Exhibit 2.1
STOCK PURCHASE AGREEMENT
BY AND AMONG
ORBIT INTERNATIONAL CORP.,
AS BUYER,
INTEGRATED CONSULTING SERVICES, INC.
AND
THE RESPECTIVE SHAREHOLDERS OF
INTEGRATED CONSULTING SERVICES, INC.,
AS THE SELLERS
December 19, 2007
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1020647.22
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1020647.22
Table of Contents
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Item Page
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Article I. Definitions 2
1.01 Specific Definitions 2
1.02 Other Definitional Provisions 2
Article II. Purchase and Sale 2
2.01 Purchase and Sale of Shares 2
2.02 Closing Purchase Price 2
2.03 Adjustment of the Purchase Price 2
2.04 Assumption of Liabilities 2
2.05 Closing 2
2.06 Closing Procedures and Deliveries 2
2.07 Conditions to Closing 2
2.08 Contingent Earn-Out Payment 2
2.09 Tax Matters 2
Article III. Representations and Warranties of the Sellers 2
3.01 Ownership of Shares 2
3.02 Authority; Binding Effect 2
3.03 No Violations 2
3.04 No Other Agreements to Purchase 2
3.05 Consents and Approvals 2
3.06 Brokers and Finders 2
3.07 Investment Representations 2
3.08 ICS Disclosure Schedule 2
3.09 Organization and Qualification 2
3.10 Corporate Power; Binding Effect 2
3.11 Foreign Qualification 2
3.12 Subsidiaries 2
3.13 Capitalization 2
3.14 Financial Condition 2
3.15 Absence of Certain Changes 2
3.16 Properties, Leases, Etc 2
3.17 Indebtedness 2
3.18 Absence of Undisclosed Liabilities 2
3.19 Tax Matters 2
3.20 Litigation and Claims 2
3.21 Safety; Zoning; Real Estate; and Environmental Matters 2
3.22 Material Contracts 2
3.23 Tangible Property 2
3.24 Title to Assets; Permitted Liens 2
3.25 Employees; Labor Relations; Benefit Plans 2
3.26 Potential Conflicts of Interest 2
3.27 Patents, Trademarks, Business Name 2
3.28 Insurance 2
3.29 Governmental and Other Third-Party Consents 2
3.30 Employment of Officers 2
3.31 Compliance with Other Instruments, Laws, Etc 2
3.32 Compliance with Securities Laws 2
3.33 Questionable Payments 2
3.34 ICS Disclosure Schedule 2
Article IV. Representations and Warranties of Buyer 2
4.01 Organization and Standing 2
4.02 Corporate Power 2
4.03 Authorization; Binding Effect 2
4.04 Capitalization 2
4.05 Subsidiaries 2
4.06 Authority to Conduct Business 2
4.07 No Violation 2
4.08 Litigation 2
4.09 Full Disclosure 2
4.10 SEC Filings 2
4.11 Conduct of Business 2
4.12 Brokers 2
4.13 Consents 2
4.14 Common Stock 2
4.15 Orbit Shares 2
4.16 Absence of Undisclosed Liabilities 2
4.17 ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act 2
4.18 Orbit Disclosure Schedule 2
Article V. Indemnification 2
5.01 Indemnity in Favor of Buyer 2
5.02 Indemnity in Favor of Sellers 2
5.03 Indemnification Procedure 2
5.04 Survival 2
Article VI. Covenants of the Sellers 2
6.01 Access 2
6.02 Conduct of Business 2
6.03 Advice of Changes 2
6.04 Voting by Sellers 2
6.05 Conduct of Business Until the Effective Date 2
6.06 Cooperation on Tax Matters 2
6.07 Assignment and Assumption of Facility Leases 2
Article VII. Covenants of Buyer 2
7.01 Employment Agreement 2
7.02 Transfer of Orbit Shares to Sellers 2
7.03 Registration Rights Agreement 2
7.04 Assignment and Assumption of Lease 2
7.05 Cooperation of Buyer 2
7.06 SEC Filings 2
7.07 Certain Tax Matters 2
Article VIII. Conditions to Obligations of Buyer 2
8.01 Accuracy of Representations and Warranties and Compliance With Covenants
2
8.02 Good Standing; Qualification to do Business 2
8.03 Minimum Net Working Capital 2
8.04 Inventory 2
8.05 Review of Proceedings 2
8.06 No Legal Action 2
8.07 No Governmental Action 2
8.08 Consents 2
8.09 Personnel 2
8.10 Employment Agreements 2
8.11 Restrictive Covenants Agreement 2
8.12 General Release 2
8.13 Other Closing Documents 2
8.14 Other Agreements 2
8.15 Corporate Records 2
8.16 Opinion of Counsel 2
8.17 Board Approval 2
8.18 No Material Adverse Change 2
8.19 Tax Withholding Forms and Certificates 2
8.20 Section 338(h)(10) Election 2
8.21 Assignment and Assumption of Lease 2
8.22 Delivery of Cash into Escrow 2
8.23 Responsibility for Filing Tax Returns 2
8.24 Termination of Shareholders' Agreement 2
Article IX. Conditions to Obligations of the Sellers 2
9.01 Accuracy of Representations and Compliance with Covenants 2
9.02 Stock Certificates 2
9.03 Cash Purchase Price 2
9.04 Employment Agreements 2
9.05 Registration Rights Agreement 2
9.06 Opinion of Counsel 2
9.07 Assignment and Assumption of Lease 2
9.08 Board Approval 2
9.09 Other Closing Documents 2
9.10 No Legal Action 2
9.11 Other Agreements 2
9.12 Consents 2
9.13 Review of Proceedings 2
9.14 No Governmental Action 2
9.15 Release of Guaranties, Mortgages 2
9.16 Pre-Closing Assignment of the Certificates of Deposits 2
Article X. Miscellaneous 2
10.01 Termination 2
10.02 [Intentionally left blank] 2
10.03 Confidentiality 2
10.04 Expenses 2
10.05 Brokers and Finders 2
10.06 Further Actions 2
10.07 Availability of Equitable Remedies 2
10.08 Modification 2
10.09 Notices 2
10.10 Waiver 2
10.11 Disclosure Schedules; Effect of Investigation 2
10.12 Binding Effect 2
10.13 No Third-Party Beneficiaries 2
10.14 Severability 2
10.15 Headings 2
10.16 Governing Law; Jurisdiction; Venue 2
10.17 Counterparts 2
List of Schedules and Exhibits
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Schedules
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ICS Disclosure Schedule
Orbit Disclosure Schedule
Exhibits
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Exhibit 2.03 - Allocation of Purchase Price
Exhibit 2.06(a)(i) - Form of Sellers' Closing Escrow Agreement
Exhibit 2.06(a)(ii) - Form of Buyer's Closing Escrow Agreement
Exhibit 2.06(d) - Form of Indemnity Escrow Agreement
Exhibit 2.07(b) - Form of Registration Rights Agreement
Exhibit 2.08(a) - Form of Buyer's Promissory Note
Exhibit 2.08(b) - Form of Custody Pledge and Surety Agreement
Exhibit 6.07 - Form of Assignment and Assumption of Lease
Exhibit 7.01 - Form of Employment Agreement
Exhibit 8.11 - Form of Restrictive Covenants Agreement
Exhibit 8.12 - Form of General Release
Exhibit 8.16 - Form of Opinion of Counsel for the Sellers
Exhibit 9.06 - Form of Opinion of Counsel for Buyer
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1020647.22
1020647.22
STOCK PURCHASE AGREEMENT
This Agreement is made as of December 19, 2007, by and among ORBIT INTERNATIONAL
CORP., a Delaware corporation ("BUYER"), INTEGRATED CONSULTING SERVICES, INC.
(d/b/a Integrated Combat Systems, Inc.) ("ICS"), a Kentucky corporation, and
▇▇▇▇▇▇▇ ▇. ICE ("MR. ICE"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇. ▇▇▇▇▇") and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ ("▇▇. ▇▇▇▇▇▇▇▇▇"), the sole shareholders of ICS (collectively referred
to as the "SELLERS").
RECITALS
WHEREAS, the Sellers own all of the issued and outstanding capital stock of
ICS free and clear of all encumbrances (the "SHARES"); and
WHEREAS, the Sellers desire to sell, and Buyer desires to purchase, all of
the Sellers' right, title and interest in and to the Shares on the terms and
conditions contained herein (the "SHARE PURCHASE").
NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby agree as follows:
ARTICLE I.
DEFINITIONS
1.01 Specific Definitions.
As used in this Agreement, the following terms have the following meanings:
"Accounts Receivable" has the meaning specified in Section 4.06(b) of this
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Agreement.
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"Affiliate" means any other person directly or indirectly controlling,
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controlled by, or under direct or indirect common control with, Buyer or ICS (or
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other referenced Person) and includes without limitation, (a) any person who is
an officer, director, or direct or indirect beneficial holder of at least 5% of
the then outstanding capital stock of Buyer or ICS (or other referenced Person),
and any of the Family Members of any such Person, (b) any Person of which Buyer
or ICS (or other referenced Person) and/or its Affiliates (as defined in clause
(a) above), directly or indirectly, either beneficially own(s) at least 5% of
the then outstanding equity securities or constitute(s) at least a 5% equity
participant, and (c) in the case of a specified person who is an individual,
Family Members of such person, or any Affiliate of any of them, or any
Affiliates of any of the foregoing.
"Affiliated Group" has the meaning given to it in Section 1504 of the Code, and
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in addition includes any analogous combined, consolidated, or unitary group, as
defined under any applicable state, local, or foreign income Tax Law.
"Agreement" means this Stock Purchase Agreement, as the same may be amended or
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supplemented from time to time in writing and in accordance with the terms of
this Agreement.
"Ancillary Documents" means the Sellers' Closing Escrow Agreement, the Buyer's
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Closing Escrow Agreement, the Indemnity Escrow Agreement, the Registration
Rights Agreement, the Buyer's Promissory Note, the Pledge Agreement, the
Assignment and Assumption of Leases, the Employment Agreements, the Restrictive
Covenant Agreements and the General Releases.
"Applicable Survival Period" has the meaning specified in Section 5.04 of this
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Agreement.
"Assets" means any and all real, personal or intangible property or goodwill
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used in connection with ICS's business.
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"Assignment and Assumption of Lease" has the meaning specified in Section 6.07
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of this Agreement.
"Bank" has the meaning specified in Section 9.17 of this Agreement.
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"Business Day" means any day other than a Saturday, a Sunday or a day on which
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banks in New York City are authorized or obligated by Law or executive order to
close.
"Buyer" has the meaning specified in the Preamble to this Agreement.
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"Certificate of Deposit" has the meaning specified in Section 9.17 of this
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Agreement.
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"Claims" has the meaning specified in Section 5.03(a) of this Agreement.
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"Claim Notice" has the meaning specified in Section 5.03(a) of this Agreement.
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"Closing" has the meaning specified in Section 2.05 of this Agreement.
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"Closing Balance Sheet" has the meaning specified in Section 8.03 of this
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Agreement.
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"Closing Date" has the meaning specified in Section 2.05 of this Agreement.
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"Code" means the Internal Revenue Code of 1986, as amended.
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"Common Stock" means the common stock, $.10 par value per share, of Buyer.
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"Consent" means waiver, permit, grant, franchise, concession, agreement,
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license, exemption or order of, registration, certificate, clauses of
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declaration or filing with, or report or notice to any person or entity,
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including, but not limited to any Governmental Authority, which by its or their
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terms is final and conclusive, from which there is no further appeal right, or
any such appeal right has expired.
"Contracts" means any agreements, contracts, leases, powers of attorney, notes,
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loans, evidence of Indebtedness, purchase orders, letters of credit, settlement
agreements, franchise agreements, undertakings, covenants not to compete,
employment agreements, licenses, instruments, obligations, commitments,
understandings, policies, purchase and sales orders, quotations and other
executory commitments to which any Person is a party or to which any of the
assets of the Person is subject, whether oral or written, express or implied.
"Courier" has the meaning specified in Section 10.09 of this Agreement.
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"Cut-Off Date" has the meaning specified in Section 3.14(a) of this Agreement.
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"Direct Claim" has the meaning specified in Section 5.03(a) of this Agreement.
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"Disclosure Schedule" has the meaning specified in Section 10.11 of this
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Agreement.
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"Effective Date" has the meaning specified in Section 2.01 of this Agreement.
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"Employee Benefit Plan" has the meaning specified in Section 3.25(i) of this
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Agreement.
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"Employment Agreement" has the meaning specified in Section 7.01 of this
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Agreement.
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"Environmental Conditions" means the introduction into the environment of any
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pollution, including, without limitation, any contaminant, irritant or pollutant
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or other Hazardous Substance (whether upon the Premises, whether the pollution
migrated from the Premises onto other property, and whether or not such
pollution constituted at the time thereof a violation of any Environmental Law
in connection with the release of any Hazardous Substance) as a result of which
ICS has or may be liable to any person, or have or may reasonably be expected to
become liable to any Person or by reason of which any Premises or any of the
Assets may reasonably be expected to suffer or be subjected to any Lien.
"Environmental Costs" means any and all costs and expenses (including,
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without limitation, reasonable attorney, consultant and engineer fees and
related expenses) for an environmental assessment, clean-up or remediation, or
legal proceeding attendant thereto.
"Environmental Laws" means any federal, state, district, or local Laws,
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regulations, ordinances, orders, permits and judgments, consent orders and
common Law relating to the protection of the environment, including any Law of
strict liability, nuisance or with respect to conducting abnormally dangerous or
hazardous activities including, without limitation, provisions pertaining to or
regulating air pollution, water pollution, noise control, wetlands, water
courses, natural resources, wildlife, Hazardous Substances, or any other
activities or conditions which impact or relate to the environment or nature.
Such Environmental Laws shall include, without limitation, the Comprehensive
Environmental Response, Compensation, and Recovery Act ("CERCLA"), 42 U.S.C.
Section 9601 et seq., the Resource Conservation and Recovery Act ("RCRA"), 42
U.S.C. Section 6901 et seq., the Clean Air Act, 42 U.S.C. Section 7401 et seq.,
the Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq., the
Emergency Planning and Community Right to Know Act ("EPCRA"), 42 U.S.C. Section
11001 et seq., the Oil Pollution Act, 33 U.S.C. Section 2701 et seq., and the
Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., each as amended.
"Environmental Liability" shall mean any and all liabilities, Losses,
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Claims, penalties, damages, Environmental Costs, expenses, remediation or
inspection costs and any expenses (including, without limitation, reasonable
attorney, consultant and engineer fees and expenses) of whatever kind or nature,
known or unknown, contingent or otherwise, arising from or relating to
compliance by ICS and/or the Sellers with any Environmental Law or arising under
any theory of law or equity and relating to, or arising from, Environmental
Conditions or the use, treatment, storage, disposal, transport, generation or
handling of any Hazardous Substance during the ownership or occupancy of the
Premises by ICS.
"Environmental Permits" means all governmental permits, licenses,
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registrations, and authorizations required by any Environmental Law in order to
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operate the business as currently operated by ICS.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended,
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and the regulations and interpretations issued thereunder.
"Escrow Indemnity Account" has the meaning specified in Section 2.06 of this
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Agreement.
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"Facility Leases" means the Lease Agreement dated March 15, 2004, between
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Louisville/Jefferson County Redevelopment Authority, Inc. and ICS for the leased
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Premises located at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇; the Lease Agreement dated April 1, 2004 between Louisville/Jefferson
County Redevelopment Authority, Inc. and ICS for the leased premises located at
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and the Lease Agreement
dated December 9, 2005 between General Booth Properties, LLC and ICS for the
leased premises located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.
"Family Members" means, as applied to any individual, any parent, spouse, child,
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spouse of a child, brother or sister of the individual, and each trust or other
entity such as a family limited partnership created for the benefit of one or
more of such persons and each custodian of a property of one or more such
persons and the estate of any such persons.
"GAAP" means generally accepted accounting principles that are (i) consistent
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with the principles promulgated or adopted by the Financial Accounting Standards
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Board and its predecessors, (ii) applied on a basis consistent with prior
periods, and (iii) such that, insofar as the use of accounting principles is
pertinent, a certified public accountant could deliver an unqualified opinion
with respect to financial statements in which such principles have been properly
applied.
"General Release" has the meaning specified in Section 8.12 of this Agreement.
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"Good Faith Interim Amendments" means, all "good faith" interim amendments
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intended to reflect (1) certain provisions of the Economic Growth and Tax Relief
Reconciliation Act of 2001; (2) Final Code Section 401(a)(9) regulations
regarding minimum distribution requirements; (3) Code Section 401(a)(31)(B)
requirements regarding certain mandatory direct rollover distributions, and (4)
final regulations issued under Code Sections 401(k) and 401(m) for qualified
plans which contain Code Section 401(k) provisions.
"Governmental Authority" means any nation or government, any state or provincial
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or other political subdivision thereof, any province, city or municipality, any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including, without limitation, any
Governmental Authority, agency, department, board, commission or instrumentality
of the United States, any State of the United States, or any political
subdivision thereof, any government authority, agency, department, board,
commission or instrumentality of the United States or any political subdivision
thereof and any tribunal or arbitrator(s) of competent jurisdiction, and any
self-regulatory organization.
"GUST" means the Uruguay Round Agreements Act, the Small Business Jobs
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Protection Act of 1996, the Taxpayer Relief Act of 1997, the Uniform Services
Employment and Reemployment Rights Act, the Internal Revenue Service
Restructuring and Reform Act of 1998, the Community Renewal Tax Relief Act of
2000 and all applicable rulings and regulations issued thereunder.
"Hazardous Substances" means, collectively, any hazardous waste, as defined by
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42 U.S.C. 6903(5), any hazardous substances as defined by 42 U.S.C.
9601(14), any pollutant or contaminant as defined by 42 U.S.C. 9601(33), any
toxic pollutant as defined by 33 U.S.C. 1362(13), or any toxic substance,
methane gas, oil, or hazardous materials or other chemicals or substances
regulated by any Environmental Laws.
"ICS Disclosure Schedule" has the meaning specified in the introduction of
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Article III of this Agreement.
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"ICS Financial Statements" has the meaning specified in Section 3.14 (a) of
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this Agreement.
"ICS" has the meaning specified in the Preamble to this Agreement.
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"ICS Shares" has the meaning specified in the Recitals to this Agreement.
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"Indebtedness" means (a) all indebtedness for borrowed money, whether current or
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long-term, or secured or unsecured, (b) all indebtedness for the deferred
purchase price of property or services represented by a note or security
agreement, (c) all indebtedness created or arising under any conditional sale or
other title retention agreement (even though the rights and remedies of the
seller or lender under such agreement in the event of default may be limited to
repossession or sale of such property), (d) all indebtedness secured by a
purchase money mortgage or other lien to secure all or part of the purchase
price of property subject to such mortgage or lien, (e) all obligations under
leases that have been or must be, in accordance with GAAP, recorded as capital
leases in respect of which ICS or the Sellers are liable as lessee, (f) any
Liability in respect of bankers' acceptances or letters of credit, and (g) all
indebtedness of any Person that is directly or indirectly guaranteed by ICS or
that it has agreed (contingently or otherwise) to purchase or otherwise acquire
or in respect of which it has otherwise assured a creditor against any loss.
"Indemnified Party" has the meaning specified in Section 5.03 of this Agreement.
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"Indemnifying Party" has the meaning specified in Section 5.03(a) of this
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Agreement.
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"Inventory" shall mean (a) all of ICS's inventory, wherever located, held for
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resale to its customers or pursuant to GAAP should be reflected as inventory on
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the Closing Balance Sheet and (b) all of the raw materials, work in process,
spare parts, finished products, wrapping, supply and packaging items and similar
items of ICS.
"Knowledge" means (i) with respect to Buyer, the actual knowledge of the
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executive officers of Buyer, and (ii) with respect to ICS or the Sellers, the
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actual knowledge of Mr. Ice, ▇▇. ▇▇▇▇▇ or ▇▇. ▇▇▇▇▇▇▇▇▇, as applicable.
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"Laws" means all laws, statutes, by-laws, ordinances, rules, regulations, orders
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or decrees of any Governmental Authority.
"Liabilities" means, any and all direct or indirect liability, Indebtedness,
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obligation, commitment, expense, claim, deficiency, guaranty or endorsement of
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or by any Person of any type, whether accrued, absolute, contingent, matured,
unmatured, liquidated, unliquidated, known or unknown or otherwise, including,
without limitation, Tax Liabilities, Liabilities in respect of products and
Environmental Liabilities
"Liens" means all liens, mortgages, easements, charges, restrictions, claims,
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security interests, options or other encumbrances of any nature.
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"Material Adverse Change" means a change that has or could reasonably be
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expected to have a Material Adverse Effect.
