Exhibit 10.2

LOGO [g25535g82l72.jpg]

March 1, 2010

Mr. Ronald P. Vargo

10160 Gaywood Road

Dallas, Texas 75229

 

Re: Severance Benefit/Protection Agreement

Dear Ron:

In consideration of your agreement to assume the duties and responsibilities of
the Chief Financial Officer of ICF International, Inc. and its affiliates
(collectively, the “Company”) effective March 1, 2010, the Company hereby offers
you the severance protection set forth below in this letter agreement (the
“Agreement”). The Company intends that the terms of this Agreement shall comply
with the provisions of Section 409A of the Internal Revenue Code of 1986, as
amended, as well as the regulations and guidance issued thereunder
(collectively, “Section 409A”) and shall be construed consistently with such
intent. This Agreement will remain in effect through February 28, 2014. On and
after March 1, 2014, and each anniversary of such date thereafter, the term of
this Agreement shall automatically be extended for one additional year unless,
not later than October 1 of the prior year, the Company or you shall have given
notice not to extend the term of this Agreement.

 

A. Involuntary Termination of Employment Prior to a Change in Control

In the event that your employment with the Company is involuntarily terminated
by the Company for any reason other than Cause1 prior to a Change in Control2
and such termination constitutes a separation from service under Section 409A (a
“Separation from Service”), you will be entitled to the benefits hereinafter set
forth below.

 

1 For purposes of this Agreement, Cause shall mean any of the following: (a) any
act that would constitute a material violation of the Company’s material written
policies; (b) willfully engaging in conduct materially and demonstrably
injurious to the Company, provided, however, that no act or failure to act, on
the Executive’s part, shall be considered “willful” unless done, or omitted to
be done, by the Executive not in good faith and without reasonable belief that
such action or omission was in the best interest of the Company; (c) being
indicted for, or if charged with but not indicted for, being tried for (i) a
crime of embezzlement or a crime involving moral turpitude, or (ii) a crime with
respect to the Company involving a breach of trust or dishonesty, or (iii) in
either case, a plea of guilty or no contest to such a crime; (d) abuse of
alcohol in the workplace, use of any illegal drug in the workplace or a presence
under the influence of alcohol or illegal drugs in the workplace; (e) failure to
comply in any material respect with the Foreign Corrupt Practices Act, the
Securities Act of 1933, the Securities Exchange Act of 1934, the Sarbanes-Oxley
Act of 2002, and the Truth in Negotiations Act, or any rules and regulations
issued thereunder; and (f) failure to follow the lawful directives of the
Company’s Chief Executive Officer, the President or the Board of Directors.

2 For purposes of this Agreement, Change in Control shall mean a change in the
ownership or effective control of the Company or a change in the ownership of a
substantial portion of the assets of the Company as described in Section 409A.

--------------------------------------------------------------------------------

1. Compensation. You will be entitled to any accrued but unpaid salary and
vacation pay as of your Separation from Service date. Any accrued and unpaid
incentive compensation that is not subject to any deferral election shall be pro
rated through your Separation from Service date, subject to satisfaction of any
established performance goals, and shall be paid at the normal time of payment
pursuant to the incentive compensation plan under which the amount is payable.

