UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of Report (Date of earliest event reported): January 19,
2007
Fortress
International Group, Inc.
(Exact
Name of Registrant as Specified in its Charter)
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Delaware
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000-51426
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20-2027651
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(State
or Other
Jurisdiction
of Incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification
No.)
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9841
Broken Land Parkway
Columbia,
Maryland 21046
(Address
of principal executive offices) (Zip Code)
Registrant’s
Telephone Number, Including Area Code:
(410)
312-9988
Fortress
America Acquisition Corporation
4100
North Fairfax Drive, Suite 1150
Arlington,
Virginia 22203-1664
(Former
Name or Former Address, if Changed Since Last Report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (
See
General
Instruction A.2. below):
o
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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Soliciting
material pursuant to Rule 14a- 12 under the Exchange Act (17 CFR
240.14a-
12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR
240.13e-4(c))
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TABLE
OF CONTENTS
Item
1.01.
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Entry
Into a Material Definitive Agreement
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Item
2.01.
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Completion
of Acquisition or Disposition of Assets
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Item
3.02.
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Unregistered
Sales of Equity Securities
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Item
3.03.
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Material
Modification to Rights of Security Holders
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Item
5.02.
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Departure
of Directors or Principal Officers; Election of Directors;
Appointment of
Principal Officers; Compensatory Arrangements of Certain
Officers
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Item
5.03.
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Amendments
to Articles of Incorporation or Bylaws
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Item
5.06.
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Change
in Shell Company Status
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Item
9.01.
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Financial
Statements and Exhibits
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Signatures
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Item
1.01. Entry Into a Material Definitive Agreement
Please
see Item 5.02 and the discussion therein of the entry into certain material
definitive agreements between Fortress International Group, Inc., formerly
known
as Fortress America Acquisition Corporation (the “
Company
”),
and
each of Thomas P. Rosato and Gerard J. Gallagher, in connection with closing
(the “
Closing
”)
of the
acquisition (the “
Acquisition
”)
of
VTC, L.L.C., doing business as “Total Site Solutions” (“
TSS
”),
and
Vortech, LLC (“
Vortech
”
and,
together with TSS, “
TSS/Vortech
”)
described in Item 2.01 below. The description of certain material agreements
related to the Acquisition in Item 2.01 below is incorporated herein by
reference. As a result of the Acquisition, each of TSS and Vortech became
a
wholly-owned subsidiary of the Company.
Item
2.01. Completion of Acquisition or Disposition of Assets.
On
January 19, 2007, the Company acquired all of the outstanding membership
interests of each of TSS and Vortech pursuant to a Second Amended and Restated
Membership Interest Purchase Agreement dated July 31, 2006, as amended by
that
certain Amendment to the Second Amended and Restated Membership Interest
Purchase Agreement dated January 16, 2007 (the “
Purchase
Agreement
”).
The
Closing consideration consisted of (a) $11.0 million in cash, (b) the assumption
of $154,599 of debt of TSS/Vortech, (c) 3,205,128 shares of the Company’s stock,
of which 2,534,988 shares were issued to the selling members, 67,825 shares were
issued to Evergreen Capital LLC as partial payment of certain outstanding
consulting fees and 574,000 shares were designated for issuance to employees
of
TSS/Vortech, and (d) $10.0 million in two convertible, interest-bearing
promissory notes of $5.0 million each. As described in the definitive proxy
statement (Securities and Exchange Commission File No. 000-51426) dated December
27, 2006 (the “
Definitive
Proxy Statement
”),
at
pages 52-54, all of the 2,534,988 shares issued to the selling members were
deposited in certain escrow accounts. In addition, as described in the
Definitive Proxy Statement, the Company entered into employment agreements
with
each of the selling members.
The
cash
portion of the payments made in the Acquisition was financed entirely through
the use of cash raised in the Company’s initial public offering and held in a
trust fund prior to the closing of the Acquisition. The balance of the net
proceeds of the initial public offering will be used by the Company for (1)
financing transaction costs associated with the Acquisition, (2) funding
payments to stockholders who voted against the Acquisition and perfected
their
right to convert their shares of common stock into their pro rata share of
the
trust fund, (3) to fund the common stock repurchase program announced on
January
12, 2007, and (4) working capital and general corporate purposes.
The
text
of the press release dated January 19, 2007 announcing the completion of
the
Acquisition is attached as Exhibit 99.1 to this Current Report on Form
8-K.
In
connection with the approval of the Acquisition, the Company’s stockholders (1)
adopted an amendment and restatement of the Company’s amended and restated
certificate of incorporation (the “
Amended
Certificate of Incorporation
”)
to (a)
change the Company’s name from “Fortress America Acquisition Corporation” to
“Fortress International Group, Inc.,” and (b) remove certain provisions
applicable to the Company only prior to its completion of the Acquisition;
(2)
approved the Company’s 2006 Omnibus Incentive Plan; and (3) elected David J.
Mitchell to the Company’s board of directors for a term expiring in
2009.
Upon
the
filing of the Amended Certificate of Incorporation on January 19, 2007, the
Company changed its name to Fortress International Group, Inc. See the
discussion below in this Item 2.01, under the heading “Market Price of and
Dividends on the Registrant’s Common Equity and Related Stockholder Matters,”
for information concerning a change in the Company’s trading
symbols.
Business
The
business of the Company is described in the Definitive Proxy Statement in
the
Section entitled “Information about TSS/Vortech” beginning on page 77, which is
incorporated herein by reference.
Risk
Factors
The
risks
associated with the Company’s business are described in the Definitive Proxy
Statement in the Section entitled “Risk Factors” beginning on page 21, which is
incorporated herein by reference.
Financial
Information
Reference
is made to the disclosure set forth under Item 9.01 of this Current Report
on
Form 8-K concerning the financial information of the Company.
Also
see
the Sections of the Definitive Proxy Statement entitled “Management’s Discussion
and Analysis of Financial Condition and Results of Operations of TSS/Vortech”
beginning on page 83, and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations - Fortress America Acquisition Corporation”
beginning on page 98, which Sections are incorporated herein by
reference.
Employees
The
employees of the Company and its subsidiaries are described in the Definitive
Proxy Statement in the Sections entitled “Information about TSS/Vortech -
Employees” on page 82, “Information about Fortress America Acquisition
Corporation - Employees” on page 97, and “Directors and Executive Officers of
Fortress America Acquisition Corporation following the Acquisition” beginning on
page 100 of the Definitive Proxy Statement. All of such Sections of the
Definitive Proxy Statement are incorporated herein by reference.
Properties
The
principal executive offices of the Company are located at 9841 Broken Land
Parkway, Columbia, Maryland 21046. The facilities of the Company are described
in the Definitive Proxy Statement in the Section entitled “Information about
TSS/Vortech - Facilities” on page 82 of the Definitive Proxy Statement, which is
incorporated herein by reference.
Security
Ownership of Certain Beneficial Owners and Management
The
following table sets forth information regarding the beneficial ownership
of the
Company’s common stock, as of January 23, 2007, by each of the Company’s
officers and directors, all of such officers and directors as a group, and
each
person known by the Company, as a result of such person’s public filings with
the SEC and the information contained therein, to be the beneficial owner
of
more than 5% of the Company’s outstanding shares of common stock.
Beneficial Owner
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Number
of Shares (1)
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Percentage of Outstanding
Common Stock
(2)
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C.
Thomas McMillen(3)
4100 North Fairfax Drive, Suite 1150
Arlington, Virginia 22203
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575,000
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5.0
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%
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Harvey
L. Weiss(4)
9841 Broken Land Parkway
Columbia, Maryland 21046
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1,070,000
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9.0
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%
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Thomas
P. Rosato
9841 Broken Land Parkway
Columbia, Maryland 21046
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1,635,555
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14.4
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%
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Gerard
J. Gallagher
9841 Broken Land Parkway
Columbia, Maryland 21046
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1,221,433
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10.7
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%
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David
J. Mitchell
9841 Broken Land Parkway
Columbia, Maryland 21046
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150,000
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1.3
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%
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Donald
L. Nickles
9841 Broken Land Parkway
Columbia, Maryland 21046
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200,000
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1.8
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%
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All
directors and executive officers as a group
(6 individuals)
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4,851,988
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41.0
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%
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Hummingbird
Management, LLC(5)
460 Park Avenue, 12
th
Floor
New York, New York 10022
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672,403
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5.9
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%
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The
Pinnacle Fund, L.P. and Barry M. Kitt(6)
4965 Preston Park Blvd., Suite 240
Plano, Texas 75093
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833,400
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7.3
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%
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Weiss
Asset Management, LLC. Weiss Capital, LLC
Andrew M. Weiss(7)
29 Commonwealth Avenue, 10
th
Floor
Boston, Massachusetts 02116
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819,664
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7.2
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%
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(1)
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Includes,
in the case of each holder of warrants, shares of common stock
issuable
upon the exercise of warrants, which became exercisable on January
19,
2007.
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(2)
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The
percentages of outstanding common stock take into account 2,602,813
shares
issued in connection with the Acquisition of TSS/Vortech and
the
conversion of approximately 756,494 shares of common stock into
cash in
connection with the vote on the Acquisition of TSS/Vortech, resulting
in
approximately 11,396,319 outstanding shares of common stock (not
including
any shares issuable upon the exercise of warrants). This number
of
outstanding shares does not include the 574,000 shares of common
stock to
be issued to employees of TSS/Vortech in connection with the
Closing of
the Acquisition. The percentages reflect, in both the numerator and
denominator of the computation as to each beneficial owner, the
number of
shares of common stock issuable upon the exercise of warrants
held by each
beneficial owner.
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(3)
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Includes
575,000 shares held by Washington Capital Advisors, LLC, of which
Mr.
McMillen is the Chief Executive
Officer.
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(4)
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Includes
452,000 shares of common stock issuable upon the exercise of
warrants held
by Mr. Weiss.
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(5)
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As
reported in a Form 4 dated January 23, 2007, and filed with the
SEC on
January 23, 2007by Paul Sonkin, The Hummingbird Value Fund, LP,
The
Hummingbird Microcap Value Fund, LP, The Hummingbird Concentrated
Fund,
LP, Hummingbird Management, LLC and Hummingbird Capital,
LLC.
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(6)
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As
reported in a Schedule 13G dated January 22, 2007, and filed
with the SEC
on January 22, 2007.
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(7)
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As
reported in a Schedule 13G dated December 14, 2006, and filed
with the SEC
on December 20, 2006. There is no family or other relationship
between
Harvey Weiss, our Chairman, and Weiss Asset Management, LLC,
Weiss
Capital, LLC or Andrew M. Weiss, Ph.D.
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Directors
and Executive Officers
The
directors and executive officers of the Company upon the consummation of
the
Acquisition are described in the Definitive Proxy Statement in the Section
entitled “Directors and Executive Officers of Fortress America Acquisition
Corporation Following the Acquisition” beginning on page 100 of the Definitive
Proxy Statement, which is incorporated herein by reference. Also see the
Section
of the Definitive Proxy Statement entitled “Certain Relationships and Related
Transactions”, beginning on page 108, which is incorporated herein by
reference.
Director
and Executive Compensation
The
compensation of the Company’s executive officers is described in the Definitive
Proxy Statement in the Section entitled “Directors and Executive Officers of
Fortress America Acquisition Corporation Following the Acquisition” beginning on
page 100, and in particular under the subheading “Employment Agreements”
beginning on page 103 and under the subheading “Consulting Agreement with
Washington Capital Advisors, LLC” on page 105, of the Definitive Proxy
Statement, which Section is incorporated herein by reference. Also see the
Section of the Definitive Proxy Statement entitled “Certain Relationships and
Related Transactions”, beginning on page 108, which is incorporated herein by
reference.
The
Board
of Directors will consider at a future date policies with respect to
compensation of non-employee members of the Board of Directors.
Certain
Relationships and Related Transactions
Certain
relationships and related party transactions are described in the Definitive
Proxy Statement in the Section entitled “Certain Relationships and Related
Transactions” beginning on page 108, which is incorporated herein by reference.
Legal
Proceedings
The
legal
proceedings of the Company are described in the Definitive Proxy Statement
in
the Sections entitled “Information about TSS/Vortech - Legal Proceedings” on
page 82, and “Information about Fortress America Acquisition Corporation - Legal
Proceedings” on page 97, of the Definitive Proxy Statement, which Sections are
incorporated herein by reference.
Market
Price of and Dividends on the Registrant’s Common Equity and Related Stockholder
Matters
The
Sections of the Definitive Proxy Statement entitled “Market Price Information
for FAAC” on page 19, “Information about Fortress America Acquisition
Corporation - Dividends” on page 97, “Price Range of Securities and Dividends”
on page 112, and “Approval of the 2006 Omnibus Incentive Compensation Plan” on
page 72, are incorporated herein by reference. The Company’s 2006 Omnibus
Incentive Compensation Plan was approved at the Company’s special meeting of
stockholders held on January 17, 2007.
The
following table sets forth, for the calendar quarter indicated, the quarterly
high and low bid information of the Company’s common stock as reported on the
OTC Bulletin Board. The quotations listed below reflect interdealer prices,
without retail markup, markdown or commission, and may not necessarily represent
actual transactions:
Quarter Ended
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Common Stock (FAAC)
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Warrants (FAACW)
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Units (FAACU)
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High
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Low
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High
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Low
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High
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Low
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December
31, 2005
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$
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5.24
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$
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5.02
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$
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0.52
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$
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0.38
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$
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6.10
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$
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5.76
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March
31, 2006
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$
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5.60
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$
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5.22
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$
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0.78
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$
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0.36
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$
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7.15
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$
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5.95
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June
30, 2006
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$
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5.54
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$
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5.35
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$
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0.83
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$
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0.49
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$
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7.20
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$
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6.23
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September 30,
2006
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$
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5.50
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$
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5.35
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$
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0.55
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$
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0.41
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$
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6.65
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$
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6.12
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December
31, 2006
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$
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5.62
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$
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5.40
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$
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0.51
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$
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0.40
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$
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6.55
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$
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6.25
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The
closing prices of the Company’s common stock, units and warrants on January 19,
2007 were $5.44, $6.50, and $0.66, respectively.
In
connection with the Acquisition, the Company’s stockholders approved an
amendment and restatement of the Company’s Certificate of Incorporation,
including changing the Company’s name from “Fortress America Acquisition
Corporation” to “Fortress International Group, Inc.” The name change became
effective on January 19, 2007. However, the Company’s common stock, units and
warrants continue to trade on the over-the-counter bulletin board (OTCBB)
under
the symbols FAAC, FAACU, and FAACW, respectively.
Recent
Sales of Unregistered Securities
Reference
is made to the disclosure set forth under Item 3.02 of this Current Report
on
Form 8-K, which disclosure is incorporated herein by reference, concerning
the
recent sale of unregistered securities.
Indemnification
of Directors and Officers
Article
Sixth of the Second Amended and Restated Certificate of Incorporation provides
as follows:
SIXTH:
Indemnification.
Section 6.1.
Right
to Indemnification.
Each
person who was or is a party or is threatened to be made a party to or is
involved in any threatened, pending or completed action, suit, proceeding
or
alternative dispute resolution procedure, whether (a) civil, criminal,
administrative, investigative or otherwise, (b) formal or informal or
(c) by or in the right of the Corporation (collectively, a “proceeding”),
by reason of the fact that he or she, or a person of whom he or she is the
legal
representative, is or was a director, officer, employee or agent of the
Corporation or is or was serving at the request of the Corporation as a
director, manager, officer, partner, trustee, employee or agent of another
foreign or domestic corporation or of a foreign or domestic limited liability
company, partnership, joint venture, trust or other enterprise, including
service with respect to employee benefit plans, whether the basis of such
proceeding is alleged action in an official capacity as such a director,
officer, employee or agent of the Corporation or in any other capacity while
serving as such other director, manager, officer, partner, trustee, employee
or
agent, shall be indemnified and held harmless by the Corporation against
all
judgments, penalties and fines incurred or paid, and against all expenses
(including attorneys’ fees) and settlement amounts incurred or paid, in
connection with any such proceeding, except in relation to matters as to
which
the person did not act in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the Corporation,
and,
with respect to any criminal action or proceeding, had no reasonable cause
to
believe the person’s conduct was unlawful. Until such time as there has been a
final judgment to the contrary, a person shall be presumed to be entitled
to be
indemnified under this Section 6.1. The termination of any proceeding by
judgment, order, settlement, conviction, or upon a plea of
nolo
contendere
or its
equivalent, shall not, of itself, either rebut such presumption or create
a
presumption that (a) the person did not act in good faith and in a manner
which the person reasonably believed to be in or not opposed to the best
interests of the Corporation, (b) with respect to any criminal action or
proceeding, the person had reasonable cause to believe that the person’s conduct
was unlawful or (c) the person was not successful on the merits or
otherwise in defense of the proceeding or of any claim, issue or matter therein.
If the DGCL is hereafter amended to provide for indemnification rights broader
than those provided by this Section 6.1, then the persons referred to in
this Section 6.1 shall be indemnified and held harmless by the Corporation
to the fullest extent permitted by the DGCL as so amended (but, in the case
of
any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than permitted prior
to
such amendment).
Section 6.2.
Determination
of Entitlement to Indemnification.
A
determination as to whether a person who is a director or officer of the
Corporation at the time of the determination is entitled to be indemnified
and
held harmless under Section 6.1 shall be made (a) by a majority vote
of the directors who are not parties to such proceeding, even though less
than a
quorum, (b) by a committee of such directors designated by majority vote of
such directors, even though less than a quorum, (c) if there are no such
directors, or if such directors so direct, by independent legal counsel in
a
written opinion, or (d) by the stockholders. A determination as to whether
a person who is not a director or officer of the Corporation at the time
of the
determination is entitled to be indemnified and held harmless under
Section 6.1 shall be made by or as directed by the Board of Directors of
the Corporation.
Section 6.3.
Mandatory
Advancement of Expenses.
The
right
to indemnification conferred in this Article Sixth shall include the right
to require the Corporation to pay the expenses (including attorneys’ fees)
incurred in defending any such proceeding in advance of its final disposition;
provided
,
however
,
that,
if the Board of Directors so determines, an advancement of expenses
incurred by an indemnitee in his or her capacity as a director or officer
of the
Corporation (but not in any other capacity in which service was or is rendered
by such indemnitee, including, without limitation, service to an employee
benefit plan) shall be made only upon delivery to the Corporation of an
undertaking, by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall be finally determined that such indemnitee is not entitled
to be indemnified for such expenses under Section 6.1 or
otherwise.
Section 6.4.
Non-Exclusivity
of Rights.
The
right
to indemnification and the advancement of expenses conferred in this
Article Sixth shall not be exclusive of any other right which any person
may have or hereafter acquire under any statute, any provision of this
Certificate of Incorporation or of any bylaw, agreement, or insurance policy
or
arrangement, or any vote of stockholders or disinterested directors, or
otherwise. The Board of Directors is expressly authorized to adopt and enter
into indemnification agreements with, and obtain insurance for, directors
and
officers.
Section 6.5.
Effect
of Amendment.
Neither
any amendment, repeal, or modification of this Article Sixth, nor the
adoption or amendment of any other provision of this Certificate of
Incorporation or the bylaws of the Corporation inconsistent with this
Article Sixth, shall adversely affect any right or protection provided
hereby with respect to any act or omission occurring prior to the date when
such
amendment, repeal, modification, or adoption became effective.
In
addition, Section 145 of the DGCL provides for indemnification of officers,
directors, employees and agents as set forth below.
Section 145.
Indemnification of officers, directors, employees and agents;
insurance.
(a)
A
corporation shall have power to indemnify any person who was or is a party
or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of
the
fact that the person is or was a director, officer, employee or agent of
the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint
venture, trust or other enterprise, against expenses (including attorneys’
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or proceeding
if the
person acted in good faith and in a manner the person reasonably believed
to be
in or not opposed to the best interests of the corporation, and, with respect
to
any criminal action or proceeding, had no reasonable cause to believe the
person’s conduct was unlawful. The termination of any action, suit or proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo contendere
or
its equivalent, shall not, of itself, create a presumption that the person
did
not act in good faith and in a manner which the person reasonably believed
to be
in or not opposed to the best interests of the corporation, and, with respect
to
any criminal action or proceeding, had reasonable cause to believe that the
person’s conduct was unlawful.
(b)
A
corporation shall have power to indemnify any person who was or is a party
or is
threatened to be made a party to any threatened, pending or completed action
or
suit by or in the right of the corporation to procure a judgment in its favor
by
reason of the fact that the person is or was a director, officer, employee
or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses (including attorneys’
fees) actually and reasonably incurred by the person in connection with the
defense or settlement of such action or suit if the person acted in good
faith
and in a manner the person reasonably believed to be in or not opposed to
the
best interests of the corporation and except that no indemnification shall
be
made in respect of any claim, issue or matter as to which such person shall
have
been adjudged to be liable to the corporation unless and only to the extent
that
the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability
but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
(c)
To
the
extent that a present or former director or officer of a corporation has
been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subsections (a) and (b) of this section, or
in defense of any claim, issue or matter therein, such person shall be
indemnified against expenses (including attorneys’ fees) actually and reasonably
incurred by such person in connection therewith.
(d)
Any
indemnification under subsections (a) and (b) of this section (unless
ordered by a court) shall be made by the corporation only as authorized in
the
specific case upon a determination that indemnification of the present or
former
director, officer, employee or agent is proper in the circumstances because
the
person has met the applicable standard of conduct set forth in subsections
(a) and (b) of this section. Such determination shall be made, with
respect to a person who is a director or officer at the time of such
determination, (1) by a majority vote of the directors who are not parties
to such action, suit or proceeding, even though less than a quorum, or
(2) by a committee of such directors designated by majority vote of such
directors, even though less than a quorum, or (3) if there are no such
directors, or if such directors so direct, by independent legal counsel in
a
written opinion, or (4) by the stockholders.
(e)
Expenses
(including attorneys’ fees) incurred by an officer or director in defending any
civil, criminal, administrative or investigative action, suit or proceeding
may
be paid by the corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount if it shall ultimately be determined
that such person is not entitled to be indemnified by the corporation as
authorized in this section. Such expenses (including attorneys’ fees) incurred
by former directors and officers or other employees and agents may be so
paid
upon such terms and conditions, if any, as the corporation deems
appropriate.
(f)
The
indemnification and advancement of expenses provided by, or granted pursuant
to,
the other subsections of this section shall not be deemed exclusive of any
other
rights to which those seeking indemnification or advancement of expenses
may be
entitled under any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in such person’s official capacity and
as to action in another capacity while holding such office.
(g)
A
corporation shall have power to purchase and maintain insurance on behalf
of any
person who is or was director, officer, employee or agent of the corporation,
or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or
other enterprise against any liability asserted against such person and incurred
by such person in any such capacity, or arising out of such person’s status as
such, whether or not the corporation would have the power to indemnify such
person against such liability under this section.
(h)
For
purposes of this section, references to “the corporation” shall include, in
addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had power and authority
to
indemnify its directors, officers, and employees or agents, so that any person
who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position
under
this section with respect to the resulting or surviving corporation as such
person would have with respect to such constituent corporation if its separate
existence had continued.
(i)
For
purposes of this section, references to “other enterprises” shall include
employee benefit plans; references to “fines” shall include any excise taxes
assessed on a person with respect to any employee benefit plan; and references
to “serving at the request of the corporation” shall include any service as a
director, officer, employee or agent of the corporation which imposes duties
on,
or involves services by, such director, officer, employee or agent with respect
to an employee benefit plan, its participants or beneficiaries; and a person
who
acted in good faith and in a manner such person reasonably believed to be
in the
interest of the participants and beneficiaries of an employee benefit plan
shall
be deemed to have acted in a manner “not opposed to the best interests of the
corporation” as referred to in this section.
(j)
The
indemnification and advancement of expenses provided by, or granted pursuant
to,
this section shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director, officer, employee
or
agent and shall inure to the benefit of the heirs, executors and administrators
of such a person.
(k)
The
Court
of Chancery is hereby vested with exclusive jurisdiction to hear and determine
all actions for advancement of expenses or indemnification brought under
this
section or under any bylaw, agreement, vote of stockholders or disinterested
directors, or otherwise. The Court of Chancery may summarily determine a
corporation’s obligation to advance expenses (including attorneys’
fees).”
Insofar
as indemnification for liabilities arising under the Securities Act of 1933
may
be permitted to the Company’s directors, officers, and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised
that in
the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the
event
that a claim for indemnification against such liabilities (other than the
payment of expenses incurred or paid by a director, officer or controlling
person in a successful defense of any action, suit or proceeding) is asserted
by
such director, officer or controlling person in connection with the securities
being registered, we will, unless in the opinion of its counsel the matter
has
been settled by controlling precedent, submit to the court of appropriate
jurisdiction the question whether such indemnification is against public
policy
as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
Financial
Statements and Supplementary Data
Reference
is made to the disclosure set forth under Item 9.01 of this Current Report
on
Form 8-K concerning the financial statements and supplementary data of the
Company.
Financial
Statements and Exhibits
Reference
is made to the disclosure set forth under Item 9.01 of this Current Report
on
Form 8-K concerning the financial information of the Company.
Item
3.02. Unregistered Sales of Equity Securities
Reference
is made to the disclosure in the Definitive Proxy Statement in the Section
entitled “The Purchase Agreement - Purchase Price - Payment” beginning on page
53, which is incorporated herein by reference. The Company has claimed an
exemption from registration under Section 4(2) of the Securities Act of 1933
for
the 2,534,988 shares of common stock issued at the Closing of the
Acquisition.
Item
3.03. Material Modification to Rights of Security Holders
Reference
is made to the disclosure in the Definitive Proxy Statement in the Sections
entitled “Approval of the Proposal to Amend and Restate our Amended and Restated
Certificate of Incorporation” beginning on page 71, and “Registration Rights
Agreement” beginning on page 60, which are incorporated herein by
reference.
With
the
completion of the Acquisition, the Company’s outstanding warrants to purchase
common stock became exercisable on January 19, 2007.
Prior
to
the Company’s initial public offering, the Company issued 1,750,000 shares to
its founding shareholders. All of the remaining shares issued to the Company’s
founding shareholders prior to the Company’s initial public offering (including
an aggregate of 1,500,000 shares owned by Messrs. McMillen, Weiss, Mitchell
and
Nickles) remain in escrow with Continental Stock Transfer & Trust
Company, as escrow agent, pursuant to an escrow agreement that expires on
July
13, 2008. During the escrow period, these shares cannot be sold, but the
founding stockholders will retain all other rights as stockholders, including,
without limitation, the right to vote their shares of common stock and the
right
to receive cash dividends, if declared. If dividends are declared and payable
in
shares of common stock, such dividends will also be placed in escrow.
Item
5.02 Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers; Compensatory Arrangements of Certain
Officers
Effective
immediately upon the closing of the Acquisition, C. Thomas McMillen resigned
as
chairman of the Company and Harvey L. Weiss resigned as chief executive officer,
president and secretary of the Company. Each of Mr. McMillen and Mr. Weiss
remains as a director of the Company. In addition, Mr. McMillen was elected
as
vice chairman of the Company, Harvey L. Weiss was elected as chairman of
the
Company, Thomas P. Rosato was elected as a director of the Company and as
chief
executive officer of the Company, and Gerard J. Gallagher was elected as
a
director of the Company and as president and chief operating officer of the
Company. Reference is made to the disclosure in the Definitive Proxy Statement
in the Section entitled “Directors and Executive Officers of Fortress America
Acquisition Corporation Following the Acquisition” beginning on page 100, which
is incorporated herein by reference.
The
Company has entered into an employment and other agreements with each of
Mr.
Weiss, Mr. Rosato and Mr. Gallagher and has entered into a consulting agreement
with Washington Capital Advisors, LLC, of which Mr. McMillen is the principal
equity owner and officer, in each case on terms consistent with the description
thereof in the Section of the Definitive Proxy Statement referred to immediately
above, particularly in the subsection entitled “Employment Agreements” beginning
on page 103 and the subsection entitled “Consulting Agreement with Washington
Capital Advisors, LLC” beginning on page 105 of the Definitive Proxy
Statement.
With
respect to the compensation of non-employee directors, the disclosure included
in Item 2.01, in the second, third and fourth paragraphs, under the heading
“Director and Executive Compensation,” is incorporated herein by reference.
Item
5.03. Amendments to Articles of Incorporation or Bylaws.
In
connection with the Acquisition, the Certificate of Incorporation of the
Company
was amended and restated. The Amended and Restated Certificate of Incorporation,
which is attached as Exhibit 3.1 to this Current Report on Form 8-K, was
filed
with the Delaware Secretary of State on January 19, 2007, and all amendments
reflected therein were effective on that date. Reference is made to the
disclosure set forth in Item 2.01 of this Current Report on Form 8-K concerning
the amendment and restatement of the Certificate of Incorporation and to
the
disclosure in the Definitive Proxy Statement in the Section entitled “Approval
of the Proposal to Amend and Restate our Amended and Restated Certificate
of
Incorporation” on page 71 of the Definitive Proxy Statement, which is
incorporated herein by reference.
Item
5.06. Change in Shell Company Status
As
described in Item 2.01, on January 19, 2007, the Company completed the
Acquisition. As a result, the Company is no longer a shell company as defined
in
Rule 12b-2 of the Securities Exchange Act of 1934, as amended.
Item
9.01 Financial Statements and Exhibits
(a)
Financial Statements of Businesses Acquired
The
financial statements and selected financial information of TSS/Vortech are
included in the Definitive Proxy Statement in the Sections entitled “Selected
Historical and Pro Forma Combined Financial Information” beginning on page 15,
and “Index to Financial Statements” beginning on page F-1, of the Definitive
Proxy Statement, which are incorporated herein by reference.
(b)
Pro Forma Financial Information
The
pro
forma financial information included in the Definitive Proxy Statement in
the
Section entitled “Unaudited Pro Forma Condensed Consolidated Financial
Statements” beginning on page 61 is incorporated herein by reference.
(d)
Exhibits
Exhibit
|
|
|
Number
|
|
Description
|
|
|
|
3.1
|
|
Amended
and Restated Certificate of Incorporation dated January 19,
2007
|
|
|
|
10.1
|
|
Second
Amended and Restated Membership Interest Purchase Agreement dated
July 31,
2006 among Fortress America Acquisition Corporation, VTC, L.L.C.,
Vortech,
LLC, Thomas P. Rosato and Gerard J. Gallagher, and Thomas P. Rosato
as
Members’ Representative (included as Annex A to the Definitive Proxy
Statement dated December 27, 2006 and incorporated by reference
herein)
|
|
|
|
10.2
|
|
Amendment
to the Second Amended and Restated Membership Interest Purchase
Agreement
dated January 16, 2007 among Fortress America Acquisition Corporation,
VTC, L.L.C., Vortech, LLC, Thomas P. Rosato and Gerard J. Gallagher,
and
Thomas P. Rosato as Members’ Representative (included as Exhibit 10.1 to
the Current Report on Form 8-K dated January 19, 2007 and incorporated
by
reference herein)
|
|
|
|
10.3
|
|
Escrow
Agreement (Balance Sheet Escrow) dated January 19, 2007 among Fortress
America Acquisition Corporation, VTC, L.L.C., Vortech, LLC, Thomas
P.
Rosato and Gerard J. Gallagher, Thomas P. Rosato as Members’
Representative, and SunTrust Bank
|
|
|
|
10.4
|
|
Escrow
Agreement (General Indemnity) among Fortress America Acquisition
Corporation, VTC, L.L.C., Vortech, LLC, Thomas P. Rosato and Gerard
J.
Gallagher, Thomas P. Rosato as Members’ Representative, and SunTrust
Bank
|
|
|
|
10.5
|
|
Registration
Rights Agreement among Fortress America Acquisition Corporation
and Thomas
P. Rosato and Gerard J. Gallagher
|
|
|
|
10.6
|
|
Fortress
America Acquisition Corporation 2006 Omnibus Incentive Compensation
Plan
(included as Annex E to the Definitive Proxy Statement dated December
27,
2006 and incorporated by reference herein)
|
|
|
|
10.7
|
|
Employment
Agreement dated January 19, 2007 by Fortress America Acquisition
Corporation and Harvey L. Weiss
|
|
|
|
10.8
|
|
Executive
Consulting Agreement dated January 19, 2007 by Fortress America
Acquisition Corporation and Washington Capital Advisors, Inc.
|
|
|
|
10.9
|
|
Executive
Employment Agreement dated January 19, 2007 by Fortress America
Acquisition Corporation and Thomas P. Rosato
|
|
|
|
10.10
|
|
Executive
Employment Agreement dated January 19, 2007 by Fortress America
Acquisition Corporation and Gerard J. Gallagher
|
|
|
|
10.11
|
|
Voting
Agreement dated January 19, 2007 by Fortress America Acquisition
Corporation, Thomas P. Rosato, Gerard J. Gallagher, C. Thomas McMillen
and
Harvey L. Weiss
|
|
|
|
99.1
|
|
Press
Release of the registrant dated January 19,
2007
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Company has
duly
caused this report to be signed on its behalf by the undersigned hereunto
duly
authorized.
Date:
January
25, 2007
FORTRESS
INTERNATIONAL GROUP, INC.
By:
/s/
Harvey L. Weiss
Harvey
L.
Weiss
Chairman
EXHIBIT
INDEX
Exhibit
|
|
|
Number
|
|
Description
|
|
|
|
3.1
|
|
Amended
and Restated Certificate of Incorporation dated January 19,
2007
|
|
|
|
10.1
|
|
Second
Amended and Restated Membership Interest Purchase Agreement dated
July 31,
2006 among Fortress America Acquisition Corporation, VTC, L.L.C.,
Vortech,
LLC, Thomas P. Rosato and Gerard J. Gallagher, and Thomas P. Rosato
as
Members’ Representative (included as Annex A to the Definitive Proxy
Statement dated December 27, 2006 and incorporated by reference
herein)
|
|
|
|
10.2
|
|
Amendment
to the Second Amended and Restated Membership Interest Purchase
Agreement
dated January 16, 2007 among Fortress America Acquisition Corporation,
VTC, L.L.C., Vortech, LLC, Thomas P. Rosato and Gerard J. Gallagher,
and
Thomas P. Rosato as Members’ Representative (included as Exhibit 10.1 to
the Current Report on Form 8-K dated January 19, 2007 and incorporated
by
reference herein)
|
|
|
|
10.3
|
|
Escrow
Agreement (Balance Sheet Escrow) dated January 19, 2007 among Fortress
America Acquisition Corporation, VTC, L.L.C., Vortech, LLC, Thomas
P.
Rosato and Gerard J. Gallagher, Thomas P. Rosato as Members’
Representative, and SunTrust Bank
|
|
|
|
10.4
|
|
Escrow
Agreement (General Indemnity) among Fortress America Acquisition
Corporation, VTC, L.L.C., Vortech, LLC, Thomas P. Rosato and Gerard
J.
Gallagher, Thomas P. Rosato as Members’ Representative, and SunTrust
Bank
|
|
|
|
10.5
|
|
Registration
Rights Agreement among Fortress America Acquisition Corporation
and Thomas
P. Rosato and Gerard J. Gallagher
|
|
|
|
10.6
|
|
Fortress
America Acquisition Corporation 2006 Omnibus Incentive Compensation
Plan
(included as Annex E to the Definitive Proxy Statement dated December
27,
2006 and incorporated by reference herein)
|
|
|
|
10.7
|
|
Employment
Agreement dated January 19, 2007 by Fortress America Acquisition
Corporation and Harvey L. Weiss
|
|
|
|
10.8
|
|
Executive
Consulting Agreement dated January 19, 2007 by Fortress America
Acquisition Corporation and Washington Capital Advisors, Inc.
|
|
|
|
10.9
|
|
Executive
Employment Agreement dated January 19, 2007 by Fortress America
Acquisition Corporation and Thomas P. Rosato
|
|
|
|
10.10
|
|
Executive
Employment Agreement dated January 19, 2007 by Fortress America
Acquisition Corporation and Gerard J. Gallagher
|
|
|
|
10.11
|
|
Voting
Agreement dated January 19, 2007 by Fortress America Acquisition
Corporation, Thomas P. Rosato, Gerard J. Gallagher, C. Thomas McMillen
and
Harvey L. Weiss
|
|
|
|
99.1
|
|
Press
Release of the registrant dated January 19,
2007
|
SECOND
AMENDED AND RESTATED
CERTIFICATE
OF INCORPORATION
OF
FORTRESS
AMERICA ACQUISITION CORPORATION
Pursuant
to Section 242 and 245 of the General Corporation Law of the State of Delaware,
Fortress America Acquisition Corporation, a Delaware corporation formed on
December 20, 2004, hereby amends and restates its Certificate of Incorporation
by its President and hereby certifies as follows:
FIRST
:
Name
.
The
name of this corporation is Fortress International Group, Inc. (the
"Corporation").
SECOND
:
Registered
Office and Agent
.
The
address of the Corporation's registered office in the State of Delaware is
to be
located at 2711 Centerville Road, Suite 400, in the City of Wilmington, County
of New Castle, State of Delaware 19808. Its registered agent at such address
is
Corporation Service Company.
THIRD
:
Purpose
.
The
purpose of the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the Delaware General Corporation Law, as
amended from time to time (the "DGCL").
FOURTH
:
Capital
Stock
.
Section
4.1.
Authorized
Shares
.
The
total number of shares of stock which the Corporation shall have authority
to
issue is fifty-one million (51,000,000), fifty million (50,000,000) of which
shall be shares of Common Stock with a par value of
$0.0001
per share and one million (1,000,000) of which shall be shares of Preferred
Stock with a par value of $0.0001 per share.
Section
4.2.
Common
Stock
.
Except
as otherwise required by law or as otherwise provided in the terms of any class
or series of stock having a preference over the Common Stock as to dividends
or
upon liquidation, the holders of the Common Stock shall exclusively possess
all
voting power, and each share of Common Stock shall have one vote.
Section
4.3.
Preferred
Stock
.
(a)
Board
Authorized to Fix Terms
.
The
Board of Directors is authorized, subject to limitations prescribed by law,
by
resolution or resolutions to provide for the issuance of shares of preferred
stock in one or more series, and, by filing a certificate when required by
the
DGCL, to establish from time to time the number of shares to be included in
each
such series and to fix the designation, powers, preferences and rights of the
shares of each such series and the qualifications, limitations or restrictions
thereof. The authority of the Board of Directors with respect to each series
shall include, but not be limited to, determination of the
following:
(i)
the
number of shares constituting that series, including the authority to increase
or decrease such number, and the distinctive designation of that
series;
(ii)
the
dividend rate on the shares of that series, whether dividends shall be
cumulative, and, if so, the date or dates from which they shall be cumulative
and the relative rights of priority, if any, in the payment of dividends on
shares of that series;
(iii)
the
voting rights, if any, of the shares of that series in addition to the voting
rights provided by law and the terms of any such voting rights;
(iv)
the
terms and conditions, if any, upon which shares of that series shall be
convertible or exchangeable for shares of any other class or classes of stock
of
the Corporation or other entity, including provision for adjustment of the
conversion or exchange rate upon the occurrence of such events as the Board
of
Directors shall determine;
(v)
the
right, if any, of the Corporation to redeem shares of that series and the terms
and conditions of such redemption, including the date or dates upon or after
which they shall be redeemable and the amount per share payable in case of
redemption, which amount may vary according to different conditions and
different redemption dates;
(vi)
the
obligation, if any, of the Corporation to retire shares of that series pursuant
to a retirement or sinking fund or fund of a similar nature for the redemption
or purchase of shares of that series and the terms and conditions of such
obligation;
(vii)
the
rights of the shares of that series in the event of voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, and the relative
rights of priority, if any, in the payment of shares of that series;
and
(viii)
any other rights, preferences and limitations of the shares of that series
as
may be permitted by law.
(b)
Dividend
Preference
.
Dividends on outstanding shares of preferred stock shall be paid or declared
and
set apart for payment before any dividends shall be paid or declared and set
apart for payment on shares of common stock with respect to the same dividend
period.
(c)
Relative
Liquidation Preference
.
If,
upon any voluntary or involuntary liquidation, dissolution or winding up of
the
Corporation, the assets available for distribution to holders of shares of
preferred stock of all series shall be insufficient to pay such holders the
full
preferential amount to which they are entitled, then such assets shall be
distributed ratably among the shares of all series of preferred stock in
accordance with their respective priorities and preferential amounts (including
unpaid cumulative dividends, if any) payable with respect thereto.
(d)
Reissuance
of Preferred Stock
.
Subject
to the conditions or restrictions on issuance set forth in the resolution or
resolutions adopted by the Board of Directors providing for the issue of any
series of shares of Preferred Stock, shares of Preferred Stock of any series
that have been redeemed or repurchased by the Corporation (whether through
the
operation of a sinking fund or otherwise) or that, if convertible or
exchangeable, have been converted or exchanged in accordance with their terms,
shall be retired and have the status of authorized and unissued shares of
Preferred Stock of the same series and may be reissued as a part of the series
of which they were originally a part or may, upon the filing of an appropriate
certificate with the Delaware Secretary of State, be reissued as part of a
new
series of shares of Preferred Stock to be created by resolution or resolutions
of the Board of Directors or as part of any other series of shares of Preferred
Stock.
FIFTH:
Elimination
of Certain Liability of Directors
.
No
director of the Corporation shall be personally liable to the Corporation or
its
stockholders for monetary damages for breach of fiduciary duty as a director
except (a) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (b) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(c) under Section 174 of the DGCL or (d) for any transaction from
which the director derived an improper personal benefit. If the DGCL is
hereafter amended to permit a corporation to further eliminate or limit the
liability of a director of a corporation, then the liability of a director
of
the Corporation, in addition to the circumstances in which a director is not
personally liable as set forth in the preceding sentence, shall, without further
action of the directors or stockholders, be further eliminated or limited to
the
fullest extent permitted by the DGCL as so amended. Neither any amendment,
repeal, or modification of this Article Fifth, nor the adoption or amendment
of
any other provision of this Certificate of Incorporation or the bylaws of the
Corporation inconsistent with this Article Fifth, shall adversely affect any
right or protection provided hereby with respect to any act or omission
occurring prior to the date when such amendment, repeal, modification, or
adoption became effective.
SIXTH:
Indemnification
.
Section
6.1.
Right
to Indemnification
.
Each
person who was or is a party or is threatened to be made a party to or is
involved in any threatened, pending or completed action, suit, proceeding or
alternative dispute resolution procedure, whether (a) civil, criminal,
administrative, investigative or otherwise, (b) formal or informal or
(c) by or in the right of the Corporation (collectively, a "proceeding"),
by reason of the fact that he or she, or a person of whom he or she is the
legal
representative, is or was a director, officer, employee or agent of the
Corporation or is or was serving at the request of the Corporation as a
director, manager, officer, partner, trustee, employee or agent of another
foreign or domestic corporation or of a foreign or domestic limited liability
company, partnership, joint venture, trust or other enterprise, including
service with respect to employee benefit plans, whether the basis of such
proceeding is alleged action in an official capacity as such a director,
officer, employee or agent of the Corporation or in any other capacity while
serving as such other director, manager, officer, partner, trustee, employee
or
agent, shall be indemnified and held harmless by the Corporation against all
judgments, penalties and fines incurred or paid, and against all expenses
(including attorneys' fees) and settlement amounts incurred or paid, in
connection with any such proceeding, except in relation to matters as to which
the person did not act in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the Corporation,
and,
with respect to any criminal action or proceeding, had no reasonable cause
to
believe the person's conduct was unlawful. Until such time as there has been
a
final judgment to the contrary, a person shall be presumed to be entitled to
be
indemnified under this Section 6.1. The termination of any proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere
or
its equivalent, shall not, of itself, either rebut such presumption or create
a
presumption that (a) the person did not act in good faith and in a manner
which the person reasonably believed to be in or not opposed to the best
interests of the Corporation, (b) with respect to any criminal action or
proceeding, the person had reasonable cause to believe that the person's conduct
was unlawful or (c) the person was not successful on the merits or
otherwise in defense of the proceeding or of any claim, issue or matter therein.
If the DGCL is hereafter amended to provide for indemnification rights broader
than those provided by this Section 6.1, then the persons referred to in this
Section 6.1 shall be indemnified and held harmless by the Corporation to the
fullest extent permitted by the DGCL as so amended (but, in the case of any
such
amendment, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than permitted prior to such
amendment).
Section
6.2.
Determination
of Entitlement to Indemnification
.
A
determination as to whether a person who is a director or officer of the
Corporation at the time of the determination is entitled to be indemnified
and
held harmless under Section 6.1 shall be made (a) a majority vote of the
directors who are not parties to such proceeding, even though less than a
quorum, (b) by a committee of such directors designated by majority vote of
such directors, even though less than a quorum, (c) if there are no such
directors, or if such directors so direct, by independent legal counsel in
a
written opinion, or (d) by the stockholders. A determination as to whether
a person who is not a director or officer of the Corporation at the time of
the
determination is entitled to be indemnified and held harmless under Section
6.1
shall be made by or as directed by the Board of Directors of the
Corporation.
Section
6.3.
Mandatory
Advancement of Expenses
.
The
right to indemnification conferred in this Article Sixth shall include the
right
to require the Corporation to pay the expenses (including attorneys' fees)
incurred in defending any such proceeding in advance of its final disposition;
provided
,
however
,
that,
if the Board of Directors so determines, an advancement of expenses incurred
by
an indemnitee in his or her capacity as a director or officer of the Corporation
(but not in any other capacity in which service was or is rendered by such
indemnitee, including, without limitation, service to an employee benefit plan)
shall be made only upon delivery to the Corporation of an undertaking, by or on
behalf of such indemnitee, to repay all amounts so advanced if it shall be
finally determined that such indemnitee is not entitled to be indemnified for
such expenses under Section 6.1 or otherwise.
Section
6.4.
Non-Exclusivity
of Rights
.
The
right to indemnification and the advancement of expenses conferred in this
Article Sixth shall not be exclusive of any other right which any person may
have or hereafter acquire under any statute, any provision of this Certificate
of Incorporation or of any bylaw, agreement, or insurance policy or arrangement,
or any vote of stockholders or disinterested directors, or otherwise. The Board
of Directors is expressly authorized to adopt and enter into indemnification
agreements with, and obtain insurance for, directors and officers.
Section
6.5.
Effect
of Amendment
.
Neither
any amendment, repeal, or modification of this Article Sixth, nor the adoption
or amendment of any other provision of this Certificate of Incorporation or
the
bylaws of the Corporation inconsistent with this Article Sixth, shall adversely
affect any right or protection provided hereby with respect to any act or
omission occurring prior to the date when such amendment, repeal, modification,
or adoption became effective.
SEVENTH:
Miscellaneous
.
The
following provisions are inserted for the management of the business and for
the
conduct of the affairs of the Corporation and for the purpose of creating,
defining, limiting and regulating powers of the Corporation and its directors
and stockholders:
Section
7.1
Classification,
Election and Term of Office of Directors
.
The
directors, other than those who may be elected by the holders of any class
or
series of stock having a preference over the Common Stock as to dividends or
upon liquidation, shall be classified with respect to the time for which they
severally hold office into three classes, as nearly equal in number as possible.
At the first election of directors by the incorporator, the incorporator shall
elect a director for a term expiring at the Corporation's third annual meeting
of stockholders. That director shall then elect additional directors to serve
in
the other classes of directors with terms expiring at the first and second
annual meetings of stockholders. At each succeeding annual meeting of
stockholders successors to the class of directors whose term expires at that
meeting shall be elected by plurality vote of all votes cast at such meeting
to
hold office for a term expiring at the annual meeting of stockholders held
in
the third year following the year of their election, subject, however, to their
prior death, resignation or removal from office as provided by law. If the
number of directors is changed, any increase or decrease shall be apportioned
among the classes so as to maintain a number of directors in each class as
nearly equal as possible. Any additional director of any class elected to fill
a
vacancy resulting from an increase in such class shall hold office for a term
that shall coincide with the remaining term of such class. No decrease in the
number of directors shall change the term of any director in office at the
time
of such decrease. A director shall hold office until the annual meeting for
the
year in which the director's term expires and such director's successor shall
be
elected and qualified, subject, however, to such director's prior death,
resignation or removal from office.
Section
7.2
Manner
of Election of Directors
.
Elections of directors need not be by written ballot unless the bylaws of the
Corporation shall so provide.
Section
7.3
Adoption
and Amendment of Bylaws
.
The
Board of Directors shall have power to make and adopt bylaws with respect to
the
organization, operation and government of the Corporation and, subject to such
restrictions as may be set forth in the bylaws, from time to time to change,
alter, amend or repeal the same, but the stockholders of the Corporation may
make and adopt additional bylaws and, subject to such restrictions as may be
set
forth in the bylaws, may change, alter, amend or repeal any bylaw whether
adopted by them or otherwise.
Section
7.4
Vote
Required to Amend Certain Provisions of Certificate of
Incorporation
.
Notwithstanding any other provision of this Certificate of Incorporation or
the
bylaws of the Corporation or any provision of law which might otherwise permit
a
lesser vote, but in addition to any affirmative vote of the holders of any
particular class or series of stock required by law, this Certificate of
Incorporation, or the bylaws, the affirmative vote of the holders of at least
66⅔% of the Corporation's capital stock entitled to vote generally in the
election of directors, voting as a single class, shall be required to alter,
amend, or adopt any provision inconsistent with or repeal Articles Fifth, Sixth
and Seventh of this Certificate of Incorporation.
Section
7.5
Severability
.
In the
event any provision (or portion thereof) of this Certificate of Incorporation
shall be found to be invalid, prohibited, or unenforceable for any reason,
the
remaining provisions (or portions thereof) of this Certificate of Incorporation
shall be deemed to remain in full force and effect, and shall be construed
as if
such invalid, prohibited, or unenforceable provision had been stricken herefrom
or otherwise rendered inapplicable, it being the intent of the Corporation
and
its stockholders that each such remaining provision (or portion thereof) of
this
Certificate of Incorporation remain, to the fullest extent permitted by law,
applicable and enforceable as to all stockholders, notwithstanding any such
finding.
Section
7.6
Reservation
of Right to Amend Certificate of Incorporation
.
The
Corporation reserves the right to amend, alter, change or repeal any provision
contained in this Certificate of Incorporation, in the manner now or hereafter
prescribed by statute or herein, and all rights conferred upon stockholders
herein are granted subject to this reservation.
IN
WITNESS WHEREOF, the Corporation has caused this Second Amended and Restated
Certificate of Incorporation to be signed by Harvey L. Weiss, President, as
of
the 19 day of January, 2007.
|
/s/
Harvey L. Weiss
|
|
By:
Harvey L. Weiss
|
|
Title:
President
|
E
SCROW
AGREEMENT
(Balance
Sheet Escrow)
ESCROW
AGREEMENT (“
Agreement
”),
dated
as of January 19, 2007, by and among (a) Fortress America Acquisition
Corporation, a Delaware corporation ("FAAC"); (b) VTC, L.L.C., a Maryland
limited liability company (“VTC”); (c) Vortech, LLC, a Maryland limited
liability company (“Vortech”); (d) Thomas P. Rosato (“Rosato”) and Gerard J.
Gallagher (“Gallagher” who together with Rosato owns, or control all of the
outstanding membership interests of both VTC and Vortech (each a “Member” and
jointly the “Members”); (e) Thomas P. Rosato in his capacity as the Members’
Representative; and (f) SunTrust Bank, a Georgia banking corporation (the
“
Escrow
Agent
”).
RECITALS:
WHEREAS,
pursuant to that certain Second Amended and Restated Membership Interest
Purchase Agreement, dated July 31, 2006, as amended by an Amendment To The
Second Amended and Restated Membership Interest Purchase Agreement dated January
16, 2007, copies of which without schedules or exhibits are attached hereto
as
Exhibit
1
(“
Membership
Interest Purchase Agreement
”)
that
are hereby incorporated by reference, FAAC will acquire all of the outstanding
membership interests of each VTC and Vortech;
WHEREAS,
pursuant to Section 2.6 of the Membership Interest Purchase Agreement, the
Members designated Thomas P. Rosato as their representative, agent and
attorney-in-fact for purposes of this Agreement and other various matters
described therein (the “
Members’
Representative
”);
WHEREAS,
as partial consideration for their respective membership interests in VTC and
Vortech, each of the Members has received from FAAC pursuant to the terms of
the
Membership Interest Purchase Agreement and Stock Acquistion Agreements, copies
of which (without schedules or exhibits) are attached as
Exhibit
2
(jointly
the “
Stock
Purchase Agreements
”)
in the
aggregate 2,534,988 shares of FAAC common stock of which 73,260 shares are
hereby delivered by FAAC and the Members to the Escrow Agent (the “
Escrow
Deposit
”)
to
hold in escrow pursuant to ther terms of this Agreement;
WHEREAS,
the parties desire to specify and clarify their rights and responsibilities
with
respect to the Escrow Deposit; and
WHEREAS,
the Escrow Agent is willing to serve in such capacity, but only pursuant to
the
terms and conditions of this Agreement.
NOW,
THEREFORE, in consideration of the mutual promises contained herein, the parties
hereto agree as follows:
1.
Definitions
.
1.1.
As
used
in this Agreement, the following terms shall have the meanings set forth
below:
“
Agreed
Share Value
”
has
the
meaning set forth in Section 5.3.
“
Agreement
”
means
this Escrow Agreement.
“
Business
Day
”
shall
mean any day other than a Saturday, Sunday, or any Federal or Commonwealth
of
Virginia holiday. If any period expires on a day that is not a Business Day
or
any event or condition is required by the terms of this Agreement to occur
or be
fulfilled on a day that is not a Business Day, such period shall expire or
such
event or condition shall occur or be fulfilled, as the case may be, on the
next
succeeding Business Day.
“
Escrow
Account
”
has
the
meaning set forth in Section 4.1.