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"Material Adverse Effect" means any change, circumstance or event, including any
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change, circumstance or event as the result of an omission or failure to act
pursuant to any regulation, that individually or in the aggregate with all other
changes, circumstance or events of whatever character or nature, is or is
reasonably likely to have a material adverse effect (i) on the business,
properties, condition (financial or otherwise), Assets, Liabilities, results of
operations or prospects of ICS, or (ii) on the consummation of the transactions
contemplated by this Agreement in a timely manner.
"Minimum Net Working Capital" has the meaning specified in Section 8.03 of this
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Agreement.
"Mr. Ice" has the meaning specified in the Preamble to this Agreement.
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"▇▇. ▇▇▇▇▇" has the meaning specified in the Preamble to this Agreement.
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"▇▇. ▇▇▇▇▇▇▇▇▇" has the meaning specified in the Preamble to this Agreement.
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"Net Revenues" has the meaning specified in Section 2.08 to this Agreement.
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"Net Working Capital" has the meaning specified in Section 8.03 of this
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Agreement.
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"Orbit Disclosure Schedule" has the meaning specified in the introduction of
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Article V of this Agreement.
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"Orbit Shares" has the meaning specified in Section 2.02(i) of this Agreement.
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"Ordinary Course of Business" shall mean the ordinary course of business of ICS
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consistent with past custom and practice (including with respect to pricing,
quantity and frequency).
"Permits" means all permits, authorizations, approvals, registrations, licenses,
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certificates, directives, orders or variances granted by or obtained from any
Governmental Authority and used or required in connection with the business of
ICS.
"Permitted Liens" means (i) Liens created by Buyer, (ii) Liens for or in respect
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of Taxes, impositions, assessments, fees, water and sewer rents and other
governmental charges levied or assessed or imposed against the leased real
property which are not yet delinquent or are being contested in good faith by
appropriate Proceedings, (iii) the rights of lessors and lessees under leases
executed in the Ordinary Course of Business, (iv) the rights of licensors and
licensees under licenses executed in the Ordinary Course of Business, or (v)
Liens, and rights to Liens, of mechanics, warehousemen, carriers, repairmen and
others arising by operation of Law and incurred in the Ordinary Course of
Business, securing obligations not yet delinquent or being contested in good
faith by appropriate Proceedings.
"Person" or "person" (regardless of whether capitalized) means any natural
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person, entity, or association, including without limitation any corporation,
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partnership, limited liability company, government (or agency or subdivision
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thereof), trust, joint venture, or proprietorship.
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"Personal Property" has the meaning specified in Section 3.23 of this Agreement.
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"Premises" refers collectively to all the real property owned, leased or
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operated by ICS or of which real property leased or operated by ICS is a part
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unless otherwise provided in this Agreement (i.e., leased Premises).
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"Prime Rate" means the fluctuating rate per annum announced from time to time in
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The Wall Street Journal as the prime rate, and in the absence of such announced
rate the prime rate charged by Citibank, N.A.
"Proceeding" means charge, complaint, action, order, writ, injunction, judgment
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or decree outstanding or claim, application, demand, suit, litigation,
proceeding, labor dispute, arbitration or other alternative dispute resolution
proceeding, hearing or investigation.
"Proprietary Information" has the meaning specified in Section 3.27(a) of this
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Agreement.
"Purchase Price" has the meaning specified in Section 2.02 of this Agreement.
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"Registration Rights Agreement" has the meaning specified in Section 2.07(b) of
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this Agreement.
"Representative" means any officer, director, member, shareholder, principal,
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attorney, agent, employee, accountant, consultant or other representative of
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either ICS or Buyer.
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"Restrictive Covenants Agreement" has the meaning specified in Section 8.11 of
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this Agreement.
"SEC" means the United States Securities and Exchange Commission.
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"SEC Documents" has the meaning specified in Section 4.10(a) of this Agreement.
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"Section 338(h)(10) Election" has the meaning specified in Section 2.09(a).
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"Section 338(h)(10) Payment" has the meaning specified in Section 2.09(a).
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"Securities Act" means the Securities Act of 1933, as amended, or any successor
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federal statute, and the rules and regulations of the SEC thereunder, all as the
same are in effect at the relevant time of reference.
"Sellers" has the meaning specified in the Preamble to this Agreement.
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"Sellers CD Funds" has the meaning specified in Section 9.17 of this Agreement.
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"Shares" has the meaning specified in the Recitals to this Agreement.
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"Share Purchase" has the meaning specified in the Recitals to this Agreement.
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"Subsidiary" or "Subsidiaries" means with respect to any Person, any
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corporation, partnership, limited liability company, association, trust, joint
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venture or other entity or organization of which such Person, either alone or
through or together with any other Subsidiary or Affiliate, owns, directly or
indirectly, more than 25% of the stock or other equity interests, the holder of
which is generally entitled to vote for the election of the board of directors
or other governing body of such corporation, partnership, limited liability
company, association, trust, joint venture or other entity or organization.
"Tax" or "Taxes" means all Taxes, assessments, charges, duties, fees, levies,
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imposts or other governmental charges, including, without limitation, all
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federal, state, local, municipal, county, foreign and other income, franchise,
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profits, capital gains, capital stock, capital structure, transfer, gross
receipt, sales, use, transfer, service, occupation, ad valorem, property,
excise, severance, windfall profits, premium, stamp, license, payroll,
employment, social security, unemployment, disability, environmental (including
Taxes under Code Section 59A), alternative, minimum, add-on, value-added,
withholding and other Taxes, assessments, charges, duties, fees, levies, imposts
or other governmental charges of any kind whatsoever (whether payable directly
or by withholding and whether or not requiring the filing of a Tax Return), and
all estimated Taxes, deficiency assessments, additions to Tax, additional
amounts imposed by any Taxing or Governmental Authority (domestic or foreign),
penalties, and interest, and shall include any Liability for such amounts as a
result either of being (or having been) a member of a combined, consolidated,
unitary or affiliated group or of a contractual obligation to indemnify any
Person, and shall include any Liability for such amounts relating to any other
Person if such Liability is imposed by reason of Law (including transferee or
successor Liability).
"Tax Return" means any return, declaration, report, claim for refund,
-----------
information return, or other document (including any related or supporting
---------
estimates, elections, schedules, statements, information or amendment thereto)
----
filed or required to be filed in connection with the determination, assessment,
or collection of any Tax or the administration of any Laws, regulations, or
administrative requirements relating to any Tax.
"Third Party Claim" has the meaning specified in Section 5.03(a) of this
-------------------
Agreement.
------
"United States" means the United States of America, its territories and
--------------
possessions, any state of the United States, and the District of Columbia.
-------
1.02 Other Definitional Provisions.
-------------------------------
(a) Any reference to an Article, Section, Schedule or Exhibit is a reference
to an Article, Section, or an Exhibit to this Agreement.
(b) Terms defined in the singular shall have a comparable meaning when used
in the plural, and vice versa.
(c) The words "include," "includes" and "including" mean include, includes
------- -------- ---------
and including without limitation.
ARTICLE II.
PURCHASE AND SALE
2.01 Purchase and Sale of Shares.
---------------------------
Subject to and upon satisfaction of the terms and conditions of this
Agreement, effective as of the close of business on December 31, 2007 (the
"Effective Date"), the Sellers shall sell, transfer, convey, assign and deliver
to Buyer all shares of ICS stock owned by them, and Buyer shall purchase,
acquire and accept from the Sellers the Shares which shall collectively
constitute one hundred (100%) percent of the issued and outstanding shares of
ICS capital stock on the Closing Date (as defined below). Although the
execution of this Agreement and the Closing shall occur on the Closing Date, the
parties have agreed that the Share Purchase shall be effectuated and accounted
for on the Effective Date.
2.02 Closing Purchase Price.
------------------------
The aggregate consideration payable by Buyer for the Shares at the Closing
shall, subject to a post-Closing adjustment as set forth in Section 8.03 of this
Agreement, be Six Million Four Hundred Thousand Dollars ($6,400,000.00) (as
adjusted, the "PURCHASE PRICE"), consisting of the following:
(i) An aggregate number of shares of Common Stock of Buyer ("ORBIT SHARES")
equal in value to One Million Dollars ($1,000,000.00) based on the volume
weighted average closing price of Buyer's Common Stock for the twenty (20)
consecutive trading days ending December 14, 2007; and
(ii) Five Million Four Hundred Thousand Dollars ($5,400,000.00) in cash
payable on the Closing Date by certified check or wired funds.
In addition, the Sellers may receive Contingent Earn-Out Payments pursuant
to Section 2.08 and a Section 338(h)(10) Payment pursuant to Section 2.09(a).
2.03 Adjustment of the Purchase Price.
------------------------------------
The Purchase Price will be allocated among the Sellers in accordance with
Exhibit 2.03 annexed hereto. The Purchase Price shall be adjusted downward or
------------
upward (as the case may be) in the event ICS's Net Working Capital is less than
or greater than the Minimum Net Working Capital, respectively, as set forth in
Section 8.03 of this Agreement.
2.04 Assumption of Liabilities.
---------------------------
Subject to the terms and conditions of this Agreement and on the basis of
the representations, warranties, covenants and agreements contained herein, on
the Effective Date, the Buyer shall assume and agree to pay, perform and
discharge when due, all liabilities of ICS disclosed to Buyer, exclusive of any
and all amounts due to Affiliates.
2.05 Closing.
-------
The closing of the Share Purchase (the "CLOSING") will take place on
December 19, 2007, the date hereof, at a location to be mutually agreed upon by
the parties, at 10:00 a.m. (local time) as soon as reasonably practicable
following the satisfaction, in Buyer's sole and absolute discretion, acting
reasonably, of the conditions precedent set forth in Articles VIII and IX (the
"CLOSING DATE").
2.06 Closing Procedures and Deliveries.
---------------------------------
(a) In order to satisfy the parties' desire to account for the Share
Purchase on the Effective Date, in the event the Closing Date occurs prior to
the Effective Date, the parties hereby agree to enter into a closing escrow
agreement (the "Sellers' Closing Escrow Agreement") with Seiller ▇▇▇▇▇▇▇▇ LLC
(the "Sellers' Closing Escrow Agent") and a closing escrow agreement (the
"Buyer's Closing Escrow Agreement," and together with the Sellers' Closing
Escrow Agreement, collectively referred to as the "Closing Escrow Agreements")
with ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLP ("Buyer's Closing Escrow Agent") in the forms attached
hereto as Exhibit 2.06(a)(i) and Exhibit 2.06(a)(ii), respectively, to enable
------------------- -------------------
the Share Purchase to become automatically effective on the Effective Date
solely through the passage of time, unless this Agreement is terminated prior to
the Effective Date in accordance with Section 10.01 hereof. Buyer shall
deposit with the Sellers' Closing Escrow Agent (i) $900,000 of the cash portion
of the Purchase Price and (ii) the Orbit Shares, in accordance with the Sellers'
Closing Escrow Agreement. Buyer shall deposit with Buyer's Closing Escrow Agent
(i) $4,500,000 of the cash portion of the Purchase Price, (ii) the payoff
balance on the existing Lines of Credit of ICS with the First Capital Bank of
Kentucky, and (iii) executed copies of this Agreement and all Ancillary
Documents delivered at the Closing, in accordance with Buyer's Closing Escrow
Agreement. ICS and each Seller shall also deposit with Buyer's Closing Escrow
Agent executed copies of this Agreement and all Ancillary Documents delivered at
the Closing, in accordance with Buyer's Closing Escrow Agreement. Buyer shall
deposit $150,000 of the cash portion of the Purchase Price with the Indemnity
Escrow Agent in accordance with the Indemnity Escrow Agreement as discussed in
Section 2.06(d) below.
(b) Transfer and Delivery of Shares. To effect the sale and transfer of the
Shares, at the Closing, each of the Sellers shall transfer and deliver to the
Sellers' Closing Escrow Agent, in accordance with the Sellers' Closing Escrow
Agreement, share certificates representing the Shares, free and clear of any
Liens of any nature whatsoever, duly endorsed in blank for transfer, or
accompanied by irrevocable stock powers duly executed in blank, in either case
by the holders of record of such Shares. The Sellers shall take such actions as
may be necessary to cause the transfer of such Shares to be registered upon the
books of ICS, and to enter Buyer or its nominee(s) as the holder of the Shares
and to issue one or more share certificates to Buyer or its nominee(s)
representing the Shares as directed by Buyer. The Sellers' Closing Escrow Agent
shall subsequently transfer the Shares to ▇▇▇▇▇▇▇ ▇▇▇▇▇ Business Financial
Services, Inc., Buyer's principal lender ("MLBFS") on the Effective Date in
accordance with the terms of this Agreement and the Sellers' Closing Escrow
Agreement.
(c) Payment of Cash Portion of Closing Purchase Price. At the Closing,
Buyer shall (i) transfer payment of $900,000 of the cash portion of the Purchase
Price to the Sellers' Closing Escrow Agent, in accordance with the Sellers'
Closing Escrow Agreement; (ii) transfer payment of $4,350,000 of the cash
portion of the Purchase Price to Buyer's Closing Escrow Agent, in accordance
with the Buyer's Closing Escrow Agreement; and (iii) transfer payment of
$150,000 of the cash portion of the Purchase Price to the Indemnity Escrow
Agent, in accordance with the Indemnity Escrow Agreement as discussed in Section
2.06(d) below. Buyer's Closing Escrow Agent and the Sellers' Closing Escrow
Agent shall pay to each of the Sellers on the Effective Date their allocated pro
rata cash portions of the Purchase Price in accordance with the Closing Escrow
Agreements, subject to Section 2.06(d) of this Agreement. Subject to Section
2.06(d) hereof, the cash portion of the Purchase Price shall be transferred by
Buyer's Closing Escrow Agent and the Sellers' Closing Escrow Agent to each of
the Sellers on the Effective Date by a certified check and/or by wire transfer
of immediately available funds to accounts designated by each of the Sellers in
writing prior to the Closing Date.
(d) Delivery of Cash into Escrow. Notwithstanding the provisions of Section
2.06(c) above, at Closing, Mr. Ice shall direct Buyer to deposit in escrow (the
"INDEMNITY ESCROW ACCOUNT") with ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLP, as escrow agent (the
"INDEMNITY ESCROW AGENT"), One Hundred Fifty Thousand ($150,000) Dollars (the
"ESCROW COLLATERAL"). Payment of the Escrow Collateral by Buyer shall be made
from the cash portion of the Purchase Price to be received by Mr. Ice in
accordance with the terms and conditions of Exhibit 2.06(a)(i) and Exhibit
------------------ -------
2.06(a)(ii) hereof. The Escrow Collateral shall be held in escrow, in an
------
interest bearing escrow account, by the Indemnity Escrow Agent pursuant to, and
-
released from the Indemnity Escrow Account, in accordance with, the provisions
hereinafter set forth and the escrow agreement to be entered into at the Closing
by and among Buyer, Mr. Ice and the Indemnity Escrow Agent, substantially in the
form attached hereto as Exhibit 2.06(d) (the "INDEMNITY ESCROW AGREEMENT"). The
---------------
Escrow Collateral is to be held by the Indemnity Escrow Agent as partial
security against the payment and performance of the Sellers' obligations with
respect to the indemnification provisions of Article V. The Escrow Collateral
shall be released from the Indemnity Escrow Account to Mr. Ice in the event
there are no Claims (defined in Section 5.03(a) hereof) for indemnification
submitted by any Person (other than the Sellers) within one year following the
Closing Date. If the aggregate amount of Claims during the one year period is
less than the Escrow Collateral the remaining amount shall be delivered to Mr.
Ice. In the event that the aggregate Claims by Buyer exceed the Escrow
Collateral, the Sellers shall remain liable, pro rata, to the Buyer for such
excess payment, subject to the limitations imposed in Section 5.03, below. Any
Escrow Collateral not released to Mr. Ice shall be released and transferred to
Buyer in accordance with the terms of the Indemnity Escrow Agreement.
(e) Certificates; Opinions and Documents. At the Closing, Buyer and the
Sellers shall deliver the certificates, opinions of counsel and documents
described in Articles VIII and IX of this Agreement required to be delivered at
Closing as conditions to Closing.
(f) Other Closing Transactions. At the Closing, each of the parties hereto
shall have taken such other actions reasonably required hereby to be performed
by it prior to or on the Closing Date, including, without limitation, satisfying
the conditions set forth in Articles VIII and IX of this Agreement.
(g) No Waiver at Closing. Buyer or the Sellers may elect to close the
transactions contemplated by this Agreement notwithstanding the breach of any
representation, warranty or covenant by the other party, whether or not
disclosed.
2.07 Conditions to Closing.
-----------------------
(a) Due Diligence. Buyer shall have completed prior to the execution of
this Agreement, a due diligence period (the "DUE DILIGENCE PERIOD") to conduct
the necessary due diligence, together with members of the staff of Cove Partners
LLC and their respective Representatives and agents, to satisfy themselves
that ICS will attain the revenue and profitability that has been provided to
Buyer in its projections and that its business will not undergo any Material
Adverse Change in the future. Notwithstanding the foregoing, in the event that
Buyer shall not have completed to its satisfaction, its environmental due
diligence, including an Environmental Due Diligence Site Assessment and Limited
Compliance Review of the Premises, conducted by ERM Consulting & Engineering,
Inc., prior to the Closing Date, it shall continue to have access to the
Premises through the Effective Date for the sole purpose of conducting such
environmental due diligence.
(b) Registration of Orbit Shares. Within a reasonable time following the
Closing but in no event later than nine (9) months thereafter, Buyer shall at
its sole cost, prepare and file with the SEC a registration statement to
register the Orbit Shares in accordance with the terms of the Registration
Rights Agreement, substantially in the form annexed hereto as Exhibit 2.07(b)
---------------
("REGISTRATION RIGHTS AGREEMENT"). Notwithstanding the foregoing, in the event
that each of the Sellers shall become able to sell all of their Orbit shares
pursuant to Rule 144(k) of the Securities Act, as non-affiliates of the Buyer,
then Buyer's obligation to maintain the SEC registration statement shall cease.
2.08 Contingent Earn-Out Payment.
-----------------------------
Buyer shall pay to the Sellers up to an additional $1,000,000 in accordance
with the allocations set forth in Exhibit 2.03, over the next three years
-------------
following the Closing in increments of $333,333 per year (the "ANNUAL EARN-OUT
PAYMENT") provided ICS attains Net Revenues (defined below) of no less than
$7,000,000 in each of the 2008, 2009, and 2010 fiscal years. The Annual
Earn-Out Payment for up to the aggregate amount of $1,000,000 shall be evidenced
by a non-interest bearing promissory note of Buyer (the "Buyer's Promissory
Note") in the form attached hereto as Exhibit 2.08(a). In the event that ICS
---------------
does not achieve the minimum of $7,000,000 of Net Revenues in any of the 2008,
2009, or 2010 fiscal years (each individually referred to as an "EARN-OUT
YEAR"), the Annual Earn-Out Payment attributable to that fiscal year shall be
eliminated in its entirety and forfeited by the Sellers in its entirety. The
Annual Earn-Out Payments, if any, shall be paid by Buyer to the Sellers in cash
on the date that is ten (10) business days following receipt by Buyer of the
final audit report for ICS (as then owned by Buyer) for the fiscal year then
ended but in no event later than April 15th (the "EARN-OUT PAYMENT DATE"). "NET
REVENUES" shall mean the sum of revenues from all sources related to ICS's
operations (priced consistently with past practices to yield similar gross
margins) and net non-operating income, after making adequate provisions for
uncollectible debt, discounts, chargebacks and rebates. The calculation of Net
Revenues shall be derived from audited consolidated financial statements of
Buyer applied consistent with past practices of ICS. Within a period of ten
(10) days following Buyer's receipt of draft financial statements for ICS, Buyer
shall deliver to the Sellers (i) an income statement of ICS for the applicable
Earn-Out Year; (ii) a calculation of the Net Revenues for such Earn-Out Year;
and (iii) a statement as to whether the Sellers are entitled to an Annual
Earn-Out Payment for such Earn-Out Year (collectively, the "EARN-OUT
CALCULATION"). Unless any of the Sellers notify Buyer of any disagreement with
Buyer's calculation of Net Revenues within ten (10) business days after receipt
of the Earn-Out Calculation, the Earn-Out Calculation shall be final and shall
be deemed conclusively accepted by and binding upon the Sellers and Buyer. On
an after the date Buyer delivers the Earn-Out Calculation to the Sellers, the
Sellers and their professional Representatives shall have access to the work
papers used to prepare the Earn-Out Calculation and the books and records
relating to the Earn-Out Calculation, upon reasonable notice during normal
business hours. If any of the Sellers notify Buyer of any such disagreement
within such ten (10) business day period and such disagreement cannot be
amicably resolved within an additional period of ten (10) business days, then
the disagreement shall be submitted for determination to an accounting firm
mutually agreeable to the Sellers and Buyer, or failing such mutual agreement,
to the American Arbitration Association in Jefferson County, Commonwealth of
Kentucky.
