AMENDMENT TO CONVERTIBLE PROMISSORY NOTE
AMENDMENT
TO
This
AMENDMENT TO CONVERTIBLE PROMISSORY NOTE
(this “Amendment”) is
effective as of the 28th day of
February, 2010, by and between FORTRESS INTERNATIONAL GROUP, INC., a Delaware
corporation (f/k/a Fortress America Acquisition Corporation) (“Maker”), and Xxxxxx
X. Xxxxxxxxx (“Holder”). Each
of Maker and Holder are hereinafter individually referred to as a “Party,” and
collectively as the “Parties”.
EXPLANATORY
STATEMENTS
Maker has issued to Holder that certain
Convertible Promissory Note, dated January 19, 2007, in the original principal
amount of Five Million Dollars ($5,000,000), as amended by that certain
Agreement, dated August 26, 2008, between the Parties (collectively, the “Note”). The
Parties have agreed, pursuant to that certain letter agreement of even date
herewith, to convert One Million Two Hundred Fifty Thousand Dollars ($1,250,000)
of the outstanding principal balance due under the Note to shares of common
stock of Maker, with the remaining principal balance due under the Note in the
amount of Two Million Seven Hundred Fifty Thousand Dollars ($2,750,000), and a
portion of the accrued interest as of the date hereof (which shall be treated as
principal beginning on January 1, 2011), to be paid under the Note as amended
hereby. The Parties desire to amend certain terms and conditions set
forth in the Note, all as further described and set forth in this
Amendment.
AGREEMENT
NOW, THEREFORE, in
consideration of the foregoing and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties, intending
to be legally bound, hereby agree as follows:
1. Amendments
to the Note. The terms and conditions of the Note shall be
amended as follows:
(a) Payment
of Principal Amount and Interest. Section A.1 of the Note is
hereby deleted in its entirety and the following is substituted in lieu
thereof:
1. Principal Amount and
Interest. FOR VALUE RECEIVED, the undersigned Fortress International
Group, Inc., a Delaware corporation (“Maker”), promises to
pay to the order of Xxxxxx X. Xxxxxxxxx, his successors and assigns (“Holder”), at 0
Xxxxxxx Xxxx, Xxxxxxx Xxxx, Xxxxxxxx 00000, or at such other place as
Holder may from time to time designate in writing, the principal sum of Two
Million Seven Hundred Fifty Thousand Dollars ($2,750,000), together with
interest thereon from March 1, 2010 at the rate of four percent (4%) per annum,
compounded annually (“Base Interest
Rate”). Upon the occurrence and during the continuance of an
“Event of Default” (as defined herein), the principal indebtedness evidenced by
this Note shall bear interest at a rate of seven percent (7%) 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 monthly, on the first day of each
calendar month, until this Note is paid in full (with the first payment of
interest due on April 1, 2010). In addition to the monthly interest
payments set forth in this subsection (a), Maker shall pay certain amounts of
the interest accrued under this Note as of March 1, 2010 (the “Accrued Interest”) as
follows: (i) Two Hundred Thousand Dollars ($200,000) of the Accrued Interest
shall be paid by Maker on or before March 1, 2010; (ii) Forty Thousand Dollars
($40,000) of the Accrued Interest shall be paid by Maker on or before December
1, 2010; and (iii) Forty Thousand Dollars ($40,000) of the Accrued Interest
shall be paid by Maker on or before January 1, 2011. The remaining
amount of Accrued Interest as of January 1, 2011 in the amount of Eighty-Two
Thousand Three Hundred One Dollars ($82,301) shall be added to the principal
balance due under this Note as of such date and shall be treated as principal
for all purposes under this Note thereafter.
(b) No
amounts of principal shall be payable under this Note until April 1, 2012 (the
“Initial Principal
Payment Date”). Beginning on the Initial Principal Payment
Date (with the first payment due on such date), the principal amount due under
this Note shall be payable by Maker in eight (8) equal quarterly installments of
One Hundred Twenty-Five Thousand Dollars ($125,000) each. Each
quarterly installment will be due on the first day of each quarterly period
(April 1, July 1, October 1, January 1) for the period beginning on the Initial
Principal Payment Date and ending on April 1, 2014 (the “Maturity
Date”). All remaining amounts of principal and interest due
under this Note shall be paid in full on or before the Maturity
Date.
(b) Acceleration
of Payments. The following provision is added to the end of
Section A.3 of the Note:
All
amounts due under this Note shall be immediately due and payable to the Holder
upon the occurrence of any of the following events: (i) a Change of Control (as
defined in that certain Executive Employment Agreement, effective as of January
19, 2007 and amended as of the date hereof, between Maker and Holder); or (ii)
the death of Holder.
2. Life
Insurance Policy. In connection with the execution and
delivery of this Amendment, Maker will use commercially reasonable efforts to
obtain an insurance policy on the life of Holder in the amount of the principal
balance due under the Note. Maker will be designated as the
beneficiary of all proceeds of such policy and shall pay when due all premiums
charged under such policy through the Maturity Date (as defined in the Note) of
the Note. Upon the death of Holder and the acceleration of the
amounts due under the Note in accordance with Section A.3 of the Note, Maker
shall use and apply all proceeds actually received by Maker under such insurance
policy toward the payment and satisfaction of the remaining amounts due under
the Note. In the event such policy is not obtained by Maker by March
31, 2010, Maker shall pay Holder the amount necessary to obtain such policy
during the period that any amounts are due and payable under the Note, but in no
event shall Maker be obligated to pay an amount in excess of Ten Thousand
Dollars ($10,000) per year under this Section
2.
3. Effect of
Amendment. Except
as otherwise expressly provided herein, all provisions of the Note shall remain
in full force and effect. This Amendment and the Note contain the
entire understanding of the Parties with respect to the subject matter hereof
and thereof, and supersede all prior oral or written communications, agreements
and understandings between the Parties with respect to the subject matter hereof
and thereof. This Amendment is intended to modify the provisions of
the Note; in the event that there is a conflict between the terms of this
Amendment and the Note, the Parties intend that the provisions of this Amendment
should govern their respective rights and obligations.
4. Payment
of Fees. Maker hereby agrees to reimburse Holder for certain
legal and accounting fees incurred by Holder in connection with the negotiation,
execution, and delivery of this Amendment, the Amendment to Executive Employment
Agreement of even date herewith, and that certain letter agreement of even date
herewith, up to a maximum amount of Twenty Thousand Dollars
($20,000).
5. Miscellaneous. The
Explanatory Statements set forth above form a material basis for this Amendment
and are expressly incorporated herein and made a part hereof. All
capitalized terms not otherwise defined in this Amendment shall have the
meanings assigned to them in the Note. All questions concerning the
construction, validity, and interpretation of this Amendment and the performance
of the obligations imposed by this Amendment will be governed by the laws of the
State governing the Note, without reference to any conflict of laws rules that
would apply the laws of another jurisdiction. This Amendment may be
executed simultaneously in multiple counterparts, each of which will be deemed
to be an original copy of this Amendment and all of which together will be
deemed to constitute one and the same agreement. The exchange of
copies of this Amendment and of signature pages by facsimile transmission or
e-mail delivery of a .pdf format data file shall constitute effective execution
and delivery of this Amendment as to the Parties and may be used in lieu of the
original Amendment and signature pages thereof for all purposes.
{Signatures
appear on the following page}
IN WITNESS WHEREOF, the
Parties have executed this Amendment as of the day and year first written
above.
Signature
page to Amendment to
