STOCK PURCHASE AGREEMENT

Exhibit 10.10

STOCK PURCHASE AGREEMENT

BY AND AMONG

ICF CONSULTING GROUP, INC.

ICF CONSULTING GROUP HOLDINGS, INC.

TERRENCE R. COLVIN

WESLEY C. PICKARD

DONALD L. ZIMMERMAN

AND

THE OTHER SHAREHOLDERS OF SYNERGY, INC.

Effective January 1, 2005

TABLE OF CONTENTS

This Table of Contents is for convenience of reference only and is not intended to define, limit or describe the scope, intent or meaning of any provision of this Agreement.

 

SCHEDULES

 

EXHIBITS

 

STOCK PURCHASE AGREEMENT

STOCK PURCHASE AGREEMENT (“ Agreement ”), dated as of January 1, 2005 (the “ Effective Date ”), by and among (i) ICF Consulting Group, Inc., a Delaware corporation (“ ICF ”), (ii) ICF Consulting Group Holdings, Inc., a Delaware corporation (“ ICF Holdings ”), (iii) Terrence R. Colvin (“ Colvin ”), Wesley C. Pickard (“ Pickard ”) and Donald L. Zimmerman (“ Zimmerman ”) (Colvin, Pickard and Zimmerman are hereinafter sometimes individually referred to as a “ Principal Shareholder ” and collectively as the “ Principal Shareholders ”) and (iv) the other shareholders of Synergy, Inc., a District of Columbia corporation (“ Synergy ”), all of whom are listed on Exhibit A.

RECITALS:

R-1. The Principal Shareholders are the holders and owners of approximately ninety one and eight tenths percent (91.8%) of the issued and outstanding shares of capital stock of Synergy (all of such outstanding shares being hereinafter referred to as the “ Shares ”).

R-2. ICF Holdings is the owner and holder of all of the issued and outstanding shares of ICF.

R-3. ICF desires to acquire all of the outstanding Shares for cash and common stock of ICF Holdings, and the Shareholders and Synergy desire the same, upon the terms and subject to the conditions of this Agreement.

R-4. Upon the closing of the transactions contemplated by this Agreement, all of the issued and outstanding options to purchase Capital Stock of Synergy (the “Options”) will be exercised or cancelled so that, upon the closing of the transactions contemplated by this Agreement, ICF will own, directly or indirectly, all of the issued and outstanding Capital Stock of Synergy and no rights to obtain Capital Stock of Synergy will be outstanding.

NOW THEREFORE, in consideration of the premises and the representations, warranties, covenants and agreements contained in this Agreement, and intending to be legally bound hereby, ICF and the Shareholders agree as follows:

ARTICLE I

Definitions and Rules of Construction

1.1 Definitions .

As used in this Agreement, the following terms shall have the meanings set forth:

“ Accrued 2004 Bonus Liability ” has the meaning set forth in Section 3.26(e).

“ Accrued Principal Shareholders’ Bonuses ” has the meaning set forth in Section 3.26(b).

“ Accrued Principal Shareholders’ Bonuses Releases ” has the meaning set forth in Section 5.1(a).

“ Acquired Business ” means the operations of Synergy and each of the Acquired Subsidiaries as conducted immediately prior to the Closing.

“ Acquired Subsidiaries ” means and refers to all of Synergy’s wholly owned subsidiaries (a list of which is shown on Section 3.1(c) of the Disclosure Schedule) and “Acquired Subsidiary” means and refers to any one of the Acquired Subsidiaries.

“ Active ” has the meaning set forth in Section 3.18(a)(i).

“ Affiliate ” means, as to any Person, any other Person that, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” of a Person means the power, directly or indirectly, either to (a) vote 10% or more of the securities having ordinary voting power for the election of directors of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.

“ Aggregate Net Option Consideration ” means the sum of all of the Net Option Consideration shown to be due each of the Option Holders on Exhibit B

“ Audited Financial Statements ” means collectively the audited consolidated balance sheets and statements of income, changes in stockholders’ equity, and cash flow together with accompanying notes of Synergy and the Acquired Subsidiaries as of December 31, 2001 and December 31, 2002, together with the December 2003 Financial Statements.

“ Benefit Arrangement ” has the meaning set forth to in Section 3.28(a)(i).

“ Bid ” has the meaning set forth in Section 3.18(a)(ii).

“ Business Day ” shall mean any day other than a Saturday, Sunday, or any Federal or Commonwealth of Virginia holiday. If any period expires on a day that is not a Business Day or any event or condition is required by the terms of this Agreement to occur or be fulfilled on a day that is not a Business Day, such period shall expire or such event or condition shall occur or be fulfilled, as the case may be, on the next succeeding Business Day.

 

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“ Capital Stock ” of any Person means any and all shares, rights to purchase, warrants or options (whether or not currently exercisable), participations or other equivalents of or interests in (however designated) the equity (including without limitation common stock, preferred stock and limited liability company, partnership and joint venture interests) of such Person.

“ Claimant ” has the meaning set forth in Section 9.11(a).

“ Claims ” means jointly all Third-Party Claims and Direct Claims.

“ Closing ” has the meaning set forth in Section 2.1.

“ Closing Date ” has the meaning set forth in Section 2.1.

“ Closing Financial Statements ” has the meaning set forth in Section 3.34(b).

“ Closing Purchase Consideration ” has the meaning set forth in Section 2.2(a)(i)(A).

“ Code ” means the Internal Revenue Code of 1986, as amended from time to time, or corresponding provisions of subsequent superseding Federal revenue laws.

“ Columbia Road Lease ” has the meaning set forth in Section 5.10(a).

“ Columbia Road Premises ” has the meaning set forth in Section 5.10(a).

“ Colvin ” means Terrence R. Colvin.

“ Commercial Software ” means commercially available Software licensed pursuant to a standard license agreement.

“ Competitive Business Activities ” has the meaning set forth in Section 5.5(a).

“ Consultant ” means any Person who is or has been engaged as a consultant by Synergy or any of the Acquired Subsidiaries or who otherwise provides services to Synergy or any Acquired Subsidiary under a contractual arrangement.

“ Contemplated Transactions ” means the transactions contemplated by this Agreement and the other Transaction Documents.

“ Copyrights ” means all United States and foreign copyright registrations and applications therefor.

“ Customer ” has the meaning set forth in Section 5.5(b).

“ December 2003 Balance Sheet ” means the audited consolidated balance sheet of Synergy and the Acquired Subsidiaries as of December 31, 2003 included in the December 2003 Financial Statements.

 

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“ December 2003 Financial Statements ” means the audited consolidated balance sheets and statements of income, changes in stockholders’ equity, and cash flow together with accompanying notes of Synergy and the Acquired Subsidiaries as of December 31, 2003, a copy of which is included in the Financial Statements attached as Exhibit C.

“ Direct Claim ” and “ Direct Claims ” mean any claim or claims (other than Third Party Claims) by an Indemnified Party against an Indemnifying Party for which the Indemnified Party may seek indemnification under this Agreement.

“ Direct Claim Notice ” has the meaning set forth in Section 8.2(d).

“ Direct Claim Notice Period ” has the meaning set forth in Section 8.2(d).

“ Dispute Notice ” has the meaning set forth in Section 9.11(a).

“ Effective Date ” has the meaning set forth in the preamble to this Agreement.

“ Entity ” means any general partnership, limited partnership, limited liability partnership, limited liability company, corporation, joint venture, trust, business trust, cooperative, association, foreign trust or foreign business organization.

“ Environmental Laws ” means any and all Federal, state, local and foreign statutes, laws (including case or common law), regulations, ordinances, rules, judgments, orders, decrees, codes, injunctions, permits, concessions, grants, franchises, licenses, or agreements relating to human health, the environment or omissions, discharges or releases of pollutants, contaminants, Hazardous Substances or wastes into the environment including, without limitation, ambient air, surface water, ground water, facilities, structures, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, Hazardous Substances or wastes or the investigation, clean-up or other remediation thereof. Without limiting the generality of the foregoing, “Environmental Laws” include: (a) the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq ., as amended; (b) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 26 U.S.C. § 4611 and 42 U.S.C. § 9601 et seq ., as amended; (c) the Superfund Amendment and Reauthorization Act of 1984, as amended; (d) the Clean Air Act, 42 U.S.C. § 7401 et seq ., as amended; (e) the Clean Water Act, 33 U.S.C. 5 1251 et seq .; (f) the Safe Drinking Water Act, 42 U.S.C. § 300f et seq .; and (g) the Occupational Safety and Health Act of 1976, 29 U.S.C.A. § 651, as amended, and all rules and regulations promulgated thereunder.