“
Escrow
Agent
”
has
the
meaning set forth in the Preamble.
“
Escrow
Property
”
has
the
meaning set forth in Section 4.1.
“
Escrow
Deposit
”
has
the
meaning set forth in the Recitals.
"
Final
Determination
"
has the
meaning set forth in Section 5.1(b).
“
FAAC
”
has
the
meaning set forth in the Preamble.
"
Indemnity
Claim
"
has the
meaning set forth in Section 5.2.
"
Indemnity
Claim Notice
"
has the
meaning set forth in Section 5.2.
“
Members
”
has
the
meaning set forth in the Preamble.
“
Members’
Representative
”
has
the
meaning set forth in the Recitals.
“
Membership
Interest Purchase Agreement
”
has
the
meaning set forth in the Recitals.
1.2.
Capitalized
terms used but not defined in this Agreement have the meanings ascribed to
such
terms in the Membership Interest Purchase Agreement.
2.
Appointment
of Escrow Agent
.
FAAC,
the Members, and the Members’ Representative hereby appoint the Escrow Agent to
act as an escrow agent as provided herein, and the Escrow Agent hereby accepts
such appointment.
3.
Members’
Representative
.
3.1.
The
parties acknowledge that, pursuant to the Membership Interest Purchase
Agreement, the Members’ Representative is authorized to act as the agent and
attorney-in-fact on behalf of all of the Members in all matters necessary to
carry out the terms and conditions of this Agreement.
3.2.
The
Members’ Representative represents and warrants to the Escrow Agent that he has
the irrevocable right, power and authority with respect to all of the Members
(a) to give and receive directions and notices hereunder, (b) to make all
determinations that may be required or that he deems appropriate under this
Agreement, and (c) to execute and deliver all documents that may be required
or
that he deems appropriate under this Agreement. The Escrow Agent may act upon
the directions, instructions and notices of the Members’ Representative named
above and thereafter upon the directions and instructions of the successor
Members’ Representative named in a writing executed by a majority-in-interest of
the Members (pursuant to the provisions of Section 2.6 of the Membership
Interest Purchase Agreement) filed with the Escrow Agent.
4.
Delivery
of Escrow Deposit
.
4.1.
FAAC
acknowledges that it deposited the Escrow Deposit in an account (the
“
Escrow
Account
”)
with
the Escrow Agent. The FAAC common stock in the Escrow Account, together with
any
dividends (and any interest or other net income received from or earned thereon)
is hereinafter collectively referred to as the “
Escrow
Property
.”
4.2.
If,
during the term of this Agreement, there is Escrow Property other than the
FAAC
common shares, the Escrow Agent will invest the Escrow Property (other than
the
FAAC common stock) as provided in Section 11.
5.
Disbursement
of the Escrow Property
.
The
Escrow Agent will hold the Escrow Property and, subject to the Escrow Agent’s
right in Section 9 to withhold disbursements when the Escrow Agent is uncertain
as to what action to take, make disbursements therefrom as follows
.
5.1.
Escrow
Agent shall disburse all or a portion of the Escrow Property on deposit in
the
Escrow Account to FAAC, the Members or both, as the case may be, upon receipt
of:
(a)
one
or
more fully executed Payment Request Forms in substantially the form attached
hereto as
Exhibit
3
,
executed by FAAC and the Members' Representative on behalf of the Members,
and
otherwise pursuant to the terms hereof. Upon receipt of a Payment Request Form,
the shares and amounts specified therein shall be promptly delivered or paid
directly to the party or parties entitled to payment as specified in the Payment
Request Form; or
(b)
a
copy of
a Final Determination (as defined below) establishing a party's right to the
Escrow Property. A "
Final
Determination
"
shall
mean (i) with respect to an Indemnity Claim (or any other dispute between the
Members’ Representative and FAAC with respect to whether either party is
entitled to some portion, or all of the Escrow Property), a final determination
stating that it is being provided under the procedures of Section 11.11 of
the
Membership Interest Purchase Agreement; or (ii) otherwise a final judgment
of an
arbitrator, arbitration panel or court of competent jurisdiction and shall
in
all cases be accompanied by a certificate of the presenting party to the effect
that such judgment is a final judgment of an arbitrator, arbitration panel
or
court of competent jurisdiction, as applicable, and indicating the party,
address, accounts or other information as necessary to process
payments.
5.2.
If
FAAC
asserts in good faith a claim (an “
Indemnity
Claim
”)
against the Members pursuant to the Membership Interest Purchase Agreement,
FAAC
shall send written notice of such Indemnity Claim (an “
Indemnity
Claim Notice
”)
to the
Escrow Agent and to the Members’ Representative. Such Indemnity Claim Notice
shall set forth in reasonable detail the basis for such Indemnity Claim and
a
good faith, non-binding estimate of the amount of such Indemnity Claim. In
submitting such Indemnity Claim to the Escrow Agent, FAAC shall account for
any
applicable threshold, exclusion or cap provided for in the Membership Interest
Purchase Agreement. Whenever FAAC sends such an Indemnity Claim Notice, the
parties shall comply with the procedures set forth herein.
(a)
If
the
Members’ Representative decides, in his sole and absolute discretion, to dispute
the Indemnity Claim described in the Indemnity Claim Notice, the Members’
Representative shall, on or before the twentieth (20
th
)
Business Day following the Escrow Agent’s receipt of such notice, send to the
Escrow Agent and FAAC a written objection to such Indemnity Claim.
(b)
If
the
Escrow Agent receives from the Members’ Representative a written objection to
such Indemnity Claim on or before the twentieth (20
th
)
Business Day following the Escrow Agent’s receipt of the Indemnity Claim Notice
describing such Indemnity Claim, and if that Indemnity Claim cannot be settled
through negotiation within twenty (20) days of receipt of the written objection,
then the dispute shall be resolved in accordance with Section 11.11 of the
Membership Interest Purchase Agreement and Escrow Agent shall hold the funds
subject to such dispute until a Final Determination is delivered with respect
thereto.
(c)
If
the
Escrow Agent does not receive from the Members’ Representative a written
objection to such Indemnity Claim Notice on or before the twentieth
(20
th
)
Business Day following the Escrow Agent’s receipt of the Indemnity Claim Notice
describing such Indemnity Claim, then the Escrow Agent shall make a disbursement
to FAAC from the Escrow Property in the amount of the Indemnity Claim described
in such Indemnity Claim Notice.
5.3.
To
the
extent that a Payment Request Form, Final Determination, or Indemnity Claim
(made and not timely answered pursuant to Section 5.2(c) above) specifies a
dollar amount (rather than a share amount) payable thereunder or in satisfaction
thereof, the amount specified or claimed shall be satisfied by the delivery
from
the Escrow Property to FAAC or the Members’ Representative, as the case may be,
of certificates for FAAC common stock equal in value to the amount specified
or
claimed (with the FAAC common stock valued at Five and 46/100 Dollars ($5.46)
per share (the “
Agreed
Share Value
”)
6.
Payments
from the Escrow Property
.
6.1.
The
Escrow Agent shall make no payments from the Escrow Property unless permitted
pursuant to Sections 5, 7, 9, 10 and 13.
6.2.
Any
cash
amounts payable by the Escrow Agent under this Agreement shall be paid by bank
check or by wire transfer, as specified in the Payment Request Form or Final
Determination received by the Escrow Agent.
6.3.
Any
amounts payable in FAAC common stock under this Agreement shall be payable
by
the delivery of stock certificates for FAAC common stock valued at the Agreed
Share Value. To the extent that the number of shares deliverable by the Escrow
Agent does not correspond with stock certificates then held by the Escrow Agent,
the Escrow Agent shall deliver to FAAC one or more share certificates evidencing
shares in excess of the number of FAAC common shares then deliverable with
instructions to FAAC (i) to retain and cancel a specified number of shares
(if
shares are deliverable to FAAC hereunder) or issue to the Members’
Representative, or to whomever the Members’ Representative directs FAAC (if
shares are deliverable to the Members’ Representative hereunder), a certificate
or certificates for FAAC common shares in the amount deliverable by the Escrow
Agent to FAAC or the Members’ Representative as applicable and (ii) to issue to
the Escrow Agent a certificate for the residual balance, if any, of those FAAC
common shares evidenced the share certificate(s) delivered by the Escrow Agent
to FAAC.
6.4.
All
interest and other income, if any, received from or earned on the Escrow
Property net of distributions paid or to be paid pursuant to Section 7.3
(“Earnings”) shall be applied first to pay any Escrow Fees then due under
Section 13, with any remaining Earnings to become a part of the Escrow Property
and be paid in accordance with the other terms of this Agreement.
6.5.
The
parties hereto (other than the Escrow Agent) each warrant to and agree with
the
Escrow Agent that, unless otherwise expressly set forth in this Agreement,
there
is no security interest in the Escrow Property or any part of the Escrow
Property; no financing statement under the Uniform Commercial Code of any
jurisdiction is on file in any jurisdiction claiming a security interest in
or
describing, whether specifically or generally, the Escrow Property or any part
of the Escrow Property. Notwithstanding anything to the contrary herein
provided, the Escrow Agent shall in no event be deemed to be a collateral agent
or agent for any pledge or purported pledge of property held under this
Agreement. The Escrow Agent makes no representation concerning whether or not
any security interest exists with respect to any property held under the terms
of this Agreement and the Escrow Agent shall have no duty or obligation with
respect to the creation, perfection or continuation of any such security
interest, it being understood that the duties of the Escrow Agent with respect
to any property held pursuant to this Agreement are limited and confined
exclusively to the duties and responsibilities expressly set forth herein.
This
Agreement shall not be deemed or construed to be a security agreement or to
grant a security interest in any property held in escrow hereunder.
7.
Tax
Matters
.
7.1.
The
parties agree that the Escrow Property is intended to consist only of FAAC
common shares and that no taxable income is anticipated. Notwithstanding the
previous sentence, for tax reporting purposes in each calendar year (other
than
the calendar year in which this Agreement is terminated pursuant to Section
14
below), all interest or other income earned from the investment of the Escrow
Property together with all fees and expenses pursuant to Section 13 below (or
that may otherwise be taken into consideration for purposes of calculating
and
reporting taxes due on earnings with respect to the Escrow Account and Funds)
shall be allocable to FAAC and so reported to the Internal Revenue Service
and
any other applicable taxing authority, except to the extent that any law or
regulation should otherwise require, as provided in a written notice from FAAC
to the Escrow Agent. Notwithstanding anything to the contrary contained herein,
for the calendar year during which this Agreement is terminated pursuant to
Section 14 below, all income, fees and expenses shall be allocated pro rata
to
the persons receiving payments of the Escrow Property during that
year.
7.2.
Each
of
the parties agrees to provide the Escrow Agent with a certified tax
identification number by signing and returning a Form W-9 (or Form W-8, in
the
case of non-U.S. persons) to the Escrow Agent within 30 days from the date
hereof. The parties understand that, in the event their tax identification
numbers are not certified to the Escrow Agent, the Internal Revenue Code may
require withholding of a portion of any interest or other income earned on
the
investment of the Escrow Property, in accordance with the Internal Revenue
Code,
as amended from time to time.
7.3.
The
Escrow Agent shall distribute quarterly to FAAC amounts when and in the amounts
requested in writing in good faith by FAAC to cover the potential federal,
state
or local tax obligations of FAAC on account of the cumulative allocation to
FAAC
of taxable income attributable to the interest and other income earned on the
Escrow Property. Such distributions shall be requested and made with respect
to
each quarter as early as fifteen (15) days prior to the date that United States
taxpayers are required to make estimated federal tax payments with respect
to
such quarter. For purposes of the foregoing, such federal, state and local
tax
obligations of FAAC initially shall be assumed to equal an effective combined
federal and state income tax rate equal to forty-two percent (42%) (but in
no
event lower than the highest Federal marginal income tax rate plus seven percent
(7%)).
7.4.
The
Escrow Agent shall report to the Internal Revenue Service, as of each calendar
year-end, all income earned from the Escrow Property, whether or not such income
has been distributed during such year, as and to the extent required by law;
and, the Escrow Agent shall prepare and file any tax returns required to be
filed with respect to the Escrow Account.
7.5.
The
persons to whom income is allocable for each year shall pay all taxes payable
on
income earned from the investment of the Escrow Property, whether or not the
Escrow Agent distributed the income during any particular year.
8.
Escrow
Agent’s Duties
.
8.1.
The
Escrow Agent’s duties are entirely ministerial and not discretionary, and the
Escrow Agent will be under no duty or obligation to give any notice, or to
do or
to omit the doing of any action with respect to the Escrow Property, except
to
give notice, make disbursements and invest the Escrow Property in accordance
with the terms of this Agreement.
8.2.
The
Escrow Agent will neither be responsible for, nor chargeable with, knowledge
of
the terms and conditions of any other agreement, instrument or document among
the other parties hereto, in connection herewith, including the Membership
Interest Purchase Agreement, and will be required to act only pursuant to the
terms and provisions of this Agreement. This Agreement sets forth all matters
pertinent to the escrow contemplated hereunder, and no additional obligations
of
the Escrow Agent will be inferred from the terms of this Agreement, the
Membership Interest Purchase Agreement or any other agreement.
8.3.
The
Escrow Agent will not be liable for any error in judgment or any act or steps
taken or permitted to be taken in good faith, or for any mistake of law or
fact,
or for anything it may do or refrain from doing in connection with this
Agreement, except for its own willful misconduct or gross negligence. As to
any
legal questions arising in connection with the administration of this Agreement,
the Escrow Agent may consult with and rely absolutely upon the opinions given
to
it by counsel (including internal counsel) and shall be free of liability for
acting in reliance on such opinions. In no event shall the Escrow Agent be
liable for incidental, indirect, special, consequential or punitive damages.
8.4.
The
Escrow Agent will not be required in any way to determine the validity,
genuineness, authenticity or sufficiency, whether in form or substance, of
any
instrument, document, certificate, statement or notice referred to in this
Agreement or contemplated by this Agreement, or the identity or authority of
the
persons executing it, and it will be sufficient if any writing purporting to
be
such instrument, document, certificate, statement or notice is delivered to
the
Escrow Agent and purports to be correct in form and signed or otherwise executed
by the party or parties required to sign or execute it under this Agreement.
The
Escrow Agent reserves the right, but shall in no way be obligated, to call
upon
the parties, or any of them, for written instructions before taking any actions
hereunder.
8.5.
During
the term of this Agreement, the Escrow Agent shall not exercise on its own
behalf any right of set-off against, or enforce any lien on, the Escrow
Property, except such right or lien as may arise in connection with this
Agreement.
8.6.
The
parties to this Agreement agree to make modifications to this Section upon
the
reasonable request of the Escrow Agent.
8.7.
In
the
event of a shareholder vote, the Escrow Agent shall have the right to exercise
all voting rights with respect to the FAAC common stock held by the Escrow
Agent
as part of the Escrow Property; provided, however, that the Escrow Agent shall
have no discretion as to voting the shares of FAAC common stock except in a
fashion that is in all respects proportional to the manner in which the FAAC
common stock not held as part of the Escrowed Property is voted (as certified
by
FAAC’s Secretary). FAAC, Rosato, Gallagher and the Members’ Representative each
hereby (i) instruct the Escrow Agent to vote all of the FAAC common shares
held
as Escrow Property in the manner described in this Section 8.7 and (ii) agree
that the Escrow Agent shall have no liability with respect to voting the FAAC
common stock held as Escrow Property in the manner described in this Section
8.7. This Section 8.7 shall constitute an irrevocable proxy, coupled with an
interest, with respect to any shares of FAAC common stock (or other FAAC
securities) that Escrow Agent holds pursuant to this Agreement.
9.
Disputes
.
9.1.
It
is
understood and agreed that should any dispute arise with respect to the payment
and/or ownership or right of possession of the Escrow Property, or should the
Escrow Agent be uncertain as to what action to take with respect to the Escrow
Property, the Escrow Agent is authorized and directed to retain in its
possession, without liability to anyone, all or any part of the Escrow Property
until such dispute or uncertainty shall have been settled either by mutual
agreement by the parties concerned (as evidenced by a written agreement among
them) or by a Final Determination.
9.2.
If
the
Escrow Agent becomes involved in litigation by reason of this Agreement, or
if
the Escrow Agent reasonably believes, in its sole discretion, that it may become
involved in litigation, the Escrow Agent is authorized to institute a bill
of
interpleader in a court in the Commonwealth of Virginia to determine the rights
of the parties and to deposit the Escrow Property with the court in accordance
with the Commonwealth of Virginia law. Upon deposit of the Escrow Property
with
the court, the Escrow Agent shall stand fully relieved and discharged of any
further duties as Escrow Agent. The filing of any such legal proceedings shall
not deprive the Escrow Agent of its compensation hereunder earned prior to
such
filing and discharge of the Escrow Agent of its duties hereunder.
9.3.
If
a bill
of interpleader is instituted, or if the Escrow Agent is threatened with
litigation or becomes involved in litigation in any manner whichever on account
of this Agreement or the Escrow Property, FAAC and the Members, jointly and
severally, shall pay the Escrow Agent its reasonable attorneys’ fees and any
other disbursements, expenses, losses, costs and damages incurred by the Escrow
Agent in connection with or resulting from such threatened or actual litigation.
All costs and expenses of such dispute will be charged to the non-prevailing
party in such dispute, unless such non-prevailing party is a third party, in
which case the Escrow Agent’s costs and expenses will be charged to and paid out
of the Escrow Property, and to the extent the Escrow Property are insufficient,
will be charged equally to FAAC and the Members.
9.4.
In
the
event that the Escrow Agent proposes to disburse to the Members any portion
of
the Escrow Property, the disbursement of which the Escrow Agent had previously
withheld pursuant to this Section, the Escrow Agent shall disburse such amount
to the Member’s Representative.
10.
Indemnity
.
FAAC
and the Members jointly and severally agree to hold the Escrow Agent harmless
and to indemnify the Escrow Agent against any loss, liability, expenses
(including reasonable attorney’s fees and expenses), claim, or demand arising
out of or in connection with the performance of its obligations in accordance
with the provisions of this Agreement, except for willful misconduct or gross
negligence of the Escrow Agent. Notwithstanding anything in this Agreement
to
the contrary, the Escrow Agent shall be entitled to set-off against the Escrow
Property and apply such set-off to payment of such fees and disbursements and
other liabilities and obligations hereunder. Upon the written request of the
Escrow Agent, FAAC and the Members jointly and severally agree to assume the
investigation and defense of any such claim, including the employment of counsel
acceptable to the Escrow Agent and the payment of all expenses related thereto
and, notwithstanding any such assumption, the Escrow Agent shall have the right,
and FAAC and the Members jointly and severally agree to pay the cost and expense
thereof, to employ separate counsel with respect to any such claim and
participate in the investigation and defense thereof in the event that the
Escrow Agent shall have been advised by counsel that there may be one or more
legal defenses available to the Escrow Agent which are different from or in
addition to those available to FAAC or the Members. FAAC and the Members agree
that all references in this Section to the Escrow Agent shall be deemed to
include references to its directors, officers, employees and agents. The
foregoing indemnities in this paragraph shall survive the resignation or removal
of the Escrow Agent or the termination of this Agreement.
11.
Investment
.
11.1.
As
used
in this Section, “
Eligible
Investments
”
include
one or more of the following obligations or securities, but only to the extent
that such obligations or securities mature within thirty (30) calendar days
or
such longer time as the Members’ Representative and FAAC shall determine, such
longer maturities not to exceed eighteen (18) months from the Closing Date:
(a)
direct obligations of, or obligations fully guaranteed by, the United States
of
America or any agency thereof, and (b) money market funds investing primarily
in
the obligations or securities listed in clause (a) above or repurchase
agreements fully collateralized by direct obligations of the United States
of
America.
11.2.
The
Escrow Agent will invest the Escrow Property in such Eligible Investments as
the
Members’ Representative and FAAC, from time to time, shall jointly instruct the
Escrow Agent in writing. Notwithstanding the foregoing, in no event shall the
FAAC common stock held as part of the Escrow Property be invested. Earnings
upon
Eligible Investments shall be deemed part of the Escrow Property, shall be
deposited in the Escrow Account and shall be disbursed in accordance with the
terms of this Agreement. Any loss or expense incurred from an Eligible
Investment shall be borne by the Escrow Property. The Escrow Agent shall have
no
responsibility or liability for any diminution which may result from any
investments or reinvestments made in accordance with this
Agreement.
11.3.
The
parties acknowledge and agree that the Escrow Agent will not provide
supervision, recommendations or advice relative to either the investment of
the
Escrow Property or the purchase, sale, retention or other disposition of any
Eligible Investment.
11.4.
The
Escrow Agent is hereby authorized to execute purchases and sales of Eligible
Investments through its own trading or capital markets operations. The Escrow
Agent shall send statements to FAAC and the Members’ Representative reflecting
activity for the Escrow Account for the preceding quarter within fifteen (15)
days after the last day of each calendar quarter. Although the parties
acknowledge that they may obtain a broker confirmation or written statement
containing comparable information at no additional cost, each party hereby
agrees that confirmations of Eligible Investments are not required to be issued
by the Escrow Agent for each period in which a statement is
provided.
12.
Resignation
.
12.1.
The
Escrow Agent may resign upon thirty (30) calendar days’ prior written notice to
the Members’ Representative and FAAC, and, upon joint instructions from the
Members’ Representative and FAAC, will deliver the Escrow Property to any
designated substitute Escrow Agent selected by the Members’ Representative and
FAAC. If the Members’ Representative and FAAC fail to designate a substitute
Escrow Agent within 15 calendar days after receipt of such notice, the Escrow
Agent may, at its sole discretion, institute a bill of interpleader as
contemplated by Section 9 above for the purpose of having an appropriate court
designate a substitute Escrow Agent. The Escrow Agent shall have no
responsibility for the appointment of a successor Escrow Agent hereunder.
12.2.
Any
company into which the Escrow Agent may be merged or converted or with which
it
may be consolidated, or any company resulting from any merger, conversion or
consolidation to which it shall be a party, or any company to which the Escrow
Agent may sell or transfer all or substantially all of its corporate trust
business shall be the successor to the Escrow Agent without the execution or
filing of any paper or the performance of any further act, notwithstanding
anything herein to the contrary.
13.
Compensation
.
FAAC
and Members agree that the fees and expenses of the Escrow Agent, including
any
investment fees and other investment-related charges, for services rendered,
including the basic fees set forth in
Exhibit
4
attached
hereto, shall be paid out of the Earnings;
provided,
however
,
that if
the Earnings are less than the fees then due, then the balance of the fees
due
to the Escrow Agent shall be paid equally by the Members and FAAC. Upon any
withdrawal from the Escrow Property to pay such fees and expenses, the Escrow
Agent shall provide written notification of such withdrawal to FAAC and the
Members' Representative, detailing such fees and expenses. The Escrow Agent
shall have, and is hereby granted, a prior lien upon any property, cash, or
assets hereunder, with respect to its unpaid fees and nonreimbursed expenses,
superior to the interests of any other person.
14.
Termination
.
Upon
delivery of all amounts constituting the Escrow Property as provided in Sections
5 and 7 and the resolution of all disputes, if any, covered by Section 9, this
Agreement shall terminate except for the provisions of Section 9 (with respect
to payment of the Escrow Agent’s expenses), Section 10 and Section
13.
15.
Notices
.
15.1.
All
necessary notices, demands and requests required or permitted to be given
hereunder shall be in writing and addressed as follows:
|
If
to the Members:
|
c/o
Thomas P. Rosato
|
|
|
Members’
Representative
|
|
|
11373
Liberty Street
|
|
|
Fulton,
MD 20759
|
|
|
Fax:
________________
|
|
|
|
|
With
a copy to:
|
William
M. Davidow, Esquire
|
|
|
Whiteford
Taylor & Preston L.L.P.
|
|
|
7
St. Paul Street
|
|
|
Baltimore,
Maryland 21202-1626
|
|
|
Fax:
(410) 223-4367
|
|
|
|
|
If
to FAAC:
|
Fortress
America Acquisition Corporation
|
|
|
4100
North Fairfax Drive
|
|
|
Suite
1150
|
|
|
Arlington,
Virginia 22203
|
|
|
Attn:
Harvey L. Weiss, Chairman of the Board
|
|
|
|
|
|
and
|
|
|
|
|
|
James
J. Maiwurm
|
|
|
Squire,
Sanders & Dempsey L.L.P.
|
|
|
8000
Towers Crescent Drive, Suite 1400
|
|
|
Tysons
Corner, VA 22182-2700
|
|
|
Fax:
(703) 720-7801
|
|
|
|
|
If
to the Escrow Agent:
|
SunTrust
Bank
|
|
|
919
East Main Street, 10
th
Floor
|
|
|
Richmond,
Virginia 23219
|
|
|
Attn:
E. Carl Thompson, Jr.
|
|
|
Fax:
(804) 782-7855
|
15.2.
Notices
shall be delivered by a recognized courier service or by facsimile transmission
and shall be effective upon receipt, provided that notices shall be presumed
to
have been received:
(a)
if
given
by courier service, on the second Business Day following delivery of the notice
to a recognized courier service for delivery on or before the second Business
Day following delivery to such service, delivery costs prepaid, addressed as
aforesaid; and
(b)
if
given
by facsimile transmission, on the next Business Day, provided that the facsimile
transmission is confirmed by answer back, written evidence of electronic
confirmation of delivery, or oral or written acknowledgment of receipt thereof
by the addressee.
15.3.
From
time
to time either party may designate a new address or facsimile number for the
purpose of notice hereunder by notice to the other party in accordance with
the
provisions of this Section 15.
15.4.
Notwithstanding
anything to the contrary herein provided, the Escrow Agent shall not be deemed
to have received any notice prior to the Escrow Agent’s actual receipt thereof.
16.
Choice
of Laws; Cumulative Rights
.
This
Agreement shall be construed in accordance with and governed by the laws of
the
Commonwealth of Virginia without regard to the choice of law provisions thereof.
The rights and remedies provided to each party hereunder are cumulative and
will
be in addition to the rights and remedies otherwise available to such party
under this Agreement, any other agreement or applicable law.
17.
Counterparts
.
This
Agreement may be executed in any number of counterparts, each of which when
so
executed and delivered will be deemed an original, and such counterparts
together will constitute an original.
18.
Successors
and Assigns
.
This
Agreement will bind and inure to the benefit of the parties and their respective
successors and permitted assigns. Except as provided in Section 12.2, this
Agreement may not be assigned by operation of law or otherwise without the
prior
written consent of each of the parties hereto.
19.
Severability
.
The
provisions of this Agreement will be deemed severable, and if any provision
or
part of this Agreement is held illegal, void or invalid under applicable law,
such provision or part may be changed to the extent reasonably necessary to
make
the provision or part, as so changed, legal, valid and binding. If any provision
of this Agreement is held illegal, void or invalid in its entirety, the
remaining provisions of this Agreement will not in any way be affected or
impaired but will remain binding in accordance with their terms.
20.
Headings
.
The
Section headings in this Agreement are for convenience of reference only and
will not be deemed to alter or affect the meaning or interpretation of any
provisions hereof.
21.
Waiver
.
No
failure on the part of any party to exercise any power, right, privilege or
remedy under this Agreement, and no delay on the part of any party in exercising
any power, right, privilege or remedy under this Agreement, shall operate as
a
waiver of such power, right, privilege or remedy; and no single or partial
exercise of any such power, right, privilege or remedy shall preclude any other
or further exercise thereof or any other power, right, privilege or remedy.
No
party shall be deemed to have waived any claim arising out of this Agreement,
or
any power, right, privilege or remedy under this Agreement, unless the waiver
of
such claim, power, right, privilege or remedy is expressly set forth in a
written instrument duly executed and delivered on behalf of such party; and
any
such waiver shall not be applicable or have any effect except in the specific
instance in which it is given.
22.
Amendments
.
This
Agreement may not be amended, modified, altered or supplemented other than
by
means of a written instrument duly executed and delivered on behalf of each
of
the parties hereto.
23.
Parties
in Interest
.
None of
the provisions of this Agreement is intended to provide any rights or remedies
to any Person other than the parties hereto and their respective successors
and
permitted assigns, if any.
24.
Entire
Agreement
.
This
Agreement sets forth the entire understanding of the parties hereto relating
to
the subject matter hereof and supersedes all prior agreements and understandings
among or between any of the parties relating to the subject matter
hereof.
25.
Escrow
Agent Documentation
.
In order
to maintain compliance with the Patriot Act, prior to the effective date of
this
Agreement, FAAC and the Members’ Representative shall provide to the Escrow
Agent a completed Form W-9, Certificate of Incumbency, and a copy of the
corporate document (i.e., Corporate Resolution, Articles of Incorporation,
Bylaws, Partnership Agreement, etc.) that would show proper authorization for
such parties to enter into this Agreement.
IN
WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first above written.
|
FAAC:
|
|
FORTRESS
AMERICA ACQUISITION CORPORATION,
|
|
a
Delaware corporation
|
|
|
|
|
|
|
|
By:
/s/ Harvey L. Weiss
|
|
Name:
Harvey L. Weiss
|
|
Title:
Chairman
|
|
|
|
|
|
MEMBERS:
|
|
|
|
|
|
/s/
Thomas P. Rosato
|
|
Thomas
P. Rosato
|
|
|
|
|
|
/s/
Gerard J. Gallagher
|
|
Gerard
J. Gallagher
|
|
|
|
|
|
MEMBERS’
REPRESENTATIVE:
|
|
|
|
|
|
/s/
Thomas P. Rosato
|
|
Thomas
P. Rosato as the representative for those
|
|
Members
pursuant to Section 2.6 of the Membership
|
|
Interest
Purchase Agreement.
|
|
ESCROW
AGENT:
|
|
|
|
SUNTRUST
BANK,
|
|
a
Georgia banking corporation
|
|
|
|
|
|
|
|
By:
/s/ E. Carl Thompson, Jr.
|
|
Name:
E. Carl Thompson, Jr.
|
|
Title:
Trust Officer
|
Exhibit
1 to Escrow Agreement
Membership
Interest Purchase Agreement
Exhibit
2 to Escrow Agreement
Stock
Acquisition Agreements
Exhibit
3 to Escrow Agreement
Payment
Request Form
[Date]
SunTrust
Bank
919
E.
Main St.
Richmond,
VA 23219
Attention:
Carl Thompson
|
Re:
|
Escrow
No. ____________ (“Escrow”)
|
Ladies
and Gentlemen:
The
undersigned hereby certify that:
(1)
Demand
for payment as provided per the terms and conditions of that certain Escrow
Agreement dated _________________, 200_ is hereby made in the amount of
$____________ to _________ [and $_____________ to _______________]. [The demand
is in respect of Section 5.1 of the Escrow Agreement.]
(2)
Please
direct payment by wire transfer[s] as follows:
$_____________
to
[Depository
Bank]
[Depository
Bank Address]
ABA
No.
_________________
Acct.
No.
_________________
For
Benefit of :_____________
[and,
$_____________ to
[Depository
Bank]
[Depository
Bank Address]
ABA
No.
_________________
Acct.
No.
_________________
For
Benefit of :_____________]
(3)
With
respect to the drawing referred to in this Payment Request Form, the [aggregate]
amount demanded hereby does not exceed one hundred percent (100%) of the Escrow
valued as of the date hereof.
FORTRESS
INTERNATIONAL GROUP, INC.
By:
|
|
|
Date:_________________
|
Name:
|
|
|
|
Title:
|
|
|
|
MEMBERS,
as represented by the
MEMBERS'
REPRESENTATIVE:
|
|
Date:_________________
|
[______________________]
|
|
|
Exhibit
4 to Escrow Agreement
Fee
Schedule
Fees
payable to SunTrust Bank for services rendered with respect to this Escrow
Agreement shall be as follows:
Legal
Fee
|
$
|
__________
|
|
|
|
|
|
Annual
Administration Fee
|
$
|
__________
|
|
|
|
|
|
This
fee
is priced with the understanding that the funds will be deposited in the STI
Classic US Treasury Money Market Fund.
The
annual administration fee is payable in advance at the time of closing and
will
be charged to the Escrow Property at such time and on each anniversary date.
The
fees shall be deemed earned in full upon receipt by the Escrow Agent, and no
portion shall be refundable for any reason, including without limitation,
termination of this Agreement.
The
parties agree that, in the event any controversy arises under or in connection
with this Agreement or the Escrow Property or the Escrow Agent is made a party
to or intervenes in any litigation pertaining to this Agreement or the Escrow
Property, to pay to the Escrow Agent reasonable compensation for its
extraordinary services and to reimburse the Escrow Agent for all costs and
expenses directly or indirectly incurred by reason of such controversy or
litigation.
E
SCROW
AGREEMENT
(General
Indemnity Escrow)
ESCROW
AGREEMENT (“
Agreement
”),
dated
as of January 19, 2007, by and among (a) Fortress America Acquisition
Corporation, a Delaware corporation ("FAAC"); (b) VTC, L.L.C., a Maryland
limited liability company (“VTC”); (c) Vortech, LLC, a Maryland limited
liability company (“Vortech”); (d) Thomas P. Rosato (“Rosato”) and Gerard J.
Gallagher (“Gallagher” who together with Rosato own or control all of the
outstanding membership interests of both VTC and Vortech (each a “Member” and
jointly the “Members”); (e) Thomas P. Rosato in his capacity as the Members’
Representative; and (f) SunTrust Bank, a Georgia banking corporation (the
“
Escrow
Agent
”).
RECITALS:
WHEREAS,
pursuant to that certain Second Amended and Restated Membership Interest
Purchase Agreement dated as of July 31, 2006, as amended by by an Amendment
To
The Second Amended and Restated Membership Interest Purchase Agreement dated
January 16, 2007 copies of which without schedules or exhibits are attached
hereto as
Exhibit
1
(“
Membership
Interest Purchase Agreement
”),
that
are hereby incorporated by reference, FAAC will acquire all of the outstanding
membership interests of each VTC and Vortech;
WHEREAS,
pursuant to Section 2.6 of the Membership Interest Purchase Agreement, the
Members designated Thomas P. Rosato as their representative, agent and
attorney-in-fact for purposes of this Agreement and other various matters
described therein (the “
Members’
Representative
”);
WHEREAS,
as partial consideration for their respective membership interests in VTC and
Vortech, each of the Members has received from FAAC pursuant to the terms of
the
Membership Interest Purchase Agreement and Stock Acquistion Agreements, copies
of which (without schedules or exhibits) are attached as
Exhibit
2
(jointly
the “
Stock
Purchase Agreements
”)
in the
aggregate 2,534,988 shares of FAAC common stock of which 2,461,728 shares are
hereby delivered by FAAC and the Members to the Escrow Agent (the “
Escrow
Deposit
”)
to
hold in escrow pursuant to ther terms of this Agreement;
WHEREAS,
the parties desire to specify and clarify their rights and responsibilities
with
respect to the Escrow Deposit; and
WHEREAS,
the Escrow Agent is willing to serve in such capacity, but only pursuant to
the
terms and conditions of this Agreement.
NOW,
THEREFORE, in consideration of the mutual promises contained herein, the parties
hereto agree as follows:
1.
Definitions
.
1.1.
As
used
in this Agreement, the following terms shall have the meanings set forth
below:
“
Agreed
Share Value
”
has
the
meaning set forth in Section 5.3.
“
Agreement
”
means
this Escrow Agreement.
“
Business
Day
”
shall
mean any day other than a Saturday, Sunday, or any Federal or Commonwealth
of
Virginia holiday. If any period expires on a day that is not a Business Day
or
any event or condition is required by the terms of this Agreement to occur
or be
fulfilled on a day that is not a Business Day, such period shall expire or
such
event or condition shall occur or be fulfilled, as the case may be, on the
next
succeeding Business Day.
“
Escrow
Account
”
has
the
meaning set forth in Section 4.1.
“
Escrow
Agent
”
has
the
meaning set forth in the Preamble.
“
Escrow
Property
”
has
the
meaning set forth in Section 4.1.
“
Escrow
Deposit
”
has
the
meaning set forth in the Recitals.
"
Final
Determination
"
has the
meaning set forth in Section 5.1(b).
“
FAAC
”
has
the
meaning set forth in the Preamble.
"
Indemnity
Claim
"
has the
meaning set forth in Section 5.2.
"
Indemnity
Claim Notice
"
has the
meaning set forth in Section 5.2.
“
Members
”
has
the
meaning set forth in the Preamble.
“
Members’
Representative
”
has
the
meaning set forth in the Recitals.
“
Membership
Interest Purchase Agreement
”
has
the
meaning set forth in the Recitals.
1.2.
Capitalized
terms used but not defined in this Agreement have the meanings ascribed to
such
terms in the Membership Interest Purchase Agreement.
2.
Appointment
of Escrow Agent
.
FAAC,
the Members, and the Members’ Representative hereby appoint the Escrow Agent to
act as an escrow agent as provided herein, and the Escrow Agent hereby accepts
such appointment.
3.
Members’
Representative
.
3.1.
The
parties acknowledge that, pursuant to the Membership Interest Purchase
Agreement, the Members’ Representative is authorized to act as the agent and
attorney-in-fact on behalf of all of the Members in all matters necessary to
carry out the terms and conditions of this Agreement.
3.2.
The
Members’ Representative represents and warrants to the Escrow Agent that he has
the irrevocable right, power and authority with respect to all of the Members
(a) to give and receive directions and notices hereunder, (b) to make all
determinations that may be required or that he deems appropriate under this
Agreement, and (c) to execute and deliver all documents that may be required
or
that he deems appropriate under this Agreement. The Escrow Agent may act upon
the directions, instructions and notices of the Members’ Representative named
above and thereafter upon the directions and instructions of the successor
Members’ Representative named in a writing executed by a majority-in-interest of
the Members (pursuant to the provisions of Section 2.6 of the Membership
Interest Purchase Agreement) filed with the Escrow Agent.
4.
Delivery
of Escrow Deposit
.
4.1.
FAAC
acknowledges that it deposited the Escrow Deposit in an account (the
“
Escrow
Account
”)
with
the Escrow Agent. The FAAC common stock in the Escrow Account, together with
any
dividends (and any interest or other net income received from or earned thereon)
is hereinafter collectively referred to as the “
Escrow
Property
.”
4.2.
If,
during the term of this Agreement, there is Escrow Property other than the
FAAC
common shares, the Escrow Agent will invest the Escrow Property (other than
the
FAAC common stock) as provided in Section 11.
5.
Disbursement
of the Escrow Property
.
The
Escrow Agent will hold the Escrow Property and, subject to the Escrow Agent’s
right in Section 9 to withhold disbursements when the Escrow Agent is uncertain
as to what action to take, make disbursements therefrom as follows
.
5.1.
Escrow
Agent shall disburse all or a portion of the Escrow Property on deposit in
the
Escrow Account to FAAC, the Members or both, as the case may be, upon receipt
of:
(a)
one
or
more fully executed Payment Request Forms in substantially the form attached
hereto as
Exhibit
3
,
executed by FAAC and the Members' Representative on behalf of the Members,
and
otherwise pursuant to the terms hereof. Upon receipt of a Payment Request Form,
the shares and amounts specified therein shall be promptly delivered or paid
directly to the party or parties entitled to payment as specified in the Payment
Request Form; or
(b)
a
copy of
a Final Determination (as defined below) establishing a party's right to the
Escrow Property. A "
Final
Determination
"
shall
mean (i) with respect to an Indemnity Claim (or any other dispute between the
Members’ Representative and FAAC with respect to whether either party is
entitled to some portion, or all of the Escrow Property), a final determination
stating that it is being provided under the procedures of Section 11.11 of
the
Membership Interest Purchase Agreement; or (ii) otherwise a final judgment
of an
arbitrator, arbitration panel or court of competent jurisdiction and shall
in
all cases be accompanied by a certificate of the presenting party to the effect
that such judgment is a final judgment of an arbitrator, arbitration panel
or
court of competent jurisdiction, as applicable, and indicating the party,
address, accounts or other information as necessary to process
payments.
5.2.
If
FAAC
asserts in good faith a claim (an “
Indemnity
Claim
”)
against the Members pursuant to the Membership Interest Purchase Agreement,
FAAC
shall send written notice of such Indemnity Claim (an “
Indemnity
Claim Notice
”)
to the
Escrow Agent and to the Members’ Representative. Such Indemnity Claim Notice
shall set forth in reasonable detail the basis for such Indemnity Claim and
a
good faith, non-binding estimate of the amount of such Indemnity Claim. In
submitting such Indemnity Claim to the Escrow Agent, FAAC shall account for
any
applicable threshold, exclusion or cap provided for in the Membership Interest
Purchase Agreement. Whenever FAAC sends such an Indemnity Claim Notice, the
parties shall comply with the procedures set forth herein.
(a)
If
the
Members’ Representative decides, in his sole and absolute discretion, to dispute
the Indemnity Claim described in the Indemnity Claim Notice, the Members’
Representative shall, on or before the twentieth (20
th
)
Business Day following the Escrow Agent’s receipt of such notice, send to the
Escrow Agent and FAAC a written objection to such Indemnity Claim.
(b)
If
the
Escrow Agent receives from the Members’ Representative a written objection to
such Indemnity Claim on or before the twentieth (20
th
)
Business Day following the Escrow Agent’s receipt of the Indemnity Claim Notice
describing such Indemnity Claim, and if that Indemnity Claim cannot be settled
through negotiation within twenty (20) days of receipt of the written objection,
then the dispute shall be resolved in accordance with Section 11.11 of the
Membership Interest Purchase Agreement and Escrow Agent shall hold the funds
subject to such dispute until a Final Determination is delivered with respect
thereto.
(c)
If
the
Escrow Agent does not receive from the Members’ Representative a written
objection to such Indemnity Claim Notice on or before the twentieth
(20
th
)
Business Day following the Escrow Agent’s receipt of the Indemnity Claim Notice
describing such Indemnity Claim, then the Escrow Agent shall make a disbursement
to FAAC from the Escrow Property in the amount of the Indemnity Claim described
in such Indemnity Claim Notice.
5.3.
To
the
extent that a Payment Request Form, Final Determination, or Indemnity Claim
(made and not timely answered pursuant to Section 5.2(c) above) specifies a
dollar amount (rather than a share amount) payable thereunder or in satisfaction
thereof, the amount specified or claimed shall be satisfied by the delivery
from
the Escrow Property to FAAC or the Members’ Representative, as the case may be,
of certificates for FAAC common stock equal in value to the amount specified
or
claimed (with the FAAC common stock valued at Five and 46/100 Dollars ($5.46)
per share (the “
Agreed
Share Value
”)
6.
Payments
from the Escrow Property
.
6.1.
The
Escrow Agent shall make no payments from the Escrow Property unless permitted
pursuant to Sections 5, 7, 9, 10 and 13.
6.2.
Any
cash
amounts payable by the Escrow Agent under this Agreement shall be paid by bank
check or by wire transfer, as specified in the Payment Request Form or Final
Determination received by the Escrow Agent.
6.3.
Any
amounts payable in FAAC common stock under this Agreement shall be payable
by
the delivery of stock certificates for FAAC common stock valued at the Agreed
Share Value. To the extent that the number of shares deliverable by the Escrow
Agent does not correspond with stock certificates then held by the Escrow Agent,
the Escrow Agent shall deliver to FAAC one or more share certificates evidencing
shares in excess of the number of FAAC common shares then deliverable with
instructions to FAAC (i) to retain and cancel a specified number of shares
(if
shares are deliverable to FAAC hereunder) or issue to the Members’
Representative, or to whomever the Members’ Representative directs FAAC (if
shares are deliverable to the Members’ Representative hereunder), a certificate
or certificates for FAAC common shares in the amount deliverable by the Escrow
Agent to FAAC or the Members’ Representative as applicable and (ii) to issue to
the Escrow Agent a certificate for the residual balance, if any, of those FAAC
common shares evidenced the share certificate(s) delivered by the Escrow Agent
to FAAC.
6.4.
All
interest and other income, if any, received from or earned on the Escrow
Property net of distributions paid or to be paid pursuant to Section 7.3
(“Earnings”) shall be applied first to pay any Escrow Fees then due under
Section 13, with any remaining Earnings to become a part of the Escrow Property
and be paid in accordance with the other terms of this Agreement.
6.5.
The
parties hereto (other than the Escrow Agent) each warrant to and agree with
the
Escrow Agent that, unless otherwise expressly set forth in this Agreement,
there
is no security interest in the Escrow Property or any part of the Escrow
Property; no financing statement under the Uniform Commercial Code of any
jurisdiction is on file in any jurisdiction claiming a security interest in
or
describing, whether specifically or generally, the Escrow Property or any part
of the Escrow Property. Notwithstanding anything to the contrary herein
provided, the Escrow Agent shall in no event be deemed to be a collateral agent
or agent for any pledge or purported pledge of property held under this
Agreement. The Escrow Agent makes no representation concerning whether or not
any security interest exists with respect to any property held under the terms
of this Agreement and the Escrow Agent shall have no duty or obligation with
respect to the creation, perfection or continuation of any such security
interest, it being understood that the duties of the Escrow Agent with respect
to any property held pursuant to this Agreement are limited and confined
exclusively to the duties and responsibilities expressly set forth herein.
This
Agreement shall not be deemed or construed to be a security agreement or to
grant a security interest in any property held in escrow hereunder.
7.
Tax
Matters
.
7.1.
The
parties agree that the Escrow Property is intended to consist only of FAAC
common shares and that no taxable income is anticipated. Notwithstanding the
previous sentence, for tax reporting purposes in each calendar year (other
than
the calendar year in which this Agreement is terminated pursuant to Section
14
below), all interest or other income earned from the investment of the Escrow
Property together with all fees and expenses pursuant to Section 13 below (or
that may otherwise be taken into consideration for purposes of calculating
and
reporting taxes due on earnings with respect to the Escrow Account and Funds)
shall be allocable to FAAC and so reported to the Internal Revenue Service
and
any other applicable taxing authority, except to the extent that any law or
regulation should otherwise require, as provided in a written notice from FAAC
to the Escrow Agent. Notwithstanding anything to the contrary contained herein,
for the calendar year during which this Agreement is terminated pursuant to
Section 14 below, all income, fees and expenses shall be allocated pro rata
to
the persons receiving payments of the Escrow Property during that
year.
7.2.
Each
of
the parties agrees to provide the Escrow Agent with a certified tax
identification number by signing and returning a Form W-9 (or Form W-8, in
the
case of non-U.S. persons) to the Escrow Agent within 30 days from the date
hereof. The parties understand that, in the event their tax identification
numbers are not certified to the Escrow Agent, the Internal Revenue Code may
require withholding of a portion of any interest or other income earned on
the
investment of the Escrow Property, in accordance with the Internal Revenue
Code,
as amended from time to time.
7.3.
The
Escrow Agent shall distribute quarterly to FAAC amounts when and in the amounts
requested in writing in good faith by FAAC to cover the potential federal,
state
or local tax obligations of FAAC on account of the cumulative allocation to
FAAC
of taxable income attributable to the interest and other income earned on the
Escrow Property. Such distributions shall be requested and made with respect
to
each quarter as early as fifteen (15) days prior to the date that United States
taxpayers are required to make estimated federal tax payments with respect
to
such quarter. For purposes of the foregoing, such federal, state and local
tax
obligations of FAAC initially shall be assumed to equal an effective combined
federal and state income tax rate equal to forty-two percent (42%) (but in
no
event lower than the highest Federal marginal income tax rate plus seven percent
(7%)).
7.4.
The
Escrow Agent shall report to the Internal Revenue Service, as of each calendar
year-end, all income earned from the Escrow Property, whether or not such income
has been distributed during such year, as and to the extent required by law;
and, the Escrow Agent shall prepare and file any tax returns required to be
filed with respect to the Escrow Account.
7.5.
The
persons to whom income is allocable for each year shall pay all taxes payable
on
income earned from the investment of the Escrow Property, whether or not the
Escrow Agent distributed the income during any particular year.
8.
Escrow
Agent’s Duties
.
8.1.
The
Escrow Agent’s duties are entirely ministerial and not discretionary, and the
Escrow Agent will be under no duty or obligation to give any notice, or to
do or
to omit the doing of any action with respect to the Escrow Property, except
to
give notice, make disbursements and invest the Escrow Property in accordance
with the terms of this Agreement.
8.2.
The
Escrow Agent will neither be responsible for, nor chargeable with, knowledge
of
the terms and conditions of any other agreement, instrument or document among
the other parties hereto, in connection herewith, including the Membership
Interest Purchase Agreement, and will be required to act only pursuant to the
terms and provisions of this Agreement. This Agreement sets forth all matters
pertinent to the escrow contemplated hereunder, and no additional obligations
of
the Escrow Agent will be inferred from the terms of this Agreement, the
Membership Interest Purchase Agreement or any other agreement.
8.3.
The
Escrow Agent will not be liable for any error in judgment or any act or steps
taken or permitted to be taken in good faith, or for any mistake of law or
fact,
or for anything it may do or refrain from doing in connection with this
Agreement, except for its own willful misconduct or gross negligence. As to
any
legal questions arising in connection with the administration of this Agreement,
the Escrow Agent may consult with and rely absolutely upon the opinions given
to
it by counsel (including internal counsel) and shall be free of liability for
acting in reliance on such opinions. In no event shall the Escrow Agent be
liable for incidental, indirect, special, consequential or punitive damages.
8.4.
The
Escrow Agent will not be required in any way to determine the validity,
genuineness, authenticity or sufficiency, whether in form or substance, of
any
instrument, document, certificate, statement or notice referred to in this
Agreement or contemplated by this Agreement, or the identity or authority of
the
persons executing it, and it will be sufficient if any writing purporting to
be
such instrument, document, certificate, statement or notice is delivered to
the
Escrow Agent and purports to be correct in form and signed or otherwise executed
by the party or parties required to sign or execute it under this Agreement.
The
Escrow Agent reserves the right, but shall in no way be obligated, to call
upon
the parties, or any of them, for written instructions before taking any actions
hereunder.
8.5.
During
the term of this Agreement, the Escrow Agent shall not exercise on its own
behalf any right of set-off against, or enforce any lien on, the Escrow
Property, except such right or lien as may arise in connection with this
Agreement.
8.6.
The
parties to this Agreement agree to make modifications to this Section upon
the
reasonable request of the Escrow Agent.
8.7.
In
the
event of a shareholder vote, the Escrow Agent shall have the right to exercise
all voting rights with respect to the FAAC common stock held by the Escrow
Agent
as part of the Escrow Property; provided, however, that the Escrow Agent shall
have no discretion as to voting the shares of FAAC common stock except in a
fashion that is in all respects proportional to the manner in which the FAAC
common stock not held as part of the Escrowed Property is voted (as certified
by
FAAC’s Secretary). FAAC, Rosato, Gallagher and the Members’ Representative each
hereby (i) instruct the Escrow Agent to vote all of the FAAC common shares
held
as Escrow Property in the manner described in this Section 8.7 and (ii) agree
that the Escrow Agent shall have no liability with respect to voting the FAAC
common stock held as Escrow Property in the manner described in this Section
8.7. This Section 8.7 shall constitute an irrevocable proxy, coupled with an
interest, with respect to any shares of FAAC common stock (or other FAAC
securities) that Escrow Agent holds pursuant to this Agreement.
9.
Disputes
.
9.1.
It
is
understood and agreed that should any dispute arise with respect to the payment
and/or ownership or right of possession of the Escrow Property, or should the
Escrow Agent be uncertain as to what action to take with respect to the Escrow
Property, the Escrow Agent is authorized and directed to retain in its
possession, without liability to anyone, all or any part of the Escrow Property
until such dispute or uncertainty shall have been settled either by mutual
agreement by the parties concerned (as evidenced by a written agreement among
them) or by a Final Determination.
9.2.
If
the
Escrow Agent becomes involved in litigation by reason of this Agreement, or
if
the Escrow Agent reasonably believes, in its sole discretion, that it may become
involved in litigation, the Escrow Agent is authorized to institute a bill
of
interpleader in a court in the Commonwealth of Virginia to determine the rights
of the parties and to deposit the Escrow Property with the court in accordance
with the Commonwealth of Virginia law. Upon deposit of the Escrow Property
with
the court, the Escrow Agent shall stand fully relieved and discharged of any
further duties as Escrow Agent. The filing of any such legal proceedings shall
not deprive the Escrow Agent of its compensation hereunder earned prior to
such
filing and discharge of the Escrow Agent of its duties hereunder.
9.3.
If
a bill
of interpleader is instituted, or if the Escrow Agent is threatened with
litigation or becomes involved in litigation in any manner whichever on account
of this Agreement or the Escrow Property, FAAC and the Members, jointly and
severally, shall pay the Escrow Agent its reasonable attorneys’ fees and any
other disbursements, expenses, losses, costs and damages incurred by the Escrow
Agent in connection with or resulting from such threatened or actual litigation.
All costs and expenses of such dispute will be charged to the non-prevailing
party in such dispute, unless such non-prevailing party is a third party, in
which case the Escrow Agent’s costs and expenses will be charged to and paid out
of the Escrow Property, and to the extent the Escrow Property are insufficient,
will be charged equally to FAAC and the Members.
9.4.
In
the
event that the Escrow Agent proposes to disburse to the Members any portion
of
the Escrow Property, the disbursement of which the Escrow Agent had previously
withheld pursuant to this Section, the Escrow Agent shall disburse such amount
to the Member’s Representative.
10.
Indemnity
.
