-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HGMaAgf8dmQq+MLG4cP2mlHbNyFuGQYatLNzW6z5iTWPBxTmi4Mvd1/Rgvi/gmi/ qDFTJ5j/kifePA2P5u1jkg== 0001144204-07-003868.txt : 20070129 0001144204-07-003868.hdr.sgml : 20070129 20070129164450 ACCESSION NUMBER: 0001144204-07-003868 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20070129 DATE AS OF CHANGE: 20070129 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: Fortress America Acquisition CORP CENTRAL INDEX KEY: 0001320760 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 202027651 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-80979 FILM NUMBER: 07561532 BUSINESS ADDRESS: STREET 1: 3 BETHESDA METRO CENTER SUITE 700 CITY: BETHESDA STATE: MD ZIP: 20814 BUSINESS PHONE: 3019611533 MAIL ADDRESS: STREET 1: 3 BETHESDA METRO CENTER SUITE 700 CITY: BETHESDA STATE: MD ZIP: 20814 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Rosato Thomas P CENTRAL INDEX KEY: 0001386710 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: BUSINESS PHONE: 888-321-4877 MAIL ADDRESS: STREET 1: 7226 LEE DEFOREST DRIVE STREET 2: SUITE 104 CITY: COLUMBIA STATE: MD ZIP: 21046 SC 13D 1 v063625_sc13d.htm Unassociated Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*

Fortress International Group, Inc.
(formerly Fortress America Acquisition Corporation)
(Name of Issuer)

Common Stock, $0.0001 par value
(Title of Class of Securities)

       34957J 10 0       
(CUSIP Number)

Thomas P. Rosato
9841 Broken Land Parkway
Columbia, Maryland 21046
Telephone: (410) 312-9988
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)

with a copy to:

Squire, Sanders & Dempsey L.L.P.
8000 Towers Crescent Drive, 14th floor
Tysons Corner, VA 22182
Attention: James J. Maiwurm
Telephone: (703) 720-7890

January 19, 2007
(Date of Event Which Requires Filing of this Statement)
 
If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o
 
Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.
 
* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.
 
The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
 
Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.


CUSIP No. 34957J 10 0 

1
 
NAMES OF REPORTING PERSONS:
Thomas P. Rosato
 
 
 
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):
 
  
2
 
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):
 
(a) o
 
(b) x
 
 
 
3
 
SEC USE ONLY:
 
 
4
 
SOURCE OF FUNDS (SEE INSTRUCTIONS):
 
PF
 
 
 
5
 
CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e):
 
o
 
 
 
6
 
CITIZENSHIP OR PLACE OF ORGANIZATION:
 
USA
 
 
 
 
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
 
EACH
REPORTING
PERSON
 
WITH
7
 
SOLE VOTING POWER:
 
1,635,555
 
 
 
8
 
SHARED VOTING POWER:
 
0  
 
 
 
9
 
SOLE DISPOSITIVE POWER:
 
1,635,555
 
 
 
10
 
SHARED DISPOSITIVE POWER:
 
 
0
 
 
 
11
 
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
 
1,635,555
 
 
 
12
 
CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS):
 
o
 
 
 
13
 
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
 
14.4%
 
 
 
14
 
TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):
 
IN


2

Item 1.  Security and Issuer.

The class of equity securities to which this Schedule 13D relates is the common stock, par value $0.0001 per share (the “Common Stock”), of Fortress International Group, Inc., a Delaware corporation formerly known as Fortress America Acquisition Corporation (the “Issuer”). The address of the principal executive offices of the Issuer is 9841 Broken Land Parkway, Columbia, Maryland 21046.

Item 2.   Identity and Background.

This Schedule 13D is filed on behalf of Thomas P. Rosato (the “Reporting Person”) with respect to shares of Common Stock beneficially held by the Reporting Person.
 
This Schedule 13D relates to 1,635,555 shares of Common Stock (the “Shares”) held by Reporting Person.
 
Reporting Person serves as a director and chief executive officer of the Issuer.
 
The business address of Reporting Person is 9841 Broken Land Parkway, Columbia, Maryland 21046.

During the past five years, the Reporting Person has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws, or finding any violation with respect to such laws.
 
Reporting Person is a citizen of a United States.
 