“ Environmental Liabilities ” means all liabilities, whether vested or unvested, fixed or unfixed, actual or potential, which arise under or relate to Environmental Laws, as applied to the facilities and business of Synergy or any of the Acquired Subsidiaries, including, without limitation: (i) the investigation, clean-up or remediation of contamination or environmental degradation or damage caused by or arising from the generation, use handling, treatment, storage, transportation, disposal, discharge, release or emission of Hazardous Substances, (ii) personal injury, wrongful death or property damage claims; or (iii) claims for natural resource damages.

“ ERISA ” has the meaning set forth in Section 3.28(a)(ii).

 

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“ ERISA Affiliate ” has the meaning set forth in Section 3.28(a)(iii).

“ Escrow Accounts ” has the meaning set forth in Section 2.1(c) and “Escrow Account” shall refer to any one of the Escrow Accounts.

“ Escrow Agent ” has the meaning set forth in Section 2.1(c).

“ Escrow Agreements ” means jointly the General Indemnity Escrow Agreement and the Lease Escrow Agreement.

“ Escrow Deposit ” has the meaning set forth in Section 2.2(a)(i)(B).

“ Escrowed Funds ” has the meaning set forth in Section 2.1(c).

“ Financial Statements ” means collectively (i) the Audited Financial Statements, (ii) the September 2004 Financial Statements, and (iii) the Closing Financial Statements, copies of all of which are attached as Exhibit C.

“ Fringe Benefits Plan ” has the meaning set forth in Section 3.28(b).

“ GAAP ” means generally accepted accounting principles as set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other Person as may be approved by a significant segment of the accounting profession in the United States.

“ General Indemnity Escrow Agreement ” has the meaning set forth in Section 2.1(c).

“ General Indemnity Cap ” has the meaning set forth in Section 5.11(f).

“ General Indemnity Escrow ” has the meaning set forth in Section 2.1.

“ General Indemnity Escrow Account ” has the meaning set forth in Section 2.2(a)(i)(C).

“ General Indemnity Escrow Amount ” has the meaning set forth in Section 2.2(a)(i)(D).

“ Governmental Authority ” means any nation or government, any foreign or domestic Federal, state, county, municipal or other political instrumentality or subdivision thereof and any foreign or domestic entity or body exercising executive, legislative, judicial, regulatory, administrative or taxing functions of or pertaining to government.

“ Government Contract ” has the meaning set forth in Section 3.18(a)(iii).

“ Government-Furnished Property ” has the meaning set forth in Section 3.18(g).

“ Government Prime Contract ” has the meaning set forth in Section 3.18(a)(iv).

 

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“ Government Subcontract ” has the meaning set forth in Section 3.18(a)(v).

“ Hazardous Substances ” means any substance that is toxic, ignitable, reactive, corrosive, radioactive, caustic, or regulated as a hazardous substance, contaminant, toxic substance, toxic pollutant, hazardous waste, special waste, or pollutant, including, without limitation, petroleum, its derivatives, by-products and other hydrocarbons, poly-chlorinated bi-phenyls and asbestos regulated under, or which is the subject of, applicable Environmental Laws.

“ ICF ” means and refers to ICF Consulting Group, Inc., a Delaware corporation.

“ ICF Holdings ” means and refers to ICF Consulting Group Holdings, Inc., a Delaware corporation.

“ ICF Holdings Financial Statements ” means the December 31, 2003 Annual Report of ICF Holdings and Subsidiary.

“ ICF Holdings Shares ” has the meaning set forth in Section 2.2(a)(i)(E).

“ ICF Holdings Share Value ” means $7.34 per share.

“ ICF Indemnitees ” has the meaning set forth in Section 8.2(b)(i).

“ ICF Pension Plan Claims / Costs Cap ” has the meaning set forth in Section 5.11(c).

“ ICF Pre-2004 Bonuses ” has the meaning set forth in Section 3.26(d).

“ Indemnification Waiver and Release ” has the meaning set forth in Section 5.11(b).

“ Indebtedness for Borrowed Money ” means any and all outstanding indebtedness for borrowed money of Synergy and the Acquired Subsidiaries as shown on the Closing Financial Statements.

“ Indemnified Party ” means and refers to a party that has the right under ARTICLE VIII to seek indemnification from an Indemnifying Party.

“ Indemnifying Party ” means and refers to a party that has the obligation under ARTICLE VIII to indemnify an Indemnified Party.

“ Intellectual Property ” means Software and Technology.

“ Intellectual Property Rights ” means rights that exist under Laws respecting Copyrights, Patents, Trademarks and Trade Secrets.

“ IRS ” means and refers to the Internal Revenue Service.

“ Key Employees ” has the meaning set forth in Section 6.4.

 

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“ Knowledge of ICF ” means the actual knowledge of any of the following personnel of ICF: Sudhakar Kesavan, John Wasson, Alan Stewart and George Lowden.

“ Knowledge of ICF Holdings ” means actual knowledge of either Sudhakar Kesavan or Alan Stewart.

“ Knowledge of Synergy ” means the actual knowledge of any of the following personnel of Synergy: Terrence R. Colvin, Donald L. Zimmerman, Wesley C. Pickard, David R. Zorich, Monika E. Ruppert and, with respect to matters falling under their areas of responsibility as Synergy employees, William R. Hodges, Jennifer J. Googins, James A. Lutz, and Fred H. Czerner, Jr.

“ Laws ” means (a) all constitutions, treaties, laws, statutes, codes, regulations, ordinances, orders, decrees, rules, or other requirements with similar effect of any Governmental Authority, (b) all judgments, orders, writs, injunctions, decisions, rulings, decrees and awards of any Governmental Authority, and (c) all provisions of the foregoing, in each case binding on or affecting the Person referred to in the context in which such word is used; “Law” means any one of them and the words “Laws” and “Law” include Environmental Laws.

“ Lease Escrow ” has the meaning set forth in Section 2.1.

“ Lease Escrow Account ” has the meaning set forth in Section 2.2(a)(i)(F).

“ Lease Escrow Agreement ” has the meaning referred to in Section 2.1(c).

“ Lease Escrow Amount ” has the meaning set forth in Section 2.2(a)(i)(G).

“ Leasehold Costs ” has the meaning set forth in Section 5.10(b).

“ Leasehold Obligations ” has the meaning set forth in Section 5.10(c).

“ Leasehold Indemnification Claim ” has the meaning set forth in Section 5.10(c).

“ Legg Mason ” refers to Legg Mason Wood Walker, Incorporated.

“ Legg Mason Agreement ” has the meaning set forth in Section 3.33.

“ Legg Mason Fees ” has the meaning set forth in Section 5.9.

“ Lien ” means any lien, statutory or otherwise, security interest, mortgage, deed of trust, priority, pledge, charge, conditional sale, title retention agreement, financing lease or other encumbrance or similar right of others, or any agreement to give any of the foregoing.

“ Material Adverse Effect ” shall mean any event, circumstance, change or effect that has had, or is reasonably likely to have, a material adverse effect (i) on the business, operations, properties, assets, condition (financial or otherwise), or results of operations of Synergy or any of the Acquired Subsidiaries, taken as a whole, other than any change, circumstance or event contemplated by this Agreement or (ii) on the ability of the Shareholders

 

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or any of the Companies to consummate the Contemplated Transactions in a timely manner. Any adverse change, event or effect that is caused by (a) conditions affecting the United States or international economy generally, (b) any condition in the industries in which Synergy or the Acquired Subsidiaries compete, (c) the announcement or pendency of the sale of Synergy and the Acquired Subsidiaries, (d) changes in Laws or interpretations thereof by any Governmental Authority and (e) any breach by ICF of any covenant or obligation set forth in this Agreement, shall not be taken into account in determining whether there has been or would be a Material Adverse Effect on Synergy or the Acquired Subsidiaries.

“ Net Option Consideration ” means for each Option Holder, the Net Option Consideration payable to each Option Holder for his Options as shown on Exhibit B.

“ Non-Competition Period ” has the meaning set forth in Section 5.5(a).

“ Non-Key Employees ” has the meaning set forth in Section 5.6.

“ Non-Principal Shareholders ” has the meaning set forth in Section 8.2(f).

“ Option Holders ” means the Persons identified on Exhibit B as holding Options.