FAAC
and the Members jointly and severally agree to hold the Escrow Agent harmless
and to indemnify the Escrow Agent against any loss, liability, expenses
(including reasonable attorney’s fees and expenses), claim, or demand arising
out of or in connection with the performance of its obligations in accordance
with the provisions of this Agreement, except for willful misconduct or gross
negligence of the Escrow Agent. Notwithstanding anything in this Agreement
to
the contrary, the Escrow Agent shall be entitled to set-off against the Escrow
Property and apply such set-off to payment of such fees and disbursements and
other liabilities and obligations hereunder. Upon the written request of the
Escrow Agent, FAAC and the Members jointly and severally agree to assume the
investigation and defense of any such claim, including the employment of counsel
acceptable to the Escrow Agent and the payment of all expenses related thereto
and, notwithstanding any such assumption, the Escrow Agent shall have the right,
and FAAC and the Members jointly and severally agree to pay the cost and expense
thereof, to employ separate counsel with respect to any such claim and
participate in the investigation and defense thereof in the event that the
Escrow Agent shall have been advised by counsel that there may be one or more
legal defenses available to the Escrow Agent which are different from or in
addition to those available to FAAC or the Members. FAAC and the Members agree
that all references in this Section to the Escrow Agent shall be deemed to
include references to its directors, officers, employees and agents. The
foregoing indemnities in this paragraph shall survive the resignation or removal
of the Escrow Agent or the termination of this Agreement.
11.
Investment
.
11.1.
As
used
in this Section, “
Eligible
Investments
”
include
one or more of the following obligations or securities, but only to the extent
that such obligations or securities mature within thirty (30) calendar days
or
such longer time as the Members’ Representative and FAAC shall determine, such
longer maturities not to exceed eighteen (18) months from the Closing Date:
(a)
direct obligations of, or obligations fully guaranteed by, the United States
of
America or any agency thereof, and (b) money market funds investing primarily
in
the obligations or securities listed in clause (a) above or repurchase
agreements fully collateralized by direct obligations of the United States
of
America.
11.2.
The
Escrow Agent will invest the Escrow Property in such Eligible Investments as
the
Members’ Representative and FAAC, from time to time, shall jointly instruct the
Escrow Agent in writing. Notwithstanding the foregoing, in no event shall the
FAAC common stock held as part of the Escrow Property be invested. Earnings
upon
Eligible Investments shall be deemed part of the Escrow Property, shall be
deposited in the Escrow Account and shall be disbursed in accordance with the
terms of this Agreement. Any loss or expense incurred from an Eligible
Investment shall be borne by the Escrow Property. The Escrow Agent shall have
no
responsibility or liability for any diminution which may result from any
investments or reinvestments made in accordance with this
Agreement.
11.3.
The
parties acknowledge and agree that the Escrow Agent will not provide
supervision, recommendations or advice relative to either the investment of
the
Escrow Property or the purchase, sale, retention or other disposition of any
Eligible Investment.
11.4.
The
Escrow Agent is hereby authorized to execute purchases and sales of Eligible
Investments through its own trading or capital markets operations. The Escrow
Agent shall send statements to FAAC and the Members’ Representative reflecting
activity for the Escrow Account for the preceding quarter within fifteen (15)
days after the last day of each calendar quarter. Although the parties
acknowledge that they may obtain a broker confirmation or written statement
containing comparable information at no additional cost, each party hereby
agrees that confirmations of Eligible Investments are not required to be issued
by the Escrow Agent for each period in which a statement is
provided.
12.
Resignation
.
12.1.
The
Escrow Agent may resign upon thirty (30) calendar days’ prior written notice to
the Members’ Representative and FAAC, and, upon joint instructions from the
Members’ Representative and FAAC, will deliver the Escrow Property to any
designated substitute Escrow Agent selected by the Members’ Representative and
FAAC. If the Members’ Representative and FAAC fail to designate a substitute
Escrow Agent within 15 calendar days after receipt of such notice, the Escrow
Agent may, at its sole discretion, institute a bill of interpleader as
contemplated by Section 9 above for the purpose of having an appropriate court
designate a substitute Escrow Agent. The Escrow Agent shall have no
responsibility for the appointment of a successor Escrow Agent hereunder.
12.2.
Any
company into which the Escrow Agent may be merged or converted or with which
it
may be consolidated, or any company resulting from any merger, conversion or
consolidation to which it shall be a party, or any company to which the Escrow
Agent may sell or transfer all or substantially all of its corporate trust
business shall be the successor to the Escrow Agent without the execution or
filing of any paper or the performance of any further act, notwithstanding
anything herein to the contrary.
13.
Compensation
.
FAAC
and Members agree that the fees and expenses of the Escrow Agent, including
any
investment fees and other investment-related charges, for services rendered,
including the basic fees set forth in
Exhibit
4
attached
hereto, shall be paid out of the Earnings;
provided,
however
,
that if
the Earnings are less than the fees then due, then the balance of the fees
due
to the Escrow Agent shall be paid equally by the Members and FAAC. Upon any
withdrawal from the Escrow Property to pay such fees and expenses, the Escrow
Agent shall provide written notification of such withdrawal to FAAC and the
Members' Representative, detailing such fees and expenses. The Escrow Agent
shall have, and is hereby granted, a prior lien upon any property, cash, or
assets hereunder, with respect to its unpaid fees and nonreimbursed expenses,
superior to the interests of any other person.
14.
Termination
.
Upon
delivery of all amounts constituting the Escrow Property as provided in Sections
5 and 7 and the resolution of all disputes, if any, covered by Section 9, this
Agreement shall terminate except for the provisions of Section 9 (with respect
to payment of the Escrow Agent’s expenses), Section 10 and Section
13.
15.
Notices
.
15.1.
All
necessary notices, demands and requests required or permitted to be given
hereunder shall be in writing and addressed as follows:
|
If
to the Members:
|
c/o
Thomas P. Rosato
|
|
|
Members’
Representative
|
|
|
11373
Liberty Street
|
|
|
Fulton,
Maryland 20759
|
|
|
Fax:
________________
|
|
With
a copy to:
|
William
M. Davidow, Esquire
|
|
|
Whiteford
Taylor & Preston L.L.P.
|
|
|
7
St. Paul Street
|
|
|
Baltimore,
Maryland 21202-1626
|
|
|
Fax:
(410) 223-4367
|
|
|
|
|
If
to FAAC:
|
Fortress
America Acquisition Corporation
|
|
|
4100
North Fairfax Drive
|
|
|
Suite
1150
|
|
|
Arlington,
Virginia 22203
|
|
|
Attn:
Harvey L. Weiss, Chairman of the Board
|
|
|
|
|
|
and
|
|
|
|
|
|
James
J. Maiwurm
|
|
|
Squire,
Sanders & Dempsey L.L.P.
|
|
|
8000
Towers Crescent Drive, Suite 1400
|
|
|
Tysons
Corner, VA 22182-2700
|
|
|
Fax:
(703) 720-7801
|
|
|
|
|
If
to the Escrow Agent:
|
SunTrust
Bank
|
|
|
919
East Main Street, 10
th
Floor
|
|
|
Richmond,
Virginia 23219
|
|
|
Attn:
E. Carl Thompson, Jr.
|
|
|
Fax:
(804) 782-7855
|
15.2.
Notices
shall be delivered by a recognized courier service or by facsimile transmission
and shall be effective upon receipt, provided that notices shall be presumed
to
have been received:
(a)
if
given
by courier service, on the second Business Day following delivery of the notice
to a recognized courier service for delivery on or before the second Business
Day following delivery to such service, delivery costs prepaid, addressed as
aforesaid; and
(b)
if
given
by facsimile transmission, on the next Business Day, provided that the facsimile
transmission is confirmed by answer back, written evidence of electronic
confirmation of delivery, or oral or written acknowledgment of receipt thereof
by the addressee.
15.3.
From
time
to time either party may designate a new address or facsimile number for the
purpose of notice hereunder by notice to the other party in accordance with
the
provisions of this Section 15.
15.4.
Notwithstanding
anything to the contrary herein provided, the Escrow Agent shall not be deemed
to have received any notice prior to the Escrow Agent’s actual receipt thereof.
16.
Choice
of Laws; Cumulative Rights
.
This
Agreement shall be construed in accordance with and governed by the laws of
the
Commonwealth of Virginia without regard to the choice of law provisions thereof.
The rights and remedies provided to each party hereunder are cumulative and
will
be in addition to the rights and remedies otherwise available to such party
under this Agreement, any other agreement or applicable law.
17.
Counterparts
.
This
Agreement may be executed in any number of counterparts, each of which when
so
executed and delivered will be deemed an original, and such counterparts
together will constitute an original.
18.
Successors
and Assigns
.
This
Agreement will bind and inure to the benefit of the parties and their respective
successors and permitted assigns. Except as provided in Section 12.2, this
Agreement may not be assigned by operation of law or otherwise without the
prior
written consent of each of the parties hereto.
19.
Severability
.
The
provisions of this Agreement will be deemed severable, and if any provision
or
part of this Agreement is held illegal, void or invalid under applicable law,
such provision or part may be changed to the extent reasonably necessary to
make
the provision or part, as so changed, legal, valid and binding. If any provision
of this Agreement is held illegal, void or invalid in its entirety, the
remaining provisions of this Agreement will not in any way be affected or
impaired but will remain binding in accordance with their terms.
20.
Headings
.
The
Section headings in this Agreement are for convenience of reference only and
will not be deemed to alter or affect the meaning or interpretation of any
provisions hereof.
21.
Waiver
.
No
failure on the part of any party to exercise any power, right, privilege or
remedy under this Agreement, and no delay on the part of any party in exercising
any power, right, privilege or remedy under this Agreement, shall operate as
a
waiver of such power, right, privilege or remedy; and no single or partial
exercise of any such power, right, privilege or remedy shall preclude any other
or further exercise thereof or any other power, right, privilege or remedy.
No
party shall be deemed to have waived any claim arising out of this Agreement,
or
any power, right, privilege or remedy under this Agreement, unless the waiver
of
such claim, power, right, privilege or remedy is expressly set forth in a
written instrument duly executed and delivered on behalf of such party; and
any
such waiver shall not be applicable or have any effect except in the specific
instance in which it is given.
22.
Amendments
.
This
Agreement may not be amended, modified, altered or supplemented other than
by
means of a written instrument duly executed and delivered on behalf of each
of
the parties hereto.
23.
Parties
in Interest
.
None of
the provisions of this Agreement is intended to provide any rights or remedies
to any Person other than the parties hereto and their respective successors
and
permitted assigns, if any.
24.
Entire
Agreement
.
This
Agreement sets forth the entire understanding of the parties hereto relating
to
the subject matter hereof and supersedes all prior agreements and understandings
among or between any of the parties relating to the subject matter
hereof.
25.
Escrow
Agent Documentation
.
In order
to maintain compliance with the Patriot Act, prior to the effective date of
this
Agreement, FAAC and the Members’ Representative shall provide to the Escrow
Agent a completed Form W-9, Certificate of Incumbency, and a copy of the
corporate document (i.e., Corporate Resolution, Articles of Incorporation,
Bylaws, Partnership Agreement, etc.) that would show proper authorization for
such parties to enter into this Agreement.
IN
WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first above written.
|
FORTRESS
AMERICA ACQUISITION CORPORATION,
|
|
a
Delaware corporation
|
|
|
|
|
|
|
|
By:
/s/ Harvey L. Weiss
|
|
Name:
Harvey L. Weiss
|
|
Title:
Chairman
|
|
|
|
|
|
MEMBERS:
|
|
|
|
|
|
/s/
Thomas P. Rosato
|
|
Thomas
P. Rosato
|
|
|
|
|
|
/s/
Gerard J. Gallagher
|
|
Gerard
J. Gallagher
|
|
|
|
|
|
MEMBERS’
REPRESENTATIVE:
|
|
|
|
|
|
/s/
Thomas P. Rosato
|
|
Thomas
P. Rosato as the representative for those
|
|
Members
pursuant to Section 2.6 of the Membership
|
|
Interest
Purchase Agreement.
|
|
ESCROW
AGENT:
|
|
|
|
SUNTRUST
BANK,
|
|
a
Georgia banking corporation
|
|
|
|
|
|
|
|
By:
/s/ E. Carl Thompson, Jr.
|
|
Name:
E. Carl Thompson, Jr.
|
|
Title:
Trust Officer
|
Exhibit
1 to Escrow Agreement
Membership
Interest Purchase Agreement
Exhibit
2 to Escrow Agreement
Stock
Acquisition Agreements
Exhibit
3 to Escrow Agreement
Payment
Request Form
[Date]
SunTrust
Bank
919
E.
Main St.
Richmond,
VA 23219
Attention:
Carl Thompson
|
Re:
|
Escrow
No. ____________ (“Escrow”)
|
Ladies
and Gentlemen:
The
undersigned hereby certify that:
(1)
Demand
for payment as provided per the terms and conditions of that certain Escrow
Agreement dated _________________, 200_ is hereby made in the amount of
$____________ to _________ [and $_____________ to _______________]. [The demand
is in respect of Section 5.1 of the Escrow Agreement.]
(2)
Please
direct payment by wire transfer[s] as follows:
$_____________
to
[Depository
Bank]
[Depository
Bank Address]
ABA
No.
_________________
Acct.
No.
_________________
For
Benefit of :_____________
[and,
$_____________ to
[Depository
Bank]
[Depository
Bank Address]
ABA
No.
_________________
Acct.
No.
_________________
For
Benefit of :_____________]
(3)
With
respect to the drawing referred to in this Payment Request Form, the [aggregate]
amount demanded hereby does not exceed one hundred percent (100%) of the Escrow
valued as of the date hereof.
FORTRESS
INTERNATIONAL GROUP, INC.
By:_________________________________
Date:_________________
Name:
Title:
MEMBERS,
as represented by the
MEMBERS'
REPRESENTATIVE:
____________________________________
Date:_________________
[______________________]
Exhibit
4 to Escrow Agreement
Fee
Schedule
Fees
payable to SunTrust Bank for services rendered with respect to this Escrow
Agreement shall be as follows:
Legal
Fee
|
$
|
__________
|
Annual
Administration Fee
|
$
|
__________
|
This
fee
is priced with the understanding that the funds will be deposited in the STI
Classic US Treasury Money Market Fund.
The
annual administration fee is payable in advance at the time of closing and
will
be charged to the Escrow Property at such time and on each anniversary date.
The
fees shall be deemed earned in full upon receipt by the Escrow Agent, and no
portion shall be refundable for any reason, including without limitation,
termination of this Agreement.
The
parties agree that, in the event any controversy arises under or in connection
with this Agreement or the Escrow Property or the Escrow Agent is made a party
to or intervenes in any litigation pertaining to this Agreement or the Escrow
Property, to pay to the Escrow Agent reasonable compensation for its
extraordinary services and to reimburse the Escrow Agent for all costs and
expenses directly or indirectly incurred by reason of such controversy or
litigation.
REGISTRATION
RIGHTS AGREEMENT
THIS
REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is entered into as of the 19 day of January, 2007, by and among Fortress America Acquisition
Corporation, a Delaware corporation (the “Company”) and the undersigned parties
listed under Stockholders on the signature page hereto (each, a “Stockholder”
and collectively, the “Stockholders”).
NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1.
DEFINITIONS.
The following capitalized terms used herein have the following
meanings:
“
Agreement
”
means
this Agreement, as amended, restated, supplemented, or otherwise modified from
time to time.
“
Commission
”
means
the Securities and Exchange Commission, or any other federal agency then
administering the Securities Act or the Exchange Act.
“
Common
Stock
”
means
the common stock, par value $0.0001 per share, of the Company.
“
Company
”
is
defined in the preamble to this Agreement.
“
Demand
Registration
”
is
defined in Section 2.1.1.
“
Demanding
Holder
”
is
defined in Section 2.1.1.
“
Exchange
Act
”
means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
of the Commission promulgated thereunder, all as the same shall be in effect
at
the time.
“
Form
S-3
”
is
defined in Section 2.3.
“
Founding
Investor Registration Rights Agreement
”
means
that certain Registration Rights Agreement dated as of July 13, 2005 by and
among the Company and the investors listed on the signature page
thereto.
“
Indemnified
Party
”
is
defined in Section 4.3.
“
Indemnifying
Party
”
is
defined in Section 4.3.
“
Maximum
Number of Shares
”
is
defined in Section 2.1.4.
“
Notices
”
is
defined in Section 6.3.
“
Piggy-Back
Registration
”
is
defined in Section 2.2.1.
“
Register
,”
“
registered
”
and
“
registration
”
each
means a registration effected by preparing and filing a registration statement
or similar document in compliance with the requirements of the Securities Act,
and the applicable rules and regulations promulgated thereunder, and such
registration statement becoming effective.
“
Registrable
Securities
”
mean
all of the shares of Common Stock owned or held by Stockholders.
Registrable Securities include any warrants, shares of capital stock or other
securities of the Company issued as a dividend or other distribution with
respect to or in exchange for or in replacement of such shares of Common
Stock. As to any particular Registrable Securities, such securities shall
cease to be Registrable Securities when: (a) a Registration Statement
with respect to the sale of such securities shall have become effective under
the Securities Act and such securities shall have been sold, transferred,
disposed of or exchanged in accordance with such Registration Statement;
(b) such securities shall have been otherwise transferred, new certificates
for them not bearing a legend restricting further transfer shall have been
delivered by the Company and subsequent public distribution of them shall not
require registration under the Securities Act; (c) such securities shall
have ceased to be outstanding, or (d) the Securities and Exchange Commission
makes a definitive determination to the Company that the Registrable Securities
are salable under Rule 144(k).
“
Registration
Statement
”
means
a
registration statement filed by the Company with the Commission in compliance
with the Securities Act and the rules and regulations promulgated thereunder
for
a public offering and sale of Common Stock (other than a registration statement
on Form S-4 or Form S-8, or their successors, or any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another entity).
“
Release
Date
”
means
July 13, 2008.
“
Securities
Act
”
means
the Securities Act of 1933, as amended, and the rules and regulations of the
Commission promulgated thereunder, all as the same shall be in effect at the
time.
“
Stockholder
”
is
defined in the preamble to this Agreement.
“
Stockholder
Indemnified Party
”
is
defined in Section 4.1.
“
Underwriter
”
means
a
securities dealer who purchases any Registrable Securities as principal in
an
underwritten offering and not as part of such dealer’s market-making
activities.
2.
REGISTRATION
RIGHTS.
2.1
Demand
Registration
.
2.1.2.
Effective
Registration
.
A
registration will not count as a Demand Registration until the Registration
Statement filed with the Commission with respect to such Demand Registration
has
been declared effective and the Company has complied with all of its obligations
under this Agreement with respect thereto;
provided,
however
,
that
if, after such Registration Statement has been declared effective, the offering
of Registrable Securities pursuant to a Demand Registration is interfered with
by any stop order or injunction of the Commission or any other governmental
agency or court, the Registration Statement with respect to such Demand
Registration will be deemed not to have been declared effective, unless and
until, (i) such stop order or injunction is removed, rescinded or otherwise
terminated, and (ii) a majority-in-interest of the Demanding Holders thereafter
elect to continue the offering;
provided,
further
,
that
the Company shall not be obligated to file a second Registration Statement
until
a Registration Statement that has been filed is counted as a Demand Registration
or is terminated.
2.1.3.
Underwritten
Offering
.
If a majority-in-interest of the Demanding Holders so elect and such holders
so
advise the Company as part of their written demand for a Demand Registration,
the offering of such Registrable Securities pursuant to such Demand Registration
shall be in the form of an underwritten offering. In such event, the right
of
any holder to include its Registrable Securities in such registration shall
be
conditioned upon such holder’s participation in such underwriting and the
inclusion of such holder’s Registrable Securities in the underwriting to the
extent provided herein. All Demanding Holders proposing to distribute
their securities through such underwriting shall enter into an underwriting
agreement in customary form with the Underwriter or Underwriters selected for
such underwriting by a majority-in-interest of the holders initiating the Demand
Registration.
2.1.4.
Reduction
of Offering
.
If the managing Underwriter or Underwriters for a Demand Registration that
is to
be an underwritten offering advises the Company and the Demanding Holders in
writing that the dollar amount or number of shares of Registrable Securities
which the Demanding Holders desire to sell, taken together with all other shares
of Common Stock or other securities which the Company desires to sell and the
shares of Common Stock, if any, as to which registration has been requested
pursuant to written contractual piggy-back registration rights held by other
shareholders of the Company who desire to sell, exceeds the maximum dollar
amount or maximum number of shares that can be sold in such offering without
adversely affecting the proposed offering price, the timing, the distribution
method, or the probability of success of such offering (such maximum dollar
amount or maximum number of shares, as applicable, the “
Maximum
Number of Shares
”),
then
the Company shall include in such registration: (i) first, the Registrable
Securities as to which Demand Registration has been requested by the Demanding
Holders (
pro
rata
in
accordance with the number of shares of Registrable Securities which such
Demanding Holder has requested be included in such registration, regardless
of
the number of shares of Registrable Securities held by each Demanding Holder)
that can be sold without exceeding the Maximum Number of Shares; (ii) second,
to
the extent that the Maximum Number of Shares has not been reached under the
foregoing clause (i), the shares of Common Stock or other securities that the
Company desires to sell that can be sold without exceeding the Maximum Number
of
Shares; (iii) third, to the extent that the Maximum Number of Shares has not
been reached under the foregoing clauses (i) and (ii), the shares of Common
Stock for the account of other persons that the Company is obligated to register
pursuant to written contractual arrangements with such persons and that can
be
sold without exceeding the Maximum Number of Shares; and (iv) fourth, to the
extent that the Maximum Number of Shares have not been reached under the
foregoing clauses (i), (ii), and (iii), the shares of Common Stock that other
shareholders desire to sell that can be sold without exceeding the Maximum
Number of Shares.
2.1.5.
Withdrawal
.
If a
majority-in-interest of the Demanding Holders disapprove of the terms of any
underwriting or are not entitled to include all of their Registrable Securities
in any offering, such majority-in-interest of the Demanding Holders may elect
to
withdraw from such offering by giving written notice to the Company and the
Underwriter or Underwriters of their request to withdraw prior to the
effectiveness of the Registration Statement filed with the Commission with
respect to such Demand Registration. If the majority-in-interest of the
Demanding Holders withdraws from a proposed offering relating to a Demand
Registration, then such registration shall not count as a Demand Registration
provided for in Section 2.1.1.
2.2
Piggy-Back
Registration
.
2.2.1.
Piggy-Back
Rights
.
If at any time on or after the Release Date the Company proposes to file a
Registration Statement under the Securities Act with respect to an offering
of
equity securities, or securities or other obligations exercisable or
exchangeable for, or convertible into, equity securities, by the Company for
its
own account or for shareholders of the Company for their account (or by the
Company and by shareholders of the Company including, without limitation,
pursuant to Section 2.1), other than a Registration Statement (i) filed in
connection with any employee stock option or other benefit plan, (ii) for an
exchange offer or offering of securities solely to the Company’s existing
shareholders, (iii) for an offering of debt that is convertible into equity
securities of the Company or (iv) for a dividend reinvestment plan, then
the Company shall (x) give written notice of such proposed filing to the holders
of Registrable Securities as soon as practicable but in no event less than
ten
(10) days before the anticipated filing date, which notice shall describe the
amount and type of securities to be included in such offering, the intended
method(s) of distribution, and the name of the proposed managing Underwriter
or
Underwriters, if any, of the offering, and (y) offer to the holders of
Registrable Securities in such notice the opportunity to register the sale
of
such number of shares of Registrable Securities as such holders may request
in
writing within fifteen (15) days following receipt of such notice (a
“
Piggy-Back
Registration
”).
The Company shall cause such Registrable Securities to be included in such
registration and shall use its best efforts to cause the managing Underwriter
or
Underwriters of a proposed underwritten offering to permit the Registrable
Securities requested to be included in a Piggy-Back Registration to be included
on the same terms and conditions as any similar securities of the Company and
to
permit the sale or other disposition of such Registrable Securities in
accordance with the intended method(s) of distribution thereof. All
holders of Registrable Securities proposing to distribute their securities
through a Piggy-Back Registration that involves an Underwriter or Underwriters
shall enter into an underwriting agreement in customary form with the
Underwriter or Underwriters selected for such Piggy-Back
Registration.
2.2.2.
Reduction
of Offering
.
If the managing Underwriter or Underwriters for a Piggy-Back Registration that
is to be an underwritten offering advises the Company and the holders of
Registrable Securities in writing that the dollar amount or number of shares
of
Common Stock which the Company desires to sell, taken together with shares
of
Common Stock, if any, as to which registration has been demanded pursuant to
written contractual arrangements with persons other than the holders of
Registrable Securities hereunder, the Registrable Securities as to which
registration has been requested under this Section 2.2, and the shares of
Common Stock, if any, as to which registration has been requested pursuant
to
the written contractual piggy-back registration rights of other shareholders
of
the Company, exceeds the Maximum Number of Shares, then the Company shall
include in any such registration:
(i)
If
the
registration is undertaken for the Company’s account: (A) first, the shares of
Common Stock or other securities that the Company desires to sell that can
be
sold without exceeding the Maximum Number of Shares; (B) second, to the extent
that the Maximum Number of Shares has not been reached under the foregoing
clause (A), the shares of Common Stock, if any, including the Registrable
Securities, as to which registration has been requested pursuant to written
contractual piggy-back registration rights of security holders (pro rata in
accordance with the number of shares of Common Stock which each such person
has
actually requested to be included in such registration, regardless of the number
of shares of Common Stock with respect to which such persons have the right
to
request such inclusion) that can be sold without exceeding the Maximum Number
of
Shares; and
(ii)
If
the
registration is a “demand” registration undertaken at the demand of persons
other than the holders of Registrable Securities pursuant to written contractual
arrangements with such persons, (A) first, the shares of Common Stock for the
account of the demanding persons that can be sold without exceeding the Maximum
Number of Shares; (B) second, to the extent that the Maximum Number of Shares
has not been reached under the foregoing clause (A), the shares of Common Stock
or other securities that the Company desires to sell that can be sold without
exceeding the Maximum Number of Shares; (C) third, to the extent that the
Maximum Number of Shares has not been reached under the foregoing clauses (A)
and (B), the shares of Common Stock as to which registration has been requested
pursuant to written contractual piggy-back registration rights under the
Founding Investor Registration Rights Agreement that can be sold without
exceeding the Maximum Number of Shares; (D) fourth, to the extent that the
Maximum Number of Shares has not been reached under the foregoing
clauses (A), (B) and (C), the Registrable Securities as to which
registration has been requested under this Section 2.2 (pro rata in accordance
with the number of shares of Registrable Securities held by each such holder)
that can be sold without exceeding the Maximum Number of Shares; and (E) fifth,
to the extent that the Maximum Number of Shares has not been reached under
the
foregoing clauses (A), (B), (C) and (D), the shares of Common Stock, if any,
as
to which registration has been requested pursuant to written contractual
piggy-
back
registration rights which other shareholders desire to sell that can be sold
without exceeding the Maximum Number of Shares.
2.2.3.
Withdrawal
.
Any holder of Registrable Securities may elect to withdraw such holder’s request
for inclusion of Registrable Securities in any Piggy-Back Registration by giving
written notice to the Company of such request to withdraw prior to the
effectiveness of the Registration Statement. The Company may also elect to
withdraw a registration statement at any time prior to the effectiveness of
the
Registration Statement. Notwithstanding any such withdrawal, the Company
shall pay all expenses incurred by the holders of Registrable Securities in
connection with such Piggy-Back Registration as provided in
Section 3.3.
2.3
Registrations
on Form S-3
.
The holders of Registrable Securities may at any time and from time to time,
request in writing that the Company register the resale of any or all of such
Registrable Securities on Form S-3 or any similar short-form registration which
may be available at such time (“
Form
S-3
”);
provided,
however
,
that
the Company shall not be obligated to effect such request through an
underwritten offering. Upon receipt of such written request, the Company
will promptly give written notice of the proposed registration to all other
holders of Registrable Securities, and, as soon as practicable thereafter,
effect the registration of all or such portion of such holder’s or holders’
Registrable Securities as are specified in such request, together with all
or
such portion of the Registrable Securities of any other holder or holders
joining in such request as are specified in a written request given within
fifteen (15) days after receipt of such written notice from the Company;
provided,
however
,
that
the Company shall not be obligated to effect any such registration pursuant
to
this Section 2.3: (i) if Form S-3 is not available for such offering; or
(ii) if the holders of the Registrable Securities, together with the holders
of
any other securities of the Company entitled to inclusion in such registration,
propose to sell Registrable Securities and such other securities (if any) at
any
aggregate price to the public of less than $500,000. Registrations effected
pursuant to this Section 2.3 shall not be counted as Demand Registrations
effected pursuant to Section 2.1.
3.
REGISTRATION
PROCEDURES.
3.1
Filings;
Information
.
Whenever the Company is required to effect the registration of any Registrable
Securities pursuant to Section 2, the Company shall use its best efforts to
effect the registration and sale of such Registrable Securities in accordance
with the intended method(s) of distribution thereof as expeditiously as
practicable, and in connection with any such request:
3.1.1.
Filing
Registration Statement
.
The Company shall, as expeditiously as possible and in any event within sixty
(60) days after receipt of a request for a Demand Registration pursuant to
Section 2.1, prepare and file with the Commission a Registration Statement
on any form for which the Company then qualifies or which counsel for the
Company shall deem appropriate and which form shall be available for the sale
of
all Registrable Securities to be registered thereunder in accordance with the
intended method(s) of distribution thereof, and shall use its best efforts
to
cause such Registration Statement to become and remain effective for the period
required by Section 3.1.3;
provided,
however
,
that
the Company shall have the right to defer any Demand Registration for up to
thirty (30) days, and
any
Piggy-Back Registration for such period as may be applicable to deferment of
any
demand registration to which such Piggy-Back Registration relates, in each
case
if the Company shall furnish to the holders a certificate signed by the Chief
Executive Officer of the Company stating that, in the good faith judgment of
the
Board of Directors of the Company, it would be materially detrimental to the
Company and its shareholders for such Registration Statement to be effected
at
such time;
provided
further, however
,
that
the Company shall not have the right to exercise the right set forth in the
immediately preceding proviso more than once in any 365-day period in respect
of
a Demand Registration hereunder.
3.1.2.
Copies
.
The Company shall, prior to filing a Registration Statement or prospectus,
or
any amendment or supplement thereto, furnish without charge to the holders
of
Registrable Securities included in such registration, and such holders’ legal
counsel, copies of such Registration Statement as proposed to be filed, each
amendment and supplement to such Registration Statement (in each case including
all exhibits thereto and documents incorporated by reference therein), the
prospectus included in such Registration Statement (including each preliminary
prospectus), and such other documents as the holders of Registrable Securities
included in such registration or legal counsel for any such holders may request
in order to facilitate the disposition of the Registrable Securities owned
by
such holders.
3.1.3.
Amendments
and Supplements
.
The Company shall prepare and file with the Commission such amendments,
including post-effective amendments, and supplements to such Registration
Statement and the prospectus used in connection therewith as may be necessary
to
keep such Registration Statement effective and in compliance with the provisions
of the Securities Act until all Registrable Securities and other securities
covered by such Registration Statement have been disposed of in accordance
with
the intended method(s) of distribution set forth in such Registration Statement
(which period shall not exceed the sum of one hundred eighty (180) days plus
any
period during which any such disposition is interfered with by any stop order
or
injunction of the Commission or any governmental agency or court) or such
securities have been withdrawn.
3.1.4.
Notification
.
After the filing of a Registration Statement, the Company shall promptly, and
in
no event more than two (2) business days after such filing, notify the holders
of Registrable Securities included in such Registration Statement of such
filing, and shall further notify such holders promptly and confirm such advice
in writing in all events within two (2) business days of the occurrence of
any
of the following: (i) when such Registration Statement becomes
effective; (ii) when any post-effective amendment to such Registration
Statement becomes effective; (iii) the issuance or threatened issuance by
the Commission of any stop order (and the Company shall take all actions
required to prevent the entry of such stop order or to remove it if entered);
and (iv) any request by the Commission for any amendment or supplement to
such Registration Statement or any prospectus relating thereto or for additional
information or of the occurrence of an event requiring the preparation of a
supplement or amendment to such prospectus so that, as thereafter delivered
to
the purchasers of the securities covered by such Registration Statement, such
prospectus will not contain an untrue statement of a material fact or omit
to
state any material fact required to be stated therein or necessary to make
the
statements therein not misleading, and promptly make available to the holders
of
Registrable Securities included in such Registration Statement any such
supplement or amendment; except that before filing with the Commission a
Registration Statement or
prospectus or any amendment or supplement thereto, including documents
incorporated by reference, the Company shall furnish to the holders of
Registrable Securities included in such Registration Statement and to the legal
counsel for any such holders, copies of all such documents proposed to be filed
sufficiently in advance of filing to provide such holders and legal counsel
with
a reasonable opportunity to review such documents and comment thereon, and
the
Company shall not file any Registration Statement or prospectus or amendment
or
supplement thereto, including documents incorporated by reference, to which
such
holders or their legal counsel shall object.
3.1.5.
State
Securities Laws Compliance
.
The Company shall use its best efforts to (i) register or qualify the
Registrable Securities covered by the Registration Statement under such
securities or “blue sky” laws of such jurisdictions in the United States as the
holders of Registrable Securities included in such Registration Statement (in
light of their intended plan of distribution) may request and (ii) take
such action necessary to cause such Registrable Securities covered by the
Registration Statement to be registered with or approved by such other
governmental authorities as may be necessary by virtue of the business and
operations of the Company and do any and all other acts and things that may
be
necessary or advisable to enable the holders of Registrable Securities included
in such Registration Statement to consummate the disposition of such Registrable
Securities in such jurisdictions;
provided,
however
,
that
the Company shall not be required to qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3.1.5 or subject itself to taxation in any such
jurisdiction.
3.1.6.
Agreements
for Disposition
.
The Company shall enter into customary agreements (including, if applicable,
an
underwriting agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of such
Registrable Securities. The representations, warranties and covenants of
the Company in any underwriting agreement which are made to or for the benefit
of any Underwriters, to the extent applicable, shall also be made to and for
the
benefit of the holders of Registrable Securities included in such registration
statement. No holder of Registrable Securities included in such
registration statement shall be required to make any representations or
warranties in the underwriting agreement except, if applicable, with respect
to
such holder’s organization, good standing, authority, title to Registrable
Securities, lack of conflict of such sale with such holder’s material agreements
and organizational documents, and with respect to written information relating
to such holder that such holder has furnished in writing expressly for inclusion
in such Registration Statement.
3.1.7.
Cooperation
.
The principal executive officer of the Company, the principal financial officer
of the Company, the principal accounting officer of the Company and all other
officers and members of the management of the Company shall cooperate fully
in
any offering of Registrable Securities hereunder, which cooperation shall
include, without limitation, the preparation of the Registration Statement
with
respect to such offering and all other offering materials and related documents,
and participation in meetings with Underwriters, attorneys, accountants and
potential Stockholders.
3.1.9.
Opinions
and Comfort Letters
.
The Company shall furnish to each holder of Registrable Securities included
in
any Registration Statement a signed counterpart, addressed to such holder,
of
(i) any opinion of counsel to the Company delivered to any Underwriter and
(ii) any comfort letter from the Company’s independent public accountants
delivered to any Underwriter. In the event no legal opinion is delivered
to any Underwriter, the Company shall furnish to each holder of Registrable
Securities included in such Registration Statement, at any time that such holder
elects to use a prospectus, an opinion of counsel to the Company to the effect
that the Registration Statement containing such prospectus has been declared
effective and that no stop order is in effect.
3.1.10.
Earnings
Statement
.
The Company shall comply with all applicable rules and regulations of the
Commission and the Securities Act, and make available to its shareholders,
as
soon as practicable, an earnings statement covering a period of twelve (12)
months, beginning within three (3) months after the effective date of the
registration statement, which earnings statement shall satisfy the provisions
of
Section 11(a) of the Securities Act and Rule 158
thereunder.
3.1.11.
Listing
.
The Company shall use its best efforts to cause all Registrable Securities
included in any registration to be listed on such exchanges or otherwise
designated for trading in the same manner as similar securities issued by the
Company are then listed or designated or, if no such similar securities are
then
listed or designated, in a manner satisfactory to the holders of a majority
of
the Registrable Securities included in such registration.
3.2
Obligation
to Suspend Distribution
.
Upon receipt of any notice from the Company of the happening of any event of
the
kind described in Section 3.1.4(iii), or, in the case of a resale
registration on Form S-3 pursuant to Section 2.3 hereof, upon any
suspension by the Company, pursuant to a written insider trading compliance
program adopted by the Company’s Board of Directors, of the ability of all
“insiders” covered by such program to transact in the Company’s securities
because of the existence of material non-public information and holder would
be
deemed an “insider” under such program, each holder of Registrable Securities
included in any registration shall immediately discontinue disposition of such
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such holder receives the supplemented or amended
prospectus contemplated by Section 3.1.4(iv) or the restriction on the
ability of “insiders” to transact in the Company’s securities is removed or is
inapplicable to such holder, as applicable, and, if so directed by the Company,
each such holder will deliver to the Company all copies, other than permanent
file copies then in such holder’s possession, of the most recent prospectus
covering such Registrable Securities at the time of receipt of such
notice.
3.3
Registration
Expenses
.
The Company shall bear all costs and expenses incurred in connection with any
Demand Registration pursuant to Section 2.1, any Piggy-Back Registration
pursuant to Section 2.2, and any registration on Form S-3 effected pursuant
to Section 2.3, and all expenses incurred in performing or complying with
its other obligations under this Agreement, whether or not the Registration
Statement becomes effective, including, without limitation: (i) all
registration and filing fees; (ii) fees and expenses of compliance with
securities or “blue sky” laws (including fees and disbursements of counsel in
connection with blue sky qualifications of the Registrable Securities);
(iii) printing expenses; (iv) the Company’s internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees); (v) the fees and expenses incurred in connection with the
listing of the Registrable Securities as required by Section 3.1.11;
(vi) National Association of Securities Dealers, Inc. fees; (vii) fees
and disbursements of counsel for the Company and fees and expenses for
independent certified public accountants retained by the Company (including
the
expenses or costs associated with the delivery of any opinions or comfort
letters requested pursuant to Section 3.1.9); (viii) the fees and
expenses of any special experts retained by the Company in connection with
such
registration and (ix) the fees and expenses of one legal counsel
selected by the holders of a majority-in-interest of the Registrable Securities
included in such registration. The Company shall have no obligation to pay
any underwriting discounts or selling commissions or transfer taxes, if any,
attributable to the Registrable Securities being sold by the holders thereof,
which underwriting discounts or selling commissions or transfer taxes, if any,
shall be borne by such holders. Additionally, in an underwritten offering,
all selling shareholders and the Company shall bear the expenses of the
underwriter pro rata in proportion to the respective amount of shares each
is
selling in such offering.
3.4
Information
.
The holders of Registrable Securities shall provide such information as may
reasonably be requested by the Company, or the managing Underwriter, if any,
in
connection with the preparation of any Registration Statement, including
amendments and supplements thereto, in order to effect the registration of
any
Registrable Securities under the Securities Act pursuant to Section 2 and
in connection with the Company’s obligation to comply with federal and
applicable state securities laws.
4.
INDEMNIFICATION
AND CONTRIBUTION.
4.1
Indemnification
by the Company
.
The Company agrees to indemnify and hold harmless each Stockholder and each
other holder of Registrable Securities, and each of their respective officers,
employees, affiliates, directors, partners, members and agents, and each person,
if any, who controls a Stockholder and each other holder of Registrable
Securities (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) (each, a “
Stockholder
Indemnified Party
”),
from
and against any expenses, losses, judgments, claims, damages or liabilities,
whether joint or several, arising out of or based upon any untrue statement
(or
allegedly untrue statement) of a material fact contained in any Registration
Statement under which the sale of such Registrable Securities was registered
under the Securities Act, any preliminary prospectus, final prospectus or
summary prospectus contained in the Registration Statement, or any amendment
or
supplement to such Registration Statement, or arising out of or based upon
any
omission (or alleged omission) to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or any
violation by the Company of the Securities Act or any rule or regulation
promulgated thereunder
applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration; and the Company shall promptly
reimburse the Stockholder Indemnified Party for any legal and any other expenses
reasonably incurred by such Stockholder Indemnified Party in connection with
investigating and defending any such expense, loss, judgment, claim, damage,
liability or action;
provided,
however
,
that
the Company will not be liable in any such case to the extent that any such
expense, loss, claim, damage or liability arises out of or is based upon any
untrue statement or allegedly untrue statement or omission or alleged omission
made in such Registration Statement, preliminary prospectus, final prospectus,
or summary prospectus, or any such amendment or supplement, in reliance upon
and
in conformity with information furnished to the Company, in writing, by such
selling holder expressly for use therein. The Company also shall indemnify
any Underwriter of the Registrable Securities, their officers, affiliates,
directors, partners, members and agents and each person who controls such
Underwriter on substantially the same basis as that of the indemnification
provided above in this Section 4.1.
4.2
Indemnification
by Holders of Registrable Securities
.
Each selling holder of Registrable Securities will, in the event that any
registration is being effected under the Securities Act pursuant to this
Agreement of any Registrable Securities held by such selling holder, indemnify
and hold harmless the Company, each of its directors and officers and each
underwriter (if any), and each other person, if any, who controls such selling
holder or such underwriter within the meaning of the Securities Act, against
any
losses, claims, judgments, damages or liabilities, whether joint or several,
insofar as such losses, claims, judgments, damages or liabilities (or actions
in
respect thereof) arise out of or are based upon any untrue statement or
allegedly untrue statement of a material fact contained in any Registration
Statement under which the sale of such Registrable Securities was registered
under the Securities Act, any preliminary prospectus, final prospectus or
summary prospectus contained in the Registration Statement, or any amendment
or
supplement to the Registration Statement, or arise out of or are based upon
any
omission or the alleged omission to state a material fact required to be stated
therein or necessary to make the statement therein not misleading, if the
statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company by such selling holder expressly
for use therein, and shall reimburse the Company, its directors and officers,
and each such controlling person for any legal or other expenses reasonably
incurred by any of them in connection with investigation or defending any such
loss, claim, damage, liability or action. Each selling holder’s
indemnification obligations hereunder shall be several and not joint and shall
be limited to the amount of any net proceeds (after payment of all underwriting
fees, discounts, commissions and taxes) actually received by such selling holder
from the sale of Registrable Securities which gave rise to such indemnification
obligation.
4.3
Conduct
of Indemnification Proceedings
.
Promptly after receipt by any person of any notice of any loss, claim, damage
or
liability or any action in respect of which indemnity may be sought pursuant
to
Section 4.1 or 4.2, such person (the “
Indemnified
Party
”)
shall,
if a claim in respect thereof is to be made against any other person for
indemnification hereunder, notify such other person (the “
Indemnifying
Party
”)
in
writing of the loss, claim, judgment, damage, liability or action;
provided,
however
,
that
the failure by the Indemnified Party to notify the Indemnifying Party shall
not
relieve the Indemnifying Party from any liability which the Indemnifying Party
may have to such Indemnified Party hereunder, except and solely to the extent
the Indemnifying Party is actually prejudiced by such failure. If the
Indemnified Party is seeking indemnification with respect to any claim or action
brought against the
Indemnified Party, then the Indemnifying Party shall be entitled to participate
in such claim or action, and, to the extent that it wishes, jointly with all
other Indemnifying Parties, to assume control of the defense thereof with
counsel reasonably satisfactory to the Indemnified Party. After notice
from the Indemnifying Party to the Indemnified Party of its election to assume
control of the defense of such claim or action, the Indemnifying Party shall
not
be liable to the Indemnified Party for any legal or other expenses subsequently
incurred by the Indemnified Party in connection with the defense thereof other
than reasonable costs of investigation;
provided,
however
,
that in
any action in which both the Indemnified Party and the Indemnifying Party are
named as defendants, the Indemnified Party shall have the right to employ
separate counsel (but no more than one such separate counsel) to represent
the
Indemnified Party and its controlling persons who may be subject to liability
arising out of any claim in respect of which indemnity may be sought by the
Indemnified Party against the Indemnifying Party, with the fees and expenses
of
such counsel to be paid by such Indemnifying Party if, based upon the written
opinion of counsel of such Indemnified Party, representation of both parties
by
the same counsel would be inappropriate due to actual or potential differing
interests between them. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, consent to entry of judgment or effect
any settlement of any claim or pending or threatened proceeding in respect
of
which the Indemnified Party is or could have been a party and indemnity could
have been sought hereunder by such Indemnified Party, unless such judgment
or
settlement includes an unconditional release of such Indemnified Party from
all
liability arising out of such claim or proceeding.
4.4
Contribution
.
4.4.1.
If
the
indemnification provided for in the foregoing Sections 4.1, 4.2 and 4.3 is
unavailable to any Indemnified Party in respect of any loss, claim, damage,
liability or action referred to herein, then each such Indemnifying Party,
in
lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid
or payable by such Indemnified Party as a result of such loss, claim, damage,
liability or action in such proportion as is appropriate to reflect the relative
fault of the Indemnified Parties and the Indemnifying Parties in connection
with
the actions or omissions which resulted in such loss, claim, damage, liability
or action, as well as any other relevant equitable considerations. The
relative fault of any Indemnified Party and any Indemnifying Party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state
a material fact relates to information supplied by such Indemnified Party or
such Indemnifying Party and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.
5.
UNDERWRITING
AND DISTRIBUTION.
5.1
Rule 144
.
The Company covenants that it shall file any reports required to be filed by
it
under the Securities Act and the Exchange Act and shall take such further action
as the holders of Registrable Securities may reasonably request, all to the
extent required from time to time to enable such holders to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rule 144 under the Securities Act, as such
Rules may be amended from time to time, or any similar Rule or regulation
hereafter adopted by the Commission.
6.
MISCELLANEOUS.
6.1
Other
Registration Rights
.
The Company represents and warrants that no person, other than a holder of
the
Registrable Securities and the parties to the Founding Investor Registration
Rights Agreement, has any right to require the Company to register any shares
of
the Company’s capital stock for sale or to include shares of the Company’s
capital stock in any registration filed by the Company for the sale of shares
of
capital stock for its own account or for the account of any other
person.
6.2
Assignment;
No Third-Party Beneficiaries
.
This Agreement and the rights, duties and obligations of the Company hereunder
may not be assigned or delegated by the Company in whole or in part. This
Agreement and the rights, duties and obligations of the holders of Registrable
Securities hereunder may be freely assigned or delegated by such holder of
Registrable Securities in conjunction with and to the extent of any transfer
of
Registrable Securities by any such holder. This Agreement and the
provisions hereof shall be binding upon and shall inure to the benefit of each
of the parties and their respective successors and the permitted assigns of
the
Stockholder or holder of Registrable Securities or of any assignee of the
Stockholder or holder of Registrable Securities. This Agreement is not
intended to confer any rights or benefits on any persons that are not a party
hereto other than as expressly set forth in Section 4 and this
Section 6.2.
6.3
Notices
.
All
notices, demands, requests, consents, approvals or other communications
(collectively, “
Notices
”)
required or permitted to be given hereunder or which are given with respect
to
this Agreement shall be in writing and shall be personally served, delivered
by
reputable air courier service with charges prepaid, or transmitted by hand
delivery, telegram, telex or facsimile, addressed as set forth below, or to
such
other address as such party shall have specified most recently by written
notice. Notice shall be deemed given on the date of service or
transmission if personally served or transmitted by telegram, telex or
facsimile;
provided
,
that if
such service or transmission is not on a business day or is after normal
business hours, then such notice shall be deemed given on the next business
day. Notice otherwise sent as provided herein shall be deemed given on the
next business day following timely delivery of such notice to a reputable air
courier service with an order for next-day delivery.
|
|
Fortress
America Acquisition Corporation
|
4100
North Fairfax Drive, #1150
|
Arlington,
Virginia 22203
|
Attention:
Chairman
|
|
with
a copy to:
|
|
Squire,
Sanders & Dempsey L.L.P.
|
8000
Towers Crescent Drive, 14
th
Floor
|
Tysons
Corner, Virginia 22182
|
Attn:
James J. Maiwurm, Esq.; and
|
|
To
a Stockholder,:
|
|
to
the addresses listed on Exhibit A hereto.
|
|
6.4
Severability
.
This Agreement shall be deemed severable, and the invalidity or unenforceability
of any term or provision hereof shall not affect the validity or enforceability
of this Agreement or of any other term or provision hereof. Furthermore,
in lieu of any such invalid or unenforceable term or provision, the parties
hereto intend that there shall be added as a part of this Agreement a provision
as similar in terms to such invalid or unenforceable provision as may be
possible and be valid and enforceable.
6.5
Counterparts
.
This Agreement may be executed in multiple counterparts, each of which shall
be
deemed an original, and all of which taken together shall constitute one and
the
same instrument.
6.6
Entire
Agreement
.
This Agreement (including all agreements entered into pursuant hereto and all
certificates and instruments delivered pursuant hereto and thereto) constitute
the entire agreement of the parties with respect to the subject matter hereof
and supersede all prior and contemporaneous agreements, representations,
understandings, negotiations and discussions between the parties, whether oral
or written.
6.7
Modifications
and Amendments
.
No amendment, modification or termination of this Agreement shall be binding
upon any party unless executed in writing by such party.
6.8
Titles
and Headings
.
Titles and headings of sections of this Agreement are for convenience only
and
shall not affect the construction of any provision of this
Agreement.
6.9
Waivers
and Extensions
.
Any party to this Agreement may waive any right, breach or default which such
party has the right to waive,
provided
that
such waiver will not be effective against the waiving party unless it is in
writing, is signed by such party, and specifically refers to this
Agreement. Waivers may be made in advance or after the right waived has
arisen or the breach or default waived has occurred. Any waiver may be
conditional. No waiver of any breach of any agreement or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach thereof
or of any other agreement or provision herein contained. No waiver or
extension of time for performance of any obligations or acts shall be deemed
a
waiver or extension of the time for performance of any other obligations or
acts.
6.10
Remedies
Cumulative
.
In the event that the Company fails to observe or perform any covenant or
agreement to be observed or performed under this Agreement, the Stockholder
or
any other holder of Registrable Securities may proceed to protect and enforce
its rights by suit in equity or action at law, whether for specific performance
of any term contained in this Agreement or for an injunction against the breach
of any such term or in aid of the exercise of any power granted in this
Agreement or to enforce any other legal or equitable right, or to take any
one
or more of such actions, without being required to post a bond. None of
the rights, powers or remedies conferred under this Agreement shall be mutually
exclusive, and each such right, power or remedy shall be cumulative and in
addition to any other right, power or remedy, whether conferred by this
Agreement or now or hereafter available at law, in equity, by statute or
otherwise.
6.12
Waiver
of Trial by Jury
.
Each party hereby irrevocably and unconditionally waives the right to a trial
by
jury in any action, suit, counterclaim or other proceeding (whether based on
contract, tort or otherwise) arising out of, connected with or relating to
this
Agreement, the transactions contemplated hereby, or the actions of any
Stockholder in the negotiation, administration, performance or enforcement
hereof.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
|
FORTRESS
AMERICA ACQUISITION CORPORATION,
|
|
a
Delaware corporation
|
|
|
|
By:
/s/ Harvey L. Weiss
|
|
Name:
Harvey
L. Weiss
Title:
Chairman
|
|
STOCKHOLDERS:
|
|
|
|
/s/
Thomas P. Rosato
|
|
Thomas
P. Rosato
|
|
|
|
/s/
Gerard J. Gallagher
|
|
Gerard
J. Gallagher
|
|
|
|
Evergreen
Capital LLC
|
|
|
|
|
|
By:/s/
Richard Kohr, Jr.
Name:
Richard Kohr
|
|
Title:President
|
Exhibit
A
Stockholders:
Thomas
P.
Rosato
11373
Liberty Street
Fulton,
MD 20759
Gerard
J.
Gallagher
5
Tydings
Road
Severna
Park, MD 211468
Evergreen
Capital, LLC
8808
Centre Park Drive, Suite 204
Columbia,
MD 21045
EXECUTIVE
EMPLOYMENT AGREEMENT
This
EXECUTIVE EMPLOYMENT AGREEMENT (this "
Agreement
"),
effective this 19
th
of
January, 2007 ("
Effective
Date
"),
between
FORTRESS
AMERICA ACQUISITION CORPORATION
a
Delaware corporation (the "
Company
")
and
HARVEY L. WEISS (the "
Executive
").
WITNESSETH
WHEREAS,
the Executive has served as the Chief Executive Officer of the Company since
December 20, 2004.
WHEREAS,
by the terms of a Second Amended and Restated Membership Interest Purchase
Agreement (the “
Purchase
Agreement
”)
dated
July 31, 2006, by and among the Company, Thomas P. Rosato (“
Rosato
”),
Gerard J. Gallagher (“
Gallagher
”),
VTC,
LLC (“
VTC
”)
and
Vortech, LLC (“
Vortech
”),
the
Company has agreed to purchase from Rosato and Gallagher all of the outstanding
membership interests of VTC and Vortech.
WHEREAS,
the Company desires to retain the service of the Executive as the Chairman
of
the Board of Directors of the Company upon the terms and conditions set forth
herein.
WHEREAS,
the Executive is willing to provide services to the Company upon the terms
and
conditions set forth herein.
NOW
THEREFORE, in consideration of the promises and the mutual agreements contained
herein, intending to be legally bound, the parties agree as
follows:
1.
DEFINITIONS
The
following words and terms shall have the meanings set forth below for the
purposes of this Agreement:
1.1.
Affiliates
.
"
Affiliates
"
of a
Person, or a Person "
affiliated
"
with
another Person, are any Persons which, directly or indirectly, through one
or
more intermediaries, controls or are controlled by or are under common control
with, the Person specified.
1.2.
Base
Salary
.
"
Base
Salary
"
shall
have the meaning set forth in
Section
3.1
hereof.
1.3.
Board
.
"
Board
"
means
the Company’s Board of Directors.
1.4.
Cause
.