Item 3.   Source and Amount of Funds or Other Consideration.

On January 16, 2007, the Reporting Person purchased in the market 174,000 shares of Common Stock at an average per share price of $5.71, with personal funds, including funds borrowed on commercial terms by the Reporting Person.
 
On January 19, 2007, the Issuer acquired (the “Acquisition”) all of the outstanding membership interests of VTC, L.L.C., doing business as “Total Site Solutions” (“TSS”), and Vortech, LLC (“Vortech” and, together with TSS, “TSS/Vortech”) from the Reporting Person, Gerard J. Gallagher and certain other selling members 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 acquisition 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 Common Stock, of which 1,461,555 shares were issued to the Reporting Person, and (d) $10.0 million in two convertible, interest-bearing promissory notes (the “Convertible Notes”) of $5.0 million each, of which the Reporting Person received one Convertible Note.
 
Item 4.   Purpose of Transaction.

The Reporting Person acquired the Shares for investment purposes. The Reporting Person may, from time to time, depending upon market conditions and other factors deemed relevant by the Reporting Person, acquire additional shares of Common Stock or warrants to purchase shares of Common Stock. The Reporting Person reserves the right to, and may in the future choose to, change his purpose with respect to his investment and take such actions as he deems appropriate in light of the circumstances including, without limitation, to dispose of, in the open market, in a private transaction or by gift, all or a portion of the shares of Common Stock which he now owns or may hereafter acquire.
 
At the date of this statement, the Reporting Person, except as set forth in this statement and consistent with the Reporting Person’s position with the Issuer, has no plans or proposals which would result in:
 
(a) The acquisition by any person of additional securities of the Issuer, or the disposition of securities of the Issuer;
 
 
3
 
(b) An extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries;
 
(c) A sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries;
 
(d) Any change in the present board of directors or management of the Issuer, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board;
 
(e) Any material change in the present capitalization or dividend policy of the Issuer;
 
(f) Any other material change in the Issuer’s business or corporate structure;
 
(g) Changes in the Issuer’s charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Issuer by any person;
 
(h) Causing a class of securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association;
 
(i) A class of equity securities of the issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act; or
 
(j) Any action similar to any of those actions enumerated above.
 
Item 5. Interest in Securities of the Issuer.

All of the percentages calculated in this statement take into account 2,602,813 shares issued in connection with the Acquisition and the conversion of approximately 756,500 shares of Common Stock into cash in connection with the vote on the Acquisition, resulting in approximately 11,396,314 outstanding shares of Common Stock (not including any shares issuable upon the exercise of warrants to purchase Common Stock). This number of outstanding shares does not include 574,000 shares to be issued to employees of TSS/Vortech in connection with the acquisition of TSS/Vortech.
 
As of the date of this statement, the Reporting Person may be deemed to be the beneficial owner of an aggregate of 1,635,555 shares of Common Stock, which represents approximately 14.4% of the Common Stock outstanding as of the date of this statement. The Reporting Person has the sole power to vote or direct the vote of, and to dispose or direct the disposition of, all of the 1,635,555 shares he holds.
 
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

Convertible Note. The Issuer issued to the Reporting Person and Gerard J. Gallagher, as selling members, a Convertible Note in the principal amount of $5.0 million on January 19, 2007, the closing of the Acquisition. Each Convertible Note bears interest at six percent per year and has a term of five years. Interest only is payable during the first two years of each Convertible Note, with principal payments commencing on the second anniversary of the note and continuing throughout the balance of the term of each Convertible Note in equal quarterly installments of $416,667. At any time after the sixth month following the closing of the Acquisition, each Convertible Note is convertible by the holder into shares of Common Stock at a conversion price of $7.50 per share. At any time after the sixth month following the closing of the acquisition, each Convertible Note is automatically convertible if the average closing price of the Common Stock for 20 consecutive trading days equals or exceeds $7.50 per share.
 
