the registration of Holder's
Registrable Securities.
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<PAGE>
(5) Expenses of Company Registration. The Company shall bear and pay
all expenses incurred in connection with any registration of Registrable
Securities pursuant to Section (k)(2) above for Holder, including (without
limitation) all registration, filing, and qualification fees, printers and
accounting fees relating or apportionable thereto, but excluding
underwriting dis counts and commissions relating to Registrable Securities;
provided, however, that the Company shall not bear the cost of any
professional fees or costs of accounting, financial or legal advisors to
the Holder. Notwithstanding the foregoing, Holder shall pay all
registration expenses that Holder is required to pay under applicable law.
(6) Underwriting Requirements. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the
Company shall not be required under Section (k)(2) to include any of the
Holder's Registrable Securities in such underwriting unless it accepts the
terms of the underwriting as agreed upon between the Company and the
underwriters selected by it (or by other persons entitled to select the
underwriters), and then only in such quantity as the underwriters determine
in their sole discretion will not jeopardize the success of the offering by
the Company. If the total amount of securities, including Registrable
Securities requested by selling stockholders of the Company to be included
in such offering exceeds the amount of securities to be sold other than by
the Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be
required to include in the offering only that number of such securities,
including Registrable Securities, which the underwriters determine in their
sole discretion will not jeopardize the success of the offering (the
securities so included to be apportioned pro rata among the selling
stockholders, including the Holder, according to the total amount of
securities entitled to be included therein owned by each selling
stockholder or in such other proportions as shall mutually be agreed to by
such selling stockholders). For purposes of the preceding parenthetical
concerning apportionment, for any selling stockholder who is a partnership
or corporation, the partners, retired partners and stockholders of such
holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons
shall be deemed to be a single "selling stockholder", and any pro-rata
reduction with respect to such "selling stockholder" shall be based upon
the aggregate amount of shares carrying registration rights owned by all
entities and individuals included in such "selling stockholder", as defined
in this sentence.
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<PAGE>
(7) Delay of Registration. Holder shall not have any right to obtain
or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect
to the interpretation or implemen tation of these Registration Rights.
(8) Indemnification. In the event that any Regis trable Securities are
included in a registration statement under this Section (k):
(a) To the extent permitted by law, the Company will indemnify
and hold harmless Holder, any underwriter (as defined in the
Securities Act) for Holder and each person, if any, who controls
Holder or underwriter within the meaning of the Securities Act or the
Exchange Act, against any losses, claims, damages, or liabilities
(joint or several) to which they may become subject under the
Securities Act, or the Exchange Act, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of
or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (i) any untrue statement or
alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto,
(ii) the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements
therein not misleading, or (iii) any violation or alleged violation by
the Company of the Securities Act, the Exchange Act, or any rule or
regulation promulgated under the Securities Act, or the Exchange Act,
and the Company will pay to each such Holder, underwriter or
controlling person, as incurred, any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this
Section (k)(8) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability, or action if such settlement is
effected without the consent of the Company (which consent shall not
be unreasonably withheld), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability, or action to the
extent that it arises out of or is based upon a Violation which occurs
in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by Holder,
underwriter or controlling person.
(b) To the extent permitted by law, Holder will indemnify and
hold harmless the Company, each of its directors, each of its officers
who has signed the registration statement, each person, if any, who
controls the Company within the
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meaning of the Securities Act, any underwriter, any other person
selling securities in such registration statement and any controlling
person of any such underwriter or other person, against any losses,
claims, damages, or liabilities (joint or several) to which any of the
foregoing persons may become subject, under the Securities Act, or the
Exchange Act, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that
such Violation occurs in reliance upon and in conformity with written
information furnished by Holder expressly for use in connection with
such registration; and Holder will pay, as incurred, any legal or
other expenses reasonably incurred by any person intended to be
indemnified pursu ant to this Section (8)(b), in connection with
investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in
this Section (8)(b) shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability or action if such settlement
is effected without the consent of the Holder, which consent shall not
be unreasonably withheld; provided, that, in no event shall any
indemnity under this Section (8)(b) exceed the gross proceeds from the
offering received by Holder.
(c) Promptly after receipt by an indemnified party under this
Section (8) of notice of the commencement of any action (including any
governmental action), such indemnified party shall, if a claim in
respect thereof is to be made against any indemnifying party under
this Section (8), deliver to the indemnifying party a written notice
of the commencement thereof and the indemnifying party shall have the
right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly notified,
to assume the defense thereof with counsel selected by the
indemnifying party and approved by the indemnified party (whose
approval shall not be unreasonably withheld); provided, however, that
an indemnified party (together with all other indemnified parties
which may be represented without conflict by one counsel) shall have
the right to retain one separate counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such indem
nified party by the counsel retained by the indemnifying party would
be inappropriate due to actual or potential differing interests
between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to
the indemnifying party within a rea sonable time of the commencement
of any such action, if prejudicial to its ability to defend such
action, shall relieve such indem nifying party of any liability to the
indemnified party under this Section (8), but the omission so to
deliver written notice to the
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indemnifying party will not relieve it of any liability that it may
have to any indemnified party otherwise than under this Section (8).
(d) If the indemnification provided for in this Section (8) is
held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage,
or expense referred to therein, then the indemnifying party, in lieu
of indemnifying such indemnified party hereunder, shall contribute to
the amount paid or payable by such indemnified party as a result of
such loss, liability, claim, dam age, or expense in such proportion as
is appropriate to reflect the relative fault of the indemnifying party
on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such
loss, liability, claim, damage, or expense as well as any other
relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the
indemnified party and the parties' relative intent, knowledge, access
to information, and opportunity to correct or prevent such statement
or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with the
underwritten public offering are in conflict with the foregoing
provisions, the provisions in the underwriting agreement shall
control.
