InterCloud Systems, Inc. (NasdaqCM:ICLD) signed a definitive agreement to acquire Integration Partners - NY Corporation from Barton F. Graf, Jr., David C. Nahabedian and Frank Jadevaia for $20.6 million in cash stock and notes on December 12, 2013. Of the purchase consideration $1.3 The consideration is the sum of an amount equal to - (i) the product of 5.2 multiplied by IPC's trailing-twelve-month EBITDA for the period ended September 30, 2013, (ii) less estimated closing debt, (iii) less estimated company unpaid transaction expenses, (iv) plus any estimated working capital surplus or less any estimated working capital deficiency; a number of shares of our common stock equal to the quotient obtained by dividing (A) (i) the product of 0.2 multiplied by IPC's trailing-twelve-month EBITDA for the period ended September 30, 2013, (ii) less estimated closing debt, (iii) less estimated company unpaid transaction expenses, (iv) plus any estimated working capital surplus or less any estimated working capital deficiency, by (B) the average closing price of our common stock for the three (3) trading days immediately prior to, but not including, the closing date of the acquisition; plus number of shares of our common stock, issuable to each of Graf and Nahabedian, equal to $0.1 million divided by the average closing price of our common stock for the three (3) trading days immediately prior to, but not including, the closing date of the acquisition. Approximately two-thirds of the initial closing payment will be payable in cash to Graf and Nahabedian and the balance will be payable to Jadevaia in the form of a convertible note.

At closing, Inter Cloud will deposit in escrow 7% of the initial cash payment with Wells Fargo Bank, National Association as escrow agent. The closing payments are also subject to customary post-closing working capital adjustments. As additional earnout consideration, InterCloud Systems will make an additional cash payment in an amount equal to the aggregate amount of (i) the product of 0.6 multiplied by the EBITDA of Integration Partners for the 12-month period beginning on January 1, 2014 plus (ii) in the event that the forward EBITDA exceeds the closing trailing-twelve-month EBITDA by 5% or more, an amount equal to 2.0 multiplied by this difference.

In order to finance this acquisition, InterCloud completed the sale today of $11.625 million aggregate principal amount of 12% convertible debentures and an aggregate of 0.04 million shares on Inter Cloud. The transaction is subject to approval by regulatory board, execution of escrow and transitional services agreement, resignation of the directors of Integration Partners and minimum cash requirements of $5000 . The agreement may be terminated at any time prior to closing (i) by mutual consent of the parties, (ii) by either party if the closing has not occurred by December 31, 2013, (iii) by either party if the other party has breached any of its representations, warranties or covenants or (iv) by either party if a court or governmental authority has issued a final order or ruling prohibiting the transaction. InterCloud expects to close the acquisition no later than December 31, 2013. M. Ali Panjwani of Pryor Cashman LLP acted as legal advisor to InterCloud Systems. Jay K. Hachigian of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP acted as legal advisor to Graf, Nahabedian, Jadevaia and Integration Partners. BDO USA, LLP acted as accountant for InterCloud Systems, Inc for a fee of $125,000.

InterCloud Systems, Inc. (NasdaqCM:ICLD) completed the acquisition of Integration Partners - NY Corporation from Barton F. Graf, Jr., David C. Nahabedian and Frank Jadevaia on January 1, 2014.