Escrow Agreements. In connection with the closing of the Acquisition, on January 19, 2007, the Issuer, TSS, Vortech, the Reporting Person, Gerard J. Gallagher, the Reporting Person as Members’ Representative, and SunTrust Bank, as escrow agent, entered into two separate escrow agreements to secure certain post-closing obligations of the Reporting Person and Gerard J. Gallagher: a Balance Sheet Escrow Agreement and a General Indemnity Escrow Agreement. Under the Balance Sheet Escrow Agreement, the Issuer deposited with the escrow agent 73,260 shares of Common Stock to secure any post-closing adjustments in the purchase price in the Issuer’s favor. Under the General Indemnity Escrow Agreement, the Issuer deposited with the escrow agent 2,461,728 shares of Common Stock to secure certain indemnification obligations of the selling members under the Purchase Agreement. The deposit by the Reporting Person of shares of Common Stock under the escrow agreements comprise of all of the shares of Common Stock issued to the Reporting Person in the Acquisition
 
 
4
 
Lock-Up Agreement. The Issuer and, as stockholders, the Reporting Person, Mr. Gallagher and Evergreen Capital LLC entered into a Lock-Up Agreement (the “Lock-Up Agreement”) dated January 19, 2007 in connection with the closing of the Acquisition. Under the terms of the Lock-Up Agreement, the Reporting Person and other stockholders party thereto agree that they will not sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or file (or participate in the filing of) a registration statement with the Securities and Exchange Commission or enter into any arrangement that transfers to another any of the economic consequences of ownership of the shares issued to such stockholder under the Purchase Agreement or upon conversion of a Convertible Note until July 13, 2008.
 
Registration Rights Agreement. The Issuer and, as stockholders, the Reporting Person, Gerard Gallagher and Evergreen Capital LLC are parties to a registration rights agreement dated January 19, 2007 (the “Registration Rights Agreement”). All 2,534,988 of the shares of Common Stock issued to the Reporting Person, Mr. Gallagher and Evergreen Capital LLC in connection with the acquisition are “Registrable Securities”. The holders of a majority-in-interest of the Registrable Securities may make a written demand for registration under the Securities Act of 1933, as amended, of all or part of their Registrable Securities. Additionally, if elected by a majority-in-interest of the demanding stockholders, the registration shall be made pursuant to an underwritten offering. The Issuer shall not be obligated to effect more than an aggregate of two demand registrations under the Registration Rights Agreement. The holders of Registrable Securities, including the Reporting Person, also have certain rights to include shares of Common Stock in a registration statement proposed to be filed by the Issuer under the Securities Act of 1933, as amended. The holders of Registrable Securities also have certain rights to require, on an unlimited number of occasions, that the Issuer register any or all of their shares of Common Stock on a “Form S-3” or any similar short-form registration which is available to the Issuer at the time, subject to the requirement that the aggregate offering to the public must be at least $0.5 million.
 
Voting Agreement. On January 19, 2007, at the closing of the Acquisition, the Issuer and, as stockholders, the Reporting Person and Gerard Gallagher, C. Thomas McMillen and Harvey L. Weiss entered into a Voting Agreement (the “Voting Agreement”). The Voting Agreement terminates immediately following the re-election of directors at the Issuer’s 2008 annual meeting.
 
In the Voting Agreement, the stockholders party thereto agree to vote their shares in favor of the following with respect to the election of directors:
 
·  
the Reporting Person and Gerard Gallagher have the right to propose the nomination of four nominees to the Issuer’s board of directors, two of whom must constitute “independent directors” within the meaning of NASDAQ rules, provided that at least one such “independent director” is approved by members of the board of directors that are not so nominated by the Reporting Person and Gerard Gallagher; and
 
·  
the members of the board of directors who are not nominated by the Reporting Person and Gerard Gallagher have the right to designate five members of the board of directors, three of whom must constitute “independent directors” within the meaning of NASDAQ rules, provided that at least one such “independent director” must be approved by the Reporting Person and Gerard Gallagher.
 
In the Voting Agreement, each stockholder party thereto has agreed to vote his shares to elect the following individuals to the Issuer’s board of directors: Gerard J. Gallagher; C. Thomas McMillen; David J. Mitchell; Donald L. Nickles; Thomas P. Rosato; and Harvey L. Weiss. While any director may be removed from the board of directors in the manner allowed by law and the Issuer’s governing documents, each of the Reporting Person and Gerard Gallagher and the members of the board not nominated by the Reporting Person and Gerard Gallagher have agreed not to vote their shares for the removal of the other group’s designees absent written approval of such group.
 