This Agreement and, in particular, the Annual Earn-Out Payment shall be
binding upon and inure to the benefit of the parties hereto, their successors,
legal representatives and assigns. During the next three years following the
Closing, the Shares shall be pledged by Buyer to the Sellers pursuant to the
terms and conditions of a Pledge Agreement in the form attached hereto as
Exhibit 2.08(b) as collateral for Buyer's obligation to pay the Annual Earn-Out
----------
Payment to the Sellers including in the event Buyer enters into a transaction or
otherwise intentionally engages in a course of conduct that causes a Material
Adverse Change to ICS's business operations, other than in the Ordinary Course
of Business, and which results in the failure of ICS to achieve the minimum of
$7,000,000 of Net Revenues in any Earn-Out Year; in such event, the Annual
Earn-Out Payment attributable to that fiscal year shall be paid by Buyer to the
Sellers by certified check or bank wire of immediately available funds on the
date that is ten (10) business days following receipt by Buyer of the final
audit report for ICS for the fiscal year then ended but in no event later than
the Earn-Out Payment Date. For purposes of clarification, examples of a
Material Adverse Change to ICS's business operations could include (x) the
discontinuance of ICS's main product line or (y) a reorganization, merger or
consolidation (other than a reincorporation or similar event, which has no
effect on ICS's business operations) or a sale of all or substantially all of
the assets of ICS to a non-affiliated entity of the Buyer (a "Change of
Control") in which the Sellers' obligations with respect to the Annual Earn-Out
Payments are not assumed in such a Change of Control. Notwithstanding the
foregoing, the Shares shall be deposited with MLBFS, Buyer's principal lender,
as collateral to ensure repayment of all loans entered into by Buyer with MLBFS
and each of the Sellers hereby agrees and acknowledges that any interest he or
she has in the Shares and the Buyer's Contingent Promissory Note under this
Section 2.08 shall be subordinated to MLBFS.
2.09 Tax Matters.
-----------
(a) Section 338(h)(10) Election. ICS and each of the Sellers shall join
with Buyer in making an election under Code 338(h)(10) (and any corresponding
election under state, local, and foreign tax law) with respect to the Share
Purchase (a "SECTION 338(H)(10) ELECTION"). Sellers shall prepare for Buyer's
review and agreement a detailed estimated schedule of Buyer's obligations under
Section 5.02(ii) as a result of the Section 338(h)(10) Election. Sellers shall
include any income, gain, loss, deduction, or other Tax item resulting from the
Section 338(h)(10) election on their Tax Returns to the extent required by
applicable Law. Buyer shall timely prepare and timely file tax forms 8023 and
8883. Buyer shall be solely responsible for any and all payments owed by the
Sellers on the Federal and State levels and by ICS on the local level as a
result of the Section 338(h)(10) Election (the "SECTION 338(H)(10) PAYMENT") and
shall pay to the Sellers the Section 338(h)(10) Payment on a net after tax
basis at least five (5) Business Days before the date that the Section
338(h)(10) Payment is due. Buyer's obligation hereunder shall survive Closing.
(b) S Corporation Status. ICS has elected to be taxed as an S corporation
within the meaning of Code 1361 and 1362 since its inception and ICS and the
Sellers will not revoke such election, or allow any events to occur which with
the passage of time could result in the revocation of such status.
(c) Allocation of Purchase Price/Earn-Out Payment. Buyer, ICS and each of
the Sellers hereby agree that the Purchase Price and any Annual Earn-Out
Payments (if paid) will be allocated to the assets of ICS by the Buyer in a
manner consistent with Code 338 and 1060 and the regulations thereunder.
Buyer, ICS and each of the Sellers shall file all Tax Returns (including amended
Tax Returns and claims for refunds) and information reports (including tax
form 8883) in a manner consistent with such values. Buyer agrees to provide
Sellers with a copy of the allocation of the Purchase Price to the assets of ICS
no later than March 15, 2008, so as to enable ICS and the Sellers to timely file
their income tax returns.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Except as disclosed (in accordance with Section 10.11 hereof) in the
disclosure schedules of ICS and the Sellers attached hereto (collectively, the
"ICS DISCLOSURE SCHEDULE"), each of the Sellers, severally and not jointly, to
the best of their Knowledge, represents and warrants to Buyer on the date hereof
and on the Effective Date, as follows:
3.01 Ownership of Shares.
---------------------
Such Seller is the sole owner, beneficially and of record, of such Shares
set forth opposite such Seller's name on Schedule 3.01 of the ICS Disclosure
-------------
Schedule, free and clear of any Liens. Sellers' Shares are not pledged,
mortgaged or otherwise encumbered in any way and there is no Lien against the
Sellers' Shares arising from such Sellers' actions. Except as set forth on
Schedule 3.01 of the ICS Disclosure Schedule, neither Sellers, ICS, or any
----------
Affiliate are a party to any outstanding options, warrants, rights of
-
subscription or conversion, calls, commitments, agreements, arrangements,
-
understandings, plans, contracts, proxies, voting trusts, voting agreements or
-
instruments of any kind or character, oral or written, relating to the issuance,
voting or sale of Sellers' Shares or of any securities representing the right to
purchase or otherwise receive any Shares. Sellers are not party to any
stockholders agreements, preemptive rights or other agreements, arrangements,
commitments or understandings, oral or written, relating to the voting,
issuance, acquisition or disposition of the Shares or the conduct or management
of ICS by its Board of Directors, other than as set forth on Schedule 3.01 of
-------------
the ICS Disclosure Schedule. At the Closing, the Sellers shall have good and
marketable title to the Shares and full right to transfer title to such Shares,
subject to any restrictions imposed by state or federal securities laws, free
and clear of all liens, mortgages, charges, liabilities, claims, security
interests or encumbrances of every type whatsoever. The sale, conveyance,
transfer and delivery of the Shares by the Sellers, to the Buyer pursuant to
this Agreement, against payment therefor in accordance with the terms hereof,
will transfer full legal and equitable right, title and interest in the Shares
to the Buyer, free and clear of all liens, mortgages, charges, claims,
liabilities, security interests and encumbrances of any nature whatsoever other
than as contemplated by this Agreement and the other agreements and instruments
to be entered into in connection with the transactions contemplated hereby (the
"Other Agreements").
3.02 Authority; Binding Effect.
---------------------------
Such Seller has the full authority and legal capacity to execute and
deliver this Agreement, the Ancillary Documents to which he or she is party and
all other certificates, agreements or other documents to be executed and
delivered by such Seller and to consummate the transactions contemplated hereby
and thereby. This Agreement and the Ancillary Documents to which such Seller is
a party have been duly executed and delivered by such Seller and this Agreement
and each of the Ancillary Documents to which such Seller is party is a legal,
valid and binding obligation of such Seller, enforceable against such Seller,
his or her heirs and assigns in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar Laws affecting creditors' rights generally
and to general principles of equity.
3.03 No Violations.
--------------
The execution, delivery and performance by such Seller of this Agreement
and any Ancillary Documents to which such Seller is party, and the consummation
of the transactions contemplated by this Agreement, do not and will not (i)
conflict with, or result in the breach of, or constitute a default under, or
result in the termination, cancellation or acceleration (whether after the
giving of notice or the lapse of time or both) of any right or obligation of
such Seller or ICS under, any contract or agreement to which such Seller or ICS
is a party or to which any of its assets is subject or (ii) violate or result in
a breach of, or constitute a default under, any Law or judgment applicable to
such Seller or ICS or by which such Seller, ICS or any of their assets are bound
or affected, except, in the cases of clauses (i) and (ii), for any conflict,
breach, default, termination, cancellation, acceleration or violation which,
individually or in the aggregate, would not reasonably be expected to impair
such Seller's ability to effect the Share Purchase.
3.04 No Other Agreements to Purchase.
-----------------------------------
No Person (other than Buyer hereunder and the Sellers pursuant to that
certain Shareholders' Agreement) has any written or oral agreement or option or
any right or privilege, whether by Law, pre-emptive or contractual, capable of
becoming an agreement or option for the purchase or acquisition from such Seller
of any of the Shares hereunder.
3.05 Consents and Approvals.
----------------------
Except as set forth on Schedule 3.05 of the ICS Disclosure Schedule, no
-------------
Consent is required to be obtained by such Seller or ICS and no notice or filing
is required to be given by such Seller or ICS or made by such Seller or ICS
with, any Governmental Authority or other Person in connection with the
execution, delivery and performance by such Seller of this Agreement or any
Ancillary Documents to which he or she is party, nor are any Consents required
under any Contracts to which such Seller is a party or by which he or she is
bound to give any notice to, or obtain the Consent or approval of, any party to
such Contract relating to the consummation of the transactions contemplated by
this Agreement.
3.06 Brokers and Finders.
---------------------
There is no investment banker, broker, finder or other intermediary which
has been retained by or is authorized to act on behalf of such Seller, or any
Affiliate of such Seller, who might be entitled to any fee or commission from
such Seller, or any Affiliate of such Seller, in connection with the
transactions contemplated by this Agreement, and Sellers jointly and severally
agree to indemnify, defend and hold Buyer harmless against claims for same.
3.07 Investment Representations.
---------------------------
Such Seller is an "accredited investor" as defined in Rule 501(a) of
Regulation D promulgated under the Securities Act, is acquiring the Orbit Shares
for his or her own account with the intention of holding such Orbit Shares for
investment and not with the intention of participating, directly or indirectly,
in any resale or distribution of the Orbit Shares. Such Seller is not a
"dealer" of securities (as that term in defined in the Securities Act). Such
Seller has such Knowledge and experience in financial and business matters that
he or she is capable of evaluating the merits and risks of the transactions
contemplated under this Agreement and in connection with the ownership of the
Orbit Shares. Such Seller's financial condition is such that he or she is able
to bear all economic risks of investment in the Orbit Shares, including a
complete loss of his or her investment therein. Buyer has provided such Seller
with adequate access to financial and other information concerning Buyer as
requested, and such Seller has had the opportunity to ask questions of and
receive answers from Buyer concerning the transactions contemplated by this
Agreement and to obtain therefrom any additional information necessary to make
an informed decision regarding an investment in the Orbit Shares. Such Seller
is aware that the Orbit Shares are not registered under the Securities Act, and
that neither the Orbit Shares nor any interest therein may be sold, pledged, or
otherwise transferred unless such transaction or transactions in the Orbit
Shares is or are registered under the Securities Act or qualify for an exemption
under the Securities Act.
3.08 ICS Disclosure Schedule.
-------------------------
The ICS Disclosure Schedule referred to in this Article III contains
certain information regarding ICS and such Seller as indicated at various places
in this Agreement and is attached to and forms a part of this Agreement. Each
such Seller hereby represents and warrants that all information set forth in the
ICS Disclosure Schedule regarding ICS and such Seller is and will be true,
correct and complete in all material respects as of the date of this Agreement
and as of the Effective Date, does not omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading, and shall be deemed for all purposes of
this Agreement to constitute part of the representations and warranties under
this Article III. Each of the documents and other writings furnished to Buyer
by ICS and such Seller pursuant to Article III and each of the representations,
warranties and statements by such Seller in this Article III is true, correct
and complete in all material respects with respect to ICS and such Seller as of
the date furnished and does not omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. There is no fact or circumstance relating
specifically to the business or condition of ICS or the Shares other than such
facts and circumstances as are generally understood to affect the industry of
ICS that could reasonably be expected to result in a Material Adverse Effect
that is not disclosed in the ICS Disclosure Schedule.
3.09 Organization and Qualification.
--------------------------------
ICS is a corporation duly organized, validly existing, and in good standing
under the Laws of its state of incorporation. ICS has all requisite power and
authority to own or lease and operate its properties and to carry on its
business as now conducted and as proposed to be conducted. The minute books of
ICS have been made available to Buyer for inspection and accurately record
therein all corporate actions taken by the Boards of Directors of ICS and all
actions taken by the shareholders of ICS. Schedule 3.09 of the ICS Disclosure
-------------
Schedule sets forth, as to ICS, its respective place of incorporation, principal
place of business, jurisdictions in which it is qualified to do business, and
the business which it presently conducts and which it contemplates conducting.
3.10 Corporate Power; Binding Effect.
----------------------------------
The Sellers have all requisite power and full legal right to execute and
deliver this Agreement, the Ancillary Documents to which they are a party and
all other certificates, agreements or other documents to be executed and
delivered by ICS, and to perform all of its obligations hereunder in accordance
with the terms hereof and thereof. This Agreement and the Ancillary Documents to
which ICS is a party and the transactions contemplated hereby and thereby have
been duly approved and authorized by all requisite corporate action on the part
of ICS, and this Agreement and the Ancillary Documents to which ICS is a party
have been duly executed and delivered by ICS and constitutes a legal, valid, and
binding obligation of ICS, enforceable against it in accordance with their
terms, subject to applicable bankruptcy, insolvency and similar Laws affecting
creditors rights generally and to general principles of equity. The execution,
delivery, and performance by ICS of this Agreement and the Ancillary Documents
to which it is a party, and the consummation by ICS of the transactions
contemplated hereby and thereby, will not result (with or without the giving of
notice or the lapse of time or both) in any conflict, violation, breach, or
default, or the creation of any Lien, or (with or without notice or the lapse of
time or both) the termination, acceleration, vesting, or modification of any
right or obligation, under or in respect of (x) the charter documents or by-laws
of ICS, (y) any judgment, decree, order, statute, rule, or regulation binding on
or applicable to ICS, or (z) any agreement, instrument, Contract, lease,
license, note, bond, mortgage, indenture, or other obligation to which ICS is a
party or by which it is bound. The Share Purchase has been approved by all
corporate action required by the Laws of the state of incorporation of ICS and
its respective charter documents and by-laws.
3.11 Foreign Qualification.
----------------------
ICS is not qualified to do business as a foreign corporation in any
jurisdiction. To the extent that ICS previously was, but no longer is,
qualified to do business in the State of Virginia or any other jurisdiction, ICS
was authorized to do business as a foreign corporation in such jurisdiction(s)
during such period. The failure of ICS to qualify to do business in any other
jurisdiction prior to the date hereof shall not have a Material Adverse Effect
on ICS.
3.12 Subsidiaries.
------------
ICS does not have any Subsidiaries.
3.13 Capitalization.
--------------
(a) The authorized and the outstanding capital stock and securities of ICS
is as set forth in Schedule 3.13(a) of the ICS Disclosure Schedule, and all such
----------------
outstanding shares of capital stock and securities are owned (of record and
beneficially) by the persons and in the amounts there indicated. All such
outstanding shares of capital stock and securities are duly authorized, validly
issued, fully paid and nonassessable, and free and clear of Liens.
(b) Other than in connection with the Share Purchase, and except as set
forth in Schedule 3.13(b) of the ICS Disclosure Schedule, neither ICS or Sellers
----------------
are bound by, or has any obligation to grant or enter into, any (i) outstanding
subscriptions, options, warrants, calls, commitments, or agreements of any
character calling for them to issue, deliver, or sell, or cause to be issued,
delivered, or sold, any shares of its capital stock, any membership interests or
any other equity security, or any securities described in the following clause,
or (ii) securities convertible into, exchangeable for, or representing the right
to subscribe for, purchase, or otherwise acquire any shares of its capital
stock, any membership interests or any other equity security.
(c) Other than in connection with the Share Purchase, and except as set
forth in Schedule 3.13(c) of the ICS Disclosure Schedule, neither Sellers or ICS
----------------
(i) has no outstanding obligations, contractual or otherwise, to repurchase,
redeem, or otherwise acquire any shares of capital stock, membership interests
or other equity securities of ICS, (ii) is not a party to or bound by any
agreement or instrument relating to the voting of any of its securities, or
(iii) is not a party to or bound by any agreement or instrument under which any
person has the right to require it to effect, or to include any securities held
by such person in, any registration under the Securities Act.
3.14 Financial Condition.
--------------------
(a) Financial Statements. ICS has delivered to Buyer audited consolidated
financial statements of ICS, including balance sheets and the related statements
of operations and retained earnings and statements of cash flows for the
year ended December 31, 2006 (the "Audited Financial Statements") and the
compiled financial statements for the year ended December 31, 2005 and the eight
month period ended August 31, 2007 (collectively the "Compiled Financial
Statements") together with the related notes and schedules (collectively, the
"ICS FINANCIAL STATEMENTS"). The Sellers in their capacity as officers of ICS
reviewed the ICS Financial Statements, and based on their Knowledge, believe
that the ICS Financial Statements do not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the periods covered by the ICS Financial Statements.
The Audited Financial Statements have been audited by a certified public
accountant and fairly present in all material respects the financial condition
and the results of operations, retained earnings, shareholders' equity and cash
flows of ICS as at the respective dates of and for the periods referred to
therein, all in accordance with GAAP and including an unqualified report. The
ICS Financial Statements reflect the consistent application of GAAP throughout
the periods involved, except as disclosed in the notes to such financial
statements. The ICS Financial Statements are true, correct and complete
statements in all material respects of the financial condition and the results
of operations of ICS as at and for the periods therein specified. Since December
31, 2006, there has been no change in ICS's method of accounting for Tax
purposes or any other purpose. The ICS Financial Statements as of August 31,
2007 (the "CUT-OFF DATE") disclose all Liabilities (contingent or otherwise) of
ICS required to be disclosed therein under GAAP and contain adequate reserves
for Taxes and all other material accrued Liabilities and there are no loss
contingencies which are not adequately provided for in the ICS Financial
Statements. The ICS Financial Statements have been prepared from and are in
accordance with the accounting Books and Records of ICS. ICS has delivered to
Buyer copies of all letters from ICS's auditors to ICS's board of directors or
the audit committee thereof during the thirty-six (36) months preceding the
execution of this Agreement, together with copies of all responses thereto.
Buyer acknowledges that it has reviewed and approved the reports of the
independent auditors with respect to the Financial Statements.
(b) ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002. The Sellers have no reason to believe that
ICS's internal controls and procedures would prevent it from complying with
Section 404 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, subject to Section 7.01 below
under which Buyer's auditors will have access to ICS's books and records to
confirm this representation.
(c) Accounts Receivable. Accounts receivable and trade receivables
(collectively defined as the "ACCOUNTS RECEIVABLE") of ICS reflected in the ICS
Financial Statements are valid, bona fide existing claims for the aggregate
amounts thereof reflected in the ICS Financial Statements, net of the reserves
or allowances for doubtful receivables reflected in such Financial Statements or
thereafter in ICS's books and records uniformly maintained in accordance with
the ICS Financial Statements, accounted for in accordance with GAAP, and the
Sellers know of no reason as of the Closing Date that would make such Accounts
Receivable not collectible. This representation is in no manner a representation
as to the amount of Accounts Receivable which will ultimately be collected.
(d) Inventory. All Inventory has been acquired and maintained in accordance
with the regular business practices of ICS, consists of new and unused items of
a quality and quantity usable or saleable in the Ordinary Course of Business,
and is valued at reasonable amounts based on the normal valuation policies of
ICS at prices equal to the lower of cost or market value on a first-in,
first-out basis. All obsolete or slow moving Inventory and/or Inventory on hand
that is not needed to fulfill present and/or anticipated orders has been written
off.
(e) Costs and estimated earnings in excess of ▇▇▇▇▇▇▇▇/ ▇▇▇▇▇▇▇▇ in excess
of costs and estimated earnings. The accounts reflected in the ICS Financial
Statements represent Sellers' best estimate of estimated costs, estimated gross
profit, estimated gross profit percentage and estimated percentage complete for
each contract in progress.
(f) Accounts Payable. Schedule 3.14(f) of the ICS Disclosure Schedule sets
----------------
forth a true, correct and complete list of all accounts payable of ICS at the
date indicated thereon and updated as of the date hereof, including amounts
payable to trade creditors and other short-term Liabilities commonly identified
as accounts payable, which are, to the best of the Sellers' Knowledge, bona
fide, valid and binding obligations of ICS incurred in the Ordinary Course of
Business on an arms-length basis. Schedule 3.14(f) sets forth the dates upon
----------------
which payment to each of the listed items is due.
