EXHIBIT G
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO, (ii) AN OPINION OF COUNSEL FOR THE HOLDER,
REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATION IS NOT REQUIRED, (iii) RECEIPT OF A
NO-ACTION LETTER(S) FROM THE APPROPRIATE GOVERNMENTAL
AUTHORITY(IES), OR (iv) OTHERWISE COMPLYING WITH THE
PROVISIONS OF SECTION 8 OF THIS WARRANT.
DIGITAL FUSION, INC.
WARRANT TO PURCHASE UP TO 516,893 SHARES
OF COMMON STOCK (this "Warrant")
Warrant No.: 001
Digital Fusion, Inc., a Delaware corporation (the "COMPANY"), hereby
certifies that, for value received, Madison Run LLC (Madison Run LLC or its
assignees are referred to herein as the "HOLDER") is the registered Holder of a
warrant (the "WARRANT") to subscribe for and purchase 304,054 shares of the
fully paid and nonassessable Common Stock of the Company, at a purchase price of
$0.89 per share and 212,839 shares of Common Stock of the Company (each such
number of shares, as adjusted from time to time, pursuant to Section 4 hereof,
is, with respect to any specific exercise of the Warrant, referred to herein as
the "WARRANT SHARES") at a price of $0.94 per share (each such price, as
adjusted from time to time, pursuant to Section 4 hereof, is, with respect to
any specific exercise of the Warrant, referred to herein as the "WARRANT
PRICE"), subject to the provisions and upon the terms and conditions hereinafter
set forth. As used herein, (a) the term "COMMON STOCK" shall mean the Company's
presently authorized Common Stock, par value $.001 per share, and any stock into
or for which such Common Stock may hereafter be converted or exchanged, (b) the
term "DATE OF GRANT" shall mean May 11, 2004, and (c) the term "OTHER WARRANTS"
shall mean any warrant issued upon transfer or partial exercise of this Warrant.
The term "WARRANT" as used herein shall be deemed to include Other Warrants
unless the context hereof or thereof clearly requires otherwise.
1. Term. The purchase right represented by this Warrant is
exercisable, in whole or in part, at any time after the Date of Grant (the
"INITIAL EXERCISE DATE"). This Warrant shall expire on May 11, 2009.
2. EXERCISE. Subject to SECTION 1 hereof, the purchase right
represented by this Warrant may be exercised by the Holder hereof, in whole or
in part and from time to time after the Initial Exercise Date, by the surrender
of this Warrant (with the notice of exercise form attached hereto as Exhibit A
duly executed) at the principal office of the Company and by the payment to the
Company of an amount equal to the then applicable Warrant Price multiplied by
the number of Warrant Shares then being purchased. The person or persons in
whose name(s) any certificate(s) representing shares of Common Stock shall be
issuable upon exercise of this Warrant shall be deemed to have become the
Holder(s) of record of, and shall be treated for all purposes as the record
Holder(s) of, the shares represented thereby (and such shares shall be deemed to
have been issued) immediately prior to the close of business on the date or
dates upon which this Warrant is exercised. In the event of any exercise of the
rights represented by this Warrant, certificates for the shares of stock so
purchased shall be delivered to the Holder hereof as soon as possible and in any
event within 30 days after such exercise and, unless this Warrant has been fully
exercised, a new Warrant representing the portion of the Warrant Shares, if any,
with respect to which this Warrant shall not then have been exercised shall also
be issued to the Holder hereof as soon as possible and in any event within such
30-day period.
3. STOCK FULLY PAID; RESERVATION OF SHARES. All Warrant Shares that
may be issued upon the exercise of the rights represented by this Warrant will,
upon issuance pursuant to the terms and conditions herein, be fully paid and
nonassessable, and free from all taxes (other than any taxes determined with
respect to, or based upon, the income of the person to whom such shares are
issued), liens and charges (other than liens or charges created by actions of
the Holder of this Warrant or the person to whom such shares are issued), and
pre-emptive rights with respect to the issue thereof. During the period within
which the rights represented by this Warrant may be exercised, the Company will
at all times have authorized, and reserved for the purpose of the issue upon
exercise of the purchase rights evidenced by this Warrant, a sufficient number
of shares of its Common Stock to provide for the exercise of the rights
represented by this Warrant.
4. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES. The number and
kind of securities purchasable upon the exercise of this Warrant and the Warrant
Price shall be subject to adjustment from time to time upon the occurrence of
certain events, as follows:
a. RECLASSIFICATION OR MERGER. In case of any
reclassification, change or conversion of securities of the class issuable upon
exercise of this Warrant (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination), or in case of any merger of the Company with or into another
corporation (other than a merger with another corporation in which the Company
is the acquiring and the surviving corporation and which does not result in any
reclassification or change of outstanding securities issuable upon exercise of
this Warrant), or in case of any sale
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of all or substantially all of the assets of the Company, the Company, or such
successor or purchasing corporation, as the case may be, shall duly execute and
deliver to the Holder of this Warrant a new Warrant (in form and substance
satisfactory to the Holder of this Warrant), so that the Holder of this Warrant
shall have the right to receive, at a total purchase price not to exceed that
payable upon the exercise of the unexercised portion of this Warrant, and in
lieu of the shares of Common Stock theretofore issuable upon exercise of this
Warrant, the kind and amount of shares of stock, other securities, money and
property receivable upon such reclassification, change or merger by a Holder of
the number of shares of Common Stock (or similar security) then purchasable
under this Warrant. Such new Warrant shall provide for adjustments that shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Section 4. The provisions of this Section 4(a) shall similarly apply to
successive reclassifications, changes, mergers and transfers.
b. SUBDIVISION OR COMBINATION OF SHARES. If at any time
while this Warrant remains outstanding and unexpired the Company shall subdivide
or combine its outstanding shares of common stock, the Warrant Price shall be
proportionately decreased and the number of Warrant Shares issuable hereunder
shall be proportionately increased in the case of a subdivision and the Warrant
Price shall be proportionately increased in the case of a combination and the
number of Warrant Shares issuable hereunder shall be proportionately decreased,
effective at the close of business on the date the subdivision or combination
becomes effective.
c. STOCK DIVIDENDS. If at any time while this Warrant is
outstanding and unexpired the Company shall (i) pay a dividend with respect to
Common Stock payable in Common Stock, then the Warrant Price shall be adjusted,
from and after the date of determination of stockholders entitled to receive
such dividend or distribution, to that price determined by multiplying the
Warrant Price in effect immediately prior to such date of determination by a
fraction (A) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such dividend, and (B) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or (ii) make any other dividend or
distribution with respect to Common Stock (except any distribution specifically
provided for in Sections 4.a. and 4.b.), then, the Company will provide notice
to the Investor of such dividend or distribution with respect to the Common
Stock and, if the Warrant is exercised in whole or in part within five days of
actual receipt by the Investor of the notice of such dividend or distribution,
the Holder of the shares of Common Stock acquired pursuant to such exercise
shall be entitled to receive the dividend or distribution with respect to the
Warrant Shares acquired by the Investor upon such exercise of the Warrant.
5. NOTICE OF ADJUSTMENTS. Whenever the Warrant Price or the number
of Warrant Shares purchasable hereunder shall be adjusted pursuant to SECTION 4
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hereof, the Company shall deliver to the Holder of this Warrant a certificate
signed by a duly designated officer of the Company setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated, and the Warrant Price and the
number of Warrant Shares purchasable hereunder after giving effect to such
adjustment.
6. DIVIDENDS. In the event that the Company shall fix a record date
for the making of any stock dividend to Holders of shares of its common stock,
the Company shall notify the Holder of the Warrants, in writing, at least 30
days in advance of the record date for the proposed dividend or distribution.
7. FRACTIONAL SHARES. No fractional shares of Common Stock will be
issued in connection with any exercise hereunder, but in lieu of such fractional
shares the Company shall round up the shares to which the recipient is entitled
to the nearest whole share.
8. DISPOSITION OF WARRANT OR WARRANT SHARES.
a. EXCHANGE. This Warrant may be exchanged, without
payment of any service charge, for one (1) or more new Warrants of like tenor
exercisable for the same aggregate number of shares of Common Stock upon
surrender to the Company by the registered Holder hereof in person or by legal
representative or by attorney duly authorized in writing and, upon issuance of
the new Warrant or Warrants, the surrendered Warrant shall be cancelled and
disposed of by the Company.
b. APPLICABILITY OF RESTRICTIONS. Neither any
restrictions of any legend applicable to the Warrant or the Warrant Shares nor
any restrictions on transfer set forth herein or in the Subscription Agreement
between Holder and the Company dated as of the date of this Warrant shall apply
to any transfer of, or grant of a security interest in, this Warrant (or the
Common Stock obtainable upon exercise thereof) or any part hereof (i) to a
partner of the Holder if the Holder is a partnership or to a member of the
Holder if the Holder is a limited liability company, (ii) to a partnership of
which the Holder is a partner or to a limited liability company of which the
Holder is a member, or (iii) to any affiliate of the Holder if the Holder is a
corporation; provided, however, in any such transfer, if applicable, the
transferee shall agree in writing to be bound by the terms of this Warrant as if
an original Holder hereof.