 
5
 
In the Voting Agreement, the Reporting Person and Gerard Gallagher and Messrs. McMillen and Weiss agree to vote their shares, to the extent applicable, in favor of electing the following individuals to the following 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

 
Item 7. Material to be Filed as Exhibits.

Exhibit
Number
 
 
 
Description
 
99.1
    
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 of the Issuer dated December 27, 2006 and incorporated by reference herein)
         
 
99.2
    
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 of the Issuer dated January 19, 2007 and incorporated by reference herein)
         
 
99.3
    
Convertible Promissory Note dated January 19, 2007 made by Fortress America Acquisition Corporation
         
 
99.4
    
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 (included as Exhibit 10.3 to the Current report on Form 8-K of the Issuer dated January 19, 2007 and incorporated by reference herein)
         
 
99.5
    
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 (included as Exhibit 10.4 to the Current report on Form 8-K of the Issuer dated January 19, 2007 and incorporated by reference herein)
         
 
99.6
    
Lock-Up Agreement dated January 19, 2007 among Fortress America Acquisition Corporation, Thomas P. Rosato, Gerard J. Gallagher and Evergreen Capital LLC
         
 
99.7
    
Registration Rights Agreement among Fortress America Acquisition Corporation and Thomas P. Rosato and Gerard J. Gallagher (included as Exhibit 10.5 to the Current report on Form 8-K of the Issuer dated January 19, 2007 and incorporated by reference herein)
         
 
99.8
    
Voting Agreement dated January 19, 2007 by Fortress America Acquisition Corporation, Thomas P. Rosato, Gerard J. Gallagher, C. Thomas McMillen and Harvey L. Weiss (included as Exhibit 10.11 to the Current report on Form 8-K of the Issuer dated January 19, 2007 and incorporated by reference herein)

6

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
 
 Dated: January 29, 2007    
   
  THOMAS P. ROSATO
 
 		  
 		  
 
   By:   /s/ Thomas P. Rosato
  Name: 
 Thomas P. Rosato
     
   

7

EXHIBIT INDEX 

Exhibit
Number
 
 
 
Description
 
99.1
    
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 of the Issuer dated December 27, 2006 and incorporated by reference herein)
         
 
99.2
    
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 of the Issuer dated January 19, 2007 and incorporated by reference herein)
         
 
99.3
    
Convertible Promissory Note dated January 19, 2007 made by Fortress America Acquisition Corporation
         
 
99.4
    
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 (included as Exhibit 10.3 to the Current report on Form 8-K of the Issuer dated January 19, 2007 and incorporated by reference herein)
         
 
99.5
    
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 (included as Exhibit 10.4 to the Current report on Form 8-K of the Issuer dated January 19, 2007 and incorporated by reference herein)
         
 
99.6
    
Lock-Up Agreement dated January 19, 2007 among Fortress America Acquisition Corporation, Thomas P. Rosato, Gerard J. Gallagher and Evergreen Capital LLC
         
 
99.7
    
Registration Rights Agreement among Fortress America Acquisition Corporation and Thomas P. Rosato and Gerard J. Gallagher (included as Exhibit 10.5 to the Current report on Form 8-K of the Issuer dated January 19, 2007 and incorporated by reference herein)
         
 
99.8
    
Voting Agreement dated January 19, 2007 by Fortress America Acquisition Corporation, Thomas P. Rosato, Gerard J. Gallagher, C. Thomas McMillen and Harvey L. Weiss (included as Exhibit 10.11 to the Current report on Form 8-K of the Issuer dated January 19, 2007 and incorporated by reference herein)


8
 EX-99.3 2 v063625_ex99-3.htm
THIS PROMISSORY NOTE AND ANY SHARES OF MAKER’S COMMON STOCK THAT MAY OR SHALL BE ACQUIRED UPON THE EXERCISE OF THE CONVERSION RIGHTS SET FORTH HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE STATE SECURITIES OR BLUE SKY LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
 
$5,000,000.00
Tysons Corner, Virginia
 
Date: January 19, 2007

FORTRESS AMERICA ACQUISITION CORPORATION
CONVERTIBLE PROMISSORY NOTE
(Rosato)