“ Option Release ” has the meaning set forth in Section 3.10(c).

“ Options ” has the meaning referred to in Recital R-4.

“ Patents ” means issued patents, including United States and foreign patents and applications therefor; divisions, reissues, continuations, continuations-in-part, reexaminations, renewals and extensions of any of the foregoing; and utility models and utility model applications.

“ PBGC ” has the meaning set forth in Section 3.28(a)(iv).

“ Pension and Profit Sharing Plan Transactions ” has the meaning referred to in Section 3.28(m).

“ Pension and Profit Sharing Plan Transactions Costs ” means all costs of every kind in nature incurred by Synergy, all or any of the Shareholders or any of the Pension Plan Fiduciaries in connection with the Pension and Profit Sharing Plan Transactions.

“ Pension Plan ” has the meaning set forth in Section 3.28(a)(v).

“ Pension Plan Claims ” has the meaning set forth in Section 5.11(b).

“ Pension Plan Fiduciaries ” has the meaning set forth in Section 5.11(b).

“ Permits ” has the meaning set forth in Section 3.23(a).

“ Permitted Encumbrance ” means any (i) mechanics’, materialmens’ and similar liens with respect to amounts not yet due and payable, (ii) liens for Taxes not yet due and payable or the validity of which is being contested in good faith by appropriate proceedings, (iii)

 

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liens securing rental payments under capital lease arrangements that are included on the Schedules and (d) such other encumbrances or imperfections in or failure of title which would not, individually or in the aggregate, materially impair the continued use and operation, or materially reduce the value of, the assets affected by such encumbrances.

“ Person ” means any individual, person, Entity, or Governmental Authority, and the heirs, executors, administrators, legal representatives, successors and assigns of the “Person” when the context so permits.

“ Personal Property ” has the meaning set forth in Section 3.15.

“ Personnel ” has the meaning set forth in Section 3.26(a).

“ Pickard ” means Wesley C. Pickard.

“ Plan ” has the meaning set forth in Section 3.28(a)(vi).

“ Post-Closing Pension Plan Administration ” has the meaning set forth in Section 5.11(a).

“ Post-Closing Pension Plan Administrative Costs ” has the meaning set forth in Section 5.11(a).

“ Post-Closing Purchase Consideration ” has the meaning set forth in Section 2.2(a)(i)(H).

“ Pre-Closing Tax Period ” has the meaning set forth in Section 5.7(b).

“ Principal Shareholder Affiliates ” has the meaning set forth in Section 5.3.

“ Prior Period Returns ” has the meaning set forth in Section 5.7(a).

“ Prospective Customer ” has the meaning set forth in Section 5.5(b).

“ Purchase Consideration Percentage ” has the meaning set forth in Section 2.2(a)(i)(I).

“ Real Property Interests ” has the meaning set forth in Section 3.14.

“ Released Parties ” has the meaning set forth in Section 9.15.

“ Respondent ” has the meaning set forth in Section 9.11(a).

“ Schedule ,” as used in this Agreement together with a numerical designation, means a section of the Disclosure Schedule of even date herewith delivered by the Principal Shareholders and/or Synergy in connection with the execution and delivery of this Agreement (the “ Disclosure Schedule ”).

“ Scheduled Contract ” has the meaning set forth in Section 3.17(a).

 

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“ Scheduled Transaction Costs ” has the meaning set forth in Section 5.4.

“ Senior Management Employment Agreements ” has the meaning set forth in Section 6.7.

“ September 2004 Financial Statements ” means the internally prepared consolidated interim balance sheet and related interim consolidated statements of operations, changes in shareholders equity and cash flows for the period January 1, 2004 through September 30, 2004, a copy of which is included as part of the Financial Statements attached as Exhibit C hereto.

“ Shareholder ” and “ Shareholders ” mean respectively any Person or all of the Persons identified on Exhibit A as holding Shares.

“ Shareholders Indemnitee ” has the meaning set forth in Section 8.2(a).

“ Shareholders’ Representative ” has the meaning set forth in Section 2.3(a).

“ Shareholders Agreement ” has the meaning set forth in Section 2.2(a)(iii).

“ Shares ” has the meaning set forth in Recital R-1.

“ Software ” means the manifestation, in tangible or physical form, including, but not limited to, in magnetic media, firmware, and documentation, of computer programs and databases, such computer programs and databases to include, but not limited to, management information systems, and personal computer programs. The tangible manifestation of such programs may be in the form of, among other things, source code, flow diagrams, listings, object code, and microcode. Software does not include any Technology.

“ Software Programs ” has the meaning set forth in Section 3.16(g).

“ Standard Employee Documents ” has the meaning set forth in Section 5.6.

“ Straddle Period ” has the meaning set forth in Section 5.7(b).

“ Subcontract ” has the meaning set forth in Section 3.18(a)(vi).

“ Subsidiary ” means and refers to any corporation, association or other business entity of which more than fifty (50) percent of the issued and outstanding shares of capital stock or equity interests is owned or controlled, directly or indirectly, by Synergy, ICF, or ICF Holdings, as the case may be, and in which Synergy, ICF, or ICF Holdings, as the case may be, has the power, directly or indirectly, to elect a majority of the directors

“ Success Markets ” means and refers to Success Markets, Inc.

“ Survival Date ” has the meaning set forth in Section 8.1.

“ Surviving Representations ” has the meaning set forth in Section 8.1.

 

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“ Synergy ” means Synergy, Inc., a District of Columbia corporation.

“ Synergy Pre-2004 Bonuses ” has the meaning set forth in Section 3.26(c).

“ Synergy Pre-2004 Bonuses Releases ” has the meaning set forth in Section 3.26(c).

“ Taxes ” means any Federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, ad valorem, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, custom, tariff, impost, levy, duty, government fee or other like assessment or charge.

“ Taxpayer ” and “Taxpayers” shall have the meaning set forth in Section 3.29.

“ Tax Return ” means any return, report, form or similar statement or document (including, without limitation, any related or supporting information or schedule attached thereto and any information return, claim for refund, amended return and declaration of estimated tax) that has been or is required to be filed with any Taxing Authority or that has been or is required to be furnished to any Taxing Authority in connection with the determination, assessment or collection of any Taxes or the administration of any Laws or administrative requirements relating to any Taxes.

“ Taxing Authority ” means any government or any subdivision, agency, commission or authority thereof, or any quasi-governmental or private body having jurisdiction over the assessment, determination, collection or other imposition of Taxes.

“ Teaming Agreement ” has the meaning set forth in Section 3.18(a)(vii).

“ Technology ” means all types of technical information and data, whether or not reduced to tangible or physical form, including, but not limited to: know-how; product definitions and designs; research and development, engineering, manufacturing, process, test, quality control, procurement, and service specifications, procedures, standards, and reports; blueprints; drawings; materials specifications, procedures, standards, and lists; catalogs; technical information and data relating to marketing and sales activity; and formulae. Technology does not include any Software.

“ Third-Party Claims ” means a claim made by an Indemnified Party against an Indemnifying Party in connection with any third party litigation, arbitration, action, suit, proceeding, claim or demand made upon the Indemnified Party for which the Indemnified Party may seek indemnification from the Indemnifying Party under the terms of this Agreement.

“ Trademarks ” means all United States and foreign trademark and service mark registrations and applications therefor and unregistered trademarks and service marks.

 

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“ Trade Secrets ” means information in any form relating to Technology or Software that is considered to be proprietary information by the owner, is maintained on a confidential or secret basis by the owner, and is not generally known to other parties.

“ Transaction Costs ” has the meaning set forth in Section 5.4(a).

“ Transaction Costs Release ” has the meaning set forth in Section 5.4(b).

“ Transaction Documents ” has the meaning set forth in Section 3.2.

“ Welfare Plan ” has the meaning set forth in Section 3.28(a)(vii).

“ Wisconsin Contract ” has the meaning set forth in Section 6.17.

“ Zimmerman ” means Donald L. Zimmerman.