1.4.1
Termination
of the Executive’s employment for "
Cause
"
shall
mean any of the following:
(i)
any
act
that would constitute a material violation of the Company’s material written
policies provided that the Company specifically terminates the Executive’s
employment for Cause hereunder within 120 days from the date the Company has
actual notice of such;
(ii)
intentionally
engaging in conduct materially and demonstrably injurious to the Company
provided that the Company specifically terminates the Executive’s employment for
Cause hereunder within 120 days from the date the Company has actual notice
of
such; or
(iii)
conviction
of (1) a crime of embezzlement or a crime involving moral turpitude; (2) a
crime
with respect to the Company involving a breach of trust or dishonesty; or (3)
in
either case, a plea of guilty or no contest to such a crime provided that the
Company specifically terminates the Executive’s employment for Cause hereunder
within 120 days from the date the Company has actual notice of
such.
1.4.2
In
any
case, if the Company desires to terminate the Executive's employment for Cause
in accordance with Sections 1.4.1(i), (ii) or (iii), it shall first give written
notice of the facts and circumstances providing the basis for Cause to the
Executive, and to allow the Executive 30 days from the date of such notice
to
remedy, cure or rectify, if possible, the situation giving rise to the Company's
allegations of Cause (the "Cure Period"); provided, however, that the Executive
shall have only one such opportunity to cure, regardless of the grounds on
which
Cause is asserted, during the Employment Period. During the Cure Period, the
Executive may not be entitled to payment of any compensation, in the Company's
sole discretion; provided, however, that if the Executive's compensation is
withheld and the Executive successfully remedies, cures, or rectifies the
situation giving rise to the Company's notice of Cause during the Cure Period,
resulting in the Company's withdrawal of its written notice of Cause, the
Executive shall be compensated for the Cure Period.
1.4.3
A
termination for Cause after a Change in Control shall be based only on events
occurring after such Change in Control; provided, however, the foregoing
limitation shall not apply to an event constituting Cause which was not
discovered by the Company prior to a Change in Control.
1.4.4
Cause
shall be determined in good faith by the affirmative vote of a majority of
the
whole Board (excluding the Executive if the Executive is a member of the Board).
1.5.
Change
in Control of the Company
.
"
Change
in Control of the Company
"
means
(a) a sale, transfer or exclusive licensing by the Company of all or
substantially all of the assets of the Company and its Subsidiaries on a
consolidated basis (measured by either book value in accordance with United
States generally accepted accounting principles consistently applied or fair
market value determined in the reasonable good faith judgment of the Board)
in
any transaction or series of transactions (other than sales in the ordinary
course of business); (b) any sale, transfer or issuance or series of sales,
transfers and/or issuances of shares of the Company's capital stock by the
Company or any holders thereof which results in any Person or Persons, other
than the holders of Company’s capital stock as of the date hereof, owning
capital stock of the Company possessing the voting power (under ordinary
circumstances) to elect a majority of the Board; (c) the stockholders of the
Company approve a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least 50% of the total voting
power represented by the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation; or (d) the
stockholders of the Corporation approve a plan of complete liquidation of the
Company.
1.6.
Date
of Termination
.
"
Date
of Termination
"
shall
mean (a) if the Executive’s employment is terminated by reason of the
Executive’s death, the date of the Executive’s death, or (b) if the Executive’s
employment with the Company and its Subsidiaries is terminated for any reason
other than the Executive’s death, the date on which Executive ceases to be an
employee of the Company and its Subsidiaries.
1.7.
Disability
.
Termination
of the Executive’s employment with the Company and its Subsidiaries based on
"
Disability
"
shall
mean termination of the Executive’s employment at the Company’s sole discretion,
upon thirty (30) days prior written notice in the event the Executive becomes
“Disabled,” as defined in any group term disability insurance maintained by the
Company applicable to the Executive, or, (b) if the Company shall not maintain
such insurance, the determination by an independent physician acting reasonably
and in good faith that the Executive is incapacitated by reason of a physical
or
mental illness which is long-term in nature and which prevents the Executive
from performing the substantial and material duties of his employment with
the
Company,
provided
that
such incapacity can reasonably be expected to prevent the Executive from working
at least six (6) months in any twelve (12) month period. The Company may require
the Executive to have the examination described in the preceding sentence at
any
time for the purpose of determining whether the Executive has a long-term
disability, and the Executive agrees to submit to such examination upon request
of the Board;
provided
that the
Company shall pay all costs and expenses associated with such examination.
This
Section
1.6
shall be
interpreted and applied consistently with the Americans with Disabilities Act,
the Family and Medical Leave Act and other applicable law.
1.8.
Good
Reason
.
Termination of the Executive’s employment by the Executive for a "
Good
Reason
"
shall
mean termination by the Executive because of: (a) a requirement to move the
Executive’s primary place of business more than twenty-five (25) miles from the
office the Executive works in on the date hereof (which termination occurs
prior
to such move) without the written consent of the Executive, (b) failure of
the
Company to pay any installment of the Executive’s Base Salary or Referral Fees
when such installment is due pursuant to this Agreement, which failure is not
cured within fifteen (15) days; (c) any other breach or breaches of this
Agreement by the Company, which breaches are, singularly or in the aggregate,
material, and which are not cured within thirty (30) days of written notice
of
such breach or breaches to the Company by the Executive; or (d) a reduction
by
the Company of the Executive’s Base Salary without the express written consent
of the Executive.
1.9.
Person
.
"
Person
"
means
an individual, a partnership, a corporation, a limited liability company, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, any other business entity and a governmental entity or any
department, agency or political subdivision thereof.
1.10.
Restrictive
Period
.
For
purposes of this Agreement the term “
Restrictive
Period
”
shall
have the following meanings.
1.10.1
If
the
Executive’s employment is terminated prior to the third (3
rd
)
anniversary of the Closing Date, then the Restrictive Period shall be the period
from the Termination Date through the third anniversary of the Closing Date
(or
if the Termination Date is within twelve (12) months of the third anniversary
of
the Closing Date), then for a period of one (1) year measured from the
Termination Date through the first anniversary of the Termination Date.
1.10.2
Subject
to Section 7.4 hereof, the Executive’s employment is terminated after the third
anniversary of the Closing Date, then the Restrictive Period shall be the twelve
month period measured from the Termination Date through the first anniversary
of
the Termination Date.
1.11.
Subsidiary
.
"
Subsidiary
"
means,
with respect to any Person, any corporation, limited liability company,
partnership, association or other business entity of which (a) if a corporation,
a majority of the total voting power of shares of stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof, or (b) if a limited liability company,
partnership, association or other business entity, a majority of the partnership
or other similar ownership interest thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more Subsidiaries of that
Person or a combination thereof. For purposes hereof, a Person or Persons shall
be deemed to have a majority ownership interest in a limited liability company,
partnership, association or other business entity if such Person or Persons
shall be allocated a majority of limited liability company, partnership,
association or other business entity gains or losses or shall be or control
any
managing director or general partner of such limited liability company,
partnership, association or other business entity.
2.
EMPLOYMENT
2.1.
Employment
Period
.
2.1.1
Expressly
conditioned upon the closing (the “
Closing
”)
under
the Purchase Agreement and effective as of the date of the Closing (the
“
Closing
Date
”),
the
Company hereby employs the Executive, and the Executive hereby accepts said
employment and agrees to render services to the Company, on the terms and
conditions set forth in this Agreement for the period (the "
Employment
Period
")
beginning on the Closing Date and ending when such period is terminated pursuant
to the terms hereof. Unless earlier terminated by either the Company or the
Executive as hereinafter provided, the Employment Period shall continue through
the third (3
rd
)
anniversary of the Closing Date ("
Expiration
Date
");
provided, however, that if this Agreement is renewed pursuant to
Section
2.1(b)
below,
then the “Expiration Date” for the then current “Renewal Term” (as hereinafter
defined) shall be the date that is last day of the one year period of that
Renewal Term). Notwithstanding anything to the contrary continued in this
Section
2.1(a)
,
if the
Closing under the Purchase Agreement does not occur, this Agreement shall be
null and void and of no force and effect.
2.1.2
This
Agreement shall be automatically renewed for an additional one year period
commencing at the expiration of the initial Employment Period or any subsequent
renewal term (each, a "
Renewal
Term
")
unless
the Company provides written notice of termination to the Executive not less
than sixty (60) days prior to the Expiration Date. Notwithstanding the foregoing
or anything else in this Agreement to the contrary, the Employment Period shall
immediately terminate prior to any Expiration Date (i) upon Executive’s death,
Disability or termination for a Good Reason or (ii) upon termination by the
Company for Cause; in all other circumstances, thirty (30) days' prior written
notice is required by either party to the other to terminate this
Agreement.
2.2.
Duties
.
During
the Employment Period, the Executive shall devote the necessary time, to the
best of his ability and discretion, to work with other senior managers and
the
Board to execute the strategic plan approved by the Board. The Executive shall
perform such services for the Company as is consistent with the Executive's
position (subject to the power and authority of the Board to expand or limit
such services and to overrule actions of officers of the Company) and as
directed, from time to time, by the Board. The Executive’s initial title shall
be Chairman of the Board of Directors. During the Employment Period the
Executive shall report to the Board, and Executive may use such titles as
assigned and approved by the Board. During the Employment Period, the Executive
may be employed or involved in other business activities for gain, profit or
other pecuniary advantages so long as such activities do not interfere with
the
performance of his duties and responsibilities to the Company as provided
hereunder or violate any of the terms of this or any other agreement entered
into with the Company.
2.3.
Insurance
.
The
Company may, at its discretion, apply for and procure in its own name and for
its own benefit life and/or disability insurance on the Executive in any amount
or amounts considered available. The Executive agrees to cooperate in any
medical or other examination, supply any information and execute and deliver
any
applications or other instruments in writing as may be reasonably necessary
to
obtain and constitute such insurance. The Executive hereby represents that
the
Executive has no reason to believe that the Executive's life is not insurable
at
rates now prevailing for a healthy person of the Executive's gender and
age.
2.4.
Corporate
Opportunity
.
The
Executive agrees that, unless approved by the Board, he will not take personal
advantage of any business opportunities which arise during his employment with
the Company and which may be of benefit to the Company. All material facts
regarding such opportunities must be promptly reported to the Board for
consideration by the Company.
3.
COMPENSATION
AND BENEFITS
3.1.
Base
Salary
.
During
the Employment Period, the Company shall pay the Executive an initial base
salary of Two Hundred Thousand Dollars ($200,000.00) per year ("
Base
Salary
")
paid
in approximately equal installments bi-weekly. The Company will review the
Executive’s Base Salary on December 31 of each year of the Employment Period in
order to determine what Base Salary adjustments, if any, shall be made, subject
to an annual minimum increase of five percent (5%), but in no event may the
Executive's Base Salary be reduced below that paid in the preceding
year.
3.2.
Annual
Bonus
.
For
calendar year 2006 (ending on or about December 31, 2006) and for each
other calendar year that begins during the Employment Period (each such calendar
year, a "
Bonus
Year
"),
the
Executive shall be eligible to receive a bonus in an amount and on such terms
as
are established by the Company's Board up to fifty percent (50%) of the Base
Salary (each, a "
Bonus
")
in
accordance with the bonus plan or formula applicable to the Executive. The
2006
Bonus shall be prorated to reflect that the 2006 Bonus Year is a partial year
commencing on the Closing Date and ending on December 31, 2006. In
addition, the Executive shall be eligible for any other bonus as the Board
may
determine in its sole discretion. Any Bonus for an applicable calendar year,
or
portion thereof, shall be paid to the Executive no later than the conclusion
of
the first calendar quarter following each calendar year.
3.3.
Vacation
and Benefits
.
The
Executive shall continue to receive vacation, health insurance and other
employee benefits as the Company makes available to other executives, as may
exist at any particular time and from time to time during the Executive’s
employment.
3.4.
Withholding
.
All
payments required to be made by the Company hereunder to the Executive shall
be
subject to the withholding of such amounts, if any, relating to tax and other
payroll deductions as the Company may reasonably determine should be withheld
pursuant to any applicable law or regulation.
3.5.
Policies,
Procedures & Benefit Plans
.
Except
as otherwise provided herein, the Executive’s employment shall be subject to the
policies and procedures which apply generally to the Company’s employees as the
same may be interpreted, adopted, revised or deleted from time to time, during
the Employment Period, by the Board in its sole discretion. The Executive agrees
to comply with such policies and procedures in all material respects. During
the
Employment Period, the Executive shall be entitled to participate in any Company
benefit plans on the same basis as other executive level employees of the
Company. The Board reserves the right to change, alter, or terminate benefits,
plans and carriers in its sole direction. All matters of eligibility for
coverage or benefits under any health, hospitalization, life, disability, or
other insurance plan, program or policy shall be determined in accordance with
the provisions of the plan, program, or policy; the Company shall not be liable
to the Executive, the Executive’s family, heirs, executors, or beneficiaries,
for any payment payable or claimed to be payable under any such benefit plan,
program, or policy. Provided that the Executive can be insured at standard
rates, the Company shall provide the Executive a $1,000,000 life insurance
policy with a reputable and responsible insurance company acceptable to the
Company and the Executive.
3.6.
Referral
Fee.
If,
during the term of this Agreement, Executive identifies a potential new client
for the Company (other than the federal government, or any agency or subdivision
thereof), he shall promptly notify the Company in writing specifying the name
of
the target, the extent of his contact and the date upon which he has identified
the potential client. Upon receipt of such notification, the Company will
promptly acknowledge receipt of the notification and either (a) confirm to
Executive that he has identified a potential new client (each an “
Acknowledged
New Target
”),
or
(b) if the Company has independently of the Executive already identified such
potential client, it will advise Executive and give him the date of the
Company's prior contact and the nature and extent thereof. As to each
Acknowledged New Target, the Executive will cooperate with the Company in
broadening contact and establishing a dialogue. Any contracts that are entered
into between the Company and an Acknowledged New Target during (i) the term
of
this Agreement, or (ii) within six (6) months after the Expiration Date, or
if
sooner terminated, the Termination Date, shall hereinafter be referred to
individually as a “
Referred
Contract
”
and
collectively as the “
Referred
Contracts
.”
Contracts entered into with an Acknowledged New Target more than six (6) months
after the Expiration Date (or Termination Date, as applicable) shall not be
deemed to be Referred Contracts. The Executive shall not identify potential
clients on a blanket basis, but shall only identify clients with which he has
made specific contact and which appear to be viable prospects for new
business.
3.6.1
For
each
Referred Contract the Company will pay Executive a referral fee equal to five
percent (5%) of the “Gross Profits” (hereinafter defined) earned by the Company
in each fiscal year (for each Referred Contract the “
Referral
Fee
”
and
for
all of the Referred Contracts the “
Referral
Fees
”).
3.6.2
For
purposes of this Section 3.6, the following terms shall have the following
meanings:
(i)
“
Gross
Profits
”
with
respect to a Referred Contract shall mean the “Gross Revenues” with respect to
that Referred Contract (as defined below) less Cost of Goods/Services Sold
with
respect to that Referred Contract (as defined below).
(ii)
“
Gross
Revenues
”
with
respect to any Referred Contract shall mean all revenue derived by the Company
under that Referred Contract from the rendering of services and the sales of
goods.
(iii)
“
Cost
of Goods/Serviced Sold
”
shall
mean with respect to each Referred Contract the direct costs of the Company
incurred by the Company in connection with generating the Gross Revenues which
costs shall include, but not be limited to (A) the labor and expense costs
of
the Company’s employees and consultants (including allocable administrative
costs); (B) direct vendor or supplier costs and other costs of goods, used
or
incorporated in or otherwise delivered to the customer under the Referred
Contract (including shipping costs) and (C) the costs of services rendered
by
third-party contractors.
3.6.3
The
determination of Gross Profits, Gross Revenues and Cost of Goods/Services Sold
with respect to each Referred Contract shall be made by the Company’s senior
financial executive using generally accepted accounting principles applied
on
the accrual basis of accounting and a basis consistent with the manner in which
the Company’s books and records are maintained.
3.6.4
The
Referral Fee due with respect to each Referred Contract shall be calculated
annually, based on the Company’s fiscal year and in connection with the
preparation of the Company’s audited financials. Not later than ten (10) days
after the release of the Company’s audited financials for the immediately
preceding fiscal year the Company’s senior financial executive shall provide
Executive with a statement (each a “
Referral
Fee Statement
”)
setting forth the calculation of the Referral Fees attributable to the Company’s
immediately preceding fiscal year in such reasonable detail as to permit
Executive to review and confirm the accuracy of such calculations. The Company
shall also provide Executive with reasonable access, subject to appropriate
confidentiality restrictions, to books and records appropriate to enable Seller
to review and verify such calculations. Executive shall have fifteen (15) days
following delivery of a Referral Fee Statement (each a “
Disagreement
Notice Period
”)
to
disagree with Referral Fee Statement by written notice to the Company setting
forth in reasonable detail the amount and nature of the disagreement (each
a
“
Notice
of Disagreement
”).
If
the Company does not receive a Notice of Disagreement from the Executive within
the Disagreement Notice Period, the Executive shall be conclusively presumed
to
agree with the Referral Fee Statement and the Company shall promptly pay to
the
Executive the Referral Fees shown to be due on the Referral Fee Statement.
If
the Company receives a Notice of Disagreement from the Executive within the
Disagreement Notice Period and if the Company and the Executive are unable
to
mutually agree upon a settlement of the disagreement within thirty (30) days
after the delivery of the Notice of Disagreement to the Company, then the
dispute shall be resolved pursuant to Section 9.
4.
SUPPORT
AND EXPENSES
4.1.
Office
.
During
the Employment Period, the Company shall provide the Executive with
an
office
allowance of Three Thousand Dollars ($3,000) per month
.
4.2.
Expenses
.
During
the Employment Period, including following any Date of Termination for
appropriate expenses incurred on or prior to the Date of Termination, the
Company shall reimburse the Executive promptly or otherwise provide for or
pay
for all pre-approved reasonable expenses incurred by the Executive in
furtherance of, or in connection with, the business of the Company or its
Subsidiaries, consistent with the Company’s policies in effect from time to time
with respect to travel, entertainment and other business expenses, subject
to
such reasonable documentation and other limitations as may be established from
time to time by the Board, including against presentation of vouchers or
receipts therefor.
5.
TERMINATION
5.1.
Termination
Due to Death or Disability, For Cause or By the Executive
.
If the
Employment Period is terminated (a) by reason of the Executive’s death or
Disability; (b) by the Company for Cause; or (c) by the Executive (other than
for a Good Reason);
then
the
Executive shall only be entitled to receive (i) the Executive’s Base Salary and
the reimbursement of any applicable expenses pursuant to
Section
4.2
through
the Date of Termination, and (ii) the Referral Fees as and when payable pursuant
to the Section 3.6; provided that the Expiration Date for purposes of
calculating the Referred Contracts and the Referral Fees shall be the
Termination Date rather than the Expiration Date. No Person shall be entitled
hereunder to participate in any employee benefit plan after the Date of
Termination if the Employment Period is terminated in connection with this
Section
5.1
,
except
as otherwise expressly required by applicable law (i.e., COBRA) and
provided
that
nothing herein shall be interpreted to limit the Executive’s conversion rights,
if any, under any of the Company’s employee benefit plans.
5.2.
Termination
by the Company Other Than for Death, Disability, or Cause or by the Executive
for a Good Reason
.
In
addition to the payment to the Executive of the Executive's Base Salary and
the
reimbursement of any applicable expenses pursuant to
Section
4.2
through
the Date of Termination, if (a) the Employment Period is terminated (i) by
the
Company for reasons other than death, Disability, or Cause, or (ii) by the
Executive for a Good Reason, or (iii) in accordance with the terms of
Section
2.1(b)
hereof
(provided the Company provides the requisite notice to the Executive to
terminate prior to any Expiration Date); and (b) the Executive executes a
general release in the form attached hereto as
Exhibit
A
(the
"
Release
")
on or
before the effective Date of Termination; and (c) the Executive has not breached
the terms of the “Assignment Agreement” (as defined below);
then
the
Company shall pay the Executive an amount equal to the Executive’s Base Salary
(at the rate in effect at the Date of Termination) for a period commencing
on
the Date of Termination and on the Expiration Date;
provided,
however
,
that if
the Termination Date is within twenty four (24) months of the Expiration Date,
then the Company shall pay the Executive an amount equal to the Executive’s Base
Salary (at the rate effective as of the Termination Date), for a period
commencing on the Termination Date and ending on the second (2
nd
)
anniversary of the Termination Date. Any payment under this
Section
5.2
shall be
made over time as though the Executive continued to be employed by the Company.
If the Executive elects and remains eligible for health coverage pursuant to
Section 4980B of the Internal Revenue Code of 1986, as amended ("
COBRA
")
(and
subject to withholding pursuant to
Section
3.5
above);
then
commencing
within
fifteen (15) business days following the date on which the Release becomes
effective pursuant to its terms, the Company will, for a period commencing
on
the Date of Termination and ending twelve (12) months from the Date of
Termination, pay a percentage of the premium for such COBRA health coverage
equal to the percentage of the premium for health insurance coverage paid by
the
Company on the Date of Termination. The Executive shall not be entitled to
any
other salary or compensation after termination of the Employment Period (other
than as set forth in this
Section
5.2
and
Section
5.3
)
and no
Person shall be entitled hereunder to participate in any employee benefit plan
after the Date of Termination if the Employment Period is terminated in
connection with this
Section
5.2
,
except
as otherwise specifically provided hereunder or as required by applicable law
(i.e., COBRA) and
provided
that
nothing herein shall be interpreted to limit the Executive’s conversion rights,
if any, under any of the Company’s employee benefit plans. In furtherance of and
not in limitation of the foregoing, the Executive may only be terminated by
the
affirmative vote of a majority of the whole Board (excluding the Executive
if he
is a member of the Board).
5.3.
Cooperation
with Company After Termination of Employment
.
For
a
period of six (6) months following termination of the Employment Period for
any
reason, as such period may be extended with the consent of the Executive, the
Executive shall fully cooperate with the Company in all matters relating to
the
winding up of pending work on behalf of the Company including, but not limited
to, any litigation in which the Company is involved, and the orderly transfer
of
any such pending work to other executives of the Company as may be designated
by
the Company. The Executive shall be compensated for any time spent pursuant
to
this
Section
5.3
at the
specific request of the Company at a
per
diem
amount
based upon the Executive's Base Salary at the Date of Termination.
5.4.
Termination
by Mutual Consent
.
Notwithstanding any of the foregoing provisions of this
Section
5
,
if at
any time during the course of this Agreement the parties by mutual consent
decide to terminate it, they shall do so by separate agreement setting forth
the
terms and conditions of such termination.
6.
INVENTION,
ASSIGNMENT, NON-COMPETE AND
CONFIDENTIALITY
AGREEMENT
6.1.
The
parties hereto have entered into an Invention, Assignment, and Confidentiality
Agreement attached hereto as
Exhibit
B
(the
"
Assignment
Agreement
"),
which
may be amended by the parties from time to time pursuant to the terms thereof.
The provisions of the Assignment Agreement are intended by the parties to
survive and shall survive termination or expiration of the Employment Period
and
this Agreement.
7.
|
NON-SOLICITATION
CUSTOMERS OR EMPLOYEES;
NON-COMPETITION
|
7.1.
Covenant
Not-to-Solicit Customers.
Subject
to
Section
7.4
below,
during Executive's employment with the Company through the applicable
Restrictive Period, the Executive shall not directly or indirectly, individually
or on behalf of any other person or entity, whether as principal, agent,
stockholder, employee, consultant, representative or in any other capacity,
contact any person or entity, which:
7.1.1
is
a
customer or client of the Company or any of its subsidiaries as of the
Termination Date; or
7.1.2
has
been
a customer or client of the Company or any of its subsidiaries at any time
within two (2) years prior to the Termination Date; or
7.1.3
is
a
prospective customer or client that the Company or any of its subsidiaries
is
actively soliciting as of the Termination Date (for the purpose of selling
products or services similar to any of the products and services offered for
sale by the Company as of the date the Executive's employment
terminates).
7.2.
Covenant
Not-to-Solicit Employees.
Subject
to
Section
7.4
below,
during Executive's employment with the Company and from the Termination Date
through the applicable Restrictive Period , the Executive shall not directly
or
indirectly, individually or on behalf of any other person or entity, whether
as
principal, agent, stockholder, employee, consultant, representative or in any
other capacity:
7.2.1
recruit,
solicit or encourage any person to leave the employ of the Company or any of
its
subsidiaries; or
7.2.2
hire
any
employee of the Company or any of its subsidiaries as a regular employee,
consultant, independent contractor or otherwise.
7.3.
Non-Competition.
The
Executive recognizes and acknowledges the competitive and proprietary nature
of
the business operations of the Company and its subsidiaries. Subject to
Section
7.4
below,
during the Executive’s employment with the Company and for the applicable
Restrictive Period, the Executive shall not, without the prior written consent
of the Company, for himself or on behalf of any other person or entity, directly
or indirectly, whether as principal, agent, stockholder, employee, consultant,
representative or in any other capacity, own, manage, operate or control, or
be
concerned, connected or employed by, or otherwise associate in any manner with,
engage in or have a financial interest in any business that is involved in
planning, designing, building and maintaining specialized data rooms, server
rooms, data centers and network facilities as to which the Company offers
expertise, except that nothing contained herein shall preclude the Executive
from purchasing or owning stock in any such competitive business if such stock
is publicly traded, and provided that his holdings do not exceed one percent
(1%) of the issued and outstanding capital stock of such business.
7.4.
Reduction
and Extension of Restrictions.
7.4.1
Notwithstanding
contained in
Sections
7.1, 7.2 and 7.3
above
the provisions of
Sections
7.1, 7.2 and 7.3
above
shall only apply to terminations made pursuant to
Section
5.1
and
shall not apply with respect to terminations made pursuant to
Section
5.2
.
7.4.2
The
Company at Company’s option, by written notice delivered to Executive not less
than thirty (30) days prior to the expiration of the then current, applicable
Restrictive Period, may extend the Restrictive Period (as previously extended
under this Section 7.4(b)) for an additional twelve (12) months, provided that
Company pays to Executive during the extended Restrictive Period an amount
equal
to the Executive’s Base Salary (at the rate effective as of the applicable
Termination Date and over time and in the manner Executive would have received
these payments had he continued to be employed by the Company).
7.5.
Non-Disparagement.
The
Executive agrees not to make any public statement, or engage in any conduct,
that is disparaging to the Company, or any of its employees, officers, directors
or shareholders, including, but not limited to, any statement that disparages
the products, services, finances, financial condition, capabilities or other
aspects of the business of the Company. Notwithstanding any term to the contrary
herein, the Executive shall not be in breach of this
Section
7
for the
making of any truthful statements under oath.
7.6.
Reasonableness
of Restrictions.
The
Executive has carefully read and considered the provisions of this
Section
7
,
and,
having done so, agrees (a) that the restrictions set forth herein are
reasonable, in terms of scope, duration, geographic area, and otherwise, (b)
that the protection afforded to the Company hereunder is necessary to protect
its legitimate business interests, (c) that the agreement to observe such
restrictions form a material part of the consideration for this Agreement and
the Executive's employment by the Company and (d) that upon the termination
of
the Executive’s employment with the Company for any reason, he will be able to
earn a livelihood without violating the foregoing restrictions. In the event
that, notwithstanding the foregoing, any of the provisions of this
Section
7
shall be
held to be invalid or unenforceable, the remaining provisions thereof shall
nevertheless continue to be valid and enforceable as though the invalid or
unenforceable parts had not been included therein. In the event that any
provision of this Section relating to the time period and/or the areas of
restriction and/or related aspects shall be declared by a court of competent
jurisdiction to exceed the maximum restrictiveness such court deems reasonable
and enforceable, the time period and/or areas of restriction and/or related
aspects deemed reasonable and enforceable by the court shall become and
thereafter be the maximum restriction in such regard, and the restriction shall
remain enforceable to the fullest extent deemed reasonable by such
court.
8.
EXECUTIVE’S
REPRESENTATIONS AND WARRANTIES
8.1.
Other
Agreements
.
The
Executive hereby represents and warrants to the Company that the Executive
is
not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any other Person.
8.2.
Enforceability
.
The
Executive hereby represents and warrants to the Company that upon the execution
and delivery of this Agreement by the Company, this Agreement shall be the
valid
and binding obligation of the Executive, enforceable in accordance with its
terms.
8.3.
No
Breach; No Conflict of Interest
.
The
Executive hereby represents and warrants to the Company that (a) the execution,
delivery and performance of this Agreement by the Executive do not and shall
not
conflict with, breach, violate or cause a default under any contract, agreement,
instrument, order, judgment or decree to which the Executive is a party or
by
which the Executive is bound and (b) the Executive is not, to the best of the
Executive's knowledge and belief, involved in any situation that might create,
or appear to create, a conflict of interest with loyalty to or duties for the
Company.
8.4.
Notification
of Materials or Documents from Other Employers
.
The
Executive hereby represents and warrants to the Company that the Executive
has
not brought and will not bring to the Company or use in the performance of
responsibilities at the Company any materials or documents of a former employer
or client that are not generally available to the public, unless the Executive
has obtained express written authorization from the former employer or client
and the Company for their possession and use.
8.5.
Notification
of Other Post-Employment Obligations
.
The
Executive also understands that, as part of the Executive's employment with
the
Company, the Executive is not to breach any obligation of confidentiality that
the Executive has to former employers or
clients,
and agrees to honor all such obligations to former employers or clients during
employment with the Company.
8.6.
Consultation
with Counsel
.
The
Executive hereby acknowledges and represents that the Executive has consulted
with independent legal counsel regarding the Executive’s rights and obligations
under this Agreement and that the Executive fully understands the terms and
conditions contained herein.
9.
ARBITRATION
9.1.
The
Executive and the Company mutually consent to the resolution by arbitration
of
certain claims or controversies (collectively, "
Claims
")
arising out of or relating to the Executive's employment or termination of
employment under this Agreement that either party may have against the other,
including the Company’s officers, shareholders, directors, employees, or benefit
plans, the benefit plans' sponsors, fiduciaries, administrators, or affiliates;
and all successors and assigns of any of them, or agents in their capacity
as
such or otherwise. The Claims covered by this Agreement shall include claims
for
(a) wages or other compensation due; (b) breach of any contract or covenant
(express or implied); tort claims; (c) discrimination (including but not limited
to race, sex, religion, national origin, age, disability, citizenship, marital
status, or any other basis protected by any applicable federal, state or local
law); (d) payment of wages; (e) benefits (except where an employee benefit
or
pension plan specifies that its claims procedure shall use an arbitration
procedure different from this one); and (f) violation of any federal, state,
or
local law, statute, regulation, or ordinance, or recognized under common law.
The Claims not covered by this Agreement shall include claims (g) for workers'
compensation or unemployment compensation benefits; (h) brought pursuant to
Sections
6 or 10
of this Agreement and breach of duty of loyalty; and (i) unrelated to the
Employee's employment with the Company.
9.2.
The
arbitration shall be governed by the procedures of the American Arbitration
Association ("
AAA
"),
in
accordance with its then-current Model Employment Arbitration Procedures and
shall take place in the Washington-Metropolitan area.
9.3.
If
the
parties to this Agreement become parties to an arbitration proceeding or
litigation arising from or relating to this Agreement, the non-prevailing party
shall pay the reasonable attorneys’ fees and costs incurred by the prevailing
party in such arbitration or litigation.
10.
GENERAL
PROVISIONS
10.1.
Assignment
.
The
Company may assign this Agreement and its rights and obligations hereunder
in
whole, but not in part, to any Company or other entity with or into which the
Company or may hereafter merge or consolidate or to which the Company may
transfer all or substantially all of its assets, if in any such case said
company or other entity shall by operation of law or expressly in writing assume
all obligations of the Company hereunder as fully as if it had been originally
made a party hereto, but may not otherwise assign this Agreement or its rights
and obligations hereunder. The Executive may not assign or transfer this
Agreement or any rights or obligations hereunder without the prior written
consent of the Company. Notwithstanding such assignment, the Company shall
remain a guarantor of the performance of all obligations owed by the Company
to
the Executive under this Agreement.
10.2.
Notice
.
For the
purposes of this Agreement, notices and all other communications provided for
in
this Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by certified or registered mail, return receipt
requested, postage prepaid, or Federal Express, signature required, if to the
Company, addressed to its corporate headquarters at the time notice is given,
"Attention Board of Directors"; if to the Executive, addressed to his home
address as listed in the Company’s records at the time notice is
given.
10.3.
Amendment
and Waiver
.
No
provision of this Agreement may be amended or waived unless such amendment
or
waiver is in writing and signed by each of the parties hereto.
10.4.
Non-Waiver
of Breach
.
No
failure by either party to declare a default due to any breach of any obligation
under this Agreement by the other, nor failure by either party to act quickly
with regard thereto, shall be considered to be a waiver of any such obligation,
or of any future breach.
10.5.
Severability
.
In the
event that any provision or portion of this Agreement shall be determined to
be
invalid or unenforceable for any reason, the remaining provisions of this
Agreement shall be unaffected thereby and shall remain in full force and
effect.
10.6.
Governing
Law
.
To the
extent not preempted by Federal law, the validity and effect of this Agreement
and the rights and obligations of the parties hereto shall be construed and
determined in accordance with the law of the State of Maryland, without giving
effect to any choice of law or conflict of law rules or provisions (whether
of
the State of Maryland or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of
Maryland.
10.7.
Entire
Agreement
.
This
Agreement constitutes the entire agreement and understanding of the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings relating to such subject matter, whether oral
or
written, including without limitation any prior or existing employment agreement
with the Company which shall be null and void and of no further force or effect.
10.8.
Binding
Effect
.
This
Agreement shall be binding upon and shall inure to the benefit of the
transferees, successors and assigns of the Company, including without limitation
any company with which the Company may merge or consolidate.
10.9.
Headings
.
Numbers
and titles to Sections hereof are for information purposes only and, where
inconsistent with the text, are to be disregarded.
10.10.
Survival
.
Section
1
and
Sections
5
through
10
shall
survive and continue in full force in accordance with their terms
notwithstanding the expiration or termination of the Employment
Period.
10.11.
No
Strict Construction
.
The
language used in this Agreement shall be deemed to be the language chosen by
the
parties hereto to express their mutual intent, and no rule of strict
construction shall be applied against any party.
10.12.
Counterparts
.
This
Agreement may be executed in separate counterparts (including by means of
facsimile), each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
10.13.
Indemnification
of the Executive.
The
Company shall, to the extent permitted by the Bylaws of the Company, in a manner
as applied to other officers of the Company, indemnify, protect and hold the
Executive harmless from and against any expenses, including reasonable
attorneys' fees and expenses, claims, judgments, fines, settlements and other
amounts actually and reasonably incurred in connection with any proceeding
arising out of, or related to, the Executive's employment by the Company or
any
of its Subsidiaries. The Company shall cause the Executive to be covered under
directors and officers liability insurance policies in reasonable amounts in
accordance with the Company's standard corporate policies.
10.14.
Injunctive
Relief.
The
Executive represents and acknowledges that, in light of the payments to be
made
by the Company to the Executive hereunder and for other good and valid reasons,
as a result of the restrictions stated in the Assignment Agreement and the
restrictions referenced in
Sections 7
hereof,
the Company and its affiliated companies would sustain irreparable harm and,
therefore, in addition to any other remedies which the Company may have under
this Agreement or otherwise, the Company shall be entitled to apply to any
court
of competent jurisdiction for an injunction restraining the Executive from
committing or continuing any such violation of this Agreement, and the Executive
shall not object to such application.
[SIGNATURES
ON FOLLOWING PAGES]
IN
WITNESS WHEREOF,
the
parties hereto have caused this Executive Employment Agreement to be duly
executed on the date and year first written above.
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THE
COMPANY:
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FORTRESS
AMERICA ACQUISITION CORPORATION
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By:/s/
Harvey L Weiss
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Name:
Harvey L. Weiss
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Title:
Chairman
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THE EXECUTIVE:
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By:/s/
Harvey L. Weiss
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Name:
Harvey L.
Weiss
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EXHIBIT
A
SEPARATION
FROM EMPLOYMENT AGREEMENT AND RELEASE
1.
This
agreement is between the Executive, Harvey L. Weiss, the Executive’s spouse,
family, agents and attorneys) (jointly, the "Executive") and Fortress
International Group, Inc. (the "Company"), its subsidiaries, affiliated
entities, direct or indirect owners and its and their respective officers,
directors, employees, agents, predecessors, successors, purchasers, assigns,
representatives, fiduciaries, and insurers (jointly, the "Released
Parties").
2.
If
the
Executive signs this agreement and does not revoke it, the Executive will
receive the applicable severance payments and benefits set forth in
Section
5
of the
Executive’s Executive Employment Agreement, dated __________ _____, 2006 (the
"Employment Agreement").
3.
The
Executive, deeming this Agreement to be fair, reasonable, and equitable, and
intending to be legally bound hereby, agrees to and hereby does, forever and
irrevocably fully release and discharge the Released Parties from any and all
grievances, liens, suits, judgments, claims, demands, debts, defenses, actions
or causes of action, obligations, damages (whether compensatory, punitive or
otherwise), and liabilities whatsoever which the Executive now has, has had,
or
may have, whether the same be known or unknown, vested or contingent, at law,
in
equity, or mixed, in any way arising out of or relating in any way to any
matter, act, occurrence, or transaction before the date of this General Release
Agreement, including but not limited to his employment with Company, the
Executive's separation from Company and the Executive's employment agreement
with the Company (collectively, "Claims").
This
is a General Release.
The
Executive expressly acknowledges that this General Release includes, but is
not
limited to, the Executive's release of any tort and contract claims, arbitration
claims, claims under any local, state or federal wage and hour law, wage
collection law or labor relations law, and claims of age, race, sex, religion,
disability, national origin, ancestry, citizenship, retaliation or any other
claim of employment discrimination, under the Civil Rights Acts of 1964 and
1991
as amended (42 U.S.C. §§ 2000e
et
seq
.),
the
Age Discrimination In Employment Act (29 U.S.C. §§ 621
et
seq
.),
the
Americans With Disabilities Act (42 U.S.C. §§ 12101
et
seq
.),
the
Rehabilitation Act of 1973 (29 U.S.C. §§ 701
et
seq
.),
the
Family and Medical Leave Act (29 U.S.C. §§ 2601
et
seq
.),
the
Fair Labor Standards Act (29 U.S.C. §§ 201
et
seq
.),
and
any other law prohibiting employment discrimination or relating to employment.
Also, the Executive understands that this General Release Agreement is not
an
admission of liability under any statute or otherwise by the Released Parties,
and that the Released Parties do not admit but deny any violation of his legal
rights, and that he shall not be regarded as a prevailing party for any purpose,
including but not limited to, determining responsibility for or entitlement
to
attorneys’ fees, under any statute or otherwise. The Executive agrees that in
the event the Executive brings a Claim in which the Executive seeks damages
or
other relief from any Released Party, or in the event the Executive seeks to
recover against any Released Party in any Claim brought by a governmental agency
on the Executive’s behalf, this Agreement shall serve as a complete defense to
such Claims.
4.
The
claims and causes of action the Executive is releasing and waiving include,
but
are not limited to, any and all claims and causes of action that any Released
Party:
·
has
violated its personnel policies, handbooks, contracts of employment, or
covenants of good faith and fair dealing between the Executive and the
Company;
·
has
discriminated against the Executive on the basis of age, race, color, sex
(including sexual harassment), national origin, ancestry, disability, religion,
sexual orientation, marital status, parental status, source of income,
entitlement to benefits, any union activities or other protected category in
violation of any local, state or federal law, constitution, ordinance, or
regulation, including but not limited to: the Age Discrimination in Employment
Act, as amended; Title VII of the Civil Rights Act of 1964, as amended; 42
U.S.C. § 1981, as amended; the Equal Pay Act; the Americans With
Disabilities Act; the Family Medical Leave Act; the Employee Retirement Income
Security Act; Section 510; and the National Labor Relations Act.
·
has
violated any statute, public policy or common law (including but not limited
to
claims for retaliatory discharge; negligent hiring, retention or supervision;
defamation; intentional or negligent infliction of emotional distress and/or
mental anguish; intentional interference with contract; negligence; and/or
detrimental reliance).
5.
Excluded
from this Agreement are any claims which cannot be waived by law. The Executive
is waiving, however, the Executive’s right to any monetary recovery should any
agency, such as the EEOC, pursue any claims on the Executive’s
behalf.
6.
The
Executive also agrees that the Executive has been paid for all hours worked,
including any overtime bonus or other incentive compensation, has submitted
all
invoices and expense reports, and has
not
suffered any on-the-job injury for which the Executive has not already filed
a
claim.
7.
The
Executive agrees that every term of this Agreement, including, but not limited
to, the fact that an agreement has been reached and the amount paid, shall
be
treated by the Executive as strictly confidential, and expressly covenants
not
to display, publish, disseminate, or disclose the terms of this Agreement to
any
person or entity other than the Executive’s immediate family, the Executive’s
attorney(s) (for purposes of seeking advice concerning this agreement only)
and
the Employee’s accountant(s) (for purposes of seeking tax advice only), unless
compelled to make disclosure by lawful court order or subpoena.
8.
The
Executive and the Company have entered into an Assignment of Invention,
Non-Disclosure, Non-Solicitation and Non-Competition Agreement ("NDA
Agreement"). The Executive reaffirms his obligation to comply with all of the
post termination obligations in the NDA Agreement.
9.
The
Executive also agrees that:
·
The
Executive is entering into this agreement knowingly and
voluntarily;
·
The
Executive has been advised by the Company to consult an attorney;
·
The
Executive has been given the right to take
[21/45]
days
(the "Consideration Period") to consider this agreement; provided, however
the
Employee and the Company hereby agree that if there is a dispute as to the
payment of wages such that the Executive is unable to make the representation
set forth in
Section
6
as to
payment for hours worked (including any overtime bonus or other incentive
compensation), the Consideration Period shall terminate on the later of the
natural expiration of the Consideration Period or the date that is one day
after
the resolution of all claims regarding wages;
·
But
for
the Executive's execution of this agreement, the Executive would not otherwise
be entitled to the payments described in paragraph 2;
·
if
any
part of this agreement is found to be illegal or invalid, the rest of the
agreement will be enforceable; and
·
this
agreement has been individually negotiated between the Executive and the Company
and is not part of a group exit incentive or other group employment termination
program. The Executive and the Company agree that the sole reason for the
termination of the Executive’s employment is a business reorganization and
reduction in force of the Company’s [INSERT DEPARTMENT OR JOB CLASSIFICATION]
which is occurring on [INSERT DATE]. All individuals who are being terminated
in
the [INSERT DATE] reduction in force will be eligible for benefits based upon
their execution of a release identical to this release. The Executive
acknowledges by signing this Agreement that the Executive understands that
the
Executive is eligible for the benefits which the Executive will receive
contingent upon the Executive executing this release, because the Executive
was
part of this reduction in force. As is more fully set forth in Attachment B,
this reduction in force will affect [NUMBER AFFECTED] other executives on
[DATE].
10.
After
the
Executive signs this agreement, the Executive will have 7 days to revoke it.
If
the Executive wants to revoke it, the Executive should deliver a written
revocation to __________ . If the Executive does not revoke it, the Executive
will receive the payment described in Paragraph 2.
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EMPLOYEE:
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COMPANY:
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FORTRESS INTERNATIONAL GROUP,
INC.
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____________________________
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______________________________
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[NAME AND TITLE]
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Date:
___________________________
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Date: ___________________________
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CONSIDERATION
PERIOD
I,
Harvey
L. Weiss understand that I have the right to take at least
[21/45]
days to
consider whether to sign this Separation From Employment and Release Agreement,
which I received on _________________, 2006. If I elect to sign this Agreement
before
[21/45]
days
have passed, I understand I am to sign and date below this paragraph to confirm
that I knowingly and voluntarily agree to waive the
[21/45]
-day
consideration period.
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___________________
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Executive Signature
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___________________
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Date
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ATTACHMENT
B
SCHEDULE
TO SEPARATION FROM EMPLOYMENT AGREEMENT AND RELEASE
On
[Date], the employment of the following individuals (identified by job title
and
age), who will the [sole] holders of their job title, will be terminated in
a
reduction in force:
The
employment of the following individuals (identified by age), who are the [sole]
holders of their job title, will not be terminated on [Date] in the reduction
in
force.
EXHIBIT
B
INVENTION
ASSIGNMENT, NON-COMPETE
AND
CONFIDENTIALITY AGREEMENT
The
following confirms an Invention Assignment, Non-Compete and Confidentiality
Agreement ("Agreement") between me and Fortress International Group, a Maryland
corporation (the "Company," which term includes the Company’s Affiliates,
subsidiaries and any assigns). The promises and commitments that I make in
this
Agreement are a material part of the Company’s consideration in my employment
relationship with the Company.
1.
I
understand and agree that my employment by the Company creates a duty of loyalty
and a relationship of confidence and trust between me and the Company with
respect to any information made known to me by the Company or by any client,
customer or vendor of the Company or other person who submits information to
the
Company, or which may be learned by me during the period of my
employment.
2.
I
recognize that the Company is continuously engaged in activities that the
Company regards as confidential, proprietary and/or legally protectable, which
activities are at least in part intended to further the interests of the Company
and to provide the Company with a competitive advantage. The Company possesses
and will, in the future, continue to possess information that has been or will
be created, discovered, developed or otherwise becomes known to the Company
(including information created by, discovered or developed by, or made known
to
me) during the period of or arising out of my employment by the Company. I
understand that various intellectual and other property rights have been
assigned or otherwise conveyed to the Company. All information concerning the
above described activities and information is collectively called
"Proprietary
Information" under this Agreement.
3.
By
way of
illustration, but not limitation, Proprietary Information includes: trade
secrets, processes, formulas, data and know-how; software programs,
improvements, and inventions; research and development plans, tools and
techniques; new product introduction plans, specifications, requirements
documents and strategies; manufacturing techniques, strategies and costs,
expenses, supplier information and lists and distribution information; terms
and
conditions in contracts of all kinds; marketing plans, strategies and service;
support strategies and procedures; development schedules; revenue forecasts;
computer programs; copyrightable material, employee salaries, employee
expertise, employee ability levels, training programs and procedures, copies
of
memos or presentations incorporating confidential information which I may have
in my files (including those which I authored), patent applications and
disclosures and customer lists.
4.
In
consideration of my employment by the Company and the compensation received
by
me from the Company from time to time, I hereby agree as follows:
(a)
All
Proprietary Information shall be the sole property of the Company, and the
Company shall be the sole owner of all patents, copyrights, trademarks and
other
rights related to Proprietary Information. I hereby assign to the Company any
rights I may have or acquire in Proprietary Information. At all times, both
during and after my employment by the Company, I will keep in confidence and
trust all Proprietary Information, and I will not use or disclose any
Proprietary Information or anything related to it without written consent of
the
Company, except as may be necessary in the ordinary course of performing my
duties to the Company.
(b)
All
documents, records, apparatus, equipment and other physical property, whether
or
not pertaining to Proprietary Information, furnished to me by the Company or
produced by myself or others in connection with employment by the Company shall
be and remain the sole property of the Company, shall be used by me solely
for
the benefit of the Company and shall be returned to the Company immediately
as
and when requested by the Company. Even if the Company does not so request,
I
shall return and deliver all such property to the Company upon termination
of my
employment by me or by the Company for any reason. I will not take with me
any
such property or any form of copy or reproduction of such property upon my
termination.
(c)
I
will
promptly disclose to the Company, or any persons designated by it, all
improvements, inventions, formulas, ideas, processes, techniques, know-how
and
data, whether or not patentable, made or conceived or reduced to practice or
learned by me, either alone or jointly with others, during the period of my
employment (all said improvements, inventions, formulas, ideas, processes,
techniques, know-how and data shall be hereinafter collectively call
"Inventions").
(d)
I
agree
that all Inventions that I develop or have developed (in whole or in part,
either alone or jointly with others) and (i) use or have used equipment,
supplies, facilities or trade secret information of the Company, or (ii) use
or
have used the hours for which I am to be or was compensated by the Company,
or
(iii) which relate to the business of the Company or to its actual or
demonstrably anticipated research and development or (iv) which result, in
whole
or in part, from work performed by me for the Company shall be the sole property
of the Company and its assigns, and the Company and its assigns shall be the
sole owner of all patents, copyrights and other rights in connection therewith.
I hereby assign to the Company any rights I may have or acquire in such
Inventions. I further agree as to all such inventions and improvements to assist
the Company in every proper way (but at the Company’s expense) to obtain and
from time to time enforce patents, copyrights or other rights on said inventions
and improvements in any and all countries, and to that end I will execute all
documents in use for applying for and obtaining such patents and copyrights
thereon and enforcing same, as the Company may desire, together with any
assignments thereof to the Company or persons designated by it. My obligation
to
assist the Company in obtaining and enforcing patents, copyrights or other
rights for such inventions and improvements in any and all countries shall
continue beyond the termination of my employment, but the Company shall
compensate me at a reasonable rate after such termination for time actually
spent by me at the Company’s request on such assistance.
(e)
In
the
event that the Company is unable for any reason whatsoever to secure my
signature to any lawful and necessary document required to apply for or execute
any patent, copyright or other applications with respect to such inventions
and
improvements (including renewals, extensions, continuations, divisions or
continuations in part thereof), I hereby irrevocably designate and appoint
the
Company and its authorized officers and agents, as my agents and
attorneys-in-fact, this power of attorney being coupled with an interest, to
act
for and in my behalf and instead of me, to execute and file any such application
and to do all other lawfully permitted acts to further the prosecution and
issuance of patents, copyrights or other rights thereon with the same legal
force and effect as if executed by me.
(f)
As
a
matter of record, on
Attachment
A
,
I have
attached a complete list of all inventions or improvements relevant to the
subject matter of my employment by the Company which have been made or conceived
or first reduced to practice by me alone or jointly with others prior to my
employment with the Company that I desire to remove from the operation of this
Agreement, and I covenant that such list is complete. If no such list is signed
by me and attached to this Agreement, I represent and warrant that I have no
such inventions or improvements at the time of signing this Agreement, and
I
agree that I will make no claim against the Company with respect to any such
inventions or ideas.
(g)
I
represent that my performance of all the terms of this Agreement will not breach
any agreement to keep in confidence proprietary information acquired by me
in
confidence or in trust prior to my employment by the Company. I have not entered
into, and I agree I will not enter into, any agreement either written or oral
in
conflict with this Agreement.
(h)
I
acknowledge that the Company from time to time may be involved in government
projects of a classified nature. I further acknowledge that the Company from
time to time may have agreements with other persons or governmental agencies
which impose obligations or restrictions on the Company regarding inventions
made during the course of work thereunder or regarding the confidential nature
of such work or information disclosed in connection therewith. I agree to be
bound by all such obligations and restrictions and to take all action necessary
to discharge the obligations of the Company thereunder.
(i)
I
represent and warrant that execution of this Agreement, my employment with
the
Company and my performance of my proposed duties to the Company in the
development of its business have not and will not violate any obligations which
I may have to any former employer.
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(j)
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I
agree that at no time during my employment by the Company or thereafter
shall I make, or cause or assist any other person to make, any statement
or other communication to any third party which impugns or attacks,
or is
otherwise critical of, the reputation, business or character of the
Company or any of its Affiliates or any of their respective directors,
officers or employees.
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5.
This
Agreement shall be effective as of the first day of my employment by the
Company.
6.
This
Agreement may not be changed, modified, released, discharged, abandoned or
otherwise amended, in whole or in part, except by an instrument in writing,
signed by myself and a majority of the members of the
Board.
I
agree that any subsequent change or changes in my duties, salary or compensation
shall not affect the validity or scope of this Agreement.
7.
I
acknowledge receipt of this Agreement and agree that with respect to the subject
matter hereof it is my final, complete and exclusive agreement with the Company,
superseding any previous oral or written representations, understanding or
agreements with the Company or any officer or representative with respect to
the
subject matter herein.
8
.
In
the
event that any paragraph or provision of this Agreement shall be held to be
illegal or unenforceable, such paragraph or provision shall be modified to
the
extent necessary to give effect to the intent of the parties or, if necessary,
severed from this Agreement and the entire Agreement shall not fail on account
thereof, but shall otherwise remain in full force and effect.
9.
This
Agreement shall be construed in accordance with the laws of the State of
Maryland without regard to its choice of law principles.
10.
This
Agreement shall be binding upon me, my heirs, executors, assigns, and
administrators and shall inure to the benefit of the Company, its successors
and
assigns.
I
acknowledge that the foregoing restrictions contained in
Section
4
are
reasonable in all respects including the scope, duration and geographic
limitations. I agree that the restrictions are an appropriate means of
protecting the Company’s legitimate business interests, and no greater than
necessary to protect the Company’s interests. I acknowledge that these
restrictions will not unreasonably interfere with my ability to make a
living.
Dated:
__________ _____, 2006
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_______________________
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Executive Signature
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Harvey L.
Weiss
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Accepted
and Agreed to:
Fortress
International Group, Inc.
By:
_________________________
Name:
Title:
Date:
________________________
EXECUTIVE
CONSULTING AGREEMENT
EXECUTIVE
CONSULTING AGREEMENT, dated as of January 19, 2007 (this “
Agreement
”),
between WASHINGTON CAPITAL ADVISORS, INC. (“
Consultant
”)
and
FORTRESS AMERICA ACQUISITION CORPORATION, a Delaware corporation (the
“
Company
”).
RECITALS
WHEREAS,
by the terms of a Second Amended and Restated Membership Interest Purchase
Agreement (the “
Purchase
Agreement
”)
dated
July 31, 2006, by and among the Company, Thomas P. Rosato (“
Rosato
”),
Gerard Gallagher (“
Gallagher
”),
VTC,
LLC (“
VTC
”)
and
Vortech, LLC (“
Vortech
”),
the
Company has agreed to purchase from Rosato and Gallagher all of the outstanding
membership interests of VTC and Vortech.