A.  PROMISE TO PAY
 
1. Principal Amount and Interest. FOR VALUE RECEIVED, the undersigned, Fortress America Acquisition Corporation, a Delaware corporation (“Maker”), promises to pay to the order of Thomas P. Rosato, his successors and assigns ("Holder"), at Thomas P. Rosato, 11373 Liberty Street, Fulton, MD 20759, or at such other place as Holder may from time to time designate in writing, the principal sum of Five Million and 00/100 Dollars ($5,000,000.00) together with interest thereon from the date hereof at the rate of six percent (6%) per annum, compounded annually (“Base Interest Rate”). Upon the occurrence and during the continuance of an “Event of Default” (as hereinafter defined), the principal indebtedness evidenced by this Note shall bear interest at the rate of nine percent (9%) per annum (the “Default Interest Rate”). At such time as an Event of Default is cured the Base Interest Rate and not the Default Interest Rate shall apply.
 
(a) Interest shall be calculated on the basis of a 365 days per year factor applied to the actual days on which there exists an unpaid principal balance. Interest shall be payable quarterly with the first payment due on the first day of third (3rd) full calendar month (the “Initial Interest Payment Date”), measured from the first day of the first full calendar month following the date of this Note (if the date of this Note is other than the first day of a calendar month (the “Payment Reference Date”)) and every three (3) months thereafter until the unpaid principal of and accrued interest on this Note shall be paid in full.
 
(b) No principal shall be payable until the second (2nd) anniversary of the Payment Reference Date. Commencing on the second anniversary of the Payment Reference Date and every three (3) months thereafter, the principal amount of this Note shall be payable in twelve (12) equal installments of Four Hundred Sixteen Thousand Six Hundred Sixty Six and 66/100ths Dollars ($416,666.66). All accrued and outstanding interest and principal not sooner paid shall be due and payable on the fifth (5th) anniversary of the Payment Reference Date.
 
1
 
2. Related Agreement. This Note is issued pursuant to a Second Amended and Restated Membership Interest Purchase Agreement dated as of July 31, 2006, by and among the Maker, VTC, L.L.C., Vortech, LLC, Thomas P. Rosato, Gerard J. Gallagher and Holder, as amended by an Amendment to the Second Amended and Restated Membership Interest Purchase Agreement (the “Purchase Agreement”). Capitalized terms used herein but not defined herein shall have the meanings ascribed to such terms in the Purchase Agreement.
 
3. Payments. All payments under this Note shall be made in immediately available funds, not later than 12:00 noon, Virginia time, on the relevant date specified herein (each such payment made after such time on such due date to be deemed to have been made on the next succeeding Business Day) at the principal office of Holder. If the due date of any payment under this Note would otherwise fall on a day which is not a Business Day, such date shall be extended to the next succeeding Business Day and interest shall be payable for any principal so extended for the period of such extension.
 
4. Prepayment. Maker may prepay the principal of this Note without penalty or premium.
 
5. Events of Default. The occurrence (whether such occurrence shall be voluntary or involuntary or come about or be effected by operation of law or otherwise) and continuation for any reason whatsoever of any of the following events shall constitute an “Event of Default”:
 
(a) except in the case of an offset pursuant to Section 9.4 of the Purchase Agreement (in which event, the payments otherwise due under this Note are paid into the General Indemnity Escrow) the Maker fails to make payment of any principal or interest when the same shall become due and payable which failure continues for five (5) Business Days following written notice of such failure by Holder to Maker;
 
(b) (i) a court enters a decree or order for relief with respect to the Maker or any of its subsidiaries, in an involuntary case under Title 11 of the United States Code (together with any successor statute, the “Bankruptcy Code”), or (ii) the continuance of any of the following events for thirty (30) days unless dismissed, bonded or discharged: (A) an involuntary case is commenced against any such party, under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, (B) a decree or order of a court for the appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having similar powers over any such party, or over all or a substantial part of its property, is entered or (C) an interim receiver, trustee or other custodian is appointed without the consent of any such party, for all or a substantial part of the property of any such party; or
 
(c) the Maker or any of its subsidiaries commences a voluntary case under the Bankruptcy Code, or consents to the entry of an order for relief in an involuntary case or to the conversion of an involuntary case to a voluntary case under any such law or consents to the appointment of or taking possession by a receiver, trustee or other custodian for all or a substantial part of its property.
 