1.2 Rules of Construction .

Unless the context otherwise requires:

(a) A capitalized term has the meaning assigned to it;

(b) An accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

(c) References in the singular or to “him,” “her,” “it,” “itself,” or other like references, and references in the plural or the feminine or masculine reference, as the case may be, shall also, when the context so requires, be deemed to include the plural or singular, or the masculine or feminine reference, as the case may be;

(d) References to Articles, Sections and Exhibits shall refer to articles, sections and exhibits of this Agreement, unless otherwise specified;

(e) The headings in this Agreement are for convenience and identification only and are not intended to describe, interpret, define or limit the scope, extent, or intent of this Agreement or any provision thereof;

(f) This Agreement shall be construed without regard to any presumption or other rule requiring construction against the party that drafted and caused this Agreement to be drafted;

(g) References to “best efforts” in this Agreement shall require commercially reasonable best efforts, and not commercially unreasonable expenditures of money, time or other resources; and

(h) A monetary figure given in United States dollars shall be deemed to refer to the equivalent amount of foreign currency when used in a context that refers to or includes operations conducted principally outside of the United States.

 

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ARTICLE II

Closing; Purchase Price; Adjustments; Escrow

2.1 Closing .

The closing (the “ Closing ”) of the Contemplated Transactions shall take place at the offices of Squire, Sanders & Dempsey L.L.P., 8000 Towers Crescent Drive, Tysons Corner, Virginia 22182-2700, at 10:00 A.M. local time on the first Business Day after the deliveries referred to in Articles VI and VII have been satisfied, or at such other time, date and place that shall be mutually agreed upon by the parties hereto (the “ Closing Date ”). At Closing, ICF shall:

(a) pay to each of the Shareholders (as directed by each Shareholder) their respective Purchase Consideration Percentage of the Closing Purchase Consideration;

(b) satisfy in full any Indebtedness For Borrowed Money; and

(c) deposit an amount equal to the Escrow Deposit in escrow with SunTrust Bank as escrow agent (the “ Escrow Agent ”), pursuant to the terms of an escrow agreements substantially in the form of Exhibit D-1 (the “General Indemnity Escrow Agreement’) and D-2 hereto (the “Lease Escrow Agreement”), among Synergy, ICF, the Shareholders’ Representative and the Escrow Agent, to fund the General Escrow Account and the Lease Escrow Account respectively (jointly, the “ Escrow Accounts ”). The aggregate amount held in the Escrow Accounts by the Escrow Agent at any time and from time to time, together with any interest or appreciation thereon, shall be referred to as the “ Escrowed Funds ” with that portion of the Escrowed Funds held from time to time in the Lease Escrow Account being hereinafter sometimes referred to as the “ Lease Escrow ” and with that portion of the Escrowed Funds held from time to time in the General Indemnity Escrow Account being hereinafter sometimes referred to as the “ General Indemnity Escrow .” Upon the expiration of any one of the Escrow Accounts, the Escrow Agent shall release and deliver to the Shareholders’ Representative for distribution to the Shareholders the amount then remaining in the applicable Escrow Account, if any, less the amount of any pending claims all as more particularly described and in accordance with the provisions of Sections 5.10 and 8.3. As such pending indemnification claims are resolved, the Escrow Agent shall, after making any payment related to such claims, release and deliver to the Shareholders’ Representative for distribution to the Shareholders any Escrow Amounts remaining from the amounts reserved for such claims.

2.2 Purchase Price; Payment .

(a) The purchase price for the Shares and payment thereof shall be as set forth below:

(i) Payment for Shares and Options . At the Closing, the Shareholders shall receive their respective Purchase Consideration Percentage of the Closing Purchase Consideration as shown on Exhibit A and each Shareholder shall thereafter cease to have any rights as a Shareholder, other than any rights granted to the Shareholders pursuant to this Agreement and the other Transaction Documents. At the Closing, ICF, on behalf of Synergy, shall pay to each of the Option Holders their respective Net Option Consideration as shown on

 

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Exhibit B and due under their respective Option Release. Notwithstanding anything to the contrary contained in this Section 2.2(a), pursuant to Section 2.2(a)(ii) below, only the Principal Shareholders shall receive the ICF Holdings Shares. For purposes of this Agreement, the following terms have the meanings set forth below.

(A) “ Closing Purchase Consideration ” shall consist of (1) cash in an amount equal to Eighteen Million Three Hundred Fifty Thousand Dollars ($18,350,000) less (w) the Aggregate Net Option Consideration, (x) the amount of Indebtedness For Borrowed Money; (y) the amount, if any, of the Transaction Costs that the Shareholders choose to have ICF pay pursuant to Section 5.4, and (z) the Escrow Deposit, plus (2) the ICF Holdings Shares (all as more specifically shown on Exhibit A).

(B) “ Escrow Deposit ” shall mean the aggregate of the Lease Escrow Amount and the General Indemnity Escrow Amount.

(C) “ General Indemnity Escrow Account ” refers to an escrow account to be maintained by the Escrow Agent under the terms of the General Indemnity Escrow Agreement to hold and administer the General Indemnity Escrow Amount as security for the Shareholders’ general indemnification obligations under ARTICLE VIII.

(D) “ General Indemnity Escrow Amount ” means One Million Five Hundred Thousand Dollars ($1,500,000).

(E) “ ICF Holdings Shares ” shall mean 68,120 shares of ICF Holdings Common Stock, par value $0.01 per share, having a value of Five Hundred Thousand Dollars ($500,000) based on the ICF Holdings Share Value.

(F) “ Lease Escrow Account ” refers to an escrow account to be maintained by the Escrow Agent under the terms of the Lease Escrow Agreement to hold and administer the Lease Escrow Amount as security for the Shareholders’ indemnification obligations with respect to the Columbia Road Lease under ARTICLE V.

(G) “ Lease Escrow Amount ” means Three Million Dollars ($3,000,000).

(H) “ Post-Closing Purchase Consideration ” shall be equal to the sum of all amounts delivered to the Shareholders’ Representative from the Escrow Agent for distribution to the Shareholders pro rata in accordance with the Purchase Consideration Percentage.

(I) “ Purchase Consideration Percentage ” shall mean for each Shareholder that Shareholder’s proportionate interest in Synergy as determined by the number of Shares held by each Shareholder on the Closing Date over the total number of issued Shares as of the Effective Date and the Closing Date, all as shown on Exhibit A.

(ii) Allocation of ICF Holdings Shares to Principal Shareholders . It is intended that the ICF Holdings Shares be issued only to the Principal Shareholders. Accordingly, and notwithstanding anything to the contrary contained in Section 2.2(a)(i): that portion of the

 

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Closing Purchase Consideration comprised of ICF Holdings Shares shall be issued only to the Principal Shareholders (with each of the Principal Shareholders receiving an equal number of ICF Holdings Shares) and the value of such shares shall be credited against the Closing Purchase Consideration otherwise payable to Principal Shareholders on a dollar-for-dollar basis (using the value of the ICF Holdings Share Value); and

(iii) Rights Associated with ICF Holdings Shares . In connection with the issuance of the ICF Holdings Shares, certain rights with regard to the ICF Holdings Shares shall be granted to the Principal Shareholders under the terms of a Shareholders Agreement in the form attached hereto as Exhibit E (the “ Shareholders Agreement ”).

(iv) Surrender of Shares . Pursuant to Section 2.1(a), ICF shall pay to each of the Shareholders (as directed by each Shareholder) in immediately available funds their respective Purchase Consideration Percentage of the Closing Purchase Consideration, provided that each Shareholder shall surrender to ICF the certificate(s) representing those Shares owned by the Shareholder as shown on Exhibit A, with all such Share certificates duly endorsed in blank, or accompanied by stock powers duly endorsed in blank, and otherwise in proper form for transfer of good title to the Shares to ICF.