3.15 Absence of Certain Changes.
-----------------------------
Since the Cut-Off Date, other than in the Ordinary Course of Business and
except as disclosed in Schedule 3.15 and as contemplated by this Agreement,
--------------
there has not been:
(a) any (i) acquisition (by purchase, lease as lessee, license as licensee,
or otherwise) or disposition (by sale, lease as lessor, license as licensor, or
otherwise) by ICS, of any properties or assets, or (ii) other transaction by, or
any agreement or commitment on the part of ICS, other than in the Ordinary
Course of Business that has not caused and is not reasonably likely to cause,
either in any case or in the aggregate, a Material Adverse Effect;
(b) any material change in the condition (financial or otherwise), of the
properties, assets, Liabilities, investments, revenues, expenses, income,
operations, business, or prospects of ICS, or in any of its relationships with
any suppliers, customers or other third parties with whom it has financial,
commercial or other business relationships, other than changes in the Ordinary
Course of Business that have not caused and cannot reasonably be expected to
cause, either in any case or in the aggregate, a Material Adverse Effect;
(c) any transaction or change in compensation by ICS, with any of its
stockholders, members, directors, officers or key employees, other than the
payment of compensation and reimbursement of reasonable employee travel and
other business expenses in accordance with existing employment arrangements and
usual past practices;
(d) any damage, destruction, or loss, whether or not covered by insurance,
that, either in any case or in the aggregate, has caused, or could reasonably be
expected to cause, a Material Adverse Effect;
(e) any declaration, setting aside, or payment of any dividend or any other
distribution (in cash, stock, and/or property or otherwise) in respect of any
shares of the capital stock, membership interests, or other securities of ICS,
except as disclosed in Schedule 3.15(e) of the ICS Disclosure Schedule;
----------------
(f) any issuance of any shares of the capital stock or other securities or
derivative securities of ICS, or any direct or indirect redemption, purchase, or
other acquisition by ICS of any shares of its capital stock or other securities;
(g) any change in the officers, directors, key employees or material
independent contractors or vendors of ICS;
(h) any labor trouble or claim of unfair labor practices involving ICS, any
increase in the compensation or other benefits payable or to become payable by
ICS to any of its Affiliates, or to any of its officers, employees, or
independent contractors, or any bonus payments or arrangements made to or with
any of such officers, employees, or independent contractors, which have caused
or could reasonably be expected to cause, either in any case or in the
aggregate, a Material Adverse Effect;
(i) any forgiveness or cancellation of any material debt or claim by ICS or
any waiver by ICS of any right of material value, other than compromises of
Accounts Receivable in the Ordinary Course of Business;
(j) any incurrence or any payment, discharge, or satisfaction or default by
ICS of any material Indebtedness or any material obligations or material
Liabilities, whether absolute, accrued, contingent, or otherwise (including
without limitation Liabilities, as guarantor or otherwise, with respect to
obligations of others), and whether due or to become due, matured or unmatured,
liquidated or unliquidated, other than that which are reflected or reserved
against in the ICS Financial Statements or incurred in the Ordinary Course of
Business that have not caused and cannot reasonably be expected to cause, either
in any case or in the aggregate, a Material Adverse Effect;
(k) any incurrence, discharge, or satisfaction of any Lien (i) by ICS, or
(ii) on any of the capital stock, other securities, properties, or assets owned
or leased by ICS;
(l) any change in the financial or Tax accounting principles, practices, or
methods of ICS;
(m) any agreement, understanding, or commitment by or on behalf of ICS,
whether in writing or otherwise, to do or permit any of the things referred to
in this Section 3.15;
(n) any cancellation or notice of cancellation, or surrender of any policy
of insurance (which has not been cured by payment of premium, procurement of an
equivalent policy, or otherwise) relating to or affecting the assets or the
business of ICS;
(o) write-down of the value of any Inventory of ICS, or write-off as
uncollectible of any notes or Accounts Receivable, or any portion thereof of ICS
in excess of the amount reserved therefor on the ICS Financial Statements;
(p) prepayments, advances or other deposits, made by customers of the
business with respect to products or services contracted for but not provided as
of the Closing Date or any other unearned income;
(q) transaction not in the Ordinary Course of Business;
(r) cancellation or threatened cancellation of any material orders from, or
Contracts with, customers of ICS, that, singly or in the aggregate, has caused,
or could reasonably be expected to cause, a Material Adverse Effect;
(s) any problems with key suppliers of ICS which would impair its ability to
fulfill its customers' orders, that, singly or in the aggregate, has caused, or
could reasonably be expected to cause, a Material Adverse Effect; or
(t) any agreement or commitment, whether or not in writing, to do any of the
aforementioned.
3.16 Properties, Leases, Etc.
--------------------------
(a) Title to Properties; Condition of Personal Properties. ICS has (i) good
and marketable title to all of the assets and properties owned by it, including
without limitation all assets and properties reflected in the ICS Financial
Statements free and clear of all Liens, (ii) valid title to the lessee interest
in all assets and properties leased by it as lessee, free and clear of all
Liens, other than lessors' interests in such assets, and (iii) full right to
hold and use all of its assets and properties used in or necessary to its
business and operations, in each case all free and clear of all Liens, and in
each case subject to applicable Laws and the terms of any lease under which ICS
leases such assets or properties as lessee. All such assets and properties are
in good condition and repair, reasonable wear and tear excepted, and
collectively are adequate and sufficient to carry on the business of ICS as
presently conducted and as proposed to be conducted.
(b) No Owned Real Properties. ICS does not own any real property or any
interest (other than a leasehold interest) in any real property.
(c) Leased Properties. Schedule 3.16(c) of the ICS Disclosure Schedule sets
----------------
forth a complete and correct description of all leases of real or personal
property under which ICS is lessor or lessee. True, complete and correct copies
of all such leases and all amendments, supplements, and modifications thereto
(THE "LEASES") (excepting any Lease pertaining to personal property with an
annual rent of less than $10,000 and total remaining rental payments of less
than $20,000), have been delivered to Buyer. Each Lease is valid and enforceable
in accordance with its terms (subject to bankruptcy, insolvency and similar Laws
affecting creditor's rights generally and to general equitable principles), is
in full force and effect and, to the Knowledge of the Sellers, no event or
condition exists that constitutes, or after notice or lapse of time or both
would constitute, a default thereunder by ICS, or, to the Knowledge of the
Sellers, any other party to any of the Leases. The right, title and interest of
ICS in and to the Leases are subject to no Lien, and ICS is in quiet and lawful
possession of the demised premises ("Demised Premises")described IN THE LEASES.
ICS has established adequate reserves which are reflected in the ICS Financial
Statements, for the anticipated costs of any and all renovation, maintenance
and/or repair required to be performed at the Demised Premises or required to be
paid for by ICS upon termination of any of the Leases. Each Lease represents
the entire agreement between the lessor thereunder and ICS, including all
representations and warranties, and there exist no agreements between ICS and
any party other than as set forth in the Leases. ICS has paid in full all
obligations for brokerage commissions and finders' fees incurred in entering
into the Leases. Except as set forth on Schedule 3.16(c), the Demised Premises,
----------------
including all fixtures, furnishings, improvements and personalty in the Demised
Premises are in good working order, and at Closing shall be in the same
condition as on the date hereof; provided, further, that the building and land
of which the Demised Premises are a part in good working order, condition and
repair, and to the Knowledge of the Sellers, have no structural or mechanical
defects.
(d) Pending Tax Proceedings. Except as set forth in Schedule 3.16(d) of the
----------------
ICS Disclosure Schedule, ICS has not retained anyone to file notices of protest
against, or to commence actions to review, real property Tax assessments against
the leased Premises, and is not aware that any such action has been taken by or
on behalf of any lessees under the leases. Schedule 3.16(d) of the ICS
----------------
Disclosure Schedule contains (i) a list and description of all actions taken by
ICS to file notices of protest against, or to commence actions to review, real
property Tax assessments against the leased Premises, and that status of all
such Proceedings, and (ii) true and complete copies of all agreements between
ICS and its Tax counsel relating to any such Proceedings.
(e) Insurance Policies. ICS has furnished to Buyer an accurate schedule of
all insurance policies now affecting the leased Premises as set forth in
Schedule 3.16(e) of the ICS Disclosure Schedule. These policies are in
---------
compliance with, and fulfill all of ICS's insurance obligations under the leases
-
and each of these policies permits any waiver of subrogation contained in, or
required by, the leases, and the only insurance policies carried on the leased
Premises are those set forth in Schedule 3.16(e) of the ICS Disclosure Schedule.
----------------
3.17 Indebtedness.
------------
Except as set forth in Schedule 3.14(f) and Schedule 3.17 of the ICS
----------------- -------------
Disclosure Schedule and disclosed in the ICS Financial Statements, immediately
after the Closing, ICS will not have any Indebtedness outstanding. ICS is not
in default with respect to any outstanding Indebtedness or any instrument or
agreement relating thereto, and no such Indebtedness or any instrument or
agreement relating thereto purports to limit the issuance of any securities by
ICS or the operation of its business. Complete and correct copies of all
instruments and agreements (including all amendments, supplements, waivers, and
consents) relating to any Indebtedness of ICS have been furnished to Buyer.
3.18 Absence of Undisclosed Liabilities.
-------------------------------------
Except as set forth in Schedule 3.18 of the ICS Disclosure Schedule or
-------------
except to the extent reflected or reserved in the ICS Financial Statements, or
incurred in the Ordinary Course of Business since the Cut-Off Date, ICS has no
material Liabilities or obligations of any nature, whether accrued, absolute,
contingent, or otherwise (including, without limitation, Liabilities as
guarantor or otherwise with respect to obligations of others) and whether due or
to become due.
3.19 Tax Matters.
-----------
(a) Filing of Tax Returns and Payment of Taxes. Except as set forth in
Schedule 3.19(a) of the ICS Disclosure Schedule, ICS has timely filed all Tax
-------------
Returns required to be filed by it under applicable Laws, each such Tax Return
has been prepared in compliance with all applicable Laws and regulations, and
all such Tax Returns are true, correct, complete and accurate in all respects.
All Taxes due and payable by ICS as reflected on such Tax Returns have been
paid, and ICS will not be liable for any additional Taxes in respect of any
Taxable period ending on or before the Effective Date in an amount that exceeds
the corresponding reserve therefor, if any, reflected in the accounting records
of ICS as of the Effective Date. ICS is not doing business in or engaged in a
trade or business in any jurisdiction in which it has not filed all required Tax
Returns and no claim has ever been made by a Taxing authority in a
jurisdiction where ICS does not pay Tax or file Tax Returns that ICS is or may
be subject to Taxes assessed by such jurisdiction. There are no Liens for Taxes
(other than current Taxes not yet due and payable) on the assets of ICS. ICS
has disclosed on its federal income Tax Returns all positions taken therein that
could give rise to a substantial understatement of federal income Taxes within
the meaning of Section 6662 of the Code. ICS has never participated in any
listed transaction, as defined in Treasury Regulation Section 1.6011-4(b)(2),
required to be reported in a disclosure statement pursuant to Treasury
Regulation Section 1.6011-4. ICS is not subject to tax under Section 1374 of
the Code.
(b) Audit History, Extensions, Etc. There is no action, suit, Taxing
authority Proceeding (foreign, federal, state or local), or audit with respect
to any Tax now in progress, pending, or to the best of the Sellers' Knowledge,
threatened, against or with respect to ICS. Except as set forth in Schedule
--------
3.19(b) of the ICS Disclosure Schedule, no deficiency or proposed adjustment in
----
respect of Taxes that has not been settled or otherwise resolved has been
asserted or assessed by any Taxing authority against ICS. ICS has not consented
to extend the time in which any Tax may be assessed or collected by any Taxing
authority. ICS has not requested or been granted an extension of the time for
filing any Tax Return to a date on or after the Closing Date.
(c) Membership in Affiliated Groups, Etc. ICS has never been a member of
any Affiliated Group, or filed or been included in a combined, consolidated, or
unitary Tax Return other than a consolidated Tax return with respect to ICS. ICS
is not a party to or bound by any Tax sharing or allocation agreement or has any
current or potential contractual obligation to indemnify any other person with
respect to Taxes.
(d) Withholding Taxes. ICS has withheld and paid all Taxes required to have
been withheld and paid by it in connection with amounts paid or owing to any
employee, creditor, independent contractor, or other Person.
(e) Amending Tax Returns. Following Closing, no Tax Returns with respect to
ICS shall be amended without the prior written consent of the Sellers if such
amendments could result in liability to such Sellers.
3.20 Litigation and Claims.
-----------------------
No litigation, arbitration, action, suit, claim, demand, Proceeding or
investigation (whether conducted by or before any judicial or regulatory body,
arbitrator, commission or other person) is pending or, to the Knowledge of the
Sellers, threatened against ICS.
3.21 Safety; Zoning; Real Estate; and Environmental Matters.
------------------------------------------------------------
Except as set forth on Schedule 3.21:
--------------
(a) To the Knowledge of the Sellers, ICS is not nor has it ever been in
violation of any applicable statute, Law, or regulation relating to occupational
health or safety, other than those the violation of which would not be
reasonably likely to, either in any case or in the aggregate, have a Material
Adverse Effect, and no charge, complaint, action, suit, Proceeding, hearing,
investigation, claim, demand, or written notice has been filed or commenced
against or received by ICS alleging any failure by ICS to comply with any such
statute, Law, or regulation, nor is there any basis therefor known to the
Sellers.
(b) To the Knowledge of the Sellers, the real properties presently owned,
leased, or operated by ICS and any leasehold improvements thereto, and any
business conducted by ICS thereon, is in compliance with and has been in
compliance with all applicable statutes, Laws, and regulations in respect of the
use, occupation and construction thereof, including, but not limited to,
environmental, zoning, platting and other land use requirements, including but
not limited to, the Americans With Disabilities Act, and ICS has not received
written notice of, and neither does any of the Sellers have Knowledge of, any
violations or investigations relating thereto. Any written notice of violations
thereof which shall be received by ICS before Closing, whether now noted or
issued, shall be cured by ICS so that the Premises shall be conveyed free of the
same at Closing. In the event that the same shall not be capable of cure prior
to Closing, it shall not constitute a default hereunder and the parties shall
mutually agree to postpone Closing or to escrow funds for such cure.
(c) To the Knowledge of the Sellers, ICS is and has been in compliance with
all judgments, decrees, orders, statutes, Laws, permits, licenses, rules, or
regulations pertaining to environmental matters, including without limitation,
those arising under any Environmental Laws and has not received any written
notice that it is presently, or ever has been, in violation of any Environmental
Law other than those the violation of which would not be reasonably likely to,
either in any case or in the aggregate, have a Material Adverse Effect.
(d) ICS currently possesses, currently is in compliance with, and, to the
Knowledge of each of the Sellers, in the past has complied in all material
respects with the terms of all Environmental Permits, if any, and other
approvals necessary to operate the business, and any application for renewals of
said permits has been filed in a timely fashion. A list of all such
Environmental Permits is set forth in Schedule 3.21(d).
----------------
(e)
(i) Hazardous Substances. To the Knowledge of the Sellers, ICS neither
--------------------
is nor has been affected by the existence of any Environmental Conditions, nor
has ICS used any (other than as may be used in the ordinary course of their
business), or received any written notice of violation for the use or misuse of
any, Hazardous Substances on or about the Premises or in violation of any
Environmental Laws, and there are no Environmental Conditions which are
reasonably likely to affect the Premises. Without in any way limiting the
generality of the foregoing provision, the Sellers specifically represent and
warrant that all prior uses of the Premises or any part of the Premises known to
the Sellers are listed in Schedule 3.21(e)(i) of the ICS Disclosure Schedule; to
-------------------
the Knowledge of the Sellers, no other user or occupant of any part of the
Premises known to the Sellers, has ever been cited for violating any
Environmental Laws with respect to operations or activities on or about the
Premises; and all reports, test results, and other documents in the possession
of ICS relating to Environmental Conditions on or about the Premises are being
delivered to Buyer concurrently herewith.
(ii) Soil Conditions; Flood and Mud Slide Hazard; Wetlands. To the
------------------------------------------------------------
Knowledge of the Sellers, (x) there is no soil condition adversely affecting the
Premises (y) the Premises are not in an area identified by any agency or
department of the federal, state or local government as having specific flood or
mud-slide hazards, or as containing wetlands, endangered species or any other
protected Environmental Condition which is reasonably likely to impair the
current use of the Premises, and the Sellers do not know of any state of facts
which is reasonably likely to cause any portion of the Premises to be identified
as containing any such wetlands, endangered species or other Environmental
Condition; (z) no portion of the Premises is or is reasonably likely to be
designated as a "wetland" as defined by any governmental agency having
jurisdiction over the Premises.
(iii) Buried Tanks. Except as set forth on Schedule 3.21(e)(iii), there are
------------ ---------------------
no underground storage tanks on the Premises, nor have any underground storage
tanks been removed from the Premises.
(iv) Obligations. There are no obligations, commitments or agreements in
-----------
connection with ICS's lease and occupancy of the Premises which will be binding
upon Buyer after Closing, except for those set forth in the Leases or which have
been approved by Buyer and are listed in Schedule 3.21(e)(iv) of the ICS
--------------------
Disclosure Schedule.
(v) Absence of Moratorium. To the Knowledge of the Sellers, no moratorium,
----------------------
statute, order, regulation, ordinance, legislation, judgment, ruling or decree
of any court or governmental agency has been enacted, adopted, issued, entered
or pending, or is in effect, which is reasonably likely to have a Material
Adverse Effect to the Premises.
(vi) Easements and Declarations. There are no easements, declarations or
----------------------------
other similar agreements affecting the Premises or any portion thereof, other
than those of public record or those which have been approved by Buyer and are
listed in Schedule 3.21(e)(vi) of the ICS Disclosure Schedule.
---------------------
(vii) Condemnation. There is no condemnation Proceeding affecting the
------------
Premises or any portion thereof, currently pending nor, to the Knowledge of the
Sellers, is any such Proceeding threatened.
(viii) Covenants, Conditions and Restrictions. There is no material default
--------------------------------------
or breach by ICS under any covenants, conditions, restrictions, rights-of-way,
or easements which may affect the Premises or any portion thereof. Gas,
electric power, sanitary and storm sewer and water facilities, and all other
utilities necessary for the current use and operation of the Premises are
available in quantities satisfactory to service the Premises and for ICS to
conduct its business operations. To the Knowledge of the Sellers, no condition
exists which is reasonably likely to result in the termination or impairment of
access to the Premises or discontinuation of necessary sewer, water, electric,
gas, telephone or other utilities.
(ix) Work Performed. No work has been performed or is in progress at, and
---------------
no materials have been furnished to, the Premises on behalf of ICS that have not
been paid for or will not be paid for in full by ICS prior to the Closing Date.
No special or general assessments have been levied, or to the Knowledge of the
Sellers, threatened, against all or any part of the Premises, except as set
forth in Schedule 3.21(e)(ix) of the ICS Disclosure Schedule.
---------------------
(x) Access. The streets, roads, highways and avenues in front of or
------
adjoining any part of the Premises have been dedicated to and accepted by the
proper Governmental Authority and such Governmental Authority has the
responsibility to maintain such streets, road, highways and avenues.
(xi) Zoning. The current use on the Premises is presently permitted under
------
applicable zoning laws.
3.22 Material Contracts.
-------------------
Except for the Contracts, agreements and other arrangements set forth in
Schedule 3.22 of the ICS Disclosure Schedule, and Contracts, agreements, or
------------
other arrangements that have been fully performed and with respect to which ICS
--
has no further obligations or Liabilities, ICS is not a party to, or otherwise
bound by: (i) any Contract, agreement, instrument, or commitment that is
reasonably likely to affect the Sellers or ICS' ability to consummate the
transactions contemplated hereby, or (ii) any other material agreement,
instrument, or commitment, including without limitation any:
(a) agreement for the purchase, sale, lease, or license by or from ICS of
services, products, or assets, requiring total payments by or to it in excess of
$10,000 in any instance, or entered into other than in the Ordinary Course
of Business;
(b) agreement requiring ICS to purchase all or substantially all of its
requirements for a particular product or service from a particular supplier or
suppliers, or requiring it to supply all of a particular customer's or
customers' requirements for a certain service or product;
(c) agreement or other commitment pursuant to which ICS has agreed to
indemnify or hold harmless any other Person, other than agreements with respect
to the purchase, sale, lease or license from it of services, products or assets
in the Ordinary Course of Business;
(d) (i) employment agreement providing for annual payments equal to or in
excess of $100,000 per annum and/or with a term greater than one (1) year, (ii)
consulting agreement providing for annual payments equal to or in excess of
$100,000 per annum and/or with a term greater than one (1) year, or (iii)
agreement providing for severance payments or other additional rights or
benefits (whether or not optional) in the event of the sale or other change in
control of ICS;
(e) agreement with any current or former Affiliate, shareholder, member,
officer, director, employee, or consultant or with any Person in which any such
Affiliate has an interest;
(f) joint venture, partnership, teaming or similar agreement;
(g) agreement with any domestic or foreign government or agency or executive
office thereof or any subcontract between it and any third party relating to a
Contract between such third party and any domestic or foreign government or
agency or executive office thereof;
(h) agreement imposing non-competition or exclusive dealing obligations on
ICS;
(i) agreement with respect to the confidentiality of ICS's Proprietary
Information, and the assignment to ICS of any and all rights employees of ICS
might have to acquire with respect to technology, inventions, developments,
etc., developed in connection with their employment with ICS;
(j) agreement, the performance of which is reasonably likely to result in a
loss to ICS;
(k) the lease of real or personal property as lessor or lessee or sublessor
or sublessee;
(l) distribution, dealer, agency, or financing agreements or arrangements
(including without limitation, letters of credit) not terminable within thirty
(30) days or less without obligation on the part of ICS; and
(m) non-competition, confidential information or similar agreements.