2
 
6. Certain Remedies on Default. If an Event of Default described in Paragraphs 5(a) or 5(b) above occurs, or at the option of the holder of this Note, if an Event of Default occurs under paragraph 5(c) above, the aggregate principal amount of this Note then outstanding, together with all interest accrued pursuant to the terms of this Note and unpaid as of the date of such Event of Default, shall automatically become immediately due and payable without presentment, demand, protest or further notice, all of which are hereby waived.
 
B. CONVERSION
 
1. Right of Holder to Convert into Common Stock.
 
(a) Subject to the provisions hereof, Holder shall have the right, at Holder's option, at any time on or after the one hundred eightieth (180th) day following the date hereof to convert all, but not less than all of the then outstanding principal amount of, and accrued interest on, this Note, into that number of fully paid and nonassessable shares of Maker’s common stock, as said shares shall be constituted on the date of conversion, obtained by dividing the sum of the then outstanding principal and interest on and under this Note by the conversion price of $7.50 per share (the "Conversion Price"), as adjusted for any stock splits, stock dividends and conversions.
 
(b) The foregoing conversion rights may be exercised by Holder, in whole, but not in part, by the surrender of this Note at Holder’s principal office at 4110 North Fairfax Drive, Suite 1150, Arlington, Virginia or such other office as Maker may designate, accompanied by a completed Notice of Exercise of Conversion Rights in the form attached as Exhibit 1 (the “Notice of Exercise”). Upon receipt of this Note and the Notice of Exercise, Maker (i) shall show the Holder as the record owner of those shares as of the close of business on the date on which the Notice of Exercise together with this Note were received by Maker and (ii) shall cause to be issued to Holder stock certificates for the shares of Maker’s common stock so acquired promptly after such conversion rights shall have been so exercised.
 
2. Automatic Conversion.
 
(a) If during the period commencing on the one hundred eightieth (180th) day following the date hereof and ending on the second (2nd) anniversary of the date hereof the average closing price of Maker’s stock (on the Nasdaq OTC market, or other recognized market on which Maker’s stock is then listed) is for a period of over twenty (20) consecutive trading days equal to or greater than $7.50 per share, as adjusted for stock splits, stock dividends and conversions (a “Conversion Event”); then all of the then outstanding principal amount of, and accrued interest on, this Note shall be converted into that number of fully paid and nonassessable shares of Maker’s common stock, as said shares shall be constituted on the date of conversion, obtained by dividing the sum of said principal amount and accrued interest by the Conversion Price.
 
(b) Maker shall notify the Holder of the occurrence of a Conversion Event within ten (10) days after the Conversion Event (which notice shall include the outstanding principal and interest of Note as of the date of conversion and the number of shares of the Maker’s common stock the Note has been converted into). Upon surrender of this Note by Holder to Maker, Maker shall promptly cause to be issued to Holder stock certificates for the shares of Maker’s common stock so acquired.
 
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3. Fractional Shares. The conversion rights pursuant to Sections B1 and B2 above shall be exercisable only as to whole shares, and in no event shall Maker be required to issue fractional shares. If the calculation of the number of shares of Maker’s common stock to be received as the result of a conversion would result in the issuance of fractional shares, then the number of shares of Maker’s common stock that would otherwise be issuable upon conversion shall be rounded down to the nearest whole number of shares and the Maker shall pay to Holder in cash the amount attributable to the fractional shares.
 
B.  GENERAL
 
1. No Waiver. No delay or omission of Holder or its assignee in exercising any power or right hereunder, and no partial exercise of such power or right, shall operate in any way as a waiver or impairment of any subsequent or further exercise thereof. Holder or its assignee shall not be liable for or prejudiced by failure to collect or lack of diligence in bringing suit on this Note or any renewal or extension hereof.
 
2. Invalid Provisions. If any provision of this Note is held to be illegal, invalid or unenforceable under any present or future law (a) such provision will be fully severable, (b) this Note will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (c) the remaining provisions of this Note will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom and (d) in lieu of such illegal, invalid or unenforceable provision, there will be added automatically as a part of this Note a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible.
 
3. Amendment. This Note may be amended, supplemented or modified only by a written instrument duly executed by or on behalf of the Maker and the Holder.
 