2.3 Shareholders’ Representative .

(a) Wesley C. Pickard is hereby appointed as the Principal Shareholders’ and the Shareholders’ true and lawful representative, proxy, agent and attorney-in-fact (the “ Shareholders’ Representative ”) for a term that shall be continuing and indefinite and without a termination date except as otherwise provided herein, to act for and on behalf of the Shareholders and the Principal Shareholders in connection with or relating to the Transaction Documents and the Contemplated Transactions, including, without limitation, to give and receive notices and communications, to receive and accept service of legal process in connection with any proceeding arising under the Transaction Documents or in connection with the Contemplated Transactions, to receive and deliver amounts comprising the Closing Purchase Consideration and the Post-Closing Purchase Consideration, to authorize delivery of cash from each of the Escrow Accounts in satisfaction of claims pursuant to ARTICLE VIII hereof, to object to or accept any claims against or on behalf of the Shareholders and Principal Shareholders pursuant to ARTICLE VIII, to agree to, negotiate, enter into settlements and compromises of, and demand arbitration and comply with orders of courts and awards of arbitrators with respect to such amounts or claims, and to take all actions necessary or appropriate in the sole opinion of the Shareholders’ Representative for the accomplishment of the foregoing. Such agency may be changed at any time and from time to time by the action of Shareholders holding more than fifty percent (50%) of the issued and outstanding Shares just prior to the Contemplated Transactions, and shall become effective upon not less than thirty (30) days prior written notice to ICF. Except as provided in the foregoing sentence, in the event that for any reason the most recent Shareholders’ Representative shall no longer be serving in such capacity, including, without limitation, as a result of the death, resignation, or incapacity of the Shareholders’ Representative, either (i) the outgoing Shareholders’ Representative shall appoint a successor Shareholders’ Representative or (ii) if the outgoing Shareholders’ Representative is unable, unwilling or otherwise fails to appoint a successor Shareholder Representative, then Terrence R. Colvin shall serve as the successor Shareholders’ Representative, or (iii) in the event that Terrence R. Colvin

 

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is unable or unwilling to serve as successor Shareholders’ Representative, Shareholders holding more than fifty percent (50%) of the issued and outstanding Shares just prior to the Contemplated Transactions, shall designate another Person to act as Shareholders’ Representative, such that at all times there will be a Shareholders’ Representative with the authority provided hereunder. Any change in the Shareholders’ Representative pursuant to the foregoing sentence shall become effective upon delivery of written notice of such change to ICF. The Shareholders’ Representative shall not receive compensation for his or her services. Notices, deliveries or communications to or from the Shareholders’ Representative by or to any of the parties to the Transaction Documents shall constitute notices, deliveries or communications to or from each of the Shareholders.

(b) The Shareholders’ Representative shall not be liable for any act done or omitted hereunder in his capacity as Shareholders’ Representative in the absence of gross negligence or willful misconduct on his or her part. The Principal Shareholders shall jointly and severally indemnify the Shareholders’ Representative and hold the Shareholders’ Representative harmless from and against any and all damages, actions, proceedings, demands, liabilities, losses, taxes, fines, penalties, costs, claims and expenses (including, without limitation, reasonable fees of counsel) of any kind or nature whatsoever (whether or not arising out of third-party claims and including all amounts paid in investigation, defense or settlement of the foregoing) that may be sustained or suffered by the Shareholders’ Representative in connection with the administration of its duties hereunder, except where such Losses arise from or are the result of the Shareholders’ Representative’s gross negligence or willful misconduct.

(c) Any decision, act, consent or instruction taken or given by the Shareholders’ Representative pursuant to this Agreement shall be and constitute a decision, act, consent or instruction of all Shareholders and shall be final, binding and conclusive upon each such Shareholder and the Escrow Agent, ICF, and ICF Holdings and, following the completion of the Closing, Synergy, ICF and ICF Holdings may rely upon any such decision, act, consent or instruction of the Shareholders’ Representative as being the decision, act, consent or instruction of each and every Shareholder and shall have no duty to inquire as to the acts and omissions of the Shareholders’ Representative. The Escrow Agent, Synergy, ICF and ICF Holdings are hereby relieved from any liability to any Person for any acts done by them in accordance with, or otherwise with respect to any aspect of, such decision, act, consent or instruction of the Shareholders’ Representative.

(d) Notices given to the Shareholders’ Representative in accordance with Section 9.2 shall constitute notice to the Shareholders or the Principal Shareholders, as applicable, for all purposes under this Agreement.

 

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ARTICLE III

Representations and Warranties of the Shareholders

Except as set forth in the Disclosure Schedule, the Shareholders jointly and severally represent and warrant to ICF as follows:

3.1 Organization and Power .

(a) Shareholders . Each of the Shareholders has full power and authority to execute, deliver and perform this Agreement and the other Transaction Documents to which he is a party and to consummate the Contemplated Transactions. Exhibit A accurately lists the names of the Shareholders, their principal addresses, and the number of Shares owned by each.

(b) Synergy . Synergy (i) is a corporation duly incorporated, validly existing and in good standing under the laws of the District of Columbia, (ii) has full power and authority to execute, deliver and perform this Agreement, (iii) has all requisite corporate power to own or lease and to operate its properties and carry out the businesses in which it is engaged, and (iv) is duly qualified or licensed to do business as a foreign corporation in good standing in every jurisdiction where its ownership of property, or the conduct of its business, requires such qualification, other than jurisdictions in which the failure to so qualify, individually or in the aggregate, would not have a Material Adverse Effect on Synergy. Section 3.1(b) of the Disclosure Schedule lists each of the jurisdictions in which Synergy is qualified or licensed to do business as a foreign corporation. Synergy is in good standing in each jurisdiction listed on Section 3.1(b) of the Disclosure Schedule.

(c) Acquired Subsidiaries . Each of the Acquired Subsidiaries (i) is a corporation duly incorporated, validly existing and in good standing under the laws of its respective jurisdiction of incorporation, (ii) has all requisite corporate power to own or lease and to operate its properties and carry out the businesses in which it is engaged, and (iii) is duly qualified or licensed to do business as a foreign corporation in good standing in every jurisdiction where such corporation’s ownership of property, or the conduct of such corporation’s business, requires such qualification, other than jurisdictions in which the failure to so qualify, individually or in the aggregate, would not have a material adverse effect on Synergy or such Acquired Subsidiary. Section 3.1(c) of the Disclosure Schedule lists each of the Acquired Subsidiaries and the jurisdictions in which each of the Acquired Subsidiaries is qualified or licensed to do business as a foreign corporation. Each Acquired Subsidiary is in good standing in each jurisdiction in which it is listed on Section 3.1(c) of the Disclosure Schedule.

3.2 Authorization and Enforceability .

This Agreement has been, and each of the other documents, agreements and instruments to be executed and delivered at Closing by the Shareholders and Synergy (together with this Agreement, the “ Transaction Documents ”) have been, duly authorized, executed and delivered by Synergy and each of the Shareholders, as the case may be, and constitutes, or as of the Closing Date will constitute, a valid and legally binding agreement of each of Synergy or the Shareholders, as the case may be, enforceable in accordance with its terms, subject to bankruptcy,

 

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insolvency, reorganization and other laws of general applicability relating to or affecting creditors’ rights and to general equity principles. The Contemplated Transactions have been duly authorized by the Board of Directors of Synergy and the Shareholders in accordance with all applicable Law and the Articles of Incorporation and Bylaws of Synergy.

3.3 No Violation .

The execution and delivery of this Agreement by Synergy and the Shareholders, consummation of the Contemplated Transactions and compliance with the terms of the Transaction Documents will not:

(a) conflict with or violate any provision of the Articles of Incorporation, any bylaw or any corporate charter or document of Synergy or the Acquired Subsidiaries;

(b) result in the creation of, or require the creation of, any Lien upon any (i) Shares or (ii) property of Synergy or any of the Acquired Subsidiaries;

(c) result in (i) the termination, cancellation, modification, amendment, violation, or renegotiation of any contract, agreement, indenture, instrument, or commitment pertaining to the business of Synergy, or any of the Acquired Subsidiaries, or (ii) the acceleration or forfeiture of any term of payment;

(d) give any Person the right to (i) terminate, cancel, modify, amend, vary, or renegotiate any contract, agreement, indenture, instrument, or commitment pertaining to the business of Synergy or any of the Acquired Subsidiaries, or (ii) to accelerate or forfeit any term of payment; or

(e) violate any Law applicable to Synergy or any of the Acquired Subsidiaries or the Shareholders or by which their properties are bound or affected, other than such violations as would not have a Material Adverse Effect on Synergy, the Acquired Subsidiaries or the Shareholders.

3.4 Consents .

Except as set forth on Section 3.4 of the Disclosure Schedule, neither the execution and delivery of this Agreement by the Shareholders and Synergy, nor the consummation of the Contemplated Transactions or compliance with the terms of the Transaction Documents, will require (a) the consent or approval under any material agreement or instrument or (b) the Shareholders, Synergy, or any of the Acquired Subsidiaries to obtain the material approval or consent of, or make any material declaration, filing or registration with, any Governmental Authority and all such consents or approvals have been obtained or waived.