2. Severance Benefits. You will receive severance benefits equal to your Base
Salary3 on the 26 bi-weekly pay dates following your Separation from Service
date pursuant to the Company’s normal payroll practices; provided, however, that
in no event shall the aggregate amount of such payments (each of which shall be
deemed to be a separate payment for purposes of Section 409A) exceed the amount
permitted to be paid pursuant to Treas. Reg. §1.409A-1(b)(9)(iii)(A) or be made
later than the last day of the second taxable year following the taxable year in
which your Separation from Service occurs. Within the 15-day period following
the last payment of such biweekly severance benefits, you will receive an
additional severance benefit in a single lump sum equal to your Average Bonus4
plus any severance benefits based on your Base Salary that exceeded the amount
permitted to be paid pursuant to Treas. Reg. §1.409A-1(b)(9)(iii)(A) and/or
would have been paid after the second taxable year following the taxable year in
which your Separation from Service occurs. Notwithstanding any other provision
to the contrary, if you are a specified employee (within the meaning of
Section 409A and the Company’s Specified Employee Identification Policy) on the
date of your Separation from Service, in the event that any severance benefit
payment which when aggregated with all other severance benefit payment
previously made to you would exceed the amount permitted to be paid pursuant to
Treas. Reg. §1.409A-1(b)(9)(iii)(A), such payment shall not be made prior to the
date that is the earliest of (i) six months after your Separation from Service
date; (ii) your death, or (iii) such other date that will cause such payment not
to be subject to any additional tax imposed pursuant to the provisions of
Section 409A. In the event of your death, any unpaid severance benefits shall be
paid to your designated beneficiary.

3. Vesting of Equity Interests. Any unvested equity interests that are not
subject to Section 409A (such as stock options and restricted stock) and that
were issued to you before your Separation from Service date will become vested
but will remain exercisable for the balance of their terms; and any unvested
equity interests that are subject to Section 409A (such as restricted stock
units) and that were issued to you before your Separation from Service date will
become vested but not payable until their original vesting dates.

 

3 For purposes of this Agreement, Base Salary shall mean your annual base salary
rate in effect on your Separation from Service date divided by 26.

4 For purposes of this Agreement, Average Bonus shall mean (i) if you have been
employed for three full calendar years, the average of your annual cash
incentive awards received from the Company (including any deferred cash
incentive awards) with respect to the three calendar years preceding your
Separation from Service date; or (ii) if you have not been employed for three
full calendar years, the average of $297,500 for 2010 plus, if any, your annual
cash incentive award received from the Company (including any deferred cash
incentive awards) with respect to each full calendar year thereafter preceding
your Separation from Service date.

 

- 2 -

--------------------------------------------------------------------------------

4. Health Care. You and your dependents will be provided with health care
(including medical, hospitalization, dental and vision programs maintained by
the Company) coverage on the same terms in effect on your Separation from
Service date for 12 months, and thereafter you will be eligible for COBRA
coverage as mandated by law.

 

B. Involuntary Termination of Employment After a Change in Control

In the event that your employment with the Company is involuntarily terminated
by the Company for any reason other than Cause or by you for Good Reason5 within
the 24-month period following a Change in Control and such termination of
employment constitutes a Separation from Service, you will be entitled to the
benefits hereinafter set forth below.

1. Compensation. You will be entitled to any accrued but unpaid salary as of
your Separation from Service date. Any accrued and unpaid incentive compensation
that is not subject to any deferral election shall be pro rated through your
Separation from Service date, subject to satisfaction of any established
performance goals, and shall be paid at the normal time of payment pursuant to
the incentive compensation plan under which the amount is payable.

2. Severance Benefits. You will receive a Basic Severance Amount6 in a single
lump sum cash payment within five business days after your Separation from
Service date. In addition, you will receive an Additional Severance Amount7 on
the earliest of (i) the first business day after six months following your
Separation from Service date, (ii) such other date that will cause such payment
not to be subject to any additional tax imposed pursuant to the provisions of
Section 409A, or (iii) your death. Each such payment shall be deemed to be a
separate payment for purposes of applying Section 409A. In the event of your
death, any unpaid severance benefits shall be paid to your designated
beneficiary.