The Sellers have delivered or caused to be delivered to Buyer correct and
complete copies (or written summaries of the material terms of oral agreements
or understandings) of each agreement, instrument, and commitment listed in
Schedule 3.22 of the ICS Disclosure Schedule, each as amended to date. Each such
--------
agreement, instrument, and commitment is a valid, binding and enforceable
obligation of ICS which is a party thereto, and, to the Knowledge of the
Sellers, of the other party or parties thereto (subject in all events to
bankruptcy, insolvency or similar laws affecting creditor's rights generally and
to general equitable principles), and is in full force and effect. ICS is not,
nor to the Knowledge of the Sellers, is any other party thereto (nor is ICS
considered by any other party thereto to be), in breach of or noncompliance with
any term of any such agreement, instrument, or commitment (nor to their
Knowledge is there any basis for any of the foregoing), except for any breaches
or non-compliances that singly or in the aggregate would not be reasonably
likely to have a Material Adverse Effect. Other than in the Ordinary Course of
Business, no claim, change order, request for equitable adjustment, or request
for contract price or schedule adjustment, between ICS and any supplier,
customer or any other person, relating to any agreement, instrument, or
commitment listed in Schedule 3.22 of the ICS Disclosure Schedule is pending or,
-------------
to the Knowledge of the Sellers, threatened, nor to their Knowledge is there any
basis for any of the foregoing. No agreement, instrument, or commitment listed
in Schedule 3.22 of the ICS Disclosure Schedule, (i) includes or incorporates
--------------
any provision, the effect of which is reasonably likely to enlarge or accelerate
any of the obligations of ICS or to give additional rights to any other party
thereto, (ii) will terminate, lapse, or (iii) in any other way be affected, by
reason of the Share Purchase, the effect of which is reasonably likely to have a
Material Adverse Effect on ICS, either individually or in the aggregate.
3.23 Tangible Property.
------------------
Schedule 3.23 of the ICS Disclosure Schedule sets forth a true and complete
-------------
list of all fixtures, machinery, equipment and any other tangible property of
ICS attached or appurtenant to, or used in connection with, its business
("PERSONAL PROPERTY"), including a description of each item, whether it is owned
or leased, the location and serial number, if any, the gross and net book value
of each item, and to the extent available, accumulated depreciation, if any,
with respect thereto (except to the extent such information is provided on other
Schedules to this Agreement). Each owned item is owned by ICS free of any Liens
or encumbrances, except for Permitted Liens. Except as indicated on Schedule
--------
3.24, each item of Personal Property is in working condition and repair,
--
ordinary wear and tear excepted, none of such items has any material defects or
--
is in need of immediate maintenance or repairs, except for ordinary routine
maintenance and repairs which are not material in nature or cost, and all of the
items listed are adequate for the uses to which they are being put.
3.24 Title to Assets; Permitted Liens.
------------------------------------
ICS has good and marketable title to all of its assets (except real and
other properties and assets held pursuant to leases or licenses described in
Schedules 3.16(c), 3.22, 3.23 and 3.27 of the ICS Disclosure Schedule), free and
-----------------------------------
clear of all Liens, except such Permitted Liens as are specified in Schedule
--------
3.24 of the ICS Disclosure Schedule.
-
3.25 Employees; Labor Relations; Benefit Plans.
---------------------------------------------
Employees; Labor Relations; Benefit Plans.
----------------------------------------------
Employees. Schedule 3.25 of the ICS Disclosure Schedule sets forth the
--------------
name, employment relationship, present compensation arrangement and other
material terms of employment or engagement of each director, officer, employee
and consultant of ICS.
Labor Relations. To the best knowledge of the Sellers ICS is in compliance with
all applicable federal and state laws respecting employment and employment
practices, terms and conditions of employment, wages and hours, and
nondiscrimination in employment, other than those the violation of which would
not, either alone or in the aggregate, have a Material Adverse Effect, and ICS
is not engaged in any unfair labor practice. To the best Knowledge of the
Sellers, there is no charge pending or threatened against or with respect to ICS
before any court or agency, alleging unlawful discrimination in employment
practices, and there is no charge of or Proceeding with regard to any unfair
labor practice against ICS pending before the National Labor Relations Board.
There is no labor strike, known dispute, slow-down, or work stoppage pending or,
to the Knowledge of the Sellers, threatened against or involving ICS. None of
the employees of ICS is covered by any collective bargaining agreement, and, to
the Knowledge of the Sellers, no such collective bargaining agreement is
currently being negotiated. No one has petitioned and, to the Knowledge of the
Sellers, no one is now petitioning, for union representation of any employees of
ICS. ICS has not experienced any work stoppage during the last three years.
Benefit Plans.
(i) Identification of Plans. Except for the arrangements set forth in
-------------------------
Schedule 3.25(i) of the ICS Disclosure Schedule, ICS does not sponsor, maintain
-----------
or contribute to any pension, profit-sharing, deferred compensation, bonus,
stock option, share appreciation right, severance, group or individual health,
dental, medical, life insurance, survivor benefit, or similar plan, policy or
arrangement, whether formal or informal, for the benefit of any director,
member, officer, consultant, or employee of any of them, whether active or
terminated; nor has ICS ever maintained or contributed to any such plan, policy,
or arrangement that was subject to ERISA. Each of the arrangements set forth in
Schedule 3.25(i) of the ICS Disclosure Schedule is herein referred to as an
-----------------
"EMPLOYEE BENEFIT PLAN."
----
(ii) With respect to each Employee Benefit Plan, the Sellers have provided
the Buyer with, or made available to Buyer, complete and correct copies of (i)
each Employee Benefit Plan, including all amendments thereto, (ii) the most
recent summary plan description (if any) and all other documents pursuant to
which the Employee Benefit Plans are maintained, (iii) the most recent annual
report (Form 5500 series) filed with the IRS (with attachments) and (iv) all IRS
determination letters, rulings and opinions received by ICS, in respect of any
applicable Employee Benefit Plans.
(iii) With respect to each Plan which is intended to be a qualified plan
under Section 401(a) of the Code as currently in effect, a favorable
determination letter has been received from the IRS as to its qualification
under Section 401(a) of the Code (including the amendments to the Code made by
GUST), each such Plan has been operated and administered in accordance with its
terms and all such Plans have been amended to comply with the Good Faith Interim
Amendments.
(iv) Compliance with Terms and Law. Each Employee Benefit Plan is and has
-----------------------------
been maintained and operated in compliance, in all material respects, with the
terms of such plan and with the applicable requirements prescribed (whether as a
matter of substantive Law or as necessary to secure favorable Tax treatment) by
any and all statutes, governmental, or court orders, or governmental rules or
regulations in effect from time to time, including but not limited to, ERISA and
the Code. Each Employee Benefit Plan that is intended to qualify under Section
401(a) of the Code is so qualified.
(v) Absence of Certain Events and Arrangements:
------------------------------------------
(A) There is no pending or, to the Knowledge of the Sellers, threatened,
legal action, Proceeding, or investigation, other than routine claims for
benefits, concerning any Employee Benefit Plan, or any fiduciary or service
provider thereof and, to the Knowledge of the Sellers, there is no basis for any
such legal action or Proceeding.
(B) With respect to each Employee Benefit Plan, to the Knowledge of the
Sellers, neither ICS nor any other Party in interest in respect thereof have
engaged in a prohibited transaction. that could subject ICS, directly or
indirectly, to Liability under Sections 409 or 502(i) of ERISA or Section 4975
of the Code.
(C) No communication, report or disclosure has been made by ICS or Sellers
that, at the time made, did not accurately reflect the terms and operations of
any Employee Benefit Plan.
(D) No Employee Benefit Plan requires ICS to provide welfare benefits
subsequent to termination of employment to employees or their beneficiaries
(except to the extent required by applicable state insurance laws, the
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) and Title I, Part
6 of ERISA).
(E) ICS has not undertaken to maintain any Employee Benefit Plan for any
specific period of time and each such plan is terminable at the sole discretion
of ICS, subject only to such constraints as may be imposed by applicable Law.
(F) No Employee Benefit Plan is maintained pursuant to a collective
bargaining agreement or, is or has been subject to the minimum funding
requirements of Section 302 of ERISA or Section 412 of the Code or is a defined
benefit pension plan.
(G) Except as set forth in Section 3.25(v) of the ICS Disclosure Schedule,
the consummation of transactions contemplated by this Agreement will not, either
alone or in combination with any other event expressly contemplated hereby in
this Agreement; (i) entitle any current or former employee or officer of ICS to
severance pay, or any other payment, except as expressly provided in this
Agreement; (ii) accelerate the time of payment or increase the amount of or
vesting of compensation or benefits due any such employee or officer; (iii)
result in termination or forgiveness of indebtedness or (iv) otherwise give rise
to a benefit that is reasonably expected to be treated as a parachute payment
under Section 280G of the Code.
(H) With respect to each Employee Benefit Plan which is intended or deemed
to be a "non qualified deferred compensation plan," ICS has operated such Plan
during 2006 and 2007 in good faith compliance with Code Section 409A, IRS Notice
2005-1 and any treasury regulations and other applicable guidance issued by the
IRS.
(vi) Funding of Certain Plans. With respect to each Employee Benefit Plan
--------------------------
for which a separate fund of assets is or is required to be maintained, full
payment has been made of all amounts that, under the terms of each such plan,
ICS is required to have paid as contributions to that plan as of the end of such
plan's most recently ended year, and through the Closing hereof consistent with
ICS's past practices.
3.26 Potential Conflicts of Interest.
----------------------------------
Except as disclosed in Schedule 3.26 of the ICS Disclosure Schedule,
--------------
neither ICS nor any of its respective officers, members, directors, or
shareholders or their affiliates (i) owns, directly or indirectly, any interest
(with the exception of passive holdings for investment purposes of not more than
2% of the securities of any publicly held and traded company) in, or is an
officer, director, member, employee or consultant of, any Person that is a
competitor, lessor, lessee, customer or supplier of ICS; (ii) owns, directly or
indirectly, any interest in any tangible or intangible property used in or
necessary to the business of ICS; (iii) to the Knowledge of the Sellers, has any
cause of action or other claim whatsoever against ICS, except for claims in the
Ordinary Course of Business, such as for accrued vacation pay, accrued benefits
under employee benefit plans, and similar matters and agreements; or (iv) owes
any amount to ICS.
3.27 Patents, Trademarks, Business Name.
-------------------------------------
(a) Schedule 3.27 of the ICS Disclosure Schedule lists all patents, patent
--------------
applications, trademarks, trade names, service marks, logos, copyrights, and
licenses used in or necessary to ICS's business (other than for software
programs that have not been customized for its use), as now being conducted or
as proposed to be conducted (collectively, and together with any technology,
know-how, trade secrets, processes, formulas, and techniques used in or
necessary to ICS's business, "PROPRIETARY INFORMATION"). Except as disclosed in
Schedule 3.27 of the ICS Disclosure Schedule, ICS owns or is licensed or
--------------
otherwise has the full and unrestricted exclusive right to use, without the
-------
payment of royalties or other further consideration, all Proprietary
----
Information, and no other intellectual property rights, privileges, licenses,
----
contracts, or other agreements, instruments, or evidences of interests are
--
necessary to or used in the conduct of its business.
--
(b) Each instance where ICS's rights to Proprietary Information arise under
a license or similar agreements (other than for software programs that have not
been customized for its use) is set forth in Schedule 3.27 of the ICS Disclosure
-------------
Schedule and such rights are licensed exclusively to such entity except as set
forth in Schedule 3.27 of the ICS Disclosure Schedule. No other person has an
-------------
interest in, other than the licensor with respect to licensed Proprietary
Information, or right or license to use, other than the licensor after the
expiration of the license with respect to licensed Proprietary Information, any
of the Proprietary Information. To the best Knowledge of the Sellers, none of
the Proprietary Information is being infringed by others, or is subject to any
outstanding order, decree, judgment, or stipulation. No litigation (or other
Proceedings in or before any court or other governmental, adjudicatory,
arbitral, or administrative body) relating to the Proprietary Information is
pending (other than litigation against the licensor of any Proprietary
Information licensed to ICS with respect to which the Sellers have no Knowledge)
or, to the Knowledge of the Sellers, threatened, nor, to the best Knowledge of
the Sellers, is there any basis for any such litigation or Proceeding. ICS
maintains adequate and sufficient security measures for the preservation of the
secrecy and proprietary nature of the Proprietary Information consistent with
the practice in its industry. All software used by ICS (the "SOFTWARE") is
legal, licensed, and authorized for use by ICS. The use of the Software by ICS
or the exercise by ICS of any license granted to it with respect to the Software
will not violate or interfere with the intellectual property or contractual
rights of any third party, including without limitation, those rights arising
under copyright, trademark, trade secret or patent law.
(c) To the best Knowledge of the Sellers: (i) neither ICS nor any of its
respective employees, has infringed or made unlawful use of, or is, to the
Knowledge of the Sellers, infringing or making unlawful use of, any proprietary
or confidential information of any Person, related to the business of ICS,
including without limitation any former employer of any past or present employee
or consultant of ICS; and (ii) the activities of ICS's employees in connection
with their employment do not violate any agreements or arrangements that any
such employees or consultants have with any former employer or any other Person.
No litigation (or other Proceedings in or before any court or other
governmental, adjudicatory, arbitral, or administrative body) charging ICS with
infringement or unlawful use of any patent, trademark, copyright, or other
proprietary right is pending or, to the Knowledge of the Sellers, threatened,
nor to their Knowledge is there any basis for any such litigation or Proceeding.
(d) To the best Knowledge of the Sellers, no officer, director, member,
employee, or consultant of ICS is presently obligated under or bound by any
agreement or instrument, or any judgment, decree, or order of any court of
administrative agency, that (i) conflicts or is reasonably likely to conflict
with his or her agreements and obligations to use his best efforts to promote
the interests of ICS (ii) conflicts or is reasonably likely to conflict with the
business or operations of ICS as presently conducted or as presently proposed to
be conducted, or (iii) restricts or is reasonably likely to restrict the use or
disclosure of any information that is necessary to the business of ICS.
3.28 Insurance.
---------
Schedule 3.28 of the ICS Disclosure Schedule lists the policies of theft,
--------------
fire, liability, worker's compensation, life, property and casualty, directors'
and officers', medical malpractice, and other insurance owned or held by ICS,
and the basis on which such policies provide coverage (i.e., an occurrence or
claims-made basis). All such policies are, and at all times since the respective
dates set forth in Schedule 3.28 of the ICS Disclosure Schedule, have been, in
-------------
full force and effect, are sufficient for compliance in all respects by ICS with
all requirements of Law and of all agreements to which it is a party, and
provide that they will remain in full force and effect through the respective
dates set forth in Schedule 3.28 of the ICS Disclosure Schedule, and will not
-------------
terminate or lapse or otherwise be affected in any way by reason of the
transactions contemplated hereby.
3.29 Governmental and Other Third-Party Consents.
-----------------------------------------------
Except as otherwise disclosed on Schedule 3.29 of the ICS Disclosure
--------------
Schedule, no Consent, approval, or authorization of, or registration,
designation, declaration, or filing with, any Governmental Authority, federal or
other, or any other Person is required on the part of ICS in connection with the
Sellers execution, delivery, or performance of this Agreement and the Ancillary
Documents to which they are a party, or the Sellers consummation of the
transactions contemplated hereby or thereby, or the continued conduct of the
present business of ICS after the Closing Date; nor are any Consents required
under any Contracts to which ICS is a party or by which it is bound to give any
notice to, or obtain the Consent or approval of, any party to such Contract
relating to the consummation of the transactions contemplated by this Agreement.
3.30 Employment of Officers.
------------------------
Schedule 3.30 of the ICS Disclosure Schedule sets forth the person who
--------------
served as chief executive officer (or in an equivalent capacity) during ICS's
last fiscal year and each of ICS's other executive officers who earned (or
accrued) compensation in excess of $100,000 during the last fiscal year.
3.31 Compliance with Other Instruments, Laws, Etc.
--------------------------------------------------
Except as otherwise disclosed on Schedule 3.31 of the ICS Disclosure
--------------
Schedule, ICS has complied with, and is in compliance with, (i) all Laws,
statutes, governmental regulations, judicial or administrative tribunal orders,
judgments, writs, injunctions, decrees, and similar commands applicable to it
and its business, and all unwaived terms and provisions of all Contracts,
agreements, instruments, and commitments to which it is a party or to which it
or any of its assets or properties is subject, except for any non-compliances
that, both individually and in the aggregate, have not had and could not
reasonably be expected to have a Material Adverse Effect, and (ii) its charter
documents and by-laws, each as amended to date. To the best Knowledge of the
Sellers, ICS has not committed, been charged with, or been under investigation
(or threatened with a pending or potential investigation) with respect to, nor
does there exist, any violation by ICS of any provision of any federal, state or
local Law or administrative regulation, except for any violations that, both
singly or in the aggregate, have not had and could not reasonably be expected to
have a Material Adverse Effect. ICS has and maintains, and Schedule 3.31 of the
-------------
ICS Disclosure Schedule sets forth a complete and correct list of, all such
licenses, Permits, and other authorizations from all such Governmental
Authorities as are legally required for the conduct of its business or in
connection with the ownership or use of its properties, except for any such
licenses, permits, and other authorizations, the failure to obtain or maintain
which in effect, both singly or in the aggregate, has not had and could not
reasonably be expected to have a Material Adverse Effect, and all of which
(except as specifically described in Schedule 3.31 of the ICS Disclosure
--------------
Schedule) are in full force and effect in all material respects, and true and
complete copies of all of which have been delivered to Buyer.
3.32 Compliance with Securities Laws.
----------------------------------
Neither ICS, the Sellers, nor anyone acting on their behalf, will hereafter
offer to sell, solicit offers to buy, or sell any securities of ICS so as to
preclude the offer, issuance, and sale of the Orbit Shares from being exempt
from the registration requirements of the Securities Act.
3.33 Questionable Payments.
----------------------
Neither ICS or Sellers has taken any action which would cause it or them to
be in violation of the Foreign Corrupt Practices Act of 1977, as amended, or any
rules or regulations thereunder. To the Knowledge of the Sellers, there is not
now, and there has never been, any employment by ICS of, or beneficial ownership
in ICS by, any governmental or political official of any country in the world.
3.34 ICS Disclosure Schedule.
-----------------------
The ICS Disclosure Schedule referred to in this Article III contains
certain information regarding ICS and Sellers as indicated at various places in
this Agreement and is attached to and forms a part of this Agreement. ICS and
Sellers hereby represent and warrant that all information set forth in the ICS
Disclosure Schedule is and will be true, correct and complete in all material
respects as of the date of this Agreement and the Effective Date, does not omit
to state any material fact necessary in order to make the statements therein not
misleading, and shall be deemed for all purposes of this Agreement to constitute
part of the representations and warranties under this Article III. Each of the
documents and other writings furnished to the Buyer by ICS and Sellers pursuant
to Article III and each of the representations, warranties and statements by ICS
and Sellers in this Article III is true, correct and complete in all material
respects with respect to ICS and Sellers as of the date furnished and does not
omit to state any material fact necessary in order to make the statements
therein not misleading.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF BUYER
Except as disclosed (in accordance with Section 10.11) in the disclosure
schedules of Buyer, (the "ORBIT DISCLOSURE SCHEDULE"), Buyer represents and
warrants to Sellers on the date hereof and on the Effective Date, as follows:
4.01 Organization and Standing.
---------------------------
(a) Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
(b) The minute books of Buyer accurately reflect all material corporate
action of its shareholders and board of directors (including committees) through
the date of this Agreement.
(c) Prior to the execution of this Agreement, Buyer has made available to
Sellers true and correct copies of the certificate of incorporation and the
by-laws of Buyer, as in effect on the date hereof.
4.02 Corporate Power.
----------------
Buyer has all requisite corporate power and full legal right and authority
to enter into and deliver this Agreement, the Ancillary Documents to which it is
a party and all other certificates, agreements or other documents to be executed
and delivered by Buyer, and to consummate the transactions contemplated hereby
and thereby, and to perform all of its obligations in accordance with the terms
hereof and thereof.
4.03 Authorization; Binding Effect.
-------------------------------
The execution and delivery by Buyer of this Agreement and the Ancillary
Documents to which it is a party, and the consummation by Buyer of the
transactions contemplated hereby and thereby, and the performance by Buyer of
its obligations hereby and thereby have been duly and validly authorized by all
necessary corporate action on the part of Buyer. This Agreement and the
Ancillary Documents to which it is a party have been duly executed and delivered
by Buyer and constitutes a legal, valid and binding obligation of Buyer,
enforceable against it in accordance with its terms.
