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
---------------------------
$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
<PAGE>
"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 affiliate of