 

5 For purposes of this Agreement, Good Reason shall mean “Good Reason” as
described in Section 409A.

6 For purposes of this Agreement, Basic Severance Amount shall mean an amount
equal to the product of your Base Amount multiplied by 3; provided, however,
that in no event shall such amount exceed the amount permitted to be paid
pursuant to Treas. Reg. §1.409A-1(b)(9)(iii)(A) or be paid later than the last
day of the second taxable year following the taxable year in which your
Separation from Service date occurs. Base Amount, as used in this Footnote 6 and
Footnote 7, shall mean (i) if you have been employed for three full calendar
years, the average of your Compensation for the three calendar years prior to
the calendar year in which your Separation from Service date occurs or (ii) if
you have not been employed for three full calendar years, the average of your
Compensation for 2010 plus your Compensation for any full calendar year
thereafter (if any) during which you are employed by the Company prior to the
calendar year in which your Separation from Service date occurs. Compensation
for purposes of your Base Amount shall mean $722,500 for 2010 and your annual
taxable W-2 compensation plus any deferred cash incentive compensation that is
paid or deferred during any full calendar year after 2010.

7 For purposes of this Agreement, Additional Severance Amount shall mean an
amount equal to the product of your Base Amount multiplied by 3 minus the amount
permitted to be paid pursuant to Treas. Reg. §1.409A-1(b)(9)(iii)(A).

 

- 3 -

--------------------------------------------------------------------------------

3. Vesting of Equity Interests. Any unvested equity interests that are not
subject to Section 409A (such as stock options and restricted stock) and that
were issued to you before your Separation from Service date will become vested
but will remain exercisable for the balance of their terms; and any unvested
equity interests that are subject to Section 409A (such as restricted stock
units) and that were issued to you before your Separation from Service date will
become vested but not payable until their original vesting dates.

4. Health Care and Other Benefits. You will be entitled to the following
healthcare and other welfare benefits.

(a) For the 36-month period following your Separation from Service date (the
“Continuation Period”), you and your dependents and beneficiaries will be
provided with Company-paid life insurance, medical, dental, hospitalization,
financial counseling and tax consulting benefits (the “Continuation Period
Benefits”) that are the same or the equivalent of such benefits provided to
other similarly situated executives who continue in the employ of the Company
during the Continuation Period and their dependents and beneficiaries. To the
extent that any such Continuation Period Benefits are subject to the provisions
of Section 409A, in compliance with Section 409A and notwithstanding any other
provision of the Company’s plans, contracts, or other arrangements in effect
from time to time: (i) the amount of expenses eligible for reimbursement and the
provision of in-kind benefits during any calendar year shall not affect the
amount of expenses eligible for reimbursement or the provision of in-kind
benefits in any other calendar year; (ii) the reimbursement of an eligible
expense shall be made on or before December 31 of the calendar year following
the calendar year in which the expense was incurred; (iii) the right to
reimbursement or the right to in-kind benefits shall not be subject to
liquidation or exchange for another benefit; and (iv) to the extent that such
Continuation Period Benefits constitute “nonqualified deferred compensation”
subject to Section 409A and you are a “specified employee” within the meaning of
Section 409A, you shall pay the Company and employee, if any, costs for the
first six months following the Termination Date, and the Company shall reimburse
you for such costs in the first payroll period thereafter. The obligations of
the Company to provide you and your dependents and beneficiaries with the
Continuation Period Benefits will not restrict or limit the Company’s right to
terminate, amend or modify the benefits made available by the Company to its
similarly situated executives or other employees, and following any such
termination, amendment or modification, the Continuation Period Benefits that
you (and your dependents and beneficiaries) are receiving will be so terminated,
amended or modified. The Company’s obligations hereunder with respect to the
foregoing benefits will be limited to the extent that you obtain any such
benefits pursuant to a subsequent employer’s benefit plans, in which case, the
Company may reduce the coverage of any benefits it is required to provide you
hereunder as long as the coverages and benefits of the combined benefit plans
are no less favorable to you than the coverages and benefits required to be
provided hereunder. This Section 4(a) will not be interpreted so as to negate
any benefits to which you or your dependents or beneficiaries may be entitled
under any of the Company’s employee benefit plans, programs or practices
following your Separation from Service.

 

- 4 -

--------------------------------------------------------------------------------

(b) The Company shall provide you with outplacement services suitable to your
position for a period of 12 months or, if earlier, until the first acceptance by
you of an offer of employment.