3.5 Financial Statements .

(a) In General . The Audited Financial Statements were prepared in accordance with GAAP applied consistently and the September 2004 Financial Statements and the Closing Financial Statements were internally prepared by Synergy, in a manner consistent with past practices for such internally prepared unaudited financial statements. Throughout the

 

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periods involved, the Financial Statements fairly and accurately reflect in all material respects (i) the consolidated financial position of Synergy and the Acquired Subsidiaries, as of the dates thereof, and (ii) all transactions of Synergy and the Acquired Subsidiaries, subject, in the case of the unaudited Financial Statements, to ordinary year end adjustments. To the Knowledge of the Synergy, neither Synergy nor any of the Acquired Subsidiaries has received any advice or notification from its independent certified public accountants that Synergy or any of the Acquired Subsidiaries has used any improper accounting practice that would have the effect of not reflecting or incorrectly reflecting in the books and records of Synergy or any of the Acquired Subsidiaries any properties, assets, liabilities, revenues or expenses.

(b) No Undisclosed Liabilities; Etc . Except as set forth on Section 3.5(b) of the Disclosure Schedule, neither Synergy nor any of the Acquired Subsidiaries has any material liabilities or obligations individually in excess of $25,000 of any nature (whether known or unknown and whether absolute, accrued, contingent, or otherwise), except for liabilities or obligations reflected or reserved against in the Financial Statements.

(c) Accounts Receivable . All receivables (including intercompany and unbilled receivables) reflected in the Financial Statements or recorded on the books of Synergy and each of the Acquired Subsidiaries (i) resulted from the ordinary course of business, (ii) have been properly recorded in the ordinary course of business and (iii) to the Knowledge of Synergy and subject to the reserves reflected in the Financial Statements (which reserves, as adjusted for operations and transactions through the date hereof, are adequate) are good and collectible in full on or before the Survival Date without any discount, setoff or valid counterclaim (net of recovery from vendors or subcontractors), in amounts equal to not less than the aggregate face amounts thereof.

(d) No Letters of Credit or Guarantees . Except as reflected in the Audited Financial Statements or as set forth on Section 3.5(d) of the Disclosure Schedule, neither Synergy nor any of the Acquired Subsidiaries (i) has any letters of credit outstanding as to which Synergy or the Acquired Subsidiaries has any actual or contingent reimbursement obligations, and (ii) is a party to or bound, either absolutely or on a contingent basis, by any agreement of guarantee, indemnification or any similar commitment with respect to the liabilities or obligations of any other Person (whether accrued, absolute or contingent).

(e) Contingent or Deferred Acquisition Expenses or Payments . Except as otherwise disclosed on Section 3.5(e) of the Disclosure Schedule, neither Synergy, nor any of the Acquired Subsidiaries is obligated, or otherwise liable for the payment of any contingent or deferred acquisition payments relating to the direct or indirect acquisition of any business, enterprise, or combination.

3.6 Relationships with Affiliates .

Except as set forth on Section 3.6 of the Disclosure Schedule, to the Knowledge of Synergy, no Shareholder or any Affiliate of any Shareholder, Synergy or any of the Acquired Subsidiaries has, or since December 31, 2003 has had, any interest in any property (real, personal, or mixed and whether tangible or intangible), used in or pertaining to the business of Synergy or any of the Acquired Subsidiaries. Other than interests that do not exceed one percent (1%) of the

 

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outstanding equity of a publicly traded company, no Shareholder or any Affiliate of any Shareholder, or to the Knowledge of Synergy, Synergy or any of the Acquired Subsidiaries is, or since December 31, 2003 has owned (of record or as a beneficial owner) an equity interest or any other financial or a profit interest in, a Person that has (a) had business dealings or a material financial interest in any transaction with Synergy or any Acquired Subsidiary or (b) engaged in competition with Synergy or any Acquired Subsidiary with respect to any line of the products or services of Synergy or any Acquired Subsidiary in any market presently served by Synergy or any of the Acquired Subsidiaries. Except as set forth on Section 3.6 of the Disclosure Schedule, no Shareholder or any Affiliate of any Shareholder, Synergy or any of the Acquired Subsidiaries is a party to any contract or agreement with, or has any contractual claim or right against, Synergy or any of the Acquired Subsidiaries.

3.7 Indebtedness to/from Officers, Directors, Shareholders and Employees .

Except as set forth in Section 3.7 of the Disclosure Schedule, neither Synergy nor any of the Acquired Subsidiaries is indebted, directly or indirectly, to any Person who immediately prior to the Closing was a Shareholder, officer or director of either Synergy or any of the Acquired Subsidiaries in any amount whatsoever, other than for salaries for services rendered or reimbursable business expenses. No Shareholder, officer, director, or employee is indebted to either Synergy or any of the Acquired Subsidiaries except for advances made to employees of either Synergy or any of the Acquired Subsidiaries in the ordinary course of business to meet reimbursable business expenses anticipated to be incurred by such obligor.

3.8 No Adverse Change .

Since September 30, 2004, no change having a Material Adverse Effect has occurred to, in, or with respect to the businesses, operations, properties or condition, financial or otherwise, of Synergy and the Acquired Subsidiaries taken as a whole, nor has any event, condition or contingency occurred that is reasonably likely to have or result in a Material Adverse Effect.

3.9 Conduct of the Business .

(a) Cooperative Business Arrangements . Except as set forth on Section 3.9(a) of the Disclosure Schedule, none of the business of Synergy or the Acquired Subsidiaries is, or since December 31, 2003 has been, conducted through any (i) joint venture, teaming agreement or relationship, partnership or other entity, or (ii) any subcontract, agreement or other arrangement pursuant to which a third party manufactures or processes products for Synergy or the Acquired Subsidiaries, or performs services for customers of Synergy or the Acquired Subsidiaries. Neither Synergy nor any of the Acquired Subsidiaries (nor, to the Knowledge of Synergy, the other party or parties to such agreements) is in material breach of any term of any such agreement.

(b) Letters of Intent, Non-Competition and Non-Disclosure Arrangements . Except as set forth on Section 3.9(b) of the Disclosure Schedule, neither Synergy nor any of the Acquired Subsidiaries is party to any letters of intent, memoranda of understanding, non-competition arrangements, non-disclosure agreements or confidentiality agreements that remain in effect.

 

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3.10 Corporate and Capital Structure.

(a) Capital Structure . Section 3.10(a) of the Disclosure Schedule sets forth the capitalization and record owners of all of the Capital Stock of each of Synergy and the Acquired Subsidiaries. All outstanding Capital Stock of Synergy and the Acquired Subsidiaries is duly authorized, has been validly issued and is fully paid and non-assessable, owned beneficially and of record by the Shareholders or Synergy, as the case may be, free and clear of any Lien. Synergy has good and valid title to all of the issued and outstanding shares of Capital Stock of the Acquired Subsidiaries registered in its name, in each case free and clear of any Liens. The holders of Synergy’s Capital Stock have no preemptive rights with respect to securities of Synergy. None of the holders of Synergy’s Capital Stock has granted any proxy, or entered into any voting trust, voting agreement or similar arrangement, with respect to his or her Shares. Other than as disclosed on Section 3.10(a) of the Disclosure Schedule, neither Synergy nor any Acquired Subsidiary (i) has any outstanding securities convertible into or exchangeable or exercisable for any shares of its Capital Stock, or (ii) has outstanding any rights to subscribe for or to purchase, or any options for the purchase, or any agreements providing for the issuance (contingent or otherwise), of, or any calls against, commitments by or claims against them of any character relating to, any shares of their Capital Stock or any securities convertible into or exchangeable or exercisable for any shares of their Capital Stock.

(b) Interests In Other Persons . Except as set forth on Section 3.10(b) of the Disclosure Schedule, neither Synergy, nor any of the Acquired Subsidiaries owns, directly or indirectly, any shares of Capital Stock or any other equity interest in any other Person.

(c) Options . As of December 31, 2004 Synergy had granted and there were outstanding the Options to the Option Holders. All obligations or liability of Synergy with respect to any and all of the Options have been cancelled and each Option Holder has executed and delivered an Option Sale and Release Agreement in the form attached hereto as Exhibit F, (each an “Option Release”) and that each Option Release is valid and binding and fully enforceable in accordance with the terms thereof.

3.11 Title to Shares .

(a) Each Shareholder is the owner, beneficially and of record, of the Shares listed opposite such Shareholder’s name on Exhibit A and has good and valid title to the Shares listed opposite such Shareholder’s name, free and clear of all Liens. Upon delivery to ICF at the Closing of certificates representing the Shares, duly endorsed in blank, or accompanied by stock powers duly endorsed in blank, in proper form for transfer, good and valid title to the Shares will pass to ICF, free and clear of all Liens, other than those arising from acts of ICF.

