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EXHIBIT 10.1
THIS PROMISSORY NOTE AND THE SHARES OF COMMON STOCK TO BE
DELIVERED UPON
CONVERSION OF THIS PROMISSORY NOTE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE
SECURITIES LAW. NO SALE,
ASSIGNMENT, PLEDGE OR OTHER TRANSFER OF EITHER THIS PROMISSORY
NOTE OR ANY SUCH
SHARES MAY BE MADE EXCEPT PURSUANT TO THE PROVISIONS OF THE ACT
AND APPLICABLE
STATE SECURITIES LAWS OR UNLESS AN OPINION OF COUNSEL,
SATISFACTORY TO MAKER, IS
OBTAINED STATING THAT SUCH SALE, ASSIGNMENT, PLEDGE OR TRANSFER
IS IN COMPLIANCE
WITH AN AVAILABLE EXEMPTION UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS.
CONVERTIBLE PROMISSORY NOTE
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$374,303.52 April 29, 2005
FOR VALUE RECEIVED, DIGITAL FUSION, INC., a Delaware corporation
("Maker"),
hereby promises to pay to ROY E. CRIPPEN III ("Holder") the
principal amount of
Three Hundred Seventy Four Thousand Three Hundred Three and
52/100 Dollars
($374,303.52), together with interest thereon at a per annum
rate equal to the
prime rate announced from time to time by the Wall Street
Journal. Interest
shall be payable monthly.
Principal shall be payable two years from the date of this
Promissory Note,
except to the extent that such Promissory Note has been
previously converted
into shares of Maker's common stock (the "Shares") as set forth
below.
The principal portion of this Promissory Note may be converted
(in minimum
blocks of $200,000 of principal) at any time by Holder into a
number of Shares
determined by dividing the converted principal amount of this
Promissory Note by
the Conversion Price in effect on the date such conversion is to
be effectuated.
The term "Conversion Price" shall mean the price per share used
to determine the
number of Shares deliverable upon conversion of this Promissory
Note, which
price shall be the sum of the ten-day average closing price of
the Shares
immediately prior to the date of this Promissory Note multiplied
by 115%. No
conversion hereunder shall be effective unless written notice of
the conversion
is given by Holder at least 90 days prior to the Due Date,
effective not later
than the Due Date.
The Conversion Price and number of Shares issuable upon
conversion in
accordance with this Promissory Note shall also be
proportionally adjusted if
the Maker shall (i) declare a dividend or make a distribution on
the common
stock in shares of its common stock, or (ii) combine, subdivide
or reclassify
the outstanding shares of common stock into a different number
of shares so that
Holder shall be entitled to receive the number of Shares it
would have been
entitled to receive had this Promissory Note been converted
immediately prior to
such event.
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Default in the payment of the principal of or interest on this
Promissory
Note when the same becomes due and payable shall constitute an
even of default
hereunder.
Upon the occurrence of an event of default, or at any time
thereafter
during the continuance of any such event, the Holder may, with
or without notice
to the Maker, declare this Promissory Note to be forthwith due
and payable,
whereupon this Promissory Note and the indebtedness evidenced
hereby shall
forthwith be due and payable, both as to principal and interest,
without
presentment, demand, protest, or other notice of any kind, all
of which are
hereby expressly waived, anything contained herein or in any
other instrument
executed in connection with or securing this Note to the
contrary
notwithstanding. If the Due Date of this Promissory Note is
accelerated as
provided above, the Holder may convert the principal portion of
the Promissory
Note into Shares at any time prior to the payment of such
principal amount.
If the Maker sells all or substantially all of its assets to a
third party,
merges, or consolidates with another entity, or engages in any
other transaction
with a third party requiring approval of the shareholders of the
Maker, Maker
shall give prompt notice to the Holder, and Holder may
immediately convert the
principal amount of this Promissory Note into Shares at any time
prior to the
consummation of such transaction.
If this Promissory Note or any installment of principal or
interest hereon
becomes due and payable on Saturday, Sunday or other day on
which commercial
banks are authorized or permitted to close under the laws of the
State of
Alabama, the maturity of this Promissory Note or such
installment shall be
extended to the next succeeding business day.
Maker shall, on or before the Due Date, pay the outstanding
principal
balance under this Promissory Note, together with accrued
interest, by wire
transfer or other cash equivalent acceptable to Maker. For any
such prepayment,
Maker must give Holder at least ten (10) days notice of such
prepayment and,
during such time, Holder may convert all or a portion of such
principal balance
into Shares.
If Holder has not received the full amount of any of the
payments by the
end of the date it is due, Maker agrees to pay a late charge to
the Holder in
the amount of three percent (3%) of the overdue payment.
The Holder of this Promissory Note, by acceptance hereof, agrees
that this
Promissory Note and the Shares to be issued upon conversion
hereof are being
acquired for investment and that such Holder will not offer,
sell or otherwise
dispose of this Promissory Note, or any Shares to be issued upon
conversion
hereof except under circumstances which will not result in a
violation of the
Securities Act of 1933, as amended (the "Securities Act"). Upon
conversion of
this Promissory Note, the Holder hereof shall confirm in
writing, by executing
the form attached as Schedule 1 to Exhibit A hereto, that the
Shares so
purchased are being acquired for investment and not with a view
toward
distribution or resale. This Promissory Note and all Shares
issued upon
conversion of this Promissory Note (unless registered under the
Securities Act)
shall be stamped or imprinted with a legend in substantially the
following form:
2
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"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO, OR (ii) AN OPINION OF COUNSEL FOR THE HOLDER,
REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATION IS NOT REQUIRED."
In addition, in connection with the issuance of this Promissory
Note, the Holder
specifically represents to the Maker by acceptance of this
Promissory Note as
follows:
(1) The Holder is aware of the Maker's business affairs and
financial condition, and has acquired information about the
Maker sufficient to
reach an informed and knowledgeable decision to acquire this
Promissory Note.
The Holder is acquiring this Promissory Note for his own account
for investment
purposes only and not with a view to, or for the resale in
connection with, any
"distribution" thereof for purposes of the Securities Act. The
Holder is an
"accredited investor" as that term is defined in Securities and
Exchange
Commission Rule 501(a) of Regulation D.
(2) The Holder understands that this Promissory Note and
the Promissory Note Shares have not been registered under the
Securities Act in
reliance upon a specific exemption therefrom, which exemption
depends upon,
among other things, the bona fide nature of the Holder's
investment intent as
expressed herein. In this connection, the Holder understands
that, in the view
of the Securities and Exchange Commission (the "SEC"), the
statutory basis for
such exemption may be unavailable if the Holder's representation
was predicated
solely upon a present intention to hold the Promissory Note and
the Shares for
the minimum capital gains period specified under applicable tax
laws, for a
deferred sale, for or until an increase or decrease in the
market price of the
Promissory Note and the Shares, or for a period of one year or
any other fixed
period in the future.
(3) The Holder further understands that this Promissory
Note and the Shares must be held indefinitely unless
subsequently registered
under the Securities Act and any applicable state securities
laws, or unless
exemptions from registration are otherwise available.
(4) The Holder is aware of the provisions of Rule 144 and
144A, promulgated under the Securities Act, which, in substance,
permit limited
public resale of "restricted securities" acquired, directly or
indirectly, from
the issuer thereof (or from an af
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