5. Excise Tax Adjustments.

(a) In the event you become entitled to severance benefits under this Section B
and the Company determines that the benefits provided in this Section B (with
the severance benefits, the “Total Payments”) will be subject to the tax (the
“Excise Tax”) imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the “Code”), or any similar tax that may hereafter be imposed, the
Company shall compute the “Net After-Tax Amount,” and the “Reduced Amount,” and
shall adjust the Total Payments as described below. The Net After-Tax Amount
shall mean the present value of all amounts payable to you hereunder, net of all
federal income, excise and employment taxes imposed on you by reason of such
payments. The Reduced Amount shall mean the largest aggregate amount of the
Total Payments that, if paid to you, would result in you receiving a Net
After-Tax Amount that is equal to or greater than the Net After-Tax Amount that
you would have received if the Total Payments had been made. If the Company
determines that there is a Reduced Amount, the Total Payments will be reduced to
the Reduced Amount. Such reduction shall be made by the Company with respect to
benefits in the order and in the amounts suggested by the Tax Counsel (as
defined below) taking into account the costs or administrative burdens of the
Company. As a rule, reduction shall occur in the following order: (i) reduction
of cash payments; (ii) cancellation of accelerated vesting of stock awards; and
(iii) reduction of employee benefits. If acceleration of vesting of stock award
compensation is to be reduced, such acceleration of vesting shall be cancelled
in the reverse order of the date of grant of your stock awards.

(b) For purposes of determining whether the Total Payments will be subject to
the Excise Tax and the amounts of such Excise Tax and for purposes of
determining the Reduced Amount and the Net After-Tax Amount:

(i) Any other payments or benefits received or to be received by you in
connection with a Change in Control or your Separation of Service (whether
pursuant to the terms of this Agreement or any other plan, arrangement, or
agreement with the Company, or with any persons whose actions result in a Change
in Control or any person affiliated with the Company or such persons) shall be
treated as “parachute payments” within the meaning of Section 280G(b)(2) of the
Code, and all “excess parachute payments” within the meaning of
Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax,
unless, in the opinion of a tax advisor selected by the Company and reasonably
acceptable to you (“Tax Counsel”), such other payments or benefits (in whole or
in part) should be treated by the courts as representing reasonable compensation
for services actually rendered (within the meaning of Section 280G(b)(4)(B) of
the Code), or otherwise not subject to the Excise Tax.

(ii) The amount of the Total Payments that shall be treated as subject to the
Excise Tax shall be equal to the lesser of (A) the total amount of the Total
Payments or (B) the amount of excess parachute payments within the meaning of
Section 280G(b)(1) of the Code (after applying subparagraph (i) above).

 

- 5 -

--------------------------------------------------------------------------------

(iii) In the event that you dispute any calculation or determination made by the
Company, the matter shall be determined by Tax Counsel. All fees and expenses of
Tax Counsel shall be borne solely by the Company; provided that, as required by
Section 409A, the Company shall bear such costs, to the extent necessary, during
a period of time no longer than ten years following a Change in Control; the
right to such benefit in kind is not subject to liquidation or exchange for
another benefit; payment shall be made on or before the last day of the taxable
year following the taxable year in which the expense was incurred; and the
amount of such benefit in one year shall not affect any other benefits to be
provided in any other year.

(iv) You shall be deemed to pay federal income taxes at the highest marginal
rate of federal income taxation in the calendar year in which the Total Payments
or Reduced Amount is to be made, and state and local income taxes at the highest
marginal rate of taxation in the state and locality of your residence on the
effective date of employment, net of the maximum reduction in federal income
taxes which could be obtained from deduction of such state and local taxes,
taking into account the reduction in itemized deduction under Section 68 of the
Code.