(f) The obligations of the Company and Holder under this Section
(8) shall survive the completion of any offering of Registrable
Securities in a registration statement under these Registration
Rights, and otherwise.
(9) Reports under the Exchange Act. With a view to making available to
the Holder the benefits of Rule 144 and any other rule or regulation of the
SEC that may at any time permit Holder to sell securities of the Company to
the public pursuant to an exemption from registration, the Company agrees
to:
(a) File with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the
Exchange Act; and
(b) Furnish to the Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i)
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a copy of the most recent annual or quarterly report of the Company
and such other reports and documents so filed by the Company, and (ii)
such other information as may be reasonably requested in availing the
Holder of any rule or regulation of the SEC which permits the selling
of any such securities without registration or pursuant to such form.
(10) Permitted Transferees. The rights to cause the Company to
register Registrable Securities granted to the Holder by the Company under
this Subscription Agreement may be assigned in full by Holder in connection
with a transfer by Holder of its Registrable Securities if: (a) Holder
gives prior written notice to the Company; (b) transferee agrees to comply
with the terms and provisions of this Agreement; (c) such transfer is
otherwise in compliance with this Agreement and (d) such transfer is
otherwise effected in accordance with applicable securities laws. Except as
specifically permitted by this Section (10), the rights of Holder with
respect to Registrable Securities as set out herein shall not be
transferable to any other person, and any attempted transfer shall cause
all rights of Holder therein to be forfeited.
(11) Termination of Registration Rights. The right of Holder to
request the inclusion of its Registrable Securities in any registration
pursuant to Section (k)(2) shall terminate if all Registrable Securities
held by Holder may immediately be sold under Rule 144.
(l) Redemption of Warrants. Provided the closing price of the Company's
Common Stock is 50(cent) or more for 10 consecutive trading days, the Company
shall have the right to call this Warrant for redemption at a price of $.001 per
Warrant at any time. The Company shall give no less than 10 days written notice
of redemption to the Holder as of the date of such notice. Such notice shall set
a date not more than 90 days after the date of the redemption notice (the
"Redemption Date"). Upon the Redemption Date, this Warrant shall be cancelled
and shall thereafter be null and void and of no effect, and the Company shall
pay to the Holder as of the date of the notice the above redemption price upon
surrender of this Warrant. This Warrant will not be subject to a redemption
notice unless at the time of the giving of such notice the Company has an
effective registration statement under the Securities Act registering the
issuance and sale of the Warrant Stock to Holder. The Company will use its
reasonable efforts to maintain such registration statement in effect until the
expiration or redemption of the Warrants.
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(m) Transfer to Comply with the Securities Act.
(1) This Warrant, or any new warrant issued pursuant to Section (d)
hereof, or the Warrant Stock or any other security issued or issuable upon
exercise of this Warrant, may not be offered or sold except in conformity
with the Securities Act and then only against receipt of an agreement of
such person to whom such offer of sale is made to comply with the
provisions of this Section (m) with respect to any resale or other
disposition of such securities.
(2) The Company may cause a customary legend for securities not
registered under the Securities Act to be set forth on each certificate
representing Warrant Stock or any other security issued or issuable upon
exercise of this Warrant not theretofore distributed to the public or sold
to underwriters for distribution to the public pursuant to Section (k)
hereof, unless counsel for the Company is of the opinion as to any such
certificate that such legend is unnecessary.
(n) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given either (i) by
delivery in person, in which case any such notice shall be deemed to have been
duly given upon receipt, or (ii) by certified mail, (postage paid and return
receipt requested),in which case said notice will be deemed to have been duly
given three (3) days after such mailing, to the respective parties as follows:
If to the Company:
SyCoNet.Com, Inc.
9208B Venture Court
Manassas Park, Virginia 20111
Attn: William Spears, President
If to Holder:
Mr. John P. Kelly
806 Broad Creek Drive
Stevensville, Maryland 21666
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or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of a change of address shall
only be effective upon receipt.
(o) Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
principles of conflict of laws.
(p) No Prior Agreements. This Warrant (i) contains the entire agreement,
and supersedes all other prior agreements and understandings, both written and
oral, between the parties hereto with respect to the subject matter hereof, and
(ii) is not intended to confer upon any other person any rights or remedies
hereunder.
(q) Effect of Headings. The section headings herein are for convenience
only and shall not affect the meaning or construction of this Agreement.
SYCONET.COM, INC.
By:
---------------------------
William Spears, President
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PURCHASE FORM
Dated __________________, 20___
The undersigned hereby irrevocably elects to exercise the within Warrant to
the extent of purchasing _____________ shares of Common Stock of SYCONET.COM,
INC. and hereby makes payment of $__________ in payment of the actual exercise
price thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name ___________________________________________________________________________
(please typewrite or print in block letters)
Address ________________________________________________________________________
Signature ______________________________________________________________________
Social Security or Employer I.D. No. ___________________________________________
ASSIGNMENT FORM
FOR VALUE RECEIVED, _______________________________________________________
hereby sells, assigns and transfers unto
Name ___________________________________________________________________________
(please typewrite or print in block letters)
Address ________________________________________________________________________
the right to purchase Common Stock, represented by this Warrant to the extent
of______________ shares as to which right is exercisable, and does hereby
irrevocably constitute and appoint____________________________________________,
attorney, to transfer the same on the books of the Company with full power of
substitution in the premises.
Signature _________________________
Dated:_________________, 20___
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