9. RIGHTS AS STOCKHOLDERS; INFORMATION. Except as otherwise set
forth in this Agreement, no Holder of this Warrant, as such, shall be entitled
to vote or be deemed the Holder of Common Stock or any other securities of the
Company which may at any time be issuable on the exercise hereof for any
purpose, nor shall anything contained herein be construed to confer upon the
Holder of this Warrant, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of the directors or upon any
matter submitted to stockholders at any
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meeting thereof, or to receive notice of meetings, until this Warrant shall have
been exercised and the Warrant Shares purchasable upon the exercise hereof shall
have become deliverable, as provided herein. The foregoing notwithstanding, the
Company will transmit to the Holder of this Warrant such information, documents
and reports as are generally distributed to the holders of any class or series
of the securities of the Company concurrently with the distribution thereof to
the stockholders.
10. ADDITIONAL RIGHTS ON TRANSFER OF BUSINESS.
a. TRANSFER OF BUSINESS. In the event that the Company
undertakes to (i) sell, lease, exchange, convey or otherwise dispose of all or
substantially all of its property or business, or (ii) merge into or consolidate
with any other corporation (other than a wholly-owned Subsidiary), or effect any
transaction (including a merger or other reorganization) or series of related
transactions, in which more than 50% of the voting power of the Company is
disposed of, the Company will provide at least 30 days notice prior to closing
of the terms and conditions of the proposed transaction. The Company shall
cooperate with the Holder in consummating the sale of this Warrant in connection
with any such transaction.
11. MODIFICATION AND WAIVER. This Warrant and any provision hereof
may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is sought.
12. NOTICES. Unless otherwise specifically provided herein, all
communications under this Warrant shall be in writing and shall be deemed to
have been duly given (i) on the date of service if served personally on the
party to whom notice is to be given, (ii) on the day of transmission if sent by
facsimile transmission to the number shown on the books of the Company, and
telephonic confirmation of receipt is obtained promptly after completion of
transmission, (iii) on the day after delivery to Federal Express or similar
overnight courier, or (iv) on the fifth day after mailing, if mailed to the
party to whom notice is to be given, by first class mail, registered or
certified, postage prepaid, and properly addressed, return receipt requested, to
each such Holder at its address as shown on the books of the Company or to the
Company at the address indicated therefor on the signature page of this Warrant.
Any party hereto may change its address for purposes of this Section 12 by
giving the other party written notice of the new address in the manner set forth
herein.
13. ASSIGNMENT; BINDING EFFECT ON SUCCESSORS. This Warrant may be
assigned, transferred, or pledged by Holder only in accordance with the terms of
this Warrant. This Warrant shall be binding upon any corporation succeeding the
Company by merger, consolidation or acquisition of all or substantially all of
the Company's assets, and all of the covenants and agreements of the Company
shall inure to the benefit of the successors and assigns of the Holder hereof.
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14. LOST WARRANTS OR STOCK CERTIFICATES. The Company covenants to
the Holder hereof that, upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant or any
stock certificate and, in the case of any loss, theft or destruction, upon
receipt of an executed lost securities bond or indemnity reasonably satisfactory
to the Company, or in the case of any such mutilation upon surrender and
cancellation of such Warrant or stock certificate, the Company will make and
deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost,
stolen, destroyed or mutilated Warrant or stock certificate.
15. DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.
16. GOVERNING LAW. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of Delaware (without giving effect to principles of conflicts of
laws).
17. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations and warranties of the Company and the Holder hereof contained
herein shall survive the Date of Grant, the exercise or conversion of this
Warrant (or any part hereof) and the termination or expiration of rights
hereunder and shall terminate three years after the date of this Agreement. All
agreements of the Company and the Holder hereof contained herein shall survive
indefinitely until, by their respective terms, they are no longer operative.
18. REMEDIES. In case any one or more of the covenants and
agreements contained in this Warrant shall have been breached, the Holders
hereof (in the case of a breach by the Company), or the Company (in the case of
a breach by a Holder), may proceed to protect and enforce their or its rights
either by suit in equity and/or by action at law, including, but not limited to,
an action for damages as a result of any such breach and/or an action for
specific performance of any such covenant or agreement contained in this
Warrant.