WHEREAS,
the Company desires to obtain financial, acquisition, strategic, business and
consulting services from Consultant with respect to the management of the
Company and future acquisitions the Company may wish to undertake;
and
WHEREAS,
Consultant is in the business of providing such services and is willing to
provide such services to the Company in accordance with the terms and conditions
of this Agreement.
NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
agreements set forth in this Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Consultant and the Company agree as follows:
AGREEMENT
Section
1.
Engagement
.
Upon
the terms and subject to the conditions set forth in this Agreement, the Company
retains Consultant as a consultant to provide analysis, advice and other
financial, strategic, business, acquisition and consulting services including,
but not limited to, the identification and sourcing of capital to meet the
needs
of the Company (the “
Services
”).
Section
2.
Consultant’s
Duties and Obligations
.
Consultant agrees, during the term of this Agreement, to provide the Services
in
a professional manner and to provide such other consulting services as may
be
reasonably requested (upon reasonable prior notice) from time to time by the
Company in accordance with this Agreement, including, without limitation,
providing the services of representatives of Consultant.
Section
3.
Term
.
(a)
Expressly
conditioned upon the closing (the “
Closing
”)
under
the Purchase Agreement and effective as of the date of the Closing (the
“
Closing
Date
”),
the
Company hereby retains the Consultant and the Consultant hereby accepts
engagement as a consultant and agrees to render services to the Company, on
the
terms and conditions set forth in this Agreement for the period (the
"
Consulting
Period
")
beginning on the Closing Date and ending when such period is terminated pursuant
to the terms hereof. Unless earlier terminated by either the Company or the
Consultant as hereinafter provided, the Consulting Period shall continue through
the third (3rd) anniversary of the Closing Date ("
Expiration
Date
");
provided, however, that if this Agreement is renewed pursuant to Section 2.1(b)
below, then the “Expiration Date” for the then current “Renewal Term” (as
hereinafter defined) shall be the date that is last day of the one year period
of that Renewal Term). Notwithstanding anything to the contrary continued in
this Section 2.1(a), if the Closing under the Purchase Agreement does not occur,
this Agreement shall be null and void and of no force and effect.
(b)
This
Agreement shall be automatically renewed for an additional one year period
commencing at the expiration of the Initial Term or any subsequent renewal
term
(each, a "
Renewal
Term
")
unless
the Company provides written notice of termination to the Consultant not less
than sixty (60) days prior to the Expiration Date. Notwithstanding the foregoing
or anything else in this Agreement to the contrary, the Consulting Period shall
immediately terminate prior to any Expiration Date (i) upon termination by
Consultant for a “Good Reason” (as hereinafter defined); (ii) upon termination
by the Company for “Cause” (as hereinafter defined); (iii) by mutual agreement
of Consultant or the Company; and (iv) in all other circumstances, thirty (30)
days' prior written notice is required by either party to the other to terminate
this Agreement.
Section
4.
Compensation;
Expenses
.
(a)
Base
Fee
.
As
consideration for the provision of the Services, the Company agrees to pay
or to
cause its Subsidiaries to pay to Consultant, during the term of this Agreement,
the following fees:
(i)
During
the Consulting Period, the Company shall pay the Consultant a fee of Two Hundred
Thousand Dollars ($200,000.00) per year ("Base Fee") paid in approximately
equal
installments bi-weekly. The Company will review the Base Fee on December 31
of
each year of the Consulting Period in order to determine what Base Fee
adjustments, if any, shall be made, subject to an annual minimum increase of
five percent (5%), but in no event may the Base Fee be reduced below that paid
in the preceding year.
(ii)
For
calendar year 2006 (ending on or about December 31, 2006) and for each other
calendar year that begins during the Consulting Period (each such calendar
year,
a "Bonus Year"), the Consultant shall be eligible to receive a bonus in an
amount and on such terms as are established by the Company's Board up to fifty
percent (50%) of the Base Fee (each, a "Bonus") in accordance with the bonus
plan or formula applicable to the Consultant. The 2006 Bonus will be prorated
to
reflect that the 2006 Bonus Year is a partial year commencing on the Closing
Date and ending on December 31, 2006. In addition, Consultant shall be eligible
for any other bonus as the Board of Directors may determine in its sole
discretion. Any Bonus for an applicable calendar year, or portion thereof,
shall
be paid to the Consultant no later than the conclusion of the first calendar
quarter following each calendar year.
(b)
Referral
Fee
.
If,
during the term of this Agreement, Consultant identifies a potential new client
for the Company (other than the federal government, or any agency or subdivision
thereof), it shall promptly notify the Company in writing specifying the name
of
the target, the extent of its contact and the date upon which it has identified
the potential client. Upon receipt of such notification, the Company will
promptly acknowledge receipt of the notification and either (i) confirm to
Consultant that it has identified a potential new client (each an “
Acknowledged
New Target
”),
or
(ii) if the Company has independently of the Consultant already identified
such
potential client, it will advise Consultant and give it the date of the
Company's prior contact and the nature and extent thereof. As to each
Acknowledged New Target, the Consultant will cooperate with the Company in
broadening contact and establishing a dialogue. Any contracts that are entered
into between the Company and an Acknowledged New Target during (i) the term
of
this Agreement, or (ii) within six (6) months after the Expiration Date, or
if
sooner terminated, the Termination Date shall hereinafter be referred to
individually as a “
Referred
Contract
”
and
collectively as the “
Referred
Contracts
.”
Contracts entered into with an Acknowledged New Target more than six (6) months
after the Expiration Date (or Termination Date, as applicable) shall not be
deemed to be Referred Contracts. The Consultant shall not identify potential
clients on a blanket basis, but shall only identify clients with which he has
made specific contact and which appear to be viable prospects for new
business.
(i)
For
each
Referred Contract the Company will pay Consultant a referral fee equal to five
percent (5%) of the “Gross Profits” (hereinafter defined) earned by the Company
in each fiscal year (for each Referred Contract the “
Referral
Fee
”
and
for
all of the Referred Contracts the “
Referral
Fees
”).
(ii)
For
purposes of this Section 3.6, the following terms shall have the following
meanings:
(A)
“
Gross
Profits
”
with
respect to a Referred Contract shall mean the “Gross Revenues” with respect to
that Referred Contract (as defined below) less Cost of Goods/Services Sold
with
respect to that Referred Contract.
(B)
“
Gross
Revenues
”
with
respect to any Referred Contract shall mean all revenue derived by the Company
under that Referred Contract from the rendering of services and the sales of
goods.
(C)
“
Cost
of Goods/Serviced Sold
”
shall
mean with respect to each Referred Contract the direct costs of the Company
incurred by the Company in connection with generating the Gross Revenues which
costs shall include, but not be limited to (1) the labor and expense costs
of
the Company’s employees and consultants (including allocable administrative
costs); (2) direct vendor or supplier costs and other costs of goods, used
or
incorporated in or otherwise delivered to the customer under the Referred
Contract (including shipping costs) and (3) the costs of services rendered
by
third-party contractors.
(iii)
The
determination of Gross Profits, Gross Revenues and Cost of Goods/Services Sold
with respect to each Referred Contract shall be made by the Company’s senior
financial Consultant using generally accepted accounting principles applied
on
the accrual basis of accounting and a basis consistent with the manner in which
the Company’s books and records are maintained.
(iv)
The
Referral Fee due with respect to each Referred Contract shall be calculated
annually, based on the Company’s fiscal year and in connection with the
preparation of the Company’s audited financials. Not later than ten (10) days
after the release of the Company’s audited financials for the immediately
preceding fiscal year the Company’s senior financial Consultant shall provide
Consultant with a statement (each “
Referral
Fee Statement
”)
setting forth the calculation of the Referral Fees attributable to the Company’s
immediately preceding fiscal year in such reasonable detail as to permit
Consultant to review and confirm the accuracy of such calculations. The Company
shall also provide Consultant with reasonable access, subject to appropriate
confidentiality restrictions, to books and records appropriate to enable Seller
to review and verify such calculations. Consultant shall have fifteen (15)
days
following delivery of a Referral Fee Statement (each a “
Disagreement
Notice Period
”)
to
disagree with Referral Fee Statement by written notice to the Company setting
forth in reasonable detail the amount and nature of the disagreement (each
a
“
Notice
of Disagreement
”).
If
the Company does not receive a Notice of Disagreement from the Consultant within
the Disagreement Notice Period, the Consultant shall be conclusively presumed
to
agree with the Referral Fee Statement and the Company shall promptly pay to
the
Consultant the Referral Fees shown to be due on the Referral Fee Statement.
If
the Company receives a Notice of Disagreement from the Consultant within the
Disagreement Notice Period and if the Company and the Consultant are unable
to
mutually agree upon a settlement of the disagreement within thirty (30) days
after the delivery of the Notice of Disagreement to the Company, then the
dispute shall be resolved pursuant to Section 9.
(c)
Expenses
.
The
Company shall reimburse Consultant for all reasonable out-of-pocket expenses
(including, without limitation, travel and lodging) incurred by Consultant,
its
managers, partners and other individuals whose compensation is reflected as
compensation expense on Consultant’s financial statements in connection with
providing the Services hereunder.
(d)
Late
Payment
.
Any
overdue fees payable by the Company under this Paragraph 4 shall accrue interest
at the rate of [__%] per annum, compounded monthly.
Section
5.
Termination
.
(a)
Termination
For Cause or By the Consultant
.
If the
Consulting Period is terminated (i) by the Company for “Cause” (as hereinafter
defined); or (ii) by the Consultant (other than for a Good Reason); then the
Consultant shall only be entitled to receive (A) the Base Fee and the
reimbursement of any applicable expenses pursuant to Paragraph 4 through the
date of termination (the “Termination Date”) and (B) the Referral Fees as and
when payable pursuant to the Paragraph 4(b); provided that the Expiration Date
for purposes of calculating the Referred Contracts and the Referral Fees shall
be the Termination Date rather than the Expiration Date. For purposes of this
Agreement the terms “Cause” and “Good Reason” and “Change in Control” shall have
the following meanings.
(i)
Termination
of the Consultants engagement under this Agreement for "Cause" shall mean any
of
the following:
(A)
any
act
that would constitute a material violation of this Agreement or Company’s
material written policies provided that the Company specifically terminates
the
Consultant’s engagement for Cause hereunder within 120 calendar days from the
date the Company has actual notice of such; or
(B)
intentionally
engaging in conduct materially and demonstrably injurious to the Company
provided that the Company specifically terminates the Consultant’s engagement
for Cause hereunder within 120 calendar days from the date the Company has
actual notice of such.
A
termination for Cause after a Change in Control shall be based only on events
occurring after such Change in Control; provided, however, the foregoing
limitation shall not apply to an event constituting Cause which was not
discovered by the Company prior to a Change in Control. Cause shall be
determined in good faith by the affirmative vote of a majority of the whole
Board of Directors (excluding any board member that may be affiliated with
the
Consultant).
(ii)
"
Change
in Control of the Company
"
means
(A) a sale, transfer or exclusive licensing by the Company of all or
substantially all of the assets of the Company and its subsidiaries on a
consolidated basis (measured by either book value in accordance with United
States generally accepted accounting principles consistently applied or fair
market value determined in the reasonable good faith judgment of the Board)
in
any transaction or series of transactions (other than sales in the ordinary
course of business); (B) any sale, transfer or issuance or series of sales,
transfers and/or issuances of shares of the Company's capital stock by the
Company or any holders thereof which results in any Person or Persons, other
than the holders of Company’s capital stock as of the date hereof, owning
capital stock of the Company possessing the voting power (under ordinary
circumstances) to elect a majority of the Board of Directors; (C) the
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least 50% of the
total voting power represented by the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation;
or
(D) the stockholders of the Corporation approve a plan of complete liquidation
of the Company.
(iii)
“
Good
Reason
"
shall
mean termination by the Consultant due to: (a) the failure of the Company to
pay
any installment of the Base Fee or Referral Fee when such installment is due
pursuant to this Agreement, which failure is not cured within fifteen (15)
days;
or (b) any other breach or breaches of this Agreement by the Company, which
breaches are, singularly or in the aggregate, material, and which are not cured
within thirty (30) days of written notice of such breach or breaches to the
Company by the Consultant.
(b)
Termination
by the Company Other Than Cause or by the Consultant for a Good
Reason
.
In
addition to the payment to the Consultant of the Base Fee, the Referral Fees
and
the reimbursement of any applicable expenses pursuant to Section 4(c) through
the Date of Termination, if (i) the Consulting Period is terminated (A) by
the
Company for reasons other than Cause, or (B) by the Consultant for a Good
Reason, or (C) in accordance with the terms of Section 3(b) hereof (provided
the
Company provides the requisite notice to the Consultant to terminate prior
to
any Expiration Date); and (ii) the Consultant executes a general release in
the
form attached hereto as
Exhibit
A
(the
"
Release
")
on or
before the effective Date of Termination; and (iii) the Consultant has not
breached the terms of the “Assignment Agreement” (as defined below); then the
Company shall pay the Consultant an amount equal to the Base Fee (at the rate
in
effect at the Date of Termination) for a period commencing on the Date of
Termination and on the Expiration Date; provided, however, that if the
Termination Date is within twelve (12) months of the Expiration Date, then
the
Company shall pay the Consultant an amount equal to the Base Fee (at the rate
effective as of the Termination Date), for a period commencing on the
Termination Date and ending on the first (1st) anniversary of the Termination
Date. Any payment under this
Section
5(b)
shall be
made over time as though the Consultant continued to be retained by the Company.
(c)
Cooperation
with Company After Termination of Engagement
.
For a
period of six (6) months following termination of the Consulting Period for
any
reason, as such period may be extended with the consent of Consultant, the
Consultant shall fully cooperate with the Company in all matters relating to
the
winding up of pending work on behalf of the Company including, but not limited
to, any litigation in which the Company is involved, and the orderly transfer
of
any pending work to the Company as may be designated by the Company. The
Consultant shall be compensated for any time spent pursuant to this Section
5(c)
at the specific request of the Company at a per diem amount based upon the
Base
Fee at the Date of Termination.
(d)
Termination
by Mutual Consent
.
Notwithstanding any of the foregoing provisions of this Section 5, if at any
time during the course of this Agreement the parties by mutual consent decide
to
terminate it, they shall do so by separate agreement setting forth the terms
and
conditions of such termination.
Section
6.
Invention,
Assignment, Non-Compete and Confidentiality Agreement
The
parties hereto have entered into an Invention, Assignment, and Confidentiality
Agreement attached hereto as
Exhibit
B
(the
"Assignment Agreement"), which may be amended by the parties from time to time
pursuant to the terms thereof. The provisions of the Assignment Agreement are
intended by the parties to survive and shall survive termination or expiration
of the Consulting Period and this Agreement.
Section
7.
Non-Solicitation
Customers or Employees; Non-Competition
(a)
Covenant
Not-to-Solicit Customers
.
Subject
to Section 7(d) below, during Consultant’s engagement with the Company through
the applicable “Restrictive Period” (as hereinafter defined), the Consultant
shall not directly or indirectly, individually or on behalf of any other person
or entity, whether as principal, agent, stockholder, employee, consultant,
representative or in any other capacity, contact any person or entity,
which:
(i)
is
a
customer or client of the Company or any of its subsidiaries as of the
Termination Date; or
(ii)
has
been
a customer or client of the Company or any of its subsidiaries at any time
within two (2) years prior to the Termination Date; or
(iii)
is
a
prospective customer or client that the Company or any of its subsidiaries
is
actively soliciting as of the Termination Date (for the purpose of selling
products or services similar to any of the products and services offered for
sale by the Company as of the Termination Date).
(b)
Covenant
Not-to-Solicit Employees
.
Subject
to Section 7(d) below, during Consultant’s engagement with the Company and from
the Termination Date through the applicable Restrictive Period , Consultant
shall not directly or indirectly, individually or on behalf of any other person
or entity, whether as principal, agent, stockholder, employee, consultant,
representative or in any other capacity:
(i)
recruit,
solicit or encourage any person to leave the employ of the Company or any of
its
subsidiaries; or
(ii)
hire
any
employee of the Company or any of its subsidiaries as a regular employee,
consultant, independent contractor or otherwise.
(c)
Non-Competition
.
Consultant recognizes and acknowledges the competitive and proprietary nature
of
the business operations of the Company and its subsidiaries. Subject to Section
7(d) below, during the Consultant’s engagement with the Company and for the
applicable Restrictive Period, Consultant shall not, without the prior written
consent of the Company, for itself or on behalf of any other person or entity,
directly or indirectly, whether as principal, agent, stockholder, employee,
consultant, representative or in any other capacity, own, manage, operate or
control, or be concerned, connected or employed by, or otherwise associate
in
any manner with, engage in or have a financial interest in any business that
competes with the business operations of the Company or any of its subsidiaries,
except that nothing contained herein shall preclude the Consultant from
purchasing or owning stock in any such competitive business if such stock is
publicly traded, and provided that his holdings do not exceed one percent (1%)
of the issued and outstanding capital stock of such business. Notwithstanding,
anything to the contrary contained in this Section 7, including, but not limited
to this Section 7(c), nothing in this Agreement shall preclude the Consultant,
or its employee and owner, C. Thomas McMillan from owning, managing, operating,
controlling, or otherwise being involved or employed directly, or indirectly
by
CyberLynk Network, Inc.
(d)
Reduction
and Extension of Restrictions
.
(i)
Notwithstanding
contained in Sections 7(a), 7(b) and 7(c) above the provisions of Sections
Sections 7(a), 7(b) and 7(c) above shall only apply to terminations made
pursuant to Section 5(a) and shall not apply with respect to terminations made
pursuant to Section 5(b).
(ii)
The
Company at Company’s option, by written notice delivered to Consultant not less
than thirty (30) days prior to the expiration of the then current, applicable
Restrictive Period, may extend the Restrictive Period (as previously extended
under this Section 7.4(b)) for an additional twelve (12) months, provided that
Company pays to Consultant during the extended Restrictive Period an amount
equal to the Consultant’s Base Fee (at the rate effective as of the applicable
Termination Date and over time and in the manner Consultant would have received
these payments had it continued to be engaged by the Company.
(e)
Definition
of Restriction Period
.
For
purposes of this Agreement the term “Restrictive Period” shall have the
following meanings.
(i)
If
Consultant’s engagement under this Agreement is terminated prior to the third
(3rd) anniversary of the Closing Date, then the Restrictive Period shall be
the
period from the Termination Date through the third anniversary of the Closing
Date (or if the Termination Date is within twelve (12) months of the third
anniversary of the Closing Date, then for a period of one (1) year measured
from
the Termination Date through the first anniversary of the Termination Date).
(ii)
Subject
to Section 7(d) above, if Consultant’s engagement is terminated after the third
anniversary of the Closing Date, then the Restrictive Period shall be the twelve
month period measured from the Termination Date through the first anniversary
of
the Termination Date.
(f)
Non-Disparagement
.
The
Consultant agrees not to make any public statement, or engage in any conduct,
that is disparaging to the Company, or any of its employees, officers, directors
or shareholders, including, but not limited to, any statement that disparages
the products, services, finances, financial condition, capabilities or other
aspects of the business of the Company. Notwithstanding any term to the contrary
herein, the Consultant and its employees shall not be in breach of this Section
7 for the making of any truthful statements under oath.
(g)
Reasonableness
of Restrictions
.
The
Consultant has carefully read and considered the provisions of this Section
7,
and, having done so, agrees (i) that the restrictions set forth herein are
reasonable, in terms of scope, duration, geographic area, and otherwise, (ii)
that the protection afforded to the Company hereunder is necessary to protect
its legitimate business interests, (iii) that the agreement to observe such
restrictions form a material part of the consideration for this Agreement and
the Consultant’s engagement by the Company and (iv) that upon the termination of
the Consultant’s engagement with the Company for any reason, Consultant will be
able to continue in its business without violating the foregoing restrictions.
In the event that, notwithstanding the foregoing, any of the provisions of
this
Section 7 shall be held to be invalid or unenforceable, the remaining provisions
thereof shall nevertheless continue to be valid and enforceable as though the
invalid or unenforceable parts had not been included therein. In the event
that
any provision of this Section relating to the time period and/or the areas
of
restriction and/or related aspects shall be declared by a court of competent
jurisdiction to exceed the maximum restrictiveness such court deems reasonable
and enforceable, the time period and/or areas of restriction and/or related
aspects deemed reasonable and enforceable by the court shall become and
thereafter be the maximum restriction in such regard, and the restriction shall
remain enforceable to the fullest extent deemed reasonable by such
court.
Section
8.
Consultant’s
Representations and Warranties
(a)
Enforceability
.
Consultant hereby represents and warrants to the Company that upon the execution
and delivery of this Agreement by the Company, this Agreement shall be the
valid
and binding obligation of Consultant, enforceable in accordance with its
terms.
(b)
No
Breach; No Conflict of Interest
.
Consultant hereby represents and warrants to the Company that (i) the execution,
delivery and performance of this Agreement by Consultant do not and shall not
conflict with, breach, violate or cause a default under any contract, agreement,
instrument, order, judgment or decree to which Consultant is a party or by
which
Consultant is bound and (ii) Consultant is not, to the best of Consultant's
knowledge and belief, involved in any situation that might create, or appear
to
create, a conflict of interest with loyalty to or duties for the
Company.
(c)
Notification
of Materials or Documents from Other Customers and Clients
.
Consultant hereby represents and warrants to the Company that Consultant has
not
brought and will not bring to the Company or use in the performance of
responsibilities at the Company any materials or documents of a former customer
or client that are not generally available to the public, unless Consultant
has
obtained express written authorization from the former customer or client and
the Company for their possession and use.
Section
9.
Arbitration
(a)
Consultant
and the Company mutually consent to the resolution by arbitration of certain
claims or controversies (collectively, "
Claims
")
arising out of or relating to Consultant's engagement or termination of
engagement under this Agreement that either party may have against the other,
including the Company’s officers, shareholders, directors, employees, or benefit
plans, the benefit plans' sponsors, fiduciaries, administrators, or affiliates;
and all successors and assigns of any of them, or agents in their capacity
as
such or otherwise. The Claims covered by this Agreement shall include claims
for
(i) wages or other compensation due; (ii) breach of any contract or covenant
(express or implied); tort claims; (iii) discrimination (including but not
limited to race, sex, religion, national origin, age, disability, citizenship,
marital status, or any other basis protected by any applicable federal, state
or
local law); (iv) payment of wages; (v) benefits (except where an employee
benefit or pension plan specifies that its claims procedure shall use an
arbitration procedure different from this one); and (vi) violation of any
federal, state, or local law, statute, regulation, or ordinance, or recognized
under common law.
(b)
The
arbitration shall be governed by the procedures of the American Arbitration
Association ("
AAA
"),
in
accordance with its then-current Model Employment Arbitration Procedures and
shall take place in the Washington-Metropolitan area.
(c)
If
the
parties to this Agreement become parties to an arbitration proceeding or
litigation arising from or relating to this Agreement, the non-prevailing party
shall pay the reasonable attorneys’ fees and costs incurred by the prevailing
party in such arbitration or litigation.
Section
10.
Indemnification
.
(a)
The
Company agrees to indemnify and hold harmless Consultant and Consultant
Personnel against and from any and all claims, liabilities, losses, costs,
damages, expenses, judgments, fines and amounts paid in settlement (including
reasonable attorneys’ fees), arising from any source, including, without
limitation, from any threatened, pending or completed actions or lawsuits
whether civil, criminal, administrative or investigative, by or in the right
of
the Company to procure a judgment in its favor, arising from the performance
of
the Services, except insofar as such may arise solely from the indemnified
party’s gross negligence or intentional wrongdoing (including intentional
violation of applicable national security requirements). The Company shall
be
entitled to direct the defense of any claim for which Consultant alleges that
it
is obligated to provide indemnification, at the Company’s expense, but such
defense shall be conducted by legal counsel mutually agreed to by the Company
and Consultant. The Company agrees to keep Consultant informed on a timely
basis
of the status of all legal proceedings relating to this indemnification and
shall provide copies of all documents relating to the legal proceedings to
Consultant or, at Consultant’s request, its legal counsel. The Company further
agrees that it will not settle, compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding without the
prior written consent of Consultant. Consultant agrees to promptly notify the
Company of any proceeding or investigation which may be the subject of an
indemnity demand hereunder. The failure to provide such prompt notice shall
not
affect the Company’s obligation to provide indemnity hereunder except to the
extent that a court of competent jurisdiction shall have determined by a final
judgment that such failure primarily and directly adversely prejudiced in a
material respect the defense of the claim by the Company.
(b)
Expenses
incurred in defending any threatened or pending civil, criminal, administrative
or investigative action, suit or proceeding shall be paid by the Company in
advance of the final disposition of such action, suit or proceeding, upon
receipt of an undertaking by or on behalf of the indemnified party to repay
such
amount if it is ultimately determined, in a final non-appealable judgment of
a
court of competent jurisdiction, that the indemnified party is not entitled
to
be indemnified against such expenses solely as a result of the indemnified
party’s gross negligence or intentional wrongdoing. This undertaking by the
indemnified party shall be an unqualified general undertaking, and no security
for such undertaking will be required.
(c)
All
of
Consultant’s and the other indemnified parties’ rights and obligations under
this
Section
10
will
continue even after this Agreement has been terminated for any
reason.
Section
11.
Injunctive
Relief
.
The
Consultant represents and acknowledges that, in light of the payments to be
made
by the Company to the Consultant hereunder and for other good and valid reasons,
as a result of the restrictions stated in the Assignment Agreement and the
Restrictions in Section 7 above, the Company and its affiliated companies would
sustain irreparable harm and, therefore, in addition to any other remedies
which
the Company may have under this Agreement or otherwise, the Company shall be
entitled to apply to any court of competent jurisdiction for an injunction
restraining the Consultant from committing or continuing any such violation
of
this Agreement, and the Consultant shall not object to such
application.
Section
12.
Nature
of Consultant’s Undertaking: No Joint Venture or
Partnership
.
Consultant shall act as an independent contractor and shall have complete charge
of its personnel engaged in the performance of the Services. The Company and
Consultant hereby agree that neither Consultant’s entering into this Agreement
nor Consultant’s provision of Services to the Company and its Subsidiaries shall
be construed to have created either a joint venture or a partnership for the
purpose of providing such Services.
Section
13.
Notices
.
All
notices, requests and other communications hereunder must be in writing and
will
be deemed to have been duly given only if delivered personally, sent postage
prepaid, by registered, certified or express mail or reputable overnight courier
service to the parties at the following addresses:
if
to the
Company, to:
Fortress
America Acquisition Corporation
4100
North Fairfax Drive
Suite
1150
Arlington,
Virginia 22203
Attention: Harvey
L. Weiss, Chairman of the Board
with
a
copy to:
Squire,
Sanders & Dempsey L.L.P.
8000
Towers Crescent Drive, Suite 1400
Tysons
Corner, VA 22182
Attn:
James J. Maiwurm
Fax:
(703) 720-7801
if
to
Consultant, to:
Washington
Capital Advisors, Inc.
4100
North Fairfax Drive
Suite
1150
Arlington,
Virginia 22203
Attn:
C.
Thomas McMillen
Fax:
(703) 528 0956
All
such
notices, requests and other communications will (a) if delivered personally
to
the address as provided in this
Section
13
be
deemed given upon delivery, (b) if delivered by mail in the manner described
above to the address as provided in this
Section
13
,
be
deemed given upon receipt, and (c) if delivered by overnight express mail or
reputable overnight courier service, be deemed given one Business Day after
mailing (in each case regardless of whether such notice is received by any
other
Person to whom a copy of such notice, request or other communication is to
be
delivered pursuant to this
Section
13
).
Any
party from time to time may change its address or other information for the
purpose of notices to that party by giving notice specifying such change to
the
other party hereto
Section
14.
Agreement
.
This
Agreement (a) contains the complete and entire understanding and agreement
of
Consultant and the Company respecting the subject matter hereof; (b) supersedes
and cancels all other understandings or agreements, oral or written, respecting
the subject matter hereof; and (c) may not be modified except by an instrument
in writing executed by Consultant and the Company.
Section
15.
Waiver
.
No
failure or delay on the part of any party hereto in exercising any rights,
power
or remedy hereunder shall operate as a waiver thereof, nor shall any single
or
partial exercise of such right, power or remedy preclude any other or further
exercise thereof or exercise of any other right, power or remedy. The remedies
provided herein are cumulative and are not exclusive of any remedies that may
be
available to such party at law, in equity or otherwise.
Section
16.
Successors,
Assignment, Third Party Beneficiaries
.
Consultant and the Company may not assign their respective rights or obligations
under this Agreement without the express written consent of the other party.
This Agreement and all the provisions hereof shall be binding upon and inure
to
the benefit of the parties hereto and their respective successors and permitted
assigns. No person other than the parties hereto (and other than the indemnified
parties specified in
Section
10
)
is
intended to be a beneficiary of this Agreement.
Section
17.
Severability
.
If any
provision of this Agreement is determined to be invalid or unenforceable in
whole, or in part, such invalidity or unenforceability shall attach only to
such
provision or part of such provision and all other provisions of this Agreement
shall continue in full force and effect.
Section
18.
Section
Headings
.
All
section headings herein have been inserted for convenience of reference only
and
shall in no way modify or restrict any of the terms or provisions
hereof.
Section
19.
Governing
Law
.
This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of Maryland, without regard to conflicts of law
principles.
IN
WITNESS WHEREOF, the Company and Consultant have caused this Agreement to be
duly executed and delivered on the date and year first above
written.
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FORTRESS
AMERICA ACQUISITION CORPORATION
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By:
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/s/
Harvey L. Weiss
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Name:
Harvey L. Weiss
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Title:
Chief Executive Officer
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WASHINGTON
CAPITAL ADVISORS, INC.
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s/s
C. Thomas McMillen, CEO
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EXHIBIT
A
RELEASE
1.
This
agreement is between the Washington Capital Advisors, Inc. (“Consultant”) and
Fortress International Group, Inc., formerly Fortress America Acquisition
Corporation, a Delaware corporation (“FIG”).
2.
The
Consultant, deeming this Agreement to be fair, reasonable, and equitable, and
intending to be legally bound hereby, agrees to and hereby does, forever and
irrevocably fully release and discharge Company, its subsidiaries, affiliated
entities, direct or indirect owners and its and their respective officers,
directors, employees, agents, predecessors, successors, purchasers, assigns,
representatives, fiduciaries, and insurers (jointly, the "Released Parties")
from any and all grievances, liens, suits, judgments, claims, demands, debts,
defenses, actions or causes of action, obligations, damages (whether
compensatory, punitive or otherwise), and liabilities whatsoever which the
Consultant now has, has had, or may have, whether the same be known or unknown,
vested or contingent, at law, in equity, or mixed, in any way arising out of
or
relating in any way to any matter, act, occurrence, or transaction before the
date of this General Release Agreement, including but not limited to Consulting
Agreement with the Company (collectively, "Claims").
This
is a General Release.
The
Consultant expressly acknowledges that this General Release includes, but is
not
limited to, the Consultant's release of any tort and contract claims and
arbitration claims. Also, the Consultant understands that this General Release
Agreement is not an admission of liability under any statute or otherwise by
the
Released Parties, and that the Released Parties do not admit but deny any
violation of his legal rights, and that it shall not be regarded as a prevailing
party for any purpose, including but not limited to, determining responsibility
for or entitlement to attorneys’ fees, under any statute or otherwise. The
Consultant agrees that in the event the Consultant brings a Claim in which
the
Consultant seeks damages or other relief from any Released Party, or in the
event the Consultant seeks to recover against any Released Party in any Claim
brought by a governmental agency on the Consultant’s behalf, this Agreement
shall serve as a complete defense to such Claims.
3.
The
Consultant also agrees that the Consultant has been paid for all services
rendered and has submitted all invoices and expense reports.
4.
The
Consultant agrees that every term of this Agreement, including, but not limited
to, the fact that an agreement has been reached and the amount paid, shall
be
treated by the Consultant as strictly confidential, and expressly covenants
not
to display, publish, disseminate, or disclose the terms of this Agreement to
any
person or entity other than the Consultant’s attorney(s) (for purposes of
seeking advice concerning this agreement only) and the Consultant’s
accountant(s) (for purposes of seeking tax advice only), unless compelled to
make disclosure by lawful court order or subpoena.
5.
The
Consultant and the Company have entered into an Assignment of Invention,
Non-Disclosure, Non-Solicitation and Non-Competition Agreement ("NDA
Agreement"). The Consultant reaffirms its obligation to comply with all of
the
post termination obligations in the NDA Agreement.
6.
The
Consultant also agrees that:
·
The
Consultant is entering into this agreement knowingly and
voluntarily;
·
The
Consultant has been advised by the Company to consult an attorney;
·
But
for
the Consultant's execution of this agreement, the Consultant would not otherwise
be entitled to the payments described in paragraph 2;
·
If
any
part of this agreement is found to be illegal or invalid, the rest of the
agreement will be enforceable; and
CONSULTANT:
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COMPANY:
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WASHINGTON
CAPITAL ADVISORS, INC.
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[NAME
AND TITLE]
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Date:
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Date:
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Accepted
and Agreed to:
Fortress
International Group, Inc.
By:
_______________________________
Name:
Harvey L. Weiss
Title:
Chairman
Date:
______________________________
EXHIBIT
B
INVENTION
ASSIGNMENT, NON-COMPETE
AND
CONFIDENTIALITY AGREEMENT
The
following confirms an Invention Assignment, Non-Compete and Confidentiality
Agreement ("Agreement") between Washington Capital Advisors, Inc. (“
WCA
”)
and
Fortress International Group, a Maryland corporation (the "Company," which
term
includes the Company’s Affiliates, subsidiaries and any assigns). The promises
and commitments that WCA makes in this Agreement are a material part of the
Company’s consideration in WCA’s consulting relationship with the
Company.
1.
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WCA
understands and agrees that its engagement as a consultant to the
Company
creates a duty of loyalty and a relationship of confidence and
trust
between it and the Company with respect to any information made
known to
WCA by the Company or by any client, customer or vendor of the
Company or
other person who submits information to the Company, or which may
be
learned by me during the period of its
engagement.
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2.
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WCA
recognizes that the Company is continuously engaged in activities
that the
Company regards as confidential, proprietary and/or legally protectable,
which activities are at least in part intended to further the interests
of
the Company and to provide the Company with a competitive advantage.
The
Company possesses and will, in the future, continue to possess
information
that has been or will be created, discovered, developed or otherwise
becomes known to the Company (including information created by,
discovered
or developed by, or made known to WCA) during the period of or
arising out
of WCA’s engagement with the Company. WCA understands that various
intellectual and other property rights have been assigned or otherwise
conveyed to the Company. All information concerning the above described
activities and information is collectively called "Proprietary
Information" under this Agreement.
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3.
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By
way of illustration, but not limitation, Proprietary Information
includes:
trade secrets, processes, formulas, data and know-how; software
programs,
improvements, and inventions; research and development plans, tools
and
techniques; new product introduction plans, specifications, requirements
documents and strategies; manufacturing techniques, strategies
and costs,
expenses, supplier information and lists and distribution information;
terms and conditions in contracts of all kinds; marketing plans,
strategies and service; support strategies and procedures; development
schedules; revenue forecasts; computer programs; copyrightable
material,
employee salaries, employee expertise, employee ability levels,
training
programs and procedures, copies of memos or presentations incorporating
confidential information which WCA may have in its files (including
those
authored by WCA or its employees and contractors), patent applications
and
disclosures and customer lists.
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4.
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In
consideration of WCA’s engagement by the Company and the compensation
received by WCA from the Company from time to time, WCA hereby
agrees as
follows:
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(a)
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All
Proprietary Information shall be the sole property of the Company,
and the
Company shall be the sole owner of all patents, copyrights, trademarks
and
other rights related to Proprietary Information. WCA hereby assigns
to the
Company any rights WCA may have or acquire in Proprietary Information.
At
all times, both during and after WCA’s engagement by the Company, WCA will
keep in confidence and trust all Proprietary Information, and WCA
will not
use or disclose any Proprietary Information or anything related
to it
without written consent of the Company, except as may be necessary
in the
ordinary course of performing WCA’s duties to the
Company.
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(b)
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All
documents, records, apparatus, equipment and other physical property,
whether or not pertaining to Proprietary Information, furnished
to WCA by
the Company or produced by WCA or others in connection with their
provision of services to the Company shall be and remain the sole
property
of the Company, shall be used by WCA solely for the benefit of
the Company
and shall be returned to the Company immediately as and when requested
by
the Company. Even if the Company does not so request, WCA shall
return and
deliver all such property to the Company upon termination of WCA’s
consulting engagement with the Company. WCA will not take with
WCA any
such property or any form of copy or reproduction of such property
upon
Consultant’s termination of the consulting
relationship.
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(c)
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WCA
will promptly disclose to the Company, or any persons designated
by it,
all improvements, inventions, formulas, ideas, processes, techniques,
know-how and data, whether or not patentable, made or conceived
or reduced
to practice or learned by WCA, either alone or jointly with others,
during
the period of WCA’s consulting engagement (all said improvements,
inventions, formulas, ideas, processes, techniques, know-how and
data
shall be hereinafter collectively call
"Inventions").
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(d)
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WCA
agrees that all Inventions that WCA develops or has developed (in
whole or
in part, either alone or jointly with others) and (i) use or has
used
equipment, supplies, facilities or trade secret information of
the
Company, or (ii) use or has used the hours for which WCA is to
be or was
compensated by the Company, or (iii) which relate to the business
of the
Company or to its actual or demonstrably anticipated research and
development or (iv) which result, in whole or in part, from work
performed
by WCA for the Company shall be the sole property of the Company
and its
assigns, and the Company and its assigns shall be the sole owner
of all
patents, copyrights and other rights in connection therewith. WCA
hereby
assigns to the Company any rights WCA may have or acquire in such
Inventions. WCA further agree as to all such inventions and improvements
to assist the Company in every proper way (but at the Company’s expense)
to obtain and from time to time enforce patents, copyrights or
other
rights on said inventions and improvements in any and all countries,
and
to that end WCA will execute all documents in use for applying
for and
obtaining such patents and copyrights thereon and enforcing same,
as the
Company may desire, together with any assignments thereof to the
Company
or persons designated by it. WCA’s obligation to assist the Company in
obtaining and enforcing patents, copyrights or other rights for
such
inventions and improvements in any and all countries shall continue
beyond
the termination of WCA’s consulting engagement with the Company, but the
Company shall compensate WCA at a reasonable rate after such termination
for time actually spent by WCA at the Company’s request on such
assistance.
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(e)
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In
the event that the Company is unable for any reason whatsoever
to secure
WCA’s signature to any lawful and necessary document required to apply
for
or execute any patent, copyright or other applications with respect
to
such inventions and improvements (including renewals, extensions,
continuations, divisions or continuations in part thereof), WCA
hereby
irrevocably designates and appoints the Company and its authorized
officers and agents, as Consultant’s agents and attorneys-in-fact, this
power of attorney being coupled with an interest, to act for and
in its
behalf and instead of WCA, to execute and file any such application
and to
do all other lawfully permitted acts to further the prosecution
and
issuance of patents, copyrights or other rights thereon with the
same
legal force and effect as if executed by
WCA.
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(f)
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WCA
represents that its performance of all the terms of this Agreement
will
not breach any agreement to keep in confidence proprietary information
acquired by WCA in confidence or in trust prior to its engagement
with the
Company. WCA has not entered into, and WCA agrees that WCA will
not enter
into, any agreement either written or oral in conflict with this
Agreement.
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(g)
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WCA
acknowledges that the Company from time to time may be involved
in
government projects of a classified nature. WCA further acknowledges
that
the Company from time to time may have agreements with other persons
or
governmental agencies which impose obligations or restrictions
on the
Company regarding inventions made during the course of work thereunder
or
regarding the confidential nature of such work or information disclosed
in
connection therewith. WCA agrees to be bound by all such obligations
and
restrictions and to take all action necessary to discharge the
obligations
of the Company thereunder.
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(h)
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WCA
represents and warrant that execution of this Agreement, its engagement
as
a consultant to the Company and its performance of its consulting
responsibilities to the Company in the development of its business
have
not and will not violate any obligations which WCA may otherwise
have.
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(i)
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WCA
agrees that at no time during its engagement as a consultant to
the
Company or thereafter shall WCA make, or cause or assist any other
person
to make, any statement or other communication to any third party
which
impugns or attacks, or is otherwise critical of, the reputation,
business
or character of the Company or any of its Affiliates or any of
their
respective directors, officers or
employees.
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5.
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This
Agreement shall be effective as of the first day of Consultant’s
engagement by the Company.
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6.
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This
Agreement may not be changed, modified, released, discharged, abandoned
or
otherwise amended, in whole or in part, except by an instrument
in
writing, signed by WCA and a majority of the members of the Board.
WCA
agrees that any subsequent change or changes in WCA’s duties or
compensation shall not affect the validity or scope of this
Agreement.
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7.
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WCA
acknowledges receipt of this Agreement and agrees that with respect
to the
subject matter hereof it is its final, complete and exclusive agreement
with the Company, superseding any previous oral or written
representations, understanding or agreements with the Company or
any
officer or representative with respect to the subject matter
herein.
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8.
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In
the event that any paragraph or provision of this Agreement shall
be held
to be illegal or unenforceable, such paragraph or provision shall
be
modified to the extent necessary to give effect to the intent of
the
parties or, if necessary, severed from this Agreement and the entire
Agreement shall not fail on account thereof, but shall otherwise
remain in
full force and effect.
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9.
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This
Agreement shall be construed in accordance with the laws of the
State of
Maryland without regard to its choice of law
principles.
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10.
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This
Agreement shall be binding upon WCA and its successors and assigns
and
shall inure to the benefit of the Company, its successors and
assigns.
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WCA
acknowledges that the foregoing restrictions contained in
Section
4
are
reasonable in all respects including the scope, duration and geographic
limitations. WCA agrees that the restrictions are an appropriate means of
protecting the Company’s legitimate business interests, and no greater than
necessary to protect the Company’s interests.
Dated:
__________ _____, 2006
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WASHINGTON
CAPITAL ADVISORS, INC.
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By:_____________________________________
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Name:___________________________________
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Title:____________________________________
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Accepted
and Agreed to:
Fortress
International Group, Inc.
By:
___________________________________
Name:
Harvey L. Weiss
Title:
Chairman
Date:
__________________________________
EXECUTIVE
EMPLOYMENT AGREEMENT
This
EXECUTIVE EMPLOYMENT AGREEMENT (this "
Agreement
"),
effective this 19th day of January, 2007 ("
Effective
Date
"),
between
FORTRESS
AMERICA ACQUISITION CORPORATION,
a
Delaware corporation (the "
Company
")
and
THOMAS
P.
ROSATO
(the
"
Executive
").
WITNESSETH
WHEREAS,
Executive and Gerard J. Gallagher (“
Gallagher
”)
were
all of the members of VTC, LLC, a Maryland limited liability company
(“
VTC
”)
and
Vortech, LLC (“
Vortech
”).
WHEREAS,
by the terms of a Second Amended and Restated Membership Interest Purchase
Agreement dated July 31, 2006 (the “
Purchase
Agreement
”)
by and
among the Company, the Executive, Gallagher, VTC and Vortech, Company purchased
from Executive and Gallagher all of their respective membership interests in
each of VTC and Vortech.
WHEREAS
as an inducement for and condition to the Company entering into and executing
and delivering the Purchase Agreement, the Company requires that the Employee
enter into this Agreement for the purpose of retaining the Executive’s services
upon the terms and conditions set forth below.
WHEREAS,
the Executive is willing to provide services to the Company upon the terms
and
conditions set forth herein.
NOW
THEREFORE, in consideration of the promises and the mutual agreements contained
herein, intending to be legally bound, the parties agree as
follows:
1.
DEFINITIONS
The
following words and terms shall have the meanings set forth below for the
purposes of this Agreement:
1.1.
Affiliates
.
"
Affiliates
"
of a
Person, or a Person "
affiliated
"
with
another Person, are any Persons which, directly or indirectly, through one
or
more intermediaries, controls or are controlled by or are under common control
with, the Person specified.
1.2.
Base
Salary
.
"
Base
Salary
"
shall
have the meaning set forth in
Section
3.1
hereof.
1.3.
Board
.
"
Board
"
means
the Company’s Board of Directors.
1.4.
Cause
.
1.4.1
Termination
of the Executive’s employment for "
Cause
"
shall
mean any of the following:
(i)
any
act
that would constitute a material violation of the Company’s material written
policies provided that the Company specifically terminates the Executive's
employment for Cause hereunder within 120 days from the date the Company has
actual notice of such;
(ii)
intentionally
engaging in conduct materially and demonstrably injurious to the Company
provided that the Company specifically terminates the Executive's employment
for
Cause hereunder within 120 days from the date the Company has actual notice
of
such; or
(iii)
conviction
of (1) a crime of embezzlement or a crime involving moral turpitude; (2) a
crime
with respect to the Company involving a breach of trust or dishonesty; or (3)
in
either case, a plea of guilty or no contest to such a crime provided that the
Company specifically terminates the Executive's employment for Cause hereunder
within 120 days from the date the Company has actual notice of
such.
1.4.2
In
any
case, if the Company desires to terminate the Executive's employment for Cause
in accordance with Sections 1.4.1(i), (ii) or (iii), it shall first give written
notice of the facts and circumstances providing the basis for Cause to the
Executive, and to allow the Executive 30 days from the date of such notice
to
remedy, cure or rectify, if possible, the situation giving rise to the Company's
allegations of Cause (the "Cure Period"); provided, however, that the Executive
shall have only one such opportunity to cure, regardless of the grounds on
which
Cause is asserted, during the Employment Period. During the Cure Period, the
Executive may not be entitled to payment of any compensation, in the Company's
sole discretion; provided, however, that if the Executive's compensation is
withheld and the Executive successfully remedies, cures, or rectifies the
situation giving rise to the Company's notice of Cause during the Cure Period,
resulting in the Company's withdrawal of its written notice of Cause, the
Executive shall be compensated for the Cure Period.
1.4.3
A
termination for Cause after a Change in Control shall be based only on events
occurring after such Change in Control; provided, however, the foregoing
limitation shall not apply to an event constituting Cause which was not
discovered by the Company prior to a Change in Control.
1.4.4
Cause
shall be determined in good faith by the affirmative vote of a majority of
the
whole Board (excluding the Executive if the Executive is a member of the Board).
1.4.A
Change
in Control of the Company
.
"
Change
in Control of the Company
"
means
(a) a sale, transfer or exclusive licensing by the Company of all or
substantially all of the assets of the Company and its Subsidiaries on a
consolidated basis (measured by either book value in accordance with United
States generally accepted accounting principles consistently applied or fair
market value determined in the reasonable good faith judgment of the Board)
in
any transaction or series of transactions (other than sales in the ordinary
course of business); (b) any sale, transfer or issuance or series of sales,
transfers and/or issuances of shares of the Company's capital stock by the
Company or any holders thereof which results in any Person or Persons, other
than the holders of Company’s capital stock as of the date hereof, owning
capital stock of the Company possessing the voting power (under ordinary
circumstances) to elect a majority of the Board; (c) the stockholders of the
Company approve a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least 50% of the total voting
power represented by the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation; or (d) the
stockholders of the Corporation approve a plan of complete liquidation of the
Company.
1.5.
Date
of Termination
.
"
Date
of Termination
"
shall
mean (a) if the Executive’s employment is terminated by reason of the
Executive’s death, the date of the Executive’s death, or (b) if the Executive’s
employment with the Company and its Subsidiaries is terminated for any reason
other than the Executive’s death, the date on which Executive ceases to be an
employee of the Company and its Subsidiaries.
1.6.
Disability
.
Termination
of the Executive’s employment with the Company and its Subsidiaries based on
"
Disability
"
shall
mean termination of the Executive’s employment at the Company’s sole discretion,
upon thirty (30) days prior written notice in the event the Executive becomes
“Disabled,” as defined in any group term disability insurance maintained by the
Company applicable to the Executive, or, (b) if the Company shall not maintain
such insurance, the determination by an independent physician acting reasonably
and in good faith that the Executive is incapacitated by reason of a physical
or
mental illness which is long-term in nature and which prevents the Executive
from performing the substantial and material duties of his employment with
the
Company,
provided
that
such incapacity can reasonably be expected to prevent the Executive from working
at least six (6) months in any twelve (12) month period. The Company may require
the Executive to have the examination described in the preceding sentence at
any
time for the purpose of determining whether the Executive has a long-term
disability, and the Executive agrees to submit to such examination upon request
of the Board;
provided
that the
Company shall pay all costs and expenses associated with such examination.
This
Section
1.6
shall be
interpreted and applied consistently with the Americans with Disabilities Act,
the Family and Medical Leave Act and other applicable law.
1.7.
Good
Reason
.
Termination of the Executive’s employment by the Executive for a "
Good
Reason
"
shall
mean termination by the Executive because of: (a) a requirement to move the
Executive’s primary place of business more than twenty-five (25) miles from the
office the Executive works in on the date hereof (which termination occurs
prior
to such move) without the written consent of the Executive, (b) failure of
the
Company to pay any installment of the Executive’s Base Salary when such
installment is due pursuant to this Agreement, which failure is not cured within
fifteen (15) days; (c) any other breach or breaches of this Agreement by the
Company, which breaches are, singularly or in the aggregate, material, and
which
are not cured within thirty (30) days of written notice of such breach or
breaches to the Company by the Executive; or (d) a reduction by the Company
of
the Executive’s Base Salary without the express written consent of the
Executive.
1.8.
Person
.
"
Person
"
means
an individual, a partnership, a corporation, a limited liability company, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, any other business entity and a governmental entity or any
department, agency or political subdivision thereof.
1.9.
Restrictive
Period
.
For
purposes of this Agreement the term “
Restrictive
Period
”
shall
have the following meanings.
1.9.1
If
the
Executive’s employment is terminated prior to the third (3
rd
)
anniversary of the Closing Date, then the Restrictive Period shall be the period
from the Termination Date through the third anniversary of the Closing Date
(or
if the Termination Date is within twelve (12) months of the third anniversary
of
the Closing Date), then for a period of one (1) year measured from the
Termination Date through the first anniversary of the Termination Date.
1.9.2
Subject
to
Section
7.4
hereof,
If the Executive’s employment is terminated after the third anniversary of the
Closing Date, then the Restrictive Period shall be the twelve month period
measured from the Termination Date through the first anniversary of the
Termination Date.
1.10.
Subsidiary
.
"
Subsidiary
"
means,
with respect to any Person, any corporation, limited liability company,
partnership, association or other business entity of which (a) if a corporation,
a majority of the total voting power of shares of stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof, or (b) if a limited liability company,
partnership, association or other business entity, a majority of the partnership
or other similar ownership interest thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more Subsidiaries of that
Person or a combination thereof. For purposes hereof, a Person or Persons shall
be deemed to have a majority ownership interest in a limited liability company,
partnership, association or other business entity if such Person or Persons
shall be allocated a majority of limited liability company, partnership,
association or other business entity gains or losses or shall be or control
any
managing director or general partner of such limited liability company,
partnership, association or other business entity.
2.
EMPLOYMENT
2.1.
Employment
Period
.
2.1.1
Expressly
conditioned upon the closing (the “
Closing
”)
under
the Purchase Agreement and effective as of the date of the Closing (the
“
Closing
Date
”),
the
Company hereby employs the Executive, and the Executive hereby accepts said
employment and agrees to render services to the Company, on the terms and
conditions set forth in this Agreement for the period (the "
Employment
Period
")
beginning on the Closing Date and ending when such period is terminated pursuant
to the terms hereof. Unless earlier terminated by either the Company or the
Executive as hereinafter provided, the Employment Period shall continue through
the third (3
rd
)
anniversary of the Closing Date ("
Expiration
Date
");
provided, however, that if this Agreement is renewed pursuant to Section 2.1.2
below, then the “Expiration Date” for the then current “Renewal Term” (as
hereinafter defined) shall be the date that is last day of the one year period
of any Renewal Term. Notwithstanding anything to the contrary continued in
this
Section
2.1.1
,
if the
Closing under the Purchase Agreement does not occur, this Agreement shall be
null and void and of no force and effect.
2.1.2
This
Agreement shall be automatically renewed for an additional one year period
commencing at the expiration of the initial Employment Period or any subsequent
renewal term (each, a "
Renewal
Term
")
unless
the Company provides written notice of termination to the Executive not less
than sixty (60) days prior to the Expiration Date. Notwithstanding the foregoing
or anything else in this Agreement to the contrary, the Employment Period shall
immediately terminate prior to any Expiration Date (i) upon Executive’s death,
Disability or termination for a Good Reason or (ii) upon termination by the
Company for Cause; in all other circumstances, thirty (30) days' prior written
notice is required by either party to the other to terminate this
Agreement.
2.2.
Duties
.
During
the Employment Period, the Executive shall devote the Executive's full working
time and attention and use the Executive's best efforts and skill to further
the
interests of the Company. The Executive shall, to the best of his ability,
execute the strategic plan of the Company as approved by the Board, perform
his
duties, adhere to the Company’s published policies and procedures, promote the
Company’s interests, reputation, business and welfare, and work actively with
the Board and other senior managers to help augment the existing business base,
increase the corporate contract backlog and identify and develop new business
opportunities. The Executive shall perform such services for the Company as
is
consistent with the Executive's position (subject to the power and authority
of
the Board to expand or limit such services and to overrule actions of officers
of the Company) and as lawfully directed, from time to time, by the Board.