4.04 Capitalization.
--------------
(a) The authorized capital stock of Buyer consists of 10,000,000 shares of
Common Stock, $0.10 par value per share. As of October 24, 2007, the issued and
outstanding capital stock of Buyer consists of (i) 4,603,571 shares of Common
Stock, (ii) 600,383 Shares of Common Stock reserved for issuance upon exercise
of all options granted under Buyer's stock option plans and (iii) no other
common stock equivalents. All such shares of Buyer are duly authorized, those
shares described in clause (i) above are validly issued, fully paid and
non-assessable, and those shares described in clauses (ii) and (iii) above, when
so issued, will be validly issued, fully paid and non-assessable.
(b) Except as set forth in Schedule 4.04(b) of the Orbit Disclosure
----------------
Schedule, Buyer does not have outstanding any capital stock or securities
convertible into or exchangeable for any shares of capital stock, and there are
no options, warrants or other rights, agreements, arrangements or commitments of
any character to which Buyer is a party or otherwise obligating Buyer to issue
or sell, entitling any person to acquire from Buyer, and Buyer is not a party to
any agreement, arrangement or commitment obligating it to repurchase, redeem or
otherwise acquire, any shares of its capital stock or securities convertible
into or exchangeable for any of its capital stock.
(c) Except as contemplated by this Agreement or as set forth in Schedule
--------
4.04(c) of the Orbit Disclosure Schedule, Buyer has not granted any registration
----
rights with respect to any shares of its capital stock to any third party.
4.05 Subsidiaries.
------------
Schedule 4.05 of the Orbit Disclosure Schedule sets forth a list of all
--------------
Subsidiaries of Buyer, showing, as to each such Subsidiary, the jurisdiction of
its organization, the number of shares or other equity or ownership interests of
each class of its capital stock authorized and the amount of each class
outstanding, and the percentage of the outstanding shares or other equity or
ownership interests of each such class owned, directly or indirectly, by Buyer.
On the date hereof, except as and to the extent set forth in Schedule 4.05 of
-------------
the Orbit Disclosure Schedule, (i) all the outstanding stock or other equity or
ownership interest of each Subsidiary of Buyer, owned directly or indirectly by
Buyer as shown on Schedule 4.05 of the Orbit Disclosure Schedule, is owned free
-------------
and clear of all Liens and encumbrances and is duly authorized, validly issued,
fully paid and non-assessable, and (ii) there are no options, warrants or other
rights, agreements, arrangements or commitments of any character to which any
Subsidiary of Buyer is a party or otherwise obligating any Subsidiary of Buyer
to issue or sell, or entitling any person to acquire from any Subsidiary of
Buyer, and no Subsidiary of Buyer is a party or otherwise obligating any
Subsidiary of Buyer to issue or sell, or entitling any person to acquire from
any Subsidiary of Buyer, and no Subsidiary of Buyer is a party to any agreement,
arrangement or commitment obligating it to repurchase, redeem or otherwise
acquire, any shares of the capital stock or any securities convertible into or
exchangeable for the capital stock of any such Subsidiary.
4.06 Authority to Conduct Business.
--------------------------------
Buyer and its Subsidiaries have all requisite corporate power and authority
necessary or advisable to own or hold their respective properties and conduct
their respective businesses and hold all material licenses, permits and other
required authorizations and approvals from Governmental Authorities and have
made all material registrations and given all notifications required under
federal, state or local Law that are necessary or advisable for the conduct of
their respective businesses.
4.07 No Violation.
-------------
Except as disclosed on Schedule 4.07 of the Orbit Disclosure Schedule,
--------------
Buyer and each of its Subsidiaries is in substantial compliance with all
statutes, laws, ordinances, rules, regulations, judgments, orders, decrees,
directives, permits, concessions, grants, franchises, licenses and other
governmental authorizations or approvals applicable to Buyer or any of its
properties. The execution, delivery and performance of this Agreement and the
Ancillary Documents to which it is a party and the consummation by Buyer of the
transactions contemplated hereby and thereby will not (i) result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default or give rise to any right of termination, cancellation or
acceleration under, or result in the creation of any Lien or encumbrance on or
against any of the properties of Buyer or any of its Subsidiaries pursuant to
any of the terms or conditions of any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation to which Buyer or any of its
Subsidiaries is a party or by which any of them or any of their properties or
assets may be bound, (ii) violate the charter documents or by-laws of Buyer or
any of its Subsidiaries, (iii) violate any statute, Law, rule, regulation, writ,
injunction, judgment, order or decree of any Governmental Authority, binding on
Buyer or any of its Subsidiaries or any of their properties or assets, or (iv)
result in or give rise (whether upon demand by the holder of any such securities
or by the terms of any such security) to the issuance of any additional capital
stock of Buyer or accelerate or alter the conversion rights of any holder of any
securities exercisable into or convertible for shares of capital stock of Buyer.
4.08 Litigation.
----------
Except as disclosed on Schedule 4.08 of the Orbit Disclosure Schedule,
--------------
there is no pending or threatened legal or governmental claim, action or
Proceeding against or relating to Buyer which could, individually or in the
aggregate, have a Material Adverse Effect on Buyer or consummation of the
transactions contemplated by this Agreement.
4.09 Full Disclosure.
----------------
With respect to Buyer or any of its Subsidiaries, this Agreement (including
the Orbit Disclosure Schedule and all materials incorporated by reference
herein), are true, correct and complete and do not contain an untrue statement
of material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which they were made, not
misleading.
4.10 SEC Filings.
------------
(a) Buyer has made available to each Seller for inspection a true and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by Buyer with the SEC since January 1, 2005 and prior to
the date of this Agreement (the "SEC DOCUMENTS"), which are all the documents
(other than preliminary material) that Buyer was required to file with the SEC
since such date. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Securities Act or the
Securities Exchange Act of 1934, as amended, as the case may be, and the rules
and regulations of the SEC promulgated thereunder applicable to such SEC
Documents, and none of the SEC Documents contained as of the date of its filing
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statement therein, in
light of the circumstances under which they were made, not misleading.
(b) The financial statements of Buyer included in the SEC Documents
(including the information contained in the notes to the financial statements)
comply as to form in all material respects with the published rules and
regulations of the SEC with respect thereto and were prepared in accordance with
GAAP applied on a consistent basis during the periods involved (except as may be
indicated on the notes thereto or, in the case of the unaudited statements, as
permitted by Rule 10-01 of Regulation S-X of the SEC). The consolidated
financial statements fairly present, in accordance with applicable requirements
of GAAP (subject, in the case of the unaudited statements, to normal, recurring
adjustments, none of which will be material), the consolidated financial
position of Buyer and its consolidated Subsidiaries as of their respective dates
and the consolidated results of operations and the consolidated cash flows of
Buyer and its consolidated Subsidiaries for the periods presented therein.
4.11 Conduct of Business.
---------------------
Since January 1, 2007, except as set forth on Schedule 4.11 of the Orbit
-------------
Disclosure Schedule and in SEC Documents, Buyer and its Subsidiaries have
conducted their respective businesses, operations and affairs in the Ordinary
Course of Business consistent with past practice; and (ii) there have not been
changes, conditions or events that, in the aggregate, have had or could
reasonably be expected to have a Material Adverse Effect.
4.12 Brokers.
-------
Except as set forth on Schedule 4.12 of the Orbit Disclosure Schedule
--------------
disclosing Cove Partners LLC, no finder, broker, agent or other intermediary has
acted for or on behalf of Buyer or any of its Subsidiaries in connection with
the negotiation or consummation of the transactions contemplated hereby.
4.13 Consents.
--------
Except as set forth on Schedule 4.13 of the Orbit Disclosure Schedule, no
-------------
consents or approvals or waivers of, or filings or registrations with, any
public body or authority are necessary, and no consents or approvals of any
third party is necessary in connection with the execution and delivery of this
Agreement by Buyer and the completion by Buyer of the transactions contemplated
hereby.
4.14 Common Stock.
-------------
The Common Stock is registered under Section 12(g) of the Exchange Act and
Buyer is subject to the periodic reporting requirements imposed by Section 13 or
15(d) of the Exchange Act.
4.15 Orbit Shares.
-------------
The Orbit Shares of Common Stock to be issued and delivered to Sellers in
accordance with this Agreement, when so issued and delivered, will be validly
authorized and issued and fully paid and non-assessable, and no shareholder of
Buyer shall have any preemptive right with respect thereto.
4.16 Absence of Undisclosed Liabilities.
-------------------------------------
Except as set forth on Schedule 4.16 of the Orbit Disclosure Schedule or
-------------
except to the extent reflected or reserved in Buyer's financial statements
included in the SEC Documents, or incurred in the ordinary course of business,
since September 30, 2007, Buyer has not incurred any material liabilities or
obligations of any nature, whether accrued, absolute, contingent or otherwise
(including, without limitation, liabilities as guarantor or otherwise with
respect to obligations to others) and whether due or to become due.
4.17 ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
-------------------
Buyer is in compliance with the provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2002, which apply to Buyer, as of the date of this Agreement, and the
certificates prepared and filed, to date, by Buyer pursuant to Sections 302 and
906 thereof are accurate.
4.18 Orbit Disclosure Schedule.
---------------------------
The Orbit Disclosure Schedule referred to in this Article IV contains
certain information regarding Buyer as indicated at various places in this
Agreement and is attached to and forms a part of this Agreement. Buyer hereby
represents and warrants that all information set forth in the Orbit Disclosure
Schedule is and will be true, correct and complete in all material respects as
of the date of this Agreement and the Effective Date, does not omit to state any
material fact necessary in order to make the statements therein not misleading,
and shall be deemed for all purposes of this Agreement to constitute part of the
representations and warranties under this Article IV. Each of the documents and
other writings furnished to the Sellers by Buyer pursuant to Article IV and each
of the representations, warranties and statements by Buyer in this Article IV is
true, correct and complete in all material respects with respect to Buyer as of
the date furnished and does not omit to state any material fact necessary in
order to make the statements therein not misleading.
ARTICLE V.
INDEMNIFICATION
5.01 Indemnity in Favor of Buyer.
---------------------------
Subject to the limitations set forth below in this Article V, each of the
Sellers, agree to severally, but not jointly, indemnify and hold harmless Buyer,
its Subsidiaries and their respective officers, directors, employees and
stockholders against and in respect of any and all of the following, but only
with respect to each Seller's respective representations and warranties set
forth in Article III of this Agreement:
(i) Claims, suits, actions, Proceedings (formal or informal),
investigations, judgments, deficiencies, damages, settlements, Liabilities, and
legal and other expenses (including reasonable legal fees and expenses of
counsel chosen by any Indemnified Party, as defined below in Section 5.03 and
subject to the limitations set forth therein) as and when incurred arising out
of or based upon (A) any breach of any representation, warranty, covenant, or
agreement of any Seller contained in this Agreement, (B) any obligation or
Liability of any nature, accrued or contingent, of ICS prior to the Closing and
not specifically disclosed to Buyer in accordance with this Agreement;
(ii) Claims, suits, actions, Proceedings (formal or informal),
investigations, judgments, deficiencies, damages, settlements, Liabilities, and
legal and other expenses (including reasonable legal fees and expenses of
counsel chosen by any Indemnified Party, subject to the limitations set forth in
Section 5.03 below) as and when incurred arising out of or based upon the
failure of ICS to obtain the consent of any Person whose consent is required to
effectuate the Buyer's right to any of ICS's assets under the terms existing
prior to the Share Purchase;
(iii) Claims, suits, actions, Proceedings (formal or informal),
investigations, judgments, deficiencies, damages, settlements, Liabilities, and
legal and other expenses (including reasonable legal fees and expenses of
counsel chosen by any Indemnified Party) as and when incurred arising out of or
based upon the relationship between ICS and any of its shareholders, members,
investors, agents, employees, officers, directors, Representatives or associates
or arising out of or based upon any agreements or negotiations between any such
parties;
(iv) Claims, suits, actions, Proceedings (formal or informal),
investigations, judgments, deficiencies, damages, settlements, Liabilities, and
reasonable legal and other expenses (including reasonable legal fees and
expenses of counsel chosen by any Indemnified Party) as and when incurred
arising out of or resulting from the acts or omissions of ICS that result in
Environmental Conditions, Environmental Liabilities, or failure to comply with
any Environmental Law;
(v) Claims, suits, actions, Proceedings (formal or informal),
investigations, judgments, deficiencies, damages, settlements, Liabilities, and
legal and other expenses (including reasonable legal fees and expenses of
counsel chosen by any Indemnified Party, subject to the limitations set forth in
Section 5.03 below) as and when incurred arising out of or based upon Contract
GS-23F-0181; and
(vi) Claims, suits, actions, Proceedings (formal or informal),
investigations, judgments, deficiencies, damages, settlements, Liabilities, and
legal and other expenses (including reasonable legal fees and expenses of
counsel chosen by any Indemnified Party, subject to the limitations set forth in
Section 5.03 below) as and when incurred arising out of or based upon Sellers'
obligations under Section 8.23 for all payments owed by ICS.
5.02 Indemnity in Favor of Sellers.
---------------------------------
Buyer agrees to indemnify, defend and hold the Sellers free and harmless
from and against all claims, actions, Liabilities and damages (including
reasonable attorneys' fees and expenses) as and when incurred arising out of or
based upon (i) the breach by Buyer or the inaccuracy of any of its
representations, warranties, covenants or agreements contained in this
Agreement, (ii) any and all incremental costs incurred as a result of making the
Section 338(h)(10) Election with regard to the Share Purchase, (iii) any breach
or failure to perform by Buyer of any material term of this Agreement, (iv) any
and all liabilities assumed by Buyer hereunder and the operations of ICS
following the Closing, (v) any liability of any of the Sellers under any
guaranty or surety agreement executed on behalf of ICS that has been previously
disclosed to Buyer, and (vi) any uninsured liability for personal injury and/or
property damage arising out of or based on Buyer's activities on the Premises,
including actions of Buyer's agents, employees, and/or contractors including
without limitation any environmental testing, but not the results of such
testing.
5.03 Indemnification Procedure.
--------------------------
All claims by a party seeking indemnification (the "INDEMNIFIED PARTY")
under this Article V shall be asserted and resolved as follows:
(a) Notice of Claims. In the event that (i) any claim, suit, action,
Proceeding (formal or informal) or investigation is asserted or instituted by
any Person other than the parties to this Agreement which could give rise to any
judgment, deficiency, damages, settlement or Liability for which the party
from whom the indemnification is being sought (the "INDEMNIFYING PARTY") could
be liable to the Indemnified Party under this Agreement (such claim, suit,
action, Proceeding (formal or informal) or investigation, a "THIRD PARTY CLAIM")
or (ii) any Indemnified Party under this Agreement shall have a claim to be
indemnified by the Indemnifying Party which does not involve a Third Party Claim
(such claim, a "DIRECT CLAIM" and, together with Third Party Claims, "CLAIMS"),
the Indemnified Party shall with reasonable promptness send to the Indemnifying
Party a written notice specifying the nature of such Claim and the amount or
estimated amount thereof (which amount or estimated amount shall not be
conclusive of the final amount, if any, of such Claim) (a "CLAIM NOTICE"),
provided that a delay in notifying the Indemnifying Party shall not relieve such
Indemnifying Party of its obligations under this Agreement except to the extent
that (and only to the extent that) such failure shall have caused the losses for
which the Indemnifying Party is obligated to be greater than such losses would
have been had the Indemnified Party given proper notice.
(b) Third Party Claims. In the event of a Third Party Claim, the
Indemnifying Party shall be entitled to appoint counsel of its choice at its
expense to represent the Indemnified Party and any others. The Indemnifying
Party may reasonably designate in connection with such Third Party Claim (in
which case the Indemnifying Party shall not thereafter be responsible for the
fees and expenses of any separate counsel retained by the Indemnified Party
except as set forth below), provided that such counsel is reasonably acceptable
to the Indemnified Party. Notwithstanding the Indemnifying Party's election to
appoint counsel to represent an Indemnified Party in connection with a Third
Party Claim, an Indemnified Party shall have the right to employ separate
counsel, and the Indemnifying Party shall bear the reasonable fees, costs and
expenses of such separate counsel if (i) the use of counsel selected by the
Indemnifying Party to represent the Indemnified Party would present such counsel
with a conflict of interest or (ii) the Indemnifying Party shall not have
employed counsel to represent the Indemnified Party within a reasonable time
after notice of the institution of such Third Party Claim. If requested by the
Indemnifying Party, the Indemnified Party agrees to cooperate with the
Indemnifying Party and its counsel in contesting any Third Party Claim which the
Indemnifying Party is defending, or, if appropriate and related to the Third
Party Claim in question, in making any counterclaim against the Person asserting
the Third Party Claim, or any cross-complaint against any Person.
(c) Settlement of Claims. The Indemnifying Party shall not, without the
written consent of the Indemnified Party (which consent shall not be
unreasonably withheld, conditioned or delayed), (i) settle or compromise any
Claims or consent to the entry of any judgment which does not include as an
unconditional term thereof the delivery by the claimant or plaintiff to the
Indemnified Party of a written release from all Liability in respect of such
Claim of all Indemnified Parties affected by such Claim or (ii) settle or
compromise any Claim if the settlement imposes equitable remedies or material
obligations on the Indemnified Party other than financial obligations for which
such Indemnified Party will be indemnified hereunder. No Claim which is being
defended in good faith by the Indemnifying Party in accordance with the terms of
this Agreement shall be settled or compromised by the Indemnified Party without
the written consent of the Indemnifying Party (which consent shall not be
unreasonably withheld, conditioned or delayed).
(d) Direct Claims. In the event of a Direct Claim, the Indemnifying Party
shall notify the Indemnified Party in writing within thirty (30) Business Days
of receipt of a Claim Notice whether or not the Indemnifying Party will dispute
such claim.
(e) Access. From and after the delivery of a Claim Notice under this
Agreement, at the reasonable request of the Indemnifying Party, each Indemnified
Party shall grant the Indemnifying Party and its Representatives all reasonable
access to the books, records and properties of such Indemnified Party to the
extent reasonably related to the matters to which the Claim Notice relates. All
such access shall be granted during normal business hours and shall be granted
under conditions which will not unreasonably interfere with the business and
operations of such Indemnified Party. The Indemnifying Party will not, and shall
require that its Representatives do not, use (except in connection with such
Claim Notice) or disclose to any third Person other than the Indemnified Party's
Representatives (except as may be required by applicable Law) any information
obtained pursuant to this Section 5.03(e) which is designated as confidential by
an Indemnified Party.
(f) Cooperation; Mitigation of Damages. Each Indemnified Party agrees to
take all reasonable steps to mitigate damages in respect of any Claim for which
indemnification is sought, including without limitation using commercially
reasonable efforts to effect recovery from third parties. Each Indemnified
Party shall use good faith efforts to avoid or minimize costs or expenses
associated with any such Claim, and shall cooperate with the Indemnifying Party
in its efforts to defend or contest any such Claim.
(g) Threshold Amount and Limitation. Notwithstanding anything to the
contrary contained herein, the Sellers shall have no indemnification obligation
whatsoever with respect to the following:
(i) Any Claims, suits, actions, Proceedings (formal or informal),
investigations, judgments, deficiencies, damages, settlements, Liabilities, and
legal and other expenses unless and until the aggregate amount of such matters
exceeds the sum of Fifty Thousand and no/100ths Dollars ($50,000.00) (the
"Basket") provided, however, that the Sellers shall not be liable for any claim
-------- -------
which individually does not exceed $5,000 and such claims not meeting this
threshold shall not be applied in calculating the Basket; and provided, further
-------- -------
that, in no event, shall the foregoing $5,000 "de minimus exception" apply with
respect to willful breaches of any representations and warranties;
(ii) The liability of any Seller for indemnification hereunder shall in no
circumstance exceed an amount equal to such Seller's allocated share of the
Purchase Price as set forth in Exhibit 2.03 of this Agreement which such Seller
------------
actually receives; and
(iii) Any liability of any Seller for indemnification with respect to a
Direct Claim which has been adjudicated pursuant to a final unappealable order
of the court of competent jurisdiction, shall be satisfied up to the thresholds
set forth in Subparagraph (ii) above, and unless otherwise directed by each such
Seller, first from the Escrow Collateral held pursuant to Section 2.06(c); and,
if not satisfied, the pro-rata portion of cash received by such Seller from any
Annual Earn-Out Payments; and, if not satisfied, next from the pro-rata portion
of Orbit Shares (valued at the average Closing Price of such stock for the ten
(10) trading days immediately prior to the payment date by such Seller); and
finally, if not satisfied, the cash received by such Seller at Closing pursuant
to Section 2.02(ii) of this Agreement.