(b) The Shares owned by the Shareholders, as shown on Exhibit A constitute in the aggregate all of the Capital Stock of Synergy, and Synergy owns all of the issued and outstanding Capital Stock of the Acquired Subsidiaries, in each case free and clear of any Liens.

 

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3.12 Charter, Bylaws and Corporate Records .

True and complete copies of the Charter and Bylaws of Synergy and each of the Acquired Subsidiaries, as currently in effect, and the minute books and stock record books thereof have been provided to ICF. The minute books of Synergy and each of the Acquired Subsidiaries contain accurate and complete records of all meetings held of, and corporate actions taken by, the shareholders, the Boards of Directors, and committees of the Boards of Directors of Synergy and the Acquired Subsidiaries, and no meeting of any such shareholders, Board of Directors or committee has been held for which minutes have not been prepared and are not contained in such minute books. The aforesaid Charter, Bylaws and minutes (including written consents or other actions) are true, correct and complete as of the date hereof.

3.13 Assets – In General .

Except as set forth on Section 3.13 of the Disclosure Schedule, the assets and rights of Synergy and the Acquired Subsidiaries include (a) all of the assets and rights of Synergy and the Acquired Subsidiaries that were material to the conduct of their businesses as conducted as of December 31, 2003, subject to such changes as have occurred in the ordinary course of business since December 31, 2003, and (b) all material assets reflected in the December 2003 Financial Statements, subject to such changes as have occurred in the ordinary course of business since December 31, 2003. Except as set forth on Section 3.13 of the Disclosure Schedule, Synergy and each of the Acquired Subsidiaries, has good and marketable title to all of their respective assets, free and clear of any Lien other than the Permitted Encumbrances. Except as set forth on Section 3.13 of the Disclosure Schedule, all assets necessary for the conduct of the business of Synergy and the Acquired Subsidiaries in accordance with past practice are (i) in good operating condition and repair, ordinary wear and tear excepted, (ii) not in need of maintenance or repair, except for ordinary routine maintenance or repairs that are not material in nature or cost, and (iii) adequate and sufficient for the continuing conduct of the businesses of Synergy and the Acquired Subsidiaries as conducted prior to the date hereof.

3.14 Real Property Interests .

Except as set forth on Section 3.14 of the Disclosure Schedule, neither Synergy nor any of the Acquired Subsidiaries owns any real property. Section 3.14 of the Disclosure Schedule sets forth a list and summary description of all leases, subleases, or other occupancies used by Synergy or any of the Acquired Subsidiaries or to which any of them is a party (the “ Real Property Interests ”). Except as set forth on Section 3.14 of the Disclosure Schedule, each of the Real Property Interests listed and described on Section 3.14 of the Disclosure Schedule is in full force and effect, and, to the Knowledge of Synergy, there is no default by Synergy or any of the Acquired Subsidiaries under any such Real Property Interests.

 

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3.15 Personal Property .

Set forth on Section 3.15 of the Disclosure Schedule is a list of all equipment, machinery, motor vehicles and other tangible personal property owned or leased by Synergy and the Acquired Subsidiaries and having an original book value per unit in excess of $500 (the “ Personal Property ”). Synergy and each of the Acquired Subsidiaries has good title to all of their respective Personal Property, free and clear of any Lien other than the Permitted Encumbrances.

3.16 Intellectual Property Rights .

(a) Section 3.16(a) of the Disclosure Schedule includes a true and complete list of all material Commercial Software used by or in connection with the businesses of Synergy and each of the Acquired Subsidiaries. Section 3.16(a) of the Disclosure Schedule also includes a true and complete list of (i) all material Copyrights, Patents and Trademarks (other than those comprising or reflected in Commercial Software) used by or in connection with the businesses of Synergy and each of the Acquired Subsidiaries and (ii) all pending applications for Copyrights, Patents and Trademarks filed by or on behalf of Synergy or the Acquired Subsidiaries and used by or in connection with the businesses of Synergy or the Acquired Subsidiaries as presently conducted. To the Knowledge of Synergy, none of such rights has been opposed or held unenforceable. To the Knowledge of Synergy, each of the aforesaid Intellectual Property Rights is valid, subsisting and enforceable. Each of the registered Intellectual Property Rights is duly registered in the name of Synergy or an Acquired Subsidiary as appropriate.

(b) Except as set forth on Section 3.16(b) of the Disclosure Schedule, the business of Synergy and the Acquired Subsidiaries as presently conducted does not require or use any Intellectual Property Rights not owned by or licensed to Synergy or the Acquired Subsidiaries. Synergy and the Acquired Subsidiaries are the owners and have the right to use the Intellectual Property Rights listed on Section 3.16(a) of the Disclosure Schedule without making any payment to others or granting rights to others in exchange therefor.

(c) Except as set forth on Section 3.16(c) of the Disclosure Schedule, neither Synergy nor any of the Acquired Subsidiaries has granted any Person any right to use any Intellectual Property Rights owned by Synergy or the Acquired Subsidiaries. No shareholder, director, officer or employee of, or Consultant to, Synergy or the Acquired Subsidiaries has any right to use, other than in connection with the business activities of Synergy or the Acquired Subsidiaries as presently conducted, any of the Intellectual Property or Intellectual Property Rights.

(d) To the Knowledge of Synergy and subject to Section 3.16(g), the operation of the business of Synergy and each of the Acquired Subsidiaries in the normal course of business prior to the Effective Date does not infringe in any respect upon the Intellectual Property Rights of any Person and, to the Knowledge of Synergy, no Person other than those listed on Section 3.16(c) of the Disclosure Schedule (i) has claimed or threatened to claim the right to use any Intellectual Property Rights or (ii) has claimed or threatened to claim the right to deny the right of Synergy or any of the Acquired Subsidiaries to use same. No proceeding alleging infringement of the Intellectual Property Rights of any Person is pending or, to the Knowledge of Synergy, threatened against Synergy or any of the Acquired Subsidiaries.

 

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(e) With respect to each material Trade Secret of Synergy or of an Acquired Subsidiary, the documentation relating to such Trade Secret is current, accurate and in sufficient detail and content to identify and explain it and allow its full and proper use without reliance on the knowledge or memory of any individual. Synergy and the Acquired Subsidiaries have taken all reasonable precautions to protect the secrecy, confidentiality, and value of their respective Trade Secrets. Such Trade Secrets are not part of the public knowledge or literature, and have not been used, divulged, or appropriated either for the benefit of any Person (other than Synergy and the Acquired Subsidiaries) or to the detriment of Synergy or the Acquired Subsidiaries.

(f) Section 3.16(f) of the Disclosure Schedule includes a true and complete list of any material rights (unlimited, limited, restrictive, government purpose license rights, march-in etc.) that any Governmental Authority has in any patents, technical data or computer software that Synergy or any of the Acquired Subsidiaries use in their respective businesses. Except as set forth in Section 3.16(f) of the Disclosure Schedule, neither Synergy nor any of the Acquired Subsidiaries has developed any item, component, process or software as a requirement of any Government Contract, or for which any Governmental Authority paid some or all of the cost of development.

(g) Section 3.16(g) of the Disclosure Schedule includes a true and complete list of all Software developed by Synergy or any of the Acquired Subsidiaries and currently used in their respective businesses (collectively the “ Software Programs ”). All of the Software Programs were developed by and owned exclusively by Synergy or the Acquired Subsidiaries and are subject only to licenses referenced in Section 3.16(c) above. The source code and system documentation relating to the Software Programs (i) have at all times been maintained in confidence and (ii) have been disclosed by Synergy or the Acquired Subsidiaries only to employees and consultants having “a need to know” the contents thereof in connection with the performance of their duties to Synergy or the Acquired Subsidiaries. All personnel, including employees, agents, consultants, and contractors, who have contributed to or participated in the conception and development of the Software Programs (or any related technical and descriptive materials relating to the acquisition, design, development, use, or maintenance of the Software Programs) either (i) are party to a “work-for-hire” arrangement or agreement with Synergy or an Acquired Subsidiary, as applicable, that has accorded Synergy or the applicable Acquired Subsidiary full, effective, exclusive, and original ownership of all tangible and intangible property thereby arising, or (ii) have executed appropriate instruments of assignment conveying to Synergy or the applicable Acquired Subsidiary full, effective, and exclusive ownership of all tangible and intangible property thereby arising. All documentation relating to the Software Programs is and has been treated as material Trade Secrets of Synergy or any applicable Acquired Subsidiaries. The Software Programs do not infringe in any respect upon the Intellectual Property Rights of any Person and no Person other than those listed on Section 3.16(c) of the Disclosure Schedule (i) has claimed or threatened to claim the right to use the Software Programs or (ii) has claimed or threatened to claim the right to deny the right of Synergy or any of the Acquired Subsidiaries to use the Software Programs. With respect to the Software Programs, no proceeding alleging infringement of the Intellectual Property Rights of any Person is pending or, to the Knowledge of Synergy, threatened against Synergy or any of the Acquired Subsidiaries.