During the Employment Period, the Executive’s title shall be Chief Executive
Officer. During the Employment Period the Executive shall report to the Board,
and Executive may use such additional titles as assigned and approved by the
Board. The Executive shall not, during the Employment Period, be employed or
involved in any other business activity for gain, profit or other pecuniary
advantage. Notwithstanding the foregoing, the Executive may (a) volunteer
services for or on behalf of such religious, educational, non-profit and/or
other charitable organization as the Executive may wish to serve; (b) manage
his
personal, financial and legal affairs; and (c) participate in the over all
management (but not the day to day management) of two private companies
identified on
Exhibit
A
attached
hereto and incorporated herein (and as to one of which, as identified on
Exhibit
A
,
the
Executive serves as the chairman of its Board), so long as such activities
do
not interfere with the performance of his duties and responsibilities to the
Company as provided hereunder or violate any of the terms of this or any other
agreement entered into with the Company. The Executive acknowledges that the
Executive may be required to travel on business in connection with the
Executive's performance of the Executive's duties hereunder, but that the
Executive's base will be the location of the Company’s headquarters in Columbia
or Beltsville, Maryland or such other location as determined by the
Board.
2.3.
Insurance
.
The
Company may, at its discretion, apply for and procure in its own name and for
its own benefit life and/or disability insurance on the Executive in any amount
or amounts considered available. The Executive agrees to cooperate in any
medical or other examination, supply any information and execute and deliver
any
applications or other instruments in writing as may be reasonably necessary
to
obtain and constitute such insurance. The Executive hereby represents that
the
Executive has no reason to believe that the Executive's life is not insurable
at
rates now prevailing for a healthy person of the Executive's gender and
age.
2.4.
Corporate
Opportunity
.
The
Executive agrees that, unless approved by the Board, he will not take personal
advantage of any business opportunities which arise during his employment with
the Company and which may be of benefit to the Company. All material facts
regarding such opportunities must be promptly reported to the Board for
consideration by the Company.
3.
COMPENSATION
AND BENEFITS
3.1.
Base
Salary
.
During
the Employment Period, the Company shall pay the Executive an initial base
salary of Four Hundred Twenty Five Thousand Dollars ($425,000.00) per year
("
Base
Salary
")
paid
in approximately equal installments bi-weekly. The Company will review the
Executive’s Base Salary on December 31 of each year of the Employment Period in
order to determine what Base Salary adjustments, if any, shall be made, subject
to an annual minimum increase of five percent (5%), but in no event may the
Executive's Base Salary be reduced below that paid in the preceding
year.
3.2.
Annual
Bonus
.
For
calendar year 2006 (ending on or about December 31, 2006) and for each
other calendar year that begins during the Employment Period (each such calendar
year, a "
Bonus
Year
"),
the
Executive shall be eligible to receive a bonus in an amount and on such terms
as
are established by the Company's Board up to fifty percent (50%) of the Base
Salary (each, a "
Bonus
")
in
accordance with the bonus plan or formula applicable to the Executive. The
2006
Bonus shall be prorated to reflect that the 2006 Bonus Year is a partial year
commencing on the Closing Date and ending on December 31, 2006. In
addition, the Executive shall be eligible for any other bonus as the Board
may
determine in its sole discretion. Any Bonus for an applicable calendar year,
or
portion thereof, shall be paid to the Executive no later than the conclusion
of
the first calendar quarter following each calendar year.
3.3.
Vacation
and Benefits
.
The
Executive shall continue to receive vacation, health insurance and other
employee benefits as the Company makes available to other executives, as may
exist at any particular time and from time to time during the Executive’s
employment.
3.4.
Withholding
.
All
payments required to be made by the Company hereunder to the Executive shall
be
subject to the withholding of such amounts, if any, relating to tax and other
payroll deductions as the Company may reasonably determine should be withheld
pursuant to any applicable law or regulation.
3.5.
Policies,
Procedures & Benefit Plans
.
Except
as otherwise provided herein, the Executive’s employment shall be subject to the
policies and procedures which apply generally to the Company’s employees as the
same may be interpreted, adopted, revised or deleted from time to time, during
the Employment Period, by the Board in its sole discretion. The Executive agrees
to comply with such policies and procedures in all material respects. During
the
Employment Period, the Executive shall be entitled to participate in any Company
benefit plans on the same basis as other executive level employees of the
Company. The Board reserves the right to change, alter, or terminate benefits,
plans and carriers in its sole direction. All matters of eligibility for
coverage or benefits under any health, hospitalization, life, disability, or
other insurance plan, program or policy shall be determined in accordance with
the provisions of the plan, program, or policy; the Company shall not be liable
to the Executive, the Executive’s family, heirs, executors, or beneficiaries,
for any payment payable or claimed to be payable under any such benefit plan,
program, or policy. Provided that the Executive can be insured at standard
rates, the Company shall maintain the Executive’s existing life insurance
policy(ies) as set forth on
Exhibit
B
attached
hereto, or if it is not possible to continue the existing policies, then provide
the Executive a $1,000,000 life insurance policy with a reputable and
responsible insurance company acceptable to the Company and the
Executive.
3.6.
Stock
Bonus.
Subject
to
Section
3.6.4
below,
as of July 13, 2008 (the period between the Effective Date and July 13, 2008
being hereinafter referred to as the “
Stock
Bonus Period
”),
Executive shall be entitled to receive up to Five Million Dollars
($5,000,000.00) worth of the Company’s common stock (the “
Stock
Bonus
”)
depending on whether during the Stock Bonus Period the highest average closing
price of the Company’s common stock (on the Nasdaq OTC market or such other
recognized stock market on which the Company’s stock is then being traded on)
for sixty (60) consecutive trading days (the “
Highest
Average Trading Price
”)
exceeds the applicable “Stock Bonus Closing Price Thresholds” set forth
below.
3.6.1
For
purposes of this Agreement (A) the “
Stock
Bonus Closing Price Thresholds
”
are
as
follows (each of which is individually referred to as a “
Stock
Bonus Closing Price Threshold
”);
(B)
the “
Stock
Bonus Threshold Share Value
”
for
each Stock Bonus Closing Price Threshold shall be the dollar amount ($500,000,
$1,000,000, $1,500,000 or $2,000,000 as the case may be) for that Stock Bonus
Closing Price Threshold as set forth below; (C) the “
Minimum
Threshold Share Price
”
with
respect to each Stock Bonus Closing Price Threshold is the maximum price per
share that is within that Stock Bonus Closing Price Threshold ($9.01, $10.01,
$12.01, or $14.01 as the case may be); and (D) the “
Threshold
Share Price Range
”
for
each Stock Bonus Closing Price Threshold shall be the price per share range
referenced therein ($9.01 - $10.00, $10.01 - $12.00, $12.01 - $14.00 and $14.01,
as the case may be).
(i)
If
during
the Stock Bonus Period the Highest Average Trading Price never exceeds Nine
Dollars ($9.00) per share, then no Company common stock shall be issuable to
Executive at the end of the Stock Bonus Period.
(ii)
If
during
the Stock Bonus Period the Highest Average Trading Price is in excess of Nine
Dollars ($9.00), then Executive shall be entitled to receive Five Hundred
Thousand Dollars ($500,000.00) of Company common stock.
(iii)
If
during
the Stock Bonus Period the Highest Average Trading Price is in excess of Ten
Dollars ($10.00), then Executive shall be entitled to receive, in addition
to
the Company common stock referenced in
Section
3.6.1(ii)
above,
an additional One Million Dollars ($1,000,000.00) of Company common
stock.
(iv)
If
during
the Stock Bonus Period the Highest Average Trading Price is in excess of Twelve
Dollars ($12.00), then Executive shall be entitled to receive, in addition
to
the Company common stock referenced in
Sections
3.6.1(ii) and (iii)
above,
an additional One Million Five Hundred Thousand Dollars ($1,500,000.00) of
Company common stock.
(v)
If
during
the Stock Bonus Period the Highest Average Trading Price is in excess of
Fourteen Dollars ($14.00) per share, then Executive shall be entitled to receive
, in addition to the Company common stock referenced in
Sections
3.6.1(ii) -(iv)
above,
an additional Two Million Dollars ($2,000,000.00) of Company common stock (based
on the Highest Average Trading Price).
3.6.2
Determination
of Company Shares Payable as Stock Bonus.
The
number of shares Company common stock to be issued as the Stock Bonus shall
be
determined at the end of the Stock Bonus Period as follows:
(i)
determining
the Highest Average Trading Price during the Stock Bonus Period;
(ii)
determining
which Stock Bonus Closing Price Thresholds are applicable (the applicable Stock
Bonus Thresholds being (y) the Stock Bonus Closing Price Thresholds for which
the Highest Average Trading Price falls within the applicable Threshold Share
Price Range (the “
Maximum
Stock Bonus Closing Price Threshold
”)
and
(z) all other Stock Bonus Price Thresholds for which the Highest Average Trading
Price exceeds the applicable Threshold Share Price Range (collectively with
the
Maximum Stock Bonus Closing Price Threshold referred to as the “
Effected
Stock Bonus Closing Price Thresholds
”));
and
(iii)
dividing
the applicable Stock Bonus Threshold Share Value for each of the Effected Stock
Bonus Closing Price Thresholds by the applicable Minimum Threshold Share Price
for each of the Effected Stock Bonus Closing Price Thresholds (other than the
Maximum Stock Bonus Closing Price Threshold for which the Stock Bonus Share
Value shall be divided by the Highest Average Trading Price).
FOR
EXAMPLE
If
at the
end of the Stock Bonus Period the Highest Average Trading Price was $14.50;
then
(A) the Effected Stock Bonus Closing Price Thresholds consists of all of the
Stock Bonus Closing Price Thresholds; and (B) the division of (y) the Stock
Bonus Threshold Share Value for each of the Effected Stock Bonus Closing Price
Thresholds by the Minimum Threshold Share Price for each of the Effected Stock
Bonus Closing Price Thresholds other than the Maximum Stock Bonus Closing Price
Threshold and (z) the Stock Bonus Share Value for the Maximum Stock Bonus
Closing Price Threshold by the Highest Average Trading Price results in the
following:
$500,000
∕ $9.01 per share
|
=
|
55,493
shares
|
$1,000,000
∕ $10.01 per share
|
=
|
99,900
shares
|
$1,500,000
∕ $12.01 per share
|
=
|
124,895
shares
|
$2,000,000
∕ $14.50 per share
|
=
|
137,931
shares
|
Total
Stock Bonus
|
|
418,219
shares
|
The
determination of the Highest Average Trading Price and the calculation of the
number of shares of Company stock that are issuable to the Executive as Stock
Bonus shall be made as follows. Not later than twenty (20) Business Days after
the Stock Bonus Period, the Company’s senior financial executive shall provide
Executive with a statement (the “
Stock
Bonus Statement
”)
setting forth the calculation of the Stock Bonus that shall include the
calculations used to determine the Stock Bonus. Executive shall have fifteen
(15) days following delivery of the Stock Bonus Statement (the “
Stock
Bonus Notice Period
”)
to
disagree with Stock Bonus Statement by written notice to the Company setting
forth in reasonable detail the amount and nature of the disagreement (each
an
“
Stock
Bonus Dispute Notice
”).
If
the Company does not receive a Stock Bonus Dispute Notice from Executive within
the Stock Bonus Notice Period, Executive shall be conclusively presumed to
agree
with the Stock Bonus Statement and the Company shall promptly issue the Stock
Bonus shown to be due on the Stock Bonus Statement to Executive pursuant to
Section
3.6.3
below.
If the Company receives a Stock Bonus Dispute Notice from Executive within
the
Stock Bonus Notice Period then the dispute shall be resolved pursuant to
Section
9
below.
3.6.3
Delivery
of Stock Bonus.
The
Company shall deliver, or shall cause to be delivered to Executive stock
certificates for any Stock Bonus.
3.6.4
Forfeiture
of Stock Bonus.
Notwithstanding anything to the contrary contained in this
Section
3.6
,
if
during the Stock Bonus Period Executive’s employment is terminated pursuant to
Section
5.1
of this
Agreement, then Executive shall forfeit any and all rights in and to the Stock
Bonus.
3.6.5
Fractional
and Restricted Shares; Acquisition Agreement
(i)
Fractional
Shares
.
If the
calculation of the number of shares of Company common stock to be received
as
the Stock Bonus pursuant to this
Section
3.6
would
result in the issuance of fractional shares, then the number of shares of
Company common stock that Executive would otherwise receive as the Stock Bonus
shall be rounded down to the nearest whole number of shares (which shall be
the
Stock Bonus payable to Executive and Executive shall receive as cash the amount
attributable to the fractional interest.
(ii)
Restricted
Shares
.
The
shares of Company common stock to be issued pursuant to this Agreement as Stock
Bonus (A) have not been, and will not be at the time of issuance, registered
under the Securities Act, and will be issued in a transaction that is exempt
from the registration requirements of the Securities Act and (B) will be
“restricted securities” under the federal securities laws and cannot be offered
or resold except pursuant to registration under the Securities Act or an
available exemption from registration. All certificates evidencing the Stock
Bonus shall bear, in addition to any other legends required under applicable
securities laws, the following legend:
“THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE
TRANSFERRED EXCEPT PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM REGISTRATION.”
(iii)
Stock
Acquisition Agreement
.
In
connection with and as a precondition to receipt of any Stock Bonus, Employee
shall execute and deliver to Company a Stock Acquistion Agreement substantially
in the form of
Exhibit
C
attached
hereto and incorporated herein and all such other documentation as may
reasonably be required by Company.
4.
SUPPORT
AND EXPENSES
4.1.
Office
.
During
the Employment Period and until such time as the Company’s headquarters are
moved from their current location to a new location, the Company shall provide
to Executive an office allowance of Three Thousand Dollars ($3,000) per month.
At such time as the Company’s headquarters are moved, the office allowance shall
cease and the Company shall provide the Executive with
furnished
offices in the Company’s headquarters (which shall be consistent with the
Executive’s duties and sufficient for the efficient performance of those duties,
all in the reasonable determination of the Board)
.
4.2.
Expenses
.
During
the Employment Period, including following any Date of Termination for
appropriate expenses incurred on or prior to the Date of Termination, the
Company shall reimburse the Executive promptly or otherwise provide for or
pay
for all pre-approved reasonable expenses incurred by the Executive in
furtherance of, or in connection with, the business of the Company or its
Subsidiaries, consistent with the Company’s policies in effect from time to time
with respect to travel, entertainment and other business expenses, subject
to
such reasonable documentation and other limitations as may be established from
time to time by the Board, including against presentation of vouchers or
receipts therefor.
5.
TERMINATION
5.1.
Termination
Due to Death or Disability, For Cause or By the Executive
.
If the
Employment Period is terminated (a) by reason of the Executive’s death or
Disability; (b) by the Company for Cause; or (c) by the Executive (other than
for a Good Reason);
then
the
Executive shall only be entitled to receive the Executive’s Base Salary and the
reimbursement of any applicable expenses pursuant to
Section
4.2
through
the Date of Termination, and the Executive shall have no right to any other
compensation thereafter (including without limitation pursuant to
Section
3.1
and
3.2
of this
Agreement, but not including
Section
5.3
).
No
Person shall be entitled hereunder to participate in any employee benefit plan
after the Date of Termination if the Employment Period is terminated in
connection with this
Section
5.1
,
except
as otherwise expressly required by applicable law (i.e., COBRA) and
provided
that
nothing herein shall be interpreted to limit the Executive’s conversion rights,
if any, under any of the Company’s employee benefit plans.
5.2.
Termination
by the Company Other Than for Death, Disability, or Cause or by the Executive
for a Good Reason
.
In
addition to the payment to the Executive of the Executive's Base Salary and
the
reimbursement of any applicable expenses pursuant to
Section
4.2
through
the Date of Termination, if (a) the Employment Period is terminated (i) by
the
Company for reasons other than death, Disability, or Cause, or (ii) by the
Executive for a Good Reason, or (iii) in accordance with the terms of
Section
2.1(b)
hereof
(provided the Company provides the requisite notice to the Executive to
terminate prior to any Expiration Date); and (b) the Executive executes a
general release in the form attached hereto as
Exhibit
D
(the
"
Release
")
on or
before the effective Date of Termination; and (c) the Executive has not breached
the terms of the “Assignment Agreement” (as defined below);
then
the
Company shall pay the Executive an amount equal to the Executive’s Base Salary
(at the rate in effect at the Date of Termination) for a period commencing
on
the Date of Termination and on the Expiration Date;
provided,
however
,
that if
the Termination Date is within twelve (12) months of the Expiration Date, then
the Company shall pay the Executive an amount equal to the Executive’s Base
Salary (at the rate effective as of the Termination Date), for a period
commencing on the Termination Date and ending on the first (1
st
)
anniversary of the Termination Date. Any payment under this
Section
5.2
shall be
made over time as though the Executive continued to be employed by the Company.
If the Executive elects and remains eligible for health coverage pursuant to
Section 4980B of the Internal Revenue Code of 1986, as amended ("
COBRA
")
(and
subject to withholding pursuant to
Section
3.5
above);
then
commencing
within
fifteen (15) business days following the date on which the Release becomes
effective pursuant to its terms, the Company will, for a period commencing
on
the Date of Termination and ending twelve (12) months from the Date of
Termination, pay a percentage of the premium for such COBRA health coverage
equal to the percentage of the premium for health insurance coverage paid by
the
Company on the Date of Termination. The Executive shall not be entitled to
any
other salary or compensation after termination of the Employment Period (other
than as set forth in this
Section
5.2
and
Section
5.3
)
and no
Person shall be entitled hereunder to participate in any employee benefit plan
after the Date of Termination if the Employment Period is terminated in
connection with this
Section
5.2
,
except
as otherwise specifically provided hereunder or as required by applicable law
(i.e., COBRA) and
provided
that
nothing herein shall be interpreted to limit the Executive’s conversion rights,
if any, under any of the Company’s employee benefit plans. In furtherance of and
not in limitation of the foregoing, the Executive may only be terminated by
the
affirmative vote of a majority of the whole Board (excluding the Executive
if he
is a member of the Board).
5.3.
Cooperation
with Company After Termination of Employment
.
For
a
period of six (6) months following termination of the Employment Period for
any
reason, as such period may be extended with the consent of the Executive, the
Executive shall fully cooperate with the Company in all matters relating to
the
winding up of pending work on behalf of the Company including, but not limited
to, any litigation in which the Company is involved, and the orderly transfer
of
any such pending work to other executives of the Company as may be designated
by
the Company. The Executive shall be compensated for any time spent pursuant
to
this
Section
5.3
at the
specific request of the Company at a
per
diem
amount
based upon the Executive's Base Salary at the Date of Termination.
5.4.
Termination
by Mutual Consent
.
Notwithstanding any of the foregoing provisions of this
Section
5
,
if at
any time during the course of this Agreement the parties by mutual consent
decide to terminate it, they shall do so by separate agreement setting forth
the
terms and conditions of such termination.
|
6.
|
INVENTION,
ASSIGNMENT, NON-COMPETE AND CONFIDENTIALITY AGREEMENT
|
6.1.
The
parties hereto have entered into an Invention, Assignment, and Confidentiality
Agreement attached hereto as
Exhibit
E
(the
"
Assignment
Agreement
"),
which
may be amended by the parties from time to time pursuant to the terms thereof.
The provisions of the Assignment Agreement are intended by the parties to
survive and shall survive termination or expiration of the Employment Period
and
this Agreement.
|
7.
|
NON-SOLICITATION
CUSTOMERS OR EMPLOYEES;
NON-COMPETITION
|
7.1.
Covenant
Not-to-Solicit Customers.
Subject
to
Section
7.4
below,
during Executive's employment with the Company through the applicable
Restrictive Period, the Executive shall not directly or indirectly, individually
or on behalf of any other person or entity, whether as principal, agent,
stockholder, employee, consultant, representative or in any other capacity,
solicit any person or entity, that:
7.1.1
is
a
customer or client of the Company or any of its subsidiaries as of the
Termination Date; or
7.1.2
has
been
a customer or client of the Company or any of its subsidiaries at any time
within two (2) years prior to the Termination Date; or
7.1.3
is
a
prospective customer or client that the Company or any of its subsidiaries
is
actively soliciting as of the Termination Date.
7.2.
Covenant
Not-to-Solicit Employees.
Subject
to
Section
7.4
below,
during Executive's employment with the Company and from the Termination Date
through the applicable Restrictive Period, the Executive shall not directly
or
indirectly, individually or on behalf of any other person or entity, whether
as
principal, agent, stockholder, employee, consultant, representative or in any
other capacity:
7.2.1
recruit,
solicit or encourage any person to leave the employ of the Company or any of
its
subsidiaries; or
7.2.2
hire
any
employee of the Company or any of its subsidiaries as a regular employee,
consultant, independent contractor or otherwise.
7.3.
Non-Competition.
The
Executive recognizes and acknowledges the competitive and proprietary nature
of
the business operations of the Company and its subsidiaries. Subject to
Section
7.4
below,
during the Executive’s employment with the Company and for the applicable
Restrictive Period, the Executive shall not, without the prior written consent
of the Company, for himself or on behalf of any other person or entity, directly
or indirectly, whether as principal, agent, stockholder, employee, consultant,
representative or in any other capacity, own, manage, operate or control, or
be
concerned, connected or employed by, or otherwise associate in any manner with,
engage in or have a financial interest in any business that competes with the
business operations of the Company or any of its subsidiaries, except that
nothing contained herein shall preclude the Executive from purchasing or owning
stock in any such competitive business if such stock is publicly traded, and
provided that his holdings do not exceed one percent (1%) of the issued and
outstanding capital stock of such business.
7.4.
Reduction
and Extension of Restrictions.
7.4.1
If
the
Termination Date with respect to the Executive’s termination occurs on or before
the third (3
rd
)
anniversary of the Closing Date, then the provisions of
Sections
7.1, 7.2 and 7.3
above
apply to Executive regardless of the reason for the termination. If the
Termination Date with respect to the Executive’s termination occurs after the
third anniversary of the Closing Date, then the provisions of
Sections
7.1, 7.2 and 7.3
above
apply only to terminations made pursuant to
Section
5.1
and
shall not apply with respect to terminations made pursuant to
Section
5.2
.
7.4.2
The
Company at Company’s option, by written notice delivered to Executive not less
than thirty (30) days prior to the expiration of the then current, applicable
Restrictive Period, may extend the Restrictive Period (as previously extended
under this Section 7.4(b)) for an additional twelve (12) months, provided that
Company pays to Executive during the extended Restrictive Period an amount
equal
to the Executive’s Base Salary (at the rate effective as of the applicable
Termination Date and over time and in the manner Executive would have received
these payments had he continued to be employed by the Company).
7.5.
Non-Disparagement.
The
Executive agrees not to make any public statement, or engage in any conduct,
that is disparaging to the Company, or any of its employees, officers, directors
or shareholders, including, but not limited to, any statement that disparages
the products, services, finances, financial condition, capabilities or other
aspects of the business of the Company. Notwithstanding any term to the contrary
herein, the Executive shall not be in breach of this
Section
7
for the
making of any truthful statements under oath.
7.6.
Reasonableness
of Restrictions.
The
Executive has carefully read and considered the provisions of this
Section
7
,
and,
having done so, agrees (a) that the restrictions set forth herein are
reasonable, in terms of scope, duration, geographic area, and otherwise, (b)
that the protection afforded to the Company hereunder is necessary to protect
its legitimate business interests, (c) that the agreement to observe such
restrictions form a material part of the consideration for this Agreement and
the Executive's employment by the Company and (d) that upon the termination
of
the Executive’s employment with the Company for any reason, he will be able to
earn a livelihood without violating the foregoing restrictions. In the event
that, notwithstanding the foregoing, any of the provisions of this
Section
7
shall be
held to be invalid or unenforceable, the remaining provisions thereof shall
nevertheless continue to be valid and enforceable as though the invalid or
unenforceable parts had not been included therein. In the event that any
provision of this Section relating to the time period and/or the areas of
restriction and/or related aspects shall be declared by a court of competent
jurisdiction to exceed the maximum restrictiveness such court deems reasonable
and enforceable, the time period and/or areas of restriction and/or related
aspects deemed reasonable and enforceable by the court shall become and
thereafter be the maximum restriction in such regard, and the restriction shall
remain enforceable to the fullest extent deemed reasonable by such
court.
8.
EXECUTIVE’S
REPRESENTATIONS AND WARRANTIES
8.1.
Other
Agreements
.
The
Executive hereby represents and warrants to the Company that the Executive
is
not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any other Person.
8.2.
Enforceability
.
The
Executive hereby represents and warrants to the Company that upon the execution
and delivery of this Agreement by the Company, this Agreement shall be the
valid
and binding obligation of the Executive, enforceable in accordance with its
terms.
8.3.
No
Breach; No Conflict of Interest
.
The
Executive hereby represents and warrants to the Company that (a) the execution,
delivery and performance of this Agreement by the Executive do not and shall
not
conflict with, breach, violate or cause a default under any contract, agreement,
instrument, order, judgment or decree to which the Executive is a party or
by
which the Executive is bound and (b) the Executive is not, to the best of the
Executive's knowledge and belief, involved in any situation that might create,
or appear to create, a conflict of interest with loyalty to or duties for the
Company.
8.4.
Notification
of Materials or Documents from Other Employers
.
The
Executive hereby represents and warrants to the Company that the Executive
has
not brought and will not bring to the Company or use in the performance of
responsibilities at the Company any materials or documents of a former employer
or client that are not generally available to the public, unless the Executive
has obtained express written authorization from the former employer or client
and the Company for their possession and use.
8.5.
Notification
of Other Post-Employment Obligations
.
The
Executive also understands that, as part of the Executive's employment with
the
Company, the Executive is not to breach any obligation of confidentiality that
the Executive has to former employers or
clients,
and agrees to honor all such obligations to former employers or clients during
employment with the Company.
8.6.
Consultation
with Counsel
.
The
Executive hereby acknowledges and represents that the Executive has consulted
with independent legal counsel regarding the Executive’s rights and obligations
under this Agreement and that the Executive fully understands the terms and
conditions contained herein.
9.
ARBITRATION
9.1.
The
Executive and the Company mutually consent to the resolution by arbitration
of
certain claims or controversies (collectively, "
Claims
")
arising out of or relating to the Executive's employment or termination of
employment under this Agreement that either party may have against the other,
including the Company’s officers, shareholders, directors, employees, or benefit
plans, the benefit plans' sponsors, fiduciaries, administrators, or affiliates;
and all successors and assigns of any of them, or agents in their capacity
as
such or otherwise. The Claims covered by this Agreement shall include claims
for
(a) wages or other compensation due; (b) breach of any contract or covenant
(express or implied); tort claims; (c) discrimination (including but not limited
to race, sex, religion, national origin, age, disability, citizenship, marital
status, or any other basis protected by any applicable federal, state or local
law); (d) payment of wages; (e) benefits (except where an employee benefit
or
pension plan specifies that its claims procedure shall use an arbitration
procedure different from this one); and (f) violation of any federal, state,
or
local law, statute, regulation, or ordinance, or recognized under common law.
The Claims not covered by this Agreement shall include claims (g) for workers'
compensation or unemployment compensation benefits; (h) brought pursuant to
Sections
6 or 10
of this Agreement and breach of duty of loyalty; and (i) unrelated to the
Employee's employment with the Company.
9.2.
The
arbitration shall be governed by the procedures of the American Arbitration
Association ("
AAA
"),
in
accordance with its then-current Model Employment Arbitration Procedures and
shall take place in the Washington-Metropolitan area.
9.3.
If
the
parties to this Agreement become parties to an arbitration proceeding or
litigation arising from or relating to this Agreement, the non-prevailing party
shall pay the reasonable attorneys’ fees and costs incurred by the prevailing
party in such arbitration or litigation.
10.
GENERAL
PROVISIONS
10.1.
Assignment
.
The
Company may assign this Agreement and its rights and obligations hereunder
in
whole, but not in part, to any Company or other entity with or into which the
Company or may hereafter merge or consolidate or to which the Company may
transfer all or substantially all of its assets, if in any such case said
company or other entity shall by operation of law or expressly in writing assume
all obligations of the Company hereunder as fully as if it had been originally
made a party hereto, but may not otherwise assign this Agreement or its rights
and obligations hereunder. The Executive may not assign or transfer this
Agreement or any rights or obligations hereunder without the prior written
consent of the Company. Notwithstanding such assignment, the Company shall
remain a guarantor of the performance of all obligations owed by the Company
to
the Executive under this Agreement.
10.2.
Notice
.
For the
purposes of this Agreement, notices and all other communications provided for
in
this Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by certified or registered mail, return receipt
requested, postage prepaid, or Federal Express, signature required, if to the
Company, addressed to its corporate headquarters at the time notice is given,
"Attention Board of Directors"; if to the Executive, addressed to his home
address as listed in the Company’s records at the time notice is
given.
10.3.
Amendment
and Waiver
.
No
provision of this Agreement may be amended or waived unless such amendment
or
waiver is in writing and signed by each of the parties hereto.
10.4.
Non-Waiver
of Breach
.
No
failure by either party to declare a default due to any breach of any obligation
under this Agreement by the other, nor failure by either party to act quickly
with regard thereto, shall be considered to be a waiver of any such obligation,
or of any future breach.
10.5.
Severability
.
In the
event that any provision or portion of this Agreement shall be determined to
be
invalid or unenforceable for any reason, the remaining provisions of this
Agreement shall be unaffected thereby and shall remain in full force and
effect.
10.6.
Governing
Law
.
To the
extent not preempted by Federal law, the validity and effect of this Agreement
and the rights and obligations of the parties hereto shall be construed and
determined in accordance with the law of the State of Maryland, without giving
effect to any choice of law or conflict of law rules or provisions (whether
of
the State of Maryland or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of
Maryland.
10.7.
Entire
Agreement
.
This
Agreement constitutes the entire agreement and understanding of the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings relating to such subject matter, whether oral
or
written, including without limitation any prior or existing employment agreement
with the Company which shall be null and void and of no further force or effect.
10.8.
Binding
Effect
.
This
Agreement shall be binding upon and shall inure to the benefit of the
transferees, successors and assigns of the Company, including without limitation
any company with which the Company may merge or consolidate.
10.9.
Headings
.
Numbers
and titles to Sections hereof are for information purposes only and, where
inconsistent with the text, are to be disregarded.
10.10.
Survival
.
Section
1
and
Sections
5
through
10
shall
survive and continue in full force in accordance with their terms
notwithstanding the expiration or termination of the Employment
Period.
10.11.
No
Strict Construction
.
The
language used in this Agreement shall be deemed to be the language chosen by
the
parties hereto to express their mutual intent, and no rule of strict
construction shall be applied against any party.
10.12.
Counterparts
.
This
Agreement may be executed in separate counterparts (including by means of
facsimile), each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
10.13.
Indemnification
of the Executive.
The
Company shall, to the extent permitted by the Bylaws of the Company, in a manner
as applied to other officers of the Company, indemnify, protect and hold the
Executive harmless from and against any expenses, including reasonable
attorneys' fees and expenses, claims, judgments, fines, settlements and other
amounts actually and reasonably incurred in connection with any proceeding
arising out of, or related to, the Executive's employment by the Company or
any
of its Subsidiaries. The Company shall cause the Executive to be covered under
directors and officers liability insurance policies in reasonable amounts in
accordance with the Company's standard corporate policies.
10.14.
Injunctive
Relief.
The
Executive represents and acknowledges that, in light of the payments to be
made
by the Company to the Executive hereunder and for other good and valid reasons,
as a result of the restrictions stated in the Assignment Agreement and the
restrictions in
Section
7
hereof,
the Company and its affiliated companies would sustain irreparable harm and,
therefore, in addition to any other remedies which the Company may have under
this Agreement or otherwise, the Company shall be entitled to apply to any
court
of competent jurisdiction for an injunction restraining the Executive from
committing or continuing any such violation of this Agreement, and the Executive
shall not object to such application.
[SIGNATURES
ON FOLLOWING PAGES]
IN
WITNESS WHEREOF,
the
parties hereto have caused this Executive Employment Agreement to be duly
executed on the date and year first written above.
|
THE
COMPANY:
|
|
|
|
FORTRESS
AMERICA ACQUISITION CORPORATION
|
|
|
|
|
|
By:/s/
Harvey L. Weiss
|
|
Name:
Harvey L. Weiss
|
|
Title:
Chairman
|
|
|
|
|
|
THE
EXECUTIVE:
|
|
|
|
By:/s/
Thomas P. Rosato
|
|
Name:
Thomas P. Rosato
|
EXHIBIT
A
PERMITTED
ACTIVITIES
EXHIBIT
B
EXISTING
LIFE INSURANCE
EXHIBIT
C
STOCK
ACQUISITION
AGREEMENT
[Name
of Purchaser]
THIS
STOCK ACQUISITION AGREEMENT (“
Agreement
”)
is
made this ___ day of __________, 2006 by and between FORTRESS INTERNATIONAL
GROUP, INC., formerly Fortress America Acquisition Corporation, a Delaware
corporation (“
FIG
”),
and
________________________, an individual (the “
Purchaser
”).
RECITALS
:
R-1.
Pursuant
to the terms of that certain Executive Employment Agreement dated the June
5,
_____ day of ________, 2006 (the “
Employment
Agreement
”),
by
and among (i) FIG and (ii) Purchaser, FIG employed
Purchaser.
R-2.
Pursuant
to the terms of the Employment Agreement, Purchaser has earned as a bonus
_________ shares of FIG common stock (collectively the “
FIG
Shares
”).
NOW,
THEREFORE, in consideration of the premises and of the mutual covenants and
agreements herein contained and for other good and valuable consideration,
the
receipt and adequacy of which are hereby acknowledged, the undersigned agree
as
follows:
As
used
in this Agreement, the following terms shall have the meanings set
forth
below:
“
Agreement
”
has
the
meaning referred to in the Preamble.
“
Employment
Agreement
”
has
the
meaning referred to in Recital R-1.
“
Exchange
Act
”
means
the Securities Exchange Act of 1934, as amended and the rules and regulations
promulgated thereunder.
“
FIG
”
refers
to Fortress International Group, Inc.
“
FIG
Securities
”
has
the
meaning referred to in Section 3.6.
“
FIG
Shares
”
has
the
meaning referred to in Recital R-2.
“
Governmental
Authority
”
means
any nation or government, any foreign or domestic Federal, state, county,
municipal or other political instrumentality or subdivision thereof and any
foreign or domestic entity or body exercising executive, legislative, judicial,
regulatory, administrative or taxing functions of or pertaining to
government.
“
Laws
”
means
(a) all constitutions, treaties, laws, statutes, codes, regulations, ordinances,
orders, decrees, rules, or other requirements with similar effect of any
Governmental Authority, (b) all judgments, orders, writs, injunctions,
decisions, rulings, decrees and awards of any Governmental Authority, and (c)
all provisions of the foregoing, in each case binding on or affecting the Person
referred to in the context in which such word is used; “Law” means any one of
such “Laws”.
“
Lien
”
means
any lien, statutory or otherwise, security interest, mortgage, deed of trust,
priority, pledge, charge, conditional sale, title retention agreement, financing
lease or other encumbrance or similar right of others, or any agreement to
give
any of the foregoing.
“
Person
”
means
any individual, person, entity, or Governmental Authority and the heirs,
executors, administrators, legal representatives, successors, and assigns of
the
“Person” when the contest so permits.
“
Purchaser
”
means
.
“
Public
Disclosure Documents
”
has
the
meaning referred to in Section 3.7.
“
Registration
Rights Agreement
”
has
the
meaning referred to in Section 2.2.
“
SEC
”
means
the United States Securities and Exchange Commission.
“
Securities
Act
”
means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“
Tax
”
means
any Federal, state, local or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental, stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, ad valorem, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, custom, tariff, impost, levy, duty or other like
assessment or charge.
“
Taxing
Authority
”
means
any government or any subdivision, agency, commission or authority thereof,
or
any quasi-governmental or private body having jurisdiction over the assessment,
determination, collection or other imposition of Taxes.
|
2.
|
Agreement
to Sell and Purchase
.
|
2.1
Sale
and Purchase
.
Subject
to the terms and conditions of this Agreement and the Membership Purchase
Agreement, FIG hereby issues and sells to Purchaser, and Purchaser hereby
purchases from FIG, the FIG Shares.
|
2.2
|
Closing
Deliveries and Payment
.
|
(a)
Upon
the
execution of this Agreement, FIG will deliver to the Purchaser stock
certificates representing the FIG Shares.
(b)
Simultaneously
with the execution of this Agreement, the Registration Rights Agreement attached
hereto as
Exhibit
A
(the
“
Registration
Rights Agreement
”)
shall
be executed by the parties thereto.
|
3.
|
Representations
and Warranties of FIG
.
|
|
3.1
|
Organization
and Power
.
|
FIG
is a
corporation duly organized, validly existing and in good standing under the
laws
of Delaware and has full corporate power and authority (a) to execute and
deliver this Agreement and the Registration Rights Agreement and (b) issue
the
FIG Shares.
|
3.2
|
Authorization
and Enforceability
.
|
All
corporate action on the part of FIG, its officers, directors and stockholders
necessary for (a) the authorization, execution and delivery of this Agreement
and the Registration Rights Agreement, (b) the performance of all obligations
of
FIG hereunder and thereunder, and (c) the authorization, sale, issuance and
delivery of the FIG Shares pursuant hereto has been taken, as applicable. This
Agreement and the Registration Rights Agreement when executed and delivered,
will be valid and binding obligations of FIG, enforceable against FIG in
accordance with their terms, subject to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or affecting creditors’
rights and to general equity principles.
Neither
(i) the execution, delivery or performance of this Agreement and the
Registration Rights Agreement, nor (ii) the issuance of the FIG Shares
will:
(a)
conflict
with or violate any provision of the certificate of incorporation, any bylaw
or
any corporate charter or document of FIG;
(b)
result
in
the creation of, or require the creation of, any Lien upon any (i) shares of
stock of FIG or (ii) property of FIG;
(c)
result
in
(i) the termination, cancellation, modification, amendment, violation, or
renegotiation of any contract, agreement, indenture, instrument, or commitment
pertaining to the business of FIG, or (ii) the acceleration or forfeiture of
any
term of payment;
(d)
give
any
Person the right to (i) terminate, cancel, modify, amend, vary, or renegotiate
any contract, agreement, indenture, instrument, or commitment pertaining to
the
business of FIG, or (ii) to accelerate or forfeit any term of payment;
or
(e)
violate
any Laws applicable to FIG or by which its properties are bound or
affected.
Neither
(a) the execution, delivery or performance of this Agreement or the Registration
Rights Agreement, nor (b) the issuance of the FIG Shares will require (i) the
consent or approval under any agreement or instrument or (ii) FIG to obtain
the
approval or consent of, or make any declaration, filing (other than
administrative filings with Taxing Authorities, foreign companies registries
and
the like) or registration with, any Governmental Authority.
|
3.5
|
Authorization
of Stock Consideration
.
|
When
issued, the FIG Shares will be (a) duly authorized, validly issued, fully paid
and nonassessable, (b) not subject to preemptive rights created by statute,
FIG’s certificate of incorporation or bylaws or any agreement to which FIG is a
party or by which FIG is bound and (c) free of restrictions on transfer or
Liens, other than restrictions on transfer under applicable state and federal
securities laws or restrictions or Liens imposed thereon by the
Purchaser.
|
3.6
|
Public
Disclosure Documents
.
|
(a)
FIG
has
filed with, or furnished to, the SEC each form, proxy statement or report
required to be filed with, or furnished to, the SEC by FIG pursuant to the
Exchange Act (collectively, with FIG’s prospectus filed with the SEC on July 13,
2005, as amended to date, the “
Public
Disclosure Documents
”).
The
Public Disclosure Documents, as amended, complied, as of the date of their
filing with the SEC, as to form in all material respects with the requirements
of the Exchange Act and Securities Act, as applicable. The information contained
or incorporated by reference in the Public Disclosure Documents was true,
complete and correct in all material respects as of the respective dates of
the
filing thereof with the SEC, and, as of such respective dates, the Public
Disclosure Documents did not contain any untrue statement of a material fact
or
omit to state a material fact required to be stated therein or necessary to
make
the statements therein, in light of the circumstances under which they were
made, not misleading, except to the extent updated or superseded by any Public
Disclosure Document subsequently filed by FIG with the SEC prior to the date
hereof.
(b)
The
financial statements of FIG included in the Public Disclosure Documents have
been prepared in accordance with the published rules and regulations of the
SEC
and in conformity with GAAP applied on a consistent basis throughout the periods
indicated therein, except as may be indicated therein or in the notes thereto,
and presented fairly, in all material respects, the financial position of FIG
as
of the dates indicated, and the results of the operations and cash flows of
FIG
for the periods therein specified (except in the case of quarterly financial
statements for the absence of footnote disclosure and subject, in the case
of
interim periods, to normal year-end adjustments).
4.
Representations
and Warranties of Purchaser
.
Purchaser hereby represents and warrants to FIG that:
|
4.1
|
Authorization
and Enforceability
.
|
Purchaser
has all necessary power and authority under all applicable provisions of Laws
to
execute and deliver this Agreement and the Registration Rights Agreement and
to
carry out his obligations hereunder and thereunder. All actions on the part
of
the Purchaser required for the lawful execution and delivery of this Agreement
and the Registration Rights Agreement have been or will be effectively taken
prior to the date hereof, as applicable. Upon their execution and delivery,
this
Agreement and the Registration Rights Agreement, will be valid and binding
obligations of Purchaser, enforceable in accordance with their terms, subject
to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors’ rights and to general equity principles.
|
4.2
|
Purchase
Entirely For Own Account
.
|
The
Purchaser is acquiring the FIG Shares for his own account (not as a nominee
or
agent) and for investment and not with a view to the resale or distribution
of
any part thereof except as specifically permitted by Section 4.3 hereof.
|
4.3
|
Investment
Experience
.
|
Purchaser
is an "accredited investor" as defined in Rule 501(a) under the Securities
Act.
Purchaser has acquired sufficient information about FIG to reach an informed
decision to purchase the FIG Shares. Purchaser has such business and financial
experience as are required to give it the capacity to protect its own interests
in connection with the purchase of the FIG Shares.
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4.4
|
Access
To Information
.
|
The
Purchaser has had an opportunity to ask questions of and receive answers from
FIG and its officers and directors concerning FIG and the terms and conditions
of the sale of the FIG Shares under the terms of this Agreement and has had
an
opportunity to obtain additional information from FIG to the extent deemed
necessary or advisable by the Purchaser in order to verify the accuracy of
the
information obtained. The Purchaser has, to the extent deemed necessary by
the
Purchaser, consulted with his or her own advisors (including the Purchaser’s
attorney, accountant or investment advisor) regarding the Purchaser’s investment
in the FIG Shares and understands the significance and effect of his
representations, warranties, acknowledgments and agreements set forth in this
Agreement.
|
4.5
|
Speculative
Investment
.
|
The
Purchaser understands that his investment in the FIG Shares entails a high
degree of risk and that a total loss of the Purchaser’s investment in the FIG
Shares is possible. The Purchaser understands that his acquisition of the FIG
Shares will be a highly speculative investment.
|
4.6
|
Representations
and Warranties by FIG
.
|
The
Purchaser acknowledges that neither FIG, nor any of its officers, directors,
representatives or affiliates, nor any other person or entity, has made any
representations or warranties, except as otherwise expressly set forth herein,
with respect to FIG, its or its affiliates’ businesses, or the FIG
Shares.
|
4.7
|
Restricted
Securities
.
|
Purchaser
understands that (a) the FIG Shares are being offered in a transaction not
involving any public offering in the United States within the meaning of the
Securities Act, (b) the FIG Shares have not been registered under the Securities
Act (in reliance upon an exemption from the Registration Requirements of the
Securities Act pursuant to Section 4(2) thereof), (c) the FIG Shares have not
been registered under applicable state securities laws, and (d) Purchaser may
not resell, pledge or otherwise transfer any such FIG Shares unless registered
under the Securities Act and applicable state securities laws (FIG being under
no obligation to so do, except as provided in the Registration Rights
Agreement).
Purchaser
understands that the FIG Shares, and any securities issued in respect thereof
or
exchanged therefor, may bear the following legend until such time, if any,
as
(a) the FIG Shares or such securities (i) are sold in compliance with Rule
144
under the Securities Act (or a comparable successor provision) or pursuant
to an
effective registration statement under the Securities Act or (ii) pursuant
to
Rule 144(k) under the Securities Act (or a comparable successor provision),
or
(b) FIG receives an opinion of counsel reasonably acceptable to it to the effect
that such legend may be removed:
“THE
SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) PURSUANT TO AN
EXEMPTION PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) AND (B) IN ACCORDANCE
WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED
STATES.”
All
notices, requests, demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered to the parties
at the addresses set forth below, as same may be modified from time to time.
Each such notice, request or other communication shall be effective (a) if
given
by facsimile, when such facsimile is transmitted to the facsimile number set
forth below if such facsimile is transmitted on a business day, and if not,
then
on the next business day thereafter, (b) if given by mail, five (5) days after
mailed by registered or certified mail (return receipt requested) or (c) if
given by express courier, on the day delivered by an express courier (with
confirmation from recipient) to the following addresses:
|
(a)
|
if
to FIG, to:
|
|
|
Fortress
International Group, Inc.
|
|
|
Attn:
Harvey L. Weiss
|
|
|
Chairman
of the Board
|
|
|
4100
North Fairfax Drive, #1150
|
|
|
Arlington,
Virginia 22203
|
|
|
Facsimile
No.________________
|
|
|
|
|
(b)
|
if
to Purchaser, to:
|
|
|
|
|
|
Thomas
P. Rosato
|
|
|
11373
Liberty Street
|
|
|
Fulton,
MD 20759
|
|
|
Facsimile
No.:
_______________
|
|
|
|
Notice
of
any change in any address or facsimile number shall also be given in the manner
set forth above. Whenever the giving of notice is required, the giving of such
notice may be waived by the party entitled to receive such notice.
This
Agreement, the Membership Purchase Agreement and the Registration Rights
Agreement contain the entire agreement between the parties hereto with respect
to the matters contemplated herein and supersede all prior agreements or
understandings among the parties related to such matters.
|
5.3
|
Assignment
and Binding Effect
.
|
Except
as
otherwise expressly provided herein, the rights and obligations hereunder may
not be assigned or delegated by the Purchaser or FIG without the prior written
consent of the other;
provided
,
however
,
that
Purchaser may assign its rights and delegate its obligations hereunder, in
whole
or in part;
provided
,
further
,
that
any such assignee that acquires any FIG Shares shall, as a condition to
acquiring the FIG Shares, agree to be bound by the provisions of any agreement
applicable to the FIG Shares, including, but not limited to, the Registration
Rights Agreement. The provisions hereof shall inure to the benefit of, and
be
binding upon, the successors and assigns of the parties hereto.
|
5.4
|
Amendment
and Modification
.
|
This
Agreement may be amended, modified, superseded, canceled, renewed or extended,
and the terms or covenants hereof may be waived, only by a written instrument
executed by all of the parties hereto or, in the case of a waiver, by the party
waiving compliance. Except as otherwise specifically provided in this Agreement,
no waiver by either party hereto of any breach by the other party hereto of
any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of a similar or dissimilar provision or condition
at
the same or at any prior or subsequent time.
This
Agreement shall be construed and enforced in accordance with, and the rights
of
the parties shall be governed by, the laws of the State of Maryland, without
giving effect to the principles of conflicts of laws thereof.
Headings
to the sections in this Agreement are intended solely for convenience, and
no
provision of this Agreement is to be construed by reference to the heading
of
any section.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original, and all of which together shall constitute one and the
same
agreement.
Each
party hereto shall pay the fees and expenses incurred by it in connection with
the transactions contemplated herein. Without limiting the generality of the
foregoing, Purchaser hereby agrees that FIG shall not be responsible for any
expenses, taxes or other costs incurred by Purchaser in consummating the
transactions contemplated herein, including legal and other professional fees
and costs, income taxes, and sales or use taxes and that Purchaser shall be
solely responsible for the payment of all such expenses, taxes and
costs.
Any
term
or provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or affecting the validity
or enforceability of any of the terms and provisions of this Agreement in any
other jurisdiction.
The
parties hereto agree to execute such further instruments and to take such
further actions as may reasonably be necessary to carry out the intent of this
Agreement.
Each
party hereto represents and warrants that, except as provided in the Membership
Purchase Agreement, no agent, broker, investment banker, person or firm acting
on behalf of or under the authority of such party hereto is or will be entitled
to any broker's or finder's fee or any other commission directly or indirectly
in connection with the transactions contemplated herein. Each party hereto
further agrees to indemnify each other party for any claims, losses or expenses
incurred by such other party as a result of the representation in this Section
being untrue
IN
WITNESS WHEREOF, the parties hereto have executed this Stock Acquisition
Agreement as of the date first set forth above.
FIG
:
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FORTRESS
INTERNATIONAL GROUP, INC.,
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a
Delaware corporation
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By:
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Name:
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Title:
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PURCHASER
:
EXHIBIT
A
REGISTRATION
RIGHTS AGREEMENT
EXHIBIT
D
SEPARATION
FROM EMPLOYMENT AGREEMENT AND RELEASE
1.
This
agreement is between the Executive, Thomas P. Rosato, the Executive’s spouse,
family, agents and attorneys) (jointly, the "Executive") and Fortress
International Group, Inc. (the "Company"), its subsidiaries, affiliated
entities, direct or indirect owners and its and their respective officers,
directors, employees, agents, predecessors, successors, purchasers, assigns,
representatives, fiduciaries, and insurers (jointly, the "Released
Parties").
2.
If
the
Executive signs this agreement and does not revoke it, the Executive will
receive the applicable severance payments and benefits set forth in
Section
5
of the
Executive’s Executive Employment Agreement, dated __________ _____, 2006 (the
"Employment Agreement").
3.
The
Executive, deeming this Agreement to be fair, reasonable, and equitable, and
intending to be legally bound hereby, agrees to and hereby does, forever and
irrevocably fully release and discharge the Released Parties from any and all
grievances, liens, suits, judgments, claims, demands, debts, defenses, actions
or causes of action, obligations, damages (whether compensatory, punitive or
otherwise), and liabilities whatsoever which the Executive now has, has had,
or
may have, whether the same be known or unknown, vested or contingent, at law,
in
equity, or mixed, in any way arising out of or relating in any way to any
matter, act, occurrence, or transaction before the date of this General Release
Agreement, including but not limited to his employment with Company, the
Executive's separation from Company and the Executive's employment agreement
with the Company (collectively, "Claims").
This
is a General Release.
The
Executive expressly acknowledges that this General Release includes, but is
not
limited to, the Executive's release of any tort and contract claims, arbitration
claims, claims under any local, state or federal wage and hour law, wage
collection law or labor relations law, and claims of age, race, sex, religion,
disability, national origin, ancestry, citizenship, retaliation or any other
claim of employment discrimination, under the Civil Rights Acts of 1964 and
1991
as amended (42 U.S.C. §§ 2000e
et
seq
.),
the
Age Discrimination In Employment Act (29 U.S.C. §§ 621
et
seq
.),
the
Americans With Disabilities Act (42 U.S.C. §§ 12101
et
seq
.),
the
Rehabilitation Act of 1973 (29 U.S.C. §§ 701
et
seq
.),
the
Family and Medical Leave Act (29 U.S.C. §§ 2601
et
seq
.),
the
Fair Labor Standards Act (29 U.S.C. §§ 201
et
seq
.),
and
any other law prohibiting employment discrimination or relating to employment.
Also, the Executive understands that this General Release Agreement is not
an
admission of liability under any statute or otherwise by the Released Parties,
and that the Released Parties do not admit but deny any violation of his legal
rights, and that he shall not be regarded as a prevailing party for any purpose,
including but not limited to, determining responsibility for or entitlement
to
attorneys’ fees, under any statute or otherwise. The Executive agrees that in
the event the Executive brings a Claim in which the Executive seeks damages
or
other relief from any Released Party, or in the event the Executive seeks to
recover against any Released Party in any Claim brought by a governmental agency
on the Executive’s behalf, this Agreement shall serve as a complete defense to
such Claims.
4.
The
claims and causes of action the Executive is releasing and waiving include,
but
are not limited to, any and all claims and causes of action that any Released
Party:
·
has
violated its personnel policies, handbooks, contracts of employment, or
covenants of good faith and fair dealing between the Executive and the
Company;
·
has
discriminated against the Executive on the basis of age, race, color, sex
(including sexual harassment), national origin, ancestry, disability, religion,
sexual orientation, marital status, parental status, source of income,
entitlement to benefits, any union activities or other protected category in
violation of any local, state or federal law, constitution, ordinance, or
regulation, including but not limited to: the Age Discrimination in Employment
Act, as amended; Title VII of the Civil Rights Act of 1964, as amended; 42
U.S.C. § 1981, as amended; the Equal Pay Act; the Americans With
Disabilities Act; the Family Medical Leave Act; the Employee Retirement Income
Security Act; Section 510; and the National Labor Relations Act.
·
has
violated any statute, public policy or common law (including but not limited
to
claims for retaliatory discharge; negligent hiring, retention or supervision;
defamation; intentional or negligent infliction of emotional distress and/or
mental anguish; intentional interference with contract; negligence; and/or
detrimental reliance).
5.
Excluded
from this Agreement are any claims which cannot be waived by law. The Executive
is waiving, however, the Executive’s right to any monetary recovery should any
agency, such as the EEOC, pursue any claims on the Executive’s
behalf.
6.
The
Executive also agrees that the Executive has been paid for all hours worked,
including any overtime bonus or other incentive compensation, has submitted
all
invoices and expense reports, and has
not
suffered any on-the-job injury for which the Executive has not already filed
a
claim.
7.
The
Executive agrees that every term of this Agreement, including, but not limited
to, the fact that an agreement has been reached and the amount paid, shall
be
treated by the Executive as strictly confidential, and expressly covenants
not
to display, publish, disseminate, or disclose the terms of this Agreement to
any
person or entity other than the Executive’s immediate family, the Executive’s
attorney(s) (for purposes of seeking advice concerning this agreement only)
and
the Employee’s accountant(s) (for purposes of seeking tax advice only), unless
compelled to make disclosure by lawful court order or subpoena.
