Contract
Exhibit
10.5
AGREEMENT
THIS
AGREEMENT is made as of this ___ day of March, 2005, by and among FORTRESS
AMERICA ACQUISITION CORPORATION, a Delaware corporation (the “Company”), SUNRISE
SECURITIES CORP., a Delaware corporation (“Sunrise”), and PALADIN
HOMELAND SECURITY FUND, L.P., a
Delaware limited partnership, PALADIN HOMELAND SECURITY FUND (NY CITY), L.P., a
Delaware limited partnership, PALADIN HOMELAND SECURITY FUND (CA), L.P., a
Delaware limited partnership, and PALADIN HOMELAND SECURITY FUND (CAYMAN
ISLANDS), L.P., a limited partnership formed under the laws of the Cayman
Islands (individually, “Stockholder,” and collectively,
“Stockholders”).
A.
Sunrise entered into a Letter of Intent (the “Letter of Intent”) with the
Company to underwrite an initial public offering of the securities of the
Company (“IPO”) and embark on the IPO process.
B. As a
condition and in consideration for Sunrise underwriting the IPO, Sunrise, the
Company and the Stockholders must agree to certain terms and conditions as more
fully described in this Agreement.
C.
Capitalized terms used in this Agreement, unless defined elsewhere, shall have
the meaning ascribed to them in Section 11 hereof.
NOW,
THEREFORE, for good and valuation consideration, the parties hereto hereby agree
as follows:
1. If the
Company solicits approval of its stockholders of a Business Combination,
Stockholders will vote all Insider Shares owned by them in accordance with the
majority of the votes cast by the holders of the IPO Shares.
2. In the
event that the Company fails to consummate a Business Combination within 18
months from the effective date (“Effective Date”) of the registration statement
relating to the IPO (or 24 months under the circumstances described in the
prospectus relating to the IPO), Stockholders will take all reasonable actions
within their power to cause the Trust Fund (as defined in the Letter of Intent)
to be liquidated and distributed to the holders of the IPO Shares. Each
Stockholder hereby waives any and all right, title, interest or claim of any
kind in or to any distribution of the Trust Fund as a result of such
distribution with respect to such Insider Shares (“Claim”) and hereby waives any
Claim Stockholder may have in the future as a result of, or arising out of, any
contracts or agreements with the Company and will not seek recourse against the
Trust Fund for any reason whatsoever (including in connection with enforcement
of the Company’s indemnification obligations under paragraph 9
hereof).
3. Stockholders
acknowledge and agree that the Company will not consummate any Business
Combination which involves a company which is affiliated with any of the
Insiders unless the Company obtains an opinion from an independent investment
banking firm reasonably acceptable to Sunrise that the Business Combination is
fair to the Company’s stockholders from a financial perspective.
4. Stockholders
will not be entitled to receive, and will not accept, any compensation for
services rendered to the Company prior to the consummation of the Business
Combination; provided that Stockholders shall be entitled to reimbursement from
the Company for their out-of-pocket expenses incurred on behalf of the
Company.
5. Stockholders
will not be entitled to receive, or accept, a finder’s fee or any other
compensation in the event Stockholders, any member of a family of a Stockholder
or any Affiliate of Stockholders originates a Business Combination.
6. Stockholders
will escrow their Insider Shares for the three-year period commencing on the
Effective Date, subject to the terms of a stock escrow agreement substantially
in the form attached hereto as Exhibit A which the Company will enter into with
Stockholders and an escrow agent acceptable to the Company.
7. The
Company and Stockholders agree to enter into a registration rights agreement
substantially in the form attached hereto as Exhibit B.
8. Stockholders
hereby represent and warrant that the information furnished in writing to the
Company and to Sunrise marked expressly for inclusion in the Registration
Statement on Form S-1 (the “Registration Statement”) is true and accurate in all
respects, does not omit any material information with respect to any Stockholder
that would otherwise be required to be disclosed under the Securities Act of
1933, as amended, or any rule or regulation promulgated thereunder.
9. The
Company agrees to indemnify and hold harmless Stockholders, and each of their
respective officers, employees, affiliates, directors, and partners (each, an
“Indemnified Party”), from and against any expenses, losses, judgments, claims,
damages or liabilities arising out of or based upon any untrue statement (or
allegedly untrue statement) of a material fact contained in the Registration
Statement, preliminary prospectus or final prospectus (or any amendment or
supplement thereto), 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 of 1933, as amended, or any rule or regulation promulgated
thereunder applicable to the Company and relating to action or inaction required
of the Company in connection with the registration; and the Company shall
promptly reimburse the Indemnified Party for any legal and any other expenses
reasonably incurred by such Indemnified Party in connection with investigating
and defending any such expense, loss, judgment, claim, damage or liability;
provided however, that the Company shall 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 the Registration Statement, preliminary prospectus, or
final prospectus (or any amendment or supplement thereto) in reliance upon and
in conformity with information furnished to the Company, in writing, by any
Stockholder expressly for use therein. Each Stockholder hereby waives any and
all right, title, interest or claim of any kind in or to the Trust Fund or any
distribution from the Trust Fund in respect of any claim or rights Stockholder
may have in the future against the Company as a result of, or arising out of,
the Company’s indemnification obligations in this paragraph 8 and will not seek
recourse against the Trust Fund for any reason whatsoever.
2
10. As used
herein, (i) a “Business Combination” shall mean an acquisition by merger,
capital stock exchange, asset or stock acquisition, reorganization or otherwise,
of an operating business in the homeland security industry selected by the
Company; (ii) “Insiders” shall mean all officers, directors and stockholders of
the Company immediately prior to the IPO; (iii) “Insider Shares” shall mean all
of the shares of Common Stock of the Company owned by an Insider prior to the
IPO; and (iv) “IPO Shares” shall mean the shares of Common Stock issued in the
Company’s IPO.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.
By:
/s/ Xxxxxx X. Xxxxx _
Xxxxxx X.
Xxxxx, President and Chief Executive
Officer
SUNRISE
SECURITIES CORP.
By:
/s/ Xxxxxx Low
Its:
President
PALADIN
HOMELAND SECURITY FUND, L.P.
|
By: |
PALADIN
HOMELAND SECURITY HOLDINGS, LLC, its General
Partner |
By:
/s/ Xxxxxxx X. Xxxxx
Xxxxxxx
X. Xxxxx, Authorized Signatory
PALADIN
HOMELAND SECURITY FUND (NY CITY), L.P.
|
By: |
PALADIN
HOMELAND SECURITY HOLDINGS, LLC, its General
Partner |
By:
/s/ Xxxxxxx X. Xxxxx
Xxxxxxx
X. Xxxxx, Authorized Signatory
3
PALADIN
HOMELAND SECURITY FUND (CA), L.P.
|
By: |
PALADIN
HOMELAND SECURITY HOLDINGS, LLC, its General
Partner |
By:
/s/ Xxxxxxx X. Xxxxx
Xxxxxxx
X. Xxxxx, Authorized Signatory
PALADIN
HOMELAND SECURITY FUND (CAYMAN ISLANDS), L.P.
|
By: |
PALADIN
HOMELAND SECURITY HOLDINGS (CAYMAN ISLANDS), LTD., its General
Partner |
By:
/s/ Xxxxxxx X. Xxxxx
Xxxxxxx
X. Xxxxx, Authorized Signatory