 

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3.17 Contracts and Bids .

(a) Scheduled Contracts . Section 3.17(a) of the Disclosure Schedule is a true and complete list of all “Scheduled Contracts” (as hereinafter defined) to which either Synergy or an Acquired Subsidiary is a party, by which it is bound, or which otherwise pertain to the businesses of Synergy and the Acquired Subsidiaries. For the purposes of this Section 3.17(a), the term “ Scheduled Contracts ” shall mean the following written or oral contracts, agreements, indentures, instruments, commitments and amendments thereof with suppliers, customers, producers, lenders of Synergy and the Acquired Subsidiaries and other third parties that are currently in effect:

(i) loan and credit agreements, revolving credit agreements, security agreements, guarantees, notes, agreements evidencing any lien, conditional sales agreements, factoring agreements, leasing agreements, sale and leaseback and synthetic lease agreements, or title retention agreements;

(ii) hedging and similar agreements;

(iii) sales orders and other contracts and commitments for the future sale by Synergy or the Acquired Subsidiaries of goods, materials, supplies, services or equipment (other than Government Contracts) providing for annual payments greater than $50,000;

(iv) purchase orders and other contracts and commitments providing for annual payments greater than $50,000 for the future purchase of materials, supplies, services or equipment by Synergy or any of the Acquired Subsidiaries;

(v) agreements relating to Intellectual Property Rights listed on Section 3.16(a) of the Disclosure Schedule;

(vi) contracts, agreements, indentures, instruments or commitments by and between Synergy or any of the Acquired Subsidiaries and Persons with whom Synergy or any of the Acquired Subsidiaries is not dealing at arm’s length;

(vii) agreements listed on Section 3.9(a) of the Disclosure Schedule;

(viii) franchise, distribution, license or consignment contracts or agreements;

(ix) sales, agency or advertising contracts or agreements providing for annual payments greater than $50,000;

(x) leases under which Synergy or any Acquired Subsidiary is the lessor or lessee other than operating leases that require future payments by Synergy or any Acquired Subsidiary of less than $10,000 per annum;

(xi) management, employment or service contracts or agreements, and contracts and agreements with Consultants, independent contractors and sub-contractors providing for annual payments greater than $50,000;

 

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(xii) agreements of any kind with any Affiliate of Synergy or any of the Acquired Subsidiaries; and

(xiii) agreements of any kind relating to the business of Synergy or any of the Acquired Subsidiaries to which employees of Synergy or any Acquired Subsidiary, or entities controlled by them, are parties.

(b) Status of Scheduled Contracts . Status of Scheduled Contracts. Except as otherwise disclosed on Section 3.17(b) of the Disclosure Schedule, each of the Scheduled Contracts is in full force and effect, and a true and complete copy of each written Scheduled Contract and a true and accurate summary of all provisions of each oral Scheduled Contract has been delivered or made available to ICF. In addition:

(i) All of the Scheduled Contracts have been legally awarded and are binding on the parties thereto, and Synergy or the applicable Acquired Subsidiary, as the case may be, is in material compliance with all terms and conditions in such Scheduled Contracts;

(ii) Neither Synergy nor any of the Acquired Subsidiaries has received any written notice of deficient performance or administrative deficiencies relating to any Scheduled Contract;

(iii) Neither Synergy nor any of the Acquired Subsidiaries has received any written notice of any stop work orders, terminations, cure notices, show cause notices or notices of default or breach under any of the Scheduled Contracts, nor to the Knowledge of Synergy has any such action been threatened or asserted; and

(iv) There is no active Scheduled Contract for the provision of goods or services by Synergy or any of the Acquired Subsidiaries which the most recent estimated total costs of completing, including any unexercised options, as estimated in good faith by Synergy or the applicable Acquired Subsidiaries, indicates that such Scheduled Contract will be completed at a loss.

(c) Proposals . Section 3.17(c) of the Disclosure Schedule sets forth a true and accurate summary of all bids, proposals, offers or quotations (other than a “Bid” as defined in Section 3.18(a)) made by Synergy or any of the Acquired Subsidiaries that were outstanding as of the date of this Agreement, true and complete copies of which have been made available to ICF. Section 3.17(c) of the Disclosure Schedule identifies each such bid, proposal, or quotation by number and the party to whom such bid, proposal, or quotation was made, the subject matter of such bid, proposal, or quotation and the proposed price. As estimated in good faith by Synergy or the applicable Acquired Subsidiaries, each bid, proposal, or quotation shown in Section 3.17(c) of the Disclosure Schedule can be performed in accordance with its terms and conditions without a loss.

 

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3.18 Federal and State Government Contracts .

(a) Definitions . The following capitalized terms, when used in this Section 3.18, shall have the respective meanings set forth:

(i) “ Active ”, whether or not capitalized, when used to modify any Subcontract or Government Contract, means that final payment has not been made on such Subcontract or Government Contract, and when used to modify any Teaming Agreement, “active” means that such Teaming Agreement has not terminated or expired.

(ii) “ Bid ” means any bid, proposal, offer or quotation made by Synergy or any of the Acquired Subsidiaries or by a contractor team or joint venture, in which Synergy or the applicable Acquired Subsidiary is participating, that, if accepted, would lead to a Government Prime Contract or a Government Subcontract.

(iii) “ Government Contract ” means any Government Prime Contract or Government Subcontract.

(iv) “ Government Prime Contract ” means any prime contract, multiple award schedule contract, basic ordering agreement, letter contract, purchase order, delivery order or other commitment of any kind between Synergy or any of the Acquired Subsidiaries and any Governmental Authority.

(v) “ Government Subcontract ” means any subcontract, basic ordering agreement, letter subcontract, purchase order, delivery order, or other commitment of any kind between Synergy or any of the Acquired Subsidiaries and any prime contractor to any Governmental Authority or any subcontractor with respect to a Government Prime Contract.

(vi) “ Subcontract ” means any subcontract, basic ordering agreement, letter subcontract, purchase order, delivery order, consulting agreement or other commitment of any kind issued by Synergy or any of the Acquired Subsidiaries to any Person in support of Synergy’s or the applicable Acquired Subsidiary’s performance of a Government Contract.

(vii) “ Teaming Agreement ” has the same meaning as the term, “Contractor Team Arrangement,” as defined in Federal Acquisition Regulation (“FAR”) 9.601.

(b) Government Contracts . Section 3.18(b) of the Disclosure Schedule separately lists and identifies:

(i) Each active Government Contract and each Government Contract on which final payment was received after December 1, 2001 (true and complete copies of which, including all modifications and amendments thereto, have been provided to ICF);

(ii) Each outstanding Bid by number, the Person to whom such Bid was made, the subject matter of such Bid, the proposed price, and whether any such Bid is dependent, in whole or in part, on the “small business” or other status of Synergy or the applicable Acquired Subsidiaries under applicable Law (true and complete copies of which, including all modifications and amendments thereto, have been provided to ICF);

 

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(iii) Each active Teaming Agreement to which Synergy or an Acquired Subsidiary is a party (true and complete copies of which, including all modifications and amendments thereto, have been provided to ICF);

(iv) Each active Government Contract that was awarded to Synergy or an Acquired Subsidiary pursuant to the Small Business Innovative Research (“SBIR”) program or any set-aside program (small business, small disadvantaged business, 8(a), woman-owned business, etc.) or as a result of Synergy’s or an Acquired Subsidiary’s “small business” or other status under applicable Law;

(v) Each active Government Contract that was awarded to Synergy or an Acquired Subsidiary on the basis of a sole source and without competition;

(vi) Each audit report, including without limitation reports issued by the Defense Contract Audit Agency and any inspector general, and notice of cost disallowance received by Synergy or any Acquired Subsidiary since January 1, 2000 relating to any Bid or Government Contract (true and complete copies of which have been provided to ICF); and

(vii) Each active Subcontract (true and complete copies of which, includ