5.04 Survival.
--------
Except as otherwise provided in this Agreement, all representations,
warranties, covenants and obligations in this Agreement, the ICS Disclosure
Schedule, the Orbit Disclosure Schedule and any other certificate or document
delivered pursuant to this Agreement shall survive the Closing and the
consummation of the Share Purchase for a period of two (2) years after the
Closing Date as to the representations, warranties, covenants and obligations of
Sellers ("Applicable Survival Period"). Any claim first asserted in writing and
in reasonable detail to the Indemnifying Party within the Applicable Survival
Period shall survive the Closing until finally resolved notwithstanding
expiration of the Applicable Survival Period, but in no other event shall any
claim for indemnification be asserted after the expiration date of the
Applicable Survival Period. The right to indemnification, reimbursement or
other remedy based upon such representations, warranties, covenants and
obligations shall not be affected by any investigation (including any
environmental investigation or assessment) conducted with respect to to the
accuracy or inaccuracy of or compliance with any such representation, warranty,
covenant or obligation, except that any Knowledge acquired (or capable of being
acquired) at any time, whether before or after the Closing Date with respect to
any representation, warranty, covenant or obligation shall void any claim for
indemnification with respect thereto. In no event shall any information or
condition of which Buyer had Knowledge (or reasonably should have had Knowledge)
on or before the Closing Date, constitute the basis of a claim for
indemnification under this Agreement against any of the Sellers.
ARTICLE VI.
COVENANTS OF THE SELLERS
6.01 Access.
------
ICS will afford, and the Sellers will cause ICS to afford, the officers,
employees, counsel, agents, accountants, and other Representatives of Buyer
reasonable access, at reasonable times and upon reasonable notice though the
Effective Date, to the plants, properties, books, and records of ICS, will
permit any of them to conduct at Buyer's expense, any environmental
investigation of the properties deemed necessary by the Buyer or Buyer's
environmental consultant, and agreed to by Sellers will permit any of them to
make extracts from and copies of such books and records, and will from time to
time furnish any of them with such additional financial and operating data and
other information as to the financial condition, results of operations,
business, properties, assets, Liabilities, or future prospects of ICS as they
from time to time may request, provided however that Buyer and its
Representatives shall not unreasonably interfere with the conduct of ICS's
business. In connection with the foregoing, ICS will allow Buyer's independent
accountants to (i) audit the ICS Financial Statements at Buyer's expense in
order to prepare such audited financial statements as are required to be
included in Buyer's Current Report on Form 8-K for the Share Purchase and
subsequently to be included in a registration statement pursuant to the
Registration Rights Agreement for the Orbit Shares, in accordance with the
applicable rules and regulations of the SEC and (ii) perform all necessary work
required to determine that ICS will have in place the necessary internal
controls and procedures to be in compliance with Section 404 of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 following the Closing Date. In addition, ICS and the
Sellers shall continue to provide Buyer and its independent accountants with
current unaudited financial statements for any completed calendar quarter prior
to the Effective Date.
6.02 Conduct of Business.
-------------------
ICS will use reasonable best efforts to conduct its affairs, and the
Sellers will cause ICS to use reasonable best efforts to conduct its affairs, so
that at the Effective Date, no representation or warranty of the Sellers and
ICS will be inaccurate, no covenant or agreement of the Sellers and Sellers will
be breached, and no condition in this Agreement will remain unfulfilled by
reason of the actions or omissions not in the Ordinary Course of Business of ICS
or any Seller. Buyer acknowledges and agrees that in the ordinary course of
ICS's Business, all of the representations and warranties made by Sellers were
believed to be accurate when made and all changes outside of the Ordinary Course
of Business will be brought to the attention of Buyer at or before the Effective
Date. Until the Effective Date, ICS will use, and the Sellers will cause ICS to
use, its best efforts to preserve the business of ICS intact, to keep available
the services of its present personnel, to preserve in full force and effect the
Contracts, agreements, instruments, leases, licenses, arrangements, and
understandings of ICS, and to preserve the goodwill of its suppliers, customers,
and others having business relations with any of them. Until the Effective Date,
ICS will conduct, and the Sellers will cause ICS to conduct, its business and
operations in all respects only in the Ordinary Course of Business and in
accordance with past practice.
6.03 Advice of Changes.
-----------------
Until the Effective Date, the Sellers will promptly advise Buyer in a
detailed written notice of any fact or occurrence or any pending or threatened
occurrence of which any of them obtains Knowledge and which (if existing and
known at the date of the execution of this Agreement) would have been required
to be set forth or disclosed in or pursuant to this Agreement, the ICS
Disclosure Schedule or an exhibit hereto, which (if existing and known at any
time prior to or at the Effective Date) would make the performance by any party
of a covenant contained in this Agreement impossible or make such performance
materially more difficult than in the absence of such fact or occurrence, or
which (if existing and known at the time of the Effective Date) would cause a
condition to any party's obligations under this Agreement not to be fully
satisfied.
6.04 Voting by Sellers.
-----------------
It is agreed and understood that until the Effective Date, the Sellers
shall not vote their shares in ICS for:
(a) Any merger, consolidation, reorganization, or other business combination
involving ICS, except as contemplated by this Agreement;
(b) Any sale, lease, exchange or disposition of assets of ICS, except as
contemplated by this Agreement or in the Ordinary Course of Business;
(c) Any issuance of any corporate interests of ICS or, any option, warrant,
or other right calling for the issuance of any such interest, or any security
convertible into or exchangeable for any such interest;
(d) Any authorization of any class of capital stock of ICS;
(e) The amendment of the certificate of incorporation (or other
organizational document) of ICS; or
(f) Any proposition the effect of which is reasonably likely to inhibit,
restrict, or delay the consummation of the Share Purchase or any of the
transactions contemplated by this Agreement or impair the contemplated benefits
to Buyer or the Sellers of the transactions contemplated by this Agreement.
6.05 Conduct of Business Until the Effective Date.
--------------------------------------------------
The Sellers agree that until the Effective Date, unless they have received
the prior written consent of Buyer, with the exception of shareholder
distributions consistent with Section 8.03 and 9.17, they will:
(a) Operate ICS's business only in the usual, regular and ordinary course
consistent with past practice;
(b) Use all reasonable efforts as to events within ICS's or the Sellers'
control to prevent the occurrence of any change or event which would prevent any
of the representations and warranties of the Sellers contained herein from being
true at and as of the Effective Date with the same effect as though such
representations and warranties had been made at and as of the Effective Date;
(c) Use their best efforts to preserve ICS's present relationship with
suppliers, customers and others having business dealings with it;
(d) Pay and discharge all costs and expenses of carrying on ICS's business
consistent with past business practices;
(e) Neither enter into any customer order or purchase order in excess of
$50,000 nor enter or make any Contract or commitment and render no bid or
quotation, written or oral, except in the Ordinary Course of Business consistent
with past practice;
(f) Create or suffer any Liens upon any of its assets (other than Permitted
Liens set forth in Schedule 3.24 of the ICS Disclosure Schedule);
-------------
(g) Not acquire or dispose of any assets or enter into any transaction,
except in the Ordinary Course of Business as currently conducted and consistent
with past practice;
(h) Maintain books, accounts and records in the usual, regular, true and
ordinary manner consistent with past practice;
(i) Incur any obligation or Liability (fixed or contingent), except in the
Ordinary Course of Business consistent with past practice;
(j) Not cancel or compromise any material debt or claim, other than in the
Ordinary Course of Business consistent with past practice;
(k) Not waive or release any rights of material value with respect to its
assets, except in the Ordinary Course of Business consistent with past practice;
(l) Not modify or change in any material respect or terminate any existing
license, lease, contract or other document required to be listed on the ICS
Disclosure Schedule other than in the Ordinary Course of Business consistent
with past practice, except that ICS shall be permitted to modify or change
existing licenses, leases, Contracts and other documents to obtain the Consents
referred in Schedule 3.29 of the ICS Disclosure Schedule hereto if Buyer
-------------
consents to such modification or change;
(m) Make any loans or extensions of credit, except to trade purchasers in
the Ordinary Course of Business consistent with past practice;
(n) Maintain its properties, machinery and equipment in their present
condition and repair, normal wear and tear excepted;
(o) Continue all policies of insurance in full force and effect up to and
including the Effective Date;
(p) Make no material change in compensation policies;
(q) Make all payments of principal and interest due in connection with
outstanding Indebtedness and not incur any additional material Indebtedness,
unless required by cash flow necessity, with Buyer's approval; and
(r) Not engage in any other transactions not in the Ordinary Course of
Business.
6.06 Cooperation on Tax Matters.
-----------------------------
(a) The Sellers shall cooperate fully, as and to the extent reasonably
requested by Buyer in connection with the filing of Tax Returns and any audit,
litigation or other Proceeding with respect to Taxes. Such cooperation shall
include without limitation, the retention and (upon Buyer's request) the
provision of records and information which are reasonably relevant to any such
audit, litigation or other Proceeding, and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder. The Sellers agree to (A) retain all books and
records, not already in ICS's or Buyer's possession, with respect to Tax matters
pertinent to ICS relating to any taxable period beginning before the
Effective Date until the expiration of the statute of limitations (and, to the
extent notified by Buyer or the Sellers, any extensions thereof) of the
respective taxable periods, and to abide by all record retention agreements
entered into with any taxing authority, and (B) give Buyer reasonable written
notice prior to transferring, destroying or discarding any such books and
records and, if Buyer so requests, ICS or the Sellers, as the case may be, shall
allow Buyer to take possession of such books and records.
(b) ICS, and the Sellers shall prior to the Effective Date, upon Buyer's
request, use reasonable commercial efforts to obtain any certificates or other
documents from any Governmental Authority or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be imposed,
including, but not limited to, with respect to the transactions contemplated by
this Agreement.
6.07 Assignment and Assumption of Facility Leases.
-------------------------------------------------
On or prior to the Closing Date, ICS shall enter into an Assignment and
Assumption of Lease, substantially in the form annexed hereto as Exhibit 6.07
------------
("ASSIGNMENT AND ASSUMPTION OF LEASE"), with each of the landlords under the
Facility Leases and the Buyer, pursuant to which all of ICS's right, title and
interest in and to each of the Facility Leases shall be assigned to and assumed
by Buyer.
ARTICLE VII.
COVENANTS OF BUYER
7.01 Employment Agreement.
---------------------
Buyer will retain the services of the individuals set forth in Schedule
--------
7.01 of the ICS Disclosure Schedule as employees pursuant to the terms of an
-
employment agreement, substantially in the form annexed hereto as Exhibit 7.01
------------
("EMPLOYMENT AGREEMENT"), to be executed and delivered upon the execution of
this Agreement, which shall contain terms and conditions customary and similar
to Buyer's existing employment agreements of this nature.
7.02 Transfer of Orbit Shares to Sellers.
----------------------------------------
Buyer shall transfer to the Sellers' Escrow Agent the number of Orbit
Shares referred to in Section 2.02(i) hereof on the Closing Date. The Sellers'
Escrow Agent shall transfer the Shares to the Sellers on the Effective Date in
accordance with the Sellers' Closing Escrow Agreement.
7.03 Registration Rights Agreement.
-------------------------------
Buyer will execute and deliver to Sellers upon the execution of this
Agreement, a Registration Rights Agreement pursuant to Section 2.07(b) pursuant
to which Buyer will file with the SEC a registration statement for the Orbit
Shares within a reasonable time following the Closing, to be mutually agreed
upon by the parties hereto, but in no event later than nine (9) months from the
Closing.
7.04 Assignment and Assumption of Lease.
--------------------------------------
Buyer shall execute and deliver to ICS an Assignment and Assumption of
Leases pursuant to Section 6.07 hereof upon the execution of this Agreement.
7.05 Cooperation of Buyer.
----------------------
Buyer shall cooperate with all reasonable requests of the Sellers and their
respective Representatives in connection with the consummation of the
transactions contemplated hereby, including without limitation using its best
efforts to obtain all authorizations, consents and permits of others which may
be required to permit the consummation of the transactions contemplated by this
Agreement.
7.06 SEC Filings.
------------
Within four (4) business days after the Closing Date, Buyer shall prepare
and timely file with the SEC a Current Report on Form 8-K describing the
transactions contemplated hereby and any and all other required filing(s) to
effectuate the Share Purchase.
7.07 Certain Tax Matters.
---------------------
With regard to any decisions by the Buyer and/or its Representatives
subsequent to the Closing regarding ICS, to effect their current or future
status via changes such as tax elections, liquidation or any other form of
change or disposition, the Buyer shall bear the full and complete responsibility
and resulting costs and all federal and/or state tax implications associated
with such, and the Sellers shall have no obligation or liability therefore.
ARTICLE VIII.
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction or waiver at or prior to the
Closing Date (unless otherwise provided herein) of each of the following
conditions:
8.01 Accuracy of Representations and Warranties and Compliance With
--------------------------------------------------------------------
Covenants.
----
(a) All representations and warranties of the Sellers set forth in this
Agreement, the Ancillary Documents to which they are a party, the ICS Disclosure
Schedule and any other document delivered pursuant to this Agreement, shall
be accurate when made and, in addition, except as may be otherwise disclosed to
Buyer, shall be accurate as of the Effective Date; and
(b) As of the Closing, the Sellers shall have performed and complied with
all covenants and agreements and satisfied all conditions required to be
performed and complied with by them at or before such time by this Agreement.
8.02 Good Standing; Qualification to do Business.
------------------------------------------------
ICS shall have delivered to Buyer a certificate of good standing from the
State of Kentucky and any other jurisdiction in which it has qualified to do
business dated as of a date no earlier than five (5) days prior to the Closing
Date.
8.03 Minimum Net Working Capital.
------------------------------
(a) The Purchase Price is based upon ICS having a minimum of Net Working
Capital of $750,000 ("MINIMUM NET WORKING CAPITAL") computed as of December 31,
2007 by Buyer's auditors. The cash portion of the Purchase Price shall be
adjusted, if necessary, on the date that is ten (10) business days following
receipt by Buyer of the final audit report for ICS (as then owned by Buyer) for
the 2007 fiscal year then ended, but in no event later than April 15, 2008. The
audit report shall include an audited consolidated balance sheet for ICS
("CLOSING BALANCE SHEET") computed in accordance with GAAP, applied consistent
with past practices of ICS. If the Closing Balance Sheet reflects Net Working
Capital that is less than the Minimum Net Working Capital (the difference to be
referred to as the "SHORTFALL"), each of the Sellers shall pay to Buyer their
respective pro rata share of the Shortfall, dollar for dollar within fifteen
(15) Business Days of their receipt of the Closing Balance Sheet. In the event
the Closing Balance Sheet reflects Net Working Capital in excess of the Minimum
Net Working Capital, then Buyer will pay to the Sellers their respective pro
rata share of the excess, dollar for dollar, within fifteen (15) Business Days
of its receipt of the Closing Balance Sheet. "NET WORKING CAPITAL" shall mean
current assets minus current liabilities in accordance with GAAP. Further,
consistent with the provisions of Section 2.09(a), above, any local level taxes
(i.e, City of Louisville/Jefferson County, Kentucky) accrued by ICS on its
Closing Balance Sheet as a result of the Section 338(h)(10) Election, shall not
be taken into account as a liability for purposes of the Net Working Capital
calculation as provided for in this Section 8.03.
(b) If the Sellers do not agree with the Net Working Capital calculation
computed by the Buyer's auditors, the Sellers shall so inform the Buyer in
writing within fifteen (15) Business Days after the Sellers' receipt thereof,
such writing to set forth the objections of the Sellers in reasonable detail.
If the Sellers and the Buyer cannot reach agreement as to any disputed matter
relating to the Net Working Capital calculation within thirty (30) Business Days
after notification by the Sellers to the Buyer of a dispute, they shall
forthwith refer the disputed items to an accounting firm of recognized standing
in the United States and mutually agreeable to the Sellers and the Buyer for
resolution, with the understanding that such firm shall resolve all disputed
items within twenty (20) Business Days after such disputed items are referred to
it. If the Buyer and the Sellers are unable to agree on the choice of an
accounting firm, then PriceWaterhouse Coopers LLP, of Louisville, Kentucky,
shall serve as the accounting firm. If PriceWaterhouse Coopers LLP is unwilling
to so serve, the Buyer and the Sellers shall within ten (10) Business Days each
select two (2) accounting firms of recognized standing within 150 miles of
Louisville, Kentucky, and the accounting firm shall be selected by lot (after
excluding their respective regular outside accounting firms). The decision of
any such accounting firm under this subparagraph (b) with respect to all
disputed matters relating to the Net Working Capital computation shall be deemed
final and conclusive and shall be binding upon the Sellers and the Buyer. Any
payments due pursuant to the decision of the accounting firm shall be made
within fifteen (15) Business Days of the parties' receipt of such firm's
decision. In addition, if the Sellers do not object to the Net Working Capital
calculation within the fifteen (15) Business Day period referred to above, the
Net Working Capital calculation as so prepared by Buyer's auditors shall be
deemed final and conclusive and binding upon the Sellers and the Buyer.
(c) The Sellers shall be entitled to have reasonable access to the books and
records of ICS and the work papers of the Buyer prepared specifically in
connection with the Net Working Capital calculation, and, upon reasonable prior
notice, shall be entitled to discuss such books and records and work papers with
the Buyer and those persons responsible for the preparation thereof.
(d) The Sellers and the Buyer shall pay their own respective costs and
expenses incurred in connection with the matters described in this Section 8.03,
------------
provided, however, that the fees and expenses of the accounting firm selected to
-------- -------
calculate the Net Working Capital pursuant to Section 8.03(b) shall be borne
---------------
entirely by the party whose calculation of the final Net Working Capital differs
by the greatest amount from the Net Working Capital determined by such
accounting firm.
8.04 Inventory.
---------
An itemized Inventory shall have been prepared on the Closing Balance Sheet
pursuant to Section 8.03 hereof, based upon physical observation by a
Representative of Buyer and a Representative of ICS.
8.05 Review of Proceedings.
-----------------------
All actions, Proceedings, instruments, and documents required to carry out
this Agreement, the Ancillary Documents to which ICS and the Sellers are a
party, the ICS Disclosure Schedule and any other certificate or document
delivered pursuant to this Agreement or incidental to any of them and all other
related legal matters shall be subject to the reasonable approval of ▇▇▇▇▇▇▇▇
▇▇▇▇▇ LLP, counsel to Buyer, and ICS, and the Sellers shall have furnished such
counsel such documents as such counsel may have reasonably requested for the
purpose of enabling them to pass upon such matters.
8.06 No Legal Action.
-----------------
There shall not have been instituted or threatened any legal Proceeding
relating to, or seeking to prohibit or otherwise challenge the consummation of,
the transactions contemplated by this Agreement, or to obtain substantial
damages with respect thereto.
8.07 No Governmental Action.
------------------------
There shall not have been any action taken, or any Law, rule, regulation,
order, or decree proposed, promulgated, enacted, entered, enforced, or deemed
applicable to the transactions contemplated by this Agreement by any federal,
state, local, or other Governmental Authority or any court or other tribunal,
including the entry of a preliminary or permanent injunction, which, in the sole
but reasonable judgment of Buyer, is reasonably likely to: (a) make any of the
transactions contemplated by this Agreement illegal; (b) result in a delay in
the consummation of any of the transactions contemplated by this Agreement; (c)
require the divestiture by Buyer or ICS of a material portion of the business of
either of them; (d) impose material limitations on the ability of Buyer
effectively to exercise full rights of ownership with respect to the properties
and assets of ICS; or (e) otherwise prohibit, restrict or delay consummation of
any of the transactions contemplated by this Agreement or impair the
contemplated benefits to Buyer, ICS and the Sellers of the transactions
contemplated by this Agreement.
8.08 Consents.
--------
The Sellers shall have obtained at or prior to the execution of this
Agreement, all Consents required for consummation of the transactions
contemplated by this Agreement.
8.09 Personnel.
---------
The individuals set forth on Schedule 8.09 of the ICS Disclosure Schedule
-------------
are employees (except those who resigned or were terminated in the Ordinary
Course of Business) of ICS as provided thereon, and shall, at the Closing Date
be actively engaged in the performance of their existing duties for ICS and
shall not have evidenced any intention not to continue employment subsequent to
the Closing Date.
8.10 Employment Agreements.
----------------------
The persons listed in Schedule 7.01 of the ICS Disclosure Schedule,
--------------
including, but not limited to, Mr. Ice, ▇▇. ▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇▇, shall have
entered into the Employment Agreements with Buyer pursuant to Section 7.01
hereof, subject to mutual agreement with Buyer as to all material terms and
conditions. Mr. Ice will be elected at the Closing effective on the Effective
Date to the position of President and Chief Operating Officer of ICS. Mr. Ice
shall receive notice of and have the opportunity to participate in all meetings
of the Board of Directors of Buyer. Any breach or default by Buyer of the
conditions herein would render any Employment Agreement void at the option of
each of these persons.