 

C. Compliance with Section 409A

Except as permitted under Section 409A, no acceleration of the time or form of
payment of deferred compensation under this Agreement shall be permitted.
Notwithstanding any other provision in Agreement to the contrary, if and to the
extent that Section 409A is deemed to apply to the Agreement, it is the
intention of the parties that the Agreement shall comply with Section 409A, and
the Agreement, to the extent practicable, shall be construed in accordance
therewith. Without in any way limiting the effect of the foregoing, in the event
that the provisions of Section 409A require any special terms, provisions or
conditions be included in the Agreement, then such terms, provisions, and
conditions, to the extent practicable, shall be deemed to be made a part of the
Agreement. Notwithstanding the foregoing, the parties agree that the Company,
any Affiliate, the Board of Directors of the Company or their designees or
agents shall not be liable for any taxes, penalties, interest or other monetary
amount that may be owed by you as a result of any deferral of payments under the
Agreement or as a result of the administration of amounts subject to the
Agreement.

 

D. Covenants

In order to be eligible to receive any severance benefits under this Agreement,
during the 12-month period following any Separation from Service, you hereby
covenant and agree:

(a) to comply with your obligations under the Invention and Confidentiality
Agreement, Code of Ethics and Nonsolicitation Agreements that you enter into
with the Company;

 

- 6 -

--------------------------------------------------------------------------------

(b) that you will acquire and have knowledge of confidential and proprietary
information concerning the current salary, benefits, skills, and capabilities of
Company employees and that it would be improper for you to use such Company
proprietary information in any manner adverse to the Company’s interests;

(c) you will not recruit or solicit for employment, directly or indirectly, any
employee of the Company during such 12-month period;

(d) except for the benefit of the Company, in any way, directly or indirectly,
through affiliates, subsidiaries, employees or agents or otherwise, not to
manage, direct, operate, control, to be employed by, associated with, or engage
in, or participate in any of the foregoing or otherwise advise or assist in any
way or be connected with or directly or indirectly own as partner, shareholder,
proprietor, advisor or consultant or otherwise or have any investment, interest
in or right with respect to any enterprise, entity or business which competes
with the Company’s business; and

(e) that the non-compete provisions of this Agreement are reasonable in scope
and duration and that you possesses sufficient skills such that you could be
gainfully employed post termination from the Company without violating such
provisions. If, in any judicial proceeding, a court refuses to enforce any of
the covenants set forth in this letter (or any part thereof), then such
unenforceable covenant (or such part) shall be eliminated from this letter to
the extent necessary to permit the remaining separate covenants (or portions
thereof) to be enforced. In the event that the provisions of this Agreement are
deemed to exceed the time, geographic or scope limitations permitted by
applicable law, then such provisions shall be reformed to the maximum time,
geographic or scope limitations, as the case may be, permitted by applicable
laws.

Your entitlement to the benefits set forth in this Agreement is also subject to
your execution of a Full Release.8 If you desire to accept the provisions set
forth herein, please sign and date where indicated below, whereupon this letter
will become an agreement between you and the Company. As to the matters
expressly dealt with herein, when accepted by you this letter agreement will
supersede the Company’s general severance policies as in effect from time to
time as otherwise applicable to you.

 

8 For purposes of this Agreement, Full Release shall mean a written release,
which is executed and received by the Company within 60 days of your Separation
from Service date and is fully effective, not subject to revocation, and which
is in a form satisfactory to the Company (and substantially similar to the
Release set forth in Exhibit A attached to this Agreement), pursuant to which
you fully and completely release the Company from all claims that you may have
against the Company (other than any claims that may arise or have arisen under
this Agreement).

 

- 7 -

--------------------------------------------------------------------------------

Very truly yours,

ICF INTERNATIONAL, INC.

By:       /s/ Candice Mendenhall

Title:    SVP, Human Resources

ACCEPTED AND AGREED:

By:    /s/ Ronald P. Vargo

Printed Name: Ronald P. Vargo

Date: March 1, 2010

 

- 8 -