19. ACCEPTANCE. Receipt of this Warrant by the Holder hereof shall
constitute acceptance of and agreement to the foregoing terms and conditions.
20. NO IMPAIRMENT OF RIGHTS. The Company will not, by amendment of
its Certificate of Incorporation or through any other means, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder of this Warrant against impairment.
21. SEVERABILITY. The invalidity or unenforceability of any
provision of this Warrant in any jurisdiction shall not affect the validity or
enforceability of such
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provision in any other jurisdiction, or affect any other provision of this
Warrant, which shall remain in full force and effect.
[Signature page follows.]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
on its behalf by one of its officers thereunto duly authorized.
DIGITAL FUSION, INC.,
a Delaware corporation
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇, III
----------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇, III
------------------------------
Its: President
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Address:
▇▇▇▇-▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dated: May 11, 2004.
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<
EXHIBIT A
NOTICE OF EXERCISE
To: DIGITAL FUSION, INC.
1. The undersigned hereby elects to purchase shares of Common Stock
of DIGITAL FUSION, INC. at a purchase price of $_________ pursuant to the terms
of the attached Warrant, and tenders herewith payment of the purchase price of
such shares in full.
2. Please issue a certificate or certificates representing said
shares in the name of the undersigned or in such other name or names as are
specified below:
-------------------------------
(Name)
-------------------------------
-------------------------------
(Address)
3. The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares.
In support thereof, the undersigned has executed an Investment Representation
Statement attached hereto as Schedule 1.
----------------------------------
(Signature)
---------------------
(Date)
Schedule 1
INVESTMENT REPRESENTATION STATEMENT
Purchaser:
Company: DIGITAL FUSION, INC.
Security: Common Stock
Amount:
Date:
In connection with the purchase of the above-listed securities (the
"Securities"), the undersigned (the "Purchaser") represents to the Company as
follows:
(a) The Purchaser is aware of the Company's business affairs and
financial condition, and has acquired sufficient information about the Company
to reach an informed and knowledgeable decision to acquire the Securities. The
Purchaser is purchasing the Securities for its own account for investment
purposes only and not with a view to, or for the resale in connection with, any
"distribution" thereof for purposes of the Securities Act of 1933, as amended
(the "Act").
(b) The Purchaser understands that the Securities 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 Purchaser's investment intent as expressed herein. In this
connection, the Purchaser understands that, in the view of the Securities and
Exchange Commission ("SEC"), the statutory basis for such exemption may be
unavailable if the Purchaser's representation was predicated solely upon a
present intention to hold these Securities 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 Securities, or for a period of
one year or any other fixed period in the future.
(c) The Purchaser further understands that the Securities must be
held indefinitely unless subsequently registered under the Securities Act or
unless an exemption from registration is otherwise available. In addition, the
Purchaser understands that the certificate evidencing the Securities will be
imprinted with the legend referred to in the Warrant under which the Securities
are being purchased.
(d) The Purchaser is aware of the provisions of Rule 144 and 144A, promulgated
under the Securities Act, which, in substance, permit limited public
resale of "restricted securities" acquired, directly or indirectly, from the
issuer thereof (or from an affiliate of such issuer), in a non-public offering
subject to the satisfaction of certain conditions, if applicable, including,
among other things: The availability of certain public information about the
Company, the resale occurring not less than one (1) year after the party has
purchased and paid for the securities to be sold; the sale being made through a
broker in an unsolicited "broker's transaction" or in transactions directly with
a market maker (as said term is defined under the Securities Exchange Act of
1934, as amended) and the amount of securities being sold during any three-month
period not exceeding the specified limitations stated therein.
(e) The Purchaser further understands that at the time it wishes to
sell the Securities there may be no public market upon which to make such a
sale, and that, even if such a public market then exists, the Company may not be
satisfying the current public information requirements of Rule 144 and 144A, and
that, in such event, the Purchaser may be precluded from selling the Securities
under Rule 144 and 144A even if the one-year minimum holding period had been
satisfied.
(f) The Purchaser further understands that in the event all of the
requirements of Rule 144 and 144A are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rule 144 is
not exclusive, the Staff of the SEC has expressed its opinion that persons
proposing to sell private placement securities other than in a registered
offering and otherwise than pursuant to Rule 144 will have a substantial burden
of proof in establishing that an exemption from registration is available for
such offers or sales, and that such persons and their respective brokers who
participate in such transactions do so at their own risk.
Purchaser:
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Date:
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# 1912403_v3
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