8.11 Restrictive Covenants Agreement.
-------------------------------
All key operating personnel of ICS identified and agreed upon before the
execution of this Agreement and who do not enter into employment agreements with
Buyer, shall have executed and delivered to Buyer a Restrictive Covenants
Agreement, substantially in the form annexed hereto as Exhibit 8.11
-------------
("RESTRICTIVE COVENANTS AGREEMENT").
8.12 General Release.
---------------
Buyer shall have received from each person who is before the execution of
this Agreement, becomes, or who at any time between that date which is one year
prior to the date this Agreement is executed was, an officer, director or
shareholder of ICS, a General Release of all claims, demands and causes of
action against ICS, dated the date of the Closing Date, substantially in the
form annexed hereto as Exhibit 8.12 ("GENERAL RELEASE").
-------------
8.13 Other Closing Documents.
-------------------------
ICS and the Sellers shall have delivered to Buyer at or prior to the
Closing such other documents as Buyer may reasonably request in order to enable
it to determine whether the conditions to their obligations under this Agreement
have been met and otherwise to carry out the provisions of this Agreement.
8.14 Other Agreements.
-----------------
Any and all agreements to be executed in connection with this Agreement and
the transactions contemplated herein shall have been duly authorized, executed,
and delivered by the parties thereto at or prior to the Closing, shall be in
full force, valid and binding upon the parties thereto, and enforceable by them
in accordance with their terms at the Closing Date, and no party thereto at any
time from the execution thereof until immediately after the Effective Date shall
have been in violation of or in default in complying with any material provision
thereof.
8.15 Corporate Records.
------------------
Buyer shall have received at or prior to the Closing Date the original
corporate minute book, stock ledger, stock certificate book, corporate seal and
other related corporate records and documents of ICS, along with the signed
resignation, effective as of the Effective Date, of the officers and directors
of each of them. Notwithstanding that fact, Mr. Ice shall be reelected by the
new Board of Directors of ICS to the position of President and Chief Operating
Officer of ICS and by Buyer, as a Director of ICS, upon the Closing Date. In
addition, Buyer shall have received at the Closing signed bank and financial
institution signature cards substituting the existing signatories with the newly
appointed signatories mutually authorized by Buyer and Mr. Ice on all bank and
financial institution accounts of ICS effective as of the Effective Date. Buyer
shall also have received at the Closing a copy of all keys to the leased
Premises of ICS and physical control and custody of all of the business assets
and property of ICS effective as of the Effective Date.
8.16 Opinion of Counsel.
--------------------
On the Closing Date, Buyer shall have received an opinion of counsel for
ICS and the Sellers, addressed to Buyer, in the form of Exhibit 8.16 annexed
------------
hereto.
8.17 Board Approval.
---------------
The Boards of Directors of ICS shall have approved this Agreement and the
Share Purchase and such approval shall not have been recorded, modified or
superseded in any way and shall remain in full force and effect on the Effective
Date.
8.18 No Material Adverse Change.
-----------------------------
From the date of this Agreement until the Effective Date, there shall not
have occurred any Material Adverse Change with respect to ICS.
8.19 Tax Withholding Forms and Certificates.
------------------------------------------
The Sellers shall have provided Buyer with properly executed Internal
Revenue Service Forms W-9, a statement that satisfies Buyer's obligations under
Treasury Regulation Section 1.1445-2(b)(2), state Tax clearance certificates or
any other document(s) which may be required by any Taxing or Governmental
Authority in order to relieve Buyer of any obligation to withhold any portion of
the payments to the Sellers pursuant to this Agreement.
8.20 Section 338(h)(10) Election.
-----------------------------
Within a reasonable time following the Closing, each of ICS and the Sellers
will join with Buyer in making the Section 338(h)(10) Election with respect to
the Share Purchase and shall timely file all tax forms (including forms 8023 and
8883) in connection therewith, pursuant to Section 2.09 hereof.
8.21 Assignment and Assumption of Lease.
--------------------------------------
ICS shall have executed and delivered to Buyer an Assignment and Assumption
of Lease pursuant to Section 6.08 hereof.
8.22 Delivery of Cash into the Indemnity Escrow Account.
---------------------------------------------------------
Buyer shall, at the direction of Mr. Ice, have deposited $150,000 cash into
the Indemnity Escrow Account pursuant to the terms and conditions of this
Agreement and the Indemnity Escrow Agreement in the Form of Exhibit 2.06(d)
---------------
annexed hereto.
8.23 Responsibility for Filing Tax Returns.
-----------------------------------------
The Sellers shall prepare or cause to be prepared and file or cause to be
filed all Tax Returns for ICS through the Effective Date. Sellers shall provide
Buyer with copies of all of such Tax Returns prior to filing and provide Buyer
with reasonable time to review and comment on each such Tax Return. The Sellers
shall be solely responsible for any and all payments owed by the Sellers for all
Tax Periods through the Effective Date. ICS shall have accrued any and all
payments owed by ICS for all Tax Periods through the Effective Date. ICS and
the Sellers' obligations hereunder shall survive the Closing.
8.24 Termination of Shareholders' Agreement.
-----------------------------------------
At the Closing, the Sellers shall have each provided Buyer with written
confirmation that the Shareholders' Agreement made and entered into on May 24,
2001, as amended, by and among ▇▇▇▇▇▇▇ ▇. Ice, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇ and ICS has been terminated and that ICS and the Sellers have no further
liabilities under such Agreement.
ARTICLE IX.
CONDITIONS TO OBLIGATIONS OF THE SELLERS
The respective obligations of the Sellers to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction or waiver at
or prior to the Closing Date (unless otherwise provided herein) of each of the
following conditions:
9.01 Accuracy of Representations and Compliance with Covenants.
--------------------------------------------------------------
(a) All representations and warranties of Buyer contained in this Agreement,
the Ancillary Documents to which it is a party, the Orbit Disclosure
Schedule and all other certificates, agreements or other documents executed and
delivered by Buyer pursuant to this Agreement, shall be accurate when made and
shall be accurate as of the Effective Date; and
(b) As of the Closing, Buyer shall have performed and complied with all
covenants and agreements and satisfied all conditions required to be performed
and complied with by any of them at or before such time by this Agreement.
9.02 Stock Certificates.
------------------
Buyer shall have delivered to the Sellers' Closing Escrow Agent on the
Closing Date, stock certificates representing the Orbit Shares that are being
issued pursuant to Section 2.02(i) and Section 2.05(b) hereof and the Sellers'
Closing Escrow Agreement. The Sellers' Closing Escrow Agent shall deliver the
Orbit Shares to the Sellers on the Effective Date in accordance with the Closing
Escrow Agreement.
9.03 Cash Purchase Price.
---------------------
Buyer shall deliver the cash portion of the Purchase Price on the Closing
Date as follows: (i) $900,000 to the Sellers' Closing Escrow Agent and (ii)
$4,500,000 to Buyer's Closing Escrow Agent pursuant to Section 2.06 of this
Agreement, the Closing Escrow Agreements and the Indemnity Escrow Agreement.
Subject to Section 2.06(d) and Section 8.03 hereof, the Sellers' Closing Escrow
Agent and Buyer's Closing Escrow Agent shall deliver the cash portion of the
Purchase Price to the Sellers on the Effective Date in accordance with the
Closing Escrow Agreements.
9.04 Employment Agreements.
----------------------
Buyer shall enter into and deliver the Employment Agreement with each
person listed in Schedule 7.01 of the ICS Disclosure Schedule pursuant to
--------------
Section 7.01 hereof.
9.05 Registration Rights Agreement.
-------------------------------
Sellers shall have received from Buyer the fully executed Registration
Rights Agreement pursuant to Section 2.07(b) hereof.
9.06 Opinion of Counsel.
--------------------
On the Closing Date, the Sellers shall have received an opinion of counsel
for Buyer, addressed to the Sellers, in the form of Exhibit 9.06 annexed hereto.
------------
9.07 Assignment and Assumption of Lease.
--------------------------------------
Buyer shall have executed and delivered to ICS an Assignment and Assumption
of Lease pursuant to Section 6.07 hereof.
9.08 Board Approval.
---------------
The Board of Directors of Buyer shall have approved this Agreement and the
Share Purchase and such approval shall not have been recorded, modified or
superseded in any way and shall remain in full force and effect on the Closing
Date.
9.09 Other Closing Documents.
-------------------------
Buyer shall have delivered to the Sellers at or prior to the Closing Date
such other documents as the Sellers may reasonably request in order to enable
the Sellers to determine whether the conditions to their obligations under this
Agreement have been met and otherwise to carry out the provisions of this
Agreement.
9.10 No Legal Action.
-----------------
There shall not have been instituted or threatened any legal Proceeding
relating to, or seeking to prohibit or otherwise challenge the consummation of,
the transactions contemplated by this Agreement, or to obtain substantial
damages with respect thereto.
9.11 Other Agreements.
----------------
Any and all agreements to be executed in connection with this Agreement and
the transactions contemplated herein shall have been duly authorized, executed,
and delivered by the parties thereto at or prior to the Closing, shall be in
full force, valid and binding upon the parties thereto, and enforceable by them
in accordance with their terms at the Closing Date, and no party thereto at any
time from the execution thereof until immediately after the Effective Date shall
have been in violation of or in default in complying with any material provision
thereof.
9.12 Consents.
--------
All Consents shall have been obtained at or prior to the date of this
Agreement.
9.13 Review of Proceedings.
-----------------------
All Actions, Proceedings, instruments and documents required to carry out
this Agreement, the Ancillary Documents to which they are parties, the Orbit
Disclosure Schedule and any other certificate or document delivered pursuant to
this Agreement or incidental to any of them and all other related legal matters
shall be subject to the reasonable approval of Seiller ▇▇▇▇▇▇▇▇ LLC, counsel to
the Sellers, and Buyer shall have furnished such counsel with such documents as
such counsel may have reasonably requested for the purpose of enabling them to
pass upon such matters.
9.14 No Governmental Action.
------------------------
There shall not have been any action taken, or any Law, rule, regulation,
order, or decree proposed, promulgated, enacted, entered, enforced, or deemed
applicable to the transactions contemplated by this Agreement by any federal,
state, local, or other Governmental Authority or any court or other tribunal,
including the entry of a preliminary or permanent injunction, which, in the sole
but reasonable judgment of the Sellers, is reasonably likely to: (a) make any of
the transactions contemplated by this Agreement illegal; (b) result in a delay
in the consummation of any of the transactions contemplated by this Agreement;
or (c) otherwise prohibit, restrict or delay consummation of any of the
transactions contemplated by this Agreement or impair the contemplated benefits
to Buyer and the Sellers of the transactions contemplated by this Agreement.
9.15 Release of Guaranties, Mortgages.
-----------------------------------
If not completed contemporaneously with the Closing, Buyer will, no later
than the Effective Date, take all necessary steps to release Sellers from any
personal guaranties of Sellers with any financial institution in favor of ICS,
and release any and all liens or mortgages on the Sellers' assets pledged to any
financial institution (including as set forth in Section 9.16 below) as
collateral in favor of ICS and Buyer agrees to fully indemnify and hold Sellers
harmless from any claims, demands and damages arising out of such obligations.
9.16 Pre-Closing Assignment of the Certificates of Deposits.
------------------------------------------------------------
Immediately prior to the Closing, ICS shall, upon Sellers' request, have
assigned the Certificate of Deposit (account #00000783806) ("Certificate of
Deposit") and funds associated with it currently in the name of ICS and held by
The First Capital Bank of Kentucky ("Bank"), as follows: $200,000 to ICS, with
the balance of the Certificate of Deposit, including any interest earned
thereon, to be allocated amongst the Sellers as follows: Mr. Ice - 80%; ▇▇.
▇▇▇▇▇ - 10%; and ▇▇. ▇▇▇▇▇▇▇▇▇ - 10% (collectively, the "Sellers CD Funds").
Sellers CD Funds may remain pledged as collateral to the Bank for ICS' benefit,
until released to the Sellers as provided in Section 9.15 hereof.
ARTICLE X.
MISCELLANEOUS
10.01 Termination.
-----------
This Agreement may not be terminated and the Share Purchase and the other
transactions contemplated herein may not be abandoned at any time prior to the
Effective Date except by written mutual consent of Buyer and each Seller.
10.02 [Intentionally left blank]
----------------------------
10.03 Confidentiality.
---------------
(a) The terms and conditions of an executed Confidentiality Agreement dated
November 18, 2005 by and between Buyer and ICS are incorporated herein by
reference.
(b) Neither Buyer nor the Sellers shall issue any press release or other
public statement or make any comment (other than in the course of performing
their respective obligations hereunder) with respect to the Share Purchase
without the prior written consent of the other party. Notwithstanding the
foregoing, each party shall have the right, after consulting with the other
party, to issue any press release or other public statement, if required by
applicable Law.
10.04 Expenses.
--------
Buyer and the Sellers will each be responsible for their own respective
expenses in connection with the proposed Share Purchase, and the performance of
the provisions of this Agreement, except the Parties agree that ICS shall
reimburse, at Closing or shall pay prior to Closing, Sellers' reasonable
expenses (including in such amount any legal and accounting fees) incurred in
connection with the matters related to this Agreement.
10.05 Brokers and Finders.
---------------------
It is understood that there are no brokers, or finders acting on behalf of
Buyer and the Sellers in connection with the Share Purchase, and no fees to any
broker or finder shall be paid by Buyer or the Sellers in connection with the
Share Purchase other than Cove Partners LLC that will be paid by Buyer. The
Buyer will indemnify and hold each of the Sellers harmless from any and all
claims of Cove Partners LLC (and any other Person acting on behalf of the Buyer)
for brokerage or finder fees associated with the transaction contemplated by
this Agreement.
10.06 Further Actions.
----------------
At any time and from time to time, each party agrees, at its expense, to
take such actions and to execute and deliver such documents as may be reasonably
necessary to effectuate the purposes of this Agreement.
10.07 Availability of Equitable Remedies.
-------------------------------------
Since a breach of the provisions of this Agreement could not adequately be
compensated by money damages, any party shall be entitled, either before or
after the Closing, in addition to any other right or remedy available to it, to
an injunction restraining such breach or a threatened breach and to specific
performance of any such provision of this Agreement, and in either case no bond
or other security shall be required in connection therewith, and the parties
hereby consent to the issuance of such an injunction and to the ordering of
specific performance.
10.08 Modification.
------------
This Agreement, the Ancillary Documents, the ICS Disclosure Schedule, the
Orbit Disclosure Schedule and the Exhibits hereto set forth the entire
understanding of the parties with respect to the subject matter hereof,
supersede all existing agreements among them concerning such subject matter, and
may be modified only by a written instrument duly executed by each party. Any
prior written agreements or forms executed by the parties are hereby repudiated
and declared void ab initio, except for the Confidentiality Agreement referred
to in Section 10.03(a) hereof which remains in full force and effect.
10.09 Notices.
-------
All notices, requests and other communications hereunder shall be in
writing and shall be deemed to have been given only if mailed, certified return
receipt requested, or if sent by Federal Express or other well recognized
private courier ("COURIER") or if personally delivered to, or if sent by fax
with the original thereof sent by Courier to:
If to Buyer:
Orbit International Corp.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ Sunshine, President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to ICS:
Integrated Consulting Services, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ Ice
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇▇▇▇▇▇ Ice:
▇▇▇▇▇▇▇ ▇. Ice
Integrated Consulting Services, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Integrated Consulting Services, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Integrated Consulting Services, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
And for each, ICS, Mr. Ice, ▇▇. ▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇▇, with a copy to:
Seiller ▇▇▇▇▇▇▇▇ LLC
▇▇▇▇▇▇▇▇▇ Tower, 22nd Floor
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
All notices, requests and other communications shall be deemed received on the
date of acknowledgment or other evidence of actual receipt in the case of
certified mail, Courier delivery or personal delivery or, in the case of fax
delivery, upon the date of fax receipt provided that the original is delivered
within two (2) Business Days. Any party hereto may designate different or
additional parties for the receipt of notice, pursuant to notice given in
accordance with the foregoing.
10.10 Waiver.
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Any waiver by any party of a breach of any provision of this Agreement
shall not operate as or be construed to be a waiver of any other breach of that
provision or of any breach of any other provision of this Agreement. The failure
of a party to insist upon strict adherence to any term of this Agreement on one
or more occasions will not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term or any other term
of this Agreement. Any waiver must be in writing and signed by or on behalf of
the waiving party.
10.11 Disclosure Schedules; Effect of Investigation.
---------------------------------------------
Nothing in the ICS Disclosure Schedule and Orbit Disclosure Schedule
(collectively, the "DISCLOSURE SCHEDULE") shall be deemed adequate to disclose
an exception to a representation or warranty made herein, unless, subject to the
following two sentences, such exception is identified in the applicable Section
of the Disclosure Schedule and the nature of such exception is reasonably
apparent from such disclosure. The Disclosure Schedule shall be arranged in
numbered schedules corresponding to the Section and subsections contained in
this Agreement and shall be complete with cross-references where and as
appropriate. Any information, item or other disclosure set forth in any
section, schedule or other portion of the Disclosure Schedule shall be deemed to
have been set forth in all other applicable portions hereof, if the relevance of
such disclosure to such other portion is reasonably apparent from the facts
specified in such disclosure. Except as otherwise provided in this Agreement,
the right to indemnification, payment of losses or other remedy based on any of
the representations, warranties, covenants and agreements herein will not be
affected by any investigation conducted with respect to, or any Knowledge
acquired (or capable of being acquired) at any time, whether before or after the
execution or delivery of this Agreement, with respect to the accuracy or
inaccuracy of or compliance with, any such representation, warranty, covenant,
or obligation, and the waiver of any condition based on the accuracy of any
representation or warranty, or on the performance of or compliance with any
covenant or agreement, will not affect the right to indemnification, payment of
losses, or other remedy based on such representations, warranties, covenants and
agreements.
10.12 Binding Effect.
---------------
The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, assigns, heirs,
and personal Representatives.
10.13 No Third-Party Beneficiaries.
------------------------------
This Agreement does not create, and shall not be construed as creating, any
rights enforceable by any person not a party to this Agreement.
10.14 Severability.
------------
If any provision of this Agreement is invalid, illegal, or unenforceable,
the balance of this Agreement shall remain in effect, and any such invalid,
illegal or unenforceable provision shall be enforceable to the fullest extent
permitted by law, and if any provision is inapplicable to any person or
circumstance, it shall nevertheless remain applicable to all other persons and
circumstances
10.15 Headings.
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The headings in this Agreement are solely for convenience of reference and
shall be given no effect in the construction or interpretation of this
Agreement.
10.16 Governing Law; Jurisdiction; Venue.
-------------------------------------
This Agreement shall be governed by and construed in accordance with the
Law of the State of New York, without reference to its principles of conflicts
of Laws. Notwithstanding the foregoing, any claim or action arising out of or
based upon the Employment Agreement set forth in Section 7.01 herein shall be
governed by and construed in accordance with the laws of Kentucky. Each party
to this Agreement hereby irrevocably submits to the exclusive jurisdiction of
the state or federal courts located in Jefferson County (as to state court), or
the Western District of Kentucky (as to federal court), for the purpose of any
claim or action arising out of or based upon this Agreement or relating to the
subject matter hereof, irrevocably waives the defense of an inconvenient forum
with respect thereto, and agrees not to commence any such claim or action other
than in the above-named courts.
10.17 Counterparts.
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This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
10.18 Construction.
------------
The parties agree that each of them and/or their respective counsel has
reviewed and had an opportunity to revise this Agreement and the Ancillary
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement and the Ancillary Documents or any
amendments hereto.
SIGNATURE PAGE FOLLOWS
IN WITNESS WHEREOF, the parties have duly executed this Agreement effective as
of the date first written above.
ICS:
Integrated Consulting Services, Inc.
BUYER:
By: _______________________________
Orbit International Corp. ▇▇▇▇▇▇▇ ▇. Ice
President
By:
▇▇▇▇▇▇ Sunshine
President
SELLERS:
▇▇▇▇▇▇▇ ▇. Ice
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
EXHIBIT 2.03
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ALLOCATION OF PURCHASE PRICE
----------------------------
▇▇▇▇▇▇▇ ▇. Ice 80%
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 10%
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 10%
The aforesaid allocation shall be made with regards to the following
consideration received by the Sellers:
- ORBIT shares received pursuant to Section 2.02(i)
- Cash received pursuant to Section 2.02(ii)
- Annual Earn Out Payments made pursuant to Section 2.07
- Section 338(h)(10) payment made pursuant to Sections 2.02 and 2.09(a)
- The Net Working Capital payment made pursuant to Section 2.03 and 8.03