4. Covenants Bind Successors and Assigns. All the covenants, stipulations, promises and agreements contained in this Note by or on behalf of the Maker shall bind its successors and assigns, whether so expressed or not.
 
5. Notices. All notices, requests and other communications hereunder must be in writing and will be deemed to have been duly given if delivered personally or sent postage prepaid, return receipt requested, by registered, certified or express mail or reputable overnight courier service to Maker and the Holder at the following addresses:
 
if to the Maker:           Fortress America Acquisition Corporation
4100 North Fairfax Drive
Suite 1150
Arlington, Virginia 22203
Attn: Harvey L. Weiss, Chairman of the Board
Fax: (703) 528-0956
 
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if to the Holder:      Thomas P. Rosato
11373 Liberty Street
Fulton, MD 20759
 
 
All such notices, requests and other communications will (a) if delivered personally to the address as provided in this Section, be deemed given upon delivery, (b) if delivered by mail in the manner described above to the address as provided in this Section, be deemed given upon receipt and (c) if delivered by 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). The Maker and the Holder from time to time may change its address or other information for the purpose of notices to such party by giving notice specifying such change to such other party.
 
6. Headings. The headings used in this Note have been inserted for convenience of reference only and do not define or limit the provisions hereof.
 
7. Governing Law. This Note shall be governed by and construed in accordance with the internal laws of the Commonwealth of Virginia without regard to conflicts of law principles. Each of Maker and Holder hereby irrevocably submits to the jurisdiction of any state or federal court sitting in the Commonwealth of Virginia for purposes of any controversy, claim or dispute arising out of or related to this Note and hereby waives any defense of an inconvenient forum and any right of jurisdiction on account of the place of residence or domicile.
 
8. Waiver of Jury Trial. Each of the Maker and the Holder hereby irrevocably and unconditionally waives any rights to a trial by jury in any legal action or proceeding in relation to this Note and for any counterclaim therein.
 
9. Interpretation. The Maker and the Holder agree that in interpreting this Note there shall be no inferences against the drafting party.
 
10. “Accredited Investor” Representation. By accepting this Note, the original Holder hereof represents that he is an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended.
 
IN WITNESS WHEREOF, Maker has caused this Convertible Promissory Note to be signed by its duly authorized officer.
 
     
 Attest: FORTRESS AMERICA ACQUISITION CORPORATION.
 
 		  
 		  
 
Sandra D. Narbesky By:   /s/ Harvey L. Weiss
 
Name: Harvey L. Weiss
  Title: Chairman
    
   
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EXHIBIT 1
 
NOTICE OF EXERCISE OF CONVERSION RIGHTS
 
To be Executed Upon Exercise of Conversion Rights
 
The undersigned hereby exercises, according to the terms and conditions of the foregoing Convertible Promissory Note, the right to convert all of the outstanding principal and accrued interest on, said Promissory Note into shares of common stock of Fortress International Group, Inc.

The undersigned hereby agrees that as of the date of this Notice, the outstanding principal and accrued interest under the Note is as follows:
 
 Outstanding Principal:    _____________________________
 Outstanding Interest:    _____________________________
     _____________________________
 Total Outstanding    
 Principal and Interest    _____________________________
    
The undersigned further agrees that the Total Outstanding Principal and Interest is convertible into   shares of the Maker’s common stock (based on a conversion price of $7.50 per share)
 
     
  __________________________________
 
 		  
 		  
 
Dated: _______________________ By:    
  Name:
 
  Title:  
 
 
 Address:
     _______________________________
     ___________________________
 
6
 EX-99.6 3 v063625_ex99-6.htm
LOCK-UP AGREEMENT
 
THIS LOCK-UP AGREEMENT (this “Agreement”) is entered into as of the 19th day of January, 2007, by and among Fortress America Acquisition Corporation, formerly known as Fortress America Acquisition Corporation, a Delaware corporation (the “Company”), and the undersigned parties identified as Stockholders on the signature page hereto (each, a “Stockholder” and collectively, the “Stockholders”).
 