8.
The
Executive and the Company have entered into an Assignment of Invention,
Non-Disclosure, Non-Solicitation and Non-Competition Agreement ("NDA
Agreement"). The Executive reaffirms his obligation to comply with all of the
post termination obligations in the NDA Agreement.
9.
The
Executive also agrees that:
·
The
Executive is entering into this agreement knowingly and
voluntarily;
·
The
Executive has been advised by the Company to consult an attorney;
·
The
Executive has been given the right to take
[21/45]
days
(the "Consideration Period") to consider this agreement; provided, however
the
Employee and the Company hereby agree that if there is a dispute as to the
payment of wages such that the Executive is unable to make the representation
set forth in
Section
6
as to
payment for hours worked (including any overtime bonus or other incentive
compensation), the Consideration Period shall terminate on the later of the
natural expiration of the Consideration Period or the date that is one day
after
the resolution of all claims regarding wages;
·
But
for
the Executive's execution of this agreement, the Executive would not otherwise
be entitled to the payments described in paragraph 2;
·
if
any
part of this agreement is found to be illegal or invalid, the rest of the
agreement will be enforceable; and
·
this
agreement has been individually negotiated between the Executive and the Company
and is not part of a group exit incentive or other group employment termination
program. The Executive and the Company agree that the sole reason for the
termination of the Executive’s employment is a business reorganization and
reduction in force of the Company’s [INSERT DEPARTMENT OR JOB CLASSIFICATION]
which is occurring on [INSERT DATE]. All individuals who are being terminated
in
the [INSERT DATE] reduction in force will be eligible for benefits based upon
their execution of a release identical to this release. The Executive
acknowledges by signing this Agreement that the Executive understands that
the
Executive is eligible for the benefits which the Executive will receive
contingent upon the Executive executing this release, because the Executive
was
part of this reduction in force. As is more fully set forth in Attachment B,
this reduction in force will affect [NUMBER AFFECTED] other executives on
[DATE].
10.
After
the
Executive signs this agreement, the Executive will have 7 days to revoke it.
If
the Executive wants to revoke it, the Executive should deliver a written
revocation to __________ . If the Executive does not revoke it, the Executive
will receive the payment described in Paragraph 2.
EMPLOYEE:
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COMPANY:
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FORTRESS
INTERNATIONAL GROUP, INC.
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[NAME
AND TITLE]
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Date:
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Date:
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CONSIDERATION
PERIOD
I,
Thomas
P. Rosato understand that I have the right to take at least
[21/45]
days to
consider whether to sign this Separation From Employment and Release Agreement,
which I received on _________________, 2006. If I elect to sign this Agreement
before
[21/45]
days
have passed, I understand I am to sign and date below this paragraph to confirm
that I knowingly and voluntarily agree to waive the
[21/45]
-day
consideration period.
ATTACHMENT
B
SCHEDULE
TO SEPARATION FROM EMPLOYMENT AGREEMENT AND RELEASE
On
[Date], the employment of the following individuals (identified by job title
and
age), who will the [sole] holders of their job title, will be terminated in
a
reduction in force:
The
employment of the following individuals (identified by age), who are the [sole]
holders of their job title, will not be terminated on [Date] in the reduction
in
force.
EXHIBIT
E
INVENTION
ASSIGNMENT, NON-COMPETE
AND
CONFIDENTIALITY AGREEMENT
The
following confirms an Invention Assignment, Non-Compete and Confidentiality
Agreement ("Agreement") between me and Fortress International Group, a Maryland
corporation (the "Company," which term includes the Company’s Affiliates,
subsidiaries and any assigns). The promises and commitments that I make in
this
Agreement are a material part of the Company’s consideration in my employment
relationship with the Company.
1.
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I
understand and agree that my employment by the Company creates
a duty of
loyalty and a relationship of confidence and trust between me and
the
Company with respect to any information made known to me by the
Company or
by any client, customer or vendor of the Company or other person
who
submits information to the Company, or which may be learned by
me during
the period of my employment.
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2.
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I
recognize that the Company is continuously engaged in activities
that the
Company regards as confidential, proprietary and/or legally protectable,
which activities are at least in part intended to further the interests
of
the Company and to provide the Company with a competitive advantage.
The
Company possesses and will, in the future, continue to possess
information
that has been or will be created, discovered, developed or otherwise
becomes known to the Company (including information created by,
discovered
or developed by, or made known to me) during the period of or arising
out
of my employment by the Company. I understand that various intellectual
and other property rights have been assigned or otherwise conveyed
to the
Company. All information concerning the above described activities
and
information is collectively called "Proprietary Information" under
this
Agreement.
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3.
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By
way of illustration, but not limitation, Proprietary Information
includes:
trade secrets, processes, formulas, data and know-how; software
programs,
improvements, and inventions; research and development plans, tools
and
techniques; new product introduction plans, specifications, requirements
documents and strategies; manufacturing techniques, strategies
and costs,
expenses, supplier information and lists and distribution information;
terms and conditions in contracts of all kinds; marketing plans,
strategies and service; support strategies and procedures; development
schedules; revenue forecasts; computer programs; copyrightable
material,
employee salaries, employee expertise, employee ability levels,
training
programs and procedures, copies of memos or presentations incorporating
confidential information which I may have in my files (including
those
which I authored), patent applications and disclosures and customer
lists.
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4.
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In
consideration of my employment by the Company and the compensation
received by me from the Company from time to time, I hereby agree
as
follows:
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(a)
|
All
Proprietary Information shall be the sole property of the Company,
and the
Company shall be the sole owner of all patents, copyrights, trademarks
and
other rights related to Proprietary Information. I hereby assign
to the
Company any rights I may have or acquire in Proprietary Information.
At
all times, both during and after my employment by the Company,
I will keep
in confidence and trust all Proprietary Information, and I will
not use or
disclose any Proprietary Information or anything related to it
without
written consent of the Company, except as may be necessary in the
ordinary
course of performing my duties to the
Company.
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(b)
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All
documents, records, apparatus, equipment and other physical property,
whether or not pertaining to Proprietary Information, furnished
to me by
the Company or produced by myself or others in connection with
employment
by the Company shall be and remain the sole property of the Company,
shall
be used by me solely for the benefit of the Company and shall be
returned
to the Company immediately as and when requested by the Company.
Even if
the Company does not so request, I shall return and deliver all
such
property to the Company upon termination of my employment by me
or by the
Company for any reason. I will not take with me any such property
or any
form of copy or reproduction of such property upon my
termination.
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(c)
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I
will promptly disclose to the Company, or any persons designated
by it,
all improvements, inventions, formulas, ideas, processes, techniques,
know-how and data, whether or not patentable, made or conceived
or reduced
to practice or learned by me, either alone or jointly with others,
during
the period of my employment (all said improvements, inventions,
formulas,
ideas, processes, techniques, know-how and data shall be hereinafter
collectively call "Inventions").
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(d)
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I
agree that all Inventions that I develop or have developed (in
whole or in
part, either alone or jointly with others) and (i) use or have
used
equipment, supplies, facilities or trade secret information of
the
Company, or (ii) use or have used the hours for which I am to be
or was
compensated by the Company, or (iii) which relate to the business
of the
Company or to its actual or demonstrably anticipated research and
development or (iv) which result, in whole or in part, from work
performed
by me for the Company shall be the sole property of the Company
and its
assigns, and the Company and its assigns shall be the sole owner
of all
patents, copyrights and other rights in connection therewith. I
hereby
assign to the Company any rights I may have or acquire in such
Inventions.
I further agree as to all such inventions and improvements to assist
the
Company in every proper way (but at the Company’s expense) to obtain and
from time to time enforce patents, copyrights or other rights on
said
inventions and improvements in any and all countries, and to that
end I
will execute all documents in use for applying for and obtaining
such
patents and copyrights thereon and enforcing same, as the Company
may
desire, together with any assignments thereof to the Company or
persons
designated by it. My obligation to assist the Company in obtaining
and
enforcing patents, copyrights or other rights for such inventions
and
improvements in any and all countries shall continue beyond the
termination of my employment, but the Company shall compensate
me at a
reasonable rate after such termination for time actually spent
by me at
the Company’s request on such
assistance.
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(e)
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In
the event that the Company is unable for any reason whatsoever
to secure
my signature to any lawful and necessary document required to apply
for or
execute any patent, copyright or other applications with respect
to such
inventions and improvements (including renewals, extensions,
continuations, divisions or continuations in part thereof), I hereby
irrevocably designate and appoint the Company and its authorized
officers
and agents, as my agents and attorneys-in-fact, this power of attorney
being coupled with an interest, to act for and in my behalf and
instead of
me, to execute and file any such application and to do all other
lawfully
permitted acts to further the prosecution and issuance of patents,
copyrights or other rights thereon with the same legal force and
effect as
if executed by me.
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(f)
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As
a matter of record, on
Attachment
A
,
I
have attached a complete list of all inventions or improvements
relevant
to the subject matter of my employment by the Company which have
been made
or conceived or first reduced to practice by me alone or jointly
with
others prior to my employment with the Company that I desire to
remove
from the operation of this Agreement, and I covenant that such
list is
complete. If no such list is signed by me and attached to this
Agreement,
I represent and warrant that I have no such inventions or improvements
at
the time of signing this Agreement, and I agree that I will make
no claim
against the Company with respect to any such inventions or
ideas.
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(g)
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I
represent that my performance of all the terms of this Agreement
will not
breach any agreement to keep in confidence proprietary information
acquired by me in confidence or in trust prior to my employment
by the
Company. I have not entered into, and I agree I will not enter
into, any
agreement either written or oral in conflict with this
Agreement.
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(h)
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I
acknowledge that the Company from time to time may be involved
in
government projects of a classified nature. I further acknowledge
that the
Company from time to time may have agreements with other persons
or
governmental agencies which impose obligations or restrictions
on the
Company regarding inventions made during the course of work thereunder
or
regarding the confidential nature of such work or information disclosed
in
connection therewith. I agree to be bound by all such obligations
and
restrictions and to take all action necessary to discharge the
obligations
of the Company thereunder.
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(i)
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I
represent and warrant that execution of this Agreement, my employment
with
the Company and my performance of my proposed duties to the Company
in the
development of its business have not and will not violate any obligations
which I may have to any former
employer.
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(j)
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I
agree that at no time during my employment by the Company or thereafter
shall I make, or cause or assist any other person to make, any
statement
or other communication to any third party which impugns or attacks,
or is
otherwise critical of, the reputation, business or character of
the
Company or any of its Affiliates or any of their respective directors,
officers or employees.
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5.
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This
Agreement shall be effective as of the first day of my employment
by the
Company.
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6.
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This
Agreement may not be changed, modified, released, discharged, abandoned
or
otherwise amended, in whole or in part, except by an instrument
in
writing, signed by myself and a majority of the members of the
Board. I
agree that any subsequent change or changes in my duties, salary
or
compensation shall not affect the validity or scope of this
Agreement.
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7.
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I
acknowledge receipt of this Agreement and agree that with respect
to the
subject matter hereof it is my final, complete and exclusive agreement
with the Company, superseding any previous oral or written
representations, understanding or agreements with the Company or
any
officer or representative with respect to the subject matter
herein.
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8.
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In
the event that any paragraph or provision of this Agreement shall
be held
to be illegal or unenforceable, such paragraph or provision shall
be
modified to the extent necessary to give effect to the intent of
the
parties or, if necessary, severed from this Agreement and the entire
Agreement shall not fail on account thereof, but shall otherwise
remain in
full force and effect.
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9.
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This
Agreement shall be construed in accordance with the laws of the
State of
Maryland without regard to its choice of law
principles.
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10.
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This
Agreement shall be binding upon me, my heirs, executors, assigns,
and
administrators and shall inure to the benefit of the Company, its
successors and assigns.
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I
acknowledge that the foregoing restrictions contained in
Section
4
are
reasonable in all respects including the scope, duration and geographic
limitations. I agree that the restrictions are an appropriate means of
protecting the Company’s legitimate business interests, and no greater than
necessary to protect the Company’s interests. I acknowledge that these
restrictions will not unreasonably interfere with my ability to make a
living.
Dated:
__________ _____, 2006
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Executive
Signature
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Thomas
P. Rosato
|
Accepted
and Agreed to:
Fortress
International Group, Inc.
By:
Name:
Harvey L. Weiss
Title:
Chairman
Date:
EXECUTIVE
EMPLOYMENT AGREEMENT
This
EXECUTIVE EMPLOYMENT AGREEMENT (this "
Agreement
"),
effective this 19th day of January, 2007 ("
Effective
Date
"),
between
FORTRESS
AMERICA ACQUISITION CORPORATION,
a
Delaware corporation (the "
Company
")
and
GERARD J. GALLAGHER (the "
Executive
").
WITNESSETH
WHEREAS,
Executive and Thomas P. Rosato (“
Rosato
”)
were
all of the members of VTC, LLC, a Maryland limited liability company
(“
VTC
”)
and
Vortech, LLC (“
Vortech
”).
WHEREAS,
by the terms of a Second Amended and Restated Membership Interest Purchase
Agreement dated July 31, 2006 (the “
Purchase
Agreement
”)by
and
among the Company, the Executive, Rosato, VTC and Vortech, Company purchased
from Executive and Rosato all of their respective membership interests in each
of VTC and Vortech.
WHEREAS
as an inducement for and condition to the Company entering into and executing
and delivering the Purchase Agreement, the Company requires that the Employee
enter into this Agreement for the purpose of retaining the Executive’s services
upon the terms and conditions set forth below.
WHEREAS,
the Executive is willing to provide services to the Company upon the terms
and
conditions set forth herein.
NOW
THEREFORE, in consideration of the promises and the mutual agreements contained
herein, intending to be legally bound, the parties agree as
follows:
1.
DEFINITIONS
The
following words and terms shall have the meanings set forth below for the
purposes of this Agreement:
1.1.
Affiliates
.
"
Affiliates
"
of a
Person, or a Person "
affiliated
"
with
another Person, are any Persons which, directly or indirectly, through one
or
more intermediaries, controls or are controlled by or are under common control
with, the Person specified.
1.2.
Base
Salary
.
"
Base
Salary
"
shall
have the meaning set forth in
Section
3.1
hereof.
1.3.
Board
.
"
Board
"
means
the Company’s Board of Directors.
1.4.
Cause.
1.4.1
Termination
of the Executive’s employment for "
Cause
"
shall
mean any of the following:
(i)
any
act
that would constitute a material violation of the Company’s material written
policies provided that the Company specifically terminates the Executive's
employment for Cause hereunder within 120 days from the date the Company has
actual notice of such;
(ii)
intentionally
engaging in conduct materially and demonstrably injurious to the Company
provided that the Company specifically terminates the Executive's employment
for
Cause hereunder within 120 days from the date the Company has actual notice
of
such; or
(iii)
conviction
of (1) a crime of embezzlement or a crime involving moral turpitude; (2) a
crime
with respect to the Company involving a breach of trust or dishonesty; or (3)
in
either case, a plea of guilty or no contest to such a crime provided that the
Company specifically terminates the Executive's employment for Cause hereunder
within 120 days from the date the Company has actual notice of
such.
1.4.2
In
any
case, if the Company desires to terminate the Executive's employment for Cause
in accordance with Sections 1.4.1(i), (ii) or (iii), it shall first give written
notice of the facts and circumstances providing the basis for Cause to the
Executive, and to allow the Executive 30 days from the date of such notice
to
remedy, cure or rectify, if possible, the situation giving rise to the Company's
allegations of Cause (the "Cure Period"); provided, however, that the Executive
shall have only one such opportunity to cure, regardless of the grounds on
which
Cause is asserted, during the Employment Period. During the Cure Period, the
Executive may not be entitled to payment of any compensation, in the Company's
sole discretion; provided, however, that if the Executive's compensation is
withheld and the Executive successfully remedies, cures, or rectifies the
situation giving rise to the Company's notice of Cause during the Cure Period,
resulting in the Company's withdrawal of its written notice of Cause, the
Executive shall be compensated for the Cure Period.
1.4.3
A
termination for Cause after a Change in Control shall be based only on events
occurring after such Change in Control; provided, however, the foregoing
limitation shall not apply to an event constituting Cause which was not
discovered by the Company prior to a Change in Control.
1.4.4
Cause
shall be determined in good faith by the affirmative vote of a majority of
the
whole Board (excluding the Executive if the Executive is a member of the Board).
1.4.A
Change
in Control of the Company
.
"
Change
in Control of the Company
"
means
(a) a sale, transfer or exclusive licensing by the Company of all or
substantially all of the assets of the Company and its Subsidiaries on a
consolidated basis (measured by either book value in accordance with United
States generally accepted accounting principles consistently applied or fair
market value determined in the reasonable good faith judgment of the Board)
in
any transaction or series of transactions (other than sales in the ordinary
course of business); (b) any sale, transfer or issuance or series of sales,
transfers and/or issuances of shares of the Company's capital stock by the
Company or any holders thereof which results in any Person or Persons, other
than the holders of Company’s capital stock as of the date hereof, owning
capital stock of the Company possessing the voting power (under ordinary
circumstances) to elect a majority of the Board; (c) the stockholders of the
Company approve a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least 50% of the total voting
power represented by the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation; or (d) the
stockholders of the Corporation approve a plan of complete liquidation of the
Company.
1.5.
Date
of Termination
.
"
Date
of Termination
"
shall
mean (a) if the Executive’s employment is terminated by reason of the
Executive’s death, the date of the Executive’s death, or (b) if the Executive’s
employment with the Company and its Subsidiaries is terminated for any reason
other than the Executive’s death, the date on which Executive ceases to be an
employee of the Company and its Subsidiaries.
1.6.
Disability
.
Termination
of the Executive’s employment with the Company and its Subsidiaries based on
"
Disability
"
shall
mean termination of the Executive’s employment at the Company’s sole discretion,
upon thirty (30) days prior written notice in the event the Executive becomes
“Disabled,” as defined in any group term disability insurance maintained by the
Company applicable to the Executive, or, (b) if the Company shall not maintain
such insurance, the determination by an independent physician acting reasonably
and in good faith that the Executive is incapacitated by reason of a physical
or
mental illness which is long-term in nature and which prevents the Executive
from performing the substantial and material duties of his employment with
the
Company,
provided
that
such incapacity can reasonably be expected to prevent the Executive from working
at least six (6) months in any twelve (12) month period. The Company may require
the Executive to have the examination described in the preceding sentence at
any
time for the purpose of determining whether the Executive has a long-term
disability, and the Executive agrees to submit to such examination upon request
of the Board;
provided
that the
Company shall pay all costs and expenses associated with such examination.
This
Section
1.6
shall be
interpreted and applied consistently with the Americans with Disabilities Act,
the Family and Medical Leave Act and other applicable law.
1.7.
Good
Reason
.
Termination of the Executive’s employment by the Executive for a "
Good
Reason
"
shall
mean termination by the Executive because of: (a) a requirement to move the
Executive’s primary place of business more than twenty-five (25) miles from the
office the Executive works in on the date hereof (which termination occurs
prior
to such move) without the written consent of the Executive, (b) failure of
the
Company to pay any installment of the Executive’s Base Salary when such
installment is due pursuant to this Agreement, which failure is not cured within
fifteen (15) days; (c) any other breach or breaches of this Agreement by the
Company, which breaches are, singularly or in the aggregate, material, and
which
are not cured within thirty (30) days of written notice of such breach or
breaches to the Company by the Executive; or (d) a reduction by the Company
of
the Executive’s Base Salary without the express written consent of the
Executive.
1.8.
Person
.
"
Person
"
means
an individual, a partnership, a corporation, a limited liability company, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, any other business entity and a governmental entity or any
department, agency or political subdivision thereof.
1.9.
Restrictive
Period
.
For
purposes of this Agreement the term “
Restrictive
Period
”
shall
have the following meanings.
1.9.1
If
the
Executive’s employment is terminated prior to the third (3
rd
)
anniversary of the Closing Date, then the Restrictive Period shall be the period
from the Termination Date through the third anniversary of the Closing Date
(or
if the Termination Date is within twelve (12) months of the third anniversary
of
the Closing Date), then for a period of one (1) year measured from the
Termination Date through the first anniversary of the Termination Date.
1.9.2
Subject
to
Section
7.4
hereof,
If the Executive’s employment is terminated after the third anniversary of the
Closing Date, then the Restrictive Period shall be the twelve month period
measured from the Termination Date through the first anniversary of the
Termination Date.
1.10.
Subsidiary
.
"
Subsidiary
"
means,
with respect to any Person, any corporation, limited liability company,
partnership, association or other business entity of which (a) if a corporation,
a majority of the total voting power of shares of stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof, or (b) if a limited liability company,
partnership, association or other business entity, a majority of the partnership
or other similar ownership interest thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more Subsidiaries of that
Person or a combination thereof. For purposes hereof, a Person or Persons shall
be deemed to have a majority ownership interest in a limited liability company,
partnership, association or other business entity if such Person or Persons
shall be allocated a majority of limited liability company, partnership,
association or other business entity gains or losses or shall be or control
any
managing director or general partner of such limited liability company,
partnership, association or other business entity.
2.
EMPLOYMENT
2.1.
Employment
Period
.
2.1.1
Expressly
conditioned upon the closing (the “
Closing
”)
under
the Purchase Agreement and effective as of the date of the Closing (the
“
Closing
Date
”),
the
Company hereby employs the Executive, and the Executive hereby accepts said
employment and agrees to render services to the Company, on the terms and
conditions set forth in this Agreement for the period (the "
Employment
Period
")
beginning on the Closing Date and ending when such period is terminated pursuant
to the terms hereof. Unless earlier terminated by either the Company or the
Executive as hereinafter provided, the Employment Period shall continue through
the third (3
rd
)
anniversary of the Closing Date ("
Expiration
Date
");
provided, however, that if this Agreement is renewed pursuant to Section 2.1.2)
below, then the “Expiration Date” for the then current “Renewal Term” (as
hereinafter defined) shall be the date that is last day of the one year period
of any Renewal Term. Notwithstanding anything to the contrary continued in
this
Section
2.1.1
,
if the
Closing under the Purchase Agreement does not occur, this Agreement shall be
null and void and of no force and effect.
2.1.2
This
Agreement shall be automatically renewed for an additional one year period
commencing at the expiration of the initial Employment Period or any subsequent
renewal term (each, a "
Renewal
Term
")
unless
the Company provides written notice of termination to the Executive not less
than sixty (60) days prior to the Expiration Date. Notwithstanding the foregoing
or anything else in this Agreement to the contrary, the Employment Period shall
immediately terminate prior to any Expiration Date (i) upon Executive’s death,
Disability or termination for a Good Reason or (ii) upon termination by the
Company for Cause; in all other circumstances, thirty (30) days' prior written
notice is required by either party to the other to terminate this
Agreement.
2.2.
Duties
.
During
the Employment Period, the Executive shall devote the Executive's full working
time and attention and use the Executive's best efforts and skill to further
the
interests of the Company. The Executive shall, to the best of his ability,
execute the strategic plan of the Company as approved by the Board, perform
his
duties, adhere to the Company’s published policies and procedures, promote the
Company’s interests, reputation, business and welfare, and work actively with
the Board and other senior managers to help augment the existing business base,
increase the corporate contract backlog and identify and develop new business
opportunities. The Executive shall perform such services for the Company as
is
consistent with the Executive's position (subject to the power and authority
of
the Board to expand or limit such services and to overrule actions of officers
of the Company) and as lawfully directed, from time to time, by the Board.
During the Employment Period, the Executive’s title shall be President and Chief
Operating Officer. During the Employment Period the Executive shall report
to
the Board, and Executive may use such additional titles as assigned and approved
by the Board. The Executive shall not, during the Employment Period, be employed
or involved in any other business activity for gain, profit or other pecuniary
advantage. Notwithstanding the foregoing, the Executive may (a) volunteer
services for or on behalf of such religious, educational, non-profit and/or
other charitable organization as the Executive may wish to serve; and (b) manage
his personal, financial and legal affairs, so long as such activities do not
interfere with the performance of his duties and responsibilities to the Company
as provided hereunder or violate any of the terms of this or any other agreement
entered into with the Company. The Executive acknowledges that the Executive
may
be required to travel on business in connection with the Executive's performance
of the Executive's duties hereunder, but that the Executive's base will be
the
location of the Company’s headquarters in Columbia or Beltsville, Maryland or
such other location as determined by the Board.
2.3.
Insurance
.
The
Company may, at its discretion, apply for and procure in its own name and for
its own benefit life and/or disability insurance on the Executive in any amount
or amounts considered available. The Executive agrees to cooperate in any
medical or other examination, supply any information and execute and deliver
any
applications or other instruments in writing as may be reasonably necessary
to
obtain and constitute such insurance. The Executive hereby represents that
the
Executive has no reason to believe that the Executive's life is not insurable
at
rates now prevailing for a healthy person of the Executive's gender and
age.
2.4.
Corporate
Opportunity
.
The
Executive agrees that, unless approved by the Board, he will not take personal
advantage of any business opportunities which arise during his employment with
the Company and which may be of benefit to the Company. All material facts
regarding such opportunities must be promptly reported to the Board for
consideration by the Company.
3.
COMPENSATION
AND BENEFITS
3.1.
Base
Salary
.
During
the Employment Period, the Company shall pay the Executive an initial base
salary of Four Hundred Twenty Five Thousand Dollars ($425,000.00) per year
("
Base
Salary
")
paid
in approximately equal installments bi-weekly. The Company will review the
Executive’s Base Salary on December 31 of each year of the Employment Period in
order to determine what Base Salary adjustments, if any, shall be made, subject
to an annual minimum increase of five percent (5%), but in no event may the
Executive's Base Salary be reduced below that paid in the preceding
year.
3.2.
Annual
Bonus
.
For
calendar year 2006 (ending on or about December 31, 2006) and for each
other calendar year that begins during the Employment Period (each such calendar
year, a "
Bonus
Year
"),
the
Executive shall be eligible to receive a bonus in an amount and on such terms
as
are established by the Company's Board up to fifty percent (50%) of the Base
Salary (each, a "
Bonus
")
in
accordance with the bonus plan or formula applicable to the Executive. The
2006
Bonus shall be prorated to reflect that the 2006 Bonus Year is a partial year
commencing on the Closing Date and ending on December 31, 2006. In
addition, the Executive shall be eligible for any other bonus as the Board
may
determine in its sole discretion. Any Bonus for an applicable calendar year,
or
portion thereof, shall be paid to the Executive no later than the conclusion
of
the first calendar quarter following each calendar year.
3.3.
Vacation
and Benefits
.
The
Executive shall continue to receive vacation, health insurance and other
employee benefits as the Company makes available to other executives, as may
exist at any particular time and from time to time during the Executive’s
employment.
3.4.
Withholding
.
All
payments required to be made by the Company hereunder to the Executive shall
be
subject to the withholding of such amounts, if any, relating to tax and other
payroll deductions as the Company may reasonably determine should be withheld
pursuant to any applicable law or regulation.
3.5.
Policies,
Procedures & Benefit Plans
.
Except
as otherwise provided herein, the Executive’s employment shall be subject to the
policies and procedures which apply generally to the Company’s employees as the
same may be interpreted, adopted, revised or deleted from time to time, during
the Employment Period, by the Board in its sole discretion. The Executive agrees
to comply with such policies and procedures in all material respects. During
the
Employment Period, the Executive shall be entitled to participate in any Company
benefit plans on the same basis as other executive level employees of the
Company. The Board reserves the right to change, alter, or terminate benefits,
plans and carriers in its sole direction. All matters of eligibility for
coverage or benefits under any health, hospitalization, life, disability, or
other insurance plan, program or policy shall be determined in accordance with
the provisions of the plan, program, or policy; the Company shall not be liable
to the Executive, the Executive’s family, heirs, executors, or beneficiaries,
for any payment payable or claimed to be payable under any such benefit plan,
program, or policy. Provided that the Executive can be insured at standard
rates, the Company shall maintain the Executive’s existing life insurance
policy(ies) as set forth on
Exhibit
A
attached
hereto, or if it is not possible to continue the existing policies, then provide
the Executive a $1,000,000 life insurance policy with a reputable and
responsible insurance company acceptable to the Company and the
Executive.
3.6.
Stock
Bonus.
Subject
to
Section
3.6.4
below,
as of July 13, 2008 (the period between the Effective Date and July 13, 2008
being hereinafter referred to as the “
Stock
Bonus Period
”),
Executive shall be entitled to receive up to Five Million Dollars
($5,000,000.00) worth of the Company’s common stock (the “
Stock
Bonus
”)
depending on whether during the Stock Bonus Period the highest average closing
price of the Company’s common stock (on the Nasdaq OTC market or such other
recognized stock market on which the Company’s stock is then being traded on)
for sixty (60) consecutive trading days (the “
Highest
Average Trading Price
”)
exceeds the applicable “Stock Bonus Closing Price Thresholds” set forth
below.
3.6.1
For
purposes of this Agreement (A) the “
Stock
Bonus Closing Price Thresholds
”
are
as
follows (each of which is individually referred to as a “
Stock
Bonus Closing Price Threshold
”);
(B)
the “
Stock
Bonus Threshold Share Value
”
for
each Stock Bonus Closing Price Threshold shall be the dollar amount ($500,000,
$1,000,000, $1,500,000 or $2,000,000 as the case may be) for that Stock Bonus
Closing Price Threshold as set forth below; (C) the “
Minimum
Threshold Share Price
”
with
respect to each Stock Bonus Closing Price Threshold is the maximum price per
share that is within that Stock Bonus Closing Price Threshold ($9.01, $10.01,
$12.01, or $14.01 as the case may be); and (D) the “
Threshold
Share Price Range
”
for
each Stock Bonus Closing Price Threshold shall be the price per share range
referenced therein ($9.01 - $10.00, $10.01 - $12.00, $12.01 - $14.00 and $14.01,
as the case may be).
(i)
If
during
the Stock Bonus Period the Highest Average Trading Price never exceeds Nine
Dollars ($9.00) per share, then no Company common stock shall be issuable to
Executive at the end of the Stock Bonus Period.
(ii)
If
during
the Stock Bonus Period the Highest Average Trading Price is in excess of Nine
Dollars ($9.00), then Executive shall be entitled to receive Five Hundred
Thousand Dollars ($500,000.00) of Company common stock.
(iii)
If
during
the Stock Bonus Period the Highest Average Trading Price is in excess of Ten
Dollars ($10.00), then Executive shall be entitled to receive, in addition
to
the Company common stock referenced in
Section
3.6.1(ii)
above,
an additional One Million Dollars ($1,000,000.00) of Company common
stock.
(iv)
If
during
the Stock Bonus Period the Highest Average Trading Price is in excess of Twelve
Dollars ($12.00), then Executive shall be entitled to receive, in addition
to
the Company common stock referenced in
Sections
3.6.1(ii) and (iii)
above,
an additional One Million Five Hundred Thousand Dollars ($1,500,000.00) of
Company common stock.
(v)
If
during
the Stock Bonus Period the Highest Average Trading Price is in excess of
Fourteen Dollars ($14.00) per share, then Executive shall be entitled to receive
, in addition to the Company common stock referenced in
Sections
3.6.1(ii) -(iv)
above,
an additional Two Million Dollars ($2,000,000.00) of Company common stock (based
on the Highest Average Trading Price).
3.6.2
Determination
of Company Shares Payable as Stock Bonus.
The
number of shares Company common stock to be issued as the Stock Bonus shall
be
determined at the end of the Stock Bonus Period as follows:
(i)
determining
the Highest Average Trading Price during the Stock Bonus Period;
(ii)
determining
which Stock Bonus Closing Price Thresholds are applicable (the applicable Stock
Bonus Thresholds being (y) the Stock Bonus Closing Price Thresholds for which
the Highest Average Trading Price falls within the applicable Threshold Share
Price Range (the “
Maximum
Stock Bonus Closing Price Threshold
”)
and
(z) all other Stock Bonus Price Thresholds for which the Highest Average Trading
Price exceeds the applicable Threshold Share Price Range (collectively with
the
Maximum Stock Bonus Closing Price Threshold referred to as the “
Effected
Stock Bonus Closing Price Thresholds
”));
and
(iii)
dividing
the applicable Stock Bonus Threshold Share Value for each of the Effected Stock
Bonus Closing Price Thresholds by the applicable Minimum Threshold Share Price
for each of the Effected Stock Bonus Closing Price Thresholds (other than the
Maximum Stock Bonus Closing Price Threshold for which the Stock Bonus Share
Value shall be divided by the Highest Average Trading Price).
FOR
EXAMPLE
If
at the
end of the Stock Bonus Period the Highest Average Trading Price was $14.50;
then
(A) the Effected Stock Bonus Closing Price Thresholds consists of all of the
Stock Bonus Closing Price Thresholds; and (B) the division of (y) the Stock
Bonus Threshold Share Value for each of the Effected Stock Bonus Closing Price
Thresholds by the Minimum Threshold Share Price for each of the Effected Stock
Bonus Closing Price Thresholds other than the Maximum Stock Bonus Closing Price
Threshold and (z) the Stock Bonus Share Value for the Maximum Stock Bonus
Closing Price Threshold by the Highest Average Trading Price results in the
following:
$500,000 ∕ $9.01 per share
=
|
55,493 shares
|
$1,000,000 ∕ $10.01 per share
=
|
99,900 shares
|
$1,500,000 ∕ $12.01 per share
=
|
124,895 shares
|
$2,000,000 ∕ $14.50 per share
=
|
137,931 shares
|
Total Stock Bonus
|
418,219
shares
|
The
determination of the Highest Average Trading Price and the calculation of the
number of shares of Company stock that are issuable to the Executive as Stock
Bonus shall be made as follows. Not later than twenty (20) Business Days after
the Stock Bonus Period, the Company’s senior financial executive shall provide
Executive with a statement (the “
Stock
Bonus Statement
”)
setting forth the calculation of the Stock Bonus that shall include the
calculations used to determine the Stock Bonus. Executive shall have fifteen
(15) days following delivery of the Stock Bonus Statement (the “
Stock
Bonus Notice Period
”)
to
disagree with Stock Bonus Statement by written notice to the Company setting
forth in reasonable detail the amount and nature of the disagreement (each
an
“
Stock
Bonus Dispute Notice
”).
If
the Company does not receive a Stock Bonus Dispute Notice from Executive within
the Stock Bonus Notice Period, Executive shall be conclusively presumed to
agree
with the Stock Bonus Statement and the Company shall promptly issue the Stock
Bonus shown to be due on the Stock Bonus Statement to Executive pursuant to
Section
3.6.3
below.
If the Company receives a Stock Bonus Dispute Notice from Executive within
the
Stock Bonus Notice Period then the dispute shall be resolved pursuant to
Section
9
below.
3.6.3
Delivery
of Stock Bonus.
The
Company shall deliver, or shall cause to be delivered to Executive stock
certificates for any Stock Bonus.
3.6.4
Forfeiture
of Stock Bonus.
Notwithstanding anything to the contrary contained in this
Section
3.6
,
if
during the Stock Bonus Period Executive’s employment is terminated pursuant to
Section
5.1
of this
Agreement, then Executive shall forfeit any and all rights in and to the Stock
Bonus.
3.6.5
Fractional
and Restricted Shares; Acquisition Agreement
(i)
Fractional
Shares
.
If the
calculation of the number of shares of Company common stock to be received
as
the Stock Bonus pursuant to this
Section
3.6
would
result in the issuance of fractional shares, then the number of shares of
Company common stock that Executive would otherwise receive as the Stock Bonus
shall be rounded down to the nearest whole number of shares (which shall be
the
Stock Bonus payable to Executive and Executive shall receive as cash the amount
attributable to the fractional interest.
(ii)
Restricted
Shares
.
The
shares of Company common stock to be issued pursuant to this Agreement as Stock
Bonus (A) have not been, and will not be at the time of issuance, registered
under the Securities Act, and will be issued in a transaction that is exempt
from the registration requirements of the Securities Act and (B) will be
“restricted securities” under the federal securities laws and cannot be offered
or resold except pursuant to registration under the Securities Act or an
available exemption from registration. All certificates evidencing the Stock
Bonus shall bear, in addition to any other legends required under applicable
securities laws, the following legend:
“THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE
TRANSFERRED EXCEPT PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM REGISTRATION.”
(iii)
Stock
Acquisition Agreement
.
In
connection with and as a precondition to receipt of any Stock Bonus, Employee
shall execute and deliver to Company a Stock Acquisition Agreement substantially
in the form of
Exhibit
B
attached
hereto and incorporated herein and all such other documentation as may
reasonably be required by Company.
4.
SUPPORT
AND EXPENSES
4.1.
Office
.
During
the Employment Period the Company shall provide Executive with
furnished
offices in the Company’s headquarters (which shall be consistent with the
Executive’s duties and sufficient for the efficient performance of those duties,
all in the reasonable determination of the Board)
.
4.2.
Expenses
.
During
the Employment Period, including following any Date of Termination for
appropriate expenses incurred on or prior to the Date of Termination, the
Company shall reimburse the Executive promptly or otherwise provide for or
pay
for all pre-approved reasonable expenses incurred by the Executive in
furtherance of, or in connection with, the business of the Company or its
Subsidiaries, consistent with the Company’s policies in effect from time to time
with respect to travel, entertainment and other business expenses, subject
to
such reasonable documentation and other limitations as may be established from
time to time by the Board, including against presentation of vouchers or
receipts therefor.
5.
TERMINATION
5.1.
Termination
Due to Death or Disability, For Cause or By the Executive
.
If the
Employment Period is terminated (a) by reason of the Executive’s death or
Disability; (b) by the Company for Cause; or (c) by the Executive (other than
for a Good Reason);
then
the
Executive shall only be entitled to receive the Executive’s Base Salary and the
reimbursement of any applicable expenses pursuant to
Section
4.2
through
the Date of Termination, and the Executive shall have no right to any other
compensation thereafter (including without limitation pursuant to
Section
3.1
and
3.2
of this
Agreement, but not including
Section
5.3
).
No
Person shall be entitled hereunder to participate in any employee benefit plan
after the Date of Termination if the Employment Period is terminated in
connection with this
Section
5.1
,
except
as otherwise expressly required by applicable law (i.e., COBRA) and
provided
that
nothing herein shall be interpreted to limit the Executive’s conversion rights,
if any, under any of the Company’s employee benefit plans.
5.2.
Termination
by the Company Other Than for Death, Disability, or Cause or by the Executive
for a Good Reason
.
In
addition to the payment to the Executive of the Executive's Base Salary and
the
reimbursement of any applicable expenses pursuant to
Section
4.2
through
the Date of Termination, if (a) the Employment Period is terminated (i) by
the
Company for reasons other than death, Disability, or Cause, or (ii) by the
Executive for a Good Reason, or (iii) in accordance with the terms of
Section
2.1(b)
hereof
(provided the Company provides the requisite notice to the Executive to
terminate prior to any Expiration Date); and (b) the Executive executes a
general release in the form attached hereto as
Exhibit
C
(the
"
Release
")
on or
before the effective Date of Termination; and (c) the Executive has not breached
the terms of the “Assignment Agreement” (as defined below);
then
the
Company shall pay the Executive an amount equal to the Executive’s Base Salary
(at the rate in effect at the Date of Termination) for a period commencing
on
the Date of Termination and on the Expiration Date;
provided,
however
,
that if
the Termination Date is within twelve (12) months of the Expiration Date, then
the Company shall pay the Executive an amount equal to the Executive’s Base
Salary (at the rate effective as of the Termination Date), for a period
commencing on the Termination Date and ending on the first (1
st
)
anniversary of the Termination Date. Any payment under this
Section
5.2
shall be
made over time as though the Executive continued to be employed by the Company.
If the Executive elects and remains eligible for health coverage pursuant to
Section 4980B of the Internal Revenue Code of 1986, as amended ("
COBRA
")
(and
subject to withholding pursuant to
Section
3.5
above);
then
commencing
within
fifteen (15) business days following the date on which the Release becomes
effective pursuant to its terms, the Company will, for a period commencing
on
the Date of Termination and ending twelve (12) months from the Date of
Termination, pay a percentage of the premium for such COBRA health coverage
equal to the percentage of the premium for health insurance coverage paid by
the
Company on the Date of Termination. The Executive shall not be entitled to
any
other salary or compensation after termination of the Employment Period (other
than as set forth in this
Section
5.2
and
Section
5.3
)
and no
Person shall be entitled hereunder to participate in any employee benefit plan
after the Date of Termination if the Employment Period is terminated in
connection with this
Section
5.2
,
except
as otherwise specifically provided hereunder or as required by applicable law
(i.e., COBRA) and
provided
that
nothing herein shall be interpreted to limit the Executive’s conversion rights,
if any, under any of the Company’s employee benefit plans. In furtherance of and
not in limitation of the foregoing, the Executive may only be terminated by
the
affirmative vote of a majority of the whole Board (excluding the Executive
if he
is a member of the Board).
5.3.
Cooperation
with Company After Termination of Employment
.
For
a
period of six (6) months following termination of the Employment Period for
any
reason, as such period may be extended with the consent of the Executive, the
Executive shall fully cooperate with the Company in all matters relating to
the
winding up of pending work on behalf of the Company including, but not limited
to, any litigation in which the Company is involved, and the orderly transfer
of
any such pending work to other executives of the Company as may be designated
by
the Company. The Executive shall be compensated for any time spent pursuant
to
this
Section
5.3
at the
specific request of the Company at a
per
diem
amount
based upon the Executive's Base Salary at the Date of Termination.
5.4.
Termination
by Mutual Consent
.
Notwithstanding any of the foregoing provisions of this
Section
5
,
if at
any time during the course of this Agreement the parties by mutual consent
decide to terminate it, they shall do so by separate agreement setting forth
the
terms and conditions of such termination.
6.
INVENTION,
ASSIGNMENT, NON-COMPETE AND
CONFIDENTIALITY
AGREEMENT
6.1.
The
parties hereto have entered into an Invention, Assignment, and Confidentiality
Agreement attached hereto as
Exhibit
D
(the
"
Assignment
Agreement
"),
which
may be amended by the parties from time to time pursuant to the terms thereof.
The provisions of the Assignment Agreement are intended by the parties to
survive and shall survive termination or expiration of the Employment Period
and
this Agreement.
7.
|
NON-SOLICITATION
CUSTOMERS OR EMPLOYEES;
NON-COMPETITION
|
7.1.
Covenant
Not-to-Solicit Customers.
Subject
to
Section
7.4
below,
during Executive's employment with the Company through the applicable
Restrictive Period, the Executive shall not directly or indirectly, individually
or on behalf of any other person or entity, whether as principal, agent,
stockholder, employee, consultant, representative or in any other capacity,
solicit any person or entity, that:
(a)
is
a
customer or client of the Company or any of its subsidiaries as of the
Termination Date; or
(b)
has
been
a customer or client of the Company or any of its subsidiaries at any time
within two (2) years prior to the Termination Date; or
(c)
is
a
prospective customer or client that the Company or any of its subsidiaries
is
actively soliciting as of the Termination Date.
7.2.
Covenant
Not-to-Solicit Employees.
Subject
to
Section
7.4
below,
during Executive's employment with the Company and from the Termination Date
through the applicable Restrictive Period, the Executive shall not directly
or
indirectly, individually or on behalf of any other person or entity, whether
as
principal, agent, stockholder, employee, consultant, representative or in any
other capacity:
(a)
recruit,
solicit or encourage any person to leave the employ of the Company or any of
its
subsidiaries; or
(b)
hire
any
employee of the Company or any of its subsidiaries as a regular employee,
consultant, independent contractor or otherwise.
7.3.
Non-Competition.
The
Executive recognizes and acknowledges the competitive and proprietary nature
of
the business operations of the Company and its subsidiaries. Subject to
Section
7.4
below,
during the Executive’s employment with the Company and for the applicable
Restrictive Period, the Executive shall not, without the prior written consent
of the Company, for himself or on behalf of any other person or entity, directly
or indirectly, whether as principal, agent, stockholder, employee, consultant,
representative or in any other capacity, own, manage, operate or control, or be
concerned, connected or employed by, or otherwise associate in any manner with,
engage in or have a financial interest in any business that competes with the
business operations of the Company or any of its subsidiaries, except that
nothing contained herein shall preclude the Executive from purchasing or owning
stock in any such competitive business if such stock is publicly traded, and
provided that his holdings do not exceed one percent (1%) of the issued and
outstanding capital stock of such business.
7.4.
Reduction
and Extension of Restrictions.
(a)
If
the
Termination Date with respect to the Executive’s termination occurs on or before
the third (3
rd
)
anniversary of the Closing Date, then the provisions of
Sections
7.1, 7.2 and 7.3
above
apply to Executive regardless of the reason for the termination. If the
Termination Date with respect to the Executive’s termination occurs after the
third anniversary of the Closing Date, then the provisions of
Sections
7.1, 7.2 and 7.3
above
apply only to terminations made pursuant to
Section
5.1
and
shall not apply with respect to terminations made pursuant to
Section
5.2
.
(b)
The
Company at Company’s option, by written notice delivered to Executive not less
than thirty (30) days prior to the expiration of the then current, applicable
Restrictive Period, may extend the Restrictive Period (as previously extended
under this Section 7.4(b)) for an additional twelve (12) months, provided that
Company pays to Executive during the extended Restrictive Period an amount
equal
to the Executive’s Base Salary (at the rate effective as of the applicable
Termination Date and over time and in the manner Executive would have received
these payments had he continued to be employed by the Company).
7.5.
Non-Disparagement.
The
Executive agrees not to make any public statement, or engage in any conduct,
that is disparaging to the Company, or any of its employees, officers, directors
or shareholders, including, but not limited to, any statement that disparages
the products, services, finances, financial condition, capabilities or other
aspects of the business of the Company. Notwithstanding any term to the contrary
herein, the Executive shall not be in breach of this
Section
7
for the
making of any truthful statements under oath.
7.6.
Reasonableness
of Restrictions.
The
Executive has carefully read and considered the provisions of this
Section
7
,
and,
having done so, agrees (a) that the restrictions set forth herein are
reasonable, in terms of scope, duration, geographic area, and otherwise, (b)
that the protection afforded to the Company hereunder is necessary to protect
its legitimate business interests, (c) that the agreement to observe such
restrictions form a material part of the consideration for this Agreement and
the Executive's employment by the Company and (d) that upon the termination
of
the Executive’s employment with the Company for any reason, he will be able to
earn a livelihood without violating the foregoing restrictions. In the event
that, notwithstanding the foregoing, any of the provisions of this
Section
7
shall be
held to be invalid or unenforceable, the remaining provisions thereof shall
nevertheless continue to be valid and enforceable as though the invalid or
unenforceable parts had not been included therein. In the event that any
provision of this Section relating to the time period and/or the areas of
restriction and/or related aspects shall be declared by a court of competent
jurisdiction to exceed the maximum restrictiveness such court deems reasonable
and enforceable, the time period and/or areas of restriction and/or related
aspects deemed reasonable and enforceable by the court shall become and
thereafter be the maximum restriction in such regard, and the restriction shall
remain enforceable to the fullest extent deemed reasonable by such
court.
8.
EXECUTIVE’S
REPRESENTATIONS AND WARRANTIES
8.1.
Other
Agreements
.
The
Executive hereby represents and warrants to the Company that the Executive
is
not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any other Person.
8.2.
Enforceability
.
The
Executive hereby represents and warrants to the Company that upon the execution
and delivery of this Agreement by the Company, this Agreement shall be the
valid
and binding obligation of the Executive, enforceable in accordance with its
terms.
8.3.
No
Breach; No Conflict of Interest
.
The
Executive hereby represents and warrants to the Company that (a) the execution,
delivery and performance of this Agreement by the Executive do not and shall
not
conflict with, breach, violate or cause a default under any contract, agreement,
instrument, order, judgment or decree to which the Executive is a party or
by
which the Executive is bound and (b) the Executive is not, to the best of the
Executive's knowledge and belief, involved in any situation that might create,
or appear to create, a conflict of interest with loyalty to or duties for the
Company.
8.4.
Notification
of Materials or Documents from Other Employers
.
The
Executive hereby represents and warrants to the Company that the Executive
has
not brought and will not bring to the Company or use in the performance of
responsibilities at the Company any materials or documents of a former employer
or client that are not generally available to the public, unless the Executive
has obtained express written authorization from the former employer or client
and the Company for their possession and use.
8.5.
Notification
of Other Post-Employment Obligations
.
The
Executive also understands that, as part of the Executive's employment with
the
Company, the Executive is not to breach any obligation of confidentiality that
the Executive has to former employers or
clients,
and agrees to honor all such obligations to former employers or clients during
employment with the Company.
8.6.
Consultation
with Counsel
.
The
Executive hereby acknowledges and represents that the Executive has consulted
with independent legal counsel regarding the Executive’s rights and obligations
under this Agreement and that the Executive fully understands the terms and
conditions contained herein.
9.
ARBITRATION
9.1.
The
Executive and the Company mutually consent to the resolution by arbitration
of
certain claims or controversies (collectively, "
Claims
")
arising out of or relating to the Executive's employment or termination of
employment under this Agreement that either party may have against the other,
including the Company’s officers, shareholders, directors, employees, or benefit
plans, the benefit plans' sponsors, fiduciaries, administrators, or affiliates;
and all successors and assigns of any of them, or agents in their capacity
as
such or otherwise. The Claims covered by this Agreement shall include claims
for
(a) wages or other compensation due; (b) breach of any contract or covenant
(express or implied); tort claims; (c) discrimination (including but not limited
to race, sex, religion, national origin, age, disability, citizenship, marital
status, or any other basis protected by any applicable federal, state or local
law); (d) payment of wages; (e) benefits (except where an employee benefit
or
pension plan specifies that its claims procedure shall use an arbitration
procedure different from this one); and (f) violation of any federal, state,
or
local law, statute, regulation, or ordinance, or recognized under common law.
The Claims not covered by this Agreement shall include claims (g) for workers'
compensation or unemployment compensation benefits; (h) brought pursuant to
Sections
6 or 10
of this Agreement and breach of duty of loyalty; and (i) unrelated to the
Employee's employment with the Company.
9.2.
The
arbitration shall be governed by the procedures of the American Arbitration
Association ("
AAA
"),
in
accordance with its then-current Model Employment Arbitration Procedures and
shall take place in the Washington-Metropolitan area.
9.3.
If
the
parties to this Agreement become parties to an arbitration proceeding or
litigation arising from or relating to this Agreement, the non-prevailing party
shall pay the reasonable attorneys’ fees and costs incurred by the prevailing
party in such arbitration or litigation.
10.
GENERAL
PROVISIONS
10.1.
Assignment
.
The
Company may assign this Agreement and its rights and obligations hereunder
in
whole, but not in part, to any Company or other entity with or into which the
Company or may hereafter merge or consolidate or to which the Company may
transfer all or substantially all of its assets, if in any such case said
company or other entity shall by operation of law or expressly in writing assume
all obligations of the Company hereunder as fully as if it had been originally
made a party hereto, but may not otherwise assign this Agreement or its rights
and obligations hereunder. The Executive may not assign or transfer this
Agreement or any rights or obligations hereunder without the prior written
consent of the Company. Notwithstanding such assignment, the Company shall
remain a guarantor of the performance of all obligations owed by the Company
to
the Executive under this Agreement.
10.2.
Notice
.
For the
purposes of this Agreement, notices and all other communications provided for
in
this Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by certified or registered mail, return receipt
requested, postage prepaid, or Federal Express, signature required, if to the
Company, addressed to its corporate headquarters at the time notice is given,
"Attention Board of Directors"; if to the Executive, addressed to his home
address as listed in the Company’s records at the time notice is
given.
10.3.
Amendment
and Waiver
.
No
provision of this Agreement may be amended or waived unless such amendment
or
waiver is in writing and signed by each of the parties hereto.
10.4.
Non-Waiver
of Breach
.
No
failure by either party to declare a default due to any breach of any obligation
under this Agreement by the other, nor failure by either party to act quickly
with regard thereto, shall be considered to be a waiver of any such obligation,
or of any future breach.
10.5.
Severability
.
In the
event that any provision or portion of this Agreement shall be determined to
be
invalid or unenforceable for any reason, the remaining provisions of this
Agreement shall be unaffected thereby and shall remain in full force and
effect.
10.6.
Governing
Law
.
To the
extent not preempted by Federal law, the validity and effect of this Agreement
and the rights and obligations of the parties hereto shall be construed and
determined in accordance with the law of the State of Maryland, without giving
effect to any choice of law or conflict of law rules or provisions (whether
of
the State of Maryland or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of
Maryland.
10.7.
Entire
Agreement
.
This
Agreement constitutes the entire agreement and understanding of the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings relating to such subject matter, whether oral
or
written, including without limitation any prior or existing employment agreement
with the Company which shall be null and void and of no further force or effect.
10.8.
Binding
Effect
.
This
Agreement shall be binding upon and shall inure to the benefit of the
transferees, successors and assigns of the Company, including without limitation
any company with which the Company may merge or consolidate.
10.9.
Headings
.
Numbers
and titles to Sections hereof are for information purposes only and, where
inconsistent with the text, are to be disregarded.
10.10.
Survival
.
Section
1
and
Sections
5
through
10
shall
survive and continue in full force in accordance with their terms
notwithstanding the expiration or termination of the Employment
Period.
10.11.
No
Strict Construction
.
The
language used in this Agreement shall be deemed to be the language chosen by
the
parties hereto to express their mutual intent, and no rule of strict
construction shall be applied against any party.
10.12.
Counterparts
.
This
Agreement may be executed in separate counterparts (including by means of
facsimile), each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
10.13.
Indemnification
of the Executive.