WHEREAS, the Stockholders are either (i) parties to the Second Amended and Restated Membership Interest Purchase Agreement by and among the Company, VTC, L.L.C., Vortech, LLC, Thomas P. Rosato and Gerard J. Gallagher, dated July 31, 2006, as amended by an Amendment To The Second Amended and Restated Membership Interest Purchase Agreement dated January 16, 2007 (the “Purchase Agreement”) or (ii) acquired stock in Company as a direct result of the transactions contemplated in the Purchase Agreement;
 
WHEREAS, the founding stockholders of the Company (the “Founding Stockholders”), in connection with the Company’s initial public offering (the “IPO”), agreed to a “lock-up” of their shares of Common Stock until July 13, 2008, being the third anniversary of the effective date of the IPO, pursuant to the terms and conditions of that certain Stock Escrow Agreement dated as of July 13, 2005;

WHEREAS, pursuant to Section 2.2(d)(iv) of the Purchase Agreement and in consideration of the transactions contemplated by the Purchase Agreement, the Stockholders and the Company desire to enter into this Agreement to provide for the “lock-up” up of the shares of Common Stock issued to the Stockholders as Stock Consideration, including those shares that may be issued upon conversion of the Convertible Promissory Note (the “Locked- Up Common Stock”), for the period commencing on the date of this Agreement until July 13, 2008; and

WHEREAS, the capitalized terms not otherwise defined in this Agreement shall have the meanings given to them in the Purchase Agreement.
 
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. Terms of Lock-Up. Each Stockholder agrees that, from the date of this Agreement until July 13, 2008 (the “Lock-Up Period”), he will not (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or file (or participate in the filing of) a registration statement with the Securities and Exchange Commission (the “Commission”) in respect of, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder with respect to, any Locked-Up Common Stock or any securities convertible into or exercisable or exchangeable for Locked-Up Common Stock, or warrants or other rights to purchase Locked-Up Common Stock, (ii) enter into any swap, derivative transaction or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of Locked-Up Common Stock or any securities convertible into or exercisable or exchangeable for Locked-Up Common Stock, or warrants or other rights to purchase Locked-Up Common Stock, whether any such transaction is to be settled by delivery of Locked-Up Common Stock or such other securities, in cash or otherwise, or (iii) publicly announce an intention to effect any transaction specified in clause (i) or (ii). The foregoing restrictions shall not apply to any transfer (i) by gift to a member of a Stockholder’s immediate family or to a trust, the beneficiary of which is a Stockholder or a member of a Stockholder’s immediate family, (ii) by virtue of the laws of descent and distribution upon death of any Stockholder, (iii) pursuant to a qualified domestic relations order, or (iv) to any partner, member or affiliate of any Stockholder organized as an entity; provided, however, that such permitted transfers may be implemented only upon the respective transferee’s written agreement to be bound by the terms and conditions of this Agreement as to the Locked-Up Common Stock. 

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2. Transfer Agent Instructions. Each Stockholder hereby authorizes the Company during the Lock-Up Period to cause the Company’s transfer agent to decline transfer and/or to note stop transfer restrictions on the transfer books and records of the Company with respect any shares of Locked-Up Common Stock and any securities convertible into, exercisable for or exchangeable for Locked-Up Common Stock for which such Stockholder is the record or beneficial holder.

3. Waiver of Registration Rights. Each Stockholder hereby waives any rights to require registration of the Locked-Up Common Stock during the Lock-Up Period.

4. Assignment.  This Agreement and the rights, duties and obligations of the Stockholders may only be assigned as set forth in Section 1 of this Agreement.  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.  

5 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.
 
 
2

 
 
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, 14th Floor
Tysons Corner, Virginia 22182
Attn: James J. Maiwurm, Esq.; and
 
To a Stockholder,:
 
to the addresses listed on Exhibit A hereto.
  
 
6. 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.
 
7. 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.
 
8. Entire Agreement.  This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, representations, understandings, negotiations and discussions between the parties, whether oral or written.
 
9. Modifications and Amendments.  No amendment, modification or termination of this Agreement shall be binding upon any party unless executed in writing by such party.
 
10. 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.
 
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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]

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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, Jr.
 
Title: President
 
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Exhibit A
 
Stockholders:
 
Thomas P. Rosato
11373 Liberty Street
Fulton, MD 20759
 
Gerard J. Gallagher
5 Tydings Road
Severna Park, MD 21146
 
Evergreen Capital, LLC
8808 Centre Park Drive, Suite 204
Columbia, MD 21045
 
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