The
Company shall, to the extent permitted by the Bylaws of the Company, in a manner
as applied to other officers of the Company, indemnify, protect and hold the
Executive harmless from and against any expenses, including reasonable
attorneys' fees and expenses, claims, judgments, fines, settlements and other
amounts actually and reasonably incurred in connection with any proceeding
arising out of, or related to, the Executive's employment by the Company or
any
of its Subsidiaries. The Company shall cause the Executive to be covered under
directors and officers liability insurance policies in reasonable amounts in
accordance with the Company's standard corporate policies.
10.14.
Injunctive
Relief.
The
Executive represents and acknowledges that, in light of the payments to be
made
by the Company to the Executive hereunder and for other good and valid reasons,
as a result of the restrictions stated in the Assignment Agreement and the
restrictions in
Section
7
hereof,
the Company and its affiliated companies would sustain irreparable harm and,
therefore, in addition to any other remedies which the Company may have under
this Agreement or otherwise, the Company shall be entitled to apply to any
court
of competent jurisdiction for an injunction restraining the Executive from
committing or continuing any such violation of this Agreement, and the Executive
shall not object to such application.
[SIGNATURES
ON FOLLOWING PAGES]
IN
WITNESS WHEREOF,
the
parties hereto have caused this Executive Employment Agreement to be duly
executed on the date and year first written above.
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THE
COMPANY:
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FORTRESS
AMERICA ACQUISITION CORPORATION
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By:/s/
Harvey L. Weiss
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Name:
Harvey L. Weiss
|
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Title:
Chairman
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THE EXECUTIVE:
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By:/s/
Gerard J. Gallagher
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Name:
Gerard J.
Gallagher
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EXHIBIT
A
EXISTING
LIFE INSURANCE
EXHIBIT
B
STOCK
ACQUISITION
AGREEMENT
[Name
of Purchaser]
THIS
STOCK ACQUISITION AGREEMENT (“
Agreement
”)
is
made this ___ day of __________, 2006 by and between FORTRESS INTERNATIONAL
GROUP, INC., formerly Fortress America Acquisition Corporation, a Delaware
corporation (“
FIG
”),
and
________________________, an individual (the “
Purchaser
”).
RECITALS
:
R-1.
Pursuant
to the terms of that certain Executive Employment Agreement dated the June
5,
_____ day of ________, 2006 (the “
Employment
Agreement
”),
by
and among (i) FIG and (ii) Purchaser, FIG employed
Purchaser.
R-2.
Pursuant
to the terms of the Employment Agreement, Purchaser has earned as a bonus
_________ shares of FIG common stock (collectively the “
FIG
Shares
”).
NOW,
THEREFORE, in consideration of the premises and of the mutual covenants and
agreements herein contained and for other good and valuable consideration,
the
receipt and adequacy of which are hereby acknowledged, the undersigned agree
as
follows:
As
used
in this Agreement, the following terms shall have the meanings set
forth
below:
“
Agreement
”
has
the
meaning referred to in the Preamble.
“
Employment
Agreement
”
has
the
meaning referred to in Recital R-1.
“
Exchange
Act
”
means
the Securities Exchange Act of 1934, as amended and the rules and regulations
promulgated thereunder.
“
FIG
”
refers
to Fortress International Group, Inc.
“
FIG
Securities
”
has
the
meaning referred to in Section 3.6.
“
FIG
Shares
”
has
the
meaning referred to in Recital R-2.
“
Governmental
Authority
”
means
any nation or government, any foreign or domestic Federal, state, county,
municipal or other political instrumentality or subdivision thereof and any
foreign or domestic entity or body exercising executive, legislative, judicial,
regulatory, administrative or taxing functions of or pertaining to
government.
“
Laws
”
means
(a) all constitutions, treaties, laws, statutes, codes, regulations, ordinances,
orders, decrees, rules, or other requirements with similar effect of any
Governmental Authority, (b) all judgments, orders, writs, injunctions,
decisions, rulings, decrees and awards of any Governmental Authority, and (c)
all provisions of the foregoing, in each case binding on or affecting the Person
referred to in the context in which such word is used; “Law” means any one of
such “Laws”.
“
Lien
”
means
any lien, statutory or otherwise, security interest, mortgage, deed of trust,
priority, pledge, charge, conditional sale, title retention agreement, financing
lease or other encumbrance or similar right of others, or any agreement to
give
any of the foregoing.
“
Person
”
means
any individual, person, entity, or Governmental Authority and the heirs,
executors, administrators, legal representatives, successors, and assigns of
the
“Person” when the contest so permits.
“
Purchaser
”
means_________________
.
“
Public
Disclosure Documents
”
has
the
meaning referred to in Section 3.7.
“
Registration
Rights Agreement
”
has
the
meaning referred to in Section 2.2.
“
SEC
”
means
the United States Securities and Exchange Commission.
“
Securities
Act
”
means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“
Tax
”
means
any Federal, state, local or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental, stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, ad valorem, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, custom, tariff, impost, levy, duty or other like
assessment or charge.
“
Taxing
Authority
”
means
any government or any subdivision, agency, commission or authority thereof,
or
any quasi-governmental or private body having jurisdiction over the assessment,
determination, collection or other imposition of Taxes.
2.
|
Agreement
to Sell and Purchase
.
|
2.1
Sale
and Purchase
.
Subject
to the terms and conditions of this Agreement and the Membership Purchase
Agreement, FIG hereby issues and sells to Purchaser, and Purchaser hereby
purchases from FIG, the FIG Shares.
2.2
|
Closing
Deliveries and Payment
.
|
(a)
Upon
the
execution of this Agreement, FIG will deliver to the Purchaser stock
certificates representing the FIG Shares.
(b)
Simultaneously
with the execution of this Agreement, the Registration Rights Agreement attached
hereto as
Exhibit
A
(the
“
Registration
Rights Agreement
”)
shall
be executed by the parties thereto.
3.
|
Representations
and Warranties of FIG
.
|
3.1
|
Organization
and Power
.
|
FIG
is a
corporation duly organized, validly existing and in good standing under the
laws
of Delaware and has full corporate power and authority (a) to execute and
deliver this Agreement and the Registration Rights Agreement and (b) issue
the
FIG Shares.
3.2
|
Authorization
and Enforceability
.
|
All
corporate action on the part of FIG, its officers, directors and stockholders
necessary for (a) the authorization, execution and delivery of this Agreement
and the Registration Rights Agreement, (b) the performance of all obligations
of
FIG hereunder and thereunder, and (c) the authorization, sale, issuance and
delivery of the FIG Shares pursuant hereto has been taken, as applicable. This
Agreement and the Registration Rights Agreement when executed and delivered,
will be valid and binding obligations of FIG, enforceable against FIG in
accordance with their terms, subject to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or affecting creditors’
rights and to general equity principles.
Neither
(i) the execution, delivery or performance of this Agreement and the
Registration Rights Agreement, nor (ii) the issuance of the FIG Shares
will:
(a)
conflict
with or violate any provision of the certificate of incorporation, any bylaw
or
any corporate charter or document of FIG;
(b)
result
in
the creation of, or require the creation of, any Lien upon any (i) shares of
stock of FIG or (ii) property of FIG;
(c)
result
in
(i) the termination, cancellation, modification, amendment, violation, or
renegotiation of any contract, agreement, indenture, instrument, or commitment
pertaining to the business of FIG, or (ii) the acceleration or forfeiture of
any
term of payment;
(d)
give
any
Person the right to (i) terminate, cancel, modify, amend, vary, or renegotiate
any contract, agreement, indenture, instrument, or commitment pertaining to
the
business of FIG, or (ii) to accelerate or forfeit any term of payment;
or
(e)
violate
any Laws applicable to FIG or by which its properties are bound or
affected.
Neither
(a) the execution, delivery or performance of this Agreement or the Registration
Rights Agreement, nor (b) the issuance of the FIG Shares will require (i) the
consent or approval under any agreement or instrument or (ii) FIG to obtain
the
approval or consent of, or make any declaration, filing (other than
administrative filings with Taxing Authorities, foreign companies registries
and
the like) or registration with, any Governmental Authority.
3.5
|
Authorization
of Stock Consideration
.
|
When
issued, the FIG Shares will be (a) duly authorized, validly issued, fully paid
and nonassessable, (b) not subject to preemptive rights created by statute,
FIG’s certificate of incorporation or bylaws or any agreement to which FIG is a
party or by which FIG is bound and (c) free of restrictions on transfer or
Liens, other than restrictions on transfer under applicable state and federal
securities laws or restrictions or Liens imposed thereon by the
Purchaser.
3.6
|
Public
Disclosure Documents
.
|
(a)
FIG
has
filed with, or furnished to, the SEC each form, proxy statement or report
required to be filed with, or furnished to, the SEC by FIG pursuant to the
Exchange Act (collectively, with FIG’s prospectus filed with the SEC on July 13,
2005, as amended to date, the “
Public
Disclosure Documents
”).
The
Public Disclosure Documents, as amended, complied, as of the date of their
filing with the SEC, as to form in all material respects with the requirements
of the Exchange Act and Securities Act, as applicable. The information contained
or incorporated by reference in the Public Disclosure Documents was true,
complete and correct in all material respects as of the respective dates of
the
filing thereof with the SEC, and, as of such respective dates, the Public
Disclosure Documents did not contain any untrue statement of a material fact
or
omit to state a material fact required to be stated therein or necessary to
make
the statements therein, in light of the circumstances under which they were
made, not misleading, except to the extent updated or superseded by any Public
Disclosure Document subsequently filed by FIG with the SEC prior to the date
hereof.
(b)
The
financial statements of FIG included in the Public Disclosure Documents have
been prepared in accordance with the published rules and regulations of the
SEC
and in conformity with GAAP applied on a consistent basis throughout the periods
indicated therein, except as may be indicated therein or in the notes thereto,
and presented fairly, in all material respects, the financial position of FIG
as
of the dates indicated, and the results of the operations and cash flows of
FIG
for the periods therein specified (except in the case of quarterly financial
statements for the absence of footnote disclosure and subject, in the case
of
interim periods, to normal year-end adjustments).
4.
Representations
and Warranties of Purchaser
.
Purchaser hereby represents and warrants to FIG that:
4.1
|
Authorization
and Enforceability
.
|
Purchaser
has all necessary power and authority under all applicable provisions of Laws
to
execute and deliver this Agreement and the Registration Rights Agreement and
to
carry out his obligations hereunder and thereunder. All actions on the part
of
the Purchaser required for the lawful execution and delivery of this Agreement
and the Registration Rights Agreement have been or will be effectively taken
prior to the date hereof, as applicable. Upon their execution and delivery,
this
Agreement and the Registration Rights Agreement, will be valid and binding
obligations of Purchaser, enforceable in accordance with their terms, subject
to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors’ rights and to general equity principles.
4.2
|
Purchase
Entirely For Own Account
.
|
The
Purchaser is acquiring the FIG Shares for his own account (not as a nominee
or
agent) and for investment and not with a view to the resale or distribution
of
any part thereof except as specifically permitted by Section 4.3 hereof.
4.3
|
Investment
Experience
.
|
Purchaser
is an "accredited investor" as defined in Rule 501(a) under the Securities
Act.
Purchaser has acquired sufficient information about FIG to reach an informed
decision to purchase the FIG Shares. Purchaser has such business and financial
experience as are required to give it the capacity to protect its own interests
in connection with the purchase of the FIG Shares.
4.4
|
Access
To Information
.
|
The
Purchaser has had an opportunity to ask questions of and receive answers from
FIG and its officers and directors concerning FIG and the terms and conditions
of the sale of the FIG Shares under the terms of this Agreement and has had
an
opportunity to obtain additional information from FIG to the extent deemed
necessary or advisable by the Purchaser in order to verify the accuracy of
the
information obtained. The Purchaser has, to the extent deemed necessary by
the
Purchaser, consulted with his or her own advisors (including the Purchaser’s
attorney, accountant or investment advisor) regarding the Purchaser’s investment
in the FIG Shares and understands the significance and effect of his
representations, warranties, acknowledgments and agreements set forth in this
Agreement.
4.5
|
Speculative
Investment
.
|
The
Purchaser understands that his investment in the FIG Shares entails a high
degree of risk and that a total loss of the Purchaser’s investment in the FIG
Shares is possible. The Purchaser understands that his acquisition of the FIG
Shares will be a highly speculative investment.
4.6
|
Representations
and Warranties by FIG
.
|
The
Purchaser acknowledges that neither FIG, nor any of its officers, directors,
representatives or affiliates, nor any other person or entity, has made any
representations or warranties, except as otherwise expressly set forth herein,
with respect to FIG, its or its affiliates’ businesses, or the FIG
Shares.
4.7
|
Restricted
Securities
.
|
Purchaser
understands that (a) the FIG Shares are being offered in a transaction not
involving any public offering in the United States within the meaning of the
Securities Act, (b) the FIG Shares have not been registered under the Securities
Act (in reliance upon an exemption from the Registration Requirements of the
Securities Act pursuant to Section 4(2) thereof), (c) the FIG Shares have not
been registered under applicable state securities laws, and (d) Purchaser may
not resell, pledge or otherwise transfer any such FIG Shares unless registered
under the Securities Act and applicable state securities laws (FIG being under
no obligation to so do, except as provided in the Registration Rights
Agreement).
Purchaser
understands that the FIG Shares, and any securities issued in respect thereof
or
exchanged therefor, may bear the following legend until such time, if any,
as
(a) the FIG Shares or such securities (i) are sold in compliance with Rule
144
under the Securities Act (or a comparable successor provision) or pursuant
to an
effective registration statement under the Securities Act or (ii) pursuant
to
Rule 144(k) under the Securities Act (or a comparable successor provision),
or
(b) FIG receives an opinion of counsel reasonably acceptable to it to the effect
that such legend may be removed:
“THE
SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) PURSUANT TO AN
EXEMPTION PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) AND (B) IN ACCORDANCE
WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED
STATES.”
All
notices, requests, demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered to the parties
at the addresses set forth below, as same may be modified from time to time.
Each such notice, request or other communication shall be effective (a) if
given
by facsimile, when such facsimile is transmitted to the facsimile number set
forth below if such facsimile is transmitted on a business day, and if not,
then
on the next business day thereafter, (b) if given by mail, five (5) days after
mailed by registered or certified mail (return receipt requested) or (c) if
given by express courier, on the day delivered by an express courier (with
confirmation from recipient) to the following addresses:
(a)
if
to
FIG, to:
Fortress
International Group, Inc.
Attn:
Harvey L. Weiss
Chairman
of the Board
4100
North Fairfax Drive, #1150
Arlington,
Virginia 22203
Facsimile
No.:
(b)
if
to
Purchaser, to:
Gerard
J.
Gallagher
5
Tydings
Road
Severna
Park, MD 21146
Facsimile
No.:
_______________
Notice
of
any change in any address or facsimile number shall also be given in the manner
set forth above. Whenever the giving of notice is required, the giving of such
notice may be waived by the party entitled to receive such notice.
This
Agreement, the Membership Purchase Agreement and the Registration Rights
Agreement contain the entire agreement between the parties hereto with respect
to the matters contemplated herein and supersede all prior agreements or
understandings among the parties related to such matters.
5.3
|
Assignment
and Binding Effect
.
|
Except
as
otherwise expressly provided herein, the rights and obligations hereunder may
not be assigned or delegated by the Purchaser or FIG without the prior written
consent of the other;
provided
,
however
,
that
Purchaser may assign its rights and delegate its obligations hereunder, in
whole
or in part;
provided
,
further
,
that
any such assignee that acquires any FIG Shares shall, as a condition to
acquiring the FIG Shares, agree to be bound by the provisions of any agreement
applicable to the FIG Shares, including, but not limited to, the Registration
Rights Agreement. The provisions hereof shall inure to the benefit of, and
be
binding upon, the successors and assigns of the parties hereto.
5.4
|
Amendment
and Modification
.
|
This
Agreement may be amended, modified, superseded, canceled, renewed or extended,
and the terms or covenants hereof may be waived, only by a written instrument
executed by all of the parties hereto or, in the case of a waiver, by the party
waiving compliance. Except as otherwise specifically provided in this Agreement,
no waiver by either party hereto of any breach by the other party hereto of
any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of a similar or dissimilar provision or condition
at
the same or at any prior or subsequent time.
This
Agreement shall be construed and enforced in accordance with, and the rights
of
the parties shall be governed by, the laws of the State of Maryland, without
giving effect to the principles of conflicts of laws thereof.
Headings
to the sections in this Agreement are intended solely for convenience, and
no
provision of this Agreement is to be construed by reference to the heading
of
any section.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original, and all of which together shall constitute one and the
same
agreement.
Each
party hereto shall pay the fees and expenses incurred by it in connection with
the transactions contemplated herein. Without limiting the generality of the
foregoing, Purchaser hereby agrees that FIG shall not be responsible for any
expenses, taxes or other costs incurred by Purchaser in consummating the
transactions contemplated herein, including legal and other professional fees
and costs, income taxes, and sales or use taxes and that Purchaser shall be
solely responsible for the payment of all such expenses, taxes and
costs.
Any
term
or provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or affecting the validity
or enforceability of any of the terms and provisions of this Agreement in any
other jurisdiction.
The
parties hereto agree to execute such further instruments and to take such
further actions as may reasonably be necessary to carry out the intent of this
Agreement.
Each
party hereto represents and warrants that, except as provided in the Membership
Purchase Agreement, no agent, broker, investment banker, person or firm acting
on behalf of or under the authority of such party hereto is or will be entitled
to any broker's or finder's fee or any other commission directly or indirectly
in connection with the transactions contemplated herein. Each party hereto
further agrees to indemnify each other party for any claims, losses or expenses
incurred by such other party as a result of the representation in this Section
being untrue
IN
WITNESS WHEREOF, the parties hereto have executed this Stock Acquisition
Agreement as of the date first set forth above.
|
FIG
:
|
|
|
|
FORTRESS
INTERNATIONAL GROUP, INC.,
|
|
|
|
|
|
a Delaware corporation
|
|
|
|
|
|
By:__________________________
|
|
|
Name:______________________
|
|
|
Title:_______________________
|
|
|
|
PURCHASER
:
|
|
|
|
|
______________________
|
|
|
Name:____________________
|
EXHIBIT
A
REGISTRATION
RIGHTS AGREEMENT
EXHIBIT
B
SEPARATION
FROM EMPLOYMENT AGREEMENT AND RELEASE
1.
This
agreement is between the Executive, Gerard J. Gallagher, the Executive’s spouse,
family, agents and attorneys) (jointly, the "Executive") and Fortress
International Group, Inc. (the "Company"), its subsidiaries, affiliated
entities, direct or indirect owners and its and their respective officers,
directors, employees, agents, predecessors, successors, purchasers, assigns,
representatives, fiduciaries, and insurers (jointly, the "Released
Parties").
2.
If
the
Executive signs this agreement and does not revoke it, the Executive will
receive the applicable severance payments and benefits set forth in
Section
5
of the
Executive’s Executive Employment Agreement, dated __________ _____, 2006 (the
"Employment Agreement").
3.
The
Executive, deeming this Agreement to be fair, reasonable, and equitable, and
intending to be legally bound hereby, agrees to and hereby does, forever and
irrevocably fully release and discharge the Released Parties from any and all
grievances, liens, suits, judgments, claims, demands, debts, defenses, actions
or causes of action, obligations, damages (whether compensatory, punitive or
otherwise), and liabilities whatsoever which the Executive now has, has had,
or
may have, whether the same be known or unknown, vested or contingent, at law,
in
equity, or mixed, in any way arising out of or relating in any way to any
matter, act, occurrence, or transaction before the date of this General Release
Agreement, including but not limited to his employment with Company, the
Executive's separation from Company and the Executive's employment agreement
with the Company (collectively, "Claims").
This
is a General Release.
The
Executive expressly acknowledges that this General Release includes, but is
not
limited to, the Executive's release of any tort and contract claims, arbitration
claims, claims under any local, state or federal wage and hour law, wage
collection law or labor relations law, and claims of age, race, sex, religion,
disability, national origin, ancestry, citizenship, retaliation or any other
claim of employment discrimination, under the Civil Rights Acts of 1964 and
1991
as amended (42 U.S.C. §§ 2000e
et
seq
.),
the
Age Discrimination In Employment Act (29 U.S.C. §§ 621
et
seq
.),
the
Americans With Disabilities Act (42 U.S.C. §§ 12101
et
seq
.),
the
Rehabilitation Act of 1973 (29 U.S.C. §§ 701
et
seq
.),
the
Family and Medical Leave Act (29 U.S.C. §§ 2601
et
seq
.),
the
Fair Labor Standards Act (29 U.S.C. §§ 201
et
seq
.),
and
any other law prohibiting employment discrimination or relating to employment.
Also, the Executive understands that this General Release Agreement is not
an
admission of liability under any statute or otherwise by the Released Parties,
and that the Released Parties do not admit but deny any violation of his legal
rights, and that he shall not be regarded as a prevailing party for any purpose,
including but not limited to, determining responsibility for or entitlement
to
attorneys’ fees, under any statute or otherwise. The Executive agrees that in
the event the Executive brings a Claim in which the Executive seeks damages
or
other relief from any Released Party, or in the event the Executive seeks to
recover against any Released Party in any Claim brought by a governmental agency
on the Executive’s behalf, this Agreement shall serve as a complete defense to
such Claims.
4.
The
claims and causes of action the Executive is releasing and waiving include,
but
are not limited to, any and all claims and causes of action that any Released
Party:
·
has
violated its personnel policies, handbooks, contracts of employment, or
covenants of good faith and fair dealing between the Executive and the
Company;
·
has
discriminated against the Executive on the basis of age, race, color, sex
(including sexual harassment), national origin, ancestry, disability, religion,
sexual orientation, marital status, parental status, source of income,
entitlement to benefits, any union activities or other protected category in
violation of any local, state or federal law, constitution, ordinance, or
regulation, including but not limited to: the Age Discrimination in Employment
Act, as amended; Title VII of the Civil Rights Act of 1964, as amended; 42
U.S.C. § 1981, as amended; the Equal Pay Act; the Americans With
Disabilities Act; the Family Medical Leave Act; the Employee Retirement Income
Security Act; Section 510; and the National Labor Relations Act.
·
has
violated any statute, public policy or common law (including but not limited
to
claims for retaliatory discharge; negligent hiring, retention or supervision;
defamation; intentional or negligent infliction of emotional distress and/or
mental anguish; intentional interference with contract; negligence; and/or
detrimental reliance).
5.
Excluded
from this Agreement are any claims which cannot be waived by law. The Executive
is waiving, however, the Executive’s right to any monetary recovery should any
agency, such as the EEOC, pursue any claims on the Executive’s
behalf.
6.
The
Executive also agrees that the Executive has been paid for all hours worked,
including any overtime bonus or other incentive compensation, has submitted
all
invoices and expense reports, and has
not
suffered any on-the-job injury for which the Executive has not already filed
a
claim.
7.
The
Executive agrees that every term of this Agreement, including, but not limited
to, the fact that an agreement has been reached and the amount paid, shall
be
treated by the Executive as strictly confidential, and expressly covenants
not
to display, publish, disseminate, or disclose the terms of this Agreement to
any
person or entity other than the Executive’s immediate family, the Executive’s
attorney(s) (for purposes of seeking advice concerning this agreement only)
and
the Employee’s accountant(s) (for purposes of seeking tax advice only), unless
compelled to make disclosure by lawful court order or subpoena.
8.
The
Executive and the Company have entered into an Assignment of Invention,
Non-Disclosure, Non-Solicitation and Non-Competition Agreement ("NDA
Agreement"). The Executive reaffirms his obligation to comply with all of the
post termination obligations in the NDA Agreement.
9.
The
Executive also agrees that:
·
The
Executive is entering into this agreement knowingly and
voluntarily;
·
The
Executive has been advised by the Company to consult an attorney;
·
The
Executive has been given the right to take
[21/45]
days
(the "Consideration Period") to consider this agreement; provided, however
the
Employee and the Company hereby agree that if there is a dispute as to the
payment of wages such that the Executive is unable to make the representation
set forth in
Section
6
as to
payment for hours worked (including any overtime bonus or other incentive
compensation), the Consideration Period shall terminate on the later of the
natural expiration of the Consideration Period or the date that is one day
after
the resolution of all claims regarding wages;
·
But
for
the Executive's execution of this agreement, the Executive would not otherwise
be entitled to the payments described in paragraph 2;
·
if
any
part of this agreement is found to be illegal or invalid, the rest of the
agreement will be enforceable; and
·
this
agreement has been individually negotiated between the Executive and the Company
and is not part of a group exit incentive or other group employment termination
program. The Executive and the Company agree that the sole reason for the
termination of the Executive’s employment is a business reorganization and
reduction in force of the Company’s [INSERT DEPARTMENT OR JOB CLASSIFICATION]
which is occurring on [INSERT DATE]. All individuals who are being terminated
in
the [INSERT DATE] reduction in force will be eligible for benefits based upon
their execution of a release identical to this release. The Executive
acknowledges by signing this Agreement that the Executive understands that
the
Executive is eligible for the benefits which the Executive will receive
contingent upon the Executive executing this release, because the Executive
was
part of this reduction in force. As is more fully set forth in Attachment B,
this reduction in force will affect [NUMBER AFFECTED] other executives on
[DATE].
10.
After
the
Executive signs this agreement, the Executive will have 7 days to revoke it.
If
the Executive wants to revoke it, the Executive should deliver a written
revocation to __________ . If the Executive does not revoke it, the Executive
will receive the payment described in Paragraph 2.
|
EMPLOYEE:
|
COMPANY:
|
|
|
|
|
|
FORTRESS INTERNATIONAL GROUP,
INC.
|
|
|
|
|
____________________
|
_______________________________
|
|
|
[NAME AND TITLE]
|
|
|
|
|
Date:____________________
|
Date:_______________________________
|
|
|
|
CONSIDERATION
PERIOD
I,
Gerard
J. Gallagher understand that I have the right to take at least
[21/45]
days to
consider whether to sign this Separation From Employment and Release Agreement,
which I received on _________________, 2006. If I elect to sign this Agreement
before
[21/45]
days
have passed, I understand I am to sign and date below this paragraph to confirm
that I knowingly and voluntarily agree to waive the
[21/45]
-day
consideration period.
|
|
____________________
|
|
|
Executive Signature
|
|
|
|
|
|
____________________
|
|
|
Date
|
ATTACHMENT
B
SCHEDULE
TO SEPARATION FROM EMPLOYMENT AGREEMENT AND RELEASE
On
[Date], the employment of the following individuals (identified by job title
and
age), who will the [sole] holders of their job title, will be terminated in
a
reduction in force:
The
employment of the following individuals (identified by age), who are the [sole]
holders of their job title, will not be terminated on [Date] in the reduction
in
force.
EXHIBIT
C
INVENTION
ASSIGNMENT, NON-COMPETE
AND
CONFIDENTIALITY AGREEMENT
The
following confirms an Invention Assignment, Non-Compete and Confidentiality
Agreement ("Agreement") between me and Fortress International Group, a Maryland
corporation (the "Company," which term includes the Company’s Affiliates,
subsidiaries and any assigns). The promises and commitments that I make in
this
Agreement are a material part of the Company’s consideration in my employment
relationship with the Company.
1.
I
understand and agree that my employment by the Company creates a duty of loyalty
and a relationship of confidence and trust between me and the Company with
respect to any information made known to me by the Company or by any client,
customer or vendor of the Company or other person who submits information to
the
Company, or which may be learned by me during the period of my
employment.
2.
I
recognize that the Company is continuously engaged in activities that the
Company regards as confidential, proprietary and/or legally protectable, which
activities are at least in part intended to further the interests of the Company
and to provide the Company with a competitive advantage. The Company possesses
and will, in the future, continue to possess information that has been or will
be created, discovered, developed or otherwise becomes known to the Company
(including information created by, discovered or developed by, or made known
to
me) during the period of or arising out of my employment by the Company. I
understand that various intellectual and other property rights have been
assigned or otherwise conveyed to the Company. All information concerning the
above described activities and information is collectively called
"Proprietary
Information" under this Agreement.
3.
By
way of
illustration, but not limitation, Proprietary Information includes: trade
secrets, processes, formulas, data and know-how; software programs,
improvements, and inventions; research and development plans, tools and
techniques; new product introduction plans, specifications, requirements
documents and strategies; manufacturing techniques, strategies and costs,
expenses, supplier information and lists and distribution information; terms
and
conditions in contracts of all kinds; marketing plans, strategies and service;
support strategies and procedures; development schedules; revenue forecasts;
computer programs; copyrightable material, employee salaries, employee
expertise, employee ability levels, training programs and procedures, copies
of
memos or presentations incorporating confidential information which I may have
in my files (including those which I authored), patent applications and
disclosures and customer lists.
4.
In
consideration of my employment by the Company and the compensation received
by
me from the Company from time to time, I hereby agree as follows:
(a)
All
Proprietary Information shall be the sole property of the Company, and the
Company shall be the sole owner of all patents, copyrights, trademarks and
other
rights related to Proprietary Information. I hereby assign to the Company any
rights I may have or acquire in Proprietary Information. At all times, both
during and after my employment by the Company, I will keep in confidence and
trust all Proprietary Information, and I will not use or disclose any
Proprietary Information or anything related to it without written consent of
the
Company, except as may be necessary in the ordinary course of performing my
duties to the Company.
(b)
All
documents, records, apparatus, equipment and other physical property, whether
or
not pertaining to Proprietary Information, furnished to me by the Company or
produced by myself or others in connection with employment by the Company shall
be and remain the sole property of the Company, shall be used by me solely
for
the benefit of the Company and shall be returned to the Company immediately
as
and when requested by the Company. Even if the Company does not so request,
I
shall return and deliver all such property to the Company upon termination
of my
employment by me or by the Company for any reason. I will not take with me
any
such property or any form of copy or reproduction of such property upon my
termination.
(c)
I
will
promptly disclose to the Company, or any persons designated by it, all
improvements, inventions, formulas, ideas, processes, techniques, know-how
and
data, whether or not patentable, made or conceived or reduced to practice or
learned by me, either alone or jointly with others, during the period of my
employment (all said improvements, inventions, formulas, ideas, processes,
techniques, know-how and data shall be hereinafter collectively call
"Inventions").
(d)
I
agree
that all Inventions that I develop or have developed (in whole or in part,
either alone or jointly with others) and (i) use or have used equipment,
supplies, facilities or trade secret information of the Company, or (ii) use
or
have used the hours for which I am to be or was compensated by the Company,
or
(iii) which relate to the business of the Company or to its actual or
demonstrably anticipated research and development or (iv) which result, in
whole
or in part, from work performed by me for the Company shall be the sole property
of the Company and its assigns, and the Company and its assigns shall be the
sole owner of all patents, copyrights and other rights in connection therewith.
I hereby assign to the Company any rights I may have or acquire in such
Inventions. I further agree as to all such inventions and improvements to assist
the Company in every proper way (but at the Company’s expense) to obtain and
from time to time enforce patents, copyrights or other rights on said inventions
and improvements in any and all countries, and to that end I will execute all
documents in use for applying for and obtaining such patents and copyrights
thereon and enforcing same, as the Company may desire, together with any
assignments thereof to the Company or persons designated by it. My obligation
to
assist the Company in obtaining and enforcing patents, copyrights or other
rights for such inventions and improvements in any and all countries shall
continue beyond the termination of my employment, but the Company shall
compensate me at a reasonable rate after such termination for time actually
spent by me at the Company’s request on such assistance.
(e)
In
the
event that the Company is unable for any reason whatsoever to secure my
signature to any lawful and necessary document required to apply for or execute
any patent, copyright or other applications with respect to such inventions
and
improvements (including renewals, extensions, continuations, divisions or
continuations in part thereof), I hereby irrevocably designate and appoint
the
Company and its authorized officers and agents, as my agents and
attorneys-in-fact, this power of attorney being coupled with an interest, to
act
for and in my behalf and instead of me, to execute and file any such application
and to do all other lawfully permitted acts to further the prosecution and
issuance of patents, copyrights or other rights thereon with the same legal
force and effect as if executed by me.
(f)
As
a
matter of record, on
Attachment
A
,
I have
attached a complete list of all inventions or improvements relevant to the
subject matter of my employment by the Company which have been made or conceived
or first reduced to practice by me alone or jointly with others prior to my
employment with the Company that I desire to remove from the operation of this
Agreement, and I covenant that such list is complete. If no such list is signed
by me and attached to this Agreement, I represent and warrant that I have no
such inventions or improvements at the time of signing this Agreement, and
I
agree that I will make no claim against the Company with respect to any such
inventions or ideas.
(g)
I
represent that my performance of all the terms of this Agreement will not breach
any agreement to keep in confidence proprietary information acquired by me
in
confidence or in trust prior to my employment by the Company. I have not entered
into, and I agree I will not enter into, any agreement either written or oral
in
conflict with this Agreement.
(h)
I
acknowledge that the Company from time to time may be involved in government
projects of a classified nature. I further acknowledge that the Company from
time to time may have agreements with other persons or governmental agencies
which impose obligations or restrictions on the Company regarding inventions
made during the course of work thereunder or regarding the confidential nature
of such work or information disclosed in connection therewith. I agree to be
bound by all such obligations and restrictions and to take all action necessary
to discharge the obligations of the Company thereunder.
(i)
I
represent and warrant that execution of this Agreement, my employment with
the
Company and my performance of my proposed duties to the Company in the
development of its business have not and will not violate any obligations which
I may have to any former employer.
|
(j)
|
I
agree that at no time during my employment by the Company or thereafter
shall I make, or cause or assist any other person to make, any statement
or other communication to any third party which impugns or attacks,
or is
otherwise critical of, the reputation, business or character of the
Company or any of its Affiliates or any of their respective directors,
officers or employees.
|
5.
This
Agreement shall be effective as of the first day of my employment by the
Company.
6.
This
Agreement may not be changed, modified, released, discharged, abandoned or
otherwise amended, in whole or in part, except by an instrument in writing,
signed by myself and a majority of the members of the
Board.
I
agree that any subsequent change or changes in my duties, salary or compensation
shall not affect the validity or scope of this Agreement.
7.
I
acknowledge receipt of this Agreement and agree that with respect to the subject
matter hereof it is my final, complete and exclusive agreement with the Company,
superseding any previous oral or written representations, understanding or
agreements with the Company or any officer or representative with respect to
the
subject matter herein.
8.
In
the
event that any paragraph or provision of this Agreement shall be held to be
illegal or unenforceable, such paragraph or provision shall be modified to
the
extent necessary to give effect to the intent of the parties or, if necessary,
severed from this Agreement and the entire Agreement shall not fail on account
thereof, but shall otherwise remain in full force and effect.
9.
This
Agreement shall be construed in accordance with the laws of the State of
Maryland without regard to its choice of law principles.
10.
This
Agreement shall be binding upon me, my heirs, executors, assigns, and
administrators and shall inure to the benefit of the Company, its successors
and
assigns.
I
acknowledge that the foregoing restrictions contained in
Section
4
are
reasonable in all respects including the scope, duration and geographic
limitations. I agree that the restrictions are an appropriate means of
protecting the Company’s legitimate business interests, and no greater than
necessary to protect the Company’s interests. I acknowledge that these
restrictions will not unreasonably interfere with my ability to make a
living.
Dated:
__________ _____, 2006
|
|
_________________
|
|
|
Executive Signature
|
|
|
Gerard J.
Gallagher
|
Accepted
and Agreed to:
Fortress
International Group, Inc.
By:______________________
Name:
Harvey L. Weiss
Title:
Chairman
Date:_____________________
359767v3
VOTING
AGREEMENT
THIS
VOTING AGREEMENT (“
Agreement
”)
is
made this 19
th
day of
January, 2007 by and among THOMAS P. ROSATO (“
Rosato
”),
GERARD J. GALLAGHER (“
Gallagher
”
and
together with Rosato the “
Target
Group
”),
C.
THOMAS MCMILLEN (“
McMillen
”),
HARVEY L. WEISS (“
Weiss
”
and
together with McMillen the “
Founders
Group
”)
and
FORTRESS AMERICA ACQUISITION CORPORATION, a Delaware corporation (“
FAAC
”).
RECITALS:
R-1.
The
members of the Target Group were all of the members of VTC, LLC, a Maryland
limited liability company (“
VTC
”),
and
Vortech, LLC, a Maryland limited liability company (“
Vortech
”).
R-2.
The
members of the Founders Group are shareholders of FAAC and own beneficially
and
of record shares of common stock of FAAC, par value $0.0001 per share
("
Common
Stock
"),
as
set forth opposite each of their names on
Exhibit
A
.
R-3.
Pursuant
to the terms of that certain Second Amended and Restated Membership Interest
Purchase Agreement dated July 31, 2006, (the “
Membership
Interest Purchase Agreement
”)
FAAC
acquired all of the Target Group’s membership interests in each of VTC and
Vortech effective as of the date hereof (the “
Acquisition
Transaction
”).
R-4.
In
connection with the Acquisition Transaction and pursuant to the Membership
Interest Purchase Agreement, the members of the Target Group have received
as of
the date hereof and own beneficially of record (subject to certain escrows
and a
Lock Up Agreement all as described in the Membership Interest Purchase
Agreement) Common Stock as set forth opposite each of their names on
Exhibit
A
.
R-5.
As
a
condition to the consummation of the Acquisition Transaction, the members of
the
Target Group and the Founders Group (collectively the “
Stockholders
”)
have
agreed to enter into this Agreement for the purpose of voting their respective
shares of Common Stock (all such shares and any shares of which ownership of
record of the power to vote is hereafter acquired by any of the Stockholders,
whether by purchase, conversion or exercise, prior to the termination of this
agreement being hereinafter referred to as the “
Shares
”).
R-6.
Capitalized
terms used but not defined in this Agreement shall have the meanings ascribed
to
them in the Membership Interest Purchase Agreement.
NOW,
THEREFORE, in consideration of the premises and of the mutual agreements and
covenants set forth herein and in the Membership Interest Purchase Agreement,
and intending to be legally bound hereby, the parties hereto hereby agree as
follows.
ARTICLE
I
DIRECTORS
AND OFFICERS
1.1
Voting
of Shares
.
Subject
to Section 3.11 below, each Stockholder will vote such Stockholder’s Shares in
support of Director Designees (as defined below) and otherwise pursuant to
the
provisions of this Section 1.1:
(a)
Board
Size and Structure
.
The
board of directors of FAAC (the “
Board
”)
will
consist of nine members, consisting of three classes of three members each.
Members of the first class will stand for election in 2007 and every three
years
thereafter (the “
Class
A Directors
”),
members of the second class will stand for election in 2008 and every three
years thereafter (the “
Class
B Directors
”),
and
members of the third class will stand for election in 2009 and every three
years
thereafter (the “
Class
C Directors
”).
(b)
Designation
Rights
.
(i)
The
members of the Target Group will have the right to jointly propose to the Board
(or appropriate nominating committee thereof), and to otherwise propose for
nomination in accordance with FAAC’s governing documents, four designees as
members of the Board (each a “
Target
Group Designee
”),
provided that at least two of the Target Group Designees constitute "independent
directors" within the meaning of the Nasdaq rules and further provided that
at
least one such “independent director” is approved by members of the Board other
than the Target Group Designees. Each of the three classes of the Board will
include at least one Target Group Designee.
(ii)
The
members of the Board other than the Target Group Designees will have the right
to designate members of the Board not designated by the members of the Target
Group pursuant to subclause (i) above (each an “
At
Large Designee
”),
provided that at least three At Large Designees are “independent directors”
within the meaning of the Nasdaq rules and further provided that at least one
such “independent director”
is
approved by the
members
of the Target Group (in their capacities as Stockholders), which approval may
not be unreasonably withheld or delayed.
(c)
Initial
Board Composition
.
The
members of the Board immediately following the execution and delivery of this
Agreement will be:
|
Class
A Directors
|
Gerard
J. Gallagher
David
J. Mitchell
__________________
|
|
Class
B Directors
|
Harvey
L. Weiss
Donald
L. Nickles
___________________
|
|
Class
C Directors
|
Thomas
P. Rosato
C.
Thomas McMillan
__________________
|
(1)
A
Target Group Designee.
(2)
An At
Large Designee.
(d)
Neither
the Stockholders, nor any of the officers, directors, stockholders, members,
managers, partners, employees or agents of any Stockholder, makes any
representation or warranty as to the fitness or competence of any Target Group
Designee or At Large Designee (collectively the “
Director
Designees
”)
to
serve on the Board by virtue of such party's execution of this Agreement or
by
the act of such party in designating or voting for such Director Designee
pursuant to this Agreement.
(e)
Any
Director Designee may be removed from the Board in the manner allowed by law
and
FAAC’s governing documents except that (i) the members of the Target Group will
not vote their Shares for the removal of an At Large Designee absent the written
approval of the members of the Founders Group and (ii) the members of the
Founders Group will not vote their Shares for removal of a Target Group Designee
absent the written approval of the members of the Target Group.
1.2
Board
Observation Rights
.
To the
extent applicable and appropriate, each Stockholder will vote such Stockholder’s
Shares in favor of any proposal by the Board or the FAAC shareholders at large
to grant board observation rights to either or both of C. Thomas McMillen and/or
Harvey L. Weiss in the event that neither C. Thomas McMillen or Harvey L. Weiss
are then directors of FAAC.
1.3
Vote
in Favor of Certain Officers
.
To the
extent applicable and appropriate, each Stockholder will vote such Stockholder’s
Shares in favor of the following individuals to hold the following corporate
offices:
|
Harvey
L. Weiss
|
Chairman
of the Board of Directors
|
|
C.
Thomas McMillen
|
Vice
Chairman of the Board of Directors
|
|
Thomas
P. Rosato
|
Chief
Executive Officer
|
|
Gerard
J. Gallagher
|
President
/ Chief Operating Officer
|
|
|
|
1.4
Obligations
of FAAC
.
FAAC
shall take all necessary and desirable actions within its control (a) to provide
for the Board to be comprised of nine members and to enable the election of
the
Director Designees to the Board in accordance with this Agreement, (b) to enable
the appointment of those individuals referenced in Section 1.3 to the offices
indicated in Section 1.3 and (c) to cause and permit C. Thomas McMillen and/or
Harvey L. Weiss to serve as an advisor to the Board of Directors and to attend
and observe meetings of the Board pursuant to Section 1.4.
1.5
Term
of Agreement
.
This
Agreement shall terminate immediately following the election or re-election
of
directors at the annual meeting of FAAC that will be held in 2008.
1.6
Obligations
as Director and/or Officer
.
Nothing
in this Agreement shall be deemed to limit or restrict any director or officer
of FAAC from acting in his or her capacity as such director or officer or from
exercising his or her fiduciary duties and responsibilities, it being agreed
and
understood that this Agreement shall apply to each Stockholder solely in his
or
her capacity as a stockholder of FAAC and shall not apply to his or her actions,
judgments or decisions as a director or officer of FAAC if he or she is such
a
director or officer.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES;
COVENANTS
OF THE STOCKHOLDERS
Each
Stockholder hereby severally represents warrants and covenants as follows for
himself, herself or itself, but for no other Person:
2.1
Authorization
.
Such
Stockholder has full legal capacity and authority to enter into this Agreement
and to carry out such Stockholder's obligations hereunder. This Agreement has
been duly executed and delivered by such Stockholder, and (assuming due
authorization, execution and delivery by FAAC and the other Stockholders) this
Agreement constitutes a legal, valid and binding obligation of such Stockholder,
enforceable against such Stockholder in accordance with its terms.
2.2
No
Conflict; Required Filings and Consents
.
(a)
The
execution and delivery of this Agreement by such Stockholder does not, and
the
performance of this Agreement by such Stockholder will not,
(i)
to
the
extent applicable, conflict with or violate any provision of the certificate
or
articles of organization or operating agreement the Stockholder;
(ii)
to
the
extent applicable, result in the creation of, or require the creation of, any
Lien upon any (A) equity interest or (B) property of the
Stockholder;
(iii)
result
in
(A) the termination, cancellation, modification, amendment, violation, or
renegotiation of any contract, agreement, indenture, instrument, or commitment,
or (B) the acceleration or forfeiture of any term of payment;
(iv)
give
any
Person the right to (A) terminate, cancel, modify, amend, vary, or renegotiate
any contract, agreement, indenture, instrument, or commitment, or (B) to
accelerate or forfeit any term of payment; or
(v)
violate
any Law applicable to the Stockholder or by which such Stockholder’s properties
are bound or affected.
(b)
The
execution and delivery of this Agreement by such Stockholder does not, and
the
performance of this Agreement by such Stockholder will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, domestic or foreign, except (i) for
applicable requirements, if any, of the Exchange Act, and (ii) where the failure
to obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not prevent or materially delay the performance
by such Stockholder of such Stockholder's obligations under this
Agreement.
2.4
Title
to Shares
.
Such
Stockholder is the legal and beneficial owner of its Shares, or will be the
legal and beneficial owner of the Shares that such Stockholder will receive
as a
result of the Acquisition Transaction, free and clear of all liens and other
encumbrances except certain restrictions upon the transfer of such
Shares.
ARTICLE
III
GENERAL
PROVISIONS
3.1
Notices
.
All
notices and other communications given or made pursuant hereto shall be in
writing and shall be given (and shall be deemed to have been duly given upon
receipt) by delivery in person, by overnight courier service, by telecopy,
or by
registered or certified mail (postage prepaid, return receipt requested) to
the
respective parties at the following addresses (or at such other addresses as
shall be specified by notice given in accordance with this Section
3.1):
|
(a)
If to FAAC:
|
Fortress
America Acquisition Corporation
|
|
|
Attn:
Harvey L. Weiss, Chairman of the Board
|
|
|
4100
North Fairfax Drive
|
|
|
Suite
1150
|
|
|
Arlington,
Virginia 22203
|
|
|
Fax:
|
|
|
|
|
With
a copy to:
|
James
J. Maiwurm
|
|
|
Squire,
Sanders & Dempsey L.L.P.
|
|
|
8000
Towers Crescent Drive, Suite 1400
|
|
|
Tysons
Corner, VA 22182-2700
|
|
|
Fax:
(703) 720-7801
|
|
|
|
(b)
If to
any Stockholder, to the address set forth opposite his, her or its
name on
Exhibit
A
.
|
3.2
Headings
.
The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this
Agreement.
3.3
Severability
.
If any
term or other provision of this Agreement is invalid, illegal or incapable
of
being enforced by any rule of law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon
such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely
as
possible to the fullest extent permitted by applicable law in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to
the
extent possible.
3.4
Entire
Agreement
.
This
Agreement constitutes the entire agreement of the parties and supersedes all
prior agreements and undertakings, both written and oral, between the parties,
or any of them, with respect to the subject matter hereof. This Agreement may
not be amended or modified except in an instrument in writing signed by, or
on
behalf of, the parties hereto.
3.5
Specific
Performance
.
The
parties hereto agree that irreparable damage would occur in the event that
any
provision of this Agreement was not performed in accordance with the terms
hereof and that the parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or in equity.
3.6
Governing
Law
.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of Delaware applicable to contracts executed in and to be performed
in
that State.
3.7
Disputes
.
All
actions and proceedings arising out of or relating to this Agreement shall
be
heard and determined exclusively in any state or federal court in Delaware.
3.8
No
Waiver
.
No
failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by
law.
3.9
Counterparts
.
This
Agreement may be executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when executed shall
be
deemed to be an original but all of which taken together shall constitute one
and the same agreement.
3.10
Waiver
of Jury Trial
.
Each of
the parties hereto irrevocably and unconditionally waives all right to trial
by
jury in any action, proceeding or counterclaim (whether based in contract,
tort
or otherwise) arising out of or relating to this Agreement or the Actions of
the
parties hereto in the negotiation, administration, performance and enforcement
thereof.
3.11
Shares
subject to General Indemnity Escrow Agreement
.
Notwithstanding anything to the contrary contained in this Agreement, the
undersigned acknowledge and agree that pursuant to the terms of the Membership
Interest Purchase Agreement, certain of the Common Stock received by Rosato
and
Gallagher respectively have been deposited in either (i) a General Indemnity
Escrow the “
General
Indemnity Escrow
”)
under
the terms of a General Indemnity Escrow Agreement dated as of the date hereof,
or (ii) a Balance Sheet Escrow (the “
Balance
Sheet Escrow
”)
pursuant to the terms of Balance Sheet Escrow Agreement dated as of the date
hereof. The undersigned further acknowledge and agree that this Agreement shall
not apply to any Common Shares owned by either Rosato or Gallagher that are
then
held in either the General Indemnity Escrow or Balance Sheet Escrow and that
this Agreement shall only apply to those Common Shares after the Common Shares
are released to Rosato, or Gallagher as the case may be from the General
Indemnity Escrow or the Balance Sheet Escrow as applicable.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
written above.
|
FORTRESS
AMERICA ACQUISITION CORPORATION
,
|
|
a
Delaware corporation
|
|
|
|
|
|
By:/s/
Harvey L. Weiss
|
|
Name:
Harvey L. Weiss
|
|
Title:
Chairman
|
|
|
|
|
|
STOCKHOLDERS:
|
|
|
|
THE
FOUNDERS GROUP:
|
|
|
|
|
|
|
|
/s/
C. Thomas McMillen
|
|
C.
Thomas McMillen
|
|
|
|
/s/
Harvey L. Weiss
|
|
Harvey
L. Weiss
|
|
|
|
|
|
|
|
THE
TARGET GROUP:
|
|
|
|
|
|
|
|
/s/
Thomas P. Rosato
|
|
Thomas
P. Rosato
|
|
|
|
|
|
/s/
Gerard J. Gallagher
|
|
Gerard
J. Gallagher
|
Company
Contact
|
Investor
Relations:
|
Harvey
Weiss
|
John
McNamara
|
Chief
Executive Officer
|
Cameron
Associates
|
Fortress
America Acquisition Corporation
|
212-245-8800
Ext. 205
|
703-528-7073
Ext. 102
|
john@cameronassoc.com
|
hweiss@fortressamerica.net
|
|
FORTRESS
AMERICA ACQUISITION CORPORATION
COMPLETES
ACQUISITION OF TSS/VORTECH
Company
Changing Name to “Fortress International Group”
ARLINGTON,
VA - January 19, 2007 -
Fortress
America Acquisition Corporation (FAAC, FAACU, FAACW) today completed its
acquisition of VTC, L.L.C. (doing business as Total Site Solutions) and Vortech,
LLC, two days after receiving approval from the public stockholders of the
Company. Less than
10%
of
the Company’s public stockholders elected to convert their shares to
cash.
Harvey
Weiss, Chairman of the Company, said, “These are excellent results. This
means that stockholders delivered a strong vote of confidence in the quality
of
the transaction, the companies being acquired, and their management.”
In
connection with the closing, Fortress America is changing its name to “Fortress
International Group, Inc.” The acquired companies are now wholly-owned
subsidiaries of Fortress and will operate under the name Total Site Solutions
(TSS). After the payments made in the acquisition and required payments to
stockholders who exercised their conversion rights, the trust account will
release to the Company over $29 million, or $2.46 in cash for each of the
11,966,213 shares outstanding after the acquisition.
Tom
Rosato, Chief Executive Officer of Fortress, said “We are looking forward
to our future as a public operating company. Total Site Solutions has a
highly respected name in the mission-critical sector. The stronger balance
sheet
and increased working capital that this transaction provides the business will
enable TSS to compete for much larger contracts than in the past. Our
bonding capacity will jump to $300 million, and the Company has today over
$30
million to finance its acquisition strategy and recently announced stock
repurchase program.”
FORWARD-LOOKING
STATEMENTS
This
document may contain “forward-looking statements”—that is, statements related to
future—not past—events, plans, and prospects. In this context, forward-looking
statements may address matters such as our expected future business and
financial performance, and often contain words such as “guidance,” “expects,”
“anticipates,” “intends,” “plans,” “believes,” “seeks,” “should,” or “will.”
Forward-looking statements by their nature address matters that are, to
different degrees, uncertain. For Fortress, particular uncertainties that could
adversely or positively affect the Company’s future results include: the
Company’s reliance on a significant portion of its revenues from a limited
number of customers; the uncertainty as to whether the Company can replace
its
declining backlog; risks involved in properly managing complex projects; risks
relating to revenues under customer contracts, many of which can be canceled
on
short notice; risks related to the implementation of the Company’s strategic
plan, including the ability to make acquisitions and the performance and future
integration of acquired businesses; and other risks and uncertainties disclosed
in the Company’s filings with the Securities and Exchange Commission. These
uncertainties may cause the Company’s actual future results to be materially
different than those expressed in the Company’s forward-looking statements. The
Company does not undertake to update its forward-looking
statements.
ABOUT
FORTRESS
Fortress
was established in December 2004 for the purpose of acquiring, through a merger,
capital stock exchange, asset acquisition or other business combination,
operating businesses in the homeland security
industry.
ABOUT
TOTAL SITE SOLUTIONS
VTC,
L.L.C., doing business as Total Site Solutions (“TSS”), supplies industry and
government with secure data centers and other mission critical facilities
designed to survive terrorist attacks, natural disasters, and blackouts. TSS’s
comprehensive suite of services, multi-disciplinary expertise, and products
provide customers a single source for critical deliverables. Headquartered
in
the Baltimore-Washington Corridor, with offices in San Francisco and Atlanta,
TSS clients and the end users of its services include the world’s most demanding
organizations, including Fortune 500 firms and U.S. Government agencies. For
more information, call 866-363-4TSS (4877) or visit
www.totalsiteteam.com
.
ABOUT
VORTECH, LLC
Vortech,
LLC (“Vortech”) provides secure data and voice networks as well as redundant
power for government and industry mission-critical facilities. A leader in
structured cabling solutions, power system installations, and emergency
power solutions for data center and high technology environments, Vortech also
provides value-added systems and network integration services for perimeter
security and access control where physical security and information technology
intersect. For more information, visit
www.govortech.com
.